We are experiencing a difficult period due to the Pandemic that has affected many of the schemes which, until that point, seemed consolidated. We've all found ourselves dealing with daily challenges - big and small - that have changed and are changing our way of life. The economic system and companies that are part of it have, in many cases, suffered an unexpected backlash, an unexpected change of course that has altered rules, economic and social balances, sales channels and customer relationships.
With this phase of change, it's more important than ever to go back and review your company's strategy, starting with 5 fundamental actions we invite you to reflect on, using all our national and international experience that we have gathered in VECO Group's almost 50 years of business. Because we are convinced that the best opportunities can always be seized, even in moments of strong change.
Plan, innovate, diversify, invest, protect.
In this phase of change we want to focus on 5 important strategic actions to use to make the correct decisions for achieving set objectives, to restart with courage, determination and vision in evaluating the risk, but also opportunities, that the future holds.
Business planning is an essential process for companies through which medium-long term objectives are defined, and the actions and tools needed to achieve them are identified, with the aim of allowing the company the best possible exploitation of its potential compatibly with the means available. The main steps to plan:
1. Analysis of the current situation, the market, competitors, and possible future developments;
2. Identification and analysis of the company's strengths and weaknesses;
3. Definition of clear and measurable goals;
4. Development of policies, products and processes for achieving the goals;
5 Preparation of a marketing plan with actions to be taken
6 Budget allocation
7. Implementation of the plan and analysis of the results
8. Review of the plan and possible adjustments (quarterly or biannually)
The VECO Group works alongside the entrepreneur to support him in his choices, planning the action points and recommending the steps required to achieve the identified objectives, with the awareness that the planning phase represents the essential starting point in medium-term growth.
Innovating basically means "changing a state of things" by introducing methodologies, systems, processes, products, and channels contrary to the usual ones. The most important thing right now is to try to change, find new paths and new rules in a decidedly different market.
Where do you start innovating your company?
The topic is often misunderstood or associated with large companies that, for example, through research are able to discover a new product to be placed on the market. But in reality, innovation also arises from ideas, processes, new channels, and it's often smaller companies that develop more innovation, and consequently become large companies in a short time.
Innovation today is increasingly associated with digitization, i.e. the use of technology to improve all business processes, including analysis, customer management (CRM), production, promotion, distribution and sales.
Let's think trivially of Amazon, a small company founded in the name of Cadabra.com in 1994 by Jeff Bezos, which initially sold books online, expanding its range of products to include DVDs, software, to eventually become the largest online supermarket in the world. It went public in 1997, at an initial price of $18.00 per share. On April 30, 2020, in the midst of the COVID-19 crisis, Amazon reached a record price of $2,474 per share.
Innovation is nothing more than a change that transforms or positively alters a situation or a status quo. Innovating in a company means optimizing processes, improving products or making any positive change that can increase well-being inside and outside the company. And often the first thing to do is change your mindset and try to look at things from another point of view.
Everyday at Veco Group we discuss various issues with our customers. Sometimes we clash, but it is our duty to suggest how to achieve the set objectives from a different point of view, and proactively advise on possible solutions to innovate your company
It means changing the status quo, altering the plan, the products, the methodologies we use, and trying to open up and explore new paths. Adopting a diversification strategy basically means for a company to try and operate in a different business.
There are two types of diversification:
• "Related" diversification, or through investment in assets that are part of the value chain in which the company operates.
• "Unrelated" diversification, or entering a sector that is completely different from the company's core business. This type of strategy, much more difficult and risky than the previous one, is often generated by extraordinary events.
A very current example can better explain this strategy. Today Company X operates in the production and distribution of men's shoes, using traditional sales channels, single-brand or multi-brand stores. However, the crisis has reduced sales by 50% and the entrepreneur finds himself having to implement the following diversification choices:
1. diversify into related businesses, i.e. try to distribute not only shoes but also, for example, accessories such as men's bags, belts or other derivative items.
2. diversify into unrelated businesses, i.e. enter completely different business sectors, for example, investing in an online company that promotes a product sales portal, or renting out part of the premises in which it carries out its business.
The VECO Group has made diversification one of the 4 pillars of its strategy by choosing the related diversification model. We started with the Multi Family Office boutique service model, which is based upon business, financial and asset consultancy, all historical services offered by the group, and in recent years have introduced the real estate, insurance and digital sectors. We are also expecting to expand to other sectors soon.
Buy or sell? These are the dilemmas of the entrepreneur, who often finds himself having to make important decisions that can radically influence the future of his company. In most cases, these decisions arise from an emergency, from the desire to retire, or with the absence of a successor within the family, or out of necessity from not seeing their turnover grow, or to seize an opportunity in a rapidly growing sector.
It's therefore necessary to address these important strategic choices in time through a preparation and analysis phase, that also starts from the objectives to be achieved, which can be different. Such objectives could be, for example, economic, getting the highest price; strategic for the continuation of the company, or business-focused, to secure the future of their employees or family members, or the future of their own children within the company.
Selling the company, and choosing when to do it, are some of the most important decisions that an entrepreneur has to make. Some entrepreneurs start a new business with clear business exit strategies, some build it over the course of their business life, while others end up considering this decision far too late because they have no other plans for the future. Implementing an exit strategy and adequately preparing for the sale of a company is a complex process, which can take up to a few years to complete, with conditions that are advantageous for both parties.
Buying a new company, or opening another office (possibly in another country) is every entrepreneur's dream, but buying can be just as difficult as selling, with the same prerogatives, times and planning processes involved. That said, buying a company during a period of crisis can represent a great opportunity.
But investing can also represent an opportunity in the financial markets, where the entrepreneur decides to invest in the real economy of his company, as well as in the financial one. With a view to diversification as well, assets must in fact be divided between owned companies, shareholdings, real estate, consumer goods, alternative investments and “liquid” financial investments. Each of them has different risk-return and liquidity characteristics.
The VECO Group is able to work alongside the entrepreneur to support them in their choices to buy or sell a company, in the real or financial way, helping them in all phases of the process, sometimes personally participating in the business.
What need could be more relevant during this year full of unexpected events and economic difficulties. The pandemic has brought an increased need to not only guard and protect assets, but also to have greater foresight and wisdom in wanting to think about the future and next generations.
The moment of generational handover is one of the most critical phases in any family-run business. Firstly, we must proceed calmly. Where possible, such handover must be planned in time and should not be carried out following an unforeseen dramatic event or when approaching retirement age. It can certainly be difficult for a company founder to come to terms with the fact that one day the end of his cycle will come, and decisions will be made by someone else. And it's even more difficult when children don't seem interested in continuing the business. But since the moment of succession will inevitably come, it is better to take a series of measures to facilitate the generational handover.
Among the instruments that are best suited for this purpose is the Trust, an exquisitely "British" instrument, the result of a flexible and pragmatic legal system based on Anglo-Saxon common law, whose origin is lost over the centuries, used by rulers and nobles who gave up management of their properties while on dangerous, far-off missions.
These days the Trust can be defined in a simple way as an "escrow" to a trusted company (trustee) to manage and keep movable and immovable property, works of art, companies and any other asset constituting the family assets according to the rules established by the settlor, in the interest of designated beneficiaries. The most frequent reasons for setting up a trust are:
• Asset protection: One of the most appreciated features of the trust is the segregation of assets so they will be unaffected by any event that personally involves the entrepreneur. Due to this very useful feature, the trust is increasingly used to protect personal assets from corporate assets, or to protect all assets, especially the weakest ones, which it is decided to protect.
• Confidentiality: the provisions contained in the trust are confidential and inaccessible to outsiders.
• Protection of minors and people with disabilities: often, as we have seen, the testamentary provisions provide that minors have limited enjoyment of assets up to the age of majority or that persons with disabilities can enjoy trust assets without being full owners;
• Protection of assets for inheritance purposes: a trust is often established for the purpose of protecting assets during generational handover, establishing the management methods of a company today and in the future, in order to define management, purpose and future strategy, guaranteed over time, and protecting the interests of shareholders but also of employees.
• Charity: in many common law systems, charities must be set up in the form of a trust; This is particularly suitable for philanthropic purposes.
• Tax advantages: in many cases, making decisions in time and evaluating the structure of the assets or company that you want to protect, can also help you benefit from some tax advantages or inheritance charges.
The VECO Group, thanks to its decades of Swiss and international experience, stand alongside entrepreneurs and families to plan their generational handover before it's too late, and to protect what the wealth accumulated over the course of life represents for everyone.