SMEs in trouble – what can be done?

Clouds over Marbella

Some years ago I was on the board of a company called ‘Superbrands’ which, in short, produces a book of brands that are regarded as ‘truly super’ in their own specific countries. In the Czech Republic, some were the huge multinational brands (Coke, Microsoft and so on) but there were others that were truly ‘Czech’ – the obvious one being Skoda, but others too – Mosers, Pilsner Urquell, Mattoni, etc. It was a fun project, and it would be nice to think that the brands that were chosen then will continue to remain as Superbrands, irrespective of what happens in the world.

A couple of mornings ago, though, I read about one of my suggested ‘Superbrands in the Czech Republic’ from those days, the fashion house Pietro Filippi, which has had to terminate all of its staff with immediate effect by agreement, with no redundancy and no notice period, as it is on its last legs due to the Covid pandemic. Such sad news, but in a country that is giving so little support to employers, particularly owner-run SMEs, not very surprising – I imagine that it is only a matter of time before we hear of many, many others doing the same, whether ‘super” or otherwise.

What is also sad about this particular article is that the majority of the comments at the end of the article were on the ‘side’ of the employees (who, it seems, will get nothing unless they take the company to court – and then, presumably, will still get nothing) and very few on the side of the owners, who have built a really nice company from scratch and are now having to live through the heartbreak of seeing it collapse. The fact is that the Covid pandemic, like most crises, is hurting SMEs in the Czech Republic a huge amount more than the big international companies, many of whom have nearly unlimited reserves, think nothing of terminating people without any compensation (what individual employee is going to take on one of the big guys in court?), and who have the power to push landlords, creditors and others to hold-off or reduce their debt with the promise of future benefits, whilst the smaller guys can do nothing (in fact, in some countries, these big companies are having a huge proportion of their salaries paid by the State, although sadly (for them) not in the Czech Republic).

Right now, I, myself, am going through my own small nightmare of a former employee who left to go on maternity leave, and with whom I have had absolutely no contact for the past seven years (other than a lawyer’s letter on one issue halfway through), who is, according to the Czech Republic’s strict labour laws, entitled to ask me to give her back her job at the beginning of this year, or, if not, pay her a small fortune. Obviously I can’t go into too much detail as to how this is or isn’t being resolved at the moment, but having watched my own former ‘Superbrand’ agency collapse and burn over the last ten months (funnily enough there are not many sport or hospitality companies needing marketing just now!) and having had no income at all myself since the start of the Pandemic (and with no sight of anything changing any time soon), I think you would agree that I could be forgiven for saying that she is being ‘heartless’ in her negotiations (particularly as she and her family are not exactly on the breadline), at the very least!

I am often being asked, and it’s a question that is always out there on ‘start-up sites’ and similar, what it takes to set up and run your own business. And I have always said that it is a lot tougher than anyone gives us ‘entrepreneurs’ credit for – my favourite saying, over the years (and, particularly, to Jan!) is that no-one can know what it is like to sit in my chair unless they do something similar themselves; the endless stress of managing clients and employees, the knowing that if one or other customer doesn’t pay you on time you may not pay your staff/rent/yourself, the fact that you might be very good at whatever it is you are actually selling, but you will spend most of your time being the HR, finance, marketing and every other director rather than doing the actual work. It is never easy, and success never happens without a huge amount of hard work and doing without. And now, well, I am sure that there are very few people that would want to be running their own company in this new and difficult world – and maybe no-one will ever want to again. But the thing is, most country’s economies really do depend on SMEs rather than the big multinationals – those guys will pack up and move on at the slightest sign of trouble. SMEs, well, they are unlikely to go anywhere, and the hope is always that some of them, in time, will turn into the Superbrands of the future.

With most of Europe in some form of lockdown now, and the virus still doing its worst, we have to wonder how many SMEs are going to get through this. I already know mine won’t, but I am in the ‘fortunate’ position of slowing down rather than building up. But I heard today that in the Czech Republic last year, 200,000 small companies/individual entrepreneurs filed for bankruptcy and thought that that can’t possibly be true. But, you know, maybe it is….

So what can we do? First I would suggest that those people that wrote rude comments on the article mentioned above (plus any other ladies out there that are preparing to virtually blackmail their former employers into paying them large chunks of money rather than giving them back a job that doesn’t exist anymore), give themselves a dose of reality – small companies rarely have great big buckets of money that their owners can keep digging into in times of crisis. And unless we all want to live in communist countries, where everyone has a job, no-one cares about what they do, salaries are paid by the state, on time and in the same amount each month, employees need to find a way, if they possibly can, to support employers rather than kill them all off. If they don’t, then most countries are going to be looking at the highest unemployment rates imaginable, with all the other problems that that will bring.

Personally, right now, along with trying to support other SMEs that I have worked with or am friends with (through time, money, just being a friend), I am looking at ways in which I/we can try to persuade the Czech government to make some changes to these antiquated and restrictive labour laws – I have time on my hands and ‘know people’ in the right places. So if you have your own story, then please let me know… something needs to be done, and fast.

PS: I know this is a bit different to my usual ‘lockdown in Spain’ rant, but as we in Marbella head into a new lockdown, I suspect that will soon be back!!!

1 thought on “SMEs in trouble – what can be done?

  1. Alex Went

    The Czech maternity leave laws are nuts. Of course it’s great from the p-o-v of the mother (which is how it is typically reported), but few people give a thought to the difficulties of the companies that are obliged to take staff back on, particularly when they have often had to replace the worker in the interim. There are examples of people who have been treated very poorly to make room for a returning mother, who by law must be found a job that is the same as or nearly equivlent to the one she left. Besides which, after a break of sometimes six or seven years (in the case of two children), technology and business practices have often moved on to the point where the returning employee requires a huge amount of training: again, the employer picks up the tab.



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