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Swiss Advisors 1973

At a time when everything seems hard, we prefer to look ahead.

At a time when everything seems hard, we prefer to look ahead.

The year 2020 will be remembered in world history as the year of COVID-19, a year when every country in the world found itself managing an epidemic that has had and is still having an impact on everyone and everything, whether individuals, companies, or institutions. It is changing the way we work and live.

We are looking to the future now. We are not waiting.

The economic system and the companies that are part of it have incurred an unexpected setback, weathered an unexpected storm, an unexpected change of course that has had and will continue to have economic and social repercussions, particularly for those companies that have not been able to “save money for a rainy day” and that are just beginning their economic life.

Switzerland promptly intervened with targeted measures in numerous spheres, sectors and social classes, demonstrating its dynamism and financial strength in support of the economic and social fabric of the country. In some new or reconverted sectors, such as the production of sanitizing accessories or for companies that have invested in e-commerce, the pandemic has brought exponential growth that now needs to be consolidated. Fortunately, it seems that the worst is over and we are slowly returning to normal, though with full knowledge that something has changed.
We believe that change brings difficulties and challenges but also opportunities for those who are able to seize them. It is time to look to the future and make important decisions for yourself, your family and your business, starting from the goals you want to achieve, whatever they may be. What matters is being clear on which path to take.

The VECO Group has also found itself managing this period, focusing on its customers, offering them all the support necessary to overcome obstacles, at times through extraordinary intervention measures, sharing the issues that were being addressed while trying not to be overwhelmed by the moment but instead looking at things with the right perspective, being aware that it is not the end of the world and, before we know it, we will be back.

Plan, innovate, diversify, invest, protect.
In this phase of change, we want to focus on five important strategic actions in order to make the right decisions to achieve the set objectives, to restart filled with courage, determination, and vision not only in evaluating threats but also opportunities that the future may hold.

Plan

Business planning is the essential process for companies through which medium to long term objectives are defined and the actions and tools to achieve them are identified, with the aim of allowing each company the best possible exploitation of its potential compatibly with the means at its disposal. The main steps for planning are as follows:

1. Analysis of the starting situation, of the market, of competitors and of possible future developments;
2. Identification and analysis of the company’s strengths and weaknesses;
3. Defining of clear and measurable objectives;
4. Development of policies, products, and processes for achieving the objectives;
5. Preparation of a marketing plan with the actions to be taken
6. Budget allocation
7. Implementation of the plan, and analysis of the results
8. Review of the plan and any adjustments (quarterly or half-yearly)

The VECO Group works alongside entrepreneurs to support them in their choices, by planning actions and recommending the necessary steps to achieve the identified objectives, being aware that the planning phase is the essential starting point in medium-term growth.

Innovate

Innovating essentially means “to change the status of things” by introducing methodologies, systems, processes, products, and channels other than the usual ones. At this time, it is necessary to try to change, find new pathways, and new rules in a decidedly different market.

How can you start to innovate your company?
Often the topic is misunderstood or associated with large companies that, thanks to research, for example, discover a new product to place on the market. In reality, innovation also originates from ideas, processes, new channels, and it is often small companies that develop more innovation, to later become large companies within a short period of time.

Innovation today is increasingly associated with digitization, or the use of technology to improve all business processes including analysis, customer management (CRM), production, promotion, distribution, and sales.

We can think of a simple example such as Amazon, a small company founded in 1994 by Jeff Bezos named Cadabra.com that sold books online, increasingly expanding the range of products with DVDs, and software. Eventually, they became the largest online supermarket in the world. The company 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, it reached a record price of $ 2,474 per share.

Innovation is nothing more than change that transforms or positively upsets a situation or a status quo. Innovating within a company means optimizing processes, improving products or making any positive change that can produce well-being inside and outside the company. Often the first thing that is needed is a shift in mindset and trying to look at things from a different point of view.

At Veco Group, we discuss various issues with our clients on a daily basis. We may disagree at times, but it is our duty to present them another point of view on how to achieve the set objectives, and to advise them proactively on possible solutions to innovate their companies.

Diversify

It means changing the status quo, framework, products, and methodologies we use, while trying to open up new avenues. Adopting a diversification strategy basically means that a company will try to operate in different businesses.

There are two different types of diversification:·
“Related” diversification, i.e. through investment in assets that are part of the value chain in which the company operates. · “Non-related” diversification or entering a sector 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. Company X operates in the production and distribution of men’s footwear, and uses traditional sales channels, single-brand or multi-brand stores. However, the crisis has reduced sales by 50% and the entrepreneur needs to implement the following diversification choices:
1. Diversify into related businesses, i.e. try to distribute not only shoes but also accessories such as, for example, men’s bags, belts or other related items.
2. Diversify into unrelated businesses, i.e. enter completely different business sectors, such as investing in an online company that promotes a product sales portal, or renting part of the premises in which it operates to a third party company.

The VECO Group has made diversification one of the four pillars of its strategy by choosing the related diversification model, starting from the Multi Family Office boutique service model, based on business, financial and asset consultancy, historical services of the group, to which in recent years the real estate, insurance and digital sectors have been added, and will soon expand to other sectors as well.

Invest

Buy or sell? These are the dilemmas for entrepreneurs, who often find themselves having to make important decisions that can radically influence the future of their company. In most cases these decisions arise from an emergency, from the desire to retire or due to the absence of a successor within the family, out of necessity because there is no growth in turnover or to seize an opportunity in a rapidly growing sector.

It is therefore necessary to face these significant strategic choices in time through a preparation and analysis phase that also begins with the objectives to be achieved, which may be different, such as economic or achieving the highest price, strategic for company continuation, corporate to ensure a future for their employees or family members, and a future for their children within the company.

Selling the company, and when to do it, are some of the most important decisions an entrepreneur has to make. Some entrepreneurs start a new business with business exit strategies already clear; others build it over the course of their business life, while still others end up considering this decision too late because they have no other plans for the future. Implementing the exit strategy and preparing properly for the sale of the company is a complex process, which can take up to several years to complete, with conditions that are advantageous for both parties.

Buying a new company, or opening another office, perhaps in another country, is the ambition of every entrepreneur, but it is just as difficult as selling it, with the same prerogatives, time periods, and planning processes. However, buying a company in a time of crisis can become an opportunity.

Indeed, investing can also consist of an opportunity in the financial markets, where an entrepreneur decides to invest in the real economy of his/her company, as well as in the financial one. In fact, with a view to diversification, assets must 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 entrepreneurs to support them in choosing whether to buy or sell a company, in a real estate or financial sense, helping them in all phases of the process, sometimes personally participating in the deal.

Protect

During this year full of unexpected events and economic difficulties, protection is likely the most pressing need. During this pandemic period, on one hand, there is an increased need to guard and protect, while on the other, there is a need for greater foresight and wisdom in thinking about the future and future generations.

The time of generational change is one of the most critical phases in any family business. First of all, one must proceed calmly. Where possible, it must be planned over time, and should not be carried out following an unexpected dramatic event or as retirement age approaches. It certainly can be difficult for a company founder to think that one day the end of their cycle will come and the decisions will be made by someone else. It is even more difficult when the offspring do not seem interested in continuing the business. However, since the time of succession will inevitably come, it is better to take a series of measures to facilitate the generational transition.

Among the tools that are best suited for this purpose is the Trust, an exquisitely “British” instrument. It is the fruit of the flexible and pragmatic Anglo-Saxon common law legal system, whose origin is lost over the centuries. It was used by kings and noblemen who gave up management of their properties when engaged in distant and dangerous missions.

Today, the trust can be defined in a simple way as “entrusting” a trusted company (trustee) to manage and safeguard movable, immovable property, works of art, companies, and any other property that constitutes the family heritage according to the regulations that the settlor establishes 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 in fact the segregation of assets so that they will not be affected 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 those parties, in particular the most vulnerable, who should be protected.
· Confidentiality. The provisions contained in the trust are confidential and not accessible to outsiders.
· Protection of minors and people with disabilities. Often, as we have seen, the testamentary provisions envisage that minors have a limited enjoyment of assets up to the age of majority or that persons with disabilities can enjoy trust assets without full ownership;
· Protection of assets for inheritance purposes. A trust is frequently set up for the purpose of protecting an asset in the generational transition, establishing the management methods of one’s company today and in the future, in order to determine management, purpose, and future strategy, guaranteed over time, protecting the interests of shareholders but also of employees.
· Charity. In many common law systems, charities must be established in the form of a trust. This tool is particularly suitable for philanthropic purposes.
· Tax advantages. In many cases, making timely decisions and evaluating the structure of the assets or the company that needs to be protected can also create benefits in the form of tax advantages or inheritance charges.

TheVECO Group, thanks to its long Swiss and international experience in the Trust sector, and among the first in Switzerland to have a Swiss Trustee company (Veco Trustee SA), works alongside entrepreneurs and families to plan the timely generational handover and protect what represents each party’s wealth accumulated over the course of a lifetime.

Now, more than ever, is the time to make important decisions for the future of your family and business.

We invite you to contact us to discuss it in depth and to evaluate how to achieve your goals.

VECO Group SA
Via Lavizzari 4
6901 Lugano
Switzerland
advisory@vecogroup.ch
T +41 91 911 71 11

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