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Read on for some useful tips on how your business can survive these uncertain times.
With the wave of COVID-19, SMEs and organisations of all sizes worldwide have been disrupted on an unprecedented level. The impact of this pandemic has been especially prominent for SMEs, since they often face challenges like cashflow, resource and talent constraints even before this economic crisis. SMEs often face difficulties obtaining financing for their business, which results in less budget available to help weather through adversities.
A total of $60.1 billion has been allocated towards COVID-19 related measures by the Singapore Government.These financial support initiatives serve as a temporary relief for SMEs. However, to emerge stronger from this crisis and prepare for business recovery, SMEs will have to ensure that they optimise every aspect of their business.
1. Manage and tighten cash flow
To tide over this economic crisis, SMEs should ensure that they manage their cash flows more closely than before, to help them gain insights and act swiftly to address cash flow issues. It is important for SMEs to invest in software tools that can help them run regular cash flow forecasts to estimate their cash flows, watch daily spending closely to discover where expenses can be reduced, and find ways to avoid negative cash flow.
In the short term, SMEs should find all cost cutting possibilities and implement them immediately. For instance, cancel subscriptions which your business is no longer using, switching to virtual meetings to save on travel cost. Sometimes we unconsciously ignore small expenses that can pile up quickly over the period of time.
Secondly, SMEs should review their policy of selling on credit, especially if they are liable to incur goods and services tax (GST) on payments to suppliers. If you do need to extend credit, thoroughly check the client’s credit background and offer credit only if they have a good repayment history. SMEs need to be meticulous and assertive in collecting payments by the due date.
2. Tap on technology to increase productivity
SMEs which were not technology ready felt the brunt of the blow when lockdowns and quarantines began, and workers had to find ways to telecommute from home. We see the importance of businesses ensuring that they stay technologically relevant in today’s day and age, online communication tools have become essential in keeping their workers efficient and productive.
Apart from this, SMEs should also equip themselves with technology offerings which drive increased productivity of their staff, and help to automate time-consuming administrative work. There are already many digital tools readily available for every business function, SMEs simply need to evaluate where their main bottlenecks of business processes are, and invest in technology that can strengthen their efficiency.
There are also grants available currently, such as the Productivity Solutions Grant that provide up to 70% in funding for companies adopting IT solutions to enhance business processes.
3. Switch to a business model that generates greater revenue
Businesses which are able to ride out this storm are the ones who are quick to innovate and adapt to the current environment. SMEs should use this time to pivot towards a new mode of business which still leverages their current products and expertise to seize opportunity gaps in the market currently.
A tuition centre can start exploring online lessons or selling recorded video lectures as an additional offering. A car dealer can step up focus on repairs and second-hand sales rather than pushing new cars. Transport companies can start branching into logistics of food supply where demand has been growing. SMEs should repurpose their assets to create new value, protect the brand and survive.
4. Retain and reallocate important assets
SMEs should recognise their most important assets – their people. The Government has rolled out several schemes such as the Job Support Scheme (JSS) designed to save jobs and SME leaders should apply for such support before resorting to retrenching staff.
Instead of retrenching workers, business leaders should look into reallocating staff to support the more demanding areas of business, such as delivery or customer service. Taking example from ComfortDelGro, they saw a surge in delivery services amid the COVID-19 outbreak and reached out to Redmart to reallocate 1,000 taxi drivers to support grocery delivery services.
SME leaders need to look into the long-term to prepare their employees and their own business models to suit the ever-changing needs of the post quarantine economy.