Can Smaller Businesses Survive the Return of the Pandemic?

SMEs must focus on the domestic market to resist the re-emergence of COVID-19

While the situation seemed to have improved last month as more and more businesses adapted and began operating again even with the threat of COVID-19 still lurking in the background, many are still expected to face ongoing hardship for the remainder of this year and into 2021. Challenges also exist in the re-emergence of COVID-19, as seen both in Malaysia and globally – an event that has stifled economies again everywhere.

This was evidenced by plummeting demand everywhere one looks. As far as estimates go, many businesses are expecting income to see an unprecedented slump.

Nonetheless, the severity of the problem may vary depending on the type of business. To be more specific, SMEs in tourism and service sectors have been battered by the virus crisis, while businesses engaging in luxuries may witness shrinking income for a longer period than others. Meanwhile, those dealing with essential products – namely food, healthcare, and medical supplies – will be more resilient.

Over the medium term, businesses will have to contend with intense competition amid low demand. SMEs in particular must compete head-on with large operators who have shifted their focus to the domestic market in lieu of the plummeting export markets.

As such, SMEs must formulate a plan to maximize the existing cash flow that’s available to them. If no avenue to increase income is in sight, the focus must be on cutbacks for expenses such as marketing costs of ineffective media, while priority must instead be given to viable products or services. Technology applications should also be embraced to minimize costs.

What’s more, cutting one’s debt burden is presently deemed crucial! This can ensure that your business will have sufficient cash to cope with any continued prolonging of this present crisis.

For cash-strapped businesses, converting assets to cash could be a smart way out. For instance, the focus must be on inventory clearance or credit management for customers. To this end, discounts may be offered to customers who can make payment before the due date, to ensure sufficient cash inflow.

Now may also be the right time for business operators to review their undertakings to generate income!

Instead of dwelling on existing markets that are still struggling, they should branch out into newer markets that have greater potential. At the same time, proactive marketing strategies must be prioritized, especially to navigate the ‘New Normal’ by facilitating consumer spending via the use of offline and online channels, the introduction of delivery service options, and online payment systems.

Here’s an example: export-related businesses should emphasize honing their competitive edge via distinctive product quality and innovation. The focus should be on product safety with improved traceability to reduce health-related concerns, which will soften the impact of price competition. At the same time, business owners should also seek entryways into viable markets, especially ones in countries with proven resilience to the COVID-19 pandemic, and are showing signs of rapid recovery, like China.

COVID-19 has definitely induced economic shock and presented a tremendous challenge for business management. To stay ahead of the game, business owners must respond in a timely manner to changes in the market. Get a full grasp of incoming issues and be able to come up with solutions to weather the crisis!

Like it or not, the present situation may best be left in the hands of the authorities, as they continue to play an important role in supporting businesses amid this COVID-19 crisis. In the meantime, pay close attention to upcoming relief measures that will be extended to improve the business scene in Malaysian. Let see if these will include measures to further promote diversifying of income opportunities and boosting liquidity for SMEs.