SURVIVING THE COVID-19 PANDEMIC: How Malaysian SMEs Deal With The Economic Impact
As we move towards the 2nd half of 2020, most organisations are at its peak to expand their businesses. However, the sudden impact from the COVID-19 pandemic has changed the *game plan” entirely. Usage and awareness of technology and digitalisation have surged massively and have become the most important aspects for companies and individuals for communication and business operations during this crisis. While the various measures implemented by the government such as temporary office closure for non-essential private businesses have proven to be effective in slowing down the spread of the virus. Unfortunately, many sectors have been disrupted. According to the Malaysia Retailers Association (MRA), the COVID-19 pandemic has affected the retail consumption, causing sales to drop as much as 80%. Some of the other sectors hit hardest by the pandemic include hospitality, travel & tourism, F&B, property, building and construction. To delve further on this issue, the following companies have shared their views with us on their current business landscape, and the strategies they have in place to keep their businesses on-going.
Q1: During the COVID-19 period, what are the key challenges to keep your business going?
Brand Soul: Many projects have been postponed due to the COVID-19 pandemic as clients/prospects are more careful with their marketing spending, and concern about what lies ahead post MCO. In short, we need to constantly challenge ourselves to look for alternatives to keep our business going.
LWE: The restrictions in movement and flight cancellations have severely affected the cross border deliveries, which is part of our main businesses.
Propedia: It is not easy to stay active in the business during this pandemic. Although there are many works to be completed with deadlines, it is hard to keep it up with the limitation of movement.
Sim Education: The biggest challenge for us is to manage cash flow and stakeholders relationship. As our industry has been severely affected, we need to find ways to maintain our cash flow so as to ensure timely payment of salaries.
SRK Noodle House: The main challenge is the restrictions on private businesses operations. Food and beverages businesses could still offer take away and home delivery services. However, the MCO has resulted in restricted customer flow and our suppliers are not allowed to operate.
Q2: Can you please share with us on how do you overcome the challenges above?
Brand Soul: We focus on providing more value-added services to companies rather than pushing sales. For example, we have shared our 360 marketing strategy template to our clients to use it as a guide for their marketing planning moving forward.
"In short, being creative, thinking of out the box, and leveraging the power of search engine marketing & in-bound marketing are the ways going forward." - Stella Wong
LWE: We offered clients alternatives for cross-border deliveries to help them solve their issues. Besides, we offer same day deliveries in main cities to facilitate groceries delivery. We also help retailers to market their products online, and in return we manage the logistics.
Propedia: Being rigor and stay focused on doing what we know best are we do to help us go through this difficult time. We took a different approach by providing value-added services to our clients and give them advice on how to minimise losses in property investment.
Sim Education: We tried to apply the special relief facility from bank, subsidy from the government and also try to minimise the overall expenses to overcome cash flow challenges. To ensure timely payment collection, we have implemented a few initiatives such as early-payment discounts and value added services to help parents go through this difficult period. To maintain our stakeholders relationship especially in challenging times like this that doesn’t allow us to conduct any face to face training and tuition class, we send pre-recorded tutorials and online tuition classes to our students’ parents to ensure learning activities continue to be carried out at home.
SRK Noodle House: In order to overcome restricted customer flow issue, we increased our marketing efforts to promote food delivery services to the public. We also did a quick stock check and contacted our suppliers to ensure uninterrupted supply of food ingredients to our kitchen.
Q3: Do you think the PRIHATIN stimulus package offered by the government is sufficient to provide immediate assistance to ease the COVID-19 economic impact on SMEs? Why and how it can help your business?
Brand Soul: The stimulus package offered by the government has definitely help some of the SMEs especially those who suffer from tight cash flow due to reduced sales revenue. Having said that, businesses should take the initiative to re-look and re-strategize their business models instead of fully relying on the government funding. As business owners, we have to constantly ensure of a resilient business model is in place to adapt to changes in our business landscape, as well as a more careful cash flow management to sustain the crisis.
LWE: In service industries like ours, we rely a lot on labour and vehicles that run on the road. The stimulus packages help to relief some of the burdens we faced in wages, loan and hire purchase of vehicles. This improves our cash flow position to help more clients to get their business going as well.
Propedia: I think government has done a good job albeit not a perfect one on this pandemic measurement. Having said that, we have to be responsible on our own part when it comes to controlling our costing as well as managing our finances. This is a biggest challenge that all bosses will need to face and for those who go through this pandemic, the best reward will be, you are going to be stronger than best after the outbreak.
Sim Education: It is insufficient as many of the SMEs could not operate during MCO. With the revenue drop and fixed expenses to be paid every month, businesses are burning the candle at both ends. The special relief loan, albeit is useful for most of us, not every SME is eligible to apply for the loan and the process takes times. I think if the pandemic persists, SMEs would have no choice but to close down the business as it’s really hard to sustain.
SRK Noodle House: I partially agree with this even though not all SMEs are eligible to enjoy the benefits of the stimulus package. While the stimulus package can provide a temporary relief for us, I urge all SMEs to be self-motivated and think about what can we do to turn this crisis into business opportunities.
Q4: What is the biggest ‘change’ when managing your business and team during this difficult time?
Brand Soul: I think the biggest change is managing clients’ expectations and team’s performance concurrently. From the client’s perspective, our productivity may be slower than usual as our entire team is working from home individually. To overcome this, out team actively engages with our clients through weekly conference calls, as well as consistent follow-up emails. We rely on digital platforms to constantly connect with our colleagues for work progress in order to meet deadlines and ensure quality of work are in check.
LWE: We learned to be more creative during this period, and more willing to try new services. model for clients to sign up and use our services. For example, as more customers are focusing on getting their businesses going, we bundle eCommerce enabling and same day deliveries to help them to market faster. We also help them to plan ahead to sell and ship their products overseas. This will help them to export to bigger markets. We rely on online platforms to reach out to more customers, by providing a much easier model for clients to sign up and use our services. This way, “self-service” clients will be able to get their account opened more easily and start shipping with us with less hassle.
Propedia: This pandemic put all of us to the self-disciplinary test. The drastic change in working environment is one of the issues whereby you cannot have your staff with you when you need to discuss something and you cannot be sure of their working hour. However, it taught me to let go and allow them to take charge of their own life management. I am grateful on how my staff take the serious initiative to sustain the company. Some may argue that they are just afraid that they will lose their job, while I think it is gratitude.
Sim Education: As the leader of the company, I came to realize the efficiency of my team members are extremely important. For employees who have good discipline, it’s easier to manage them even though they are working from home. In terms of business operations, we have developed our elearning platform since 2018, and now that we have started to see there are more people accepting it as a form of distance learning.
SRK Noodle House: SRK started as a traditional enterprise and we are working towards modernizing our business. We are improving our business mindset and encouraging innovation in order to adapt to the new normal.
Q5: Experts are in view that the new normal lifestyle has changed the traditional way of business operations to digital business models. Do you agree and will this benefit your business?
Brand Soul: Yes. In fact this is the new normal now. For any traditional business that do not adopt the digital transformation, they are already losing out in the market. Just look at the latest data from the Malaysia Retailers Association (MRA), the 80% sales drop is a ‘red flag’ for many offline businesses. Embracing digital transformation for businesses is no longer a choice but a must to keep-up with the change especially with the rapid advancement in technology and applications.
LWE: It has certainly changed. It only takes 21 days to form new habits. This is the only time where businesses are forced to shut and everyone needs to be creative. We see a growth eCommerce activities which relies on logistics even more. This habit will continue as it is expected that travelling will be limited even after MCO is lifted. As such, businesses that have invested to develop their eCommerce channels will see significant growth
Propedia: Yes. In fact it is unhealthy for the business to stay the same at all the time. Industrial revolution I took off in 1760s to 1820s while the second and the third revolution happened in 1870s to 1914 and the 1970s respectively. Each of the revolution brings transformation to the economy.
"The business that stays the same way will be eliminated while those who embrace the change will reap the rewards." - Vicky
In the long run, running business that have invested to develop their eCommerce channels will see significant growth with digital era will save cost, using less work force and even time.
Sim Education: Yes, I agree. People have started to realize the importance of doing business online such as selling at e-marketplace and adopting the use of e-wallet. It’s no longer about changing the traditional way of doing business, but adopting the new change.
SRK Noodle House: Yes. While digital transformation takes times and may looks different in every company, adopting the change is the only way to keep our business ongoing.
Q6: How do you see the Malaysian economy will perform for the next half of 2020?
Brand Soul: It will take some time for the market to recover and rebounce. The pandemic has dampen the economy globally. Various sectors have suffered financially with some are being forced to shut down. Businesses will have to re-strategise and their models with more stringent cost management. We foresee more businesses will reap the benefits of digital marketing to build stronger brand identities and a boost in e-commerce technologies.
LWE: It will be slow for a start, however businesses will start to recover towards the end of the year, but it will take more than 12 months to recover back to their original positions.
Propedia: The economy will be suffering for the increased in unemployment rate, sudden decrease in tax received, fall in currency exchange, dropped in oil price, fall in export volume and depleted national reserve amount to help in stimulus plans. The next half of 2020 will not look good for some of the businesses but I believe this hardship will not be permanented. Malaysian leaders have demonstrated how our country managed the pandemic in chaotic time and put our healthcare on the top of the list in the world ranking. This will attract many other nationalities who would like retire and invest in Malaysia. This will be bringing in future FDI to the country. In the long run, Malaysia economy will see a quick surge after the recovery.
Sim Education: The economy will start to recover after 6 months, and hopefully to be booming again next year.
SRK Noodle House: I believe that the Malaysia economy will be relatively slow in the next half of the year, and will start to gain back the momentum probably by next year only.