Global media reports that COVID-19 could cause the worst economic recession in two decades, and it is said to be the worst in Malaysia's history.
Entrepreneurs who have been in business for a long time have survived and lived through some ups and downs of the economy to tell the story.
From them, other SMEs could learn how to learn some lessons from running their business in previous financial crises.
In a webinar, Hann Liew, founder and director of RinggitPlus, in collaboration with Maybanks Managing Director of Business Banking, gathered some of them to share their knowledge.
1. Understand that you cannot control everything
Zamir of GM Peladang Sdn Bhd said that when he coped with the economic crisis in 2007 and 2013, he learned that pricing through ups and downs is often an issue that cannot be controlled.
Photo credit: GM Peladang Sdn Bhd
Coming from agriculture, he said that pricing is usually determined by customers, so they need to focus on areas that they could control instead.
2. So, Focus on areas you can control
Instead of trying to control something beyond your control, instead focus your efforts on what is in your control, Zamir said.
For example, instead of trying to control the price, they focused on increasing production yields and experimenting with new technologies to increase the life expectancy of plants.
3rd Strengthen the basics of your business
It is recommended to look outside the box for various solutions to overcome or mitigate the effects of financial crises. However, it is also important that you strengthen the core of your business.
Zamir took an example from his own experience and said that in the agricultural industry, despite working with agrotourism and selling technology, farm production remained the core of their business and they had to stay strong.
4th Digitization is good, but you need to be able to get back to the basics
Wan Shairi of WSF Travel & Tours Sdn Bhd from the tourism industry said that while using IT is good, it is important to keep in mind that some people will be left out if that is your only strategy.
Photo credit: WSF Travel & Tours Sdn Bhd
For the latter group, companies need to be able to go back to the basics of using newsletters, get back on the streets, and hand out flyers.
Some may argue that such methods are out of date, but Wan Shairi believes that this will be one of the best ways to maximize efforts and be inclusive in this climate, especially for the tourism industry.
5. Diversify your business
In a different situation than in agriculture, the tourism industry has hit its main business model, travel.
In addition to its main business, WSF Travel & Tours also deals with F & B and IT. At the moment, they had to shift their priorities by focusing on trips to F&B and IT.
By diversifying their business, they can access sources of income when their main business does not generate cash flow.
6. The importance of crisis management
During his decades of entrepreneurial experience, Puan Chan Cheong (CC Puan) from Green Packet Bhd said that he had learned the hard way the importance of policy- and action-oriented crisis management.
CC Puan / Photo Credit: Green Packet Bhd via The Star
Your leadership style must also be agile and able to adapt to different situations, as your usual style may not cut it.
7. Make difficult and quick decisions
The survival of your company is the most important thing in crisis management mode. For CC and his company, this meant ruthless prioritization, in which they had to make difficult decisions quickly.
There was a time when the company was suffering financially, and CC knew that it would take at least a year to get an investor on board to survive. This was the time that they didn't quite have.
When they found out they had subscribers owed them overdue payments in the millions, they had no choice but to report them to CTOS to force them to pay. This contributed to the increase in sales, although it may have made customers a little upset.
8th. Good, authentic communication
Good cross-company communication means sharing problems and challenges openly with your team so that they understand the situation and decisions you make.
This was particularly important for CC, since his company had negative cash flow in the tens of millions annually through WiMAX.
So he openly shared the company's situation with his team and they could work together to find solutions.
9. Involve your team members in decision making
We have heard over and over that employees should be involved in decisions, because not only are they affected by those decisions, but they also send them the message that their opinions and ideas are important to the company.
In trying to overcome their crisis, CC said they involved key team members and led the initiative to solve the problems of sales growth and cost reduction.
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In the current crisis, entrepreneurs had some farewell advice to share about other measures they take.
Zamir said if you sell perishable goods you shouldn't keep your stocks while waiting for a better selling price and market as this will simply lead to losses.
Instead, try to sell your shares as soon as possible, and with the money you earn from them, you can use them for new ideas in the long term.
In the long term, you need to diversify your sources of income and reinvest in new technologies.
In the tourism industry, the leisure market is "almost dead," said Wan Shairi. Therefore, in the future, a greater focus should be placed on medical, corporate and F&B (or interest) tourism, so that future crises similar to COVID-19 can occur better.
CC said it will be critical to see how customer behavior will change over the next few months, and companies will need to figure out how technology and digitalization can open up new sales and product channels.
It is also a good idea to invest in supplying the low-touch economy, for example, where social distance and new hygiene guidelines influence corporate management.
- More articles about COVID-19 can be found here.
Selected image source: freepik