It’s being reported by global media that COVID-19 may cause the worst economic recession we’ve seen in 2 decades, and it’s said that it’ll be the worst in Malaysia’s overall history.
Entrepreneurs who have been in business for a long while have weathered some of the ups and downs of the economy, and lived to tell the tale.
From them, other SMEs could learn how to apply some lessons they learnt about managing their businesses during past financial crises.
1. Understand That You Can’t Control Everything
Zamir of GM Peladang Sdn Bhd shared that when he weathered the 2007 and 2013 economic depression, one thing he learnt was that through the ups and downs, pricing is often an affected item that one cannot control.
Coming from the agriculture industry, he said that pricing is usually determined by customers, so they had to focus on areas that they could control instead.
2. So, Focus On Areas That You Can Control
Instead of trying to control something out of your influence, focus your efforts on what is within your control instead, Zamir said.
For example, rather than try to control the price, they focused on increasing production yield, and experimenting with new technologies for higher plant life expectancy.
3. Strengthen The Fundamentals Of Your Business
While thinking outside the box for different solutions to overcome or soften the impact of financial crises is encouraged, it’s also important that you strengthen the core of your business.
Taking an example from his own experience, Zamir said that in the agricultural industry, despite dabbling in agritourism and selling technologies, production in the farm remained the core of their business so they had to keep it strong.
4. Digitalisation Is Good, But You Must Be Able To Return To Basics
From the tourism industry, Wan Shairi of WSF Travel & Tours Sdn Bhd shared that while using IT is good, it is important to keep in mind that some people will be left out if that’s your only strategy.
For the latter group, businesses must be able to go back to the basics of using newsletters, and going back out on the streets and giving out flyers.
Some may argue that such methods are outdated, but Wan Shairi believes that this will be one of the best ways to maximise efforts and be inclusive in this climate, particularly for the tourism industry.
5. Diversify Your Business
In a different situation from the agricultural industry, the tourism industry has taken a huge hit on their main business model which is travel.
WSF Travel & Tours dabbles in F&B and IT alongside their main business, and currently, they’ve had to shift their priorities by moving their focus on travel to F&B and IT.
By diversifying their business, they have revenue streams to fall back on when their main one isn’t bringing in any cash flow.
6. The Importance Of Crisis Leadership
Over his decades of entrepreneurial experience, Puan Chan Cheong (CC Puan) of Green Packet Bhd shared that he learnt the hard way how important having directive and action oriented crisis leadership was.
Your leadership style must also be agile and be able to adapt to situations accordingly in various situations, as your usual style might not cut it.
7. Make Tough, Quick Decisions
When in crisis leadership mode, survival of your business is the most important thing. This meant ruthless prioritisation for CC and his company, where they had to make tough decisions quickly.
There was a period in time when the company was suffering financially, and CC knew that getting an investor on board to help them survive would take at least a year, which was time they didn’t quite have.
When they found out that they had subscribers who owed them millions in overdue payments, they had no choice but to report them to CTOS to force them to pay. This worked to increase their revenue, even if it meant that customers might get a little upset.
8. Have Good, Authentic Communication
Good inter-company communication means sharing issues and challenges openly with your team so they understand the situation and decisions you make.
This was particularly important to CC, as his company was experiencing negative cash flow in the tens of millions per year through WiMAX back then.
So, he openly shared the company’s situation with his team, and they were able to work together to come up with solutions.
9. Involve Your Team Members In Decision Making
We’ve heard time and time again that employees should be involved in making decisions, as not only are they affected by these decisions, but it also sends them the message that their opinions and ideas matter to the company.
In trying to overcome their crisis, CC shared that they involved key team members and had them lead the initiative on solving the issues of revenue growth and cost cutting.
Moving forward in the current crisis, the entrepreneurs had some parting words of advice to share about other actions they’re taking.
Zamir said that if you’re in the business of selling perishables, you shouldn’t keep your stock while waiting for a better sell price and market, as it will simply lead to losses.
Instead, try to sell off your stock as quickly as possible, and with the cash that you earn from that, you can put it towards new ideas for the long-term.
For the long-term, you need to diversify your revenue streams and reinvest in new technologies.
In the tourism industry, the leisure market is “almost dead”, Wan Shairi said, so for the future, more focus should be put on medical, corporate and F&B (or interest) tourism so that future crises similar to COVID-19 can be managed better.
CC shared that in the next few months, it is crucial to observe how customer behaviour will change, and businesses must figure out how to use technology and digitalisation to open new revenue and product channels.
It is also a good idea to invest in catering to the Low Touch Economy, where social distancing and new hygiene guidelines, for example, are shaping how businesses are run.
- You can read more COVID-19 related articles here.
Featured Image Credit: freepik