Malaysia’s small businesses well-placed to recover from economic impacts of Covid-19

PETALING JAYA: With many of Malaysia’s small businesses reporting both reasonably strong finances and usage of digital technology in 2019, they are well-placed to manage through the Covid-19 crisis and to recover fairly quickly, according to a survey of small businesses across the Asia Pacific by accounting body CPA Australia.

CPA Australia’s Asia-Pacific Small Business Survey 2019-20 found that many of Malaysia’s small businesses entered the pandemic crisis in good financial health with over two-thirds (67.7%) reporting that they grew in 2019, and only 16.3% of businesses finding it difficult to pay business debts in 2019.

In addition, with over half (51.7%) of Malaysia’s small businesses in 2019 generating greater than 10% of their sales online, they are well placed to offset at least some of their lost sales from traditional means, and to respond to significant shifts in consumer behaviour to online sales that the movement control order (MCO) is driving, which is likely to continue well after the MCO is lifted.

CPA Australia general manager of external affairs Paul Drum warned that while the results were on balance positive for Malaysia, past performance is no guarantee of future success.

“With this crisis, small businesses have little margin for error. Prudent management, focusing on the changing needs of customers and even greater adoption of technology, rather than good fortune, will be essential to business recovery and ongoing future success.

“The business you had before this pandemic hit will not be the same as the business you have after the pandemic abates and economic activity recovers. Small business owners face the challenge of adapting their businesses to ‘a new normal’ at a time when finances are tight, although stimulus measures by the government are easing that particular challenge,” Drum said in a statement.

The survey results showed that many of Malaysia’s small businesses are well-managed and focused on their customers.

The top four factors that had a positive influence on Malaysia’s small businesses in 2019 were customer loyalty, improved customer satisfaction, good staff and improved business strategy.

“Our survey results continue to show year after year, through both good times and bad, businesses with a focus on their customer, technology and strategy are much more likely to be growing strongly than other businesses.”

While it is wise to focus on cash flow and financial health at this time, businesses should also be looking to how they can meet the fast-changing needs of customers, especially through increasing online sales.

“While over half of Malaysia’s small businesses generate more than 10% of their sales online, if a large proportion of Malaysia’s small businesses are to recover, that result will need to be far higher by the time we run this survey again at the end of this year.

“Given that nearly all Malaysian businesses invested in technology in 2019 and that 45.7% stated that such investment was already profitable, it looks as if many of Malaysia’s small businesses have the digital capability to expand their online sales in 2020,” said Drum.

In this difficult period, CPA Australia suggested that Malaysia’s small business focus on improving cash flow and financial health, utilise technology and online sales to meet changing consumer behavior, capitalise on existing pool of loyal customers and investigate the SME relief measures announced by the government, especially as Malaysia’s small business were the least likely to report easy access to finance in 2019.

It also suggested that small businesses dedicate any spare time to develop and implement a recovery plan, and learn about industry trends and emerging technologies and how they can be applied to business.

“Ask staff with any downtime to undertake training so they are better skilled to meet the recovery needs of your business. If you are in a relatively strong financial position, keep an open eye to any opportunities that may emerge in the recovery. Seek professional advice.”

source https://www.thesundaily.my/business/malaysia-s-small-businesses-well-placed-to-recover-from-economic-impacts-of-covid-19-BF2241892