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Keeping Your Head Above Water: Pivoting During A Pandemic 

With the ongoing pandemic and the resulting economic crisis, small businesses are facing challenges just to stay afloat. As business owners continue to do everything possible to garner revenue and keep the business running, it is more important than ever to assess and optimize your business. Here are five ways to pivot your business and help you weather this economic downturn.

1. The best time to digitalize your business

A lot of businesses have held off on digitalizing their business due to the inconvenience that comes with any sort of transformation. This shift towards digitalization has proven not only effective but essential to businesses these days to stay relevant. When things are digital and on the cloud where it is readily accessible, there isn’t a need to be physically at a location to get data. With the government pushing for more work from home orders, this will be essential to run an efficient workflow. These days, there are lots of ‘freemium’ office software where SMEs can take advantage of it. Most of these services even have discounted plans for companies struggling during the pandemic.

2. Have a 24/7 business model

A lot of brick and mortar businesses are affected by this pandemic. Mostly due to the restricted movement of customers. Thus, people are spending their time online and most importantly, spending their money online. While most traditional businesses think that it is difficult or impossible to move their products and services online, it is not.

Our fire safety business has been offline for the past 40 years but about 2 years ago we’ve fully focused on bringing it online. We were surprised to see customers purchasing fire extinguishers at the wee hours in the morning – 4am. As well as late at night. By bringing your business online, you’re not limited to office open hours anymore as your store is now accessible 24/7.

There are plenty of resources on starting an online store. Depending on the resources available within your company, it can be done in-house or outsourced. E-commerce platforms these days make it very easy to set up online stores, even for the older generation business owners.

3. Relook at your business model

Some businesses are fixated on their products and services, without wanting to ever change anything. This is the main reason why smaller, more nimble companies are able to survive this pandemic. With less of a ‘core’ to uphold, they are able to change and tweak their business models. While it is difficult for larger businesses to do so, there is still a solution. Business can package their products towards a more B2C focus. As for our business, fire extinguishers are mainly seen as a regulatory product, where one needs to purchase it rather than wanting to purchase it. We’ve managed to change this mindset by running social media ads and campaigns to showcase the use of cases of fire extinguishers in homes and vehicles. Through this, we’ve managed to sell tens of thousands of fire extinguishers to homes and families on our website.

4. Reassess your business finances

If you have implemented some of the suggestions above, your company’s financials would definitely have changed. You should now work out a cash flow budget for the coming one to two quarters and assess your business’ financial position.

Knowing the length of this projected runway is crucial to ensure you are able to meet any financial commitments your business may have, such as financing or even hire purchase agreements for company vehicles. Missed payments will affect your business’ credit report, leaving a negative mark on CCRIS, the country’s central  credit information database that banks and financial institutions refer to when you
apply for a financial product.

Just as it is with individual credit reports, inconsistent repayment of your business’ credit facilities will result in poor credit health and a low company credit score – and ultimately, reflect poorly on your business as a customer to the banks. In turn, this reduces your business’ chances of future financing applications being approved.

If you find your runway to be dangerously short, the next step will be essential for
your business:

5. Find out what assistance is available to you

In these challenging times, the government and the banking industry have many forms of assistance available for businesses. The government’s SME-focused PENJANA economic stimulus package offers various industry-specific financing options that businesses can tap into at a fixed subsidized rate. For example, there are financing options specifically for SMEs (PENJANA SME Financing) as well as for micro-SMEs (PENJANA Microfinancing Fund). In total, the government has allocated RM35 billion in the PENJANA economic stimulus package.

Following the tabling of the 2021 National Budget recently, microenterprises 1 with original facility financing of up to RM150,000 are eligible for the Enhanced Targeted Repayment Assistance Programme, with options of a deferment of repayment for 3 months or a 50% reduction in monthly repayments for 6 months.

Meanwhile, the banking industry remains prepared and ready to assist SME customers affected by Covid-19. Repayment assistance is still available for application if you believe your business may need a helping hand in the coming months. Your bank may offer new financing terms with lower monthly repayments spread over a longer tenure, allowing you to breathe easier with additional cash freed up and ease cash flow issues.

Business owners should also note that taking any repayment assistance during this period will not be recorded on CCRIS, and thus will not negatively affect your business’ credit health. This is crucial for when your business needs to grow in the future.

What’s next?

If your business is financially affected by Covid-19, speak to your bank now about repayment assistance that is available to your business. During this period, banks stand ready to assist you in resuming your financing repayments. This is important also for the economy, as the banking industry will be impacted if too many borrowers cannot resume repayments.

Note that SME customers may be offered repayment assistance. While the banking industry has contributed significantly to businesses and individuals alike during the 6- month blanket moratorium, the gradual recovery of the economy also depends on assisting the SME industry, which is well-known as the backbone of the country’s economy.

As a testament to the banking industry’s commitment, Bank Negara Malaysia recently revealed that as of 9 October 2020, about 640,000 applications for repayment assistance has been received, with an approval rate of 98%.

Banks are also going the extra mile by contacting customers to find out if their customers require financial assistance during this time. Speak to your bank and discuss your available options. While the economy gradually recovers, this continues to be a critical period for all businesses. It also means it is more important than ever to take charge of your business’ financial health and seek assistance where needed on an urgent basis.

Regardless of whether you are an SME or micro-SME owner, your bank is ready to assist. Speak to your bank as soon as you can and don’t delay to sort out your financial obligations.