When the first Covid-19 case was reported in Malaysia on 25th January 2020, the government implemented various containment measures. On 18th March 2020, the movement control order (MCO) was enforced nationwide to contain the spread of the disease. Under the MCO, people are restricted to move freely, and non-essential businesses are not allowed to operate.
The government’s primary focus is to ensure people’s lives and livelihood. When people and businesses are not allowed to carry on with their usual activities, things significantly slowed down. Many companies were forced to close down, with many merely generating sufficient revenue to hang on.
According to the Small and Medium Enterprises Association of Malaysia (Samenta), at least 150,000 SMEs have shut, resulting in 1.2 million job losses since March 2020. The unemployment rate has increased, causing many people to suffer (Chew, 2021).
In 2020, SME GDP contracted 7.3% to RM512.8bil, reflecting an estimated RM40.7bil loss. The contribution of SME GDP reduced to 38.2% in 2020 with a value-added of RM512.8bil against 38.9% or RM553.5bil in the preceding year.
In comparison, Malaysia’s GDP declined 5.6%, while non-SMEs’ GDP contracted 4.6% in 2020 (The Star, 2021). The primary focus of the government was to protect the lives and livelihood of the people. In short, SMEs were severely impacted by the containment measures.
Fast forward to the present moment; the Covid-19 pandemic remains a challenge to the socio-economy in Malaysia. While credit should be given to SMEs that have successfully sustained business continuity throughout the pandemic, there is still grave concern about a possible extension of movement restrictions. If this happens, another cluster of SMEs may have to cease operating.
On the bright side, the ramping up of vaccination exercise may put the situation under control when the community achieves herd immunity. Therefore, it is time for SMEs to prepare for business recovery. These are some critical questions SMEs need to think hard and work on: What are the primary tactical measures SMEs need to execute now? Why are these measures necessary? How can SMEs leverage government assistance? What do SMEs need to consider for business continuity and sustainability in the long run?
Resetting the Business
SMEs that remain operational must have surmounted tremendous hardships in the past 18-month. Handling unprecedented challenges, overcoming uncertainties while ensuring the safety of the workforce are no easy tasks.
As the Covid-19 pandemic is taking another change for betterment, following the rampant vaccination campaign, SMEs must seize the opportunity to rebound positively with solid business recovery. They need to plan and implement sound tactical measures to stay on course for business recovery. Following are the primary tactical measures SMEs need to execute:
- Renewing Mindset
After settling with minimum business activities for the past 18-month, SMEs need to recharge and rebuild their confidence and momentum to reactivate their businesses. With the changing environment under the new normal, SME owners need to view things differently.
Gone are the days when business meetings and transactions are carried out physically; the frequency will likely be lower if it persists. SME owners must adapt to the new norm of conducting business negotiations through remote channels. They need to learn new skills in establishing rapport with their stakeholders virtually.
In dealing with the customers, they need to realise the changing consumer behaviour who prefer an online channel that is prevalent among many consumers. They must be more open-minded, receptive to innovations and adaptable to changes. Because of this, SMEs need to reframe their mindset, enabling them to recover and charge forward in the new normal.
- Realigning Business Model
In tandem with changes in the new normal, the SME business model requires realignment as SMEs start to work on business recovery. Internally, SMEs need to address social distancing requirements at the workplace, where some staff will continue to work from home. Working from home, if executed well, can be beneficial to the business in terms of cost rationalisation. Otherwise, it can affect the overall staff productivity.
Research shows that the mean of work-from-home productivity relative to working at the usual workplace was about 60% to 70% (Morikawa, 2020). As the business would spend more time online interacting among the workforce and with external stakeholders, it is critical to reinforce their cybersecurity.
More so, SMEs must also invest more in digitalisation. By digitalising some of the primary functions, SMEs can raise process efficiency and lessen the dependency on labour in the long term.
- Rebuilding Financial Strength
The Covid-19 pandemic has depleted SMEs’ financial resources in keeping up with the business. It was indeed a challenging and costly task for the SMEs. As the situation improves shortly, SMEs need to strengthen their financial position to propel them on business recovery. They need to rebuild their financial strength in giving the business the required thrusts during the business recovery stage.
SMEs can leverage on government assistance that includes financial and non-financial areas. Since the emergence of the Covid-19, the government has implemented eight economic stimulus packages amounting to RM530 billion, representing 37% of the country’s GDP in 2020. Some of the pertinent financial aids are loan moratorium, wage subsidies, and various financing packages, particularly the government guarantee schemes offered through Syarikat Jaminan Pembiayaan Perniagaan (SJPP).
In addition, SMEs should also leverage various non-financial government assistance for upskilling and reskilling of the workforce, guidance on digitalisation and automation initiatives, and market expansion.
SMEs that have survived throughout the pandemic deserve credit. They must have executed various measures right to remain relevant today. Moving forward, SMEs must remain agile in managing their strategic imperatives and operational functions. They need to be flexible and dynamic in making a quick decision when facing any challenging circumstances.
SMEs must gradually integrate ESG (environmental, social and governance) principles in their business operations in the long term (Hu & Kee, 2021). ESG will be a critical requisite in achieving business sustainability in the long run.