by Sabine Chen
Things are looking glum for Singapore’s economy this year. The slowdown in China’s economy has hit hard amidst dropping oil prices and the volatile nature of global stock markets. Singapore’s GDP expanded by just 2 per cent last year, marking its slowest rate of growth since 2009.
SMEs are particularly vulnerable in times of crisis. They face problems such as lack of access to funding, incapacity to expand, and steep business costs. As a result, the opportunities for growth in 2016 seem few and far between.
However, there are some ways in which SMEs can bolster themselves. Here are five tips for SMEs to stay afloat in an economic crunch.
1. Cut costs intelligently
A creative way to cut costs is to allow employees to work from home whenever possible, which should help to reduce office costs on electricity and lighting. By installing a Virtual Private Network (VPN), you will be able to provide employees with a safe option to work from home.
If this isn’t a viable option for you, consider moving to a smaller office space. Other ways to minimize costs include using energy-saving Compact Fluorescent Lamps (CFLs), and purchasing energy-efficient alternatives to your current office gadgets – printers, refrigerators, and air-conditioners.
2. Leverage cloud technology
Use tech to improve how you conduct your business processes. Cloud software has SMEs spoilt for choice with an ever-growing selection of cloud applications for just about every business function, from marketing to project management. Moving to the Cloud will help business owners free up considerable amounts of time and money – McKinsey & Company estimates potential savings to amount to “20 to 30 percent across the entire IT budget (including facilities, telecommunications, infrastructure, software, labor)”.
With smart accounting apps like Xero, business owners are given the flexibility of being able to access real-time analytics and financial data from any device or location, allowing business owners to keep track of their cashflow easily. Business owners no longer have to worry about backing up data as everything is on the Cloud.
Moreover, the Cloud will do away with the need for paper. This means less physical mess, and increased ease of access, since employees can access information on the Cloud even when working from home. Couple these with drastically decreased costs of server storage, and the security of having backups of your data, and Cloud storage will seem like an ideal option.
3. Don’t stop innovating
Keep innovating and sourcing for better business solutions to gain a competitive edge. It has become easier for SMEs to develop new capabilities with many useful government grants available. Upskilled workers will be able to create more value for the company, and enhance productivity. Two notable examples are the Lean Enterprise Development (LED) Scheme and the Germany-Singapore SME Funding Programme.
Currently in its pilot phase, the LED scheme, launched by the Ministry of Manpower (MOM), looks to aid SMEs which wish to become manpower-lean, improve existing skills of its employees, and create better jobs for Singaporeans. The German-Singapore SME Funding Programme will provide funding towards joint research and development (R&D) projects. It also looks to increase the number of collaborations between Singaporean and German enterprises.
4. Consider collaborations
Diverse partnerships are a great way for SMEs to fill in any gaps of their expertise and expand their businesses. By partnering with local universities, businesses can consider roping in students to assist them in tackling industry-related problems, and potentially gain access to university research and facilities.
Corporate partnerships are crucial for progressive SMEs. An interesting example of this from Eurofound is that of a local partnership between around 350 businesses in the metal and electrical industry in the Ruhr region, Germany, where enterprises agree to pool their employees.
In the face of economic downturn, or when a business faces an overwhelming surge in orders, the enterprises in the agreement can temporarily allocate their staff to the companies in need. This allows them to draw from a reserve of talent, thus avoiding layoffs and the need for temporary hires.
5. Have a contingency plan
David Toh, head of the PricewaterhouseCoopers Singapore internal audit practice, offered this critical piece of advice at SME Outlook 2016. In the event that your business encounters unprecedented disruption, there are several questions to ask yourself before making important decisions:
- What are some possible problems that your business may encounter this year?
- What are some ways in which you can avoid the problem?
- If it is impossible to skirt the issue, how can the blow be softened?
By considering these questions, you can then come up with a contingency plan to buttress your business against impending crises.
Do you need help with futureproofing your business? Alpha7 can help you to make your business processes faster, more cost-effective, and more efficient with the applications available on our proprietary A7 AppsConnect™ platform. Drop us an email today to get in touch!