Tech solutions for SME cash flow crisis
There is no doubt that small and medium enterprises (SMEs) are the backbone of our economy. These businesses provide employment for 7.3 million people and generate 38 per cent, or about RM580 billion, of Malaysia’s gross domestic product (GDP). Yet, even with over a million SMEs currently operating in the country, 70 per cent of these businesses are struggling with cash flow issues.
With the global economy teetering on the brink of recession at a 2.6 per cent growth rate, the need for sufficient cash reserves is paramount for sustaining day-to-day operations. Meanwhile, opportunities for SMEs are becoming slimmer as larger corporations with substantial financial assets continue to foster and maintain dominance within the market. In fact, 22 per cent of micro and small businesses feel less confident about their growth prospects. Furthermore, the business landscape in Malaysia is becoming increasingly intense, with both local and international players constantly vying for market share.
In spite of all these external conundrums, the real problem for SMEs boils down to one specific factor: size does matter.
One of the issues SMEs struggles with is effectively managing agent networks due to limited experience. As SMEs, it is uncommon to have limited resources and experience in their respective fields. Unfortunately, staying lax and prolonging this will evidently result in inefficient operations and hindered growth. At the same time, SMEs may also find it challenging to navigate complex agent management tasks without employing the knowledge and experience of dedicated subject matter experts. This may lead to mistakes that can impact their overall business performance.
SMEs often lack the resources and skills to analyse sales data effectively. This can lead to poor inventory and production decisions, which negatively impact cash flow. On top of this, some SMEs falter due to business inconsistencies resulting from the absence of streamlined processes. Any changes or sudden decisions in policies may require teams to adjust quickly, which can be very difficult without proper guidance. This constant flux can create uncertainty and fluctuating quality, making it harder for businesses to plan and execute long-term strategies.
Addressing these challenges overnight is impossible. However, SMEs can find the help they need without looking too far. Seeking experts from third-party technology solution providers may offer SMEs a range of innovative solutions designed to enhance and support their operations, ensuring sustainability. Businesses can take advantage of these solution providers, such as Squarelet, to identify, boost, and empower various aspects of their company and regain their competitive edge.
Knowledge is more than power
One of the first things an SME needs in such dire times is knowledge. Having valuable insights and a strong grasp of the market will help businesses improve their management practices and stay updated with the latest trends. In fact, there are various free resources available online where SMEs can access a wide variety of business insights, such as the Sembang Squarelet podcast broadcasted on Squarelet’s YouTube platform. SMEs can also address operational inefficiencies, which often stem from a lack of knowledge. Thus, it is important for SMEs to encourage continuous learning and expose themselves to new ideas, tools, and methodologies, ultimately enhancing their performance.
Additionally, seeking training opportunities — like SQ Savvy, Briefing & Coaching training programme — is another crucial step to support a business knowledge-wise. Stagnancy is poisonous to a business’ development. By accessing training programmes, SMEs can develop the necessary skills to manage their businesses more effectively. For example, training on agent management, data analysis, and commission calculations can equip owners and their teams with the skills and knowledge required to handle these tasks proficiently. Furthermore, training ensures that all team members remain on the same page regarding business processes and standards. This consistency is vital for maintaining quality and reliability in operations, which in turn enhances client satisfaction and loyalty.
Obtaining the right tools
SMEs must also consider obtaining comprehensive business management tools to overcome operational challenges. Integrating various functions like sales, customer relationship management (CRM), finance, and more can help streamline operations and reduce the complexity of managing multiple disconnected systems. With all information and processes centralised, different departments can coordinate more effectively.
During the current economic crisis, financial management tools can provide solace for SMEs through detailed financial tracking. Digital financial solutions can help SMEs maintain healthy cash flow, manage expenses, and ensure compliance with accounting standards. Additionally, SMEs can obtain accurate budgets and forecasts. In times of uncertainty, having access to proactive financial planning tools will aid SMEs in anticipating future needs and managing their resources efficiently.
There’s no denying that the challenges faced by Malaysian SMEs are significant. However, they are in no way insurmountable. By embracing digital solutions and seeking expert support from professionals like Squarelet, SMEs can overcome these challenges, drive growth, and secure their position in the ever-competitive business landscape. The future of SMEs remains bright, and with the right tools and support, they can continue to thrive and contribute to the nation’s economic prosperity.
