For many businesses in Malaysia, 2020 has gotten off to a very challenging start, especially the small and medium enterprises (SMEs).
Many business owners and leaders are worried about developments that take place every day.
Though it is hard not to get caught up in the impending current situation, leaders will do well to utilise these challenges as opportunities to take a thorough look at their businesses.
There are three key areas which business leaders can look into – priorities, performance and financial literacy – to help put things in perspective, provide direction to aid businesses steer their way through tough times.
Focus on business priorities, act decisively
Although it is obvious every business should have a plan with clearly defined priorities and goals for success, however, in a global survey, many executives said that their business had too many contradicting priorities.
When priorities are at odds, it creates the potential for conflict when it comes to decisions and resource allocation.
The advice to every business is to make growth a main priority.
All policies, decisions and actions should be aligned towards supporting business growth, always; irrespective of the economic climate.
With a long-term business strategy in sight, identify growth enabling areas and assess the current resources supporting the business are effectively managed.
Creative thinking, agility and a certain level of risk taking is key, particularly in challenging times, because the safe, ‘old way’ of doing things may yield poor or no results.
However, any risk-taking must be a good strategic fit that ultimately drives growth.
Tough decisions will also need to be made.
Leaders should not be afraid or sentimental to make difficult well-informed choices.
Act decisively in the interest of the business’ priorities and ensure the decisions are effectively communicated to all stakeholders. Current events have time and again shown that poor communication can erode trust; it is a crucial commodity that businesses cannot afford to lose.
Invest for competitive advantage, tackle underperforming areas
Challenges are a wake-up call when the soundness of the business model is truly tested.
Key decisions on where to invest for competitive advantage and which underperforming areas to cut back on should be the focus during executive meetings.
Leaders should thoroughly understand the business strategy and what really drives success.
Was it internally driven through strategic decision making? Look back at the highs to understand what drove this in the first place before attempting to formulate solutions or make changes.
Tackling underperforming areas always brings long term benefits to the business and it should be part of the plan when it comes to resolving challenges.
Ask the tough questions, be specific about the issues, understand the external factors that may play a role and deal with these areas quickly.
In addition, talent is every business’ intellectual capital. While it may be tough to invest in employees’ skills and development during challenging times, it is worth considering the long-term benefits which come from developing these assets.
Financially literate employees for organisational success
Studies shows that financially literate employees positively impact the bottom line of a business.
The premise is simple – help people to understand financial information and empower them to use that knowledge to contribute to the business.
A good financial education programme should be aimed at giving employees a solid foundation in areas such as profit and loss, revenue, income statements, balance sheet, expenses, cash flow statement and liabilities amongst others. Depending on resources, the educational programme could be executed in-house or through external parties.
Although times may be tough, investing in financial literacy is not only a competitive advantage, it can also be a saving grace.
As employees become more aware of how their actions and decisions link to the health of the business, it brings challenges closer to home and subconsciously drives their efficiency and productivity.
At the end of the day, if they look at issues with their finance cap on, they are likely to support the difficult decisions and fight for what the business needs.
Contributed by Loh Wei Yuen, BFP FCA, Head of Malaysia, ICAEW