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【7 Blueprints for Small and Medium Enterprises

to Fight Against Pandemic】

COVID-19’s pandemic situation has hits the world! Malaysia’s economy is also in trouble, and of course SMEs are inevitable! Businesses are not only facing a serious shortage of cash, but also feel helpless because they cannot see when the Malaysian economy will recover, and they are also caught off guard by the outbreak of the pandemic and do not know how to face it.

 

Whether you have not stopped work under the "Movement Control Order" period, or have just resumed work, or have not yet started work; it is necessary for Enterprises to develop their own 7 blueprints to fight against the pandemic in order for the enterprise to recover in the shortest time and break through the crisis!

The 7 Blueprints to Fight Against Pandemic are as follows:

1. Boss's Mindset Blueprint

2. Business Model Blueprint

3. Synergy Team Blueprint

4. Cash Flow Management Blueprint

5. Cost Cutting Blueprint

6. Business Failure Prevention Blueprint

7. Blueprint for Reducing Dependence on Foreign Workers

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1. Boss's Mindset Blueprint

Bosses are so worried about the impact of the pandemic nowadays. However, problems could never be solved by complaining it. Therefore, bosses must:

a.) Adapting to the new normal : what is the new normal? The new normal is like: you must wear a mask when you go out, maintain a social distance, wash your hands diligently, and prohibit group gathering. These behaviors are the new regulations that people must abide by under the new normal.

The business environment has also been completely different after the pandemic, and bosses must immediately adapt to the new normal. For all the “unknowns” that cannot be controlled, such as: the catastrophic outbreak of COVID-19, various measures implemented by the current government to combat it and etc. Bosses should accept and confront the situation with a positive attitude and fight back the challenges!

 

b.) Positive thinking : stop complaining and insulting; adopt positive energy and believe in the law of attraction. Good thinking always attracts good people and good things, and brings good luck to yourself! Let’s fight through the challenges as you may hide for once or twice, but you can never hide forever.

 

c.) Regaining the original intention of starting a business : Bosses must return to their original intention, find the "courage" and "proactiveness" when starting a business, be brave to take risks for the enterprise, find the breakthrough point of the enterprise, and break out of the comfort zone!

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2. Business Model Blueprint

 

When the bosses stop complaining and have positive thinking, it means they have very clear thinking. They can immediately remove their old business model and start to develop a core business model for business sustainability!

 

What is "core business model"?

 

a.) The enterprise removes business models that are no longer useful, reduces unnecessary expenses, and reduces operating costs.

b.) The enterprise implements automation and digitization, thereby improving the enterprise's production efficiency and making profit to a higher level.

c.) The bosses also need to dare to innovate and create a unique business model that only belongs to your business in the market!

  •  For example, the food delivery service has recently emerged due to movement control orders. This service will continue to be popularized in the future and become a new trend in the future. The bosses can think about how to benefit from the delivery service and develop a new business model according to the nature of their business.

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3. Synergy Team Blueprint

 

A successful company not only needs good leaders, but a good team is an indispensable success factor!

The teams are mainly divided into three categories. Business owners can first analyze which of the following categories their team members belong to, and draw up a blueprint for a large team of synergy effects:

 

a) Outstanding performance : This kind of group members are suitable for training to become "somebody" and assist the company to decide the future direction.

b) General performance : Such members are suitable for cultivation as "talent" to assist the company to solve critical problem.

c) Unable to perform : The enterprise should lay off such members, and ask him to seek another job.

 

Different group members can bring different values to the enterprise. Only by putting the right people in the right position can the enterprise produce the maximum benefit and achieve the synergy effect.

In addition, companies can also adopt integrated department strategies, such as: integrating business development department and customer service department. This can not only ensure that the enterprise as a whole is moving towards the goal, but also allow the departments to understand each other and enhance teamwork.

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4.Cash Flow Management Blueprint

 

Under the movement control order, most SMEs are severely affected. Including unable to open for business, the factory being unable to produce, resulting in no income at all, but bosses are forced to continue to pay fixed expenses, such as employee salaries, utilities, rent, and government taxes. Therefore, the bosses were "forced" to make losses and closed down the business.

 

At this critical juncture,  are you still waiting for government assistance? Are you still waiting for the pandemic to be controlled? Or immediately start the four strategies of corporate self-protection, and keep the "lifeline" of the enterprise?

 

The four major strategies for corporate self-protection are as follows:

a.) Immediately master the new normal cash flow model : The bosses need to immediately assess the past and recognize the current patterns, formulate cash flow statement forecasts for the next 6 to 12 months. Ensure that the company has at least 6 months of reserve funds to make full preparations for various unpredictable situations.

b.) Immediate and effective recovery of debts : Enterprises can encourage debtors to pay off all debts at a offer price, and can reduce the debtor business, focus on cash business. When a company has to choose between "account profit" and "cash in hand", the company must choose cash in hand, which reduces the risk of bad debts.

c.) Cash out from existing inventory : The bosses can sell the existing inventory in a short time at a price acceptable to the market, and cash out from it to restore the company’s cash flow.

D.) Successful financing : Companies should immediately use the latest government incentives and low-interest financing packages to enhance their cash flow in the shortest time and solve the company cash flow issue.

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5. Cost Cutting Blueprint

In the new normal business environment, bosses must immediately reduce the following three major costs!

a) Procurement cost : After the outbreak, it can be said to be an opportunity everywhere. Nowadays, there are not many companies that are able to purchase raw materials in large quantities in cash. The bosses should immediately seize this opportunity and negotiate with suppliers to purchase raw materials in bulk through cash, and receive at least 20% or more discounts before placing orders.

 

b) Labour cost : The enterprise should immediately implement automation to reduce the company's high dependence on labour. Replacing manpower with automation can greatly improve production efficiency, and it is a long-term plan that must be implemented for business sustainability.

c) Machinery cost : During the pandemic, did your old machine not use for too long? And faced with the problem of not functioning after resuming work? Rather than bear the expensive maintenance and repair costs, it is better to use government incentives to seize the opportunity to purchase new machines. Under the incentive, you only need to pay 50% of the fee, and the remaining 50% is subsidized by the government.

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6. Business Failure Prevention Blueprint

 

According to a survey by the SME Association of Malaysia, 25% of small and medium enterprises are expected to close down. Is your business one of them? I hope not.

In order to get rid of the doom of business failure, the bosses must quickly start the "sustainability business model" and draw up a "Business Failuure Prevention Blueprint" for your business to continue to operate.

Here to share a short story with you:

If one day, you and your competitors are unfortunately chased by tigers in the forest. You all want to survive, so you run desperately to avoid being eaten by the tiger. But you don’t need to run faster than a tiger! why……?

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Because it is impossible to run faster than a tiger! In fact, you only need to run faster than your opponent and let the opponent be eaten by the tiger, then you can survive!

This story precisely reflects the current situation. Tigers are like the endless pandemic disasters now; you are the bosses who are desperately trying to keep the enterprise. SMEs with insufficient cash flow will be swallowed by the disaster at any time, and you who run faster are those companies that have more cash flow than your opponents, and your business will continue to operate forever.

Therefore, sufficient cash flow is equivalent to strong legs, which allows you to run faster than your opponents and survive the pandemic. This is the way of survival in the new normal.

The bosses must calculate the amount of cash flow required by your business in order to draw up your own "Business Failure Prevention Blueprint."

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7. Blueprint for Reducing Dependence on Foreign Workers

It is believed that during the outbreak of the pandemic, the bosses are facing various problems in hiring foreign workers, such as:

  • If the enterprise does not pay social insurance (SOCSO) for foreign worker or illegal foreign workers, the boss must bear the cost of testing for COVID-19.

  • Currently, foreign workers are at higher risk of getting infected.

  • The cost of hiring foreign workers is high, including admission fee, levy and agency fee.

  • Enterprises need a long time to train low-skilled workers until they are proficient, and affect the entire production process; if the foreign workers have a permit problem and they must return to their country, it will affect the production line and cause additional costs.

How can SMEs reduce excessive dependence on foreign labor?

a.) Hiring local employees: replacing foreign workers with hiring local employees. The enterprise does not need to pay the levy, and only needs to pay the minimum salary, which is RM1200 per month.


b.) Through outsourcing companies: enterprises can quickly hire foreign workers through outsourcing companies, and the outsourcing companies will bear all the obligations related to foreign labor , Such as accommodation, permit renewal, and the cost of introducing foreign labor, saving time and effort.

c.) Introduce new technology and implement automation: Introduce new technology and implement automation to reduce dependence on foreign labor to perform production. The so-called long-term pain is not as good as the short-term pain. Although enterprise automation requires a certain amount of capital, from a long-term perspective, automation is the best way to improve enterprise production efficiency and is the future trend.