The Covid-19 pandemic has taught many business owners expensive lessons. During the first half of 2020 (1H20), the world saw them fall into two extremes: shutting down or performing above and beyond. Regardless of which category a company falls under, Vin Tan, the founder of Singapore-based FinTech Alliance Pte Ltd, tells Enterprise that the “If it ain’t broke, don’t fix it” mindset of companies is clearly outdated. If this pandemic has demonstrated anything, it is that they need to be ready for all eventualities.
“Business owners need to constantly challenge themselves with practices which are effective but out of their comfort zone. It is important to keep in mind that though the status of your business may be good today, you never know what will happen tomorrow. Being ready is key,” he says.
It is a rarity for businesses to experience success during the pandemic period, Tan says, adding that it is likely that the main reason for their outperformance is their adoption of technology and ability to market their products online. These companies also probably have the right mindset and holding power to stand strong during this pandemic.
Tan says hopefully these companies can expand further and create more job opportunities for the rest of the workforce. But most importantly, business owners must remember to create a culture to constantly innovate from within because companies that embrace innovation have a higher chance of coping with unknown changes that happen around the world.
“Running a business is a never-ending battle and all I can say is fight harder. If you have an advantage, keep expanding based on your advantage. One good example is the virtual classroom business. To keep the momentum going, the virtual classroom training provider must continue to enhance its content and its trainers’ interaction with participants,” he says.
“There will definitely be more competition once the new normal sets in. To ensure your competitive advantage, you must be ahead of the curve and continue to enhance the quality of your service, the level of interaction, and keep an eye on new developments. This is the part where ‘always be ready to fix it’ comes into play because if you are not ready for what’s next, your competition might and, eventually, all the advantage gained previously will no longer be relevant.”
The next challenge, he says, is whether companies are ready for the next Covid-19 wave (if any) and if their business model is sustainable under the new normal. “Some may have relied on the existing cash flow to sustain themselves but ultimately, without a business model that deals with the new normal, it will be very tough to bring the business back to pre-Covid-19 levels.
“Consider if you have the right business models and evaluate your available resources to begin a new business direction as getting these aspects of the business right will be the greatest challenges,” he says.
As for companies that suffered during the pandemic, Tan says for these companies to rebuild their businesses, their people have to be willing to sacrifice themselves for the company so that it can carry on. Tan explains that businesses need people who can adapt and contribute and business owners should focus on the people with the right mindset to help them to rebuild the business.
“To survive a crisis and to eventually experience business growth, business owners need the support and strength of an effective and loyal team. Therefore, the core team should be one that can push the business to greater heights and help it recover,” he says.
Next, companies should re-examine their business model to see if it is suitable for the new normal. Tan says business owners should think about how they can transform their business model to cope with not just Covid-19 but also the realities of a post-Covid-19 world.
“My advice to them would be to observe emerging trends in their respective industries and keep their businesses agile to accommodate the changes,” he says.
Some of the business trends he has seen coming out of the Covid-19 pandemic is online learning or e-learning, be it via a webinar or virtual classroom, as people have been flocking to sites to acquire knowledge. Tan believes that online learning will definitely remain beyond Covid-19 and is expected to be a US$350 billion (RM1.47 trillion) market by 2025.
Another trend that is here to stay is cashless payment. While it has been around for the past few years, Tan says the adoption rate of cashless payments was greatly accelerated by the pandemic.
“The thought of handling physical cash and the transmission of the virus through physical cash have overhauled the entire cash handling mindset, with even small hawkers actively adopting cashless payment. I believe this will definitely continue after Covid-19,” he says.
“Digital transactions are here to stay too. As long as a product or service can be transacted online, companies have the potential to excel in the new normal with consumer behaviour moving towards online purchases. Any business that does not have online or digital transaction capabilities will be at a severe disadvantage.”
Different business owners have different practices. Some prefer to take profit early, whereas some believe in reinvesting in the ability for future growth. There is no right or wrong, says Tan. Nevertheless, he believes that every business should have an emergency fund of at least three to six months of expenditure in liquid assets. Now, after the pandemic, he believes the emergency fund should actually have more in it.
“With the Covid-19 experience, there has been talk of longer duration emergency funds but while having excess cash flow in time of crisis is good practice, it is unwise to have excessive non-interest generating cash flow in better times. The management team of a company must make a clear decision on how long the emergency funds will last and subsequently, if a similar crisis strikes beyond the intended emergency fund period, what are the measures to cut losses temporarily and yet still having the ability to bounce back when the economy recovers.”
Another measure to prepare for a crisis is to diversify revenue streams. Tan says not every business or revenue stream is able to cope with the impact of the pandemic, but the question is whether a business has diversified enough to provide it with other options in times of crisis.
“If your business relies solely on one revenue stream, it is a do-or-die scenario, but if you have multiple revenue streams, you can evaluate your options and minimise the overall impact.”
Tan says some opine that “If you have technology, you will be absolutely fine”. But companies need to bear in mind that technology changes at a very fast pace. Having technology is not enough; an innovative mindset as well as the the ability to adapt to new technologies will ensure a business is constantly future-ready.
“Technology is a must-have for the foundation of the business. When managing a new business, owners should look at leveraging strategic technology partners. Being a business owner sometimes requires you to wear many hats and focus on many things at once,” he says.
“To save time and to address the challenges of constantly sourcing for new technology tools, finding the right technology partner can help your business cope with technology advancement while you focus on refining your business model.”
The Covid-19 pandemic curveball has seen a lot of companies re-evaluating their business continuity plans (BCPs). The three basic components of a BCP is risk management, innovative culture and emergency funds, says Tan.
Given his experience in compliance, Tan says risk management is a key component of every business continuity plan. Some of the more pertinent questions to ask should be about a company’s revenue stream, alternatives in a supply chain and if the business has any regulatory risk.
“For example, if a business’ revenue focuses on certain countries, will diplomatic tensions affect its revenue? Does your supply chain rely on a single source country and will supply termination effectively end your business? Does your business rely on a specific licence (i.e. medical or financial) to operate and are there backup plans in the event the licence is cancelled or not renewed?
“Different businesses have different risk concerns. There must be a specific risk management plan in place to ensure your business risk does not result in cessation of the business.”
Tan adds that companies must have enough innovation capabilities and mindsets within the organisation to cope with macroeconomic changes. Most businesses have experienced the cruelty of Covid-19, where some businesses did not have enough time to evolve, resulting in them shutting down. "And we don’t know when the next wave is likely to hit.
“Because of this, business owners should ask themselves if their businesses have the ability to innovate because innovation is required to ensure a business has the ability to transform in the face of any possible crisis.
“Using Covid-19 as an example, we are now noticing that digital adoption has been accelerated among businesses. Businesses that were unable to adapt to the required digital transformation are now facing huge challenges to continue operating during the pandemic. Other businesses, which were successful in innovating, achieved better volumes during the crisis period.”