Growing businesses in tough economic times

THIS year will be a challenging one for businesses in Malaysia, no question about it.

Businesses will be impacted by local policy changes, oil and petrol price fluctuations, as well as the uncertain global economy, influenced partly by the twin shocks of Brexit and the Trump victory.

For average Malaysian businesses to weather the storm of this tricky economic situation, they must be proactive. Here are some tips:

Take advantage of Malaysian Budget incentives. The Malaysian Budget presents some interesting scenarios for both households and businesses.

For instance, there are a number of housing incentives announced, so now is a good time for property companies to highlight these incentives and marry them to their projects.

Also, tax rates for Small and Medium Enterprises (SMEs) are more attractive. SMEs earning up to RM500,000 in profits will be reduced by 1% from 19% to 18%.

Get your tax consultant in and see how you can plan your business operations for tax savings, instead of waiting until the end of the year for the tax hammer to fall on you.

Strengthen your core for the next upturn – strategise and train. During challenging and slow business seasons, there is a tendency for reduced employee activity. This is a blessing, not a worry.

First, this will enable you to strategise with your top management to take advantage of the current business opportunity window.

Second, you will find the time that you normally do not have to train your staff and make your team a super team.

Special emphasis should be placed on your leaders and their capabilities in leading their teams effectively.

Smart employers act to strengthen internally, emerging stronger than their sleeping competitors.

Build up resource levels cheaply. A company we know uses softer economic periods to build up its inventory of raw materials at reduced market prices.

Visionary property companies always seek to expand their land bank cheaply when property prices are challenged. This principle applies to other assets as well, including share market investments.

Of course, this depends on how large your cash reserve is.

Negotiate better trading terms. Everyone wants cash now but, more importantly, everyone wants business.

As such, this may be a good time to be brave and negotiate for better trade terms, that is, the length of time in which you are required to settle your payments.

Keep in mind that the better cash flow arising from such a tactic is meant to leverage your company, not to spend on frivolous and non-urgent expenses. Motivate against the tide. Most companies, during tough times, gloomily predict that the company and by extension its employees, will have to brace themselves. In happy contrast, good companies highlight the opportunities present in every business scenario, and motivate their people by pointing these to them.

Leaders will play a significant role in achieving this goal, as even their everyday mannerisms and attitude will be observed and transmitted to their teams, directly impacting employee morale.

Strengthen your backroom. One of the key and common weaknesses of companies is their internal organisation.

Poor or redundant human resource structures, lack of SOPs (standard operating procedures), dodgy safety situations and inefficient process chains all impact the smooth running of a business.

In these times, conduct internal organisational health checks – using an external consultant, if necessary – to build and streamline systems and processes.

These are just some of the opportunities that will present themselves in 2017. Plan for them. Thrive on them.