It is evident that while many businesses have been seriously impacted by Covid-19, the pandemic has also shed light on the importance of surviving and staying resilient in unprecedented times. As we transition to an endemic phase, the question is: Are businesses ready to transition to the new normal?
According to Ernst & Young Consulting Sdn Bhd (EY), 86% of Malaysian businesses are ready to live with Covid-19. Meanwhile, 77% of companies prioritise technology adoption in the near term as they look to accelerate their adaptation to the new normal.
Xero Asia head of sales Ferdy Nandes opines on a positive outlook for SMEs in 2022.
1. SMEs will shift into growth mode with a strong focus on digitalisation
2021 was challenging for small businesses, as the pandemic forced many to re-evaluate their operations. According to Nandes, to survive, many small businesses accelerated their digital investments, adopting new tools and technologies to stay afloat.
“In 2022, we expect to see a more focused approach to digital adoption from small businesses. Some will look to digital tools to expand their customer base and facilitate relationships in the face of an evolving regulatory environment. Others will seek out technology that enhances innovation and supports the development of new products and services.
“Many small businesses will focus on technology that improves operational processes, driving efficiency and opportunities for business to grow further. No matter what their focus, we expect to see more small businesses embrace digital solutions to stay competitive in an ever-changing landscape,” said Nandes.
Digital transformation has also been fueled by government initiatives such as the SME digitalisation grant, which encourages local SMEs across all industries to adopt cloud solutions like Xero, providing a 50% matching grant to digitise business operations from marketing/sales, e-POS systems, HR payroll/CRM, procurement, e-commerce, and ERP/accounting and taxes.
2. SMEs will tap into data to solve customer pain points
He added that local SMEs have yet to maximise the power of data to help inform and validate their business plans and strategies.
“As the economy recovers from the impact of Covid-19, businesses are looking to switch gears and optimise their current resources for growth. Cloud technology and tools such as artificial intelligence (AI) can play a key role in this, enabling businesses to make informed decisions based on up-to-date data,” said Nandes,
He further added that cloud technology can help businesses be more agile and resilient. For example, cloud-based applications or systems can be quickly deployed and scaled up or down as needed without expensive infrastructure. AI can also be used to gather and analyse data, helping businesses to identify trends and opportunities.
3. Increased tech spending helps SMEs stay afloat
As the business landscape continues to change, it's becoming increasingly clear that SMEs need to invest in technology if they want to stay competitive. From automating tasks to improve efficiency to adopting new tools to enable remote work, technology can play a major role in helping businesses recover from the impacts of the pandemic.
“With more SMEs recognising the benefits of investing in technology, we expect to see a corresponding increase in technology budgets. This investment will be crucial for enabling businesses to accelerate their post-crisis recovery and ensure that they are able to continue to thrive in the new normal.
“According to International Data Corporation (IDC), at least 20% of small businesses globally will cease operations by 2025 if they don’t digitise fast enough,” said Nandes.
SMEs thrive with digital adoption
“At Xero, we help small businesses with the tools they need to survive and remain resilient in the next phase of their business journey. For instance, InTune Outsourcing used Xero to completely migrate its desktop software and servers to the cloud before the pandemic. It said that this was key to keeping operations running since the outbreak.
“Another example is GoGet, which said that Xero helped them scale their technology during the pandemic and helped them manage their growing volume of accounting work, simplify and streamline their business tasks,” said Nandes.
He further points out that SMEs can use cloud-based accounting software like Xero to gain more significant insights into their real-time cash flow and overall financial health. This, in turn, allows them to make more informed and confident decisions despite any market volatility.
Additionally, having all of one’s financial statements and documents in one place simplifies the process of accessing capital – whether in the form of government grants, bank loans or investments.
Getting quick access to capital and streamlining financial operations is key in an uncertain economy. Turning to cloud accounting solutions like Xero can make a big difference – for example, Nandes shared that Xero customers who use online invoice payments get paid up to twice as fast than those who don’t use online invoice payments.
App-solutely easy to be on the cloud
The modern business world is increasingly reliant on cloud-based services, and accounting is no exception. SMEs that are looking for ways to optimise their operations and business planning should assess their ongoing accounting processes and analyse how cloud accounting solutions like Xero, along with integrated workflow tools, can help them. Xero’s App Store allows SME owners the ability to pick and choose various tools that work for their business, and they can customise and add-on accordingly as they scale and grow.
Nandes said: “There are a few methods that can help to make the decision-making process easier. A decision matrix, for example, is a great visual tool for assessing the pros and cons of different options against specific criteria. Another tactic is a pre-mortem, which starts with the end result in mind and works backwards, creating a list of potential points of failure for current and alternative solutions.”
Lastly, he added: “Don't underestimate the power of community. Speaking to fellow SME owners is a great way to share learnings and get recommendations for cloud business tools. By taking some time to assess all of your options, you can make the best decisions for your business.”
Source: https://www.thestar.com.my/business/business-news/2022/06/07/xero-empowers-malaysian-smes-with-cloud-business-solutions