In every crisis there is an opportunity. Even in times of pandemic, closed borders, and uncertainty, we’re looking at how entrepreneurs can grow and scale up their companies whether newly registered in Singapore, or have been set up for a number of years.
What can small medium businesses do differently to evolve into cross border businesses in times of these unprecedented challenges?
We engaged in a webinar with Singapore-based entrepreneurs and businessmen to discuss the major points of scaling up, and what businesses can do today to survive and thrive.
Hosted by Ian Lloyd of MatchMove, the discussion involved:
- Amar Abrol, Chief Commercial Officer of MatchMove, a business that pivoted from a gaming company to fintech and payments company that provides banking as a service;
- Adam Loke, Singapore Partnerships Lead at Osome — a chat-based solution that leverages AI and cloud accounting to provide automated incorporation, company secretary, accounting, tax, payroll, and visa services in multiple jurisdictions;
- Chan Chiou Hao, Chief Operating Officer of JustLogin, a cloud-based HR application that manages all HR-related processes in one integrated platform;
- Janus Lim, Founder and Managing Director of Finaqe — a credit advisory firm that provides credit solutions to businesses of all sizes in Singapore and within the region.
Here are the key takeaways that might be helpful in your situation.
Improve Your Chances of Getting Bank Loan to Fund Cash Flow
Most SMBs have no idea that the director’s personal credit bureau scores would impact their business in qualifying for business financing
While many business owners have industry expertise, their financial knowledge is often insufficient. In early startup days, most of them don’t have a full-time finance function to advise or manage their money, so they turn to outsource accounting firms that do annual reviews of their accounts.
When SMBs face cash flow issues, they seek funding or loans from banks and other lenders. At this point, they discover that the application process for financing is often unclear, complicated, and time-consuming. Moreover, SMBs often lack knowledge in the area, which is why they don’t always know how to make their application succeed.
As a result, many of them fail to meet the approval criteria, and have no idea what was wrong. Another problem is that lenders widely market their loans, which makes many SMBs wrongly assume that they qualify for financing. In reality, lenders can say if a company qualifies for sure only when it assesses its financial documentation like the company’s balance sheet, income statement, and cash flow statement.
Not meeting approval criteria often leads to other issues. When an application is rejected, a lender may blacklist a borrower for a period of 3 to 6 months. If an SMB applies for multiple loans from multiple lenders at once and fails, it means all their financial options can be cut off for several months.
So how can small and medium-sized companies maximise their chances?
Ensure that the company director has a good credit bureau score
In Singapore, a common thing would be to ensure that the company director has a good credit bureau score. It may sound weird, but it makes sense from the bank’s point of view.
If you’re a new applicant, the bank has no visibility on your repayment history or repayment habits, it doesn’t know you as a company. In other words, the bank has no idea if you’re a reliable borrower. The thing the bank can check is the credit history of a company’s director or guarantor. And if their credit score is questionable, your loan application can be declined — even if your company itself is perfectly viable. So if you’re a business owner, it may be vital to consider how you can improve your credit score to scale up your company.
Have good repayment ability
Another thing that can increase the chances of your application is good repayment ability. It would help if you have 4-5 digit numbers monthly ending on your bank accounts, avoid having written checks, and can show proof of future cash flow from new contracts.
Besides, you should think of a clear working capital strategy. Look into your cash flow management and receivables, because all businesses — including your buyers — can be deeply affected by Covid and delay their payments.
Use All Available Support When You Enter a New Market
To scale, you need to plan, to embrace technology and what could be upcoming.
When entrepreneurs start their businesses, they tend to do it in their home country. It makes sense to set up in a familiar market, but when you want to scale up and build a cross-border business, it’s important to plan ahead.
The first step of your business scaling plan is to look for a country or jurisdiction that’s a hub of a region you want to go into. Next, you should check if this country of jurisdiction is supportive of new foreign businesses.
When you start a new company in an unknown environment, having the right support — be it technology or an opportunity to hire the right team — is vital. Besides, at times like these, you should leverage the potential of technologies; now, many things like certifying or sending documents over can be done remotely. So leverage the new tech to expand.
Trust and Empower the Team
When it comes to crises like that, you have to pay more attention to the welfare of employees than ever.
Covid quickly became a synonym of “crisis” and “unemployment”. On the one hand, it caused very reasonable fears among employees, even if their jobs are secure. On the other hand, this showed business owners that professionals on their teams are the only thing that can save their companies during this period. This puts additional pressure on the employees who are asked to work harder than ever. However, working harder and working from home means burning out faster. Considering this, employers now have to pay a lot more attention to the welfare of their employees. Not just in terms of paying salaries or providing benefits, but also when it comes to their mental health and financial and physical wellness. If you’re an entrepreneur, these are the things you should be monitoring when it comes to your team. At the same time, too much monitoring can easily turn into micro-management, and that’s something you should avoid. There’s no need to make sure your employees do each tiny task they’re assigned; instead, trust them to come up with the best ideas and do what will be the best for your company.
However, your team will put all this effort into scaling your business only if they feel engaged and motivated, so that’s something you should invest in. You need to give them a sense of bigger purpose, provide vision to work towards. First of all, communicate with them frequently. Ask how they are doing, whether they feel motivated or burnt out. Secondly, acknowledge and relate to them. Give them the confidence if they are worried about job security, look out for issues they might be having at home. Ask if they need to be working more flexibly or need better hardware. In other words, just make an extra step to find out what makes your team more engaged and more motivated. Thirdly, be more understanding: help them up if you can and show some appreciation for their work. A little assistance at this time will buy you a lot of loyalty for years down the road. Do not ignore these things — they usually don’t cost much for most companies, while the return might be tremendous.
At the same time, remember that you should be genuine. If it’s evident that your focus on their well being comes from wanting to get a benefit from them, your employees won’t stay. So you too, as a company founder or an entrepreneur, should work on how you interact with your team to scale your company.
Watch out for Your Costs
Every penny that you save is going to help and potentially course back.
As you double down and work harder, you should be watching your costs as well. In tough times like these, costs can become a critical ingredient. The funds that you save are going to course back and support your business in one way or another. If you’re a business owner or manage the financial side of an SMB, you should be paying very close attention to the cost rate.
For instance, if you own or manage a cross-border business and you frequently send remittances, the cost of sending them might be hidden deeply in the P&L. If you as a founder are focused on deals and try to make sure your business is ticking and moving forward fast enough, it’s easy to miss smaller opportunities like finding ways to cut costs on transactions. However, these opportunities add up, and optimizing many seemingly small costs can save a lot of money for your business as a whole. It would do you good if you consider financial aspects like this when coming up with a business scaling plan.
A Perfect Time to Pivot & Experiment
Despite the challenge, now many entrepreneurs have an opportunity to scale up their companies, even if they run a cross-border business. Janus Lim, for instance, believes that this might be the perfect time to pivot, experiment and quickly test how your business model can change to serve your customers in a better way. To achieve this, you should go leaner: cut cash from non-essential businesses and prioritize.
“It's a great time to increase and improve on digital marketing approaches and also to explore partnership opportunities with other firms which you may not have considered prior — to explore and achieve new revenue streams and reach out to more customers”- Janus Lim.
This crisis made many entrepreneurs sit up and realize that they can’t do the same things as before as they simply don’t work anymore. So you should look at new approaches, think of new ways of reaching out to your customers, and leverage tech and support schemes wherever available.
Another thing you should be aspiring for is becoming resilient and agile when pivoting in different scenarios. Depending on your situation and scenario, it’s important to know how you’ll pivot. Rethink the services that you provide, rethink how you engage your clients, and think how you can learn from Covid. Look back to previous financial crises and think about what has changed and who survived those changes, and how you could use that knowledge to prepare better for what's ahead.
“The next normal could be very different from this normal and the subsequent normals”, notes Adam Loke.
Entrepreneurs and business owners should rethink, be flexible, and try to work with the right resources — not just tech, but human resources and partners as well.
It’s no less important to look at internal processes. When business is going as usual, many people do not have time to examine them. COVID-19, however, gives you an opportunity to review your whole business flow.
“Can you streamline or automate how things are done at your company? Can you cut down your costs, like reconsider renting a big office? This is the best time to evaluate such things. Now you don’t spend that much time on clients, and there will be no such opportunity later,” believes Chiou Hao Chan.
Besides, with fewer new clients, you should focus on your existing customers and revisit your relationships with the old ones. Re-establish relationships with your old customers and see how you can help them at this stage. This is the time when you buy favours and show empathy — and during good times when they’ve recovered, they will return the favour. It also won’t hurt to look into partnerships to see how you can achieve more together.
In addition, the most vital thing you can do is focus. It’s best to invest all your effort in one area that you know and believe in, and pursue it.
“Put all other projects on hold, just do one thing, but do it really, really well”, advises Chiou Hao Chan. - “If it’s a “maybe”, it’s a “no”.
This approach could optimize processes in many companies.
Amar Abrol lets on how it improved both organization and results at MatchMove: “We stepped away from business that was not making sense. Compared to the previous year, when a large portion of our team would be in airports and hotels and in planes, we’ve utilized this opportunity to sort of regroup, rethink and re-energize the organization — to focus on where they really want to be, where the revenues are, where the profit pools are, and certainly bring along the organization in that journey”.
Like our webinar content? Keep in touch with us on LinkedIn to get the latest updates of our webinars for companies looking to grow your business. Osome helps you to focus on selling more by taking the load of tasks around corporate administration and accounting for companies in Singapore off your hands.