When the going gets tough, the tough get going…
The last few months have been difficult for all businesses, but there are reasons for Hong Kong’s mumtrepreneurs to be optimistic. Not only has the Small and Medium Enterprise (SME) community been especially supportive of each other, sharing practical tips and insights, but the Hong Kong Government has also launched various initiatives to provide financial support to these small and medium enterprises. If you are a mumtrepreneur looking for different ways to cope through these challenging times, here is some helpful business advice.
1. Focus On Cash Flow Management
Lacking proper cash flow management is the main cause of business failures, not poor profitability alone. This is especially true in the current climate as COVID-19 has negatively affected the cash flow of many businesses. Mumtrepreneurs who are looking for ways to improve on their existing business should thus focus on their business’ cash flow management process and identify areas for improvement. There are several ways to improve one’s cash flow management, such as optimising your cash flow movements and creating cash reserves.
Optimising cash flow means to maximise your cash inflows and minimise your outflows. There are several ways to do this, namely by reducing business expenses and by staying on top of invoicing. Cloud accounting software, such as Xero, provides mumtrepreneurs with an easy way to act on these methods. This offers invoicing functionality that gives business owners the ability to issue and chase outstanding invoices automatically, so they are able to be proactive in making sure invoices are settled as soon as possible. This software can also generate comprehensive financial reports that provide transparency regarding the health of a company and can help identify any expenses that may be cut or adjusted. For example, a business owner could realise that:
- They could cut marketing costs and conduct these tasks in-house
- Make use of virtual meetings to minimise travelling time and expenses
- Relocate their office to a lower rental area
- Lower their supply costs by purchasing in bulk
However, sometimes only cash flow management is not enough to help a business, as COVID-19 has demonstrated. To prepare for these instances, mumtrepreneurs should create cash reserves going forward. A cash reserve can help smooth over any fluctuations in cash flow as a result of seasonality, loss of a major customer or other causes (like the present pandemic). To build a cash reserve, simply set aside a ratio of your profits, a cash reserve should slowly accumulate. Being able to rely on emergency funds can not only help with cash flow issues but can also provide a greater sense of safety for business owners as unforeseen circumstances may no longer derail their businesses.
2. Consider The Value Of Your Time
This advice often gets overlooked by enthusiastic small business owners. Mumtrepreneurs should recognise the difficulty of handling various aspects of their business simultaneously. This is where automation enters the picture as it allows business owners to utilise cost-effective ways to manage their business in the current environment where resources are comparatively scarce.
A business’ internal tasks such as payroll management or even invoicing can be automated through the use of cloud-based services. This could help you move away from time-consuming tasks or free up resources and allow them to focus on revenue-driving activities instead. Apart from saving time, automation can also limit errors, provide enhanced visibility, make customer interactions easier and can improve cash flow management (as mentioned before).
3. Foster A Relationship With Your Customers
COVID-19 has forced businesses to adapt by embracing the digital space. This also presents an opportunity to re-evaluate how a business interacts with its customers. Social media, email marketing, discussion forums and even external complaint channels are providing customers with new mediums to engage with businesses.
You should take advantage of the current environment to develop your digital channels and enhance customer experience.
- For instance, does your company provide services? If so, then introducing a communication line where customers can obtain assistance or have their questions answered can convey the message that your business cares about its customers.
- Does your company sell goods? If so, then automated sales features can help identify customers preferences and can recommend additional products that they might be interested in.
- One of the most effective ways you could leverage digital mediums to enhance business is by rewarding loyalty. Loyalty programmes can encourage repeat spending and can foster a sense of brand belonging that is easily promoted through digital channels.
4. Utilise The Hong Kong Government’s Funding Schemes
As a response to COVID-19, the Hong Kong Government announced the launch of the Employment Support Scheme (ESS) and Distance Business Programme (D-Biz) to Hong Kong SMEs in the short-term through financing. Mumtrepreneurs who are seeking more tangible support can utilise these schemes for a variety of purposes. ESS is designed to help Hong Kong employers retain their staff who would otherwise be made redundant due to COVID-19’s effect on businesses whereas D-Biz helps them adopt IT solutions that can facilitate remote working.
Under ESS, the Hong Kong government will cover 50% of employees’ salaries for six months in two tranches (at the time of writing, details for Tranche 2’s application deadlines have yet to be released), with the subsidy for each Hong Kong employee being capped at $9,000.
Mumtrepreneurs are eligible for ESS as long as they have made Mandatory Provident Fund (MPF) contributions, or have set up an Occupational Retirement Schemes (ORSO) and have established these accounts either on or before Tuesday, 31 March 2020. Even self-employed persons who have set up an active MPF account before that date are eligible to apply!
To facilitate remote working, each applicant can receive a total funding of $300,000 to adopt three separate IT solutions as outlined by the Hong Kong government. For example, mumtrepreneurs who are looking to adopt IT solutions that can offer automation features will be glad to hear that they can apply for funding under the scope of D-Biz!
You are eligible to apply for D-Biz if you have a business that meets the following criteria:
- Is registered in Hong Kong and has substantive business operations here
- Commenced business before Wednesday, 1 January 2020
- Is not a listed company/associated with the Hong Kong government
Small business owners who are interested in these services, but are unsure of how to apply, can seek advice from and engage the help of a professional services firm. Not only can they maximise the odds of an application being approved, but they can also help maintain compliance with the terms of these various Hong Kong government funding schemes.