To thrive in the long run, small businesses must first reevaluate their processes

When it comes to thriving as a business in this age, tapping into digital opportunities could be the key lever to accelerating growth: after all, it’s the easiest starting point to reach a regional or global audience and has a multitude of platforms and channels ripe for the picking. One area that businesses often overlook, however, is operational agility – a crucial factor that is intrinsically linked to a company’s financial performance and ability to scale.

“Operational agility is about taking note of shifting customer behaviors and expectations in the face of uncertainty and using technology and infrastructure to capitalize on new opportunities,” explains Jenny Choo, head of sales for Asia at Xero, a global cloud platform focused on small businesses.

Jenny Choo, head of sales for Asia at Xero. / Photo credit: Xero

Fitness studios offering online classes or brick-and-mortar retailers moving into the ecommerce space are all examples of this.

With teams now working remotely and asynchronously, organizations have to be more flexible in how they run their businesses, adds Choo. This mindset, she says, should also be employed when making tough decisions, such as implementing cost-cutting measures in times of economic uncertainty.

Making calculated pivots

According to a recent Forrester report, one-third of small businesses believe they have a competitive edge over large corporations in pivoting to new processes, particularly when reevaluating their supply chains or reinventing their offerings.

However, 34% of owners admitted to making these decisions based on instinct rather than data-driven insights. Findings from Accenture, meanwhile, showed that just 44% of these founders planned to increase their spend on technology-related investments amid the pandemic.

In addition to employing tools such as accounting software, Choo recommends these owners to seek advice from professionals such as accountants or advisors when making key business moves.

“Intuition can be inherently biased or emotionally driven, so supporting this with facts and historical data could help to confirm gut feelings,” she notes.

When Singapore-based team-building and events company The Fun Empire faced significant business challenges during the pandemic last year, its co-founder Ryan Ho consulted with the company’s accounting partner, Harvest Accounting, to help them to analyse and develop business strategies for both the short- and medium-term.

At the same time, the company made pivots to shift its service offering into virtual formats – think home experience kits delivered to customers’ doorsteps to facilitate team-building activities, and new products such as virtual escape rooms.

In addition, The Fun Empire’s consulting team of accountants advised them on government initiatives and grants they could leverage to support their business continuity and digitalisation journey. Ho further credits Xero for providing the company with valuable data and information, enabling The Fun Empire to make critical and time-sensitive decisions with confidence.

“The pandemic highlighted the importance of digitalization for business continuity,” Xero’s Choo says. “By coupling this shift with an app that provides visibility, transparency, and analytics, a business could see long-term growth and be more scalable.”

Forecasting is crucial

Another important factor that companies have to pay attention to is cost management.

“Delayed payments not only impact cash flow but could result in missed revenue-generating opportunities such as the start of new projects,” Choo points out. “This could even impact business owners’ interest on bank deposits.”

To tackle the issue, Xero developed a short-term cash flow forecasting tool for SMEs last May. Company owners simply have to link their bank accounts to their Xero profiles, and the tool can help them plan for future scenarios, gain visibility on their business’ runway, and track their bank balances for the coming seven to 30 working days.

Photo credit: Xero

According to Choo, short-term forecasting can be worked into a company’s other moving parts, which – depending on the nature of the SME – could span inventory management, payroll processing, invoicing, and workflow processes. Xero partners with over 900 apps, each of which can tackle specific pain points for SMEs.

Singapore-based accounting firm Numbers Management is one example of how short-term forecasting can help. The firm’s clients initially relied on manual data entry to update their accounts, but the time-intensive process also left much room for human error, and did not enable them to predict future cash flows.

By migrating from spreadsheets to the Xero platform, Numbers Management’s clients saved on time and gained better transparency on their day-to-day financial positions through access to real-time financial data.

“By consolidating data in a central location or software, accountants can make full use of these custom-built tools to help their clients with cash flow forecasting, real-time financial advice, and smart tax planning,” explains Choo.

Consumers’ changing needs

Setting out the right internal processes could lay a better foundation for another ongoing challenge that companies are coming up against: building user engagement. With more people hooked on mobile and digital channels – and as their demand for personalization grows – marketers and business owners have their work cut out for them.

Beyond doubling down on email and marketing automation tools, Choo suggests that startups build meaningful branding through collaboration with industry experts and influencers who resonate with their audience. Rather than rely on mass media campaigns, which could be expensive for SMEs, a “cost-effective yet measurable alternative” lies in the online space, which would allow businesses to achieve significant engagement through shareable user-generated content, reviews, and organic social media content.

“Don’t be afraid to reimagine your business model,” the Xero exec adds. “It’s an ongoing journey of testing, learning, and growing.”

Xero is a cloud-based accounting software that helps small and medium-sized businesses digitize their accounting processes and improve business efficiency. Find out more by visiting the Xero website.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.