AuthorLee Siqi, Concept Folks Covid-19 has not only crippled global healthcare systems, it has also caused severe disruptions to global economies. We are experiencing an economic recession that is unprecedented in nature. Today, over 4 million people have been infected by Covid-19 globally, and hundreds of thousands of lives have been lost to the virus. With no end to Covid-19 in sight, global supply chains have been left paralyzed and helpless to the forces of nature. In order to tide through these disruptions, businesses and individuals need to be able to adapt the changing economic landscape, and seek out new opportunities both at home and abroad. In an article by the Straits Times, Chairman of NTUitive, Mr Inderjit Singh, remarked that it may take at least a couple of years to recover from the global economic damage. He added that businesses should plan for a 50% to 80% drop in demand for the next one to two years. Singapore is heavily reliant on its global economic trade ties. We may suffer our worst recession this year since independence, as the global economy takes its biggest hit since the Great Depression of the 1930s. The coronavirus pandemic has also brought about numerous business and lifestyle changes that may eventually become part of the new normal. Mr Singh added that changes such as working from home and the increase in technology adoption are some of the areas where businesses and individuals will have to adapt to. In addition, businesses must also look into cost reduction strategies in order to maintain a healthy balance sheet. All aspects of cost reduction need to be considered. This includes taking full advantage of government assistance schemes, re-negotiating payment terms with vendors, and working out a survival plan with employees. 3 ways to keep your businesses sustainable throughout this crisis 1. Government Aid for SMEs Having been through SARS and the financial downturn that followed it in 2003, the Singapore government and different financial institutions have responded promptly with different financial schemes to support the economy through Covid-19. There are plenty of financial schemes available for SMEs. For instance, the Ministry of Finance’s Wage Credit Scheme (WCS) will co-fund 15% of qualifying wage increases given in 2019, 2018 and 2017 to more than 700,000 Singaporean employees earning gross monthly wages of up to S$4,000. SMEs do not have to apply for the WCS, but will require a GIRO or PayNow Corporate account in order to receive the funds. In addition, the first government stimulus package also provides subsidies for 8% of wages 3 months under its Job Support Scheme. Be sure to make full use of the financial schemes available to help your business and employees survive the crisis. 2. Adopt Cost Cutting Measures As the economic outlook remains uncertain for the next few years, businesses have to adopt cost cutting measures in order to save on unnecessary expenditure and to maintain a healthy balance sheet at the end of the day. During this pandemic, flexible work arrangements are becoming a norm. Having large offices became less of a necessity but more of a liability. Moreover, office rent is a huge expense, and saving on rental fees will help to cut costs during this period. Rather than renting out a traditional office space, more businesses are considering coworking spaces as a viable solution. Coworking spaces provide companies with greater pricing flexibility, as they can commit to monthly leases rather than yearly leases. While it is difficult to commit to a traditional 3 to 5 year office lease now, a 1 month or 6 month coworking plan helps businesses to achieve greater savings. They also can save on other office setup costs such as construction, utility bills, maintenance fees, network installation fees and others. Furthermore, coworking spaces can help businesses with their social distancing needs, as they can now split their teams into different work locations to prevent working in the same common space. For instance, coworking space NAS Workplaces is designed with private rooms, which businesses can use to separate teams from each other. Coworking spaces will continue to grow, as they offer a unique way to optimize space for everyone. With the rise in flexible work arrangements, some landlords are even considering partnering with a coworking space operator to implement their flexible workplace arrangements into an existing office. SMEs looking to reduce rental costs should consider a coworking space which enables them to have a professional workspace, while enjoying the flexible work and pricing plans. 3. Implement Employee Training & Development SMEs that are experiencing reduced business demands can make full use of this time to reskill their employees. Sending employees on training programs can ensure that they will stay competitive and relevant when the economy recovers. There are plenty of training programs available in Singapore that teach different business functions. The Workforce Singapore (WSG) has also implemented The Adapt & Grow programme to provide wage subsidies and training support for businesses. WSG is also working with the Singapore Economic Development Board, Enterprise Singapore and the Supply Chain & Logistics Academy to introduce a three month redeployment programme for rank-and-file supply chain and logistics employees to reskill and prepare them for industry upheavals. Are you looking beyond Covid? Experts have warned that it will take a couple of years before our global economies can recover from the losses incurred during this Covid-19 pandemic. Businesses have to be prepared for the world beyond Covid-19. That not only includes keeping business costs low, but embracing new trends that will continue to shape the future of work. Flexible working arrangement and an increase in digitalisation are two major areas that businesses should look into to better streamline their costs and optimize their businesses for the post-covid world. Comments are closed.
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