The coronavirus COVID-19 outbreak has affected all of our lives dramatically. Financial struggles, especially for small businesses, during this period are inevitable.
In early January, Malaysian SMEs in numerous industries including retailers have seen a 30% drop in their business.
Since then, the number has grown drastically as retailers are now reporting an outrageous 80% drop in sales.
But does that mean that small businesses can’t do anything about it?
In fact, here are 3 quick tips to help your business cut costs during this coronavirus COVID-19 pandemic:
Table of contents
1. Renegotiate with suppliers
During this time, rent will be a major burden for small businesses as it takes up a huge proportion of their operating costs.
Contact your landlord and negotiate for:
- 30% rental rebate – 30% rebate on a RM5,000 rental would give you an extra RM1,500 into your cashflow!
- 1-2 months rental deferment – this will also help you regain your financial footing
For landlords, providing these reliefs to existing tenants are much better than having no tenant.
In terms of suppliers, you may renegotiate to extend your credit terms for 15-20 days.
And if they don’t budge, perhaps it’s time to survey the market for alternate suppliers that may offer lower prices.
Every penny saved is a penny earned!
2. Review your employee policies & procedures
First off, freeze all hiring immediately.
When reviewing your employee policies and procedures, here are some elements you may consider reducing:
Bear in mind these guidelines when taking such measures.
- Set an example by cutting your own salary first
- Be transparent when communicating with employees
- Soften impact on low-wage worker – especially if they’re frontline workers
- Apply sections of the Employment Act 1955 before making any final decision
If this is your first time implementing work-from-home, try out different web conferencing software to find out which is the best fit for your business.
Here are some free and reliable options:
All this will help you also cut costs, which ultimately contribute to prolonging the payroll and ensuring job security.
3. Restructure your marketing plan
People are simply not the most receptive during this period, meaning that the conversion rate will decrease significantly.
Our advice is to reduce the volume of your existing ads and campaigns by 80%.
When it comes to promotions, watch out for credit risks and reduce your customers’ subsidies.
If your gross profit margin is negative after the subsidies, then you might want to consider removing it.
One simple way to check is to calculate using a profit margin calculator before setting the discount.
Let’s take an example scenario:
You’re selling t-shirts for RM19.90, with a cost of RM10 each.
Initially, you’re working with a 49% gross margin and a RM9.90 profit for each sale. But say you’re offering a 50% discount and is now selling at RM9.95. All things considered, you might receive more orders but your true gross margin would be -0.5% and you’re losing RM0.05 for each sale.
This is where having a smart POS system like StoreHub comes in handy.
It allows you to manage and keep track of your stock, pricing, and promotions seamlessly, plus it lets you set up your very own online shop through StoreHub Ecommerce.
And if you’re an F&B business, consider Beep Delivery, which gives you a heavily subsidised commission fee rate compared to the up to 35% charged by major food delivery marketplaces.
Here’s to making your F&B business awesome!
We hope these tips will help your business mitigate the financial impacts of the coronavirus COVID-19 outbreak in Malaysia.
If you have any other tips that you would like to share with us, please leave them down below in the comment section.
In the meantime, stay home and stay safe everyone!
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