Scaling SME businesses: how to tip the scales of growth in your favour

Andrew Ong, CEO, Asia Pacific, 3S Money

Talk of a global recession has been hogging headlines and conversations. In Singapore, the latest data from the Ministry of Trade and Industry showed the local economy shrinking 0.4% from the previous quarter, triggering comments from analysts that a potential technical recession is on the way. 

SMEs, which make up to 99% of establishments in ASEAN, are likely to be hit hardest by the difficult business environment today, given their vulnerability to supply chain and economic disruptions. In light of these challenges, SMEs are likely to buckle down to prioritise consistent cash flow and managing cost.

At the same time, in order to scale, SMEs in countries such as Thailand, Philippines, Vietnam, Hong Kong and Japan need to look beyond their own shores and explore new markets. Business leaders need to also consider acting on long-term growth plans despite current economic uncertainties.

With 3S Money’s roots as a start-up, we can relate to the challenges of scaling a business under bootstrapped conditions. One question we asked ourselves in our founding years was: how can we work more efficiently, in order to focus on delivering long-term business value and innovation for our customers?

Budgets And Balance

SMEs keen on exploring new markets and expanding overseas will have to nail down essential administrative details, such as opening an overseas bank account, setting up seamless payment processes for overseas customers, and adapting products and services for new markets.

Amidst a long to-do list, questions and complications that arise over the course of setting up a new business account may not be adequately addressed with virtual support that present generic solutions. In such circumstances, a platform that has dedicated client managers with local domain knowledge is a boon when going digital can sometimes create more questions than answers.

Understanding the ins and outs of a new market requires significant time and resource investment. In the process, many SMEs will need to strike a balance between managing costs with their existing operations, and directing additional resources to overseas expansion.

As it stands, more than 7 in 10 SMEs in Southeast Asia (SEA) already make foreign currency transactions monthly when working with overseas suppliers and partners to establish operations in new markets, leading to an inevitable rise in operating costs, according to a study by YouBiz. Cross-border transaction fees tend to add up quickly with traditional banking systems relying on banks in other jurisdictions to complete transactions, causing fees to compound with the involvement of each intermediary.

Managing cross-border payment fees can result in substantial cost savings for SMEs over time, and is one of the key priorities for any business setting up an overseas outfit. New digital financial services, which provide more inclusive payment processes for SMEs, have technologies that remove the need for an intermediary, helping companies save on transfer costs and foreign exchange conversion fees.

A trusted platform can also take care of other essential details, through their expertise in compliance, trading routes, and industry-specific knowledge. This ultimately enables companies to focus on important long-term goals that will drive meaningful business impact.  

Investing In Innovation

Improving workforce productivity has been a key priority for many businesses as they navigate current economic uncertainties, and the latest innovations in generative AI and automation provide more teams and companies access to tools that can increase efficiency.

While some SMEs may be daunted by the initial costs of investing in new technologies, the mainstreaming of AI in the workforce is a clear indicator of the potential for these new tools to transform how we work. Generative AI and automation tools not only replace repetitive tasks like drafting emails or following up on feedback, but also allow companies to achieve personalisation at scale by analysing customer data to create customised responses.

It is critical to note that the success of implementing new tools and systems is contingent on whether employees are equipped with the skills to leverage AI to drive innovation. According to a Salesforce study, although 7 in 10 respondents in Singapore are aware of how generative AI can positively impact their work, only 15% say that they possess AI skills. There is a clear digital skills gap, and SMEs need to supplement technology with upskilling and training opportunities to harness the full potential of AI for their business.

The adoption of innovation also heavily hinges on trust, with the onus skewing towards platforms and services to rigorously prove that they can be trusted by customers and users. When it comes to finances, businesses of all sizes deserve the highest levels of protection for their coffers and a trustworthy payment solutions is an important digital partner.

Businesses should also consider where and how their funds are held. Platforms such as 3S Money have a safeguarding scheme in place, from a legal standpoint it means we keep customers’ funds in bank accounts separate from our business’ and in the unfortunate event of insolvency, our customers’ funds will not be affected.

In the race towards business expansion and scale, SMEs can take on a more holistic approach to growth, one that looks at both building up the digital infrastructure of the company, and also investing in upskilling programmes for employees, freeing up capacity for further innovation, strategy, and impactful outcomes for the business.

Translating Business Impact To Community Good

With the business growth and innovation pieces in place, this in turn creates an opportunity for SMEs to develop initiatives to address broader environmental and social issues. 

Consumers and employees today are increasingly concerned with businesses’ impact on society, and many are choosing to only support or work with companies that are aligned with personal values. Creating positive and tangible social impact boosts longer-term customer loyalty and brand reputation, which can in turn strengthen employee engagement levels.

While costs and manpower resources are some of the biggest barriers to SMEs contributing more to   community and social needs of today, digital innovations may be a true game changer in enabling the participation of businesses of all scales in positive societal change. AI and automation are leveling the playing field for SMEs to expand their business to overseas markets, and for teams to become more productive and effective regardless of headcount.

A long-term vision that encompasses revenue targets, product innovations and broader social impact  may no longer remain just an aspirational goal for SMEs, but one that can be realistically attained by leveraging the digital technologies available to us today. There is a real opportunity for SMEs to transform the way they work, elevate their business outcomes, and become a force for good.