A recent nationwide survey by CTOS of their SME customers has shown that maintaining sales and profit margins are the primary concerns for the sector, ahead of gaining new customers.
This sentiment is carried across the board, throughout the distributing, manufacturing, construction and finances industries.
We are seeing that issues such as pricing and competition are factored much lower down the list, this may mean that the SME sector is looking at consolidating positions in 2019
“With 37.1 percent of Malaysia’s GDP coming from SMEs, the issues that affect them will undoubtedly affect Malaysia as a whole,” says Dennis Martin, Group CEO of CTOS Data Systems.
“We are seeing that issues such as pricing and competition are factored much lower down the list, this may mean that the SME sector is looking at consolidating positions in 2019, rather than looking towards expansion”.
Using a sample of SME respondents from a diverse geographical range, a focus on sales and profit margins, rather than a focus on new customers and competition, shows that SMEs are shoring up their existing customer base and finding ways to be more productive and therefore profitable in an uncertain environment.
Notably, cash flow issues are the second largest concern, with 37 percent of respondents highlighting it as a major problem, giving further credence to the theory that SMEs are feeling the financial pinch as larger organisations may be struggling to meet commitments to SMEs.
At the other end of the spectrum, are ‘Government Policies’, of which only one fifth of SMEs are concerned about.
With support on a national level, SMEs are finding that they are able to concentrate on doing business regardless of the effects of potential governmental or regulatory issues
“The lack of concern over government policies in comparison to financial drivers such as profit margins and cash flow issues can be taken as a generally positive note,” counters Dennis Martin.
The recent 2019 budget allocated a total of RM17.94 billion for SME development in 2019 under the Third Focus: To Foster an Entrepreneurial Economy. Among the key initiatives include financing, Industry 4.0, export, tourism, agriculture, entrepreneurship, human capital development and incentives.
“With support on a national level, SMEs are finding that they are able to concentrate on doing business regardless of the effects of potential governmental or regulatory issues, which correlates with our survey findings,” Martin further explains.
“This survey and the ensuing increased understanding of the wants and needs of our SME clients will allow us to better serve them going into 2019, with our suite of services tailoring towards efficiency in all aspects of business, be it improving cash flow, through improved collections or increasing profit margins through reducing bad debts”.