5 business mishaps Singapore firms must avoid in a volatile economy

Uncertain markets force big decisions on businesses. When there’s pressure to maintain cashflow and customers, firms often have to take bold steps to achieve greater efficiency or competitiveness.

However, with the changes wrought by technology and globalisation, many traditional strategies for weathering storms no longer work. Some of the common beliefs held by companies about the best way forward may instead damage their prospects. Here are five common mistakes to avoid:

1. “I will concentrate on what I know, and focus on existing markets”

When times are hard, there’s a temptation to stick to tried and tested basics. However, one lesson of successful companies like Google is that businesses must continuously innovate and iterate. The fact that something worked last month does not guarantee future success.

Innovation can mean developing new products or services, but also new markets. Recent research found that in most countries of the world, companies with international markets are performing better, in terms of revenue and profit growth, than those that only operate domestically.[1] It also showed that companies that already operate across borders are so appreciative of the value delivered by international markets that they wish to invest further in them.

2. “Expansion is complex and expensive, so now is not the time to do it”

Successful expansion certainly requires an investment of resources and planning. There are markets to research and regulations to understand, all of which takes time. Nevertheless, some of the perceived barriers to expansion may not be as big as you think.

Around one third of firms globally believe that the biggest obstacle to overseas expansion is setting up an office/workplace presence in a foreign country.[2] But it is possible to reduce the investment and overheads associated with establishing an office abroad by using virtual office solutions or flexible, ready-to-use workspace. These solutions remove the capital outlay, allow businesses to increase or contract their footprint as needed, and take care of equipping your office.

3. “People are expensive so I will reduce headcount, or cancel plans to hire”

 Yes, staff are the biggest overhead for most businesses, but losing your talent can prove expensive. Instead, reduce other major overheads, such as premises, or look for ways to help staff work more effectively. Offering employees choice over where and when they work cuts commuting times, and helps hard-pressed staff manage stress levels, and 41% of businesses believe it improves productivity.[3]

In terms of hiring, one way to reduce HR costs is to look at hiring freelance workers. Freelance hiring enables businesses to pay for people only when and where they actually need their specific skills, and 49% of firms were planning to do it in 2012.[4]

4. “Our customers understand that we’re under pressure and will sympathise”

Whatever pressure your business is facing, never let it affect customer service. The loss of a customer jeopardises more than the value of a single lost order: it also forfeits repeat business and the chance of referrals.

Therefore, do everything possible to ensure customer satisfaction – in terms of product, price, support, general interactions and value - and look out for early warning signs of problems.

On the other hand, do try to resist pressure from customers to cut prices. Try instead to discuss alternatives like offering greater value or service for the same price, or introducing cheaper, no-frills versions alongside your existing products.

5.  “We’ll keep overheads low by doing everything ourselves”

Every hour spent on non-core tasks is an hour diverted from cash generation. By outsourcing administrative tasks or premises management, you can liberate management time for revenue-generating activities.

For example, office and workspace providers can often manage all the peripheral activities associated with running an office, from reception and mail services to IT management and maintenance. They can also provide access to facilities that a small company may not be able to afford, such as high-quality printers or videoconferencing facilities.

2013 may send chill winds blowing over many businesses, but battening down the shutters and sheltering behind the old, defensive ways of doing things may not be the best way forward.

Those businesses that fare best in 2013 will probably be those that find new and better ways to do things: that could mean finding new markets abroad, moving to new, flexible labour or hiring practices, or rethinking what is the best use of management time. Don’t think that just because a strategy worked in previous years, it’s the right way to run your business now.