I have recently conducted research on this topic with fellow RMIT lecturer Dr Vu Thi Kim Oanh. Our research demonstrates that businesses need to be much more entrepreneurial and innovative, and solve problems with what they have at hand.
To achieve that, there are some possible paths that businesses might follow:
In our study, many firms involved in the hospitality, tourism, or wine industry resorted to diversifying their business scope. For instance, deliveries or online sales were predominant ways of increasing revenue streams to maintain vital cash-flow. In Vietnam’s coffee scene, initiatives have been implemented, including offering online coffee tours and coffee-making classes.
Learning different online platforms might become more pronounced in many firms’ future, first, because of the spread and adoption of smart phone technologies among their consumers, and second, because of potential distancing and other restrictions due to the current or future health crises.
Related to diversification, at least one-fourth of the surveyed businesses considered changing their business model through the above-described initiatives, while the same number vied to continue with their current model if proven adaptive (relying on traditional client groups and increasing online presence).
The bottom line is: businesses will need to increase their level of engagement with customers. This effort could enable them to gather key information regarding emerging demands for products and services, and with it, uncover new business opportunities.
Despite the serious predicament firms are facing, the current crisis should be utilised to continue gathering information, and increasing knowledge and business acumen.
For example, learning online tools, such as delivery applications, point-of-sale, developing a webpage could help firms to expand their reach. Firms can also expand their ‘online life’ through staff’s social media engagement.
I believe this is an area where educational institutions and government could engage much more strongly, including through the offer and availability of upskilling workshops (for example, English language or spreadsheet upskilling).
3. Reactive measures
Overall, in the absence of vital financial and other resources, numerous MSMEs will be compelled to apply a ‘scaffolding approach’ to their problem solving. Just like buildings are constructed one level at a time, businesses should focus on surviving day after day and building on strength after strength.
For example, many of the surveyed firms relied on their own savings to solve immediate cash-flow-related challenges. Others considered implementing in-house training using their own human resources who were themselves trained as facilitators and coaches.
Complementary government support
Even though there is only so much that governments can do to support financially or otherwise, it cannot be denied that policies are essential to avoid the financial haemorrhage caused by COVID-19. Such policies could be in the form of tax rebates or small subsidies that, especially for the smallest businesses, could go a long way.
Another problem identified during our study was the mental wellbeing of entrepreneurs, employees, and future generations of workers. Many individuals are suffering emotionally and psychologically due to having lost their income or being unable to find jobs. This challenge could be partly addressed by governments, providing counselling, or also by educational institutions, providing business mentoring to small entrepreneurs. Clearly, there are limitations to these types of support. However, a small gesture of support could go a long way.
Story: Dr Abel Alonso, Senior Program Manager for International Business, RMIT University
A version of this article was first published in Vietnam Investment Review.