What Are The Biggest Opportunities For SMEs In 2024?

What Are The Biggest Opportunities For SMEs In 2024?

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2023 has certainly been a tough year for Malaysian business. With the weakening of the ringgit, global economic headwinds, new taxes, wage policies, subsidies removal and more, the year ahead looks like it will be a bumpy one. It is not all bad news however. A new year also brings new possibilities and opportunities. 

Employment Hero released their latest SME Sentiment Report recently, where they surveyed hundreds of small and medium enterprises (SMEs) across Malaysia, in order to gather valuable insight to better understand the current business sentiment among Malaysian businesses.

Here are some of the key highlights that were revealed.

Highlights of the SME Sentiment Report for Malaysian business owners

1. The majority are confident about Malaysia’s growth prospects

Despite the many challenges and uncertainties that Malaysia has faced in 2023 and will soon face in 2024, it might come as a surprise that most are rather optimistic about growth prospects for the coming year. According to the report, up to 79% of business leaders are confident about the growth prospects of their company. 

However, it was also noted that micro and small companies were less confident than medium-sized ones. Regardless, there is a sense of cautious optimism as up to 50% of business leaders predict that Malaysia’s economy will perform well in the next 12 months.

2. Challenges of micro and small vs medium businesses

SMEs are a core part of Malaysia’s economy. However, they appear to be saddled with difficult challenges. These include limited resources, stringent regulatory environments and the constant struggle for visibility.

According to the report, micro and small companies were far more likely to rate their company’s performance as poor or average (59%) last year compared to medium-sized companies (74%). The main reason for this is rising costs and inflation, cashflow, as well as lower revenues and customers. On the other hand, the biggest challenges that medium-sized companies are facing involve upskilling of talent and a shortage of manpower.

3. Biggest opportunities for SMEs in the next 12 months

According to the report, digital transformation, AI and automation are the number one priority for most organisations. The Malaysian government seems to believe so as well as they have kicked-off initiatives such as MyDIGITAL to help transform Malaysia into a high-income nation that is focused on digitalisation. Other initiatives to help SMEs accelerate their digitalisation journey include the SME Digital Accelerator Programme as well as the 100 Go Digital Coaching Programme.

The Malaysia External Trade Development Corporation (MATRADE) also continues to work towards making SME access to global trade markets easier. SMEs can register online for free with MATRADE in order to gain assistance to bring their goods and services to overseas markets.

4. Biggest challenges SMEs may face in next 12 months

While there are big opportunities for SMEs to improve and grow themselves in 2024, there are many challenges ahead. Based on the results from the report, business leaders believe that rising costs and inflation (47%), cashflow (27%), low revenues and customers, as well as interest rate hikes (both 23%), are the biggest challenges of the coming year.

Fortunately, it is possible to mitigate the damage that these issues may bring. For the most part, SMEs are using cost control measures (38%), expanding their product or service line (36%), and expanding to other markets (34%) in an effort to counteract these challenges. The adoption of new technology such as HR and payroll, project management, and accounting software can also help to streamline business processes and help organisations save on certain costs.

“One of the biggest challenges for Muji is the heightened competition for top talent. As the job market evolves and remote work becomes more prevalent, attracting and retaining skilled employees becomes increasingly competitive. 

Offering competitive salary packages, bonuses, and comprehensive benefits is also crucial in retaining top talent. We will need to regularly review and adjust our compensation structures to align with industry standards.” – Mei Ling, Human Resource & Administration Manager at Muji (Malaysia) Sdn. Bhd.

5. Government grants and SME support uptake

Another area where micro and small businesses may be missing out are in leveraging on government grants and financing programmes. The report revealed that micro and small businesses were more likely to have not applied or not be aware of available grants compared to medium-sized businesses.. The Bankable Investment Gameplan (BIG) Programme, Cradle Grant and GrowBiz Programme were found to be the top 3 grants that  most SMEs aren’t aware of to help grow their business.

How businesses can leverage on Employment Hero HR solutions

With 2024 looking like it will be a rocky road for SMEs, you will need every advantage you can get to ensure that your business grows. This is where Employment Hero can help. 

Employment Hero offers even micro and small businesses access to a comprehensive range of tools that can help you streamline HR and payroll processes by leveraging automation, relieving your business of the burden of high manpower costs.

Employment Hero also offers more benefits to employers and business owners. Checkout the Malaysia SME BizHub, a resource centre designed to provide SMEs with clear and concise information on employment practices and legislation, all in one place. For those looking to get ahead of the competition by leveraging on industry insights, read up on the Employment Hero 2024 SME Sentiment Report to check out where the SME scene is headed in the coming year. You can download the report right here for free.

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