Korea Sees Unprecedented Wave of Small Business Closures

 1. In an online community of more than 1.8 million small business owners, a user in Jeonju, North Jeolla Province, wrote on Friday: “Am I the only one whose business is falling apart?”

2. “The restaurant near my shop went out of business and has since been replaced by a rental space, and the walnut pastry store next to it also shut down,” the user continued. “This feels serious and unsettling.”

3. The post was soon flooded with sympathetic replies, including: “Business is so dead I can’t even think straight” and “I opened my chicken shop at 4 p.m. and only made 120,000 ($87) won by 8 p.m.”

4. These accounts from small business owners offer a vivid snapshot of the hardships many are enduring — struggles that are reflected in the data.

Digital resilience as a practical blueprint for SMEs in Malaysia

1. Over the past two years, Malaysia has counted roughly one million micro, small and medium enterprises (MSMEs). Together, they generate close to two-fifths of national GDP and supply nearly half of all jobs. According to the SME Association of Malaysia, as many as 90-95 per cent of firms with more than ten employees have already moved key operations online. Whether those investments translate into lasting advantage now hinges on how confidently businesses turn digital promise into measurable performance.

2. Government policy is firmly behind them. National programmes such as the Malaysia Digital Economy Blueprint and the forthcoming ASEAN Digital Economy Framework Agreement aim to deepen connectivity, broaden market access and raise the region's collective digital skill base. The opportunity for growing Malaysian firms is therefore to convert high-level ambition into everyday gains that lift productivity at scale.

mckinsey on MSME - Part 1 - How MSMEs fuel economy-wide production and jobs

1. MSMEs create enormous value for economies around the world. They account for roughly half of global GDP. That share varies significantly among economies. In Portugal, Israel, Indonesia, Italy, and Kenya (ordered by decreasing share of value added), the share is larger than 60 percent. In the United States, Nigeria, and India, it is less than 40 percent.

2. They are also significant employers, accounting for roughly 40 percent of all employment and 70 percent of employment in the business sector, which we define as excluding the farm, government, and finance sectors. That share is as high as 96 percent in Kenya, where MSMEs account for half of all employment.

Helping small businesses thrive in the digital economy

1. Leaders across the public and private sectors have long recognized the importance of supporting small businesses. Across OECD countries, small- and medium-sized businesses (SMEs) represent around 99% of all firms, are a main source of employment and generate 50% to 60% of value added on average.

2. But it isn’t just about economies, it is about stronger communities and greater social inclusion. And by helping small businesses accelerate their digital journeys, it has a multiplier effect in building much wider access to the digital economy.

Small businesses are key to a more sustainable and inclusive world. Here's why

1. Small and medium-sized enterprises (SMEs) are a force to be reckoned with. They make up 90% of businesses globally, create two out of every three jobs worldwide, support the livelihoods of over two billion people, and are indispensable to the smooth functioning of global supply chains.

2. Despite their enormous impact, many are not yet fully engaged on environmental, social, and governance (ESG) issues. It is easy to understand why. The EU, for example, classifies small businesses as those with 11-49 people and revenues below €10 million a year. A medium-sized business has 50-249 people and annual revenues of up to €50 million.

3. Owners and managers in such firms have a lot on their plate, and fewer resources than their larger rivals. They may feel they lack the time, knowledge, capacity or funds to tackle problems like the climate crisis or discrimination against minorities. Others simply do not know where to start. But we do need SMEs to work for a better world – for their own sake and for everyone.

How to do Cyber Security Awareness Training for Small Business

1. Imagine if you couldn’t access your computer systems or data. It could lead to an existential threat. Unfortunately, many companies have already gone bankrupt after cyber attacks (e.g. Bicycle manufacturer Prophete, KNP Logistics, Financial services company Travelex, Cloud Nordic, window manufacturer Swiss Windows).

2. That’s why prevention is necessary. One key element of required measures: Cybersecurity awareness training. It can help your small business withstand cyber risks.

3. As a small business, you interact daily with your team, customers, potential customers, vendors, government agencies, and many other stakeholders. Organizations don’t operate in bubbles.

4. To build and maintain these relationships, digital communication channels are essential. We can’t avoid using the internet or email; it’s a business necessity to stay connected and reachable.

5. While these tools are useful, they leave your business exposed and vulnerable. That’s because malicious actors also use these channels for their fraud attempts.

6. As long as humans use computers and apps, we are targets because every good hacker knows it’s easier to hack humans than systems. This fact is underscored by the FBI Internet Crime Report, which states that fraud attempts via email (phishing) are the top crime type.

7. In other words, cyber risks are unavoidable. The good news is that it’s a risk you can do something about.

America’s industrial transformation needs a Marshall Plan for small businesses and their workers

1. There’s broad agreement on at least one thing about this year’s election outcome: Americans want more good jobs and an affordable cost of living, especially for working families. A question now emerges: Can our nation’s leaders leverage a budding industrial renaissance that hinges, far more than we recognize, on the capabilities of America’s small businesses and their workers? 

How private and SME businesses can thrive under the Malaysia MADANI roadmap

1. In 22 September 2023, Prime Minister Datuk Seri Anwar Ibrahim made his debut address at the United Nations General Assembly (UNGA) in New York and took Malaysia Madani to the world stage. The Prime Minister’s speech on the country’s roadmap under the Malaysia Madani framework was well received and helped raise the country’s profile on the international stage.

2. According to the Chief Economists Outlook, 60% of economists expect the global economy to weaken in the coming year. The Madani Economy Framework is timely in providing a roadmap to boost Malaysia’s economy amid slowing global momentum and continuing economic uncertainty. The launch of the New Industrial Master Plan (NIMP) 2030, which serves as a roadmap for the country's economic development over the next ten years, and the National Energy Transition Roadmap, which aims to accelerate the country’s green and sustainable growth agenda, if well implemented, will drive domestic growth and spur the growth of small and medium-sized enterprises (SMEs).

3. The NIMP 2030 is instrumental in supporting the Madani Economy framework. It emphasises the role of SMEs as key contributors to economic growth, targeting to double SME exports to 25% in seven years. SMEs make up roughly 97% of the Malaysian economy, accounting for 48% of employment and contributing 38% of total Gross Domestic Product (GDP). The Government recognises that support is needed in order for SMEs to achieve the goals of the NIMP 2030. In Budget 2023, the Government focused on initiatives to support SMEs, from financing to funding, tax cuts and even a Digitalisation Grant Scheme.

Five Tips For Maximizing Productivity As A Small-Business Owner

1. Small-business ownership can be a challenging and rewarding journey. From keeping track of finances and operations to overseeing employees and making critical decisions, the demands on a small-business owner’s time and energy are never-ending, and it’s no wonder that many small-business owners struggle to stay productive and efficient. But in a fast-paced and competitive business world, maximizing productivity is essential to success.

2. Whether you are looking to grow your business, increase your bottom line or simply reduce stress and improve your work-life balance, productivity is key. In the 20-plus years that I’ve been helping small-business owners and mentoring individuals, I’ve discovered that having the ability to systematize and create processes around productivity is so important. Before I implemented these simple steps, my company ran in a constant state of chaos.

3. From tried-and-true time management methods to cutting-edge technology, there are many ways to improve your productivity and achieve your goals.

Why closing the small business productivity gap can create enormous value for economies

1. Micro, small and medium-size enterprises (MSMEs) play an underappreciated and outsized role in the global economy. They account for 90% of all businesses, half the value added, and more than two-thirds of business employment. In Indonesia, for example, they account for almost 90% of employment and two-thirds of value added. Small businesses also inject dynamism into economies.

2. Many large companies of today were MSMEs not long ago. About one in five of today’s very large companies – defined as having a market capitalization of more than $10 billion in the United States and equivalent values in other economies – were MSMEs at some point after 2000 and have since powered their way to large company status.

3. Yet small businesses struggle with productivity in comparison with large companies. Raising MSME productivity has long been an aim of governments who recognize their central role in economic growth and employment.

3 common barriers to AI adoption and how to overcome them

 1. There’s a growing consensus about the need for businesses to embrace AI. McKinsey estimated that generative AI could add between $2.6 to $4.4 trillion in value annually, and Deloitte’s “State of AI in the Enterprise” report found that 94% of surveyed executives “agree that AI will transform their industry over the next five years.” The technology is here, it’s powerful, and innovators are finding new use cases for it every day. 

2. But despite its strategic importance, many companies are struggling to make progress on their AI agendas. Indeed, in that same report, Deloitte estimated that 74% of companies weren’t capturing sufficient value from their AI initiatives.

3. Nevertheless, companies sitting on the sidelines can’t afford to wait any longer. As reported by Bain & Company, a “larger wedge” is being driven “between those organizations that have a plan [for AI] and those that don’t—amplifying advantage and placing early adopters into stronger positions.”

4. So, what’s holding companies back from capturing AI’s value? While there are plenty of barriers to AI adoption, from our experience, three tend to be the most common causes for concern. Here’s what those barriers entail, and why leveraging automation as the ‘muscle’ that allows you to operationalize the ‘brain’ of AI is the most effective approach to realize value from the technology.

Future of SME Business: Smart Technology and Industry 4.0

1. It may seem at first that industry 4.0 is something that only benefits enterprises and large companies that have facilities scattered throughout geographic regions, dozens of departments, and generally large and complex operations. However, this is not the case.

2. Even tiny businesses can benefit from what industry 4.0 has to offer. By using the cloud to process and store information more efficiently or by using various other new technologies to improve the way they design, build and deliver their products and services, they boost their efficiency and become more relevant.

3. Just like with previous industrial revolutions, it may take some time before the benefits reach every corner of the business sphere. But even in the present moment, small businesses are experiencing the benefits of industry 4.0.

4. They can now compete with large enterprises in ways that would have never been thought possible a few decades ago.

Encouraging Local Businesses to Embrace Technology

1. Encouraging local businesses to adopt your technology can be a challenging task. However, by understanding their pain points, offering personalized support, and highlighting the benefits of your solution, you can increase the chances of successful adoption. 

2. Start by identifying the specific challenges faced by local businesses in your industry and tailor your approach to address their unique needs. Provide personalized support through various channels, such as phone, email, or in-person meetings, to help them overcome any obstacles they may face. 

3. Additionally, emphasize the benefits of your technology, such as increased efficiency, cost savings, and improved customer relationships, to demonstrate its value to their business.

How can Small Businesses Benefit from Industry 4.0

1. You might think that Industry 4.0 only applies to large-scale industries, but many benefits also apply to SMEs, including increased efficiency and productivity, giving you greater business flexibility. This leads to enhanced profitability and better customer satisfaction. 

2. Industry 4.0 technologies provide you with more and better information to improve decision-making in your business. You'll find out how to optimise your organisational processes so that you'll save time and resources. In doing so, you'll deliver more services or products quickly and cost-effectively. It's a win-win situation.

A New Generation of Robots Can Help Small Manufacturers

1. Automation is fundamentally changing industries and workplaces. The International Federation of Robotics predicts that in a decade, more than half of production operators will be working with robots. Big companies? They’re already there, harnessing advanced technology and optimizing their output. Small and medium-sized enterprises (SMEs)? Not so much.

2. Let’s take a moment to think about why this matters. Representing a whopping 99% of businesses, they’re the cogs and gears of U.S. and European economies — the backbone of job creation, supply chains, economic growth, and innovation. Overall, their role in building national economic resilience cannot be underestimated.

3. The fact that SMEs have typically been slow to harness the benefits of automation matters because a slow pace of adoption is often what prevents businesses from achieving the resilience and efficiency needed to remain competitive. When SMEs lag behind, we all feel it. Manufacturing continues to decline in key markets such as the U.S. and the UK, with both reporting ongoing manufacturing downturns since the start of the Covid-19 pandemic.

Providing the right levels of support to small and medium-size enterprises

 1. Government agencies and NGOs with a good understanding of SME subsegments can better tailor their programs to meet SMEs’ unmet needs. We have researched SME support programs across the world and categorized them into a matrix of ten approaches. Some are tailored to a single subsegment while others address one of the six unmet needs for all or most subsegments.

2. For all these categories, the specifics of how they are implemented matter; therefore it is difficult to draw universal best practices from them. However, it can be instructive to consider the following ways these programs are helping to close the productivity gap for SMEs.

Strategies for SME Growth

1. Small and medium-sized enterprises (SMEs) are the growth engine of many economies, but it can be a challenge for them to expand internationally and integrate into global value chains.

2. SMEs account for around 99% of companies and 70% of all jobs in OECD countries, and they contribute more than 50% of gross domestic product in high-income countries worldwide, according to a 2022 McKinsey report titled Beyond financials: Helping small and medium-sized enterprises thrive.

3. UN research from 2022 on the effect of the fourth industrial revolution on SMEs finds that major barriers to international expansion include an inability to benefit from economies of scale as easily, greater difficulty in accessing financial resources, and a higher likelihood of being burdened by bureaucracy and poor infrastructure.

4. The pandemic hit SMEs hard, setting back export growth. In mid-2020, McKinsey analysis found that 45% of small businesses were facing supply chain disruptions, which hindered their ability to export products and integrate into global value chains.

5. Advanced technologies such as artificial intelligence, data analytics, blockchain and automation are crucial in helping SMEs grow, ultimately claiming space in global value chains and further bolstering the economies of their host countries. However, the adoption of such advanced technologies often requires substantial financial investment and expertise, posing a challenge for SMEs with limited resources. Recognising this barrier, government support becomes paramount in facilitating SMEs’ access to these transformative technologies. Through funding initiatives, training programmes and strategic partnerships, governments can empower SMEs to harness the benefits of cutting-edge tools, fostering innovation and propelling international expansion.

6. Using South Korea as a case study, the UN research shows that compared with large companies, the South Korean SMEs that adopted Industry 4.0 technologies such as digital tools were more likely to invest and expand overseas.

Penang Automation Cluster building local supply chain and elevate SME capabilities

1. Building automated equipment systems is akin to the assembly and production of vehicles. Visitors to automotive manufacturing plants would have observed that they usually operate in industrial clusters — the better to attract customers, precision engineering firms and material suppliers. Likewise for technology equipment manufacturers and automation houses, as they would require high-precision metal fabrication components, modules and systems to build their products.

2. More than four years ago, three tech-savvy manufacturers — ViTrox Corp Bhd, Pentamaster Corp Bhd and Walta Engineering Sdn Bhd — conceived the idea to build a world-class fabrication cluster at Batu Kawan Industrial Park in Penang that would serve as a one-stop metal component supply chain hub.

3. The result was Penang Automation Cluster Sdn Bhd (PAC), formed in January 2017 with the mission of enhancing the local ecosystem and uplifting the capabilities of local small and medium enterprises (SMEs).