What digital transformation looks like for small businesses
SMALL businesses are critical to the Southeast Asian economy. They provide employment to a majority of the residents and are part and parcel of the cityscape that defines the region.
However, even though everyday living tends to revolve around the restaurants, florists, and bakeries that residents have come to rely on, these small businesses are just as vulnerable to digital disruption as are giants in the financial services and manufacturing industries.
In order to survive and stay profitable, these small businesses need to go digital. Luckily, that’s not as challenging a task as most would think.
Given the scale of these businesses, adopting new-age digital solutions is easy and implementation presumably doesn’t require too much preparation or testing.
Going cashless is the first step for small businesses
One of the first things that most small businesses in Southeast Asia need to do in order to go digital is make it possible for customers to pay via credit and debit cards and mobile wallets.
This is a critical first step as the younger generation is more likely to steer clear of small businesses that don’t accept some form of digital payment.
Speaking of going cashless, the benefits in the small businesses space definitely outweigh the risks, costs, and challenges.
The wireless point of sale (POS) device that makes accepting new-age payments is cheaper and easier to procure and more often than not, is something small businesses can get their hands on when they sign up with a local or regional payments company or bank.
Book-keeping should be digital
Once small businesses start accepting digital payments, the next thing they need to do is migrate their books to some sort of digital solution.
There are plenty of software packages on the market, and a quick search on the internet can help businesses determine which one is right for them.
Usually, in today’s day and age, businesses tend to choose something that’s in the cloud and offered as a SaaS (software as a service) offering — making life easier for all everyone — including the accountants who audit the books and file tax returns on behalf of the company.
This might not seem critical to many, but the ease of use is worth the trouble since a digital book-keeping solution can not only connect with the bank to make record-keeping seamless when accepting digital payments but also make analyzing expenses quite easy.
Further, a digital accounting software can also help the business generate insights about their business that weren’t previously available — for example — which months do customers visit more frequently, which months to transaction values increase without an increase in the number of customers the store receives, and more.
Once a small business owner sees the value such a solution can bring, they’re more willing to go deeper and explore more modules (including those involving artificial intelligence) that can help the business understand its customers.
Using a platform to join the digital economy
Just because a small business is operated independently — and offline — doesn’t mean that’s the way it should remain.
Today, platforms such as Grab, Go-Jek, Go-Get, and Lazada make it easy for small businesses to take their offerings online and sell to a wider group of users who they wouldn’t otherwise be able to attract.
According to a recent Google report, Southeast Asia’s digital economy is expected to reach US$240 billion, clearly indicating that there’s room for all of these entities to go digital, gain momentum, and scale faster than their brick and mortar offering makes possible.
Once small businesses reach a point where they’re cashless, are collecting customer and transaction data via a digital solution and have joined a platform to contribute to the digital economy, their digital transformation efforts are near complete — at least till they scale up to become a mid-market entity.
Once they get there, digital transformation is a whole new ballgame; but they’ll have the resources to really explore what is the best way to get to the other side of the bridge when they come to it.