Business growth requires more than survival

KUCHING: Microbusinesses can survive years of setbacks without necessarily improving their finances or growing stronger.

Universiti Malaya’s Ungku Aziz Centre for Development Studies (UAC) Research Fellow Post Doctorate Nik Zirwatul Fatihah (pic) said experience could teach entrepreneurs how to manage difficult situations, although some practices developed during those periods might no longer suit their changing business circumstances.

She said a microbusiness could appear busy, with orders coming in, parcels waiting to be shipped and customers participating in live-selling sessions, yet still leave its owner worried about money.

“By the end of the month, suppliers need to be paid, packaging reordered and new stock purchased, while advertising expenses and discounted sales have already taken up part of the revenue.

“Money can constantly move in and out, with little actually remaining in the business,” she said.

Citing figures from the Department of Statistics Malaysia (DOSM), she said micro, small and medium enterprises (MSMEs) contributed 39.7 per cent of Malaysia’s gross domestic product (GDP) in 2025.

Behind that national contribution, she said, were individual business owners making daily financial decisions, including how much stock to purchase, whether to increase advertising expenditure and whether to retain available cash for the following month.

“A wrong decision can remain visible for months as boxes that still need to be sold,” she said.

She said years of operating a business also allowed entrepreneurs to develop instincts that helped them respond to difficult conditions.

“When sales weakened, experienced owners often knew which expenses to reduce first, how to clear slow-moving inventory and which alternative suppliers to approach when existing arrangements became unreliable.”

She described the ability to adapt, reorganise limited resources and continue operating during uncertain conditions as closely related to what she termed Entrepreneurial Survival Capability (ESC).

“Such capability does not develop overnight. It accumulates through weak sales months, failed products, supplier problems, rising costs and the many decisions that have to be made when circumstances become difficult,” she said.

However, Nik Zirwatul said entrepreneurs could become accustomed to resolving immediate problems, only to encounter another set of difficulties the following month.

“Year after year, the business remains open. Yet the business may still be standing in almost the same place,” she said.

She said one concern was that strategies adopted in response to previous difficulties could continue influencing business practices even when circumstances had changed.

She gave the example of an entrepreneur who suffered a significant loss after ordering excessive stock and subsequently became extremely cautious about inventory.

“The owner might respond by purchasing smaller quantities and choosing safer colours, an approach that could initially protect cash flow.”

However, she said stronger demand several years later could result in popular products repeatedly running out of stock because the owner remained reluctant to increase inventory.

She said a similar situation could arise when a disappointing experience with an employee prompted an entrepreneur to handle every operational responsibility personally.

“Although the decision might initially save money, the owner could still be photographing products, answering messages, conducting live-selling sessions, checking payments and packing parcels alone late at night several years later.”

She stressed that such decisions were not necessarily mistakes, as they might have been exactly what the business needed at the time.

“The difficulty arises when a temporary survival response becomes a permanent way of operating,” she said.

According to Nik Zirwatul, business experience needed to do more than remind entrepreneurs of previous mistakes, with lessons from the past helping to improve future decisions.

Beyond reconsidering established business practices, she said entrepreneurs also needed to recognise the difference between financial recovery and expansion.

“When sales began stabilising after a difficult period, owners might be tempted to purchase more inventory, introduce new products, increase advertising expenditure or enter additional sales channels.”

However, she cautioned that a business emerging from financial difficulties might first need to rebuild its financial position before pursuing further growth.

She said recovery could involve replacing personal savings used to sustain operations, clearing old inventory, rebuilding working capital or establishing sufficient financial reserves to prevent one slow month from becoming an emergency.

“These achievements are not particularly exciting to display on social media. Yet they make the business less fragile,” she said.

She said entrepreneurs rebuilding their businesses should not automatically interpret slower expansion as evidence that they were falling behind, as restoring what had been lost could itself represent necessary progress.

She also highlighted the increasing workload faced by microbusiness owners who continued handling operational responsibilities themselves.

She pointed to a familiar attitude among microbusiness owners, expressed through the phrase ‘Better I do it myself’.

“At the beginning of a business, handling most operational tasks personally could be a practical way to minimise expenses.

“However, as orders increased from five to 20 and eventually 50, the entrepreneur’s responsibilities and working hours could increase alongside sales.

“This raised the question of whether the business had actually grown or whether its owner had simply become busier.”

Nik Zirwatul said growth for a microbusiness did not necessarily involve opening 10 outlets.

“Instead, it could involve improving inventory management, attracting more repeat customers, obtaining additional assistance during busy periods or establishing an operation capable of continuing when the owner took a day off.

“Sometimes growth means making the business stronger, not simply bigger. This matters because remaining small is not the same as remaining fragile,” she said.

For entrepreneurs who had spent eight or 10 years navigating business challenges, she acknowledged that the ability to remain operational reflected valuable experience.

Behind those years, she said, could be unsold stock, difficult customers, rising costs, supplier problems and numerous financial decisions whose consequences only became clear after money had been spent.

“But we should be careful not to romanticize permanent struggle as entrepreneurial success,” she said.

She said working longer hours every year merely to maintain approximately the same business position did not necessarily indicate that the operation was becoming stronger.

“Because survival keeps the business alive. Recovery restores its strength. And growth creates the space to build what comes next,” she said.