Small Businesses SME's need to survive COVID19 pandemic & must build trauma management capabilities to be able to respond to a crisis with their inherent strength, resolve and resilience.
Covid-19 has significantly increased the odds of around 19-24 per cent of the 75 million SMEs in India being at the risk of insolvency or extinction. Around one-fourth or one-fifth of the balance sheet of the loans to SMEs are at the risk of being NPAs. Around 10-25 million jobs in SMEs are expected to be lost over a period of next 12-18 months, particularly the temporary staff in manufacturing companies. Indian economy is expected to report the GDP growth close to 1-2 per cent by the end of 2020, with small businesses and poor people being the worst causalities.
“Small Businesses needs to fight COVID19 pandemic & bounce back with 10 times more energy to raise our economy.”
The COVID-19 pandemic developed as a health crisis, moved on to becoming an economic concern, and now has transformed into a recession hard to stave off. The current climate has particularly stopped the music for theVC ecosystem, startups and small and medium enterprises (SMEs). Indeed, small to medium size businesses are at the front line of the battle, with the repercussions being especially severe for them, due to higher levels of vulnerability and limited resources.
Here are the 5 key factors every SME/ MSME needs to keep in mind after resuming business post the lockdown
This is the first concern for every business, be it small or big. In the case of SME’s and MSME’s, it is important to first make a final assessment of the current financial situation of the company. One may sit down with the CA and finance team to understand deficits, future inflow of funds, potential expense and liabilities etc., and draw up a fresh 3/6-month plan of action. At this point, getting reliable and accurate information about government relief packages, financial support initiatives and support extended from trade bodies like CII etc., and getting a clear picture from investors is vital before planning and executing a financial strategy.
Based on the financial assessment, risks, and revival strategy, it is important to re-evaluate the business plan form the pre-COVID times. Assessing the current situation, one needs to redefine business goals and plan a more realistic, and well-rounded growth plan that can be immediately executed. At this point, it is vital to have all stakeholders – senior employees and department heads as well as external investors, to be involved and come to a mutually agreed set of new targets. This may be a 3 month/ 6month or an annual growth plan, depending on the company’s current financial situation and may include deferring funding rounds or accelerating PE funding or even forming new collaborations/ business partnerships, which can help achieve the renewed business goals.
The global implications of the outbreak have brought both people and businesses closer than ever, making it the best time to take a step away from traditional funding, and move towards partnerships and alliances. The market demand patterns have been disturbed, with extreme plunges in some classes and an upward surge in others. Thus, SMEs need to form complementary alliances by leveraging on each other’s resources and capabilities, and transform into a stronger entity that can cater to the current market demands with agility. This will assist with their commercial survival while using minimal funds, as well as helps serve their communities and create positive PR
If one thing that the COVID-19 has taught businesses, it is the power of digital engagement! Even as an SME or and MSMSE, it helps to be present and active on the digital media, through the website, blogs, and social media. Not only does it help create a positive brand recall but also helps generate business through channels, especially for brands that are into retail, who have benefited impressively through online sales. A part from online sales, a consistent and positive social media presence can prove a boon for consumer and stakeholder engagement, not only in times of social distancing and lockdown but long after that as well. Additionally, a digitally enabled internal ecosystem also needs to be in place that can accommodate remote working or work from home scenarios, without compromising data security or productivity of employees.
Yes, you are absolutely right having a business coach at this point of time can help you to grow faster and create your niche in the market since the situation after COVID19 slowdown will be worse for the market and whole economy. A business coach can help you to get the best out of yourself during such tough times. As a business owner you may like to diversify your business or change the current set of operations as business dynamics are changing rapidly, it is the time when you can invest in business coaches to stay ahead from your competition by making your Niche market segmentation.
Taking lessons from the recent crisis, it is vital to chalk up an effective crisis management plan that will take into consideration both immediate and long term impact. Hence, from creating a financial back-up and reservoir of funding, to have a robust digital and technology-enabled ecosystem that can ensure minimum damage to productivity needs to be in place. While most businesses are prepared for an internal crisis like fire, theft etc., albeit at a preliminary level with insurance policies, one also needs to have a solid bounce-back/ business revival plan in place, keeping in mind average days of work lost, impact on revenue, liabilities and outstanding etc.
The coronavirus outbreak is a shock to the entire system of society. And typically, these enterprises are very fragile. They don't have the resilience of a larger company, and are therefore greatest at risk. So, if this thing drags on for a long time, and if we don't do enough to throw a lifeline to them, keep them alive, and then help them adapt, more than half of them will die and won't recover. This could be a catastrophe for us.
“Small Businesses needs to find the opportunity in this situation rather than becoming a victim.”
Some of above measures might be viewed as additional costs/expense at a time of an already tight financial situation, especially for SME’s and MSME’s who are cash strapped, the measures mentioned above are vital points for survival and an effective bounce back for businesses, keeping long term growth and planning in mind.