The current COVID outbreak has left a lasting impact on the economy. Supply chains all over the world have been disrupted, imports and exports are stalled, and unemployment is surging. Across the world as well as India, Micro, Small and Medium Enterprises (MSME) have been impacted the most. The obscenely huge number of malnourished and unemployed migrant workers across the country are proof of how MSMEs have seen the worst casualty of Covid-19.
In September 2019 the Department of MSME published a report which stated that there were 6.34 crore MSMEs in the country (urban and rural India). The MSMEs employed over 11 crore people of which 55 per cent were working in urban MSMEs.
Further, the report says that seven Indian states account for 50 per cent of all MSMEs. These are Uttar Pradesh (14 per cent), West Bengal (14 per cent), Tamil Nadu (8 per cent), Maharashtra (8 per cent), Karnataka (6 per cent), Bihar (5 per cent) and Andhra Pradesh (5 per cent). This gives an idea of why and where the pain of the MSME crisis is to be felt the most.
The complete lockdown in the two months of last year raised some pertinent questions because many of the MSME firms did not have much resources to sustain. Two primary issues that created the cash crunch faced by MSMEs during the lockdown were notably the lack of formal funding from the banking system and the delay in inward payments.
The government, in order to help the small businesses tide over the COVID-19 crisis, announced a sum of Rs 3 lakh crore (collateral-free loan) for the MSMEs as an Emergency Credit Line Guarantee Scheme under the Atmanirbhar Bharat initiative.
On June 22, 2021, an announcement was made by Finance Minister Nirmala Sitharaman that the total amount sanctioned under the Emergency Credit Line Guarantee Scheme (ECLGS) by the public sector and private banks stood at Rs 75,426.39 crore, out of which Rs 32,894.86 crore had been disbursed.
However, the government and its agencies are doing their bit to bail the MSMEs through this tough phase. Additionally, the direct stakeholders would also have a major role to play in this endeavour. The manner in which our business leaders manage this crisis is set to make all the difference in the long run.
Despite the fact that choices in hand seem limited, there are still potential strategies which can be applied.
The Reserve Bank of India has already announced the monetary policies and fundings to deal with the crisis while the Minister of Micro, Small and Medium Enterprises Nitin Gadkari and the 151, have been given the sole responsibility of the sector.
Gathering authentic information about government financial initiatives and a clear picture from investors are essential before one can plan and execute a financial strategy. One must take into consideration all the assessment and support from the ecosystem before any plan is executed. Moreover, the financial planning may also require some firm decisions on pay cuts, investment pullbacks or pausing new recruitments.
Being an MSME, the power of digital engagement will help with your presence online. In this digital age, one must be regularly active via blogs, website, and social media. Such activities do not only create a concrete brand identity but also help generate business through social channels.
A consistent and positive social media presence can prove a blessing for consumer and stakeholder engagement, too.
Additionally, in view of the experience that we had after the onset of the pandemic, a digital ecosystem with a company can support remote or work from home scenarios for better employee productivity. While designing it, data security needs to be accorded an important consideration, too.
While analysing the current situation, one needs to redefine business goals and chalk out a practical growth plan keeping in mind all the risks involved. A plan that can be executed at short notice.
An entrepreneur along with his stakeholders and senior employees, need to come to some mutually agreed new targets. As a part of the annual growth plan, one needs to rethink forming new collaborations or partnerships, which can help obtain the redefined business goals.
Most importantly, with kaleidoscopic transformation and development happening all around, business owners must also spend time to learn new skills. Make new strategies, think about new products, find trends in online data or work on new business models. Whatever it may be, one must keep himself updated and productive.
According to experts, collective wisdom is always useful. With a surfeit of webinars and training available online you can easily make the most out of them. Moreover, many domains are extending free support for online discussions/ opinions, and you must take advantage of these as well.
Taking hard-hitting lessons from the ongoing pandemic, it is imperative to formulate an effective crisis management and recovery plan for both immediate and long-term impact: starting from creating a financial back-up to having an effective digital ecosystem that can ensure minimum damage to the productivity of the company.
All said and done, deliberate and meticulous planning and action have always proven to be the keys towards developing a stronger business that is even capable of withstanding the test of time.