With a global crisis after COVID-19, SMEs (small and medium enterprises) find themselves in a shaky situation. We can assess the problem by loo
With a global crisis after COVID-19, SMEs (small and medium enterprises) find themselves in a shaky situation. We can assess the problem by looking at some data:
- A profound disruption in the global supply chain has been revealed by the international trade center’s 2020 SME competitiveness outlook.
- The three major supply chain hubs – China, the US, and the EU faced lockdown due to which there has been a global loss of export of the order of 120 billion USD
- 55% of SMEs have been adversely affected by this situation.
But things are looking up now with India’s government coming up with a surfeit of bailout packages in the form of amended fiscal policies, rate cuts, loans, and waivers to help the ailing industries. SMEs have a chance to utilize this to get the finances for gaining capital and resources to move their business online.
Here is a slew of changes that have happened in the past few months:
- We know that there is an emotional backlash against China, which could cascade into an economic backlash. Countries all over the world now want to diversify their supply chain plans, which will help to neutralize their dependency on China. SMEs can leverage this as a new opportunity for acquiring market share that was earlier dominated by China.
- Though RBI had drastically reduced interest rates in the last couple of years, the same was not passed on to the customers by different banks. But there is a recent directive from RBI for banks to match their interest rates with the external benchmark. SMEs will be able to get benefits from this endeavor soon.
- SBI is looking at moving from asset-based financing to cash-based one. This could change the game for small businesses that do not have the working capital model like the large conglomerates.
Let us look at some steps that micro to medium businesses must first focus on while dealing with this crisis:
- Resolve current deficits – SMEs must aim to keep their debt burdens at the minimum. Rather than focusing on growth plans, a better idea for the present would be to keep a tab on borrowings and outflow of capital. They must keep themselves up to date with various respite systems from the government and use it.
- Go digital – Today, you need social media more than ever. Tapping into digital pathways seems to be the wisest choice right now. Companies should leverage automation technologies like RPA, AI, IoT (internet of things) for emerging out of this economic turmoil by cutting costs, distributed work, and faster customer services.
- “Remote” is the new buzz word – Businesses must look at enhancing their workforce by giving employees the flexibility of working from home.
- Be Agile – It is imperative to be nimble in your operations. One needs to be connected to their customers so that product offerings can be changed as per demand. By synergistic collaborations with peers in the market, one can expand their reach quickly.
SMEs are an essential part of the inclusive growth of any nation. The economic development of a country is reflected in how the SMEs flourish there. The government and banks are making plans to help them through this chaotic situation; at the same time businesses must also mitigate risks and acclimatize themselves for any crisis in the future.