COVID-19 crisis has brought in major disruptions and darkness to many, and more so for Small Businesses as they had a rough year before 2020. Know five lessons learned for small businesses from this ongoing pandemic and possible takeaways for such?
Arnab Das, a 48-year old restaurant-chain-owner in Kolkata, said that his business was teetering on the brink of collapse. While he had to down the shutters of most of his restaurants, the remaining ones are struggling to stay afloat. His sales, which depends on greater footfalls, have fallen by almost 70-80 per cent. His debt has piled up to a huge amount. And the banks and moneylenders are banging on his door every day.
The COVID-19 crisis has brought in major disruptions and darkness. This has in turn impacted major economies around the world. The vaccines have improved the situation. But largely, uncertainty hangs in the air. Things have worsened in the current year. India’s economy had entered a recessionary phase in 2020, which continues until now. Sectors such as trade, hotels, transport, communications, and services have taken a big hit. This is followed by construction, mining and quarrying, and manufacturing. And the worst affected are small and medium enterprises (SMEs), due to its smaller cash buffer and weak supply chain capabilities.
In a survey in June 2020 by the All India Manufacturer’s Organisation, around one-third of SMEs owners’ said that their businesses were beyond saving. The industry group further said that such a ‘mass destruction of business’ was unprecedented.
SMEs must speed up their digital network and ensure rapid response to crisis situations or opportunities. It would ease the communication system and bring clarity on each other’s responsibilities. During times of crisis, the owners could fall back on such framework for better effectiveness and accountability. Moreover, better digitisation could help them to operate from anywhere and reach out to a wider number of potential customers.
Start-up and SMEs government policies must be rebooted. There should be a proper backup plan in place, in case of any major crisis. There should be a recovery programme in place, to “build back better” with a support system. There should also be a clear insolvency plan and a clear exit plan for the businesses.
It’s very important to make smart investments; to take calculated risks, even when times are good. It’s important to cut unnecessary costs and curb expenses. There should definitely be an emergency fund. This will ensure survival of your business in the long run.
There must be clear communication with all possible stakeholders. The business owners must maintain transparency with all the people to gain their trust. One must support their workforce by understanding their situation. The workforce must be encouraged to understand the difficulties of small business, upgrade and hone their skills during lockdowns / minimal workloads.
One should take into account a unique challenges and opportunities SMEs encounter and prepare themselves accordingly for unprecedented times. Re-architect the business modal and the vision with the inputs and lessons learned from the pandemic. SMEs must try to strengthen their forward-looking capacity, resilience, and responsiveness.
The pandemic has given the SMEs the opportunity to streamline their businesses and adapt to changing realities. In such times, they could only survive by amending their businesses and reinforcing strategies to make the most of the current situation and prevent any such eventualities, in future. Sometimes, Rebooting the business with a new strategy may yield exceptional results.
GST Accounting Software Price: FREE for 1st year in India refer pricing for other countries such as India, Australia, Malaysia, Nepal, Pakistan, Singapore, Sri Lanka, & UK
Easiest GST ready Accounting software