SMEs make up over 60 million units across India. It contributes to nearly one-quarter of India’s $3 trillion economies while employing more than 500 million workers. Many of these small businesses are now in the midst of an unprecedented financial crisis which has led to the closure of thousands of factories and shops. These cash-starved enterprises do not have adequate money to pay rent, utility bills, or bank loans. Most importantly, they lack funds to pay wages to employees and settle the creditors.

Small businesses can overcome this financial setback by taking advantage of government initiatives, digitising services to enhance customer experience, and being prepared for reduced sales and managing cash flow.

Government Aid

• Government should provide loans and interest waivers
• Make concessions for municipality taxes, power bills, water, other facilities, etc.
• They could also provide guarantees to specific sectors like agriculture, small manufacturers, etc.
• Thereby, promoting setting up new local and wider ecosystems for businesses to survive.

Co-operative unions as a Solution

• Forward and backward integration of independent business units is a critical need at this point of time. olive video editor download
• Forming a network of the entire value chain will work as an ecosystem rather than the units dying without support by working in silos.
• Businesses should take initiative to formally or informally form co-operative unions.

Digitization

As the traditional way of doing business has changed, the digital route is becoming the solution.

Businesses must adopt digital modes of business execution, marketing and client service deliveries.

Managing workforce

• The changing business structure or working hours due to the lockdown is a hindrance which needs to be tackled.
• With changing working hours, the output patterns see a change too. Distance and potability must be redefined now.
• Jobs that require travel have become redundant and digitization call for different type of resources, leading to change in workforce type.

Change in customer behavior and purchase power

• Market necessities have shifted post covid and customer expectations has changed leading to a shift in buying patterns and consumer behaviour.
• Early birds who succeed to recognise the shift in this space will surely have an advantage.
  Digitization has opened up wider alternatives for businesses leading to many pre-covid requirements becoming obsolete.

New way ahead

Support needs to come from innovative and new-age setups like fintech lenders, technology providers, channel integrators along with the government and their timely intervention policies.

The right steps and policies are crucial to ensure the survival of SMEs. Our team at Leap can help nurture a positive, resilient and sustainable future that helps in your growth and success.

Joy John is a Chartered Accountant and a Certified Information System Auditor with more than 20 years of experience in Governance, business and IT risk and controls, financial optimization, and audits. He works closely with the industry and is an expert in practical entrepreneurship.