Recovery Plan for MSMEs Post the Pandemic Situation
Blog: NASSCOM Official Blog
- By Mr. Vikram Kumar, Co-Founder and Managing Director, SRV Media Pvt. Ltd.
The current COVID outbreak has left a lasting impact on the economy. Global supply chains are down, imports and exports are stalled, and unemployment is surging in. Across the world and India, Micro, Small and Medium Enterprises (MSME) have been impacted the most.
Thousands of stranded and jobless migrant workers across the country are proof of how MSMEs have seen the worst casualty of Covid-19.
According to the Annual Report of the Department of MSME published in September 2019, there are 6.34 crore MSMEs in the country (urban and rural India). They employ over 11 crore people. 55% of the employment happens in urban MSMEs.
Further, the report says that seven Indian states account for 50% of all MSMEs. These are Uttar Pradesh (14%), West Bengal (14%), Tamil Nadu (8%), Maharashtra (8%), Karnataka (6%), Bihar (5%) and Andhra Pradesh (5%). This gives a sense of why and where the pain of the MSME crisis is to be felt the most.
The total lockdown in the last two months raised questions because primarily many of the MSME firms did not have much cash to sustain. Two basic things that raised the cash crunch faced by MSMEs during the lockdown were notably the lack of formal funding from the banking system and the delay in payments.
As a part of the government’s efforts to help small businesses over the COVID-19 crisis, a sum of Rs 3 lakh crore (collateral-free loan) was announced to MSMEs as an Emergency Credit Line Guarantee Scheme under the Atmanirbhar Bharat package.
On June 22, 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 stand at Rs 75,426.39 crore, out of which Rs 32,894.86 crore has been disbursed.
The government is doing its bit to tide the MSMEs’ through these tough times. But the business leaders would also have a major role to play here. The way our business leaders manage this crisis is set to make all the difference in the long run.
While the choices at hand seem limited, there are still potential strategies which can be applied.
A Strong Foothold on the Financial System
The monetary policies & fundings announced by the Reserve Bank of India, Nitin Gadkari ( Minister of Micro, Small & Medium Enterprises) and the Finance Minister Nirmala Sitharaman, have been adequately allocated to the sector.
Nevertheless, from an entrepreneur point of view, you need to sit down and chalk out a financial plan, too. In the case of MSMEs, it is vital first to make an assessment of the current financial situation of your company. You may need to sit down with your team to understand potential expenses, fund inflow/outflow, liabilities, deficits, and draw up a half-yearly and/or an annual action plan.
Getting accurate information about government financial initiatives and a precise picture from investors is essential before you plan and execute a financial strategy. All the assessment and support from the ecosystem need to be in place before the execution of the plan. The financial planning might also involve some firm decisions on pay cuts, investment pullbacks or halting new recruitments.
Design a robust Digital Ecosystem
As an MSME, the power of digital engagement will help with your presence online. You can be thoroughly active via blogs, website, and social media. These not only create a concrete brand identity but also helps generate business through social channels.
A constant and positive social media presence can prove a blessing for consumer and stakeholder engagement, too.
Moreover, an internal digital ecosystem in place can support remote or work from home scenarios for employee productivity. While designing the same, data security needs an important consideration, too.
Revamping the Business Plan
While assessing the current situation, you need to redefine business goals and build a practical growth plan keeping in mind all the risks involved. A plan that can be rapidly executed.
You, along with your stakeholders and senior employees, need to come to some mutually agreed new targets. In this annual growth plan, you need to rethink forming new collaborations/partnerships, which can help obtain the revamped business goals.
Importantly, with so much transformation and development happening around, business owners like you must also spend time to learn new things. Make new strategies, think about new products, find trends in your data or work on new business models. Whatever it is, keep yourself updated and productive.
Experts say that collective wisdom is always useful. With a plethora 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 recent crisis, it is necessary to chalk out an effective crisis management recovery plan for both immediate and long term impact; from creating a financial back-up to having a sturdy digital ecosystem that can ensure minimum damage to productivity.
After all, deliberate planning and action always prove to be the keys to develop a stronger business that is even capable of withstanding the test of time.
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