The year 2020 was certainly a difficult year for everyone, but it was particularly tough on MSMEs. This sector of our economy was already stressed pre-covid times, and the lockdown exacerbated these cracks further.
However, the past year has given a lot of opportunities for coming generations across sectors to learn and make amends to existing structures of their enterprises. This topic was the key focus of Economic TIme Boardroom’s MSME day where familiar faces affiliated with organizations such as FISME, TiE Global and IMC Chamber of Commerce & Industry were present and shared their learnings from the past year.
Under the light of aforementioned observations, we believe it is high time for MSMEs to formulate a business continuity plan that will ensure a safer journey through rough tides to come. Here, we have attempted to summarise the key takeaways from the panel discussion for our readers in the subsequent points. This serves as a precursor for business owners to build a business continuity plan for small businesses to recover from covid-19. To read the full discussion please visit The Economic Times.
1. Building A Conceptual Tent
Years ago, our ancestors built empires and businesses the way one builds a stone fortress. For better or worse, that analogy can not be applied in today’s digital era as one has to build their business in a way that resembles a tent. One that can be picked up and is ready-to-move to places that suit its survival.
This point is drawn further by Mr. Ashish Vaid, President – FISME, who runs a real estate business and states that the lockdown has shown them the importance of having a leaner organization. MSMEs should know how to downsize the staff and automate more things. Whereas on the financial side, one needs to be debt-free as much as possible, be asset-light by selling and moving on to make way for business continuity.
2. Leveraging Technology for Health & Wealth
Before COVID hit us, people worked 12 to 18 hours a day. It is time we learn to slow down and learn how to treat ourselves well, physically and mentally. The pandemic has made us reconsider our plans on the long-term and has highlighted the importance of leveraging technology for our benefit. Both personally as well as professionally.
Personally, one needs to switch to digital ways of transferring money instead of relying solely on cash availability. Professionally, we cannot stress enough on the need to go digital for every kind of business. If you’re still evaluating on the edge of whether or not to go digital, then this digital transformation article should help you settle the argument.
3. Driving a Consumer-oriented Business
The final point that needs to be taken care of has been first published in obscure pages of Marketing bibles, but is now a commonly accepted fact. If your business does not create products and services that cater to the consumer, then there are high chances for your business to be easily sidetracked when a lockdown appears at the horizon. An optional product should not be the only offering of your business, if at all it contributes a major portion of your revenue.
4. Tracking Different Doors to Funding Avenues
The moratorium periods of six, eight months on interest payments was a much needed help for the MSME sector. However, the dearth of such an aid would’ve had counter-effects due to the lack of preparedness of MSMEs to fund themselves beyond the upcoming quarter or year.
As a result, it is important for MSMEs to keep a watch on different ways to seek funding beyond loans from banks and NBFCs. A prime example of this alternative is chasing Foreign Direct Investment(FDI) that has several benefits for business owners as well as investors.
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5. Creating a Business Continuity Plan
“It is extremely critical because if we have to move to the next stage we cannot run our businesses the way we were running earlier. We are insisting now that we have to follow a due process and how to improve that and introduce technology in that.” says the President of FISME on the importance of having a Business Continuity Plan(BCP).
A BCP ensures that business’s survival is not dependent on a single person or a management team. Efforts are being made to bridge the gap and enable knowledge transfer from technically sound MSME sectors of Taiwan and Korea and an MSME owner in India can certainly look for more inspiration from these countries.
It is high time to make our companies lean — from both debt and operating costs point of view — and try to reduce costs. The national economy is going through a tough time and it will take time to stabilize, but with proper planning at grassroot levels, we will be on the right track.
We, at MSMEx, believe the MSME sector is a backbone to our economy and make efforts above and beyond to facilitate knowledge for business owners under this umbrella. To get in touch with industry experts reach out to the Experts Page, at MSMEx.in