As each drop on its own fills the vast ocean, similarly the small businesses- though neglected as of the margins for they are of just “another entrepreneurial or adventurous enterprise” or are of a “gambler’s gambit”- holds the key to unlocking the inherent economic power of India that else lies unmined in a rather inchoate state. This however also establishes the trend that while Indian economy is projected to shrink by 7 percent as per FY21, the micro, small and medium enterprises (MSMEs) (as per the credit rating agency) will be subsequently projected as to incur 1/5th loss in their revenues due to the ongoing coronavirus pandemic. Now, while Prime Minister Narendra Modi’s programme through $40 billion of government-guaranteed loans are set to help small businesses or the “80 percent of the small business surveyed predicted they will survive and come out of it on the other side even if Covid worsens a bit” (Manoj Adlakha, SVP and Chief Executive Officer, American Express Banking Corp India told BusinessLine) depicts an optimistic outlook however the reality does stand on the worrying figures of instability ahead.
In the Blueprint’s 2021 survey of 275 small and mid-sized
business owners and managers based in the USA, only 6% reported a positive
impact of COVID while 46% were moderately negatively impacted and the majority
48% were severely negatively impacted. Thus, 94% SMBs or small businesses in
total detail of negative impacts, wherein majorly the restaurant, retail, legal, non-profit, and
healthcare and medical services sectors were affected. It is also to be noted
that 42 percent of small businesses in India for the same American Express
survey hope to find consumer spending returning within the next three months.
To stay “afloat” they “expect” the “consumer spending to return for their
businesses” by the end of the year (Manoj Adlakha). This indicates that while
in India an optimistic overview will be healthy however the prime focus will be
the healthy entertainment of the consumer market. Moreover, the loans guaranteed
by the government for the funding of SMBs also show inadequacies for they are
not sufficient to save the MSMEs and may only imply a larger debt on the
shoulders of the owners. The credit lines inherently also do not ensure that
the bankers will lend loans to the SMBs and thus indicate that a rather timely
aid would be of interest waivers on loans or of cutting of goods and service
taxes.
All India Manufacturers’ Organisation survey in July of 2020
indicated that more than a third of small and medium enterprises said that
their businesses were beyond any rescue. This is majorly because the SMB rely
on a few months of cash flow and hence stand without much resource reserve to
support the chain of goods and services that are interlinked via their
business. To succinctly tackle the issue a subjugation to the digital world is
a must. E-learning as a hub has recently built millions worth of turnover say
by Vedantu or by Byjus in India which inadvertently stipulates the new rise of
the internet consumer culture. A digital footing over the goods and services of
SMBs would propose a fast track world and may reflect a future without a supply
chain or say direct consumer end marketing. To prepare for this new future a
financial plan that could acknowledge diversified revenue streams and meet new
customers is required. Moreover, a better and newer understanding to meet the
consumer market by either upskilling of employees or by using far-reaching
mediums like social media to propagate business is important. Needless to say,
human resources will always be an asset and while providing, comprehending and
establishing the means to mould so to make a richer and healthier outlook for
one’s own business one, as the manager or the owner of SMBs one should not neglect
their physical, emotional and mental responsibilities as an individual and as a
member of a community. Alas as the Covid19 has posed a crisis not only to the
physical front but also at the financial front, the securing of SMBs presents
as a priority to intercept.
-by
Shreya Rawat
Member,WiB
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