04 April 2020

Despite corona virus – digital world can help SMEs succeed !


Th coronavirus pandemic has brought the world to a standstill. The worst affected segment in this crisis unarguably is the micro, small and medium enterprises (MSMEs).
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With businesses shut off and fixed costs dangling over them, SMEs and MSMEs are unable to handle the situation. While this section of the business ecosystem is not new to surprises and shocks, thanks to demonetisation and the changes brought when the new Goods and Services Tax (GST) policy was introduced, COVID-19 has nonetheless brought a unique predicament in the lives of entrepreneurs of small and medium businesses.

Unknowns in COVID

When we think about COVID-19, there are more questions and unknowns than there are knowns and answers. The scenario that I worry about, particularly when it comes to MSMEs, is what I call a mass extinction. The coronavirus outbreak is a shock to the entire system of society. And typically, these enterprises are very fragile. They don't have the resilience of a larger company, and are therefore greatest at risk. So, if this thing drags on for a long time, rwcand if we don't do enough to throw a lifeline to them, keep them alive, and then help them adapt, more than half of them will die and won't recover. This could be a catastrophe for all.

Steps to take

A lot of irresponsible behaviour is seen in firms where they are not enforcing hygiene measures like not insisting that everyone wears a mask. Japan and South Korea were able to slow down the impact of coronavirus not by some crazy lockdown, but by simply implementing some good social practices, like 100 percent use of masks. We need to find the most useful ideas to combat this situation — like recognising your most loyal customers and asking them if they will give you advances. In addition, entrepreneurs also need to figure out what the world needs and not what they used to produce. 

MSMEs are very important for the Indian economy, and I their contribution more towards employment than GDP. There are about 70 million MSMEs which employ one in 10 people. And they comprise more than 95 percent of all businesses. They collectively employ 110 million people.  COVID-19 is a giant reset for most of the economies including India.

Recovery

We were already worried about 4.5 percent and now we're looking at the negative realm. Also, we don't know how fast the economy can and will recover because we don't know the behaviour of this virus.  All said and done, there's no doubt that without the SME sector flourishing, India cannot have a balanced economy or a real and sustainable growth. And what we had in the ‘pre-COVID’ era is often called a missing middle. India either has a very large number of small enterprises which are self-employed, or have less than 10 employees, or we have a few really big firms like the Tatas and Reliance. India is a very strange economy for us.  Almost no other large economy has midsize firms that are completely missing. But let's use this crisis as an opportunity to get many more entrepreneurially-minded people thinking about opportunities. Furthermore, we need to focus less on what the government can do and should focus more on what we can do. 

Digital World

The digital world is already making it possible for all of us to work from home. By maintaining basic hygiene and a healthy lifestyle, we can indeed keep the virus and work for the entire globe by working digitally.

In Sum

Let us define a digital identity for ourselves and move towards great success, using even corona as just a challenge and not a stumbling block.

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