The current lockdown has hit the economy very hard, and as usual small businesses are suffering. The harsh truth is that India’s economy was in a bad shape even before the pandemic. Our GDP growth is now in negative, and recovery is surely going to take a long time. Even back in April, SMEs (Small and Medium Enterprises) in India were at a 19-24% higher risk of insolvency. The figures will only be more worrisome this month.
Additional Reads – Check Out The Impact of COVID-19 on Businesses in India
It’s not just India, businesses all over the world are struggling with depleting finances and rising debts. Since this is now the new normal, we must innovate with solutions, too. Here are some ways in which SMEs can manage their business post Covid.
SME finance management post-Covid
1. Be proactive, be quick
It has been more than 6 months to the beginning of the lockdown. It’s time to recover from the initial shock and take actionable measures towards recovery and sustainability. Remember that the states which adopted strong measures before the pandemic hit them hard were the ones that handled it better. SME finance management also works in that sort of way.
2. Take the hard decisions
In a time of crisis and most probably, an SME loan looming over your head, you cannot afford to have unproductive resources and uncalculated risks in your plan-of-action. Let go of employees who aren’t contributing enough, stop products which aren’t bringing enough ROI, sell the assets which are not providing enough returns.
3. It’s high time you went digital
One of India’s biggest brands, JioMart has gone digital and started taking orders on WhatsApp. Even local kirana stores have started doing the same. A group of weavers in rural Bihar turned their situation around by promoting and selling their goods via Twitter.
If demonetization wasn’t a sign enough, this pandemic must be. Businesses in almost every sector have developed operations and made their customer-facing processes digital to the highest extent possible. If you don’t keep up, you will be providing relatively less value to customers. Start with basic things such as accepting wallet payments and think of how you can innovate more with apps, social media, etc. Business during Covid, business post-Covid, and business thereafter is set to be revolutionized with the intensity of digital involvement.
4. Supply chain funding
Along with the pursuit of becoming ‘atmanirbhar’, India is also trying to pitch itself as a better alternative to China for the rest of the world to conduct business with. To think of it, this could be a blessing in disguise for Indian SMEs. You can now reclaim the business that China has usurped. Don’t just think about an SME loan. Try to secure supply chain financing as it carries the credibility of MNCs that purchase from you. Making strong finance available to both MNCs and their small suppliers is the best way that the government can make the economy global-business-ready.
Additional Read – How to Use SME Business Loans Effectively in Post Pandemic World
5. Keep track of loans
Although SME finance management is currently too hard without borrowing, remember not to let your business fall too deep into the debt trap. Keep track of your borrowings and make sure they’re only for essential purposes. If that means compromising on temporary growth, so be it. Think about the long haul. Think about sustainability.
6. Disaster management
Business post-Covid is not going to be risk-free. Risk is the nature of business and so are unexpected troubles. If you didn’t have a response and management system in place before 2020, you have surely realized the need for it now. Make sure you have a shock absorbing system in place in case this kind of disaster strikes again.
They say that the sign of a good businessperson is turning adversity into opportunity. It’s easy to say but hard to accomplish. But you surely got into business ready for the numerous ups and downs that it comes with. Consider it a part of your journey, your success story and work on constructive solutions. Crises usually come with unheard of opportunities, find them and attack them. After all, you’re in it for the long run. If you need an urgent SME loan, Tata Capital Unsecured Business Loan can be your saviour. Whether you want to buy new machinery, launch a new store, increase working capital, revamp your business, or outperform your competitors, this loan can be your support system.