SMEs contribute to the development and growth of an economy. They help in creating jobs, making countries self-reliant, and also aid in the effective use of resources.The constraints on transport and borders, social distancing and lockdowns have disrupted supply chains, decreased market demand and reduced cash flows. As a consequence, small businesses are unable to pay store rent, wages of workers, suppliers and creditors, creating a spiralling impact on households and the economy.
some main struggles faced by Sme’s:
1. Cash Flow Shortages
The obvious concern about the unusual existence of the novel coronavirus is that no one knows how long it can affect civilization. Many small business owners know it’s prudent to save for emergency circumstances, but they don’t expect these desperate conditions to last for months with no end in sight. SME’s should be able to adapt their monetary capacity according to the situation in the crisis. Many supply chain firms are looking for credit-based maintenance of the supply chain. Cash flow maintenance is a huge problem for companies currently facing losses due to decreased cash reserves or unstable cash flows.
2. Worrying over limited workers
coronavirus-related influences have given rise to new issues that have driven uncertainty and concerns to new heights and added others that no one certainly didn’t expect to see. Worries of limited workers are disturbing the flow of work. Businesses may be pretty small in number, but large in range, meaning that they are not at the control of a handful of consumers. Digital may be genuinely inspiring in this sense. On the other side of the continuum, India’s largest corporation is also doing the same with the introduction of the JioMart test in Mumbai as the delivery of grocery orders over WhatsApp.
3. Decreased Revenue
Another problem related to small businesses and COVID-19 is a decrease in sales. It could happen for some reasons. You can own a small café and have had to drastically limit the number of diners accommodated at once due to social distancing steps. Alternatively, you could only have a brick-and-mortar store and dubious online retailers have grabbed a piece of your business while more customers prefer to sit at home.
4. Supply Chain Difficulties Hindering Operations
Small companies should apply for supply chain funding, which allows them to get cheaper credit from banks on the basis of the comfort factor offered by MNCs that use their goods/services. Secure the supply chain by engaging with the regular vendors and deciding if they can satisfy your demands soon. Investigate, if possible, how new suppliers could help to fill the defined holes. If supply chain issues concern consumers, be frank with them about potential shortages or lengthy inventory outages.
5. Customers Not Knowing About Reopened Businesses
For too many companies opening up in waves and others already closing, customers can’t keep track of where they should order products from locations they frequented before the pandemic. Making your business go online, or making payment method online will make your business flow easy. Creative ways of making your business that can be reachable to others as well.
Covid-19 SME Impact Survey
Cash flow, particularly in a stable economy, is always a challenge for small firms. Many are essentially living the equivalent of “paycheck to paycheck.” Sharp drops in market demand will quickly transform them into red and, maybe, into collapse.
1.Almost 50% of SMEs have less than a month or a month of cash savings.
2.Almost 30 per cent of SMEs expect 50 per cent or more of their workforce to be laid off.
3.Just 35% are optimistic that no workers would have to be laid off.
Opportunities that await to be explored:
SME’S must exhibit their creative side and develop solutions to combat the Corona Virus Impact. They will have to explore possibilities, Find areas where they can contribute not just to them, but to the society as well. With the increase in the coronavirus influence it is more important, day by day, to accelerate the rate of transforming difficulties into opportunities. Many countries are now deploying a wide variety of policy instruments to assist small and medium-sized businesses and, in particular, self-employed citizens in this highly tough time. The immediate priority is on addressing short-term liquidity. Such policies have different forms, and here are some of the most common:
1.Payment deferral: Income taxes, property taxes, excise duty and other contributions paid by companies to the government are postponed to relieve the liquidity restrictions that SMEs face.
2.Credit: Government expands the supply of credit to small and medium-sized businesses using a variety of approaches: direct lending by state-owned banks, lowering interest rates on special lending projects or easing the monetary policy of the central bank, expanding the use of credit guarantee systems, or extending grace periods on existing loans.
3.Wage assistance: The government bears, in part, the burden of delivering salary and income assistance to workers temporarily laid off or to businesses to safeguard jobs.
The “new normal” would lead to improved intra-regional trade as countries steadily ease their trade and border restrictions. Governments must help to encourage exports, increase internet access and increase shipping connectivity. To conclude, the pandemic has affected the SME’S but also gave opportunities to increase their maximum reach in the market.