Around the country, the Nagpur-based SEE-Tech Solutions has been implementing energy efficiency projects for over 23 years now, with its consultant's sourcing data and analytics from project sites across India before they provide solutions or recommendations to their clients.
With the onset of the COVID-19 pandemic in 2020, small and medium enterprises (SMEs), including SEE-Tech Solutions, observed the panic of survival anxiety and the impact of the pandemic on business continuity, labour force, revenue, and multiple other factors.
The CEO of SEE-Tech Solutions, Milind Chittawar, found this a great opportunity to incorporate innovation into the business model. His first attempt was to digitize his enterprise and transform a process that helped his business eliminate site visits, touchpoints, and face-to-face interactions. The innovation included portable IoT devices that collected data and transferred them to an analytical platform that sent recommendations to user dashboards.
The innovation brought in great value addition to their clients, but Milind regrets the idea of innovation to emerge after the impact of the pandemic and would have preferred changing and adapting the business model beforehand.
Amit Kumar, CEO, and Co-founder, MSMEx, stated that SEE-Tech Solution is one among the multiple MSMEs that adapted their business model after the recent events caused by the pandemic. The pandemic, however, changed the course of MSMEs as they are now well prepared to face any challenges.
Amit explains, “The lockdown in 2020 hit every business, as it was completely unexpected. While they were still getting set to count their losses, the second wave struck, and this time, it dealt a mental blow as well.”
Challenges Linked with Extended Lockdown
With the harsh impact of the pandemic, MSMEs have emerged stronger and have given first-time entrepreneurs exposure to deal with adverse business environments shortly. Having the largest MSME sector in the world, the challenges faced by these businesses are bound to be multi-faceted with increased competition all around.
MSMEs catering to non-essential businesses will encounter adverse consequences like revenue flow shortage, delinquencies, labour shortage, and much more, given if the lockdown remains persistent. However, businesses have become better prepared with the increased awareness of the disease, said Dr Vivek Bindra, founder of Bada Business, an online business skill training platform.
It became evident that those industries that adapted and regulated their business model during the first 2 waves of the COVID-19 pandemic could sustain longer, while the traditional enterprises that failed to adapt were forced to incorporate digitization or ultimately faced closure.
Adapting and Evolving with Digitization
Data processed by A Dun & Bradstreet in April 2021 stated that 82% of small businesses turned to digitization, among which 54% saw a cost reduction, while 51% and 45% saw enhanced competitiveness with a better understanding of customer behaviour and massive benefits, respectively. Digitization helped small businesses thrive through the pandemic and prevent their closure.
The incorporation of digitization by MSMEs is relatively less than expected, but they have encouraged other businesses to adapt their models for effective results.
“Learning from the previous, businesses shall focus on profitability, clear inventories, reduce Capex, maintain transparent employee engagement to accommodate remote or hybrid models of work, manage business costs and make timely vendor payments to streamline supply chain management,” explained Dr Vivek Bindra.
"Most MSMEs have found alternate routes or suppliers, even in the case of labour supply, which is another issue faced during the pandemic. MSMEs have managed to secure a more robust supply of labour. Initiatives from the central government, like the extended credit limits, have also helped,” stated Ashutosh Kharangate, Managing Director and Founder of Mangal Analytics and Research Consulting.
Ashutosh claims that the government shall offer them respite by deferring EMIs with a period of 6-12 months on a case-to-case basis, and the state government must waive off most charges which are usage dependent. Further, the government shall prioritize MSMEs for purchases while ensuring timely payment or release of blocked payments to them.
“The issue of the government dues to MSMEs is a critical one and has been reviewed over the past year from the point of view of the central government and the various departments which owe money to the MSMEs, inclusive of Public Sector Undertakings (PSUs). The central government has decided to settle payments according to the standard 45-day rule,” said Finance Minister Nirmala Sitharaman during the question hour in Rajya sabha.
The key way to revive small businesses is by solving delayed payments, increasing moratoriums, and giving small grants to MSMEs.
Government shall consider pure working capital relief to survive another pandemic, believe the Founder and CEO of Kinara Capital, Hardika Shah.
Barriers to Business Modification
The conventional nature and lack of resources and skills are major barriers that prevent MSMEs from taking quick decisions for changing their business running models. This has also been cited as one of the main reasons that hampered the transformation of MSMEs during the first 2 waves of the pandemic.
Hence MSMEs have consistently been trying to adapt to digitization in both external and internal markets. Lack of resources, finances, and easy access to quality service providers are still considered one of the major barriers in the digitization process of MSMEs.
Hardika Shah further claims that any small business or MSMEs looking to survive the potential third wave of the pandemic shall focus and prioritize digitization. The digitization process could include major working factors of the business like sourcing materials, marketing/selling, invoicing their customers, collecting and making payments digitally, and much more. For businesses and MSMEs to conquer the third wave, they must embrace the concept of digitization.
Read the full article here: Can MSMEs and small businesses survive a potential third wave? (yourstory.com)