SMEs: Surviving a Pandemic
Jul 07, 2020 | PANDEMIC
Small and medium-sized businesses have been hardest hit in the current crisis. According to the World Bank, SMEs represent about 90% of businesses and more than 50% of employment worldwide. They are responsible for upto 40% of GDP in emerging economies & significantly contribute to the economic growth and social development of communities they thrive in.
But unfortunately, a post Covid -19 world is presenting its own share of challenges for owners of small businesses. This crisis is particularly hard on them as these organisations do not have enough cash flow to sustain themselves through the coming months with no more than 30% making it longer than 3 months.
In many instances, small units and factories have been forced to close their doors to business during the lockdown, their supply chains have been adversely affected with owners along the value chain struggling to procure raw materials. In cases where the supply chains have been innovative to source product, the need for these products have fallen, driving a wedge between what is being provided for and what is in demand by consumers.
But all is not lost. Measures can be taken as a community to help SMEs ride this wave. A crisis is difficult, yet predictable. Expect cash flow to reduce, leading to layoffs. At this stage, it is critical to help those most vulnerable in the workforce. For instance, when leadership teams take a pay cut for a short time period, it lends predictablity and job security to those that are working within the organisation at a minimum wage. For one things is clear, good talent and a strong workforce are critical ingredients for ensuring organisations rebuild for a post COVID world.
Governments have a vital role to play here too – with a cash-strapped economy and with SMEs most in need of a revenue runway, access to cash flow, relaxing of credit terms for debt financing especially for smaller firms allows businesses to weather this storm. SME’s for their part, can pivot around their product and solution strategy to address market needs that are relevant both in the pandemic as well as after. For example, alcohol manufacturers are re-calibrating their ingredients to provide industrial-grade hand sanitisers for hospitals. Clothing retail stores are repurposing their delivery fleets for getting medicines and supplies to those that need it the most.
As a community, we have a vital role to play. Buying local and from independently owned businesses, help generate much needed revenue during this crisis. If we can’t support small businesses, promote favourite local brands on social media. According to Andrei Vasilescu, a digital marketing expert “Today, customer reviews influence more than 95 percent of online customers before they decide to purchase a product”. Instagram for instance, has recently launched a new sticker that gives users the opportunity to help support small businesses on their platform. If communites step up in supporting these creative initiatives, and invest in local SMEs through their buying behaviour, there is a strong chance that SMEs stand a better chance of surviving this pandemic.
Every little helps. It helps our SMEs and in turn, helps build a community that is better prepared to weather this storm.