A New Dawn for MSMEs and Startups
Things can change quickly in life. The security of one moment can quickly become impermanent before we have a chance to realize it. This is certainly the case with the crisis that has resulted from the global outbreak of the coronavirus (COVID-19). The global economy has gone into freefall, a recession, if not a depression, now seems likely. Panic buying in the shops is common practice. No one knows what tomorrow holds.
What seemed certain only a couple of weeks ago, no longer does. People are worried about the most basic things in life; putting food on the table, keeping a roof over their heads, being able to see friends and family members.
Things cannot go back to the way things were prior to the coronavirus outbreak. Things have to change. This needs to start with the nature of our economy and our society. It should not take a new deadly pandemic virus for people to be kind, humane and compassionate towards one another. It should not take a major crisis for governments to think about protecting those in low-paid employment. It should not take a global virus for us to drastically reduce our carbon emissions internationally. Governments today need to put aside petty nationalism and work together to defeat the coronavirus. The same energy needs to be channelled into tackling the looming climate crisis.
Against this backdrop, how can we imagine a new dawn for micro, small and medium enterprises (MSMEs)? How can we reimagine purposeful and meaningful startups? What can MSMEs learn from this pandemic? What is the new Normal for MSMEs?
Here are 6 key factors every MSME or startups needs to keep in mind post-COVID-19:
- Financial Assessment and Security: This is the first concern for every business, be it small or big. In the case of MSMEs, it is important to assess the business’ financial situation with the chartered accountant or financial advisor to understand deficits, future inflow of funds, potential expenses and liabilities, and draw up a fresh three- to six-month action plan. At this point, getting reliable and accurate information about government relief packages, financial support initiatives and getting a clear picture from investors is vital. Once this financial risk assessment and support ecosystem is in place, one can execute the plan. This may involve deciding on a potential pay cut, pull back on investments related to infrastructure or expansion, halting new recruitments, which then need to be effectively communicated and put into action.
- Re-evaluate the business plan: Based on the financial assessment, risks, and revival strategy, it is important to re-evaluate the business plan from pre-COVID times. At this point, it is key to have all stakeholders – employees, as well as external investors, involved and come to a mutually, agreed set of new targets. This may be a three- to six-month or an annual growth plan, depending on the company’s current financial situation and may include deferring funding rounds or accelerating private equity funding or even forming new collaborations/ business partnerships, which can help achieve the renewed business goals.
- Create a strong Digital Ecosystem: The one thing COVID-19 has taught businesses is the power of digital engagement. Even as an MSME, it helps to be present and active on digital media, through the website, blogs, and social media. Not only does it help create a positive brand recall but also helps generate business through these channels, especially for brands that are into retail, who have benefited impressively through online sales. Moreover, a consistent and positive social media presence can prove a magnet for consumer and stakeholder engagement, not only in times of social distancing and lockdown but long after that as well. Additionally, a digitally enabled internal ecosystem is needed to accommodate remote working or work from home scenarios, without compromising data security, productivity or labour rights of employees.
- Adopt the Fourth Revolution for Business: Apart from being present and accessible on the digital platform, this is also the time to leverage the new age technology innovations and adopt the 4th Revolution for your business. While most MSMEs look at this as an ‘out of league’ investment, it is actually very simple and can be incorporated for a higher ROI in the long run. Be it automation, CRM, ERP, or IoT, a well-planned strategy to scale to a technology-enabled, highly productive, a next-generation business can be worked out with a 2-3 year plan. It is key to implement it with urgency once the pandemic ends as it will help advance short-term growth goals while mitigating future business crises.
- Business Can Rely on Less Physical Space and Assets: Companies have learnt that remote work can be efficient and productive. Working from home can be an acceptable form of employment with team meetings taking place online and physical meetups can happen less frequently, maybe once a week. This can lead to a dramatic reduction in office space and overhead costs associated with security, utility bills, and insurance, among others. As the public health crisis continues and a slow return to work starts across the globe, it is crucial to prioritize the safety and health of workers, including by abandoning the open office trend.
- Put a crisis management strategy in place: Learning from recent crises, it is critical to chalk up an effective crisis management plan that will take into consideration both immediate and long-term impacts. The plan should expand from a financial back-up and reservoir of funding to a robust digital and technology-enabled ecosystem that can ensure minimum damage to productivity. While most businesses are prepared for an internal crisis such as fires or thefts, it is also key to have a solid bounce-back/ business revival plan.
My final thoughts and recommendations for MSMEs or startups post COVID-19 are:
- Have a good answer to “How did you help during the Great Pandemic?”
- Quantify what you did for your employees, customers, community and country.
- Identify stakeholders who will help tell your story in the months ahead.
- Leverage the opportunity to build a better business
- Become more disruption-resilient via cloud, mobile and telework tools
- Harden systems against hacking, ransomware, supply chain disruptions
- Have credible solutions to the new major challenge
- What will grow employment, increase resilience or save money?
- Diversify revenue streams where possible, risk management is no longer a luxury.
- Prepare to engage reformers on the systemic failures exposed
- What do 21st-century safety nets need to look like, and how do we pay for them?
- How to enable inclusive growth that leverages and helps focus market forces?
- Think globally, act locally
- Diversify supply chain optionality while defending trade and global engagement
- Lead by example in supporting global institutions aimed at shared challenges
Some of the above measures might be viewed as additional costs at a time of an already tight financial situation, especially for MSMEs who are cash strapped; nevertheless, these measures are vital for business survival, keeping long term growth and planning in mind. Always remember the famous quote, “The struggle you are in today is developing the strength you need for tomorrow. Don't give up.”
by Ahmed Mohamed Osman, President of the International Council for Small Business (ICSB)
This article is part of the Decent Jobs for Youth Blog Series: Youth Rights & Voices. The Blog Series highlights the impact of the COVID-19 pandemic on young women and men in the world of work and discusses action-oriented policy responses and solutions. If you would like to comment or contribute, please contact email@example.com.
To bring youth voices to the forefront of action and policy responses, the Global Initiative on Decent Jobs for Youth (DJY) and its partners are conducting a survey on the impact of the COVID-19 pandemic on youth rights. Participate in the survey now!