Small Industry Day: Top 5 lessons for MSMEs from COVID-19 second wave
As India’s small industries emerge from the impact of the COVID-19 pandemic, here are the top five lessons learned by entrepreneurs during the pandemic, presented to you by SMBStory on account of Small Industry Day 2021.
The backbone of India’s economy - Micro, Small and Medium Enterprises (MSMEs) - is hurting on account of the impact of the COVID-19 pandemic.
Lockdowns impacted business and growth plans for several small industries in India, with over 82 percent of small industries seeing a negative impact and 70 percent stating that it would take almost a year to achieve pre-COVID levels, as per a Dun & Bradstreet Report.
As India’s small industries emerge from the ashes, here are the top five lessons learned by MSME entrepreneurs during the pandemic, presented to you by SMBStory on account of Small Industry Day 2021.
Adopt modern technology, or risk being left behind
During the pandemic, small industries learned first-hand the importance of online selling mechanisms, digital payments, digital bookkeeping, cloud solutions, automation, managed services, and various as-a-service solutions.
These allow MSMEs to tap into new avenues of growth and they no longer worry about spending on a large, internal team to manage these processes manually.
Packages available for MSMEs comprise solutions for digital bookkeeping, CRM, and ERP, which address several business aspects, including but not limited to purchasing, production, marketing, invoicing, managing inventory, HR management, customer relations management, and accounting.
Cloud tech is a must-have
When forced to work remotely from home, MSMEs learned how cloud-based technology helps them focus on core areas of business instead of spending time and resources on managing in-house IT infrastructure.
Cloud also offers security, reliability, and scalability for small industries to adopt technology in a much faster time.
Recently, B Raghavendran, Head of SMB Segment, Amazon Internet Services, pointed out that cloud also gives access to the latest technology like AR, VR, and ML, and - most importantly – makes available what is available to a Fortune 500 company to SMBs.
Besides manufacturing and retail, other sectors that have become highly dependent on cloud computing services are e-learning, telemedicine, banking, financial services, and insurance (BFSI).
Bridging credit gap through technology
By adopting digital mechanisms for remittance and payments, small industries can build a formal financial record - which is critical in helping them gain access to a range of financial services.
Now, with the RBI and the government championing the cause of MSME business owners, industry experts believe many banks today offer business loans at competitive rates, making it much more cost-effective for MSMEs to opt for the same.
CIBIL reports also play an important role in helping MSMEs build credibility scores to access financing. Banks look for a good CIBIL and credit report while dispensing loans, and small industries themselves need to study their CIBIL and credit reports before approaching a bank.
However, it is not always advisable to rely on loans, especially if small industries don’t have the ability to pay them back.
Infographic design by Daisy Mahadevan
Limiting dependence on loans
In response to the impact of COVID-19 on small industries, the government introduced a slew of loan schemes. But some industry experts believe there should be a low dependency on loans as repaying them can be a burden on entrepreneurs.
Mukesh Mohan Gupta, President of Chamber of Indian MSMEs, told SMBStory earlier this year that loans “only provide temporary relief to MSMEs”, and may end up adding to their existing burden, as many MSMEs have been struggling to repay them.
If an MSME borrowed Rs 5 crore at nine percent interest and is due to repay Rs 1.67 crore annually with Rs 50 lakh interest, it can be difficult to repay the amount when overall market demand is yet to return to pre-COVID levels.
Going online to become future-ready
During the pandemic, small industries that survived were largely those that adopted digital tools and leveraged technology and ecommerce.
Hirdyesh Mordani, Co-founder of , said recently:
“When you set up your shop on ecommerce platforms or any other way, you do not have to pay hefty rents, electricity bills, or hire staff - all factors that contribute to major expenses. Online selling gives you ready data about consumer behaviour. This helps businesses to innovate according to the market demands, which is essential to survive and sustain."
Factors such as rising income and increased exposure have also changed the game in favour of new-age brands, which small industries can keep pace with if they adopt direct-to-consumer approaches to selling online.
Edited by Anju Narayanan
MOST VIEWED STORIES
