Challenges and opportunities for MSMEs

COVID-19 has hit trade, businesses and industries very hard. This has further impacted the Micro Small and Medium Enterprises (MSMEs) and the devastating aftereffects are clearly visible today.

In the context of our economy, the role and the contribution of MSMEs are very vital and impactful. To substantiate it with a broad overview of statistics, MSMEs contribute between 30 to 35 % to the national GDP. As mentioned by the well-known business consultancy firm – KPMG, MSMEs contribute 36 % to our business, 31% of the manufacturing and 33 % through other type of business activities. This specially presented statistics makes everyone think and visualize what impact our Economy, Industry and the MSMEs will have in the post-COVID-19 scenario. We can also get a feel of the challenges our MSME Sector is going to face in the near future.

The above summery comprising of the economics and statistics related to COVID-19 highlights the business specific challenges and constraints posed before the MSMEs. This becomes more vital as the pandemic struck the world at the fag end of the financial year 2019-20. The last quarter in the business year is always very crucial from the business transaction and turnover of all the enterprises including the MSMEs. This is the way and manner our business cycle has operated for decades. The effects of COVID – 19 therefore becomes much more relevant. As far as MSMEs are concerned and to put it in rural perspective, this situation can be compared when the farmers lose their ready-to-harvest crop due to storm and heavy rains and the effect lasts at least for the next year.

Under such circumstances, it becomes essential for the MSMEs to brace for multiple and unforeseen challenges facing them. The following type of responsive approach could be useful to them. Though difficult and challenging, the task would not seem difficult at the below type of operational approach, if adopted by the MSMEs.

It is important to analyse and assess the post COVID – 19 impact and the effects it has had on the MSMEs in business perspectives. While analysing these effects, due care must be taken to study what are the business impacts created for the main or core industry or the business sector for which the MSMEs are mainly catering to.

This would enable and equip the MSMEs to have the business-specific reality check related to their business and services. This should be taken very seriously in view of all aspects related to the post-COVID – 19 business scenario. The MSMEs can then revisit their business and work on the revised business plan at the enterprise level.

A quick overview reveals the range and the severity of the Risk Factors and Concerns Covid-19 has posed before the MSMEs. These challenges mainly comprise of the critical issues such as Economics & Financials, Policy or Strategy-related, Business specific, Family or People specific, Socio-Economic etc.

The narration of the risks factors are representative in nature and specifically related to MSME. It becomes essential to identify the relevant and critical risk related to the MSME concerned and therefore it calls for customized action and responses at the enterprise level. This would be beneficial to the enterprise and make the MSMEs identify and successfully overcome the challenges the units are facing currently.

The impact of Covid-19 are varied and going to be long lasting in many ways. They may be at Global, Financial, Socio-Political, and Business-related and even at individual levels. It is important to note that the nature and gravity of these impacts also vary in its own way and manner.

While analysing the impact COVID-19 , the MSMEs need to take into account the specific nature and extent of the impact on the business sector , core industry in general and the MSME unit in particular. Such approach would provide the focused way forward for its action points and shall be helpful to expedite implementation of the business action plan in an effective manner.

For industry of every size, COVID-19 was totally unforeseen and unexpected. So are its impact and the challenges posed by it. These challenges are mainly related to unexpected disruption of the business cycle, industrial activity and transportation coming to stand still, financial setback, business uncertainty, derailment of the plan and future, sudden switch over to the new approach towards business model, technology, process and services, sense of worry and added anxiety among people and even sudden non-availability of requisite skills and manpower.

The list and particulars of such challenges though appear elaborate and challenging, for the MSMEs, it calls for immediate action based introspection giving reliance on the responsive actions as required by the revised business. This would be possible if at the unit level, the entrepreneur works on analysing the severity of the latest business situation and works on the revised business plan. This can be achieved only when the owner-entrepreneur dose the quick but balanced study of what has been maintained while so much might have been lost due to COVID – 19 .

To revive businesses in the post-COVID-19 scenario, the MSMEs need to ascertain to what extent they were impacted at the business level and then formulate an action plan in a timely manner. This exercise of reviving the business at the enterprise level would equip them to do business in the new context.

This exercise must focus on vital issues such as business impacts the unit had on short term and long term basis, the strategic and operational changes required and executed with reference to business potential, strategy, production or services leading to implementation and execution at the enterprise level. The “P4” approach customized for MSME comprises of Projecting, Planning, Preparing and Performing thus can prove to be useful in this regard. The latest classic example of Maruti and Mahindra, the well-known car manufacturing companies, shifting their planning and priority to manufacture ventilators speaks for itself.

Going forward, adopting and implementing such or similar types of changes and business priorities shall be essential as the part of their business. The adoption, implementation, and its methodology need to be customised to the changing requirements of the business. This approach would certainly prove to be a game-changer for them in many ways. Thus they would not only be able to sustain but also help them succeed in their endeavour at the enterprise level.

The ownership and leadership for the MSME is direct and different. It basically goes with the accountability which is focused and confined to a person or a few persons. These persons must adopt and execute the entrepreneur level Managerial Leadership based on analytical approach, consistency based on commitment to the cause, decision making and effective execution under the changing circumstances . Doing different things definitely can be effective mantra for MSMEs from now onwards.

Like the Medico-Social perspectives, the post-COVID-19 business scenario has now become a stage to stay in business. In order to address and overcome this scenario, like every stakeholder in the business society, MSMEs have to understand and undergo the challenging business requirements.

They need to work out their own business plan to succeed and the success rate would mainly and solely depend on their changed efforts to deal with the challenges. The pre-requisite for converting the challenges COVID – 19 has posed, shall be the business plan and approach based on Risk Management and its mitigation, act of emotional balancing at business related decision making and converting the capability into ability at every level at the MSME.