How SMEs Can Manage Their Finances Post-COVID In India
Dec 09, 2020
The Coronavirus outbreak emerged out of nowhere and the financial budget of every household went for a toss. Moreover, the dominating pandemic reached every nook and corner of the world and traumatized the economy of every country. Where the superpowers needed time to stabilize themselves at the stock market, the SMEs of India were crushed under the COVID effect. Gradually, the economy of India is trying to revive itself. However, the country’s SME needs to go beyond strengthening its financial aspects. They should now focus on restructuring their business strategy to stand back on its feet post-pandemic. Here are some helpful methods that can equip SMEs in India to glide through post-COVID while efficiently managing their finances.
Revisiting Financial Structure
Business Policies are based on your current capital status and financial objective. The pre-COVID strategies will not be applicable to the current market trend. You may need to re-evaluate your assets, inventories, debts, outstanding payments, etc. to build an updated version to tackle the financial crises amidst the pandemic. You may need to curtail your expenses and provoke revenue earning tangents while keeping cushions for exigencies during dipping sales. You should invest in inventories according to the demand. Simultaneously, you also need to ensure that there is a smooth flow of critical commodities without hampering your production process. Such practice will assure you of regular cash inflow even through unfavorable market scenarios.
Applying for Waiver
SMEs function with limited funds and have scarce cash reserves. Further, they have a low-profit margin. Considering the most vulnerable category of business, discussions for providing relief to MSME is underway. MSME (Micro, small, and medium enterprises) covering startups, manufacturing units, and service industries can breathe a sense of relief as the government is planning to waive off compound interest on loans less than Rs. 2 crores during a pandemic for a six-months moratorium period. The SMEs’ reduced burden can ease the passage of diverting the funds in production.
Adaptation for Survival
The survival of the fittest is the fundamental source of inspiration to overcome the prolonged declining market scenario. The industry needs to alter its production strategy based on the demand and supply curve. It is imperative for the management to make amendments in fund allocations to boost the production of basic commodities mostly in demand as a result of the pandemic, while halting manufacturing of pre-COVID products that have reduced demand. Thus, the organizational objective should be flexible in adapting to changing market trends.
As the COVID cobweb is gripping the local market with lesser footfalls and dimming sale activities, it would be a wise move to leap into the online market. SMEs can compensate for the loss of in-store sales with an alternative medium. The transition can help in retaining clients and inducing sales. You can manage it by strengthening your online infrastructure to ensure smooth flow. Further growth can be determined by nourishing social media platforms, such as blogs, displaying product benefits on Facebook, LinkedIn, etc. to create awareness of your entry into the online world.
Remodeling Your Business Strategy
You can govern the market when you align your business strategy according to the market scenario. Your business goal should revolve around improving cash inflows even in a restricted market. The market downturns may stretch more than expected, so it is best to adopt methods to reduce debts and increase revenues. You need to chalk out a 3-months policy, 6-months policy, or 9-month policy to gauge the unpredictable market.
The pandemic is an ideal time to re-evaluate your future business prospects. Though it may be difficult to assess the prolonged effects of COVID, a sustainable business practice will keep you smiling through the rough weather.