From multinational firms to small enterprises, everyone has been impacted by the current pandemic which has disrupted economic activity worldwide. Nations have imposed lockdowns, with only essential services functioning. This has disrupted businesses whose impact will be felt months after the economic activity resumes. There have been numerous salary cuts, salary delays and lay offs in this period.
In India, the impact is most felt by the small enterprises. While the large banks may be too big to fail, the MSME sector in India is too small to survive. The pandemic is often compared to the global financial crisis of 2008, and thus in India there is an inherent need to support the small enterprises in such tough times. A recent report by KPMG states that the MSME economy is worth 46 million, employing more than 106 million people nationwide. While the Union Minister has highlighted the possibility of funding for this sector, it is going to be insufficient. Some of it’s schemes like, the Pradhan Mantri Mudra Yojana also known as Mudra Loan, has gained popularity during such dire times. Thus businesses have to pave out a strategy to survive the pandemic on their own. Some of the steps they can take are:
Redo the Business Plan
Most firms are forced to pivot post the pandemic. So, the first step is to get the leadership team together and strategize the business plan for the “new normal”. For example, most brick and mortar stores have no option but to digitize as foot traffic will considerably reduce even post the lockdown as people will be cautious.
Consider where you Need Funding
Assessing your financial statements and cash flow can help decide where to prioritize any additional funding you may require. Restocking inventory, equipment financing, vendor trade lines or getting a business line of credit – these are some of the ways in which funds can be utilized to get the business running. To ensure faster recovery from the months of lockdown imposed, this is critical as money cannot be wasted in such dire circumstances.
For small businesses, availing funding is the most important step to resuming business operations. The Pradhan Mantri Mudra Yojana is one such scheme that can be utilized in such circumstances. The scheme was introduced by the union government on April 8, 2015 for giving out loans of upto Rs. 10 Lakhs to the non-cooperative, non-farm small/micro enterprises in India. These loans are provided by the Micro Units Development and Refinance Agency Ltd and are hence called the Mudra loans. The loans mainly cater to truck operators, repair shops, artisans or food processors are mainly out of business since the lockdown. Under the Mudra loans there are 3 schemes:
- Shishu Loans: These are the most popular and cover loans upto Rs. 50,000
- Kishor Loans: These cover loans between Rs. 50,000 to Rs. 5 Lakhs.
- Tarun Loans: These cover loans above Rs. 5 Lakhs and up to Rs. 10 Lakhs.
Read more on how mudra scheme helps small businesses.
You may need to access additional funding in order to recover from the losses incurred. In cases where there is a need for a loan above Rs. 10,000 you can opt for the Bajaj Finserv Business Loan available on Finserv MARKETS. It comes with benefits such as flexible repayment tenor of upto 60 months with zero collateral. You can get these business loans online instantly by submitting minimal documents. All you need to do is visit the website and choose the Bajaj Finserv Business Loan and get approval in as less as 3 minutes.
Be Prepared for the Next Disaster
The pandemic has taught us a lot of lessons. Having remote work policies in place as well as investing in technology can help overcome such disasters. Building up an emergency fund if not only advised but is essential. You may also want to start paying off debt and cutting down on non essential expenditure. While the government has adopted certain policies in place for disaster management may help in the future, having your own company policy also helps dealing with disasters at such scale.
Prioritize Business Activities
While funding comes first, doing everything at once will not yield efficient results. Certain activities like securing customers and getting money back from the vendors is essential to kick start the business. Activities like rehiring can be delayed till the business is cash flow positive.
We have all learnt hard lessons from this pandemic. We must choose to look at the silver lining and try to regain what has been lost over the months. While everyone is going through the same loss in revenue, it is important to be a step ahead and strategize well in advance in order to minimize losses as much as possible.
Read more about How to Grow Business in Pandamic