MSMEs In The Shadow Of Corona

The little geniuses of the KredX "Do More With Your Time" internship initiative have been honing their writing skills with us through the lockdown days. Here's a detailed blog by our 12-year-old intern, Akshit R Satheesh, about the impact of coronavirus on the MSME sector and how businesses can tide over the crisis written from a first-person perspective as an MSME business owner.  During this time of crisis, many small businesses are facing problems related to money. This is causing these businesses to close or come crashing down. Without financial help,  many small businesses are going to close, which could cause the global economy to fall. So, I am writing this article to help them survive. I am a successful business owner whose business has been running smoothly for the past four years. During this time, I never faced such a challenge. No-one could predict that the global economy could ever fall so rapidly and steeply.  At the moment, the biggest concern for everyone is money. So, businesses need a lot of money. They have fixed and variable costs, such as:

Fixed Cost- Employee salary, office rent payment

Variable Cost- Electricity bill, packaging, raw materials

When they make sales, part of it goes to the fixed cost and variable cost, and the rest is for the business itself. However, their sales have gone down. This does not help. Without their source of income, they cannot pay their costs for long. This forces them to close their businesses. But even though businesses will come down, they will come up again after the pandemic as people will flock to shops after being cooped at home for so long. So they just have to survive during the pandemic.  No business can survive without their employees. I feel that if a company wants to survive this pandemic, it must keep its employees. Many businesses have invested money for training their employees. So, if the employees leave these businesses, they could face losses and may have to spend more money to train new employees. Employees can help by taking pay-cuts and not taking bonuses. I see a number of MSMEs are trying to move to the healthcare manufacturing sector now. I feel that they should not do this unless the owners of these businesses have knowledge or experience about how to manufacture masks, ventilators, gloves, and other protective equipment.  Small businesses can tide over the pandemic in many ways, such as: Small businesses can survive by taking loans. The banks can give interest-free or low-interest loans. They should also give long term repayable loans. Also, many businesses are suppliers to large companies. These companies usually have more money in reserve and can help and support these small businesses. They also have access to better loans which can help small companies to tide over this pandemic. Many large companies only survive because of their suppliers. So, they should help them in their time of need. Business owners should create a three-month financial plan which can help them tide over the crisis. Many businesses have the same key expenses. So, you should talk to the people who you will have to pay in the next three months and find out how you can spread the expenses. This will help you conserve money. I have been working with a plan since February to help sustain my business through this time. For franchise businesses, liquidity is just part of the equation. The cost of goods sold in the industry is mainly wages paid to staff. Debt loads from small business association loans are common for small businesses and can create additional pressure on business owners. With demand down and paid leave provisions now a reality, layoffs are a big concern.  To help startups across India, the Small Industries Development Bank of India [SIDBI]  has launched a new program COVID-19 Startup Assistance Scheme [CSAS].  A recommendation committee consisting of 5 members will be formed. Through this scheme, startups can receive a loan of up to Rs 2 crore.  The government for its part has been working to come up with a number of support initiatives for an MSME like my own -
  1. It has been encouraging banks to keep loans ready
  2. It is trying to delay loan repayments for small industries
  3. The government is trying to roll out sops for MSME that manufacture locally for self-production in India


This is a time for all the MSMEs to stay positive, work with a plan in place to survive and take the help that is offered by various segments in the business and most importantly work with their partners & support ecosystem to tide over this challenge! We will SURVIVE and THRIVE.