21 Key aspects that MSMEs must consider while creating a recovery action plan

It’s June 27, which is designated by United Nations as

“World MSME Day”, Micro-, Small and Medium – sized Enterprises Day which is celebrated to recognise the contribution of these industries in the implementation of the Sustainable Development Goals #SDGs.

According to the United Nations, 90% of businesses are generated from MSMEs and these businesses provide 60 to 70 per cent of employment. The contribution of MSME to Gross Domestic Product (GDP) worldwide is 50%.

Covid19 had a big impact on MSMEs. An International Trade Centre survey on COVID-19 impact among businesses in 136 countries has shown that nearly 62% of women-led small businesses have been strongly affected by the crisis, compared to just over half of firms led by men, and women-owned are 27% more likely not to survive the pandemic.

This year, the UN and its partners are recognizing the important role that the entrepreneurs play in strengthening the global economy under the theme “MSME 2021: Key to an inclusive and sustainable recovery.”

United Nations Industrial Development Organization (UNIDO) has released guidelines which can be used as a reference document for MSMEs to help them recover from Covid19.

The key criterion which usually separates micro, small, and medium enterprises from large enterprises is that most of the micro, small, and medium enterprises are managed directly by their owners. Hence, owner perspective is important during the recovery from a disaster.

In India MSMEs are classified as below

21 key aspects that MSMEs must do to create a recovery plan

1. Carryout a SWOT analysis to analyze your present internal situation

2. Do a damage assessment – make a list of what a got damaged in your organization due to this pandemic, it could be material, machinery, cash flow or a process.

3. Assess your current needs

4. Take an ageing report of your accounts payable and receivables

5. Check your statutory compliance status

6. Calculate minimum sales to be achieved in a month to cover costs

7. Be aware of price change by competitors and how are they doing

8. Assess your marketing efforts

9. Know where your target customers are spending time and money on

10. Open new marketing channels

11. Check if you need to add new products or bring in value innovation to existing ones

12. Validate your inventory needs – whether it is same as what it was before pandemic

13. Any equipment to be replaced or added

14. Is location change needed in this situation?

15. Do a job analysis – is every role that you planned before is required for future or new roles to be define.

16. Forecast cashflow, profit and loss, what can you afford for

17. See if your suppliers are able to catch up with your new plans

18. If you are planning for any major changes, evaluate if you are capable of doing it with present resources

19. Ensure that the business model that you were using so far is compatible with changes introduced to adapt post pandemic period

20. There is n disgrace in dropping a product line or shutting down a factory or branch that is non-performing

21. Learn more about future developments that are going to take place in the market.

Define recovery objectives well and then prepare action plan by writing down what is the present scenario, do not generalize anything. Sort out what is affected, what is not, what might affect in the coming days when third wave hits.

It is MSMEs that comprise the majority of business entities globally and collectively. Every National Government has put in place programmes and schemes to support MSMEs for resilience and recovery to the covid19 pandemic.

“India is home to close to 6.3 crore MSMEs, that form the backbone of the Indian economy and contribute heavily to the country’s GDP. During the pandemic, as larger businesses are taking efforts to get accustomed adapt to digital operations. Some are still struggled with technological integrations to keep themselves afloat as the entire economy moved to digital platforms and offerings. Digitization has become a necessity for all businesses, more than before now, including MSMEs, as customers are expecting digital offerings.

It is crucial for MSMEs to adopt services that will help them automate their communications towards customers and stakeholders. It is high time for small and medium businesses to adopt intelligent communication platforms to ensure business continuity.