Dr. Digger
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Dr. Digger

Fate of Small Businesses post COVID19

Covid-19 appears to have dealt the global economy a crippling blow, which could result in the entire world staring at a global recession looming over the horizon.

Closer home, India’s growth rate is expected to fall to around 2% in the coming future. The bloodbath on the stock market combined with the poor health of our public sector banks is sure to compound the problem.

The Government is yet to announce any measures that would provide a breather to small businesses. EMI moratorium is purely a delusion as the interest on this would be compounded and charged when the moratorium expires, defeating the entire purpose of the leeway. Additional working capital loans, even at a concessional interest would create more burden on the already strained capital. While fixed expenses continue to mount, revenues would be slow to come and depending on how long it takes the economy to gain momentum once the lockdown is lifted.

Funds crunch all across shall limit the quantum of business and speed of recovery.

It is expected that 20% of the small businesses might shut shop and the rest would be forced to go back in time by several years in terms of growth. Survival being the most critical necessacity, the resultant measures would involve some tough and unpleasant decisions which would invariably lead to large scale retrenchment and may add to the growing job unemployment scenario.

Though, we can hope for not everything to be bleak, there could be a positive effect as well. This downturn could necessitate the businesses to think differently, to become compact, more adept at managing with limited resources and credit wary. Following “zero credit” policy could reduce the bad debts which hitherto have been a big cost for the small enterprise. Managing with lower inventory and lower debts could provide faster turn around and better RoI.

Focus in the coming months should be on managing costs and retaining business. Growth is bound to happen once the economy is back on its feet. Immediate need is survival and the best way is to manage the debt and costs. Only we can save ourselves. No government, no bank and no institution is going to come to the aid. It’s ours and our battle alone!

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Sunil Newatia

Sunil Newatia

I do not have any claim to fame. I am just one amongst the billions inhabiting our great planet. I am just a spiritual being having a human experience