Covid-19 crushes micro and small enterprises

The coronavirus pandemic has had disastrous impact on small and medium-sized enterprises across the country. With only 24 per cent small and medium businesses currently operational, a new report has indicated that five out of ten businesses would run out of working capital within two months, and will have to depend on loans from peers, friends and family in order to survive.

Covid-19 has negatively impacted 79 per cent of micro and small enterprises (MSEs). Nine out 100 businesses are also expected to lose 100 per cent of their revenue during the next two weeks, according to the study, which surveyed 420 players in 12 cities across manufacturing, BFSI, IT, ITES, telecom, travel, transport, logistics, retail and outlets, education and related areas, and other professional services sectors.

The first of a three-wave study, by data, insights and consulting company Kantar, shows the impact on key business areas, with seven out of ten businesses witnessing significant decline in customer footfalls and enquiries.

While seven out of ten manufacturing businesses are unlikely to procure raw materials for the next one month, the study shows six out of ten businesses are uncertain about their business financial health for the next two weeks.

Only two out of 10 businesses have more than 10 per cent contributing workforce, with BFSI and education sectors experiencing higher workforce contribution.

Silver lining
The study aimed to highlight the economic outlook for MSEs, challenges that threaten their existence and the opportunities that they seek to remain relevant in current times.

The overall impact on business has led to 18 per cent MSEs operating at less than 50 per cent capacity. Restricted movement, low demand from customers, financial and workforce woes are leading to high level of customer-oriented challenges, notes the study.

However, despite the overall low sentiments, at least 55 per cent businesses surveyed said they are looking at leveraging opportunities to better their businesses in the current scenario.

While 35 per cent are turning to leverage technology and digital solutions, the report showed many MSEs would rehash their business models and adopt digital channel for sales and customer communication strategies. MSEs were also keen to adopt technology products and solutions.