While the novel corona virus has inflicted devastation upon the organised world, it has also ushered an opportunity for the new tides of transformation to emerge. This bleak situation where businesses and institutions have suffered substantial losses on account of the global pandemic also holds the potential for heralding a profound paradigm shift in the way businesses are imagined and defined, namely the shift from offline to the online digital medium. While most organisations in the world have sanctioned their employees to work from the safety of their homes, there is still much ground left to cover. There is an overwhelming gamut of businesses belonging to sectors, which have hitherto operated in a conventionally offline manner. Industry types like the assembling ventures, retail activities, hospitality, portability, and so on have consistently existed along the physical forms of activity. While the huge global companies have the benefit of huge capital and asset to their removal, small and medium undertakings make the most of their dexterous and more minimal nature of working. The lockdown has taught the entire business world a lesson in the survival of the fittest tactics and how best to leverage seemingly adverse conditions to one’s gain. The Government of India has brought in a surfeit of bailout packages, amended fiscal policies, rate cuts, loans and waivers to rescue the ailing industries in the country. It has also unequivocally championed the need for the nation to become self-reliant, besides heralding a slew of ingenious schemes such as the ‘vocal for local’, financial aid and an INR 20,000 crore security reprieve. The centre is also endorsing the immediate need for businesses, academic institutions, and public sector units to immediately and effectively shift to online means of business to maintain market relevance. Here may be a slew of essential factors every SME and MSME must undergo before recommencing their operations once the lockdown gets lifted:
Counterbalance the situation
Regardless of the size, nature, or measurement, the essential worry for each business is to start an inside and out appraisal of the current organization resources, its general finance related wellbeing and security viewpoints. As the pandemic has interfered with tasks, creations and deals across outskirts, organizations need to show up at a reasonable and all-encompassing review of the current circumstance despite the harmful pandemic. The organizational administration must purpose the different shortages, planned inflow and outpouring of capital, inert uses and weights. Getting trustworthy and significant reports in regards to the different break from government, peak exchange and business bodies, financial specialists are fundamental before attempted basic choices, for example, pay cuts, rejecting of likely future speculations, development and extension plans, and so on.
Reorienting the objectives
Re-appraisal of all business blueprints is of the utmost essence for SMEs within the event of such an industrial setback. The post-pandemic landscape is undoubtedly getting to vary than the pre-COVID days and businesses need to revamp and realign their planning and strategy for the longer term accordingly. There's a requirement for a sensible and well-formed map for the road ahead while taking into consent the outlook of the varied stakeholders of the corporate . The leadership should also reschedule the corporate objectives in accordance with the unprecedented coronavirus developments. Reforming the annual execution plan can constitute a spectrum of diverse business variables like suspension of funding rounds, forging new partnerships, or discontinuing unfavourable ones.
Adopting the digital
The current condition directs that SMEs along with the smaller entities promptly change to the computerized pathways of business commitment and make a solid and genuine online nearness. By taking advantage of the capability of internet based life, organizations can even create deals through connections with friends and clients by means of online channels of correspondence. This is the period of advanced media advertising, and business visionaries must outfit it now, like never before. Those associations that have up to this point worked through disconnected modes ought to scratch out a progress design for the up and coming advanced future without settling on worker productivity or data safety.
The transformation must continue
The fourth technological revolution may be a well-timed boon indeed, a veritable blessing in disguise for businesses round the world. Even the SMEs must leverage the newest technological disruptions like the AI, ML, IoT, CRM, Cloud and other innovations. Businesses should adapt to the fourth revolution of smart automation and invest appropriately to bestow a new-age tech-empowered operational facelift, thus thriving within the digital economy. Tech-empowered businesses have the sting over conventional competitors churning higher ROI and market performance even within the times of the pandemic. Though the required investments for these overarching business augmentation and up-skilling could seem unfeasibly vast, it's an important cost that has got to be undertaken considering the longer term consequences. Businesses must execute optimum risk-mitigation strategies within the face of the pandemic and will also seek to acclimatise for any future crisis.
COVID-19 framework: Stretch from a deep-steepto a sanguine recuperation
Scenarios for the world economy post-Covid-19, range from a deep-steep (L-Shape economic growth) to an optimistic recovery (V-Shape). Within the range, there are all kinds of possibilities as key variables are widely unknown, including virus containment, ripple and systemic effects of economic shutdowns.
We believe that no matter the form of the scenario, we'll be experiencing a “new normal” where not only economic but also social behaviours will drastically change. This may comprise a change in social dynamics (i.e. social distancing, restricted public events/entertainment), values (i.e. support to local businesses, value added to consumers/users, impact on wellbeing), consumer behaviour (i.e. different expenditure priorities, less income, online over brick and mortar), international travel decline (i.e. quarantine while travelling inside/outside countries), among others. In such a context and supported the changes of the five trends analysed, we've laid out a group of potential impacts that SMEs will face once all the dust settles and therefore the world moves into the “new normal”. In the short term, the main target for SMEs is to remain alive, through the capacity to react, act and adapt to the present situation. This suggests identifying and adjusting to the changes not only from the customers’ preferences, behaviours and wishes, but also from the suppliers, networks, employees, and people untapped.
For those SMEs that manage to navigate through the present crisis and stay alive, there'll be new opportunities that would emerge within the future.
COURSE 1: CULTURE OF ENTREPRENEURSHUIP / VENTURE CULTURE
• Risk capital culture has been on the increase
• Major successful exists have boosted the morale of entrepreneurs
• Young age of average entrepreneurs
• Sizeable amount of SMEs operating within the industry, F&B, and traditional economic sectors
• Start-ups emerging are mainly from the industry using “traditional” technology. Absence of deep technology in new ventures
How the long term of entrepreneurship could appear as within the purview after Covid-19?
• There'll be new fields of play for SMEs and start-ups in health, wellbeing, agritech, in-home entertainment, cyber security, computer game, food, online delivery.
• VC appetite for traditional technologies and repair platforms are going to be further diminished, prioritising deep-tech investments
• The entrepreneurship landscape of the region could take a big step back
• Many SMEs will disappear, especially those within the most affected economic sectors that don't have solid digital capabilities or the power to digitise parts of their business model
• Only the few SMEs or start ups working with deep technology are going to be significantly more contended.
COURSE 2: EDUCATION NEEDS REDESIGNING – NEW ABILITIES ADVANCEMENT
• Despite a shortfall of STEM education, GCC governments are investing massively in upgrading education
• New tertiary training offers new information fields (for example MBZ University of AI, or 1 Million Coders Initiative), albeit low degree of post-graduate enrolment will remain
• High reliance on expatriate human capital for delivering advanced levels of education
• Limited success of previous MOOCs and online distance learning platform
How SMEs will deal with the longer-term skills required
• Covid-19 will quick advance the mass reception of separation learning selection
• It will accelerate automation and make demand for brand spanking new knowledge and skills
• It will put even more pressure on advanced degrees and STEM education
• SMEs owners/founders will need to up skill and re-skill themselves
• GCC Governments will accelerate the event of micro degrees and micro training, also as push for developing technology skills and advanced degrees.
COURSE 3: TECHNOLOGY UPTAKE AND 4RTH TECHNOLOGICAL REVOLUTION (4IR)
• 4IR industrial sector expected to be 20 per cent of GDP in 2030
• UAE and KSA (which together account for 70 per cent of technology spending within the region) are encouraging tech-driven business around internet of things (IoT), robotics, health, biotech, etc.
• High level of investment creates barriers for SMEs to enter these sectors
How longer the term of 4IR for SMEs could appear?
• 4IR technologies will take an enormous boost as work becomes more remote, less reliant on physical interactions
• As companies will look to de-risk global supply chains, decentralisation and therefore the use of other manufacturing like 3D-printing will grow
• GCC governments will place even more specialise in boosting 4IR agendas and policies
• Less funding are going to be available and financial pressure will increase the barriers for SMEs
COURSE 4: FINANCING AVAILABILITY FOR SMEs
•While new funding mechanisms like peer-to-peer (P2) lending, crowdfunding are still incipient within the region, they're gaining traction and SMEs are becoming wont to them
•Super subsidizing activities are being sent in Abu Dhabi and Saudi Arabia, which are infusing capital into the biological system
•Sovereign wealth funds are looking to make local impact
•High levels of income and saving capacity of GCC citizens and residents can become an influx for brand spanking new funding mechanisms
•Low level of interest from traditional banks towards SMEs means limited funding mechanisms available
How will the longer term of the new financial models for SMEs will appear?
•Income is going to be seriously impacted, reducing drastically new funding mechanisms.
•Investors will look to safer assets like gold and low risk investments
GCC citizens and residents will prioritise cash availability and low-risk investments over riskier investments for instance P2P for SMEs
• Financial stress on SMEs could increase the amount of defaults on their P2P loans, eroding confidence during this mechanism
• Government-backed funding mechanisms for SMEs will allocate larger sums of capital, although many existing SMEs funded pre-COVID will presumably default their loans, causing larger stress within the system
• The indifference of banks towards SMEs will only be intensified, creating more stringent lending criteria and banking requirements.
COURSE 5: REGULATORY EVOLUTION IMPACTING SMEs
• Countries start moving towards long-term and versatile visa programmes
• Changing bankruptcy laws and incentives for fixing new businesses
• Introduction of VAT and additional taxes on the rise
How the subsequence of regulation will be on the SMES?
•New limitations could be forced on portability of individuals given wellbeing concerns
•Governments to relax further long-term visas going to attract and retain residents
•New taxes could be introduced to fund healthcare expenditure
•Starting a business could be easier as governments will relax restrictions and reduce costs for SMEs
•While GCC-authorized SMEs will continue having special treatment and motivating forces, governments could begin loosening up further limitations for non-GCC authors
•There will be more pressure coming from countries outside the GCC, who manage to provide better incentives and leaner regulation.
In light of uncertainty, it is vital to stabilise and explore. While there is no single path forward for SMES, a quick recommended path of action is to stabilise exploitation activities while that concentrate on exploring new horizons:
•Stabilise exploitation activities within the short-term
•Leveraging local subsidies and support to resizing the organisation, reviewing core activities, revisiting the supply chain, stress-testing P&L,that concentrate on cash management, etc.
•specialise in exploration activities within the medium and long-term
•Analyse ways of pivoting through either changing the price proposition, delivery channels or targeting new customer segments
•Re-shape components of the business model to capture different opportunities and navigate the challenges explained
SMEs that are able to successfully specialize in both are getting to be able to navigate the crisis, others will face the danger of disappearing.
Re-evaluating SMEs lending withinfluence ofinvesting in post COVID-19 scenario
The Covid-19 outbreak and its economic fallout have made India’s path to realize sustainable development goals (SDG) by 2030 quite challenging. Among those goals, ‘access to banking, insurance and financial services for all’ appears even harder to achieve if the $600 billion SME credit gap continues to widen. In this scenario, impact investing or impact financing could help in bridging the gap by offering access to capital to SMEs. Consistent with International Finance Corporation (IFC), impact investing is formed into companies or organizations with the intent to contribute to measurable positive social or environmental impact, alongside a financial return. The role of SMEs in strengthening the socio-economic fabric of India through employment generation and entrepreneurship makes it one among the key target sectors for impact investors. The concept of impact investing is within the early stage of evolving in India at the instant which gives the SME lenders a superb opportunity to draw in impact investing to the world. As a matter of fact, an IFC report on impact investing in 2019 says that the investor appetite for impact investing is approximately $26 trillion globally. So, a neighbourhood of the answer to the access-to-credit issue of the SMEs lies in attracting those investments to the SME sector. to form that happen, SME lenders must create accountable, compliant and transparent investment opportunities for impact investors, shunning the vice of impact washing. Impact financing could end up to be the saviour for the SMEs that run businesses with none formal source to borrow capital. Due to Covid-19 pandemic, SMEs are browsing liquidity stress thanks to revenue loss and reduced borrowing options. Impact investing – if properly channelized – could redefine and reenergise SME lending within the post-COVID world.