Care in Crisis: Precautionary steps to be taken by small business owners against COVID-19

During these unprecedented adverse times, the focus of SMEs should remain on staying safe, supporting their customers to keep the wheels of earning turning.

The novel Coronavirus has forced the entire world to adapt to change quickly. After a considerable lockdown period, workplaces in India are taking a large number of precautions for their employees in the unlock phase.

COVID-19 pandemic has put the spotlight on the renewed need for hygiene and overall facility management to deal with new set of challenges.

While large businesses have the infrastructure and funds to put safety facilities in place, it is the small businesses that face the existential threat and cannot remain closed for long. They are often financially fragile, with little cash or resources.

For small businesses to resume operations, and once again serve as an engine to economic growth, they need to take some precautionary measures for the safety of their staff.

  1. Sanitization and regular cleaning of offices, factories, restaurants, shops, or business facilities is important. For this, following cleaning and disinfecting measures can be followed:
  • Wear disposable gloves to clean and disinfect.
  • Clean surfaces using soap and water, then use disinfectant.
  • Practice routine cleaning of frequently touched surfaces.
  • Surfaces and objects in public places that are touched frequently, such as shopping carts and sale counter keypads should be cleaned and disinfected before each use. Apart from this, high touch surfaces at workplaces include railings, tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, sinks, etc.
  • While disinfecting hard surfaces, keep solution on the surface for at least 1 minute.
  • Electronic equipment at the workplace, such as tablets, keyboards, remote controls, and ATM machines should be wrapped with a wipeable covering.
  1. Make sure that you staff washes their hands at regular intervals, wears gloves and masks, especially if they are facing customers.
  1. Seating arrangement at your facility should be such that two employees have at least 6 feet distance. For shops and stores, ensure that your staff is available for assistance, and customers touching the products is minimal.
  1. Ascertain that the clothes or uniform worn by your staff is washed and sanitized every day, and their temperature using infrared thermometer is checked before they enter the facility.
  1. If your staff is delivering goods to households, practice a no-contact delivery, wherein the delivery executive should be advised to keep the goods at a distance for the receiver to pick them up.

However, disinfecting the more-exposed surfaces is just not enough. Exercising easy communication to educate workers about identifying the symptoms of COVID-19 is equally important. Explain the importance of washing hands, wearing masks and gloves, and cooperating with ASHA workers who visit the house or store to conduct tests for coronavirus symptoms. Also, instructions on what to do if they develop symptoms within 14 days after their last possible exposure to the virus must be provided.

On Premise precautions

It cannot be denied that one of the prime sources of exposure to COVID-19 for small business owners could be their buyers, sellers, or supply chain staff. It needs to be understood that it is not just one person but the whole ecosystem at the back end around the individual, which consists of their family who have to be safeguarded.

To do this, business owners can take the below mentioned steps:

  • Monitor delivery and supply chain staff: Temperature check or thermal-scanning before entering the facility should be made mandatory for staff and customers.
  • Protective gear: Masks and hand gloves must be worn by the staff that is into customer facing roles. Customers must also be asked to wear masks covering their nose and mouth. Also, shoe covers should be provided to the customers while entering the malls, marts or supermarket.
  • Sanitization booth: A supermarket or a mall that allows customers to help themselves should install sanitization booth with foot pumps for people to pass from or place contactless sanitizer dispensers in order to minimize the spread of virus. Also, a PPE clad security person can be appointed to ensure that people are adhering to the guidelines, post which, used PPEs should be responsibly disposed.
  • Social distancing: Healthy distance of at least 4 to 6 feet should be maintained from the customer by creating a sealed area right in front of your counter/sales staff facing spaces.
  • Make Arogya Setu App installation mandatory for people entering your premises: Aarogya Setu App is a COVID-19 tracker launched by the Government of India. It keeps the user informed if they have crossed paths with the positive COVID-19.
  • Promote online payment: Instead of using cash for receiving or making payments, modes of digital payment like mobile banking, internet banking, cards, etc. should be encouraged.

Precautions while dealing with customers

International MSME Day 2020: Navigating the ‘New Normal’ Together

Small businesses play an important role in the economy. Not only do they outnumber large firms considerably, but employ vast numbers of people as well. The International MSME day was initiated in order raise awareness about the importance of supporting the development of small and mid-sized businesses in developing countries.

Definition of an Indian MSME:

An independently owned and operated enterprise that is created for profit and sells products that are needed by customers in the local market is referred to as an MSME (micro, small and medium enterprise), which in Hindi translates to लघु, छोटे और मध्यम व्यापार.

On 13th May 2020, Finance Minister Nirmala Sitharaman added additional criterion of turnover along with investment to define enterprises as MSME. This definition was announced under the Atmanirbhar Bharat Abhiyaan to facilitate MSMEs to grow in size and help them deal with the difficulties brought upon by the pandemic and the ensuing lockdown.

The definition, however, got further revised on June 1, 2020 on representations that the revision is still not in tune with the market and pricing conditions and should be revised upwards. As per the revised definition, medium enterprises got redefined as businesses with up to ₹50 crore in investment and up to ₹250 crore in turnover.

This step will help attract investments and create more jobs in the MSME sector. The following table provides details of the revised limits:

CategoryOld CapitalOld TurnoverNew CapitalNew Turnover
Micro₹25 Lakh₹10 Lakh₹1 Crore₹5 Crore
Small₹5 Crore₹2 Crore₹10 Crore₹50 Crore
Medium₹10 Crore₹5 Crore₹50 Crore₹250 Crore

Why is MSME day observed?

Observed on the 27th of June every year, the International Micro, Small and Medium Enterprises (MSME) celebrates the magnanimous contribution of smaller companies in construction of the foundation and growth of the global economy.

History

In 2017, to recognize the importance of micro, small and medium enterprises in promoting innovation, creativity and employment for all, and to root for achieving the 2030 Agenda for Sustainable Development (focusing on people, planning and prosperity), the United Nations General Assembly declared 27 June as International MSME Day.

Significance of the MSME sector

Micro, Small and Medium Enterprises (MSMEs) play a major role in most economies, particularly in developing countries. They represent about 90% of businesses and generate employment for more than 50% of the world’s population. Moreover, MSMEs contribute up to 40% of the national income (GDP) in developing economies and create 7 out of 10 jobs worldwide. But what hinders MSME growth is access to finance. It cannot be denied that MSMEs largely depend on internal funds, or cash from friends and family, to launch and run their enterprises rather than opting for bank loans. The International Finance Corporation (IFC) estimates that 65 million firms, or 40% of micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of $5.2 trillion every year. The prominent MSME markets are East Asia And Pacific, Latin America and the Caribbean, Europe, and Central Asia.

Source: www.worldbank.org

The MSME Landscape in India:

  1. There are 42.50 million, registered & unregistered MSMEs in India, this accounts for a staggering 95% of the total industrial units in the country.
  2. MSMEs in India employ about 106 million people, that is, 40% of India’s workforce – second to the agricultural sector.
  3. Indian MSMEs produce more than 6000 products.
  4. They currently contribute around 6.11% of the manufacturing GDP and 24.63% of the service sector GDP.
  5. MSMEs produce 45% of the total Indian manufacturing output.
  6. MSME exports are approximately 40% of total Indian exports.
  7. MSMEs account for 16% of bank lending and their fixed assets total ₹1,471,912.94 crore.

Source: msme.gov.in/KPMG/CRISIL/CII

Stimulus packages for MSMEs from across different nations

The Covid-19 relief package for micro, small and medium enterprises are aimed at liquidity infusion at this juncture. Here are the top 5 countries that have announced stimulus packages for MSMEs to help them tide over the COVID-19 lockdown-induced crisis.

Japan: The 31.9 trillion yen budget will fund a 117 trillion yen ($1 trillion) economic stimulus package, that will help fight the economic impact of the novel Coronavirus pandemic. It would be the world’s largest stimulus package of $2.18 trillion for a Coronavirus-hit economy, as they have already spent nearly $1 trillion to restore the adverse effects of the pandemic. The total package would amount to 40% of the country’s Gross Domestic Product.

USA: The House of Representatives in the USA approved a $483 billion stimulus plan on top of a $2.2 trillion package, followed by a half a billion dollar stimulus. This money will back small businesses on the brink of bankruptcy, and hard-pressed hospitals. The package is necessary to ensure that small businesses have access to the resources they need.

Sweden: The central government of Sweden has guaranteed that 70% of new loans banks be provided to the companies experiencing financial difficulty due to the COVID-19 virus. This loan guarantee will primarily target small and medium-sized enterprises. Also, the Swedish National Debt Office will administer the guarantee and it is proposed that each company be allowed to loan up to SEK 75 million, although exceptions can be made.

Germany: A package worth up to 750 billion euros ($808 billion) to mitigate the damage of the Coronavirus outbreak on the economy has been announced. The relief measures by Germany include funds of up to 100 billion euros which can be used to take direct equity stakes in companies as a way to foil foreign takeovers. It also includes another 100 billion Euros in credit to public sector development bank KfW for loans to struggling businesses. The stability fund will offer 400 billion Euros in loan guarantees to secure corporate debt at risk of defaulting, taking the volume of the package to up to 750 billion euros. The extra budget includes a 50 billion Euro program to help small businesses and the self-employed threatened with bankruptcy by the Coronavirus crisis, with direct payments of up to 15,000 euros depending on the size of the firm.

India: The Atmanirbhar stimulus package of ₹20 Lakh Crore is designed to offer fiscal and monetary support to ease running of businesses. Moreover, to save the lockdown-battered economy, the stimulus package includes tax breaks for small businesses and incentivises domestic manufacturing. The combined package works out to roughly 10% of the GDP, making it among the more substantial stimulus packages in the world. (https://www.solvezy.com/indias-rs-20-lakh-crore-covid-19-economic-stimulus-package-impact-on-msme-sector/).

Comparison of Global Coronavirus Stimulus Packages

Trends shaping the growth of MSMEs in a post COVID19 world

Over the last few months, the COVID-19 crisis has dealt a severe shock to economies across the world. It has triggered certain trends that will change the way of doing business in the near and long term, and will help shape the growth of MSMEs.

Accelerating trends in the wake of the COVID-19 crisis:

> Digitisation: Digital tools will become popular in both the B2C and B2B space, and there will be a shift of venture capital focus from service centric businesses to deep tech companies. MSMEs and start-ups, therefore, need to build solid digital capabilities and digitise parts of their business model. Besides this, expansion into new sales channels is also the need of the hour. Consumers will require goods even amidst lockdowns. Thus, creating opportunities to serve one’s markets through alternate sales channels, such as expanding to e-commerce via platforms like SOLV and boosting one’s online-marketing efforts is critical. (https://www.solvezy.com/micro-small-medium-enterprises-msmes-covid-19/).

> Rise of the locally produced goods: Reliance upon foreign sources for getting technologies or weapons will see a decline, and the domestic market is expected to surge owing to a decline in global trade. That’s because the decline in global trade due to restrictions on international shipping and travel will see a rise in demand for goods manufactured entirely locally. Manufacturers will also have to look at backward integration of their supply chains.

> Changing consumer demands and expectations: Coming of age, consumers will become more prudent and health conscious, and businesses need to cater to their changing demands and expectations. Operating as earlier won’t suffice.

> Need for upskilling and reskilling: In the post COVID world, MSMEs will need to adopt new technologies and new ways of working in order to survive and compete. Governments will need to develop specialized institutes and training programs to create a pool of skilled resources in order to help local industry.

> Limited availability of finance: Disposable income will be impacted and investors will look for safer and low risk investments. As a result, MSMEs will end up relying on Government-backed funding mechanisms.

In the light of uncertainty, it is important to stabilise and explore. While there is no single path forward for all, MSMEs should follow a few basic tenets:

  1. Stabilise one’s core offering and explore new adjacent areas to venture into
  2. Leverage local subsidies, revisit the supply chain, and focus on cash management
  3. Analyse ways to change the value proposition, delivery channels and target new customer segments

COVID-19 impact | Reviving post-lockdown MSME manufacturing

By Nitin Mittal

The need of the hour is clarity in policy communication by making it simple for the MSMEs, without leaving any room for subjectivity.

The COVID-19 pandemic has wreaked havoc on the economy. Taking steps to protect our industries and commerce is an immediate and critical need of the hour. To this end, the government recently announced its intention to spend almost 10 percent of India’s gross domestic product (GDP) in the fiscal year 2020 on economic relief measures towards reviving economic growth.

A sector that is reeling under the impact of the COVID-19 outbreak is the Micro, Small and Medium Enterprises (MSME), which contributes to around 35 percent of India’s manufacturing output. The MSME sector, which is also the second-largest employment generator in the country after agriculture, needs special attention from the government.

The stimulus package announced is a mix of fiscal support, monetary support, ease of conducting business processes, as well as some fundamental reforms. The need of the hour is clarity in policy communication by making it simple for the end beneficiaries, the MSMEs, without leaving any room for subjectivity, which needs to be urgently taken up by the central and state governments. For instance, the Finance Ministry’s notification in May, amending the General Finance Rules (GFR) 2017, disallows global tenders to encourage MSMEs to take part in tenders below INR 200 crores, but has bestowed power to respective departments in ‘exceptional case’ scenarios to consider global tender enquiry (GTE). Policies cannot be left to individual inference when a critical step in economic progress like quality sourcing is being sought from domestic players, especially the MSME sector which is gearing to be a major supply chain player for domestic and global markets.

To make this a reality, certain measures with respect to limiting imports may be a necessary step, at least for the foreseeable future. China, for example, is one of our top three trading partners and the trade deficit with the country has increased manifold over the last few years. To stem this, the Government of India proposed amendments in the Customs Act which gives it the power to ban import and export of certain items, “under exceptional circumstances”. These measures are intended to make our supply chains more self-reliant and less dependent on imports, but it is also important to remember the unparalleled scale and capability of manufacturing-driven countries like China; it will take significant policy interventions and drastic structural changes to match their scale, expertise and skills, to be globally competitive.

This is a feat that India is not new to; the challenge has previously been overcome successfully by the likes of the textile industry in India, which is the second largest exporter of textiles in the world. As a country, we must collectively find ways to extrapolate the success stories of the textile industry to other import-heavy industries, while also learning from its failures to kickstart growth in the new normal.

Here are some of the essential steps needed to get the manufacturing MSMEs back on track.

Financial incentives

  • RBI needs to immediately issue guidelines for higher provisioning revisions to banks, in the absence of which liquidity injection into the system is getting delayed
  • Instant availability of subsidies, with simplified processes for getting them without hindrance
  • Speedy cashflow issue resolution through GST refunds and short-term collateral free, low-interest loans to both large corporates and MSMEs

Article first published on: www.moneycontrol.com/