Small businesses (having employee size of 1 to 99) and medium businesses (having employees between 100 and 999) have faced critical barriers in the past two years in terms of growth because of the pandemic, with significant numbers of businesses facing severe roadblocks or having to shut down, succumbing to the challenges in their way. We wanted to find out how the small and medium businesses in India are faring at the moment, when the pandemic situation has begun to change slightly for the better. We spoke to three hundred small business owners from our extensive panel base in order to learn about the ground realities from people who deal in them.
Looking at the challenges that worked most prominently in crippling small businesses, we found out what they were and how they worked their influence:
- For 74%, lockdowns and restrictions in travel that barred free movement and disrupted workflow
- For 63%, Employees contracting the virus and going on long periods of isolation made smooth work challenging
- 57% faced trouble due to supply chain disruption caused by the pandemic
- 54% reported lesser demand for products from the customer end since they were suffering from job and salary cuts as well
- For 47%, cash flow had suffered and access to finance was limited
- 41% complained about inflation
Many of the above challenges have long-standing implications, yet, SMBs identify a silver lining in the cloud for the near future. Around 61% of SMBs contend that they have reaped some positive takeaways from their experience in the last couple of years and they have mostly coped with the situation now. They have learnt new and improved ways of doing business by working around the challenge. The most common steps applied by SMBs all across, to cope with the situation, have been the following:
- 79% cut down on costs by eliminating extra avenues of expenditure
- 66% started relying on savings rather than on loans
- 44% began offering new products that are in demand in the changed lifestyle
- 61% adopted new technology since work-from-home is the new-normal for employees
Technology has played a key role in helping businesses of all proportions to overcome their challenges. Businesses also reckon that the trend of technology-dependence is here to stay and develop in unique ways. Hence, SMBs have decided to increase their investment in technology by a significant percentage, considering further to increase this share every year based on outcome.
Currently, despite having faced barriers in the past years, most SMBs feel confident that they have seen the worst and the future holds promise, both in terms of business prospects and finance. Around 47% SMBs feel optimistic that their revenues will increase within the coming year while a whopping 79% hope to have reached the pre-pandemic level of profitability. This confidence stems from the fact that their customer base have increased significantly over the last few months, partly because of the return to the normal flow of life and partly because most SMBs have diversified into fields that appeal more to their client base in the changed pattern of life. Encouragingly for SMBs, cash flow has improved over the past months owing to several factors including increased customer spending.
Hence it is safe to say the SMBs are, in effect, gearing up for growth. They intend to put their learning during the pandemic to good use and utilize their newly-acquired skills of diversification, management and operations to bring out the best in business.