The COVID-19 pandemic had adverse effects on the Indian economy and every sector. This ongoing crisis has hit small business sectors and small startups the worst, facing a tremendous blow of unemployment and a massive financial crisis Due to lockdown, production was stalled, which led to a substantial financial deficit for many of these small firms. Some of the micro, small, and medium enterprises were shut down permanently during this period.
The small and medium business sector in India is the second largest after agriculture and forms an integral part of the Indian economy. Some of the takeaways from the coronavirus impact on the small business sector in India are:
- The small business sector of India is facing a sharp decline in revenue due to a shortage of production.
- The sector is also facing decreasing customer-base due to COVID.
- The small and medium sector of India comprises about 1/3rd of India's GDP and employs approximately 100 million people.
- The sector faced numerous setbacks related to the payment of wages, debts, repayments, etc.
- Market analysts say that the pandemic induced lockdown had a 20-50% impact on the earnings generated by the sector.
- Business firms located in rural areas faced numerous supply chain and logistics issues due to lockdown and inter-state travelling restrictions.
- Many firms faced woes related to procuring raw materials and resources of production.
The Government of India and other organisations are lending support to the Small and Medium business enterprises in this hour of crisis. Measures aiming liquidity flow to the firms are being introduced. Similarly, awareness of digital modes of payments is also being encouraged in this phase.
Impact of Pandemic on Other Sectors of the Indian Economy
The COVID-19 induced lockdown worst hit the agricultural sector, which is the primary sector of the Indian economy. The sector faced a massive blow as the supply chain and logistics were affected due to nationwide lockdown, and a substantial part of the product could not be transported.
India's manufacturing sector also faced a huge blow due to the coronavirus crisis. However, some experts feel that this crisis has come as a blessing in disguise for India's manufacturing sector. Due to recent trade restrictions imposed by the Government of India, gradually, manufacturing FMCG goods has shifted from China to India.
The Indian Tourism sector is one of the badly affected industries from the Coronavirus pandemic. Due to the fear of the spread of the COVID-19 virus, there was a significant drop in the tourism sector. As travel modes like railways and aviation were suspended, the popular tourist destinations across the country did not register visitors.
Measures to Strengthen Small Business Enterprises and Grow their Business
- One of the proper ways of boosting the Small business landscape can be introducing the use of digital payments. Digital payments like BHIM, Google pay, Paytm are proving to be hassle-free transactions both from the customer and the supplier's side. The Coronavirus pandemic has increased the use of digital payments due to its contactless mode of payment.
- Small Business firms can use social media to promote their products, and thus, they can amplify their customer base and reach out to more and more people.
- Small Business enterprises can increase their customer base by asking for referrals from their existing customers. They can also promote their products by indulging in some PR activities.
- Small Business can also expand their base by containing production costs and can help them save finances for other important things.
- During this period of the pandemic, several business firms can shift their focus on manufacturing essential commodities like sanitisers, masks and other protective products in-demand at this moment. This will also result in increased demand from the customers' side.
- The COVID-19 era has also disrupted the supply chain and logistics severely. Thus at this moment, the enterprises can think of supplying goods to local areas so that they can save time and energy required for the logistics and supply chain of the products.
- Identify your customer base: To start your business one must be aware of the demographics of the customer base.
- Start with small funds: It is always beneficial to start one's business with small funds instead of splurging a considerable amount.
- Procuring raw materials locally: It is also said that procuring raw materials from a nearby location will save other costs for the firm.
- Introduce innovative technology in production: Due to advancements in technology, many machines in the markets save time and energy. So the business firms can deploy innovative machines to save time and also get quality in products.
- The first step to open a bank account for a small business is to register your business firm.
- After registering, one can apply for a business account either through online banking facilities or through the bank directly.
- After applying for the Business account, some other formalities like the (KYC) Know Your Customer has to be done wherein certain documents are to be given to the bank.
- A Public Provident Fund scheme is known for low risk, and it also has guaranteed returns for the benefit of the customers.
- Moreover, PPF accounts can also be opened for Business firms and investment as it gives good returns.
- There is a fixed tenure of a PPF account where funds can be locked for a period of 15 years.
- Loans can also be availed from the PPF account of the holder.
- It can be opened easily at any bank by giving certain documents like the PAN card or Aadhar Card.
- The customers can avail income tax benefits on the PPF account.
The COVID-19 crisis has many takeaways. This period has taught all of us to be patient and to survive on minimum resources. Similarly, it has a lot of takeaways for Small Business firms. They can learn a lot from this crisis period and can subsequently do well in their business.
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