Small-medium businesses and companies are vulnerable during an economic crisis. They are primarily because their resources are scarce and have to adapt to the change in context. It is evident from a survey done by the ITC COVID-19 BUSINESS IMPACT that the pandemic has affected over 4,467 companies across 132 countries. This depicts that the pandemic has affected small-medium companies strongly. The survey also points out that nearly two-thirds of micro, small and medium firms’ business were affected by the pandemic compared to 40% of large companies. One-fifth of the SME-s said they would risk shutting down their companies permanently in the next three months
There are cases in which SMEs rely on suppliers from countries and regions with more COVID-19 cases. SMEs face obstacles in transporting their services by sea, road or air during these challenging times. SMEs are also vulnerable to disrupted supply chains. With time, SMEs might find great difficulty re-building connections with former networks since supply chains will find new partners once it’s disrupted. Their old partners might have renewed the contracts with some other enterprise
There is a considerable reduction in customer orders since the pandemic, which paves the way to a high decrease in SME revenue. Almost 75% of companies and enterprises suffer from a demand reduction, and 50% are facing a drop in orders. These are affecting the internal and external cash flow of the company drastically.
The production capacity of SMEs is reducing at a swift pace due to the reducing number of temporary workers, paid leaves by employees or lower working hours. This has forced firms to take more drastic measures, including asking employees to take unpaid leaves, work for lower wages or laying off permanent staff. Enterprises also report a significant shortage of workers because of containment measures, fear of getting infection or family responsibilities.
With both productions as well as demand collapsing steadily, SMEs face massive challenges in giving salaries for employees and for those workers who are being affected by the infection.
Several countries are allowing government-supported commercial banks to allow a temporary moratorium on debt payments. Local governments have also deferred the property taxes paid.
Another obstacle that SMEs are facing is adopting to means of teleworking or working from home. The extensive use of the internet and technology is challenging for certain SMEs since it’s an entirely new working environment. They find it challenging to find balance in their work and life since both happen at the same place (their home, where they live). It is difficult for SMEs to have a proper work-life balance since they are already struggling with revenues and workload. They also have to take care of their family members, pay bills, rents or fees for their ward.
The plunging demand is forcing working to lay off from work. Most of these workers may not have the financial resources to survive these conditions. The head of SMEs is also in a problematic grave situation because they are helpless to provide their workers. Their lives are also in danger since the whole enterprise could go bankrupt. The responsibility of the company lies in their hands. The owners might have built this with incredible difficulty. It might push them to psychological distress if the situation forces them to shut down the enterprises.
The SMEs could aspire to reach psychological resilience. The owners of SMEs should be given more psychological support from their resources and the public. They need to be taken into consideration while making policies during the pandemic. Only if they achieve resilience in these challenging times can they continue to move their company forward and take care of their employees. It takes great effort from the owners of SMEs to keep the company moving and not shut down. The government should give importance to their well-being since SMEs constitute a significant part of the economy and are also a source of employment for most of the population. More people should come forward to support SME owners in this pandemic.
|Suppose there are more means for SMEs to add to their supply chains. In that case, it will help them diversify their business, thereby maintaining their relationship with buyers and employees. This would matter greatly in these challenging times.||The government should take into consideration the needs of SMEs and change national policies concerning them. SMEs should be protected, by all means, failing, which will lead to the global economy being at risk.|