The ongoing pandemic has changed everything. In the last few months, the world has evolved into living with the ‘new normal’. This has impacted businesses, irrespective of their size or sector. But in the case of small and medium businesses (SMBs), the impact has been particularly severe. For a country like India, where SMBs generate nearly a third of its GDP, their swift rebound is paramount.
Not only do SMBs provide employment to millions, they are also important suppliers and customers to larger enterprises. In recent decades, SMBs’ entrepreneurial spirit has driven much of India’s growth — which is why they are so critical to economic recovery as the nation grapples with the impact of the pandemic.
With restrictions easing, businesses are opening again. But things don’t look to be very pleasant. Recent media reports suggest that 30-40 per cent of restaurants may never open again. And it seems to be the same situation in many other sectors. Having said that, numerous studies have shown while SMBs in the country have a positive sentiment towards revival, there are areas that need immediate attention to ensure their survival and growth.
The World Health Organization indicated, “we all have to learn to live with the virus”. So, there is no doubt that remote working will be in for the long haul. Migrating to a digital-first business model will have to be top priority for SMBs in their turnaround roadmap. Adopting technology will enable SMBs to be nimble and flexible in their operations but also equip them to adapt to customer needs more quickly and reach beyond their borders. While Indian SMBs were warming up to benefits of going digital, the pandemic has ensured that this will now be their top priority — as it directly co-relates with their ability to survive and thrive.
Whether the push comes today’s customer who expects businesses to offer streamlined, automated, and personalised experiences, or workforces that will prioritise working remotely, safely and securely. The ability for SMBs to adapt their business models to deliver fast-paced, continuous engagement between customers, partners and employees will squarely determine their future.
Transforming business models
As businesses re-open and economic activity resumes, most SMBS are finding themselves in an uphill battle for capital to get their business going again. While there is good liquidity with banks and NBFCs to fund businesses, it is obvious that these financial institutions will prefer business models that are more likely to sustain the pandemic onslaught.
Before lending to any SMB, financial institutions would be keen to understand how much any business can adapt technology to sell its products and service, utilise its workforce that has migrated to smaller towns and digitally market its product offerings and solutions. Therefore, it is imperative that SMBs pivot their business models towards a more agile, digitally-enabled setup that makes them more attractive for lenders.
Helping SMBs go digital
There is enough evidence out there to show that growth correlates with how a company values digital adoption for its success. The good news is that SMBs in India understand this and are keen to step up their use of online tools and to digitise processes to increase efficiency and productivity. Research shows that more than 75 per cent SMBs recognise that going digital is important for the survival of their business.
But it also throws up a surprising statistic — that SMBs are more likely to turn to financial institutions for advice than get help from technology companies.
This clearly indicates that many SMBs do not have the right guidance or support to unlock innovation and transform their business models. This is when there is government support; availability of funds with financial institutions and bevy of IT companies that offer devices, services, or the knowledge to help businesses drive innovation through digitalisation.
The need of the hour is for these three ecosystems to join forces and provide SMBs with the support, guidance, and resources to re-imagine their business models and have the right strategy to come back stronger and be more resilient.
SMBs in India have the potential to bounce back stronger from the current crisis. Many of them are more agile and able to digitally transform than they realise. I long to see a day where a craftswoman in a small village does not have to travel to the city to sell her wares. Instead getting orders online and shipping her wares to distant countries at the click of a button. All of this is possible — and the right guidance and technology can make it possible.
The writer is Managing Director, HP India Market