From health difficulties to mental health issues, the Coronavirus outbreak has affected us in numerous ways – big and small. There’s no doubt that this once-in-a-lifetime pandemic has hit us all hard. Unfortunately, SMEs, retailers, and small-scale manufacturers are among the worst impacted by Covid-19.

Considered the lifeline of the economy, SMEs were brought to a sudden halt with the nationwide lockdown. Though lockdowns have been relaxed, and the country is now in various stages of reopening, the small business sector is yet to find its footing. Experts predict that it will be a  long time before businesses bounce back to pre-Covid-19 levels. The vast majority of SMEs are struggling to make ends meet during these challenging times. 

Also Read: COVID-19 Relief Package For MSMEs Under Atmanirbhar Bharat Abhiyan

At Indifi, we believe that “opportunity lies in the middle of difficulty.” In this guide, we’ve put together a list of practical tips for SMEs to better manage their finances, so that they can recover quickly post Covid-19. Use these guidelines to make the best use of opportunities as the world adjusts to the “new normal.”

Perform a Financial Health Check-up of your Business

We believe tackling your finances without a clear picture of what’s going on is like walking into a forest blindfolded. The first step in managing your finances is to understand what’s going on.

Start by analysing your current financial health. Create detailed records of your debts, outstanding payments, and inventory. Once you have a clear picture of your current finances, it becomes easier to understand what you should do now to better tackle this crisis.

Also Read: How Do The Latest Moratorium Policies Impact EMI Repayment for SMEs?

Redraw your Budget

No one could have predicted the pandemic. We’re sure that the budget and assumptions you drew up before the pandemic are either obsolete, or completely irrelevant today. Work with your finance team to prepare a new budget for your business post-Covid-19.

Analyse the impacts of the pandemic on your business, and work out the changes that you have to make going forward. For example, if you expect a drop in sales in the coming months, then adjust inventory accordingly. Similarly, if a crucial supplier will not provide you with a critical product, then arrange alternative suppliers.

Carefully consider the different scenarios that impact your business due to the pandemic, and see how best you can refine your budget going forward.

Also Read: Survival Strategies Post COVID-19 Lockdown For Businesses

Work on Improving your Cash Flow

The financial health of any business rests on the cash flow. The better the cash flow, the easier it is to use available opportunities and grow your business. Right now, it’s true that most SMEs are facing massive cash flow shortages due to reduced sales volumes, erratic supply lines, local lockdowns, and other restrictions.

Here are a few tips for improving your cash flow. Note that some of these tips may not be relevant to your business. So, analyse each pointer carefully, and choose only the ones that work for your company.

Also Read: How Covid-19 Has Impacted Indian Business And Economy

Stock Management

  • Take steps to boost sales, especially of products that do not have a long shelf-life.
  • Run promotions for items that are likely to become dead stock.
  • Reduce inventory to keep up with the low demands until the situation becomes normal.
  • Increase purchase of items that are likely to see an increase in demand due to the pandemic.

Also Read: Covid-19 Challenges Faced By MSME

Credit Management

  • As per the government’s initiatives to help businesses during these challenging times, it’s now possible for SMEs to restructure ongoing loans.
  • Restructuring is offered for MSME loans that have been standard as of 1st March 2020. The last date to apply for restructuring is 31st March 2021. 
  • Work with your lenders to see if you can restructure it – opt for a temporary moratorium on EMI payments, or extend the loan’s tenure to reduce monthly payments.

Also Read: Top 10 Business Ideas After Lockdown

Debtors Management

  • Check with debtors to see if they can pay on time. If they’re experiencing cash flow problems and cannot pay the entire amount, check if it would be possible for them to pay small periodic payments.
  • Reduce debtors by encouraging customers to pay at the point of purchase. See if you can offer them added incentives like extra discounts, to make them pay on time.

 Tighten your Purse Strings

“A penny saved is a penny earned.” This age-old adage holds very real, especially during a crisis like the one we’re facing now. Review your expenditures to see if you can cut down on unnecessary spending.

Avoid spending on unessential infrastructure and other expenses. Review your staff and see if you can reduce numbers. It’s time for some hard decisions – let go of employees who aren’t productive.

Also Read: How To Manage The Shortage Of Credit During Lockdown?

Look for Funding to Meet your Working Capital Needs

It may seem counterintuitive to take on additional loans during a pandemic. Having adequate funding to purchase inventory and expand your business now will help you make the best use of opportunities once business picks up.

Check with your lender to see if they can increase your overdraft limit. Alternatively, you can consider taking an MSME loan to meet your working capital needs. At Indifi, we offer hassle-free loans to businesses across sectors. As one of the top online lending platforms for businesses in India, we provide various lending solutions; like term loans, invoice discounting, merchant cash advance, and line of credit. Check our solutions and find the right credit needs for your business to get back on your feet during these challenging times.

Also Read: Top 10 Business Ideas After Lockdown

Focus on Online Selling

The key takeaway from this pandemic is that – business models have been radically altered. More and more people are staying at home – either voluntarily or under the instruction of health authorities. People are looking to reduce contact with others. This has fundamentally altered the way business is conducted.

From large retailers to small Kirana stores – everyone has gone online. And, this trend is expected to stay for the foreseeable future. If you haven’t focused on online selling until now, it’s high time to get started. Invest in the appropriate infrastructure to facilitate online selling. Introduce convenient payment options for customers and reduce the pain points of online selling to make it hassle-free. 

Also Read: How To Manage The Shortage Of Credit During Lockdown?

Finally, it’s Time for a Reality Check

The silver lining here is that the pandemic has provided all SMEs an opportunity to reflect and upgrade for the future. Here are a few questions to ask yourself:

  • Were you happy with the way the business was run before the pandemic?
  • Was there adequate cash-flow before the pandemic?
  • Are you getting sufficient returns on investment?
  • What could you do better to increase profits?
  • What needs to be changed to make the business sustainable and profitable in the long run?

Pondering over these questions will help you plan the future of your business.

Final Thoughts

As they say, “there’s a silver lining in every crisis.” Try to evaluate and re-shape your business during these challenging times, so that you can emerge financially stronger and sounder post-Covid-19.

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