So far, Nepal has shown 5 confirmed cases of coronavirus. If the numbers are to exponentially grow as it has in other nations, the country is evidently under-equipped to fight this Global pandemic. As a preventive measure, when the Government of Nepal imposed nationwide lockdown from the 24th of March 2020, the capital city of Kathmandu saw a mass exodus of around 1.5 million people. Consequently, otherwise hustling streets of Kathmandu are now hauntingly quiet, shutters of local vendors, restaurants, cafes, parlors, and clothing stores are now indefinitely shut. Small business owners can already feel the economic repercussions of COVID-19. Many online platforms dedicated to SMEs are now calling this a crisis and stimulating open discussions through webinars, podcasts, and live shows over what can be done to bounce back from it. One such webinar was hosted in ZOOM by Chitwan Youth Chamber and serial entrepreneur Mr. Aashish Aadhikary founder of Red Mud Coffee, Mero2paisa, and Dropout Creation.
Below are some compelling points that were raised in this interactive webinar session and they can be taken as a precautionary guideline by SMEs to adapt and to deal with these uncertain times.
COVID-19 is a test of leadership
If anything, COVI-19 is a test of a founder’s leadership skills. The crisis affects communities and its people. Its uncertainty brings dynamic changes in how employees, consumers and the network of other stakeholders behave. Given the drastic nature of this change, the founders of start-ups need to pivot and prioritize.
First of all, it is essential to remind yourself that businesses are run by people and not by mere profits. Your strategy to manage your human resource, how profoundly you empathize with their individual needs will largely affect your employee’s long-term commitment to your organization.
Secondly, the nature of consumer behavior changes with the crisis. COVID-19 is going to make people rethink their values, what they consume and how they consume. So, businesses need to be mindful and adapt to this change. Not just in terms of what services or products they are offering in the market but also in terms of how they are delivering them to consumers. It is equally important to engage with your customers, to reinforce your digital presence and brand by constantly keeping in touch with your existing consumer base. While a crisis is a challenge for some, it may be an opportunity for others.
Time to Revamp, Reanalyse, and Restart
When preventive measures against Coronavirus calls for social distancing and isolation many SMEs that depend on social interactions see disruption in their cash flow as well as their supply chain.
The fixed costs like rents remain as it is, while liabilities shoot up, cost of holding inventory and stock out cost increases. The situation becomes grim as businesses deal with liquidity crunch as business transactions drop. In these times businesses that are either in the start-up or scaling-up phase and take the hardest hit.
While there is no first aid, it is vital for founders to reconsider their next move. It may very well be the time to revamp your business model and reanalyze your supply chain to optimize your performance.
In the wake of the coronavirus outbreak, a circular published by NRB has made it compulsory for commercial banks to provide any e-commerce service facilities free of cost to its customers. The measure has been taken to encourage e-commerce trade. So, have you yet considered how you can connect technology to your service?
Negotiation and collective action.
SMEs contribute to 70% of the Nepali Economy and is one of the highest employment generating sectors. Still, only 5% of total bank loans are extended to this sector. Crisis like these is a perfect opportunity for SMEs to come together and to lobby the government so that policies and reforms can be made to propel the industry forward. Similarly, It is a crucial time for founders of start-ups to work on their negotiation skills and to renegotiate their terms of credit. Communication is going to be the key in terms of how you deal with your suppliers, creditors as well as other stakeholders of your business. Hence, for survival it is equally crucial to maintain your business relationships through honesty and accountability.
Furthermore, Nepal Rastra Bank has already taken some proactive action to ease credit payments of loan holders by making it compulsory for commercial banks to delay installment payment by the end of this fiscal year (30th Asar), to forgive any penalty charges on the same and to provide a 10% discount on loan installment payments made in these three months period.
SMEs should now study, strategize as well as negotiate and influence policies/terms to place themselves in better positions.
Last but not the least, SMEs should be guided by vision, a clear perspective of its founder and proper financial planning and forecasting are always an indispensable tool. There are lots of challenges ahead, but Nepal entrepreneurs have always dealt with uncertain challenges from earthquakes, to the economic blockade and we can definitely bounce back from this!
(The points that follow are inspired by personal parallel experiences of Mr. Aashish Adhikary, reader discretion advised.****)
To be part of other such webinars hosted by Chitwan Youth Chamber follow them on their facebook page and get all updates.
Article by Shambhavi Singh.