Business Recovery Strategies for SMEs After Pandemic

Business Recovery Strategy

In the Philippines, SMEs or small and medium-sized enterprises are defined as any business or activity engaged in industry, agri-business, or services, that has at least 10 to 199 employees and/or assets owned from P3 million to P100 million. When small and medium-sized enterprises are combined with micro-enterprises they make up 99.6% of establishments in the country. Single, small and local are the three words that characterize MSMEs. Filipino SMEs are usually single proprietorships and often the owner himself may also be the sole employee of the business. Or SMEs may also apply to producing one product or providing only one kind of service. Specifically, SMEs are the tech startups, the Instagram entrepreneurs or small owner businesses, the grocery store owners, your cousin running the family business, or your nosey neighbor. Anyone and everyone can have the initiative to start their own business. One might think that the MSMEs or micro, small and medium enterprises are just small businesses because of their nomenclature but don’t get misled because they are a major component of the Philippine economy. Given that they are small businesses with small capital and revenue, but considered the backbone of many economies this pandemic, however, has been very difficult also for them. Hence, they are in dire need of a business recovery strategy after Covid-19 to help them back on their feet again.

Nevertheless, running a small or medium enterprise has been made easier today thanks to technology. During the pandemic, business concepts centered around food like “ube cheese pandesal” became popular and easy to find because of social media. It has helped a lot of Filipinos, who were out of work during the peak of the pandemic, to bring food for their family. More opportunities for SMEs to recover, thrive, and grow because of the help of the digital age or the internet.

Below are some business recovery strategies after Covid-19 that could help the small and medium-sized enterprises in the Philippines.

Recovery Measures from the Government

During these times of crisis brought by the COVID-19 virus, external support such as from the government can be a huge help for the small and medium-sized enterprises to obtain more positive results from innovation practices in the form of performance improvements and reinforced survival indicators. Another reason is that any external support can push the innovation efforts of the business owners.

One of the business recovery strategies after Covid-19 should be coming from the government. The government must have a strategy for SMEs at the enterprise level that could help them survive in the new normal, considering that they are the backbone of many economies. They have been badly hurt, if not more, by the coronavirus disease (COVID-19) pandemic. The uncertain lockdowns and confusing travel restrictions have disrupted the supply chains, diminished consumer demand, and shrank the cash flow of many small business owners. As a  result, small and medium-sized enterprises are unable to pay store rent, employees’ wages, suppliers, and creditors causing the businesses to be buried in a lot of debt and ultimately, creating a spiraling effect on households and the economy. SMEs, which employ an average of 60% of Asia’s workforce, need policies from the government that will help them to bounce back and survive the pandemic in this new business climate that will emerge afterward. They need policies that will promote the flow of goods and services within local and international transports and across borders to revive global supply chains. With the help of undaunted and limitless infrastructure projects of the government from its  “Build, Build, Build program,” it is believed that it will be the main driving force of rebuilding the domestic economy in promoting a faster and more reliable supply chain in the country, learn more from this article from BRIA Homes– Skyway Stage 3 a Game-changer in Economic Recovery Amidst Pandemic.

The government in the country should provide a wide array of measures to mitigate the economic impact of the coronavirus outbreak on small businesses and to help them to get back on their feet. A wide range of policy measures should be crafted and adopted to support SMEs and particularly the self-employed as a business recovery strategy after Covid-19.

However, it must be kept in mind that the economic impact of the pandemic on small and medium-sized enterprises varies greatly because the flow of the business vastly depends on the speed of government response to stop the spread of the virus. As a result, the policies that the government will deploy should be carefully reviewed and heavily scrutinized taking into account the implications of the policy measures that they will implement.

Below are some government policy interventions that could be considered as one of the business recovery strategies after Covid-19 to pull out the SMEs in danger of closure.

1. Tax Deferment Policy from the Government

One issue that should be addressed is the short-term liquidity because such policies take various shapes. For instance, the tax deferment policy. Taxes and other payments remitted by small businesses to the government like income taxes, and excise duties should be deferred for the time being to ease liquidity constraints that SMEs face. However, one of the implications of this tax deferment policy on the part of the government is that it will add fiscal pressure to them and eventually will reduce to fund more recovery programs for the SMEs since the government will obtain a less profit from less tax payment made by the business owners.

2. Credit Policies

Moreover, the government should extend more credit arrangements to SMEs using several strategies like, for instance, borrowing by SMEs through state-owned banks, extending credit terms or grace periods on existing loans, reducing interest rates on special loans, or relaxing some monetary policies. These credit arrangements could go a long way in helping SMEs to recover their business from this pandemic.

3. Wage Subsidy

Lastly, the government should also partially cover the cost of the business by providing wage and income support for employees temporarily laid off, or for enterprises to safeguard employment. In the end, the government should encourage SMEs to innovate and adapt to the emerging business environment by pivoting to another business model or other products and services.

Another external support from the real estate tycoon himself,  Manuel B. Villar, Jr., is a development of a 2,000-hectare central business district in the southern part of Greater Manila. This project will create more opportunities for small and medium-sized enterprises to flourish again. Read from this article from BRIA Homes– Villar developing 2,000-hectare business district.

Innovation practices

Another business recovery strategy after Covid-19 will be innovation. Innovation has become a necessity for all businesses for them to survive in a world fueled by tight competition, rapid technological change, and consistent recurring crises. In this case, SMEs should be able to adopt new practices to cope with the new normal. Innovative practices involve the effective implementation of new solutions to challenges faced by all businesses. For instance, to innovate from a SMEs point of view means to be able to produce new products or processes that address customer needs or new marketing strategies and the like.

Small and medium-sized enterprises owners should keep abreast of vital business information solutions together with other entrepreneurs or through training to help them make wise decisions to overcome the hardship brought by the pandemic. Through the help from external parties, SMEs could gain knowledge to develop new practices and ideas that they could use in building new effective measures for production and expenditures.