Business Post LockdownApril 25, 2020
Lockdown Opportunity; Reduce Fixed cost to Variable cost…?June 16, 2020
MSMEs, in general would have felt the inherent risk they suffer from during Covid crisis. However MSME should take due care in addressing those risk, to avoid major business impact in future.
- Low capital and high debt in working capital, affects credit and operation
- This lead to cash flow problem – Bank DP problem; lower ratings
- If possible gradually liquidate assets/investment and bring money in business.
- Don’t divert funds under any influence; Business needs funds: Invest more in it
- You can get best return from business where you have maximum experience
- Generally owner has strength in 1-2 function (from Sales – purchase – commercial – production – HR – Accounting); other functions are not managed by capable experts.
- Bring experts – build second line – Increase delegation and efficiency
- MSME suffer from low capacity utilisation and lack of information to improvise – Define installed capacity – process-wise/product-wise and monitor utilisation
- Lot of Capex done without detailed analysis (IRR /payback/ROI) – Avoid it
- Build system with check & control –generate data – validate accuracy– implement it. Entire team (withowner) should come and support system
- Low and inadequate Insurance coverage; leading to high risk in emergency
- Evaluate, Identify & Implement right ERP at right stage; with full commitment
Organisation do have Auditor – Tax – GST consultants etc, but very few have business consultants for implementingthese best practices to support management in improving their decision making process.
Post Covid become stronger to withstand any crisis that come in future