Small Medium
Enterprises after the
COVID19
Pandemic
INTRODUCTION
According to the findings of an ILO SCORE Program survey, micro, small, and medium-sized companies
(MSMEs) are more important than ever. They cannot be ignored, as they account for more than 70% of
global employment and 50% of world GDP. Small enterprises, unfortunately, are the hardest damaged by
the pandemic's aftermath. Solutions are required to provide them with the assistance they require to live
and contribute to the global economy. The United Nations General Assembly designated June 27 MSME
Day to enhance public awareness of their contribution to sustainable development and the global economy.
Effects on business continuity
Seventy percent of the 1,000 businesses polled from eight countries on four continents had to shut down
operations. Half of the businesses (50 percent) have temporarily closed as a result of direct directives from
authorities, while the other half (50 percent) have temporarily closed due to a decrease in orders or staffing
issues. COVID-19 infection or, more regrettably, COVID-19 infection for life
Lower Revenues
Through 2020, more than 75% of SMEs are experiencing or anticipate a revenue decrease. Revenue
reductions can be significant in some cases. According to the entrepreneurs polled, one-third of enterprises
(33%) expect to lose more than half of their revenue, and the situation is unlikely to improve. In other
nations, such as Myanmar, Ghana, Bolivia, and Colombia, there is a good dose of optimism mixed in with
a healthy dose of uncertainty about the future. Significant losses are projected in other nations, such as
Indonesia, Peru, Tunisia, and Pakistan, with a bigger number of entrepreneurs forecasting losses of more
than -25 percent.
Reduced demand for orders
Despite the fact that the majority of those polled expect demand to improve significantly in the sec
ond
half
of
2020,
the
majority
still
foresee
a
reduction
of
between
25 and 50 percent. These are also the countries with the most optimistic revenue forecasts.
-
Cash flow shortages
For SMEs, the situation is serious, and it gets even more so when considering cash flow.
Nearly nine out of ten organizations are suffering cash flow problems. According to
those polled, the situation is unlikely to improve through 2020.
Responding to the pandemic
Companies are reacting to COVID-19's economic consequences in a variety of ways. To match demand
reductions and production constraints, half of the SME's surveyed had cut their production of goods and
services. Over a third of SMEs (38%) are negotiating compensation changes with employees or new payment
arrangements with banks and suppliers. Some SMEs are attempting to diversify their sales channels or
products to mitigate the effects of the crisis on their firm, but this is a rare occurrence.
The comments of small firms to the poll are varied, but they all seek for help to ensure their survival throughout the
pandemic. Their objectives are crystal clear:
57 percent of businesses want help with infection prevention, and 50 percent want help with business continuity.
The survey results show that occupational health and safety training, as well as business continuity training, are critical for
businesses to survive the pandemic. These services, however, must be backed up by strong government action.
Businesses require easy access to short-term financing, the delay of utility payments, and the deferral of social security
contributions since cash flow is a major concern. Critical policies that can assist small firms endure COVID-19 were recently
identified in an ILO blog article. Emergency interest-free loans and cash grants are available to help with wages, training,
productivity improvements, and new product development.
It is critical to have the correct rules in place to ensure the survival of small businesses. Despite the considerable challenges
that SMEs face, the government's reaction to the COVID-19 epidemic can assist small enterprises around the world cultivate
a positive, resilient, and sustainable future.