The Gist: An insight into the plight of SMB entrepreneurs during the ongoing COVID-19 lockdown. Please read completely, or I recommend not to waste your time. As we pass time in the lockdown to fight the Novel Corona threat, the Indian Government has taken a plethora of steps to ensure that people are not hit drastically by streamlining the demand-supply chain for essential commodities, ensuring that the lockdown is imposed properly and isolating cases in addition to announcing some great economic measures to ensure stability and peace. The Indian lockdown scenario: Official (as announced) – 21 days. Disturbance before announcement – 3 days Assuming monthly weekends – 8 days Other holidays in the period of lockdown – 9 days Total – 41 days of lost productivity. We support the government in its entirety and understand teh magnanamity of the task. That announcing and executing the same in so short a time, is a great challenge. The government has kept its word on every commitment made and we are sure that we will successfully thwart the Corona threat. Kudos. We thank every front-line health worker, from doctors, nurses, and paramedics to those involved in sanitary services who are risking the infection to ensure that we, the common people live in relative safety. While everything looks hunky-dory at this stage, let us look at the economic ramifications from an SMB [small and medium businesses] point of view that could surface once the lockdown is over [the possibility of the lockdown being extended is not ruled out]. Most SMB owners in India do not come from affluent or rich families. Compared to the salaried counterparts, most SMB owners would have about 2-month revenues as liquid savings. The intelligent salaried normally would have 4 to 6 months of salary as liquid savings. And a good entrepreneur takes about 10% of the turnover home, as salary or drawings. The Indian SMB entrepreneurs can be classified as:
- The Upper Middle Class:
How’s the cash flow in the lockdown period:The Rich and Affluent: Big businesses that manufacture or distribute essential products are making good money for now, but the demand will diminish and balance out in a quarter following the lifting of the lockdown. But, for now, they are accumulating the cash and riding the cash flow due to panic buying and rolling back the same into business, so a boost for them is inevitable. Big businesses are run by the affluent or the government, therefore they are going cash-rich, albeit temporarily. This is more so since we are all paying or getting paid salaries on time irrespective of the lockdown. The Salaried: The salaried are not much affected by the lockdown financially since the salaries are mandatorily payable and they get to spend more and buy more due to savings on eating out, clubbing and all those expendable income activities. The Below Poverty Line: The most affected by this crisis are the people below the poverty line and the government has done well by ensuring the PDS [Public Distribution System] remains well-oiled and distributing free food, ration, and money. This is irrespective of the fact that their income has not taken a dent and they are being paid salaries on time.
The essential lockdown crisis:As small business entrepreneurs, we are all between a rock and a hard place.
- We are paying salaries irrespective of work done or not.
- We have to run our homes, in a crisis.
- No income comes our way, at least for the 41 days.
- We are not being supported in any manner by the government.
While reading this, please note:
- This is my point of view only and I do not expect anyone to subscribe to it.
- The above points are purely apolitical and pragmatist and do not cater to any manifestos.