In the present scenario, nobody is sure when this lockdown will get over in Kerala and in other states. Many say that the MSME sector is going to get a bigger blow than big companies. “But the bigger companies will have bigger problems and the smaller one will have smaller problems,” says Christo George, Chairman and Managing Director of Hykon India Limited.
The most important thing for MSME is to survive, especially for the next 3 to 4 months. For taht, they need to consider four key points which are:
1. Minimise the cash outflow
2. Maximise the cash inflow
3. Take bold decisions
4. Stand together as a team
Minimise the cash outflow:
We might have made a lot of payments for the vendors. The company owner has to call the vendors and ask for more time to make the payments for raw materials and other things. Assure that the payment will be made. And it is sure that most of the vendors will support you at this stage. Second, if you are paying rents, then you have to call the landlords and ask for payment extension or for instalments. The business owner should have an idea about all the company expenditure. For that, the company owner has to sit with the accounting team and understand all the expense in the company
Maximising cash inflow:
Every company will have a non-moving inventory like raw materials, finished products etc. Take steps to liquidate non-moving inventory. Stop the credit sales and focus more on cash sales. There will be a lot of pending payments to be collected. Send mail to the customers and inform them of the situation. And take actions if you are eligible for getting GST refund
Take bold decisions:
Almost every company will have non-performing employees. Identify 20% among them and take actions. Second, re-shuffle the employees in the organisation. Maximum employees have to be used in the area where the revenue is going to be generated. And reduce the team size to the optimum level
Stand together as a team:
You have to create a core team in the organisation and take collective decisions. And this information and decision have to be passed on to the employees and request their support. The most important thing is to keep clear communication with all those people associated with the organisation, be it investors, employees, customers etc. Meet the banks, brief them your situation and take their supports and advice.
