Think about your local grocery store, restaurant or the car rental agency. They are all examples of small businesses, and these small businesses are the foot soldiers of any economy. In most of the sectors, they are the ones who ultimately serve the end customers. Growth in small businesses is a crucial parameter for measuring economic growth. 

Here are a few difficulties faced by small businesses:

Operational Uncertainties

The lockdown to curtail the spread of Covid-19 pandemic, although necessary for the security of the people at large, has particularly left an adverse impact on small businesses. Essential services like grocery, medical and dairy are allowed to function within pre-defined time limits in most places. However, other small businesses have been completely shut down and are now non-functional.

The Gap between Receivables and Payables 

Initially, the lockdown was planned for 21 days, and it has been extended for two more weeks. But considering the current situation, no one can say with any certainty when the lockdown will be lifted. And, even if the lockdown gets lifted, it will happen in a phased manner, and things will take quite some time to return to normalcy.

To understand the situation better, let us consider this example. Imagine that you are the owner of a local restaurant. Since it remains shut, all of your employees are left jobless, although temporarily. Your income has been halted, but as the owner, you will have to pay your employees their monthly or weekly salaries. Furthermore, you have rented this property.

Credit Crisis

Generally, small businesses run on credit. They take loans from their local bank branches. The EMIs for these loans need to be paid. Most of these small businesses also function from rented spaces. They still have to pay the rent.

Usually, you would have managed all these expenses from the income generated from the daily cash register. However, now you don’t have any other source of income. So how will you cope with all these expenses, such as paying rent, giving salaries to all the employees, and managing your personal expenses?

Covid-19 and Banking

Covid-19 has made banking services a huge hurdle for owners of small businesses. There is no certainty when your local branch is operational, and if it is functional, are the services you need available? 

Also, visiting the branch, meeting representatives, physically exchanging papers, and currency notes pose a risk of transmission of the disease.

You should use internet-based platforms as much as possible to mitigate this risk. Analyse your cash flow using the virtual financial dashboards to find out where you can optimise, reduce expenses and build new income streams. You can negotiate a lesser rent with your landlord during the lockdown period. You can also negotiate an overdraft or a loan extension to meet the needs of this emergency. Moreover, you can do all of this without having to step out of your house. You can now fix other challenges while staying on top of the financial aspect of your small business.  

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