Survival of Small Businesses — Part 1 — Cash Flow Gaps

Introductory article on strategy of series for survival of business in post Covid19 scenario.

Survival of Small Businesses — Part 1 — Cash Flow Gaps

The downtime during Shutdown has given all of us a hitherto unforeseen opportunity to think. Thinking about our situation, good fortunes and supposed misfortunes, our fears, insecurities, pasts, presents, and futures etc.

I have spent time thinking about how small businesses are going to fare in the post-Covid scenario? Why small businesses? Because I have worked with them extensively over the past many years.

Here are a few random thoughts that are occupying my mind…

Disclaimer on context. This story has been written with India in mind…

Broadly, a lot of businesses have had lower Sales Order levels over the last few months leading into corona shutdown. This is across and not just restricted to MSMEs…

However, keeping this post restricted to MSMEs, lower sales have led to lower customer collections… leading to further widening WC gaps…

How are they going to fund these WC gaps? Would they be able to sustain? Would they be able to recover even with government stimulus… whatever form such stimulus may take? These and many more are unknowns so far.

Issues for such MSMEs are not just restricted to their revenues or costs but more importantly to regular Cash Flows. This has been their situation when they were asked to shutdown… The revenue tap is shut, the expenses pipe is not. (more on this later)

These and other similar ones are questions which need to be answered. I will try to share a few thoughts on the way forward based on clients discussions, my experiences, and personal observations in the coming days…

Opinions, Thoughts welcome…


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