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Indian Small Business Continuation Strategy during Covid 19 - YouTube
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hello everyone this is Uncas here from
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BC Shevchenko I believe you and your
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family are safe during this covered 19
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pandemic this epidemic has caused
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unprecedented disruption in business and
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in some cases even a crisis situation
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Indian government is doing its best to
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exchange support to poor families and
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also has done its bit to help small
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businesses during this calamity the
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crisis is going to continue for some
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time but will eventually settle as
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medical discoveries happening till then
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we need to sustain our business and look
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at opportunities what lies ahead in this
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video we are talking about what you can
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do to run your business
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during this lockdown period and also
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once the economic opens up to be normal
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so firstly how do I run my business as
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efficiently as possible during this
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downturn let's look at what the
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government is providing to small
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businesses you can delay GST and tedious
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payments by three months check whether
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delaying your GST payment and tax
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withheld on vendor payments and employee
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payments from March to May is better
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considering that by delay you will occur
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a subsidized interest cost of 9% this
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may not be suitable for you if you are
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debt-free however if you have borrowed
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and the interest cost is higher than 9%
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which it is in most cases it's better to
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delay or statutory payments which saves
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you a lot of cash for emergency the
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second benefit is loan rescheduling RBA
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has instructed banks to allow
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restructuring of loans without
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downgrading your account to an NPA even
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if you don't pay EMI on time this is
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important as this allows you to borrow
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more during emergency however keep in
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mind that it will create interest burden
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in the long term it is better to ask
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your accountant to calculate the cost
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and benefit of ratio during your law the
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last benefit is PF way with SPF
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remittance waiver government has
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promised to contribute both employee and
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employer contribution to employ
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Provident Fund for the period of April
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to June 2020 this is applicable to
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companies employing less than 100
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employees and 90 percent of the
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employees
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should be less than 15,000 check this
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provision carefully and apply it
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immediately these benefits provided by
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government are limited but are important
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at the same time now let's look at what
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you can do eternally the first step is
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reduce the fixed costs some of the fixed
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costs are rent salaries maintenance
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contracts etc here are some ideas to
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reduce them office rent with this
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epidemic it is expected that more and
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more people will get accustom to work
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from home with technology enabling and
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in some instances efficiency in fact has
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improved with flexibility as an added
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advantage in the future you would
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require less office space and hence
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there will be lower demand for
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commercial real estate with this
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backdrop you can negotiate or request
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your landlord for partial or full rent
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holiday they do salary ask her employees
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to take a pay cut with highest paid
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employees taking larger cut and lowest
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paid employees taking lower this will
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significantly reduce your fixed cost
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bring in flexible pay having high
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variable pay which is result-oriented
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will keep your employees motivated in
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the long run suspend internal
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housekeeping maintenance contracts for
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the next three months so that you can
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reduce cash ok the next step is raising
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perform my invoices instead of taxi
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moths to customers this will ensure that
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you don't create unnecessary GST
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liability as during this period
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customers don't tend to pay on time
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raise tax invoice only after the payment
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is confirmed if you have lost finished
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goods check with your insurance company
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if they are covering that loss which has
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happened during the span depth and claim
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the benefit if available if you are into
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software development or manufacturing it
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is a very good time to invest in R&D as
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your staffs are relatively free this
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will make your company attractive for
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investment and maybe you can raise
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equity capital which can help you
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sustain through this downturn and lastly
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check your bank balance and liquid
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assets calculate how long the cash flow
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is sufficient and communicate it
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throughout your organization so that
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everyone supports
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initiatives now that you got some ideas
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to improve efficiency in your business
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during the downturn I am sure you would
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also like to get some ideas for being
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well prepared for such calamities in the
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future it is expected that every 8 to 12
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years such calamities may occur and
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disrupt the business so the first step
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is having a break-even analysis for your
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business it is very important break-even
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point is the amount of revenue at which
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your business is no profit or no loss
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situation in other words business is
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self sustainable so get this prepared
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every year and review it every quarter
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after knowing your break-even point now
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it's time to lower the break-even point
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you can do this by reducing your fixed
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first as you need to cover it anyway
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even if you have no revenue some ideas
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here are encouraging people to work from
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home and which will reduce the rentals
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low fixed pay and high variable pay for
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employees where your employees get paid
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low during downturns but get paid richly
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during profitable period next take long
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term fixed EMI loans instead of cash
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credits or old drafts as this will make
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sure that you steadily clear your debt
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and you get out of the debt burden
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consciously cash credits even though it
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they are highly flexible it is a trap to
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keep your debt forever
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next you can create a contingency fund
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bank account and transfer certain
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percentage of revenue every month or
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every quarter have a target to create a
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fund which is large enough to cover six
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months of your running or fixed cost for
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your company
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next you can prepare cash flow forecasts
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and review it every month or quarter see
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if you are on track to achieve your
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revenue profits expenses and most
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importantly cash flow targets last but
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not the least invest on technology which
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will automate your business as much as
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possible this will pay off in the long
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term some examples are software's for
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payment reminders to customers bank
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reconciliations flour-based Billings
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tools etc these are low cost solution
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however a manufacturing company can look
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at by high-end machines or robotic
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process automation these are some of my
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suggestions if you have more ideas or if
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you have any further questions on this
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topic please post it in the comment
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sections below thank you
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