Friday 22 / November / 2024
THERE are 44,000 registered small and medium-sized enterprises (SMEs) in the Sultanate, which employ 40 per cent of the total workforce, contributing 15–20 per cent to the national GDP.
Five thousand of them initiated their business last year only and they are not immune to the financial impacts of the pandemic; in fact, this sector is currently in danger.
The local authorities are easing the lockdown procedures in the Sultanate now according to the Supreme Committee directions; however, the number of people infected with COVID-19 is increasing.
At a time when our local enterprises are catching their breath after three months of lockdown, the authorities have clearly indicated that further restrictions will be applied, if necessary.
There seems to be no escape from the pandemic’s consequences with the increasing number of complaints regarding sales and cash flow; however, the chances of SMEs surviving a second lockdown will be much higher with the deployment of additional steps as soon as possible.
Here are some steps that could help SMEs survive in the event of a second lockdown (if not applied yet):
1. Offering a delivery service
There is no doubt about the importance of having a delivery service in the current pandemic. With the social distancing requirements, many families prefer to have their necessities delivered to their doorstep. SMEs can either provide the delivery service as an in-house exercise or by tying up with one of the delivery apps available in the market. For example, the Omani app for delivery services "Akeed", has seen a 27 per cent increase in the number of orders since March 15, when the lockdown started.
2. Going online with social media
Even small SMEs can have an Instagram page, at least in order to connect with their customers and boost sales.
We currently see many Instagram pages of home businesses that offer quality products. Instagram now has over 1 billion monthly active users — a 42.86 per cent increase from 2017, when it had 700 million. That is a lot of growth in just two years’ time.
Among these users, 90 per cent follow a business on the platform, suggesting that Instagram users are keen on hearing from and about brands.
In a global survey, 66 per cent of people said they use Instagram specifically to interact with brands; 53 per cent said they would follow a brand for its content alone, and 84 per cent of consumers will buy from a brand they follow on social media over a competitor.
No matter what kind of retail business we are dealing with, they must have some sort of social media connection to boost sales during this period.
3. Renegotiate/reschedule rentals/loans
Renegotiating expenses during the pandemic is a commonly accepted practice by banks, property owners, and even employees.
It clearly demonstrates the will of an SME management team to continue the business despite the difficult time and illustrates their passion.
Below are some important cost items to negotiate:
Bank Loans: Banks are providing deferral programmes and loan rescheduling with interest-free options in some cases.
Lease agreements: Shop rental, store rental, and any other sort of rental must be negotiated at this time for cost cutting.
Insurance rates: Fire insurance, works men compensation insurance, and any other type of insurance policy is an extra item worth negotiating as well.
4. Seek the support of Oman Development Bank
Before giving up, SMEs must apply the above points and check for signs of improvement, if these signs are clear and the business owner feels the confidence and requires more time, this is the step to go for.
SMEs in the category of entrepreneurship holders, including borrowers from the Al-Rafd Fund, are entitled to benefit from the loan program for those affected by Covid-19.
The loan repayment period will be four years, of which six months will be the grace period. The loan will be approved, and amounts will be sanctioned within three working days.
Yet, the SME owner must go through a feasibility check before applying for this step. Remember it is a loan after all, and it needs to be paid.
This loan will be added to any previous loans that the company has. In summary, the responsibility for the SMEs’ continuity does not rest with the government or the business owners only — consumers should support this as well.
If you have a small supermarket in your neighborhood, for instance, try to get some of your needs from them even if you are used to purchasing all of your requirements from a hypermarket once a week, for example.
Your purchase will support them with the cash flow required for survival during this period.
SMEs bankruptcy will start a chain reaction of increased rates of unemployment, disrupting the market balance of demand and supply, leading to a reduced GDP and hence, greater deficit and a slow economy, which at the end, could reach your job and source of income.
