By Angela Castor
The whole country experienced continuous declarations of lockdowns in their respective regions last week because of the Covid-19 pandemic, and the first few days were chaotic- people resorted to panic buying, the general workforce seemed confused whether they are going to work or stay at home, and businesses were scrambling to implement their control measures.
Some companies were quick in their decision-making and setting their priorities. Case in point was the big conglomerates in the Philippines who took the spotlight and basked in the praises of netizens all over the country because of their efforts to allocate budget for their employees and cushion the effects of Covid-19 in the livelihood of Filipinos. And who wouldn’t admire them? With billions of pesos allocated for wages of their workforce and hundreds of millions for personnel financial support, expedited bonuses, not to mention massive donations to help the front liners on their duties. One can’t help but say, “Sana All”.
Unfortunately, not all companies are as big as the Ayala Group, SM group, Gokongwei group or the Aranetas who can afford to take a toll in their businesses such as this. Out of the 1.42 million business registrations in May 2019, 99.56% are micro, small, and medium enterprises (MSME), and only less than 1% are considered large enterprises. While this might be a painful jab to the large companies, the pandemic is a 1-2-3 combination punch that could bring MSMEs to their knees. When MSMEs fail, it doesn’t just mean a business loss for the entrepreneurs, it’s also a loss of livelihood for the employees, a loss of income for a household, and decreased tax revenues for the government. Ultimately, the entire economy will suffer a major blow.
Leveraging on Technology
While it is the plight of MSMEs to continually look for ways to be productive despite the pandemic, leveraging on technology somehow paved alternative ways for MSMEs to keep the business afloat in this period of uncertainty. Companies who can afford to have a flexible or work-from-home set-up have been maximizing different online collaboration tools and communication platforms like Skype, Zoom, and Workplace by Facebook, to virtually keep the business running. MSMEs have also turned an adversary into an opportunity as they are turning to social media platforms to connect with their customers and extend their services by delivering commodities such as food, water, and groceries right in their doorsteps. Turns out, the menial tasks we ignore have become luxuries these past few days.
In lieu of face-to-face meetings, technology also gave options for MSMEs to scout for potential clients via call, email, or social media platforms. Some people receiving these kinds of messages might find it annoying and insensitive to be thinking about business in the face of crisis, however, one must consider that profit may not always be the drive; like any company, there is, big or small, owners have a huge burden and responsibility to look after the greatest asset of their business- their employees. For MSMEs, profit is not only at stake, but it’s also the lives of their employees too.
Activity and Liquidity
And unlike large enterprises, MSMEs have fewer cash reserves. A survey by the PhilExport participated by MSMEs showed that their greatest hurdles when the pandemic broke out were the slowdown in market demand, higher cost of raw materials and an increase in logistics cost. As business activities are being limited to contain the spread of the virus, it is a herculean task to think about payrolls and operating expenses on top of everything.
Unfortunately, activity and liquidity have a significant linear relationship in the financial performance of an MSME. And while it’s nice to know that other companies have the option to extend collection periods for customers, some MSMEs can not afford the same option as much as they want to. One can only hope that their reserves are enough to last until the quarantine is lifted and the operations can go back to normal again.
Bayanihan of All Sorts
Of course, government agencies have also been preparing measures to alleviate the economic impact of the virus on MSMEs. COVID 19 P3-ERF is a P1 billion enterprise rehabilitation financing facility by an agency under DTI that aims to help micro and small enterprises stabilize and recover from its losses (DTI, 2020). DOLE will also provide financial relief to establishments and workers affected by the pandemic, coming from its P2 billion fund (D.O. 209, 2020).
It is also important to note that NGOs, civic organizations, corporations, businessmen and even fellow citizens, have joined forces to combat the pandemic through financial aids, donation of PPEs, goods and other essential items for those who are most affected. Amidst the panic, fear, and politics, the spirit of Bayanihan, is very much alive in everyone. With this much solidarity shown on all fronts, there’s no doubt that MSMEs will be able to bounce back after this crisis. After all, Filipinos always have a knack for ingenuity and overcoming adversities.
Angela Castor is the Sales Manager of FutureSmart Resources + Strategies Inc., an Asian company committed to bridge gaps through technological innovation and data-driven strategies. She is also a former market researcher and brand marketer in one of the biggest research firms in the country and financial service industry, respectively.
