COVID exposed a fatal flaw in most of the Indian Companies, especially the MSMEs.
It is apparent that MSMEs were literally working on a hand to mouth existence, and just did not plan for a crisis. There was no contingency plan or fund.
This could have been because MSMEs are not professionally managed. In most of the cases, the Entrepreneur is a technocrat or a marketing guy who lacked skills in other domain. The entrepreneur falls into the trap of 'I know everything and can manage' syndrome and were clueless when the sky fell on them as they ran out of cash.
Cash flow is critical for any business.
As a New Venture Advisor, I always insist that either the Entrepreneur employs quality people to man Finance, Marketing, Logistics or alternatively have professionals advising him in these areas.
I have heard complaints that Banks do not entertain funding requests from MSMEs. Having been an Investment Banker, I can vouch that 99% of the proposals are poorly made, do not cover what is required by the Financial Institution, and is more of Project ideas, than detailed Project Reports with 5 year financials plus risk assessment. The least MSME can do while seeking funds is to involve your Auditor and ask him to prepare the documents are required by the Financial Institutions.
Be Professional, assess your Business Risks, have a Risk Mitigation Plan.
Let COVID 19 mark a new beginning
