How small businesses are adapting to survive the coronavirus crisis

The innovation and creativity of small entrepreneurs offers an interesting case. There was a time when every small business would set for itself the target of when to seek venture funding, when to go public, and how to scale up and become large. T...

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The seeds of innovation sown in a crisis are those that hold the power to change the narrative for the world.
By Uma Shashikant

It will soon be time to sow seeds for the next season in the garden. A friend recommended a local seed selling enterprise, run by a couple from their farm. The website was basic and new. The ordering and payment process was smooth. The seeds arrived by post neatly packed and labeled. At a fraction of the cost we usually pay.

Small businesses are in the middle of a churn. The Covid crisis has modified the business model significantly. Most lost a lot of business in the early days of the crisis, since they had to shut down their enterprise to walk in customers, their primary clientele. But soon, most went online.

Many businesses now have a basic website that enables transactions. Thanks to social media and the familiarity the general population has with online tools, it is easier than ever before to put up products for sale online. Payment methods have gone electronic since the demonetisation, and those investments in cashless payments have helped a lot of businesses receive payments without meeting the customer.

Even those who were not sure if they would go online, are now creating business cards and placards that are shared on social media. If the only issue to resolve is the logistics of pick up and delivery, they are willing to rework their business to get at least a fraction of the revenue they had in better times.

Some have turned around and become innovative with their methods. My cousin who ran a catering business found that her entire enterprise came to a grinding halt with the complete cessation of weddings, functions and ceremonies. She waited for a few months, paying rents and salaries and bleeding her savings. Then she reworked her model to serve packed meals to households.

Busy households where both partners are working from home; elderly citizens who are unable to cope with pressures of running the kitchen; young people who aren’t skilled at stocking and cooking each day; and isolated people who cannot go out to replenish grocery are all her customers now. They all order her ready to eat everyday meals and she is hopeful of achieving adequate volume to pay her rents and salaries and turn in a modest profit.

These innovations by smaller businesses have reached new heights as people think up creative ways of reaching out to customers. The celebrated chef of our neighborhood restaurant now runs an online cookery class; teachers of yoga, meditation, various fancy forms of exercises and dance and music are busier than before with online classes. Everyone and his uncle is now busy online.

The more interesting story is about how customer attitudes have changed. Many are willing to work with and encourage small local businesses. They are happy to shop at smaller stores. They also see it as their responsibility to encourage local businesses. A farmer friend who struggled to educate his customers that he can only send a basket of vegetables he freshly harvested that week, has found an amazing turnaround in the attitude of his buyers. They no longer ask him for non-seasonal vegetables nor do they complain that the basket does not have family favourites. They just buy and give happy feedback.

The larger picture still remains pessimistic as the end to this crisis seems farther than we originally thought. Many still continue to lose their jobs. This earnings season has offered the sharpest known cuts in revenues in recent memory. Businesses that offer services, from hotels to airlines, travels and tourism, beauty and cosmetic treatments, to repairs, renovations and restorations are all badly impacted. But everyone knows that something is changing significantly.

No one subscribes to the idea that businesses will return to normal as was known before the crisis hit. Households have been surprised at their ability to survive and plod on without incurring as much expenses as before on goods and services. The overall consumption basket has shrunk, leading many to fear a recessionary outcome for economies across the world.

But the positives are unmistakably present. The seeds of innovation sown in a crisis are those that hold the power to change the narrative for the world. The social media, WiFi, internet, and all the technologies that support and connect people, the same tools that were painted as the evil of modern society, have turned around to become the saviours of a population that cannot imagine how life in social isolation would have been without these very tools.

The world owes a thank you to Google, Amazon, Facebook, Microsoft, Apple and other large technology product and solution providers that enable so much to happen when people have to work from home in isolation. But not all that is big would be seen as beautiful. Relevance to people’s lives will become a touchstone. That would be an interesting turn.

As small businesses innovate and create niche market share in the local community, and as consumers show higher preference for their products and services, big businesses will finally see competition and resistance for their products and services. We now question whether the benefits of scale and specialisation have led to mass production that might have caused more harm.

Nowhere is this more evident than in the food industry. The growing awareness about healthy alternatives to processed foods; the shunning of added sugars and fats in packaged food; and the shocking revelation of unethical practices that have led to harmful substances being present in everyday food, have begun to modify the choices that consumers make.

Which is why the innovation and creativity of small entrepreneurs offers an interesting case. There was a time when every small business would set for itself the target of when to seek venture funding, when to go public, and how to scale up and become large. These may not be the default goals after this crisis. There may be renewed respect for remaining small, local and niche.

If that preference asserts itself, the investable universe for the capital market investor will change. The best local businesses will not issue shares and open itself for public subscriptions. The economic benefits will flow in the real rather than in the financial markets. Much needed restoration of the lost balance.

(The Writer is Chairperson, Centre for Investment Education and Learning)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of
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