The pandemic disrupted the lives of billions of people around the world, and the Philippines is no exception – job losses, business closures, and economic slowdown were extremely felt across the country.
While big corporations have the resources to weather the storm, it’s the micro, small, and medium enterprises (MSMEs) that have been hit the hardest. Unprecedented challenges that have forced businesses to adapt rapidly to constantly-changing circumstances or face closures.
For instance, lockdowns, ECQs, GCQs, and social distancing measures have resulted in the closing of physical stores, therefore limiting the ability of businesses to conduct operations.
A lot of MSMEs also had to switch to a remote work setup with no time to prepare at all. This made way for challenges in communication and productivity.
Global supply chains also came to a halt due to limited transportation, factory closures, and other logistical issues. This resulted in a massive shortage of raw materials and other product components.
Many MSMEs found themselves ill-prepared to deal with these problems, especially those that do not have the financial capacity to find new suppliers urgently.
The pandemic also caused nationwide job losses (estimated over 7.3 million jobs lost). MSMEs, especially those in sectors directly impacted by lockdowns like entertainment and tourism, had to say goodbye to employees due to lack of revenue.
Consumer behavior also changed drastically, especially as safety concerns became a priority. All businesses, big or small, had to rapidly adjust to meet these demands such as shifting to digital channels.
Small businesses that lacked a strong online presence struggled to engage with customers and lost revenue.
And even as the pandemic begins to recede, MSMEs are still facing significant challenges as they try to rebuild. In this guide, we’ll explore some of the pressing challenges faced by MSMEs and provide tips on how to overcome them.
Specific Post-Pandemic Challenges Faced by MSMEs
Due to their size, structure, and vulnerabilities, MSMEs still face unique challenges even after the pandemic.
1. Restoring operations
As the pandemic declined, MSMEs still face the daunting task of restoring their operations. This means not only reopening their physical stores, but also rehiring employees, restocking inventory, and rebuilding supply chains.
MSMEs must learn to adapt to new market conditions since the pandemic changed consumer behavior and preferences considerably.
Businesses must pivot their products or services to fit the new post-pandemic landscape. This may mean investing in digital technology, developing new product lines, or changing their approach to marketing and customer engagement.
Furthermore, the pandemic also created a sense of uncertainty among consumers, and it will take time for businesses to rebuild trust.
Enterprises must take steps to ensure the safety and cleanliness of their establishments, as well as provide reassurance to customers that it is safe to transact with them.
2. Financial challenges
This is one of the most pressing challenges faced by MSMEs post-pandemic. Many MSMEs have depleted their savings and incurred debt just to survive the pandemic.
It may take time before revenue returns to pre-pandemic levels, and businesses need to be smart about their finances to avoid bankruptcy.
3. Labor challenges
While many businesses had to let go of employees during the lockdowns, the need for skilled workers remains high.
However, with the current unemployment rates, it may be challenging for enterprises to attract and retain talent.
4. Supply chain disruptions
Even as the pandemic recedes, supply chain disruptions are still a significant issue for MSMEs.
Many suppliers and producers have been forced to close their shop or cut down their production, therefore causing a shortage of raw materials and components.
5. Technological challenges
Digital transformation is no longer just an option for MSMEs, it’s a necessity. However, many small businesses lack the resources or expertise to implement new technologies. This includes everything from e-commerce platforms to software for remote work.
Not only that, but the emergence of advanced technology may pose further challenges for MSMEs. For instance, AI and automation may disrupt traditional business models and require significant investments in new technology.
Strategies to Overcome Post-Pandemic Challenges
Despite the many challenges that MSMEs face in the post-pandemic landscape, there are strategies that businesses can use to overcome these obstacles.
Below are some effective strategies that MSMEs can use to get back on track.
1. Financial strategies
MSMEs should aim to build up their cash reserves and reduce debt as much as possible.
Restructuring debt
One strategy that MSMEs can use to overcome financial challenges is to restructure their debt.
This involves negotiating with lenders to modify repayment terms which can result in lowered interest rates or extension of the repayment period.
By restructuring debt, MSMEs can reduce their monthly payments and free up cash flow for other essential expenses.
Finding new sources of finance
Another strategy that MSMEs can use to overcome financial challenges is to explore new sources of finance like grants, loans, and equity financing.
MSMEs may also research and apply for various grant programs offered by government agencies or private organizations.
It’s worth noting that the emergence of online loans like the Tonik Flex Loan is also a viable option for MSMEs that need quick access to funds with lower interest rates (which go as low as 1.7%).
These loans are often more flexible and require less paperwork than traditional loans, making them an attractive option for businesses looking to rebuild after the pandemic.
MSMEs can also take advantage of crowdfunding platforms like Investree to raise funds for specific projects or products.
Crowdfunding allows businesses to connect with potential investors and donors who may be interested in supporting their cause.
2. Operational Strategies
To meet the changing market conditions, operational strategies must also be changed. The following strategies can be implemented to help MSMEs adapt and thrive in the new normal.
Adapting new business models
Old business models may no longer work in the post-pandemic landscape, and MSMEs must be willing to adapt and pivot their strategies if they want to keep operating.
For example, businesses that had relied on physical locations may need to expand their online presence and invest in e-commerce platforms to reach customers who prefer to shop online.
Diversifying suppliers
As supply chain disruptions continue to be a challenge for MSMEs, diversifying suppliers is a key strategy to mitigate this risk.
By identifying and engaging with multiple suppliers, businesses can ensure they have a reliable source of raw materials and components.
This strategy requires additional efforts to build relationships with new suppliers and invest in inventory management systems to maintain a consistent supply of inputs.
Implementing safety measures
The pandemic has brought about a heightened awareness of health and safety issues, and MSMEs must prioritize the health and safety of their employees and customers.
Implementing strict workplace safety measures such as social distancing, regular sanitation, and use of personal protective equipment can help prevent the spread of the virus and instill confidence in customers.
3. Human Resources Strategies
People are the backbone of any business, and MSMEs must invest in their human resources to attract and retain the best talent.
Retraining staff
Employees need new skills and knowledge to perform their jobs effectively in today’s post-pandemic world. MSMEs must develop training programs to upskill their workforce and prepare them for new roles and responsibilities.
This will not only help employees adapt to the changing business landscape but also increase their job satisfaction and loyalty to the company.
Maintaining employee morale
The pandemic has taken a toll on everyone’s mental health, and MSMEs must learn to prioritize their employees’ well-being to maintain a positive work environment.
This includes offering mental health resources which can come in the form of counseling sessions and support groups.
Creating a positive work culture that values employee feedback and recognizes their efforts and achievements can also boost employee morale and motivation.
Managing remote work
Remote work has become increasingly common in the post-pandemic landscape, and businesses must learn to manage this new way of working effectively.
Providing the necessary technology and resources for employees to work remotely is vital. Aside from that, implementing communication and collaboration tools to facilitate teamwork and productivity. May also help.
4. Marketing strategies
Here are some effective marketing strategies that businesses can implement to reach their target audience.
Rebuilding customer relationships
There’s no denying the impact that the pandemic has had on customer behavior and preferences.
MSMEs should focus on rebuilding their customer relationships and finding new ways to engage with their target audience. One of the ways to do this is by implementing customer feedback mechanisms to understand their changing needs and preferences.
Another strategy is to launch targeted marketing campaigns to reconnect with customers. Offering exclusive discounts and promotions can also incentivize customers to return and support the business.
Leveraging online platforms
With the increasing shift to online shopping and browsing, MSMEs must leverage online platforms to reach their target audience such as creating a strong online presence through social media platforms like TikTok and Facebook. Blogging and email marketing may also help.
Businesses can use online platforms to share valuable content, showcase their products or services, and interact with their customers in real-time.
Additionally, investing in search engine optimization (SEO) can help businesses rank higher in search engine results and drive more traffic to their website.
Adapting to changing customer behaviors
The pandemic has caused a significant shift in consumer behavior, and MSMEs must be willing to adapt their marketing strategies to meet these changing needs.
Conducting market research to understand the new customer trends and preferences and adjusting their product offerings to meet these demands is a must.
For example, many consumers are now more conscious of their health and wellness, and enterprises can capitalize on this trend by offering products or services that promote healthy living.
With the rise of eco-conscious consumers, businesses can also consider focusing on offering sustainable and environmentally friendly products.
Collaborating with influencers
Influencer and affiliate marketing has become increasingly popular in recent years, and MSMEs can leverage this strategy to reach a larger audience.
By partnering with influencers or affiliates, MSMEs can tap into their followers’ trust in their recommendations and promote their products or services to a wider audience. This can be done through sponsored posts, product reviews, or social media takeovers.
However, MSMEs should choose influencers whose values align with their brand and work collaboratively with them to create authentic and engaging content.
5. Technological strategies
Implementing technology can help MSMEs increase efficiency, streamline processes, and improve their overall business operations.
Here are some technological strategies that businesses can implement.
Embracing digital transformation
The pandemic has accelerated the need for digital transformation, and MSMEs must embrace technology to stay competitive in the post-pandemic world.
Nowadays, a lot of MSMEs feel the need to implement cloud-based solutions for accounting and inventory management, as well as customer relationship management (CRM) software to track customer interactions and sales data. This can streamline a lot of manual processes to save time and effort.
More importantly, MSMEs must prioritize e-commerce to tap into the growing online shopping trend. This involves creating a user-friendly and secure e-commerce website that allows customers to browse and purchase products or services from anywhere at any time.
Pairing this with an effective digital marketing strategy can help MSMEs reach a wider audience and increase their sales.
Training for digital literacy
To fully embrace digital transformation, MSMEs must ensure that their employees are digitally literate and have the necessary skills to use these new technologies effectively.
Training and resources must be provided to help employees adapt to new software and tools, as well as incorporating digital literacy into their hiring and onboarding processes.
Investing in necessary technology
MSMEs must invest in the necessary technology to improve their business operations and stay competitive.
This includes upgrading their hardware and software, such as computers, servers, and cybersecurity tools, to ensure that they can handle the demands of a post-pandemic business landscape.
Additionally, investing in technology can improve customer experience and help businesses stand out from their competitors.
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Author Bio: MJ de Castro is the lead personal finance columnist at Grit PH. MJ started her career as a writer for her local government’s City Information Office. Later on, she became a news anchor on PTV Davao del Norte. Now, she juggles writing professionally, her business centering on women’s menstrual health, and surfing.
