Battered MSMEs struggle to find ways to survive
It’s National MSME (micro, small and medium enterprises) Week here in the Philippines, but the businesses which the country are meant to be celebrating are likely not in a joyous mood, given the struggles they continue to face because of the COVID-19 pandemic. In the first month of implementation of the enhanced community quarantine (ECQ), the Department of Trade and Industry (DTI) reported that over half of these enterprises had to fully stop operations, something which seriously hurt their cash flow.And as a group of franchisers points out, cash flow is the “lifeblood” of MSMEs.
“If you [stop] the flow, what do you think would happen next? Cash flow is what MSMEs need to survive,” says Jenny Wieneke, project head of the “BUYanihan” campaign, launched recently by Association of the Filipino Franchisers Inc. (AFFI). A movement, an advocacy and a beacon of hope for MSMEs, the BUYanihan campaign seeks to “encourage Filipino [consumers] to patronize MSMEs and slowly breathe back life into their businesses.”
Reviving the MSME sector does the same for the country’s economy, as data from the DTI—a partner of AFFI in the BUYanihan program—also show that these businesses represent 99.6 percent of the Philippines’ 1.42 million registered businesses. As such, MSMEs also provide for 63 percent of the nation’s employment.
“Statistics say that 40 percent of MSMEs will not be able to survive this pandemic,” Wieneke says. “Please do not allow this ill-fated number to become a reality.”
Together with their other partners—Go Negosyo, SM Super Malls, Globe My Business, PLDT KaAsenso, Security Bank, Union Bank, Sea Oil, Farmacia ni Dok, Philippines Association of National Advertisers, and Kapisanan ng mga Brodkaster ng Pilipinas—AFFI has created a comprehensive eight-point program for the BUYanihan campaign. The plan includes:
• A communications campaign, through the launch of a music video of a song by Gary Valenciano titled “Pwede Pang Mangarap,” which will be uploaded online and aired on national TV and radio.
• The opening of MSME e-commerce platform www.BUYanihan.shop/home.
• Individual recovery programs of BUYanihan partners, such as SM Supermalls’ waiving of rent during ECQ, and offer of discounted rates thereafter; PLDT KaAsensos’s affordable business data plans; Security Bank’s convenient payment gateway for BUYanihan.shop merchants; and Pioneer Insurance’s affordable coverage, which includes COVID-19, for employees.
• BUYanihan Virtual Expo, a series of virtual trade shows that can open opportunities for MSMEs to market their goods, sell franchises and find product resellers.
• BUYanihan Diskwento Caravan, an onsite marketplace to be mounted in partnership with the DTI, which would increase exposure for participating MSMEs all over the country;
• BUYanihan BRAD (business recovery advisors desk), a consultation line open to MSMEs where they can access free mentorship.
• BUYanihan One Health, a medical app-based system designed to help MSMEs monitor their employees’ health even after mandatory rapid testing is done. While it is ideal for companies to do regular, frequent rapid testing, such arrangement would not be financially sustainable for such small businesses—hence the need for this app.
• BUYanihan Online Forum, an online magazine show that can educate and empower MSMEs.“BUYanihan was conceived by MSMEs for MSMEs. We know the pain [points], we know the needs—and we know how to address these,” Wieneke says.But programs such as BUYanihan, as well as assistance provided by government through the DTI, are only as strong as MSMEs’ determination to get themselves out of the economic rut created by the pandemic—and that entails embracing digital transformation, says an enterprise application software company.
According to a recent survey by SAP of 4,500 Southeast Asian business leaders, 40 percent of respondents said they were still adopting a “wait and see” approach in response to the pandemic.
However, the same survey, which was conducted among attendees of SAP’s “Forward Together” virtual conference held on July 14-16, reveals that over 80 percent of regional business leaders surveyed expect the “significant/massive impact” of COVID-19 to change their business model or operations, with just 1 percent expecting a “business-as-usual” scenario in the long run.
The majority of respondents (63 percent) have also reported seeing changes in customers’ purchasing behavior and motivations since the start of the year; at the same time, though, 21 percent said they were “unsure or lack insight on changes in their customer’s needs.”
Amid this shift in consumer behavior, SAP says “organizations are still moving conservatively with their digital transformation efforts, with many adopting a protective stance and the mindset that disruption from COVID-19 will pass in due course.”
Smaller businesses, in particular, still worry over implementation costs of digital platforms, SAP says.
“For countries and companies that are complacent with a ‘wait and see’ attitude, they would be left behind—and may even become ‘irrelevant,’” says Rachel Barger, president and managing director of SAP Southeast Asia. “As businesses recalibrate their strategies for the long term, it is crucial to shift away from an expectation to revert to normalcy as before.”As such, SAP says digital technology has the power to help leaders of businesses of all sizes evolve, in order to: achieve resiliency, and steer the company through challenging times with agility; deliver profitability, with transparency across both the top and bottom line, supporting business growth and increased productivity; and act sustainably by reducing carbon footprint, minimizing waste and transitioning to the circular economy.
“The COVID-19 pandemic has resulted in the world economy going through a period of ‘reset’ for the ‘rebound.’ The race for competitiveness has already started again, and countries that sprint forward now will leave others trailing behind,” Barger says.
