6 Things MSMEs Should Do During Lockdown

These steps might appear basic, but in the current situation where distress and panic have taken over, there are chances a lot of MSMEs might miss out on them.

By Harshvardhan Lunia • Apr 30, 2020

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These are testing times for all of us. It's unprecedented and the impact of this is at a scale that no one has experienced before. The spread of COVID-19 and the resulting slowdown has added to the existing de-acceleration the economy was already witnessing. The MSME sector is also majorly hit during these times and given that it is the backbone of our economy with more than 50 per cent contribution to our gross domestic product, it is critical that all steps be taken to revive it. With 63 million-plus industries in this sector that is responsible for 150 million jobs, we need to ensure their recovery is our topmost priority.

While the Reserve Bank of India and the government have and will continue to put measures in place to stoke their revival, there are steps that MSMEs can take to ensure that they are able to come out of this and expedite their own revival. These steps might appear basic, but in the current situation where distress and panic have taken over, there are chances a lot of MSMEs might miss out on them.

Ensure Capex is in check

It might sound logical, but a lot of us go by commitments and might want to follow through on capital expenditure-driven decisions we might have taken in the pre-COVID scenario. The next six months are about using capital right. Focus on essentials and utilities, unless the spend is irrevocable ensure that you are avoiding it. Once the economic indicators and market factors stabilize one can re-visit, recalibrate and take the decision.

Inventory management

With social distancing in place, a lot of units are closed. Hence in the absence of production, new inventory pile-up is not there. However, with existing stocks and when production does start do ensure that a simple rule of thumb is followed. For manufacturing firms, 30-35 per cent should be a ballpark in terms of inventory at hand. It may be different for trading firms. What needs to be kept in mind is that the level is optimum, and in line with expected demand. Demand volatility might prevail in the short run once the lockdown is over, so certain tweaks in strategy might be needed but in general ensure that you are avoiding inventory pile up.

Workforce management

While for owner-run businesses this may not be a concern, but for a vast majority of business managing human capital and workforce will be critical. The government has already issued pleas to suggest no measures towards attrition be taken, a reiteration is critical. Loss of human capital will have an impact on business, in the short to medium term. You may restructure salaries or incentives and ensure you are holding onto your resources, exit, and rehiring of human capital has costs associated with it which will have an impact later. It is best to work on ensuring employees stick around.

Check fat

This is the best time to have a close look at your profit and loss statement with in-depth analysis, check every item and trim the fat. When in expansion mode, we take calls and add expenses assuming similar trajectories. These costs may or may not be necessary now and we could look at ensuring that some recurring non-essential costs can be removed or checked. Before taking any action do ensure these are non-business impacting and they do not limit or impact productivity or output in the post-COVID era.


This is critical, you yourself cannot revive your business, you need advice and you need to seek it. There are a lot of people and stakeholders you can communicate with. Employees, to seek their assistance and their inputs, family to seek their support and to lean on them, suppliers, buyers and intermediaries to keep them abreast of your situation. Also, you can, and you should speak to your competitors, remember we are all in this together. Brainstorm, discuss, contribute ideas, till we all don't solve it together we won't come out of it.

Think digital

A lot of businesses have tweaked their model into a digital-first one, and a lot of businesses are ensuring that they move towards digitization. What it does is it helps you distribute your risks better, on the supply side, on the demand fulfilment side, on the employee management and work fulfilment piece. Digital helps the organization every step of the way, now is the time to upskill yourself and ensure that you are upskilling your business to adopt the digital way of things.

There will be a lot of concerted effort required from the policymakers as well as from the MSMEs to ensure that the economy revives, and we are once again poised for growth. MSMEs need to realize that a lot of rests in their hands to ensure that they are on the right track and they are up to speed when the economy kickstarts towards growth.

Harshvardhan Lunia

CEO and Managing Director, Lendingkart

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