Small businesses see growth back in 3-5 years after facing Covid headwinds; recovery in 3-12 months

The Covid pandemic has necessitated digital technology adoption among small businesses.

Ease of Doing Business for MSMEs: Small businesses are trying to hold their ground despite the Covid headwinds. Out of more than 500 small businesses in India, surveyed by web hosting company GoDaddy as part of its annual Global Entrepreneurship Survey in June, 63 per cent are confident of business recovery and continuity vis-à-vis 52 per cent small businesses globally. However, recovery could take as much as 12 months from a minimum three-month period, according to 57 per cent small businesses surveyed. The growth, on the other hand, is expected in the coming three-five years by 88 per cent respondents. Nonetheless, it won’t be a 100 per cent jump in the said period even as 43 per cent of them are hopeful of at least 50 per cent growth while another 45 per cent see minimum 25 per cent growth.

“Entrepreneurs in India are showing what the entrepreneurial spirit is about. They may have had to shut down even if only temporarily, but they are adapting and working to rebound and help their small business grow,” said Nikhil Arora, Vice President and Managing Director, GoDaddy India.

The global survey covered 5,265 small businesses across Australia, Canada, Germany, India, Mexico, Philippines, Turkey, the UK and the US. The survey comes amid an increased number of MSMEs supported with emergency credit line guarantee scheme by the government to help recover post-Covid. As of August 24, Rs 1,05,926 crore was disbursed into 23,77,808 MSME accounts for working capital support of 20 per cent of their outstanding credit as on February 29, 2020, according to the data tweeted by Finance Minister Nirmala Sitharaman’s office on Tuesday.

Also read: Delayed MSME payments: 75% dues pending by govt, CPSEs cleared in July, says MSME Secretary AK Sharma

The optimism among small businesses, however, is despite 83 per cent respondents reported a revenue decline while over 70 per cent saw overall fall in investment. 45 per cent (of 83 per cent) had to shut their businesses temporarily and another 45 per cent had to make changes in the way they operated during Covid period. Moreover, 48 per cent of small business reporting decline in investment claimed that maintaining cash flow was most important for them to keep their business running.

The Covid pandemic also necessitated digital technology adoption among small businesses to survive and make the most out of the existing digital resources available. According to the survey, 53 per cent said they would focus on “accelerating online/social selling capabilities.” Around 170 of over 500 respondents said that they would likely increase investment in digital education and cybersecurity.