SMEs The Future Investment Perspective
The bulk of economic activities these days as job creation, new technologies, economic dynamism is coming from Small and medium-sized enterprises around the world. These bursting young companies are, in fact, the engine of growth and innovation; however, they cannot participate to the extent that they should or could be in the global trading system. After the announcement from the WHO that the coronavirus ” may never go away” with many affected by the coronavirus worldwide, millions of cases are coming up.
Understanding the figures in an economic category, millions of jobs are lost, and many businesses went out. Economies are shrinking day by day. With all this, we still are uncertain that when the pandemic will be over. Nevertheless, we stay positive and united together and fight to eradicate the virus.
Finding the opportunity in these times of crisis as SMEs to be the beating heart of the global economy as their economic contribution to GDP is significant and provides most employment globally. Hence SMEs will prove to play a vital role in propelling a sustainable and resilient economy moving forward.
SMEs need immediate and medium-term support to get them back on their feet to enable them to perform better in terms of productivity on overall economic backgrounds.
Among various interventions, the government plays a vital role as the productivity policies and frameworks adopted—optimal utilization of resources all through the process of the crisis.
Impact and future investment
We expect the coronavirus to be temporary in nature as it is an event-driven crisis and is not cyclical the approach for small businesses such as restaurateurs, moms, and pop shops, as at the current scenario SMEs that have no cash inflow seek revival. There needs to be a more significant response in terms of the broader economic environment in which they operate and can only be the best scenario.
The best propositions made for portfolio companies are to invest in SME businesses if they do not have an equity stake. Looking at the relief programs announced by the banks with help from the government, any kind of moratorium or obligations is helpful, but injection is much required to pay their suppliers to pay their employees if the products don’t move to the consumers turns to be no cash inflow for the business.
As we see in the hospitality industry, it has never faced such a situation as having absolutely no bookings, thus leaving the doors closed for business.
Therefore, due diligence to understand the reasons and ameliorate this situation , capital immediately will be very malleable. The assistance and initiatives being provided by the government to help businesses with their cash flow crunch. The commercial plumbing is essential, but if the company fails to its commitment to repay the loans would turn into a massive ripple effect.
This year is not the year to make profits, just the year to invest in our broader society and economy, confidence is the cheapest form of stimulus, and we need to reignite spirit within ourselves as we start to emerge from our isolation.