How Are MSMEs Struggling in the Midst of the Covid-19 Outbreak?
Corona Disease or COVID-19 is not a type of disease that can be underestimated. Since the outbreak in March 2020 in Indonesia, the coronavirus has caused chaos in a number of sectors, including the economy.
How bad is the impact of COVID-19 on MSMEs?
The study mentioned that COVID-19 caused a percentage decrease in Indonesia's economic growth of up to 0.1% at the beginning of 2020. In the second quarter of 2020, the impact was getting worse, Indonesia's economic growth decreased to drink 5.32%. Here are a number of cases that show how severe the impact of the pandemic on the economic sector, including MSMEs (Small and Medium Micro Enterprises) in the country.
- Reduced buying and selling activity
The most felt effect of MSMEs is the decrease in buying and selling activities. This is related to the enactment of social distancing and self-quarantine that requires people to stay at home. As a result, MSMEs such as warteg, hair shaving services, and small traders experienced significant reductions in income.
Uniquely, research conducted by CEMSED(Center for Micro and Small Enterprise Dynamic)and CESS(Center for Economic and Social Studies)said MSMEs in Indonesia have the potential to rise, develop, and survive in the midst of a crisis.
- The process of digitization
Some MSMEs actually already rely on technology such as smartphones and laptops to run activities, but not too maximal. Even the Jabodetabek MSME Readiness Index is still classified as medium (highest scale 5). The outbreak of Covid-19 also makes businesses and consumers unprepared to 'move' completely to virtual services.
MSME managers who have not prepared themselves with the presence of digitalization may be difficult when they want to market their products online. Even so, the opportunity to survive and reach consumers remains if this method is seriously pursued.
- It's hard to get raw materials.
Based on the latest data from the Department of Manpower, Transmigration, and Energy in DKI Jakarta, about 30 thousand workers lost their livelihoods due to mass layoffs. More than 130,000 workers have no income as a result of being laid off without pay. As a result, the production capacity of MSME raw materials is reduced in large quantities, while the price rises dramatically.
One of the sectors that feel the effects is MSMEs bread and cake. Soaring prices of raw materials such as wheat flour, eggs, and granulated sugar forced them to raise the selling price of their products. This decision is also very risky considering the low purchasing power.
How do MSMEs deal with a crisis in the midst of a pandemic?
As mentioned, MSMEs have the opportunity to survive in the midst of a pandemic crisis if they implement the right strategy. You can focus on the following three things:
1. Optimize the use of technology
MSMEs need to improve their business processes, such as replacing manual recording with accounting software. Payroll of employees who usually wear envelopes can be transferred to the payrollsystem. Even tax payments can be made online.
Then to market products and branding,MSMEs can take advantage of free platforms such as social media and chatapplications. Cooperation with application-based transportation start-ups will also help you in providing deliveryservices. Learning these things is easy because there are many online classes that offer free courses.
2. Prepare new strategies to develop the business
The crisis triggered by the Covid-19 outbreak is different from the financial crisis in 2008 that triggered a drastic decline in purchasing power. Health crises will generally only hold back people's desire to buy. In other words, MSMEs still have the opportunity to prepare new strategies to develop businesses during the pandemic.
Financial management is among the things you should learn carefully to manage capital and avoid losses due to health crises. In addition, you will be more careful when designing new strategies to run MSMEs.
3. Improve the quality of products and services
Crisis times should be used by MSME managers to improve the quality of their products and services. Why? Because not a few business owners who do not realize there are goods or services that are less needed by consumers. Similarly, services that may also affect customer satisfaction.
So before applying a new strategy, you as the manager of UMKN should do an in-depth evaluation with the team. Leave the things that hinder effort and use a new plan that will restore the condition of MSMEs as before.
