Year 2009 â the way forward

Top Stories

»	Indiaâs export outlook brighter as manufactured goods gain share: RBI
»	Private consumption driving growth in Q3 with rural India taking lead: RBI
»	Indian MSMEs create about 10 crore jobs in 15 months
»	Indian prefer Q-commerce for daily essentials, physical stores for high-value buying
»	Embedded finance to unlock $25 bn revenue opportunity for Indiaâs platforms by 2030

Bikky Khosla | 30 Dec, 2008
As the dawn of a new year peeks round the corner, the business community is probably heaving a sigh of relief for having survived a horrifying year. Across all industrial sectors gloom and darkness has crept into every corner which the thin light of hope seems unable to penetrate. Sadly, sleeping through the night and waking up to a bright Sunday morning will remain an elusive Utopia in 2009 too.

Although no one knows how long this economic downturn will last, what all will perhaps agree with is that no recession lasts forever. The year 2008 will perhaps cast a longer shadow on the coming year than most of us think â and if we are to believe what economists are saying then there will be an upswing in the fourth quarter of 2009. Judging from the current situation, it is only year 2010 that will bring us back to where the slide began.

The effects of global meltdown on the other hand pulled down exports to a seven-year low and exporters who thought that their plight was just over with the depreciating rupee, went into a spiral with the collapse of major financial institutions in the US and unstable global markets all leading to a worldwide economic recession and slump in demand for Indian goods.

So during this period there will be a lot of consolidation in small and medium companies.

Loans for SMEs are only harder to find from overly cautious banks and simply cutting interest rates aren't helping either. When financial institutions are scared to lend and businesses are afraid to borrow any cuts in lending rates are not really going to help.

Above that, buyers are tightening their belts and starting to spend only on necessities, which has a major impact on SMEs. The story doesn't end here â buyers are also starting to look carefully at who they have as suppliers and customers.

Before placing even the smallest of orders, they are asking questions they never asked themselves before. Are these suppliers quoting us the right price? Will they be able to deliver the right goods at the right time? â so on and so forth.

The silver lining amidst the gloom is that during economic downturns, competitors' failures present an opportunity, and the best SMEs can do and should do is exploit this. It's also important to face facts and act accordingly â avoid going into hysteria and overreacting to every single thing. Exercising restraint is the need of the hour. While other companies around will stumble and be tempted to buckle under pressure, it may be worth seeing this period as an opportunity instead.

Improving your relationship with your existing customers can be the single-most beneficial strategy to keep your cash registers tinkling. During a downturn keeping your customer base connected and reassured or simply keeping your customers near may open new doors in the future.

SMEs should use this time for branding and positioning themselves better in the marketplace. Now is the time to build more relationships in preparation for the inevitable upturn. With other means of media getting costlier by the day, SMEs should use the Internet as the medium for promoting their brand and their products.

I would say this is the best time for SMEs to get lean and efficient. During the good days SMEs employed people because they were hopeful of acquiring huge volumes of work. Getting lean though, is very important now but it should not be just by cutting costs or shedding dead skin. SMES should embrace processes and software that can improve efficiency, cut flab and improve performance.

It is better to use all our resources to tide over this rough weather and make it to the other side of the river instead of just sending SOS calls to the authorities to save us. We have sailed smoothly during fair weather and there is no doubt that we can ride the waves of this recession too.

Here's wishing all a safe sailing and a year full of new ideas and successful ventures.