From Where We Sit

Seizing the digital lifeline: Helping pandemic-hit MSMEs thrive

Wendell Ganhinhin
By:
Wendell Ganhinhin
Contents

THE disruptions brought by the Covid-19 pandemic have stirred business and global market uncertainties. In the Philippines, the current business outlook is far from rosy. Micro, small and medium enterprises (MSMEs) continue to bear the brunt of the effects of the health crisis, grappling to stay afloat amid travel restrictions and new government-imposed lockdowns. Considering the surge of Covid-19 cases nationwide, we can say that the struggle of small businesses to sustain growth is far from over.

Before the pandemic hit, MSMEs were already struggling to compete with bigger firms. Today, they are battling a bigger foe head on. According to a November 2020 ADB report, 70 percent of small businesses in the Philippines shut down operations temporarily a month after the government imposed a lockdown to stem the spread of Covid-19. This came despite a slew of crisis response measures initiated by the government. The same problem that posed a challenge for MSMEs in other Asian countries was recorded in the Philippines by the Asian Development Bank (ADB): difficulty in raising ample capital to continue operating.

A year and three lockdowns after the global health crisis began, many MSMEs are now leveraging on their strengths and banking on digital transformation. Some have ventured into using e-commerce platforms to drive sales and respond to consumer demands. However, statistics show that a big number of small businesses in the country are not too keen on adopting e-commerce. A survey conducted by the Department of Trade and Industry (DTI) cited that 70 percent of MSMEs surveyed, comprised of mostly micro enterprises, has not taken advantage of the benefits of e-commerce.

Reaping the benefits of social media

For small businesses to thrive in the new normal, improving social media presence is the key. This is one strategy that brick-and-mortar types of businesses can employ at a time when foot traffic is low due to the virus scare and strict implementation of the health protocols. The GoDaddy 2020 Global Entrepreneurship Survey showed that 51 percent of small businesses and start-ups relied heavily on online platforms and messaging apps as main channels to communicate and offer services to the public.

For micro enterprises intent on boosting their sales and patronage, they can build their online presence using just two basic components: a smartphone and internet connection. For businesses that are a little bigger with one store or more, having a mix of online presence, communication through apps like Facebook Messenger, and delivery service is needed. Putting up a website to showcase products and services is also a good idea. While having social media presence to boost customer engagement is a basic strategy, particularly for MSMEs, it is clearly not enough. MSMEs should also consider accepting e-payments, using e-commerce platforms, and giving customers the option of having goods delivered through courier or on-demand delivery services.

Challenges and solutions

One of the primary concerns of small business owners that deters them from utilizing e-commerce and social media platforms is lack of knowledge and experience in social media or online marketing. Some are also adamant to engage in digital payments because this is something new to them.

To help ease these concerns, national agencies and local government units are stepping up their game in educating owners of small businesses on the principles behind digital transformation, e-commerce and online marketing as tools that can boost business growth in these trying times. Last month, the DTI announced that it has created various modules on digital transformation, financial marketing and content management strategies for MSMEs with help from various industry groups.

To further help inform MSMEs about these areas, the private sector, in partnership with the local government, is now at the fore of implementing trainings and sessions on the importance of digital transformation and e-commerce. In fact, the Cebu Chamber of Commerce and Industry (CCCI), in partnership with the Cebu City government, recently launched the Barangay-Based Entrepreneurial Mentoring Program (BBEMP).

The mentoring program under the BBEMP aims to boost Cebu City's local economy by supporting and enlightening its MSMEs on how to revive, survive and if needed, to reboot and reformat their businesses in order to recover and build back their businesses in a better position amid the financial pandemic due to Covid-19. This program caters to MSME owners in Cebu City and offers both on-site and face-to-face sessions. One-on-one coaching sessions are also part of the BBEMP where industry leaders share valuable insights to participants.

The program has five mentoring modules, which tackle entrepreneurial mindset, business models in the new normal, marketing, operations management and cash flow management. These modules were developed by Famcor Franchise Management and Executive Development Corp. I currently handle the module on cash flow management, which covers the financial measures, sources of funds and efficient use of funds. The program teaches MSMEs to put a formal structure of their business and properly set up their books of account so that they will have a chance to access funds from lenders or investors.

The BBEMP of CCCI and Cebu City is a good model of a public-private partnership initiative, which will help our MSMEs reboot, recover and build back their businesses during this financial pandemic. It is intended to cultivate a change in mindset, showing MSMEs that despite the effects of the pandemic, there are opportunities for business growth and capability-building. Likewise, these programs are also conducted in a bid to encourage other local government units, in collaboration with the private sector to prioritize helping MSMEs build back their businesses.

While the effects of the pandemic are still felt by small businesses, these blows can be cushioned by allocating funds, putting up programs that promote continuous learning and encouraging small businesses to take advantage of digital transformation and e-commerce. In the midst of changing business conditions, MSMEs must be prioritized as they contribute largely to the country's economic growth.

 

As published in The Manila Times, dated 25 August 2021

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