Coronavirus crisis: Lower demand hits small businesses, startups hard; cost-cutting likely ahead

By: |
Published: March 22, 2020 4:34:35 PM

In order to deal with the negative impact of the Coronavirus, businesses will cut down on discretionary expenses, reduce employee costs etc.

Coronavirus, Coronavirus India, coronavirus risk in India, chances of coronavirus spreading to India, study on coronavirus risk, Coronavirus latest updates, Coronavirus outbreak, n95 mask, wuhan university, sars, nipah virus, n95 respirator mask, kerala virus, karona, carona, Coronavirus symptoms, Coronavirus treatment, Coronavirus medicine, Coronavirus prevention, coronavirus treatment breakthrough, coronavirus treatment, coronavirus narendra modi statement, PM Modi on coronavirus, PM Modi holi coronavirus, coronavirus all you need to know, coronavirus india, corona updates, corona alert india, coronavirus prevention India, ICMR coronavirus, indian council of medical research coronavirus, COVID-19, icmr guidelines for coronavirus test, coronavirus test cost India, coronavirus test indiaStartups and small businesses are also looking at reducing costs to lower Coronavirus impact.

The Coronavirus is having a detrimental effect on the health of startups and small businesses in India as many of them are staring at crippling business services ahead. For instance, 71 per cent of startups and small businesses in India are witnessing lower demand for their products and services while 48 per cent are experiencing supply disruption or increase in supply costs, said a survey of 35,000 startups, small businesses and entrepreneurs by the community social media platform LocalCircles. Over 18,000 responses were received in the survey.

In order to deal with the negative impact of the Coronavirus, 63 per cent respondents said they will cut costs which included cutting down on discretionary expenses, reduce or exit non-essential supplier projects and reducing employee costs. “Some startups and SMEs have reported the exercise of Force Majeure clause by their customers and getting out of a contract. Others are reporting postponement of deliveries by Indian and global customers. Some SME exporters have reported being unable to find containers to ship as they are stuck at ports around the world,” the survey said.

Also read: World’s richest man Jeff Bezos’s Coronavirus concern grows, tells workers crisis may get ‘worse’

Industry body Assocham had last week suggested government several measures to help MSMEs cope with the current situation such as concessional working capital loans for MSMEs equivalent to one to three month’s (based upon the extent of disruption) average turnover of last year. Assocham also asked the government to extend the period for payment of utility, GST and other statutory payments by three months without any impact on the businesses’ credit history.

According to the survey, startups and small businesses are also looking at reducing costs with respect to the workspace, operation etc. as 30 per cent respondents said they would reduce their expenses on office rentals, operations along with marketing or advertising costs. However, 37 per cent said they won’t take any action as there has been no impact on their businesses because of Coronavirus.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Covid19 Fallout: Work-from-home practice hurting food tech firms
2DrivebuddyAI: A start-up aims to reduce accidents
3Veritas Finance raises Rs 350 crore from Kedaara Cap, others