Page 55 - 3rd Newsletter - Nov 2020 to June 2021 English

Expert opinion

Challenges and the

near future for small and
medium businesses

By BBS member, Dr. Ghaneya Aldurazi
With no sign of the end of Corona virus in sight, how will the SME sector in the near future overcome the challenges posed
by this global pandemic?
In contrast to large companies that rely on larger resources that enable them to bear the burdens of the crisis, small and
medium companies rely on modest resources that help them incur the burdens of staying month by month, especially
financial liquidity, which is often sufficient for a period not exceeding a few weeks. Thus, with the level of business
shrinking and sales and revenues declining due to the pandemic, this category of institutions is considered the most
affected in the current period. Given the importance of this sector to the global economy and its effective role in creating
job opportunities for many, as it employs more than fifty percent of the workforce in the world, governments in many
countries have provided many loans and programs to maintain the continuity of these institutions.
The current challenge is simply the continuity of these institutions and this depends largely on the individual ability of each
institution to adapt to the “new normal”, by setting a vision to ensure the continuity of its business and not leave the labor
market. The vision depends on evaluating the positive and negative data of the current reality, which is based on new
habits that people have adopted to adapt to this global pandemic.
The goal is to reduce operational cost and increase sales by serving the consumer in a way that suits the requirements
of the current stage. The current stage also requires rescheduling priorities, and for each institution to put realistic
estimates of its cash flow, comparing this cash flow with fixed expenses and expenses that can be reduced, and taking
serious steps to reduce the most flexible expenses.

It is also not early to think about the future of the institution’s work after the pandemic and to adjust its long-term business
model to suit the requirements of the new world, bearing in mind that after the pandemic ends, the global landscape
will change. Many clients may be poorer, with a significant shift in priorities. Many will still be afraid of the dangers of
contagious diseases, but they will also be anxious to enjoy themselves after long isolation. So every organization needs to
think smart about how the post-pandemic world will change its business model - and bring the perspective and interest
of customers into the planning process. Companies that can go digital will also find more success going forward. This is
the age of online shopping and small and medium businesses that can take advantage of technology and increase online
business are the ones that have a high probability of survival in the market.

It is also necessary for every organization to cretain and maintain the loyalty of its best employees. The employees of the
institution are an important element for its success, and if the institution loses this effective element during the crisis, it
will be more difficult to rebuild its operations. After the global financial crisis a little over a decade ago, it was the small
and medium-sized companies that recovered the fastest.

So even if this class of organizations were to drastically reduce labor costs during the crisis, they would want to maintain
their ability to re-hire their best workers when the world is open to business again.

While many institutions are experiencing an increased risk of closure, this does not mean a permanent transition into a
global recession. The recovery will happen and tech-savvy SMEs will lead the way.
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