IPB University Lecturers Give Tips for MSMEs to Be Ready to Face a Recession

Today, the threat of a global recession overshadows many countries around the world. This situation will certainly depress the domestic trade balance. It is estimated that the Micro, Small, and Medium Enterprises (MSMEs) sector is able to become a buffer for the national economic system in the face of recession.

Lecturer of IPB University from Agribusiness Study Program, Vocational School, Khoirul Aziz Husyairi, SE, MSi said, so that MSMEs are ready in the face of recession conditions is to pay attention to financial conditions especially related to the availability of cash. Plans for investment should be allocated as a reserve fund in anticipation of the addition of working capital at any time.

"MSME actors should be prepared to make business changes by making various innovations in order to remain able to serve customers, adjusting to existing conditions. The current recession was caused by the COVID-19 pandemic, resulting in limited activity due to various government policies such as Large-Scale Social Restrictions (PSBB), rules to keep distance, and restrictions on operating hours. Migration to digital-based businesses can be done to keep businesses running," he said.

He added that in order for MSMEs to survive the economic recession, at least by keeping cash flow positive. For any other way, cash flow/cash flow is the breath of the business. The way to keep cash flow positive is to maximize sales and keep spending especially production costs as efficient as possible. With efficient production costs, the price of the resulting product remains affordable to consumers.  

There are other tips that MSMEs should prepare in the face of this recession. That is, the first focus remains on serving customers well. Recession conditions where there is a very likely decline in purchasing power make MSMEs have to be observant to retain existing consumers. Do not disappoint consumers by lowering the quality of products produced due to resource limitations. Communicate well with customers if they want to make changes to the resulting product.  

Second, change your business target from high margin to high sales volume. Being able to survive is good in these conditions. The expectation is that despite "thin" profits, the business will survive with increased sales volumes.

The third does efficiency on spending. This can be done by changing the packaging of products, innovating sales (can be by collaborating with online service providers) so that there is no need to rent a place. Also reduce spending aimed at promotion. Use non-paid promotional media. Can maximize the use of social media to support promotional activities.

Fourth, strengthen good relations with suppliers. With a good relationship with suppliers, MSMEs do not need to stock up too much inventory, so the costs associated with inventory can be suppressed.

Fifth, don't ignore employees, because however employees are an important part of the effort. Build good communication with employees, so that employees also know the condition of the company.

Sixth, avoid withdrawing loans to cover working capital. If that's still possible, then look for investors who can help with the yield-share scheme. But if it is difficult, another alternative is to sell inventory goods that are not directly related to the effort to meet the needs of working capital.

The hope going forward for MSMEs in the face of recession is the stimulus of government assistance for MSMEs who have loans to banks. Both by restructuring the loan and with the reduction of loan interest. The development of this working capital assistance program makes the efforts that are carried out can survive.

"Cooperation between governments, education, especially universities, and other institutions is also needed to help MSMEs migrate to digital-based businesses. This cooperation can be realized by training and business assistance, so that MSMEs can continue to maintain the continuity of the market," he said. (IAAS/NAS)

Published Date : 13-Oct-2020

Resource Person : Khoirul Aziz Husyairi, SE, MSi

Keyword : MSMEs, Economic Recession, COVID-19 Pandemic, Vocational School, IPB University, IPB lecturer