In Episode 4 of the Coping with COVID-19 series for young entrepreneurs, our featured expert Bhavna Saraf, Managing Director and Head of Trade Products at Lloyds Bank, shared her insights on trade finance, elucidating how the crisis is affecting every enterprise. This episode shed light on how digital tools and solutions are bringing new opportunities to SMEs during the COVID-19 pandemic. She also explained that although the current situation is causing a severe economic downturn worldwide, it will lead to a number of new opening and opportunities in the post-COVID-19 context. Therefore, it is up to youth entrepreneurs to set up their digital models now so they can take full advantage of the new economy that rises after. Here are some key takeaways from it:
Digitization of trade - As Paul Romer, a Stanford economist used to say,
“Crisis is a terrible thing to waste.”
Now more than ever, trade can play a vital role in helping SMEs weather the storm and drive a faster economic recovery. Facing the current pandemic, going digital to access trade is no longer a choice related to efficiency or cost, but a necessity for SMEs. Bhavna shared, “We have seen the transformation from paper to digital solutions, including the increased use of different e-commerce channels and social media. In particular, we have seen the incorporation of AI and Blockchain in trade also to help preserve the authenticity and drive transparency.”
Luckily, many youth entrepreneurs taking part in the webinar explained through a quick poll that they were already utilizing a digital business model and were leveraging a variety of e-commerce platforms to reach a broader customer base. The response by attendees to Bhavna’s insights just goes to show that youth are often the early adopters of new digital solutions and therefore well poised to adapt and take advantage of new opportunities in trade through digital!
Digitization of supply chain- Prior to the COVID-19, the major suppliers of global goods and services were China, South East Asia and Europe. Having such high consolidation in global supply chains isn’t good, as it can lead to potential risks in supply and less liquidity for SMEs.
Since the breakout of the pandemic and the subsequent closing of borders in many parts of the world, more and more companies have realized the relevance and necessity to tap into local resources in order to diversify their supply chains. In addition, digital sales and marketing platforms, including a company’s own website, as well as the services provided by Amazon, EBay and Alibaba, significantly reduce transaction costs for SMEs, making it much easier to extend a company’s existing offering into regional and/or global markets. According to Bhavna, now is the time to assess your own suppliers and analyze potential ruptures in your existing supply chains. By investing in near-shoring or local suppliers, SMEs can insulate themselves from global shocks in the future.
Impetus from governments-The current crisis provides a good opportunity for policy makers to revisit and reform their policies supporting SMEs and trade. Although there is no one-size-fits-all solution that meets the needs of every country and its unique trading conditions, it is crucial that governments provide timely and tailored financial schemes around trade, taxation and tariffs to accelerate their country’s economic recovery. Providing loans with low interest rates, digitally accessible ‘Bounce Back’ loans, setting up staff furlough programmes, as well as facilitating general support for exporters are examples of just a few actions governments in many countries have taken or could take in the near future to enhance the resilience of local SMEs.
To summarize, despite all the challenges brought about by the COVID-19 pandemic, entrepreneurs can leverage digital solutions to turn this crisis into an opportunity, especially when it comes to trade. All you need to do to is: Reset-Adapt-Engage. What does this mean?
1- Reset your strategy and approach to trade to ensure business continuity in and after the crisis;
2- Adapt your operating model to maximize opportunities through digital;
3- Engage diverse ecosystems to foster cooperation and learning.
Stay tuned for the upcoming Episode of Coping with COVID-19_ Cash-in, Cash-out, Managing Finance in times of Crisis featuring expert guest Miguel Sanchez de Pedro, Senior Partner at OxValue Advisors SL. He will be shedding light on how to manage your finances when you have fluctuations on both the supply and demand side. We are ready to chat with you on 16 June, 16:30-17:30 (CET), Save the date and Register now!