What does MSME need in today’s ever changing business situation? Few good lending institutions & banks who can understand their condition and business cycle.
But finding such a thing in itself is a challenge and how to overcome, is by getting an independent msme advisor who on behalf of the MSME can negotiate and bargain to get better interest rates plus sensible terms & conditions which takes care of the MSME business cycle needs. Msme Advisor helps the MSMEs to take right finance decisions by making them understand Finance well.
MSME Assist (MSME Advisors) can bring the necessary talent and their most important skill set i.e. his/her financial acumen to decipher the intricacies of MSME Challenges. As the MSME Assist perspective would be completely independent devoid of any preconceived notions Who always thinks how to solve the challenges from the long term and short term timelines.
Here is the real story of Mrs. Selva Lakshmi, an entrepreneur. She is a M.Phil qualified and computer literate and savvy person, running a xerox & stationery shop in Madurai. Her shop offers typing jobs for customers in addition to stationery items targeting school kids.
Selva Lakshmi’s honesty is her USP which wins over loyal customers and retains them. Her husband is working in a small tea shop as a tea master for meager salary. In Spite of this, she is a gritty and confident entrepreneur who believes by putting down one’s head and working smartly one can reach any heights.
As she does not have strong financial support & backing yet she has taken this risk. But her high spirit & burning desire to succeed against all odds does not stop her enthusiasm to try new things in her business.
Her entrepreneurial journey started with a few hiccups and after a few falls and tries she was able to find her footing and was able to manage the family expenses comfortably from the income of the shop.
But during the course of her journey, a strange thought crept into her heart and that thought was doing circles in her head. The rent she was paying for her rented house, it was pinching and was making her uncomfortable plus it gave her unnecessary worries.
As she confided this with her mother, her mother spoke about her unrealised dreams of owning a house. Selva lakshmi too understood this can be solved by owning her own house.
Business was getting better, it gave her confidence and she also wished to buy a house at the earliest. She was confident that she could repay the loan from the income she gets from her business.
Mrs. Lakshmi got a housing loan easily. But here comes the pain point of not thinking thoroughly from all business & personal perspectives or having an MSME Assist at your disposal.
She got the housing loan at an exorbitant interest rate. She did not know the consequences of debt and huge interest as a fixed cost during low demand or no demand periods. Everything went well initially after taking the loan.
She was able to manage the interest rate without any problem for a year.
Then came the most challenging period, as lightning out of the blue, Covid 19 pandemic happened. It brought the most gloomy business days in everybody’s life. As with Covid, businesses were asked to shut down due to lock down and necessary steps the governments across the world asked to do.
As the shop was closed, income stopped form the business but outgoing and fixed expenditure kept piling up. As covid made everything standstill in everybody’s life except the huge interest on the housing loan for selva lakshmi.
She was forced to sell her two wheeler to service the loan for a few months, Then she had to go for an additional part time job to service the loan for a few months, by closing the shop during the evenings ( the peak time of her business) for her part time job. This part time impacted her the most as she couldn’t make any money in her business peak time.
She was trying hard to repay the housing instalments, that is what her mind & body focussed and it was the main thing lingering in her mind. She was not able to build working capital for business & open the shop in the evenings.
The high cost of the Loan was eating away her funds and troubling the sustainability of her business.
If at all, she had the opportunity of getting the right advice to avoid the high interest loans, she should have taken her business to the next level!
Are we getting the loans at a reasonable cost? is a question to be asked by the entrepreneurs.