MICRO, small and medium enterprises have been among the hardest hit by the Covid-19 pandemic, causing alarm to the industry, especially for young entrepreneurs.
A Youth Co:Lab survey, co-led by the United Nations Development Programme (UNDP) and Citi Foundation found that youth entrepreneurs faced serious headwinds during the Covid-19 pandemic.
“Their nascent businesses have limited cash reserves and assets, as well as few mechanisms to withstand shocks,” the survey reported.
About 92% of young entrepreneurs have been negatively impacted by the shockwaves of the crisis, from lockdowns and collapsing demand to broken supply chains and a credit crunch.
“As a result, 85% have had to take actions to shrink their business model or limit their growth to protect their survival.
“Some 51% had to partially or fully close at some point, 59% saw their cashflow decrease, while 21% have had to lay off staff or reduce staff hours or wages,” it stated.
UNDP deputy resident representative for Malaysia, Singapore and Brunei, Manon Bernier said a number of youths has started to venture into business amid the pandemic.
“They have no choice because that was the only alternative. So, this segment was more of a survival strategy during the Covid-19 since some have no income to support their families,” Manon told The Malaysian Reserve.
However, Manon said young entrepreneurs were also creative in responding to the Covid-19.
“They have very good ideas and solutions to the problems with their communities. They have early-stage operating models to generate cashflow and use different strategies which are quite resilient in response to Covid-19,” Manon said.
Besides, she stated that the lockdown had forced young entrepreneurs to remodel their businesses by going digitalisation.
“I think one of the characteristics of young start-up entrepreneurs is that they are digital natives. They were able to adapt their business model very quickly,” she said.
According to the survey, about 92% have increased their use of mobile or digital solutions, 68% have entered new partnerships, 70% implemented financial coping strategies to protect their liquidity, and 86% have innovated from launching new products to transforming their operating models.
“So being agile and a digital native was a huge asset for many start-ups and young entrepreneurs, especially in the Asia Pacific,” noted Manon.
Meanwhile, UNDP is also concerned about the digital divide and its impact on the young entrepreneurs in rural areas.
“If you are a rural young entrepreneur, it is tough to pivot your business model because there is no reliable access to the Internet. This is where the government and stakeholders can help to ensure Internet connectivity in rural areas,” stated Manon.
On the other hand, there is very little data in Malaysia as well as in the Asia Pacific on the needs of young women entrepreneurs.
“We know that the Covid-19 hit young women entrepreneurs and that when school was closed, they were burdened with taking care of work which women took more than men,” she added.
Hence, she urged the government and stakeholders to help generate more data to understand the needs of young women entrepreneurs better and help build a gender-sensitive environment.
Moreover, young entrepreneurs have also requested to get access to government procurement.
“One of the main challenges they face is determining how to expand their market because they usually do not have both the capital and network, so this is something they have requested.
“This is some good element that will welcome the start-ups and young entrepreneurs in the future,” she said.
In the meantime, UNDP will continue to look at where the gaps are and where the potential of young entrepreneurs needs to unleash.
On Sept 20, UNDP partnered with the Malaysian Global Innovation and Creativity Centre for the Social Impact Challenge Accelerator programme.
The programme aims to boost the development of social entrepreneurship and impact-oriented start-up ventures in Malaysia while achieving sustainable development goals.
Nevertheless, Manon views that young entrepreneurs’ businesses will sustain in the long-term period.
“Young entrepreneurs are more aware and very cautious. They are concerned about the future, and they have ideas, creativity, digital natives and agility in remodelling their business. So, I really see the opportunity, and I think Covid-19 has put more lives into their business,” she said.
Source: https://themalaysianreserve.com/2021/10/29/new-entrepreneurs-hardest-hit-by-covid-19-pandemic/