Lounges from shops to cafes: small services look at the end of the road

A grocery store at Mayur Vihar in Delhi (Express Photo by Gajendra Yadav)

FROM a South Mumbai cafe that ended after 10 years in operations to a separate lounge in the heart of the capital who is unsure if he can ever start again at a restaurant in the Meerut Mall launched by an entrepreneur First-Time With Your Personal Savings – Every story of relief in the micro, small, and medium-sized business is unique, but they all have the same chorus.

Operations based on personal savings, sweat and struggle, now face the end of the road. Because, it is not only the problem of how to survive the current phase, but more basic questions: how difficult will it be to collect the pieces when things return to normal? Will there be a demand for your services to ensure viability?

These beneficiaries of India’s consumer boom, helped in recent years by online apps and delivery options, now look to a bleak future as beauty salons, spas, restaurants, retail stores, guest houses and various Other segments of trade in services are facing what lies on the other side of the pandemic.

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Until then, the dice are loaded: there is no credit to get past the closing phase, new credit cycle rules mean that sellers demand cash, even when buyers are unwilling to pay at the time of delivery, the exhausting working capital on payments like rent, electricity and wages and a complete lack of certainty about when, if ever, the lawsuit will return.

Take Vishal Batra, 43, who ventured out of the family business to start his in January 2020. His restaurant in the main market area of ​​Meerut was very promising, launched with an investment of Rs 10 lakh which She gathered up her savings and some family assistance. . Then the blockade hit.

Income is zero, but Batra has to pay for the store rent and staff salaries, in addition to paying for the food expenses of seven employees who are stranded in Meerut.

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People queue outside a grocery store amid a national shutdown

“It takes time for a new business to recover and we just started to cover our expenses, but in March the closure began. In the first week of April, we started selling through Zomato, but just 10 days later, the pizza delivery case (case of a pizza delivery boy who tested positive for coronavirus in Delhi, leading 72 families to that delivered and 17 other deliveries (boys in quarantine) happened and our orders fell sharply, ”Batra said. He had to lower the blinds for the moment.

Chef Pooja Dhingra in Mumbai is far from Batra and Meerut, but the concern is identical. Earlier this month, Dhingra had to shutdown its Le15 Café in downtown Mumbai after 10 years in operation.

Before renouncing the lease on the cafe, Dhingra had considered other options: renegotiate the coffee rental to reduce the size of his equipment and operate as a delivery-only business. However, the “exceptionally high” costs of running a restaurant in Mumbai, coupled with a lack of customers, made it impossible to continue, he said.

But, most importantly, it was when he looked at the next six months that the outlook seemed bleak. “Most of our clients were tourists. That plus the start of the monsoons would reduce footfalls. The bleeding in the next six months is one that we couldn’t afford as a business, “he told The Indian Express.

For small businesses, the problems are multiple: from the availability of credit to the lack of working capital and the problems of collecting their assets, even if they closed the store.

Owners of the 12-member Elvis and Reema Salon Fort in Greater Kailash-1, a popular freestanding salon that would receive, on average, about 500 clients a month before closing, aren’t sure how much longer they will be able to stay.

Reema Bhatia, co-founder, hopes that the clientele will be cut almost in half if they are reopened due to the rules of social distancing.

“Our core business comes from longer and more elaborate services, which we don’t think anyone wants. They will want to quickly come and get minor services and leave. We are getting some requests from our repeat customers asking us when we will reopen, but even if we do We don’t expect all of our customers to come back, “he told The Indian Express.

The salon has been struggling to pay its costs, which represent almost 50 percent of its revenue, because right now “there is no revenue, and we are a company that operates on a daily basis.”

While the salon does have some savings, costs like rent, electric and water bills, and its employees’ salaries have depleted its reserves. It is expected to run out of savings in the next month or so, according to Bhatia. “Suddenly, when you don’t get to work for two months, it kicks you back,” he said. “It is heartbreaking for me to even think about firing some of my team. I can’t do that, because where would they go? Even the largest salon chains will not hire during this time, “he said.

For small businesses, the problems are multiple: from the availability of credit to the lack of working capital and the problems of collecting their assets, even if they closed the store.

Companies in the service sector in the downstream logistics business also face challenges. Aakanksha Bhargava, CEO of PM Relocations, a Gurugram-based packaging and moving company with an annual turnover of approximately Rs 72 million, said the depletion of working capital is a major challenge. This tension has resulted in a cash crisis for employers like Bhargava to pay April salaries to their 500-employee staff at 10 offices across the country. “Landlords are not giving up rent even at a nominal percentage, forget about accepting late payments. Therefore, there is pressure to pay rent for offices and warehouses along with wages when earnings have become zero, “he said.

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A department store, which is almost sold out in Navi Mumbai (Photo by Amit Chakravarty)

The event management segment where hired employees earn a steady stream of income during weddings and other functions has been hit hard. “Many people associated with our business, such as catering, chef, fruit suppliers, pastry chefs, have lost their livelihood. We don’t expect the marriage and celebration business to improve in the next six months, “said Manish Goel, owner of Ludhiana-based Sri Laxmi Fabrics, which offers fabric, décor and catering services.

In general, the demand for a government aid package focuses on liquidity and capital protection. The logistics company PM Relocations, Bhargava, says that the government should take over contributions from the Provident Fund even for micro and small companies, in addition to the support measures already announced for a section of companies.

Many said labor laws should be amended to support companies in allowing measures such as overtime to be allowed in the coming months. “Once the shutdown closes, the concern is that workers may demand permits later in the year and that will be a double whammy as industries would be in a crucial revival mode,” said an industry representative.

Other employers have ensured that their workers who chose to stay behind are cared for. Vipul Ray of Elmex Controls, based in Vadodara, which has Honeywell Automation and Rockwell Automation among its clients, is one such unit. “MSMEs are usually owner-driven companies, so culture is more of a family business.

While they may not be in a position to meet the mandatory legal requirements of the government, they do meet their own moral requirements. They will see to it that medications and ration problems are resolved until things are back to normal, “Ray told The Indian Express.

Until then, all eyes are on the Government. An entrepreneur in Mumbai speaks for everyone: “The government is everything, especially for small businesses that have to comply with a lot of regulations and laws. Our appeal to the Government is that you regulate everything, decide on taxes, say to protect the livelihood of employees, what is your responsibility at this time, our darkest hour? “

(Tomorrow: the emergency wish list: capital, safety net for work, curb relief)

(Additional report from Aanchal magazine, Sandeep Singh)

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