International Journal of Advanced Engineering, Management

and Science (IJAEMS)

ISSN: 2454-1311
Vol-7, Issue-1; Jan, 2021
Journal Home Page Available: https://ijaems.com/
Journal DOI: https://dx.doi.org/10.22161/ijaems
Article DOI: https://dx.doi.org/10.22161/ijaems.71.4

Impact of Covid-19 on Micro and Small Entrepreneur

(MSE) Graduates of the Kapatid Mentor Me Program of the
Department of Trade and Industry
Debbyriza T. Hidalgo1, Francis Peter B. Marquez2, Pachicco B. Sarmenta3, Jean Kanty A.
Alvarez4, Dennis U. Ong5, Felipe E. Balaria6
1Trade-Industry Development Specialist, Department of Trade & Industry, Philippines
2Business Counselor, Department of Trade & Industry, Philippines
3Credit Analyst, Bank of the Philippine Island, Philippines
4Accounting Staff, Local Government Unit Quezon, Philippines

5Marketing Manager, Pharma, Philippines

6
Professor, Nueva Ecija University of Science and Technology, Philippines

Received: 14 Nov 2020; Received in revised form: 26 Dec 2020; Accepted: 09 Jan 2021; Available online: 21 Jan 2021
©2021 The Author(s). Published by Infogain Publication. This is an open access article under the CC BY license
(https://creativecommons.org/licenses/by/4.0/).

Abstract— The outbreak of the coronavirus disease (COVID-19) has severely affected the Micro, Small, and
Medium-sized Enterprises (MSMEs). Unfortunately, small businesses are being hit hardest by the fall-out of the
pandemic [1] and are being addressed by the Department of Trade Industry (DTI) with several measures and
initiatives to mitigate its impact on the Philippine economy. This study was conducted to describe the status
and effects of the pandemic to the Micro and Small Entrepreneur graduates of the Kapatid Mentor ME
(KMME) Program of DTI in the province of Nueva Ecija, Philippines, as the agency’s guide in streamlining
the future direction of the program. The descriptive method of research was used with a semi-structured one-
page online survey to determine the KMME MSE graduates’ profile and the overall impact of COVID-19
pandemic particularly during the declaration of the community quarantine. The data gathered showed that
most of the KMME MSE graduates continued their business operations amidst the pandemic. They are
responding to the economic fall-out in several ways with optimism, government response and interventions that
are significant to ensure MSEs survival. Likewise, they develop resilience through business continuity
trainings, productivity improvements, and subsidies.
Keywords— Business continuity, COVID-19 impact, Department of Trade and Industry, Entrepreneurs.

I. INTRODUCTION was recognized as one of the fastest-growing economies [3].

The Micro, Small, and Medium Enterprise (MSME) sectors Last 2018, it is projected that the gross domestic product
play a critical role as drivers of economic growth [2]. MSME (GDP) growth rate over the next two years will increase by
is known as the backbone of Asia Pacific Economic 6.7% [4].
Cooperation (APEC)’s 21 economies and in the Philippines,

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In 2015, MSMEs represented 99.6% of the total enterprises many challenges to MSMEs in the province, research efforts
and provided 63.27% of the country’s total employment. are targeted to identify the status and condition of the
That makes the MSMEs a significant sector of the economy KMME MSE graduates amidst the pandemic, in order to
[2]. determine the specific assistance necessary for business
As catalysts of investment and employment generation in the continuity and recovery. This study will contribute to
Philippines, the government initiated and policies and streamline the future direction of the program in the
development programs to strengthens the thrust on province, highlighting the profile of the KMME graduates,
entrepreneurship through trade and investments. As stated its challenges during the nationwide community quarantine
Republic Act No. 10644: Go Negosyo Act, “An Act caused by COVID-19, and its present status.
Promoting Job Generation and Inclusive Growth Through Kapatid Mentor ME Program: Overview
the Development of Micro, Small and Medium Enterprises” The Kapatid Mentor ME program (KMME) is a coaching
thus the DTI conduct Technology Transfer, Production and and mentoring program under the partnership between the
Management Training, and Marketing Assistance for SMEs Philippine Center for Entrepreneurship-Go Negosyo and the
[5]. Department of Trade & Industry (DTI) as part of its strategy
However, the micro, small, and medium enterprises boost economic activity focusing on micro and small
(MSMEs) are vastly affected by the Coronavirus disease enterprises (MSEs) [6]. The program aims to assist small
(COVID-19) outbreak. COVID-19 is an infectious disease- players to scale up their businesses and contribute to
causing global health crisis and economic downturn. DTI is economic growth and address issues of unemployment, job
assisting MSMEs to adapt to new business concepts amidst mismatch, and migration through coaching and mentoring.
the challenges of the “new normal”. This study shall Based on a study in the US, only 30% of MSEs survive their
contribute towards the determination of DTI’s interventions first ten years of operation not because of lack of
and future plans on the implementation of its programs and government support but more of mismatched strategies in
services [6]. It is, thus, crucial to provide them with the handling opportunities.
necessary interventions in mitigating the pandemic’s impact Go Negosyo, as the program’s coordinating body will assign
on MSMEs and improve business resiliency to quickly adapt a mentor that specializes in a specific topic to a batch of
to the disruptions caused by COVID-19 through providing mentees composed of 20 micro-business owners with
business development support, capacity building, access to potential for growth. This will be in close coordination with
finance and market, and promote sustainable value chain [7]. DTI representatives [4].
The Kapatid Mentor ME (KMME) is one of the programs
launched by DTI and the Philippine Center for
II. METHODOLOGY
Entrepreneurship (PCE) to help the country's micro and
small enterprises (MSEs). The said program provides The descriptive method of research and input–process–
comprehensive training with ten modules designed to output (IPO) model were used in this study. According to
prepare Micro and Small Entrepreneurs (MSEs) for their Calderon (2012), “descriptive method involves the
integration in the value chains of medium and large description, recording, analysis and interpretation of the
enterprises and scale up their businesses through mentoring present nature, composition or processes of phenomena
on different functional areas of entrepreneurship [4]. which focuses on prevailing conditions, or how a person,
group or thing behaves or functions in the present” [8].
In June 2017, the DTI has successfully launched the said
According to the Six Sigma Daily website, "The Input-
program in Nueva Ecija and has completed three batches as
Output (IPO) Model is a functional graph that identifies the
of August 2019 with a total of 60 graduates. After all the
inputs, outputs, and required processing tasks required to
KMME runs, valuations and assessment valuations are
transform inputs into outputs"[9]. This method was to
necessary to provide information on how the program is
determine the necessary actions to improve the KMME
contributing results to meet the objectives of the program
program implementation and to assist the KMME graduates.
deliverables.
The 60 KMME graduates were invited to participate in this
As the COVID-19 pandemic was confirmed to spread in
study by responding to a quick online survey via Google
Central Luzon including the province of Nueva Ecija with 55
forms. Considering the current community quarantine and
confirmed positive cases as of May 31, 2020, which posed
health protocols, the researchers conducted the survey by

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

sending the survey link to KMME group chat messenger per affected, (b) slightly affected, (c)Moderately affected, and
batch as approved by the Executive Committee of the (d) Strongly affected. The rehabilitation/loan facility under
Department of Trade & Industry- Nueva Ecija Provincial the Pondo para sa Pag-asenso and Pagbabago (P3) program
Office. Participation in the survey was voluntary. The of DTI was an option on an item no. 6 on how the
questions on a semi-structured one-page online survey form respondent deals with cash shortages.
were kept as simple as possible to be answered with the The survey and data collection were conducted on June 1-3,
below structure: 2020 after the Modified Enhanced Community Quarantine
The first part determined the demographic data and profile of was lifted. Descriptive statistical tools such as percentage
the respondents with questions on age, municipal address, and frequency distribution, tables, and graphs on Google
KMME batch, industry, and year of establishment. The Forms and Microsoft Excel were used to summarize,
respondents were asked about the status of business describe, and analyze the data gathered.
operation prior to the March 17, 2020, enhanced community
quarantine. The second part assessed the overall impact of
III. RESULTS AND DISCUSSION
the COVID-19 pandemic with items related to the status of
business operations, cash flow, and challenges on raw Due to limitations brought by the pandemic, a total of 60
materials and workforce requirements. The item on how the surveys were obtained but 21 respondents or 35% of the
business operations were affected by the COVID-19 surveys conducted were successful. Table 1. Shows the
pandemic was measured using a Likert scale where (a) not demographic characteristics of the respondents.

Table 1. Descriptive Analysis for Study Sample

Category Measure Scores

Age Mean 43.10

Range 31 to 52

Gender Male 9.00 (42.86%)

Female 12.00 (57.14%)

KMME Batch Mode 2 (90.48%)

Industry Food 9
Manufacturing 12

As presented in the table above, the age of the respondents respondents belong to the first three batches of KMME
ranges from 31 to 52 years old and the age mean is 43.10. graduates in the province. Likewise, 9 of the respondents are
Approximately, 57.17 % of the respondents were male and engaged in the food industry while 12 of them belong to the
the remaining 42.86 % belongs to male respondents. The manufacturing industry.

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

Fig.2: Percentage of Respondents’ Business in Operation as of March 15, 2020.

The illustration above has shown the percentage of business business operates on the said date while 9.50% answered no.
of KMME graduates’ business which still operates as of This question is in relation to the imposition of lockdown on
March 15, thus 90.50% of respondents answered that their areas affected by the pandemic.
Table 2. Assessment of Overall Impact of Covid-19 Pandemic
Frequency Percentage Verbal Description
5 23.80 % Not Affected
4 19.00 % Slightly Affected
9 42.90 % Moderately Affected
3 14.30 % Strongly Affected

The illustration showed the percentage of how the business affected while 42.9% of the respondents were moderately
operations of KMME graduates' businesses were affected by affected. In addition, 19% of the respondents were slightly
the pandemic, only 14.3% of the respondents were strongly affected while the remaining 23.8% were not affected at all.

Fig.3: Assessment of Respondents on the Risk of Business Continuity due to Crisis

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

The illustration above shown the assessment of respondents their business will close within a month or less, 28.80 %
on the risk of business continuity due to crisis. The majority forecasted that their business will close with a month or three
of the respondents don’t envision of business closure or and 14.30 % thought that their business will last less than six
shutdown with 47.60%, while 9.50 % of them predicted that months.

Table 3. Significant Factors of Financial Problems of the Business Encountered by the Respondents During the Covid-19
Outbreak

The table above shows the percentage and the is noticeable that the financial problems ranked higher are
ranking of respondents' most significant contributors to related to operating expenses. And only 10% of the
financial problems. According to the data presented, 57% of respondents mentioned that they have no specific problem
the respondents said that staff wages and social security with their financial problems.
changes cause the financial problem to their business. And it

Fig.4: Percentage of Forecasted Span of Cash Flow Liquidity to Sustain Business Operation

The figure above shows the percentage of the 42.90 %, and 19.00 % of them assumed that their cash flow
forecasted span of cash flow liquidity to sustain its business can only sustain business operations within a month or less.
operations. The majority of the respondents forecasted that And 14.30% of respondents with high hopes that their cash
their available cash will last for more than three months with can sustain their operation for more than six months.

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

Table 4. Financial Alternatives to Deal with Cash Flow Shortage

No. of Respondents % of respondents Rank
A. Loans by Commercial Banks 7 33% 3
B. Loans by P3 12 57% 1
c. Reduction of Operating Cost 9 43% 2
d. Negotiating with Lenders to avoid 6 29% 4

As reflected in Table 4, 57% of the respondents say that they cash cycle. In connection with question number 5, business
will ask for loans under DTI's P3. Doing so will aid the owners must find a way to prolong their working capital
working capital. While 29% of the respondents say they will before it depletes. Question number 6 will identify the
negotiate with their lenders. In times of financial woes, respondents' alternatives to meet their funding requirements
business owners need to be creative in times of disruptive to ensure smooth business operations.

Table 5. Solutions on how to deal with Shortage of Workforce

No. of Respondents % of respondents Rank
(a) Wage increases 2 9.50 % 4
(b) Use of advanced equipment or software to 1 4.80 % 5
reduce the amount of work,
(c) Outsourcing of orders 10 47.60 % 2.5
(d) Delay in delivery 11 52.40% 1
(e) No shortage of workers 10 47.60 % 2.5

The illustration above shown the solutions on how to deal tells that they will suffer from delivery delays while only
with a shortage of workforce. One of the effects of the 4.8% of the respondents will use advanced equipment or
Pandemic the Business owners is the shortage of workers. In software to address the concern. Surprisingly, 47.6% of the
line with this, question 7 showed the possible effects of a respondents said that they do not have a shortage of workers
labor shortage on their business. 52.4% of the respondents even in the times of Pandemic.

Table 6. Alternatives Considered by KMME graduates in Dealing with the shortage of raw materials.
No. of Respondents % of respondents
(a) Reduction of production 11 52.40 %
(b) Outsourcing orders 10 47.60 %
(c) Increasing the procurement prices 4 19.00 %
(d) Seeking new procurement channels 12 57.10 %
(e) Delaying goods delivery 6 28.60 %
(f) No shortage of raw materials 1 4.80 %

The illustration above has shown the main means of how choose up to two options. 11 answered that they had a
KMME graduates deal with the shortage of raw materials in reduction in their production while 10 answered that they
their businesses. The respondents were given the chance to outsourced orders. 4 answered that they had an increase in

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

the procurement prices while 12 of them sought new delivery while only 1 respondent answered that he/she did
procurement channels. Furthermore, 6 of them delayed their not have any shortage of raw materials.

Table 7. Assessment of the overall problems encountered by the businesses due to the pandemic.
No. of Respondents % of respondents
(a) Reduction of orders 14 66.70 %
(b) Inability to deliver existing orders 3 14.30 %
(c) Increased difficulty of financing 6 28.60 %
(d) Existing loans cannot be extended 8 38.10 %
(e) Disruption of logistics 6 28.60 %
(f) Upstream and downstream chain disruptions 2 9.50 %
(g) Insufficient protective equipment (e.g., masks) 7 33.33 %

As shown in the illustration above, all of the KMME difficulty with their finance while 8 of them had existing
graduate’s businesses faced various problems because of the loans which cannot be extended. Moreover, 8 of them had
pandemic. To be specific, 14 of the respondents had a disruption of logistics while 6 of them had upstream and
reduction of orders while 3 were unable to deliver existing downstream chain disruptions. Lastly, 7 of them did not have
orders. In addition, 6 of the respondents had an increase of enough protective equipment like masks, face shields, etc.

Fig.5: Percentage of Expected changes in company income over the recent year

The illustration above shown the Percentage of Expected IV. CONCLUSIONS AND RECOMMENDATIONS
changes in company income over the recent year. Almost During the start of Luzon Enhanced Community Quarantine
one-third of the total population stated that the expected (ECQ) dated March 17, 2020. The majority of the
income will decrease by 10 %, and 23.80 % agreed that their respondents comprising of 90.50% stated that they are
business revenue will also decrease by more than 10 %. operating on the start of the ECQ in Nueva Ecija. 9.5% were
23.80 % of the population believe that their income will already closed during the said period.
increase despite the pandemic outbreak. However, 4.80 %
Cash Flow is the total amount of money being transferred
said their income will be similar to last year' and 14.30%
into and out of a business, especially affecting liquidity. It is
said that they are unable to determine the income changes.

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Debbyriza T. Hidalgo et al. International Journal of Advanced Engineering, Management and Science, 7(1)-2021

vital for business owners to have the right amount of [6] Department of Trade & Industry. (2016) “Kapatid Mentor Me
liquidity to be prepared in emergency [10] to sustain Project”. Retrieved from
continued business operations. Based on the study conducted https://www.dti.gov.ph/negosyo/kapatid-mentor-me-project/\
[7] Department of Trade & Industry. (2020). COVID-19 Updates
the majority of them forecasted that their cash flow can only
and Issuances/DTI COVID-19 Resources/www.dti.gov.ph
sustain three months or more of the business operations.
[8] Calderon, Jose F., Methods of Research and Thesis Writing,
However, most of the respondents consider loan financing to 2012 (reprint) • Hale, J. (2011). The 3 Basic Types of
provide financial means to the business. Descriptive Research Methods. Psych Central. Retrieved on
It is highly noted that despite the pandemic 47.6% of the June 30, 2013, from
respondents are still positive as they are not envisioning http://psychcentral.com/blog/archives/2011/09/27/the-3-
basic-ty
closure of their business while 28.6% of respondents expect
[9] Six Sigma Daily. (August 2012). "Input-Output Model"
the effect of the pandemic will make their business closed
Retrieved from https://www.sixsigmadaily.com/input-output-
within 3 months. Despite the current business obstacles, they model/
are facing, KMME graduates find solutions on how to make [10] Subia, G. S., Mangiduyos, G. P., & Turgano, J. B. D. (2020).
their business resilient. Emergency Preparedness of Novo Ecijanos. Open Journal of
The researchers recommend exploring possibilities to grant Social Sciences, 8, 17-23.
https://doi.org/10.4236/jss.2020.83003
reinforced aid to the KMME graduates affected within three
[11] Rouchen Dai, Junpeng Hu, and Xiaobo Zhang. (February
months of the pandemic to prevent the closure of their
2020). "The Impact of Coronavirus China's SMEs: Findings
business. Considering the specific needs across different from the Enterprise Survey for Innovation and
sectors, supportive and relevant policies should be taken into Entrepreneurship in China"
account. To help them overcome the crisis, program [12] Mina, J., Subia, G. & Ermita, P. (2020). Value Chain
implementations should also be more transparent if they are Analysis of Slipper Industry in the Footwear Capital of the
to deliver subsidies directly to private entrepreneurs [11]. North. International Journal of Supply Chain Management.
Vol.9, No.5, 178-183.
The researchers recommend further study and gather more
information about the experience of KMME graduates to
have beneficial repercussions to improve more the program
implementation [12] and public assistance.

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