Everyone agrees that SMEs are important for the growth of the nation and the Gross Domestic Product itself. Yet, when it comes to setting up the SMEs and nurturing through its infancy, most promoters are frustrated by the series of bottlenecks. Thankfully, the winds appear to be changing and the climate for SMEs in India is expected to change for the better significantly in the coming days. There are many things that SMEs can learn and implement to ensure that their efforts are rewarded and their enterprises transition successfully from infancy to childhood and grow into a worthy adult business. The following tips are designed to aid them through the process.
Many knowledgeable circles who comment on SMEs at regular intervals have opined that the quality of data that SMEs present have poor structure. In turn, the absence of structured financial data presents a trust deficit situation for the lending agencies. With promoters bringing in negligible equity and market knowledge to sustain the enterprise, the lender’s risk perception works against the interest of the promoter.
Ability to predict market behaviour
In a slew of instances, promoters are unable to predict market behaviour. The Indian market is distinct from the West and many enterprises have failed trying to copy the West to the Indian population. The story of Shopping Malls and super markets in India presents a tell tale evidence of why aping the West is not the best business model in India. The shopping habits of middle class Indians are predominantly traditional. Spending a whole day at the Mall shopping for what the family needs and does not need cannot be expected of many Indian families. Swiping cards may have picked up momentum, but impulse buying still lags behind. In short, Indians are more concerned about the net household debt at any given point of time.
Online space gaining momentum
The online business model is essentially gaining momentum in India. Logistic costs are still affordable and for the right players there is a sea of opportunities waiting to be tapped. Focusing on quality to garner loyal and sustainable customers is the key to growth in this sector. In most metros, groceries and vegetables have a huge market waiting to be tapped. But getting a foothold in this sector has its share of pains. A deep study of how some local brands engage with the customers while many others fall by the wayside will be a helpful measure for promoters wanting to explore these opportunities.
Google has lots on offer
While finding the right niche and the ability to take risks will continue to be the success mantras for SMEs , Google on its part is has many tools and programs focused on helping SMEs. Identifying these tools and perhaps engaging with Google is one way that many SMEs can cross many hurdles and nurture their businesses. ’Google my business’ for instance, is a Google initiative to help SMEs create their web presence using a simple mobile app, exchange business information in multiple languages including English. Presently just about 5% of Indian SMEs have a digital presence and Google is aiming to rope in as many as 20 million SMEs into the digital world by end 2017
Sustaining through the early days
During the early days of the businesses, the cash flow is often one sided. Promoters can only expect to keep spending and wait for the efforts to convert into revenue. This is a crucial stage when the promoter/s and those who depend on them need to sustain themselves. Therefore, ideally, your working capital needs should factor in the expenditure. The ability to plough back business profits into the business during the nascent stage can avoid many of the future jerks.