The global marketplace today has witnessed rapid development due to the significantly increased customer demand and this, in turn, has resulted in the establishment of a wide range of small and mid-sized enterprises. As per 2018, India is home to about 55 million Small and Medium Enterprises (SMEs) - employing 106 million of the country’s workforce - indicating that the nation has the potential to turn into the manufacturing hub of the world and hints at booming development for the SME community. This is a mammoth cycle, and the cogwheels have gained momentum in the past decade. There is no doubt that SMEs are vital for the development of the country. Besides, government initiatives like ‘Make in India’, ‘National Equity Fund Scheme’, and ‘Skill India’ aim at promoting the SME status in the country. The primary goal of these initiatives is to further the growth of the SME industries. SMEs should focus on following pointers to leverage upon its ‘sales and marketing’ strategy.
Build internal capabilities through strategic investments in technology
It is essential for SMEs to build the skillsets of the present workforce and ensure that they are well-equipped to handle the wave of technology that we are currently riding on. Modernisation of software and technology can go a long way in deploying efficient solutions and improving business process efficiency. Cloud storage services are easy to implement, understand, monitor and track. Employee skilling for the same is provided at approved training centres that receive direct incentives and grants from the government. The digitisation of the Indian markets is leading to the much-needed transformation of the SME landscape.
Discerning the international markets
Conventional business dictates that an enterprise first establishes itself in the home ground before branching out. However, by adopting new business models in recent years, SMEs in India have distribution networks emerging all over the Indian subcontinent. Companies with an international footprint seek resources from overseas markets. These activities help to bring the best practices and technical know-how to local managers and business owners. It is necessary to have an understanding of the market and define how much market share the SME will be able to capture.
Blue Ocean Strategy
SME sector can also leverage its size and scale effectively to explore uncontested markets. Tailored segments in the industry are often serviced by SMEs, thus leading to a niche that is occupied and utilised by this segment only. Embracing the changing business requirements is essential to the survival and growth of SMEs.
Differentiate your business offerings
An advantage of an SME is the pace at which it can reinvent itself and possess dynamic business goals. It is important to develop products/services after understanding customer requirements, and determine the strengths and weaknesses of the current market by analyzing the competitive landscape. It is crucial to keep reinventing the business from time to time to stay current and keep up with the times.
Funding for SMEs
With the number of lenders on the rise, there is a myriad of financing opportunities available to SME sector in India. SME loan facilities ensure that the business does not suffer and that business owners concentrate entirely on growing the establishment. SME loans finance the launch of a new product, warehouse needs, overhead costs, business expansion and also marketing and advertising fees. These loans can be obtained hassle-free through mobile-applications or online websites.
Establish Brand Identity
One way to traverse the space of SMEs in India and shift to different levels is to look at branding from a different perspective. In the age of digital media, branding does not have to be an expensive exercise. Strategic digital solutions aid in shifting mindsets and help to sustain the growth of a business. Branding also supplements cross-border trade and augments a global position for the SME. This can also include social media. By being accessible to all customer groups, the growth of the business can increase multi-fold.
Building Human Capital
In a competitive marketplace, it is important to have a unique selling proposition to sustain oneself. A lot of employees are opting to work with SMEs that offer scope for professional growth and recognise their potential. SMEs usually possess simple organograms that allows for rapid response to changes in the current market as opposed to large enterprises with complex hierarchies.
In order to ensure long-term growth, it is imperative for SMEs to build a responsible and profitable business model. It is necessary to take steps for sustainable development of the organization and inculcate these measures into its value chain.
Alliances and Partnerships
Presence in external forums not only brings networking opportunities with prospective partners but also helps to keep abreast of the market dynamics. Further, participating in MSME associations also provides credibility and transparency to the members.
It is crucial to build and maintain a management team, with a strong succession plan. SMEs should not ignore the importance of sound company policies and good practices, as the company ethos are the base of any future growth.
Investing in Innovation
Innovation is essential for any business, irrespective of its size. Thus, the size of the SMEs should not be a hindrance for investments in disruptive technologies and new product development. Across industries, investments in R&D have paid off in the long run.
The Future of SMEs in India
Small and Medium Scale enterprises play a vital role in the socio-economic growth of various classes of Indian society. The SME sector accounts for roughly 40% of the total export of India and encourages inclusive growth by being the backbone of the world’s economy. SMEs are expected to contribute 600 million jobs globally by the year 2030. With the incremental positive changes associated with SMEs in our country, it is safe to say that they are here to stay and a more business friendly environment will boost their growth.
Author: Prashant Nagre - Chief Executive Officer - Fermenta Biotech Limited