Digitisation, disruption, transformation, agility: What small businesses need to focus upon
“It used to be that the big eat the small; now it’s the fast that eat the slow. Fast is the new big,” says Daniel Burrus, the best-selling author of New York Times. And quite rightly so!
Today, the flexible, agile, and risk-taking Micro, Small and Medium Enterprises (MSMEs) are giving the big firms a run for their money that continue doing business in their conventional style.
With VC funding becoming more accessible for entrepreneurs, the constraint of funds is no longer an impediment to the growth of MSMEs.
MSMEs — the growth engine
These small businesses form the backdrop of the Indian economy as they are among the largest employment generators and contribute significantly to the country’s GDP growth.
According to a Creditq, CRM report, the MSME sector employed over 55 million people in India and made up eight percent of India’s GDP in December last year. The SME and MSME segment in India accounts for almost 50 percent of manufacturing output along with 40 percent of the country’s exports.
The major reasons behind the meteoric rise of MSMEs are — low input cost, steady flow of credit, skilled workforce, merit-based hiring and promotions, less paperwork, ability to market product/service on social media platforms, among others.
COVID-19 pandemic — the roadblock
However, like many other sectors, the outbreak of novel coronavirus hit the MSMEs hard. Thousands of jobs were lost, and some firms even had to shut operations. The subsequent lockdowns hit entrepreneurs hard as most of them were not quite prepared for such a crisis.
In such times, Charles Darwin’s “survival of the fittest” theory assumes significance like never.
Digitisation — the new business model
Many enterprises interpreted the current business environment and switched towards digitisation to turn the crisis into an opportunity. Technology has already been transforming business processes in India but after the pandemic, firms will operate in a completely different manner, believe experts.
Today, a jewellery store in Mumbai has consumers from all over the country as digital media provided the business with the platforms to run advertisement campaigns at a relatively lower cost than what is demanded by those in print and television advertising.
The increasing penetration of smartphones has also brought a tremendous opportunity for small businesses as they can now become a popular brand through social media sites. It is not just GenZs and the millennials but also the older generations who are also active on such platforms.
This has made it easier for MSMEs to connect with customers, address their issues, and reach out to new people in unexplored territories.
Disruption — the buzz word
Disruption is another theme sweeping the business world. MSMEs are very conscious of the next big change. They understand how to be relevant in such times. For instance, many fashion designers are now moving from a traditional brick and mortar shop to a pop-up store or a shared rented space.
The consumers find such spaces innovative as a store is often rented by two businesses that complement each other — like jewellery and ethnic clothes. Similarly, many stores run their businesses online and avoid leasing a traditional shop in a market to save bucks.
Government support — the step-in right direction
Acknowledging the revenue losses that the MSMEs incurred due to COVID-19 lockdown, the government launched a slew of measures to help the entrepreneurs in such a crucial time.
These measures include — relaxation on norms for holding board meetings, increasing the due date for completing pending payments of central and excise duties, pushing the deadline to file income tax returns or GST to June 30, increasing the default threshold limit for triggering insolvency proceedings to Rs 1 crore, among others.
Employment is one of the most important factors for a budding economy as a largely unemployed workforce can actually turn India’s demographic dividend into a disaster and hence, it is important for the government to continuously strive and support the small businesses in India.
I believe that the recent focus of the government in supporting local products/services is a step in the right direction. The officials must accelerate their efforts in this direction to make India a manufacturing hub.
Startups — the way forward
On a macro level, the number of startups that have come up in the last few years in India is testament to the talent and opportunities available in this country. Sometimes, we see that the large incumbents react to changing trends late but MSMEs latch on to these changes quickly – we have already seen that play out in the fintech space in India. This trend will continue as we move ahead.
If India is to become a $5 trillion economy by 2025 – the small businesses will have to play a very crucial part.
As we move forward, the competition is only going to become more intense and to keep up with the times; MSMEs will have to deliver the best product/service at the most reasonable prices possible.
These firms have all the potential to do so and I am confident that small business will move past the current economic slump and emerge triumphant in helping India rise to glory.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)