4 tips to strengthen the ‘backbone’ of the Indian economy - the MSMEs

It is a no-brainer that micro, small and medium enterprises (MSMEs) have been the backbone of the Indian economy for decades. This sector comprises two categories, namely- manufacturing and services, and employs more than 11 crore Indians.  

The sector also accounts for the country's 30 percent gross domestic production (GDP), and boosting MSMEs’ financial velocity is crucial to giving the GDP an enormous impetus.

However, the coronavirus pandemic has wreaked havoc on mankind and hit the MSME sector hard.  The traditional one-size-fits-all approach will not suit the sector now, and the need of the hour is to get customised support to rebuild the economic ecosystem.

The World Trade Organization (WTO) has also emphasised the importance of a tech-savvy MSME market, which will only create a level playing field amid rising competition. Deploying operational and financial strategies require due diligence and decent capital, and here are four key that will help - 

Automating business processes

Technology is the key here, and those who do not adopt technology will be left on the fringes.  The world is moving towards automation and digitalization. This not only brings operational efficiency but saves time and capital in the long term, thanks to dedicated software, hardware, and machinery.

Eliminating mundane tasks with automation boosts the morale of the employees and helps them think out of the box, resulting in higher creative and productive solutions to the core business. This will also improve the customer experience. 

Getting financial rights

Every small business needs financial support from time to time, either for the working capital, short-term finances, or for long-term needs. Small businesses are often forced to resort to techniques like invoice discounts to customers, which is not a good practice.

A strong, healthy, and hassle-free mechanism to ease the financial crunch and roping in strategic partners or co-owners to get the financials streamlined is very important.  Self-help groups can also come together to help each other in tough times, but the solutions need to be practical and tactical.

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Sound marketing strategies 

Small businesses lack efficient and effective marketing strategies and often end up with cash burn without tangible results. MSMEs should fine-tune their marketing strategies including promotions, advertisements, and PR activities, as they establish brand identity and increase long-term earnings. 

Harness the right talent

Often, while MSMEs offer greater flexibility to employees by giving them a decent work-life balance, there are limited opportunities compared to larger corporations. Thus, MSMEs should organise their staffing policies to give better opportunities and defined career paths.