Surviving the 'New Normal': Indian SMEs And Their Quest To Find the Light Within the Tunnel
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While COVID-19 has inflicted significant damage on the organized world, several new opportunities for transformation have also emerged. The current situation has provided businesses an opportunity to make an extreme paradigm shift in the way they approach the market, employees and investments in the future. A key change has been in the mindset on equity structure. Businesses have gradually understood that they need to be agile and flexible for survival, in addition to looking for and leveraging opportunities thrown up by adverse conditions.
SMEs play a major role in the economy of the world, more so in India—contributing to the GDP and employing workforce and in a nation which still lives majorly in its hinterland. The increase in the fortunes of the SMEs in India is directly proportional to the growth our country witnesses. It is thus critical for SMEs to adopt pivotal strategies in order to normalize their operations during and post the COVID-19 era.
Equity vs Debt… It’s time SMEs make the right choice
A common scenario which we often witness in India is of large businesses and startups opting for equity as they prefer bringing-in more knowledge in lieu of sharing ownership and profits. Most often, equity investors enter at a low cost and are therefore willing to take risks to get higher return on an otherwise minimal initial investment. A well-managed equity has a history of adding great wealth to an organization as well as to the personal wealth of the entrepreneur. Unfortunately, many negative stories about equity continue to cloud the vision of SMEs, so it is considered a double edged sword.
By simply looking at success stories of organizations, it is a no-brainer to comprehend that the scope for growth and success rates of equity as a source of funds is exponentially higher than that of debt. Debt makes SMEs risk averse and reduces their ability to innovate and grow, which is why SMEs in India need to latch onto the equity model to ensure they are able to launch new offerings and innovative solutions. Ironically, the visibility is lower for failures of debt-heavy models as it is managed within organizations whereas failures in the equity market are rigorously tracked and recorded due to compliance issues and the media interest in listed companies.
A planned and well-managed approach to the market reduces risks and ensures that the enterprise looks attractive to investors. SMEs record better performance when they are not overleveraged and with the business scenario as it is today, overleveraged books can really spell the doom of established organizations.
Optimise performance to adjust to the ‘new normal’
Technology such as AI, CRM, automation, cloud among other innovations coupled with a high performing workforce can really increase revenues per employee metrics. SMEs need to invest in this area in a structured manner to improve the IT infrastructure and not look at it as a dead or high-cost investment. Bringing in professionals at the highest levels will help usher in the required business understanding to implement technology which in turn will be a huge stepping stone to growth. Today with SAAS models and innovative staffing models becoming more acceptable in India, the opportunity to access the ebay technologies and hiring highly qualified professionals and mentors is higher than ever and shouldn’t be missed by SMEs. It can become their single biggest catalyst for growth or their biggest missed opportunity.
Relooking at sales function and evaluating with an open mind
With travel being restricted and the fear of meeting people, more and more organizations are recognizing the need to use the more efficient digital platforms to create their funnels and even take the sales process forward through such funnels. While larger businesses, due to their sheer geographical spread have a history of leveraging digital online meeting platforms; this trend however has not traditionally been adopted by Indian SMEs who have always been inclined towards face to face meetings for both selling and procurement purposes.
Digitization of the process for acquiring new customers has been used by larger companies for years and SMEs are realizing quickly that those models can be adapted for smaller companies as well. Experimenting with different models, using tools like CRM, online calendars, meeting platforms, inside sales, online sales collaterals, microsites and explainer videos have today become popular tools for helping enterprises pivot their customer acquisition process. Organizations adapting quickly, remodeling and reskilling their sales and marketing organizations are coming out as winners.
Brand building for a stronger today and tomorrow
Brand building has traditionally been neglected by SMEs. The need for new customers to trust an organization without meeting them physically means that the organization and its leaders—both need a strong brand. SMEs now need to build a brand to cover all major aspects of their business: access to customers and to investors or financial institutions—leadership brand, investor brand as well as the corporate brand. Building a brand is no longer the prerogative of large enterprises. If SMEs have to survive and grow, they need to build a brand that will ensure that the brand survives through multiple generations of leaders and one that thrives independent of individuals.