Rahul Raj is the co-founder & CEO of FloBiz that he started with – Aditya Naik & Rakesh Yadav in 2019. As CEO, he has a hands-on role in the company’s compliance, marketing & growth strategies. He believes that despite being a significant contributor to the nation’s economy, SMBs are deprived of growth opportunities, advancements, and encouragement. SMBs in India have immense potential to grow, flourish, expand and sustain. We can together unlock this potential by solving crucial problems through technology.
The micro small and medium enterprises (MSMEs) are considered the most important sector for the development of any growing economy, and India is no different. MSMEs contribute nearly 30% to the GDP of the country, 40% of exports and 45% of the manufacturing output. However, in a post-COVID era, there are many challenges that MSMEs need to overcome to accelerate growth and contribution to GDP.
If we go back a decade or so, we will find that there was always enough evidence to prove that MSME (micro small and medium enterprises) need to adopt a digital and mobile-first approach. But it was not until the COVID-19 pandemic hit India, did MSMEs pay attention to the same. As a result, only the MSMEs with early adoption of digitisation not only survived but were able to minimize the impact of COVID-19 on their businesses.
A Dun and Bradstreet survey of 250 MSME owners across India in the last quarter of 2020 found that 54% of the businesses had managed to bring down their operational costs as a result of digitisation, 51% went a step ahead and were able to improve their competitive positioning. On the other hand, those businesses that were unable to leverage technology and adopt a digital-first approach had either failed to survive or were struggling to stay afloat.
More than 80% of SMBs are still using pen and paper for their daily business operations like creating invoices, managing inventory and keeping a track of account receivables and payables. This has impacted their efficiency and stunted their business growth. Most of them have been reluctant to adopt technology as they find it overwhelming to comprehend and also have a wrong perception that such solutions come at a high cost. Further, concerns such as loss of control, security, and lack of the requisite technical skills have bogged them down. In a post-COVID world, SMBs can no longer afford inefficiencies in managing their business operations and need to think progressively and act proactively to carve out a digital strategy for their business.
At a time when the economy is in its recovery phase, and the Government is trying to make the business atmosphere conducive for MSMEs, the need of the hour is for business owners to break free of their comfort zones, and reinvent business models at the core for redefine their strategy and have a competitive advantage over their peers.
Scale as you learn
COVID-19 has been a litmus test for real-time ability to unlearn, re-learn and adapt. The time is now to put those learnings to good use and turbocharge the ability to scale. However, moving boldly does not mean moving aimlessly or thoughtlessly. As MSMEs enhance their learnings it is important to translate their learnings into responsive action. Some questions that are useful while reimagining digital strategy and choosing the right set of software solutions are:
Usability – What are your business operations’ use cases which are addressed by a software solution?
Scalability – Can the software support you as you expand your business physically as well as digitally and whether it offers you visibility for every node of your business?
Data security – Does the software adhere to industry practices of having ISO certifications and does it give you confidence on the safety of your proprietary data fed while transacting?To accelerate the pace of growth, MSMEs need to enhance the opportunity to learn from large scale deployment, in lieu of testing one dimension at a time. The real time learnings can be perceived as an opportunity to test the value of your product/service, incorporate feedback quickly and improve it nearly instantly. This agile approach once embedded in employee culture can then be the mantra for greater and higher success.
Keep it simple and stay focussed
Scaling while experimenting with digital-first strategies can lead to complexities, leading to several channels of distribution that may fast lose relevance with ever-changing customer preferences. The devil is in the detail for most MSMEs who may get overwhelmed due to the scale of experimentation and lose focus.
The trick, therefore, is to stay steady on the perceived path and take fast action to prune offerings that are no longer viable while improving your core offerings as per customer needs and preferences. Quick action and steadfastly staying focused with simple offerings result in a higher share of loyal customers and lower operational costs.
SaaS companies & fintechs are a ray of hope for MSMEs
MSMEs that have thus far been wary of digitisation have now realized that a digital-first approach is no longer a choice, but an imperative to scale and grow. The good news is where they lack in knowledge or expertise, they can rely on an array of services that SaaS and fintech companies have bought in the market.
These SaaS and fintechs are able to offer robust,responsive and tailored solutions to MSMEs, helping them collaborate among suppliers, customers and partners much more effectively. From digitizing every aspect of a business to accessing a bouquet of financial services, MSMEs are coming to terms with the plethora of choices available in front of them. Invoicing, accounting, AR/AP tracking & reconciliations, inventory management and compliance filings are all possible with a smartphone or laptop, with platforms leveraging the cloud, artificial intelligence (AI) and the entire API infrastructure.
With the use of simple yet powerful solutions that SaaS & fintechs are devising, MSMEs can now record and analyse all of their business data in a secure environment. Not just that, the data that they are progressively storing in the digital world also helps these businesses garner valuable customer insights that they can then act upon quickly to deliver better customer value.
In the pre-COVID times, the rate at which MSMEs have embraced digital transformation had been slower as compared to large-scale businesses. In a post COVID environment, SaaS companies and fintechs are helping MSMEs leverage benefits at a faster pace to enhance efficiencies and ensure sustainable growth.