SMEs Must Think Beyond Traditional Marketing Practices to Succeed

by March 22, 2016 0 comments

The micro, small and medium businesses face problems of non-availability of adequate and timely credit at cost effective rates, technological obsolescence, marketing constraints, non-availability of skilled human resources, infrastructural bottlenecks, high input costs and a host of rules and regulations.

Besides the above, the issue of delayed payment is a big concern that affects the MSME the most. MSMEs supply lots of materials to Defence, Railways, Space research, PSUs, state and Central govt. establishments, whereas payment from these organisations gets delayed over 180 days, despite having an MSMED Act in force, where payment should be made within 45 days. Government should work in this regard for the enforcement of law.

“We have proposed to the government that an agency could be set up or facilitation councils could be used, which will specifically work towards resolving the issue of delayed payments. All MSMEs should be mandated to provide a list of receivables after 45 days to this agency along with documented proofs,” says Neotia.

“This agency should have the power to take strict action against the defaulters, like legal action or have the right to withdraw tax or duty rebates/ incentives from the defaulters,” he added.

Harshavardhan Neotia President, FICCI

Harshavardhan Neotia
President, FICCI

“The Internet offers significant opportunities for India’s booming SME sector and the Indian economy….with fewer than 5% of businesses having web presence…India is poised for big gains as remaining 95% of businesses come online. ”

Breaking the Struggle Chain

FICCI has undertaken deep research over the years to understand issues that have constrained the MSME sector. FICCI has been servicing the MSME sector for decades and reaffirming its commitment to promote MSMEs growth FICCI has established “The Confederation of Micro, Small & Medium Enterprises” (CMSME) in December 2013. FICCI-CMSME endeavors to provide one-stop organization that will work closely with the MSME sector. For FICCI- CMSME, therefore, the mission is to develop MSME capabilities to meet the challenge of their business operations.

“The CMSME has tied up with several partners who are supporting us towards our ambition of empowering MSMEs,” remarks Neotia. In order to make organized finance facility available to our members across the country at competitive interest rates, FICCI-CMSME signed a MoU with IDBI Bank Ltd. This partnership with IDBI Bank Ltd offers concession of 100 bps on interest rates and IDBI will charge only 0.10 per cent processing fee from FICCI-CMSME members.

Insurance is an extremely important component of the MSME’s business. FICCI-CMSME addresses this issue by providing members with Cost-effective and Useful MSME Insurance services and guidance. CMSME also provides digital marketing services to its members.

Assistance from the Government-The Ministry of MSME

There have been numerous efforts, schemes and policies rolled out by the Ministry of MSME (MoMSME) to provide support to the MSME segment in the area of credit and finance, technology upgradation, marketing, quality, design, and many more. The recent schemes launched by the MoMSME are MUDRA, ASPIRE, revamped SFURTI scheme, employment exchange for industries & the most important is the easing of registration process by launching an online registration facility i.e. Udyog Aadhaar.

There are several policies for MSMEs but as of now there is no comprehensive policy for the sector. FICCI understand that the MoMSME is already working towards bringing out one comprehensive policy for MSMEs.

FICCI expects to work towards strengthening policy consultations with the Government and address plethora of concerns faced by MSMEs. A conducive business environment for MSMEs is the key expectation from the Government. Towards this direction, FICCI has submitted to the Government an “Ease of doing business for MSMEs” document in May 2015.

Role of IT

According to the findings of a survey conducted by FICCI, the use of ICT tools for an effective integration of the supply chain SMEs is not sufficient. As many as 88 per cent respondents do not use ERP in their business. In spite of 58 per cent people being aware about ERP, only 12 per cent actually use it in their business. Majority of the people know about ERP but still do not use it.

Also, FICCI-Nathan study on “Unleashing the Potential: Internet’s Role in the Performance of India’s Small and Medium Enterprises” revealed significant opportunities both for India’s booming SME sector, where fewer than 5 per cent of all businesses even maintain a web presence, and for India’s economy: small medium enterprises are critical to the economic growth in India. According to the report, only 51 per cent of online SMBs use the web to advertise a mere 27 per cent use it for e-commerce. But with 95 per cent of businesses yet to even establish a website; India is poised for big gains as more small enterprises come online.

Challenges in Implementing IT

Some of the reasons cited by MSMEs for not using IT are that implementation of the same requires technical expertise which MSMEs generally lacks and if we talk about ERP then it is very expensive. Substitutes such as Tally, MS Access and MS Office are available which serve their purpose to a large extent. Further, many SMEs do not have business operations large enough which requires the need of sophisticated software or ICT tools like ERP.

Government should introduce MSMEs to new Technologies like Cloud Computing, Telecom Connectivity, etc at cost effective rates.

As a part of membership services, FICCI-CMSME helps create effective brand and facilitate members to establish their own identity via a website at very minimal cost, because the protection of online reputation assumes special significance to increase brand value and revenue/leads. CMSME also provides digital marketing services to its members.

In 2013, FICCI jointly with Google India organized the first ever ‘India SME Heroes Challenge’ an award that recognizes SMEs who have used the Internet to grow and expand their businesses in innovative ways to celebrate small enterprises who have already gone online in India.

In 2014, FICCI jointly with Amazon.in, organized a special session with Jeff Bezos, Founder CEO, Amazon.com where he engaged in an interactive dialogue on ‘Creating an enabling environment for SMEs in the digital economy’.

Workshops like ‘Adding muscle to your Business’ by FICCI-CMSME are aimed to deliver simple methods to strengthen their businesses.

Future Roadmap for Indian SMEs

Indian MSMEs offer greater value to their partners so as to improve the overall competitiveness of the value chains. Also, it is equally important for MSMEs to understand and adhere to the international standards and norms for becoming a preferred supplier in the domestic as well as global value chain.

To support this idea, the need of the hour is not only to depend upon the schemes and policies of the government but also to develop and strengthen ourselves with new innovative ideas that could attract support and assistance in the fields of strong market research, innovative production processes, efficient supply chains, speedy financing solutions etc.

Also, in order to succeed in an ever-dynamic economic and business environment, MSMEs have to think beyond traditional marketing practices and adopt new age tools to promote their products and services. Website, search engine optimisation (SEO), social media, blogging and e-commerce tools, for instance, have emerged as channels that businesses cannot ignore.

MSME sector has shown promising as well as excellent growth trends surpassing the industry sector over the last couple of years. Projections indicate that an enabling ecosystem will help the sector consolidate its position in the global value chain (GVC) and MSMEs could play a crucial role in enhancing India’s global market share.

“It is well known that the MSME sector is the growth engine of our economy given its scale of operations not only in India but worldwide as well. The MSME sector constitutes over 90 per cent of the overall industries and hence is bound to contribute in a major way in the growth of the economy,” Neotia concluded.

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