They say change is the only constant.
One has to agree that truer words haven’t been spoken.
In India, change came with the Liberalization, Privatization, and Globalization drive in the 1990s. There was a need to establish quality domestic enterprises. This was done so that enterprises can compete with global enterprises. Therefore they can create their own niche in the international markets. Thus the Government of India (GOI), started creating a favorable environment for Small & Medium Businesses (Indian SMEs).
Flourishing in the middle of a challenging environment, Indian SMEs experienced several ups and downs in the past few years, 2020 being the icing on the cake. India is expected to emerge as one of the leading economies by 2024. A major focus in his crucial time is being given to the SME sector.
Thus we have made guide for Indian SMEs owners on what Industry leaders are doing differently and what they can adopt in those practices.
- How Different Departments Can function With Higher Efficiency
- Growth Trends in SMEs
SMEs are self-funded proprietary firms, private co-operatives, private self-help groups, Khadi, and Village and Coir industries. They provide huge employment opportunities and also ensure regional balance by taking industrialization to rural India.
Indian SMEs are extremely significant to our country’s growth. They make a big contribution to India’s GDP, with the entrepreneurship and innovation they foster. They are one of the key drivers behind the Indian growth story. It has emerged as the most vibrant and dynamic engine of growth of the Indian economy in the past few decades.
Indian SMEs can learn a lot from industry leaders. Mostly in terms of managing their firms. Therefore observing and adopting industrial leaders can help Indian SMEs establish global standards from the word get-go. As a result, this works like a stamp of approval consequently enhancing their client/customer base.
How Different Departments Can function With Higher Efficiency
We will talk department wise here. A firm has several departments that perform specific tasks. It is important to know how these tasks are being performed with higher efficiency.
In an SME this is a broad classification of departments:
- The production innovation department designs products innovate them and produce them.
- A marketing department develops a strategy to place the product within the user’s reach.
- The Accounting & Finance department handles the industry’s accounts and performs audits as and when required.
- The Purchase department tackles inventory, purchase, logistics, and other such operations.
- Finally, Human Resources handles industry personnel.
The driving factor in today’s product innovation is the novel technologies that the Fourth Industrial Revolution offers.
The Fourth Industrial Revolution (or Industry 4.0) is the ongoing automation of traditional manufacturing and industrial practices, using modern smart technology. This will help to achieve a shift from mass production to customized production. It has been high in demand. The technology involved could be the Internet of Things (IoT), Artificial Intelligence (AI) and Machine Learning (ML), robotics, and 3D Printing and nanoparticles. Therefore they help companies increase efficiency, enable high levels of product customization, and improve speed to market.
Digital transformation initiatives will cover in-bound, in-plant and outbound logistics to establish digital continuity across the value chain. Sectors like textile, automotive, pharma and healthcare would be among the earliest to adopt higher automation. The manufacturing sector has several of its processes heavily dependent on its workforce.
Process innovation in Assembly Lines and Factory Floors
Bajaj Auto is one of the earliest adopters of cobots – collaborative robots- in India. Bajaj Auto is the biggest Indian customer of Universal Robots, a Danish company that builds cobots. Cobots are much smaller than industrial robots. Bajaj has deployed 150 cobots in its factories and at vendor sites and its aim is to have “man-less assembly lines” in two-three years.New Engineering Works an MSME in Jamshedpur, uses cobots for auto components’ machining, leading to a 40% increase in their productivity.
Process Innovation in Process Control
Automation was earlier confined to the control room of plants. But now it’s a part of anything that could lead to safer operations, nimble workforces and an enhancement in productivity.
In a highly regulated pharma industry, there’s a common control system that controls the manufacturing process parameters like temperature and humidity. This control now is a combination of sensors, AI, and IoT that ascertains when the control parameters are about to leave the range thereby triggering a response where automation takes corrective steps. Companies like Cipla use this. They use real-time data to achieve closed-loop operations and to reduce incidents through monitoring and safety controls.
Production can become dynamic and stable with the help of AGVs (Automated Guided Vehicles). An AGV is a portable robot whose movements are controlled by a combination of software and sensor-based guidance systems. Sunil Mathur, MD and CEO of Siemens India says “With AGVs, manufacturers can improve the production process and optimize the manufacturing flow. It allows them to change their manufacturing lines into a flexible and modular production. AGVs are the backbone of the digital factory”
3D Printing industry
The 3D Printing industry has revolutionized the process of production. Morphedo is an online 3D printing services platform for rapid prototyping and customised part manufacturing for businesses. They also provide 3D printing consultancy, 3D designing for 3D printing and 3D scanning for reverse engineering. Other such Indian startups are Supercraft3D, 3Dexter, etc.
‘Out of sight, out of mind’ is one phrase that accurately sums up the need for marketing your brand.
There are so many ads consumers watch on a daily basis. So what does one do to successfully drive home their message? How does one identify their target audience? How to create sufficient buzz around your product to keep yourself relevant in the market? Marketing department exists to achieve these goals.
For any business, the marketing strategy follows certain tried and tested methods to create a thought-provoking campaign that lasts in the minds of their clientele.
Here are some key pointers for your marketing strategy-
- Prior to starting a marketing strategy, it is imperative to define a target market and keep them in mind to generate content. Asian Paints reoriented its marketing focus on women after research found that it’s the women of the house who primarily make decisions when it comes to home décor.
- Before strategizing, establishing a clear idea of what the brand has to offer and creating their logo and imagery accordingly. For example matrimonial sites like shaadi.com, jeevansaathi.com
- Two-thirds of small businesses rely on websites to connect with their customers.
- These days Social Media Marketing is a key feature in any strategy. Running Facebook, Instagram, Snapchat, YouTube accounts to express one’s brand and keeping it in the public eye is essential.
- Search Engine Optimization (SEO) is the practice of creating web content in a manner such that the search engines are able to detect their content and display them higher in the search ranks. This increases visibility to the site & gets more potential customers.
- Mobile-friendly email marketing is another such domain. Zomato, Fasoos, and Dominos pursue an aggressive email marketing strategy.
- Combining online and offline marketing strategies to avoid “putting all your eggs in one basket”. Amul is a good example. Whenever there’s a new issue, the Amul girl has its poster ready.
- Sharing knowledge through webinars, blogs, YouTube tutorials
- Most companies use Pay Per Click (PPC), Google Ads, Google My Business for paid advertising.
- Use of Market Automation Tool (MAT) like Omnisend, Marketo, MoEngage, WebEngage, Eloqua, etc. for dynamic behavioral marketing. Marketing automation software is used to help to capture leads, develop relationships, and move prospects through the sales funnel at scale.
ACCOUNTING & FINANCE
SMEs (Small and Medium Businesses) generally require bookkeeping software, which focuses on recording financial transactions via a general ledger.
True SME accounting software should be having better tools for financial data management, reporting, analytics, tax preparation, etc. SME accounting tools have become increasingly affordable in recent years, making them the preferred choice for most businesses.
Some of the leading products suited to small businesses are:
- Tally: It has been in the market for more than 20 years and is used widely
- TranZact: It is free and aimed for SMEs to digitally transform their business process from inquiry to dispatch.
- QuickBooks requires training for new users, but it is convenient to use with an accountant and other financial services because most providers in the space are already familiar with it.
- FreshBooks is a bit simpler and requires less training;
With the advent of Industry 4.0, CFOs would have to continually reinvest themselves to deliver accurate, concise and real time results. Therefore they cannot miss innovations in Accounting Softwares. Some innovations are:
CLOUD BASED ACCOUNTING
Cloud-based Accounting Tools enable accountants to access financial data anytime and anywhere in real-time. Therefore it helps enhance constant collaboration between accountants and clients. For example ZOHO BOOKS is a cloud-based computing accounting software catering to Indian manufacturing sector companies like Lion Picture and Frames, Popcorn Furniture, etc.
ACCOUNTING SOFTWARE INTEGRATION
Accounting operations involve different jobs like – manage invoicing, process payment, handle payroll, track inventory, and manage financial reports. As a result, they rely on different software solutions. Therefore a lack of synergy between these solutions may be a big problem for the company
Herein Accounting Software Integration could work wonders. This integration can help automate the information sharing between various accounting operations quickening the overall process. In conclusion it reduces chances of errors, redundancy and makes the bookkeeping clean.
For example: Integrating Tally software with TranZact platform.
OPTICAL CHARACTER RECOGNITION (OCR):
The Optical Character Recognition (OCR) technology allows accounting firms to automate and accelerate manual entries. Accounting firms can leverage OCR technology to convert textual information to digital files using scanners and mobile device cameras.
Giddh software offers this facility for manufacturing firms.
ARTIFICIAL INTELLIGENCE (AI)
Artificial Intelligence (AI) makes it easier for accountants to accelerate and simplify data related tasks – bookkeeping and transaction coding. Apart from automating repetitive tasks, AI will further enable accountants to deliver functions of higher value like business strategy implementation and financial advising.
MACHINE LEARNING (ML):
It’s a sub field of AI and can be used to create detailed reports by extracting financial information from various resources. It improves the visibility of spending patterns, earnings, and more by offering tools to track changes in business finances.
According to Accenture, use of robotics could reduce accounts operations cost by 80%. Robotics can be used to automate repetitive tasks, entering financial data, saving the financial data in relevant formats, generating reports, and performing tax operations – quickly and accurately. Though different businesses will have different requirements, Automation Anywhere RPA (Robotic Process Automation) jumpstarts the transformation of Finance and Accounting operations by eliminating manual processes to reduce costs, strengthen controls, improve accuracy, accelerate financial reporting, and empower employees
Integral to any manufacturing industry is the Purchasing department in any Indian SMEs. It broadly focuses on sales, inventory, customer support, and collaboration. CRM (Customer Relationship Management ) System is the software that manages these tasks.
When it comes to handling Indian SMEs, Zoho, Freshsales, and Maple CRM are some CRMS based in India tailored for SMEs. Certain trends that are being estimated in 2021 for innovation in CRMs are:
ARTIFICIAL INTELLIGENCE – BIONIC CUSTOMER SERVICE
Bionic service gives sales executives the best action to take while maintaining an empathetic human touch, critical to the entire process. This is enabled by AI used in CRMs. It applies AI to customer interaction, analyses it, and quickly recommends the next best steps. Therefore it helps in guiding agents past any blind spots in the process.
Sprint, a large US telco, serving almost 60 million customers implemented this and revolutionized its customer care services thereby increasing its NPS by 40% and had an eightfold increase in customer upgrades.
ANTIQUATED SILOS TO CHANNEL-LESS INNOVATION – OMNICHANNEL FOR CUSTOMER BRAND ENGAGEMENT:
Businesses need to stop building IT solutions from the outside in and start building out from the core of the business. This results in a unified system that drives customer engagement on every channel – a shift from email and chatbots to Facebook and Alexa. It enables a consistent experience regardless of the device they may be using.
By integrating their CRM and mobile, Optus achieved customer interactions to create one-to-one, real-time, contextual offers in less than 200 milliseconds and increase relevance.
IOT AND AUGMENTED REALITY – PREDICTIVE CUSTOMER SUPPORT THAT RELIEVES SELF-SERVICE FRUSTRATION:
Indian SMEs aspire to solve customer dilemmas even before they arise. But as customer service solutions shift from offline to online mechanisms, it’s difficult to gauge customer emotions through languages or tones. Not receiving requisite answers could lead to customers’ frustration. So customers’ state of mind cannot be ascertained which is a death knell for businesses
Augmented Reality (AR) and IoT can help here. If the device is IoT enabled, then using AR issues can be resolved visually in real-time. Software installations and fixing bugs could be carried out well.
HUMAN RESOURCE (HR)
‘Human Resource’ is used to describe the individuals who comprise the workforce of an organization. It is the function within an organization that has the overall responsibility relating to the management of individuals (i.e. the human resources).
- Indian SMEs face a resource crunch and require better methods to solve the complexities for better cost optimization on their assets and requirements.
- Cost is a major constraint in introducing many HR practices that can hugely benefit the workplace and employees and Indian SMEs have a cost restraint as well.
- Indian SMEs are struggling to fill the talent gap, identify the right talent, find a skilled workforce, and retain talent.
- Most Indian SMEs do not focus on Training and Development activities.
- Vendor management, complexities associated with the workforce, compliance, workforce administration, and the need for smart analytics are seen in Indian SMEs.
Indian SMEs can overcome this issue by HR Outsourcing and using Cloud HR. They can outsource this service to Keka HR and Payroll software which is a cloud-based HR for the seamless working of their organization.
Growth Trends in SMEs
SME-focused B2B e-commerce
The data-driven Industry 4.0 technology is opening newer channels for businesses across several sectors. This is particularly true for B2B e-commerce firms solely focusing on SMEs. Consequently, the presence of innovative technological platforms is bringing on board a rising number of small players including the neighborhood Kirana-stores. To sum up, this results in enabling efficient transactions, procurement of raw materials and industrial goods, and most importantly, forging better connections between established, brands and small shop owners.
Companies like Amazon saw the participation of lakhs of Small & Medium Enterprises (SMEs) this sale season. This was to help them rebuild and accelerate their businesses after the pandemic. Customers had the opportunity to shop for unique products from thousands of Amazon sellers under various programs such as Local Shops, Amazon Launchpad, Amazon Saheli, and Amazon Karigar and enjoy deals given by lakhs of small businesses.
Amalgamation of e-commerce & market-commerce
Digital transformation is no longer a fancy term as far as Indian SMEs are concerned. This is due to the courtesy of faster penetration of the Internet. Add to this the increased affordability of smartphones, it can be said that the Indian SMEs are experiencing simultaneous adoption of web as well as mobile-based technology. As a result, companies have now enhanced their focus on mobility as against social, resulting in a change from Social-Mobility-Analytics & Cloud (S-M-A-C) to Mobility-Analytics-Cloud & Social (M-A-C-S).
The Technologies Under The SMAC Umbrella
- Social: Social media channels like Twitter, Facebook, Instagram, and Snapchat have provided businesses with new ways to attract engage and delight customers. It has given rise to new job profiles such as social media influencer or digital influencer, marketing tactics such as viral marketing campaigns, and new data sources such as likes, comments, shares, retweets, etc.
- Mobile: Mobile technologies and devices like the iPhone and the iPad or Smart Watches have changed the way people communicate, shop, and work. The introduction of connected devices and wearable devices both rely on cheap sensors to generate and transmit data.
- Analytics: Data analytics allows businesses to understand how when and where their target audience consumes goods and services.
- Also to know as to when will be the right time to introduce a new product or service. As a result, the cost for processing power and storage decreased and analytics became a top priority for companies.
- Cloud: Cloud Computing provides a new way to access technology and the data a business needs to solve its problems and respond quickly with respect to changing markets. It ushered in a new way to build infrastructure, platforms, and services. Amazon Web Services was one of the big disruptors in this space.
Improving SME lending with growth in FinTech firms:
There is no easy availability of finance when it comes to Indian SMEs.
It is difficult for Indian SMEs to find favor with traditional banks when it comes to lending, courtesy lack of experience, absence of collaterals and infrastructure, and/or poor financials. But it is through their significant online presence that several modern fintech players make it convenient for Indian SMEs to receive loans.
These alternative lending companies analyze the creditworthiness of the sellers using analytics and other scanning metrics. Just like their sales and fulfillment records they can disburse loans in less than 48 hours. For example, some banks like Bank of Baroda are also partnering with new-age Fintechs to expand their reach, especially in the SME sector.The Government’s consciousness about the potential of Indian SMEs has resulted in myriad initiatives to provide sustained financial aid to SMEs. For instance, the implementation of GST which ushered in the concept of One Nation One Tax has considerably eased the tax systems.
Overcome FOMO of Digital Tech
There are many technologies available to explore. It becomes overwhelming and often people suffer from the FOMO or – fear of missing out when it comes to utilizing digital tech. Above all, the key here is not to lose sight of the goal one has envisioned and using the most efficient yet optimized way to achieve said goal.
SMEs today should be able to identify the types of transformation that various areas of their business can potentially undergo. This systematic approach helps keep FOMO at bay.
These areas can be:
- Process transformation
- Robotic Process Automation (RPA) is used to mechanize operations. For Example, the assembly line or the movement of goods in the warehouses. When earlier the process of sales involved flyers and door-to-door marketing, it has been replaced by online and social media marketing thereby transforming the marketing area of business.
2. Domain and Business Model transformation
Domain and business model transformation is an area not many have exploited. It has immense potential. One of its foremost examples can be the app Unacademy in the education sector. Classroom studies cannot be replaced but for remote areas, such apps are a boon. COVID 19 also saw a rise of Ed Tech platforms
Another example is the Mumbai – based The Yarn Bazaar. It’s a B2B one-stop marketplace for the fragmented yarn industry. It is a holistic one-stop platform for discovering good quality yarn, getting the best price, and also vendors. In just a year of its inception, this app has a GMV of Rs. 58 crores.
3. Cultural/Organizational transformation:
Businesses are dynamic entities and need to be treated so. They require transformation as well to fit in with the changing customer demands and the avenues available to the businesses to meet the said demands. To sum up , it’s important that decentralized decision-making systems based on precise feedback exist.They should also be trained to do this efficiently. This would result in the creation of an agile workforce.
Next Decade Trends
The above timely and methodical steps should help when striving for a growth-driven transformation with a focus on sales and marketing to increase the client base. As we embark on the next decade, some of the trends that SMEs are likely to exhibit are:
Digitization and Automation have been a thing for industrial giants for a long time.
It has now come to the doorsteps of SMEs. Many startups in India have started creating digital solutions in the form of apps and software with a special focus on the needs of small businesses. It’s an exciting market space that these startups are vying to capture. In this process, they are inadvertently educating the traditional SMEs and digitizing them in the process. For example, Pune based company Business Setup promises to be a personal CFO to help entrepreneurs start, run, and grow their startups.
Trends that’ll be followed next decade are-
- Business Collaborations are going to be the norm. With the marketplace being shifted to the internet, the customer is now spoilt for choice. To compete in this scenario the SMEs are expected to create quality products with competitive rates. Doing so in collaboration would help pool resources and be a winning scenario for the resultant team.
- Customer service should also be taken into focus. It’s important to create a loyalty base because that is what results in “brand creation”. Therefore customer engagement is most important. It works as an excellent feedback mechanism system that aids in business improvement, keeping the competitive edge and of course, a satisfied customer is the best marketer.
- Delegation and Diversification are quickly gaining traction in small businesses. These enterprises have limitations when it comes to a talented workforce, resources and capital. Therefore, certain functions of the organization can be outsourced to another entity. The Human Resource Management System (HRMS) is software that aids the HR personnel in its functions thereby optimizing workforce and time. Further, one doesn’t know what could happen in the future that would turn the waters of the economy choppy. It could be a pandemic, a terror attack, or a conflict between nations. The key is to handle a few small businesses aside from the main separately and independently. In difficult times if one business doesn’t perform well, then there’s at least some revenue from the other business.
- Focus on R&D and innovation can be brought about with access to game-changing digital technologies like Artificial Intelligence (AI) and Machine Learning (ML). Innovation can be done in the field of marketing and sales with the aid of Big Data.
When it comes to Indian SMEs , one has to be careful. All aforementioned changes cannot be carried out without a well-thought strategy. They face the issue of capital crunch. Therefore whatever they possess needs to be judiciously used. The old things need to be gradually phased out. At the same time skilling their employees to work efficiently with the new technologies is a major requirement.
Step by step methodical approach to successfully bring up Indian SMEs to the global standards so as to increase our exporting capabilities should be kept in mind. It is strategy that should proceed action in all spheres. What we often tend to forget is that we have done this successfully before. We established our pharmaceutical and automobile industries. Today when needed, India beautifully rose to the occasion to manufacture lakhs of personal protective equipment (PPE) gear and became an exporter from an importer to tackle the COVID-19 pandemic.