THE WAY FORWARD-SMALL AND MEDUIM ENTERPRISES

THE WAY FORWARD-SMALL AND MEDUIM ENTERPRISES

Over the miniscule experiences I have been having over the past few years of being in the consulting sphere is that SME Sector shall continue to inspire and drive the country’s economy. However there are certain issues relating to the sector which I would like to mention. SME today is a sector which with its combined might is itself like a behemoth like ‘Reliance’. Stretching from 5 Crores to 500 Crores in basic top-lines these businesses not only have their own problems but have time and again been able to come out with unique ways of dealing with crisis. The present economic melt down not withstanding it is now time that every one of us recognize the unique status all these enterprises hold in keeping the economy alive and kicking.

The Challenge – The single biggest challenge that SME’s face today is quality manpower. Rest of the problems can be solved if they can somehow acquire, retain and develop talent.
The whole of India is today infatuated with big businesses. Employees want to work with bigger companies. Consulting Organizations, Advertising Agencies, Law and Accounting firms, Raw Material Suppliers, HR Firms all want to work with Bigger companies as they give easy money. Even Banks and Financial institutions want to serve bigger organizations and the terms which they offer to smaller organizations in-spite of the priority status are much inferior to what they give to Big companies. The result is the ‘Big-fall’ for every one to see. Even in the downside the first one’s to take the real hit in terms of recoveries, supplies, funding etc are the SME players. The Government Officials presently are a very committed and competent lot who want to have progressive thoughts, but seriously lack the implementation and execution skills. The challenge here is to look for a brother in Arms rather than look for a god father. The greater the re-aligning, M & A’s, JV’s happen in this sector the greater would be its speed of recovery at this time and faster will be the growth curve.

Professional Management – The transition from a owner driven to a professional set-up and finally to a professionally managed corporation is the most difficult journey which a organization travels. Our advice to SME’s has always been to train themselves by undergoing professional courses. Create horses for courses in your own organization by upgrading their knowledge in the particular fields they are interested in. A continuous support to a young child in his education, extra curricular and his interests creates a leader of a family. This same philosophy shall hold good in chosen individuals in a organization.
Consulting support and being open to newer ideas of professional consultants is required for creating newer bench marks for bringing about the desired change in a organization. A indifference to this leads to many organizations being locked in the same orbit or trajectory forever. Also the concept of 'CEO Mentoring' and moving towards corporate set-up is a must.

Technology – In- spite of being leading providers of soft power the world over…Indian SME’s are not able to leverage technology as much as they should. May be because of their own lack of knowledge and secondly because most of IT Hardware and software providers do not have cost effective solutions for them . Apex Chamber Bodies could enable for shared solutions for small players and on the other hand encourage strongly the implementation of technology from sourcing to delivery for organizations so that SME’s continue to be lean on all resource utilization from power/energy to HR.

Economic Meltdown – Small businesses are feeling the heat with crumbling demand in the Export and Western markets. Small businesses now feel that Cheaper Asian Countries will not only give them a run for their money on foreign shores but will also eat into their domestic market share. SME’s dependent on a few global clients like say Iron ore to China/ Japan etc, to US Distribution Chains or Retailers are facing severe order and cash crunch and are at loss to decide their future course.

Funding and PE – Disturbing events in the US investment banking scene has had its impact on the Funding and PE deals in India. Last year India was the largest receiver of PE investment, precisely USD $ 10 billion. This year the figures are going to alter in, quite a few percentage points. However a firm belief is held that the smaller cogs in India Inc Wheel will continue to move driven by domestic demand. Number of PE Funds and Banks like SBI ICICI and SME player SIDBI have announced setting up of SME focused funds. A good infrastructure set-up, a product with future and demand which is domestically driven first and is potentially international will attract the funding. Also the Governments noises to support Industrial growth from bottom up augur’s well provided it is executed.

All in all Big Fat rich Boys of Indian Industry are today where they are because of SME’s doing the dirty work. The Dirty boys now need to dress up and be counted on the world stage.