Change is permanent! With pandemic times and the experience of #workfromhome in #COVID-19 we can rephrase the statement to now read “Change is imminent!” The business model of a SME is actually going to metamorphose to an extent that one has to go for “Rewiring of the entire model” and not just changing a few wires here and there!
The Metamorphosis in SME Biz Model
- Markets will open up and MSME will face competition from many new vendors
- MSME has to scale up his business volume to earn the same profit volumes
- MSME has to learn to deal with the “invisible customer” who will interface through the digital Internet medium. (Yes, this applies for B2B markets as well!)
- The type of on-the-job competencies required is changing and MSME has to rewire their existing manpower planning models.
- Outsourcing will be the only way for an MSME to get the “Right person for the Right Job at the Right Time for the Right Price”
- Investment into Quality in terms of R&D as well as Quality Control will become prerequisite for all MSME’s
- MSME cannot survive on one core competency. They have to adapt, absorb and appreciate (if not master) collateral skill sets.
- MSME has to do his “Demand Forecasting” with techniques of Data Analytics, CRM (Customer Relationship Management), Machine Learning and Artificial Intelligence. Gut feelings will prove to be disastrous.
- Finance Management for all MSME will reduce to ability to generate cash and use the same judiciously.
- The principle of “Less is More” will get in vogue at the enterprise level. Less machinery, Less people, Less working capital, Less energy leading to More production, More profitability and More customers!
- Technology will no longer be desirable for the MSME. It has quickly moved into the “Vital” category now.
The Panacea for MSME owners
Is there any one panacea for all these challenges?
We have great belief in the #bounceback grit of MSME’s in India. Surely, every MSME needs to rewire their #beliefsystem as far as MSME business system is concerned.
What are the recommended changes in belief system of a MSME?
- Start believing in Quality that has to sell. (Stop believing in the minimum quality required to sell)
- The belief that Customers perception is final and hence one has to start investing in branding to generate a brand equity.
- MSME must fall in love with the function of Sales. For this they need to understand the science of Sales and the need to do Marketing.
- The belief that online presence is Vital. (Stop thinking that it is desirable for B2B markets)
- The belief that “Process” will give you victory. “People” will always create challenges for you. (Stop believing that People drive business models)
- The belief in outsourcing as a model with no dent to secrecy and confidentiality.
- The belief that “Less can give More” and work around it to create a business model which is based on minimalism.
- Technology should be the first choice to solve any problem
How much time will all this take for a MSME?
This process of change should take one year’s time to understand and three years’ time to master.
How much will all this change cost? Will it be affordable to the MSME?
Well, this is no longer an option. Hence it is not a question of affordability but that of survival. However, the inputs are more attitudinal, and mindset based rather than capital intensive. The cost consideration should not be too much bothersome for the MSME. Investing into a think tank of professionals who could drive this change management should be good enough.
In a nutshell
Purists have been shouting for last 10 years to MSME’s that “Differentiate or Die”. Most MSME’s did not pay heed to the same. Now thought leaders are shouting from the top of their roof tops: “Do or Die!”. If MSME owner ignores this call even now one can only say that the Japanese method of suicide called “Hara Kiri” may perhaps prove to be less painful for the MSME.
About Sanjay Singh
The writer is a Business Performance Coach and is a Knowledge Partner for the ICICI Bank SME CEO Circle in India. He has close to 11 years of hands on experience of working closely with SME and MSME sector under the banner of ICICI Bank Ltd. He is also a MDP Faculty with IIM Kolkota and mentors brands like LG , ICICI, Godrej, Calderys, Lemken, Osborne, Airtel and many more.