An Analysis On The Fundamental Needs Of SMEs

Here is our 3rd part of the “SME Week Series”, where we shed light on the core issues concerned with running a SME. It will be extremely useful for all those working in the space of SME, Retail, Manufacturing Unit, Association and other relative sectors to learn innovations and new approaches in running a successful SME.

SMEs need to have access to adequate information to enhance productivity and to facilitate market access. So, here are the major needs and challenges of a SME to expand business.

Managing cash flow

With slim margins and limited resources, SME owners are always concerned with ‘balancing their balance sheet’. One of the key challenges hindering efficient cash flow in SMEs is the problem of

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late payments by customers. This poses a headache especially for small businesses with low cash reserves. SMEs need to have a thorough understanding of their sales margin in order to ensure that their revenue covers not only the cost of goods but also overheads as well as the costs of financing.

Hiring and retaining staff

Hiring and retaining staff is an ongoing challenge for SMEs. While you may not be able to offer the best remuneration packages for your employees, there are other creative (and non-monetary) means to keep your employees happy and motivated. You may also wish to consider hiring freelance consultants instead of taking on a full-time employee for fixed term projects with once-off deliverables – such as building a website or designing a brand identity for an event.

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In that case, make sure you know the key differences between independent contractors and employees and the relevant legal rights and obligations.

Dealing with customer / client complaints

It is important to keep your customers happy. After all, they keep your business going.

Marketing your business online

Technology has presented businesses today with whole new dimensions to market them. This however poses its own challenges.

Customer expectations have changed and competition is no longer local but now global. Deciding on an effective marketing method with the most return on investment can be difficult, especially when faced with little budget and resources.

One can use social media platforms that are free to set up to build up an online community. The same goes for blogging and other forms of online advertising.

Rising costs & competition

Running a business in hubs can be a challenge with the high overheads and strong competition. The rising cost of office rental, as well as increased cost of production, has squeezed the profit margin for small businesses.

Thankfully, there are ways to manage costs even in expensive cities. While co-working spaces are often associated with startups and tech entrepreneurs, SMEs who use co-working spaces agree

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that it may be a more cost-effective alternative to rented office space. Co-working provides you with the flexibility to scale the size of your operations up or down rapidly, and allow frequent review of your terms of stay more frequently than traditional, fixed leasing arrangements.

Protecting ideas and commercial assets

Intellectual property (IP), which comprises of trademarks, patents, copyrights and trade secrets, is a core business asset. Yet, SME owners neglect to properly protect their IP rights as they are daunted by the application process, and often are unaware of what needs be protected. As a result, SMEs run the risk of having their ideas stolen.

Whenever your business develops intangible human creations, it is a key that you protect your creations. Your business has information that should remain private, such as your customer database, financial information, and new business ideas. A Confidentiality Agreement (or Non-disclosure Agreement) is your

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first line of defense to protecting this information. This legal document creates a confidential relationship between your business and any contractors, employees, and other business partners who might get behind-the-scenes look at your operations.

Dealing with regulation and staying up-to-date

It is important that you stay up-to-date with the latest updates to laws, acts, and regulation that may impact the way you run your business.

Legislation changes frequently; and by being unaware of the latest developments, you put your business at risk.

This is especially true for SMEs who are looking to expand business. They need to fully grasp the relevant legal and taxation requirements of the concerned place.

Challenges faced by SMEs while deploying digital solutions

Some of the major challenges still faced by Indian SMEs are the lack of technology knowledge, funds, ROIs, and access to digital talent. Although most SMEs are keen on adopting newer technologies, a lack of awareness and poor infrastructure holds them back. It is the implementation of these technologies which is a major challenge for these businesses. They are unsure of which technology model to choose since they have varied requirements in terms of scalability, flexibility, and costs.

If you’re stuck in traditional business, expose and immerse yourself in the new technologies surrounding you like the

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Internet, smartphones, and social media. Companies now offer affordable digital solutions that make digital business accessible and easy to use. For example, one may use Shopify, an e-commerce platform that businesses can use to create their own website.

Takeaway

SMEs play a huge role in a country’s development. By involving SME’s opinion at various fronts, make them more eager to learn vis-à-vis various other aspects, which by and large, create interest among SME’s to venture new projects leading to growth of a sector, a region, a country and its respective economy.

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