As large corporations across the globe are leading their countries forward with rapid innovation and expansion, small and micro businesses play a significant role in strengthening economic development. They create a platform for wider employment and economic opportunity at the local level of the country.
As per the 73rd National Sample Survey, there are about 63.052 million MSMEs in India, creating 111 million jobs and contributing 8% to India’s GDP and 40% to the entire exports. Reeling under the lockdowns and pandemic-induced restrictions due to COVID-19, many small and native businesses were nudged at the sting of closure.
The pandemic forced several small business owners to run their businesses in a more lean and efficient manner, resulting in a permanent shift in their operating landscape and increasing the demand for adopting AI and advanced technology instead of traditional manual processes. Not limited to merely sales, the digital approach will help them to enjoy benefits like making more informed, accurate, intelligent decisions, cost savings, increased output, improved asset and inventory management, and better customer experience.
With the changes and challenges brought by the last couple of years, several of those MSME within the country are working hard to regain their momentum. However, most of the unorganized sector, unfortunately, is yet to reap the advantages of digitalization. For instance, most small entrepreneurs maintain stocks and inventory in analog format. A part of the challenge that comes with changing the present practices and increasing MSMEs access would force the flexibility to stay tabs on the provision chain and fulfill orders immediately. A strong inventory management system can streamline this process with a combination of software, hardware, mobile devices and apps, data analytics solutions, and security tools, making it easier to deliver products to customers, and giving workers the tools to be more productive and efficient.
The government as well has consistently reiterated India’s vision to push for local production and domestic manufacturing with a spotlight on exports. By doing this, the government isn’t only encouraging the manufacturing and selling of products that are ‘Made in India’ by small businesses but also inspiring them to determine their presence online to sell, widen the customer reach, and to grow the businesses further.
The reasoning behind why MSME stay small in India is because their entire focus is on ensuring the business remains afloat instead of spending time growing the ecosystem. There is a need for small businesses to concentrate on digital transformation, improving their customer experience as a whole, while Local businesses need to re-imagine themselves with a social mindset.
Consumers now have new and different expectations for a way they differentiate an honest customer experience from a substandard one. Businesses today must become more consumer-centric: In some ways, the balance of power has shifted from the business to the individual. With customers flocking online to induce feedback on products, easy payment, loyalty points, and rewards, little business relies too heavily on new-fangled online business methods. In fact, social media platforms like WhatsApp, Facebook, etc., have helped to attach the dots in encouraging digital adoption among small business owners, even in rural India. Digitization within the sort of social media marketing has been identified as a robust tool for businesses to extend their transactions and expand their clientele.
It will help increase sales and also improve the standard of relationships with customers since this pandemic-triggered paradigm shift in their behavior and expectations is probably going to stay post-pandemic, and businesses will continuously adapt to satisfy them. Except for some small businesses, digitalization requires significant investment; lack of assets remains one of the biggest barriers to the sector’s growth.
Formal financing institutions within the country choose to lend the enterprises that have a better vintage, and hence MSMEs need to depend on informal sources of financing, friends, and family, additionally to exploitative money lenders. Assessment processes of those institutions are often manual and time-consuming, require onerous documentation often not available, and are subject to manual discretion and human bias, which frequently excludes certain marginalized groups given societal norms and divides.
Bottom-line:
Digitization would further fuel India’s entrepreneurial spirit by enabling quick access to credit for cash-strapped businesses. Improving the approval rate for loans as lenders have quite more data to validate applications. India’s micro-entrepreneurial spirit can truly flourish when its financial needs are met.
Adapting to the new normal, accepting the shift in consumer behavior, and adjusting to new online models are all vital aspects of such preparation. Within the foreseeable future, India will still witness further cycles of rapid technology adoption and onboarding of companies on e-commerce platforms, with a spotlight on the direct-to-consumer approach to selling online. The adoption of digitalization is going to be key to reworking small businesses to be more competitive and resilient in the future. For India’s economy to pass through the adverse effects of this pandemic, the tinyMSME must form the bulwark of the revival plan.
The authored article is written by Mr. Debarshi Dutta Co-founder & CEO of Ayekart and shared with Prittle Prattle News exclusively.
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