These 4 things needs to be done to strengthen MSMEs, the 'Backbone' of Indian Economy

It is a no-brainer that Micro, Small and Medium Enterprises, abbreviated as MSMEs, are the backbone of the Indian economy for decades. This sector differentiates between the three based on the investment and/or revenue but comprises two categories, namely- manufacturing and services.

This sector employs more than 11 crore Indians and accounts for the country's 30 percent gross domestic production (GDP). Boosting MSMEs’ financial velocity will be crucial to giving the substantial GDP growth rate an enormous impetus.
However, the worst pandemic of the last century wreaked havoc on mankind and hit the MSME sector hard. Ailing for aid, the sector is not looking for the traditional one-size-fits-all approach in the business, as it is time to get them tailor made support to rebuild their economic ecosystem.

Even the World Trade Organization (WTO) has laid its emphasis on the tech-savvy MSME market, which can add more to the GDP of the world and create a level playing field amid the rising competition. Deploying the operational and financial strategies require due diligence and a decent capital, where these sectors take a setback.

Here are four key pointers which should be taken into account to bootstrap the MSME sectors in India:
1. Automating the Business Process
Technology is the key for the class and those who are backbenchers in this space, stand outside. The statement might be harsh but it's a truth that the world is moving towards automation and digitalization. This not only brings operational efficiency, but saves your time and capital in the long term, thanks to dedicated software, hardware and machinery.
Eliminating mundane tasks with automation boosts the morale of the employees and strengthens them to think out of the box, resulting in higher creative and productive solutions to the core business. This will also improve the customer experience and the key personnels can allocate more time to solutions.
2. Getting the Financial Right
Finances are key to every business, particularly which require a hefty capital or where the cash flow is lackluster. Every small business needs financial support from time to time, either for the working capital or the short term finances or for the long term needs. They often resort to techniques like invoice discount to customers which is not a good practice.
The government should have a strong, healthy and hassle-free mechanism to ease the financial crunch for the economic backbone of the country. Also, the MSMEs should aim to rope in strategic partners or the co-owners to get the financials streamlined. Another solution to the problem is a self-help group where MSMEs can come together to help each other in tough times, but the solutions shall be practical and tactical.
3. Strong marketing Strategies
Small businesses lack efficient and effective marketing strategies which often leads to cash burn without tangible results. Strong business operation with lower sales is a sign of business and it's only the sales that result in profits. Rest increases the profitability.
The MSMEs should fine-tune their marketing expenses including promotions, advertisements and PR activities which establish their brand identity and increase the long term earnings. Sit with your managers to train, educate and brainstorm them in generating results.
4. Harness the Right Talent
Oftenly, MSMEs offer greater flextibility to employees which gives them decent work life balance, but limit their opportunities compared to the larger corporates. Thus, MSMEs should organize their staffing policies to give them better opportunities and defined career paths.
MSME has the potential to offer an attractive career which can resonate with the ambitions of the new generation, helping them to thrive in the dynamic business environment. The right talent is the key to the exponential success of the business and having horses for the courses in the stable would be a prudent way.
 
Authored by:
Mudit Pareek CTO, Saraf Furniture