5 challenges Small and Medium Enterprises face in today’s competitive environment

Entrepreneurship is one of the key factors in the developmental process of a nation. Small and medium-sized enterprises (SMEs) are touted to be the main engine of economic growth. The dynamism of SMEs, their adaptability, flexibility and innovative capacity have made them a cornerstone of ongoing economic reforms. SMEs contribute significantly to the economy in terms of output, employment, new job creation and innovation. In India, SMEs’ contribution towards GDP is nearly 50%. 

There is a gaping need to assist SMEs to realize their trade and investment opportunities and become competitive both in domestic and global market. Tally Solutions has introduced the Tally Xcelerator (TX) Program, which is an integrated entrepreneurial capacity-building program that promotes entrepreneurship and the overall SME development in the nation. Under this program, Tally has appointed carefully selected partners called ‘Tally Xcelerators’, who extend business advisory services and play the role of a coach, mentor and trainer to all of Tally’s partners and small and medium businesses across the country. 

“Today you will find a number of organizations willing and eager to provide mentorship and advisory services to large corporates, but there are very few in this role for MSMEs. Tally Xcelerators are the one stop solution for the MSMEs – they play the role of virtual CXOs, System Integrators (SI), Strategy Planners and assists in Goal Setting & Monitoring, Policy Making, Process Reengineering, MIS & Analytics etc.”CA Bhibhuti Bhusan Mishra, Chief Mentor, Fincrony Consulting Pvt. Ltd.

Since the inception of the program, Tally Xcelerator Partners have been working with businesses to understand their pain points and finding effective solutions to mitigate the problems and help them grow. Some common challenges SMEs face are:

I. Lack of continuous innovation
Innovation plays a significant role in a nation’s ability to make a mark on the global map. It also reflects on the company’s competitiveness within its own playing field. Unlike larger MNCs, SMEs understand the pulse of their target audience and can deliver customized and tailor-made goods and services. “In order to differentiate themselves from the pack or competition, SMEs have to continually focus on creating value for the customer to buy or deliver an experience that an established player cannot create. This is the challenging task, as this is continuously evolving.” Vivek Kumar, CEO, Platinum One Business Services Pvt. Ltd.

II. Inconsistency in customer experience
Lack of an organizational culture or a well-defined structure might not seem to be an important area to focus on when a business is in the early years; however, as the number of customer and employee count increases, absence of these two can have adverse effects on the customer experience and product quality. When aspects like marketing, operations and finance rank high in the priority list and leads to compromising on the quality of the service it will eventually lead to a decrease in customers. Therefore, it becomes very critical to lay down thefoundation and adopt best industry practices, which not only improves retention of customers and maintains high customer service level but also lets SMEs be more competitive, develop newer markets, reduce costs and become more efficient, and improve the skills of their workforce.

III. Lack of finance
Most SMEs are a result of their founders’ personal savings and loans taken-up against property and assets. While this kind of capital is a good starting point for any business, the challenge arises when one wants to scale up and diversify. Most SMEs find it difficult to raise adequate funds from banks especially for high risk projects. “SMEs don’t have deep pockets unlike bigger players. TX therefore will provide smarter ways to capture market and build brands without burning hole in their pockets.Some of these may include use of social media, website, blog, community-connect and various unconventional tools and methods. TX will ensure that such critical elements of business do not remain an afterthought, but get the differentiated focus within the smaller budgets that SMEs can afford.” Says Ajay Kumar, Owner, Cognegix Learning LLP.

IV. Scaling-up
The challenge of expanding and growing is dependent on a number of features like access to the right technology, substantial funds, structuredplanning, divided focus and training and mentoring the employees.“Some of these products have the potential to compete against the big brands. The challenge they face is in expansion and branding of these products. Many such potential market-fit products are doomed to fail if SMEs do not pay due attention and deserved focus. TX provides services to SMEs in creating branding and marketing strategies to expand to larger geographies, taking the competition head-on and creating a market for themselves; whilst serving a niche customer base.” Ajay Kumar. “The role of Tally Xcelerators can come in handy for such organizations. It is important to build the team beyond the owner’s capability to ensure scope for expansion and diversification in the future. By delegating and up-skilling employees, it allows the entrepreneur to move away from the daily operational tasks to being a visionary” said Vivek Kumar

V. Adopting changing regulations
Businesses today have various regulations to comply with which include regulations, taxes, environmental and certain sector specific regulatory laws and licenses. SMEs can set up units anywhere in the country but are subject to local restrictions. With so many to dos’ and exemptions and in the absence of proper centralized information centers, it becomes difficult for the MSMEs to comprehend the complexity.“Through Process Reengineering, we also help organizations to build the automated statutory compliance processes for PF, ESI, TDS, IT, GST and ROC matters, which was earlier subject to individual professional decision” CA BhibhutiBhusan Mishra. Fincrony Consulting Pvt Ltd is a change agent enabling organizations to adapt compliance requirements and accelerate in diversified business and statutory regulations environment.