Indian SMEs' Trending Challenges & Opportunities


India being a developing country has given rise to several small businesses, approximating to 42.50 million of registered & unregistered SMEs, which equates to 95 percent of total industrial units of the country. It also addresses the tremendously growing unemployment problem by employing 40 percent of Indian workforce. This in turn contributes majorly to the Indian economy. But, it is not an easy task to manage and lead the small businesses. There are lots of risks involved and challenges faced by these SMEs each passing day. Lately, A&A Business Consulting in its survey result reported that lower sale rate, capital management, obtaining skilled manpower & their retention, and marketing are the challenges that cause a nightmare for the SMEs.

Challenges SMEs Face

The inadequate working capital and unorganized expenses are the most prominent issues every small business comes across. Nearly 20 percent have reported in the survey that with lower capital management, the SMEs are unable to cope up with changing market. Lack of hard assets among the SMEs deprives them from obtaining credits to invest in their businesses. Thus, these SMEs find it very difficult to cope up with the inadequate capital in the sluggish economy. Along with this, about 47 percent have stated that poor sales rate remains a key pain point for the SMEs. Lower sales affect the overall business enormously. To improvise its sales rate, the company has to focus on its marketing strategies, as the marketing and sales go hand-in-hand in any business. But the small businesses claim that the country lacks marketing platform; constrained budget plays a vital reason for this. In addition to these, hiring and training a right candidate takes in a lot of time and energy, but retaining such workforce is also an added challenge for the SMEs, said 20 percent of SMEs in the report.

Retaining their skilled workforce would need a reframing in their employee policies and improved sales will need a check in the product quality, current market trend, and organized business strategies. But, their struggle to overcome the battle of survival on everyday basis prevents them from focusing on the transformation needed in their business.

Measures to Overcome SMEs Problems

Making sure that the SMEs doesn’t run out of capital, can sort out all the major issues small businesses deal with. The SMEs can consider several financing option such as equity funding, debt funding, NBFC Loans, Mezzanine debt funding and more. Instead of renowned banks, opting for other funding would help SMEs; these are providing favorable funding to the startups.

With the present scenario, there are blooming opportunities for the SMEs across the Asian countries. The trade war has paved way for other countries to grab the opportunity. Hence, this is the right time for the small businesses to flourish. Commenting on the survey reports and on the ways to overcome the challenges SMEs face, Pravin Daryani, Founder & Chairman of A&A Business Consulting states,SMEs can grow irrespective of external factors such as a slowdown or policy changes throwing challenges. They first need to bridge the gaps that exist internally. The markets will eventually ease out. But this is a good time for them to introspect, work on internal problems, fix them and be prepared to cash-in on the opportunities that will come their way. ”  

Besides, considering the current business favorable situation, the Indian government has also reviewed the bank’s lending rates and also has increased the GDP of SMEs. The government has also allocated about 20,000 crore for small businesses through Micro Units Development Refinance Agency (MUDRA). Furthermore, the Reserve Bank of India is working to improve its liquidity of the system, and it is also looking forward to bring down the cost of funds by four times reduced interest rate. Furthermore, measures are taken to enhance the non-banking lenders’ liquidity to support the SMEs by offering credits. If speculations are to be true, PM Modi’s visit to US can also bring in several other opportunities for the SMEs.

With everything falling in place, it’s time the small businesses gear up and bring in the much needed transformation in their business. By addressing the regular issues faced by the SMEs by following a structured business approach, we can elevate the country’s economy.