The first few questions that may come to a person's mind while reading the above title are 'What is SME?',' What is the meaning of SME?' Well, SME is nothing but an abbreviation for small and medium-sized enterprises. Some examples of SMEs are restaurants, grocery stores, garment stores, etc. that have a hyperlocal audience as a target and run with a limited number of employees and business aids. Section 7 of the Micro, Small, and Medium Enterprises Development Act of 2006 defines small and medium enterprises.
There are three types of SMEs:
- Micro Enterprises
- Small Scale Enterprises
- Medium Scale Enterprises
The investment in micro enterprises is usually less than INR 25 lacs. The range of investment in small scale businesses usually lies between INR 1 crores and INR 10 crores, while for medium scale enterprises, the range is between INR 5 crores and INR 50 crores. SMEs are also characterised based on the number of employees, which varies from country to country.
Although Indian SMEs are doing great as compared to the past, there are still many things to learn and develop. Indian SMEs have many requirements similar to multinational companies but lack the resources required. Therefore effectively learning certain things from the SMEs of developed countries and subsequently applying them to Indian SMEs can lead to greater success. So here are 12 things Indian SMEs need to learn from the SMEs of developed countries.
1. Keeping up with changing trends
The market trends keep on changing just like fashion. Yesterday's fashion may become today's trend. The business owners who understand this psychology and are ready to adapt to new trends are the ones who survive in the market. The SMEs in developed countries like Norway and Germany always keep an eye on the constantly changing market trends. This helps the entrepreneurs to get a good understanding of the needs and requirements of customers. Keeping an eye on the changing trends helps to make the business competent if it faces tough competition in the market.
2. Saving Time with Automation
SMEs in developed countries have completely automated every process in business. Digitalisation of business practices such as having an eye on items that are not selling or items that have high demand can help a business owner understand the demand of customers too and help in clearing out old stocks and stocking up the products which always remain out of stock. Digitalisation helps in preventing wastage which is one of the most crucial aspects which Indian SMEs must learn from SME's of developed countries.
3. Developing The Quality
In the process of running a business, one must never forget about the core of the business i.e. the product. The SMEs in developed countries always maintain a top-notch quality of products. The basic thing which keeps the customers coming is the product itself. When the product fills up the checklist of customer expectations, the trust builds ups resulting in a good customer relationship. Therefore, stocking up products of good quality is something that SMEs of developed countries understand, which Indian SMEs must learn.
4. Prioritising customer satisfaction
Prioritising customer satisfaction is something that helps in customer retention. This fact is well known to the SMEs of developed countries. Customer retention is difficult but powerful enough to keep your business running. Excellent customer service is one of the great ways of increasing customer satisfaction leading to customer retention.
5. Using Digital Staff management app
The SMEs of developed countries have amped up their system of staff management by incorporating digital apps in the management system. Staff management is crucial as it is the backbone of any business and when ignored can lead to low productivity. Staff management is another aspect of SMEs which is usually ignored in India. Therefore using digital staff management apps like OkStaff can help to enhance efficiency.
6. Utilising Technology
Being technology forward is something which the SMEs in the developed countries have taken up seriously. Although technology must never be used as a replacement for manpower, there are many mismanagement examples of SMEs which can be solved by the use of technology easily. Issues such as security are solved better with the use of technological devices such as security cameras. Technological use in payment methods also helps to solve issues such as lack of physical money.
7. Using Digital Record keeping
Using digital methods to keep an account of every transaction helps SMEs in the best possible way. SMEs in developed countries use digital record keeping for many purposes such as collecting payments, tracking the inventory, and generating bills. This helps to save a lot of effort and time while keeping the data and records safe at your fingertips. This much ease provided just by digital record keeping apps is incredible. Indian SMEs can use digital bookkeeping apps such as OkCredit, which is a one-stop solution to all bookkeeping needs.
Another reason for the success of SMEs in developed countries is extensive promotions. Promotions help SMEs grow. It not only helps the business to survive but also helps the SMEs to sell more and more products. Promotions can be done in many ways, such as newspaper advertisements, television ads, word of mouth, and the latest social media ads. Among all these methods, the most powerful is word mouth as these are the actual testimonials given by the present customers to other people. One may try multiple ways to manipulate the customers’ views, but real testimonials are the most powerful way of persuading potential customers.
9. Investment in the right tool
The small and medium-sized enterprises in developed countries invest the money they get to develop and grow the business strategically. Investment in tools or machinery or equipment or manpower is how investment can be used for the growth of the business. This is how Indian SMEs can also use money wisely to invest in the right thing and grow the business.
10. Identification of Loopholes
Sitting back and tracking the areas of losses and profits is something which is done by the small and medium-sized enterprises in developed countries. It doesn't matter which business one owns but sitting back and identifying the loopholes is something every SME must do. This helps in troubleshooting the problems and making a strategy to conduct business more efficiently.
11. Forming Partnerships
Every business has some hits and misses. There is no business that is hundred percent efficient in conducting business. Therefore small and medium-sized enterprises in developed countries form partnerships with other SMEs to cross-sell products. This helps partner enterprises to grow their business successfully.
12. Bring the business online
The final but most important tip which Indian SMEs must follow is to start an online business. The recent and most powerful source of information is none other than the Internet. There may be some people who may not know about your business but may need a product which you sell. The Internet proves to be the best medium to make both ends meet. Therefore having an online presence may help the business to have more visibility and get a larger audience.
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Q. What are the advantages of SMEs?
Ans. The advantages of SMEs are that they are closer to customers and flexible.
Q. What are some small-medium enterprise examples?
Ans. Garages, local restaurants, local boutiques, and garment stores are some small-medium enterprises.
Q. What are the main issues faced by SMEs?
Ans. The main issues faced by SMEs are inadequate advertising platforms, lack of money for investment, no access to technology, and lack of innovation.
Q. What is the SME sector?
Ans. The SME sector encompasses all the small and medium-sized enterprises. They are classified as such according to the size of the investment and the number of employees.