Information spurs growth

The mantra repeated over the years is that ‘India is growing at a blistering pace, and it is the SME sector that is powering this growth’. However, the question is - what is really powering the SME growth engine? In this context, it is apt to recall a view of one of the well-known CEOs. He was of the opinion that even in these turbulent times, our economy is still resilient. India also has a vast population (fortunately or unfortunately), to ensure consistent consumption. These comments are often viewed with scepticism. If the growth of our SMEs was indeed infallible, would not India have emerged as a superpower overnight? Notwithstanding, this opinion, the truth lies somewhere in between. Hence it is very important to seek the answers to these questions, as information is the key for progress and further growth in any sector. From general observations, most of the SMEs are contemplating a scaling down of their existing businesses altogether. There are companies, which are struggling to survive, forget about growing and expanding further. So, what is it that has caused cracks in the erstwhile shining armour of these SMEs? Is it the inflation or the severe liquidity crisis or is it a combination of several macroeconomic factors? It can be stated that macro-economic factors have been a mere speck of influence on the overall performance of the SMEs. To begin with, the real causes have been a lack of planning by most entrepreneurs while pursuing the feverish growth targets of the past. Eventually, it always boils down to one thing – lack of accurate and scientific information about their business, their competition and their end users. Nine out of ten SMEs in our country unfortunately are completely oblivious to any form of organised information. Business decisions have often been based on ‘gut-feel’, and the assumption about a general estimate on the ‘business climate’.
Naturally, the bubble is bound to burst some time. Often, it will be sooner rather than later. When the dotcom boom happened, every business – large and small alike – were inclined towards that online domain. Nevertheless, the irony is that, questions like - ‘What exactly did they want to start? And why did they want to do so?’ - were mostly unanswered. The issue that should have been addressed ideally is – what is the sustainable competitive advantage that the business will continue to have over the medium term? This is a question that has not been pondered upon by most of the SME owners. Retail, real estate and IT companies have recently gone the same way. Very often, businesses in these so-called ‘emerging sectors’ have started exploiting the ostensible valuations they would attract – valuations, which are very often restricted to paper, or at best to the Bill Gates’ spread sheets. This is the fundamental ill ailing the bulk of India’s SMEs. Most of these businesses – regardless of the sector – lack a credible, unique value proposition. Without this kind of a value proposition, they continue to remain a mere statistic, not having the ability to become a brand. In addition, this in turn means, without a brand there is no brand value. Therefore, it is crucial for the owners of all the small and medium enterprises to wake up and smell the coffee, and plan their expansion and diversification more meticulously. This plan of course needs to be based on reliable and accurate information. The kind of information the Indian SMEs need to seek are as follows: a) Firstly, they need to understand their own DNA and core values. What is making the business tick? (May be even something like – what is the singular reason they have for continuing to exist for so long?).
b) Secondly, the enterprise needs to understand its competition. The more thorough the information, the more effective can be the SMEs’ plan of growth. (Remember, in today’s times, a watch no longer competes with another watch. It actually competes with a shirt, a pen or a wallet. And in most economics, Coca-Cola’s biggest competition is plain old water!) c) Next, the SMEs need to study and comprehend their end users intimately. The process would involve knowing every single stakeholder interacting with their products or availing their services. They should learn from these insights gathered and understand their requirements. d) SMEs need to then make smart inferences on what is going to ensure their stakeholders’ continued loyalty to their products or services. e) Finally, SMEs need to understand the environment, the various channels of communication and the clutter and budget constraints. How will they enjoy maximum mindshare for themselves? Yes, all this ‘understanding’ stems from insights, which are based on rigorous information. In addition, the information needs to be gathered through detailed scientific processes. The scientific process is no doubt painstaking and perhaps, seemingly expensive for an SME. However, apparently there is simply no other choice for today’s entrepreneurs or their small and medium ventures. Today’s entrepreneurs need to invest more in the process of gathering and effectively collating scientific information. To put it simply, they need to do sufficient ‘looking’ before the ‘leaping’ to the next level. Otherwise, with an ill-informed approach the SMEs will plunge into a cavern of no return.

Source : Indiatimes