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4 Common Mistakes Most SME’s Do And How To Avoid Them

Listed here are the 5 key mistakes most SME’s and MSME’s make and how these can be avoided with the help of a business consultant or mentor:

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SME’s have a significant contribution to the Indian GDP and growth and, as per a GoI report ‘MSME At A Glance’, SME’s account for around 6.11% of the manufacturing GDP and 24.63% of Service sector GDP. The sector accounts for 45% of the total Indian manufacturing output and 40% of India’s total exports and currently employs about 106 million people – amounting to 40% of India’s workforce, which is second only to the agricultural sector.

Despite the mammoth contribution and significance of the SME’s and MSME’s in the Indian economy, the sector has been struggling with a lot of challenges. Lack of an organised business structure and mentorship remain the highest challenge. While MNC’s and larger conglomerates operate with a set of business advisors, financial and business analysts and life coaches for varied aspects of business, SME’s generally lack the insight, resources and inclination to reach out and seek external advice from a professional. As a result, there are some very common mistakes that SME’s and MSME’s continue to make, impacting their growth.

In recent years, however, there has been a steady rise in the number of mentors and business consultants specifically catering to Start-up’s, SME’s, MSME’s and first-generation entrepreneurs, helping them navigate through complex challenges of 21st-century global marketplaces.

Listed here are the 5 key mistakes most SME’s and MSME’s make and how these can be avoided with the help of a business consultant or mentor:

Lack of long term vision:

Most SME’s start with a long term vision but in the course of time, after managing daily challenges and internal bottlenecks etc., somewhere lose themselves in basic survival. Others may become too engrossed or even satisfied with their state of business, getting comfortable with it and losing sight of growth and expansion. This can be addressed with the help of an external consultant or a mentor, who can help to not only draft a systematic long term growth chart but also work together to ensure the same is followed. Through consistent follow-up and support, a mentor or consultant help address short term challenges and neutralise set-backs by devising a strategic growth trajectory that is practical and achievable.

Lack of Focus on core competencies:

With the increasing competition and volatility in the market, several entrepreneurs and SME’s have taken to the diversification of business or have added new services and products to their portfolio, so as to remain relevant to the consumers. While this is a good strategy, it can often lead to lack of focus on the core competency. Having started with a focused approach with a product or a service, which was the flagship initiative of the company, most SME’s and MSME’s tend to lose their edge while trying to accommodate or adapt to newer, diversified businesses. This could spell doom for the business, leading to diminished chances of growth and also, finally, failure. Start-up consultants and mentors can extremely help here to strategize a growth plan that involves healthy diversification while retaining a clear focus on the core competencies and enhancing them, in the face of the dynamic market scenario.

Hesitant to learn and upgrade skills:

Every business in the 21st century is evolving at a rapid pace, thanks to the consistent innovation in business processes and the ever-changing consumer landscape. This makes it almost inevitable to escape these changes, and staying away from them or not upgrading the skill sets as an entrepreneur, may result in an eventual failure in business.  While most SME’s and MSME’s look at skill up-gradation, training of staff and team and continuous learning as an investment burden, if done right, it has the potential to not only ensure they continue to remain in business but can also grow exponentially and thrive by weeding out the competition. These insights and also guidance on cost-effective ways of skill up-gradation can be brought to the table by a mentor and business coach, who can help break down the pro’s and con’s while showcasing the big picture. 

Slow adoption of technology:

Technology today has become an inevitable aspect of every area of life, from healthcare, entertainment, leisure, and wellness to business processes across sectors. The recent start-up wave brought in a new level of technology-enabled business and personal lifestyle disruptions that have transformed the way we live and work in the 21st century. Despite this, a large number of SME’s and MSME’s continue to shy away from adopting cost-effective, and efficient technology solutions and continue to rely on manual labour. Sometimes this is due to lack of awareness, while at other times it could purely be a case of perceptions or sceptical outlook to technology. Through positive counsel, showcasing success stories and effective hand-holding, external business consultants and mentors can help identify and implement effective technology solutions for SME’s and MSMSe’s, which can be beneficial for them in the long run.

Way Forward:
Apart from the above-mentioned points, some basic factors like effectively leveraging government policies, efficient financial planning and revenue generation, smart marketing techniques and tools and adequate focus on collaboration are some of the other areas where SME’s and entrepreneurs can seek help and benefit. The growing number of Millennial entrepreneurs are turning out to be business savvy and are seeking help and support of external business mentors, thereby ensuring they can make the best of the economic and financial opportunity in the market.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Vipul Agarwal

The author is a Start-up mentor, Serial investor, and Consultant. Head of Tringo Solutions India

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