Before SMBs walk down the road in the new year, they ought to break down the changes which are now today’s reality.
2020, put simplistically has been a watershed year across the board. The severity of Covid-19 caught everyone by surprise and irretrievably changed things for businesses, especially the mid segment. Those who suffered badly were forced to look for new ways of doing things, but those who fared well have also had to pivot severely to remain in the game before thinking of elevating their stature amidst an unprecedented crisis which nobody could have anticipated. It made us urgently stop and relook at our lives, businesses and priorities to re-evaluate the way forward.
Therefore, before SMBs walk down the road in the new year, they ought to break down the changes which are now today’s reality, rather than look at it as a domineering whole which has consumed their lives and businesses.
1. More and more stages of the buyer decision making process is happening digitally. Online Search and Ads, Reviews, Festive sales are playing a crucial role in both B2B and B2C scenarios. People are looking more carefully at online ads now as their traditional sources of advertising like billboards, newspapers are no longer available. Customer preference is for “tried and tested” even if that comes at a higher price. With industry exhibitions likely to stay minimal in 2021, restricting avenues for SMBs to add new customers; entrepreneurs need to change long-held belief and mindset to acknowledge that customers are also changing ways of finding service providers like them. Small and medium enterprises will need to rethink how to present themselves for predictably attracting new clients and be present in every stage of their decision-making process. Correspondingly SMEs are beginning to look at digitisation as an opportunity to access new markets in the light of online brand building having replaced most events and offline activations.
2. Agile manufacturing to suit the requirements – Health and Home have become the center of our existence. Businesses need to explore how to use infrastructure differently. Capitalising on their loyal customer base and accordingly tweaking the product mix would be their best bet. Companies who have been agile have aced the curve. Swiggy shifted its focus to grocery deliveries, Dyson to ventilators and Spotify to offering deals on podcasts
3. Cash Flow vs Profitability- SME promoters have to learn to delegate power down the line. This will help in proper utilisation of time and increase productivity. Historically, SMEs have focused more on Cash flows paying little attention to profitability. With Cash flows dipping in 2020, SMEs were forced to focus on leakages and better utilization of funds. In 2021, investments funnel needs to be created for equity investment in SMEs. The equity fund will de-leverage the balance sheet and make it healthy. Promoters of SMEs need to bring innovation and research into their business and explore both offshore and onshore markets to expand their business.
4. Investors are eyeing successful businesses and entrepreneurs behind new or innovating companies versus funding early stage or idea stage businesses with unproven entrepreneurs. SMEs need to be motivated to get listed and bring transparency and corporate governance. This will create trust in the company which will help in its growth and fund infusion. Investors investing in the equity could be encouraged by giving them tax incentives for investment for more than 2 years.
5. Businesses are changing like never before! Technology which was a “good to have” earlier, needed only for scale, has now become the backbone for the very existence of most SMEs. SMEs have to attract talent or outsource some of the key activities which they think they can’t manage. This will pluck the loopholes and increase the efficiency of the firms. Flexible workforce is becoming an option as more and more innovative staffing solutions are coming up. This has also increased access to mentors and consultants whom SMEs were not accessing earlier preferring to hire in house, even if they were not not bringing in the right mix of skills.
Source: Business World
