The coronavirus pandemic exposed the need to address the gaps in Indian small and medium enterprises (SMEs) for the industry to thrive. As the country is rebuilding its businesses’ backbone in the post-pandemic world, these gaps need to be catered to with the help of simple yet complex ways of modern functioning. One such method is through the digitization of MSMEs.
Digitizing a business process has the potential to work wonders for an enterprise that has the intent to transform. The global slowdown in orders and deliveries shows that commitment to adopt digitization is not just the first step, it is unavoidable.
Let’s understand how digitization is the solution that MSMEs need today.
MSMEs in India today are finding value in tying up with technology-driven startups to streamline their business processes. This has happened due to two reasons. One because MSMEs now understand that their prospective clients have been forced to adopt technology which wasn’t the case pre-covid and they are actively looking for ways to transact digitally. Any MSME who can help customers get access to their needs digitally is ahead in its effort to rebuild the business and they are likely to succeed.
The second reason is that the post-pandemic opportunity to streamline processes appears to be a one-time golden chance to restructure and reconstruct businesses based on evolving market trends. For most MSMEs, there is no capital to waste as there is either a perpetual shortage or the business is taking its own time to pick momentum post-covid. Technology is unveiling an opportunity for MSMEs to do a similar process as earlier in much lower cost and significantly lesser time, both of which are precious for a small enterprise.
The post-covid world is one with limitless possibilities for those enterprises that are ready to go the extra mile to reach out to lucrative buyers.
Digitizing the customer acquisition process increases the scope of selling a product or a service in a global world without infusing large infrastructure capital, thus eliminating difficulties at multiple checkpoints of a business cycle. An MSME seller can tie-up with a tech company to reach out to customers globally and follow this process: discovering clients digitally → winning orders → meeting working capital requirements → preparing shipment → creating digital invoices → securing seamless payments in a transparent manner, this was a structure that existed pre-covid but wasn’t inescapable.
Duplication of receipts, inconsistencies in billing, and erratic tracking of payments have been herculean challenges for the traditionally operating MSMEs. Besides engaging manpower, these issues deplete the invaluable time and effort of the workforce. With digitization, steps such as adapting solutions provided by app-based technologically driven companies for everyday invoicing and payments, MSMEs would be able to manage their goals better.
Any kind of incomplete or conflicting billing also poses a big challenge for MSMEs who have now adapted to following the goods and services taxation (GST) regime. Small enterprises typically have to file GST quarterly, an activity that requires to be leak-proof to ensure the labor force which refers to a small group of people at MSMEs- is well-utilized. When MSMEs commit to adopting technology for their everyday payments cycles, the chances of weeding out incoherent records leading to tax penalties would reduce greatly.
Overall, the internal working of an MSME—process management, workforce administration, and methodical output—would become efficient once digital tools are embedded in day-to-day work. An MSME also stands to benefit from digital analytical methods such as artificial intelligence, and machine learning techniques that digital-savvy companies can provide to improvise the end-to-end business cycle.
With more than six crore MSMEs in India, the opportunity for both small companies and digital-solutions providers in the country is enormous. Given the minuscule percolation of technology in the MSME ecosystem, the next step after commitment to transformation would be awareness and appropriate partner choices.
India is a vivid emerging young country with explosive growth prospects. The only way ahead for the country in the post-pandemic world is to embrace technology and digitize its dynamic MSMEs in light of the world looking at India as its next hot investment destination. It would be right to say that the digitization of MSMEs is no more a choice but a necessity.
(The article was first publised on entrepreneur.com)