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How Can MSMEs Overcome Business Challenges?

  • Tata nexarc
  • 08-Sep-2021
Do you want to scale your small business? Are you facing challenges that are holding you back from implementing your expansion plans? Do you wish to know whether these hurdles are the same as those responsible for stunting the growth of other companies? This article discusses the challenges faced by small industries and how these challenges can be overcome.

What Are the Finance-related Challenges Faced by MSMEs?

Shortage of working capital is the most common problem faced by small industries across the country. This limits the scope for scaling their business operations. The problem worsens further with irregular repayment of dues. Lenders hesitate to extend credit to small enterprise owners as they fear that they may not get their money back. Some of the small enterprises do not possess assets to offer as collateral, which further damages their creditworthiness. Besides, many MSME owners are unaware of the government’s initiatives to support this industry. Below are some of the solutions that not only can make it easier for small businesses to secure loans, but they also come with flexible repayment terms and lower interest rates.

  • Learn about various government policies and schemes.
  • In the wake of the financial crisis inflicted by the COVID-19, the Government of India has eased the restrictions that previously prevented MSME owners from securing capital for their business. For instance, the requirement to provide collateral is no longer mandatory for MSME owners to avail loans.
  • The government has expanded the definition of MSMEs to extend the provision of unsecured loans to wholesalers and retailers. Check whether you are eligible to qualify as an MSME under the new terms.


What Are the Labour-related Challenges?

Another persistent problem faced by small industries is the constant shortage of skilled labour. The task of putting together a skilled workforce and then managing to retain them for a long period of time at an affordable cost can become difficult. The lack of infrastructure to ensure proper training and development of employees further aggravates problems related to hiring. Here are a few steps that you can take to overcome these challenges.

  • If you have the financial capability to afford higher wages for employees, pay more to retain skilled labour.
  • Devise training programmes for your employees and make them sign a contract for a limited time if you are worried about not getting the necessary returns.
  • Strive to provide better living conditions for workers and protect their rights as it will act as another incentive for them to hold on to their jobs.


What Are the Challenges Related to Sales?

Nowadays, companies need to provide services that fulfil the needs of customers and exceed their expectations. Failure to do so will inevitably result in them losing business to their competition. Often MSMEs lack the motivation to identify gaps in their product development and sales strategy. Here are some methods to resolve sales-related challenges:

  • Keep track of customer feedback and improve relationships with your existing customers.
  • Study the strategies that your competitors employ to expand their reach.
  • Have a robust sales strategy in place. It is advisable to conduct regular analysis of your sales data to understand the dynamics of the market.


What Are the Challenges Related to Marketing?

Many MSMEs lack the knowledge needed to market their product and the financial resources to hire a marketing agency. In the absence of both, it becomes difficult for them to reach their target audience, who are spread across the country. Here are a few suggestions they can implement to overcome these challenges.

  • Work on expanding your social network. It will help you to find mentors who can guide you on matters related to management and marketing.
  • Learn about government schemes that help small businesses to increase their sales. Few examples include Domestic Market Promotion Scheme (DMP), Export Market Promotion Scheme (EMP), Skill upgradation and Mahila Coir Yojana (MCY), among many others.


What Are the Challenges Related to Technology?

There are two aspects related to the technology problems faced by MSMEs.

  1. They cannot afford the latest technology in terms of machinery and equipment. This severely restricts their ability to achieve the manufacturing level required to enjoy economies of scale.
  2. Most MSME owners come from rural backgrounds where technical literacy is low. With less penetration of technology in these areas, small business entrepreneurs might not be proficient in using computers. As a result, they cannot use technology to increase their efficiency and productivity. They might find it difficult to file tax returns online, enrol for online courses, or access tutorials.

To overcome this challenge, learn more about the IT development programmes sponsored by the Government of India. It will keep you abreast of the latest developments in your sector and increase your technical prowess.



What Should Be Your Next Steps?

  • Find out about loans and schemes provided by the government to avail collateral-free loans.
  • Devise employee welfare policies to retain skilled employees.
  • Learn marketing tactics to generate leads and drive sales.
  • Create a website using free tools available online and use social media marketing to target new customers cost-effectively.
  • Upload your business profile on nexarc to increase your online visibility.
  • Find relevant information like articles, webinars, and tutorials on platforms like YouTube and Government portals on the internet (https://www.msme.gov.in/).
  • Invest in technology upgrades for your facility to automate various processes to increase efficiency.

 

This article is written by Monil Dubey.

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