The small and medium enterprises (SME) sector is worried if Centre's decision to permit 100% FDI in single brand retail sector will help the sector or not.
The Indian government has permitted 100% foreign direct investment (FDI) in single brand retail. It has notified the regulations and stated that all wholly owned global brands will be needing to source minimum 30% of their need from the domestic small and cottage industries, which have a maximum investment in plant and machinery of $1 million (almost Rs 5 crore).
The Federation of Indian Micro, Small and Medium Enterprises (FISME), which is an apex body for the sector, has stated that the mandatory sourcing rider won't be making much of difference.
Internet marketing is also known as web marketing, online marketing or e-marketing. It is a broad term and cannot be confined to just marketing through the internet but also through other mediums such as the wireless or email. The world, as postulated by Marshal McLuhan, can be regarded as a global village. McLuhan envisaged the world as interconnected by an electronic nervous system; this is popularly regarded as the internet. We live in the world of cloud computing where everyone is connected. No one can escape technology seeing that, everyone from a rickshaw puller to a billionaire, carries a mobile.
Web Presence Technology is the pulse of life of the present generation. When a company establishes itself, it is extremely important for it to have a web presence. This acquaints the customers not just with the product but also with the company. Nowadays, the consumers are intelligent and the internet is the best medium to lure them. The media has a strong impact on the mindset of the people, who live in the world of virtual reality. Due to its nature, the internet medium allows consumers to research and to purchase products and services conveniently. So the internet has become a must in order to make a positive utilization of internet marketing.
Age of Information It is essential for SMEs to realize that we live in the age of information. The way information is conveyed plays a very important role in boosting the sales of the product. This is the world of mediacracy and there could be nothing better than the internet to attract customers. Marcus Sheridan, the owner of ‘The Sales Lion’, says that effective content leads to winning the trust of the customer which further helps to get a lead in the market and thereby increase sales. So embrace internet marketing if you want to remain ahead in the promotion of the sales of your company.
Fast and cost effective mode The best part is that with a small amount of investment just about anyone can have a web page on the Internet. In this manner, almost any business can reach a large market, directly, fast and economically. It is irrespective of the size or location of the business. This medium is cost effective as any SME can save its funds through internet marketing. This is because, anyone who can read and write can have access to the World Wide Web. According to the Internet World Stats, India has a large number of internet users which has gone up to about 100,000,000 till December 31, 2010.
Interactive medium The internet has consolidated itself as a very powerful platform with an impact on the working culture and the manner in which people communicate. It has changed the working environment and affected the way businesses operate. It is about interaction — interaction creates relationships and those relationships open up the opportunities for you to share information about your products and services. Good personal relations can actually boost your sales.
Thus it is important to ensure that your website is user friendly, concise and up to date. In this way you can inform the world about the latest developments in your firm. Make good use of the innovative method of marketing through the internet to generate a more positive responses towards your business.
With the ever changing demand and supply dynamics of the markets, SMEs do feel pressurized to meet the requirements. The major challenge which they came across is to sustain and fulfill the requisites without hampering enterprise's profitability.
After covering two 'Sutras' for effective business growth - Scalability and Sustainability, we will have a session on third Sutra – Profitability in this blog. By understanding its various aspects, you can imply them practically and make them instrumental to accomplish organisational growth.
Profitability A Microlevel organization is said to be Profitable when it makes enough profit to take care of its employees, customers, investors and the Microlevel Entrepreneur in a satisfied manner.
Importance of Profitability
Profitability plays an important role in motivating the Microlevel Entrepreneur in the right direction
If the profitability is not in there in the business, it becomes extremely difficult for a Microlevel Entrepreneur to continue in the business
Do’s
Make sure the business unit makes profit from day one of its operation
Cut down all unnecessary expenses
Make sure that the Microlevel Entrepreneur focuses on the core business
Dont’s
If the existing unit is not making profit, first make sure that it becomes profitable
Don’t open up a new business unit if the first unit is not profitable
Don’t spend extra money on additional resources
Case Study:
Case Study-1: (Product Business)
Ms. Usha is a Microlevel Entrepreneur from Mysore in Karnataka. She is selling natural fresh juice. The details of Ms. Usha’s business organization unit are as follows:
1) Name of the entrepreneur: Ms. Usha 2) Name of the organization: Sushruta Fresh Juice Centre 3) Nature of business : Sale of Natural fresh juice
4) Details of turnover for the past 3 years:
Let us understand the analysis regarding Profitability factors for Ms. Usha’s business (Product Business):
Ms. Usha’s business has made 30%, 35% and 40% profit in the past 3 years
She is making good profits
As the turnover is increasing, she is also able to increase the profit margin
This is a good, profitable business
Challenges in Profitability
Uniformity in production and packaging.
To create awareness among their customers that natural fresh juice will provide good health.
Case Study-1: (Product Business)
Mr. Charan Singh is a Microlevel Entrepreneur from Jalandhar in Punjab. He is selling fertilizers.
The details of Charan Singh’s business organization unit are as follows: 1) Name of the entrepreneur: Mr.Charan Singh 2) Name of the organization : Guru Gobind Agro 3) Nature of business : Selling fertilizers, Seeds and Chemicals 4) Details of turnover for the past 3 years:
The analysis regarding Profitability factors for Mr. Charan Singh’s business (Product business) suggest:
Mr. Charan Singh’s business has made 10% profit in the Past 3 years.
He is not making good profits.
As the turnover is increasing, he is not able to increase the profit margin.
This is not a profitable business.
Challenges in Profitability
Mr. Charan Singh is making a large turnover but less profit.
The challenges for Charan Singh are to increase his profitability along with his turnover.
Key Points to remember:
Make sure that the existing business unit is profitable. Increasing the profitability doesn't necessarily mean, you may have to open up more units. You can increase the profitability either by increasing the price for your products/services or increasing the customer base.
Once the existing unit becomes profitable, a Microlevel Entrepreneur can think of opening new business units.
With this the journey of understanding the three vital 'Sutras – Scalability, Sustainability and Profitability' for business growth ends here followed up by your actions to implement them practically in the business growth strategies and witness the difference.
We will continue our journey of understanding various 'must know' topics for Small and Medium Enterprises (SMEs) in the subsequent blogs.
The blog has been authored by Mr. GK Pramod, Co-founder, The Second Gear - MBA for Non MBA's Mentoring Module Concept.
What does the Auto Expo do for you? If capitalized right, the Auto Expo can provide ample opportunities to micro, small and medium enterprises. Smaller companies can showcase their products to most of the industry and new entrants can find themselves good opportunities. This hyped show is taking place at Pragati Maidan in New Delhi and it has the ability to attract a large number of customers.
Technological Advancements Technological innovation is the thing to watch out for at the Auto Expo. Small component manufacturers need to keep an eagle’s eye on technological developments. The Auto Expo is a great place to know what is happening. It gives a holistic view of the automobile and components industry and if you are in that business, this is the best place to learn of new research and latest technological advances. There are also new national and international brands to be launched in India and the Auto Expo will introduce you to these opportunities. India is a growing market and if you operate in this booming industry then you need to acquaint yourself with the latest technological advancements because this knowledge will assist you to plan your business and give it a giant head start.
Perfect Platform The Auto Expo is also the best outlet to showcase or even launch your product. It gives you an access to Indian and international buyers that no other marketing plans can provide. The small and medium auto component manufacturers are developing new technologies and offering new products. There could not be a better place to showcase these products because of the scale and industry-wide platform it offers. With 1500 exhibitors from 24 countries, this is also a wonderful international platform to participate in.
Explore More This is the largest automotive show in India and you will be able to see the latest technology products from all leading and upcoming brands of the industry. The Auto Expo will introduce SMEs to new and locally designed or developed auto components, component designs and new age electronics.
The special focus of the Auto Expo would be on technological innovations in the field of safety, environment and fuel efficiency. These are great ways to improve and enhance your business. You can also check out special automobiles such as cars, SUVs, MUVs, CVs, two or three wheelers, hybrid vehicles, electric vehicles and special vehicles.
New Opportunities If you run a small firm, every purchase you make has to be planned. If you are contemplating buying vehicles for your firm, this is the place. You get to identify, purchase and choose from a variety of special vehicles. In a highly competitive market, the Auto Expo comes as a buzzing and informative coalition of all large and small auto manufacturers. The Auto Expo is also the place to meet company representatives who will take you through different products with all the information that you require. This helps you to understand the market, competition and what is the future. It is also a great place to understand what the Indian markets requires.
If you have been wondering about the many brands entering India, the Auto Expo will help you understand what makes India the hottest market for foreign automobiles. Find out the hows and whys of the Indian automobile and components industry here.
The Reserve Bank of India (RBI) has directed the banks to compulsorily acknowledge all the loan applications, submitted either manually or online, by the micro, small and medium enterprise (MSME) borrowers.
The central bank has issued the directive after receiving complaints from industry associations/ chambers that banks have not been acknowledging loan applications. The banks have been asked for ensuring that a running serial number is seen on the loan application form and also on the acknowledgement receipt.
Moreover, the banks are strengthened to commence a central registration for loan applications, said RBI. The same technology is expected to be used for online submission of loan applications for enabling online tracking.
For the micro enterprises, the simplified application-cum-sanction form, printed in regional language, needs to be unveiled for loans up to Rs 1 crore.
It has been more than two decades since Akar Impex (P) Ltd. came into being but the focus and determination to be the best is as strong as ever. Its name is taken amongst the leading companies providing water and waste water treatment solutions. The company has progressed from being a beginner in the field to one of the well-known enterprises in the industry. This was possible with a forward looking approach of the company's Director Mr. Taral Vaidiya. “I am a mechanical engineer by qualification and we manufacture water and waste water treatment plant,” says Mr. Vaidiya by way of introduction.
Initial days for Mr. Vaidiya were hard fought as there were various challenges that were blocking their road to the top. But, Mr. Vaidiya did not let it deter him from keeping his mind focused on his goal. “We have added to our strengths in terms of manufacturing, on site services, after sales services, tried to build up new projects with the limited staff strength. So challenge has been basically to evolve ourselves.” shares Mr. Vaidiya. Like any other company, the beginning was slow with a focus to solve set of challenges and shortcomings within the company which included manpower, technical know how and market presence but they overcome these hurdles with panache.
Factors that contributed to the challenge were turned into company's strengths but not before they had worked towards achieving it. “We have got two strengths which define our working process – the first is manpower and other one being the ability to come up with innovative solutions,” proudly shares Mr. Vaidiya. The company also has a well-defined marketing strategy which can be termed as the third pillar of the company on which it stands firm. “Having hands on approach basically helps us, you will not find any of our marketing personnel with no idea how an equipment is manufactured,” adds Mr. Vaidiya. Marketing personnel who are well acquainted with the products and their operations adds to the repute of the company and this has been well identified by Mr. Vaidya.
Shifting the focus on varied clientele, Mr. Vaidiya says, “The textile industry is one of the major clients for us, apart from that hotel industry is a very big client for us and we also specialise in residential complexes.” Looking to fly even higher, Mr. Vaidiya associated himself with IndiaMART.com. “IndiaMART.com made sure that projection of our company's real strengths has gone to the customers,” says Mr. Vaidiya.
Talking about his future plans, Mr. Vaidiya says, "The future for us is developing more and more such innovative solutions, try to see that cost is brought down in such a way that efficiency is not compromised, and at the same time, develop something which a customer is able to save space with and make sure that effluent quality is such he can use it for recycling and at the same time, try to make a product that lasts for a long long time."
Sustain 'Sustainability' for elevated growth in business
To achieve top-line growth and bottom line results, sustainable business growth strategy is the practical approach. Preferably, the Indian SMEs should embrace sustainability to optimize their operations enabling enhanced overall performance.
While we delved deeper on 'Scalability' in the previous blog, it would be equally interesting to touch upon 'Sustainability' – the second 'Sutra' of business growth.
The Business Growth has to be Sustainable. If there is no sustainability in the Business Growth, it becomes very difficult for a Microlevel Entrepreneur to survive.
Sustainability
If a Microlevel Entrepreneur is able to maintain the business without affecting the quality of the product/service, with consistency in increasing turnover and profitability, such an attribute is called Sustainability.
Importance of Sustainability
This is an important parameter for a Microlevel Entrepreneur. If there is no Sustainability, he/she may have to completely close down the business unit.
However, large business organizations can still survive with one wrong step forward, but a small Microlevel Entrepreneur has to be very careful.
Do’s
If you are a Microlevel Entrepreneur, be very clear before expanding your business whether you will be able to survive even after the business expansion.
Prepare a detailed excel sheet summarizing all the revenues and expenses of the new unit. This would give you a clear idea.
Dont’s
If the expansion of the business doesn’t promise to provide Sustainability, please do not expand.
Case Study
We will discuss a case study of Ms. Usha who is Microlevel entrepreneur from Mysore. Ms. Usha sells natural fresh juice.
The details of Ms.Usha’s business organization unit are as follows:
1) Name of the entrepreneur: Ms.Usha 2) Name of the organization: Sushruta Fresh Juice Centre 3) Nature of business: Sale of Natural fresh juice juice 4) Details of turnover details for past 3 years:
Analysing the sustainability factors for Ms. Usha’s business (Product Business), we have the following observations:
Ms. Usha’s business is sustainable because she is able to deliver the same quality of juice in all the juice centers run by her.
She is manufacturing the juice in one centralized location, thereby reducing the cost of production.
She is running each of the juice centers as a profitable business centre.
She has a common production Machine, Production staff, Marketing staff, Finance staff and HR staff for all the juice centers. This makes her business more Sustainable.
Challenges in Sustainability
Uniformity in production and packing packing.
To create awareness among their customers that natural fresh juice will provide good health.
To my belief, practicing the three 'Sutras – Scalability, Sustainability and Profitability', would lead your organisation towards business growth. Wrapping up the detailed discussion here, we would learn about profitability in our next blog.
The blog has been authored by Mr. GK Pramod, Co-founder, The Second Gear - MBA for Non MBA's Mentoring Module Concept.
