India boasts about 63 million MSMEs enabling around 11.10 crore jobs– This means MSMEs contribute to 22% of employment in the nation. Not only do small to medium businesses help in employee empowerment but also contribute the lion’s share to a nation’s financial health.
Unfortunately, 17% of India’s MSEs have been closing due to sparse demand and regional restrictions. To even worsen the case, the pandemic left a significant impact on the growth of several micro to medium enterprises.
Here’s some good news. Digitization of MSMEs has shown a positive impact on business growth. And that’s exactly what you’ll uncover in the article. Also, as you read more, you’ll understand digitization’s pros, cons, implementation, and much more.
So, let’s dive in.
Importance of Digitization
The Indian MSME minister, Mr. Nitin Gadkari, said, “MSMEs digitization is one of the wisest solutions to fix almost all issues. Moreover, it helps make small businesses transparent, result-oriented, and time-bound.”
However, 90% of MSMEs haven’t yet adopted digital solutions. What’s more alarming is the digital transformation in these businesses is extremely slow, just like a snail’s walk.
Did you know that according to Singapore’s first-quarter economic survey in 2019, the companies adopting digital tools spiked their value and productivity by 25% and 16%, respectively?
These tools are especially life-saver for businesses during a pandemic and skyrocket their business. While all sectors are falling back financially, the technically robust companies drove their revenue to the mountain peaks.
A study in 202 by a CISCO APAC SMB Digital Maturity found that 50% of MSMEs adopting automation tools can drive up to 3.1 trillion USD to Asia Pacific’s GDP by 2014. The use of tech tools makes internal and external operations of a business effortless.
For instance, using social media tools like Facebook, Instagram, Twitter, and Pinterest has enabled worldwide transactions preventing taxation and regional law complications. At the same time, the CRM tools like Hubspot, Salesforce, etc., assist in inbound marketing from nurturing to interacting with the audience.
Essential Areas MSMEs Must Focus on Digitization
The digital transformation in MSMEs produces an elite impact on the overall growth and value. The tech tools are boon, especially for eCommerce and service-based businesses to garner customers from anywhere at any time.
Whether finance or security concerns, digitization resolves each issue without a hitch. Now, it’s time to look into some important areas that require technological advancement. Read on.
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Although most of the companies in the earlier days were self-funded, nowadays, the startup requires huge credits to survive and grow. That’s why it’s essential to enroll in various government initiatives such as MUDHRA to enjoy adequate funding.
In general, government fundings consume more time for processing related documents. So, switching to reliable fintech company policies is a wise option. Several credit offering fintech companies help you avail of massive funding at minimal Interest rates.
Between 2015 and 2019, the finance companies have spiked to 1300 in the B2B space. A few reliable fintech solutions include LendenClub, PayNearBy, and Brego.
Project management is another important area to look after for the smooth functioning of a business. Usually, the micro, small, and medium enterprises boast 10, 50, and 250 employees. So, it’s freaking hard to manage the workflow during various operations.
However, the project management software and tools ensure an organized workflow with utmost productivity. A few project management tools include Asana and Trello, which help team management, project workflow management, and much more.
The major concern for micro to medium businesses is marketing. The local laws and policies are major barriers for MSMEs to reach audiences across states. This is why it’s important to focus on digitizing marketing operations in an enterprise to reach a wider audience across the globe.
For instance, the social media handles such as Facebook, WhatsApp, Instagram, or Pinterest help engage and nurture an audience. As a result, it drives sales and conversion rates incredibly.
Research from the Endurance International Group found that 50% of MSMEs switched to digital tools, including WhatsApp and video conferencing tools, to manage day-to-day operations. Not only do these tools contribute to business revenue, but they also build robust consumer-centric brands.
One of the most profitable sectors due to digitization is eCommerce. Sharing eCommerce products on WhatsApp, Instagram, or Facebook has increased sales abruptly. Moreover, the simultaneous use of Facebook and Google ads generated enormous income within a few weeks to months.
One of the essential areas that companies should consider is security. As the business grows, it should focus on advanced security systems to protect internal and external data from hackers.
The lack of cybersecurity systems results in several issues for customers and businesses. In contrast, the efficient security systems in a workspace ensured minimal liabilities, compensation, and expenses.
How to prevent digital hacks and ensure extreme security for the consumers? Simple. Install antivirus software and work with cybersecurity professionals to ensure a safe and secured business environment.
Customer Engagement & Interaction
The last key area MSMEs should digitize is customer engagement and interaction. Whether a service-based business or an eCommerce, customer interaction and engagement play a crucial role.
Several businesses are leveraging chatbots, review sites, websites, email marketing, contact forms, forums, and social media to enhance customer interaction. Although it’s pretty overwhelming, the proper usage of these tools ensures credibility and garners customer trust.
On the other hand, businesses should focus on customer engagement to drive them to purchase more and more. A few ways to engage consumers include blogs, social media updates, email marketing, and YouTube videos.
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Online purchases have spiked by 30% as of March 2020. Since the consumers have rapidly adapted to online, the digitization of MSMEs plays a crucial role in enjoying unlimited profits.
The exciting part about digital transformation is that the MSMEs spending over 30% on the tech-tools and software has garnered 9X revenue. So, MSMEs should adopt digital tools for hassle-free business operations, from manufacturing products to market them to a global audience.
A few areas MSMEs should focus on digitizing are marketing, finance, customer engagement, security, and project management.