Challenges Facing Small and Medium Sized Businesses
Through the diverse experiences of investors, entrepreneurs, and merchants who have work experience across different sectors in the MSME, there is no reasonable doubt that there are clearer perspectives on some of the vital challenges that stand in the way of Micro, small, and medium enterprise. Some of these problems are general and applies all over the world, while others are restricted to specific geographical locations.
The different kinds of challenges to MSMEs are risks that have totally obliterate different businesses, or fatally paralyzed many which hardly recover from the fall. This article will provide you with the most crucial challenges which may be a huge blow to your business of not avoided or solved on time. It will also consider the different impacts which the COVID-19 has had, and the changes it is bringing into the financial sector.
The biggest challenges facing Micro, Small, and medium businesses in the industrial sector includes:
- Having the right team
- Strategy Execution
- Making the business unique
- Systems and Processes
- Performance gauging
Subsequently, we will discuss each of these challenges by trying to figure out how and why they are a challenge, the risks they pose to MSMEs on a general level, as well as in a well defined environment. It is important to take note of the reasons why these challenges can be a risk for business, and the ways which they can negatively affect the business of not avoided or eliminated. This will keep entrepreneurs at alert to the possible ways to handle such challenges when they arise.
This is one of the biggest challenges that may be a risk for any king of business, organization, and entity; not just for MSMEs. While other kinds of businesses may require people who have vast experience in a particular field, or company to take up leadership positions, this is not the case in MSMEs. Because MSMEs are usually personal, small scale business, the sole proprietors of the business usually assume responsibilities and has the highest position.
As such, being a leader in an MSME does not require any academic qualifications or prior experience in chosen venture. If there were any course on leadership for small and medium scale business, merchants and entrepreneurs would most likely pass on the chance to take it. However, the lack of the required skills to deal with people and challenges which the business can run into can be catastrophic.
There is also a mounting belief that leaders are born with the natural skills to lead people or entities; if you are not a born leader, you shouldn’t take a leadership role. That is not entirely true. While most leaders who take front roles in many business organizations might naturally have leadership skills in leading people, it can also be acquired.
There are lots of influential books about leadership in business which will definitely enlighten merchants about the concept of leadership. These books will equip merchants with the right skills and abilities to make the difference in your team.
Getting the right culture in business is becoming a rising and relevant trend. In the last couple of years, lots of business owners have been trying to cultivate a culture of which their business are known for. By establishing a culture of business, customers are well aware of the well defined purpose of the business through which organizational values flow. Though we can admit to the existence of different values which a business may have, but we will list here four of the most important values which every business must possess.
The most important values of business offered through a consistent culture includes:
- Professionalism & Integrity
- Customer Service
- Initiative & Innovation
In order to integrate these values, it is important to enlighten every individual on your business team about them. Follow this up by looking out for these values in the daily processes or interactions involved in the business through constant staff appraisals, and team meetings. This helps to reinforce these values in the activities of staff in any transaction executed on your behalf. Setting up stickers at workplace or creating a slogan will not do much, changing business behavior however go a long way in bringing out these values.
At the end of the day, sticking by these values creates a culture which your staff will strive to grow I to and protect. These values and cultures will become the backbone and support of your business in turbulent times, just like the recent coronavirus pandemic.
Planning the next moves, changes, recruitment are some of the most important aspects of any business entity, including MSMEs. Without the right strategy in business, a MSME will find itself in the downward spiral due to the lack of innovation which is meant to help businesses adapt to changing trends. With time, the business venture becomes outdated and obsolete. Poor strategy is one of the direct consequences of lack of leadership.
Today, there are lots of technological tools which are well documented for business planning. These tools help draw up plans to move the business in the right direction while taking current trends into consideration. It’s great for team development if the key players in the business are involved in the “how” of implementing the strategy.
While having a plan or idea is so important in business, executing these ideas is even more important. One of the easiest ways which a business can be fast tracked to success is through perfect strategy execution. Implementing ideas, plans, and strategy at the right time, in the right conditions can make a business much more easier to run. Additionally, objectives and projections of business are achieved in a much quicker time.
Poor strategy execution can easily offset a business and deny it the huge profits which would have been feasible. Such is how damaging poor strategy execution can be. Implementing strategies in the right way can be the difference between a good plan and a terrible one. As a result, much more energy should be invested in strategy execution.
Picking the right team
To many entrepreneurs and business owners, picking the right team is one of the biggest tasks while setting up a business. As vital as all the other challenges of MSMEs might be, picking the wrong set of people to work with can be the beginning of the end for any business. It is important to find the right set of people who are well grossed and experienced in different parts that make up the entire business. Vital positions like sales, production, customer support, marketing z, operations, and accounts need the right people who are passionate and dedicated to helping your business grow.
In a bid to run and grow a business effectively, business owners should be removed from the distractions of running the day-to-day operations. Setting up a capable team in place makes for a more effective running of business.
Making the Business Stand-Out
The business sector is a very competitive space where new companies and business entities are always coming up to displace the others in the market. In order to thrive, it is vital that your business has a competitive edge which makes customers prefer to do business with you than your direct competition.
Despite being the obvious secret to achieve success in whatever sector your business falls to in the industry, finding that competitive edge in the market can be such a daunting task as it require a lot of time, investment, and innovation to finally come up with the right idea which will make your MSME unique.
MSMEs can have a competitive edge by considering the following factors when thinking up a strategy to earn more customer and advantage over your competitors.
- Customer Service
- Convenience (Local/Delivery/Stock availability)
- Difficult to buy it elsewhere
When you consider each of these factors, you will able to come up with an idea which makes provides customers with higher quality for money, convenience, and the drive to do business with you.
Productivity has close relations with high quality and systems and more. It is important that everyone that is part of your business team to understand your business goals and objectives which has to be achieved in a given time frame. That way, all hands will be on deck to work towards achieving those goals within the give time by driving up productivity without compromising quality.
Additionally, your team has to be active in critical thinking to quickly come up with effective solutions when encountered by a problem.
As the saying goes, “What gets measured, gets done”. This has been one of the most enduring principles in small and large scale businesses. The most challenging situations for MSMEs is the inability to identify and pinpoint the important metrics that the business thrives on. Some of the key metrics that drives MSMEs includes parameters like sales revenue, gross profit, net profit, price, quality, efficiency, productivity, and so on. While these performance metrics information is available for every business, finding the right measure can be a task.
For a lot of companies it’s very difficult to increase prices which puts a constant pressure on controlling costs. The challenges facing small and medium sized businesses owners is they have no control over politically driven cost increases such the living wage and pension contributions and are unable to pass them on to the customer.