Do you know, MSME is the second-largest employment generator in India, after agriculture? They are the backbone of the Indian economy. They also contribute over 40% of India’s total export.
In this article, we will discuss the contribution of MSME in different sectors and how it truly proves to be the backbone of India.
Then we will move on to the challenges faced by MSME in different sectors such as construction, restaurants, hotels, transportation, laundry services, retail shops, and their status in the current pandemic.
In the end, I’ll be discussing the solutions to the below-mentioned problems. After reading the article, you will have a clear knowledge and idea of overcoming the challenges.
COVID 19 and Its Deadly Effect
Covid-19 has affected almost every part of life. Its measurable impact can be seen on the economy, health, and mental well-being. Lockdown was imposed to save the life of people, but it has indirectly affected the lives of almost every section of society. Its adverse effect increases the unemployment rate in India.
About 90% of India’s workforce work in informal society face job insecurity. There have been pay cuts and layoffs in formal and informal sectors, but no one is talking about self-employed, owners of small businesses, start-ups, retail shops, etc. They have lost their way of earning and have struggled with huge financial losses. The spread of the virus has made it impossible for SMEs to survive physically. The small businessman, hotels, start-ups, etc., we’re struggling with many challenges such as restriction on labour mobility, the decline in a market order, and disruption in logistics. Major challenges varied by industries –
For example, export firm suffers a lot due to decline in external demand.
SMEs in the residential sector had hit hard because of decreasing demand.
Agriculture enterprises reported problems with logistical disruption.
MSME and Its Contribution
Our nation’s growth considerably lies on micro, small and medium enterprises. In India, the contribution made by MSME in the nation’s GDP is above 8%, and the contribution to the manufacturing output is over 45%. It plays a vital role in creating mass employment in every corner of India. This is the only sector that works together with the government to develop backward and rural areas.
The current economic situation is not good for small enterprises such as restaurants, retail shops, laundry services, hotels, etc.
During this lockdown, MSME is the worst-hit sector since industries remained closed for more than two months, resulting in less market liquidity. However, many economic measures were taken up by the government for its support.
Let us now look at the challenges in detail:
Challenges faced by MSMEs
Finance related challenges
In India, one of the biggest challenges that MSME face is a lack of finance. Lack of financial literacy is one of the significant reasons behind this. Most of the time, you are unaware of the financial privileges given by the government. And because of this, you take some impractical financial decisions, which leads you to financial crises. Also, knowledge about finance is important because many times, you have to rely on MSME loans. And if you don’t have the financial knowledge, you won’t be able to compare it with the same, available in the market. You need to know everything related to MSME loans.
Lack of advance technology
Lack of advanced technology is one of the major challenges faced by MSME in India. Most of the MSME operates from the ruler and semi-urban areas. They are not aware of the technologies available to them, such as Enterprise Resource Planning technologies(ERP), AI-based machinery and tools, Inventory Management Computer programs, etc., which can help them increase productivity and enhance the business.
Most of the MSME owners are uneducated and come from poverty-hit regions, because of which they are not aware of the software and hardware available to them. In case they are aware, they lack the financial power to purchase.
Lack of credit
Despite having an idea of an extremely innovative product, it’s not easy to start even a small business. Most MSME looks towards lending institutions to ease the cost of starting the business. And these lending institutions are not always friendly to them.
There are SME loans available, but it comes with complex documentation, requires huge collateral, high-interest rates, etc., making it difficult for SME owners to opt for it.
Lack of adequet marketing
Even if you have a remarkable business idea, it may not become profitable if you lack the proper marketing of products or services. This is one of the main SME challenges which affect their income negatively.
In such a pandemic, the ongoing migrant crisis is one of the most difficult areas to work. Apart from labour issues, businesses need to emphasize training and skill development. Skill development can benefit the sector in this time of crisis which requires minimal investment.
Let us move to the solutions now.
In today’s world, technology change has brought competition in business. The digital platform is huge and is doing wonders in skilling it up. Across the country, every business has only one goal of increasing sales and gaining profits.
And guess what can help you in achieving your goal and increasing your profits?
The answer is Digital Marketing.
● It helps in generating revenue.
Digital marketing is highly automated and helps in generating more revenue compared to the traditional method. It is best for maximizing your sales and earning a huge profit.
It is important to decide your goal first. Accordingly, decide the strategy and go ahead, utilize the platform. You can use social media websites to reach your potential customer base and target the right audience with the right content. You can also use business profiles and promote your product and generate revenue.
● More cost-effective
Digital marketing is the cost-effective method than traditional marketing. It helps to grow your business with minimum resources and minimal investment.
Giving an ad for any product or service on a newspaper, tv, or banner is more costly than advertising through social media.
You can optimize your website for better traffic. You can use Google AdWords within your budget. Therefore, it is said to be cost-effective.
● Level ups the promotional goal
It helps in promoting and marketing your business online with less investment. It helps in financial savings, which was earlier spent on the promotion.
You have diverse social media platforms available for you. It is a good idea to promote your content on all the platforms rather than sticking to one or two. Every platform has its own set of audience, and using it all guarantees a wider reach.
● Delivers better conversion
Promotion and marketing through digital media deliver better conversion compared to the traditional ways.
We have numerous marketing ways available under the umbrella of digital marketing. Like I said earlier:
- You can use business accounts on social media platforms.
- Use website optimization for better traffic.
- Appropriate use of hashtags to reach the right audience.
- Use diversified channels for promotion, etc.
These are some of the ways through which we can expect better conversions.
● Helps in building brand reputation
It helps in creating a brand for your services which leads to a rise in your reputation. A Taylor-made promotional strategy helps to develop the brand by better interacting and maintaining a healthy brand reputation.
Reputation is earned when there is a sync between what you promote and what you offer your customer. For ex- through digital marketing, it is easy to explain the features of any product such as fridge, TV, mobile, etc. After the customer has bought the particular product and felt cheated with one of the features, the product won’t survive for long in the market. Hence, digital media provides an easy platform to make or break a reputation.
● Survive the competition
Digital marketing helps you in surviving today’s market competition. Nowadays, many online businesses depend on digital marketing. So, to have healthy market competition, digital marketing is a must.
You can promote your business online and provide online buying options to your customers.
Online promotion will give you a wider customer base.
You can promote unique features of your product and let your customers know how it is different and better from your competitor’s product.
Above are some of the options which will help you survive the competition.
● Earn’s people trust.
When it comes to trust and quality, customers do not care about price. Digital media uses social media platforms where information is constantly regulated.
Visitors’ reviews, customers feedback, written or video testimonials show the credibility of any brand. And that earns trust.
Engage more and more with your customer through social media channels, that also develops trust.
Digital marketing is the easiest, quickest, and best way to showcase your brand. After your goal is set, decide the strategy and once that is in place, utilize the channels as per your need. Digital marketing provides ample options to popularize your brand. It has something for everyone. If you are someone whose business is on a very small scale and had little budget to support the promotion, you can use different social media channels to promote for free.
It provides a wide range of benefits to MSME business, such as improved sales and revenue, better customer reach, brand popularity, and much more. It helps in creating opportunities in a better way.
Digital marketing helps in creating job opportunities in a better way. It is cost-effective, and with minimal investment, you can reach your target audience. No matter the size of your business, you will profit through this channel.
It is no more an added benefit. It is really important for survival. If you are engaged in the MSME sector, then think no more, embrace digital marketing services.
Please let us know your feedback or queries in the comment section. Alternatively, in case of any digital marketing assistance, you can also visit our website (https://seintellect.com/) or contact us directly at [email protected].