In today’s dynamic and competitive business environment, small and medium enterprises (SMEs) find themselves at a crossroads. Digital technology is no longer a luxury but a necessity for survival and growth. This was the core message delivered by Urvisha Koradia, Founder & CEO of Pitch Books and National President of the Startup Council at WICCI, during her keynote at Xcelerate 2024 in Mumbai. Speaking to a packed audience, Koradia outlined the key challenges SMEs face and how technology can be the game-changer in overcoming them.
SMEs: The Backbone of India’s Economy
The SME sector plays a vital role in India’s economic landscape, accounting for over 40% of the country’s industrial output, 35% of direct exports, and another 15% in indirect exports. “SMEs have been highly positive on the future prospects of growth,” Koradia stated, “largely owing to the economic development and support provided by the government.” However, despite their optimism, SMEs face significant challenges that could potentially derail their growth trajectory.
Key Challenges Facing SMEs Today
Koradia highlighted five critical challenges that SMEs grapple with today:
Access to Proper Funding
Finance remains a pressing issue for most SMEs. “SMEs are still facing severe constraints with regard to finance,” said Koradia. High-interest costs and transaction fees often leave small businesses stuck in a vicious cycle of liquidity crunches. Without timely access to funding, they are vulnerable to market shocks, which hampers their ability to grow and scale.
Lack of Technology Adoption
Technology adoption in SMEs is staggeringly low, even in tier-2 and tier-3 cities. “Many SMEs are still using rudimentary technologies, which definitely can be enhanced,” Koradia pointed out. She emphasized that it’s not just about acquiring the latest software or hardware, but about integrating these technologies into the very fabric of the business. “Assimilation of novel technology is costly and challenging but essential for growth,” she added.
Shortage of Skilled Labor
SMEs struggle to attract skilled labor due to their inability to offer competitive salaries, job stability, and career advancement opportunities. Larger corporations often lure the best talent, leaving SMEs with fewer resources. This talent gap further widens when it comes to the technological skills necessary for the digital age.
Marketing Problems
Despite the proliferation of digital marketing channels, SMEs still struggle with brand visibility. “With the gamut of information on social media, how do you tap and target the right audience?” Koradia asked. Many SMEs turn to marketing agencies for help, but without a strategic approach, even these efforts can fall flat.
Stiff Competition from Larger Players
Large corporations with deeper pockets are increasingly encroaching on sectors traditionally dominated by SMEs. “It’s really hard for small businesses to compete,” said Koradia. Despite government schemes aimed at protecting small enterprises, the competition remains highly one-sided.
How Technology Can Help SMEs Overcome Challenges
While SMEs face formidable obstacles, Koradia was optimistic about their ability to overcome them through smart use of technology. She laid out several ways in which digital tools can accelerate business growth:
Leveraging AI and Data Analytics
Koradia explained how AI and data analytics can empower SMEs by offering valuable insights into customer behavior. “AI-driven recommendation engines can analyze past purchase patterns to suggest products that align with individual preferences,” she noted. By utilizing such tools, small businesses can tailor their offerings and create more personalized customer experiences. The result? Improved customer satisfaction and increased sales.
Automation for Increased Efficiency
Automation can drastically reduce the time employees spend on repetitive tasks, allowing them to focus on more strategic, revenue-generating activities. “Tools that automate mundane tasks can significantly boost productivity,” Koradia advised. Whether it’s document handling, customer inquiries, or sales processes, automation allows businesses to operate more efficiently and cost-effectively.
Marketing Through Social Media and Data-Driven Insights
Koradia stressed the importance of a well-thought-out social media strategy. “Leveraging social media is a cost-effective way to reach your target audience,” she said. Additionally, data analytics can help SMEs fine-tune their marketing strategies by offering insights into customer behavior and preferences. By using these tools, businesses can ensure their marketing efforts are directed at the right people, improving ROI and brand visibility.
The Importance of Staying Informed
One of the key takeaways from Koradia’s speech was the importance of staying updated with the latest technological trends. “Technology is no longer optional but vital for a competitive edge,” she remarked. Whether it’s AI, cloud computing, or big data, SMEs need to keep a close watch on what their competitors are doing to ensure they stay ahead in the game.
Technology is an Investment, Not a Cost
A common misconception among SMEs is that technology is too expensive. Koradia dispelled this myth by explaining that while the initial investment may be significant, the long-term benefits far outweigh the costs. “The long-term benefits in terms of cost savings, efficiency, and customer satisfaction are substantial,” she stated. Moreover, there are opportunities for SMEs to collaborate with tech companies for revenue participation or sweat equity, making technology adoption more accessible.
A Call to Action for SMEs
In conclusion, Koradia urged SMEs to re-evaluate their business models and integrate technology into their core operations. “SMEs that adapt and innovate will find themselves well-positioned in a competitive marketplace,” she asserted. Technology offers not just an opportunity for growth but a pathway to survival in an increasingly digitized world.
Koradia’s keynote was a powerful reminder that while SMEs face many challenges, they also have unprecedented opportunities to grow by leveraging technology. By embracing digital transformation, SMEs can overcome barriers, improve efficiency, and set themselves on a path to long-term success.
Watch the full session here: https://youtu.be/8fA5S4rVt5I
