‘What MSMEs Want?’ SMEStreet Survey Unleashed Top Five Priorities of Indian MSMEs
Seeking affordable finance in a time-bound manner is the most sought after demand among Indian MSMEs. Accessing affordable finance has emerged as the top priority for today’s MSMEs, in a nationwide survey titles ‘What MSMEs Want?’ conducted by the SMEStreet.
SMEStreet has conducted a nationwide study titled as What MSMEs Want? in order to understand the top five priorities of Indian MSMEs. In this activity, entrepreneurs from more than 70 cities and industrial towns of India, representing various industry fields have been approached. More than 50,000 CXOs were approached touching upon more than 70 cities and towns of business or industrial relevance.
This SMEStreet survey ran for over 8 weeks and after getting a considerable amount of responses we got some key indications from the MSME community.
The questions were sent through digital modes and the questions were purposely kept simple.
“As the title goes, ‘What MSMEs Want?’, the idea of doing this kind of survey was simply to understand top demands of SMEs about what they want in order to do business happily and smoothly. The survey methodology was kept simple and we only asked a list of top priorities of business from the entrepreneurs,” says Faiz Askari, Founder Editor of SMEStreet.in.
According to SMEStreet Survey What MSMEs Want? – Top Priorities of MSMEs here are the Five Key Priorities:
- Finance Access /Affordable Finance
- New Business Streams/New Business Development
- Streamlining Business Processes / Documentation
- Optimizing Profitability
- Accessing Talented Manpower
There were more than 55,000 top management CXOs, Business owners were approached across India for this survey. There are 3845 complete responses came back. The Top five priorities were analysed after tabulation of these responses.
“Although the total number of responses was quite high if we include some incomplete responses also,” Faiz added, “Affordable finance emerged as the number one demand for Indian MSMEs unanimously. For example, this is the priority for a garment manufacturer as well as ITeS company owner.”
Because the responses were slightly subjective in nature as the respondents were asked to express their priority with a brief explanation of why they feel that priority is a priority for their respective business. This pattern of responses can be understood as a trend with MSMEs.
Here are some brief descriptions of the analysis of the following priorities:
Finance Access/Affordable Finance
Close to 83% MSMEs who responded in the survey expressed ‘accessing finance or accessing affordable finance is a priority for their business’. This statement shows that there is a big scope of opportunity in filling a communication gap between Banks and MSMEs. This is an aspect which needs clarity from both from both ends. Banks and banking systems work on specific thumb rules, and within those thumb rules –knowing the unique business environment is a missing gap. Because of this, the lending equation most of the times doesn’t appeal to an entrepreneur. Similarly, an entrepreneur in many cases found completely unaware of the fact that banks require documents. And there is a specific set of documents which are needed. However, this is a long debatable issue which needs a lot of discussion and understanding of both sides.
Notwithstanding, recent banking and lending frauds have led to the even tough situation for the aspect of the availability of affordable finance for MSMEs. We have discussed that in past and will continue to focus this element in future as well.
New Business Streams/New Business Development
This was preferred by over 53 % MSME respondents in the survey. Our analysis, based on the responses we have got, says that MSMEs since they are resource, crunched they often spend most of their time in serving or managing their limited and long-term customers. This limits their scope of business growth. However, the urge of new business emerges when the second generation joins the business.
Streamlining Business Processes/Documentation
Around 41% respondents rated the urge of streamlining their processes and managing documentation for their businesses as a priority.
This factor at such a position is due to the fact that our economy has recently undergone major transformation through GST. However, the new tax regime is ultimately to simplify the documentation process but the information flow regarding the GST claimed a lot of time from the entrepreneurs’ schedule. This element is expected to get reduced with time to come. But the major reason for this aspect at the number three position is because of the lack of automation within the business environment of MSMEs. However, the government’s focus on digital payments is expected to resolve this challenge as a priority for MSMEs.
Around 37% respondents feel that their business profitability can be increased. They strive for that as a business priority. This reflects that vendor ecosystem around MSMEs needs to offer the best pricing for the raw materials involved in case of manufacturing MSME and vendor services provided to a service class MSME.
Accessing Talented Manpower
Close to 34% per cent MSMEs feel that their priorities their operations in order to attract qualified talent. However, this priority is due to the fact majority of business students from leading business schools or engineering colleges prefer to work in MNCs or else established brands. MSMEs falls low in the order to student’s preference. This leads to a quest for MSME entrepreneurs to attract talent.
This initiative of SMEStreet was just to understanding the evolving behaviour of Indian MSME entrepreneurs. It is so obvious to analyze that business as a whole is transforming, Indian MSMEs are the most important part of this evolving and transforming business ecosystem. Sometimes this transformation is due to any government policy or taxation structure, but sometimes this transformation is due to the new generation joining the business or some new trend becoming popular in the respective business vertical. So, the transformation is inevitable, what is important for the entrepreneur is to change the priority and what is important for the policymaker to understand their changing priorities of entrepreneurs.