Why MSMEs need expertise to scale up

The 63 million MSMEs in India play a critical role in driving socio-economic growth and development. Together, they employ nearly 120 million people and contribute to 25 percent of GDP from services, 40 percent of India’s exports, and 6.1 percent of GDP in manufacturing.

To scale up and remain competitive with larger firms, MSMEs need two things: expertise and capital. While capital is easier and cheaper to get overtime, expertise needs to be built internally with the help of specialised service providers like domain expert consultants, venture incubation firms, and brand accelerators. 

Building expertise 

Expertise helps firms identify their unique value proposition and execute it. This helps create a strong market for their product or service and a sustainable advantage that is hard to replicate. 

Define the unique value proposition

At a broad level, there are only three basic value propositions. The product or service can be cheaper, better, or faster. Any firm that has even one customer will be able to identify exactly why the customer has come to them, and the core reason will fall into one of the three buckets.

Once this is done, it is important that the firm focuses on the value proposition and improves it over time. For example, a food and beverage consumer goods MSME supplier can increase the speed at which new solutions are provided to customers by refining the processes followed or focus on improving the taste of products by investing more in consumer research and determining how the taste can be enhanced.  

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Formulate and execute a strategic plan

The company should commit to a strategic plan and focus its resources on improving the value proposition. This can then be communicated to potential new customers to grow the business. 

This helps build a well-positioned brand, get more customers, and reduce the selling time to get new business. 

Focus on the core

Being innovative is great, but companies with resource constraints should first focus on building the core value proposition. And only when it reaches some scale should it venture into newer areas. Any new area that the firm selects will have its challenges and will require resources, which can be better used in scaling up the core product or service. 

Go online

MSMEs should go online to expand the reach of their services. While the initial cost of setting up an online model may often discourage small business owners, the benefits far outweigh the expenses. MSMEs should explore all avenues of finance and even consider EMI-based options to set up their online practice.

Specialised domain experts and consultants can provide support to a business to go online by building their website, integrating it with payment gateways and delivery partners, and making products available on marketplace platforms. This is a simple activity that can be completed in less than a few weeks.

Every firm is unique in its own way. What firms should do is find their unique value proposition with the help of experts and set out on a path to focus on and improve their proposition. This will help develop a strong brand and a market development model, which will unlock growth opportunities.