Tag: Management


Seven Sins of SMEs

Businessmen put in their sweat & blood and invest money to build a thriving business. But as this business grows, there are several aspects which, if ignored, become the sins that can creat turmoil. Seven such sins that are often committed by SMEs impacting the growth of their organization are picked and addressed.

1. Service Ignorance

This is the worst sin any SME can commit. Ignoring customers’ service doesn’t just cause loss of that customer for repeat purchases; it also adversely affects word of mouth branding and referrals for new businesses. No matter how good your product is, if customer service is not up to the mark, expanding business would become a challenge. Make sure that you pay full attention to even the smallest of your clients. Happy customers would mean more repeat purchases implying increased Business Growth at lesser cost; hence much higher profitability. These satisfied customers become loyal to the organization with time. And loyal customers lead to successful Business Strategy implementation, Critical Learning Experience, Reduced Risk of Business Failures and Employee Motivation. Any SME can create a Competitive advantage by overcoming this sin.

2. Promoting Sycophancy


“Sycophancy is something which kills your business slowly but surely”

Human resource is one of the most important aspects of business which is very often ignored in SMEs. Herein manpower is managed either by the owner or admin manager and every employee has easy access and personal touch with management. Also, responsibilities are non-uniform. This approach leads to retention of low performing sycophants and attrition of high performing employees. This affects productivity and efficiency of the organization.  Hence, promoting sycophancy and ignorance of people management is the second biggest sin of any SME.

It is a need of the hour for owners to focus on employee aspects and create a more professional environment. You should create organic infrastructure to attract, retain, grow talent and develop internal leaders across the organization. This will directly reduce the operating cost and smoothen technological transition.

3. Undocumented Process

Every organization has its own way of functioning. Whereas, multinational companies follow well documented, technology driven processes. SMEs still have numerous undocumented processes. This creates high risk of miscommunication & lack of accountability among employees leading to poor culture across the organization which hampers productivity on ongoing basis. This becomes next big sin for SMEs.

This is high time for SMEs to define processes systematically. Whether the operations are big or small, having a clear blue print of what happens when, helps you keep a clear sight on things. Documenting exception scenarios and learning would help plan better for future and reduce risk of any last minute surprises. Make sure that the team understands and follows a defined process diligently. Process keeps you competitive & agile and creates a uniform culture across the organization. If done properly, this can become a real competitive advantage.

4. Impromptu Decision Making

In Indian SMEs, the decision making is highly centralized and the management takes almost all the decisions. Most of the times these decisions are made out of gut feeling, experience or inaccurate data analysis. As a result, delayed or poor decisions are made, which become bottleneck for the growth of the organization. Also, managements’ focus and involvement in operational aspects leads to poor focus on many important decisions related to growth, diversification & risk assessment, causing them to stick to the same business model. Management should allocate tasks to their team but ensure that all reports and data are stored centrally. This will help them get a bird’s eye view on everything – information flow, gap areas, places that need more attention etc. Also, this helps in enforcing a transparent work culture and reduces risks of delayed or lost information.

5. Absence of Identity

“As a Person needs an identity so does a Corporate.” In the absence of Corporate Identity, corporate’s brand value gets diluted in the mind of its customers, investors, banks & employees and this becomes a big hurdle in the road ahead towards being a professional organization. Hence absence of Corporate identity becomes a sin.

Corporate identity is visually manifested by way of branding and the use of trademarks. It, also, includes product design, advertising, public relations etc. Having a proper business mail id and web properties like a website, social media pages etc. adds more credibility to your business name. Moreover, this reinforces the practice of doing all official communication via corporate mail, thus dipping any chances of misinformation or data loss.

6. Change Mismanagement:

SME management is usually keen to bring changes in the organization but due to lack of effective internal system, these changes become very difficult and also irrelevant at times. From basic operational software to ERP to business intelligence tools, make sure you are up to date on technology. These are investments that would make your business more agile, scalable and secure. Using technology, you can expedite your operations, improve efficiency and control costs, all in one go. But implementation of these technologies becomes difficult due to poor change management. Therefore, poor change management becomes a sin.

hange management

“If only change is permanent then make sure you manage it well”

To successfully implement technological and other changes it is important for you to implement systems in the organization and it should be your priority. Also, before picking technological changes you should consult experts about what would work best for your business type and then pick that same.

7. Corporate Non – Planning

Because of poor systems and micro managing culture, SMEs usually don’t like to think beyond their current scenarios. As a result, your vision for the corporation is very limited. Either you remain at the same level or diminish with time. Therefore, lack of Corporate Planning is a big sin.

Business challenges keep changing with time. You should think big and define your 3 year- 5 year goals and act accordingly. Also make sure that processes foresee and cover some of the future pain areas and operational system is robust enough to sustain the unexpected jolts.


Although for SMEs, these seven sins are identified but if you overcome these blunders in a systematic manner and use people, processes and technology to scale and grow business effectively, you can become big and adaptable for all kinds of industrial reforms.



Demonetization | Challenges & Opportunities for SMEs

On the eve of 8th November 2016 honorable Prime Minister of India, Mr. Narendra Modi announced the demonetization of 500 and 1000 currency notes. He also came up with the supporting statement that this step was taken to curb the evil of black money, counterfeit currency coming from cross-borders and remove corruption. This announcement received both positive and negative feedbacks from different sections of the society and industrialists.

This decision has undoubtedly impacted Small and medium-sized enterprises (SMEs), which are a big chunk of the economy contributing 8% percent of the overall GDP whilst employing more than 80 million people yearly. However, before analyzing its impact one should understand the decision making process in SMEs.

In Indian SMEs the decision making is highly centralized and the management takes almost all the decisions. Most of the time these decisions are made out of guts, experience or invalidated data analysis. As a result, delayed or poor decisions are made, which become bottleneck for the growth of the company. Also, managements’ focus and involvement in operational aspects lead to poor focus on many important decisions related to growth, diversification & risk assessment, causing them to stick to the same business model.

In current rapidly changing business environment, it has been evident that economic, political & legal decisions made by government and introduction of new technology can either help a company grow exponentially or gradually making it disappear, depending on the way they react to these changes. Demonetization is a perfect example of one such impactful socio-economic change.


Demonetization has brought various opportunities for the SMEs which they might consider for taking future decisions for faster and stable growth.


Currency Impact on Exports

The value of the Indian rupee is at a historic low. This means that Indian exports will be increasingly cost competitive in the short to medium term. In this scenario, the Indian B2B businesses should rapidly evaluate if their products could have a demand internationally. Those companies that already export should explore ways to enhance the exports share of their turnover. By focusing on exports, SMEs can not only tide over the short term pain of demonetization, but also build a foundation for a more prosperous future.


The rapid growth of global ecommerce business and the presence of global ecommerce marketplaces in India have made entry barriers for exports virtually nonexistent. A weak rupee is the positive trade wind that B2B SMEs can use to set sail in the international markets.

Investment Opportunity

Deposit growth is likely to improve with more money coming into the banks, and impacting the savings positively. SMEs can take the bank loans at cheaper rates and can invest it for capacity enhancement, robust systems implementation and diversification of business.


Capacity Planning and expansion

As there is an export opportunity and loans may be available at cheaper rates companies need to reassess the internal capacity. Also, they need to decide whether to reinvest for growth or pay taxes on profit. Hence Capacity Planning and Expansion becomes an important decision to make.

Systems Implementation

Demonetization and other related decisions taken by government will drive many SMEs which earlier were using their personal contacts for sourcing, marketing & liaising with government officials to shift to digital mode. As a result, market will become more competitive and SMEs will need to work on internal inefficiencies which can only be overcome by implementation of robust systems so that they can compete against MNCs by reducing costs and improved decision making.


Time to enter into a new market place: ATM Machines, Swipe Machines, Smart phone demands and Money transaction platforms has boomed within a night and is likely to grow exponentially. Due to this, Moulding Industry, Electronics Manufacturing Industry and IT industry are likely to have a positive impact and SMEs can diversify their business in these segments. This Diversification is need of the hour for SMEs to hedge the risk associated with their particular industries.

Along with these opportunities demonetization will cause lesser corruption in Government organizations which will lead to better planning, resulting into harmonious outputs and financial stability. Also, scope of corruption within the company for SMEs will decrease wherein many companies kept on focusing either to save taxes or to save from various government norms.

Digital transactions will help them in better analysis, improved planning and improved ability to hedge the risk which will lead to use the most important resource of any SME, i.e. the management’s time, more effectively that currently goes into handling the cash accounts and transactions.  Also, with increased digitalization, hedging the risk by using new insurance products will become important for them.


Demonetization has brought a plethora of difficulties for SMEs for the coming 2-4 months. It has adversely impacted availability of labors, sourcing and cash-flow leading to the underutilization or total shut-down of plants.

For some of the industries demonetization has impacted negatively. Construction and Real Estate industries and other industries which are directly or indirectly dependent on them is impacted for this period.  Demand for Luxury items such as Gems and Jewelry, high End Retail, Auto Sector along with Auto Component Sector will tend to decline.

Therefore, looking at the opportunities and challenges of Demonetization it can be concluded that the medium to long-term gains are likely to outweigh the short-term pains. However, change in management’s thinking also becomes the most important and vital aspect with respect to the current scenario. And whether to take demonetization as an opportunity or as a threat; it’s the thinking of the management to grow either bigger or die by resisting the change.