Indian SME’s Taking Recession in Their Stride, Taking India Ahead

SME-Small and Medium Enterprises are the undeniably the underdogs of the Indian Economy. They are not given the emphasis and coverage they deserve, yet they go on doing what they are best at.

“Charting and Executing Their Growth Plans and Taking India Ahead”

I chanced about a recent report conducted on Indian SME’s sometime back and if the numbers are anything to go by, the Indian SME Sector is a force to reckon with.

Here are some important stats from the study,

• There are 13 million plus SME units
• They employ over 42 million people
• Account For 45% manufacturing output
• Account For 40% national exports
  (source: Business Today)

These numbers speak volumes about the viability and the importance of these SME’s in India’s Economic ecosystem. In fact, accounting for nearly half the manufacturing output is something that had me in a twist. Given the scale the SME’s operate on, the contribution to the manufacturing output is huge. The same goes for the contribution towards national exports. It also highlights the fact that a lot of clientele for SME’s is situated outside India.

What’s more, a major chunk of these companies, at least the ones with a good track record have not been subjected to a major loss of revenue attributed to the current global slowdown. In fact, these SME’s are growing at a pretty decent pace and expanding horizons.

I was wondering the reasons why the SME Sector manages to do well despite all odds, and here are some of the probable reasons I could come up with,

• Being Lean is always one of their priorities and they constantly revamp their strategies to be in tune with it.
• They never go in for mad expansion based on market conditions. Unlike the corporate houses products, like Subhiksha et all which grew at a frantic pace during the retail boom, the well run SME’s are always cautious.
• A Flat organization hierarchy is what is common in almost each successful SME. I don’t know how feasible it is to run Flat Hierarchies in large corporations, but if you have read THE WINNING by Jack Welch, it is indeed possible.
• The employees are much closer knit and they have a sense of ownership. I don’t know if there is a supporting study to prove that, but I seriously feel that employees in the SME’s actually love doing their jobs and in turn give their best.
• Good SME companies hate the word DEBT. This is one reason you will notice all SME CEO’s mentioning when asked “What makes you work”. Well run SME account books have null or very little of debt.

I am not sure if all these attributes can be seamlessly mapped with the large corporations too, but then a few actually look doable. Moreover, at some stages all large corporations were small right. It to my understanding is sometime a case of,

“Forgetting To optimize the bottom lines while gunning for Over the Roof Top Line Growth”

What are your thoughts on the same? Can the large corporations take a leaf out of the Small and Medium Enterprises?

[This post is written by Ankit Agarwal, an ERP Consultant by profession, a wannabe entrepreneur and stock market stalker by passion]