It has been observed that mid-sized organisations often lack the abilities of larger enterprises to deal with economic and functional issues. The challenges are diverse in nature and hence a substantial amount of time and energy of the Founder tends to be spent on overcoming them. This trend needs to be controlled and reversed early on as it limits business growth and renders the business unsustainable in the long-run.
Some of the major challenges faced by mid-sized companies in India include:
Absence of adequate, timely finance and high cost of borrowing
Lack of adequate finance from banks and other formal sources, paired with the absence of transparency is proving to be a stumbling block in growth of mid-sized companies in India. Not only do rising input costs eat into profits, but the high costs of borrowing have only worsened the situation for them. Due to high-risk perception among banks, the cost of credit remains high for this sector, which incidentally, needs it the most.
Technology solutions such as business analytics tools can play a pivotal role in assisting small business with better financial management and maintaining customer relationships. Adopting these tools would in-turn help in creating a heightened sense of confidence among lenders regarding transparency, sound business goals and well-developed business plans.
Inadequate marketing and branding strategy
Marketing and branding have been one of the key areas of concern for mid-sized companies mainly due to lack of funds and, more importantly, of awareness regarding crucial marketing and branding strategy. Most of them fail to get enough buyers or generate enough enquiries because of their inability to develop and market Unique Selling Points (USPs) for their products or services. Moreover, their area of operation is largely limited to a regional target market, with very few venturing out geographically.
Once again, analytics plays a crucial role in solving the problem for lack of market awareness and delays information collection, processing and analysis.
Delayed payments as the order-to-cash cycle is lengthy and strenuous
Cash-flow remains a huge challenge for organisations, but never more so than for mid-sized organizations. Timely payments from customers will help them in reducing their working capital requirements leading to lower interest costs, improved profitability and create a positive impact on the long-term health and sustainability of overall sector.
The role of analytics here is to help to monitor the collections process, help them understand customer behaviour – what they buy and how they pay – enabling managers to identify overdue balances and other receivables bottlenecks. It also enables the companies to improve their recovery rate.
Non-availability of appropriate technology and awareness
Without enabling their organisation with tech, companies stand a very slim chance to grow. If falls upon leaders of small businesses to adopt and transform their company in-line with suitable technology. Technology can help streamline production processes, manage marketing and management costs, increase efficiency and achieve economies of scale. High costs and a lack of knowledge often deter SMEs from adopting this crucial step in their growth journey.
Deciphering business analytics tools like Excel, Solver can be extremely helpful for business owners and leadership teams, as it helps them build dashboards, review mechanisms and build forecasting models which in-turn predict outcomes. These existing tools are cost-effective solutions for mid-sized companies to adapt to technology and analytics frameworks.
Mid-sized companies face intense competition from large domestic firms and multinationals who tend to be armed with better technology, financial strength, managerial ability, skilled workers, marketing plans, product quality, and a wide range of product offerings. Small firms often find it difficult to sustain their existence in such conditions. As the Indian economy opens up to global competition, the mid-sized companies must find ways to innovate in order to succeed in this business landscape.
Once again, Business Analytics tools can help create new means of revenue and enhance customer convenience through value-added services. These help in determining future buying patterns, making it easier to prepare for seasonal fluctuations.
Non-availability of skilled manpower and increasing labour cos
Large firms lure skilled workers with higher remuneration and job security. Mid-sized companies are often left with the remains and as a consequence suffer from low managerial capabilities, higher inefficiencies in decision-making and lower productivity levels at the factory or the field levels. Moreover, due to a small scale of operations, skill-development is challenging and often ignored.
Data-based tools enable companies to capture a complete and accurate snapshot of their employees’ activities and help in decreasing labour costs, improving workforce efficiency and manage talent better.
An ecosystem enables and assists these mid-sized companies to continue to grow and meet these challenges effectively is the need of the hour. With the globalisation of our economy, there is a changed notion of manufacturing, productivity and competitiveness, and our businesses must be quick to adapt.
The starting point for this ecosystem, we believe, lies in adopting data-driven business models