There is only one way for SMEs in India wants to go – up. But some of the best and most successful business people will tell you that calculated and planned growth is better than impulsive and haphazard development.
If you think it is time for your business to grow, and you envisage explosive growth, take a moment to consider these few points before undertaking massive changes in the way you work.
Can you afford an expansion?
To make money, you need money. Are you in a financially-secure place where you can make investments towards your growth? Do you have the requisite infrastructure to support your plans? If not, you need to first look at getting that sorted. Growth will entail a whole host of activities, like hiring new people, training existing ones, expanding premises, purchasing hardware and software, setting into place new processes, etc. And then there is the marketing in the new location. Don’t scrimp. If you manage to get the customers, make sure you have built a robust website. You don’t want to lose customers mid-transaction if your website crashes.
What works better for you – SME loan or business funding?
If you don’t have the finances, you need to make alternate arrangements. You have an option between SME loan and fund raising.
You can avail an SME loan from standard financers, like banks, financial companies, online lenders, private corporations, etc. You take the loan, and pay it back within a decided time with interest.
Business funding usually involves selling part of your ownership in the business (as shares or equity). With a loan you continue to remain in control of every decision you take for the company. In equity, there is a board of investors that you are accountable to. A loan gets disbursed faster than funding, and is cheaper in the long run as compared to fund raising.
Have your competitors already expanded?
Are you looking at new market share or expanding the idea? Has competition already done that, or do you have first mover’s advantage?
If not, study your competitors and learn from them. Their success and failures are learning ground for you. Also, if you are not introducing an entirely novel idea, you need not spend time and money into educating your audience; the groundwork has already been done. You can even offer the same service at a discounted rate and win more customers, faster. However, tempting as it may appear to be, don’t wait for your competition to strike first. It takes much longer to woo customers away from well-established business.
Is your team geared for the expansion?
We can’t say this enough. Do not decide on expansion on a whim. You might have the resources and the space and the time to expand, but if your employees lack motivation, your plans are going to fall flat. Even with the motivation, is the team efficient enough to tackle the new set of unknown challenges that the expansion will bring? Are they prepared to tackle them head-on? Without the support of your team, you will find it difficult to achieve or sustain the levels of expansion that you had hoped for.
Talk to your team and make them understand what will be required of them when growth kicks in. Make them part of the decision process.
Growth in the SME India sector can be exponential, but it isn’t to be taken lightly.