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Problems faced by MSME in India
Marketing Strategy: This factor has been the most common of problems as today’s MSME’s don’t want to have role in end mile connectivity with the consumer. For example if a MSME is manufacturing Broom Stick, it will not go to have end mile connectivity of positioning the product or marketing of the product. Instead they are happy to part with percentages to be given to distributor or sales agent or retail shop, which keeps a good percentage of the share. The payment realization also becomes late which increases from 30 days to 120 days this ensures that the MSME’s which are into manufacturing don’t get the payment in time and this leads to cash flow going negative for which the founders pump in funds from market.
Expansion problem: MSME’s which have completed 3 years in existence don’t want to expand their capacity and hence the load of increase in sales is still catered by existing infrastructure which is unable to take it up and hence crashes. The thought process of MSME’s need to change to adapt the current business scenarios. It cannot start preparing if war is tomorrow. The MSME’s should focus on continuous flow of funds in expansion, marketing, technology and finding new ways of reaching the end mile consumer and rather depend on traditional methods
Looking for new markets: This mantra is completely obsolete in MSME’s segment as they are happy catering to existing business and its stake holders and never look for new markets or new initiatives with product. They keep focusing on the same what they have been doing but forget completely to look at Average Revenue per product and Average cost per product and Average time for payment realization these are the parameters which cost MSME and leads to closure. For e.g one precision MSME manufacturing for hour hand & second hand for titan for last 20 years was happy but in the process it had not grown, never looked for new opportunity and when there was rejig by the buyer for these products MSME take hit as it was never focusing, developing comfort zone should be avoided.