Understand the Cost of Ignorance
We all talk about SME’s potential in the country’s growth. This segment is at high priority for policymakers and industry stakeholders. While we say that Indian SMEs are the biggest employer for Indians, their contribution to the country’s manufacturing output is well known, many experts believe that innovation is a preferred practice among Indian SMEs. But, on the contrary, and more importantly, we also know that Indian SMEs are surrounded by challenges.
Although, this list is long a major portion of this list belongs to finance.
Let’s not discuss the most common challenge of the credit crunch or access to finance. This is so common as it can be considered as part of the game. So let’s move on to the other category of challenge which is about self preparedness of financial documentation.
SMEs usually try to stay lean or stay less interested in preparing their financial books properly. They would like to use old age technologies to maintain their company’s financial records. In India, there are some so successful and robust accounting solutions such as Tally which actually make SMEs glued up. I know a few examples in which the entrepreneur has started his business from a small shop with a turnover of a couple of hundred thousand and now they have reached a turnover of more than 30 Crores. But their whole journey was financially documented on Tally.
I personally feel that there is nothing wrong in having loyalty to any brand, but loyalty to old processes is not something to motivate.
There are some new examples who have a successful focus in specific Indian geographies and are trying to sell the accounting software to SMEs while bundling the same as ERPs. However, some global players such as Intuit is also in the market but yet to make a big bang in the market. Needless to say that the options are available to the customer but options may not bring the change that is needed.
SME owners must have to change their mindset towards their financial preparedness. This financial preparedness can lead to multidimensional growth. A couple of years back, I met an entrepreneur from Faridabad and at that time he was reluctant about getting credit rating for his business. He was having an opinion that the investments required for getting the credit rating done were high and he was unable to visualize its returns for his business. But, after getting that process he has felt a C change in his sales and now his company’s revenues are showing high growth.
There are many examples like this. But the importance of any knowledge can only be derived from its implementation. Implementation can only happen when there is a will. So I urge my entrepreneur friends, to use their knowledge and use the knowledge which is available in their surrounding and get themselves equipped with best in class solutions and please do not ignore the financial documentation. It needs to be understood that cost of such ignorance is huge for SMEs.
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Truth be told, the purported strategies are most likely unlawful. In the event that they are influenced by the miscreants and consent to go along with, they may infringe upon the law. This could be considered as a cost paid by the lack of education.
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