Varun Sehgal | 9th Dec 2020
In my capacity of heading operations at EBTC, I have been facilitating growth and collaboration for SME’s, both on the European and the Indian side.
Thinking of this article made me retrospect with regard to the transition of MSME’s in India and I feel confident in saying that the narrative for a successful MSME revolves around three important factors - working capital, technological innovation, and value chain efficiency.
With all else remaining constant, it is demand which drives growth of an MSME. However, the delivery capabilities of MSME’s are facilitated by reliable cash flows, as well as technology- and process efficiency, and ultimately those become the catalyst for the long-term success of an MSME.
I’d like to focus on the first point, the importance of cash flows and financing. For me as the COO of a not for profit MSME, I daily face a very crucial business value chain risk for the company: managing working capital and gaining easy access to working capital financing. In the absence of the latter for the company, managing financial viability of each step in company growth and company process design becomes critical, whilst simultaneously managing clients, employees, vendors, partners, and compliances. It requires a substantial amount of micro-management, which to a great extent crowds out more strategic and growth-oriented tasks and responsibilities. It is manageable with hands on supervision and effective planning, however, without access to even negligible credit lines, development and growth become slower than I would wish for and for sure otherwise aim for.
In addition to the constant endeavour of managing working capital, it became ever more important to take time to zoom out, reflect, and ultimately create a network of innovation and collaborations in order to mitigate the financial risks for the business as a whole.
Internationalisation of our efforts helped us in achieving both these goals, and I am sure it can support other MSMEs as well! Internationalisation offers opportunities for knowledge sharing, technological growth, economies of scale, new markets, and most importantly - an opportunity to discuss and address common risks and hurdles.
A further positive outcome of such collaboration and partnerships is that they have enhanced our troubleshooting skills and infused a deeply set growth mindset.
I can only encourage all in a similar position to introspect on financing issues and consider mitigating risks by collaborating. And I will always be open to have a discussion along such lines should you wish so!
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