, particularly in the developing economies. SMEs are part of the responses to development in most developing countries and have proven to play major roles of development in both developing & developed worlds. But, it is reported that 6 out of 10 businesses in developing countries like India fail in the first year and close down before they step into the next year. Whereas, it is seen that only 1 out of 10 businesses fail in developed countries. So, why do some fail, while some make so much profits that will eventually lead to business expansion. This is what this article is all about!
There are reasons to fail and there are reasons why some SMEs are successful. Some of the common & terrible mistakes SMEs make are as follows:
- Having no proper business plan
- Being ignorant of what customers want.
- Not being legally compliant.
- Not appearing on Google.
- Selling at a really low price to be competent.
- Borrowing too much money they can’t repay
- Not spending time in marketing.
- Not maintaining right business records
- Ignoring the use of technology and accounting software.
On the other hand, SMEs in developed countries do better than the ones in developing countries in terms of sales, profit, growth etc. Top 10 countries that have got the best running SMEs in 2019 are Denmark, Hong Kong, New Zealand, Ireland, Sweden, Canada, Norway, Singapore, Switzerland and Finland. These countries are better than others when it comes to starting and running a business according to Forbes.
Let’s look at what measures each of these countries taken to be at the top 10 place for ease of business.
The government has made it easy to start up new businesses. Denmark is considered as one of the world’s most entrepreneurial countries.
2. Hong Kong
Belonging to China, Hong Kong has a least tax burden on businesses that one can think off. The money saved can be invested in working capital that helps in more sales and hence profit.
3. New Zealand
Known for its free-market economy. The county is heavily industrialized that gives them global competitive advantage.
This country ranks at the top for freedom, and has a relatively low tax burden on businesses.
This country having highly skilled labor force makes a best place for doing business.
Land is mostly urban and industrial–and with great personal freedom and negligible red tape–Canada ranks high in ease of doing business.
With strong tech sector along with a strong social safety net for its citizens, making business easier to establish.
Singapore is free-market economy, and their Govt is notably free of corruption.
Switzerland has a high per-capita GDP. It is also famous for its stable government, its highly skilled workforce, and strong service industries.
Finland has a highly skilled workforce and is considered as an innovative country, a strong manufacturing base, and a flood of technology exports.
These 10 top developed countries have taken a huge step in building a better future by encouraging their SME segment. Measures are taken in terms of lowering tax burden, providing high skilled labour force & corruption free environment. Their Free market economy makes it easier for SMEs to buy and sell better giving them all the personal freedom to perform at their best and make maximum profits.
It is true that the government in these developed countries makes it easy to start up new businesses. But for the business to be up and running successfully for a longer duration, it is not just about the country they operate in that matters, the reasons for their success are many!
Here are 7 things SMEs in developed countries are good at ( something that Indian SMEs should be good at too!)
- They are Tech-Savvy.
Do you know what gives SMEs in developed countries competitive advantage? Their technology forwardness! They rely on technology to communicate with their customers. Whether it is about new deals and discounts, transaction message or just the bill details, everything is digitalized. They are paperless and more efficient and instant. They serve customers better and on time with the help of modern tools and software. Digitizing improves working conditions and customer experience.
Tracking inventory, creating bills, payment collection happens digitally using Billing App. They use softwares that’ll help them monitor their business even while they’re away from their office/store. They monitor their sales, staff, stocks right from their smartphones, that’s how smart they are!
With tech at their fingertips, they automate business processes wherever possible and with this comes efficiency and productivity. Cool, isn’t it?
2. They adapt to new-age.
Market is all about risk and instability. It is quite important to keep a watch on evolving trends. A lot is changing every day: people are changing, their likes and dislikes change, the economic condition of the market changes. A small change in the trend can make or break your business.
SMEs in developed countries know this, they always keep themselves competent under current trading conditions. They always keep an eye on the changing trends. They keep a watch on what’s Happening Now & What Will Happen Tomorrow. This trait is helping them make improvements in their business and get better business ideas.
3. Their Quality is top-notch.
Quality is what differentiates you in a crowded market. Regardless of what business you’re involved in, your customers aren’t going to choose you solely based on price, but often on quality. If you fail to meet customers’ expectations, they will quickly look for alternatives. They might even go to the extent of giving negative reviews on your products and services on the internet. This is the worst thing that could happen to any business as it reduces the business’s reputation.
That’s why we see SMEs of developed countries concerned about the quality of their products and services. No matter what, they don’t compromise on quality. They believe, that’s the only way to build trust with customers, that’s how they keep coming back. They try their best to come up with good quality products/services no matter what.
4. Customer service is their #1 priority.
Everybody likes to be treated well, your customers are no exception. Successful SMEs never let their customers down. They provide top-notch customer service. They ensure customer satisfaction. Because, when customers are happy, they become your loyal customers and continue to buy from you. It is found that 6 out of 10 happy customers refer their friends and family to your business. It becomes a chain reaction.
This is one of the traditional marketing methods that is applicable even now and forever. Also, Customers are willing to pay more to companies who offer better customer service.
5. Their Business Records are submit-ready.
Most of the SMEs in developed countries have Clean business records set up by their accounting software. Not because they fear Govt. They believe, having records organised helps them track bills, cash-in-hand, payments, taxes, and working costs. This is critical for any business owner who wants to grow. Not just that, it also helps you to,
- Monitor the progress of your business.
- Identify source of receipts & bills.
- Track deductible expenses.
- Find information you need to run your business and help it grow.
- Get a loan or sell your business.
- Stay organised when dealing with customers and suppliers.
- Find important information and documents quickly during disputes.
- File your tax return easier & saving you tax.
This is why it’s very important to keep good accounting records. This is what successful businesses do.
6. They know the value of promoting their business consistently.
Successful SMEs constantly promote their business. That the way to sell more of their products/services and attract new customers.
Advertising your business will help you in many different ways:
- Increase brand awareness
- Provide appropriate information
- Increase Customer Traffic
- Build sales and profits
Here are the ways to do it
- Offer Deals on a Regular Basis
- Use Email Marketing to Remind Customers to Shop.
- Branch Out With Social Media Platforms like
Facebook, Twitter, Instagram, Pinterest, YouTube
- Highlight Products on Social Media
- Try Paid Advertising on Social Media
- Print Your Business Name on Shopping Bags
- Stick Pamphlets Everywhere You Can
- Get Customers to Review You Online
If you don’t do everything you can to promote your online shop, who will? So, want to sustain in the competition? One of the things to do is to promote your business consistently.
7. They make smart investments
Successful businesses use money wisely. They invest in growth, they buy the right tools to improve business efficiently, to be at the right place, to buy items that are fast-selling. They also invest in hiring staff to handover routine tasks to free up their time and conserve their energy.
SMEs in developed countries put their money into advertising their brand. The more popular the company is, the more money it will make in the future. They invest on Anything that contributes to the growth and improvement of your company. Anyhow, investing in a business looks different for every business owner and it can change over time. The key is using your money to improve the source of your income.
Along with these business improvements, there are things that need attention too.
Here’s what Indian SMEs who wish to succeed should be doing
Note down the results you wish to see in your business. Research ways through which you can achieve it.
Do thorough market research on who your customers are, what do they want, how much they’re ready to pay, etc.
Before starting your business, discuss through your plans with a lawyer and accounting professional.
Start a Facebook page or any other social media page, mark your business address on Google maps, have a website, get on to Instagram. All these will make you visible online.
Analyse your profit and losses on a daily basis. Compare daily, weekly, monthly growth. Your Billing App should be able to give you this report. If you don’t have one, better start using it to enter your business transactions. This will help you know which of your items/services is bringing your profit/loss. You can invest right.
Check the market rates and calculate your desired profit margins. Review what competing businesses in your area charge. Charge accordingly!
Think outside the box. Make the most of what you have. If you’re running under loss, you might end up losing loan amount too. Be wise.
Find out the ways to reach your customers. Distribute pamphlets through daily newspaper, Advertise on hoardings to reach your local customers. Talk to other shops and stick printouts about what you offer, etc.
Maintain account of books for your business. Use business accounting Apps such as Vyapar, Tally to save all the business transactions right on your phone.
Even if your bookkeeper handles day-to-day accounting, you must have access to what’s happening in your business. With Apps like Vyapar App, Tally you can instantly know today’s profit/loss, how much money you should receive, who hasn’t paid till date, what’s remaining in your inventory etc.
While these are some business tricks and tips Successful SMEs have got in common, they don’t guarantee success. But, it will definitely give a boost to your slow running business especially if you’re in a developing country like India. So why not give it a try and find it out yourself?