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15 Jun
  • Editorial Team

Small and Medium Enterprises (SMEs) contribute a major chunk to India’s GDP. Despite being the backbone of our country’s economy, these businesses are prey to challenges that come from traditional practices and lack of digital influence. To add to that, intense competition, ever-demanding customers and tight funding often pose more problems for growth. Hence, digitization of SMEs can go a long way to overcome these issues and help small businesses reach more customers and reap more profits than ever before.

If small and medium enterprises wish to prosper, they must adopt the latest technology and tools which can promote workforce efficiency, reduce human errors, and measure growth parameters in a very concrete manner. Other reports also supports this theory and stresses that SMEs should go digital without delay. A digital makeover will also help SMEs grow fast globally, without heavy investment.

Traditional SMEs in India

At present, problems that traditional Indian SMEs face are like,

  1. Lack of infrastructure – These require government or private intervention at times and are often ignored due to lack of sufficient funds. Many SMEs are not aware of the various financing options available to them from NBFCs and banks, and they lack the digital knowledge to gather information online.

  2. Low productivity – Undoubtedly, digitization has enhanced productivity in progressive companies with all manual processes becoming technology based. But traditional SMEs have slow processes and their employees often lack basic computer skills. This hampers productivity.

  3. Low sufficient funds – Besides improving or expanding the infrastructure, funds are required for marketing or advertising the products offered by traditional SMEs. Plus, lack of digitization means that there is no strict monitoring of cash flow and the SMEs cannot do a cost-benefit analysis. Also, digital marketing is way cheaper than physical marketing, which traditional SMEs cannot employ.

  4. Lack of new innovation – With no digital literacy, conventional SMEs cannot think of new ways to attract customers. And since most shoppers go online and use their tablet or smartphone to buy things today, traditional SMEs cannot acquire them. They cannot accept payments online or send e-invoices.

  5. More risk – Since traditional SMEs depend on manual operations for selling their products, there are high chances of human errors in terms of quantity sold, payments made, total revenue, total cost etc., resulting in less precision and more risk.

  6. High cost – Operational costs, advertising costs and expansion costs are always higher for a traditional SME than a digitized one. If you go digital, you can earn revenue from any city and any country without having opened a new plant or shop. Plus, more the digitization, lesser will be the need to invest in manpower.

  7. Lack of training and skills – Lack of knowledge about computer usage, digital marketing, websites, social media and web analytics hamper conventional SMEs by negatively impacting productivity. There is no one to monitor the day to day sales, profit, and competition this way.

Benefits of Going Digital

  1. Customer Acquisition – Going digital means you can engage more with your target audience and reach customers in any country, for enhanced visibility. Customer relationships can be managed more efficiently and you will gain customer insight through different tools. This will help you market products better and devise new sales channels.

  1. Operational Efficiency – As a digitized SME, technology can automate your core processes, making you more efficient. This will help use resources in a better manner and give you more control on logistics.

  2. Workforce Enablement – With digital tools, you can figure out areas which need skill development and identify shortfalls in the workforce. It will be easy to track employee productivity, train them and make them aware of the latest concepts in digitization.

  1. Risk Management – By going digital, you can protect your company’s sensitive information and financial data through security software. You can also keep an eye on physical assets through advanced surveillance and make logistics more powerful.

  1. Improves productivity – Incorporation of digital tools can help employees work faster and more efficiently. They can work remotely as well and at anytime, to meet business emergencies immediately.

  1. Innovation – By adopting digital tools, you can assess your business better with metrics. Activity metrics like web traffic, process metrics like sales and acquisition, knowledge metrics like consumer insights, and people metrics like employee satisfaction can help improve different aspects of your enterprise easily.

  2. Save costs – Digitization will help reduce operational costs by automating core processes and making everything streamlined. Moreover, you can open up to any country in the world for business, without spending anything on advertising.

  1. Reduces manpower – Since digital tools will make most business processes automated, the need for manpower will go down. There will be less chance of human error and less monitoring will be required.

As more and more industries, as well as the Indian government, is realizing the importance and benefits of bridging the digital skill gap for SMEs, digital training programs, tutorials, and free tools are coming up, to rise to the occasion. Companies are conducting special sessions for improving digital skills of employees and in the near future, conventional SMEs are expected to go digital with full force and hope.

Did You Know


The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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