Episode 19, Season 3: New Research on Business Scaling: What Works Best for MSMEs

[00:00:00] Welcome to Episode 19 of Season 3 of EmpowerBiz, MSME Growth Mindset. I am Abanibhusan Bera and today we are exploring a topic at the heart of every entrepreneur's aspirations and that is scaling your business.

[00:00:18] While growth is the goal, scaling is about doing it sustainably, ensuring that your operations, finances and team can handle increasing demand.

[00:00:30] Recent research has uncovered exciting insights into what works best for scaling MSMEs.

[00:00:37] In this episode, I will unpack these findings, translate them into actionable strategies and provide examples tailored to businesses like yours, whether you are in manufacturing, distribution, system integration or services.

[00:00:57] Scaling doesn't have to feel overwhelming. With the right approach, you can expand your business while maintaining quality, efficiency and profitability.

[00:01:09] Let's dive in.

[00:01:11] Now what is scaling and why it is critical for MSMEs? Scaling means growing your business without a proportional increase in costs.

[00:01:21] It's about efficiency and leverage. Doing more with the resources you already have. Why does this matter?

[00:01:30] According to a recent study, 65% of MSMEs that fail to scale attribute it to operational bottlenecks and lack of planning.

[00:01:42] Businesses that adopt scalable processes early are 30% more likely to achieve long-term success.

[00:01:52] Scaling isn't just about revenue. It's about building a foundation that can support sustainable growth.

[00:02:01] Now let's talk on key findings from recent research on scaling.

[00:02:07] 1. Process automation is a game changer.

[00:02:12] MSMEs that automate repetitive tasks see a 25-40% increase in productivity within the first year itself.

[00:02:22] Automation reduces human error, accelerates workflows and frees up resources for higher value activities.

[00:02:32] If you are a mid-sized manufacturer of industrial components and you implement an inventory management system that automatically tracks stock levels and reorders materials, what will happen?

[00:02:47] This will reduce stockouts and overstock situations that will help you cutting costs by 20% and improving delivery times.

[00:02:58] Here is an actionable tip. Start by automating small but time-consuming tasks such as invoicing, email follow-ups or inventory tracking.

[00:03:10] Tools like QuickBooks and Joho Inventory are affordable options for MSMEs.

[00:03:17] 2. Strategic partnerships accelerate scaling. Here is the insight.

[00:03:23] Businesses that form partnerships with complementary companies grow 1.5 times faster than those that go it alone.

[00:03:33] Partnerships allow you to leverage another company's expertise, resources or audience.

[00:03:40] Here is an example for B2B distributors.

[00:03:44] Imagine you are a distributor of industrial sensors and you partnered with a local system integrator to bundle products with installers and services.

[00:03:54] This collaboration not only will increase sales but also enhance customer satisfaction, creating a win-win for both businesses.

[00:04:04] Here is a pro tip. Identify businesses in your ecosystem whose strengths complement yours. Build partnerships based on clear value exchange and long-term goals.

[00:04:20] 3. Focus on core offerings before diversifying. MSMEs that concentrate on refining their core product or service achieve sustainable scaling faster than the market.

[00:04:35] 4. Then those that diversify too early. Over-diversification can dilute focus and resources.

[00:04:43] If you are a logistics startup, you can scale by specializing in last-mile delivery for e-commerce business.

[00:04:53] By perfecting your processes and customer experience, you can build a loyal client base and increase your revenue before expanding into warehouse management services.

[00:05:06] Here is an actionable tip. List your top performing products or services. Focus on improving their quality, pricing, and delivery before considering diversification.

[00:05:20] Number 4. Finding. Employee upskilling is non-negotiable. Research shows that companies that invest in employee training during skilling periods experience 50% less turnover and higher productivity.

[00:05:38] Skilling often requires new skills and training your team ensures they can keep up with growth.

[00:05:45] Here is an example for system integrators. Imagine that you are a system integrator and you implemented advanced training on IoT solutions for your technicians.

[00:05:56] This will allow you to take on more complex projects and expand into higher paying markets. Here is a pro tip. Offer regular workshops, certifications,

[00:06:07] or online courses for your team. Focus on skills that align with your scaling goals such as digital tools, customer relationship management, or specialized industry knowledge.

[00:06:23] Number 5. Finding. Digital marketing drives skillable customer acquisition. Businesses that allocate 20-30% of their marketing

[00:06:37] budget to digital channels grow their customer base faster. Digital marketing offers precision targeting, scalability, and real-time performance tracking.

[00:06:50] Here is an example for MSME retailers. If you are a small eco-friendly packaging company, you can use targeted Facebook and LinkedIn ads to reach e-commerce startups.

[00:07:04] Within 6 months, you can double your client base while keeping your marketing costs low.

[00:07:12] Here is an actionable tip. Start with cost-effective digital marketing strategies like social media ads, content marketing, and email campaigns. Use tools like Google Analytics to measure ROI and refine your approach.

[00:07:27] How to apply these insights to your business. Let's break this down into a step-by-step action plan for MSMEs.

[00:07:39] First, audit your current operations. Identify bottlenecks in your processes. For instance, are manual tasks slowing you down? Is your team struggling with new demands?

[00:07:52] Number 2. Prioritize scalable changes. Focus on one area at a time. For example, automate repetitive tasks before scaling production. Strengthen partnerships before entering new markets.

[00:08:07] Number 3. Track your progress. Set measurable goals and KPIs such as reduction in operational costs, increase in customer acquisition rates, faster delivery times, or improved client satisfaction.

[00:08:24] Number 4. Iterate and scale. Use data to identify what's working and refine your strategies. Scaling isn't a one-time event.

[00:08:36] It's an ongoing process. Let's think of a use case. Scenario is like this.

[00:08:45] A system integrator specializing in automation solutions wants to scale by expanding into new regions.

[00:08:52] What are the Aksan plans? Based on research number one, process automation.

[00:08:57] Implement a CRM to manage leads and automate follow-ups, reducing lead-to-conversion time by 25%.

[00:09:05] Number 2. Strategic partnerships. Partner with local resellers to establish a presence in new regions without significant upfront costs.

[00:09:15] Number 3. Employee upskilling. Train the team on advanced solutions like AI-driven automation to take on higher value projects.

[00:09:25] And number 4. Digital marketing. Launch targeted LinkedIn campaigns to reach manufacturers in the new regions.

[00:09:34] Now, actually this is a use case of one of my clients with whom I am engaged for consulting assignments for a year starting from August 2024.

[00:09:49] And based on the audit, the above four has been recommended to them and already they have started the employees scaling through the training which is provided by me.

[00:10:01] Now, within four months they have a considerable increase in their order itself.

[00:10:11] And now the implementation of CRM is on the way.

[00:10:16] And hopefully we will be able to share the outcome of the actions they are taking based on my consulting assignments and recommendations.

[00:10:27] It will be shared after a year.

[00:10:31] Thank you for joining in today's episode and if you have not joined my community, you can visit msmegrowthhub.com website for much more details.

[00:10:49] Till then, thank you and see you in the next episode.