This guest column is by Kshitij Ladia, Head – Strategy & Service, GirnarSoft
India being a highly unorganised market and traditionally being a land of businessmen and entrepreneurs, we find a lot of small medium enterprises running across every industry segment. Every startup goes through this phase and evolves with time as their operations scale up to become large enterprises. While some become large, some continue to be small or medium businesses.
The growth depends on the prospect of the business as well as on the individual’s ambition to grow it big. Some businesses may not have the opportunity or the prospect to grow large. For e.g. someone running a local tutorial academy may not be able to scale it very large as its quite personal and dependant on the tutor’s skills. He may always have that dilemma that the execution may suffer if he had to recruit teachers who may not deliver similar quality as him.
So what can be done in such cases? Is there a way to really scale entities like these? Or what is it thats hampering their growth?
I am sharing my experience working with SMBs and what is really required to scale them faster. Below are the top 5 things SMBs lack and if worked upon, it can help build scalable organisations:
- Human Resource Management
- Data Oriented Approach
- Change Management
Highlighting each of the above points in detail below :
- Most SMBs lack processes and structures. There is usually a lot of human dependancy on everything they do. This impacts their scalability. Companies cannot run ONLY on human dependancy. I am using the word “ ONLY “ as people come and go but the work needs to continue. Removing human dependancy by building redundancy into the system is the most important thing
- Lack of documentation. Most of the things in SMBs are stored into the brains of individuals. So 2 people doing the same job tend to do the same thing differently. This results in quality being suffered and no control over the outcome.
- Technology brings in efficiency. Efficiency brings in cost reduction, but most SMBs fear investing as they are not sure of the outcome. It is important to evolve with the better technology specially when you run remote operations. Why do we always find a product in a large departmental store but our local Kirana wala at most times does not have one or the other product ? The answer is human brain has certain limitations and that is exactly where technology comes into play. Technology removes human dependancy, ensures full proof process followups, ensures that you invest your time into constructive and non-mechanical things. Imagine a restaurant manager spending his time in tallying daily cash every night which could have been easily done via a simple billing software
3. Human Resource Management
- This according to me is the biggest problem. Right from the quality of manpower to their execution to their performance, everything is usually a problem in SMBs
- Because of lack of technology mentioned above, a lot of work is manual. No smart person would want to have monotony in their work life beyond a time because of which it becomes extremely difficult to retain your staff. Attrition rate is extremely high
- Another reason for high attrition is lack of clear KRAs. Most people do not have a well defined KRA and metrics to measure them. Hence its difficult to gauge the quality of work done which again results in guesstimate oriented appraisals and brings in concepts of favouritism thereby resulting in employee dissatisfaction. Meritocracy lacks big time and results in high performing employee exits
- Lack of incentives results in low motivation and creates bureaucratic environments and lack of ownership
- No visibility of growth ladder. If someone joins as an operations executive, he is not clear where will he stand 5 years down the line
- Lack of structured training and continued learning
- No employee engagement activities to build team bonding
- Lack of flow of information down the hierarchy. Most working in SMBs lack the vision the company carries resulting in missing the bigger picture
- Lack of empowerment to the lower levels. Most decisions are taken by one or few people running the show which in turn creates bottlenecks in terms of multiple views, different perspectives and also faster decisions.
4. Data Oriented Approach
- What you can’t measure you can’t improve. Do ask a restaurant owner, the % sale drop from last year same month to this year. Or ask a bike dealer where did he loose the customers ? Or ask a Kirana store his product shelf life ?
- Not only on your operational metrics, but even your employee performance needs to be measured with clear metrics. This ensures transparency and also provides scope of improvement to your team
- Identification of key metrics and close measurement of the same is required to ensure correct counter actions are taken with solid proof and not human hunch.
5. Change Management
- No one likes to change but change is the only constant. Companies and employees tend to continue the traditional approach and very reluctant to change. Hence there is no innovation resulting in a small competition which may be relatively new super-seding your company in no time. What happened to Nokia or rather Blackberry ? Blackberry kept on saying that consumers do not want good music and camera in their phones and the greatest utility will be emails and phone calls. They were reluctant to change and this itself killed the market for them. This is the problem in most SMBs too. Be it adopting to processes than human dependancy or working on technology than paper / pen, change is the key to business evolution and must be accepted to build larger enterprises
It may be difficult to bring the above things, timing can be different but what is important is to have a mindset to bring them into the organisation to ensure a scalable and sustainable business in quick time.
For any questions or suggestions, please comment and I shall be happy to answer them.
Image Credit: ShutterstockCategory Startups