Sales growth not working capital is major challenge for MSMEs, says survey

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Updated: September 11, 2019 8:14:30 PM

For 47 per cent of the MSMEs, surveyed by Mumbai-based consulting firm A&A Business Consulting focusing on small and medium businesses, sales growth and not the working capital is the major challenge.

Managing working capital and attracting along with retaining talent are the other top causes of concern for 20 per cent surveyed MSMEs in each area. Image: Reuters

Even as working capital crunch has been the key barrier to the growth of India’s vast MSME segment as echoed by businesses and acknowledged by the government as well, a recent online survey among MSMEs has a different story to tell. For 47 per cent of the MSMEs, surveyed by Mumbai-based consulting firm A&A Business Consulting focusing on small and medium businesses, sales growth and not the working capital is the major challenge. “Since sales is one of the most important pillars of any company that assures its very existence, it was bound to top the list, especially when SMEs have been historically struggling with sales,” the survey said.

Nonetheless, managing working capital and attracting along with retaining talent are the other top causes of concern for 20 per cent surveyed MSMEs in each area. “This projects a worrisome situation because either they are not able to pay off short-term expenses or their assets are not being put to good use,” the survey added.

Also read: Govt’s Alibaba-like e-commerce portal for MSMEs to make small businesses as attractive as startups

“Indian SME segment is unorganized. The prolonged economic downturn has made it even more difficult for them,” said Pravin Daryani, CMD, A&A Business Consulting. The remaining percentage included branding and marketing, and creating a profitable business model as challenges claimed by 8 per cent and 5 per cent of the surveyed MSMEs respectively. The survey was conducted on Twitter, Facebook and the company’s website, however, it doesn’t mention the total number of responses received.

Daryani wasn’t available for comments at the time of publishing this report.

To boost sales growth and expansion, the government has been undertaking a slew of measures for digital adoption among MSMEs including Tech-Saksham project along with CII and large technology players including WhatsApp, Intel, HP, Dell etc. The MSME Ministry has also been setting up its e-commerce portal called Bharat Craft to help MSMEs improve their sales via online selling to customers across India on the lines of Alibaba.

Pertaining to the issue of working capital due to delayed payments from corporate and government agencies, Finance Minister Nirmala Sitharaman last month in a meeting with representatives from India Inc. and MSME sector has asked the ministry officials to separate disputed cases of delayed payments with the non-disputed ones in order to expedite the payments due to MSMEs, an MSME representative present at the meeting had told Financial Express Online.

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