India’s GDP growth at 6.6% bears a testimony to its development which thrives on the growth of small businesses among other factors. Let us crunch more numbers on the growing economic powerhouse: At 6.6% India grew faster than China’s 6.4% GDP growth in the third quarter. As the fastest growing economy in the world, India accounts for about 15% of global growth. MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities. The sector’s contribution to the country’s GDP is expected to increase to 22% in 2020. With SMEs playing such a critical role it is imperative to identify key drivers that can help the sector grow in leaps and bounds. Here are the latest Small business trends that will set the course of its future.
1) Fintech companies to pave way for easier loans:
It is a well-known fact that the primary barrier for SME growth has been finance. Most businesses face extreme difficulties in getting access to working capital loans. Their problems range from inability to provide collateral, lack of comprehensive credit score and a challenging application process for approval of loan. Some of the lending platforms offer up to Rs 1 crore loan at a reasonable interest rates within three days and, that too, without collateral. The new age online lenders are using AI-driven algorithms to generate a credit score for applicants to make the process of disbursing SME loans in India faster. There is a surge in non-banking finance companies offering customized quick small business loans solutions on online platforms. Going forward digital start-ups and alternate lending platforms will become an effective platform to solve the problems of SME business loans.
2) SMAC technologies to find resonance with SMEs:
In a digital landscape when businesses are adapting technologies, SMEs cannot afford to remain behind. SMAC which combines technologies like social, mobile, analytics and cloud will be the most sought after solutions and emerge as small business trends 2019. It will aid businesses to sell products and services in an engaging, personalized and comprehensive manner, and that, too within affordable cost structure. The technology helps to create a level playing field for SMEs and enables them to compete with larger players as well.
3) P2P lending to pick up:
With businesses crossing borders, the needs of SME business loans have expanded significantly. Today peer-to-peer lending has gained momentum as it eliminates the traditional approach of raising SME loans in India which is tedious, cumbersome and take a longer time. Under P2P model, a business owner can place the request which is viewed by lenders who then decide on the requirements. Once a borrower’s profile is approved, a loan can be sanctioned in a few hours. Even the credit rating procedure and background check of a borrower is processed faster as compared to traditional banks leading to better disbursal of SME business loans. With digital banking you can easily get quick business loan approvals on platforms such as Lendingkart. Such innovations in lending space would emerge as one of the key sme business trends in 2021.
4) Payment companies to expand services:
Those businesses have a successful run which relies on efficient tracking payments mechanisms. A new set of tech savvy companies have emerged to make the process of collections for merchants easier. These companies operate in the cloud and simplify the transactions. The entire payment is made seamless for merchants who can share payment links with customers via email, SMS, or WhatsApp. Such companies also work in tandem with traditional payment methods like credit cards, NEFT/RTGS, wallets, net banking etc.
5) Social media will remain a top priority:
Around 96 per cent of the SMBs use social media in their marketing strategy. Facebook has been the most preferred social media channel for expanding the reach of SMEs and the platform keeps introducing features and insights to help them connect with new customers from different cities, regions or countries. One of the major small business trends in 2021 will be to weave social media in their marketing strategy and explore areas such as live videos to connect with audiences.
6) Cloud continues to be the main stay:
SMEs adopting the cloud have witnessed clear benefits because the technology is advanced, affordable, and easy to use. Cloud can solve some of the biggest challenges including password management, CRM, and managing mailing lists. According to the latest study, SMEs witnessed a multiplier effect of 1.5 times in its productivity and profitability with multiplier effect of 3 times after shifting from low to medium cloud technology. In fact, data and advanced analytics solutions are being explored to increase efficiency and cut cost. Businesses are developing algorithms and investing in artificial intelligence (AI). AI and analytics will dominate the SME trends in 2021.
With advancements in technology, it is time SMEs notice these trends and adapt them to stay ahead of the pack.