MSMEs IN COMFORT ZONE... - Grow in Market

MSMEs really growing or its virtual growth ?

We’ve been doing business for years; some people have it from generations. But your business really growing ? Answer to this question is very usual, I’ve had a home on business, my kids have been educated, and everything is going well. But this is your personal progress, what about the progress of the business that led to this progress, I expect that answer. Today we see many shops where the father running the business, today his son takes care, the shop has been running for years, the goods have increased, the sales figures have increased, but the business graph has really gone up ? never checked ? The definition of the progress of our business is just that our third generation is now going on! But if you are in the third generation in the business, how many shops you should have today or the simple question is how much increase in your market share in your segment?

How MSMEs stuck in Comfort Zone ?

Whether it’s life or a business, we’re afraid to take risks, we always finds a comfort zone. We hardly make any changes in our business, our entrepreneurs afraid of taking policy decisions in fear of losing current business. Always remember that there is a direct relationship between risk and returns, so that the more risk you take, the more returns you get. However, sometimes too much risk can be risky, so that entrepreneurs should take calculated risks so that even if some decisions turn out to be wrong, they can recover in time. In the country also very few businessmen achieve milestones, only because of their decision making & courage to handle risks due to that.

If you want to verify these, find answers to the following questions –

Whether your business is a turnover base or margin base ? If you have a low margin base or of high competition business, you should try to increase your turnover & not margin.
Turnover increased but due to volume or rates ? Price inflation can also be the reason for the increase in turnover amount, so always measure business growth as volume turnover.
Profit increased as compared to last year but by what percentage excluding price inflation ? The reason for the increase in profits is often price inflation and then care should be taken while calculating growth when the profit looks very high compared to the previous year.
Have you compared the turnover and profit of the products or segments ? Those who have multiple products need to check segment-wise turnover and profit growth so that the weaker player in the team can be find out.
Has the stock been classified according to its demand and margin on it (ABC)? There is a lot of stocking in the business, its carrying cost is also high, so it is more important to decide holding how much stock of which product by categorizing them as ABC.
Have you ever checked what your controlled and uncontrolled expenses are? Every businessman is trying to increase profits by keeping his expenses under control, so first classify expenses into controlled and uncontrolled and focus on controllable spending so that the efforts will be successful.
If the margin of business is less than FD, have you ever wondered why you are doing business? Many businesses have a low margin base in which case you should compare your business with bank’s FD rates. Make sure you’re having a higher margin; otherwise you need to either start some new products or you need to make a decision of your business.
Did you try to reduce the dependence of the business (raw materials, customers, employees, etc.)? There are many factors that adversely affect the business due to raw material shortage, shortage of customers, employee strike, so think about how to reduce the market dependence of your business or create a backup plan.
When investing outside the business, do you compare the margin of the business and the margin of that investment? Many businessmen are in the confusion of whether to pay off debt or to invest outside the business to maintain liquidity, so it is very important to do a cost benefit analysis.
Have you ever checked your business is currently in which phase on the graph of business life cycle? Every business has a life cycle which consists of phases such as start-up, grove up, scale up, maturity and decline, in which if we identify what phase our business is currently in, we can prepare accordingly.
Have you classified your customers according to annual sales and prompt payments? The classification of customers is very important. You should provide better services to those customers having considerable turnover with you and also paying dues in time, so that they will have long term relationship with your business and the their mouth publicity will definitely have beneficial effect on your business.
Have you ever considered doing backward or forward integration in your business? Manufacturers should always think about whether they can start any new product by integrating their raw materials and finished goods, which not only reduces market dependence but also opens up new markets with the introduction of new product lines.
If you have a partnership business, have you checked the basis on which the partnership is, whether it is capital, division of work or so on? It is very important to check the criteria of partnership. It is important to check whether we really need a partnership and if so, in what case, so the partnership should run only until the need is met or else become self-sufficient and avoid profit sharing.
Have you ever checked the carrying cost of money blocked in stock and debtors? Carrying costs directly affect your profits because these costs are very difficult to recover from the customers, so try to keep these costs to a minimum.
Have you ever checked what your business needs working capital, technology or expansion? Every business is like your little child, just like a child goes through different life stages, the stages in which his needs change and when the parents meet them, he grows, just like the business, we should be able to identify its needs and then make efforts to meet them.

There is a saturation point in every business, at that point, the growth of the business slows down, there is a need to make some changes in the business or else the decline level starts from there.

OPM Builder providing Solutions –

We the OPM BUILDER had the team of Chartered Accountants try to find out solutions of the above questions for the businessman’s so that they can surpass hurdles in their growth to achieve the milestones in the business. You can contact us to arrange a meeting with our experts to discuss above questions and the ways to find their solutions.

“GROWTH HAPPENS OUTSIDE THE COMFORT ZONE”