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Why MSME don’t scale faster?
We all need change but we are not ready to be changed, every MSME undergoes this problem and its because of the attitude is what held’s them back.
First Reason: is not hiring resources at higher salary:- This happens for one simple reason the founder builds the company with all his assistants which come at low salary and achieves one goal. This process changes the thought process of founder that for next level growth he will do the same strategy, but he doesn’t realize that this strategy of hiring low cost will not help as for the scalability to happen you need to have people who have the experience and come at higher salary. Remember you through peanuts you get monkeys
Second Reason: Investing in infrastructure when I get order, this is one of the biggest contributor for not scaling is you are not preparing the infrastructure required for scaling, but you are waiting for revenue to come and then you will scale, its like penny wise pound foolish. So when you have the client at door step is where you realize that I need time to build infrastructure and in this process client walks out. Investing in infrastructure keeping in ready is right way of looking if you are planning for a bigger vision being infrastructure ready is required rather than waiting for client.
Third Reason: Investing in expansion and being happy with what’s happening as revenue is flowing without much problems, but in this scenario you are not anticipating the thresholds that can come as barriers. Sudden change in market scenario reduces the inflow of cash and you become cash starvation in process. The reason being simple, you are in comfort zone with doing business and happy in receiving flows but for scaling you don’t plan nor you invest in looking at diversification as you don’t want to re invest in your MSME. When suddenly turbulence comes into market is where you run ok know I should look at expansion and at that time cash flow is low which doesn’t allow you and the market crunch is reducing your income. Its like having two sided sword.
Plan ahead of time and forecasting is essential, remember time spent on planning reduces time spent on execution. And having planned in when things are safe will help you in turbulence time.