Ever since i started blogging, one of my close friends (who is a director in a big 4 audit firm) has been urging to engage myself into technical writing. I have been reluctant. This one is for his encouragement, though I am not sure if this would qualify to be called a "technical blog"!
Small and Medium Enterprises (SME)
I have been engaging with SME's, close to a decade now in various capacities -in the initial years as a banker to SME's, managing their credit requirements and now as a consultant and adviser, helping SME's improve their profitability. One behavioral trait that i have seen with most of them, if not all, is that the majority of a SME entrepreneur's time is spent on non-core issues. Pareto!
If you wiki on Vilfredo Pareto, you would notice that he was an engineer, a sociologist, a political scientist, an economist and a philisopher! His famous 80-20 rule is so much spoken today and as an ode to this great man, i can be sure that "80% (or more) of anything written or spoken about, has a reference to Pareto". One of my HR friends says that we should erect a statue of Pareto in Marina beach (and he says so, not in a lighter vein).
A SME entrepreneur wishes to spend his time on the following:
In this race that he/she keeps running, they build certain misconceptions - Two of them adds to the trouble - they perceive that a higher capacity utilisation of the factory line is a healthy sign and money in the bank account is a healthy financial position. They keep borrowing from every credit source and try to run the factory 24/7 and expect a fat bank balance. And when it does not happen, fire-fight to manage recurring payments. Moreover they are never in a position to say "no" to their customers. Their wishlist of spending time on products, processes and customers are intact - however a SME, in more than one way would fall under Pareto's the law of vital few!
There are a few questions that i ask an entrepreneur, (which mostly becomes the task of my job):
- Innovation - product and process
- Enhancing capabilities - Physical plant capacity, employee capabilities, technical improvement etc
- Enriching customer experience
- Expansion - Every SME entrepreneur at all points of time has an "upcoming" expansion plan - could be geographical or across businesses. There is no dearth of ambitions.
- Managing finance- Count the number of visits and discussions that he/ she has every week with the banker(s).
- Battling manpower issues- There is a gap between the time a SME entrepreneur starts seeking the most appropriate person for the job and the time he/she compromises and settles for the actual available candidate (I am not being sarcastic and i am just putting down the sad reality). He/she is also plagued with a lot of attrition - most of the employees do not spend a notice period (actually abscond), leaving the SME with an unexpected vacancy.
- Compliance with business laws
- Managing consultants - Practically everything in a SME is outsourced!
In this race that he/she keeps running, they build certain misconceptions - Two of them adds to the trouble - they perceive that a higher capacity utilisation of the factory line is a healthy sign and money in the bank account is a healthy financial position. They keep borrowing from every credit source and try to run the factory 24/7 and expect a fat bank balance. And when it does not happen, fire-fight to manage recurring payments. Moreover they are never in a position to say "no" to their customers. Their wishlist of spending time on products, processes and customers are intact - however a SME, in more than one way would fall under Pareto's the law of vital few!
There are a few questions that i ask an entrepreneur, (which mostly becomes the task of my job):
- Are all products manufactured / service provided profitable? Do we know the profitable ones?
- Do happy and satisfied customers automatically mean profitable customers?
- Do you know the actual cost of a product / service? (not the anticipated cost and not a periodic total)
- Are expansion plans financed completely from long term sources?
- Are you spending too much time on preparing MIS?
- Are you taking decisions based on MIS reports? (I know organisations that take 10 working days to prepare MIS and spend 45 minutes to discuss them - that too on the veracity of the numbers)
