SME Growth Strategies

SME Growth Strategy

It is not enough for an entrepreneur to start a new business and leave it on its own but it’s more important being an entrepreneur to continue to lead the firm to its growth, which is what entrepreneurship is about.

Darren Dahl in the article How to Develop a Business Growth Strategy states that small businesses should start to focus on the strategies that are at the lowest step of the ladder for growth and then move on as and when needed. Darren says that while developing the growth strategy for a small business the lowest step that is the Intensive growth strategy should be reflected upon. The different types of intensive growth strategy includes as follows:

1. Market penetration

2. Market development

3. Alternative

It was also found that firms which adopt internet are much better placed in the market, are technologically sound and are also graphically updated about their customers. Finally the article concludes by stating that SME must target new market with existing products using the internet forum.

In the vast existing literature on strategies more is given to larger companies or businesses but not much theoretical background is present to explain and guide the strategies for small scale businesses. (Gilling et al) as in (Yogo, 2013)

SMEs in India

SME (Small and Medium Enterprise) play a very major role in the economic development of both developed and the developing economy. SMEs majorly focus on production in the country, generating high level of employment and tremendous amount of contribution to the nation’s export. For a developing nation, industrialisation is the solution for all economic and social progress. (Kour, n.d.)

In India, as per Micro, Small, & Medium Enterprise Development Act 2006, SMEs are defined based on the level of expenditure on the plant and machinery. (the details are given below)

Description INR

Micro Enterprise Up to Rs. 25 lakh

Small Enterprise 25 lakh to 5 crore

Medium Enterprise 5 crore to 10

The SMEs itself contributes up to 17% of the GDP. But even after consuming 40% of the workforce the overall contribution to the GDP is very low because many SMEs deliberately remain small in order to avoid taxes and regulations. The other reason why many SMEs go out of business is due to lack of financing. (Goyal, 2013)

According to K.D.Raju from 1991 due to LPG reforms many new national and international policies has led to opening up of many new markets and opportunities for small scale industries. As per the author of the article SME-past, present, and future in India a co-ordinated effort is the need of the hour absorb the dynamism of the technology involvement and also the financial requirement of the small scale industry should be taken care effectively. (K.D.Raju, 2008)

Currently according to Small and Medium Business Development Chambers of India, this sector consists of 36 million units, provides employment to 80 million people, has quality products of about 8000 units, contributes to around 8% to the GDP and also accounts to 40% of the country’s exports. (Goyal,