India has always had a vast and vibrant small and medium business (SMB) ecosystem. Even before the advent of international retail chain stores and big-wig service aggregators, small merchants and service providers across the country have had an offline network of customers they could connect with directly and their businesses grew organically by word of mouth. However, with the digital technology having become an integral part of our lives, going online is no longer a luxury for businesses, it is now a necessity. This is especially true for small and medium entrepreneurs across India’s small cities and towns who might often limit their digital strategy to just WhatsApp messaging. However, SMB entrepreneurs have to understand that such platforms are only tools to disseminate messages and aren’t considered as full-fledged digitisation or taking a business online.
Below are some of the most important reasons why small and medium entrepreneurs need to move their businesses online.
One of the biggest barriers for SMB businesses to go online is the supposed high cost of setting up an online presence, however, it is important to note that this barrier is only a mental one. Today, there are a host of companies looking to help entrepreneurs to build a digital presence and take their businesses online for very minimal costs. This is especially true in the Indian context where internet penetration is high and connection costs are some of the lowest in the world. Coupled with the wide availability of smartphones and other gadgets, it further favours the argument for digitisation.
Profitability & Revenue
For any business owner, profitability remains a top priority. By taking a business online, entrepreneurs are opening up the doors to increased profit margins and more revenue for precisely two reasons. For example, to garner bookings for a small hill station homestay, the owner of the property would have to be listed on an aggregator website and eventually part with some share of their earnings because of steep commissions charged by aggregators. To add to this, their discoverability on the aggregator website would depend on a host of algorithm-driven factors and competition from other bigger market players. Hence, the owner of the small hill station homestay is at the mercy of aggregator apps for revenue and profitability. By building their own website to handle bookings 24×7 from multiple channels such as Whatsapp, Google, Facebook and Instagram, they could avoid splitting their revenue in terms of commissions and be able to build an independent network of loyal customers who they can communicate with directly without the intervention of aggregators. Thus, when entrepreneurs decide to take their businesses online, both increased profitability and revenue are direct advantageous outcomes that will follow.
Saving on time and effort
More often than not, SMB entrepreneurs have more than one business to look after. For them, digitising their business becomes even more important as it can free up time and energy that can then be diverted to other pursuits. It can also help small and medium business owners to run their businesses remotely and not be bound to one location all year round. Once a business has been digitised and mundane yet crucial tasks such as invoicing, bookings, refunds etc. are automated, entrepreneurs of small businesses—that usually don’t have many human resources to manage various tasks—can let their business run on autopilot mode and redirect their focus towards business growth and other strategic priorities.
Today, a single Google search has the potential to attract or repel a customer from buying a product/availing of any service. Hence, creating an online presence is a crucial aspect of maintaining a business’ reputation. A simple website, blog, or Instagram handle adds value and credibility to a business, establishing it as a real and professional brand. In today’s highly competitive market, customers cannot be expected to take a business seriously if they have no online presence to showcase their offerings effectively. Simply put, why would someone want to choose a particular taxi service or homestay if they have nothing to show for themselves; customers today expect to pre-experience a product or service even before they have purchased it. Hence, creating an online presence is an absolute necessity for a business to establish itself as a serious and reputable player.
As per the latest numbers, India has nearly 51 million SMB businesses, but yet, there are only about five million registered domain names, indicating that there is a vast community of small and medium business owners that are unable to leverage the full power of technology services in order to grow their businesses. If India is to truly become self-reliant and bounce back from the impact of the pandemic, its SMB ecosystem will need to be digitally empowered so that it can become an active member of India’s transformation narrative.
(The author Vineet Toshniwal, is CEO & Founder Bizzo)