Kuldip Maity

A collaborative relationship among SMEs would translate into multiple SMEs across different segments, strategically working in the pursuit of similar goals through their unique contribution and thereby empowering each other against the competition in the market.

During testing times in the market, such as the recent pandemic, SMEs take huge hits. During such times, the need for funds and uninterrupted functioning becomes a matter of survival. Since most SMEs may not qualify for bank loans with rigid documentation requirements, they opt for more flexible and cooperative options such as NBFCs, which take into account their human factors, especially those who already have experience in microfinance through the JLG model.

Owing to competition on a global scale and having corporate giants as their immediate competitors, SMEs fall short in several factors such as networks, manpower, reach, and other resources. This is where a collaborative environment among SMEs can level the playing field.

Entrepreneurs who are the faces behind these SMEs usually have ambitious visions for their enterprises. However, the lack of resources and infrastructure can dampen their spirit and disrupt their goals. The interesting part is that the ambitious vision is often shared by other SME owners who in turn are faced with their own set of challenges. Under such conditions, the idea of collaboration comes up as a natural solution.

When these SMEs, each bringing their own set of contributions to the table, collaborate symbiotically, their power in numbers and expertise can uplift them to give a tough competition for larger businesses. Other than the financing I shall discuss three broad spheres of productive collaboration that in my opinion have the potential to empower SMEs beyond expectations.

Firstly, SMEs can enter into collaborative arrangements that directly result in cutting costs. For instance, local SMEs can engage in strategies to share the cost of transportation by coming up with innovative ways of delivery and commuting that help all the parties involved and in turn, reduce their costs. Local businesses that are not direct competitors can share equipment, machinery, and even office spaces to thereby have access to more advanced solutions that would otherwise be out of their budget.

Secondly, they can have a mutual-benefit model to jointly enhance their sourcing and sales. Some SMEs need raw materials, some need semi-finished goods, while others need services, etc. By creating a strong network among enterprises, gaps in the market and fluctuating prices can be overcome. Intelligent arrangements can also lead to sharing clients and increasing business reach.

Last but not the least, collaboration can enable SMEs to achieve specialized services. I have earlier spoken about the adoption of technology to improve the productivity and efficiency of SMEs. Several SMEs have recognized the importance of cloud computing, but some still lack its affordability. Similarly, skills such as marketing, especially in the digital space, require seasoned experts. When SMEs work together, they can access these services and they will no longer be reserved only for corporates.

Collaboration, when applied with necessary caution such as ensuring transparency, pre-deciding arrangements, maintaining confidentiality, and following healthy trade practices, can be a boon to the SME industry.

It's time for entrepreneurs to take charge. Inferiority is a mindset. Collaboration is Empowerment.