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  • Feb 2021

Value Creation as Important as Product Creation

Value Creation as Important as Product Creation

If you ask yourself why a business would suffer just because demonetization happened, you will realise that it was not a problem of cash but a problem of business. Be it a diamond manufacturer or an apparel manufacturer, his or her source of income was not profits but savings from tax. If it would not have been GST or demonetization, some other external factor would have played out, such as someone creating the same products at a low price, who would take away the customer from you. Therefore, rather than blaming demonetization and GST for all these we should accept that our business model was weak.

When China started its manufacturing era, it very quickly realised that it was supplying to the world at large. In a few categories, as for example mobile phones, it has become a dominating force. The Chinese government has also been very conscious of the fact that there would be forces from around the world that would try to hack this rapid manufacturing momentum, which led them to encourage the creation of brands along with products in their own country. More recently Prime Minister Narendra Modi came up with ‘Make in India’, US’ President Donald Trump came up with ‘Make in America’, and so forth. Sensing this, the Chinese government has put a trillion dollar fund to create Chinese brands. The result is that you can find Vivo and Oppo posters all over the country and the same is the case worldwide.

I will share with you the things that are necessary for any SME’s growth:

Build the Brand

First and foremost, a brand is very important. You should always concentrate on building a brand even if you are a manufacturer so that everyone gets to know what you stand for.

Capitalize the Business

A large number of SMEs suffer because of lack of capitalization. As a result, many SMEs remain undercapitalized. Seasoned businesses are somehow reluctant to ask for money or approach private equity or angel investors. The truth is that the capital is available more for mature businesses but people are under the impression that a startup can get money but not them.

Go for Radical Growth

A business can only thrive if it continues to grow. The growth is only ensured through spotting a new market through an innovative product and through a new channel of selling your product. Entrepreneurs, therefore, need to push their journey from being ‘in the business’ to being ‘on the business’ in order to grow.

Build Value

All our lives we build an income-driven business but fail to build the value of our enterprise. A proprietary product or a market share or your brand….anything which resonates well with your identity is the only way to build the value of the enterprise.

Diversity is a Must

Another important area is diversification. Businesses are changing faster than you know. And knowing when to shift is another factor that aids growth and diversity. It is advisable to shift when one is at the peak.

Make a Talent Pool

Talent is the only change that you can bring in the required transformation in your company. Don’t run the business by yourself. Get good people around you.

Sweat the Capital

The SMEs don’t sweat the capital. They keep investing in some other asset class like savings in real estate, gold but don’t invest back into their own business. It is important to sweat your capital in your business to make it grow.

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