BANGALORE, INDIA: Mark Wolfram, general manager, Worldwide SMS&P, Midmarket Business, Microsoft Corporation gives more insight into the challenges faced by
small and medium businesses (SMBs) during economic slowdown and how are they trying to overcome the same. Excerpts:
CIOL: How have SMBs been reacting to the current slowdown scenario?
Mark Wolfram: Small and mid-size businesses (SMBs) employ 90 per cent of the world's workforce and account for more than 50 per cent of GDP worldwide, according to AMI Partners. But right now, SMBs worldwide are facing unprecedented challenges brought on by economic concerns and global competition. Nearly 60 per cent of SMBs surveyed by Microsoft during a late October flash poll expressed strong concern about the economy.
AMI data (Q1 pulse AMI Dec08) tells us that in India, the three major concerns SMBs face are: restricted cash flow (75 per cent), decreased revenue (72 per cent) and slower payment from clients (52 per cent).
However, the relatively good news is that SMBs are incredibly resilient. Once market pressure is applied, SMBs take advantage of their close connections to their customers and partners to react in ways that bolster the bottom line relatively quickly. 86 per cent of small business owners surveyed by Microsoft (Office Live SB and Elance Inc) in December 2008 indicated that despite the economic downturn, they still prefer owning their own businesses to working for someone else.
This passion and resiliency may be one reason why the U.S. Small Business Administration and others have suggested that SMBs have a greater potential to recover faster from a recession than larger businesses.
CIOL: What are the challenges SMBs are faced with during the slowdown period?
MW: Some of the challenges which SMBs have been facing include fragmented markets in respect to their inputs as well as products, vulnerability to market fluctuations, limited access to technology and product innovations, lack of awareness of global best practices, considerable delays in the settlement of dues or payment of bills by large-scale buyers, non-formal business practices and lack of transparent financial information.
In addition, financial crunch and demand recession are among the other challenges.
The economic downturn is getting SMBs to rethink the way their business is run. Technology that is familiar and easy to use can play an important role in helping businesses improve productivity and adapt to, even capitalize on, competition and economic uncertainty.
Microsoft is working closely with the SMBs through its network of partners, specially the small business specialist partners (SBSC), to generate awareness about the value of IT as well as the fallouts of not using original software.