How Can Tech Startups and the Community Connect Better with MSME?

How Can Tech Startups and the Community Connect Better with MSME

Technology, as we all know, is the great equalizer.

It’s the best tool that any MSME can use to compete with their bigger counterparts. Startups, on their end would benefit with getting traction with MSMEs because they comprise the bigger slice of the economic pie, at 99.6% to be exact. Logically, it would seem easier for a startup to get to the decision maker of a small company, than it is to a big one.

So, if this a mutually beneficial arrangement, why can’t startups sell to MSMEs, and why is the adoption of technology so hard for the MSMEs?

Why are Startups having problem connecting with the small companies?

When we first brought MiDash (our sales software for real estate developers) to market, we initially targeted the small and medium sized developers. We had moderate success with the ones in our area for two reasons: 1) we knew the decision-makers personally, and 2) the decision makers were young and relatively tech savvy, hence it was an easier sale.

But when we ventured to sell to other similar-sized companies whose decision-makers were older, and were located outside our network of influence, we encountered huge challenges.

We were lucky that we also have access to the big developers, so we used our traction with the smaller companies as a validation of our software when we introduced it to the big honchos. The big companies were more driven to innovate, they were primed for change, our timing was perfect, and so it worked.

It has always puzzled me, our failure to penetrate the MSME’s more successfully, since our tool would undoubtedly be very beneficial to them. So, I decided to dig a little deeper on whys, and possibly, determine the hows. Here’s what I found. The adoption of technology in a small company lies solely on the company owner’s perception of technology in relation to the business.

These are four points of perception, the WHYs.

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    1. Understanding of technology

      The less the owner/s understand technology and its benefits, the less likely they are to adopt it. Owner’s tech savviness is key. Most feel that their business is too small to adopt technology, even if it’s just a website. The competency of the owner in the areas of vision, value, technical ability and control determines the adoption of technology. However, the chances of them adopting technology despite the lack of understanding can be influenced by the extent to which their customers, collaborators, and direct competitors are using technology, including the internet. In other words, a vast majority of them are reactive about it, rather than proactive.

    2. Perceived benefits

      Owners are less likely to adopt technology when its perceived benefits are not clear to them, or there are no available clear measure or tool that indicates it being an enabler of the business. Most owners have no clue how much it cost them to acquire a client. They are more concentrated on how much a contract is worth, so when there is no perceived relationship between cost and benefit with the adoption of technology, or how it increased their sales or their profit margin, they will not be interested in technology.

    3. Perceived challenge

      Owners are less likely to adopt technology when the perceived challenge in integrating traditional business practices and with new tech and web-based solutions is too high. 51% of owners feel that the time required to adopt technology is too big a chunk to be taken out from their usual traditional business day. They project their own natural fear of technology with their people, assuming that the team will see it as a burden.

    4. MSMEs tend to opt for a “just doing” approach rather than for a “formal planning”

      Most small business owners tend to be myopic about their business. Their main pressing concern is survival, hence, most owners are more focused on the “now”. Their long term strategies are not planned in advance, instead, their short term strategies drives their daily actions. They are sprinters, rather than marathon runners. This approach then fails to set measurement goals for their businesses, apart from the daily sales. Thus, in the adoption of technology, they feel that any time taken outside of the processes of a normal business day affects their bottom line.

It’s not all doom and gloom though. While the adoption of technology is slow for MSME’s, it is changing. Current data tells us so.

  1. Competitive Edge – 83% of MSMEs that have a website feel they have competitive advantage over those without one.
  2. Worldwide Reach – 75% of MSMEs believe that internet marketing is very effective, with over 1 billion people visiting Facebook business pages each month.
  3. Brands with Facebook Page – More than 40 million brands use Facebook Pages, and 75% of them pay to promote their posts, products, or services.
  4. Mobile Strategy – Mobile e-commerce growth is 48% faster than e-commerce overall. Now more than ever it’s important to have a strong mobile strategy.

On the micro level, how can a startup meet all the above challenges? Here’s are our practical tips, the HOWs:

  1. Technology is contagious. When you make a presentation to the owner of a small business, tell them why their competition is using technology, why their potential customers prefer a tech solution to their age-old pain points.
  2. Show them in figures, the cost benefits, how it affects their bottom line. How much savings, therefore, how much increase in profit they will achieve using your technology. Savings could be in actual sales & marketing cost, client acquisition, operations, in productivity and efficiency, and others.
  3. How technology will affect their brand image in the eyes of their industry and therefore, their customers. Every small company aims to be bigger, so show them how in facts and figures, cite examples, and case studies.

All the above requires research, but you need to arm yourself with the tools to counter the fears of your target market. Hard data is the best way to do that.
So, which business process should an MSME adopt technology? As a startup, these are the aspects of a small company’s business that are ripe for technology adoption.

  1. Human Resource

    There are plenty of human resource software and SaaS tools that are economical and are good for an MSME to adopt. These tools enable an MSME to manage the salaries, VL’s, time ins and outs of their employees, among others. In the Philippines, among your options are Salarium, Payoneer and Sprout.

  2. Finance

    From cash flow management to a more complicated accounting software, there are solutions in the market. Such as Xero, Quickbooks, Freshbooks, Outright and Wave.

  3. Marketing

    Online is the new real estate in marketing. Everything is online. To ignore this is perilous to the business. Online marketing campaigns are one thing (Google ads, Facebook, SEOs, websites, social media), automating your marketing processes are another.

  4. Sales

    Automating your sales process is key to maximizing your profit, to shortening the sales process. One prime example is the MiDash for real estate by MiDash will enable a seller to record and track every bit of the sales transaction from start to finish.

  5. CRM

    There are many customer relationship management software that will enable you to keep track, manage and take care of your clients. Service is considered good if it is consistent. Your choice of CRM should be one that is designed specifically for your industry, such as the MiDash system, which was designed by real estate sellers for real estate sellers.

  6. Data gathering, storage and analytics

    If there is one thing any business must do to enable them to scale better and faster – this is gathering the data about their current and target customers. Normally, your CRM should be able to do this. It is crucial to gather data and turn them into insights.

  7. Payment

    Whether it is your payment, such as taxes, etc, or the client’s payments to you, this should be done in the most convenient way possible for yourself and your clients. There are many payment portals available in the market, such as Dragonpay, Pay88, VMoney, etc. The more convenient payment options you offer to your clients, the higher the likelihood that they will buy.

Given the hurdles, what can we collectively do to connect the dots faster and better between technology, the startup community and MSMEs?

  1. Education and Early Information

    The government and the community could come up with some informational materials about the technology, and the company behind it, that are available in the market. It would be ideal if any new small companies are provided all the technological options available to them when they register their business. Most of the time, because the owners of the small companies are not tech savvy, they are unaware of the options and the potential of technology.

  2. Incentives

    The government can give incentives. Perhaps some tax breaks both for the startup (in exchange for giving special rates to small companies) and the MSME (for using technology).

  3. Discounted Prices and Other Promo Prices

    The technology company can extend a special rate for the MSME’s that are considerably lower than what they charge the big companies. Special rates can include free trials for a short period of time, or freemium models.

Grace is a best-selling author, an entrepreneur, and a proud sales professional. She is also the fascinating mind behind MiDash, a property sales technology for real estate professionals.

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