While the Indian government has instituted quite a few initiatives to help the Indian MSME sector in the post-crisis world, one essential issue for the longevity of any MSME is succession organizing and sustainability even as a lack of it is the greatest lengthy-term danger to such organizations, according to professionals. India has a vast base of about 6.33 crore MSMEs, quite a few of which are family-run enterprises with the second and third-generation entrepreneurs carrying forward their company legacy.
“India’s MSMEs, employing more than 45 percent of the country’s workforce, are working relentlessly to make an impression in the global market, with risk-taking being a part of their entrepreneurial DNA. However, the disconnect between passion and reality, the challenge in managing black swan and grey rhino events, and the lack of a structured framework to pass on the business legacy to the next generation are placing these MSMEs at risk of survival,” stated Hersh Shah, CEO, IRM India Affiliate at a webinar organised by the institute. IRM had, in September last year, partnered with the government’s premier MSME development body National Institute of Micro, Small and Medium Enterprise (NI-MSME) that trains MSMEs, folks, and experts for entrepreneurship development, capacity constructing, promoting, innovation, infrastructure development, top quality management, and more.
Industry professionals also echoed Shah’s views on the challenge of succession organizing amongst MSMEs. According to V Swaminathan, Head of Corporate Audit & Assurance, Godrej Industries Limited, as quite a few as 35 per cent MSMEs really feel succession organizing is their most significant dilemma and that MSMEs largely have an owner or promoter-driven structure due to which the choice generating is focused on them, as opposed to significant organizations that have a clear organization structure. “There is a functional implementation of roles and responsibilities. There is no concept of shared ownership, the external talent is only need-based, and loyalty is higher than just functional capability,” Swaminathan added.
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Moreover, amid alterations in the all round company atmosphere more than the previous couple of years in India such as demonetsation, GST implementation, Covid pandemic, financial downturn, and so on., the will need for succession organizing is more important than ever. Also, there is a challenge of obtaining workers who are as skilled as the outgoing ones in the organization. “Succession planning is one of the most critical factors for MSMEs especially in the current climate, where the business environment has undergone a transformation, and there is a lot of unpredictability. The lack of skilled manpower is a major constraint for MSMEs, and when key employees retire from an organisation or leave for other opportunities, the inability to replace them with an adequately experienced successor can directly impact the wellbeing of the business,” stated Sandeep Bhatnagar, Director – Marketing & Business Development, NI-MSME. The institute is searching to help such MSMEs into danger-prepared enterprises more than the next decade via IRM’s programmes in enterprise danger management.