Understanding the mind set of small and medium business in India for management consulting practice

Abstract

According to Dun and Bradstreet India It is estimated that SMBs account for almost 90% of industrial units in India and 40% of value addition in the manufacturing sector. They contribute 35% to India s merchandise exports. Apart from the policy focus and government s thrust towards promoting the SME segment, globalization and India s robust economic growth has opened several latent business opportunities for this segment. SMEs exhibited growth of an average rate of 35% over the last two years. Small and Medium businesses (SMBs) are an integral part of India's dynamic economic growth. Management consulting in India has not been as prevalent as with the rest of the world. Some of the large management consultancy firms have had offices in India for quiet some time now. But most of these companies target only the large businesses. SMEs have not been the main target for many of these firms. A primary reason can be traced to be prohibitively high consulting costs. There seems to be a potential for a management consulting practice to target just the SMBs in India. This project tries to give a practical picture of the same Initial idea for this project was to create an end to end business plan for a management consulting start up which is specifically targeted at the small and medium businesses in India. On further analysis, it was observed that it is important to understand the industry itself and see if there is really a potential for a new entrant. There are specific characteristics of a small and medium sized business, which needs to be analyzed and understood before trying to see if there is scope of management consulting. Thus the idea for this project is to understand the SMB market and the nuances of targeting this market in India by a management consulting firm. The current project comes up with a hypothesis which is validated by doing an industry study based on research reports and interview conducted with various business owners of SMES in India. The project concludes that even though the SMEs in India form a huge untapped market potential for management consulting, the "felt need" for management consulting is low, and so a strategy is required to "develop" the market. A consultant is seen as a luxury / unnecessary cost - and not as a value adder. The demand is latent, and not evident on the surface. Thus the key challenge is to change the brand equity from "unnecessary cost" to "great value".