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Scale Up Ikm Business During a Pandemic? Why not?
Based on data from the BPS in 2018, the population of MSMEs in Indonesia is more than 58.9 million people, meaning that more than 25% of the people are business actors. In addition, there are interesting data; according to the SBA (Small Business Association), only 70% of the business population survives in the first two years, while 50% can still survive in the 5th year and 34% of the population survives in the 10th year, only 25% can survive in year 15.
Before discussing ( (scale-up), it is better first to understand the definition of economies of scale. Economies of scale are business calculations/calculations if the unit cost of a product/service decreases as the firm's output grows. In conclusion, the production scale increases so that the cost of producing goods/services can decrease. So the business that undergoes this process is said to be scalable.
For example, in the case of school shoe production, the more people buy and the more people use our product/brand, the lower the unit cost of production. In another case, if SMIs produce breathable insoles that are not yet on the market, the price per item/per unit can still be high. Because customer awareness of comfortable shoes is getting bigger, the use of breathable insole products is getting more massive, increasing production. Then the output of the insole is said to be scalable.
However, not all businesses can scale up their business. For example, the services of lawyers, consultants, mentors, doctors, and teachers are indeed challenging to scale up. But wait. Currently, nothing is impossible to scale up. One of the strategies is collaboration. Next time we will discuss this issue.
Back to the question of how to scale up during a pandemic? Is it possible?. Just pivoting to survive is good. Moreover, footwear products are not the primary necessities during the pandemic. Let's discuss for a moment.
Scale up is about mind set, various thoughts, attitudes, and emotions that come from how we view life; that is what distinguishes success and failure. For example, everyone knows that the more you practice badminton, the more honed your skills will be. The formula that everyone understands. Mindset is not about knowing or not understanding, but about what we think about how to behave better by using knowledge more wisely. So no matter how good your business is, how substantial our capital is, and how accurate your business strategy is, the mindset will determine the end result.
Back to strengthen the definition (scale-up) above is not a fine journey. Everything is according to plan, and all situations can be controlled. The response of our minds when faced with problems such as the current pandemic is what determines business success. At this time of the pandemic, everyone is being tested for their mental responses, including local footwear brands, on how to survive during an uncertain situation. So our principal capital at this time is the right mindset. For example, you have a car with 300HP power, fast, latest safety technology, and efficient. But if you still have the mindset that speeding is dangerous, then you won't be speeding even though you have a more sophisticated car.
How about the footwear business. The fact on the ground is that most of the IKM are "bonsai" companies. The minds of footwear business actors respond that many still think that their business is still limited as a necessity of daily life. So that the business mindset only to survive and meet the needs of life dramatically affects the mind's response on how to develop its business. This is the biggest challenge for the footwear industry players how to develop, grow and not continue to be a "bonsai".
In particular, there are basic requirements for how the footwear industry can scale up successfully.
(1) From the internal side, the footwear business process that you are building must have sufficient economies of scale. What about footwear SMEs? However every business has limitations to scaling up, but every business person can do it. With the main capital mindset, you have to learn again how to understand business processes more deeply than just selling and managing a business into a company that makes economies of scale.
(2) From the external side, the company's business processes must have a vision for a bigger market (either in value or volume) to continue to grow. This external factor is a matter of market size or addressable market. Your business will be difficult to develop if the industry's market size is small. So that the company can scale up, it must be ensured that the target market size must be large enough.
Rest assured that there must be an opportunity behind the wisdom of this pandemic. Your positive response as a businessman is the main thing to facing today's uncertain conditions. Keep fighting, and believe that you are a hero to your family and the people who depend on your business for their livelihood. Salam Scale Up!!
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