You must have heard the term MSMEs often, right? However, do you understand what MSMEs are and their types and roles?
Even though they are called MSMEs, it turns out that this scale of business absorbs almost 97 percent of the workforce in Indonesia.
This statement was conveyed directly by the Deputy for Coordination of the Digital Economy, Employment and MSMEs, M. Rudy Salahuddin, on the website of the Coordinating Ministry for Economic Affairs of the Republic of Indonesia.
Still from the same note, Rudy Salahuddin said that the contribution of MSMEs to Gross Domestic Income (GDP) reached more than 60 percent.
From this data, Friends of Labamu can see that MSMEs have the potential to become an interesting business opportunity to pursue. So, to better understand what MSMEs are, their types, roles, and how to develop them, read this article until the end, OK!
What is MSME?
According to Law no. 20 of 2008 concerning MSMEs, it is stated that Micro, Small and Medium Enterprises (MSMEs) are small companies that are owned and managed by someone or owned by a small group of people with a certain amount of wealth and income.
Even though they are small in scale, MSMEs are able to boost the country’s economy. In fact, several times MSMEs have “saved” the country from the economic crisis. Such as the monetary crisis in 1998, the financial crisis in 2008, to the global crisis due to the COVID-19 pandemic several years ago.
Thanks to him, the Indonesian economy has revived and shown its strength.
Types of MSMEs
As the name suggests, MSMEs are categorized into 3 types, namely micro, small and medium enterprises, all of which have different definitions and criteria. The following is the explanation.
1. Micro Business
Micro businesses are businesses managed by individuals or small families with limited resources.
Classified as a micro business because its turnover reaches IDR 300 million per year with assets (net worth) of at least IDR 50 million, excluding land and buildings where the business is located.
Examples of micro businesses are grocery stores, food stalls, and clothing manufacturers.
2. Small Business
A small business is an independent business, not a subsidiary or branch of another company managed by an individual or business entity. Even though their scale is larger than micro businesses, small businesses still focus on local/regional markets.
Classified as a small business because its turnover reaches IDR 300 million – IDR 2.5 billion per year with net worth (assets) IDR 50 – IDR 500 million, excluding land and buildings where the business is located.
Examples of small businesses are coffee shops, cattle farms, and car repair shops.
3. Medium-sized Enterprises
Medium businesses are businesses that have a larger market reach, namely covering national and even international markets and have a more organized managerial system. Classified as a medium business because its turnover reaches IDR 2.5 – IDR 50 billion per year with net worth (assets) IDR 500 million – IDR 10 billion, excluding land and buildings where the business is located.
Examples of medium-sized businesses are franchise businesses, minimarkets and agribusiness.
The Role of MSMEs in the Economy
As mentioned, MSMEs are economic drivers that contribute significantly to economic conditions, both directly and indirectly. The following are some of his roles.
1. Fulfill Community Needs
You could say that MSMEs are of the people, by the people, and for the people. Its contribution is very close and can be felt in real terms by the community to meet its needs. Both basic needs such as food and clothing to tertiary needs to fulfill lifestyle.
2. Moving the Wheel of the Economy to Reduce Poverty
MSMEs play an important role in driving the economy and reducing poverty. In today’s digital era, MSMEs can freely use e-commerce, social media, and online food delivery (OFD) to market and sell their wares.
With this continuously developing economic cycle, MSMEs are able to create a more equitable and prosperous economic system so that they can reduce the poverty rate in Indonesia.
3. Reducing the Unemployment Rate
According to data, MSMEs are able to absorb 96.9 percent of the total national workforce. This means that MSMEs are very effective in reducing unemployment in this country. Not only that, MSMEs have the potential to open up business opportunities as well as expand employment opportunities in line with the continuing increase in the population in Indonesia.
4. Improve individual quality
Apart from absorbing labor, MSMEs can also encourage and motivate other communities to compete to create new businesses and opportunities. Indirectly, MSMEs are able to improve the quality of individuals to be empowered and work using their abilities and expertise.
5. Source of State Foreign Exchange
In the end, MSMEs are able to increase the country’s income or foreign exchange. Moreover, currently more and more MSME players are serious about developing their business so as to produce quality products that are no less competitive with those made abroad and even export them.
How to Develop MSMEs
So, the next question is how to develop MSMEs so that they can have high competitiveness amidst the current hypercompetitive market. Here are several ways that can be implemented.
1. Memperbaiki Kualitas Produk dan Layanan
Improving the quality of products and services is the first way to go if you want to develop a business. Use criticism and suggestions as valuable insight so you can turn things around and turn them into bigger opportunities.
That’s why don’t hesitate to ask for consumer input, learn from business competitors, ask for expert advice, and upgrade your skills and insights. and way of thinking.
2. Be diligent in participating in exhibitions or fairs
Taking part in exhibitions or bazaars can take MSMEs a step further. Apart from having the opportunity to introduce and market products to visitors or exhibitors who come, you can learn a lot of new things through this opportunity.
For example, by recognizing competitors’ advantages and disadvantages, increasing relationships, interacting more closely with potential customers, and many others.
3. Be observant in responding to changing trends
As a business actor, Friends of Labamu must understand that consumer trends and behavior continue to change. This is where the foresight of business people is really needed to respond to these changes. Indeed, not all trends need to be followed because many are short-lived.
However, there are new trends and behaviors that need to be responded to so you don’t lose out on the market. For example, by opening a stall in e-commerce because currently people prefer to stay at home but their needs are met without having to go far to shop directly.
Moreover, there are many attractive offers such as shipping discounts, price cuts, cashback, and so on.
4. Implement Digital Marketing
Looking at the current market situation, digital marketing is a must! You cannot ignore the fact that consumer behavior has changed a lot and many conveniences are offered, both for buyers and sellers.
Therefore, optimize the use of digital technology and social media to start marketing products and reach a wider market.
5. Provide Electronic Payment Facilities
Apart from implementing internet-based sales, you also need to provide electronic payment facilities. You need to know, more and more people are choosing cashless payment methods in this era. For example, by using QRIS, virtual account, e-wallet, or debit/credit card.
As a solution, you can use the POS cashier application from Labamu to make transactions easier. Not only that, there are many other features that you can use to document business administration in real time and effectively. Starting from controlling stock of goods to monitoring business financial reports. Immediately download the application via Google Play or App Store to get the benefits!
So, the question of what MSMEs are and what they do with them has been answered completely through this article. Hopefully this information is useful and brings your business to the forefront!
