Four Hands of UMKM : an Idea for the Innovation of the SME Businesses in Indonesia
“All of our dreams can come true. If we have the courage to pursue them” — Walt Disney
Let’s imagine, what if one day, every UMKM owner, from the scale of street-side vendors to the size of 10 branch restaurant owner, know what it means to have a high profitability ratio? Know how to measure their liquidity ratio?
What if, they have access to knowledge, of how to treat their employee better, and motivate them to work more efficiently so they can have more spare time for their family?
What if, they have someone to lean on, someone to ask, what they need to do to be able to retire with enough saving for their grandchildren?
As I’m writing this article, more and more “what if” scenarios keep popping up in my head. All of the scenarios where UMKM leads the nation as the backbone of the economy and the overall prosperity of Indonesia people increased, enough to make us forget about the “stomach” problem, and move the focus on to the human development area.
Why do I have a great interest in UMKM?
“It’s always the small pieces that make the big picture.”
I don’t have any dramatic background. I’m just an ordinary man, living in a suburban city, just next to Jakarta and Bogor, working as an employee in a local company, from a modest family.
It’s just, one day when I was commuting all my way from Depok to Serpong in my internship time, I saw through the small window on the sliding door of the train a lot of people, trying their best for their family with their “own called business”.
Some of us just see it as another local business, that spreads out all over the town, with no real impact or whatsoever. Some of us just take it for granted, buy things from them, not really thinking about how they might survive in this pandemic. Some of us even think of it as an unimportant part of society, that can be replaced anytime. Some of us do not even think about it.
Furthermore, some of us do not really know that they are actually contributing to 99,9% of business units in Indonesia. Some of us never know that there are 64 Million units of UMKM in Indonesia, that this even almost the same as the population in Thailand. Some of us never heard that in 2018, they even contributed to more than half of our Gross Domestic Products (GDP).
Yes, some of us mislead their size with their name, “Mikro, kecil, menengah”, when they are actually bigger than what we used to imagine. That’s why, I really interested in UMKM, and I believe they are the main player in the economy of the country, and they have the capability to be the game-changer.
What are the challenges that they face? How can we help to improve our UMKM?
Based on my observation, I believe there are 3 main challenges that are being faced by the UMKM owners, which are :
- Access to the knowledge
- Capital for backing up and growing their business
- Subject matter experts that they can lean on
Moreover, these challenges will get harder if they are on the edge of their financial condition. However, I believe that with the right strategy from the right party, we can overcome this challenge on a big scale, delivering a big impact for the UMKM and for society. I call this strategy as “the Four Hands of UMKM”.
How exactly these four hands work to improve the UMKM? Let’s start with the three what-ifs that I have mentioned in the first section of this article.
What if one day, every UMKM owner, know what it means to have a high profitability ratio? Know how to measure their liquidity ratio?
Well, I am not an expert on this kind of accounting things. Actually, I just learned about it in the last 2 weeks, when I had my accounting management course in my MBA class. It is really difficult, for real. However, one thing that really carved in my mind, is that if every UMKM owner knows this knowledge, they will see and act in a totally different behaviour, for the objective of growing their business.
However, not everybody has the access to this knowledge. Trust me, even if we have so many sources to learn, it is still hard to learn if there is no one that can teach us. Even if somebody can share the smallest part of the basic knowledge, it will really really helpful. This is where the first-hand works, which is, the university, and the students inside.
The idea is to create an environment where the university and the students can give their hands, side by side, to share the knowledge with the UMKM owner. If this strategy can be executed, I believe, the way UMKM owner see their business will be different. Hence, the rest of the story will also be different.
What if, they have access to knowledge, of how to treat their employee better, and motivate them to work more efficiently so they can have more spare time for their family?
Not everybody can have a clear vision for their future. Not everybody mother can make good planning for their family. Not every father can manage their financial condition better for their family needs. Not every UMKM owner know what to do to make their business perform better. This is their pain.
This is where the second-hand works, which is the expertise. Knowledge from the university is a really good thing, a really good basic to boost the business understanding of UMKM owner. However, how to make it more efficient, how to make a better environment, is another thing. Another thing that will be really really meaningful and impactful, if the party that manage this thing daily can share the experience and knowledge with them.
The idea is to create a two-side profitable environment for the expertise side and for the UMKM owner, so that the experts can give their best advice for the UMKM owner so that they can grow their business, with the basic knowledge that they get from the university, while also give profits to the experts. In this way, both parties will get a meaningful benefit, while maintaining the growth of the overall UMKM.
What if, they have someone to lean on, someone to ask, what they need to do to be able to retire with enough saving for their grandchildren?
Doing business is a really interesting thing to be concerned about. However, running a business is not the same as running our own life. Maybe some of us ever heard quotes like “Your job is not the definition of your career”. Truthfully, it is also applied to life.
I believe that it’s not often that we see somebody that can run their business successfully, but not their family life. Or on the other hand, someone that looks really happy and enjoying their life could be not good enough to run their own business. The point is, business and life are related, but not directly affects each other. However, changes in life will affect your business, and somehow vice versa. This is where the third hand's works, which is the community.
The idea is to have a friendly environment that can enable the community to share their experience about their life. Thus, UMKM owner can learn and avoid mistakes that often happened. With this strategy, we can help UMKM to balance their life with their business, and use their knowledge from university and advice from the expert more wisely.
Last but not the least, is the government. As we have known, the government have the biggest capability to make a strategic action for the prosperity of the nation, including the UMKM.
Next action
It probably seems like these Four Hands are really enormous and make us rather confused. What can we actually do to be involved and thus make impacts in improving our UMKM? What is our role in this action?
Well, I don’t have the most correct answer. But I believe, we can take the role, we can take part in anywhere that we find the most suitable for us. Just choose your side among those Four Hands, take the smallest action as your first step, and continue delivering impact for the UMKM.
As you can see in the second quotes placed in this article, “It’s always the small pieces that make the big picture.” Your small action, if there are millions of people also doing this kind of action, it will be preconcerted that it will make a big impact.
And for me, what is my smallest action? I am trying to hustle with the Instagram account that made by me and my wife, Catherine, which is, The Grid Class (https://www.instagram.com/thegridclass/). We are trying to take part in the First Hand because alhamdulillah, fortunately, I have an opportunity to take an MBA degree in one of the best places to learn in Indonesia, and I intend to share my knowledge in the easiest form, for UMKM, to grow their business.
Now, will you join the Four Hands with me?
Which role will you take?
What kind of action will you do?
Save your answer, and let’s make a big impact for UMKM together :)
Grow At Paragon #InnovatefortheGreaterGood #InnovationMindset #ParagonInnovationSummit #GrowAtParagon
