Jaime Rico Palacios
Director
CE Consulting México
/
Insight

SME Suppliers Need Business Development Help to Survive

Mon, 09/01/2014 - 10:47

“Smaller Tier 2 and 3 companies coming to Mexico often face challenges regarding the right business administration in this new market, due to a lack of internal structure,” says Jaime Rico Palacios, Director of CE Consulting Mexico. A consulting firm that assists clients with business management, accounting and judicial matters, CE Consulting feels it could help small suppliers professionalize in administrative matters and business development. CE Consulting has a long history of targeting SMEs in a range of industries, providing them with insight from teams specialized in one specific sector. Palacios explains that this allows automotive SMEs in Mexico to receive advice about tax benefits, industry trends, or even the right growth strategy, that is very specific to their situation. “The Mexican automotive market is not focused on sophistication but on labor costs and the quality of the products manufactured in the country. Therefore, companies and family businesses evolve without a sustainable long-term growth plan,” says Rico Palacios. Yet, the professionalization of these companies could make Mexico even more attractive to the automotive industry. In consequence, more international players could be motivated to open R&D centers in the country, as opposed to seeing the country only as a destination for manufacturing and assembly plants. “When companies have a project to develop, such as an automated production line to sell to OEMs, we can provide them with a business plan for their production capacity increase over five to ten years. We can professionalize them through financial development opportunities set up by government institutions. CE Consulting helps these companies to change their general mindset, open new avenues of business, and plan for the future,” states Rico Palacios.

The first approach between CE Consulting and SMEs is done step-by-step, without the SMEs feeling that they are being rushed into services they do not fully understand. Rico Palacios says that the first step in the professionalization of these companies usually addresses their administration, especially concerning legal and business processes. As most SMEs in Mexico are directly run by their owners, it is sometimes difficult to convince them to change their internal operations. In Rico Palacios’ experience, they usually agree to the changes once the benefits and added value are made clear to them. After basic services are taken care of, including fiscal, labor and legal matters, SMEs become more open to specialized services, such as HR consulting and marketing. Later still, they may become interested in topics such as sustainable growth and social responsibility, which SMEs often dismiss as unimportant. This is where SMEs benefit from CE Consulting’s service model. “The users pay only for the use of the resources that they require, whether basic or specialized. Most SMEs do not have the money or staff to support a specialized department, so we charge them by the hour, through an established contract, or for a fixed tariff for a set number of services over an agreed timeframe,” reveals Rico Palacios.