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The survival of small businesses has not been a top concern of the global economic development community. Most business solutions are driven towards medium to large businesses. And why not? That’s where the solutions generate bigger impact, right? But let’s take a moment to think about how to enable small businesses to earn more and become larger.

Yes, like most of us, they dream big and start small, but somewhere in the middle they do not grow. In my interactions with small merchants, I’ve noticed that financial literacy is one of the key missing components affecting their growth.

Out of hundreds of micro-merchants I have interacted with, barely anyone tracked their day-to-day business performance.

“How do you keep track of your profits?” I asked Amit, a retailer in Nanded, Maharashtra.

“I check my cash balance at the end of the day, that’s it,” he replied, giving very little thought to credit transactions and stock on hand.

The cash earned at the end of the day or week or month is what matters to business managers like Amit. That metric sums up the business performance for them. The end objective of a small business is to have a positive cash flow from day one. After all, this is the source of bread and butter for a small merchant’s family. Yet bookkeeping is usually a low priority item for these businesses, though its relevance is crucial for businesses of all sizes.

Bookkeeping is the recording, on a day-to-day basis, of all the financial transactions and information pertaining to a business. It helps a small business to record all of its core transactions and events, like sales, purchases, inventory, tracking payments, cash requirements, expenses and net earnings. Bookkeeping builds organisational memory, keeping entrepreneurs well-informed of their progress. Consistent bookkeeping strengthens their decision making and thus makes a positive impact on their bottom line. However, the lack of a bookkeeping system at best stagnates – and at worst kills – a business.

It’s definitely true that business decisions among small merchants have always been gut-driven rather than data-driven. There are many factors influencing this behaviour  —  including lack of formal education, financial literacy, availability of resources and more. Yet the more precise the business information, the more realistic are the decisions coming out of it.

I understand that a double entry bookkeeping system is complicated —  and for all the reasons mentioned above, micro-merchants do not want to complicate their lives any further. However, if there were a very easy-to-use system that would help small merchants to record their core transactions and events, there’s no doubt that they would make far better business decisions. Moreover, different performance indicators and trends could give them insights to build their financial literacy. And all of this is possible with the lightning-fast growth of technology.

For instance, I asked a shop owner in Bangalore: “How comfortable are you in adopting a mobile app solution?”

It blew my mind when he showed me his iPhone and said: “If you glance through my phone you will see only the apps that benefit my business. I use WhatsApp, some news app, and a bike/car rental app for local business conveyance.” He added: “I may have studied only till grade 10, but I can surf over internet to see if there is any solution out there to help me grow my business.”

Each quarter, smartphone usage in India reaches a new all-time high. There are chatbots, artificial intelligence, machine learning, speech recognition tools and many more technologies that are either here, or will soon be on their way, to boost the growth of the country’s small businesses. More importantly, the penetration of mobile applications like Facebook, WhatsApp and Paytm – even in the smallest of towns – is indicative of the growing technological adoption in remote areas. If there were some solution as easy and interactive as a Facebook, WhatsApp or Paytm that could be built, then making this behavioural change in small merchants would be less of a Herculean task. Imagine if vendors had three touch points and boom, their transaction is recorded!  I could see even easier adaptability in digitizing their financial records with such solutions.

Indeed, there are infinite possibilities if this basic financial hygiene can be fixed. I could see small businesses in India going from good to great. I could see them getting access to fair and affordable credit. I could see them procuring goods at the most competitive prices. Once the challenges on the supply side are addressed, I know that with the right technology, these businesses would be able to sell with ease. I know this is a highly unorganised sector requiring complete behavioural change, but every big challenge has a solution.

Please share your suggestions and feedback in the comments.

Vikas Kabra leads Finance and Investor Relations at Menterra.

This post was originally published on Medium. It is republished with permission.

Photo courtesy of travelphotographer.