Intuit Small Business India » The Next Mile

Business Development or Detriment

admin — Wed, 22 May 2013 06:30:52 +0000

Let me start with a question, “Is there such a thing as too much Business Development?”

I am sure there are a lot of you shaking your heads vigorously and thinking “What? Is that even a sensible question? In business, more is always better. How else will a business grow?”

The reason I raised this question is not to say that businesses should not grow. It is about keeping two things in mind when going after business development – (1) existing business and (2) the costs associated with business development.

Healthy business growth is built on the foundation of your existing clients. In aggressive business development scenarios, there is a tendency to push the needs of existing clients to the backburner. The hunger to win a new piece of business could see too much of focus on the potential, to the detriment of your clients. In large organisations, there may be a possibility that the business development team is separate from the team that services present clients. However, small businesses rarely have such a luxury. The time and effort you are putting into the business development comes at the cost of your clients. You have to ensure that one does not suffer on account of the other.

But before that, let’s take a step back. Imagine if there was a channel of business development where most of the hard work is already done? Sounds implausible? Here’s how.

Take a closer look at your business, and your existing clients, as they stand today. Do all your existing clients know about all your offerings? Are there any services or products that you offer but your clients are unaware and going to someone else for it? Believe me, it happens more often that you think. Most businesses (and clients) believe that they already know everything there is to know about each other. But it is seldom true. Find out the extended needs of your customers and whether you can meet them. And if your customer is satisfied with the existing relationship (as they should be) this could mean additional business for you.

But getting more business from existing clients can only take you so far. Business development, and everything it entails – costs, time, effort – is an integral aspect of business. In this scenario, I would rephrase the original question slightly, “Is there such a thing as spending too much money on business development?”

There are no two ways about it. Business development costs money. From networking and keeping an ear open for opportunities, to cold calls, travel to meetings or even just gathering robust market intelligence before approaching a potential customer costs money. And as a business owner, you would have budgeted for it in your plans. However, there are occasions when the business development budget is subtly or blatantly ignored. Chances are, this happens for customers where you see huge potential. But remember to keep track to ensure that you are not eating into other planned activity by expanding this budget.

You have to be very level-headed when you evaluate your business development budget and returns. Critically analyse your hit rate, and the methods you can employ to increase it. Ensure that you study and dissect every business pitch that you make – the ones that are successful as well as those that weren’t. Many companies spend a lot of time on post-mortems of failed business pitches to probe the areas where they went wrong or where they have to fill the gaps. However, an investigation of the things that went right in a successful pitch can bolster and strengthen your subsequent business development efforts.

I’ll conclude with another question. “How are you going to ensure that Business development will never be business detriment henceforth?” Share your opinions and suggestions in the comments below.

Lose a job. Gain a business.

admin — Thu, 25 Apr 2013 12:07:22 +0000

It seems a scene right out of many movies. The main character is suddenly out of a job. He or she then goes on to face the challenge by setting up their own business with grit, determination and usually not much else in the way of finances. During the course of the next one and a half or two hours, this business goes on to become a wild success and often win over the original firm that the hero or heroine was in. And the audience is left elated and inspired.

In real life, there are some parallels to this story, but most of the time, there are deviations. Am I telling you not to start a business if you lose your job? No, not at all. I am all about entrepreneurship. All I am saying is that you have to be sure that you want to do it, and be prepared for a long, but hopefully satisfying grind.

Lose a job. Gain a business

The most important thing to remember is not to be impulsive. Starting a business should never be a rebound decision from losing a job. It has to be a well thought out decision and one that fills you with anticipation and excitement. Because, there is no success in business without passion, and that is something you cannot force or manufacture.

Getting to the brass tacks, here are some tips that could hold you in good stead during this transition and onward.

Have a concrete business plan

Write it down so it becomes more ‘real’. You need a roadmap to guide you and keep you on track as you move forward. If you are looking at financing, a robust business plan is absolutely essential to present to the bank or any other financier. Even if you are planning to bootstrap it, write a business plan.

Getting the funding

Most businesses need some investment to start. Take a long look at how much you will need for both day to day expenses as well as to get the business up on a stronger footing. You have to decide whether it can be met by your own funds or you need financial help in the form of a loan, or even a partner.

Business financials is different from personal financial

You may be a whiz at your personal financial management. But business financials is a different game altogether. As a business owner, you will have to gather enough knowledge about revenues, payables and receivables, profits and so on, apart from the legal and statutory requirements that your business can fall under.

Develop a difference

As a new business, you will have to give your potential customers a very good reason to choose you over the competition. What is the way you have differentiated yourself? Is it a unique or improved product? Better value for money? A different type of service? The thing to keep in mind is that your differentiating factor has to be something that you can have for the longer term. A tactical offer will not cut it.

Stick to it

Starting a business is not easy. Keeping it running through the initial hiccups and the ups and downs is even more so. Many entrepreneurs get disheartened as their rosy dreams of success take longer to achieve than they imagined. But starting and running a business is for the long haul. You have to believe in yourself and your business idea, and keep your focus on making it a success.

Trust your instincts

A good business person has great instincts and learns to trust them. Remember that you are the creator and owner of the business, and at least in the initial stages, there’s nobody who knows the big picture better than you when it comes to your baby. So, you have to trust your gut when you feel that you are at crossroads. Sometimes, the best way forward may not be the way that everybody else has always done it. But that does not mean you need to do something different just for the sake of being different.

There’s no getting way from the fact that losing a job, most of the time, is something that you cannot control and is a moment that will lead to great change. However, what that change could be, is something that you can control. Gaining a business could be one of the ways to turn the change into a factor that works in your favour. And who knows, maybe real life may mirror reel life for some of you.

Innovation and creativity – a culture of its own

admin — Tue, 09 Apr 2013 11:05:12 +0000

Majority of the entrepreneurs have innovation on their minds. In most cases, businesses are setup because someone has an idea that brings to the world something completely new or a better way of doing something. And in most cases, it works. I have seen innovative ideas become successful small businesses. And I have also seen existing small businesses that used innovation to stay ahead of the game and stay competitive.

However, it is extremely important to make innovation and creativity an inherent part of your company culture, even when your business is in its nascent stages. In any business, traits like innovation and creativity have to be encouraged and nurtured over time. It is not possible to gather your employees into a conference one morning and ask them to be innovative. To truly tap into the innovative potential of your employees, the first step starts with you, the owner. You have to ensure that the conditions for creative thinking and experimenting are put in place.

Empower your employees

A large part of thinking creatively comes from the freedom to do so. If your employees have to take permission or approval even for the smallest of things, they would have no incentive to try new things. It engenders a feeling among them that any deviation from the status quo is frowned upon. What’s more, it does not encourage ownership of responsibilities among employees. However, giving employees the power to make decisions at their level will foster a culture of constant innovation as employees try to improve processes or products. When you empower your employees, you demonstrate your trust in them. And in most cases, this trust is a great motivator for the employee to push him or herself to do better.

Encourage open communication

Most businesses have a top down approach to management, and innovation. However, the first rule of creative business thinking is that it can come from anywhere. In my experience, I have often found that great ideas come from relative freshers, or from employees who have may not even be in the relevant department. If your company has channels of communication where employees can share their ideas without fear of rebuke or ridicule, chances are that you will see a constant stream of great ideas coming into the business.

Eliminate fear of failure

Creative thinking does not always lead to path breaking innovation. Successful innovations are built on the foundation of learnings gathered from failures along the way. Employees have to know that they will not be penalized if their ideas do not work out. Otherwise, the fear of negative repercussions will not only stifle their creativity, but will also discourage employees from coming forward with any ideas whatsoever.

Diversify your talent pool

If you hire the same kind of people across your organization, chances of new ideas are naturally reduced. Ideas from different kinds of people, with different mentalities and skillsets, will spark and feed off each other to take better shape. These differing approaches can help make an innovative idea more robust and comprehensive.

Factor in thinking time

An employee who is thinking about nothing but their present work responsibilities or operations does not have the mind space to think about anything else. Creativity needs both the free mind and the free time to blossom and amount to something concrete. Build this ‘thinking time’ into the employees’ workday or work week, rather than expect employees to do this on their own time. For instance, Intuit’s unstructured time is well-known model where employees spend 10 per cent on innovation or projects not related to core business tasks. This gives our employees some time to explore their areas of passion to drive growth and come up with some ingenious ideas!

Change the stage

Taking your employees out of their usual setting can be a good trigger to start then thinking differently. Offsite sessions for brainstorming or coming up with new ideas work for a variety of reasons. For one, the lack of distraction. Even if you are able to shut everyone into a conference room, the participants’ minds will be on the work that they have the moment they get out. A new location also exposes them to new visual or other stimuli that can spark off new trains of thought. Lastly, the freshness of the location and the unfamiliar environment help in making people break out of their comfort zone.

In summary, encourage a culture that encourages and nurtures innovative and creative thinking in your organization right from day one, and see the results for yourself.

Pivoting – Knowing when to change tack

admin — Fri, 08 Mar 2013 11:16:14 +0000

So you’ve established your start-up with big dreams and goals, you are following the rules and you have a set game plan. All this is great stuff but a few months down the line, you realize that things are not all that gung-ho. Your game plan that looked solid on paper turns out to be a little wobbly in reality. So ask yourself – do you preserve and try to work things out or do you need to pivot? I can tell you that as a start-up, as daunting as it may seem, you would need to seriously consider pivoting – a phenomenon by which you change parts of your game plan or even the underlying business strategy.

Pivoting can be as simple and stress-free as revising the product price or a certain part of your marketing campaign or as drastic as changing your target audience or your company’s basic offering! Not surprisingly, many people are under the impression that pivoting only happens during unfavourable circumstances, but many firms pivot when they see advantageous opportunities too. At times, entrepreneurs though inclined towards pivoting, are unaware about the right time to pivot.

Here are some factors that could be quite telling when it comes to pivoting:

Your product/service doesn’t generate interest: Be quick in assessing if your product or service is actually connecting with your target audience or generating good interest. If you find out that there is a disconnect, then your business surely needs to pivot asap! Try altering your basic offering, tweaking your marketing or even taking a relook at your target audience/market.

Revenues stop making sense: If the revenue generated by your start-up is downright dismal, then it may be time to pivot. True, it may take time to break even for a start-up, but if you see yourself underperforming even against extremely conservative forecasts, it is better is better to identify the problem areas and pivot accordingly.

Employees and customers’ feedback: Regular interactions with customers can be one of the most reliable methods to know the areas of improvement, especially when your business is still in its nascent stages. This apart, customers offer feedback and opinions that could be constructively implemented during pivoting. Employees on the other hand, notice flaws that an entrepreneur may not notice. Creating an atmosphere where employee suggestions are taken could help in innovative pivoting.

Competitor induced: Sometimes pivoting can be induced by your competitors’ actions and this is especially true for a start-up that is vying for the same market share as your competitor. Constantly monitor your competition and see when an opportunity or a serious threat to your business arises.

When survival is at stake: If you feel the very survival or the future of your company is at stake, then pivot right away. From time to time, ask yourself this question – “is my start-up future proof?” If the answer is in the negative, take a cue and change tack. Keeping your ear to the ground, following trends and regularly reinventing yourself is the best way to make your small business future proof.

My advice to most start-ups that feel the need to pivot is to quickly but diligently identify and separate the symptoms from the actual cause. The more agile you are, the better your survival rate when it comes to pivoting. Also, don’t expect miracles to happen immediately after pivoting – it’s a gradual process, where even the results will be seen gradually.

Scaling Up?

admin — Fri, 01 Feb 2013 11:47:18 +0000

There always comes a time when a small business owner, or for that matter, any entrepreneur asks – “what next?” From my own personal experience, I can tell you that the answer to that question more often than not is, “let me see how I can scale up my business.” This holds especially true if you have survived the first year after setting up a small business. With the Indian economy expanding rapidly and getting more competitive each day, it is only natural that many a small business owner would be tempted to expand their venture – call it survival instinct kicking in.

Scaling up a small business is about increasing your current levels of production or services. It means you will be more aggressive with your marketing and will also need to follow through on higher levels of deliverables. It would most likely involve you spending more resources and working harder. I suggest that you ask yourself some extremely critical questions before jumping in to expand and only to find your business in a tricky position.

How do you want to expand?

You know you want to expand, but ask yourself just how. Will you be scaling up in terms of the products and services you are offering or would you be looking at completely new geographies? You will need to carefully assess new markets and also address how you are going to meet the demands of new consumers. As a small entrepreneur, it is important to not bite off more than you can chew – a new geography does have to mean a completely different global location, it could even just be a different locality within the same city. Understand just how much you can expand given the current state of affairs for your business.

Where will you get the funding from?

If you are liquid or profitable enough to fund your own growth, then reinvest into your small business. Another way to finance your expansion would be to pitch for investment from angel investors and venture capitalists. Loans from banks are an option worth analysing, as long as you find a good deal in terms of interest rates and the duration of the loan. The one factor working in your advantage when looking for outside financial support, is the track record that you have already build for your venture.

Should I partner with a third party?

Try to strike mutually beneficial partnerships. For instance if I were in the business of photography, I would look at collaborating with event management companies. Your partners can help expand your business in markets that you never would have considered before, and likewise, you can do the same for your partners.

How about trying a different medium?

If you own a business that solely operates online, then you could try to establish a brick and mortar presence. This can attract more customers and pave the way for expanding your scale of operations. Alternatively, one of the easiest ways to make your business globally known, is to establish an online presence. Set up an official website with e-commerce facilities where visitors to your site can order products and services.

This apart, try and expand the areas that you can deliver your products and services to. Consider offering international shipping to your consumers.

What is the risk involved?

Expanding your business in a lot ways is like starting a new business – the only difference is that, this time around you have a foundation in place. Aspects like SWOT (strengths, weaknesses, opportunities & threats), PEST (political, economic, social & technological) and risk analysis will need to be carried out. The onus is on you to thoroughly understand the new markets that you are about to dip your feet into. Analyse if the risks that you are taking would pay off in the long term.

Can my current infrastructure support me?

This is another crucial aspect that you need to address the very instant you start thinking about scaling up your small business. Does your business infrastructure need an upgrade or does it need to expand? You may need a bigger office space, an additional space for storage or even a bigger parking lot! When you address this question, think about your IT or technology infrastructure. Try out some suitable new software that can simplify processes as your business gets more complex. My advice – shift your business process to the cloud as much as you can right now!

Do I hire or outsource?

As your business grows, the need for specialists such as IT specialists, accounts and HR professionals will also grow. Do you plan on hiring these specialists to work in-house or does hiring the services of consulting professionals make sense for you? When you outsource specialist services, draw up good contracts that include strong confidentiality clauses.

Hope the above questions help you to get on the right track with your plans for scaling up. Here’s wishing that more small businesses meet success and expand their business in 2013.

10 New Year Resolutions for Small Businesses

admin — Tue, 08 Jan 2013 06:54:18 +0000

Let me start by wishing you all a Happy 2013! Yes, it’s that time of the year when most of us are busy making plans and a list of things to achieve over the next 12 months. There’s a buoyant feeling that leads us to believe that we can work towards our aspirations with new vigour. This feeling is of course no different in the small business ecosystem too. Numerous small businesses out there will be chalking out their goals for the coming year. Here are 10 resolutions that small business owners could adopt in order to help you stay on track and reach your goals.

1. Be Realistic

Start by setting realistic goals in terms of financial profits, the number of employees and the number of clients you want by the end of this year. While you can be ambitious, biting off more than you can chew could leave you feeling burnt-out even as early as mid-year. Another way to keep yourself grounded would be to further divide your yearly plans into monthly targets.

2. Communicate better

Make an effort to communicate better – ask questions, listen more and be concise about what you want and what you can offer. As a small business good, communication helps you set clear expectations and improve your overall relationships with all stakeholders.

3. Be approachable

Be easily accessible and approachable to your stakeholders – employees, customers and vendors. This increases interaction and makes the environment around more conducive for exchange of ideas and work. Also, this saves you from being a lone ranger at work and your colleagues will feel more in-sync with your long and short term business goals.

4. Embrace social media

If you have still not jumped on the social media bandwagon, then do so now! Social media networks are here to stay and almost every day there is a new development. It helps you become more attuned to the small business ecosystem. Your business is plugged into the now of things and you can always leverage social media platforms to raise your small business profile.

5. Learn something new

Learn a new skill – a new language, get certified in project management or any other subject that catches your fancy. Every new skill you add to your arsenal helps your business grow and invigorates you to be better. Formal education or certificates also validate your business acumen.

6. Join a professional organization

While what you know is important, as a small business owner, who you know is equally important. Joining a professional organization increases your network and contact database.

7. Give Back

Give back to the community in some way on another. You can even source locally and help other businesses around your neighbourhood this way. Integrate corporate social responsibility initiatives into your small business right from the word go. It adds to business goodwill and your image as an attractive employer.

8. Move on

Make sure you move on to keep moving forward. Close on projects that have been stuck in limbo for far too long, part ways with clients who are abrasive and vendors who do not pay up or deliver on time. In essence, bid goodbye to people and any elements holding you back from reaching your full potential.

9. Invest in tools

Invest in tools and technology that can ease your workload. Move your accounting to the cloud or catch up on work while on the move by using a smartphone or tablet. In short – get tech savvy! This improves productivity and helps you get more things done.

10. Work-Life Balance

Strive for a better work-life balance, simply because you’ll be a happier entrepreneur and will be more productive.

Wish you all a superb 2013 once again and keep me posted on how you are doing with your resolutions.

Which is more important for entrepreneurs – formal education or experience?

admin — Mon, 10 Dec 2012 04:32:47 +0000

Classroom-smart or street-smart? A school of business or the school of hard knocks? Education or experience? Which is the better foundation for an entrepreneur to build on?

The debate rages with passionate believers in either viewpoint espousing their cause. “See dropouts like Steve Jobs and Bill Gates” say the ones who think education is less important. While the other side names “Larry Page and Sergey Brin, Jeff Bezos”.

This brings me to the crux of the matter. I don’t think it is an either or question. If it were that simple, all the successful entrepreneurs would fall in to one or the other category. I have met brilliant entrepreneurs who have made a business purely on their instinctive grasp of the industry that they are in and their innate business acumen. And I have met entrepreneurs who have started their businesses and run them successfully based on what they learned in classrooms.

Experience and education have their own strengths. And whether education or experience is more important depends on which strengths are necessary in what field.

Experience gives you practical learning and therefore the ability to handle real-world, on ground situations. In most cases, experience comes in handy if you have been in a particular field or industry and wish to continue in it. The downside of depending purely on experience is that you have to find your own way and may not be equipped with tools for in-depth analyses of data and so on.

Education, on the other hand, can give you a wider perspective and equip you with analytical and theoretical knowledge. A good business education gives you the foundation to launch yourself into an entrepreneurial career path. However, education could make things too theoretical, and the real world never seems to work as neatly as the theories do.

Ideally, the ‘either or’ relationship between education and experience when it comes to entrepreneurship should be an ‘and’ relationship. Many entrepreneurs are driven by passion (and a healthy dose of impatience) and may not want to postpone starting their ventures to enroll or complete their studies. However, if you are able to get your business running smoothly, at least to a fashion, it may make sense to update and upgrade your knowledge and skills with a course of some kind – it could even be through distance education or a part-time program.

When I look back to my initial entrepreneurial experiences, what strikes me the most are the varied challenges coming at you from all directions. Finding the solutions to those challenges, therefore, needs to come from a variety of approaches as well. Having the right educational background makes it easier to find solutions to certain kinds of challenges, while practical experience can give you a heads up on the effectiveness or limitations of certain solutions.

As an entrepreneur, you have no choice but to face and solve the challenges. And as long as you are willing to work towards gaining the knowledge – whether in a brick and mortar university or in the university of life – you can make it happen. Because, at the end of the day, the answer usually boils down to knowledge.

Indian Small Businesses and technology adoption – The Solutions

admin — Wed, 05 Dec 2012 04:39:48 +0000

After examining and understanding the challenges to technology adoption in small business in light of the Intuit collaborated MSME study, it is time for us to dive right into the solutions! Just as concrete as the challenges are, so are the solutions.

But before I move on to the plausible solutions, let us first let us look at the type of businesses that emerged while looking at technology adoption. The study was qualitatively able to classify businesses into three categories, namely – tech non-adopters, tech aspirers and moderate tech adopters. Identifying which category your small business falls under will help you understand how much of change needs to take place in order use technology to its full potential in your firm.

To stay true to the definition, I am going to go ahead and quote word for word from the MSME study – “Tech non-adopters do not employ technology to any great extent and rely mostly on manual methods. They tend to be older manufacturing, established businesses who practice “old school” business development and management. Tech aspirers represent a mix of service and manufacturing units but tend to be on the smaller size. The business attitude among this group is “ambitious but cautious”, as this group is usually comprised of new entrepreneurs with younger, more inexperienced management. While tech aspirers have a much higher awareness of the beneﬁts of technology than non-adopters, they also exhibit low engagement and only adopt technology solutions when they are tried and tested by others. The ﬁnal group – moderate tech adopters – is the most technology-savvy of the sampling and uses technology to keep ahead of trends and interact with clients in various aspects of their business, although not always consistently and without struggle. These businesses are mostly found in the services sector. Moderate tech adopters have an evolved understanding and use of technology but this clearly remains at the nascent stage.”

As we moved further into the research, a clear and mutual goal between Intuit and India’s Ministry of Micro, Small and Medium Enterprises that arose was the need to ensure that the country’s small businesses have good access to the technology that could support their business growth. The “how” behind this goal, comes down to some very specific, yet extremely simple solutions.

Increase awareness
A systematic approach to increasing awareness about the benefits of technology adoption has to be created and implemented. Another important aspect to raise awareness about is, are the government and other institutional schemes available for the beneﬁt of small businesses. All stakeholders, including the Government of India, training institutions and the private sector must join hands in making sure that information about the available resources and the benefits of technology reach the country’s SME ecosystem.

The cost solution
Demonstrating the value add for the business is critical and should be done using cost–beneﬁt analyses and simple comparisons of growth between traditional operations versus IT-based approaches. The use of indigenously developed technology could significantly lower the cost challenge.

Also according to the study, “68 per cent of MSMEs say they adopted technology solutions only after seeing other businesses using it to their beneﬁt. Furthermore, 36 per cent of all survey respondents said that hearing from other small businesses about their experiences with technology would be helpful.” This makes developing resources such as case studies and testimonials crucial. These resources will not only educate other small business owners about the benefits of technology, but will justify the initial investment being made, since the return on investment would be clear to see!

Step up on infrastructure
In order to deal with infrastructural limitations, features such as “easy instalment, credit options, and pay-as-you-go options can provide sustainable solutions toward addressing cost concerns. Additionally, software should be easy to use and offered in local languages to breakdown the perceived complexity of IT.”
Indigenously developed technology and infrastructure will not only drive easier technology adoption, but also will pave the way for more research and development in the nation, and facilitate more small business entry into the tech domain.

Mapping manpower needs
What needs to be made very clear to small business owners is that technology adoption does not mean putting in place an extensive IT team. Contrary to this belief, most technology that is relevant to a small business is something that can easily be handled by existing employees. Small businesses should understand that IT support can always be outsourced to an SAAS (software as a service) providing company.

Staying secure
Strong passwords, secure socket layer certificates, secure cloud-based apps, encryption, firewall settings, anti-virus software and so many more security measures are available at the disposal of small business owners. Again, as I have been repeatedly stressing – it comes down to increased awareness and understanding.
Working towards better community engagement and sharing best practices is all that it takes! The key to increased technology adoption among lies in the understanding of barriers, solutions and multiple stakeholders coming together.

Indian Small Businesses and Technology Adoption – The Challenges

admin — Wed, 07 Nov 2012 04:59:23 +0000

We all know technology is great – it helps us multitask, be more effective and efficient. However, there are still many challenges that need to be addressed, before technology can be fully embraced by small businesses in India. It is quite unlike me to discuss the challenges or barriers first, but sometimes, without a proper understanding of the issues, the solutions may not be as effective.

Most of the times when I face issues at work, the answer almost always involves a technology solution of some sort. Either a software, a code, a website/microsite or free online tools! I find myself and those around me, relying increasingly on technological solutions. Not surprisingly, the usage of technology acts as a catalyst not just for the growth of individuals and businesses, but also for the growth Indian economy.

However, there is a noticeable apprehension towards the adoption of technology especially among small businesses in India. The recent study conducted by Intuit in collaboration with the Government of India’s Ministry of Micro, Small and Medium Enterprises, the National Institute of Entrepreneurship and Small Business Development and the National Small Industries Corporation, affirms that the small business community feel that there are many barriers to the adoption of technology at work. According to the report, “many stakeholders, including the Government of India, technology companies and MSME leaders, recognise that roadblocks relating to infrastructure, technology and skilled labour must be eliminated to sustain the growth of MSMEs and ensure their continued contribution to India’s industrial production, economic growth and employment.”

In spite of the challenges, what stood out for me and many other, was the fact that when it came to mobile technology in India, small, medium-sized and large businesses were even ahead of their counterparts in Western markets!

Though technology adoption substantially increased during the implementation of the Government of India’s 11th Five Year Plan, the use of technology in small businesses remains limited. In order to up our game when it comes to fully reaping the benefits of technology in business, we first need to identify and address the primary challenges. According to the study, the main barriers or challenges to technology adoption in small businesses are –

Cost: A sizable number of small businesses are still not convinced about the return on investment, when it comes to technology.

Low awareness on the benefits of technology: One of the main reasons that many entrepreneurs are not sure about the ROI in technology is the lack of awareness about the kind of benefits. Measures need to be taken to raise awareness about the advantages for technology.

Poor Infrastructure: The IT infrastructure in India at times leaves a lot to be desired. To easier facilitate technology adoption, quality infrastructure needs to be created.

Lack of skilled manpower: Many small business owners shy away from investing in new technology at work, since they feel it would call for further spending on skilled manpower.

Security and privacy: There are also many apprehensions about security and privacy when it comes to technology at work, and rightly so. Users of technology have to be cautious when it comes to data security. However, with it comes to security and privacy, there are several measures that one can put in place to, in order to protect data.

True, the challenges when it comes to technology adoption in small businesses are many, but the solutions are many more, and this is the best part. In my next post, we’ll look at technology adoption in small businesses, in light of the solutions.

The Rise and Rise of Social Entrepreneurs

admin — Wed, 26 Sep 2012 13:10:19 +0000

For centuries, we were witness to people and profit being at opposite ends of the spectrum in the business context. Conventionally, private enterprise has been seen to be motivated by profit, while welfare has been considered the duty of the State. Any gaps in the State’s net were traditionally filled by NGOs (non-governmental organisations) who worked, more often than not, on a charitable basis.

However, in the recent times, I see a new breed of entrepreneurs emerging. Social entrepreneurs who recognize social challenges around them, and use entrepreneurial principles to organize, build and manage social ventures to achieve desired social, economic and ecological changes. The fundamental difference is that unlike traditional business entrepreneurs, who typically measure performance in terms of profit and return, a social entrepreneur also measures positive returns to society; thus focusing on transforming systems and practices that are the root causes of poverty, marginalization, ecological deterioration and accompanying loss of human dignity. In doing so, these entrepreneurs set up for-profit or not-for-profit organizations. Thus, moving onto the humane side of fulfilling the needs of a wider social, cultural and ecological aspect both in the semi-urban and rural sectors.

Working closely with the small business sector, I know that the establishment and growth of a social small business can especially be rough! There are multiple hurdles like finding and retaining suitable talent, finding investors who believe in your cause as much as you do, raising capital, and building the value chain for sustainability. Becoming a social entrepreneur doesn’t mean becoming a philanthropist, activist or working like the CSR wing of a company. Social entrepreneurial ventures believe that it is possible to introduce systems – changing solutions that can create a measurable impact, while still making fair profit. And this desire to make a difference has seen the number of social entrepreneurs climbing every day.

Being a social entrepreneur is not very different from being an entrepreneur in any other field. Many of the principles, as well as the challenges, remain the same. After all, you are not in it for charity. The only difference is that economic or social upliftment is as important as profit when setting and measuring goals. Here are some things to keep in mind:

• Have a mission statement to create and sustain the social value
• Recognize and persistently pursue new opportunities to serve that mission
• Be in a state of continuous innovation, adaptation, and learning so as to cope with challenges
• Act fearlessly without being bogged down by resource crunch
• Showcase a heightened sense of accountability in each and every step

Social entrepreneurship need not be restricted to a region or even a country. A few examples of social entrepreneurs whose systems-changing solutions have had global impact include Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses, who was awarded a Nobel Peace Prize in 2006. Some others in the Forbes Impact 30 include names like Rafael Alvarez of Genesys Works, which teaches low-income high school juniors basic IT skills like installing and troubleshooting software, then placing them in paid internships, hoping they’ll land steady jobs after graduation. Martin Fisher and Nick Moon from KickStart develop low-cost, high-impact products –including a brick press and a machine that makes cooking oil from sunflower seeds.

In India too, there has been a significant rise of social small businesses like – Agastya International Foundation by Ramji Raghavan, Selco India by Harish Hande, click2plant.com by Upendra Agrawal and Jiten Agrawal, Daily Dump by Poonam B Kastturi and many others.

The National Social Entrepreneurship Forum (NSEF) founded in 2009, helps social enterprises to address their biggest challenges by connecting them to talent equipped with the right skills and mindsets to jumpstart their growth. NSEF has created a multiplier effect by supporting a number of young social entrepreneurs, impacting thousands of lives in India. Also, leading academic institutes TISS and NMIMS have come up with course modules to help aspiring students become the role models of tomorrow’s social small businesses.

The road ahead for social small businesses, though filled with many challenges – like balancing the two supposed extremes of profitability and social change, and getting access to funding – is one that is filled with huge potential. However, with more and more people dreaming big about social entrepreneurship, and talented individuals ready to turn this dream into reality, I have to say that the future looks bright.

Risky Business

admin — Fri, 14 Sep 2012 06:38:16 +0000

Not too long ago, running my own small business and being responsible for 75 employees, made me acutely aware of the kind of risks that my business, my employees and I were susceptible to. After all, the element of risk is embedded into the DNA of any business. The current global volatility just makes this gene even more dominant! There is however, one differentiator between a successful entrepreneur and a not so successful one – it is his/her ability to anticipate, prepare and effectively navigate their way through risks and disasters. Even the vital and booming INR 990 crores Indian SME sector took a hard hit during the recession. This wake up called proved that there is little one can do to avert disaster. Instead, what the recession taught us was how to mitigate risks and navigate our way through a crisis. Through my years as an entrepreneur and in my current position at Intuit India, I have learnt that even in the moments where you feel most powerless, you still have some amount of control. Maximizing this control comes from constant practice and prep!

Remember your high school, college entrance and job interviews when you had to do a SWOT analysis? You might have found the exercise cumbersome at that point in time but this simple self-analysis can save you and your firm a lot of trouble down the line. Identifying your enterprise’s strengths, weaknesses, opportunities and threats gives you a chance to capitalise on your strengths and straighten out chinks in your armour. Addressing any severe weakness is key, as you are just as strong as your weakest link!

While SWOT is great for internal analysis, study your external environment using a PEST (Political, Economic, Social, and Technological) analysis. There are all kinds of risks that small businesses are vulnerable to, some of these include financial, marketing, operational, strategic and other risks. This vulnerability makes it necessary to monitor the immediate business environment. This is one of the surest ways to do some serious damage control. For instance if your organization is already in a crisis, a recently amended governmental policy could save your day. However, in order to make use of such external factors to your advantage, you first need to be aware of them. As a small business owner, you also have the advantage to use one of the simpler tools to analyse risks, since there are relatively lesser number of factors that affect a small business, when compared to a larger corporation. Entrepreneurs can even look at a qualitative risk analysis from time to time. Once the risks are identified, take steps to address them in a timely manner.

Also, be prepared with Plan B, C, D and more! It is imperative that contingency plans are developed. As pessimistic as this may sound, being prepared for the worst will help you when things take a turn for the worse. Yes, think of all the things that can possibly go wrong and this way you would even be able to savour all those moment when things go as planned.

Always remember to make the best utilization of available resources and start by making smart investment choices. This wins half the battles for you! Resources include both material and human assets. When disaster hits, make the best of the resources you have in hand. For instance an employee who can multitask or a gadget that can take on double the workload would be your best bet. Speaking of resources, anyone would agree when I say that, “money is probably the first resource on your mind as an entrepreneur!” Hence, exercising financial discipline from the word go is important but it becomes crucial during a crisis. Invest in a good financial and business management software that provides you crucial insights on the health of your business. A good adage to keep in mind is that every penny saved is a penny earned, so curb back on unnecessary expenses and overheads. Remember that austerity measures don’t just hold good for the Eurozone!

It is critical for entrepreneurs to remember that managing risks and preparing for a crisis is an on-going process rather than just a one-time task. The one rule that I can’t stress enough is – “Don’t wait for issues to take catastrophic proportions!” The next time there are some red flags along the way, address them immediately.

The Two Faces of Entrepreneurship – By Choice or By Necessity

admin — Mon, 23 Jul 2012 07:47:32 +0000

I recently read an article that claimed that bad employees could make good entrepreneurs and I found myself wondering- how would a person who cannot even prove him/herself under the guidance of a manager, be his/her own boss? What sort of drive could such a person have to be a successful entrepreneur? Come to think of it, there are only two main reasons for people to look at entrepreneurship, as an option-it is either a choice they make or it stems out of necessity. Especially in country like India, the examples of both entrepreneurship by choice and by necessity are found in abundance. Here’s a look at both these drivers.

“I want to!”

The trend of being an entrepreneur by choice is on the increase especially among Gen Y. When a person becomes an entrepreneur by choice, he/she is typically characterized by their willingness to take risks and a motivation to achieve. These people are passionate enough to drop other very viable sources of income and a comfortable lifestyle, in order to create something of their own. Educated young individuals, who have many other attractive job offers in front of them, go on a make a conscious choice to create thriving start-ups. This choice empowers them to forge ahead come what may.

“I need to…”

While on one hand in India, there is an increasing amount of people taking up entrepreneurship by choice but on the other hand more people also enter it out of sheer necessity. In a time of turbulent economic trends and a decrease in the availability of lucrative jobs, many a times people jump on board the entrepreneurship bandwagon. Entrepreneurship for some people then becomes about mere income generation and survival. Sometimes, it is even a case of simply following in the footsteps of other family members, without any ideas or growth plans of their own.

A question of growth

If you take the most simplistic definition of entrepreneur, it is defined as someone who organizes a business venture and assumes the risk for it. Going by this definition, is it alright to assume that a street hawker is an entrepreneur? After all one is his/her own boss, he/she has a certain amount of vested capital, interest and also has assumed risks. Now-a-days what really distinguishes an entrepreneurship or a start-up is the aspect of growth.

For instance, Henry John Heinz’s first product in 1869 was horseradish. He then moved on to selling pickles, sauerkraut, and vinegar. Heinz used to deliver all his products in horse-drawn wagons to grocers in Pittsburgh. Heinz continued to grow by developing many of the world’s best-known branded products like tomato ketchup, baked beans, and baby foods. He and the eponymous brand gained worldwide fame. Henry John Heinz moved on from remaining a Pittsburgh localite, who sold horseradish to grocers in the neighbourhood in order to make ends meet to a global brand that has withstood the test of time.

One should only turn to the domain of social entrepreneurship in India. This growing sector is characterized by both need and by choice. For a lot of entrepreneurs in this sector, there is an inherent need to solve basic issues of income generation and other very pragmatic details that is necessary for survival. But somewhere along the way, the need for income generation transforms to the want to achieve a lot more!

Whether it is a boring job, a choice or necessity that makes one an entrepreneur – it really does not matter. These are but the driving force that makes one start a journey but the success and growth of this start-up comes from other, very different drivers.

Why Small Business Owners Should Read The Lean Startup

admin — Fri, 20 Jul 2012 09:18:37 +0000

The Lean Startup by Eric Ries (co-founder of internet company IMVU) is being hailed as a ‘must read’ by many, from established business scions to starters – for anyone who dreams of setting up his own venture or is at the helm of a small to medium enterprise. The book is fast becoming a business classic of 2011-2012 and has been recommended by people like Marc Adreesen (founder of Netscape) and Dustin Moskovitz (cofounder of Facebook).

Eric Ries first coined a business approach by the same name (The Lean Startup) a few years back. The approach aims at bringing a paradigm shift in the way companies are built and products are launched. The emphasis is on learning and scientific experimentation to shorten product development cycles, monitor progress, and gain valuable customer feedback.

Through his book – The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses – Ries has succeeded in taking his philosophy beyond the boundaries of Silicon Valley, (where it was first conceived)to spread its wings throughout the world.

While in the beginning the lean start-up philosophy was primarily aimed at tech companies, its scope has now expanded to include individuals, teams and companies looking to introduce new products or services into the market.

Practically implementable solutions for enterprises are at the core of this book. If you are an entrepreneur, it is especially relevant for you. Not only will it help you understand the demands of your customers, but will also offer solutions for surviving the initial tough period (a usual pain-point for start-ups) without the need of big funding or expensive product launches.

The primary challenge in establishing a start-up is usually the availability of capital. Ries’ book talks about several options available for aspiring entrepreneurs. In fact, the way the book touches upon this and other pertinent aspects of starting an enterprise, makes it a beginner’s course in entrepreneurship of sorts!

The book also delves into a variety of entrepreneurial situations from traditional, physical businesses to those that only existent on the web. In case you are looking at starting your own business, chances are you may find some very relevant solutions to your questions in Ries’ The Lean Startup.

Here are some aspects that may interest you:

1) It makes you sit up and realize that increasing innovation is lowering the cost of reaching our customers – in effect; it reduces any associated market risks.

2) The book talks about the need of testing all concepts against reality before implementation, in order to avoid failures.

3) It urges entrepreneurs to understand the metrics that drive their businesses.

4) To bring clarity to various concepts, The Lean Startup also makes ample use of relevant real world examples and case studies.

So, if you are a business owner, go The Lean Startup way. Don’t miss this one.

The Art of Pitching for Small Business Owners

admin — Wed, 11 Jul 2012 05:24:05 +0000

The Cambridge Dictionary defines a pitch as “the words or speech someone, especially a salesperson, uses to persuade someone to buy, do, or use something.” In a nutshell, this definitely is the most simplistic meaning of a pitch, but examined at a deeper level, a business pitch is something a lot more complex. It isn’t just the words someone uses, it is about the body language, the tone, and striking the prefect balance between sounding convincing without sounding desperate, even if your best-laid plans depend on a single pitch!

Pitching for an entrepreneur is an opportunity to write what he/she wants on a clean slate – the minds of their audience. However, not with a chalk but a permanent marker! If you make a bad job of it, there is no rubbing the slate clean! You will just have to pull up your socks, learn from your mistakes and then look around for some new slates. Deep down most small business owners already know these ground rules, but here are some pointers you can keep in mind. Just go ahead and write your destiny just the way you want to.

Make an emphatic start
The first few minutes are critical, so do not beat round the bush. Establish your credentials and what you bring to the table within the first few minutes. Take care to not bore your audience with a long-drawn life history that will have them suppressing yawns, or worse, exchanging uncertain glances.

Know your audience
Be relevant and realise that the same presentation does not work for everyone. Put in adequate amount of research to get to know the people you would be presenting to and understand the industry. Customize your messages to make your business appear aligned to their strategic needs.

Be concise
As a CEO of a start-up you may want to say a lot but it is very important to time your pitch correctly. Keep it simple and to the point. Avoid any sort of hyperbole and remember that you are more likely to score brownie points for keeping the content relevant and crisp.

Back to basics
Even the best pitch may come to nothing if the projector dies out on you, the electric supply lets you down, or any other previously unthought-of calamity strikes you. Be adequately prepared with your backups – a second laptop, print-outs of the slides, or whatever else it takes to be battle-ready. Also, reach on time to set up the stage well in advance. This will rid you of needless anxiety.

Look in-charge
While it is important to showcase team spirit and give others a slice of the pie, you still need to control the pitch. As a small business owner, you need to look and be in-charge. This comes naturally with proper preparation and knowing the details. Make sure to inspire the audience with your confidence without appearing like a know-it-all.

Listen
Listening is already half the battle won. The very fact that you are listing to your audience means, they are engaging with you by making conversation around your presentation. Carefully understand what your audience is trying to convey to you and read their body language to respond accordingly. Listening to your audience will actually open up avenues to make you pitch stronger.

Pitch Repeatedly
Finally, do not let failures bog you down. The more you pitch, the better you will get at it. True, your best-laid plans could very well rest on a single pitch, but you never know when a new opportunity will come along to make your dreams come true.

Sectors Driving India’s Entrepreneurial Charge

admin — Thu, 24 May 2012 11:25:35 +0000

As India Inc. grows stronger by the day, more entrepreneurs want to dip their fingers in the pie. But the question here is- which is the best part of the pie to target? While entrepreneurship is on the rise, what are the sectors that drive the country’s entrepreneurial charge or which sectors are the most profitable ones?

Entrepreneurship is no more about- “I am a qualified journalist with x years of experience, so I think I could start my own publication.” It is about understanding your own strengths and analysing how you can utilise it in specific growth sectors. You may very well be the best journalist out there, but after scouring through endless reports on growth trends, you might just realises that the sanest decision would be to set shop in the content marketing or the public relations industry! At any given point in time, there are certain sectors that drive a country’s economy and here is a roundup of some sectors that are currently ticking. Also find out what it takes to set foot into these sectors.

Digital Technology: With GPS, mobile apps, cloud technology, website development, digital design and highly successful social media initiatives; the one sector that holds promise for rapid growth is the digital technology sector. Especially in India, the sector is nascent, unlike in countries like USA and UK. Even the huge players in the market still need the support of small businesses in this fast paced and dynamic industry.

What it takes: A bit of technical knowledge, oodles of creativity and curiosity, a great team of techies and sound understanding of cyber laws across countries.

Lifestyle & Wellness: The lifestyle and wellness industry is in full bloom in India, what with the mushrooming number of concept gyms, spas, salons, martial art centres and more. The Indian Direct Selling Association (IDSA) says, “Wellness has emerged as a leading product category contributing to the highest share of sales leaving behind cosmetics and personal care products.” With urban India’s innate need to look and feel good, the growth in this sector has shown no signs of slowing down.

What it takes: Pro networking skills, an expert hospitality industry consultant, a knack for recruiting the right kind of talent and a customer driven culture at work.

Social Entrepreneurship: Social entrepreneurship is no more just in the NGO domain. There are several social ventures out there proving that with the right mix of conscience and business acumen, there are profits to be made. This niche sector has led to many innovations. Several small businesses operators hold patents for coming up with innovative creations that address various sustainability needs for people and places. This sector drives growth in the semi-urban and rural sectors.

What it takes: A unique mind-set that makes one put helping others ahead of making profits and drive to reach out to people not just in urban sectors but in rural sectors as well. An entrepreneur in this industry also needs to have the knack for spotting the right kind of inventions and creations.

Education: World statistics estimate that between 2010 and 2030, India will add another 241 million people to the working-age demographic and that means the children who are currently in our education system. Even the present Union Budget has identified the sector as one of the critical sectors that will drive the long term growth of the country. Entrepreneurs in sectors would not only enjoy one of the biggest market shares, but also support from the government in terms of allowances, subsidies and tax deductions. Right from play schools and educating children with special needs to training young adults for competitive exams, this sector presents a myriad of opportunities.

What it takes: The motivation to help build the next generation of super brains, trained teachers/ tutors and strong admin support.

Healthcare: With a market potential of Rs.50,000 crores, this sector holds immense potential for entrepreneurs. With India now fast establishing itself as a medical tourism hub and venture capitalists pumping money into research and development in this sector, the healthcare industry is brimming with lucrative opportunities. Clinical trials, speciality clinics, combining healthcare with holistic wellness are some of the exciting new developments in this sector.

What it takes: To start off, a lot more capital investment than the afore mentioned emerging sectors! A strong understanding of life sciences and niche markets, not just in India but across the world. You would also need a skilled operations management and administrative team.

The other growth sectors include food and hospitality, agriculture, microfinance and of course IT. While further analysis will reveal more growth areas, it would do well to keep in mind that most of these key sectors come under the direct radar of regulators. You would have to know if your business plan is viable in terms of your own strengths and external factors like legalities, regulations, target audience and geographic scope. Your best bet would be to do a thorough research and bring on an expert consultant, before you reach out for that tempting piece of market share!

What Keeps Small Business Owners Up at Night?

admin — Mon, 07 May 2012 09:57:28 +0000

Regulatory hurdles, financing woes, staffing challenges, runaway rents – running a small business in today’s environment is no walk in the park. Still, not many entrepreneurs would trade what they are doing for a steady and predictable job with less volatility. Studies indicate that entrepreneurs, on average, have higher degrees of job satisfaction than non-entrepreneurs. This is true especially when they are self-employed by choice and not by necessity.

It is also true that the pressure rarely lets up for this group: pressure to pay the rent, to grow the business, to do more than just stay afloat. ‘What keeps you up at night?’ is a classic business probe into the anxiety that fuels the actions and decisions of business leaders. If one were to ask a group of small business owners that question, at least some part of their response will match what executives in larger corporations may come up with. Maintaining a positive cash flow and keeping the sales pipeline active, for example, figure in the goals of any business. However, for a small business, these goals take on greater urgency because survival depends on meeting them.

In matters related to cash flow, small businesses have to be particularly vigilant since they don’t have the luxury of cash reserves that larger organizations do. And so, in that respect, timely invoicing, having a clear receivables policy and pushing for advances or early payments wherever possible are all sensible and essential practices. Enforcing these payment policies with clients is not always easy but it helps to cite the number crunchers in your team when pushing for payment (I’m sorry but my Finance team cannot give you more than 30 days to pay this invoice).

On the sales end, there is a need for ongoing lead generation. Here again the stakes are higher for a small business that can’t afford to see its pipeline dry up. Active marketing geared towards generating the next big deal or sale will help keep this pipeline stoked and alive.

However, making the sale is just the beginning of an ongoing quest to hold on to that portion of revenue. For many small business owners, customer retention can be a journey marked with ups and downs. In the process of adding scale, they may lose a grip on the attributes that won them customers in the first place. And so, this again is another balancing challenge that small businesses grapple with.

There are plenty of other issues that may cause small business owners sleepless nights. Staffing is one big area. Finding the right person or people to handle critical tasks, from accounting to sales is a challenge for many businesses. Another cause for worry is getting the teams to work together in a cohesive and results-oriented fashion. It calls for a consistent focus on training and skills upgrades while keeping an eye on individual aspirations. Succession planning to ensure stability when a core team member departs is also critical for a small business that can’t depend on organizational layers to soften the impact of such a departure.

The elephant in the room is, of course, staying relevant as things change rapidly around you. Will the new hypermarket in the area wipe out the results of my little stationery shop? Will online shopping and lower prices diminish the margins of my small lending library? In small business as in business in general, paranoia with regard to what tomorrow will bring is a key survival trait.

There are several valid reasons, it seems, why you, as a small business owner, should lie awake at night. On the flip side, there are also plenty of reasons for you to go to bed satisfied: for having built a business from the ground up, for believing in the value of what you offer and for carrying an entire team along on the strength of your conviction. This conviction is what is likely to get you out of bed in the morning, ready to take on a new day with fresh challenges.

Sleep well and sweet dreams!

Keeping it in the family

admin — Mon, 23 Apr 2012 04:44:38 +0000

Lessons for small businesses from Indian family corporations

The Indian business landscape is dotted with family owned conglomerates. Between Tata, Reliance, Birla, Bharti, Wipro and many others, it is easy to see why a recent Economist article described these companies as comprising ‘the backbone of India’s private sector’ (The Bollygarch’s Magic Mix, The Economist, October 2011). The stories of how many of these companies made it into the big league is the stuff of business legend.

The best family owned organizations, I believe, are adept at leveraging the personal involvement and purpose that run through their genetically linked boardrooms. However, there also areas in which keeping it in the family can be a bit of a liability.

For small business owners, there are plenty of lessons to be learnt from this group, both in terms of practices to emulate and those to avoid. Here’s a list of the most prominent ones, in my view:

Practices to emulate…

Separating personal from professional

Successful business owners recognize that they can’t let personal ties get in the way of sound business decisions. The best managed family businesses have extremely well defined systems and processes in place, including guidelines for hiring, settling conflicts, communication cycles and more.

Knowing when to seek external intervention

While they may prefer to keep the vast majority of decision making in the family, many of these businesses still understand the value of bringing in an outside expert for strategic business changes and improvements. They don’t hesitate to hire professional consultants for specialised tasks, including time consuming administrative work and documentation. This can free the leaders to concentrate on other mission critical tasks.

Assessing the financial merit of every business move

When it comes to financial savvy, few businesses are as strongly equipped as family run ventures. From broad impact business decisions to petty expenses, family businesses are driven by the philosophy to invest only where it makes financial sense. There is a relentless focus on long term profitability in these organizations, a trait that every small business owner should hone.

…and a few to avoid
Leadership succession

It is true that family run organizations usually don’t have to look too far or long for new leaders, often finding them in the next generation that has grown up with the business. However, this could prevent the fresh infusion of ideas that an outsider can bring. In addition, family politics may interfere with the succession process, keeping it from being as smooth and seamless as it ideally should be.

Governance and accountability

When there are few investors outside the family gunning for results, growth may be compromised. Family owned corporations that don’t have to answer to stockholders or external boards are often less motivated to make uncomfortable business changes in the interest of driving growth.

No matter what their failings, there is no doubt that India’s successful family owned corporations are inspiring examples of entrepreneurial drive and ambition. Every small business owner can learn and benefit from the value system that is embedded in the DNA of these companies.

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Small Businesses and the 2012 Union Budget

admin — Fri, 30 Mar 2012 15:20:46 +0000

The 2012 Union Budget is widely viewed as a pragmatic one. For the next fiscal, the government is projecting a growth of 7.6 per cent, directing its efforts at reducing the deficit while highlighting education and infrastructure as key areas for growth.

So far, so good. When it comes to other sectors like IT, Power and MSMEs, the budget however, doesn’t really deliver in a strong way. For the most part, small businesses just get a passing mention in this budget, with few incentives and programs geared specifically for them. This has to be disheartening for a sector that is widely credited with fuelling economic growth and job creation.

Here’s my take on what’s good and not-so-good for small businesses in this budget:

The Bright Side

Skill development

One of the better moves in this budget is the allocation of INR 10 billion towards the National Skill Development Fund. This will be helpful in upgrading skills and addressing the shortage of suitable talent in the Indian workforce.

Revised tax slabs

Raising the limit for compulsory tax audits for SMEs to INR 1 crore from 60 lakhs will also bring relief to many SMEs, especially as we are still in recovery mode. On the same lines, the income tax of 20 per cent previously limited to those in the 5 to 10 lakh income bracket, has now been extended to cover those making 8 to 10 lakhs. The extension in the tax slab translates into higher disposable incomes for people, which has positive implications for consumption and growth.

Purchase and procurement policy

The policy requiring Ministries and Central Public Sector Enterprises (CPSEs) to make a minimum of 20 per cent of their annual purchases from MSEs has finally been approved. Four per cent of this has been set aside for procurement from MSMEs owned by Scheduled Caste/Tribe entrepreneurs. This is a welcome move in support of MSMEs.

The Flipside

Increased indirect taxes

One of the biggest drawbacks of this budget for SMEs, is the increase in indirect taxes. In tackling the fiscal deficit, the Finance Minister appears to have gone the tax increase route, rather than the expenditure management one. The two per cent increase in service taxes and excise duty can adversely affect numerous players in the SME sector. Most of all, it can curb the very consumption that leads to economic growth.

Not much for IT

The IT industry has been largely side-lined in the 2012 Budget. This may prove detrimental, since many start-ups and existing SMEs operate in the IT sector.

The tax holiday for software technology parks and export oriented undertakings expired last year, without any extension. Unfortunately, it was not re-introduced in this year’s budget. This would have greatly helped SMEs in their efforts to set up shop or expand their operations.

Higher indirect taxes will also have an adverse impact on operational costs and prices. Several IT-based SMEs starting up or expanding in Tier I and Tier II cities may have to scale back their plans. This will have a negative impact on overall economic growth.

DTC and GST

Despite talk of revising the Direct Tax Code (DTC) and Goods and Services Tax (GST), the budget doesn’t present a clear plan and time line for implementing these revisions. This is disappointing for SMEs that have waited a long time for these business impacting changes to the tax code.

In the final analysis, the 2012 Union Budget forces small businesses in India to look for indirect ways to benefit from the slew of new policies and funds being introduced across sectors. However, the SME ecosystem in India is strong, and has always pulled through in sun and rain. Surely, the 2012 Union Budget is not enough to dampen Indian SMEs’ spirit.

Since it is tax time, I plan to close the year by running the end with a 10 kilometer run on Saturday, the 31st March. So I suggest that you close your books, relax and plan for the next year, just to make it a little less taxing!

A Budget Wish List for Small Businesses

admin — Wed, 14 Mar 2012 10:20:55 +0000

Management Guru Peter Drucker once said: “Whenever you see a successful business, someone once made a courageous decision.” It is a simple statement that is a powerful reflection on what it takes to jump on the entrepreneurial roller coaster.

Small businesses and the courageous individuals who head them power the country’s economy, providing employment to many and producing more than half its industrial output.

The country clearly has a lot riding on their success and it is that time once again when the government can demonstrate that it is committed to the sector. When the Union Budget is unveiled later this week for the next fiscal year, many small and medium businesses will nervously wait to see whether it will address some of their pain points when it comes to running their businesses.

Although business leaders and analysts have already weighed in with their ideas on what the budget should deliver for various sectors, I wanted to take a stab at my own wish list for the SMB sector. Here are a few things that I would place at the top of this list:

More Accessible and Less Expensive Credit
Credit is not easy to come by for small businesses. Obtaining loans from banks is a process fraught with excessive paperwork, uncertainty, and the very real possibility of rejection for any number of reasons. Many businesses find it equally challenging to get funding from other sources, including private equity, venture capital and angel investors.
The high cost of credit also adversely impacts many businesses, increasing operating costs and squeezing margins. Opening up the credit taps for small businesses could mean more government support in the form of guarantees, a simplified loan qualification process and greater access to lower interest sources of funding.

Tax Incentives that Reward Entrepreneurship
The SME sector is one of the biggest employers in the country with a labor intensity that exceeds that of large enterprises. However, this huge employment generation potential is not completely recognized and rewarded under our present system of taxation. A large number of SMEs are unincorporated entities that lack the status and pull of a formal organization. Hence, their contribution to the economy in terms of jobs and output often falls below the radar of the government’s tax incentive structure. An overhaul of this structure to cover more of the country’s SME units will go a long way in strengthening this backbone of our economy.

Lower the Cost of Doing Business
The International Finance Corporation (IFC) which maintains figures and rankings on ‘ease of doing business’ for economies across the world, has placed India 132 on a list of 189 countries for 2012. So we clearly have work to do on this front. Among the activities that the IFC examines the difficulty levels for in coming up with these rankings are starting a business, obtaining construction permits, registering property, enforcing contracts and paying taxes.
I recently watched a revealing interview with the Managing Director of a small manufacturing operation where he lamented the valuable daily time lost in compliance with various governmental regulations. For a small business, this translates into lost productivity that directly impacts the bottom line. By eliminating red tape and bureaucratic hurdles wherever possible, the government can lay the foundation for a small business friendly environment in the country.

More and Green with Technology Upgrades
The government already has a few helpful schemes in place to enable businesses to periodically upgrade their manufacturing equipment, IT infrastructure or other business-critical technology. Ideally, however, these credits should be extended to cover more categories of business infrastructure and equipment, including green energy and other upgrades designed to drive sustainability. By encouraging the broader adoption of green technology, the government can provide momentum for its long-term goals in sustainable development.
This may be a small wish list but it addresses the big areas where small businesses feel pinched and pressured. By taking a closer look at these and related measures, the government can send a clear message to the country’s entrepreneurs that it cares about their success.