Small is challenging
The small and medium enterprises sector is one of the biggest employment creators in the country today, and needs to be nurtured through proper handholding, as came out during the Entrepreneur India 2012 event. Meha Mathur reports

Each year, five lakh professionals come out of professional education institutes, and look for jobs. The ratings of management institutes and engineering colleges are in terms of pay packages their passouts can secure in campus placement. The ecosystem is such that youngsters too join these institutes in order to achieve those pay package. How to bring about a sanity, so that youngsters start thinking in terms of entrepreneurship and become job providers rather than job seekers? How to bring about a balance between demand for jobs and supply of jobs? This concern was expressed by HP Kumar, Chairman and Managing Director, National Small Industries Cooperation (NSIC), at Entrepreneur India 2012 in Surajkund, Faridabad on May 18-19.

The event was organised by Franchise India, which has helped as many as two lakh people in their entrepreneurial journey since 1999 through mentorship, and which also has a magazine titled The Franchising World. It was an event organised with great care to details, including making it interactive, to some good compeering. A good opportunity to witness event management skills.

Eighteen per cent of the population in this country comprises entrepreneurs. They are those people who are keen to take charge of their life, who are fed up of ‘Hari Sadu’ bosses. But their journey is not a cake walk or a straight walk. Even so, entrepreneurial spirit is thriving in the country. Ritu Marya, Editor in Chief of Franchise India said that each day she gets 10 to 12 profiles of entrepreneurs who are low on capital and are yet adding to the economy. Encouraging entrepreneurs thus has huge multiplier effects on the economy, in terms of job generation and consumption. Thus incubation, financial support, handholding the entrepreneurs through the paperwork is very important. The seminar provided a great opportunity to entrepreneurs to learn from people who have already been through that process, and who provided valuable advice on all these counts.

Kumar of NSIC spoke in particular about rapid incubator that his organization is promoting. Discussing the traditional method that universities, research institutes and Government organisations adopt, he said that these provide space, infrastructure, telecom, internet and mentors, and leave the person to develop an idea, do research on market, finding out space for the production plant, tie up with banks, seeking approvals from the government etc. All this takes two-three years, a very long gestation period indeed. This requires perseverance and resilience. Looking at the country’s requirement for a large number of entrepreneurs, we need faster gestation period. The NSIC has thus devised a rapid incubator, with a turnout time of six months.

This is how it operates: NSIC has a list of 100 products, which pertain to basic human needs like food, clothing and shelter. You can walk in and choose a product depending upon your interest. The incubation starts with practical training in simulated conditions. In the first month, you will actually have to operate the machines and work on procuring raw material etc. After that, you write a project report with mentor’s help. Following that, you work on funding your project, in the fourth month you work on installation, tying up with buyers etc, and work on approvals. Stating that money is not a problem in this sector, it’s the presentation of your project to prospective financers that causes problem, Kumar informed that NSIC has a large number of tie-ups with financing institutions. “We are open. We will work for you without cost,” he summed up.

Harish Bahl, Founder and Chairman of Smile Group, pointed out that most of the great companies started in the last 10 years — Google, Yahoo, Facebook etc — have been founded by people less than 30. “This is not an accident, there is a clear pattern. When you are young, your energy level is high, mind is clear, and you have the ability to challenge the unknown. It creates the right ingredients.” Yet, he said, not all great companies of this era have been innovation-led, which are “disruptive” in nature. Many great companies, like Make My Trip of Deep kalra, have been replica of already functional companies (in this case Expedia). These are execution-led models and they succeed (or fail) due to the following factors:

1. Business model risk: Is it a good business model? Even great entrepreneurs with bad business model can fail. For example, e-commerce was a bad business idea in 2000 because the market was not ready then.

2. Operating management risk: You have to have a great team. Invest in human capital. Funding is not difficult, putting up the right team is.

3. Market risk: Is there a market for your product? If it’s an idea with a small market, you will have to struggle a lot harder. Niche business might sound nice, but it also means a smaller market. Go for products and services that are culturally aligned with the country. For example, a dating website is difficult to succeed in India. Smart persons have launched matrimony sites instead.

4. Financing risk: The amount of capital chasing the entrepreneurs is unbelievable. You have to master your pitch, and demonstrate to the investors a clear exit path, either in the form of an IPO or a buyout.

Dr Mukesh Batra of Dr Batra Homeopathy has actually demonstrated how to take an idea to its logical culmination. His company has treated seven lakh patients, including three prime ministers.

Through his own example, he delved into the two fundamentals of entrepreneurship: risk taking and innovation. “There was no SIDBI to fund doctors when I started, and for homeopaths certainly not. The computer that I needed then cost 125,000. I borrowed from various sources.” Going for innovation in a large way, the company went for innovations like blister packaging, electronic case records, ERP solution and video conferencing, among others, relying heavily on IT in a big way. The Dubai branch of the clinic opened in 2009 at a time when the world was hit by recession. “Perseverance is important. You have to be for the idea for some time,” he advised.

Among his other learnings:

• Invest in learning, for that is for ever.
  Failure is good. The earlier you fail, the better, because then the cost of failure goes down.”
  
• It’s important to delegate in order to expand. Trust others, so that you find time for creative pursuits too

Navin Kumar Maini, Deputy Managing Director, SIDBI, wondered at the fact that there are 30 million enterprises in MSME space, operating without the social security of developed countries. All they have is their natural innovativeness and willingness to slog. “We are happy to support youngsters with ideas, who are dropping out of placement,” he said.

He described the Credit Guarantee Trust of SIDBI, which takes care of the problem of collateral security. “The first generation entrepreneur from a middle class family does not have collateral security. What does he do? SIDBI has set up Credit Guarantee Trust for loans upto one crore.” He said eight lakh entrepreneurs have been able to take 37 crore worth of loans under this scheme. He also pointed out that SIDBI is setting up an exhaustive website for entrepreneurs to handhold them from the stage of ideation through funding and approvals. Bikky Khosla, CEO, tradeindia.com and Co-Chairman of SME Expert Committee, ASSOCHAM, emphasized research and reading to keep abreast of changing times all the time. This younger brother of Silicon valley icon Vinod Khosla shared with the gathering that his brother is reading even on the dining table.

He also stressed on keeping focus; building teams (“individuals don’t win, teams win”); being open to suggestions from employees; investing in new media to be more cost effective; and taking care of customer satisfaction. Joseph Mathai, Vice President, Entrepreneur India, and Sachin Marya, CEO, Franchise India, held an interactive session on entrepreneurial mindset. In this, they took up the 10 entrepreneurial strategies highlighted in the book Take Charge by Gaurav Marya.

Among the other persons invited at the event were: Vikaas Gutgutia, Founder and MD, Ferns N petals; K Pandia Rajan, Founder and MD, Ma Foi Strategic Consultants Ltd; Kuku S Kumar, Vice President, Federation of Women Entrepreneurs; and Pradeep Hirani, MD, Kimaya Fashions Pvt Ltd.

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