Published Article Details

How new breed of entrepreneurs are running businesses successfully without bank loans

Posted by: Uma Shashikant on Oct 23, 2017, 06.30 AM IST

The thriving small-scale industry that works overtime to make festivals and celebrations more special, only gets better each year. With posters and protests creating a din around the use of firecrackers, that specialist industry is no longer the centerpiece.

Those who participate on the supply side of the festive season are a varied set of entrepreneurs operating out of homes, sheds, backyards, footpaths, congested streets and million other locations and facilities spread across the country.

There was a time when making sweets and savouries for the festivals was a family affair. Large-scale production happened in the kitchen, where men and women of the household busied themselves in making tins of stuff to be stacked away and distributed on the day of the festival. The practice slowly gave way to store bought stuff, and there was a time when the mithaiwallas ruled.

Not any more. There is now a choice of service providers: entrepreneurs who will supply specialised sweets and savouries, made with ingredients that appeal to the quality or health conscious; specialists who will come home to cook with your ingredients; small teams that will cook for a bunch of homes if space is provided in the housing society; small industries that will deliver stuff home; and numerous vendors who sell online by themselves or in association with larger online stores.

Deep cleaning the house to make it festival ready is now a corporatised and process driven affair. A team of efficient and able young men and women comes in with all the materials, scrubs everything including the grease on the exhaust fan, and leaves the floor and walls sparkling like new. There are decorators who will bring in strings of light; rangoli artists who will dazzle with colour; florists who will deliver flowers for the door, pooja, and interiors; and suppliers of rentable furniture, d├ęcor and potted plants are just one phone call away.

The list is too long and can fill the page, but you get the drift. From masseurs and make-up artists, cooks to culinary artists, gift packers to delivery boys, an entire industry is alive and agog with activity when the festival season kicks in. There is an informal network that operates beneath the buzz.

Given the ubiquitous cell phone, and the ability to send pictures, voice messages and missed calls to get work done, people connect with one another to let the other know what they can do. Many young people have come together to set these up and keep them going. The team of young men that came to deep clean our house was employed as direct sales agents with a bank. They began this enterprise as a moonlighting exercise and they told us that their venture keeps them highly motivated and enthusiastic compared to the drab and thankless nature of their day jobs.

Most of these service providers work with very little capital. Their biggest concern is the delay in payments. They do not have much of a pricing power as the market is very competitive. In a large country like India, the opportunity to sell to a large number of buyers also comes with the risk that a large number of sellers will soon push the market to become competitive and drive prices down. Those who can specialise and differentiate thrive; those who sell basic stuff get squeezed. A little girl who was selling diyas on the footpath told us that every buyer invariably asks for a lower price, or a few extra free diyas. Since she risks losing the customer to many others who are also lined up like her, she obliges.

Perils of perfect competition and exploitative buyers. Many service providers have to meticulously plant their working capital. An informal network of credit works in closed networks, where payments to everyone in the chain happens after the final customer has paid for the goods or services.

No one we spoke to had a working capital loan from a bank or an NBFC. They were wary of dealing with institutions and defaulting. Their informal networks were more accommodative and understanding of the cash flows in the business, and irregularity of receipts and payments. A common theme in the conversation about why they were in the business, was the lure of a "better life."

There was a time when small-scale entrepreneurs were mostly those who could not set up a large-scale business. The festival specialists have mostly chosen to be small, operating in a limited geographical area, serving a well-known network of customers, and operating with the benefits of familiarity and community. They were seeing the economic opportunity to make some money so they could also buy a two-wheeler or car; take a holiday with the family; buy some durables for their home; wear better clothes and eat better; and most wanted to send their children to better schools.

The festive season brings to the fore millions who put in hours of work to offer goods and services that will get them enough money to fund their dreams. A bunch of young call-centre employees had set up a dial-adriver service, and operate with great bonding where the women in the team take calls from customers, assign the task, and monitor the performance, while the men go out to complete the task.

They laughed at the mention of sexual exploitation, saying that they were a team that cared about getting the work done and had no time for needless drama!

The abiding image for me this festival season was that of Abdul, an expert embroidery artist, who works for a high-end boutique in Bengaluru. Abdul says he does not have the money or the connections to sell clothes as well as his employers do. But he charges them top rates as he knows what the final prices are, and how he can move to another boutique if they did not pay him well enough.

His friends, who are also artisans like him, are connected on a Whatsapp group and they know the trends, rates, prices and demand in the market place. He was seated in the garage of a large house, with the expensive silk fabric held tautly in a frame. His deft hands were creating a beautiful design even as he was intently engaged in conversation with his little daughter, whose voice was emanating from the cell phone he had on the edge of the frame. He was oblivious to everything else, just focused on his work and his intimate conversation. Inspiring new breed of entrepreneurs!



(The author is Chairperson, Centre for Investment Education and Learning) This article appeared in Economic Times dated Oct 23, 2017, 06.30 AM IST

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