I want to expand my business because……it upgrades my social status
Many entrepreneurs want to grow for reasons such as bigger opportunities, addressing a pain point for the society, bringing in novelty etc. However, some SMEs in India aim at growing with an eye on upgrading social status as the primary goal, a risky proposition.
Recently I went to meet one entrepreneur in the Industrial Area accompanying one friend. He has been an entrepreneur for 30 years. He had been successfully running a business of manufacturing critical high precision components using most advanced manufacturing faculties. As the business reaches the stage of full potential, he wanted to upscale the business. He chanced upon a guy, who promised to secure higher funding support at softer terms.Read more
Choose your banker prudently- A crucial decision to shape the future of business for SMEs in India
Banker plays an important role in the success for SMEs in India. SMEs should take
Recently I met an entrepreneur who has been in the business of manufacturing of plastic racks for retail shops. The business has been doing well since the time new age of organised retailing started taking roots.Read more
What is the appropriate level of borrowing for my enterprise?- A lingering question for many SMEs in India
Prudent borrowing is as important as growing business for SMEs. Uncontrolled borrowing without reference to income generation may slowly eat into liquidity and eventually stress the business beyond revival.
Recently I had a chance to interact with one entrepreneur in services sector who have successfully built his business from scratch and made to scale the height of Rs 60 crores turnover. Though the growth and profitability were good, he was restless and looking for raising fresh debt to meet the working capital. He needed increasing working capital as more ordered starting flowing in. He was complaining about brokers who have taken his file and not reverted. He requested me to look at his financials.Read more
SMEs under distress-Grab the windows of opportunities to turnaround
SMEs experiencing distress should seek relief under new regulations meant for assisting turnaround without waiting for bankers to act and stay away from suppressing their financial difficulties.
Recently Indian Express reported that the deputy governor of the Reserve Bank of India (RBI), S S Mundra, held banks responsible for the large number of ‘sick’ micro, small and medium enterprises (MSMEs). Mundra, who was speaking at the 13th convocation of the Pune-based National Institute of Bank Management (NIBM), also said the banks have not paid enough attention to this sector.Read more
Insolvency and Bankruptcy Code 2016 (IBC 2016)- A ray of hope for distressed SMEs in India.
Recently implemented globally comparable Insolvency and Bankruptcy code will make turnaround or liquidation of distressed firms more humane and quick for SMEs in India
Responding to clamour of industrial sector for decades, Govt has finally brought in a law to deal with instances of insolvency and bankruptcy in a more humanely and within stipulated time. Govt has recently set up Insolvency and Bankruptcy Board of India (IBBI) for implementation of the new legal mechanism to deal with stressed businesses.Read more
Protect against risks to life- Few suggestions to SMEs in India
Entrepreneurs normally obsess with the business goals and ignore risks to themselves. Mitigating such risks by taking sufficient insurance is paramount to protect themselves and their loved ones.
Recently I came across a story of an entrepreneur who had been thoroughly focusing on growing business which went through much turbulence in early days. As usual, he was very passionate and obsessed with his business which we normally observe among entrepreneurs. He had been managing finances of his business through hand loans and not much emphasis placed on bookkeeping or analysing major risks.Read more
Embarking on growth without financial plan- A fatal blunder seen in many SMEs in India
Unplanned approach to fund-raising to finance the growth is fatal to SMEs. A meticulously drawn financial plan which is sensitive to economic viability and entrepreneur’s financial strength can help to avert disaster in growth stage
Recently I met an entrepreneur friend after three years. In 2013 Then he approached me for guidance on seeking a small loan from his bank wherein both manager and himself could not agree on the approach to structure a loan to fund his business needs. Later he could get the loan after resolution of the contentious issue.Read more
SWOT Analysis- A Simple Technique for Planning Sustainable Growth for SMEs
SWOT analysis is a simple and handy technique for SMEs in India to undertake a holistic review of the business before setting on the growth plan. This will eliminate blind spots and make growth transition sustainable.
In the previous fortnight, we had published a blog on managerial capacity (Relation between Growth of Business & Managerial Capacity- A Riddle for SMEs in India). After going through the blog, one of the entrepreneurs opined that SMEs normally overlook various challenges they will have to confront after commercial operations when a business moves from startup to growth stage. He is the view that managerial capacity is not only one but there are many challenges they should address while planning for growth.Read more
Relation between Growth of Business & Managerial Capacity- A Riddle for SMEs in India
The managerial capacity constraint has failed many growing SMEs in India. Overcoming this constraint is paramount for SMEs to make growth sustainable.
I have witnessed the failure of an SME in pharmaceuticals space for want of managerial capacity commensurate with the size of business. The firm was initially established as a small manufacturing company by an entrepreneur who had been a very successful retailer of pharma products.Read more
Insufficient response to health contingency of entrepreneur -A common mistake among SMEs in India
ontingent events like terminal illness of entrepreneur are dealt with ad-hoc approach among SMEs in India leading to the spectre of struggle and messy financial crisis for families to bear.
I came across a story of entrepreneur recently in Bangalore who died after prolonged illness. Two years back he was detected with a brain tumour and was operated upon.Read more