Small Business Entrepreneurship

Abstract:

The main purpose of the article is to introduce and understand the actual meaning of Small business entrepreneurship and the growth of entrepreneurship in the micro, small &medium enterprises of India. In particular. The Indian market has changed considerably and also the activities of Small scale enterprises. Today, for businesses to survive, enthusiasm and entrepreneurship must exist in its completest grade.

Introduction to Small business entrepreneurship & their Business Operations

An entrepreneur is a person who owns a small business and staffs it as needed to meet customer needs. Entrepreneurship means that a business owner will focus on creating a market for his/her products or services based on a business plan. This focus on testing a business idea requires an entrepreneur to decide early on if he will assume the role of small business manager or hire another person to oversee daily operations.

To decide if you will manage operations, study your personal strengths. If your talent lies in working with customers or developing your products, that's where you invest your time. A big part of small business management is creating policies and procedures to guide daily operations. Some small-business managers shape these protocols based on prior experience and education. Also, studying your instincts. Understanding the specific market you have chosen for your products or services will help you adjust policies and procedures and business strategy.

Managing a small business requires choosing the right organization for business operations. A tax adviser suggests what type of corporation, sole proprietorship or limited liability Company to form. Organization concerns how to develop infrastructure to support production and distribution. A manager consults with a business owner about which human resources, technology, financial resources and physical resources to invest in. A good manager handles the details of organizing resources on a daily basis to keep costs low and maximize high-quality outputs for customers.

Small-business management requires planning. Some entrepreneurs take advantage of resources at a small-business development center. At a minimum, becoming an entrepreneur should include consulting a business checklist. If you write a business plan that addresses all or most of the questions in a checklist, you have a better chance of success. If you decide to delegate the management of small business operations, you can trust your manager to implement the specific details of the business plan in an incremental way, building infrastructure with available resources.

Entrepreneur’s Challenges

Small business managers help entrepreneurs bear the risk intrinsic in experimenting with a business idea. An entrepreneur opens an existing business concept in a new location or sector of the market, or she/he tries to take some market share away from competitors. Alternatively, she creates a new market with a novel business idea. Small-business management requires knowledge of how to develop the market by marketing one or more products to customers and convincing them that your company gives these products value. Both entrepreneurs and small business managers must bear the uncertainty of consumer demand for product and service offerings because business sales can be feast or famine.

Capital Problem:

Cash flow is essential to small business survival, yet many entrepreneurs struggle to pay the bills while they’re waiting for checks to arrive. Part of the problem stems from delayed invoicing, which is common in the entrepreneurial world. Provide service or product, send an invoice, and then get paid after 1 month later. In the meantime, you have to pay everything from your employees or contractors to your mortgage to your grocery bill. Waiting to get paid can make it difficult to get by and when a customer doesn’t pay, you can risk everything.

Employee’s Hiring:

The hiring process can take several days of your time: reviewing resumes, sitting through interviews, sifting through so many unqualified candidates to find the diamonds in the rough. Then, you only hope you can offer an attractive package to get the best people on board and retain them long-term.

Time management problem:

Time management might be the biggest problem faced by entrepreneurs,  the work allocation crisis. If you only had more time, you could accomplish so much more!

Failing in making Marketing Strategy:

You don’t know the best way to market your products and services: print, online, mobile, advertising, etc. You want to maximize your return on investment with efficient, targeted marketing that gets results.

Challenges faced by SMEs and Micro SMEs & its contribution to Indian economy

When it comes to contributing to the economy – Micro, Small and Medium Enterprises’ (MSME) – boast of significant potential, both in context to the generation of employment opportunities and contribution to GDP. They are offering volume to the Indian industry base, fostering new entrepreneurship, contributing to national output, and adding to the export figures of the nation.

In recent years, this sector has been weaving some of the most inspiring success stories of India. In fact, MSMEs are accounting for 46 % of the industrial production and 95% of the total industrial units; they are the largest employment providers with over 6 corers of the Indian population depending on them for livelihood.  [Source: Faircent co. for the year 2016]

Quick finance and easy access to loans or personal loans serve to be the primary critical growth drivers for the growth of Indian MSMEs; this is because most businesses in this sector trigger off their operations with minimum capital. However, the lack of adequate and easy access to business loans has emerged as a major obstacle for their growth. From inefficacy of measures in credit flows (such as credit scoring for SMEs) to information asymmetry faced by banks and financial institutions, there are plentiful challenges that have impacted the contribution and performance of small and medium enterprises in the Indian economy. More than 80% MSME entrepreneurs have to resort to other avenues of financing, such as peer-to-peer lending, to obtain credit assistance. On Fair cent, personal loans to fund business expansion is the second largest loan purpose stated by borrowers.

In most cases, transaction lending and access to credit pose strong challenges because of:

·          Inadequacy of ‘soft’ and ‘hard’ information,

·         Relationships of SMEs with banks,

·         Availability of low credit facilities because of the origin and size of banks,

·         Long-drawn decisions on credit financing for SMEs and delays in fund disbursement,

·         A specific bias against smaller-sized loan portfolios,

·         Cumbersome processes and non-task oriented structures of Indian banks,

·         The requirement of complex collaterals for obtaining term loans- even at very high rates,

·         Difficulty in obtaining Private Equity Funding,

·         Non-standardized project appraisal systems for term loans, etc.

In the given scenario, SMEs and micro-businesses are looking for easy, affordable and quick funding opportunities for setting up their operations. The borrowers in this segment belong to different towns and cities of India and desire to obtain convenient credit access to start their showroom, clinic, restaurant, e-commerce business, franchisee, store, or other commercial establishments. They have limited working capital, insufficient collaterals, and inadequate credit scores to bank on. These factors make it all the more difficult for them to avail term loans from financial institutions. What’s the way out?

Peer-to-Peer (P2P) lending often serves as a long-term solution for the capital requirements of such SMEs. P2P lending in India generally operates online, wherein marketplace like Faircent introduce SME borrowers directly to a wide range of investors and lenders. For instance, the financial experts at Faircent screen SMEs for quality and provide their information to a vast pool of lending resources (currently, more than 6000 registered lenders have pledged more than Rs. 11 crores to fund 26000 registered borrowers with demand totaling to Rs. 7.7 crores approx. on the platform). Once the documentation and other nuances of borrowing are confirmed, the lenders registered with Faircent release funds to SMEs in the form of personal loans or business loans across a widely spaced risk basket – typically, low risk (12-14%) to high risk (26-30%) loans.

SME Business Peer-to-peer - Features & Benefits

Today, easy business loans are being offered to SMEs via technology-backed peer-to-peer lending platforms to help them generate more capital and better growth opportunities. P2P personal loans and business loans are way easier and faster!

·         In general, these loans have flexible timelines (at Faircent, the loan tenure stretches from 6 months to 36 months) for the repayment of forecasted loan amounts.

·         Loan approvals are also on the basis of current/ future cash flows and not based only on the historic financial statements of SME businesses.

·         The in-house technology platforms and modern underwriting approach of P2P lending agencies ensure that money flows into the accounts of credit worthy borrowers in just a couple of days.

Even though the P2P industry is in its infancy stage in India, it’s a matter of time before it will start competing with its counterparts in more mature economies. This alternative method of financing is here to stay. It is fast becoming the answer to the many challenges of easy access to credit in the Indian economy – especially for SMEs and micro-businesses.

. [ Source : Faircent co.]

Conclusion:

Being able to overcome self-doubt is a necessary trait for entrepreneurs. Having a good support system will help: family and friends who know your goals and support your plight, as well as an advisory board of other entrepreneurs who can objectively opine as to the direction of your business.

One of the best ways to deal with self-doubt is to work your goals and tasks lists. When you’re down and lack motivation, look at your lists and know that the tasks you do today are contributing to your lifetime goals. By doing them, you’re one step closer, and you can rest assured that you are, indeed, on the path to business success.

Create new processes that focus on task delegation. Many entrepreneurs, used to wearing all the hats, find themselves in this position once they’ve achieved a modicum of success. Because you’re doing everything, your growth halters to as top when it hits a self-imposed ceiling. The only way to break through is to delegate tasks to others and take yourself out of the production end and segue into management and, finally, pure ownership.

Entrepreneurs face many challenges, and volumes have been written about how to overcome them. Perseverance and intelligence are your allies; use them to your advantage keep working toward your goals. Understand that you’re not the first to struggle, and because of that there are many resources available to help you get through your darkest days as an entrepreneur so you can reap the immeasurable rewards that come with building your own successful business.