Kuldip Maity

As I move on to the ‘S’ segment of the ESG blog, I would like to acknowledge this segment as the most significant factor for screening any company’s potential.

A society, simply put, is a circle of individuals coexisting based on sets of norms that keep it sustainable.

The ‘S’, deals with the social aspects of investment sustainability. The term ‘social’ itself is quite a diverse concept and requires a lot of exploring; although the ESG perspective of the society explains all norms that would maintain human relationships complimenting the workforce, the society, and the political environment within which it exists.

The composition and workforce are the roots of a business. We have seen in multiple instances that a labor strike can make an entire business tumble down.

The business is built on the coexistence of humans and hence has one factor that acts as a chain of its sustainability—relationships. A company’s relationship with its employees, customers, and suppliers are the defining factors that facilitate or dampen its growth. For example, if an employee does or not like working in the company or the wages, the question will always persist whether they would walk the extra mile for the sake of organizational progress. We may keep talking about professionalism in the workplace, but my personal experience says that it is foolish to ignore human emotions and treat them as robots. A company’s employee interest directly relates to its financial profits.

Not only do the internal relationships affect the company, but its community relations also determine the kind of path it traverses. Social evolution is an essential pillar of human rights, and through ESG strategies, a company needs to assure with preventive measures against any human rights violation, internally or as an impact on the communities around.

Although a company cannot be held responsible for how the various ancillary organizations of its supply chain function, investors normally steer clear of companies that maintain integral relations with those with poor human right policy records.

EHS (Environmental, Health and Safety) is also a significant factor in evaluating the “S” component. The concept of EHS is based on the health and safety of company workers and the environment they work in. A company that is likely to put people at unnecessary risk has been usually condemned by the general public. The EHS is practiced in organizations that strive to maintain a good workplace policy.

Lastly, I would like to mention that diversity does not mean to be just a political discussion. Be it race, gender, status, or ethnicity, promoting diversity reflects well on the company in the public eye and increases the rate of productivity. Discrimination has always been a two-edged sword, for which we should have zero tolerance.

To sum up, the ‘S’ component reflects the social responsibilities of a company and is essential for sustainability.

In this blog, I shall focus on the ‘E’ factor of ESG.

The environmental criteria are set based on how the operations have an impact on nature and natural resources, both directly and through its ancillaries. Managing environmental risks is the core of the E in ESG, as it has a direct impact on the sustainability of the organisation, thus leading to investment decisions.

The ultimate goal of the E is to reduce the risk of environmental risks and harms and set policy benchmarks to mitigate them. For example, let me try citing the business of leather processing. If the company continues its operations where the harmful chemicals are dumped in the sewage, which goes to mix in the water bodies, it is just a matter of time before the climate activists (or even the common people) will force the regulatory bodies to invoke actions that may lead to huge production losses and financial risks. Needless to say, no investor would like to pump in funds in such a situation. A company failing to have a proper plan to tackle environmental challenges is guaranteed to suffer downfalls.

Broadly the factors include a few critical aspects of the natural environment around us. We need to evaluate how the company operations use natural resources such as land, water, greenery and other critical non-renewable elements. How disposal of waste and the resultant pollution is handled is also an aspect that needs to be delved into. Let me remind you that in all aspects it is not only the direct impact but also the impact on the entire supply chain that is to be measured while evaluating the risks.

With this background, let us sum up how a well-projected 'E' criteria can impact an organisation:
A company with strong controls over environmental norms has goodwill in the market and the confidence of its investors,
If applicable, the demonstration of responsibility towards the environment helps in expanding the markets, resulting in growth,
In the long-term, well-executed ‘E’ risk mitigations help in reducing costs,
Employee morale increases, resulting in enhanced productivity,
Environmental-friendly propositions enhance the probability of a high return on investment and promise more sustainable opportunities.

Companies that ensure environment-friendly controls in their growth strategies often outperform their peers.

After I wrote the last blog on ESG, a few came back asking me for further clarity on the two terms used frequently by corporates whenever they talk about sustainability — CSR and ESG.

CSR or Corporate Social Responsibility is the initiative taken by a corporate to give back to the community. This may include either or all of the four areas of environmental, philanthropy, economic, and ethical responsibilities that the corporate has toward providing a positive social impact. Businesses often use CSR to build a positive brand image while making a difference in the world around them, but not necessarily inside the company.

CSR would involve activities beyond the regular operations of the organization, often through a third-party specialist like an NGO. While the activities might involve the employees, it is hardly mandated but involves more about the motivation to volunteer. The best part of CSR is that it touches multiple segments like the company, its employees, society as well as NGOs through which the initiatives get executed. When we discuss sustainability in the context of CSR, it relates more to the holistic aspects beyond the organization.

On the other hand, ESG is more aligned with the company operations and its financial reporting, with a direct impact on the sustainability of the business. The type of business, its infrastructure, and size, the employees, the business model, and innovation, all are included in the discussion, as ultimately the performance is regarded from a holistic aspect. The focus has shifted from being solely on profitability to the ethics that is held by the organization, as that is regarded as having a longer-term vision and viability of sustenance.

As ESG is more compliance-oriented, there is more importance given to the data than is done in CSR. This when compared against international frameworks, ratings and standards brings in an extent of the relation between ESG disclosures and business performance. On the other hand, CSR outcomes are generally not directly included in business performance reporting, other than the budgetary numbers.

To sum it up, while both are oriented towards the greater good of the world we live in, ESG involves managing material, environmental, social, and governance risks and opportunities of the business as a part of its strategy. CSR is important to develop a public opinion on the credibility and sense of responsibility of the corporate, while the importance of ESG reporting will keep gaining importance in the eyes of the investors.

The recent buzz that we are hearing often in the corporate world is that of ESG or environmental, social and governance. Compliance with ESG goals is becoming extremely important, not only for statutory reasons but also to showcase the responsibility the corporate carries as an organization.

As it is a fairly new term, many may not be aware of what ESG goals are. ESG goals are a set of norms that apply to a company’s operations to adopt better environment-friendly practices, showcase social responsibility and implement better governance.

Environment: As a member of corporate India, we are expected to perform as a steward of nature. Not only are we expected to refrain from actions that harm our environment, but our policies should also be to ensure that the present crisis faced by us is reversed to the best of our capabilities.

Social: While Corporate Social Responsibility has been a mandated norm for many years now, there is still a need to put extra effort to ensure that life and living conditions improve not only within the organization but direct and indirect stakeholders of the company and the social communities also benefit from its growth.

Governance: Anyone having an iota of interest in the business world, would not oppose better measures put in place when it comes to corporate leadership, executive pay, audits, internal controls, and shareholder rights. We need to understand that an organization is successful only when all its stakeholders enjoy the benefits, but within the limitations laid down in the policies.

The pillars of ESG are quite extensive and are difficult to address in a single blog. However, I will try and explore them in the subsequent weeks.

I feel ESG is a welcome structure to follow, as it captures all angles of business and society. While it may not reflect on the financial performance of the organization, it has its effects on its sustainability. However, there is a lot of confusion around its reporting structure and compliance. These, I am sure, will go as we progress in our journey.

Lastly, I would like to state that as a popular measure, we have been focusing a lot on the ‘E’ and the ‘S’ aspects. But no one can deny that every organization also needs a strong ‘G’ in place without which we can hardly get the benefits we are targeting to avail ourselves through ESG. So, it will be fair to say that our earlier path was not wrong, ESG goals are just an added measure.

As I start writing the second part of the blog, focusing on cryptocurrency, let me start with a disclaimer that I do not want to influence your investment decisions in any way. Neither do I endorse, nor am I opposing the cryptocurrency trade, but would request all of you to follow the government regulations.

For those who are still not aware of cryptocurrency, it is a virtual currency that is traded digitally and secured by cryptography, making it nearly impossible to counterfeit. The name is derived from the fact that all of its transactions are highly encrypted, making the exchanges highly secure. Many cryptocurrencies use blockchain technology to decentralize their trading. We also must keep in mind that cryptocurrencies are generally not issued by any central authority. This makes it theoretically immune to government interference or regulations.

The trading pattern of cryptocurrencies is that of direct transfer between two parties, without the need for a trusted third-party intermediary, thus saving in transaction costs, but also increasing the risk typical of zero regulation.

Broadly, there are three ways of obtaining cryptocurrencies. They can be bought on an exchange, received as payment for goods or services, or one can virtually “mine” them. Mining is a process that cryptocurrencies commonly use to generate new coins and verify new transactions, through decentralized networks of computers around the world to verify and secure blockchains. Users can add their mining computers onto the network to aid the process. In return for their contribution to processing power, the computers on the network are rewarded with new coins.

While the first decentralized cryptocurrency, viz. the Bitcoin, was first released as open-source software in 2009, the year 2021 saw a defining moment where it come under tremendous focus with more than 9,000 other cryptocurrencies coming into the marketplace, of which more than 70 had a market capitalization exceeding $1 billion.

Trading in cryptocurrencies is gaining popularity as it involves cheaper and faster money transfers. The decentralized systems used do not have a single point of failure and can be well assumed as immune to total collapse. However, we also need to be cautious about its extreme price volatility and high energy consumption for mining activities. Typically, as a rule, a high-speed and high-volatility currency might be a concern for those who are not financially secure in life, but that is a universal observation and not specific only to cryptocurrencies.

From what we have been reading, the lack of regulations through any centralized authority has started witnessing a lot of use of cryptocurrencies in criminal activities. This makes me think that very soon we shall find regulations coming in to monitor the trade. How and when it comes and whether it facilitates or hampers the speed will be interesting to watch.

In my last blog on financial trends, I deferred the discussion on blockchain and cryptocurrency, as, I felt, it needs some elaborate explanation for those who are not intrinsically associated with the financial industry. These are two terms that have not only taken the world by storm but also created a lot of confusion as they break somewhat the barriers of our traditional mindset.

To start with blockchain, let me first clarify that the same term is commonly used in two distinctly different contexts—one is a technology, while the other is a cryptocurrency company. In this blog, I will briefly try to explain the technology.

IBM defines blockchain as ‘a shared, immutable ledger for recording transactions, tracking assets and building trust’. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

All businesses run on information, hence the speed and accuracy with which we receive the information are extremely critical for the success of any business. This is where blockchain adds value. It is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.

In a blockchain, the ledgers are stored over distributed clusters of computers, where all participants have access to the information without having to store it separately, thereby eliminating any redundancy of data. Records stored are sacrosanct. No one can alter the data once it is stored. Even if the data stored is found to be incorrect, we have to store a fresh set of data and both will be visible at all points in time. This eliminates any chance of data manipulation. The third element of the blockchain is a ‘smart contract’. These are a set of rules which trigger automatic transactions, making the entire technology faster.

It is not difficult to understand why blockchain is getting adopted at such speed. Traditionally we had found that speed was the first aspect we sacrificed when we wanted to make the system more secure. But even with the compromise, there have always been regrettable incidents of security breaches. With blockchain, as non-members of the network are restricted from participation, we can be assured of the accuracy, but no compromise is made on the timeliness of the information. It is a big step towards the long-desired transparency and trust in information networks.

This section is the first part of a two-part blog that I have put together to explain the concepts. The next part will be on cryptocurrency.

Till around a few years back, before we adopted digital technology on a mass scale, financial discussions were restricted to those who had a formal education. Financial institutions were extremely scared of connecting to the rest of the world. There were also days when we saw banks have a separate computer to access email, out of the local area network which had the ‘work’ computers.

But the world seems to be changing rapidly, and it is also having its impact on the financial industry, with Fintech companies encroaching into the space of Finserv.

For those who are not clear about the two terms, Finserv is an abbreviation for the traditional financial companies which offered us financial services. These would include our banks, NBFCs, insurance, stock/commodity/mutual fund traders, etc. FinTech, on the other hand, is an abbreviation for “financial technology”, used for companies that leverage technology to provide financial services. These are normally the new technology start-ups operating in the financial space.

While it seems deductive that Fintech companies will chalk the future of finance, I feel that Finserv will also transform itself through the adoption of new technology, helping the consumer with easy access to cost-effective services.

The second buzz that we find around us is Artificial Intelligence and personalization. In today’s world, we expect organizations to know us well, through our past behavioral patterns, and offer us solutions that suit needs specific to us. With the trend of shrinking available time, customers are hardly ready to wait. They seek real-time and proactive financial experiences from the financial institution they approach. Traditional approaches towards customer management will not be of much help for more days to come.

To get hyper-personalized services, even the customers are willing to share personal data, as long as they get the confidence that their specific details will not be misused or sold elsewhere.

Artificial Intelligence and Machine Learning based solutions are available to collect consumer interaction data, demographical information, and normal usage patterns to provide hyper-personalized experiences that go much beyond just seeking and answering questions. Nowadays customers need financial institutions to anticipate their needs and provide them with relevant and holistic guidance, even when their query is totally on a separate track. After all, finance is a matter that touches upon every aspect of our daily lives and our decisions should take them all into account.

Recently I came across an article that stated that IDC has predicted that, by 2026, 85% of organizations will use AI and ML in some capacity or other, to augment their foresight, resulting in a 25% increase in productivity. This space will be interesting to watch.

With all this happening around us, a traditional aspect that keeps constantly ramping up and getting modernized is that of information security. Without proper cyber and data security measures in place, consumer trust in such a rapid progression of technology may hit a major setback. Let us hope that we do not see such a day.

Another important topic that seems relevant here is that of Cryptocurrency and Blockchain. But let’s park that for another day.

We keep discussing the digital transformation of micro-enterprises. But most of the time the discussion stays confined to the go-to-market strategies.

I feel digital transformation can have a much larger purview.

First, we should look at how digital solutions can improve processes in micro-enterprises. For example, several agri-tech startups are using digital technology to bring improvements to traditional agriculture. These affordable solutions will improve productivity in the micro-enterprises. Next are IoT-based solutions, which can bring a level of automation to repetitive tasks. It is wrong to think that common micro-businesses cannot afford these solutions.

Then comes a cultural change that can be driven through digital transformation. Here, the first aspect that comes to mind is communication. Knowledge from the entire world has come into our hands through the smartphone and easy access to data. I am not only referring to YouTube advisory videos here, but they also play a great role in learning. Even support of equipment can be managed through a virtual network and what would have taken days for an engineer to reach may get resolved in minutes through digital communication. At VFS also we brought in the cultural change by shifting the majority of our transaction-based processes to digital solutions. Feedback from the field indicates that our customers have largely appreciated the shift.

Though I started saying that we should broad-base our discussions on digital transformation, we can never ignore the aspects of business transformation through a digital solution. And go-to-market strategies are definitely impacted on a large scale. Even the remotest village can now get products or services through eCommerce, and can also sell online. Many organizations are readily extending their hand, either as a part of their corporate social responsibility or at a nominal cost, to help the rural micro-enterprises set up their digitally enabled sales channels. I have come across solutions where no upfront cost is being charged for such purposes. These unique solutions have made it affordable for micro businesses to grow and transform into the next higher level.

A major roadblock seems to be ignorance of the solutions. Many startups, even with good solutions, are not able to reach the right audience or speak the language that is easily understood in rural segments. We need to actively look at resolving this aspect so that the micro-enterprises can benefit from the available digital technology solutions.

Whenever we discuss innovations in business forums, we tend to discuss large businesses. Maybe that is because most of our exposure to business is oriented toward urban enterprises. But the level of innovation that I come across while interacting with the owners of micro-enterprises amazes me.

From whatever I could gather from experience in the industry, innovation in the micro-enterprises is not as much about technology as it is about the owner’s willingness to accept change and outlook for growth. If both are on the positive side, the rest falls in place. After all, owing to the size of the enterprise, small innovations can have large benefits.

Once the entrepreneur starts dreaming of growth, she will be enterprising enough to reach out to the right places. Furthermore, with the increasing popularity of digital channels such as YouTube, it has become easier for entrepreneurs to know about all that is happening in their space. Getting the innovative solution, once identified, is hardly a task. Sometimes the hurdle may be a financial one, but VFS customers hardly worry about this score. The associated aspects of training, maintenance, etc. will never be a roadblock for the enterprising business owner. Last, but not least, we always have the ‘Great Indian Jugaad’ to fall back to.

Such is the story of Sukla Das, from Hooghly, West Bengal. Traditionally her family has been in the business of manufacturing puffed rice (muri, as they call it in Bengal). The family used to employ the traditional methods of heating the rice grains in woks and stirring them manually till they puffed up. While everyone was comfortable with the process, the production capacity was determined by the manual labor available. But personal expenses increased with new members getting added to the family and inflation. Something needed to be done!

Sukla’s found that muri can also be made with machines. It opened up the prospect of multiplying their capacity with the same manpower. The demand was already there, so they knew that the plan was a sure bet. VFS approved Sukla’s application and she bought a machine. As mentioned earlier, Sukla fit the profile where training and other enterprising necessities were never a roadblock. Micro-enterprise owners, with a vision and hunger for growth, equip themselves with the necessary training, on-the-job or even off-the-job to gain the experience that helps their business.

We are happy to learn that Sukla is looking for additional finance to grow further.

As I keep mentioning, business schools and forums need to provide more space for learning the trends of innovation in micro and small enterprises. With MSMEs contributing to a substantial part of the country’s economy, learning about their innovations to bring customers, suppliers, and other entities together for and development of new products/businesses will help transform micro and small enterprises into medium and large companies.

While checking out the blogs published on the Harvard website, I came across an interesting one that referred to a study on the relationship between a woman’s health and her employment status. The study was done through a survey of an ethnically diverse group of 4,624 who were either salaried employees, self-employed or working for wages. All were over the age of 50 years.

The results suggest, with disclaimers, that self-employed women might have health advantages over others.

According to the blog, “The study found that women who were self-employed reported 34% lower odds of obesity; 43% lower odds of high blood pressure; and 30% lower odds of diabetes compared to those working for a salary or wages. Meanwhile, self-employed women appeared to have lower body mass index (BMI) and be more physically active, with 80% saying they exercised at least twice a week compared to 72% of other participants.”

This comes as a motivating surprise for the likes of us in VFS, who are trying to help women and their families come out of the grasp of poverty through the self-employment route. Now we have another reason to drive the cause with extra zeal.

But while better health may be a good reason to be self-employed, I think that at the core it is the flexible work environment of self-employed women that helps them live a better life than their employed peers. At least in rural India, where women are not much known to go to the gym for a daily workout session, the benefits of the varied kinds of physical work involved in entrepreneurship far outweigh the repetitive work done by those who are salaried or work for daily wages.

Furthermore, when we look at the livelihood benefits, we may find in most cases, the self-employed are better positioned to enjoy government schemes than those who work for others. For example, a women entrepreneur in agriculture or agri-allied business such as animal rearing may also avail themselves of the benefit of MNREGA, etc., which involves short durations of engagements.

There may be a few cases, like driving Toto autorickshaws or managing a kirana shop, which are full-time engagements in nature, but even in those situations, the work conditions and stress levels may be regulated based on the needs of physical health. These businesses are also fewer in numbers when we look at the rural parts of the country.

If the survey results show that self-employed women have better health than their counterparts holding jobs, I would like to believe that it is true and urge more women to become entrepreneurs.

The positives of operating with Joint Liability Groups (JLGs) go much beyond acquiring social collaterals from each other on microfinance loans.

The demographic we deal with hardly gets the opportunity to go to any formal management school and learn how to run a business. But a lot of the gaps are filled when a JLG’s members sit together and share experiences, and learnings and also try to resolve each other’s issues. Sometimes, VFS representatives also sit in those meetings to contribute their ideas.

One such topic that I want to discuss here is Backward Integration. Those of us who have learned formal management are already aware that backward integration happens when a company expands its role to fulfill tasks earlier done by businesses up the supply chain. In simpler words, it happens when a company either expands to play the role of its suppliers or acquires a similar company. As with any business concept, it has its pros and cons, depending on the business issue it is trying to resolve. But that is not the topic of discussion here.

I wanted to share an experience of interacting with a VFS customer, Rupali Maity, whose husband is a construction worker. The male members of the entire extended family have taken up similar professions in construction. Of the women members, Rupali was the first to come up with the idea of starting a business of paint dealership.

Rupali already had a cosmetics shop that she ran along with her daughter. As the business stabilized, it was time to expand to something new. Her son was also not earning much. Of the several ideas that cropped up, paint made the most sense. After all her husband and his team of construction workers provided a steady sales funnel.

It is no surprise that the business took off well, and also motivated the other women members of the extended family to follow. It came up in our conversation that around 12 relatives of Rupali have followed her example and, with the financial support of VFS, started dealing in paint, not in the same locality or JLG, but dispersed across.

What had driven Rupali towards the decision is similar to the concept of backward integration. While Rupali might still have no clue that there is a term coined for what she did, her application of common logic made her take the same call.

Our society has several dynamics, which lead to repetitive occurrences of a similar phenomenon, that later get consolidated under a topic and taught as a management principle. Learning it from a business school helps in knowing them upfront before venturing out into the professional world. But even those who are not fortunate to afford such education can gather the pearls of wisdom through proper social interactions and experience sharing.

Nowadays we celebrate our religious festivals with temporary installations (pandals) around us decorated in various themes, where the idol is worshipped in different forms, sometimes much different from the one we visualized through our mythology. There is even a carnival organized in Kolkata where the different award-winning Durga idols are showcased after Durga Puja.

On this note, every year, I witness a buzz going around on social media, discussing if these grand works of art should be preserved in some sort of museum. It is indeed painful to see sculptures made through such a level of artistry and toil get washed off in the water.

There is another group who feel that idol immersion (using non-polluting methods) should not be stopped.

The visarjan ritual symbolizes the reality of life that revolves around life and death, by re-establishing the concept of destruction after every construction, because nothing is permanent and that change is the only constant. The old has to make way for the new. That is the reason, every year, we find new idols getting made using contemporary artistic concepts.

My stand on this is totally from the viewpoint of the businesses we support. The religious festivals provide a spike in demand for our micro-enterprises, especially the potters and sculptors. Their business depends in a big way on the practice of immersion. If we break the cyclic pattern of idol-making the market will stagnate and force them to opt for other business strategies. And, as with any other micro-enterprise, that will not be an easy thing to do.

Instead, I would prefer more stories of the likes of Sankary Pal, an idol maker from the Hooghly district of West Bengal. Every year during the festive season she approaches VFS for enhanced loan approval so that she can take in more orders. It is fast approaching a level when she would outgrow the micro-enterprise definition and move to the category of small. That will indeed be a very happy occasion to celebrate, just like these festivals.

Psychologically, we get attached to beautiful things and it is difficult to let go of them. That is why most humans tend to clutter. Sometimes it also obstructs our rational thinking and makes us blind toward the bigger cause the material possession is serving. In this case, it is the stagnation of business growth for a specific segment.

The temporary sadness created after immersion, not only due to the loss of a work of art but also because the festival comes to an end, may be overcome with the fun of waiting for the next festival and the thought that there are many whose livelihood gets a boost from the act.

When UNESCO included Kolkata’s Durga Puja in its Representative List of Intangible Cultural Heritage of Humanity in December 2021, it was the trigger for us to celebrate the festival on a grand scale for the first time since the COVID19 pandemic and its lockdowns hit life in 2020.

We know that the time we celebrate Durga Puja is called Akaal Bodhon, i.e., the untimely invocation or worship of Ma Durga. Legend has it that it was started by Lord Ram when he was not able to defeat Ravana, owing to a boon from Ma Parvati. It is said that the actual battle took place between Ma Durga and Mahishasura in Chaitra when we celebrate Basanti Puja.

I have always wondered why Akaal Bodhon got more popular than the Basanti Puja, which remained more of a family festival than a public one. Maybe the climate has to do something with the adoption, as the September-October period, when Durga Puja is celebrated, is much more pleasant than Chaitra, the onset of summer. I will be happy if someone could help me with a reason given in the scriptures.

What amazes me the most is the philosophy behind the worshipping of Shakti. Be it the battle with the Asura King or Ravana, irrespective of whoever is fighting at the forefront, time and again our mythology reminds us that, during a grave crisis, it is the feminine form of humankind that needs to be invoked for the added power required to win over the adversary.

This philosophy aligns with that of VFS Capital, where we strongly believe that empowering the female member of the household through financial support and motivating them to start their entrepreneurial journey is key to fighting the adversity of financial woes. It is the woman who can take the entire family out of the crisis.

I have written a few times on the economic benefits of the Durga Puja festival on microenterprises. Since 2020, the COVID-19 pandemic disrupted life as we knew it, and affected the micro-enterprises badly. But, hopefully, this year will bring in better sales numbers. I shall try and update you on the learnings, as I get the feedback from the ground.

Till then, I wish you Subho Bijoya and happy and prosperous times ahead.

Over the weekend, while searching for a document, I stumbled upon an article about Kalpana Saroj and was reminded of her life story, the struggles that she had to go through in her early life after her father rescued her from an abusive marriage, her journey as an entrepreneur and how it led to a Padma Shri for trade and industry. What an amazing leader!

We have had several such personalities who have risen from rags to riches and become examples for others. It is all about latching on to the right opportunity that comes our way.

But when we talk on these lines, I keep getting reminded of the stories that I hear from VFS customers. While we all wish that some of them grow to become business celebrities, even the small progressions of the others cannot be ignored. The efforts and passion of our women entrepreneurs who try to get their families out of financial distress are commendable and should also be included as case studies in all management institutes.

One such story is of Anjali Pal, who could attend school only up to Class 6 before she was married off. But she did not let her life be derailed.

After performing the traditional family responsibilities and becoming a mother of three children, Anjali started helping out with her family’s agricultural land, while looking out for growth opportunities. When her eldest son Narayan had to put his education on hold after writing his Higher Secondary examination, she reached out to VFS for a loan to take some agricultural land on lease and grow vegetables. She planned to set aside the profit to help her son restart his education.

Anjali lacked capital, but what was never lacking is her passion and determination to succeed. Needless to say that her business initiative flourished and she could even pay for her daughter’s wedding.

It has often been seen that when a person’s income level rises, so do the expenses, as the person moves to a higher standard of living. But not with Anjali! She would never forget that all this was for her son’s education and there was no compromise on that front. Narayan has enrolled for a graduate degree and is also taking vocational training at an ITI.

If Narayan has the same tenacity as his mother, it is a sure bet that we shall witness another rags-to-riches case.

There was a time when most workplaces banned social media and personal mailing systems because managers were worried about business information being leaked to rivals. Today, some managements still ban social media but this is to optimize bandwidth since most people have smartphones loaded with apps. Every company’s information technology team has to find new ways of securing information.

As we create more communication channels, we also become more vulnerable. But this outweighs the positives of having free-flowing communications.

On the same note, as the digital world takes over communication, the most critical question that keeps us awake is how much business information can remain confidential.

There was a time when many micro, small, and medium enterprises or MSMEs were reluctant to disclose details of director-level stakeholders of the company, to prevent critical escalations. The government then ordered transparency and this practice was dropped. One can easily look up the construct of a company by visiting its website.

While we are on the topic, we should also differentiate between what we define as confidentiality for business and what is meant by privacy. Confidentiality primarily refers to internal business information shared between the owners of a business and other individuals or entities that should not be communicated to a third party without the consent of the business owners. Privacy, on the other hand, is more personal, referring to an expectation of freedom from intrusion into personal matters or information. While both are of extreme importance, this blog is more about confidentiality.

Normally we define confidential business information as that which holds economic value, which if shared with anyone with a vested interest might negatively impact the business. As most information is stored digitally and can flow freely, it is important to ensure that it does not go beyond the designated recipients. IT solutions play a major role here and we should not cut corners while implementing them.

On the other hand, information is the key to every business and it must flow. Blanket restrictive measures could affect performance. Hence availability is also important and we need to be reasonable on what information we should consider confidential. By definition, confidentiality is specific to the profile of the person who has access to the information. The level of detail of the information that gets shared also defines its confidentiality. For example, while individual invoices generated for a customer may be confidential, the figures add up to the turnover of the organization, which has a much lower rating of confidentiality.

It is important that we maintain a balance and treat information on its merit and deploy measures that are optimal to facilitate sharing.

A few years back, I was spending an evening with a friend when he narrated an amusing story. For his business, he needs to travel a lot and sometimes at short notice. On one such occasion, he did not get time to book his hotel and walked directly up to the reception. Being a frequent guest there he was quite aware of the room rent and was surprised when the receptionist quoted a much higher price. Even when he explained that he was used to a lower rate, she would not budge. Standing at the counter, he looked up a travel portal on his smartphone and got a much lower rate. He checked in at the discounted price, which the receptionist had not been willing to offer.

This experience was not very uncommon till around five years back, when the companies had two distinct operations for digital and physical channels. While it has matured with time, there are still many such glitches where businesses have not been able to manage convergence well. Needless to say that it was frustrating for any consumer to pay a higher price at the store when free delivery is offered from the marketplace at a much-discounted price.

I firmly believe that this disparity needs to go, and fast.

While there is no denying that in today's world, digital is the way forward, companies that abruptly dumped their existing physical processes to bet on digital ones run the high risk of losing both ways. Discarding physical assets that got success to the company in the past, to venture into unknown territory in a hurry is like pushing away the real value that the customers saw in them in the first place. Transformation, as in all other cases, needs to be well planned and at a comfortable speed.

Looking from the other side of the table, though less now, after the lockdown many companies are still sceptical about taking the digital route, waiting for others to take the plunge while they follow. There might be situations where these entities will not be able to pick up speed and perish over time. Taking a cautious step does not necessarily imply that you cannot take the first step. “Who else has done it” may be a phrase that needs to be discarded. Every digital initiative needs to be evaluated on its merit and not on precedence, and then aligned to the present business model with proper change management.

I keep reminding my team and those who have started their entrepreneurial journey with assistance from VFS that physical and digital processes have their own merits and how much we adopt them depends on the nature of business.

Modes of executing processes should facilitate business operations. It should never be the other way around.

I have come across many who are eager to jump into the world of entrepreneurship but hesitate to take the plunge as they are unable to figure out how to solicit business from a new prospect. This is not uncommon as we have traditionally grown up in a system where conversation with unknown people is restricted. While from the perspective of a child’s security it is not a bad practice, it holds us back from opening new doors in an unknown space.

But does that mean introverts cannot be entrepreneurs or good new business developers? No, that will be a very wrong assumption to make. All it might take is a few conscious grooming steps. And that might apply to all.

A new entrepreneur needs to be a disciplined self-starter and a positive thinker. The person cannot be complacent with the present state and look at each event as an opportunity. On the other hand, it is extremely important not to get burdened with failures. Each failure should be analyzed so that remedial steps help avoid mistakes in the future. Entrepreneurs, by definition, do not operate under a boss and should be hungry enough to set their quotas and monitor themselves against key success metrics. They should continuously look forward to improvement, and not expect anyone else to drive them.

Discipline is a non-negotiable quality that an entrepreneur should possess. Right prospecting and planning have the biggest contribution towards hunting for new businesses. Or else, not only do we waste a lot of time chasing non-existing businesses, we get exhausted before we reach those who actually can give us revenue.

Like it or not, you should want to meet new people. Shying away from networking opportunities will not help in generating new business. Even if you are not comfortable in soliciting, just being visible helps a lot in getting time for meeting prospective customers. But while doing all this one needs to also be conscious and respectful of the schedule of others. Denials should not be taken personally as rejection. It is not that your prospect does not want to meet you, it may be that the person has higher priorities. Persistence in such scenarios plays a key role.

Lastly, and the most important aspect, is to stay nimble. Hour-long slots scheduled for meetings often get trimmed to a couple of minutes. It helps if you have multiple versions of the pitch ready. Elevator pitches need to be practiced, and practiced again, till they become an organic part of your system. Elaborate research on the prospect can never be counterproductive, though you might still want to hear the facts from the customer directly. Listening skills play a crucial role here.

There may be other necessities to counter specific scenarios, but the above aspects should be common to all businesses which require personalized customer interactions.

Please bear in mind that the job does not end with opening the door. In the rapidly changing business environment, entrepreneurs should progressively qualify their prospects. Sweet surprises of getting orders from the least probable ones are not very uncommon. But more on that later in another blog.

Micro, small and medium enterprises or MSMEs and digital technology are among the biggest influencers in the Indian economy and will become unstoppable when they converge.

If we go back a decade or two, MSMEs, other than those in tech-enabled lines of business, resisted going down the digital route. The reasons were not arbitrary. Implementing digital technology came with its own sets of challenges—high capital investment, the need to recruit a white-collared IT task force, and training the workforce on things that seemed alien to them. In short, the hassles outweighed the benefits.

Changes in the digital workspace are taking care of the inhibiting factors. Almost all the business solutions that an MSME needs now come with flexible payment options of SaaS (Software-As-A-Service). An MSME no longer needs to set up an expensive data center but can opt for less capital-intensive cloud options. Add the smartphone revolution and the workplace changes wrought by the COVID-19 pandemic. Almost every business household may now have at least one smartphone, which gives them the platform to run business apps. The apps are user-friendly.

With all these changes, MSMEs can now plan their digitalization with better clarity. Several business processes can adopt automation and artificial intelligence capabilities, increasing overall efficiency. Many MSMEs have started implementing IoT or “Internet of things” solutions to automate triggers for functions that earlier needed manual intervention. For example, a flower cultivation business can easily automate the water sprinkling process based on a few monitored parameters. We also need to keep in mind that sustainability is no longer a responsibility of only the bigger corporates. MSME businesses also need to keep a keen eye on sustainable options that give them good business returns. Energy use is the first thing that comes to mind.

On the sellers' side, the digital world has progressed to a level that MSMEs hardly need any extra effort to get them on the platform. I find solutions floating around where an MSME business does not even need to build a website, leave alone enable e-commerce. All this, with minimum upfront investment. This opens the entire world for MSMEs and those who stay back run the risk of losing out to market dynamics.

The way MSMEs and digitization are working hand-in-hand, the outlook for India’s business environment is bright.

“Small business” —does the name indicate all that a small business truly is? The common perception that is attached to small businesses is that they are miniature versions of regular and large-sized enterprises. In an extension of the same assumption, by default, it is also believed that small businesses are limited in their workforce, capital, and ultimately, profits. However, in this day and age, such a restrictive assumption is far from reality.

A small business can fulfill big goals when the right business strategy is applied. In my previous blog, I spoke about the importance of choosing the right business idea and subsequently, converting it into a business reality. Once a small business owner has the right idea that has the potential to hit their goals, they are already on the right track.

At this stage, it is important to acknowledge that business goals are not unidirectional. While profits might appear to be the most popular goal of entrepreneurship, several businesses are built for other purposes. These goals can vary from social causes, community building, and sustainability, to even building a legacy.

However, be it large profits or other large ambitions, certain aspects are overlapping for a small business to achieve these goals. One of the major commonalities among several small businesses is that they try to create a niche in an overcrowded market space, with several competitors, including the bigger players. This problem can be countered in two major ways. On the one hand, small business owners can choose to start the initiative in a way that is unique and unexplored. Essentially, they could adopt the blue ocean strategy. However, due to the highly idealistic as well as risky approach that this path would have, a majority of first-time small business owners are driven to more tested waters. Instead of viewing this as a loss or a disadvantage, the successful entrepreneur will change their lens to view the opportunity for small businesses despite the competition.

To put it in one word, differentiate.

Ambitious entrepreneurs should convert their disadvantages into opportunities by changing their perspectives. For instance, if a business at a micro or small level caters to a certain geographic location, it should focus on building a strong and loyal consumer base. Similarly, when it comes to sourcing, they should adopt cheaper and more efficient local options that will help them optimize their costs. Even when it comes to building a dependable workforce, hiring local people and upskilling can prove to be more feasible and rewarding than recruiting from the market.

Another major determining factor for the success of small businesses is financial planning. In the absence of an unlimited fund source, entrepreneurs need to dedicate considerable planning efforts to forecasting the fund requirements as well as maintaining reserves for unpredictable scenarios. Flexible borrowing options and schemes should be researched and tapped with the same spirit that an entrepreneur would research their consumer demand.

In the end, the role of a small business owner is not for the faint-hearted, but small steps with balance and foresight can prove to be transformative and ultimately result in big, profitable leaps.

Time and again, I have highlighted the rising graph of entrepreneurship in India. The success of businesses at the grassroots has inspired ambitious persons across generations to become entrepreneurs. The glamour of business success can be enticing and often ends up being the primary motivation for many.

As it is often said, the starting point of a successful business is almost always a good idea. While I agree with the statement, I would like to emphasize the fine print that comes along with it—one that is easily overlooked.

Not all great ideas grow into successful business realities.

Albeit spontaneity and risk-taking are a part of entrepreneurship, impulsiveness can end up in loss and failure. While every entrepreneurial adventure comes with its elements of surprise, certain essential elements need to be set straight before one develops an idea into a business venture.

At a time when the opportunities are virtually endless and the market is ready to experiment, it is easy to be brimming with seemingly “revolutionary ideas”. In fact, at the risk of sounding blunt, almost every single person, if asked, will have their version of a “mind-blowing idea” for a successful business. Amidst such an overflow of ideas, would-be entrepreneurs need to give themselves a reality check. They need to take a step back for the calculative assessment of the practicability of their idea. To achieve this, they need absolute clarity about their business. Whether to engage in providing goods or services or both and to which degree is crucial to determine. Once decided, the same needs to be applied through possibilities. The checklist should assess whether their idea brings real value to the market and whether there is a demand for it. The identification of a relevant market includes the determination of the target audience for a business’s products and services. The tastes and preferences of this target audience need to be accounted for. It is also important to study competitors who are engaged in similar activities.

There are multiple layers to this test since there are times when novel products or services that solve gaps in the market are entirely new to the consumers. However, that is when market research comes into play.

Once the market research game is strengthened for an entrepreneur, half the battle is won. In the next part lies building capacity and scalability.

If a strong business plan is the heart of a business, then finance is the blood that keeps it beating. The initial investment, working capital, and the entire short-term, as well as long-term financial plans of a business, have to be forecast. The sourcing for this finance needs to be decided based on a range of factors. In a previous blog, I had drawn a parallel regarding when to dip into one’s savings for a business venture and when to borrow money.

Once the foundation is laid, other intricacies including branding and brand positioning, team building, marketing strategy, sales plan, and legal compliances have to be handled. Only when these requirements are handled does a business become ready for deployment.

Entrepreneurship is not for the faint-hearted. Therefore, even after these considerations, there is a risk factor. However, preparedness makes all the difference and determines whether one dives into the sea with or without a life jacket.

There is a lot of discussion about employment opportunities for today’s youth. While it is important to plan around job creation, both in the public and the private sectors, the advent of automation, artificial intelligence, the Internet of Things, and so on is bound to take away thousands of jobs in the lower strata of the pyramid.

Traditionally, independent India has developed a culture of its youth lining up for jobs in the government or the private sector. Creating jobs for themselves (and others) may not be the thought that crosses minds organically.

However, there is no denying the fact that in the present state of India, entrepreneurship will play a crucial role in socio-economic development and the generation of employment opportunities. The traditional approach of our education system has been oriented towards knowledge and skill development, which spawns job seekers, not job creators. I am not implying that business owners do not need such skills, but that they also need exposure to complexities that go much beyond.

So it is imperative to fine-tune our education system to contribute to the nation’s economy by ensuring that its graduates are contributors as well as leaders. It is my strong opinion that we should not wait for the youth to complete their formal training and education before providing them with entrepreneurial exposure. The sooner it starts, the more exposure can a budding entrepreneur get.

Entrepreneurship is a subject that will not only encourage self-employment but also help the students to develop a positive personality along with a sense of self-reliance and responsibility. Even if our youth do not go forward to set up their own business, exposure to entrepreneurship helps them understand the nuances of business executives and appreciate the decisions taken. This helps them stay in line with the company vision, with grounded expectations, thus ultimately helping progression in their career.

In VFS, we have a structured methodology to orient our women customers on entrepreneurship. We also expect them to take the learnings home to their children, the next generation. This is important as, with their mothers as examples, many of the children of our customers may want to be self-employed. The education received informally from the previous generation will help them grow faster.

Lastly, even if the formal education system does not have options to study the skills of entrepreneurship, I would urge my young friends and their parents to try and find avenues. Be it giving tuition, running small-scale social entrepreneurship programs, or even trying out the available games on entrepreneurship, please put in some serious effort and use the net to learn more about the business.

Let us not wait to complete our formal education, but get work experience before diving into the entrepreneurial journey. Try them in parallel wherever possible.

Micro, small and medium enterprises (MSMEs), in their quest to maximize profits, often end up ignoring one of the most essential contributing factors toward the success of a business—happy customers. The entire process of keeping costs low, increasing financial viability, organizing the supply chain, etc. is important for an enterprise, but focusing on customer relationships is a low-investment, high-return strategy.

There are several reasons why investing in customers is bound to be fruitful. However, many entrepreneurs fail to understand the true extent of customer relationships. For starters, an enterprise’s bond with its customer is not merely transactional. Genuine bonds extend beyond the exchange of goods or services. The businesses that stand out and inspire loyalty among customers are the ones that take that extra effort to ensure their satisfaction.

The entrepreneurs who think long-term will ensure that customers are approached for their feedback even after they have made their purchase. This is beneficial in multiple ways. Not only does it help a business understand their customer’s mindset, but it also serves as a reminder to customers who, even if for brief moments, think about the business and their experience. Needless to say, it also gives customers the impression that the business cares about them. I would even venture to say that if the customer wants a non-related product but still asks your business representative for personal advice, the bond is made.

Apart from customer feedback, MSMEs can also come up with innovative means to market their endeavors. New schemes, new features, and new facilities can all be announced through personalized emails, messages, and in some exceptional cases, even through phone calls. Every element where a business spends time and effort to enhance the efficiency of goods and services deserved to be marketed before customers.

Apart from the other methods of creating customer relationships, such as gifts and discounts on special occasions, another benefit of forging customer relationships is to use them for market research. By overlooking their existing customers, many enterprises lose out on understanding the changes in their demand, their new needs that can give the enterprise ideas of expansion, and their shortcomings.

Micro and small enterprises have a huge advantage in all these domains. They enjoy the benefit of not having to invest the kind of time, effort, and expenditure that large-scale enterprises require.

The importance of customer relationships can be gauged from the growing CRM branches of large enterprises. Micro and small businesses can recognize the advantage of easy access and greater visibility over their customers to build lasting interpersonal customer relationships. Be it through handwritten notes, token freebies, or personal follow-ups, these enterprises can inspire immense loyalty and goodwill among their customers.

It should not come as a surprise that even in this day and age, word-of-mouth holds an overwhelmingly great value in growing a business. Therefore, a satisfied band of customers can eventually bring a whole party.

People are known to use the phrase “born leaders” as a compliment. One might wonder if leadership is, in fact, an inherent quality that people are born with and if it is a quality that is engineered into their genetic makeup. But this could lead to the conclusion that people who are not born with this innate quality of leadership cannot be successful leaders.

Before we try to answer this question, we need to recognize what entrepreneurial leadership truly is. In my opinion, leadership is not a singular trait. Instead, it is a culmination of different traits and skills. Leaders are unique and do not fit into a template. However, some recurring commonalities can be found among leaders, such as the ability to inspire followers.

The question that remains is whether leaders are forged at birth or molded through experience.

Arguably, the most common terms used in connection with entrepreneurs are vision and passion. It is undeniable that some individuals, from a very young age itself, display immense passion and the vision to build something, and are very clear about it. An effective mentor, an inspirational idol, or even difficult circumstances, can shape true changemakers out of introverted souls, leaving the bystanders in awe.

It would be inaccurate to say that entrepreneurial leaders can simply use their inherited charm to sway past the numerous difficulties that they could face while running an enterprise. Albeit it surely helps to have such qualities as a part of one’s personality, there are several other factors such as tenacity, business sense, and hard work. When innate talent does not grab opportunities at the right moment, that talent remains in its potential state without ever materializing.

Furthermore, one cannot ignore the fact that practically, a successful venture is backed by education. This education is not always formal or institutionalized. Education can be built over time through taking on challenges, experience, and invested learning through doing. The moment a leader stops growing and adapting herself or himself according to changing market scenarios, they risk becoming stagnant and diluting into irrelevance.

Some qualities have to be adopted and ingrained into one’s personality, such as empathy for the workforce, which leads to strong interpersonal relationships that inspire loyalty. Further, it is only when an entrepreneur has sincerity and integrity that she can inspire trust among their clients.

At the same time, it cannot be denied that many of these qualities come easier to some people than others. However, through my experience, I have observed that leadership is more about learning and conditioning than about the talent that one is born with. Generational businesses have proved that genes do not guarantee good entrepreneurs. Even the successful generational business tycoons that we see today are testament to the success of independent perseverance.

While nature cannot be entirely ignored when it comes to entrepreneurial leadership, ultimately, nurture plays a decisive role.

Livelihood training remains an elusive concept in the areas where it should be most prevalent. Even in places where it is not an entirely foreign concept, livelihood training is often given a very restrictive meaning.

On the other hand, livelihood is a well-known concept. It is the means of earning to sustain oneself. This concept gave rise to the concept of sustainable livelihoods. Livelihoods transform into sustainable livelihoods only when there is stability, i.e., when livelihoods do not collapse in the face of market changes or unexpected events such as natural disasters, pandemics, and the like. Livelihood training trains groups of people who have similar resources, such as locations, incomes, livestock, land, tools, education, social networks, and skills. The essence of true livelihood training is empowering people to put such resources to the best use to make their livelihoods sustainable.

However, gone are the days when livelihood training was restricted to only earning limited income for sustenance. Today, livelihood training has a huge impact on the holistic lives of individuals with limited means. It is directly correlated to instilling an entrepreneurial spirit that drives people to put their skills to practical applications and build enterprises of their own.

Moreover, a key benefit of livelihood training is psychological. Once individuals feel empowered with the strength of the resources around them and truly recognize them as assets, their self-confidence and self-esteem get a boost. With this dignity, integrity, and confidence, individuals break out of inferiority complexes and are equipped to take calculated risks toward success.

Livelihood training teaches passionate micro and small entrepreneurs to sustain their entrepreneurial activities on the ethos of their skills. It acts like a comprehensive primer on the different facets of entrepreneurship such as business vision, communication, technology, networking, finances, and inventory control. With these skills in the basket, and more importantly, with the zeal of applying these skills independently, individuals can transform into entrepreneurs.

Time and again, I have stressed the importance of having a vision. A restrictive outlook does not help create grand successful business ventures. Empowered, strategized and ambitious foresight chalks the path to creating businesses that think beyond short-term income.

Livelihood training, whether or not labeled as such, has led to many such enterprises coming up and becoming successful. Examples of livelihood-inspired businesses have been spotlighted in my previous blogs as well. For instance, Khodija Bibi turned the recyclable scrap in her locality into an enterprise, or Jaba recognized the potential of her family garden of marigolds and became a flower-selling entrepreneur. Similarly, VFS Capital women have also availed themselves of loans for tools such as sewing machines, with which they have built successful micro businesses.

The main message that I wish to convey with these examples is that entrepreneurship is no longer a path that is restricted to inherited skills, or persons with ready-to-use capital at their disposal. People can be inspired by the resources around them, and once they have the skill to put them to their best use, they can look at flexible borrowing options such as microfinance to turn their ideas into sustainable and successful business ventures.

A collaborative relationship among SMEs would translate into multiple SMEs across different segments, strategically working in the pursuit of similar goals through their unique contribution and thereby empowering each other against the competition in the market.

During testing times in the market, such as the recent pandemic, SMEs take huge hits. During such times, the need for funds and uninterrupted functioning becomes a matter of survival. Since most SMEs may not qualify for bank loans with rigid documentation requirements, they opt for more flexible and cooperative options such as NBFCs, which take into account their human factors, especially those who already have experience in microfinance through the JLG model.

Owing to competition on a global scale and having corporate giants as their immediate competitors, SMEs fall short in several factors such as networks, manpower, reach, and other resources. This is where a collaborative environment among SMEs can level the playing field.

Entrepreneurs who are the faces behind these SMEs usually have ambitious visions for their enterprises. However, the lack of resources and infrastructure can dampen their spirit and disrupt their goals. The interesting part is that the ambitious vision is often shared by other SME owners who in turn are faced with their own set of challenges. Under such conditions, the idea of collaboration comes up as a natural solution.

When these SMEs, each bringing their own set of contributions to the table, collaborate symbiotically, their power in numbers and expertise can uplift them to give a tough competition for larger businesses. Other than the financing I shall discuss three broad spheres of productive collaboration that in my opinion have the potential to empower SMEs beyond expectations.

Firstly, SMEs can enter into collaborative arrangements that directly result in cutting costs. For instance, local SMEs can engage in strategies to share the cost of transportation by coming up with innovative ways of delivery and commuting that help all the parties involved and in turn, reduce their costs. Local businesses that are not direct competitors can share equipment, machinery, and even office spaces to thereby have access to more advanced solutions that would otherwise be out of their budget.

Secondly, they can have a mutual-benefit model to jointly enhance their sourcing and sales. Some SMEs need raw materials, some need semi-finished goods, while others need services, etc. By creating a strong network among enterprises, gaps in the market and fluctuating prices can be overcome. Intelligent arrangements can also lead to sharing clients and increasing business reach.

Last but not the least, collaboration can enable SMEs to achieve specialized services. I have earlier spoken about the adoption of technology to improve the productivity and efficiency of SMEs. Several SMEs have recognized the importance of cloud computing, but some still lack its affordability. Similarly, skills such as marketing, especially in the digital space, require seasoned experts. When SMEs work together, they can access these services and they will no longer be reserved only for corporates.

Collaboration, when applied with necessary caution such as ensuring transparency, pre-deciding arrangements, maintaining confidentiality, and following healthy trade practices, can be a boon to the SME industry.

It's time for entrepreneurs to take charge. Inferiority is a mindset. Collaboration is Empowerment.

The crowd of budding entrepreneurs is growing fast as it has started becoming a more acceptable choice of career in society. The first image that pops in one’s mind when they imagine an entrepreneur, is a young, charming person with expensive gadgets, superior technology, and a high bank balance. The reality is often far from this romanticized idea of what entrepreneurship truly is. Therefore, this acceptance comes at the cost of propagating a contorted view of doing one’s own business, one that conveniently ignores the challenges and numerous hurdles faced by an entrepreneur.

The truth is that not every business becomes an automatic success, especially when the people driving it are acting in auto-pilot mode.

For any successful business venture, irrespective of scale, an essential factor is its strategy. An SME’s leader must be aware that the service or product he is selling is going to face competition in the market. They need to rise above their limited perspective as a business owner and achieve the ability to view their enterprise through the lens of a consumer.

When an SME leader stands in the shoes of their consumer, they realize that the first thing that a consumer looks for is the personality of their enterprise. The personality of SMEs defines who they are, why they are in existence, and where they are aiming to go. The main two representatives that encompass the personality of an SME are Vision and Mission.

Often incorrectly used synonymously, the vision and mission statements are two distinct aspects of an enterprise. I shall attempt to elaborate with a quick primer on these two salient components of a successful SME.

The mission statement of an SME represents the cumulative of its goals and values in the present time. A mission statement describes precisely what the business does. It includes the short-term goals of an enterprise, along with the plans devised to ensure the fulfillment of those goals. The trick to identifying the perfect mission statement for an SME is to highlight its USPs to show the consumer why it should be chosen over all other alternatives.

On the other hand, a vision statement is a future-oriented, comprehensive glance into an SME. The concretized ethos of the business along with its purpose should be highlighted in its vision statement. The leader of the SME can take more liberties with the vision statement and include their realistic aspirations and future goals. The key is to design a vision that inspires confidence and trust in the consumer.

The process of building a vision and mission does not end after writing some abstract words. The entrepreneur must ingrain the spirit of their SME’s mission into the entire team and align all their activities to the vision of the SME.