Kuldip Maity

In my previous blog, I had addressed one of the most debated “indecisions” that people replay in their minds: Whether to start a business or take the salaried route.

While this quandary can seem too intimidating to explore, it often shifts focus from a very important reality, which is that one can always revisit an idea. The decision to start a business does not need to be rushed. Nor does a decision to not start a business have to be permanent. One can revisit the options any number of times, then weigh the pros and cons before deciding the way forward.

Contrary to popular perception, the conclusion arrived at by choosing to start a business, is only the beginning of a long and complicated future.

For instance, one of the first questions that loom over an entrepreneur’s mind is related to the sustenance and operation of a business—the dilemma of capital. Capital, be it working or fixed, is the fuel on which a business runs. The predicament that entrepreneurs often face is whether to take a loan or dip into their savings. While savings can seem like a risk-free solution in the short term, loans may be the more judicious option in the long term. Typically, a VFS customer must determine whether she risks losing her emergency fund if she dips into her savings.

Entrepreneurs face another key dilemma: how to build teams, however small they may be. Difficult decisions regarding hiring—whether to hire and train or take seasoned players, whether to work with relatives or recruit professionals—are questions that arise time and again when one is running a business. Ultimately, it is a challenge to achieve a balance between prioritising the interests of the business and ensuring that morale is always up and rising. Experienced and successful entrepreneurs are the ones who realise early in the game that business interests and team satisfaction are not contrasting issues but complementary. The one who can strike the perfect harmony takes the cake.

An entrepreneur’s life is filled with challenges and her decision-making power is a skill that determines the success of her business. Successful entrepreneurs can soar over unexpected hurdles and know how to get up and continue after a stumble, storing the lessons learnt.

Though a sensitive subject, the wisdom to know when to wind up a business is also essential for an entrepreneur. It is the ability to recognise when one should work with renewed zeal to rejuvenate a business and when the business is well past its expiry date.

Whenever I think about these omnipresent dilemmas in an entrepreneur’s life, I think of the core concept that stayed with me in every decision that I take. The concept of opportunity cost. Opportunity cost represents the benefit that one forgoes when one chooses one opportunity over another. In simpler words, opportunity cost refers to what you give up when you choose one thing over another. For an entrepreneur, the process of overcoming these dilemmas is nothing but a rational assessment of opportunity cost in numerous situations and she strives to ensure that the decision she takes keeps the opportunity cost at a minimum.

“Business or a salaried job? What do you think is the better option?” is one of the most common questions that I come across while interacting with those starting their professional life. Guess this dilemma has lingered for decades now.

There is no right or wrong answer here. It depends on the individual—her character traits and aspirations.

If one is mentally inclined towards a regular monthly income, then a salaried job may be the best option. Those who love taking risks to pursue a dream can opt for business. When you start a business, a key requirement for growth is that a part of the profits should be ploughed back into the business. In a salaried role, you may be better placed to fulfil the need for a steady income befitting your lifestyle.

There was a time when many budding entrepreneurs had to become salaried workers because of the lack of access to capital. Today, there is an array of microfinance and other loans for micro, small and medium enterprises for such entrepreneurs. But if you need money to buy a double-door refrigerator or a plasma TV, it is better to be a salaried worker than a business owner to secure a personal loan.

A business owner does not require any minimum educational qualifications, which are essential for those seeking a job. There are many ways to learn how to start a business. A degree in business management, learning from a mentor, self-teaching, or hiring a business advisor may all be as helpful as the other. A business owner will need exposure in varied fields such as management, marketing, production, human resources, compliance and, most importantly, finance.

For a person in the job market, qualifications may involve an educational degree, minimum years of experience, and/or certifications that an employer deems necessary to ensure that the candidate will be able to perform well in a job role. Working in a job role may also provide opportunities to develop skills and grow with new responsibilities or promotions.

While running a business gives the business owner a chance to be as innovative as she wishes to be, employees can also be innovative, depending on the culture of their organisation. However, employees must get their innovation “approved”, and the process can be time-consuming or result in rejection. A business owner, on the other hand, can veto the critics although I am not sure if seasoned entrepreneurs do this.

The bottom line: it is foolish to stick to any one option if it is not fetching results. So, if you want the security of a job but are not getting any offers, think about becoming an entrepreneur instead of just brooding over your jobless state. Similarly, if you are an entrepreneur stuck with a loss-making business and can’t see any light at the end of the tunnel, you could try getting into a job for income security and switch back into entrepreneur mode later.

Growing one’s income by diversifying is one approach that rural entrepreneurs can take to spread business risk and reduce the impact of unforeseen adversities. I mentioned this recently in one of my blogs. Since then, some readers have asked me if this strategy is recommended in every situation.

Like in every discussion of business strategy, one size never fits all. Some definite assumptions drive every recommendation. Diversifying when the core business is not in shape risks both the old business and the new. So, the priority is getting your existing operations into shape before diving into a new project.

The story of Narayani Sarkar Adhikari of Amritapur village in Dakshin Dinajpur district of West Bengal is a case in point.

Narayani had been helping her husband run his ‘dasakarma bhandar’, a variant of a kirana store that sells items needed in all Hindu rituals. The dependence on a single source of income always bothered her. Moreover, she always dreamt of having a business of her own.

Around three years back, with the dasakarma bhandar generating enough income to maintain their household, Narayani decided to set up a cosmetics and stationery store. It would be the only one of its kind in the locality. She stocked it with imitation jewellery and affordable cosmetics that would help the village women add to their beauty.

The store would have been a hit had not the COVID19 pandemic gripped the nation, leading to a series of lockdowns. Narayani had to close her shop during the lockdown, as it did not sell any essential items. However, the family did not feel much of a pinch because the first shop remained operational. Having weathered the storm, Narayani’s shop now sells enough to keep her happy and she is thinking of stocking more variations. She buys fresh stocks from a wholesaler, as she knows what the local women like.

Rural economies are more versatile and, hopefully, more sustainable and resilient. Diversification in rural economies is a real possibility, not only in setting up different traditional businesses but also in utilizing technology to start working on digital platforms. Many key functions such as sourcing, sales, and logistics are gradually going digital and the sooner a business can adapt, the faster it will grow.

But with all these good points one should not get swayed and neglect the core business that has established them. While putting all your eggs in one basket increases the risk of business, spreading too thin may jeopardize all that you have built. The most prudent strategy in this context is to take a balanced approach.

The restaurant industry is showing signs of change. We knew the businesses required high startup costs and costly compliance, keeping out many entrepreneurs who are at the bottom of the financial pyramid. The COVID-19 pandemic that hit the world in March 2020 endangered the businesses of all those who had started restaurants based on traditional food business models. Now, a promising solution has emerged.

Cloud Kitchens.

A cloud kitchen is a kitchen space that provides food businesses with the facilities and services needed to prepare food for delivery and takeout. Unlike traditional brick-and-mortar locations, cloud kitchens allow entrepreneurs to cook and deliver food without having to pay for an equivalent dining-in space and service staff.

The low startup costs and fewer administrative hassles make it affordable for entrepreneurs who want to enter the industry but did not have the means to transform their culinary acumen into business. With the growing popularity of food delivery apps, business owners can now focus on turning out delicious meals. Marketing costs are low as the transparent rating system guides the consumer even to those who have low or no brand recall.

I feel this is a perfect opportunity for microfinance customers. The initial capital requirement is low and can be provided by microfinance, opening new doors for women entrepreneurs.

Gitanjali Behera from Purusottampur village approached the VFS branch at Panikoli, Odisha, with a similar idea. She loved to cook traditional local snacks that people consume at home. But food delivery apps do not get orders from rural areas so Gitanjali decided to move to the capital Bhubaneswar, where her brother lived in a rented flat.

After less than a year of running a cloud kitchen, Gitanjali has gained the traction to expand. She is yet to decide whether to start a dine-in restaurant or stick to the delivery apps and her cloud kitchen. But her story shows that the food industry is no longer out of reach of the financially less fortunate.

The food ordering market is expanding at a CAGR of 16 per cent and could reach $17 billion by 2023, according to projections by DataLabs by Inc42 in December 2019, just before the COVID19 pandemic hit us. If anything, the lockdowns have made food ordering apps even more popular.

The market size of cloud kitchens is expected to reach $1.05 billion by 2023.

It is my opinion that the cloud kitchen revolution is just starting, and if microfinance customers adapt to the model, the business volumes may turn out to be many times the projections.