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Future of Small Business: Trends and Opportunities

Nikhil Arora
Managing Director & Vice President-Intuit India
Wednesday, October 2, 2013
Nikhil Arora
Intuit India is a fully owned subsidiary of Intuit, Inc. (NASDAQ:INTU) that provides business and financial solutions for small and mid-sized businesses and financial institutions.

India is definitely proving to be an extremely conducive place for start-ups and entrepreneurs. According to the Ministry of MSME's annual report for 2012-13, the total number of registered micro, small and medium enterprises (MSMEs) rose by 19 percent in 2011-12. This can be attributed to several factors like favorable policy developments, an increase in risk-taking behavior due to economic uncertainty, the lowering of entry barriers for start-ups and so on.

The recent past has seen the emergence of several classes of entrepreneurs. We are witnessing the rise of social entrepreneurs, lifestyle entrepreneurs, women entrepreneurs and members of the young digital generation, who are starting on their own. These groups are also much better prepared for success since they are familiar with the business challenges, have the knack of dealing with it tactfully and are also adept at putting technology to work to solve problems.

The ongoing turbulence in the economic scenario is one of the major reasons why India is witnessing a surge in the entrepreneurship. The slowdown has given rise to risk-takers, who plan meticulously before taking the entrepreneurial plunge. They are also focused on what they want to offer through their business and how they can deliver the highest value to their customers. As nimble startups, they are well-positioned to offer solutions at best the possible price points or niche solutions. The new generation of entrepreneurs (whatever their age) are also well versed with the tough and competitive market scenarios.
Another key factor which has contributed to the spread of the start-up culture in India is the lowering of entry barriers, both in terms of costs and equipment. Today, entrepreneurs are selective about what they want to spend on while starting a business. Thanks to the technology revolution, concepts like virtual workplaces are fast catching up and bringing down the overall capital expenditure.

Technology adoption has also opened up new ways of bringing down the operational expenses.
While most of the Indian start-ups and small businesses are still a far cry from leveraging the benefits of the technology, we are noticing an upsurge in various new businesses leveraging cloud based technologies in order to be cost effective and offer more value to their customers. According to a study published by Intuit in collaboration with the Ministry of MSME, Indian start-ups are also adopting mobile technology in a big way and are even ahead of their counterparts in Western markets. India’s widespread adoption of mobile solutions creates a major opportunity for other countries to learn from India’s experience and find new ways to “leapfrog” traditional communication means and use the mobile channel to reach huge populations on key issues of social and economic importance.

On the policy front too, the environment is likely to get more favorable for entrepreneurs in the future, though this will be a gradual process. The latest move by the government to fund and incubate technology startups that specialize in electronics will give the ecosystem a much needed boost. Market regulator SEBI too recently announced two funding norms with an aim to encourage small start-ups. The recent approval of the Companies Bill by the Parliament, which mandates that large corporate spend two percent of net profits towards CSR, is also a welcome move and will give much needed encouragement for start-ups in the social innovation space. However, there is a necessity for more policy push to make the entrepreneurial environment more vibrant in India; the sector deserves all possible support from the government to thrive under the current economic scenario. For example, government support is required for the MSME sector in terms of sops and concessions such as restructuring of loans. While there is a need to create a separate policy to promote women entrepreneurship, a large section of current women entrepreneurs are unaware of the number of existing financial and supportive schemes from the Government. Hence, it is important to create awareness among them to ensure they take advantage of these schemes that could enable them to take their ventures to success.

The Indian small business sector contributes 17 percent to India’s GDP and employs 40 percent of the total work force. This percentage is seeing a steady rise, which proves that small business will continue to be the backbone of India’s economy.

With the global economic scenario not showing signs of settling down any time soon, the opportunities for entrepreneurs in the country will only continue to increase. India’s growing consumerism and an investor friendly environment will hopefully further enhance the start-up ecosystem in the country.
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