WHY DO SMALL INDUSTRIES REMAIN SMALL? — PART 3
Minish Umrani (Industrial Consultant)
Mobile: 9822390363
[ONE BUSINESS OR MANY SIDE BUSINESSES?]
You may have seen boards outside shops or houses saying things like:
“Beautiful Ganpati idols available here”
“Eggs ₹3 each”
“Blouse stitching available”
“Tuition classes for Classes 1 to 4”
“Devgad Hapus mangoes ₹600 per dozen”
You may also have seen several boards at the same shop or house: “Sangeeta Grocery Mart,” “Sangeeta Beauty Parlour,” “Sangeeta Tailoring Classes,” and so on.
The objective in such cases is usually simply to earn enough to run the household or achieve a better lifestyle.
These are genuine business people. If papayas grow on a tree in their backyard, they may put them on a stool outside the house and sell them.
But I would not call such a person an “entrepreneur.”
Just as the objective is personal and small, the income potential is also limited. There is usually little possibility—or intention—of building a business with lakhs or crores of revenue or creating significant employment.
When an entrepreneur establishes a factory to manufacture a product, and his entire focus is on making that particular business larger, the chances of rapid growth increase.
But when the factory does not generate enough income, the entrepreneur may feel the need to start another activity or side business.
That feeling should actually be treated as a warning signal.
It is like having a second child because the first child is not intelligent enough. 😁
This became especially common during the COVID pandemic. Many micro and small businesses were badly affected, and for ultra-small businesses, surviving that period itself was difficult.
The same thing can happen when a sudden recession hits or the market for a particular product collapses.
Starting a side business during such an unexpected and difficult period is not necessarily wrong. The entrepreneur has to survive if the business is to survive.
But once the difficult period is over, the focus should return to the original business.
Otherwise, the objective of earning a monthly income from several different businesses can become harmful to the growth of the original business.
The interesting problem is that once the original crisis ends, the side business may itself start generating good income. Then the entrepreneur faces a dilemma.
The side business may generate enough money to meet all personal needs and even leave money for comforts and luxuries.
When two or three additional income sources are managed along with the original business, the focus on the original business naturally reduces.
This is a temptation, and the entrepreneur needs to recognise it as such.
Sometimes, when the original business needs money, funds are brought in from the side business. Collections from the original business then get neglected. As long as the problem does not become severe, the pressure is hidden by the additional income.
This is a common business psychology.
At such a stage, it may be better to separate the side business from oneself or ensure that income from it is not routinely used to support the original business.
In the previous part we saw that the business should have priority. It is equally important to ensure that this focus does not become divided.
Every business is originally started as a source of personal income. Therefore personal needs are naturally important in the beginning. But as the business grows, its objective also needs to become larger.
This transition needs to be understood.
The journey from MICRO to SMALL can therefore contain a dangerous trap. It is more likely to occur in micro businesses. Small and medium enterprises are generally better equipped to survive such situations.
During difficult periods their income may fall, but they can reduce manpower, control costs and sometimes adjust salaries. They can generally survive until the market recovers.
They are much less likely to start an entirely unrelated side business during the crisis. Once the difficult period ends, the original business resumes its normal course.
Being an entrepreneur cannot simply mean “someone who runs a business.”
Entrepreneurship is a mindset—a highly positive mindset that converts crises into opportunities.
Such people do not panic when faced with small or large difficulties. Like a cat that somehow lands on its feet even after falling from a height, they overcome the crisis and rebuild the business with determination.
Micro entrepreneurs should seriously consider this mindset.
If you want to break the ₹5 crore “Dahi Handi” from an annual turnover of ₹1–2 crore, you cannot keep your objective limited to jumping in the air and ringing the temple bell.
Just as the Dahi Handi requires complete concentration, your original business and its growth require the same level of focus.
The business you want to grow deserves your full attention, doesn't it?
.... PART 3 ENDS | 30 June 2024
Minish Umrani (Industrial Consultant)
Mobile: 9822390363
[ONE BUSINESS OR MANY SIDE BUSINESSES?]
You may have seen boards outside shops or houses saying things like:
“Beautiful Ganpati idols available here”
“Eggs ₹3 each”
“Blouse stitching available”
“Tuition classes for Classes 1 to 4”
“Devgad Hapus mangoes ₹600 per dozen”
You may also have seen several boards at the same shop or house: “Sangeeta Grocery Mart,” “Sangeeta Beauty Parlour,” “Sangeeta Tailoring Classes,” and so on.
The objective in such cases is usually simply to earn enough to run the household or achieve a better lifestyle.
These are genuine business people. If papayas grow on a tree in their backyard, they may put them on a stool outside the house and sell them.
But I would not call such a person an “entrepreneur.”
Just as the objective is personal and small, the income potential is also limited. There is usually little possibility—or intention—of building a business with lakhs or crores of revenue or creating significant employment.
When an entrepreneur establishes a factory to manufacture a product, and his entire focus is on making that particular business larger, the chances of rapid growth increase.
But when the factory does not generate enough income, the entrepreneur may feel the need to start another activity or side business.
That feeling should actually be treated as a warning signal.
It is like having a second child because the first child is not intelligent enough. 😁
This became especially common during the COVID pandemic. Many micro and small businesses were badly affected, and for ultra-small businesses, surviving that period itself was difficult.
The same thing can happen when a sudden recession hits or the market for a particular product collapses.
Starting a side business during such an unexpected and difficult period is not necessarily wrong. The entrepreneur has to survive if the business is to survive.
But once the difficult period is over, the focus should return to the original business.
Otherwise, the objective of earning a monthly income from several different businesses can become harmful to the growth of the original business.
The interesting problem is that once the original crisis ends, the side business may itself start generating good income. Then the entrepreneur faces a dilemma.
The side business may generate enough money to meet all personal needs and even leave money for comforts and luxuries.
When two or three additional income sources are managed along with the original business, the focus on the original business naturally reduces.
This is a temptation, and the entrepreneur needs to recognise it as such.
Sometimes, when the original business needs money, funds are brought in from the side business. Collections from the original business then get neglected. As long as the problem does not become severe, the pressure is hidden by the additional income.
This is a common business psychology.
At such a stage, it may be better to separate the side business from oneself or ensure that income from it is not routinely used to support the original business.
In the previous part we saw that the business should have priority. It is equally important to ensure that this focus does not become divided.
Every business is originally started as a source of personal income. Therefore personal needs are naturally important in the beginning. But as the business grows, its objective also needs to become larger.
This transition needs to be understood.
The journey from MICRO to SMALL can therefore contain a dangerous trap. It is more likely to occur in micro businesses. Small and medium enterprises are generally better equipped to survive such situations.
During difficult periods their income may fall, but they can reduce manpower, control costs and sometimes adjust salaries. They can generally survive until the market recovers.
They are much less likely to start an entirely unrelated side business during the crisis. Once the difficult period ends, the original business resumes its normal course.
Being an entrepreneur cannot simply mean “someone who runs a business.”
Entrepreneurship is a mindset—a highly positive mindset that converts crises into opportunities.
Such people do not panic when faced with small or large difficulties. Like a cat that somehow lands on its feet even after falling from a height, they overcome the crisis and rebuild the business with determination.
Micro entrepreneurs should seriously consider this mindset.
If you want to break the ₹5 crore “Dahi Handi” from an annual turnover of ₹1–2 crore, you cannot keep your objective limited to jumping in the air and ringing the temple bell.
Just as the Dahi Handi requires complete concentration, your original business and its growth require the same level of focus.
The business you want to grow deserves your full attention, doesn't it?
.... PART 3 ENDS | 30 June 2024
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