Entrepreneurs: 5 Things About New and Established Entrepreneurs
Today India is the most happening destination for aspiring entrepreneurs with abundant opportunities to explore. New-age entrepreneurs basking on the digital phenomenon are creating a new trend of digital entrepreneurship.
With the supportive entrepreneurial eco-system in place, young entrepreneurs are weaving inspirational entrepreneurial success stories. They set to conquer the markets with innovative business ideas and viable business models.
However, this was not the scenario when established entrepreneurs began their journey. The dynamics of commencing and growing business were entirely different.
Let us dwell upon 5 ways in which new-age entrepreneurs are different from established ones.
- Ease of Doing Business
Ease of doing business looks at how conducive and simpler are regulations for business operations. World bank developed Ease of Doing Business (EoDB) index for ranking 190 countries on various areas of business regulation.
As per ‘Doing Business 2020’ World Bank’s publication, 10 major areas of business regulation as follows,
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
Based on the above indicators, the World Bank ranks economies. In 2020, India is at 63rd spot among 190 countries. Since 2014, India leapfrogged from 142nd place to 63rd one enhancing its position as a business-friendly nation.
India’s improvement in Ease of Doing Business index is undoubtedly an indicator of booming entrepreneurship in India. It indicates how conducive is the environment for budding entrepreneurs in India.
However, this was not the case a few years ago. Let us dwell how India evolved from restrictive state to a de-regularized one for businesses.
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Business Scenario Pre-Reforms: From 1947-1990
For a long India was not on the side of promoting entrepreneurship. Since its formation as independent nation in 1947, the country was inclined towards policies and practices encouraging state intervention.
Intending self-sufficiency and public welfare, major industries we under the control of the state. Monopoly was exercised on sectors including transportation, electricity, insurance, chemicals, banks and so on. Private players were curtailed with a stringent license raj system.
Adding to this, tariff rates were high and imports extremely restricted. Although the period witnessed renowned names like TATA Group, Aditya Birla Group, Bajaj Group, and so on, they were conducting business within the government’s tight regulations.
The limitations were imposed on borrowings, pricing, investments, and so on. There was no scope for growth and expansion for businesses. The foreign investments and deals were strictly under the scanner.
These policies, however, cramped economic growth and pushed the nation into the balance of payment crisis.
As such, in 1991, India carried out major economic reforms towards ending license raj and reduce state intervention in businesses. The three components of reforms – liberalization, privatization, and globalization welcomed competition and integrated India with global markets.
Business Scenario Post Reforms: The surge of new entrepreneurs
Tapping the opportunities opened by liberalization, a new wave of back-office and BPO service firms unleashed. Since reforms, more IT and IT-enabled service firms were established by first-generation entrepreneurs.
Gradually, the Indian industry was witnessing a shift from traditional capital-intensive businesses to asset-light business models. With minimum capital, entrepreneurs were venturing into new businesses and tasting success.
In a study by Dr Kaustubh Dhargalkar, an innovation and design thinking expert, on the role of liberalization in creating successful entrepreneurs in India, there were four reasons for the rise of first-generation entrepreneurs’ post-liberalization.
“Technology has substantially reduced the costs associated with niche marketing; stock markets have become more efficient and transparent and made it easier for entrepreneurs to access money; the costs of starting up an enterprise have fallen because of access to angel investors and venture capitalists, and Indians have opened up to entrepreneurship.”
While entrepreneurship was surging, investors were equally willing to fund startups. Today, Indian investors comprise Private Equity firms, angel investors, startup incubators and startup accelerators, venture capitalists, equity crowdfunding and so on for funding startups at different stages. At the same time, startups are having increased access to Foreign Direct Investment (FDI’s).
Foreign investors are keen on making investments as Indian startups are emerging as innovative hubs. With an emphasis on innovation and technology, new-age entrepreneurs are looking at innovative business solutions and products to reach a wide customer base.
As per #startupindia data, there were 50,000 startups in 2018, of which 8900-9300 of them are technology-led startups. Startups are also creating new jobs and acting as engines of growth. So far, startups in India created 1.6 – 1.7 lakh jobs.
2. Entrepreneurial Spirit Across Diverse Family Backgrounds:
Another significant shift since reforms is people from non-business families showing more inclination towards entrepreneurship. For a long time, business and trade were primarily conducted by few communities and religious groups in India.
The business acumen was passed over generations and family-owned businesses made up much of Indian industry. While entrepreneurship was an interesting area of only a few, the majority believed in getting into jobs that gave risk-free life and sufficient earnings.
But, with the liberalization of the economy doing business became relatively easy. With the favourable conditions prevailing, educated people from diverse family backgrounds began to show interest in exploring entrepreneurial ideas.
They were willing to take the risk, bring in fresh business ideas, implement new technologies and even accept failures. This new set of entrepreneurs pumped in a new belief that entrepreneurship can be a better choice over employment.
In the words of Dr Sunil Shukla, GEM India and Director, Entrepreneurship Development Institute of India (EDII) –
“The entrepreneurship in India was mainly constrained to family businesses until a decade ago. However, today the ecosystem is much favourable to start-ups who want to chart their territory and build a business.”
Furthermore, he added, “Supportive government policies, positive perception of the society towards start-ups and availability of funds from the financial community has given much confidence to entrepreneurs for opting to start a business with a specific ‘purpose’ in mind, rather than just another option to the job.”
3. Government Support System to Foster Entrepreneurship
In recent years, the Indian government has come up with many initiatives to nurture entrepreneurship. Several schemes and programs are being launched to give a boost to startup culture in India. Most of them are directed towards offering/enabling funds for starting a venture, which encourages new-age entrepreneurs.
Let us dive into a few initiatives.
- Make in India Campaign
Launched in 2014, the Make in India campaign was initiated to support entrepreneurs in four ways,
- Driving investments for businesses
- Promote innovation
- Skill Enhancement
- Protect Intellectual Property and build world-class manufacturing infrastructure
The focus of the initiative was on streamlining the processes and arriving at transparent and user-friendly measures for attracting global investors and making India a business-friendly nation.
Make in India approach identified 25 sectors, spanning across manufacturing, infrastructure and service, wherein policy changes were made to pull in more investments.
Through this initiative, the government donned the role of a facilitator rather than a regulator of Indian industry.
- Startup India Initiative
In 2016, the Startup India program was launched with the 19-point Action Plan directed to build a robust ecosystem for startups across India. The 19-point Action Plan encompasses several initiatives like tax-exemptions, countrywide incubation centers, Startup India Hub that offers a single point of contact, funding backup with aid of Rs. 10,000 crore corpus fund, and so on.
Through its several schemes, the program aims at speeding up the process of regulatory compliances, thereby enabling entrepreneurs to concentrate on core business operations. To enable easy interaction with regulatory authorities and the flow of information among several stakeholders, Startup India portal and mobile app were introduced.
Apart from above other key startup programs include,
- Stand Up India
- Atal Incubation Centre (AIC)
- New Generation Innovation and Entrepreneurship Development Centre (NewGen IEDC)
- Micro Units Development and Refinance Agency (MUDRA)
- The Women Entrepreneurship Platform (WEP)
- Support to Training and Employment Programme (STEP)
- National Skill Development Mission (NSDM)
- Biotechnology Industry Research Assistance Council (BIRAC)
- Use of Digital Space and Growth of Digital Startups:
What is Digital Space?
Digital space is regarded as the one visible on the display of digital devices like mobiles, laptops and so on.
Now, how is digital space related to entrepreneurs?
Entrepreneurs are using digital space for doing business – developing internet-based products or services or carrying out internet-abled delivery business. Such entrepreneurship or enterprise is referred to as digital entrepreneurship or digital enterprise.
From the scholarly work of Reuber and Fischer, “a digital enterprise is termed as a person or a business that utilizes information and communication technologies in order to communicate between customers and partners. This involves activities with the main aim of selling products or services which are digitalized.”
Digital entrepreneurship covers digital startups and the businesses which are transforming their operations from the traditional way to digitalized mode.
According to Vasilchenko & Morrish article, “small scale business firms which perform their actions with the support of information and communication technology applications like online accounting, Wi-Fi – hotspot, phone backup, artificial intelligence soft wares, social computing websites like music consumption, and small mobile and internet-based businesses like classification/cataloguing of specialized information, travel/recruitment agencies and the buy-sell marketplace can also come under digital entrepreneurship.”
It is estimated that internet usage in India is by over half a billion people. Internet penetration in India is considerable with rural internet user’s growing. Today, India stands as the second-largest online market globally.
This digital adoption in India is primarily driven by the Digital India initiative, which was launched to make India a digitally empowered nation. Digital India program gave a push to aspiring Indian entrepreneurs by offering a more coordinated start-up eco-system. It opened the opportunities for global reach from one’s place.
As such, the accessibility to internet and internet-services changed the way businesses start, connect and operate. Relying on digital infrastructure development, digital entrepreneurs evolved in India.
Digital entrepreneurs are exploring the business opportunities brought in by the digital arena and commercializing the ideas into digital ventures in a big way. There are numerous startups in India from IT domain across businesses like health and wellness services, digital learning, fashion e-commerce, mobile wallets, and so on.
Few Successful Tech Startups in India
Bengaluru-based InMobi is a mobile advertising platform with a global presence in regions including the US, Europe, UK and South Africa. Founded in 2007, InMobi develops ads, which are more user-friendly and effective in optimizing the ad rankings on mobile phones.
InMobi was the first company to acquire the status of Indian Unicorn Startup. The company is directly competing with giants like Apple, Facebook, Google in the mobile advertising arena.
In the Indian healthcare segment, there is a dearth of the common platform wherein the information about doctors can be easily accessed by patients. On the other hand, doctors and health care providers find it difficult to engage patients thoroughly.
In 2008, bridging this gap between patients and doctors, Practo, a Healthtech platform was launched. Practo offers services like finding doctors, booking an appointment for diagnostic tests, store medical records, online doctor consultation, order medicines and so on.
Noida-based Paytm is a payment and financial services company offering payment solutions to both merchants and customers. Started in 2010, Paytm offers an array of services like bill payments, recharges, online ticket bookings, online shopping, movie ticket booking, Paytm wallet, and so on.
This digital payment company has a monthly customer base of around 140 million and is keen on expanding its presence and product range.
Bengaluru-based Byju’s is an education startup that launched Byju’s The Learning App in 2015 to make quality content and learning more accessible. Byju’s app offers learning programs for students from classes I – XII and training for competitive exams like CAT, IAS, UPSC and so on.
Byju’s offer personalized learning to its users with analysis and assessments. It gauges students understanding and recommends the learning that suits them. So far, there are 50 million student registrations and 3.5 million paid subscriptions for the app.
Ola is a ride-hailing company founded in 2010 that operates by Ola app. Through its mobile application, Ola connects customers and drivers and simplifies the process of hiring a transport service.
It enables customers to book from a variety of services like cabs, autorickshaws and bikes. The company makes about 1.5 million rides every day and is the biggest ride-hailing company in India.
5. Growing Consumerism in India
Another important difference between young entrepreneurs and established ones is consumerism.
Consumerism refers to increased consumption of goods and services. It pertains to obtaining products or services more than required and deriving happiness from excess material possessions.
In the olden days, the spiritual mindset of Indians kept them away from materialistic possessions. They were content with the necessary things they own and never desired for more.
However, the trend changed post-liberalization. Indians transformed into consumerists, desiring to own surplus products and goods. Several factors contributed to the rising consumerism in India.
Reasons behind Consumerism
The liberalized economy resulted in burgeoning middle-class with increased disposable incomes. As such the demand for products and services increased. Added to this, India became a global market and foreign players were strategically positioning their brands here.
With aggressive advertising and promotional activities, global players were able to attract Indian consumers. Moreover, increased accessibility to the internet gave rise to the online shopping trend. Consumers can get desired goods at the comfort of their homes.
For instance, the success of global online retailer Amazon, in India shows how Indians are preferring e-commerce trends. Alongside, Amazon’s success also brought forth interesting points like how global companies are localizing and customizing their products and business models to serve Indians better.
On the other hand, the changing retail landscape in India with the emergence of mall culture and ‘shopentertainment’ experience is equally inspiring consumers.
Moreover, Indian consumer behaviour is shifting towards luxuries and lifestyle products. This trend is observed both among urban and rural consumers.
Also, the preferences and expectations of consumers are rapidly changing with the wide choices available. Indian consumers, especially younger ones who are tech-savvy and educated are driving demand for global consumer brands.
According to the World Economic Forum’s report ‘Future of Consumption in Fast-Growth Consumer Market – India’, the country is set to become the third-largest consumer market following the US and China.
The report also stated that India will witness the growth of the middle class and lift itself from poverty. As such India will change to a middle-class led nation. By 2030, consumer spending is also expected to grow from $1.5 trillion at present to $6 trillion.