Enabling entrepreneurship by choice, not by force!

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How do we catalyse entrepreneurship and promote it as a preferred choice for youth in India? There are no easy answers but there is tremendous scope to support small entrepreneurs and help them grow and scale to become ambassadors of job creation in India. This guest article by Rajesh A R, Chairman and Managing Director, LabourNet takes us through the conditions to create systemic interventions for enabling entrepreneurship.

Today, India is in the midst of implementing many government and private sector initiatives to reap the demographic dividend through job creation. Promotion of entrepreneurship has assumed high priority in many industry sectors. However, before we delve into this topic, let’s reflect on some related issues. What comes first? Skills or jobs? Let’s look beyond the chicken and egg situation of skills and jobs.

India has embarked on various national and state level programs to impart skill-based training with an intention to enhance youth employability. Now that the youth are getting certified after training, they are unable to get placed in jobs. The problem with jobs is that we don’t have of them or let’s put it this way – the process of job creation has been very slow and hence there has been a national level push to encouraging youth to become entrepreneurs.

Entrepreneurship by choice

Picture credit: All India Industrial Exhibition, Hyderabad

When such large scale entrepreneurship initiatives are launched, where we expect the skilled youth to turn job-creators, a lot needs to be looked into for ensuring sustainable income, dignity of work and most importantly, options and support to scale and grow an enterprise. Do we want these entrepreneurial ventures to eventually add to the existing micro and small informal enterprises through local and cluster-based interventions? Evidently, we want them to grow, scale and sustain as successful business ventures.

Rajesh A R Chairman LabourNet

Rajesh A R Chairman LabourNet

Are we prepared to help such entrepreneurs with a sound system that provides access to capital and markets along with appropriate counselling, mentoring, training and technology support? Without such a system in place, these entrepreneurs would remain in the informal sector, like many others who took to entrepreneurship by force, since there was no choice for them to earn a decent livelihood.

Consider the hundreds we come across everyday on the streets and lanes of India – given a choice, perhaps, they would have chosen a different path. Ask them about their business and profits and listen to the stories of daily struggle, social insecurity, other apprehensions and insecurities. These small businessmen and women, who form the backbone of Indian economy, creating 85 % of employment are actually devoid of any organized systemic support.

Now, contrast this with our formal and organized entrepreneurial network that comprises large and medium business houses, conglomerates and MNCs that create the rest of 15% of jobs. Even though they are low on employment numbers, they comprise creamy layer of companies that fulfill the four conditions described by E. F. Schumacher, to a large extent. These conditions have a direct impact on productivity and economic growth.

“Economic development is primarily a question of getting more work done. For this, there are four essential conditions. First, there must be motivation; second, there must be some know-how; third, there must be capital; and fourth, there must be an outlet: additional output requires additional markets. E.F. Schumacher, Small is Beautiful – A Study of Economics as if People Mattered”

Catalysing entrepreneurship by creating 4 essential conditions

To make entrepreneurship attractive and convert job seekers into job creators we need to create the four conditions, that are in fact the basics of any incubation model, irrespective of the trade or region.

Motivation: It is difficult to change the typical Indian mindset that has been conditioned with getting a well-paying, secure job after completing formal education. It is even more difficult to inspire and motivate dropouts and low-achievers (who are the beneficiaries of many government sponsored skilling programs) to embark on a journey that spells uncertainty of income and has challenges – mostly unknown and unforeseen and remain most undesirable.

Know-how: Many entrepreneurs are not able to leverage economies of scale due to quantity and this increases input costs hence there is a need to create backward linkages. Another important aspect of getting started is heavily dependent on know – how and use of appropriate technology. Without correct knowledge and exposure to mentors and experts, any enterprise is bound to run into problems. Besides domain knowledge, one needs to know about the rules, processes and documentation compliance to set up a business.

Capital: Without access to capital, a business idea would never unfold into an enterprise. How does one approach investors and pitch the business is as important as applying for a bank loan to explore financing options. Entrepreneurs need right information and some handholding

Markets: Where does one sell the products or services? This question should be answered early on since a clear picture of customers and markets is a basic essential to kick off a start-up. Entrepreneurs need market linkages and connections with networks develop their business.

By creating these four conditions, we can keep the incubation machinery well oiled, nevertheless, to rev it up, we need to strengthen the support system through well-organized and process-driven interventions that can mentor, manage and monitor the progress of these entrepreneurs as they move into the formal sector.

This is a guest article by Rajesh A. R, Chairman and Managing Director, LabourNet Services India Limited.

The views expressed above belong to the author. NSN does not subscribe to the views and opinions expressed in the article.