Micro-entrepreneurship opens up many opportunities for people to create jobs and provide a dignified means of livelihood to many below the poverty line. It has remained a popular model of business in India, particularly, in the services sector. Besides contributing significantly to the overall GDP growth, micro enterprises positively impact the local economies with great potential for job creation and sustainable development. It has also helped many migrant workers to explore alternative means of growth and success by running small businesses.
Meghna, 22, a skilled cook, worked with caterers and restaurants for 2 years. She lost her job when the restaurant cut down on staff in the kitchen. Instead of knocking other doors for similar low paid jobs, she saw it as an opportunity to eventually do what some of her friends had been telling her to do – make snacks and pickles and sell them in local markets. She set up a small shop and employed 2 women to prepare the items. As the sales soared, her business became profitable but she found it difficult to expand by including few more products. Many factors deterred her plans; though she knew there was a market for the products, she did not know how to get financial support. She was not aware of packaging for longer shelf life. And she did not have any idea of logistics and other overheads to expand a business. Finally, she dropped her idea of expansion and had to satisfy herself with the small shop.
This is just one example of many struggling micro-entrepreneurs who have been operating informally with limited opportunities for business growth. Even though there are many initiatives and schemes aimed at supporting micro entrepreneurs, there is more to be done in formalizing the sector and providing access to network, finance, training and linkages.
Many micro enterprises have tremendous potential to grow and scale if they have the right supportive environment , whether it is caterer, a bike mechanic, a retailer or a beautician. We need systematic measures to develop this sector for seizing the domestic and global opportunities. This will adequately help young and dynamic entrepreneurial talent in India who wish to make micro-entrepreneurship as their first career choice. How do we help women like Meghna to realize her potential and make a difference to her life and many who she might employ? The answers lie in the way we formalize micro-entrepreneurship in India.
Ways of formalizing micro-entrepreneurship
Create a formal identity for business
Micro enterprises need to register their business and follow tax regimes like GST to demonstrate their credibility. Compliance with the rules and regulations proves beneficial in availing loans and other forms of financial support in addition to attracting big customers.
Build a vision through market driven approach
Micro-entrepreneurs need to be aware of the big picture of doing business and have a vision for the growth of their enterprise. This will indirectly create a need for them to go through formal ways of setting up a business. They should be supported to find markets with untapped demand opportunities. This enables them to build their growth strategies and create, position and price their products as per the market.
Training and practical exposure
Providing effective skill training is essential as it helps them to overcome the challenges associated with expanding their business. Micro, Small and Medium Enterprises – Development Institutes (MSME-DIs), Entrepreneurship Development Institutes (EDIs), NIMSME, NIESBUD and many organization conduct training programmes aimed at the empowerment of entrepreneurs. These programmes will help the micro-entrepreneurs in obtaining, strengthening and maintaining the capabilities to set and achieve their business goals over time.
Monetary and technical Support
Providing the right funding options for micro entrepreneurs can go a long way in showing the way to grow. One of the options is the government scheme of MUDRA which helps small entrepreneurs to fund their business. Along with monetary help, entrepreneurs need to know the basics of using digital and mobile devices to operate their business.
Incubation and handholding
Mentoring and guidance have played a key role in making successful entrepreneurs. This can be extended through organized incubation for micro-entrepreneurs that links them with technical and business experts.
If micro-entrepreneurship has to become of the ways to leverage India’s demographic dividend, then it needs to attract many youth and show them a path towards growth and prosperity. To achieve this goal, any step towards formalizing their business would indirectly imply sustainable means of self-realization and job creation.