“Structures that support micro-enterprises so that they can employ more, improve the contribution to economic necessity”


Micro-entrepreneurs need mentoring to tackle difficult experiences in the beginning.

Simple business transaction for MSMEs: According to the latest annual MSME report (2021-2021), micro, small and medium-sized enterprises contribute a third of the country’s GDP and gross value added (GVA), of which the micro-sector accounts for 99 percent of the MSME sector. Micro-businesses are evenly distributed in urban and rural India, and 66.42 percent of businesses belong to socially disadvantaged groups. In the small and medium-sized sector, on the other hand, only a third belong to the socially backward groups. The microsector also provides 97 percent of the jobs provided by the MSME sector. In Delhi itself, 9.25 lakh micro-enterprises employ 23 lakh. The average number of employees in micro-enterprises is three. While a large number of micro-enterprises continue to operate in the informal sector, they form the backbone of the Indian economy. It is therefore imperative that there are structures in place that not only support the micro-enterprises so that they can employ a few more people on average and improve their contribution to the economy.

From some of my 25 years of work with startups, small and entrepreneurial companies, I have found that the primary motivation of micro-entrepreneurs is to make a living, to be independent, and to use their skills to gain wealth for themselves create. Very often the traditional definition of entrepreneurship, responding to an opportunity in order to find a solution, is not the reason for different micro-entrepreneurs. Given that the micro-entrepreneur very often enters the market either to get through a bad period or to use his skills to make a living or to be able to pay for his own hobby, the company’s design is limited in its growth potential . Hence, the thought that tiny businesses will grow when they have more resources is flawed. This would be akin to thinking that a chikoo tree becomes a mango tree when there are enough water and resources available.

The micro-entrepreneurs need mentoring to formalize their business. Often times, the formalization process seems too cumbersome and daunting, especially for entrepreneurs who are untrained or poorly trained and who live in rural areas or on the outskirts of urban India. The micro-entrepreneur therefore prefers to keep it informal and sometimes it can even be illegal without intent.

While there is a cost to formalization, there are benefits to formalization such as: B. Providing an identity and a face for the company that can help overcome the suspicion that is associated with the unknown and novelty of a company. Also, formalization would help the entrepreneur by taking better care of himself and his employees about the existing systems for long-term benefits in terms of health and pension, etc. Simplification of the formalization process, advantageous formalization, and assistance with formalization would go a long way in helping the business. Some of these mentoring solutions can be technology-based. Policy makers need to be careful to ensure that more and more people in the micro business sector are included in social support mechanisms such as health and pensions.

Also Read: MSME Vendors Count Almost Five-fold In 12 Months Amid Covid On Modi Government’s Ecommerce Marketplace

Micro-entrepreneurs need mentoring to tackle difficult experiences in the beginning. Many difficult situations arise at the beginning of business and no one is ready to deal with all of them. Hence, it is necessary to have mentors to talk about some of these situations. For example, an entrepreneur who sold unique inner pots he had designed agreed to deliver 50 such pots to a customer. The customer had bargained hard and the contractor agreed at a price that was just a little more than the cost of production, excluding the cost of the contractor’s time. When the entrepreneur started preparing the pots for delivery, he found that the customer expected to pay for the delivery. Since his item was fragile, it would add additional costs to packaging and delivery, and it would add 25 percent of the product cost on delivery. Fulfilling the order would mean losing a tidy amount of money. Canceling the order would cause a loss of face and damage to his reputation in the market. Discussing with a mentor at this point would help the entrepreneur cope with these and many more tricky problems that businesses face, especially when starting up.

The third and most important support that the micro-entrepreneur needs is access to the market. While the need for marketing assistance for micro-entrepreneurs is recognized, I believe much of it is still conceptualized in the pre-Internet world. Much of this is the creation of marketplaces where people display their goods and / or a middle unit that buys the product and forwards it to central sales units. Marketing support for micro-entrepreneurs in the 21st century can include creating posters and messages to share on platforms such as WhatsApp, taking pictures to upload to online marketplaces, creating an attractive bundling of products and services, packaging and delivery, and learning include dealing with customs declarations, becoming familiar with accepting digital payments, etc.

I have deliberately kept micro-entrepreneur financing out of this post as I assume that many micro-entrepreneurs start out with capital or borrow something and then, with their hard work and care, let it grow to themselves and the average three people they employ feed. However, the financial crisis shows up when there is a natural or family crisis. I think that cheap, sensible and simple insurance can be the way out to cope with difficult situations. Here, too, technology-based intelligent insurance policies can be innovated for such micro-entrepreneurs.

Micro-entrepreneurs are the backbone of our economy and a sustainable and inclusive way to strengthen the economy. So it is time we thought a little outside the box of MSME and thought hard about the Micro Enterprise Box in order to create an environment in which the Micro E can thrive and prosper.

Neharika Vohra is Vice Chancellor at Delhi Skill and Entrepreneurship University. Previously, she was a professor at IIM-Ahmedabad and chair of the Center for Innovation, Incubation and Entrepreneurship. The views expressed are those of the author.

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Steven Gregory