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Five mantras that today’s entrepreneurs should learn from traditional businesses

The words ‘startup’ and ‘entrepreneur’ may generate quite a bit of buzz these days, but many often overlook that the business leaders of the small ventures of today could learn a great deal from their more traditional peers.
The phenomenon of startups shutting down as fast as they bloom is probably “fine” in the western world – however, India and Indian entrepreneurs are just coming to terms with this new normal. The recent issues of founders being held liable for organisational dues have somewhat shaken the aura of glamour and excitement around the running of a startup; however, what needs to be understood is the fact that India is a land with more than 60 million MSMEs, which have powered the unorganised economy and job market sans venture funding and media glitz.

A typical, traditional small entrepreneur pledges his family jewellery to start off with a single minded focus on “very early profitability” – something that is often considered a “must-not-have” if you are a founder with a large, long term vision in the startup arena. For him, scale is an eventual consequence if the business model is successful. Being an ex-banker myself, and someone who has worked very closely in the lending space for more than a decade with SMEs, I have come to the conclusion that there are some pertinent and pervasive virtues that we all can learn from a traditional SME entrepreneur:

Being an ex-banker myself, and someone who has worked very closely in the lending space for more than a decade with SMEs, I have come to the conclusion that there are some pertinent and pervasive virtues that we all can learn from a traditional SME entrepreneur:
Capital is scarce; spend only when it’s absolutely needed: A traditional entrepreneur raises capital from his personal savings, pledging his family assets like jewellery or taking out loans from his known circle. Hence, every rupee spent had to fully justify its relevance and absolute need. There was a constant pressure to repay or replenish the initial sum, which led to prudent and indigenous financial decisions.

Sheer quality creates branding; you don’t need to splurge on client acquisition: Your neighbourhood chaat shop or Udipi Hotel wouldn’t even have a marketing budget – yet, you see customers walking into the shop repeatedly and consistently over the years. The proprietor’s loyal clientele was built on quality service, customer satisfaction, word-of-mouth referral, and, of course, practical pricing.
Good business models take time to build; have patience and perseverance: Most of the large businesses of today, from MTR to Nirma to Halidarams, have all had extremely humble beginnings. These businesses gradually perfected their business model, and at an opportune inflection point, scaled up dramatically. However, the modern day startup model is in complete contrast to this, where you scale up drastically (in most cases, way beyond practicality) and perfect the model as you move on, while parallelly searching for profitability.

Build a business to stay and not sell: For a traditional businessman, his business is his pride, and an asset for himself and his family. His decision-making and approach to business is to ensure its longevity and sustenance. For him, his business is an asset that generates annuity income over time, and this annuity needs to be passed on to his subsequent generations. The sheer thought of selling a business is a big “No” for most traditional entrepreneurs.

Don’t celebrate success; never attract unwanted attention: Unlike the present day entrepreneur, a traditional entrepreneur never celebrates success; on the contrary, as he grows, the simpler and humbler he gets. He is wary of drawing unwanted attention to his business, and keeps his growth and progress completely under wraps. This has ensured that his entire focus stays on business, and not around it.

The above virtues may seem to be completely out-of-sync in the present day startup context; however, these have stood the test of time, especially during the bad times. Failure rates in traditional businesses are far lower than startups despite minimal access to capital and markets. The present day entrepreneur would certainly do well to try and adopt a few of the above mentioned traits of the traditional Indian entrepreneur.

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