The Killjoy of Finance for MSMEs

MSMEs biggest enemy is the Financial ability – to invest into their business, research, quality improvement or even Customer Services. As a result, the biggest hurdle for MSMEs are to find money to run and then to grow teir businesses. There is little left, if at all, to provide for growth levers such as Research, Product Innovation, Promotion and Distribution

Banks while increasing exposure to the MSMEs are still per capita way below the national lending averages – indicating a distrust for the MSME operations or otherwise higer operational costs (recovery, bad debts etc). If one were to remove the larger within this fish pond, the smaller proprietorship / partnerships and medium businesses are left with little to chew.

Communities such as the ‘Marwari’ (a collective term for people from Rajasthan), support their members within through a unique network of relationships and family connections to ensure they are able to uplift their distressed brethren. However the solution for growth is still within the individual or the organisation to find.

So, what is a practical Angel / VC approach to this otherwise rather key problem?

Way back in the ’70’s (yes, we are talking about over 50 years back), a businessman from the above mentioned community wanted to set up a small grocery shop in the South of Kolkata bordering a premier vegetable market near the lakes. He had the shop and had started doing business, but was strapped for cash to grow and to offer the items his customers wanted. He went across to his key customers and told them to give him 100 as a seed capital each and that he would adjust this amount each month from their purchases – with a 10% discount. In a form of ‘crowd funding’ he was able to collect a reasonable sum and in short time grow with more customers now wanting this facility. Well within the margins, he was able to turn a tidy profit from no investment of his own

Unique problems need unique street solutions. MSME financing is similar to the above story. If you wish to know more about how the business can be grown by simply building a support system from within the business mechanics, contact@nat-cons.com

There is no problem for which a solution can’t be found!