5 Clever Small Business Financing Options in India

For a new small business in India, like everywhere else globally, finance is the key to success and sustenance. Efficient and consistent fundraising is not the easiest of jobs. Still it does not have to be the toughest either. Traditionally banks tend to be the first and most preferred source of raising capital. Though they do not necessarily have to be the only option.

 

For a business to get to the stage of revenue generation and a profit making stage, the initial solid push is critical. That push comes from money. It might be for a brand new business starting out or a small business looking to scale up.

 

Here a few ways in which that money can be raised smartly.

 

Alternative methods to raise finance for a small business in India –

 

With the digital economy taking flight with rocket boosters, one has to think beyond banks. There are a number of other reliable options that can be explored. Such as:

 

Angel Investors 

While most business owners are familiar with angel investors, in simple terms, these are individuals with interest, initiative and investing power looking to vest in businesses. They keep a close watch on sectors that they think will work best for them and will be interested to fund businesses that meet their profitability criteria. Typically they operate as part of networks where they collectively scour through proposals and business plans to finally decide which ones they are going to support. Getting the nod of an angel investor(s) to fund a business is a big deal for most businesses. Depending upon their background and expertise, angel investors also tend to take a keen interest in the business and offer advice and suggestions for improving the revenue generation. Need to know the 8 most prominent angel investors in India? Read this article on Forbes online.

 

Crowdfunding

Crowdfunding is already a great fundraising option albeit a fairly competitive space. Given the popularity and ease of accessibility it’s fast turning out to be a preferred method for particularly startups. Crowdfunding literally means getting individuals to invest or give money for a business idea by putting it out there on a crowdfunding platform. Of course, the idea has to have potential and the investors need to see some ROI before they commit. Even so, this one is a fairly new age method and those who know how to play it properly can get good support for their business or business idea. This link lists the top 15 crowdfunding websites/services in India.

 

Lending Institutions

There are a number of independent lending institutions that can help raise finance for a small business in India. The requirements to secure a loan can be exhaustive for a small business at most banks. Unlike banks, these institutions are willing to take the risk to finance a small but solid business if basic eligibility criteria are met. This is a very effective source as there are high chances that the loan will come through. These institutions exist to cater to the newer and smaller entrepreneurs who have trouble taking their proposals to traditional sources. While they don’t come with as great a repute as banks, the financial help provided by them is great for most small businesses. Lendingkart is one of such institutions in India.

 

Bootstrapping

While mostly explored by startups, bootstrapping can be an effective way of securing finance for smaller existing businesses as well. A small business requires capital when wanting to scale up or expand. It can also be for acquisition of equipment, logistics or payroll management. Bootstrapping involves either investing one’s own funds into the business or getting some money from friends and family at low interest rates. It’s imperative to understand that this method works if the loan requirement is not too high. As the popular saying goes, one shouldn’t keep all their eggs in one basket.

 

Venture Capitalists

Funding from a venture capitalist is like finding a diamond in a coal mine. It’s hard to come by, but scores incredibly big points for a business owner. Most VCs prefer to support existing small businesses as opposed to startups. If they find proof of potential and scalability, they come on board not only with money but with expertise, mentorship and a lot of guidance. They tend to stay with the business till it’s either acquired by someone or till it goes public. The only possible downsides are that they exercise control and there is a lot of accountability towards the VCs.

Why Customer Engagement is Important? Part 1 – Rave Reviews and Rants

Customer engagement has become an important parameter for business success today. In this context, customer engagement is now almost synonymous to customer satisfaction. Customer engagement can happen through both online and offline channels. Positive customer engagement not only boosts your brand’s reputation but can also help drive sales. There are several ways a business interacts with its customers.

Product Review Sections

Customer review sections are some of the most visited sections on e-commerce sites. A product review is like a personal endorsement from a genuine purchaser. New buyers read these reviews for making a decision. The more negative or positive reviews you get the more effect it has on your sales.

Social Media Pages

Buyers also leave reviews on social media brand pages. Facebook, Twitter, and Instagram have become a medium for buyers-seller communication. Popular brands have been engaging with customers on social media for a while now.

Review Aggregators

These independent review sites let people rate their buys and offer advice to new buyers. Users can also rate offline products and services here. For example, TripAdvisor lets users share their experience of hotel stays.

Online Forums

User forums have also become quite popular with first-time buyers. Websites like Quora have become an important source of information for the netizens. Again, these forums are quite useful when you are looking for offline product reviews.

Customer Care

Customer care numbers still get a lot of queries and complaints. Although a bit conventional, this is a more interpersonal medium for customer engagement. Generally, customers can rate their experience through SMS and email questionnaires after the call.

Significance of Rave Reviews and Rants

• The most visible effect of 5-star reviews is that these reviews help drive your sales. The closer you are to a 5-star rating, the more buyers choose your product over the competition. Replying with thank you notes to your customers can further enrich user experience.

• Happy customers not only help improve online sales but can also drive offline sales. Nowadays, social media and word of mouth can spread a customer’s experience like wildfire.

• Unhappy customers can also be a source for driving sales. Timely resolution of user concerns can motivate them to reverse their initial review. This in turn can make a potential buyer confident in trading with you.

• Furthermore, user rants can also be beneficial for your company. Analysing negative reviews can help you understand the ways customers use your products. Based on that you can develop alternative usage scenarios for your product. Also, genuine user concerns can be used as a guide for future product development.

• A good user engagement strategy will also increase brand loyalty. A buyer is more likely to shop for your product if he/she has had a positive experience in the past. Buyers may also look for your brand’s other offerings in such instances.

Concluding thoughts

User experience or UX is fast becoming a key factor in increasing sales/growth for companies. The theory was brought to fore by the late CEO of Apple Inc. – Steve Jobs. The success of Apple all these years later is a testament to the enduring philosophy of UX. Customer engagement forms a large part of UX and is critical for any business’s long-term success.

Advertising for SMEs – Do You Need It?

SMEs for the most part are strapped for funds. In fact, because of this, fundraising becomes an almost ongoing activity for entrepreneurs. Given that money is tight, every rupee counts. When accounting for costs, as a small or medium business owner you need to take stock quite carefully and expenditure must be decided based on the ROI. In such a case, advertising costs might seem like an overhead that you can do without.

This, however is not the correct approach. All businesses, whether big or small need to advertise. There is no getting away from it. Advertising is an important tool to build brand loyalty, credibility and a strong customer base. In the case of SMEs, the only thing you need to be mindful about is the tools and methods that you choose. By choosing effective methods of advertising that will work both in terms of cost as well as returns, you can maximize the results and gain a lot out of the exercise.

Here are a few things that can help you get the most out of your advertising efforts:

Hire Professionals: While investing in the services of a full scale advertising agency might seem like a burden, you need to treat this more like an investment. Even if you can’t go to a top-notch agency, make sure that you go to a smaller one that is efficient. Advertising does not magically work on its own. It requires strategy, backed by creative thinking and the ability to position the brand and company in a way that will drive sales. You will need the help of a professional to be able to achieve this.

Research: No advertising campaign should ever be attempted without proper research. You need to know exactly who your target audience is, what is it that they are interested in and how you can best present yourself to them. Research helps to identify consumer persona and it makes a lot of sense to get an idea of what your consumers want or like before you serve anything to them. In fact, more importantly, proper research will help you identify who your customers are. It’s more important to know who to sell your product to, before you get to the how.

Track your advertising: You have to find ways to determine whether the advertising you are doing is working or not. If you are going for traditional methods of advertising such as print and mass media, there are ways to find out whether there has been any spike in sales. Depending on when the ad is put out, you can track the period and link it to any jump in sales that you may experience. If it is online advertising that you are utilizing (as you most probably are, given the times), then you need to understand the tracking metrics of various platforms such as Google AdWords and Facebook to see how your advertising efforts are faring.

When it comes to advertising for SMEs, a lot of efforts are being concentrated on online advertising or digital marketing as it is called. Digital Marketing includes advertising via Search on Google as well as putting in money to boost your Facebook posts and create sponsored ads.

What is important to understand when it comes to online advertising is that conversions actually take time and you need to be patient. Also, targeting the right customers and the right demographics is absolutely crucial. You can get a sense of who your frequent visitors are on your page and this will help you understand the kind of customer group you should be targeting.

Online advertising, if done right, can reap a lot of rewards. In most cases, the returns are not by one-time orders but rather but repeat customers as building up brand loyalty.

Advertising is not optional, whether it is a big, small or medium size business. Make it work for you by being smart about it and reap the rewards.

The Ultimate Guide To Grow Your Business Online

Given the economic climate, for any business intending to grow to its maximum potential, there is no shying away for exploring the online space. In fact, as a small business owner what is important and critical for you to understand is that optimizing your business on the web is no longer a choice that you can contemplate making or not making. It’s actually a necessity and a reasonable amount of time and resources need to be diverted for this.

The big question however is- how do you get the best returns on your investment and what is it that you can do to make sure you are leaving no stone unturned when it comes to finding new ways of growing your business online?

Here is a best practices guide to help you navigate this space effectively:

Build your online presence:

The first step for you is to evaluate your online presence. What we really mean by this is that “being online” can mean number of things. A lot of people confuse online with just social media. Do not make that mistake. Your online presence quite literally consists of a combined effect of all the different avenues available to you. This usually consists of your website, all the social media handles that you are on and tools like email marketing that you can employ. A complete overview of your online presence and an in-depth strategy on how the different platforms are going to be connected to each other is a must.

Think about mobile:

With over 300 million people in India accessing the internet via their mobile phone, you need to make sure that your mobile strategy is well thought out. For this to happen, your site needs to be mobile savvy and you need to work on that. Invest in building a mobile site that is nicely accessible on smartphones and also rich in content. Search engines consider mobile friendliness as an important factor when they rank your site. It is important to keep this in mind as, if you are not able to do this, you will lose online visibility and this will affect your online growth immensely.

Engage on social media:

We cannot emphasize this point enough. Using social media for business can be tricky but if played well can reap very high rewards. Remember, you can use your social media handles as the voice of your business. Whatever you want to convey about your business, your products and services can be done via these platforms. You can use these handles to talk to your customers and this will keep them engaged. In addition, your customers will get to understand your brand better and this usually leads to a more personal connect and builds loyalty. One way to sustain this engagement is to remember that your handles should not become cluttered with information just about your business and promotions. Create a content calendar that has space for sharing information about the industry, storytelling and giving your followers a chance to interact with you and your business directly. Focus on authentic and creative ways to hook your followers.

Social Media Marketing:

In the present web scenario, there is no running away for online marketing. Most platforms expect you to invest some money in online advertising and it’s only with that that they will give you the outreach that you desire. The good news however is that if you are able to invest smartly, you can get very good returns on this money and you’re the visibility of your business can really grow online. For this to happen you need to make sure that target audience is chosen well, the posts that you are going to promote are picked after some research and thinking and also make the best of what each platform has to offer in terms of advertising. Other than this, regular SEO for your website is a must and reaching out to customers and keeping them informed consistently via e-mailers is very important.

While it doesn’t end with these four, given the expanse of the web, even investing and getting these right as basics can help kick-start online growth, something that can then be built on consistently.

Keeping your Company’s Cash Flow Happy – Debugging Budgeting!

Keeping your Company’s Cash Flow Happy

Does cash flow translate to revenue? Certainly not. Deteriorating revenue with a robust cash flow is not going to be a saving grace for a failing company, but a good cash flow plan in a relatively stable business can work wonders. The important thing to note here is that cash flow deals with actual cash, as in payments received from the customers. 

So, what is Cash Flow Actually?

Money enters the company through sales, investments, etc. and exits the system through operations, investments, taxes, processes and the like. The record of this incoming and outgoing money comprises the detailed cash flow statement. Cash flow is indeed a crucial factor in any company’s finances, but not the totality of it. What methods need to be implemented depend upon the capabilities, strength and weaknesses of each method, in the light of the proposition that is offered by cash flow.

Understanding the Cash Flow Statement

The complete financial statement of any company, is made up of the balance sheet, the income statement and the cash flow statement. The income statement of a company depicts the profitability over the course of a financial year. The balance sheet details assets and liabilities of the company. The cash flow statement can clearly depict the working capital requirement of your company. In other words, the operating funds needed by your business to run efficiently. Keeping a close watch on the cash flow statement can help you regulate the funds required to keep your business running steadily. Here are some helpful tips that might aid you in better cash flow management in your business.

Understanding and Analyzing the Monthly Bank Statement

The bank statement is not just a ready reckoner for the funds that you have left at the end of the month. You will need to compare the balance you have in the beginning of the month with the balance at the end of the month. There might be instances wherein you haven’t made any purchases in a month towards restocking your inventory or spending on expanding your business, and that might make the month end balance more than the month’s beginning figure. That will not be an accurate measure of how your business is doing. On any average month, where you have regular spends and income, the ratio between the opening and closing monthly balance will be a good yardstick to measure your cash flow amount. In short, cash flow adds together the monthly accumulation of profit, accounts receivable & payable and change in the inventory.

Cash Flow Budgeting

If the cash outflows of your company are more than the inflows, it should be addressed on an immediate basis.

Ascertain Cash Inflow (Receipts)

As soon as goods and services are sold, they should be recorded immediately. Expenses occurring at the same time should be considered as well. Always keep in mind the profit and loss budget while deciding on the cash receipts of the month.

Ascertain Cash Outflows (Expenses)

Salaries, rent of the office/warehouse location, telephone bills, electricity bills, including management costs of the inventory, operational costs, spends on different departments and expenses incurred in execution make up your cash outflows.

Forecasting Cash Flow

Forecasting in any sense always includes careful observation. If you have kept track of the previous two points for quite some time and have a good grip on what your fixed expenses are, this might not be as difficult. At the same time, you will also come to realize the problem areas which affect your cash flow. There might be a few business units or customer segments that turn in the cash receivables at odd intervals or have irregularities in payments. You can then focus primarily on these points and act accordingly to normalize your cash flow.

Collecting Account Receivables Faster

Online, e-wallet, credit card payments if introduced into the business can make cash inflows from your customers a lot faster and boost cash flow for your company. Getting authorized for any of these services is much easier day by day. With a valid company registration certificate or even a current account statement from your bank, you can be set up with a decent e-payment option.

Planning the Flow of Inventory

Timing your inventory restocking with cash inflows is an effective way to protect your operating funds from being depleted. It also reduces the complications of calculating and tallies the incoming and outgoing cash at the same time instead of putting it off for later. Being mindful of the sales cycle helps. All being said and done, we would advise you to move to a digital cum physical bookkeeping if you haven’t already. Google Spreadsheets are a great way to start. If you already have a hang of operating spreadsheets, try out some free accounting software that is available for small business. You don’t necessarily have to invest a lot in a professional software. Cash flow deals with your company’s working capital and there are times when you might need some additional funds. Did you know that Lendingkart Finance offers working capital loans exclusively for small businesses? Want to know what you should keep in mind before applying for a working capital loan? Small Business Loans – Why and Why Not explains that in detail.

6 Amazing Ways to Execute Ideas for Small Businesses

Idea is the core of every business. As somebody who is either interested in starting a new business or is already on that journey and now looking for growth, you are meant to know that, right? What you might know however is that sometimes even the best ideas fail due to the inability of the business owner to execute them properly.

The idea is like a seed and execution is the solid base that helps that seed grow and flourish. It is very important to understand that good execution requires some thinking and coming up with a proper strategy. Moving from the idea stage to the implementation stage can be challenging, especially for first timers. You have a lot to think about, and the ‘how’ piece needs to be broken down to create a plan that not only does justice to the original idea but also creates a solid foundation for a business that can be then taken to the next level.

Here we give you some guidance on six great ways to execute ideas that are going to be helpful:

Spend enough time thinking: Good ideas need time and nurturing before turning them into reality. As a potential entrepreneur, you need to spend enough time in processing the idea for your business and then some more in understanding and developing the strategy for execution. The temptation to run off and launch a fresh idea can be high but it’s important to remember that some breathing time needs to be given before locking down and closing on the final.

Do a lot of research: While you might want to believe that your idea is one of a kind and never been thought before (which it might be, no denying that), it helps to do some research before and during the execution stage, whether someone else has done something similar and learn from their experiences. More importantly, it helps to have a bunch of advisors who can help you with learning from their own experiences. As a new entrepreneur, it pays to be humble. That being said, use your discretion when taking feedback and be smart about what you want to utilize and what you want to leave.

Performance tracking: Don’t be overconfident about your idea. One rule of good execution is to constantly look for improvements and find ways to get better from where you started off. Track your performance and find ways to measure your results so that you are able to use that data and find ways to improve on your existing business model. This is helpful also from growth point of view. Knowing how you are doing in your current business state will help you in taking decisions about where you want to take the business next.

Work on a good pitch: It is extremely critical to have a proper business plan. What you want to do is to have other people believe in your vision and being able to sell your vision well is very important for converting an idea to reality. For an idea to be executed, outside support holds a reasonable amount of value. The belief of your investors and customers is key and being able to simplify your vision and get them to see the big picture and how it is connected to profitability and growth adds power to the execution plan.

Solid communication and teamwork: No idea can ever be implemented by one person alone, no matter how robust and foolproof it is. One way to be able to roll out and master the process of execution is to build a team that believes in the idea passionately and feels ownership of it. In addition to that, you need a rock-solid communication strategy. Then, you are on good grounds for conversion of something that is just on paper into something that is real and tangible.

Use technology: This might seem like something very obvious but you will be surprised at the number of entrepreneurs who undermine the power of tech when rolling out and implementing the business idea. Tech should not support, ideally technology should lead and help optimize the business roll out plan. Find the best technology tools that’s suitable for the execution of your idea and use them effectively. This not only will lead to smoother execution but also give you an insight on how to innovate and improve.

While the idea is a start, there is a lot that goes into making it come alive. These guidelines above can help you get the best out of your idea and turn it into a profitable business.

750% Growth – This is How Success is Defined!

The Curtain Call of Coir – G Sindhu’s Entrepreneurial Story

In 2007, a remote area of Modakupatti in Tirupur saw the emergence of Evergreen Enterprises. As a company that dealt in coconut and coconut products primarily, it wasn’t much of a contrasting setup in the locale. The defining trait in the company was that it was being spearheaded by a woman, being in an industry that is mostly male dominated.

A graduate from the University of Warwick, G Sindhu made a bold move of taking over her husband’s family business. While keen business acumen and dedication were the keys to turning the tables in her favor, this woman entrepreneur opines that having a sharp lookout for the relevant opportunity can go miles in making the best of any situation. While the initial challenge was convincing the family to let her take control of the business that comprises 99% men as suppliers and buyers, there were further business challenges as well.

The challenge of coping with the shortage of human resource was handled in a very smart way. Locals of Modakupatti were trained and recruited to serve as the manpower for the startup. This has resulted in the employment of over 100 uneducated people and now they have a steady livelihood thanks to the company. Evergreen Enterprises works mainly out of Modakupatti, and has a business office in Coimbatore.

For the problems concerning funding, G Sindhu tried approaching banks. But unnecessarily long processes and requirements of collaterals made the entire situation too muddy to cope with. Another bold move on her part was approaching an alternative lender, Lendingkart. The business had taken up all of the pooled capital and she was looking for cash flow. “The speed of processing the loan was very fast, compared to public sector banks”, says G Sindhu. An avid supporter of the role of technology in furthering a business, a fintech company like Lendingkart made more sense to her than traditional banks.

In just a year of taking over the business, G Sindhu has made the company increase its turnover by 750 percent. In the past 2.5 years, the number of clients for Evergreen Enterprises has shot up from 10 to a considerable 140.
Citing a few words on accountability and goal-setting from the successful entrepreneur herself – “(We) follow a system to measure the progress and set the goals every day, every fortnight and every 45 days. This fosters accountability among team members.” Working alongside farmers, clients and team members, she suggests that an amiable environment for all of them is the key to growing a business.