India has over 1 million registered companies and another 51 million SMEs that collectively employ close to 120 million people, and account for 37% of India’s GDP. With a population of 1.2 billion, ours is a labour-intensive economy that supports an entrepreneurial mindset.
Entrepreneurs spur economic growth and create value by developing innovations that often produce a cascading effect, stimulating other businesses and sectors of the economy. The IT sector is one such excellent example. Entrepreneurs contribute to national income by generating wealth and spurring job creation. A recent survey by The Entrepreneurship School, suggests that each new startup creates an average of 5 jobs, which increases to 50 or more if the startup survives the initial phase of growth.
Most importantly, entrepreneurs often create social change with their innovations, paving the way for newer or evolved iterations of old methods or technologies that change the way we work and live. Online startups in the food and delivery sector offer many such examples. Some entrepreneurs innovate for the greater good taking their innovations to the people that need them the most. From clean energy alternatives to microloans, these entrepreneurs are changing the face of rural India.
I believe entrepreneurs are magicians with spines of steel. It takes a whole lot of courage to leave a secure job and start your own business. Neither is it an easy task. India ranks 77th out of 190 countries in the World Bank’s latest doing business report. Despite the progress, there are still many challenges to overcome – complex regulations to compliance and taxation.
When you start a business, financial security flies out the door, especially in the initial stages. Money is often the biggest challenge. Entrepreneurs give up secure jobs to start a business, often risking their family’s financial security to do so. They also have to ensure they have at least a year’s runway to pay overheads, salaries and other business expenses. It takes 1000 days for a business to set up strong roots. Some entrepreneurs find it extraordinarily hard to raise capital to meet the needs of their growing businesses. They start with minimal capital, which often hurts their potential and stagnates growth. India must loosen some of its strict regulatory practices giving growing companies more accessible access credit, the most critical growth driver.
Then there’s the everyday stress that can make or break. The less said about this, the better.
Every time I read smug reports of an entrepreneur failing, it makes me very, very angry. Not because they failed, but because the rest of us can’t seem to see past the failure. Many entrepreneurs say that shutting down their company is one of the worst experiences of their life. They spend countless hours, growing it and nurturing it, and when it fails, it feels like a family member has died. The reality is that most new companies don’t last. Each entrepreneur sets up their business confident in their dream to make it a success, but not all of them will.
Do we want them to give up and go home or try again? I’m firmly in the ‘try again’ school of thought. And to make this happen, we need to treat entrepreneurs like a national asset. Just like any other national asset, they should be nurtured and protected. As a government, we should make it easy to start and run a business; not 77th but 7th on the World Bank list. Or 1st. As investors, we should protect and motivate, not invest today and expect a return tomorrow. Most importantly, we should celebrate failure. So each of these brave souls is more than willing to pick themselves up after a setback and try again. And again. And again.
And I believe this change shouldn’t be limited only to governments and investors and shareholders. Many who have the ambition, don’t venture into it because they are challenged by circumstance or responsibility.
At Fabtech we’re creating a future generation of intrapreneurs with a great deal of success. Across the company, we have seen some of our Life Engineers organically assume responsibility for their department or even the whole vertical or ‘family’ as we call it in Fabtech. Rather than place barriers in their path, we do everything we can to open up their horizons, create learning and growth pathways, nurture and mentor them to success. There is unprecedented transparency so they can monitor their own P&L.
I believe Fabtech may be unique in this area. In our industry, most family or promoter run businesses tend to operate the different aspects of their business in closely guarded silos. They often employ protectionist policies where one department usually has no clue as to how the other functions. This fear of losing control often results in these businesses dying a slow lingering death within two-three generations.
For Fabtech, this strategy has had many benefits. For one thing, it has freed up the promoters to focus on growth strategies and acquisitions; secure in the knowledge that the day to day management of the company is in excellent hands.
Fabtech has provided growth capital to several companies in the industry and beyond, and we’re always on the lookout for potential people and companies whom we can back. I’m keen to mentor the next generation and learn from them too.
This post originally appeared on LinkedIn Pulse