Dr. B. V. Krishnamurthy 's write up on Indian Entrepreneurs is related very much to our times.Though small and medium entreprises account for more than 80% of Indian business,
many entrepreneurs are not professionally managing their organisations.The learned author is correct when he says that business is equated with family.This is a distinctive feature of India only.

The Indian entrepreneurs consider every problem as a crisis because they are not able to priortise their problems and issues.

I appreciate very much when the author says that the learning curve is not felt by the Indian entrepreneurs. The growth of entrepreneurship in India will reach its pinnacle if all the suggestions made by the author are introduced both by the government and the business community. It is worth noting that even now, nearly 700 products are "reserved" for the small sector. The sooner such protectionism is removed, the sooner the small enterprises would be forced to compete and succeed.

A very contemporary subject with practical insights, wisdom and suggestions. Kudos for shedding light on real issues. Books are aplenty and abound in theories. What we need today is more of such solution-oriented approaches. Indian industries can indeed make it to the big league if they shed their inhibitions and dream big.

BVK has hit the nail on its head . I am a CEO of a International
call center and these are few reasons that has hampered our Growth to the next level.

Sir,
Your findings truly reflect the reasons for the question, why do small businesses eternally remain small?
Your observation is right that small entrepreneurs treat the business like their family and that is one of the reasons for these entrepreneurs to work for long hours and as a consequence many of them are unable to spend sufficient time with their family. In my understanding the business and entrepreneur is almost same as most of the decisions (including routine decisions) are made by entrepreneurs.
Apart from the valid suggestions you have made for addressing scalability challenge, I like to add two more suggestions.
1. Entrepreneurs have to hire professionals who are better than themselves. Because, entrepreneurs are not experts in all the functional areas.
2. Entrepreneurs have to operate on a Trust based model while dealing with employees. This initiative will allow entrepreneurs to naturally delegate authority to their employees, which results in saving of time and they can prioritize their work.

I was one of the participants in Dr BVK's workshop. Perhaps not to embarrass those present, he has not mentioned one dimension that came out during the interaction. When asked to mention the biggest mistake they had committed and what they had learnt from it, not a single participant (myself included) had the courage to own up to her or his mistake. Dr BVK observed very politely that this was as close to a perfect audience as he had ever come across. We make mistakes all the time. Neither are we willing to admit the mistake nor are we willing to learn something from it. This to me is one of the major stumbling blocks for small entrepreneurs. I wonder whether it is true of all entrepreneurs.

Dear Sir,

This is a very interesting post that you have given.

The main reasons why these Indian Enterprises cannot grow in global standards are as follows:

1. Low End Technology: With low-end technology it is very difficult to go ahead both locally and globally.

2. Cheap Imports: They break down to competition from outsiders from manufactures they become traders, cheap imports kills many of the manufacturing units.

3. Lack Of Professionalism: As Druker said there should be a complete divorce from management and ownership, in the Indian context it is hardly applicable and you are absolutely right, that is the biggest problem with the Indian entrepreneurs. It becomes a family business as you rightly pointed out delegation becomes a big problem. The Family run business finds a big threat in professional managers.

4. Lack Of Vision: Most of the small timers remain small timers because they don’t have any vision, after making a little money they become directionless or they want to siphon away the fund from business because of myopic reasons.

But still Indians are know round the world for their business acumen and out of these three million small units a visionary like Dhirubhai will be born.

This is the incubator for Ambanies, Mittals, and Mallyas who are going to make India proud.

With Warm Regards,

The points made are relevant. But one of the other factors for small enterprises not growing (and in many cases failing) is the diversion of funds for accumulating personal assets. Non Performing Assets (a term used to denote loans that cannot be recovered) have reached staggering proportions and are one reason for financial institutions to be very conservative in lending. Of course, even large firms are guilty on this count. They tend to get away because they have other businesses to fall back upon. More accountability and probity are needed before small enterprises can dream of making it big.

Dr. B. V. Krishnamurthy,
I immensely enjoy reading your observations on topics related to India, they are very insightful. please keep them coming

This topic seems to boil down to what Indian entrepreneurs are focusing on, leading vs managing. It looks like they initially start out leading the companies and further along the road they start managing the business rather than focusing on the primary role of leadership and hiring good managers.

A very practical illustration of the prevailing obstructions in rise of small and medium enterprises in india. The author's insight into the reasons is quite rational and the arguments provided are also considerably convincing.one major reason which i think was missed out by author is that the ceo's of these enterprises are none other than the products of the crippled and flawed education system in india.which can be explained as below.
1.although india has some of the best business schools but majority of them lack quality facaulty and infrastructure and yet get approved by government agencies.
2. the admission modality which excessively relies on single window entrance exam format,which propels coaching classes culture there by creating banality in the system. and never considers intellectual pursuit and passion of the applicant.
3. the prevailing ideologies among the applicants is primarily "follow the trend' rather understand one's suitability(both rational and intellectual) for that, which results in such ineffeciency.
i can grossly declare that the reason for author's reasons is primarily an inefficient education system.

This is a response to the argument that treating business like family inhibits growth.

First, from the business perspective, wouldn’t caring for people like family result in more productive and loyal employees? By treating employees more like family than interchangeable parts in a machine, they are more likely to stay with the business. As a result, the business would not need to spend time and money consistently training replacement employees, and employees with extensive knowledge of the company would be retained.

Second, from a social perspective, when did business become so inhuman that growth is more important that “emotional attachment to…people,” i.e. relationships? Personally, I would rather see many small businesses that care for their workers than a few transnationals with billionaire CEOs and an impoverished majority. This is not socialism, just socially conscious business. There can even be a business case for this model, as a society with a large middle class will be more stable than one with great wealth inequality. Also, money would circulate more quickly in the hands of many middle class small business employees than in the hands of a few billionaires.

Thanks for all the comments.

1. Mike: No dispute at all. Even large organizations need to
treat employees with dignity and respect. The case for a
"humane" workplace is indeed very strong. What was suggested
in the post was slightly different. The extended family
outlook of small enterprises overlooks human development and
performance. We need to make a distinction between caring
and compassionate leadership, and overbearing, patriarchal
leadership.

2. Vinit: Thanks for your observation on education. I will be
writing a separate column on the education scenario.

3. Vishnu: Great observation.

4. Manoj: You are right. Entrepreneurs need to understand that
honesty is still the best policy.

5. Debashish: I share your optimism.

6. Suresh: Trust is the key to the success of any enterprise.
I do hope entrepreneurs will listen to you and hire
professionals - preferably those who are smarter than
themselves.

7. Tarun, Venkatesha and Prabakaran: Thanks for taking time to
respond. I keep learning from all of you.

Warm Regards