Cooking up a small food business? Read these tips to get a head start.

According to statistics, 9 out of 10 start-ups fall by the wayside. This figure may paint a grim picture, but rather than getting discouraged, budding entrepreneurs should take heart, because 1 start-up out of every 10 does manage to tick all the right boxes, and that start-up can be you. In this article, the business mentors at deAsra have put together a few challenges commonly faced by small-scale food businesses, along with tips to help you sail over these speed bumps smoothly.

But first, what qualifies as a micro/small-scale business?

A mess service, a home-made ladoo business, or even a food packaging and reselling outlet can fall under the category of a small business, as long as the capital investment in machinery does not exceed 5 crores, (for businesses in the manufacturing sector) and is up to 2 crores (for businesses in the service industry) If your investment in machinery is up to 25 lakhs (manufacturing sector) and up to 10 lakhs (service sector), your business will be classified as a micro enterprise. In this case, revenue generated does not bear much weight – For example, a vada-pav vendor could be selling 1000+ vada pavs a day from his cart, yet, his business is still classified as a small business.

Partnership, Proprietorship, or Private Limited? Depends on the need.
Another question often raised deals with registrations – what kind of company registration should start-up founders and co-founders opt for? According to deAsra mentors, it depends on the need. For example, when you’re at the cusp of transforming your chakli-making hobby into a full-fledged business, you may start off with a proprietorship registration, and later, as the business scales, convert it into a private limited, in order to run it in more professional way.as well as to take advantage of tax benefits.

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Source: Google Images

Get your licenses right before anything else.

Before you get your business in place, it is essential to get your licenses in order. Miss this step, and fines or penalties could be staring you in the face.

For any business, however small, FSSAI registration and the Shop Act registration are compulsory. Manufacturers, distributors, retail traders and stockists also need to get licenses if their business turnover exceeds 12 lakhs.
A variety of legal formalities too are applicable on the different kinds of company registration. For example, partnership businesses call for partnership deeds and registration thereof, and private limited companies need to get registered at the Registrar of Companies (ROC).

Funding is more accessible than most people think.

Since Pune (and the surrounding region up to a radius of 40 kms) is classified as a developed zone, certain government subsidies do not apply to businesses here. However, to give women entrepreneurs a leg-up, the government has launched many organisations, like the Mahila Arthik Vikas Mahamandal, which offers loans at beneficial interest rates.

The big F word in the start-up scene – funding – is not out of reach anymore – especially if your business is commercially viable, enjoys a continuous stream of revenue and you can raise up to 25% of the margin demand by the bank. And even if that margin is beyond your scope, organisations like deAsra connect you to banks and financial institutions who can give your business some amount of runway.

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Image Courtesy: Quora

Research before you figure out your pricing sweet spot.

“How should I price my products/services?” is one of the foremost challenges every entrepreneur faces. Low prices can undercut competition, but can also make your business unviable, while high prices will put you out of the running completely.

 

To tackle pricing, deAsra mentors help the business owners undertake a thorough audit where they assess the financial viability of a business, and estimate various fixed and variable costs, including raw materials, equipments, electricity, packing material, etc.
They also encourage entrepreneurs to carry out extensive competitor studies, observe the rates in the surrounding localities for the same product/service, and then work on the pricing model.
The USP of your business and its competitive edge can also affect pricing.

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Source: Google Images

Marketing matters.

A preference for a brand can only be born when there is awareness of that brand’s existence. To get customers beating a path to your shop, deAsra mentors recommend converting your current brand champions into marketers for your business, since referrals, according to them, work the best. Roping in relatives and friends who swear by your delicacies and spreading the news through them is a good way to get one foot in the door.
A few other marketing tactics which can get you off to a good start include distributing food samples and leaflets in your area of operation, distributing products through retail outlets and offering incentives/discounts, especially to referred customers.
Keeping in touch with customers through Whatsapp and email marketing channels; and closely monitoring people’s preferences is also crucial. For example, people are becoming increasingly health-conscious, so incorporating that aspect into your product (think ‘diet chiwda’) could help boost sales.
For a vada pav seller, a simple change in the presentation of his product – and a switch from a wooden cart to a swanky mobile van – did wonders for his business.

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Source: Google Images

Watch out for these hurdles.

As an entrepreneur, it’s ok to make mistakes; in fact mistakes are the stepping stones to success. But learning from those mistakes, and more importantly, learning from other people’s mistakes, can take you a long way ahead in the entrepreneurial journey.

For example, many food businesses end up buying wholesale quantities and building unwanted inventory, which leads to revenue drain. Also, home-grown businesses borrow money from chit funds or micro-finance institutions, which lands them with higher rates of interest. Instead, opt for banks and reputed financial institutions, suggest deAsra mentors. For food businesses, maintaining consistency in quality and taste is also a major problem area. This can be solved by strictly adhering to Standard Operating Procedures (SOPs). Raw materials need to be tested too, which is not widely practised in India. For example, there are more than 20 kinds of potatoes produced in our country, so a vada pav seller has to test all varieties and find out which works best for his vadas.
Keeping tabs on the shelf life of products is equally crucial; maintaining a batch-wise record of products can prove to be helpful in this case. Apart from this, maintaining a proper book of records is essential and comes in handy when you need to recover pending payment dues.

The food business is beset with labour problems – how does one handle that?

According to deAsra mentors, most business owners forget that their labourers too, at the end of the day, are customers, and should be treated with dignity and respect. At deAsra, business owners are introduced to HR management techniques, which help bridge the gap of discord between labourers and owners, while building loyalty and reducing attrition.

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Source: Google Images

Finally, don’t give up too soon, and don’t pass up expert help.

Any food business generally takes a year to pick up pace, and that’s if the quality is top-notch and the right marketing strategies and SOPs are followed to a T. What’s the advice of deAsra mentors to budding entrepreneurs? ‘Don’t give up on your business too soon, but more importantly, don’t hesitate to ask for expert help. Help can move you forward, fast.’

deAsra partners with mentors, business experts and other complementary organisations and financial institutions to help entrepreneurs build a successful food business from the ground-up. Need help with your food business? Give us a call at +91 20 65365300 / 11.

To know how we helped other food businesses take off, read our impact stories here.

 

The Checklist

We have been talking about planning as a prerequisite for sustained efficiency and quality. The systematic planning makes us more agile and we can deliver quality work in minimum time frame.  Here is an example of how failure to plan has lead to a  big chaos. You may have read a few days ago that Maharashtra Chief Minister’s flight could not take off from the airport because one of the officials accompanying him on the international tour had forgotten to take along  his Visa papers! The Chief Minister along with the rest of the passengers had to wait till it was  retrieved from his home.

The common sense answer to avoid these lapses is – the checklist. Mere planning is not useful unless it is executed flawlessly.  The checklist serves as an effective tool – Plan. Do. Check whether the things are happening as per the plan. If not, Act i.e. make the necessary correction. This is called the PDCA Cycle. This is the foundation of ISO 9000.

We often tell school children that they must keep ten minutes at the end of the exam to go through the answer sheet and to make sure they have   attempted all the questions. Another very common example in our daily lives is  we check the taste of a recipe before serving it to people to ensure that it is upto the expectation.  What we are doing here is simply checking if all the ingredients have been added, and in the right proportion to give the right taste. Once we are sure of it, we are ready to enjoy all the compliments that come our way as guests relish the dish!

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Image Source- Google Images

If we use this ‘checklist’ in so many activities in our daily lives, why not in our professional lives.  A company manufacturing auto spare parts had to dispatch parts in lots of 8, 24 and 72. The client would randomly check the number of parts in the boxes and if any one box had a,shortage, it was presumed that all  boxes contained the same quantity and he used to deduct the  payment on the entire consignment causing substantial loss to the supplier   The company, then, started a system wherein they sent parts in multiples of the lot number to the packing department. So for the lot of 8, they sent 800 parts for packing, no more, no less. This way, as the parts got packed in boxes, in case one or two remained, it meant that some box had been filled with a wrong number of parts and it  used to be checked immediately.  The loss to the company was  averted as with systematic packing of job  there was no chance of delivering the wrong quantity. The point is, to accomplish excellence in quality and to  maintain the consistency  the job/product needs to be checked at various stages. Dr. Atul Gawande’s book ‘ The Checklist Manifesto’ underlines the importance of regular checks on processes to prevent damage or loss. He has related his observations of the American hospitals where lapses in following protocol in examinations led to spread of infections. The book lucidly explains the cause and effect of the problem and how it was overcome by  observing a strict protocol and following it.

We often avoid  following PDCA Cycle referred above.  You will be amazed  to know  how much difference this little checklist can make while presenting the final, flawless product. It not only gives you the opportunity to rectify errors but also enhance the final effect of the product, service or process and to enhance Customer Satisfaction.

Author: S.R. Joshi

The author is a director at deAsra Foundation. deAsra Foundation is a Section 25 company, a not for profit association formed to contribute to social welfare by enabling entrepreneurship, which will create employment opportunities.

deAsra Foundation- Gaining Momentum

To us, every entrepreneur who joins the deAsra family is special. But, of course, our group of 53 ‘enabled’ entrepreneurs is extra special! These are the entrepreneurs who, to date, deAsra has helped set up business. They are mainly first generation entrepreneurs, and are, by and large, salaried professionals. All the more reason to salute their decision and celebrate their ‘businesspeople’ status.

deAsra Foundation is happy to announce that, in less than 16 months of its launch, we have successfully helped enable 53 entrepreneurs. This is a success worth celebrating, simply because these entrepreneurs are going to be tomorrow’s employers and contribute to the economy of our country.

These 53 enabled entrepreneurs have started businesses in categories ranging from baking and travel to beauty salons, spice making and more. This diversity amply demonstrates deAsra’s preparedness to guide varied kinds of businesses. Guidance in every aspect of the business was provided to entrepreneurs, whether it was finance or marketing or licences. What’s more, deAsra doesn’t just provide planning or executional help, but also the confidence building and morale boosting that every budding entrepreneur needs. Our motivation builds the entrepreneur’s confidence to achieve great heights.

What is creditable on the part of these entrepreneurs is the willingness to take the plunge, go for calculated risks and march ahead to achieve a dream. Today, the deAsra Foundation team is busy and working hard to help more such entrepreneurs to launch, set up, start, run and grow their businesses. We help not only budding entrepreneurs, but also existing business owners who wish to diversify or grow their business. It’s been a great partnership so far – one that has great strategies, plans, understanding, patience, empathy, attitude and a lot of action.

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Team deAsra- Guiding Entrepreneurs

Our Mission is to help enable 25,000 entrepreneurs by Year 2020. We have no doubts that we will achieve our target.

If you have a business idea, do drop us a mail on team@deasra.co.in or call us on 020 65365300/11

How entrepreneurs should build a good Bank Proposal

The term ‘bank proposal’ can create a pit in the stomach for many a new and accomplished entrepreneur. Funding and loans are the most challenging and fear-inducing tasks as you decide to embark on your entrepreneurial journey.

However, with the help and guidance of experts, these tasks become pretty simple and doable; which is why deAsra Foundation is here.

We got our experts talking and worked with them to offer you entrepreneurs, some tips on how to build a great bank proposal that stands a good chance of succeeding and getting you the loan you want.

Read on to get your answers.

Q 1 What is the process of submitting a business proposal to a bank, in brief?

Applicant/candidate prepares a project report may be with the help of consultants, which covers detailed information about promoters, project cost, means of finance, details of the activity (product/service) on which the business is based, financial projections, market study, cash flow, repayment ability, security- primary and collateral.

In a nut shell, it is a techno/economic feasibility/viability report of the project.

Q 2 Who at the bank sees and approves the proposal?

Each bank has its own specified assessment-appraisal system. Typically, the initial study/appraisal is done by the Credit Processing Officer and is approved by a Senior Official. The powers for sanctioning the loan are given to authority or position holders (e.g.: Branch Manager, General Manager, CEO , Credit Committees etc.) High-value loans are sanctioned by the Board itself. Banks have a Financial Power Structure, approved by the bank’s Board, which is how loans are approved and sanctioned.

Q 3 What should the proposal have that the banks like or favour?

Banks need to see reliable promoters having credibility, experience, sound technical knowledge, a service or product which has a good market and potential, and the fact that this business is a feasible and viable activity. Banks also need to know the availability of primary and collateral security which has a direct impact on the loan decision.

Q 4 What should the proposal not have – things that the banks disapprove of?

Non-viable business, promoter with a weak financial background, unfavourable credit reports, very high-risk ventures/activities such as gambling etc.

Q 5 What are the typical things that budding entrepreneurs miss out on, in the proposal?

In their rush to get the bank proposal submitted, budding entrepreneurs typically miss out on some important things and these are: not doing the home work and groundwork properly while choosing the activity/product/service on which the business will be based; market study not done at all or is not adequate in its information, forecast and projections not supported by data, highly ambitious/over ambitious project.

Q 6 How much time does it take for a proposal to be approved-from applying to approval and loan disbursement?

This duration depends on the size of the loan, financial power/decision making structure in the bank, quality of proposal prepared and submitted and also on which bank we are going ahead with. Different banks follow different structures and procedures for proposal approvals and loan disbursements. It will pay rich dividends if the entrepreneur understands these and plans his way ahead, accordingly.

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To set up and run a business, or to grow a business, entrepreneurs need to have a working knowledge of how the banks work and how proposals need to be done. It helps to read on this, talk about this among the entrepreneurial community as well as have heart-to-heart and transparent discussions with your consultant. Leaving everything to the consultant is not advisable because your stakes in this are high. You should work with consultants closely and choose them right.

deAsra Foundation has Udyog Mitras and senior experienced members aboard who can take you through this entire process with ease. To know more, call us on 020 65365300/11 or write to us on team@deasra.co.in

Delight Your Customer!

In the previous blog post, I wrote about how Quality has different meanings for different people.When we sell goods internationally, it is critical that these goods are produced to and maintained at a certain high standard – one that is decided by our customer and that we have committed to meet.

However, for a service, the customer does not define a standard and we do not have a clear idea of his expectation. As we have no idea about the customer’s expectations, the question of agreeing to meet them does not arise. Even so, there are some basic expectations that we must fulfill if we want to provide good quality service. Let’s look at some examples to understand this.

On a visit to a dentist, as soon as I had sat in the chair, I saw the previous patient’s extracted tooth, a swab of bloodied cotton and used instruments on a round table next to my chair. I also saw some red stains in the basin next to the chair. I mumbled an excuse and promptly got up and left. I went to the dentist next door. At the second dentist, I was called in only after everything had been cleaned. The dentist washed his hands in front of me and sterilized every instrument before examining me. I was impressed by his methods. After that, not only did I become a regular patient, I also recommended him to numerous friends and acquaintances.

On another occasion, I had called a plumber to my house to fix a leaking tap. The plumber came, changed the washer and got the tap working. After that, he threw the old washer into the garbage bin and cleaned the tap and the surrounding area. He then proceeded to check all the taps in the house and clean their filters – all this without being told! While leaving, he gave us a bill for the work done, along with a detailed break-up of the amount. He told us that we could call him any time between 7 am to 9 pm for anything we needed. He has now become the ‘go-to’ person for my household.

The well-known Marathi writer, Shri Va Pu Kale, has recorded several observations in his story ‘Satavalekar’ from his ‘Karmachari’ collection. He has described in accurate detail how finding a piece of onion or garlic skin or chilly stalk in one’s ‘kanda-pohe’ is enough to dampen one’s enthusiasm!

Nowadays, most weddings serve buffets. There, if one has to wipe one’s own plate, spoon and bowl, then, however good the food may be, it is unlikely to earn any praise. At some buffets, some of the items have to still ‘arrive’. When this happens, a person usually eats whatever he can get, compliments the hosts on the good food and makes his way out!

Small things like these cause a customer to feel let down. Every customer won’t give you his feedback; he will simply avoid you.

Overall, we have to think about what will make our service good, decide the processes to be followed and keep making improvements to bring our service to a level of excellence. Only then will our customers say that we offer ‘quality’.

Author: S.R. Joshi

The author is a director at deAsra Foundation. deAsra Foundation is a Section 25 company, a not for profit association formed to contribute to social welfare by enabling entrepreneurship, which will create employment opportunities.

Quality Lesson from a Taxi Driver

As customers, we often get frustrated when we don’t get satisfactory service at the time when we need it. How many times have we been angry and frustrated at call drops just when we are in the middle of an important conversation? Similarly, when you are in the role of a supplier, your customer expects service that meets his expectations.

However, in the daily flurry of running a business – raw material procurement, production, marketing, delivery, managing cash flow and loan repayments – we often forget this most important aspect of our business – Quality.

What exactly is Quality? Quality has many different meanings. Often, quality is relative. Everyone measures quality based on their own expectations and perceptions. These expectations are different for different customers and sometimes they could be diametrically opposite – hence, it is difficult to define ‘Quality’.

Overall, it is important for a businessman to know the expectations of his customers and what is critical to his customers.

The Taxi Story

Mumbai Taxi

I’d like to illustrate the concept of Quality and Customer Delight through a personal experience.
I was outside Dadar Station in Mumbai one day, looking for a taxi to take me to Santa Cruz. I was impressed by a taxi that looked spick and span and promptly hailed it and got in. To my pleasant surprise, the interior of the taxi matched its exterior – it was clean and fragrant. Moreover, the taxi was equipped with every conceivable item a passenger could possibly need – English and Marathi dailies, copies of rail and air timetables, a list of emergency numbers, a sealed bottle of drinking water and a mobile charger. The driver was courteous and disciplined, even asking me what kind of music I would like to listen to! I was so delighted that, on reaching my destination, I gave him a hundred rupee tip.

I was curious and asked him how he could afford to provide this level of service to his customers. He replied that what he received in tips more than made up for the expense incurred. What’s more, he had the satisfaction of happy customers, who, in turn, would go forth to do their work with enthusiasm!

Have you ever had such an experience? No? From now on, I tell every taxi and rickshaw driver I meet, that if they provide such excellent service, they will never have to go looking for customers; customers would come looking for them!

I hope we realise the importance of quality and understand that it requires prioritization.

Author: S.R. Joshi

The author is a director at deAsra Foundation. deAsra Foundation is a Section 25 company, a not for profit association formed to contribute to social welfare by enabling entrepreneurship, which will create employment opportunities.