The first-ever survey of small businesses and startups across the country shows that these are good times for them, with better days to come
This survey was conducted during the end of April and the beginning of May when most organizations had a sense of how performance during the past financial year was and what to expect from the current financial year.
Planned strategic initiatives
What are going to be the key growth-related initiatives that small businesses and startups are likely to take in the first half of 2008? The answer is in the graph given below.
We divide these into three types — market related, M&A related and funding related. Of these, we find that product and market related initiatives top the agenda, followed by those related to funding. M&A initiatives get the lowest priority, possibly because the respondents are in a stage where organic growth can still be very significant.
Within market-related initiatives, launch of new products and services is the highest on the agenda, with as many as 46% of the respondents stating that they are looking at launching new products and services. Thirty-two percent stated that they are planning at entering new markets, while 27% were actively contemplating launching a new line of business. Together, these represent a very healthy prognosis of future prospects and a very bullish outlook for the segment.
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As far as funding is concerned, bank funding for new projects and venture funding were on an equal footing with two-thirds of the respondents saying they would be looking at considerable funding infusion into their operations. Given the size of the businesses we are covering in this survey, it is natural that not too many IPOs are being planned.
It is interesting to note that 16% of the respondents are contemplating an acquisition or a merger in the immediate future!
We divided the survey into three sections, covering performance during the second half of 2007-08, prospects and plans for the first half of 2008-09 and impact of environmental factors on their business. Slightly more than half of our respondents came from IT and related industries and we covered ten industry verticals across fifteen states. The survey was conducted onlinethrough a predefined database. The total sample size was 200 businesses, in the sunrise segments.
To cut the long story short, these are great times to be a startup or a small business in India.
Robust growth
For starters, as many as 66% of the respondents saw their businesses growing in rupee terms during the previous half year and only slightly under 10% reported that there businesses actually shrunk. Forty percent of those that reported a negative growth in rupee terms came from the technology-enabled services sector. This is slightly surprising, given that the services sector is experiencing robust growth.
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It is a good thing to experience actual growth. But how did it measure up against expectations? To answer this question, we went to the budgets. How was the performance against budgets and targets? Here also, the picture is more or less similar. Fifty-nine percent of the respondents achieved 90% or more of what they targeted, with 11% stating that they actually did better than expected. Amongst the 18% who said that their performance was less than 80% of what they had budgeted, we had a fair spread across industry verticals and states.
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