Debt, funding through VCs cause friction between generations of SME owners: Gayathri Vasudevan

Gayathri Vasudevan is the CEO and co-founder of LabourNet Services, an end-to-end solutions provider that enables entrepreneurship and employment through skill development and education. In the last 23 years, she has observed developing trends in Indian entrepreneurship from close quarters as part of many corporate and government bodies. She has observed how new generations adapt to newer challenges posed by technology, competition and ambition. She speaks with SME Futures about how the new crop in the SME sector is redefining the idea of leadership.
On Change in Guard in the SME Sector
SME segments are mostly proprietor driven. Traditionally, SME owners expect to groom their children to take over the business from them. However, today this tradition is on the decline due to the plethora of opportunities opening up for the next generation. Hence, parents, too, have stopped pressuring their children into join the family business. If they are looking at family succession, then there needs to be a plan in motion wherein they need to allow the younger generation the freedom to take the business on different paths that are aligned to the demands of the current market. For instance, the Bangalore-based jeweller Krishniah Chetty and Sons and the bespoke suit designers P N Rao have taken their business online with the next generation managing the business and being part of the decision-making process for business expansion. This freedom has helped the family succession to take place smoothly and efficiently. In the absence of such free will, the children would look for other avenues and the succession process will turn complicated when trying to find a suitable contender outside the family.
On Experience vs Fresh Energy
From a fund-raising perspective in the SME sectors, young entrepreneurs have more knowledge and awareness of the different avenues of procuring funds through equity and debts. However, there is a constant friction between the older and younger generations regarding debts as the former have reservations pertaining to venture capitalist funding, since they feel that business control would cease to remain solely in their hands.
For a young entrepreneur trying to look for fresh avenues by leveraging the family business, putting across revolutionary ideas to the traditional minded elders may be challenging. One can overcome this by starting on a small scale and carving out a success story to showcase to the seniors. Today, in the urban consumer segments, like hotels, gems and jewels, tailoring and confectionery market, family owned enterprises, like P C Chandra, Malabar Jewellery, Karachi Bakery, Jade Blue, etc. are impacting the ecosystem by embracing new ideas for growth and expansion through distributorship and franchisee models. The young guns, who are at the helm of operations, are ready to take calculated risks to take their businesses to the next level.
On Challenges and Handling Capability
For budding entrepreneurs, the manufacturing sector that still operates the traditional way holds little promise in terms of growth for SMEs except the export route, which is throwing fresh opportunities. On the other hand, the service sector, being consumer driven, is growing more than ever before with a lot of opportunities for young entrepreneurs. Sectors like healthcare, entertainment, food service, beauty and wellness, hospitality and tourism are welcoming individuals with radical ideas that will take the consumer market by storm. Going by the current trends, I will always advise today’s entrepreneurs to look for entry into the service sector with strategies that would hit the right chord with consumers.
(As told to Arshia Khan)