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Tag: MSME

UGRO Capital – Report – Analysis of Budget Impact on MSME’s

MSMEs at the Centerstage of Budget 2024: The government has recognized the importance of MSMEs in addressing unemployment and rural distress. The budget for 2024-25 has given special attention to MSMEs, particularly labor-intensive manufacturing, through financing, regulatory changes, and technology support.

Improved Access to Credit: A new credit guarantee scheme has been introduced to facilitate term loans for MSMEs to purchase machinery and equipment without requiring collateral or third-party guarantees. This scheme supports MSMEs, especially those in the manufacturing sector, to access credit more easily.

Continued Bank Credit During Stress Periods: A new mechanism has been proposed to ensure MSMEs continue to receive bank credit during stress periods, even if they are in the special mention account (SMA) stage.

Enhanced Mudra Loan Limits: The limit for Mudra loans has been increased from ₹10 lakh to ₹20 lakh for entrepreneurs who have successfully repaid previous loans under the ‘Tarun’ category.

Improved Credit Assessment Models: Public sector banks are set to develop new credit assessment models based on the digital footprints of MSMEs, rather than relying solely on asset or turnover criteria.

Expansion of SIDBI Branches: The Small Industries Development Bank of India (SIDBI) will open 24 new branches this year to serve major MSME clusters.

Reduced Compliance Burden: The turnover threshold for mandatory onboarding on the Trade Receivables Discounting System (TReDS) platform has been reduced from ₹500 crore to ₹250 crore.

Energy Audit and Sustainability Initiatives: The budget has allocated financial support for conducting energy audits in 60 MSME clusters. This initiative aims to help clusters shift to cleaner energy sources.

Support for Food Processing and Export Sectors: Provisions have been made for setting up 50 multi-product food irradiation units and 100 quality testing labs with NABL accreditation, as well as the creation of e-commerce export hubs in public-private-partnership (PPP) mode.

These strategic measures are aimed at fostering growth and enhancing the competitiveness of MSMEs in India. The contribution of MSMEs to all-India manufacturing output in FY 22 was 35.4% and the share of MSME-made products in exports in FY 24 was 45.7%, this is only expected to grow. By 2028, India’s MSME sector is projected to contribute US$ 1 trillion to the nation’s overall exports, making up about 35% of the GDP.

Budget Reaction 2024 by Experts

With Budget 2024 now announced, the reactions from industry experts are coming in fast and furiously. This year’s fiscal plan has prompted a diverse set of responses from leading figures in the business and economic sectors. In this series of quotes, we capture their expert evaluations of the budget’s potential impacts, offering you a comprehensive view of how different industries are preparing for the changes and challenges of the upcoming year.

 Today’s budget introduces pivotal initiatives for the e-commerce sector, notably addressing the skills gap and enhancing MSME operations. The creation of E-Commerce Export Hubs through PPPs aligns seamlessly with ShopClues’ mission to expand global market access for MSMEs and traditional artisans.

 The focus on women-specific skilling programs and market access for women-led enterprises is commendable. Aligning course content with industry needs, particularly in e-commerce, will enhance digital literacy and technical proficiency among MSMEs. Collaborative efforts with local institutions and e-commerce platforms like ShopClues will drive these initiatives, promoting economic empowerment.

 Furthermore, reducing the TDS rate from 1% to 0.1% and removing the Equalisation Levy are significant reliefs for online sellers , fostering a favorable environment for online transactions and enhancing global competitiveness. Overall, the budget paves the way for a robust and inclusive digital economy. – Anuraag Gambhir, Managing Director, Shopclues

 The key highlight of the budget is the fine balance between fiscal prudence and welfare schemes, with a special focus on Bihar and Andhra Pradesh. With most pointers in line with the interim budget, the key takeaway is the downward revision to the FY25 fiscal deficit figure to 4.9% and an increase in capital gains tax. Though there is a tinge of populist measures on expected lines, the government remains focused on job creation, infrastructure development, strengthening the ecosystem for manufacturing, renewable energy and new sectors and creating disposable income in the hands of people with key focus on rural. Though we do not rule out some kneejerk reaction in equity markets, the long-term trajectory and the intention of the government looks pro-economy and adding wings to move the economy towards the USD 5 trillion mark in the near term.- Manish Chowdhury, Head of Research, StoxBox

 The introduction of the MSME credit guarantee scheme for collateral-free loans and the doubling of the MUDRA loan scheme to Rs 20 lakh marks a significant positive development. These measures will facilitate easier access to capital for the MSME sector, fostering favorable conditions ahead.
The allocation of Rs 10 lakh crore for the Prime Minister’s urban housing plan is commendable. Encouraging states to reduce stamp duties is a positive development for aspiring homeowners, as lower stamp duties will make homeownership more affordable and stimulate the housing market. In my view, these initiatives will also significantly boost the home loan industry as a beneficial side effect.

We also welcome the abolition of the 30% Angel Tax for all investor classes. This move will encourage more angel investors to support startups, fostering innovation and growth in the startup ecosystem. – Mr Manish Aggarwal, CEO & Founder, FINQY

 The Hon’ble Finance Minister along with officials of the Ministry of Finance, held a marathon and focussed Trade & Industry Pre-Budget Consultations. It is heartening to witness that many of the valid recommendations of Trade Bodies have seen light of day in this Union Budget, making this budget a reflection of a Budget For the People, By the People and of The People. The Full Union Budget 2024 lays down the roadmap of the next five years. Propelled by a robust Tax Revenue buoyancy of 1.4 during FY 23-24 the focus now is on job creation through GDP growth by putting in more disposable income in the hands of the common man. New Income Tax Scheme relaxations in standard deduction, slabs reduction and family pension deduction relaxation may help in savings of around Rs.35000 per taxpayer.

 As requested by the Trade & Industry bodies and laid down by the Economic Survey, for MSME businesses the compliance burden is also sought to be relaxed; litigations will be reduced in new VIVAAD SE VISHWAS SCHEME.

 TDS provisions have been relaxed substantially like relaxation of rectification timelines, penalties, reduction in TDS Rates u/s 194O for E Commerce operators.

 Big Corporations have been motivated to invest more in Plant, Machinery, Equipment in IPR and make in India by relaxations on import duties.

 To prevent drain of wealth from India where certain MNCs show less profit in India and more outside India, this budget has pushed for Global Minimum Tax of 15% and promoting safe Harbour Rules.

 The GST Amnesty Scheme for waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20;, and making the new time limit for availing ITC as per Section 16(4) of the CGST Act as 30/11/2021 to avail ITC pertaining to financial years 2017-18, 2018-19, 2019-20 and 2020-21; are an icing on the cake.- Vivek Jalan, Partner Tax Connect, A PAN India Multi disciplinary firm

 This is recognition of the growing need for a deeptech economy. However, alongside the R&D Fund, the government should look at the Intellectual Property regime. The much overdue Patent Policy needs to come out soonest to enable maximisation of R&D Fund. -Bhaskar Majumdar, Managing Partner, Unicorn India Ventures

 The 1000 Cr fund of funds for space tech is testimonial to India’s capability in coming up with breakthrough solutions at low cost. This will certainly help space tech companies to look for much needed early stage capital to get started. This will certainly help mobilise over Rs 4000 Cr, great move. Angel Tax abolishment was long pending, glad that Hon. FM has heard industry voices and has finally abolished it. This will certainly help in expansion of angel investment in India and will take away a lot of burden from the minds of everyone on tax notice for tax paid investment. This will also free up a lot of domestic capital and improve the funding sentiment in a strong way. – Anil Joshi, Managing Partner, Unicorn India Ventures

 This was an albatross that hindered much needed capital to be deployed to deserving founders. Removal of this dreaded tax will give a huge fillip to startups in the country and free up investors to focus on the investments without having anxiety on how to deal with their implications. A few other things that work well for deep tech focused funds like us. The rooftop solar policy, the pumped storage policy and research and development for small & modular nuclear reactors, Bharat small reactors, R&D for small modular reactors, R&D for new technology in nuclear form a neat troika to alter the energy map of India. Specially on the nuclear side, it positions India to replicate the renaissance that nuclear is experiencing in the US. – Mayuresh Raut, Managing Partner, Seafund

 The removal of the angel tax will make it significantly easier for us to complete transactions faster and streamline the investment process. Previously, the requirement for income tax officers to understand and assess valuations led to unnecessary conflicts and delays, involving CAs, valuers, and tax officials. Valuation assessments were never meant to fall within the purview of income tax officers, and this change eliminates those complications. This simplification allows us to focus on our primary job—investing in and supporting innovative startups—without the burden of navigating through cumbersome tax regulations.

As a venture capital fund, we see the Indian Budget 2024’s tax reforms as a major boost for the VC, PE, and startup ecosystem. The increase in LTCG tax rate for financial assets to 12.50% and STCG to 20% may pose challenges for listed investments. Still, it’s a significant advantage for other financial products like startups and Alternative Investment Funds. The reduction in LTCG tax from 20% to 12.50% for these investments will result in substantial savings and increased IRR, fostering growth and innovation. While we await the detailed budget, this move is a long-awaited positive development that will make India an even more attractive destination for global investors and drive further growth in the venture capital and private equity sectors. – Anirudh A Damani -Managing Partner – Artha Venture Fund

 “Abolition of angel tax will provide a boost to the budding Indian startup ecosystem. It will encourage the flow of capital without tax leakages, especially relevant at a time when the funding crunch is impacting startup liquidity. It is key to establish India as an innovation hub and leader vs follower for new and breakthrough ideas. Focus of the budget is on sustainable growth with employment generation, of continuity and stability. The changes on the capital gains tax structure was unexpected, especially during a time when the fiscal position of the economy seems to be in check.

Budget 2024 Reactions on MSME by Experts

The announcement of Budget 2024 has brought a wave of reactions from experts regarding its impact on the Micro, Small, and Medium Enterprises (MSME) sector. In this selection of expert quotes, we delve into their evaluations of the budget’s potential to drive growth, address challenges, and shape the future of MSMEs in the coming year.

 Delphin Varghese – Co-founder and Chief Revenue Officer, AdCounty Media

 The seriousness of the government in facilitating credit access to aggrieved MSMEs stands as a critical factor for survival and growth of the sector. While MSMEs are the backbone of the economy—contributing 30 per cent to GDP and 48 per cent to exports—it faces an estimated credit gap of ₹20-25 trillion by IFC estimates. There could be a gap bridged with the proposed multiple mechanisms; for example, credit growth to MSMEs was 11% year over year in FY2021. Better access to credit would have implications for massive job creation and economic stability if taken from over 110 million working in the MSME sector. This is opportune; 67% of MSMEs surveyed said that the pandemic hit them adversely. By ensuring credit flow, it would revive a sector that is important for achieving India’s goal of a $5 trillion economy.

 Atif Shamsi, CEO & Founder at OuchCart

 It is an integral part of ease of doing business reforms, and subnational deregulation aimed at reducing the compliance burden of MSMEs. As of now, compliances run to over 750 annually for MSMEs, with an estimated ₹12 lakh crore cost incurred for the same. The maze of these regulations has reportedly retarded their growth—it is stated that about 64% of MSMEs reported compliance as a huge challenge. Streamlined, these two processes can help save billions in compliance costs and hundreds of work hours annually. This is also in step with India’s vision to break into the top 50 in the World Bank Ease of Doing Business rankings from its current position of 63rd. Coupled with simplification of regulations at the state level, it has the potential to unlock the actual potential of the MSME sector accounting for 95 percent of India’s industrial units. Coupled with access to credit, this could be transformative for the 63.4 million MSMEs in India.

 Ridhima Kansal, director of Rosemoore

 It is of significant interest that the Economic Survey puts a focus on striking a fine balance between concerns over trade and security with China for MSME growth. Indeed, the Chinese share in India’s imports is about 30%, a large share of which comprises intermediate goods that are vital for MSMEs. Recent tensions along the border led to restrictions that affected 19% of India’s imports from China. This is what most affected the MSME sector, with 45% of them reporting some form of supply chain disruption. This call for balance underlines a complex interdependence, wherein the 70% of active Pharma Ingredients come from China and 80% of cells utilized in the solar sector are also manufactured there. The government is balancing this call for shielding MSMEs from dumping or unfair competition against access to vital inputs. This is a sensitive balancing act for 6.3 crore MSMEs in India, as it affects their competitiveness and survival not only in the domestic market but also in international markets.

Mr. Ketan Mehta, CFO of CredAble

 “We are delighted to see that the Union Budget 2024–25 has addressed many critical facets of the economy.

This year, the budget has truly put the spotlight on key issues facing the MSME sector in securing timely credit and has ushered in a plethora of opportunities for young entrepreneurs.

The government has proposed a new scheme under the Credit Guarantee schemes for MSMEs in manufacturing, providing MSMEs with collateral-free term loans for buying machinery and equipment. To further strengthen the financial stability of MSMEs, the limit for Mudra loans has been increased from INR 10 lakh to INR 20 lakh. Additionally, E-commerce export hubs will be set up to boost international trade. The government’s strategic move to provide internships and new schemes for the country’s youth, with a central outlay of INR 2 lakh crore, sums up its futuristic outlook.

The Union Budget has been extremely positive in recognising the role being played by MSMEs in India’s present and future. It’s also encouraging to see the government’s move to incentivise existing businesses and abolish the angel tax for all classes of investors, which will further aid the acceleration and globalisation of the startup ecosystem in the country.”

 Prakash Sankaran – MD&CEO of Invoicemart

“TReDS has made a significant impact in FY24 by facilitating MSME invoice financing exceeding Rs. 1 lakh crore. The Finance Minister’s mention in today’s budget speech of the government’s proposal to reduce the turnover threshold of buyers for mandatory onboarding on TReDS from Rs 500 crore to Rs 250 crore is a welcome move.

This change will now bring a large number of medium-sized corporates under the ambit of TReDS. Additionally, this presents an opportunity for NBFCs, which are very active in this space, to play a significant role as financiers on TReDS.”

 Mr. Rahul Garg, CEO & Founder, Moglix

 “The removal of angel tax is a welcome move for India’s startup ecosystem. This, coupled with the establishment of a ₹1,000 crore VC fund for the space economy, will foster innovation. The budget’s focus on manufacturing, with the introduction of plug-and-play industrial parks, is progressive. MSMEs will benefit significantly from the credit guarantee scheme, new assessment models by PSU banks, and increased Mudra loan limits. The substantial allocation of ₹11 lakh crore for infrastructure especially nature resilient is crucial for building a Viksit Bharat. The strategic shift towards nuclear energy as a major power source is visionary. Finally, the emphasis on cultural heritage through the development of the Vishnupad, Mahabodhi temple corridors, Rajgir, and Nalanda is a welcome addition.”

Mr Ratish Pandey, Business Coach and Founder, Ethique Advisory

 The expansion of the credit guarantee scheme for manufacturing sector MSMEs is a welcome step. It will enable MSME players to invest in plant and machinery, thereby enhancing their capacity for further growth.

The emphasis on employment and skill development will greatly benefit MSMEs by enabling them to hire more ‘employable’ individuals. The support for internships, along with the financial assistance for EPFO costs for new employees, will encourage the inclusion of more workers into formal employment structures.

FTCCI in association with NASSCOM held a half-day MSME workshop on Strategic Digital Adoption

Hyderabad, July 13, 2024…. The Federation of Telangana Chambers of Commerce and Industry (FTCCI)’s ICT Committee and the National Association of Software and Service Companies (NASSCOM), a non-governmental trade association and advocacy group jointly on Friday organized a half-day MSME workshop on Strategic Digital Adoption

SEEN IN THE PIC ARE BP ACHARYA PRESENTING A MEMENTO TO A SPEAKER AT THE WPORKSHOP FOR MSMES ON DIGITAL ADOPTION. ALSO SEEN ARE MOHAN RAIDU AND YERRAM RAJU

Over 100 participants and MSMEs participated in the same.

BP Acharya, a retired Special Chief Secretary, Govt of Telangana and Chief Advisor, FTCCI graced the valedictory function. Addressing the gathering “failure is not an option” as stated by NASA, today’s MSMEs have no option except going digital. MSME is an important sector. You will perish if you don’t adopt. Don’t Be a Tech Dinosaur, not only adopt the technology fast but also embrace the Age of AI. MSMEs are the most innovative, the maximum number of job creators in the country. Besides farmers, the biggest risk-takers in our country are MSMEs. Most of the state governments, including Telangana are coming up with Policies to develop the MSME sector.

Mr. R. Ravi Kumar, Vice President of FTCCI, Rajesh Raju, Founder and CEO of Achala Solutions; Nirupam Chaudhuri, Director at NASSCOM and Dr B. Yerram Raju, a banker turned economist and K Mohan Raidu, Chair of FTCCI ICT Committee graced the inaugural function.

R. Ravi Kumar said MSMEs will have a competitive advantage over their peers and rivals if they adopt digital technologies. They can also improve significantly by adopting digital tools, applications and technologies in their daily operations and business processes.

Nirupam Chaudhuri, Director at Nasscom, Digital Transformation Enthusiast, and Community influencer said Digital adoption is a growing trend among MSMEs who are looking to scale their businesses in the years to come. Digitization will lead to enhanced operational efficiency, improved customer and employee engagement and expanded market and customer reach.

Dr. B. Yerram Raju, International SME Specialist & MSME Turnaround Management Consultant said staying ahead in sports or business is not an easy task. You must be equipped with every ammunition possible. In this case, adopt technology and prosper otherwise you will perish, he said.

Prashanthi Kolluru, Founder & CEO of KloudPortal explained the difference between traditional and digital marketing, digital advertising, its best practices etc. Businesses with an online presence are more confident in their growth, with 79% of business owners with a website expecting to grow by 25% in the next three to five years, she added.

Kamlesh Kishore Naidu, Global Head of Strategy & Insights, PXP Financial spoke about eCommerce-Prerequisites, Support, Payments and Fraud. He explained platforms for e-commerce. Ensure your site is mobile-friendly. Simplify navigation and checkout processes, he said.

Indian Overseas Bank Conducts the 178th SLBC Meeting for Tamil Nadu

Chennai, 21th June 2024 – The 178th State Level Bankers’ Committee (SLBC) meeting for the state of Tamil Nadu was successfully conducted by the Indian Overseas Bank – Convenor, under the esteemed Chairmanship of Thiru Thangam Thennarasu, Hon’ble Minister for Finance, Human Resources Management, Government of Tamil Nadu (GoTN), at the Secretariat in Chennai.

Indian Overseas Bank Conducts the 178th SLBC Meeting for Tamil Nadu

The meeting saw the presence of several distinguished dignitaries, including:

  • Thiru Joydeep Dutta Roy, Executive Director, Indian Overseas Bank & Chairman, SLBC, Tamil Nadu
  • Thiru T Udhayachandran, IAS, Principal Secretary to Government, Department of Finance, GoTN
  • Smt. Uma Sankar, Regional Director, Reserve Bank of India
  • Thiru R Anand, Chief General Manager, NABARD
  • Thiru V V S Kharayat, DFS, Government of India

Secretaries and Department Heads of various GoTN departments, along with senior executives and officials from the Reserve Bank of India (RBI), NABARD, State Government, Banks, and Lead District Managers (LDMs) of all districts in Tamil Nadu, also participated.

During the meeting, key agendas under Priority Sector Advances were discussed, with a focus on Agriculture, MSME Lending, Educational Loans, and Housing Loans. These discussions were presented and deliberated by the Convenor of SLBC, Thiru Mohan M, General Manager, Indian Overseas Bank.

A significant highlight of the meeting was the release of the Annual Credit Plan for the Financial Year 2024-25 by Thiru Thangam Thennarasu. The Annual Credit Plan has set a target of Rs. 8,08,745 crores under Priority Sector Lending for FY 2024-25, estimating a growth of 21.80% over the previous financial year 2023-24.

The SLBC meeting reaffirmed the commitment of all stakeholders to foster financial inclusion and economic growth in Tamil Nadu through concerted efforts in priority sector lending.

The 2nd North India Garment Fair (NIGF 2024) by CMAI Commences; Brings Together 200+ Exhibitors and Expected to attract about 7000 Trade Visitors

CMAI Dignitaries and Leading Retailers inaugurates 2nd edition of NIGF 2024 - IMG 1

New Delhi, June 11, 2024: The 2nd North India Garment Fair (NIGF 2024) organised by the Clothing Manufacturers Association of India (CMAI) commenced on Jun 11 till June 13, 2024, at the Yashobhoomi Convention Centre (IICC), Dwarka, New Delhi. NIGF 2024 features over 200 exhibitors showcasing a diverse array of menswear, womenswear, and kidswear.

The inauguration ceremony was graced by leading North India retailers, including Manik Jain & Sahil Jain of Aristocrat Garments, Bharat Bhushan Taneja of Paul Garments, R D Gupta of Bindals Group, Ranjit Surana of Bachoomal Collection, Sanjeev Garg of Stanmax, Mohinder Chaudhary and Saurabh Chaudhary of Suvidha Stores, Tarun Langer & Chander Shekhar Mahajan of Yougal Sons as Guests of Honour. Key dignitaries from CMAI present at the Inaugural included Rajesh Masand – President; Rohit Munjal – Vice President; Santosh Kataria, Chairman – NIGF; Rahul Mehta – Chief Mentor and Pankaj Jain – Hon. Secretary – North and other office bearers of CMAI.

Rajesh Masand, President, CMAI, expressed, “The Domestic Garment industry in India is poised for significant growth, driven by the country’s dynamic demographic and economic potential. NIGF 2024 is a testament to CMAI’s commitment to supporting MSMEs and enhancing the garment trade in North India. The upcoming festival season is a crucial period for the Garment industry and hence NIGF 2024 plays a pivotal role in connecting manufacturers with thousands of buyers ensuring they are well-prepared to meet market demands”.

At the Inauguration, Santosh Katariya, Chairman said, “NIGF 2024 has fast developed as a successful platform for Manufacturers from across the country. It offers North India’s Retail industry a fantastic opportunity to meet new Suppliers, new Brands and refresh their merchandise for customers from across India. For the benefit of Exhibitors, we have also organized a Business Networking Session tomorrow with leading Agents & Distributors from pan India”.

NIGF 2024 features a diverse array of garment manufacturers, with over 95% representing MSMEs from various parts of India, including key hubs like Mumbai, Surat, Jaipur, Bengaluru, Indore, Ludhiana, Uttar Pradesh, and the Delhi-NCR region. Retailers from across the country have pre-registered to visit the fair and expected to attend the fair.

Is your MSME ready for private equity, venture capital? Here’s what it would take to attract private money

Mr. Mudit Pareek, CTO, Saraf Furniture1

By – Mudit Pareek, CTO, Saraf Furniture

India’s MSME sectors were highly affected by the wrath of Covid-19. Despite the steep fall in the new cases, the impact of destruction caused by the second wave still gives chills in the spine to many, especially to MSME business owners.

According to CII, MSME sectors employ about 12 crore people and about half of the Indian exports. With the successful MSME sector, India can achieve its goal of being a $5 trillion economy.

The root problem from the domestic MSME sector is failure to attract the private capital into their business, leading to constant starvation for funds. MSME owners and entrepreneurs should thrive to rope in professional money.

This capital, however, is entirely distinguished from the funds lent by the banks or NBFCs. Their expectations are entirely different from the business backbone of the country.

Lenders give you debt, which is temporary whereas private players give you real capital for long term growth. One can repay the debt in a given time period for the pre-agreed interest rate but the private capital seeks the exit for their investment at a later stage.

Lenders are not active participants of your business, whereas PE funds or VCs participate in the growth actively and give a professional structure to the business. They come with high expectations of returns on their investments.

Private capital comes as the co-owners, even though the stake is minor, but their voice can not go unheard. Their money in the balance sheet may shoot the bottom line in the long run but they seek accountability even from the promoters or owners who become ‘managers’ of the business.

Other than compounding their wealth in the long term, the private money brought in from the external investors has a few caveats, which can not go ignored. Here are a few keynotes suggesting how to prepare a business for private investment and its optimal usage:

Go for Growth

Without any predetermined rate of interest, private investments are the most expensive form of capital for a business. One should use this capital in areas where the return on investments is higher than the cost of capital. Investing this capital judiciously in the needed business areas can fetch much higher returns than the actual cost.

Bring in Transparency

Some of the MSMEs fail to maintain the complete records, which lets the private players down. Businesses must keep the proper, periodic and accurate records of their operations. Clear data information is a necessity for all related parties. If there is a mismatch in the data or information, one may lose faith in the other. Incorrect numbers can impact the topline and bottom line and it is impossible to remember everything.

Restructure the Operations

External shareholders are the co-owners and have every right to question you for the business decisions taken. You should formally structure and organize the business before you knock on their doors. This can be a blessing in disguise for you as you can rope in some professional hands into your business for KRAs, SOPs and KRAs. Delegation of authority to the next in line leaders creates supportive and transparent structures.

Don’t mix the Personal Expenses with the Business

Without external funding, your funds are solely yours, whereas when an external party invests in the business, the assets become shares. So, money utilized for personal reasons shall be excused from the business-related expenses. The new investors may not appreciate the mixing of funds, and this happens most of the time. So, if you are partying on the evenings of the business trips, it shall not be treated as a business expense.

Business of ‘Dynasty’ is nasty

A Family owned business prefers the succession to the true heir of the owner, which is his son/daughter. This is a concession taken by the majority of MSMEs. However, when private funds are involved in the business, things must take a professional turn. Only qualified, eligible and tested personnel should be elevated to the higher management, even if they are blood relatives of the owners.

Conflicts of Interest

When you are operating and running a business, keep the bloodline at the doorstep of the office as having personal relationships within may affect the business, in particular, if the third-party funds are also involved. The business must not feel the heat of your personal sweet-bitter relationships. A cozy relationship may hurt the business, whereas bitterness has a higher toll on it. It should not be a trick-or-treat game in business operations.