Each Business is a Disruptive Force in Itself

Newsletter Issue 52
August 2017

The key to any transformation is disruption. You can either be a follower by imitating the new, or you can be the new. Businesses that disrupt markets, alter economics with technology and innovation, and overcome barriers creatively, lead the future. Whether small or large, each business is a disruptive force in itself – and a powerhouse of endless potential.

How Demonetisation Disrupted the Payments Sector in India

India’s monetary policy took an unprecedented turn on November 8, 2016, when Prime Minister Narendra Modi announced pan-India demonetization. By withdrawing the existing Rs 500 and Rs 1000 notes from the system, nearly 86% of the cash in circulation at that point of time was rendered unusable.

What started as a means to fight corruption, black money and tax evasion, also became the biggest disruption ever, for the country’s digital payments sector. This article, will highlight how demonetization turned around the payments industry in India through a policy-driven fintech revolution.

Surge in Plastic Money (Debit Cards, Credit Cards, PoS) – Not surprisingly, the immediate effect of cash crunch in the system was a rise in the use of debit / credit cards. The number of debit card transactions increased to over 1 billion in January 2017 (up from about 817 million in 2016). Of these, while the number of ATM withdrawals and transfers have remained more or less the same at around 700 million, the additional growth has been mostly due to card swipes at Point of Sale (PoS) terminals.

The volume of PoS swipes increased by 300% to 328 million (up from 109 million in January 2016). Banks collectively set up additional 1 million PoS terminals within three months of demonetization announcement, thereby making the total number of PoS terminals in the country reach a record figure of 2.52 million.

Prepaid Payment Instruments (e-Wallets) – While plastic money stole the show in the beginning, soon digital wallets took the centre stage. Digital wallet is a fintech innovation that allows customers to pay, receive and hold electronic money from the convenience of any location as long as they have a laptop / smart phone and internet connectivity. Players like PayTM also have additional features like wallet-to-wallet payment through QR code, and withdrawal of wallet balance to bank.

Prepaid Payment Instruments (PPIs) reported 350% rise in the volume of transactions on an average in January-March quarter of 2017, from that in 2016. In March 2017, the volume of PPI transactions stood at 342 million, up 375% from 72 million a year earlier. For PayTM, the largest digital payments startup in India, the daily transactions increased by 300% to 7.5 million. Mobikwik, another e-wallet startup, grew its transaction volume by four times. Recently, PayTM also received approval from RBI to set up a payment bank.

Payment Apps and Gateways – Pure-play payment gateways are different from digital wallets in terms of these being only transaction facilitators and enablers. CCAvenue, Razorpay and InstaMojo are a few examples of payment platforms, which enable individual and corporate payments by either connecting to e-wallets or to bank accounts directly.

The Bharat Interface for Money (BHIM), an ambitious digital payment application launched by the Prime Minister on December 30, 2016 has already been reported to have 10 million downloads so far. In the four days post its launch, BHIM clocked in 700,000 transactions – a commendable feat. As a convenience payments app, BHIM is connected to more than 30 private and public sector banks in India.

According to a recent NASSCOM report, India’s fintech industry is estimated to reach 2.4 billion USD by 2020, from just 1.2 billion USD in 2016. While demonetization provided the much-needed thrust for the payments sector, for sustained growth in the future we will need improved digital infrastructure, increase in the payment options available, rise in the number of POS terminals, EMI option for bigger purchases, better security of transactions, increased trust and confidence among the consumers, and a means to overcome the rural-urban divide in accessing payments technology.

Better regulations and policy-making coupled with innovation and seamless execution by fintech players will lead the way forward for India’s dream of corruption-free, near-cashless economy.

Event – Business Buyer’s Club – Ahmedabad

After successfully organizing our pilot event in Mumbai, we are organizing the second Business Buyer’s Club event in Ahmedabad. This is an exclusive deal making opportunity for businesses, buyers and investors from Ahmedabad and Vadodara.

We are showcasing 10 businesses shortlisted by our analysts. As a buyer/investor, you’ll have the opportunity to know these businesses closely and interact with its promoters directly. This is an exclusive event created with the sole purpose of helping our clients reach their goals faster.

For registration or any further details, click here.

How to Prepare Your Business for Growth in a Sluggish Economy

Guest Contributor: Gagan Ghai, Crest Capital Advisors

Growing a business in uncertain economic climate presents harder challenges. However, with appropriate mentorship and guidance, entrepreneurs can thrive regardless of economic conditions. Over the past few years, we have helped several businesses rethink & re-structure their core strategy to outrun competition and protect their businesses against bad times.

While there are no hard and fast rules, here are some of our key learnings from working with businesses, which you can apply to achieve your growth objectives for your business.

  1. Diversify Your Customer Base

If your business is too dependent on one or two customers to generate the bulk of sales, it is at significant market risk.

In the case of one of our clients, who happened to be in the business of institutional supply of clothing, we found that even a small degree of diversification in the customer mix resulted in superior financial performance, not to mention higher stability.  Regardless of the size of the business, diversifying client base has its own benefits. Often, the most diversified firms experience faster growth that their non-diversified counterparts.

  1. Focus on Your Best Customers

While it’s important to ensure that you have the right mix of customers, it’s also wise to treat your best customers (Category A) with extra attention. By nurturing relationships with key customers and building their loyalty, you can grow along with them.

A case in point is a client of ours – a creative & design agency. By bringing razor-sharp focus on the most important clientele, we have helped them in solving the purchase behavior issues & overcame the challenges with regard to serving their most important client. The agency acted on our advice and has now become the best fit for its key clients, not just for a particular service but for a range of value additions.

  1. Proactive Approach to Marketing

No product or service sells itself, especially not in a slow economy. And word-of-mouth marketing often isn’t enough to grow a business. You need to define and promote your unique selling points intelligently. Consider creating a well-defined marketing strategy that defines your target customer, uses the right tactic to reach them and uses quantifiable metrics to measure the results. We have been advocating competitor analysis to all our clients to monitor marketing positions regularly and thereby, get optimum results.

  1. Focus on Strategic Goals

While it is easy to get lost in routine details and neglect your strategic plan, the consequences can be severe. It’s essential to keep your mission and vision in mind as you go about making day-to-day operating decisions. Know what your strengths are, what you want to achieve and how you plan to get there. Also, make sure that you keep your strategic plan documented, updated and shared across key team members.

  1. Foster a Positive Attitude in the Team

Everyone within the organization needs to be trained and coached to understand the business’s strategy and proactively promote the business at every opportunity. When you hire, look for people who not only have the right qualifications, but also the right attitude & passion.

  1. Monitor Your Cash Flow

Most entrepreneurs are only focused on managing the bottom line by monitoring sales, gross margin and expenses. But, they often ignore cash-flow management. It’s important to balance short-term and long-term needs with short and long-term sources of funds. Many early stage businesses close down due to sheer mismanagement of funds raised and incomes accrued over time without proper planning.

We would be happy to answer growth challenges faced by entrepreneurs and would be glad to assist in multiplying his / her business together.

Our Guest contributor can be connected via LinkedIn

Team Member Message

Fintech sector is one of the biggest sectors to have emerged since the disruption in the Indian economy because of demonetization. Yet it still has a long way to go before it experiences its highest point. We at indiabizforsale a fintech company, are helping businesses, buyers and investors in India to grow with the use of technology and our expertise in deal making.

Leave a Reply

Your email address will not be published. Required fields are marked *