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Scouting for small business

Paran Balakrishnan | October 25, 2003

Lakshmi Venkatesan will be living out of a suitcase for the next few months.

The sparky founder of the Bharatiya Yuva Shakti Trust will be criss-crossing Asia, explaining how it's possible to turn youngsters with a germ of a good idea into entrepreneurs. Rs 50,000 is all it takes, she will tell everyone, but small amounts of cash must be backed by plenty of advice.

Venkatesan's first stop will be China, which is mixing entrepreneurship with a new style of Communism that the world hasn't seen before.

China will be followed during the next six months, by Nepal, the Maldives, Malaysia and Indonesia. Says Venkatesan: "Most people want to learn from our experience, because we are a model for other developing countries."

The fact is that Venkatesan's BYST has been more successful than anyone would have dreamt.

During the last decade it has built an impressive track record in turning young people into entrepreneurs. It has backed 900 young entrepreneurs and its systems and style of functioning are being copied in other developing countries like South Africa.

It has recovery rates of 95 per cent on the money it lends to small entrepreneurs. And it has even outdone the Prince's Youth Business Trust in Britain on which it was modelled.

That's an assessment that probably wouldn't be disputed by Prince Charles, the heir to the British throne.

BYST was formed after a chance encounter during a state banquet at Buckingham Palace in London in 1990. Venkatesan was at the dinner thrown in honour of her father President R Venkatraman and she found herself sitting next to Charles.

While the next few courses were served the Prince explained how the Prince's Trust, which he had formed during the Thatcherite years in the '80s, worked.

Venkatesan isn't one to let the grass grow under her feet. She returned to India and roped in the top names of industry and government into her new venture.

These included J R D Tata, Bajaj Auto's Rahul Bajaj and H P Nanda of Escorts. Also, she convinced bureaucrat Mantosh Sondhi to join the board and persuaded the Confederation of Indian Industry to back her efforts.

It took about two years to get the ball rolling and in the first few years Venkatesan sat in on interviews with young entrepreneurs and criss-crossed the country meeting small- and medium-scale entrepreneurs who could act as mentors to the young hopefuls.

BYST finally kicked off in 1992. Later this month Prince Charles will be present at a BYST seminar on Youth Employment and Entrepreneurship.

Charles couldn't come last year because of the Gulf War so it's a 10th anniversary event even though it is a year late.

BYST has certainly built an impressive track record in the 11 years since it first reached out to Indian youngsters in towns and cities.

It makes loans of upto Rs 50,000 without taking a collateral if it thinks that the potential entrepreneur has a good and workable idea.

It backs this by giving the businessperson a mentor who can guide them through the rocky shoals of entrepreneurship.

Take Nita Jain, a Delhi-based businesswoman who approached the organisation back in 1995. Jain was determined to make her mark as an entrepreneur even though she was visually challenged. Her disability restricted the number of opportunities that she could pursue.

Under any circumstances, Jain would have had a tough time establishing herself. But BYST helped her in two ways. First it gave her an initial loan of about Rs 50,000 and backed it by appointing Ashok Dayal, managing director, Bellman Data, as her mentor.

Under Dayal's guidance Jain started a desktop publishing unit Aarkays Graphics which prospered for a few years. But by 1998 bristling competition forced her to cut prices to rockbottom levels.

But Jain wasn't about to give up. She now makes pre-gummed labels for use in hi-tech industries and has an annual turnover of around Rs 17 lakh (Rs 1.7 million).

Dayal, who is in software, admits that he hasn't been able to help her much in the labelling business. But he has made suggestions about branding and the jigs and fixtures for her new venture, which he as an engineer understood.

Says Jain: "Mr Dayal was a great help when it came to technical matters." Adds Dayal who has helped several BYST entrepreneurs: "Jain was very gutsy. She had a lot of courage and she was full of enthusiasm."

Such stories have multiplied over the years. There is, for instance, Pradeep Loomba who makes corrugated boxes and who today has a turnover of Rs 2.5 crore (Rs 25 million). His mentor taught him the smarter points of inventory control and quality consciousness.

Similarly, there's Udham Singh of Seekri village in Haryana, who dropped out from school at 12 and, over the years, carved out a niche for himself repairing agricultural implements.

Today he makes a range of agricultural equipment including threshers and cultivators. His company has a turnover of Rs 42 lakh (Rs 4.2 million), he employs 12 people and his client list includes companies like Eicher.

What is Venkatesan's role in all this? She's a systems engineer who studied at New York University and worked with AT&T Bell Labs for over a decade.

She returned to India and started an infotech and telecom consultancy. Says Venkatesan: "With all my advantages I know how tough it is to be an entrepreneur."

But BYST has been her passion for the last decade. Today, she focuses more on mentor training and building systems that help the organisation further its goals.

It has, for instance, put its mentor training programme online. Besides that BYST has also brought in Silicon Valley entrepreneurs who are mentoring the mentors.

A lot of Venkatesan's time is, however, now spent in selling BYST's message to other developing countries. An organisation like BYST must, inevitably, be tailored to fit the country in which it operates.

That's why the Prince's Trust model designed for conditions in Britain, doesn't really work in Third World countries.

Prince Charles also has great faith in Venkatesan and he frequently tells people from countries like Brazil and South Africa that they should consult her before finalising their programmes.

That's why Venkatesan has been flying to countries like South Africa and the Philippines, studying local conditions and advising local bodies on how to start their programmes.

One problem for instance, is that mentors are usually small-scale or medium-scale business. Says Venkatesan: "In other countries where small and medium scale business don't exist it is very tough."

Studying local conditions and innovating accordingly has been one of Venkatesan's strengths. BYST has always tried to ensure that the demands on the mentors should not be too great.

So, how does it get the mentors to out of the way rural regions? One way is the mobile mentor clinic.

About four or five mentors with different fields of expertise are made responsible for a cluster of villages. Once a month the mobile clinic travels to the villages and meets the entrepreneurs on their home ground.

Says Venkatesan: "When people see them coming to the villages it also helps to create a positive climate for the entrepreneurs."

BYST reckons that the roughly 900 ventures it has helped in the last decade have created around 3,000 jobs. And about 5 per cent of its entrepreneurs have a turnover of over Rs 1 million.

As Venkatesan turns one eye on foreign shores that's not a bad track record to look back on.

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