Anand Deshpande On How Small Businesses And Start-ups Can Manage Crisis.
Our Co-founder & CEO, Mr. Sanjay Ghare spoke with Dr. Anand Deshpande, Founder, Chairman, and Managing Director of Persistent Systems Ltd., regarding the current crisis and ways for small scale businesses to seek help during these times. Dr. Anand has been the driving force in growing Persistent Systems since 1990. He is one of the founder members of the iSPIRT think tank. Along with his family members, Anand founded the deAsra foundation with the vision to demystify entrepreneurship for the common man. Since his journey from IIT Kharagpur to Persistent Systems, he has accomplished numerous milestones. Persistent Systems is a technology solutions company that delivers digital business acceleration and enterprise modernization for businesses across various industries with more than 11,000 employees across the globe.
Mr. Sanjay Ghare asked Dr. Anand Deshpande the following questions during the interview:
Sanjay Ghare: What according to you is the role of technology services during these times of crisis and how can someone make the most out of it?
Dr. Anand Deshpande: Technology services business like Persistent, are not that badly affected in terms of ability to work. We can work from home quite efficiently and most of our customers continue to work with us while working from home as well. We are not affected as travel or tourism where major business is down. More and more businesses that are offline with difficulties to keep their customers are finding mechanisms to sell online. This change, for a lot of offline businesses, is creating new sets of opportunities in general.
The key for most businesses in the technology services industry is the specific customers you work with; they must survive and thrive. If they do well with your help, it will be good for you. My recommendation currently is to engage very closely with customers. By customers, I mean not only the company but the individuals as well. See what they are thinking, engage with them, convince them that you can do more for them, and be more relevant to their long-term business potential, think as their partner which is what people expect in this model. When you are in a tough spot like we are in right now, people tend to not work with people who are just fair-weather partners. They work with people who are long term partners for them and that’s really where a lot of your efforts should be spent right now.
No customer is going to work with a new partner at this time, so people tend to work with existing people they know. It is difficult and unrealistic for people to start new relationships during this time. Under these conditions, if you do not maintain your customer and take care of them there is a chance that somebody else might snap your account from you. Hence, it is important to work with existing customers and build stronger relationships in this phase.
Sanjay Ghare: What Are Some of The Mistakes You Wished You Could’ve Avoided?
Dr. Anand Deshpande: I have a different approach to this kind of problem. I do not believe that a business journey is about making big decisions or big mistakes. It is about the small things you do every day that adds up. If you make mistakes you must keep adjusting on an ongoing basis and keep moving forward.
A mistake is not a mistake but a wrong decision that you make. It is also about continuous adjustments that you make throughout the journey. The biggest kinds of mistakes people tend to make in businesses are to do with two things one of them is, Hiring. Hiring the wrong people can be a problem or missing out on hiring somebody that you should have hired can be a problem. Second would be in terms of deciding which customer you want to chase aggressively versus not. These are some decisions you must deal with on an ongoing basis.
Sanjay Ghare: How do you see the impact of the crisis on the travel and tourism industry? What are your expectations as a traveller from the industry especially from a safety perspective?
Dr. Anand Deshpande: People want to travel for sure. Although everyone is hesitating to travel because they are afraid of what might happen or who they might run into. You are of course at a bigger risk if you are traveling with a COVID19 patient. Safety is very important. Anybody who is looking at travel-related things wants to make sure that people are tested more frequently but then that is not entirely realistic. So, people are just going to be cautious. To travel for a short distance, drive to your destination rather than flying. People still want to take vacations even if they do not want to travel so that is another thing to think about. We need to figure out better ways to think differently and see how to make vacations possible.
Sanjay Ghare: We have seen many unicorns who started during a crisis. How do you know that you have the right idea and it is time to execute in this crisis since you have overseen many businesses?
Dr. Anand Deshpande: The interesting thing to note is that start-ups happen when you have good ideas that you are willing to execute. It is about finding a problem to solve. There are two ingredients to a great start-up. One is the problem that they are trying to solve which is unique and appropriate for that environment along with the right team to execute it and make the start-up possible. Problems get exposed during a crisis. What happens in a crisis is that people are frustrated and unhappy so a lot of ideas can come out because you are trying to solve a problem.
The second thing is the availability of people and the willingness of people to use this opportunity to incubate something new. Another thing to add is that the valuations are lower, so investors tend to consider new opportunities and get more. On the other hand, start-ups don’t get a lot of money so they try to operate more frugally which can work in favor of the start-up.
Sanjay Ghare: If you had one piece of advice for young entrepreneurs to be a great leader what would it be?
Dr. Anand Deshpande: A lot of new businesses come into existence because new entrepreneurs are passionate about their ideas and are trying to do something about it. People should start up a business when they believe in the problems they are trying to solve. That is the main thing that people should be thinking about when they are trying to start a business. Typically, start-up founders are not necessarily seasoned executives, but they are usually passionate youngsters who have a bright idea along with the willingness to execute it. That is the difference between a start-up starting versus a management team running an established business and there is a time for both.
My advice would be to work through your ideas you believe in. There is high risk but there is also high energy that is needed to make that transition from zero to one. Management teams tend to approach differently since they already have the business established and they are simply trying to grow. For building the right leadership characteristics for a start-up you should focus on raw energy, passion, and power.
Sanjay Ghare: The unorganized sector contributes more to the Indian economy than the organized sector. How do you see the impact of the crisis on the unorganized sector in India?
Dr. Anand Deshpande: Crisis usually hurts smaller businesses more than it hurts the bigger ones. Bigger companies usually have cash reserves and they also have the ability to borrow. People lend money to people who can repay it or have a track record of delivering something. Smaller businesses not only have difficulties in borrowing, but they also run into a cash crunch. The good news though is that smaller businesses need a smaller amount of funds to get past crises and they can manage with fewer employees. This makes them more resilient.
In a large company, if you run out of money, you will collapse very quickly. Smaller businesses can probably survive a little longer than a large company with fewer funds. There are trade-offs. But small companies will be affected greatly especially in the unorganized sector because their ability to retain cash and then borrow cash at this time is under pressure.
Sanjay Ghare: Could you tell us more about what you are working on DeAsra, your non-profit organization?
Dr. Anand Deshpande: In India, we have 25 -26 million people at every age. This means we need about 15 Million jobs every year in India and I believe that these 15 Million jobs are not just created by companies trying to hire employees or by large government jobs. It is imperative that we create jobs for millions of these people through job creation engines like small businesses that can not only help themselves but also few people along with them. I believe that is what is the main driver for the future of the economy of our country.
From my learnings through Persistent, I had the opportunity to see how the technology industry has scaled and experienced the accomplishments that we have achieved. I’m trying to put this to good use and go after the problem of job creation which is difficult to solve but is extremely important in the long term. We want to do this at a scale of millions at the same time. So, we are working on building an online platform that can get things to a point where we can execute effectively without hiring a lot of staff to get the job done. You want to make sure that your team does not scale linearly. The team should deliver more and more things which is possible by creating a technology solution.
Sanjay Ghare: How many businesses are you working with through deAsra?
Dr. Anand Deshpande: In the past few years, we started with a small number of businesses and helped them end to end. But we found out that it is not scalable and most small businesses don’t want to be continuously helped. They just need to get to help when they need it. We have a low touch service, so businesses can get a small thing from us and move on or come back whenever they need something. So far 87,000 businesses have benefited from us. It is fairly low touch, but we are trying to go broad at the moment to help a greater number of people. That is what we are focusing on currently.
We also help businesses with things around compliance like marketing, sales, and various other things. We do not give training but instead, we analyze the situation and give them a few pointers to find their way on their own rather than us giving them everything. A lot of these small businesses, especially the ones in the unorganized sector, are not open to changing their processes or doing something different immediately. So we build some confidence with them first. We plan to show them a few things that they can use right away and as they start to find us more meaningful then they engage with us for a longer period.
Sanjay Ghare: Working at a scale of 87,000 businesses, what are the key problems you see with these businesses?
Dr. Anand Deshpande: The first common problem we see is cash flow and cash flow management. Funding is another area that a lot of small businesses experience difficulty, especially in getting loans from banks. We help them with that process quite a bit. The 3rd area of course is compliance. People do not realize that they need to have certain processes, compliances, certificates, legal documents like shop act or professional tax, and other things. Then we also help them to get on social media, help them to make or receive payments, set up UPI payments, and so on. A set of things like these are in my opinion relatively easy to do but for someone in that category may not be exposed to some of these areas.
So, we help them make sure that their listing on Google comes in at the right place. Once they know how to do these things, it gets easier. Just to find out what to do may take them several hours and if they come to us we give them steps to follow and get things done. We try to make it simpler and demystified to make it easy for people in this unorganized sector to get going.
Sanjay Ghare: If you had one piece of advice for someone just starting, what would it be?
Dr. Anand Deshpande: Just do it. You have to try or you would never know if you can do it or not. Unfortunately, in small businesses or the start-up world, no amount of theory is useful. There is no such thing as assured business or a short failure either. You must start and kind of evolve your way into where you want to be. You need to be willing to get in it for the long term, take chances, and start to find your way around. You may not know everything on day one but over some time you’ll figure out and every step where you feel like you are lost there are support systems available including what we are trying to do in deAsra. Getting started is all about being consistent.
A lot of things will go wrong and that is sort of the given but it is not the end of the world. Whenever something goes wrongs there is always a way to fix it too.
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Established in 2018, Vervotech was founded by a team of passionate entrepreneurs, who came in with a collective experience of several decades in the travel technology industry. Vervotech aims at collaborating closely with travel agencies to help solve complex problems by leveraging artificial intelligence, putting data at the core of decision making, and being laser-focused on their clients’ business.