The Fortune Cookie Principle

THE 20 KEYS TO A BRAND STORY

1. The Truth. 

What business are you in? Car companies don’t just manufacture boxes to get people from A to B.

2. Purpose. 

The reason you exist.

3. Vision. 

What impact do you see your business making in the world?

4. Values. 

Your values reinforce the vision for the business, shape its culture, and guide its behaviours.

5. Products and Services. 

Do they live up to the story you want to tell?

6. Your People. 

Leaders and employees, their values and posture.

7. Value you deliver. 

Think beyond features and benefits. People don’t buy what you do; they buy how it makes them feel.

8. Name and Tagline. 

Your opening move.

9. Content and Copy. 

Your content and copy are the way you woo your customers. They are your voice and the way you communicate your brand’s personality.

10. Design. 

The visual shorthand that helps people to make decisions about your brand. It also shapes the user’s experience of your products and makes them work better.

11.Your Actions. 

How you do everything, from greeting customers to answering the phone and requesting payment,

12. Customer Experience. 

Customer experience is everything that happens when people encounter your brand and how it makes your customers feel.

13.Price and Quality. 

The price you charge and the quality of what you sell or serve sends a signal to the right people.

14.Perception. 

Your position is your customers’ perception. It’s shaped by the way in which you touch their hearts, not by how you manipulate their thinking.

15.Distribution. 

How you get your products and services into the hands of customers sends them a signal about your brand. It can also provide a competitive advantage.

16.Location. 

Your location has to align with your business strategy.

17.Ubiquity or Scarcity. 

Do you want to have a product in every store, or will being selective about where your brand is stocked align with your story? Is your plan to have a presence on the tablet of every consumer with access to an Internet connection, or will you serve just a handful of consulting clients each year?

18.Community. 

Your audience. The people you want to reach out to. Those your brand resonates with. The people who feel like they belong and who want to share your story.

19.Reputation. 

The story your customers tell about you. How your idea and brand story is spread. What one person says to another to recommend your brand.

20.Reaction and Reach. 

How your customers behave towards your brand. Lines at the Apple store.

Source: http://thestoryoftelling.com/the-fortune-cookie-principle/?utm_source=rss&utm_medium=rss&utm_campaign=the-fortune-cookie-principle

quote by e. e. cummings

“when man determined to destroy
himself he picked the was
of shall and finding only why
smashed it into because.”


“To be nobody but
yourself in a world
which is doing its best day and night to make you like
everybody else means to fight the hardest battle
which any human being can fight and never stop fighting.”


e. e. cummings

quote by Peter Lynch

"Know what you own, and know why you own it." - Peter Lynch

quote by Charlie Munger

"It takes character to sit there with all that cash and do nothing. I didn't get to where I am by going after mediocre opportunities"- Charlie Munger

45 things about life

Life isn't fair, but it's still good.

When in doubt, just take the next small step.

Life is too short – enjoy it.

Your job won't take care of you when you are sick. Your friends and family will.

Pay off your credit cards every month.

You don't have to win every argument. Stay true to yourself.

Cry with someone. It's more healing than crying alone.

It's OK to get angry with God. He can take it.

Save for retirement starting with your first paycheck.

When it comes to chocolate, resistance is futile.

Make peace with your past so it won't screw up the present.

It's OK to let your children see you cry.

Don't compare your life to others. You have no idea what their journey is all about.

If a relationship has to be a secret, you shouldn't be in it.

Everything can change in the blink of an eye, but don't worry, God never blinks.

Take a deep breath. It calms the mind.

Get rid of anything that isn't useful. Clutter weighs you down in many ways.

Whatever doesn't kill you really does make you stronger.

It's never too late to be happy. But it’s all up to you and no one else.

When it comes to going after what you love in life, don't take no for an answer.

Burn the candles, use the nice sheets, wear the fancy lingerie. Don't save it for a special occasion. 

Today is special.

Over prepare, then go with the flow.

Be eccentric now. Don't wait for old age to wear purple.

No one is in charge of your happiness but you.

Frame every so-called disaster with these words 'In five years, will this matter?'

Always choose life.

Forgive.

What other people think of you is none of your business.

Time heals almost everything. Give time time.

However good or bad a situation is, it will change.

The most important sex organ is the brain.

Don't take yourself so seriously. No one else does.

Believe in miracles.

God loves you because of who God is, not because of anything you did or didn't do.

Don't audit life. Show up and make the most of it now.

Growing old beats the alternative of dying young.

Your children get only one childhood.

All that truly matters in the end is that you loved.

Get outside every day. Miracles are waiting everywhere.

If we all threw our problems in a pile and saw everyone else's, we'd grab ours back.

Envy is a waste of time. Accept what you already have, not what you need.

The best is yet to come.

No matter how you feel, get up, dress up and show up.

Yield.

Life isn't tied with a bow, but it's still a gift.

Much happier

Here is a list of 15 things which, if you give up on them, will make your life a lot easier and much, much happier. We hold on to so many things that cause us a great deal of pain, stress and suffering – and instead of letting them all go, instead of allowing ourselves to be stress free and happy – we cling on to them. Not anymore. Starting today we will give up on all those things that no longer serve us, and we will embrace change. Ready? Here we go:

1. Give up your need to always be right. There are so many of us who can’t stand the idea of being wrong – wanting to always be right – even at the risk of ending great relationships or causing a great deal of stress and pain, for us and for others. It’s just not worth it. Whenever you feel the ‘urgent’ need to jump into a fight over who is right and who is wrong, ask yourself this question: “Would I rather be right, or would I rather be kind?”Wayne Dyer. What difference will that make? Is your ego really that big?

2. Give up your need for control. Be willing to give up your need to always control everything that happens to you and around you – situations, events, people, etc. Whether they are loved ones, coworkers, or just strangers you meet on the street – just allow them to be. Allow everything and everyone to be just as they are and you will see how much better will that make you feel.

“By letting it go it all gets done. The world is won by those who let it go. But when you try and try. The world is beyond winning.” Lao Tzu

3. Give up on blame. Give up on your need to blame others for what you have or don’t have, for what you feel or don’t feel. Stop giving your powers away and start taking responsibility for your life.

4. Give up your self-defeating self-talk. Oh my. How many people are hurting themselves because of their negative, polluted and repetitive self-defeating mindset? Don’t believe everything that your mind is telling you – especially if it’s negative and self-defeating. You are better than that.

“The mind is a superb instrument if used rightly. Used wrongly, however, it becomes very destructive.” Eckhart Tolle

5. Give up your limiting beliefs about what you can or cannot do, about what is possible or impossible. From now on, you are no longer going to allow your limiting beliefs to keep you stuck in the wrong place. Spread your wings and fly!

“A belief is not an idea held by the mind, it is an idea that holds the mind” Elly Roselle

6. Give up complaining. Give up your constant need to complain about those many, many, maaany things – people, situations, events that make you unhappy, sad and depressed. Nobody can make you unhappy, no situation can make you sad or miserable unless you allow it to. It’s not the situation that triggers those feelings in you, but how you choose to look at it. Never underestimate the power of positive thinking.

7. Give up the luxury of criticism. Give up your need to criticize things, events or people that are different than you. We are all different, yet we are all the same. We all want to be happy, we all want to love and be loved and we all want to be understood. We all want something, and something is wished by us all.

8. Give up your need to impress others. Stop trying so hard to be something that you’re not just to make others like you. It doesn’t work this way. The moment you stop trying so hard to be something that you’re not, the moment you take of all your masks, the moment you accept and embrace the real you, you will find people will be drawn to you, effortlessly.

9. Give up your resistance to change. Change is good. Change will help you move from A to B. Change will help you make improvements in your life and also the lives of those around you. Follow your bliss, embrace change – don’t resist it.
“Follow your bliss and the universe will open doors for you where there were only walls” Joseph Campbell

10. Give up labels. Stop labeling those things, people or events that you don’t understand as being weird or different and try opening your mind, little by little. Minds only work when open. “The highest form of ignorance is when you reject something you don’t know anything about.” Wayne Dyer

11. Give up on your fears. Fear is just an illusion, it doesn’t exist – you created it. It’s all in your mind. Correct the inside and the outside will fall into place.
“The only thing we have to fear, is fear itself.” Franklin D. Roosevelt

12. Give up your excuses. Send them packing and tell them they’re fired. You no longer need them. A lot of times we limit ourselves because of the many excuses we use. Instead of growing and working on improving ourselves and our lives, we get stuck, lying to ourselves, using all kind of excuses – excuses that 99.9% of the time are not even real.

13. Give up the past. I know, I know. It’s hard. Especially when the past looks so much better than the present and the future looks so frightening, but you have to take into consideration the fact that the present moment is all you have and all you will ever have. The past you are now longing for – the past that you are now dreaming about – was ignored by you when it was present. Stop deluding yourself. Be present in everything you do and enjoy life. After all life is a journey not a destination. Have a clear vision for the future, prepare yourself, but always be present in the now.

14. Give up attachment. This is a concept that, for most of us is so hard to grasp and I have to tell you that it was for me too, (it still is) but it’s not something impossible. You get better and better at with time and practice. The moment you detach yourself from all things, (and that doesn’t mean you give up your love for them – because love and attachment have nothing to do with one another, attachment comes from a place of fear, while love… well, real love is pure, kind, and self less, where there is love there can’t be fear, and because of that, attachment and love cannot coexist) you become so peaceful, so tolerant, so kind, and so serene. You will get to a place where you will be able to understand all things without even trying. A state beyond words.

15. Give up living your life to other people’s expectations. Way too many people are living a life that is not theirs to live. They live their lives according to what others think is best for them, they live their lives according to what their parents think is best for them, to what their friends, their enemies and their teachers, their government and the media think is best for them. They ignore their inner voice, that inner calling. They are so busy with pleasing everybody, with living up to other people’s expectations, that they lose control over their lives. They forget what makes them happy, what they want, what they need….and eventually they forget about themselves. You have one life – this one right now – you must live it, own it, and especially don’t let other people’s opinions distract you from your path.

13 Things Happy People Do Differently

People aren’t simply happy or sad, we’re both. Sometimes at the same time.

Happy and sad are momentary experiences, just as hunger, melancholy, joy, grief or clarity are things you experience in a specific moment.These things define a moment, not a person, so while happiness isn’t something you possess as you do with a shoe size or eye colour, it is something that you can cultivate more of.

Happiness can surely get you into trouble if you go about it in the wrong ways (by padding life out with the accumulation of stuff rather than filling it with moments of value, for example), but at its core, happiness can remind you of all that’s good in the world, rather than focusing on all the bad things.

This is why it’s worth bothering about, because happiness adds to your perception and lends you perspective, always lending you a better, simpler way of looking at things.

We’re not setting out to be part of an inane, smiling, delusional cult of happiness here. I can’t think of anything worse or more irritating.

But if happiness feels like something you’d like to experience more of, here are 12 things happy people do differently that you can start with.

1. Practice gratitude
Being grateful and thankful doesn’t turn you into the kind of simpleton who would say “Thank you, I love ducks” right after being pushed into the boating lake. It does however, create thinking that tunes you in to the good things you have in your life rather than becoming more and more blasé about them. Practicing gratitude focuses you on what life brings rather than what it doesn’t, and that’s where happiness comes from.

2. Prioritise nourishment
Nourishment is more than eating your vegetables and getting a decent night’s sleep. It’s about making sure your head, heart and body are kept topped up with the stuff they need not only to function, but to flourish. If you’re not taking good care of yourself little else will matter.

3. Don’t pursue status
Your brain is wired not only to figure out where you sit in the professional and social pecking order against others, but to reinforce your position in that pecking order. Yeah, we’re hardwired to be assholes sometimes. When you get wrapped up in establishing or maintaining status, the moment your place in the hierarchy drops you’re going to feel pretty horrible, like you’ve screwed up, that you’re no good or that others are better than you. Don’t get into the status game – there are no winners.

4. Separate success and specific outcomes
Your level of happiness is not dependent on reaching a goal or objective. Your success and happiness have nothing to do with what happens, and everything to do with how you perceive your achievements, your value and how you’re engaging with your life. Every time you make your success and happiness conditional on something happening, you’re missing point entirely.

5. Don’t reject or bury the bad
If you’re in the habit of brushing the bad stuff under the carpet, sooner or later you’re gonna trip up over that small hill that’s grown in the middle of the room and end up smashing your ego all over the place. You can only ignore or shut out the bad stuff in life (and there will always be bad stuff in life) for so long. Respect it. Integrate it. Welcome it. Learn from it. Accept it.

6. Stay out of the drama
Happy people don’t spend their time whining about how hard they’re having it, how everything’s going wrong, how everyone just needs to stop screwing everything up for you and how life would be so much easier if it wasn’t for everyone and everything they do. Getting into all of the “he said she said” of the world will keep you down in the detail and drama and you’ll be excluding all the beautiful and extraordinary stuff that’s right there in front of you.

7. Strip away expectationsInside that noggin of yours, your brain is doing its best to figure out what will happen next so that it can make sure you’ll be safe and sound. So it starts creating expectations for how things will go, what you’ll do next and how you’ll do it. It creates expectations about what others will do and what that means for your world. It even creates expectations about what other people might expect of you, just so you can fit in, not draw attention and keep on staying safe, secure and certain in your environment. Only, those same expectations will drastically limit your quality of life and resultant levels of confidence and happiness. So get rid of ‘em.

8. They know what makes them tickIt’s redundant to talk about happiness unless you know something about what makes you happy. So what are the things that make you tick – the stuff that matters to you enough for you to do something about? You’ll experience more happiness from doing the things that foster meaning, flow and contribution, so doing a little leg work to see what makes you tick goes an extraordinarily long way.

9. Don’t fight against their environment
So many people waste time and energy flapping their wings against the bars of the cage they think they’re in, they never figure out a better way to use that same energy. If you struggle against your environment, your environment will win. Instead, put in some effort to create an environment that’s congruent with what matters to you – an environment that brings what matters to life.

10. They’re connected
Feeling isolated is pretty darn sucky. It’s a bit like being alone in an attic while the zombie apocalypse happens in the world outside. You end up scared, stuck and listening out for sign of an undead brain-eater heading your way. Okay, so it’s mainly the scared and stuck thing. Feeling connected (to others, a project, a community, a family, a cause, etc.) gives you a sense of belonging, a sense that your life and your world are bigger than just you and that you’re part of a network that counts for something.

11. Notice the small things
I talk a lot about doing stuff that matters to you, making a difference and creating extraordinary change, and the temptation is to think that this is some big, grand, oh-so worthy endeavour.
Truth is, there’s wonder in the tiny things too. Holding hands. Sunlight through trees. A steamed-up bathroom. The way someone smiles. That song you love. Squirrels playing in the park. A car letting you cross the street. The first page of a book. Laughing out loud. The small things matter massively.

12. Leverage natural confidence
Natural confidence is being able to choose your behaviour with implicit trust in that behaviour. It’s knowing that you can get on, make choices and do stuff, and deal with whatever happens.
Natural confidence is freeing, simple and powerful, and it’s the quality that allows you to get out there and do what matters.

13. Know they don’t need to be happy all the time
Happy people don’t bank on feeling happy all the time. They know that it’s transitory, and they know that there are moments when it’s a choice. Thinking that you need to be happy all the time or that you’re owed happiness will put you on the road towards Missing the point completely.
Happiness is as much an intention – a precursor to a moment in time – as it is an outcome.

How are you with this whole happiness thing?

Source: http://www.dumblittleman.com/2013/04/13-things-happy-people-do-differently.html?utm_source=feedly&utm_medium=feed&utm_campaign=Feed:+DumbLittleMan+(Dumb+Little+Man+-+tips+for+life)

This, I know

You will receive a body. You may like it or hate it, but it will be yours for the entire period this time around.

You will learn lessons. You are enrolled in a fulltime informal school called life. Each day in this school you will have the opportunity to learn lessons. You may like the lessons or think them irrelevant and stupid.

There are no mistakes, only . Growth is a process of trial and error, experiment . The failed experiments are as much a part of the process as the experiment that absolutely works.

A lesson is repeated until learned. A lesson will be presented to you in various forms until you have learned it. When you have learned it, you can go on to the next lesson.

Learning lessons does not end. There is no part of life that does not contain its lessons. If you are alive there are lessons to be learned.

There is no better than ‘here’. When your ‘there’ has become a ‘here’ you will simply obtain another ‘there’ that will again look better than ‘here’.

Others are mere mirrors of you. You cannot love or hate something about another person unless it reflects to you something you hate or love about yourself.

What you make of your life is upto you. You have all the tools and resources you need. What you do with them is up to you. The choice is yours.

Your answers lie within you. The answer to life’s question lie inside you. All you need to do is look, listen and trust.

Book review: V is for Vulnerable

I love reading. I absolutely love reading. So i have decided to write book reviews on stuff i read. Here is the recent one:

V is for Vulnerable : Seth Godin - Life outside the comfort zone.

Seth is brilliant. Seth isnt a writer, he is a movement. He is a shift of thought. You will get it when you read him. I am most happy to pay for the beautiful work he writes. He makes art. He produces magic.

V is for vulnerable is a short fun book. It's got alphabets from A to Z with some fun besides each alphabet. Thats all. Here are my favorites. Have fun

Anxiety is experiencing failure in advance. Tell yourself enough vivid stories about the worst possible outcome of your work and you'll soon come to believe them. Worry is not preparation, and anxiety doesn't make you better.

Commitment is the only thing that gets you through the chasm. Commitment takes you from "that's a fine idea" and "it's done." Commitment is risky, because if you fail, it's on you. On the hand, without commitment, you will fail, because are unshipped isn't art.

Effort isn't the point, impact is. If you solve the problem in three seconds but have the guts to share it with me, it's still art. And if you move ten thousand pounds of granite but the result doesn't connect with me, I'm sorry for your calluses, but you haven't made art, at least not art for me.

Feedback is either a crutch or a weapon. Use feedback to make your work smaller, safer, and more likely to please everyone (and fall in the long run). Or use it as a lever, to further push you to embrace what you fear (and what you're capable of).

Heroes are people who take risks for the right reasons. Real art is a heroic act. Hipsters, on the other hand, are pretenders who haven't risked a thing but like to play the part.

Initiative is the privilege of picking yourself. You're not given initiative, you take it. Pick yourself. If you're not getting what you want, it may be because you're not making good enough art, often enough.

More is not the goal of the artist. Better is the artists dream. Better connection is the point of the work. More stuff leads to a world of scarcity, while better connected creates abundance.

No feels safe, while yes is dangerous indeed. Yes to possibility and yes to risk and yes to looking someone in the eye and telling her the truth.

Pain is the truth of art. Art is not a hobby or a pastime. It is the result of an internal battle royal, one between the quest for safety and the desire to matter.

Shame is the flip side of vulnerability. We avoid opening ourselves to the connection art brings because we fear that we will finally be seen as the fraud that we are.

Umbrellas keep you from getting wet. Why on earth would you use one? Getting wet is the entire point.

Vulnerable is the only way we can feel when we truly share the art we've made. When we share it, when we connect, we have shifted all the power and made ourselves naked in front of the person we've given the gift of our art to. We have no excuses, no manual to point to, no standard operating procedure to protect us. And that is part of our gift.

My new found miracle : running

Since mid March, running has been my new found miracle. It is an exhilarating experience to go for a jog/run 3/4 times a week.

There has been significant transformation in the way I run since I began. Initially running was more of an effort where by I would struggle and barely manage a 3km run. My breathing was certainly not rhythmic and it was about the pace at which I ran.

Now as I look back, running is about the distance, training the machine like body to run the 10 kms daily. That's my current daily target. Running now is about the rhythm and breathing. Forget the pace, focus on running the distance. The pace will take care of itself.

Apart from the physical fitness associated with running, I find the challenge of daily goal setting and achieving it, an exhilarating experience.

Why More Is The Wrong Place To Start

The end goal of all marketing is more.

More customers or subscribers. More sales and increased profits.
This is the reason business strategy questions and answers often begin, (and end) with the ‘how to’ of getting more.

But more is the wrong place to start for two reasons.

When you begin by asking, “How can we sell more?“
You’re bypassing the question that comes before it, which is—“Why will people want more?”

And, what makes a good business a great brand isn’t just more.
It’s more of the right customers who believe in the story.

Sure aim for more. But remember it’s meaning that scales.
Source: http://thestoryoftelling.com/more-wrong-place-to-start/?utm_source=rss&utm_medium=rss&utm_campaign=more-wrong-place-to-start&utm_source=The+Story+of+Telling&utm_campaign=6996c02c07-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_b219f3cf17-6996c02c07-312829165

Welcome back me

Hi there. I was lost since october 2012 - havent blogged since. Lots has been happening - lots of fun. I look forward to sharing it over the blog. This post is just a welcome back :)

Agriculture land as a component of your investments

Published on: http://www.marketexpress.in/2013/05/agriculture-land-as-a-component-of-your-investments.html

India has a rising middle class and its aspirations to cater to. Amidst the high inflation, as the value of money reduces, where can an Indian find a bang for his buck? Equity markets have been volatile making poor returns since 2008, property prices have seen great variation, fixed returns through bonds and fixed deposits do not suffice to cover inflation, our savior has been Gold.

That’s been the darling! What other opportunities except for the shiny metal pose as a good long-term investment? In my opinion, owing agricultural land is an extremely rewarding long-term investment opportunity. The intended approach of the article is one of ease, simplicity and a quick read. Here’s what makes it a rewarding investment:

• Agricultural land investment provides high level of capital protection as it backed by a physical asset. Over time the value of this investment only appreciates.
• There is a fundamental limitation to the supply of land because they don’t make it anymore. Anyone who owns agricultural land is always favorably positioned.
• Agricultural land is an attractive portfolio diversification tool as there is low correlation to equity and bond markets.
• Investor interest in agricultural land across the country is on the rise. The early mover will benefit the greatest.
• Agriculture income is free from income tax. It seems unlikely to be made taxable over the next decade given the political environment in India.
• There is increasing demand supply mismatch of agricultural commodities. This leads to increase in commodity prices that in turn forms the case for increase in rental returns.
• Farmland has been a stable income-producing asset that has stood through the good and bad times. Like gold, it has been the storekeeper of wealth and value. Despite the rewards, there are several challenges in owing agricultural land. 

These are:

• One of the biggest hurdles in owing agriculture land is the requirement to be a farmer. While there are ways of getting converted to a farmer, the process isn’t as simple.The lack of professionals in the field, force an individual to scout around to learn of this process. Often this exercise is a time consuming and expensive process. There are several deceitful brokers waiting to pull a smart one over you. It is difficult to trust one and the fragmented nature of the industry doesn’t help either. Word of mouth could be your starting point, but it may not necessarily be helpful.
• Another major hurdle is the risk of illegal encroachment, or frankly, of being sold a worthless piece of land. One needs to ensure that the title of the land is clear and it isn’t encumbering or has litigation on it. Even after engaging the legal aspects with a proper realtor/lawyer and local broker, one cannot be too sure. A thorough title due-diligence needs to be done on the land with at least 30 years historical title check. There should be no minor as owner of the land. One needs to ensure that there are no village roads/lanes; no electrical wires running though the land. One also needs to check whether the farmers have been rehabilitated if the land is vacated.
• Location challenges like access to a main road,development of motor able roads, availability of or accessibility to electricity and water for the site also needs to be kept in mind. The price of a good land parcel vis-a-vis neighboring parcels also needs to be thoroughly evaluated.

While the benefits of owning land are obvious and plenty, the tiresome efforts of time, money and finding the right people do not guarantee returns. However with great precaution and due diligence one can acquire agriculture land as a component of their investments. If got right, it will certainly add great alpha to your portfolio.

Challenges faced by Indian SMEs during fund raising

Published on: http://www.marketexpress.in/2013/03/challenges-faced-indian-small-medium-enterprises-during-fund-raising.html

SME key statistics are old news. Over 13 million SME’s producing over 8,000 products, comprising ~41 million people, ~40% industrial output, ~40% of all export, 8 to 9% of GDP –known old news (source: Assocham and Grant Thorton report named: SME’s have to be smart money enterprises).

Most of the challenges faced by SME’s are also known news. Lack of adequate and accurate information about the SME borrower is a crucial input for decision-making by banks in the lending process. This information asymmetry proves to be a major hurdle. Grading system at banks could be inadequate to have the requisite capability to discriminate between good and bad risks. Often providing adequate collateral offering to bankersis a challenge.

There is already much known information through the World Wide Web apart from articles, journals and papers if you research the topic. So what perspective can we share that differentiates this article from the rest? The question raised above lingers in our mind as we write this article. Our attempt is to share some ofthe grass root challenges we have experienced during the process of fund raising for Indian SME’s.

There are two broad sources of fund raising for SME’s – debt and equity. Banks provide debt. Friends and family, angels, venture capitalists and private equity funds provide equity. We have kept aside internal reserves and any quasi instruments out of this topic. For the purpose of this article we will be discussing the aspects of fund raising through debt.

A large part of the fund raising for SME’s takes place through debt. Banks are mandated primarily to assess the SME’s assets and collateral. Business assessment takes a backseat.Loans are largely disbursed based on collateral strength, not business strength. There are several reasons for this. The primary aim behind the nationalization of banks in 1969 and 1980 was to spread the bankinginfrastructure and make economical finance available to Indian businesses.However, as time has passed, the truth has become more and more evident. It is a known fact that the business doings and financials for SME’s are not necessary what gets reported. In such a case what can a banker do? A banker is trained to look at the numbers, and in such cases numbers do not necessarily reveal the entire story.One can also argue that the due diligence capability of some banks to assess the business strength is also weak. So amidst this murkiness, the onus on the basis on which disbursements takes place is based on the SME assets and collateral. Lack of adequate collateral translates to lack of adequate funds (required for working capital and/or capital expansion) that translates to lower growth rate. The causality dilemma then comes into play: which came first, the chicken or the egg?

However, in the recent years, bank (especially private sector banks) has focused on the cash flow projections offered by the SME’s. However, most SME’s fall short on the projections made to the bank. Hence, bankers tend to discount the future projection that makes the proposal look weak forcing them to deny credit. It is imperative that SME’s approach this with sincerity. One must seek professional help if the accountant is not skilled in such projections.

Let us assume a new business initiative with no credit history comes to the bank. The project size is Rs.100 million. The bank will expect the promoter to bring in equity worth Rs.35 million and the rest will be financed through debt. Of the Rs.65 million to be financed through debt, the bank asks for a collateral of ~40% beyond the primary security (that of land/building). Mr. Promoter has no additional collateral than the primary security (where he plans to put up the manufacturing unit for which he is taking a loan). So the bank asks Mr. Promoter to provide his residence as a collateral (for some reason, residence as collateral gives a bank great psychological comfort in our opinion).

Mr. Promoter has come to a crossroad. To start his business initiative, he has to bring in equity, provide his existing land as security, and provide his house in the city of Mumbai as collateral. I’m guessing this should be just about sufficient or not, depending upon where he stays. Let us assume for a moment that the Mr. Promoter has arranged the collateral and is raising debt. Next up is the bank loan agreement. I’m guessing William Goldman came up with his quote (“Life isn’t fair, it’s just fairer than death, that’s all”) right after reading a bank loan agreement.  Pardon the weak attempt at humor. But it’s really that way. Its one sided. Itfavors the institution lending the funds. After all, everybody wants strong borrowers. Such is the difficult journey borne by Mr. Promoter to raise debt. However, this is one part of the story.

The other challenge faced by Indian SME’s during fund raising stems from their own backyard. In India, even today, hierarchy is respected more than wisdom/intelligence. What can one do when the business head of the family who founded the business and has grown it over the years makes a decision? The second/third generation has their hands tied, respect for hierarchy you see.

Let’s move on to another important member of the SME world – the chartered accountant. The life blood of every SME. Most decisions with regards to funds are run across to him. And as we understand, his role is to help the SME save tax. That’s his KRA (key result area/primary job responsibility). Mr. CA, how about helping grow the balance sheet over the years? What banker/equity partner wants to fund a SME whosenet worth that has not grown in proportion to the business?Also good advice is not available to SME’s owing to its own revenue challenges. Should advice be fixed or variable? Consultants would prefer fixed, while SME owners would prefer variable. The variable structure also has its challenges and then again as consultants, the soft advice that can go a long way in making a difference cannot really be measured.

Amidst all these challenges coupled by the Indian macro economic state and the world economic condition, Dalai Lama’s quote comes to my mind: “Choose to be optimistic, it feels better.” There is no denying that there is action-taking place on the ground in India – the implementation of the Micro, Small & Medium Enterprises Development Act 2006, schemes from the government, cluster formations, filling in investment gaps with FDI, providing strategic information such as benchmarking or trends, linking firms to training programs from local universities and fostering networking service centers and associations.As SME’s are not uniform, both in size and shape across the globe, it is difficult to make any direct comparison. However, one can take cues/inspiration from the government’s of South Korea, Taiwan, Japan, Trinidad and Tobago amongst others for the role they are playing in boosting the SME sector in their respective countries.

Lets take the example of South Korea. Although Korea boasts a strong automotive and electronic sector, they are facing intensive competition from similar goods coming from Japan. While the Korean SME’s used to supply to the chaebols (large conglomerates in Korea are called as Chaebols such as Samsung, Hyundai and LG), competition from China is forcing unproductive Korean firms to step up or step out. In such a competitive environment for the sector, the government has been channeling efforts to ensure the SME’s keep pace. Business incubators are there to guide innovative SME’s,efforts are underway to strengthen regional innovation clusters in Korea by decentralizing policy responsibility, and encouraging local linkages between universities, technology centers and companies.

An important organization for supporting SMEs in Korea is the Small and Medium Business Administration(SMBA). SMBA, a government branch has the primary task of encouraging, nurturing and growing newbusiness start-ups and entrepreneurial spirit in Korea. Almost all areas of government policy for SME’s are dealt by SMBA. The Global Review of Innovation Policy Studies report shares that the annual budget for 2010 was 1.68 trillion won (1.4 billion USD). The report also mentions that in addition, SMBA had a SME promotion fundof 4.3 trillion won (3.6 billion USD)..

Another Korean policy focus is to turn aroundtransforming traditional SMEsto high-growth SMEs through the “Inno-biz” and “Global Stars” programs. “Inno-biz” receives the supportof business ventures through dedicated funds fuelled by domestic and overseas sources. One such Korean company that received the “Inno-biz” support was DongHwaEntec (manufacturer of heat exchangers for ships, power plants, food factories, agriculture).

The “300 Global Stars” program is significantly different program to Inno Biz. 100 SME candidates are selected yearly for the“300 Global Stars” program on the basis of their merits of management, business amongst others. These selected enterprises will be supported by a comprehensive support package of financing, mentoring, advice, networking, technology and marketing. The program sees international championship for such SME’s. In recent years, Korea has been witnessing an emerging new group of young entrepreneurs who are developing start-up technology-intensive companies.

The “Inno-biz”, “Global Stars”, SMBA areexamples of how the government is addressing the challenges faced by the Korean SME’s as well as assisting them across fund raising. The keywords today for SME policy in Korea are growth, global competitiveness and innovation. These key words should resonate in the Indian policy framework for SME’s as well. John Maynard Keynes has said “the difficulty lies, not in the new ideas, but in escaping from the old ones.”India needs to tread on such a path. Existing practices, institutions, policies, attitudes, and practices – even though they were successful in the past – have to change and evolve too.

The Indian SME space is witnessing change, no doubt. But can our framework and policies keep pace? Only time can tell.

Mr. Milind Sarwate has contributed generously to this article.

Market View: Earnings attributed to stock performance

Published on: http://www.marketexpress.in/2013/05/market-view-earnings-attributed-stock-performance.html

Monday, May 13, 2013: The nifty and Sensex are at ~6100 and ~20000 levels. Markets have had a sharp run for the last 2 months on account of improving macroeconomics. Correction in commodity prices especially oil and gold have helped curtail the current account deficit (CAD). Improving current account deficit translates to a better overall economic environment when you take a top down approach. And that is reflected in the broad market.

The sharp upward move made by the NIFTY is accounted by the stellar performance of the oil and gas, pharmaceuticals, banking and FMCG stocks. However, one must not forget that the performance of the NIFTY is not a true reflection of the markets. It is a mere reflection of India’s top 50 companies by market capitalization. We keep hearing figures saying FII’s have invested XYZ amounts in the markets. The conclusions one can form are obvious when you see the statistics:

Warren Buffet has been quoted several times when he says: follow your own counsel, not the advice of others. Amidst this gung ho about liquidity and buying by FII’s, falling commodity prices, improvement in India’s macro economic scenario and great momentum, one is often tempted to jump on the band wagon.

However a look at the markets from a bottom up approach tells a different story. A single word that can be attributed to stock performance is earnings. What has changed on a macro level to affect earnings on a ground level?

The argument of a decreasing interest rate environment resulting in a lower interest payout thereby improving earnings does not hold ground. It’s a weak argument. It makes a difference in earnings, but not a sustainable one.

Policy logjam, corruption scandals continues to exist. The biggest worry is the political uncertainly that prevails. And an even greater worry is the leadership of these political parties. It’s a matter of time before this drama starts to unfold. The timing isn’t certain, but the certainty of the event occurring is. For those who have been investing, one need not mention the volatility associated with such events.

And if that didn’t get you thinking already, evaluate the risk return payoff from here on. Given the way Mr. Market can behave when volatility increases, at these levels, an investor should take a tactical call on the market -continue the battle or wait for the dust to settle.

As for myself, I am a prospect theory kind of a guy – loss aversion (refers to people’s tendency to strongly prefer avoiding losses to acquiring gains). I don’t feel compelled to buy at the moment even if it seems fashionable.