Every crisis throws up an opportunity. And the global economic meltdown is no exception. The recession threw up a few such opportunities for passionate entrepreneurs who, undeterred by the turmoil outside their offices, built their businesses while many others were either collapsing or struggling to survive.
While many biggies at Wall Street were shutting shop, five young entrepreneurs in Bangalore invested in their start-up venture and moved it from a scrap yard to a big building. Praveen Crasta and four friends, who founded Lsquare for making paper honeycomb, a building material made out of reinforced paper, saw an opportunity in recession.
According to Praveen, managing director of Lsquare, the recession and the trend of encouraging green products helped their company a lot. The lightweight, eco-friendly and cost-effective honeycomb was an instant hit in the market. “We started the company with a total investment of just Rs 1 lakh. In the first year itself we had a turnover of Rs 80 lakh and this year we hope to touch Rs 2.5 crore,”says Praveen, who is an engineering graduate.
Praveen and his friends, Abhijeet Makhijani, Gaurav Modi, Rohit Bhandari and Neeraj Quadros studied in different colleges. But they pooled in their talent to make it big in business and contribute to society. Within a short time, they were able to expand their business across the country. They have invested around Rs 1.5 crore to take their company to the next level and conquer newer markets.
Honeycomb, a 100 per cent paper-based product, does not use any virgin paper and it is shaped like a hexagon, almost like a honeycomb. The shape gives vertical strength to the product, which can be used instead of wood in doors and furniture, and also as a packing material.
“Wood costs Rs 25 per square foot, while Honeycomb costs just Rs 4 to Rs 5. It has the same load-bearing capacity and life as wood,”says Praveen. He and his friends were inspired by A.P.J. Abdul Kalam’s book Ignited Minds to start the venture. While the boys did well in business, the eco-friendly product helped customers save money and also some trees that would have been cut down for making furniture.
During recession, consumers tend to look for high quality products at affordable costs. This desire to get the best returns for the hard-earned money helped another entrepreneur, Raj Majumder, founder and CEO of financial services firm iMetanoia, which is based in Bangalore. By focusing on retail investors, it did extremely well during recession.
At the height of recession, many big banks and financial advisory firms abruptly terminated their operations leaving investors in the lurch. “That was the time when we moved into the high networth individual (HNI) segment that we saw was growing much faster,” says Raj, who had earlier worked with Infosys, Goldman Sachs and Accenture.
When big companies were closing down, investors were looking for firms like iMetanoia, which focus their resources to address the needs of individual investors. These investors can also interact with the experts handling their accounts, unlike in big firms. Says Raj: “During the time of recession, we saw pockets of opportunities and we got in. In the HNI category, the growth was almost 100 per cent.” He says even IIMs and IITs invited it for campus recruitment. “That is very good for a start-up like ours.Normally, talents from such big institutions go to well-established firms.”
Another young man, Amar Lodaya, left his job in an insurance company to start Alz Creations, which makes ties, cufflinks and shirts. This 26-year-old, who did his MBA in banking and insurance, was undeterred by the challenges the start-up had to face during recession.
“I quit the insurance job as I was bored of the 9 to 5 routine,” says Amar. Along with his business partner Lucy, a management graduate, he started his own company with an investment of Rs 4 lakh a few months ago. Apart from their regular corporate clients, they have a retail outlet that sells good products at affordable prices.
“Recession has not discouraged me as my business involves a lot of creative work. Anyway, I know it will take some time for my business to break even,” says Amar. He has also started a rent-a-tie service in Mumbai. It is targeted at a large number of people working in the insurance, pharma and other sectors.
“When I was working in the insurance company, I was spending around Rs 600 on ties every month. But after two or three months, I never used those ties again,” he says. Many professionals, he says, do not mind opting for a rent-a-tie service by paying Rs 500 for a three-month membership. Every week, the members get a different tie and at the end of six months, they get one tie for keeps.
“We are getting a good response. For Rs 500, you get to wear 12 ties and at the end you get one tie for yourself. People who take up our offer are aware that they are using a tie that has been used by someone and another person would be using it after them,” says Amar. Along with Lucy, he visits big firms to meet professionals and make presentations.
Many other businesses and corporate law firms are also busy during recession. “The current developments in the corporate world have kept us busy,” says Omprakash K.V. of Conscientia Consultancy, Bangalore. The firm has tied up with multinational companies and local corporates to take care of their legal issues. “We get cases from those terminated from work and also from companies facing litigations from terminated employees. Start-ups also seek our help in building their firms, while many others want to settle their cases quickly through arbitration as they do not want to get involved in long, legal battles,” he says.
Institutes that impart communication skills and vocational training are in demand as the competition to get a job is increasing by the day. Veta, which conducts spoken English courses, has been opening six new centres every month. “The competition to get a job has increased so much that everyone wants to improve their English language and communication skills,” says Major K.V. Rajan, executive director of Veta. Last September, it started operations in Sri Lanka and is now eyeing other emerging markets in Vietnam and Thailand.
A.P. Srivatsan, managing director of Vocational Academy of India (VOCAD), says: “There is no better time to launch a business than during recession, as costs of setting up a business are down. If you are really looking at a long-term vision, recession is the best time to start a business.” VOCAD, a joint initiative of Collabrant Group and STRiVE (an offshoot of IFMR Trust), started its services in Bangalore in April and plans to set up over 600 centres across the country in the next seven years.
Says Srivatsan: “Our objective is to bridge the gap between Bharat, where manpower is available, and India Inc, where jobs are available.”
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