Entrepreneurship:Business Incubators

Business Incubators: business support resources and services

Business incubators are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term: Historically, 87% of incubator graduates stay in business.

Most common incubator services:

• Help with business basics
• Networking activities
• Marketing assistance
• High-speed Internet access
• Help with accounting/financial management
• Access to bank loans, loan funds and guarantee programs
• Help with presentation skills
• Links to higher education resources
• Links to strategic partners
• Access to angel investors or venture capital
• Comprehensive business training programs
• Advisory boards and mentors
• Management team identification
• Help with business etiquette
• Technology commercialization assistance
• Help with regulatory compliance
• Intellectual property management

Unlike many business assistance programs, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation program must apply for admission. Acceptance criteria vary from program to program, but in general only those with feasible business ideas and a workable business plan are admitted. It is this factor that makes it difficult to compare the success rates of incubated companies against general business survival statistics.

Incubators in India

Agro Industry: Last Decade

Indian Agro: Farm output bounces back

Has Indian agriculture turned the corner? Official data on crop production as well as consumption of key farm inputs suggest so.

The accompanying table shows output trends for major crops over three periods: 1995-2000, 2000-2005 and 2005-2010 (April-March). For each of these five-year periods, the average production has been taken, in order to minimise the impact of unusual year-to-year fluctuations arising from the vagaries of weather.

A clear picture emerges. The early half of this decade was pretty bleak for agriculture, with output stagnating or rising only marginally in most crops, and declining in the case of oilseeds and pulses.

Turnaround time

However, the subsequent five-year period – roughly coinciding with the United Progressive Alliance (UPA) in office – has witnessed a reversal of fortunes in foodgrains, oilseeds and sugarcane. In some crops – cotton, maize, potato and onions – the production increases have been quite significant. Even milk has posted a bigger jump relative to the preceding period.

The evidence of a turnaround is further borne out when one looks at the ‘input' side. There has been a robust rebound, for instance, in tractor sales and consumption of fertilisers, reflective of higher demand originating from farms.

Part of the overall improved agricultural performance is explained by higher yields. This is particularly apparent in cotton and maize, where Bt technology and increased penetration of hybrids have made a difference.

But equally, if not more, important has been the role of prices. During 2005-06 to 2009-10, the average wholesale price index (WPI) for ‘food articles' went up by 40.76 per cent, which was more than the 24.14 per cent for ‘all commodities'.

It was the other way round in the previous five years, where the cumulative general WPI inflation of 20.30 per cent exceeded the 9.27 per cent of food.

Twin bonanza

The more favourable terms of trade for agriculture in the recent period are likely to have induced farmers to ramp up output, just as the earlier lower relative prices may have discouraged expansion of cultivation. The combination of higher production and better price realisations has, in turn, helped boost rural incomes.

That still begs the question: Why have food prices spiralled so much despite the farm sector staging a revival of sorts during the UPA regime (unlike the earlier period when prices ruled soft even in face of stagnant production)?

The answer could lie in the increased purchasing power accompanying higher economic growth rates over the last 5-6 years. This has led to a situation where food production is now having to keep pace not just with rising population (as in the past), but also rising incomes.

Demand-pull

The growth in the purchasing power base may have made prices more volatile than before – with the result that even a 10 per cent production shortfall nowadays translates into a 100 per cent price increase. Onions are a live example of this.

NEW PRODUCTS: Foster's mineral water

Foster's mineral water launched in AP:

SABMiller has launched packaged mineral water and soda under its beer brand Foster's, in the Andhra Pradesh market. The Company now seeing mineral water and soda as a core business segment, unlike earlier when it was surrogate brand for them. Andhra Pradesh is a second largest market after Tamil Nadu in the segment. The products, which were available in 10 other States since 2007, are priced at Rs 15/litre of mineral water and Rs 10/500 ml of soda in Andhra Pradesh, SKOL currently operates 10 bottling plants across the country and they are planning to set up five more plants in Orissa, Goa, New Delhi and Chennai over the next four months. The company aims to sell at least 60,000 cases a month in the State.

FMCG INDUSTRY2011

Spate of price hikes spells good fortune for FMCG industry

FMCG players seem to be regaining their pricing power, with Hindustan Unilever taking price increases of 5-8 per cent in soaps and detergents, Dabur India hiking prices by 3-4 per cent and Britannia Industries 5-10 per cent on select brands of biscuits over the past six months.

After dealing with rampant inflation, bruising competition and parsimonious consumers in 2009 and 2010, listed players in the fast-moving consumer goods (FMCG) segment can now look forward to an easier year ahead.

A 20 per cent increase in Corporate India's wage bill, strong hiring plans and a good monsoon may put consumers in a mood to spend more lavishly on FMCGs this year.

Rural, wage push to demand

As escalating food prices took a bite out of the consumer wallet for much of 2009 and 2010, leading FMCG companies were forced to cut selling prices in categories such as detergents, hair oils and biscuits to drive volume growth.

FMCG behemoth Hindustan Unilever closed 2009-10 with a decline in its sales, while the top line for the 12 leading listed players crept up only by 2 per cent.

Demand rebound

However, demand for FMCGs appears to be on the rebound in recent months.

For one, with food price inflation subsiding from a peak, consumers are beginning to again experiment with ‘aspirational' products, pushing up sales for skin care products, health supplements and processed foods in the recent September quarter.

Two, the good monsoon and a rebound in agricultural output is helping rural demand for the bread-and-butter FMCGs such as soaps and shampoos.

Players such as Dabur India note that rural sales of shampoos and toothpastes grew at higher rates than urban sales in the April-September period. Colgate Palmolive, Hindustan Unilever and Dabur, who derive over half of their sales from rural India, may be the key beneficiaries of this.

Sales growth for the listed FMCG companies thus averaged a reasonable 10 per cent in the first half of 2010-11, aided mainly by better sales volumes.

What could also keep the higher FMCG demand going is the fact that Corporate India is back to handing out handsome wage hikes.

For the first six months of 2010-11, the combined wage bill of the listed BSE 500 companies shot up by 20 per cent, putting an additional Rs 17,000 crore in the hands of its workforce.

This income buoyancy seems to be allowing FMCG makers greater freedom to pass on rising input costs to their consumers.

In fact, with input costs rising, soap and detergent selling prices have already been pegged up by 5-6 per cent, coconut or hair oils have seen prices rise by 10-13 per cent, and biscuits by 5-10 per cent in the last six months.