The Hindu Business Line : Small professionals rely on savings for initial funding: Survey

While 44 per cent of the 175 respondents in India said they would pass the business on to professional management, around 33 per cent of them will let their children take over.

Mumbai , Dec. 16

Four out of 10 small business professionals in India plan to grow their business and have professional managers take it over, says a survey conducted by the Economic Intelligence Unit of The Economist.

The survey, which was sponsored by Citibank, has been conducted among 677 small business professionals in India, Hong Kong, Singapore, South Korea and Malaysia. While 44 per cent of the 175 respondents in India said they would pass the business on to professional management, around 33 per cent of them will let their children take over. Around 10 per cent of the respondents said they would sell their business.

The professional segment defined for the survey was an enterprise with an annual turnover of less than $10 million. For initial funding or seed money, India's small professionals rely on savings (50 per cent) while financing from a bank is the second option (24 per cent). Owners who bought the business tend to source their working capital from retained earnings (50 per cent). Those who start the business, however, rely on a variety of sources — retained earnings (33 per cent), a bank (24 per cent) and personal savings (16.4 per cent).

Red tape

Indian respondents in the survey, however, see red tape as a problem. Half the respondents asked for a reduction in bureaucratic procedures for licences, registration and financing. In other Asian markets, 40 per cent said the Government should reduce red tape.

Citibusiness customers

Citibank on Friday launched the "Citibusiness Power Access", which is a network of 11 service providers for customers to access.

"Citibusiness customers" can have deals and discounts on DHL, eOffice Planet India Pvt Ltd, Fortune Hotels, Hewlett Packard, Cox&Kings and Avis Rent-a-Car.

Mr Rajiv Jamkhedkar, Head-Personal Loans and Business Banking, Citibank, said small business loans contributed around 35 per cent of the bank's total retail assets of over Rs 15,000 crore.