Hello readers, Today we are in conversation with Mr. R.Narayan who is the Founder of Power2SME ,this startup is empowering small and medium enterprises So lets see how this visionary does the same.
Tell us a little bit about “POWER2SME”.
Ans: Power2SME is the first ‘Buying Club’ for SMEs in India that started its operations in 2012. The company focuses on the small and medium business enterprise segment and its vision is to “Empower SMEs to enable the India growth story”. As the Buying Club for SMEs, the company focuses on reducing their purchase prices and increasing productivity. Power2SME strives to ‘empower’ small and medium businesses by ensuring that its customers can focus on their core business of driving growth and expansion, while it takes on the role of sourcing input raw materials for the SMEs at the most competitive price points across multiple products in categories like Polymers, Metals, Chemicals, Inks and Paints etc.
What inspired the creation of “POWER2SME”?
Ans: The idea to start Power2SME came about during my experience with the SME community on the field. I used to deal with both the SME and enterprise segments during my previous stints. I have seen price quotations that have been sent to an SME as well as a large enterprise, for the same product, where the variance was to the tune of 20-45%. This was mainly due the size of the orders and SMEs’ weak negotiation power. With 70% of the Indian job market powered by SMEs, I felt this was an unfair gap between SMEs and enterprises. In 2009, I conducted research with the help of IIM-Lucknow students which validated this notion of unfair advantage enjoyed by corporates. At that point in time, I decided to build a portal where SMEs could submit their requirements and I would buy on their behalf.
Moreover, getting SMEs online wasn’t much of a problem because of the e-commerce era that has emerged over the last 2-3 years. The widespread adoption of the internet has given a large number of individuals the option to search for options and order/procure items for their personal needs via the internet. A large number of these individuals are people who work at senior levels at these SMEs.
What is your target audience and why?
Ans: The target audience for Power2SME include Small and Medium Enterprises (SMEs) with turnover ranging from Rs 5 crores to Rs 250 crores.
The influence of SMEs is strong in the current Indian landscape, where they play a big role in generating employment opportunities, contributing to aggregate investment, as well as to the promotion of innovative ideas. It is Power2SME’s aim to help unlock the potential of these SMEs, whose progress is so critical to the India growth story. SMEs stimulate private ownership and entrepreneurial skills, help diversify economic activity and make a significant contribution to exports and trade.
What is unique about your company?
Ans: Power2SME is the first ‘Buying Club’ for SMEs in India. The company has an innovative business model that enables it to focus on procuring raw materials for SMEs at competitive price points, thereby enhancing productivity and impacting the bottom line of SMEs in a positive manner.
Power2SME has taken specific steps to better understand the pain areas of the SME community and address them. We realized that one of the biggest challenges for the SMEs is the lack of availability of adequate and timely credit. To address this, we have tied up with NBFCs and banks to assist the SMEs with the working capital requirements.
The services offered by Power2SME go beyond match making. We procure directly from the manufacturers, taking title of the goods and then sell directly to end consumer organizations. We offer a 24×7 online platform and take complete ownership of the entire order process for the customers, from ensuring a quality supplier pool, availability of raw materials across locations, best possible prices, transparency in billing and order tracking flexible payment options and door step delivery.
What problem does your company solve?
Ans: As the Buying Club for SMEs, the company focuses on reducing their purchase prices and increasing productivity. Power2SME strives to ‘empower’ businesses. It ensures that its customers can focus on their core business of driving growth and expansion, while it takes on the role of sourcing input raw materials for the SMEs at the most competitive price points across multiple products in categories like Chemicals, Inks, Paints, Metals, and Polymers etc. The company can help SMEs make considerable savings in their raw material procurement, thereby impacting their bottom line in a positive manner.
We are strong believers in the potential of India’s SME market, and we have a long term vision of empowering SMEs by helping reduce their purchase costs and cater these SMEs across multiple sectors. SMEs are facing numerous challenges related to pricing of raw materials, quality of the products purchased and lack of options in the materials purchased, therefore, our customers count on us to overcome these problems. Our business allows SMEs to compete on an equal footing with large enterprises.
Power2SME caters to raw materials across multiple categories like Chemicals and Additives, Inks, Paints, Metals, Polymer Commodity and Polymer Engineering. Through an online portal, as well as dedicated online and offline marketing, Power2SME helps SMEs in India to increase their profits, by providing access to cheaper prices as well as the financing for raw materials.
Who are the founders and key team members?
Ans: I am the Founder and CEO of Power2SME. My senior management team includes some of the best talent in the industry.
These include –
- Sumit Bhatia– Senior Vice President, Business Operations
- Deepak Gupta– Vice President, Business Development
- Deepak Gupta– Vice President and Head, Finance
- Preeti Marwah- Vice President and Head of Human Resources
- Sudha Sarin – Advisor, Marketing & Communications
- Nitish Pande– Technology Head, Power2SME
What relevant domain experience do they have?
Ans: Our Management team has huge experience and expertise in their respective fields. They have extensive experience in working with start-ups and entrepreneurs. The SMT is a good mix of experienced professionals across industries. These are professionals with proven track record of excellence in their fields. The SMT understands the pulse of the SME industry that helps in overall business strategy of the company.
What risk are you facing?
Ans: Power2SME’s biggest risk has been with regards to the acceptance of its business model. The SMEs function on the traditional supply chain model and it was difficult to convince them about the value proposition of the Power2SME’s business model and how it can affect their bottom line positively.
Earlier Powe2SME had been operating as the sole service provider in this category. We are expecting more entrants in this market. With new entrants, there are new strategies that need to be devised as competitors can try multiple different strategies to compete with us ranging from under-cutting on prices to selective customer targeting. We will need to be innovative and move at a rapid pace to counter emerging competition. The new players will add to the risk.
What is your greatest competitive advantage?
Ans: Buying Clubs for SMEs’ raw material is a unique concept and enjoy an early mover advantage. We have been unable to identify another player operating with this business model in India so far. There are several similar concepts globally but they focus on providing discounts on services. To the best of our knowledge, there is no such business operating in the direct raw materials space internationally. Our services go beyond match-making, which is the focus of the majority of the current online business websites for the SME sector. We procure directly from the manufacturers, taking title of the goods and then sell directly to end consumer organizations. We take complete ownership of the entire order process for the customers, from ensuring a quality supplier pool, best possible prices, flexible payment options and door step delivery.
What has been your most effective marketing technique?
Ans: To market the services of Power2SME, a mix of offline and online marketing strategies were devised. Digital marketing includes SEO & SEM marketing. We have been following multiple off-line routes to reach customers including on the ground sales, providing a dedicated call center and alliances with leading industry bodies & organizations focusing on SME. An ongoing, strong, PR campaign has also contributed to creating awareness about Power2SME and the SME sector. Major media organizations’ such as The Economic Times, CNBC TV18, Dainik Jagran and The Times of India all look at the SME story regularly. The PR campaign for Power2SME successfully met this media demand for stories by highlighting the innovative solution, entrepreneurship track record and funding success of Power2SME. We are also engaging with government, government affiliated bodies and industrial associations to form Private Public partnerships, to build more momentum around the SME initiative.
What outsiders have been most important to your business (eg. Mentors, bankers etc.)
Ans: The most important contributors to our business have been our investors- Kalaari Capital, Inventus Capital Partners and Accel Partners. Our investors have shown confidence in our business model, time and again.
We are thankful to the Members of the Board who have invested their time into their business. They have also supported us with valuable suggestions for the business as and when required.
What is your advice to young entrepreneurs starting today?
Ans: My only advice to the young entrepreneurs starting today is to believe in their idea and their dreams. They should follow their dreams with passion and conviction and take up every roadblock as a challenge.
How has been your journey so far as an entrepreneur?
Ans: I believe in the power of ideas, new business models and testing new waters while setting up a business. The origin of Denave came from the realization that large IT companies required business services and there was hardly any player in the industry to cater to such needs. It was an open territory, and the need for sales enablement was growing fast in India. Thus, companies in several sectors reached out to Denave, to take care of their sales programme in Tier 1 to Tier 4 cities for both B2B and retail sales.
Similarly, the idea to start Power2SME originated when I saw a huge disparity in the market while dealing with the SMEs. The business model is simple, wherein we leverage the internet to request the SMEs the share their requirements. We aggregate these raw material requirements across SMEs and procure them from the suppliers, that are reputed brand names in their own specific industries, at a much affordable price point and ship them raw materials to the specific SMEs.
In both case, I recruited people right at the beginning for managing the day-to-day operations of the business. In case of Power2SME, I also realized the benefits of having an investor in the early stage.
I would like to continue with my journey and transform obstacles into opportunities for businesses in India and thereby, help boost the growth of the Indian economy.
Where do you see yourself and your venture 5 years from now?
Ans: The company intends to be a Rs 150 crores company by the end of 2014-15 and a $ I billion company in the next 5 years. It has plans to open offices in Madhya Pradesh, Andhra Pradesh and Karnataka in the near future and increase its presence to pan India in the next couple of years.