LEDS would work for the economic empowerment of small producers and micro-entrepreneurs by assisting them in capacity building and in establishing enterprises and collectives of excellence, using market based strategies and by making available professional management and incubation services.
It is estimated that 50-60% of microenterprises established as livelihood interventions in India does not reach breakeven levels and tend to become defunct after a few years of operation. Even a majority of the ones that survive do not generate adequate profits, and therefore do not make meaningful contribution to very purpose for which they were established. This scenario poses a challenge to the logic of using microenterprises as tool for poverty alleviation. Various studies among micro-enterprises in India found the following to be major reasons for the underperformance of enterprises:
- Inadequacies in general management
- Unavailability of forward and backward linkages
- Lack of appropriate quality assurance mechanisms
- Inability to effectively market their products
- Access to finance
- Management of working capital
Addressing these issues is critical in improving the success rate of enterprises and to help new and existing enterprises do better business and thereby improve earning capacities. The most critical area where intervention is needed is in creating mechanisms that nurtures and promotes enterprises through a process of mentoring and handholding in functions related to planning and operations. Many of these functions- Planning, Technology, Finance, Marketing, Sales & Human Resource management- are specialised in nature, and small enterprises often do not possess the wherewithal to execute them effectively. As such, there was a need for an agency that incubates the enterprises by executing these functions for them, till such time as they would become independent and self sustaining.LEDS was created to execute this role.
LEDS would provide end to end solutions to microenterprises and their clusters as below:
- Enable individual enterprises to operate profitably by assisting them to execute specialised functions (such as procurement and marketing) effectively.
- Enabling similar enterprises to cluster and scale up to leverage scale economies and resources.
- Building a sustainable value chain for the clusters by facilitating vertical integration (developing forward and backward linkages in the areas of procurement, production, technology, marketing, branding, etc)
- Providing capability building in appropriate areas.
- Creation of appropriate organisational structure for the cluster based on co-operative principles, and institutionalisation of professional management in the organisation.
- Mentoring and handholding this organisation till such time as it develops best-in-class systems, processes and capability in diverse areas to carry on its own.