1. Overview of Small and Growing Businesses (SGBs) and better livelihood for the poor
According to Varhad Research, Small and Growing Businesses (SGBs) are growth oriented firms
employing between 50 and 250 people with capital requirements between USD1-5m. The owners of
SGBs are the people who are ready to tap potential opportunities with professional help. The Varhad
Group can help the SGBs raise funds which remove the hurdle of SGBs access to finance, human
capital, business development and capacity building. With growth, the SGBs can provide
employment to skilled and unskilled workers. According to Global Poverty Research Group (GPRG),
UK, SGB employees earn 75% higher than self – employed entrepreneurs which helps bring the poor
out of poverty through stable incomes, in addition to providing many more jobs indirectly.
The small and medium enterprises provide over 60% employment and over 50% to the GDP, but it is
observed that microenterprises and large enterprises are predominant in developing countries and
not small and medium enterprises. This gap is called the ‘missing middle’.
Source: Harvard (http://www.hks.harvard.edu/centers/cid/programs/entrepreneurial-finance-lab-research-initiative/the-missing-middle)
Due to extreme poverty, the people work in various kinds of jobs for survival. However, such works
do not allow the people to improve their skills and are not sustainable. SGBs on the other hand can
provide jobs that are sustainable and the workers can perfect their skills. It is important to note that
microenterprises do not provide sustainable employment as they are created out of compulsion
rather out of entrepreneurial ambition.
SGBs help to create 78.25% employment in low income countries and within this 86% are in the
formal sector and in spite of regulatory hurdles, corruption and poor infrastructure they are able to
grow. Investments in the SGBs will help create jobs for both skilled and unskilled workers. SGBs are
too small for banks, but, too large for MFIs to fund them; investing in the missing middle will create
positive spill over effects in the community.
Lack of access to clean drinking water, proper housing, sanitation and healthcare prevents poor from
being employed as regular employees. Due to disease prevalence in children, the daily incomes of
the poor are severely affected as they cannot go and work on account of childcare. Due to cash
inflow uncertainties, the poor cannot spend on essential items and they remain deprived as large
enterprises do not employ them, but SGBs can employ them.
There are 365 – 445m SMEs out of which 70% do not avail banking facilities even though in countries
such as India which mandates the Priority Sector Lending, where certain credit needs to be allocated
to sectors with social benefits. Similarly, CSR funds of large corporations, banks, financial institutions
and insurance firms can be used in capacity building of SGBs. The Varhad Group intends to pull out
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2. 1m people out of poverty through 1,000 SGB billionaires’ (direct and indirect employment). The
social impact of the SGBs can be studied in collaboration with business schools and bring in
additional business to SGBs through the Public Procurement Policy, which is expected to create
sustainable jobs for 1m people from 1000 SGBs.
Methodology:
To understand the impact SGBs have on the livelihood of the poor, a survey is made from a sample
of 4,000 small and medium enterprises (SMEs). For the study, a ten percent of the total sample, that
is, 400 SGBs are studied in detail. The surveying team visits each SGB and interacts with the
promoters and the skilled and unskilled employees of the SGB. As a Sustainability Study Project, the
students of selected business schools will be allotted the live projects, where they will get an
opportunity to learn and study the social impact of SGBs in uplifting the standard of living at the
base of pyramid. Out of the total 400 SGBs, 50 SGBs will be studied in greater detail where 5 SGBs
can be allotted to 10 teams, each team consisting five students. As a part of their project, the
students will study the positive effects that SGBs have in improving the livelihoods of the poor. They
can interact with the promoters of the SGBs and this will be a huge takeaway for the students in
terms of gaining practical knowledge of how sustainable businesses make profits but at the same
time improve lives of many by generating employment and giving stable incomes.
The survey will be conducted using data collected from the employees how their lifestyle was before
they work with the SGB and the improvement that has taken place after they work with the SGB.
The target employees of the survey will be employees who have worked for at least three years so
that the improvement in income levels of these employees can be assessed. In addition to
understanding the rise in income levels, the study will try to find out as to how improvements in
incomes have helped the poor raise their standard of living. More importantly, the study aims to
understand how the lives of the employees have improved after they have started working in the
SGBs. The students will be provided with a questionnaire having a set of questions that guarantees
anonymity to the respondents, but have a detailed list that will help in understanding where the
employees worked before, what was their living conditions, etc.
Live Project on
SGBs
Livelihood
improvement of
employee
Correlation with
increase sales
and income
Total Sample
4000 SMEs
Income
evaluation of
SGB employees
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© 2013 by The Varhad Group. All rights reserved. No part of this document may be reproduced or
transmitted in any form or by any means without prior written permission of The Varhad Group.

3. The interaction with the promoter will centres around the growth in revenue through increase in
sales. With increased sales, the SGBs will be in a position to increase the profit after tax. This will
allow the SGBs to grow and expand it businesses. An SGB, being a growth focused enterprise will
seek out the best talent and will also invest considerably to train and improve the skills of its
employees. Since the SGBs need to attract talent, they offer competent compensation to the
employees earn competitive with the industry. This is accomplished through a good human
resources team and policies that works in the best interests of the employees and the SGB. With
proper employment policies in place, the employees have access to stable income. The SGB, as a
part of governance initiatives can create bank accounts for the employees for salary payment. This
will allow the employees to have greater access to bank credit facilities which will help them
improve their livelihoods.
Page 3 of 3
© 2013 by The Varhad Group. All rights reserved. No part of this document may be reproduced or
transmitted in any form or by any means without prior written permission of The Varhad Group.