In the knowledge economy, commercial organizations deal with more and more intellect and less and less material. As the critical component in a product/service value proposition is knowledge, professionals like to strike it on their own/partner with fellow professionals rather than serve a large company because of high margins in the service sector. Generally, professionals are highly skilled because of their academic background and rich work experience that is being leveraged to offer value-added service in a niche area. These individuals have enjoyed key positions in different organizations/verticals in the past and intend to apply that knowledge and skills in serving corporate clients in increasing revenues or decreasing costs or adding value. Professionals deeply engage with clients on a retainership basis that gives a steady income for a definite period of time (generally 6 months to 12 months). They also help other clients in one and done deals that provides one-time income. Hence, professionals have a regular source of income from one set of clients to meet operational expenses and another set of clients who seek their advisory services in consideration for a decent fee.

Generally, professionals have a head start because fee-based services that they offer do not require any serious funding. The initial set up costs of a professional firm involves office automation such as computer hardware, software, photocopiers, fax, and printers including rental advance paid to the landlord. This capital expenditure is met either through savings or hire purchase or personal loans. It takes lot of grit and determination to establish a professional practice requiring strong networking skills with people who matter. The teething troubles of a professional firm because of an erratic flow of income makes it difficult to sustain the operations. Most professionals learn the basic tenet – No Network, No Work through the school of hard knocks. To reap synergistic benefits every professional require: participation in seminars, workshops, and symposiums; subscription to journals and magazines; contribution to content in print, electronic, and print media; entertain fellow professionals; and visit clients frequently by being flexible on location to share their valuable thoughts and practices. All these recurring expenses of a professional firm are usually met through swiping credit cards for any kind of purchase, entertainment, and travel needs.

In order to scale up the practice and to take it to the next level, a firm needs to hire more professionals. It is a highly people-intensive and knowledge-driven business activity warranting attracting, nurturing, and retaining talent. A small firm will not have enough cash flow to attract strong minds nor can offer partnership upfront. Hence, most professional firms stay small and local and cannot scale up to become regional or national players. Banks are also not supporting the growth of these organizations as this is not a material-intensive activity that can be offered as collateral to raise short-term working capital. Loans cannot be extended to the firm as they are not asset-driven. Professionals avail loans in their personal capacity to fund the organizational activities making it the most expensive format of doing business. Group Funds are the most appropriate as they provide greater flexibility to save and borrow simultaneously and optimally.