How to Convert Small Business Challenges in India Into Opportunities for Growth

February 3, 2017, Posted By : Team Yomillio

Around 90% of the 98,000 or so new small businesses that launch every year in India don’t survive. But the businesses who manage to get past the challenges have huge opportunities to grow in the world’s largest democracy with 1.3 billion people as your home market.

Small Business Opps and Challenges Image1The recent growth of Indian MSMEs and increasing number of startups highlight these opportunities that exist. As per data from the Ministry of Micro, Small & Medium Enterprises, the growth of MSMEs is pegged at 18.74%. These 2.6 crore businesses, which produce a total of over 8,000 products, now contribute 38% to India’s GDP, and account for 40% of exports and 45% of India’s manufacturing output. The country now has more than 19,000 technology-enabled startups, led by consumer Internet and financial services firms.

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  • Are you facing regional barriers to growth?
  • Are you an SME facing challenges such as getting funding from formal channels?
  • Are your applications and projects being delayed by corruption and red tape?

These are common challenges, but the good news is that there are opportunities to grow here that you need to grab quickly.

Regional Divide – Small Business Opportunities and Challenges

The Challenge: India is a large country with 122 major languages across 29 states and 7 union territories. There are geographic and cultural barriers that a growing small business has to overcome when trying to cross state and regional barriers. If you are a small business in Karnataka, how do you establish branch offices in cities across Tamil Nadu, Kerala, and Andhra Pradesh?

The sheer distance and limited resources to reach these new markets makes it hard expand business beyond one’s local region. Add to this the lack of knowledge about language, culture, local and state government rules and regulations, licenses required, etc.

The Opportunity: Make use of the web and online B2B networks such as Yomillio to connect with businesses/partners in other cities and states. Get their help to sell your products and reach a large base of customers before you even set foot in any city.

Small business opportunity #1 – “Join Yomillio to expand to other cities without investing much.”

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What you get: Sales leads. Apply for Funding. Avail Business Support Services.

Funding – Small Business Opportunities and Challenges

The Challenge – Starting a business in India involves a whole lot of red tape if you don’t have funding and the right contacts. If you go to a government bank or agency that provides small business funding, you may be filling up loan application forms and other paperwork for months.

Private and co-operative banks process loan applications much faster, but they won’t take any risks. NBFCs and government banks that do SME lending facilitated by credit guarantee schemes like MUDRA are the most appealing option for someone who wants to start or grow a business but doesn’t have the assets or credit history required to get loans from banks.

The Opportunity – Small businesses can make use of new government incentives such as PM Narendra Modi’s announcement that working capital loan for digital transactions is being hiked from 20% to 30% of turnover. Amount for which you can get credit guarantee under MUDRA has been hiked from 1 crore to Rs. 2 crore, and it now covers both banks and NBFCs.

Furthermore, we need to realise that with demonetization the cash deposits with banks have gone up and hence their have access to more fresh capital which they can give out as loans to businesses.

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What you get: Sales leads. Apply for Funding. Avail Business Support Services.

Small business opportunity #2 – “Go digital and start accepting card payments to get more small business financing from government schemes, banks and NBFCs.”

Corruption & Red Tape – Small Business Opportunities and Challenges

The Challenge – If you go to a government office to apply for a license, you could be going round different tables for months. A little hard cash greases the wheels and your application moves forward much faster.

The Opportunity – Post-demonetisation, taking bribes and hoarding black money is a lot harder for government officials since they are now being forced to accept digital payments. This is a golden opportunity for small businesses to get their applications and projects approved quickly.

Small business opportunity #3 – “Ride the demonetisation train to get fast approval for licenses and projects.”

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