E-Book January 2020

START YOUR SMALL BUSINESS IN SMALL TOWN
DISCLAIMER
 This Document (E-Book) has been developed with the primary objective to
introduce the subject-matter as one of the possible career options among the
aspiring entrepreneurs of small towns and to provide them with a general
understanding of the concept thereby supporting in crucial investment
decisions.
 This Document (E-Book) is also expected to provide general guidance to

carry viability analysis by the stakeholders in the process of identifying most
suitable Business Idea.
 The Document (E-Book) has been compiled through extensive desk research
referring the secondary data relevant to the subject-matter collected from
various reliable sources including Policy Guidelines, Newsletters, Magazines,
Research Articles, Journals and Study Reports etc. and also downloaded
from many websites as well as blogs available in the Internet.
 Although due care and diligence has been carried out while developing this
Document (E-Book), the prospective users of this Document (E-Book) are still
encouraged to carry out additional diligence seeking professional guidance
from qualified field experts for making an informed decision.
 The team members of “Dollar Power Projects” have been developing

Business Documents in diverse areas of business interests under non-profit
social advisory model to disseminate and to assist the unemployed
youths/aspiring entrepreneurs in identifying suitable business opportunities
while contributing in generating employment in the local economy. However,
the team members of “Dollar Power Projects” do not assume any liability for
any financial loss or other loss in consequence of undertaking any business
proposition indicated in the Business Documents being published.
TABLE OF CONTENTS
CHAPTERS CONTENTS Page
No.
CHAPTER-1 INTRODUCTION 1
CHAPTER-2 PONDERING ABOUT STARTING A SMALL BUSINESS 4
CHAPTER-3 BUSINESS AND EMERGING TRENDS IN BUSINESS 6
CHAPTER-4 THE EASE OF DOING BUSINESS IN INDIA 10
12 BENEFITS TO START-UPS BY INDIAN 11
GOVERNMENT
CHAPTER-5 SMALL TOWNS MAKE SENSE FOR BUSINESS 13
THE BUSINESS ENVRIONMENT IN SMALL TOWNS 13
BENEFITS OF STARTING A BUSINESS IN SMALL 14
TOWNS
POTENTIALITY OF SETTING UP BUSINESS HOUSES IN 15
SMALL TOWNS
CHAPTER-6 START SMALL TO STAY LONGER 17
IMPORTANT BENEFITS OF STARTING SMALL 18
CHAPTER-7 BASIC STEPS FOR STARTING A BUSINESS 19
EXPLORING THE BUSINESS IDEAS 19
DECIDING ON BUSINESS IDEAS SUITABLE FOR SMALL 22
TOWNS
PREPARING A PLAN OF ACTION 24
CHAPTER-8 DEVELOPING A BUSINESS PLAN 30
CHAPTER-9 IMPORTANT TIPS FOR SMALL BUSINESS IN SMALL 32
TOWNS
KEEPING UP WITH EMERGING BUSINESS TRENDS 34
CHAPTER-10 BENEFITS FROM POLICIES AND SCHEMES 35
CHAPTER-11 LEGAL AND REGULATORY ASPECTS 37
CHAPTER-12 STANDARDS AND LICENSES 40
CHAPTER-13 FINANCING YOUR VENTURE 42
FACTORS DETERMINING FIXED CAPITAL 42
FACTORS DETERMINING WORKING CAPITAL 43
SOURCES OF CAPITAL 44
TIPS FOR SECURING A BUSINESS LOAN 45
CHAPTER-14 MANAGING LOAN REPAYMENT 48
CHAPTER-15 HOW TO AVOID DEFAULTING ON YOUR BUSINESS 50
LOAN
CHAPTER-16 MANAGING A BUSINESS 52
CHAPTER-17 GROWING YOUR BUSINESS 54
WORK WITH RIGHT PROFESSIONALS 55
CHAPTER-18 MOST COMMON REASONS OF SMALL BUSINESS 56
FAILURE
CHAPTER-19 50 PROFITABLE BUSINESS IDEAS FOR SMALL 59

TOWNS
RETAIL BASED BUSINESS IDEAS 60
SERVICE BASED BUSINESS IDEAS 67
DEMAND BASED BUSINESS IDEAS 80
CHAPTER-20 CONCLUSION 86
CHAPTER-1
INTRODUCTION
Moving from small towns or villages to bigger cities has been the norm since time
immemorial owing to limited job opportunities in Indian small towns and villages. As
per survey findings in India, 25-30 people migrates every minute towards big cities in
search of jobs, livelihood, better income or better business opportunities. One can
visit a Railway Station or Bus Station in mega cities to witness the epic occasional
rush of the home-travellers especially during festivals such as Diwali, Holi and Eid
etc.
Image Source: Downloaded from Internet
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But due to the rapid growth of urban population both natural and through migration,
many Cities in India are already under the pressure of overcrowding, urban air-
pollution, unbearable summer heat, water-logging problem, peak-hour traffic
congestion, urban crimes, reduced living standards etc. The sheer magnitude of the
urban population, haphazard and unplanned growth of urban areas and a desperate
lack of infrastructure has put heavy pressure on public utilities like housing,
sanitation, transport, water, electricity, health, education and so on. Air-pollution is
hitting city life like no other health or environmental crises ever before. City doctors
say it is suppressing our immunity, making us vulnerable to respiratory disorders,
heart attacks, cancer and is reducing the overall life expectancy. Considering the
unpleasant experiences of City Life, a growing number of people are choosing to
move out of big cities either going back to their roots or moving to sparsely populated
good small towns. Call it disillusionment with city life or the availability of better
opportunities in smaller towns/ rural areas, ‘reverse migration’ is a trend that is slowly
catching on in India.

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India is among the emerging markets with huge potential as suggested by the
country’s current business environment. The huge potential of India lies in the fact
that it offers a very large customer base to tap into. With the population of India
running into the billions, the scope this offers is tremendous. Thus, the purchasing
power capability of India makes it an area of immense potential and offers a wide
array of avenues to pursue. Such favourable situation offers tremendous
opportunities for entrepreneurs to start up new business and expand the old one.
The opportunities are available in almost all sectors at initiation level as well as
expansion level. The Indian government is also contributing to create opportunities
through “make in India”. Thus, entrepreneurial opportunity is becoming very popular
among many and playing a big role in reverse migration in India.
These days business is not limited to big cities only but small towns and rural areas
too. Moreover, small towns are not small anymore as they are becoming a hub for
low cost businesses to run excellently and gain good profits. Due to internet and
other options, small business start-ups are flourishing even in the small towns. In
fact, there are thriving marketplaces in these towns with urbanesque spaces like
supermarkets, beauty parlours and gymnasiums. They have private schools, medical
clinics, a variety of fast-food eateries, modern tailoring shops, mobile and electronic
stores. Small towns are potentially the biggest market for consumer goods as well as
for e-commerce companies. There’s also the fact that small towns make for such
thriving business centres due to better availability of resources, lower infrastructure
costs and a low attrition rate. Investors say that entrepreneurs from small towns
appear to be more charged to succeed and willing to put in the hard works to make
their start-ups flourish.
Small businesses are plans that needs low investment and can be started by small
town people. But starting a business without planning where you want to reach is like
starting a car journey with no idea of your final destination or a map to get there;
you’re bound to get lost. Many business ideas end up in complete failure as they are
unable to produce the desired results despite all the efforts put in by the founders
sacrificing their personal life, hard-earned savings, career and professional
aspirations to accomplish something. A lot of mistakes are committed by new
businesses rushing into things without pondering the critical aspects of the business.
Business failure because of poor planning is completely avoidable. Once you know
what kinds of planning you should do before you start your small business, it's just a
matter of educating yourself and getting it done.
No matter what type of business you start—selling physical products, offering up

your services on a contract basis, building a digital product, or launching a start-up—
there are going to be ups and downs. When going into business for yourself, it's
incredibly important to set realistic expectations so that you're not winding up
disappointed with your progress after the first few months of growing your customer
base. Though the procedure for setting up a business is not the same for all types of
businesses, there are certain steps which you have to take and some of the
preparations you should make before starting any small business. In this compilation
as an E-Book, a humble attempt has been made to orient the prospective
entrepreneurs about the important basic steps in setting up of a small business unit
in Small Towns.
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CHAPTER-2
PONDERING ABOUT STARTING

A SMALL BUSINESS
Things are changing in India as more and more people are coming forward to fulfil
their entrepreneurial dream and starting small businesses. Gone are the days when
people were happy merely with just their jobs. Most interestingly, a sizeable number
of Indian youths are opting entrepreneurship as preferred career option nowadays.
Few choose to venture out on their own right on completion of their formal education
and few dream to start after bagging sound experience as starting own business is a
dream for the majority of Indians. One of the best things about pursuing a career as
an entrepreneur is the wide-open possibilities. The possibilities in entrepreneurship
are endless and the rewards can be high too.
Thousands of people set up their own business every year. Some do it because they
want to work for themselves, others because they have a great idea and have
spotted a gap in the market. These are all valid reasons for starting a business.
Different people may have different reasons to start their business, but some of the
most common alluring factors and intrinsic motivations for today’s entrepreneurs
include the following;
 Opportunity to Make a Difference in the World,

 Opportunity to Reach One’s Full Potential,
 Opportunity to Create One’s Own Destiny,
 Opportunity to Reap Impressive Profits,
 Opportunity to Help Others achieve their Goals,
 Opportunity to Contribute to Society,
 Opportunity to Accomplish Something Great,
 Opportunity to Live a More Flexible Lifestyle,
 Opportunity to Build a Sense of Security through Financial Gains,
 Opportunity to Leave a Legacy.
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The current Indian economic climate is ripe with opportunity for individuals ready to
strike out on their own with a great business idea. With more small business ideas in
India popping up in the scene and people taking an interest, starting a business has
gained a lot of popularity among masses. People are not only ready to take up the
risk but are also ready to do anything that it takes to make their business successful.
Here are some reasons why you should consider starting a small business.
 India has the world’s third largest number of start-ups.

 The Indian government now provides easier and faster licensing for new
businesses.
 Capital for small businesses is readily available from various sources.
 Indian universities churn out staggering five million graduates from various
streams every year- which makes competition for good jobs very difficult.
 The Indian society no longer attaches taboos to business. People with own
small businesses are as respected as those holding stable jobs.
You can start your own business on the side with just a few hours a week and no
experience—even if you have a full-time job. Starting your own business on the side
is one of the most powerful ways to take control of your life and make extra money
month after month. As said, the part of best of all is that you get to choose your
hours, pick projects you find exciting and meet interesting people. And therefore,
getting started isn’t that hard.
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CHAPTER-3
BUSINESS AND EMERGING TRENDS IN BUSINESS

When we talk about business we usually think of selling something to a customer
and getting money back in exchange. If our business is successful we will make a
profit, which means that the income we receive from selling products or services will
be greater than the costs we have incurred in producing them.
A business enterprise is an economic institution engaged in the production and/or

distribution of goods and services in order to earn profits and acquire wealth. The
scope of a business is very wide. It includes a large number of activities which may
be classified into two broad categories i.e. Industry and Commerce. Production of
goods is the domain of 'Industry' and distribution comes under 'Commerce'.
To make the business sustainable and profitable there are two important
criteria that must be fulfilled:
1. The business should not harm or degrade the environment in any way. If it does
so it will not be able to continue to operate in the long run.
2. The business must be profitable – this means that the income from the goods or
services sold must be greater than all the costs paid out for materials, labour, rent
and other expenditure.
There are always risks involved in running a business. Perhaps an insufficient

number of customers are prepared to buy your products, or they may think the price
you are asking is excessive. In this case your revenue will be small and there will be
no profit generated. The product or service might be difficult to manufacture or
provide or its quality might be inferior – which again may mean it is difficult to sell.
You run a critical risk if it is unclear who is responsible for different tasks in the
business and if everyone concerned does not agree about how things should be run.
You can minimize risks by preparing and planning everything properly in advance. If
you plan carefully together with stakeholders who would be involved in the business
concerned, the chances of being successful would be much higher.
EMERGING TRENDS IN BUSINESS
As technology continues to evolve, new business issues emerge in the corporate world every
passing day that business leaders never had to deal with before. Climate changes are inspiring
new corporate commitments to sustainability. New generations are bringing new values to the
forefront. The emergence of these tide-shifting changes redefines the way business is conducted
and profits are realised. As technology continues to evolve, new issues emerge in the corporate
world every passing day that business leaders never had to deal with before. Climate changes are
inspiring new corporate commitments to sustainability. New generations are bringing new values
to the forefront. The emergence of these tide-shifting changes redefines the way business is
conducted and profits are realized. These changes are referred to as business trends.
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Although the elements of these trends have been around for years, the trends
themselves emerge when the timing is right and when several factors come together.
Now let’s discuss to explore all the latest business trends and their effects in society.
Following are the emerging trends of carrying business and understanding them may help you to
redefine your go-to-market process to capitalize on the new reality.
 Network Marketing
 Franchising
 Business Process Outsourcing (BPO)
 Aggregator
 Knowledge Process Outsourcing (KPO)
 Digital Economy
 E-Commerce
 M-Commerce
Network Marketing : Network marketing is basically a medium of marketing that

manufacturers use to expand their sales. In simple words, it is a method of marketing
that utilizes independent representatives to reach potential customers that a
company otherwise would not reach with traditional online or offline marketing
methods. Network marketing distributors purchase products at wholesale prices and
may either use discounted products themselves or retail the products to others for a
profit. In addition, distributors receive a commission for their ‘personal volume’, which
is the value of every product they personally buy or sell. Further, distributors receive
a net commission on the total turnover they had created from their group personal
volume.
Network Marketing is a type of business opportunity that is very popular with people
looking for part-time, flexible businesses. Network marketing programs has an
advantage of minimum upfront investment-usually only a few hundred rupees for the
purchase of a product sample kit and the opportunity to sell a product line directly to
friend, family and other personal contacts. Some of the best-known American
companies in India are Avon, Oriflamme, Tupperware, Amway and so on, fall under
the network marketing umbrella.
Franchising : Franchising is a term which defines the business relationship between

two organizations where a franchiser, who is the owner of a brand name, product, or
system of a business, permits a franchisee to use its brand, product, or business
process for a fee. The right granted by a franchiser to a franchisee is given under a
special agreement known as the Franchise Agreement. A franchiser may have such
agreement with more than one franchisee.
Franchising is a great way to expand a business without incurring additional costs on

expansion. This is because all expenses of selling are borne by the franchisee. This
further also helps in building a brand name, increasing goodwill and reaching more
customers. A franchisee can use franchising to start a business on a pre-established
brand name of the franchisor. As a result, the franchise can predict his success and
reduce risks of failure. Furthermore, the franchise also does not need to spend
money on training and assistance because the franchisor provides this.
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Business Process Outsourcing (BPO) : Business Process Outsourcing, popularly

known as BPO, is the business strategy where one company hires another company
to perform a certain task for them, i.e. they outsource a certain job. Say for example
a manufacturing company will outsource their supply chain management to another
company who specializes in supply chain management. So it essentially entails
outsourcing one or more non-core business activities or processes to an external
service provider. So there are two parties involved, the client company (the
outsourced) and the external service provider or the vendor (the outsourcer)
One point to note here that only non-core activities are usually outsourced. The
companies do not part with their core competencies, they maintain all their focus on
these like manufacturing, marketing etc. However non-core services like after sales
service, customer relations, supply chain management, real-time accounting etc. can
be outsourced to BPOs.
Aggregator : The term finds its origin in the word aggregate, meaning to combine,
amalgamate or bundle up together. So an aggregator is a website or application that
amalgamates homogeneous information or content from the internet. This makes it
easier for the end user to navigate and find the required information from the web.
Nowadays, we witness a big boom in the world of digital marketing. All the big
companies and brands of the world have their own website. They also use social
media (Twitter, Instagram etc.) for advertising and promotions. They have online
brochures and inquiry forms. So a potential customer or internet user has to browse
through many pages and information to fulfil his purpose. And this is where
aggregators step in.
Knowledge Process Outsourcing (KPO) : Knowledge Process Outsourcing

(KPO) means information related business task or knowledge-based processes such
as research, analysis, consultancy or any other high-level task are outsourced i.e.
done by the workers of another company or allocated to the subsidiary of the same
organization. These subsidiaries can be in different countries or geographical
location. This is done in order to save resources and costs. KPO firms can take
decisions of businesses on the behalf of the parent companies. KPO is nothing but
the subset of Business Process Outsourcing (BPO). Cost-effectiveness, access to
the best talent, focus, better utilization of the resources are the advantages of
Knowledge Process Outsourcing (KPO).
Digital Economy : Digital economy is one collective term for all economic
transactions that occur on the internet. It is also known as the Web Economy or the
Internet Economy. With the advent of technology and the process of globalization,
the digital and traditional economies are merging into one. It essentially covers all
business, economic, social, cultural etc. activities that are supported by the web and
other digital communication technologies. Digital economy has given rise to many
new trends and start-up ideas. Almost all of the biggest companies in the world
(Google, Apple, Microsoft, Amazon) are from the digital world. Let us look at some
important merits of the digital economy.
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E-Commerce : The standard definition of E-commerce is a commercial

transaction that takes place over the internet. E-commerce is also known as
electronic commerce or internet commerce. These services provided online over the
internet network. This involves the transaction of goods and services, the transfer of
funds and the exchange of data etc. These business transactions can be done in
four ways: Business to Business (B2B), Business to Customer (B2C), Customer to
Customer (C2C), Customer to Business (C2B). The standard definition of E-
commerce is a commercial transaction which is happened over the internet. Online
stores like Amazon, Flipkart, Shopify, Myntra, Ebay, Quikr, Olx etc. are examples of
E-commerce websites.
E-commerce provides the sellers with a global reach. They remove the barrier of
place (geography). Now sellers and buyers can meet in the virtual world, without the
hindrance of location. One other great advantage is the convenience it offers. A
customer can shop 24×7. The website is functional at all times, it does not have
working hours like a shop. It provides quick delivery of goods with very little effort on
part of the customer. Customer complaints are also addressed quickly. It also saves
time, energy and effort for both the consumers and the company.
M-Commerce : M-Commerce or mobile commerce refers to the buying

and selling of goods and services through wireless handheld devices such as mobile
phone and personal digital assistants (PDAs). To put it in simple words, M-
commerce entails the e-commerce transactions done with a mobile phone. So M-
commerce is the use of mobile phones to conduct any type of business transaction.
It takes the help of the e-commerce background and WAP technology.
M-commerce is actually a rapidly growing sector of e-commerce. Nearly 70% of the

online transactions that occur in India happen from mobile phones. Globally it is a
700 billion dollar industry. It provides a very convenient and easy to use the system
to conduct business transactions. Mobile commerce has a very wide reach. A huge
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part of the world’s population has a mobile phone in their pocket. So the sheer size
of the market is tremendous.
CHAPTER-4
THE EASE OF DOING BUSINESS IN INDIA

The strong reform driven approach initiated by the Government of India in the recent
past, has strengthened economic progress and even made the smaller cities and
towns as the favourable breeding ground for the start-up ventures. Therefore,
business and starting up is no longer a big city phenomenon.
The government is very passionate about facilitating the ease of doing business in
India. Some of these initiatives include Start-up India which aims to help promote the
start-up culture in India. In addition, India encourages developing an ecosystem of
entrepreneurs, investors, along with incubation centres linking up with research
institutes as well as mentorship programs, tax and fiscal benefits and patent
registration rights reform. These create a system that helps start-ups help each other
to grow and promote the make in India initiative. Along with this, the government
encourages investment in start-ups with the removal of tax on angel investments and
cutting down taxes on Foreign Venture Capital in Indian Start-ups. Many start-ups
have sprung up all across the country in last few years in a wide variety of sectors of
the economy such as Agriculture, IT, Financial Sectors, Healthcare and Biotech
etc. With the addition of over 1,100 start-ups in the year 2019, India has continued to
maintain its position as the third-largest start-up ecosystem in the world, according to
the industry body NASSCOM.
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12 BENEFITS TO START-UPS BY INDIAN GOVERNMENT :

The Government of India introduced a wide array of incentives and many benefits to
the entrepreneurs establishing business (also known as start-ups) in order to
generate employment, promote growth and help Indian economy. Start-up India
Scheme is an initiative by the Government of India and was launched on 16 th
January 2016. Benefits of Start-up India Scheme includes Simplification of Work,
Financial Support, Eligibility for Government tenders and Networking opportunities.
Let us understand more about benefits of Start-up India.
1. Equal Opportunity : Equal opportunities will be provided to both start-

ups and experienced entrepreneurs. Earlier this was not possible because all
applicants required either ‘prior experience’ or a ‘prior turnover’. But now, public
appropriation norms have been relaxed for start-ups.
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2. Simple Process : Start-up India enables companies to register through

their mobile application and upload relevant documents for easy registration for
start-ups. Anyone interested in setting up a start-up can fill up a simple form on
the website and upload certain documents. The entire process is completely
online. There will also be single window clearances for approvals, registrations
and filing compliances among other things.
3. Reduction in Cost : Patent filing approach has been simplified. The Start-up
will enjoy a rebate of 80% of the fee in the patent application. The start-up will
bear only the statutory fees and the government will bear all facilitator fees. The
government also provides lists of facilitators of patents and trademarks. They will
provide high quality Intellectual Property Right Services including fast
examination of patents at lower fees.
4. Easy Access to Funds : A 10,000 crore rupees fund is set-up by

government to provide funds to the start-ups as venture capital. The government
is also giving guarantee to the lenders to encourage banks and other financial
institutions for providing venture capital.
5. Tax Holiday for 3 Years : Start-ups will be exempted from income tax for 3
years provided they get a certification from Inter-Ministerial Board (IMB).
6. Apply for Government Tenders : Start-ups can apply for government

tenders. They are exempted from the “prior experience/turnover” criteria
applicable for normal companies answering to government tenders.
7. R&D Facilities : The Start-up India programme will encourage research and
innovation among students who are aspiring entrepreneurs and seven new
research parks will be set up to provide facilities for start-ups in the R&D sector.
8. No time-consuming Compliances : Various compliances have been simplified

for start-ups to save time and money. Start-ups will be permitted to self-certify
compliance (through the Start-up mobile app) with nine labour laws and three
environmental laws. In the case of labour laws, no inspection will be
conducted for a period of three years.
9. Tax saving for Investors : People investing their capital gains in the venture
funds setup by government will get exemption from capital gains. This will help
start-ups to attract more investors.
10. Choose your Investor : After this plan, the start-ups will have an option to
choose between the VCs, giving them the liberty to choose their investors.
11. Easy Exit : In case of exit – A start-up can close its business within 90 days from
the date of application of winding up.
12. Meet other Entrepreneurs : Government has proposed to hold 2 (Two) start-
up fests annually both nationally and internationally to enable the various
stakeholders of a start-up to meet. This will provide huge networking
opportunities.
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CHAPTER-5
SMALL TOWNS MAKE SENSE FOR BUSINESS
Small town is neither a village, nor a city. Usually, a small town is considered to be
an urban centre with a population of 50,000 people or less. It is an economic
parlance representing the area providing liaison between rural centres and urban
places of significance. It is here that the forces of demand and supply converge. In a
country like India where agriculture and other primary activities engage more than 70
per cent of population necessarily requires settlements to bridge rural and urban
functionaries. The small towns constitute more than 60 percent of total number of
towns in India.
Small towns don't necessarily mean small business opportunities. If you're able to
launch a business that meets the needs of a small town while providing friendly
service, a small-town business can become a successful and lucrative venture.
Small towns offer business benefits like limited competition and lower operating
costs.
The Business Environment in Small Towns is characterised by following

favourable situations:
1. Abundant natural resources including land, water, minerals and solar power as
well as wind power.
2. Local Government extends supports and necessary infrastructure facilities like

Commercial/Industrial Plot/ Industrial shed, Power, Water etc. are made available for
a nominal charge.
3. Lower tax burden increases the competitive strength for starting a business.
4. Availability of labour particularly of semi-skilled and unskilled type is easy and

wage rates are comparatively cheaper.
5. Small Towns are free from air pollution or are less polluted.
When getting into the world of business, entrepreneurs may be tempted by the ultra-
modern atmosphere of the metropolitan cities or other large urban landscapes.
However, many advantages and plethora of benefits exists in small towns too for the
aspiring business owners.
Advantages:-
 You don’t have to pay your employees as much as you pay them in
metropolitan cities because the cost of living will be less and they will also be
happier living in their home towns.
 Everybody will live a stress-free, healthy and peaceful life. And it will also help
infrastructure development at your workplace
 From office rent to labour, everything will cost you less and in a way, will
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increase your profits.
Myths:-
 Skilled labour is a problem in Small Towns. So many people who work in

metropolitan cities are from small towns. Just get in touch with people and you
will realise a lot of skilled people are working at different places, leaving their
hometowns.
 A Metropolitan start-up has higher possibilities of success. This is not
true. In most cases, your idea and hard work is what that makes your start-up
successful, and not its location.
Having a business in a small town doesn’t necessarily mean that your business
would run slowly. Small town businesses all over are delivering large orders in a big
way. Let’s take a look at few benefits of starting a business in Small Towns.
1. More Affordable To Start Up : Starting a business in a big city can often require
a lot of costs up front. Real estate prices often match the size of the city, so your big-
city locations will be accompanied by big-city rates. That’s not to mention the cost of
living for you and your employees, nor the cost of doing business, with undoubtedly
more regulations, fees, taxes and potentially higher supply costs. Also, things like
marketing and advertising will also be much higher in a large city, due to your need
to stick out above the competition. However, starting in a small town community will
be far cheaper in almost every way. The land will be cheaper, as will renting or
leasing space. Of course, you should still do your own research on the area you
are considering starting a business in order to ensure that the prices are suitable for
you.
2. Networking Opportunities : The aspiring business owner can’t deny the

benefits of effortless networking. Word-of-mouth promotion is a pillar of any new
business and welcomed heartily by those who understand the benefits. Since
everybody knows everyone in a small town, connecting with the decision makers and
the leaders within a community comes much easier when the area has years of
history and trust between families and individuals.
3. Less Competition : One of the most obvious and most beneficial

advantages of starting a business in a Small Town is the lack of competition. While
you may certainly have a greater pool of potential customers in bigger cities, you
might come across numerous other competitors of various sizes that provide the
exact same service you do which would make it difficult for you to get market share.
Your brand can easily be overshadowed, or just simply lost in the wide swath of
other look-alikes. But in a small town, you may often have the opportunity to be the
first business of your type in the area, creating not only a more loyal customer base,
but also the standard by which all other followers would be measured.
4. You Might Be Closer to The Raw Materials You Need : When most people
think of a rural community area, you might think of farms and the growing/production
of materials. As a result, if your business needs or uses a certain type of material, it
makes a lot of sense to start your business very close to those resources. This could
be anything from using wood for carpentry, using fruits to make jams or jellies, and a
wide variety of other things.
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5. Community Support : The community support found among community

members of small towns is often much greater. A deep sense of collaboration, desire
to support local businesses and pride in the community strengthen the likelihood of a
business’s success. If you develop a solid product or service, offer good customer
service and a friendly attitude, you could develop customers for life in a small
community. They are normally very loyal and will likely continue to be your customer
as long as you maintain the same quality and service they expect.
6. An opportunity to Help the Economy of a Small Town : When you start

another business in a metropolitan city, you are likely not doing much for the
economy of that city, as there are already thousands and thousands of
entrepreneurs in those cities. However, when you start a business in a rural
community area, you are directly helping that small town to stay afloat. Not only that,
but entrepreneurs in small towns can have a variety of other positive effects on these
communities. Locally-owned businesses have been statistically associated with
higher income levels, less income equality, lower poverty and unemployment levels
and so much more.
7. Better Quality of Life : Traffic! Pollution! Crime! We know it’s not impossible to
navigate the difficult hurdles of big-city life, but it’s not easy. Small town living brings
a sense of belongingness, greater community involvement, a slower pace and less
unrest within the economy, all resulting in better quality of life.
8. Future Opportunities : Whether you seek it or not but being an entrepreneur

lands you the opportunity to share from your experience and make a positive
difference in the direction of the community.
Potentiality of setting up Business Houses in Small Towns

Not every start-up or company can work in small towns, but the ones that can be
more profitable and employment-friendly can surely be started. Here are some
justifications;
1. Start-ups should be started at Small Towns :
If you are planning to launch a start-up that would work for clients abroad or if your
office work only happens in a cubicle with no clients visiting your place, then try
starting your company in a small town than a metropolitan city. This will surely give
others a lot of employment opportunities.
2. MNCs should not stick only to Metropolitan Cities :
MNCs should start opening their offices in small towns, especially IT companies
which play a significant role in our county’s economic growth, and provide many
employment opportunities. A background check of employees who are already
working at MNCs would give the statistics of people belonging to small towns.
Companies like Infosys have already set an example by starting a training centre in a
city like Mysuru. If a lot more companies made this possible by getting into non-
metropolitan cities all over India, it would lead to more peaceful lives for many more
people.
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3. BPOs should give it a thought :
It’s high time that BPOs are established in small towns and cities. BPOs look for
good communication skills and there are lot of people from small towns who are
qualified enough to work there. And since everything happens through a phone or a
system, there will be no issues and the place of work won’t really make a difference.
When Start-ups or MNCs etc. start moving to small towns, many other business
vendors, from petty Chai-Wala to Vegetable seller, Rickshaw-Wala to Taxi driver,
Grocery stores to Super markets, will start moving to small towns. In practice, this
change can’t happen overnight, but at least a thought from entrepreneurs and start-
ups will surely make a large difference. The spreading of industries even in small
towns and villages would encourage the habit of thrift and investment among the
people of rural areas.
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CHAPTER-6
START SMALL TO STAY LONGER

Dripping water hollows out the stone, not through force but through persistence. So
don’t underestimate the power of starting small. Small efforts sustained over time
can produce significant results. In fact, starting small is one of the most powerful
hacks successful people used to create extraordinary results in their lives. Every
great organization starts with a single employee, every great author starts with a
single paragraph, every great athlete start from winning his local competitions and
every singer starts from singing in front of the mirror. You don’t have to afraid of the
situations; neither have you to wait for the perfect condition. It’s time for you to shake
your mind, body, and soul to set you on the journey of dreams. Thus, start small and
take little actions that will lead you to your ultimate destination. Therefore, Think Big,
Dream Big, but Start Small.
Everyone wants their business to be successful, with multiple locations, lots of

employees and loads of revenue, but you have to learn to walk before you can run.
Overtrading is the biggest cause of running out of cash and business failure. A
common example is having too high a level of stock; you might still be selling but
there is too much cash tied up in stock and the income is not coming in fast enough
to cover your costs. If this affects your ability to pay loan charges, a lender or creditor
may start to get concerned and call in the debt or cease supplies. Don’t spread
yourself too thin or take on too many expenses at the beginning, especially if your
income might take a while to catch up to your ambitions.
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By starting small, you ensure that you can survive the inevitable hiccups associated
with running a small business. Those entrepreneurs who begin with modest
operations can recover and learn from their mistakes without taking on a lot of debt.
If possible, self-fund your business idea and then go for funding when you can create
a growth story. This might cause you to break up your product/service offering into
smaller pieces so you can fund the early stages and get some traction and
experience. Starting small will help your small business grow into a successful
enterprise.
Here are 3 most important benefits of starting small;

1. Tighter control on Finances and Overhead : A traditional business may
have a large staff and office space that really isn't needed for maximum growth and
productivity. One of the first things we look at when a client is struggling with cash
flow is their overhead and look for ways to reduce their recurring costs.
 Do you really need a full time bookkeeper or could you do just as much by
outsourcing the task to a third party?
 How much money is spent on IT and HR to manage your staff of thirty? Could
that money be spent elsewhere to grow your business?
 Do you really need a full time sales team or could you outsource it when you
launch a new product or in times of expansion?
2. Higher chance of Success : Eight out of every ten businesses fail within the
first five years. However according to the findings of research studies, 62 percent of
very small size businesses are over five years old." So it stands to reason that the
smaller the footprint, the higher the chances are for success over the long haul.
3. Ability to Scale and Grow Responsibly :And the third reason, Small
businesses are a good idea, has to do with scaling and growing responsibly. As your
business grows, you are going to pay close attention to your profit margins and
adjust accordingly. It is much easier to hire as you go, then to downsize to maximum
profits. So by starting small and making smart decisions, you can grow into your
business.
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CHAPTER-7
BASIC STEPS FOR STARTING A BUSINESS
Some people might think that it is very easy to start a small business if you have
sufficient amount of money for the business. Talk to any entrepreneur or small
business owner and you'll quickly learn that starting a business requires a lot of
work. It requires so many decisions and steps to be taken at various stages. You
have to take decisions about the nature of business, location of business and
sources of raising necessary capital. You also have to take a decision regarding
physical, monetary and intellectual resources. Generating a business idea is a great
starting point, but an idea doesn't become a business without effort. Some budding
entrepreneurs understand the effort necessary to create a business, but they might
not be familiar with the many steps required to launch a business venture.
If you are also thinking of starting up a business, there are certain basic steps which
may be followed though the procedure for setting up a business is not the same for
all types of businesses. Let us discuss about some of the important steps in setting
up of a small business unit.
A) Exploring the Business Ideas :

Establishment of a successful business unit begins with choosing a good idea for the
business. This idea may be to produce something new or existing product, to buy
and sell a new or an existing product; or to provide some existing or new service to
the customers. But the question arises as to how you would decide on the product
and the type of business activity you should take up.
While selecting a particular product you have to conduct market and product analysis
from the viewpoint of consumers. The data on consumers’ preference and needs are
to be collected by using various market research techniques. You may survey the
local area to find out the demand for any product. If the existing demand is
substantial or growing in the area then you may consider to select that particular
product. You may also foresee some new opportunities expected to arise in near
future due to any change in social, political and technological activities. The various
developmental initiative of the Government also generate other related activities. In
any case, the selected venture must have the scope for a reasonable quantity of
sales volume and the possibilities for growth.
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A.1. Sources of Ideas: A business idea may be discovered from the following
sources:-
i) Observing Markets: Careful observation of markets can reveal a business idea.

Market surveys can also reveal the demand and supply position for various products.
It is necessary to estimate future demand and to take into account anticipated
changes in fashions, income levels, technology etc. Competition and price trends
can also be analysed through market surveys. From the data collected through
market observation, one can identify the products/industries which are in demand
and which require increase in supply. A promoter can then find out the most
profitable line of business.
ii) Prospective Consumers: Consumers knows best what he wants and the
habits/tastes which are going to be popular in near future. Contacts with prospective
consumers can also reveal the features that may be converted into a
product/service. These days good business firms generally conduct a survey among
prospective consumers before choosing the product to be manufactured.
iii) Development in other Nations: People in underdeveloped countries generally

follow the trends of developed countries for example new feature products which are
being used and are successful in the market and are imported from those countries.
Therefore, an entrepreneur can discover good business idea by keeping in touch
with developments in advanced nations.
A.2. Study of Project Profiles: Many government and private agencies publish
periodic profiles of various projects and industries. These profiles describe in detail
the technical, financial and market requirement and prevailing position. A careful
scrutiny of such project profiles is very helpful in choosing the line of business.
i) Government Organisations: Several government organisations nowadays assist

entrepreneurs in discovering and evaluating business ideas. Development banks,
state industrial development/investment corporations, technical consultancy
organisations, export promotion council etc. provide advise and assistance in
technical, financial, marketing and other areas of business. Government also
identifies the priority sectors for investment through five year plans and industrial
policy resolution guidelines for perspective entrepreneurs.
ii) Trade fairs and exhibition; National and international trade fairs are a very good
source of business ideas. A visit to these fairs provides information about new
products/machines. Trade fairs and exhibitions provide opportunities for assessing
the market trends in terms of demand potential and type of products required. It also
helps in assessing the attitude of the competitors in a particular product or marketing
area.
A.3. Process the Ideas: Once business ideas are discovered, screening and testing
of these ideas is carried out. The following considerations are significant in the
evaluation and testing of business ideas.
i) Technical Feasibility: It refers to the possibility of producing the product. Technical

feasibility of an idea is judged in terms of availability of necessary technology,
machinery, equipment, labour skills and raw materials. The advice and assistance of
technical experts may be necessary to judge the technical feasibility of various
business ideas.
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ii) Commercial Viability: A cost benefit analysis is required to ascertain the

profitability of the ideas. An elaborate study of market conditions and prevailing
situation is made to assess the viability and prospect of the proposed projects. A
number of calculations have to made about the likely demand, expected sale
volume, selling price, cost of production, break-even point etc.
After preliminary evaluation of the idea, the promising idea is subjected to a thorough
analysis from all angles. Full investigation is carried out in the technical feasibility
and economic viability of the proposed project. Financial and managerial feasibility of
the ideas are tested. At this stage, a lot of information is required. Consultations with
experts in various area of the industry may be necessary to carry out the detailed
analysis.
After the evaluation of a business idea is completed, the findings are presented in
the form of a report known as Feasibility Report or Project Report or Business Plan.
This report helps in the final selection of the project. It is also useful for procuring
licenses, finance etc. from the concerned agencies.
A.4. Idea Selection: The Feasibility report is analysed to finally choose the most
promising idea. Generally the following considerations influence the selection of idea
for a product or service:-
i) Products whose imports are banned or restricted by the government.

ii) Products which are surplus in production and can be exported easily.
iii) Products whose demand exceeds their supply so that there exists ready demand.
iv) Products which shows high profitability.
v) Products for which incentives and subsidies are available.
vi) Products favoured by the govt. industrial/licensing policy.
vii) Products based on the expansion or diversification plans of existing firms of the
family/friends/relatives.
After considering the various factors an entrepreneur should analyse and compare
pros and cons. A selection matrix may be prepared for this purpose. The matrix
indicates the type of diverse data that needs to be collected for each project. It also
throws light on each item that hold some encouraging and some discouraging
factors. The entrepreneur must consider all these factors into account.
A.5. Input Requirement: Once the promoter is convinced of the feasibility and
profitability of the project, he assembles the necessary resources to launce the
enterprise. He has to choose partners/collaborates, collect the required finances,
acquire land and buildings, plant & machinery, furniture and fixtures, patents and
employees etc. Decisions have to be made about the size, location layout etc. of the
enterprise. The form of ownership organisation has to be selected. The main inputs
required for launching enterprise are as follows;
i) Information and Intelligence: In the turbulent business environment, information

and intelligence have become the key input in entrepreneurial success. An
entrepreneur requires relevant data on the following aspects:
 Size and nature of demand for the product/service.
 Volume and source of supply.
 Price cost volume relationship.
 Sources of raw material.
 Nature and degree of competition.
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ii) Personnel: People are the most valuable asset of an enterprise and this asset
does not appreciate. An entrepreneur has to make the following decisions
concerning the personnel;
 Number of personnel required for management, technical and other positions
in the enterprise.
 Qualifications and experience required in the personnel to perform the jobs
effectively.
 Sources of recruitment from which the needed staff will be procured.
 Procedure and methods of selecting the best candidates.
 System and criteria for evaluating the performance of employees.
 Procedure and methods of selecting the best candidates.
 Policies and methods for remunerating the personnel.
 Facilities to be provided by the safety, health, welfare of the staff.
A.6. Establish the Enterprise: This is the last step of entrepreneurial system. It is
very important step. In this phase the entrepreneur integrates the resources and
establishes the enterprise.
B) Deciding On Business Ideas Suitable For Small Towns :

Following are some important points to consider while deciding on Business Ideas
suitable for Small Towns;
B.1. Pay attention to fields that are always in Demand : There are particular
business niches that don’t depend on seasons and crises. For example, people will
always eat and drink, get dressed, take care of themselves and visit doctors.
Basically, everything concerning people’s daily routines and principal needs will
involve businesses that are “recession-proof.” Analyse the availability of shops
and pharmacies in your area. Is there a supermarket in your neighbourhood, or do
you need to go across town? Figure out what is missing and what is already in place,
and then explore how your skills and experience can fill the gaps.
B.2. Consider Purchasing Power : You’ll probably agree that selling certain
exclusive, expensive items may be high-risk. Sophisticated fashion boutiques, car
showrooms, VIP beauty salons, venues like these won’t be a success in every small
town. Similar start-ups may not be good business ideas for small towns because of
the high risk. Instead of getting a profit, you could lose money.
B.3. Attract Tourists : Tourist towns have their own advantages. Look at the
cosy little stores, workshops, cafes and family businesses in small European towns.
You can choose to follow this line in your hometown and turn your business into a
local attraction. You could promote local traditions and crafts, combining them with
souvenirs or unique dining experiences.
B.4. Can you create a Business to provide Scarce Services : Scarce

resources aren’t exclusive or hard to find items. For example, many small towns
have few affordable entertainment options that cater to adults and kids. Consider
opening an open-air movie theatre, DIY or Cookery classes, provide camping
programs or even open an arcade centre. Figure out what your town is missing and
give it to the people!
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B.5. Go Online : Today the Internet gives business owners more opportunities,
so why not grab them? The type of business and its target audience affects online
results, so before you start make sure you’ll be able to take full advantage of this.
You can be in your small town and operate through online. Keep your small business
feel, while using the internet to reach a broader audience. But, make sure that you
keep a special space for your locals, offer discounts for locals or personalized
services that you can’t find on your site. For example, if you’re thinking about
opening a farm food store, maybe it’s worth complementing the business with a
website and delivery service. Right away, the online presence and delivery service
will make you stand out from your competitors. At the same time, you’re providing
additional opportunities for scaling up your business later. Once your website gains
some traction you can use advertising as a stream of passive revenue.
B.6. Businesses based on Local Products : The idea is that you buy from the
local community and then sell those goods in bigger towns or cities at higher prices.
As a rule, local produce (fresh vegetables, fish and farm produce) is relatively
inexpensive. Popular options for businesses based on local products revolve around
food items such as fresh-baked bread, farmed vegetables or locally harvested
honey.
B.7. Small-scale Production : You can produce goods for sale in other cities or
within your town. This could be anything including furniture, metal working products
or even soap. Use your imagination and explore your town’s market. You’ll likely find
a niche quickly! On a special note, production costs in a small town tend to be much
cheaper.
B.8. Franchise Options : This type of business is called franchising. This

means you no longer have to create a business from scratch but instead, you
represent a brand. Franchises are now offered by many well-known brands from fast
food to high-end retail. Essentially, you open a store and handle things such as
overhead costs and staffing. However, the corporate end of the business will
often provide marketing materials, metrics for success, and inspect your location to
ensure it meets brand standards. Franchise opportunities usually require paying a
percentage to the corporation that’s permitting your franchise to operate.
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C) Preparing a Plan of Action :

Once you have selected a specific product and decided to establish a business unit,
you will have to prepare a plan of action. You will have to decide in advance each
and every step you are going to take in that connection till it starts functioning. It will
be helpful in avoiding delay at the initial stages of starting business. The following
aspects of the action plan should be kept in view before deciding on the course of
action.
C.1. Nature of Business: At first, decision is to be taken about the nature of

business. To decide about the nature of business you want to launch, you have to
consider the following factors:
i. Whether the business would be profitable;
ii. How much capital would be required;
iii. What would be the degree of risk;
iv. Whether there would be sufficient market demand for the goods; and
v. Whether there would be opportunities to grow and expand.
The above factors will help you to decide as to which line of business you can
successfully pursue.
C.2. Choice of Business Organisation Forms: In starting a business in India,

choosing the right forms of business organization is important. Each type of
organization has its own merits and demerits. The right choice of the forms of
business organization is very crucial because it determines the power, control, risk
and responsibility of the entrepreneur as well as the division of profits and losses.
Being a long term commitment, the choice of the form of business should be made
after considerable thought and deliberation. Although you can change your
ownership type at any time, you should decide carefully, experts agree, because the
form of business you choose will affect the way you file paperwork, face personal
liability, pay taxes and, if necessary, file for bankruptcy protection.
In choosing the right forms of business organization for your enterprise, you must
consider the characteristics of an ideal form of organization. These are as follows:
 The formation process should be easy and simple. The formation should not
involve many legal formalities and it should not be time-consuming.
 The form of organization should facilitate the raising of the required amount of
capital at a reasonable cost. If the enterprise requires a large amount of capital,
the preconditions for attracting capital from the public area) safety of
investment b) fair return on investment and c) transferability of the holding.
 A business enterprise may be organised on the basis of either limited

or unlimited liability. From the point of view of risk, limited liability is preferable.
 The responsibility for management must be in the hands of the owners of the
firm. The day-to-day operation and management operations should take care
of properly.
 Stability is essential for any business concern. Uninterrupted existence enables

the entrepreneur to formulate long‐term plans for the development of the
business concern.
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According to the desired parameters, choosing the right forms of business

organisations is most crucial in starting any business. Following are some of the
forms of business organisations those can be registered in India;
 Sole Proprietorship;
 One Person Company
 Limited Liability Partnership
 Private Limited Company
 Public Limited Company
 Joint Hindu Family Business
 Co-operative Organisation
Forms of Business Organisation

Sole Proprietorship: A sole proprietorship company is a form of the organization
managed and owned by a single person. This form of organization is the most
popular business entity in India. This type of company is perfect for the first
generation entrepreneurs. Additionally, it is perfect for starting any small offline or
online business as such. After taking the decision, you can start operation within
15 days of time. The PAN card of the owner helps to open a current account in any
nationalized or private bank. You may require a Trade License from the local
municipal authority. And after getting the current account number, you can apply
for other licenses. Such as manufacturing license, VAT, Service Tax, IEC, FSSAI
etc.
One Person Company: A sole proprietorship company is a form of

the organization managed and owned by a single person. This form of
organization is the most popular business entity in India. This type of company is
perfect for the first generation entrepreneurs. Additionally, it is perfect for starting
any small offline or online business as such. After taking the decision, you can
start operation within 15 days of time. The PAN card of the owner helps to open a
current account in any nationalized or private bank. You may require a Trade
License from the local municipal authority. And after getting the current account
number, you can apply for other licenses. Such as manufacturing license, VAT,
Service Tax, IEC, FSSAI etc.
Limited Liability Partnership: The Limited Liability Partnership (LLP) is

essentially a general partnership in form, with one important difference. Unlike a
general partnership, in which individual partners are liable for the partnership’s
debts and obligations, an LLP provides each of its individual partners protection
against personal liability for certain partnership liabilities. In states that recognize
LLPs, a partnership qualifies as an LLP by registering with the appropriate state
authority and fulfilling various requirements. Some states require proof that the
partnership has obtained adequate liability insurance or has adequate assets to
satisfy potential claims. All states require a filing fee for registration. Additionally, it
requires that an LLP includes the words Registered Limited Liability Partnership or
the abbreviation LLP in its name.
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Forms of Business Organisation continue......
Private Limited Company: A private limited company (Pvt Ltd company) is one of
the most common forms of business organization. Any individual can carry on
business for an entity intending to make a profit and enjoy the benefits of an
incorporated entity, particularly limited liability. A private limited company stands
between partnership and widely owned public company. In addition, there are
several identifying marks of a private limited company. The list includes a name, a
number of members, shares, formation, management, directors, and meetings,
etc. The maximum number of directors shall have to be mentioned in the Articles
of Association. In the grant of privileges and exemptions, the Companies Act has
drawn a distinction between an independent private company and other private
company which is a subsidiary of the other public company.
Public Limited Company: A public limited company is a voluntary association of

members. Therefore, after incorporation, it has a separate legal existence and the
liability of whose members is limited. It must have a minimum of seven members
but there is no limit as regards the maximum number. The shares of a company
are freely transferable. Additionally, any shareholder can do this without the prior
consent of other shareholders or without subsequent notice to the company. The
liability of a member of a company is limited to the face value of the shares he
owns. Once he has paid the whole of the face value, he has no obligation to
contribute anything to pay off the creditors of the company.
Joint Hindu Family Business: In JHF business, there must be at least two
members of the family, and family should have some ancestral property. It is not
created by an agreement but by operation of law. The JHF business is a jointly
owned business. Hindu Succession Act 1956 governs this type of organization in
India. Generally, the senior most member of the family (Karta) manages the
business. Other members do not have the right to participate in the management.
The Karta has the authority to manage the business as per his own will.
Additionally, no one can raise question about his ways of managing. If the
coparceners are not satisfied, they can dissolve the HUF status of the family by
mutual agreement.
Co-operative Organization: The term cooperation means working together. So

those who want to work together with some common economic objectives can
form a society. Basically, it is termed as a cooperative society. The Section 4 of
the Indian Cooperative Societies Act 1912 defines Cooperative Society as “a
society, which has its objectives for the promotion of economic interests of its
members in accordance with cooperative principles”. In India, you can register
cooperative societies under the Cooperative Societies Act 1912 or under the State
Cooperative Societies Act. Basically, you can register the Multi-state Cooperative
Societies under the Multi-state Cooperative Societies Act 2002. Once registered,
the society becomes a separate legal entity and attains certain characteristics.
Some of the different types of co-operative organizations are Consumers’
cooperative societies, Producer’s cooperative society, Marketing cooperative
society, Housing cooperative society, Farming cooperative society, Credit
cooperative society.
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C.3. Process Selection: Once the product is finalised, choices of process

technology emerge. In some complex products, process know how has to be
imported from foreign collaboration. In such cases agreements for technology
transfer should be made with due care to safeguard one's interest. A lot of
appropriate technology is being developed at CSIR and Defense Research Labs and
some of this technology can now be bought from: Such indigenously developed
process know how intrinsic benefits such as appropriateness and relative
inexpensiveness have.
C.4. Financial Planning: A business cannot be started and run without sufficient
amount of capital. Capital is required to buy fixed assets like land, building, machines
and equipment. Capital is also required to buy raw material and meet day to day
expenses of the business like salary and wages, electricity charges, telephone bill,
carriage, etc. An estimate has to be made regarding the amount of capital required
for the various purposes and decisions taken regarding the sources and methods of
raising it. The amount to be contributed by the owners and the amount to be
borrowed from financial institutions, banks, etc. must also be decided well in
advance.
C.5. Location of Business: Where to establish a business is also to be decided in

advance. It primarily consists of decision regarding the choice of locality and
selection of site. The deciding factors usually are nearness to the source of supply of
raw material, nearness to the market, availability of labour, transportation and
banking facilities. Selection of the site also depends on cost of land, development
cost, etc.
C.6. Physical Facilities: Decisions have to be taken regarding Plant & Machinery,
equipment’s to be procured for the business, building and other physical facilities like
Water, Power Supply, and Transportation etc. The factors that may affect the
decisions in this regard are the size of business, techniques of production to be
used, availability of funds, etc.
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C.7. Unit Development: Setting up an establishment is much more than putting a

sign board up and waiting for customers to walk in. It requires negotiating a
favourable plot or shed purchase, organising for proper construction of building,
design of interiors and finding good deals for equipment and machinery.
C.8. Construction of Physical Building: Once an industrial plot for the unit is
secured, then the next job is that of finding a suitable architect. Design of factory
building has to be in consonance with the type of industry. It should also take care of
the requirement of plant layout. It should be noted again that an architect's estimate
of building construction is essential for loan applications. Further, architect's
certificate for money spent on building is needed for disbursement of loan. After the
construction of building is over the interiors are designed according to the need of
specific industry.
C.9. Getting the utility connections: Among the utilities of prime importance are
power and water. In many cases getting power connection causes delay in setting up
of plant. Therefore it is imperative to commence work on these aspects with diligent
follow up.
Power connections are generally of either LT (Low Tension) or HT (High tension)

type. If connected load is up to 75 HP, LT connection is provided. For connected
loads of 130 HP or higher only HT connection is provided. A formal application
needs to be made in a specific form to the state electricity board. An electrical
inspector is deputed for evaluation of application to factory site, after which the load
is sanctioned. In areas of power shortage, it is advisable to augment the power
supply with a captive generating set. Water connection is also obtained likewise by
applying in advance in formal forms. The water supply can be augmented by
installation of tube well.
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C.10. Machinery: Choosing and ordering of right machinery is also of paramount

importance. In many cases, technology or process provides us with specifications
which are not adequate, then an extensive techno-economic survey of machinery
and equipment available must be carried out. International trade fairs and
engineering fairs are good places to look at available options.
C.11. Plant Layout: After selecting the machinery and equipment required, it is
necessary to decide about their installation in a proper manner. This is called plant
layout. A good layout makes the operations efficient and economical. It reduces the
cost of material handling, storage of inventory, use of space etc. It helps in optimum
utilization of all resources.
C.12. Manpower: The number and type of manpower to be appointed have to be

estimated and decided in advance and the process of their recruitment, selection
and training duly planned.
C.13 Raw Materials: Raw materials are an important input for producing goods. To
maintain continuity of production, raw materials must be available in adequate
quantity and in nearby areas. On the other hand, non-availability may result in
production hold-ups, idle machine and manpower. For essential imported raw
material whose lead time are large proper planning is all the more essential. The
advice of DIC, SISI and NSIC can also be sought in this regard. Therefore, material
procurement plan should be decided in advance for ensuring their sources of supply.
C.14. Production Process and Operations: The whole production process is to be

visualized and the various activities involved in its operation are to be planned well in
advance.
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CHAPTER-8
DEVELOPING A BUSINESS PLAN

Having decided upon the product and the form of organisation, the entrepreneur has
to put his ideas and other information sought in the form of a business plan. A
business plan is meant to provide the necessary information, which may be required
for the purpose of processing and assessing the proposal for getting the financial
assistance from the financial institutions.
Effective business planning is critical to an entrepreneurial venture’s long-term

success and its ability to raise capital and grow successfully. Business planning is
the process of setting goals, explaining the objectives and then mapping out a
document to achieve these goals and objectives. A well-written Business Plan lays
out the best growth path and strategy, as well as the rationale for the selection of the
strategy over other alternatives. In essence, a Business Plan is the articulation and
explanation of why the chosen game plan for starting the business makes sense,
what resources it will need to implement the vision, who will be the appropriate team
that will have the skills and leadership to execute the vision, and what path they will
follow to get there.
Business Plan is not only essential for a start-up, but it's an important tool for
established businesses too. Viable businesses are dynamic; they change and grow.
The company's original business plan needs to be revised as new goals are set.
Reviewing the business plan can also help you see what goals have been
accomplished, what changes need to be made, or what new directions your
company's growth should take.
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A Business plan should normally include following points in detail;
Profile of the company's management - Listing the names of top executives

and their qualifications and industry experience.
Kind of Business - A brief description of the industry your firm is focusing on or

the new venture’s strategy.
Objectives - The short term and long term objectives of the new business
venture.
Financial requirements - Briefly state how much finance is required indicating

the degree of flexibility you are willing to show in case the investor suggests any
changes in your plan.
Budget allocations - How you will be using the finance.
Market Analysis - The business plan should dwell upon the prevailing
competitive environment with a view to convincing the investor that his/her
product/service is a niche product or service with substantial prospects for growth
and capable of attaining a competitive position in the market.
Environmental Influences - The impact of the environmental influences such as

political, economic, technological, socio-demographic and ecological factors that
affect your area of business.
Quality - The quality control measures to be put into place for ensuring quality of
the product/service.
Marketing - Identify the target market which should be substantiated by a

thorough market research. Once the target market has been identified, focus on
the communication strategy including advertising, branding, packaging etc.
Sales Forecast - Sales forecast is primarily dependent on three factors - size of

the market, fraction of the market you will be able to capture as a result of your
marketing strategy and the pricing strategy.
Financial Plans - A new venture must show projected profit and loss statements
and cash flow statements.
Human Resources - Make an organisation chart with details of key executives

and profiles of individuals likely to be hired.
Form of Business - Describe the legal form of your business - whether it is a sole
proprietorship or a partnership, public limited co., private limited co. or society etc.
Critical Risks - As a legal and moral obligation, the entrepreneur must, in the
business plan, envision risks the investor would be undertaking in case he makes
a choice to invest in your business. This will protect you from civil and criminal
liability.
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CHAPTER-9
IMPORTANT TIPS FOR

SMALL BUSINESS IN SMALL TOWNS
No doubt, there are distinct advantages of owning a business in small towns but
living and working in a small town is a different way of life. Many businesses that
thrive in metropolitan areas wouldn’t survive a month in a small town. Geographic
location of a business can have a big effect on its long-term viability. Hence, aspiring
business leaders must understand how to make the most out of their given location.
If you’re thinking about opening a business in a small town, following are some
important considerations to make before getting started.
Lining up Support : You'll look for support from key players of the town. Attend
town committee meetings to meet local politicians and pitch about your business to
them. Their feedback can help you determine the potential viability of your business.
Do what you can to get to know these key figures and give them copies of your
business plan.
Collaboration and Connection with the Community : No matter how hard

you are willing to work inside the business, you still need external relationships with
suppliers, people in your business network and your community. In small towns, this
may mean sponsoring local events, supporting complementary businesses and
community involvement. In a small town, joining a chamber of commerce is also a
great way to know what's going on in the community. Introduce yourself to your
community by attending important events and remember to hand out business cards
so that people remember you helped with the event. In any business, collaboration is
real ability to move people from customers to fans to friends. All businesses require
collaboration. As such, it’s imperative for any new business owner to make
connections with other business owners, local officials and as many consumers as
possible.
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Stay a Step ahead of the Market : The ingredients for success in a small
town are the same as anywhere else, but with a healthy dose of localized flavour.
Businesses that never change are now forgotten. Even if your town never seems to
change, there are always changes in trends, people and technology. Entrepreneurs
not innovating are actually losing ground. Whatever you sell through your business
but ultimately you are going to sell an experience. In today's world of social media
and the internet, people want to know who you are and what makes you outstanding
in your field. When it comes time to open your doors, be sure to make a favourable
lasting impression. Offer a special promotion to entice customers to stop by, for
example by giving away merchandise or holding a contest. You can also give the
residents a feeling of inclusion by presenting them a personalized invitation that they
can redeem for a prize upon visiting your business.
Tailor Your Message : As marketing and advertising methods have

grown more sophisticated over time, businesses have managed to tailor their brand
message to their specific customer base. And it’s only natural that companies
operating in a small town should craft a brand identity that resonates with the locals.
Hiring a few professionals who are familiar with the area can help you court
customers effectively. Lastly, business owners may also consider reaching out for
professional market research help.
Diversify Marketing Efforts : Marketing for a small-town audience is

quite different to marketing to a national customer base. Therefore, traditional
marketing techniques — like billboards, newspaper, television and radio
advertisements — can have a big impact on your sales numbers in a small town.
However, it’s also a good idea for new companies invest digital marketing. That way,
new consumers will be able to locate your business and patronize it.

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Focus on Customer : While all businesses should make the customer a

priority and adopt a customer-first mentality, small businesses in Small Towns must
treat their patrons with special attention. Remember, companies that are located in
big cities have a better chance of replacing customers over time. Businesses in small
towns don’t have that same luxury. So make it a point to focus on customer
retention at all times. For example, in a small town with no other hardware store, you
may be lulled into complacency as customers flock into your hardware store at any
price, but soon a competitor will pounce. Work to build memorable customer
experiences today, or the store may be empty tomorrow.
Keeping Up With Emerging Business Trends
Keeping up with emerging business trends can help a start-up or an existing

business. Business owners who spot trends can discover ways to innovate their
businesses to make them more profitable or to beat competitors to market with
exciting new products. Business owners may use emerging business trends to learn
how to cut costs through automation and outsourcing. Or they may learn how other
companies are adjusting to changing consumer buying habits. Keeping up with
emerging business trends is a fairly straightforward process.
1. Attend two or three industry trade shows a year. There are trade shows for
virtually every industry, from high tech to pest control. Find out about conventions
through industry organizations. Attend to learn about emerging business trends in
your field.
2. Visit other companies. Use contacts made at industry functions to schedule field
trips to study other successful businesses. Companies may not share their best
secrets, but some will talk about their success and emerging trends they have
spotted.
3. Follow consumer spending habits and lifestyle changes by reading general

interest newspapers and magazines. Successful businesses from restaurants to
airlines are always tweaking their business models to adjust to changing tastes and
habits of consumers.
4. Hire people who have worked at other successful companies -- including interns, if
you own a business. Bringing in people who have worked somewhere else is an
excellent way to find out about what other companies are doing. Even an intern who
worked for a leading Wall Street investment firm the previous summer may share
lessons learned about emerging business trends.
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CHAPTER-10
BENEFITS FROM POLICIES AND SCHEMES

The primary responsibility of promotion and development of micro, small and
medium enterprises sector lies with the State Governments. However, the
Government of India, in recognition of the potential of these sectors in both creation
of wealth and employment and the need for a countrywide framework of policies and
measures for their promotion and development, has always taken active interest in
supplementing the efforts of the State governments in several ways.
Over the years, the Central Government has formulated policy packages for the
promotion and development of the sector and has been implementing a large
number of schemes and programmes. The policies and programmes implemented
by the Ministry span across different areas of operations of MSMEs, covering credit,
marketing, technology, skill development, infrastructure development, fiscal matters
and legal/regulatory framework. These programmes are implemented through
various organisations under the Ministry, commercial banks, development banks and
the State/UT Government.
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The govt. policies can range from being relevant to multiple sectors or may be
specific to a single sector. Policies are of extreme importance as they can determine
the growth potential as well as the ease of doing business in a particular industry.
Therefore, once an entrepreneur has taken all the important decisions relating to
starting a business, they should pay sincere attention to such govt. policies.
IMPORTANT POLICIES AND SCHEMES UNDER CENTRAL GOVERNMENT
1. MSME Schemes http://msme.gov.in/sites/default/files/MSME_Schemes_English_0.pdf

2015- Ministry of
Micro, Small and
Medium Enterprises,
Government of India.
2. All Schemes under Ministry of Micro, www.msme.gov.in/all-schemes
Small and Medium Enterprises,
Government of India.
3. Ministry of Skill Development and http://www.skilldevelopment.gov.in/
Entrepreneurship, Government of
India.
4. List of Schemes, Ministry of MSME, https://dcmsme.gov.in/schemes/schemes.html
Govt. of India
5. Credit Guarantee Trust Fund for Micro https://www.cgtmse.in/

& Small Enterprises (CGT SME)
6. Schemes under Start Up India https://www.startupindia.gov.in/content/sih/en/government-

schemes.html
7. Prime Minister’s Employment https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

Generation Programme (PMEGP)
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CHAPTER-11
LEGAL AND REGULATORY ASPECTS
A.LEGALASPECTS:
It’s critical for entrepreneurs to have basic legal knowledge. While start-ups innovate
to affect society in general and laws of the land have to catch up to them, there are
specific legal aspects that an entrepreneur needs to know about. Nurturing a new
business includes many things. One such stepping-stone is knowing basics of the
start-up laws. Before diving into a deep legal sea, let’s have a look at the vital start-
up laws with which you can start the long journey.
i. Choosing the type of Venture: The most important thing while thinking of starting
a business is knowing what kind of organization you want to set up. It can be a
private limited company, public limited company, partnership firm, or a limited liability
partnership. Before taking this decision, it is indispensable to analyse and ponder
upon the practicality, visibility, sustainability, aptness and related profits that are
expected from this type of organization. Structuring the organization and business
vehicle may take some time. It will vary according to your long term objectives and
vision. Each form of business will be governed by separate laws and not complying
with them means loss in the form of heavy fines before you can even start making
profit.
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ii. Basics of accounting and tax related laws: Running any kind of business
means that one has to pay taxes to the Central/State government or local bodies.
Therefore, it becomes a necessity for every new entrepreneur to be aware about
accounting details and tricky lanes of the taxation world. Different sectors have
diverse tax laws and it is imperative to be acquainted with any recent changes that
have taken place. In fact, tax laws change according to geographical region and the
kind of business/product too. It is always beneficial to keep a record of accounts and
go through them periodically to adopt best practices. Taxation information according
to area and sector of work will help in retaining and improving the financial and legal
strength of any organization.
iii. Securities laws: Familiarity with Securities laws which is carefully regulated by
the Securities and Exchange Board of India (SEBI) will aid in easing out the process
of listing. Keeping a track of various updated regulations issued by SEBI will assist in
managing the various stages of nurturing a new business, including fund-raising.
Foreign direct investment, angel investors, crowd funding, venture capitals and even
joint ventures are areas that a new entrepreneur must be aware about.
iv. Business finance: Business finance means the way you manage your start-up’s
financial needs across its life cycle. This includes everything from FDI (foreign direct
investment), angel investors, VCs (Venture capitals) or even joint ventures. This will
take your business to the next level.
v. Labour laws: Each start-up will eventually have to hire new people. Even if you
plan to outsource or employ independent consultants, every such employee-
employer relationship will be directed by labour legislations. Breaching these will not
only harm you financially but also spreads a negative review about the start-up even
before you initiate it. Productivity of employees and ultimate success of the start-up
are dependent upon how happy your employees are to work for you.
vi. Intellectual Property (IP) laws: Legally protecting intellectual property is of

supreme importance to any business. Timely IP audits, filing the accurate
trademark/copyright/ patent claims will not only protect your business but increase
profits too.
vii. Information Technology Law: We are living in a technologically advanced era

where things like e-contracts, cloud computing, digital signatures, securing
confidential data from hackers, cloud computing, protecting your privacy are not only
very common but extremely important too. Knowledge of IT laws will help in
exploring these avenues and thus, growing your business.
viii. Contract law and dispute resolution: A business survives on contracts.

Nevertheless, disputes may be one of the unavoidable consequences of few
contracts sometimes. Therefore, fundamental knowledge regarding contracts,
arbitration, mediation, conciliation can smoothen the progress of a successful
business.
ix. Knowledge related to government contracts: This might not be extremely

necessary but a successful venture depends upon a steady flow of funds. Bidding for
government contracts can create wonderful opportunities for growth, revenues and
reputation building.
Hence, knowing about all the above legalities can help-out in smooth sailing even on
a rough sea.
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B. REGULATORY ASPECTS:
In regulatory role, the government directs businesses for their actions. This is
executed by standardizing the code of conduct, norms and regulations in domestic
environment. Government of India has the foremost objective of social welfare,
hence they control the business and economic activities in such a way that it benefits
the society and buyers. Regulating it involves ceiling the prices, rationing the goods,
imposing taxation on excess profits, allocation of foreign exchange, adding
restrictions on foreign trade, industrial licensing etc. It is mainly done by two ways:
 Discretionary Measures
 Non-Discretionary Measures
Discretionary measures involve the direct measures by the discretion of

administrative authority. These include fixation of prices of commodities, quantitative
restrictions on export or import, rationing on supplies of goods, distribution of scare
recourses for optimum utilization of resources, licensing the goods like hazardous
chemicals, defence and railways. In direct control government majorly regulates the
balance regional growth with optimum utilization of resources in a nation as a whole.
These discretionary measures are performed at micro level i.e. at the firm level or
industry level. While regulating government makes sure that interest of all sections
should be maintained. For example, no conflict among the management and labour
and labour laws should be preserved.
Non-Discretionary Measures include the control without any administrative discretion

of an authority. These measures are exercised at macro level through fiscal and
monetary policies. For examples imposing different taxes on different products at
different places, amending customs tariffs, regulating the bank interest by changing
repo rates or reverse repo rates, regulating money supply and credit creation and
granting subsidies to different industries. Government of India is sponsoring and
providing subsidies to solar and power projects for sustainable development. Hence,
non-discretionary measures are achieved by passing different laws. There are
examples of regulations like for environmental protection that envisages a wide
legislative framework covering every aspect of environment protection like air, water,
noise, forest conservation, wildlife protection, etc. The Ministry of Environment and
Forests (MoEF), is the nodal agency for regulating all such environmental aspects. It
undertakes conservation & survey of flora, fauna, forests and wildlife; prevention &
control of pollution; afforestation & regeneration of degraded areas. Every industry
has to abide by all such guidelines and parameters for environmental protection
because only this will ensure its sustainable progress and growth.
There are also regulations that relates to quality management by a firm. Bureau of
Indian standards has been set up by the Government for enforcement of quality
standards in the country. It provides a framework for quality management throughout
the processes of producing and delivering products and services for the customer.
The scheme covers a wide range of industry and service sectors. A sound quality
control mechanism ensures that a firm produces products that match prescribed
standards and thus boost the growth of the firm.
An entrepreneur has to take into account the basic regulatory requirements of the
country in order to ensure sustainability of the profits and productivity of his/her
business. These regulatory requirements ensure that the organisation is functioning
as per the statutory framework of the country.
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CHAPTER-12
STANDARDS AND LICENSES
A. STANDRADS:
Standards are an established norm or requirement. It is usually a formal document
that establishes uniform engineering or technical criteria, methods, processes and
practices. Standards make our lives easier, safer and healthier. Without them, many
everyday actions we take for granted would be unpredictable. Standards help to
make many of the products we use safer and more reliable. They are fundamental
building blocks of society, representing a common commitment to quality, safety and
ethical practice.
Product standards are specifications and criteria for the characteristics of products.
Process standards are criteria for the way the products are made. Social and
environmental standards in agriculture are essentially process standards. These
process criteria might or might not influence the characteristics of the end products.
Process standards can be further divided into management system standards and
performance standards. Management systems standards set criteria for
management procedures, for example for documentation or for monitoring and
evaluation procedures. They do not set criteria for the performance of the
management system in terms of what actually happens in the field or the packing
station. Performance standards, in contrast, set verifiable requirements for factors
such as the non-use of certain pesticides, or the availability of sanitary services.
Standards can also be developed by group
Types of Standards
1. National Standards
2. International Standards
1. National Standards: Bureau of Indian Standards is the National Standards Body

of India that covers product quality certification, consumer affairs and development of
technical standards. MSMEs can strengthen their product quality and thus improve
their business competitiveness by implementing these standards. Further, Ministry of
Commerce Under the “National Programme for Organic Production” has also
prescribed certain National Standards for Organic Production.
2. International Standards: MSMEs desiring to export in the global markets need to

maintain a minimum standard of quality for product design and function. Various
developed markets have laid out specific minimum standards for import of various
products.
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B. STATUTORY LICENSES:
An individual who wishes to run a business not only has to research and finalise his
business plan, funding and servicing/product model but also comply with various
regulations and obtain the required licenses in India. Business licenses are primarily
issued by the government to allow individuals to run businesses. It is important to
note that a license would be issued will be based on the business requirements of
the organisation after its registration or incorporation. However, there are various
other factors which may also determine the type of license which has to be issued
such as the type of business ownership, business location and number of employees
among others.
There are various types of business licenses issued in India. For Examples, following
types of licenses and documents (indicative) are required while planning for starting
a new business in India,
1. NOC from Local Body

2. Filing Entrepreneurship Memorandum at DIC (Provisional)
3. Obtain PAN Number from Income Tax Department
4. Open a Current Account
5. GST Registration
6. Trade License
7. Shop & Establishment License/Factory License
8. Permissions Required at the Construction Stage
9. Post Construction Clearances
10. Power Allocation Clearance
11. Product Specific Licenses (For Example, FSSAI License for Food Processing)
12. File Entrepreneurship Memorandum at DIC (Permanent)
13. Employee's Provident Fund
14. Employees State Insurance (ESI) Scheme
15. Importer Exporter Code etc.
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CHAPTER -13
FINANCING YOUR VENTURE
This step essentially involves two things. First is estimating the requirement and then
deciding about the sources and their proportion. You are well aware that business
cannot run without capital. Adequate capital is required to establish any business
whether it is small or big. The capital requirement of a business is of two types, (a)
fixed capital and (b) working capital.
Fixed capital refers to funds required for acquiring fixed assets like land, building,
machinery and equipment’s, whereas working capital is required to meet the routine
expenditure like payment of salary, wages, electricity and telephone bill, purchase of
raw-materials, payment for transport, etc. The amount of capital required by a
business depends upon a number of factors like nature of business, size of
business, production process, technology used etc. Let us now make up some of
these factors.
A. FACTORS DETERMINING FIXED CAPITAL:

As fixed capital is needed to meet the long-term requirements of the business, it is
necessary to estimate the amount with utmost care. Following are the important
factors that may be kept in view for estimating fixed capital requirements.
(a) Nature of Business: The business may be in the form of a manufacturing unit, a
service undertaking, or a trading concern. In a manufacturing firm larger amount of
fixed capital is required for land, building, machines etc. which require more funds to
be invested. In a trading concern fixed capital requirement is lesser as the fixed
assets like furniture etc. do not involve large investment.
(b) Size of business: The amount of fixed capital required also depends upon the
size of business i.e., larger the size greater will be the need for fixed capital.
(c) Types of goods produced: If a business manufactures consumer goods like

soap, hair oil etc. amount of capital required is small, but if it manufactures industrial
goods like machine tools and equipment, large amount of fixed capital will be
required.
(d) Production Technology: In a capital intensive production unit, the amount of

fixed capital required will be more while it will be small if labour intensive technology
is used.
(e) Method of acquisition of fixed assets: Fixed assets may be purchased or

acquired on lease or on hire purchase basis. If the fixed assets are purchased it will
require more fixed capital initially as compared to the assets procured on lease or
hire purchase.
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B. FACTORS DETERMINING WORKING CAPITAL:

Working Capital is the capital required to meet day to day expenses like wages, rent,
electricity and water charges, and to be invested in the current assets, such as
debtors stock of raw materials, semi-finished goods, finished goods etc. Working
capital is also called circulating capital. This is because investment in current assets
are recovered and reinvested repeatedly in course of business operations. Going by
the above meaning of working capital, its requirements may be met by short-term
funds. However, since the business is a continuing concern it must at all times have
a certain amount of working capital, which in effect is of a fixed nature. This may be
regarded as the permanent part of working capital.
Following are the various factors that need to be considered to estimate the requisite
amount of working capital.
(a) Proportion of cost of raw materials to total cost: If the raw materials account
fora major portion of the total cost of the finished product, more working capital is
required.
(b) Cost of labour: If labour intensive methods of production are used more working
capital will be required.
(c) Length of operating cycle: If more time is taken in the completion of the
production process and the sale of the products, higher investment will be required in
inventories and wage bills and hence more working capital will be needed.
(d) Terms of purchase and sale: If raw materials and other services are available
on credit and goods produced are sold for cash, less working capital investment will
be involved. On the other hand, if raw material is to be purchased for cash and
goods produced are sold on credit, larger amount of working capital will be
necessary.
(e) Cash requirements: The amount of cash needed to meet the operating
expenses like wages, rent, freight, taxes etc. also determine the amount of working
capital.
(f) Seasonal operations: Business units engaged in manufacturing seasonal goods

are required to have a relatively larger amount of working capital. The recovery of
working capital through sales of such products is limited to a particular period, and
hence a large amount of working capital is required to meet off–season
requirements.
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C. SOURCES OF CAPITAL:
The financial requirement of any business can be met from (1) Owners’ capital; and
(2) Borrowed capital. The owners’ capital is provided by the owners from their own
savings. But this may not be sufficient to meet the total capital requirement of
business. So, the business needs to borrow capital from the outsiders. Money can
be borrowed from friends, relatives, moneylenders, and commercial banks. Then
there are some financial institutions which provide capital support on easy terms to
small-scale units. The manufacturers and suppliers of raw materials and goods also
provide support in various ways. In case of certain type of goods in high demand, the
customers may give advance money to the supplier, which also acts as an important
source of finance.
From all the above sources the business can get the required funds in various forms.
For example, commercial banks provide funds in the form of cash credit, overdraft,
discounting of bills and loans. The suppliers and manufactures give trade credit,
instalment credit to the traders.
Look to the following resources to help you with securing start-up capital;
 Government grants and loans – take advantage of the many options

available to young Canadian entrepreneurs that can provide you with early
start-up capital. There are professional firms that can help you with the
application process for a success-based fee that will save you time, increase
your chances of getting funding and help you access additional funding
programs that may not be directed solely towards young entrepreneurs but
maybe available to you based on your industry or type of business.
 Family and friends – sometimes the people closest to you, who see your
passion for the business, are willing to invest in the company’s future.
 Bank loans – while bank loans have typically been considered the most
traditional form of financing for new start-ups, they can be challenging for
young entrepreneurs to obtain due to their limited business and industry
experience, limited credit history and limited equity in the business. However,
many banks are willing to invest in young entrepreneurs, provided you have a
solid business plan that addresses these concerns and demonstrates that you
have a well-thought-out plan to overcome these obstacles.
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 Crowd funding – “crowd funding” has become a popular financing option for
private start-ups. The practice of funding a venture by raising monetary
contributions from a large number of people, typically via the internet, has
increased due to the number of websites that provide crowd funding
opportunities. There are several different types of crowd funding: reward-
based (pre-sell a product or service), equity-based (sell unlisted shares) and
credit based (borrow amounts that are subject to interest and principal
repayments). You should work with your business advisors to determine
which option may be best for your company.
 Angel investors – angel investors can be another good source for not only
getting funding for your private business, but gaining mentors and industry
experts that are willing to guide you along your business journey. They might
be more willing to provide funding to your business because they have an
interest in your product or service that goes beyond a simple return on their
investment. If you’re considering this source as a financing option, keep in
mind that angel investing firms can require equity in your business and you
may be required to take on partners who could expect to play an active role in
management of the business.
 Venture Capitalists – venture capital firms typically require an equity interest

in exchange for an initial investment in start-up companies that are expected
to achieve high-growth in a short period of time. This source of financing can
provide large amount of funding to start-ups that need significant capital
investment to achieve their high growth potential. Most venture capital firms
divest their interest after a three- to seven-year period through a public
offering or through sale of the business to another investor. Therefore, if
retaining complete ownership of your business fora long period of time is
important to you, this may not be the best option.
D. TIPS FOR SECURING A BUSINESS LOAN:
Applying for a business loan can be both stressful and exciting at the same time. If
you are on the verge of starting your business, you need to acquire sufficient capital
for the same. For obvious reasons, your first preference will be banks or government
agencies since they are the most popular sources of funding for any start-up venture.
However, before making an official loan application, there are a few things that you
should know and take into consideration;
i. Business Plan is Important, Backed by Practical Projections: Before granting

you a small business loan, the lender will be eager to know your business potential
and make sure that your business proposal is a credible one. Besides, they will
ensure that you have good knowledge regarding the products/services you are going
to offer in the market. To impress your lender, you will require a typical business plan
inclusive of an executive summary, business objective, revenue forecasts, market
analysis, and profit-generation strategies. So, get your business plan ready as well
as your cash flow projections to assure that there will be a steady flow of cash to
repay the loan.
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ii. Set a Realistic Budget: Your budget will indicate if you have the sufficient funds
to handle the capital expenditure and business expansion plans. Have a plan in
place to monitor the financial impact of your business decisions and operations. This
will enable you to compare the estimated financial goals with actual numbers. In
essence, it acts as a measure to keep the performance under radar. The budget
should be adjustable with your business loan. You may also split it up in different
departments such as sales, marketing, production etc. Another option is to seek the
help of professionals such as financial advisors or bankers for a more flexible
budget.
iii. A Clean Personal Credit Record is a Must: Your lender would definitely verify
your credit worthiness. They would like to know your credit history. Hence, make a
copy of your credit report before you apply for a loan. If you find your credit report to
be less than perfect, then fix it. You will require some time to rectify the flaws, but
you need to be patient about it if you are to earn the trust of your lender in the very
first meeting. Moreover, you should also consider having personal references too. If
someone who is known and respected can provide good feedback on your behalf, it
will instantly turn things to your favour. Similarly, you should have your tax returns
documents of the past few years beforehand in case the lender wants to review your
personal income history.
iv. Be Acquainted with Cost and Payment Structure of Various Business

Loans: Business loan criteria may differ on the basis of lending institution and
amount. You need to do your research properly so that you can get a business loan
in a hassle-free manner and at a good interest rate. Consider interacting with other
entrepreneurs to know which banks or government agencies will be suitable for your
funding purpose. There can be a series of initiation fees due up front so it is
imperative for you to go through the loan agreement thoroughly to understand the
precise terms and conditions.
v. Repayment Tenure and Interest Rate: Factors to consider while applying for
your business include repayment term length, interest and payment amount. Term
lengths determine how long you have to repay your loan. The longer the repayment
period, the smaller each payment will likely be. However, longer repayment periods
also mean more time for interest to build on the money you’ve borrowed. So while
you may have smaller, more manageable payments, you’ll also end up paying more
money over a longer period of time. The amount of your monthly payments, which
will generally be influenced by term length, is important to keep in mind. Monthly
payments that are too large to manage will leave you with depleted cash reserves
and a taxing debt obligation hanging over your head. In the worst case scenario, you
may simply not be able to keep up with the payments, leading to a default on the
loan and potential loss of your business. Finally, remember the role interest plays in
repayment. The higher the interest you’re being charged, the faster you’ll want to pay
off your loan. More interest means more money spent, and even smaller loans can
end up costing a fortune if the interest charged on them is too high.
vi. Determine the Collateral that You Can Submit: Apart from being credible,
trustworthy, and knowledgeable, the lender will be eager to know that you can pay
him/her back on due time. They will try to figure out what collateral you can use to
back the loan. You can submit anything that can be easily converted into cash, and
is equal in value (or greater) than the borrowed loan amount. Any of your
personal/business assets having tangible value will help you secure the loan and
reduce the exposure to risk.
46
vii. Risk Management: A part of your business loan must be saved for any probable
risks. Establish a risk contingency budget for unforeseen circumstances. This budget
will contain funds that can be tapped so that your project doesn’t exhaust the
assigned expenses. Consider two factors while planning a risk contingency fund- the
probability of occurrence of risk and its impact on your project. We hope you are now
in a better place to align your budget with the small business loan.
viii. Checklist of Important Documents: Following are the common important

documents that a funding agency looks for along with loan application;
Sl. Documents
No.
1. Loan Application Form
2. Self-attested Copy of KYC Documents
3. Bank Statement of the Promoter:
Latest Bank Statements for last 6 months (in case of First Time Borrower)
and 12 months (in case of Takeover proposals). In case of multiple banking,
statements covering minimum 75% of banking turnover is to be provided.
4. Financials:
 Last 3 years Audited/Provisional Financials (Audited financials to include

Balance Sheet, Profit and Loss Account along with schedules and Notes to
Accounts, Tax audit reports, Statutory Audit report). In case of Provisional
financials, VAT returns are also required.

 Current year performance and projected turnover on letterhead of the entity
Last 1 year Income Tax returns of the borrowing entity (along with
Computation of Income and copy of acknowledgement), if filed online,
acknowledgement number is required.
5. Project Report containing cost of project, means of finance, expenditure

incurred and projections along-with justifiable details.
6. Government approvals for power, Pollution, Building plan along-with

documentary proofs.
7. Proforma invoices of assets to be purchased, copy of allotment

letter/conveyance deed in case of land, architect certificate for validating cost
of building to be constructed.
8. Orders in hand and status along with Work-Order copies/Letters of

intent/Contract agreements etc.
47
CHAPTER-14
MANAGING LOAN REPAYMENT

If you’re planning to start a new business, timely repayment of debt can be a critical
first step in securing the success of your venture. Debt represents lingering
obligations from previous financial transactions. Since you are entering a new phase
in your life, the last thing you need to do is to be carrying those obligations into your
new future. Moreover, when you avail a business loan, you’re entering into an
agreement to repay the funds borrowed. How this repayment process is structured
can significantly impact your financial situation and mean the difference between a
streamlined arrangement and a burdensome debt obligation.
There are at least five ways to manage business loan repayment and improve your
chance of succeeding in business.
i. Minimize your cost of living: Whenever you start a new business, cash flow is
usually the biggest hurdle. You may even start the business with no cash flow at all.
This situation can be at least partially offset by having a substantial amount of cash
reserves that you can live off of for the first few months of operations. Any debt that
you can pay off completely will be one less obligation you will need to cover out of a
limited cash flow. That alone will improve your chances of succeeding in business.
Cash flow is one of the biggest reasons for early business failures, and the better
that you’re able to manage it, the less likely it will be to put an early end to your
business.
ii. Have a clean balance sheet at a time of transition: Any time you start anything
new, you should try to do it from a position of financial strength. A clean balance
sheet is a sign of that kind of financial strength. Balance sheets are comprised
of assets -- physical goods and financial instruments -- that represent the capital that
you have available. On the other side of the balance sheet are liabilities. They
represent liens against those assets, and a reduction of your net worth.
A balance sheet is never very important on a personal level. But once you start a
business it suddenly becomes significant. Not only will future lenders be interested in
the financial strength demonstrated by your balance sheet, but so will potential
vendors, partners and even major customers. Each may want to know that you have
the financial stability necessary to enter into long-term contracts. The time to clean
up your balance sheet is before you start your business. It will be much more difficult
to do so after the fact, when your primary concern will be surviving the early months
and years of building your business.
iii.Clear your head: Once you start your business, you will have concerns that you
never had as a salaried employee. As stated, cash flow will be a constant concern.
But you will also have to worry about marketing, supply chains, coordination with
subcontractors and meeting customer/client obligations. If you also have a bunch of
debts that need to be paid each month, it will add a level of worry to an already
crowded mind. If you have a concern that’s even modest in scope before you start
your business, it will only become more so later on. You have a lot to juggle when
you’re an entrepreneur, so you should do all you can to minimize the number of
48
concerns that you have. Paying off debt is an excellent way to keep your head clear,
and fully focused on your business.
iv. Remove risk to income-generating assets: Most of us are more concerned

with revolving debt, such as credit cards. But when you’re in business, the risk from
secured loans can be even greater. Should you fall behind in your credit card
payments -- during a time of insufficient cash flow -- the credit card company will
hound you mercilessly. Eventually they’ll place your account in collection, or obtain a
court judgment against you. But none of these actions will affect your cash flow, and
more important, none will subject important personal assets to seizure. This is not
true with secured loans. For example, if you have a car or business equipment that
are necessary to the operation of your business, and each has a loan attached to it,
you could lose either or both assets to seizure by a lender for non-payment. This will
not only damage your credit, but it will remove those income producing assets from
your possession. That could hurt your ability to earn income, and put you out of
business. For this reason, you may want to emphasize paying off secured loans
ahead of revolving lines of credit. This will allow you to take income generating
assets out of harm's way.
v. You may need to borrow later: When starting a business, most people can
easily envision the need to obtain credit to get the operation up and running. But an
even greater need can arise a year or two later, when you need additional capital to
expand the business. Let’s say that your business is 2 years old, and you’re earning
enough money to live. But if you could buy certain equipment, or move to a more
strategic location, you could double or triple your cash flow. If your ability to borrow
fresh capital is impaired by too many old debts, you may not be able to get the
necessary cash for expansion. Think of getting out of debt as a form of keeping your
powder dry for a more important financing needs later. The success of your business
will rely on long-term thinking and planning. For that reason, you may be well
advised to delay the opening of your business until you have a chance to pay down
debt, and to pay off certain specific debts entirely. The success of your business
could hang in the balance.
49
CHAPTER-15
HOW TO AVOID DEFAULTING

ON YOUR BUSINESS LOAN
There could be many reasons why one defaults a business loan. While sometimes it
could be just miscalculation, in most of the other cases it will be due to declining
sales, sudden hardship or many other similar factors which will lead to have a
struggle to repay debts. Defaulting loan is a very daunting feeling, it will lead to quite
a lot of uneasiness when these debt collectors walk up to the door step to remind
and to ensure we are making payments on a timely manner without defaulting. The
only fortunate things about business loan as compared to other loans is lender will
start using your collateral assets instead of creating scenes at your door step. But in
this case, the safety of your assets is at risk.
Quite a lot of opportunities are available if you are having trouble to repay the loan.
And avoid these situations is advisable than finding resolution for defaulted
payments. Delinquency is the term used by banks and NBFCs when the borrowers
make late payment on the outstanding loan amount. In most of the cases banks will
charge a fee on the late payment and will let go off the delinquency. This is only in
the scenario when late payments happen once in a while, but if you tend to keep
delaying the payments often, then banks will start charging you more and more and
will also add you to the defaulter bucket.
50
Though usually in most cases, most banks will categorize a borrower as defaulter
only when there are default of making payments for three instalments. However, it is
totally up to the discretion of the lender to decide when to term the borrower as a
defaulter. While some banks consider you as defaulter right at the very first payment
delay, other might give you couple of chances. If you tend to have too many loan
slips, then the intensity of lender approaching you will go up. This is where the real
issue lies. Again banks have different way of approaching these delayed payments.
Some will directly tag you as the defaulter, while others will appoint third party to
collect repayments from the defaulters.
Here some of the most depressing aspects of loan defaults are covered, but it’s now
time to check how to avoid this situation on your outstanding loan;
i. First of all, Talk to Your Lender: The first best move is always to call up the
lender directly and letting them know your present situation. If you are in a state to
not pay the loan amount for couple of months, then give them the surety that you are
looking to clear of the debts within a specific period of time. This will help in getting
some time from them before they term you as defaulter.
ii. Debt-Consolidation: One of the common problems with every business is short
term debt. In such situations, it is advisable to have a macro view of the problem and
try to clear all the petty ones with one single low-interest big loan. Something like
Debt consolidation is a great option. This has lot of pros and cons thus check the
details before taking this approach for your business loan. Also while doing debt
consolidation, make sure your personal debts are not clubbed with business debts.
iii. Prioritize Your Debts: It’s true that lot of money will go in and out of business but
prioritizing them is very crucial. If you have some payments to be made by end of
month and early this month, it is advisable to clear the early outstanding if you are
expected some additional money to flow into the business. If the case is otherwise,
prioritize which expense is very crucial and clear the same. However, have an open
conversation with those lenders to whom you owe.
51
CHAPTER-16
MANAGING A BUSINESS
After a business has been set up and established, it must be managed properly.
Proper management reduces risk of failure by ensuring that the day-to-day business
aspects are handled correctly. Management includes leading the business and
ensuring that the best decisions are made. Management is responsible for handling
employees and ensuring that correct marketing strategies are implemented. Issues
such as taxes, insurance, and human resources are also handled by management.
Business management involves handling legal issues, matters, and concerns.
Financial aspects, such as expanding or growing the business, are the responsibility
of management. As business management is an invaluable component to success, it
is imperative that only those who are qualified fill these positions.
Good business management is the key to success of any business house. It is a

creative force which helps in the optimum utilisation of resources of an organisation.
The process of managing a business comprises several intertwined elements by
which the goals and objectives of the organisation are achieved. These elements or
functions include, promoting and marketing the product produced by the firm; making
the product available to prospective consumers through proper distribution channels;
managing the accounts and finances of the firm; protecting its intellectual property,
etc. It also involves creating harmony among the working of various departments and
divisions of the firm. Managing human resources and managing relationship with the
customers are the most important elements in the whole process of business
management.
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An entrepreneur with good managerial skills can convert the disorganised resources
of men, money, material and machinery into a productive business enterprise. In a
modern business, different types of skills are required in order to effectively manage
an organisation in a dynamic environment. These skills include:-
 Technical skills: - refer to the ability and knowledge in using equipment,

techniques and procedures involved in performing specific tasks. An
entrepreneur must know the skills which should be employed in his enterprise
and must understand both the role of each skill employed and the inter-
relationship between skills.
 Conceptual skills: - comprise the ability to see the whole organisation and
the inter-relations between its parts. Such skills help the entrepreneur to
conceptualise the environment and to take a broad and farsighted view of the
organisation. These skills include the competence to understand a problem
facing the organisation in all its aspects and solving the problem. It is
necessary for rational decision making.
 Interpersonal skills: - consist of the ability to work effectively with other

people both as individuals and as members of a group. Such skills are
required by an entrepreneur in order to win co-operation of others and to build
a base for a successful work team.
Managing is a dynamic and an on-going process which continues to operate so long

as there is an organised action for the achievement of group goals.
The process of managing a business comprises several intertwined elements by

which the goals and objectives of the organisation are achieved. These elements or
functions include, promoting and marketing the product produced by the firm; making
the product available to prospective consumers through proper distribution channels;
managing the accounts and finances of the firm; protecting its intellectual property,
etc.
53
CHAPTER -17
GROWING YOUR BUSINESS
For many entrepreneurs, growth is the key to opportunity and success. While many
new private business owners enjoy the hands-on approach to managing a business,
sometimes planning for growth needs to incorporate a team approach. Some
strategies for you to consider when planning for growth include;
 Consider hiring a management team to take some burden off your shoulders
and to give you sufficient time to continue to grow your business.
 Involve your management team to help grow the company by including them
in strategic initiatives such as product development, marketing, financing, IT,
as it can help generate fresh new ideas.
 Analyse your initial business plan with your management team members to
determine what has worked well so far and what has not. Have you
implemented all of the ideas that you had in your initial business plan? Are
there strategies that you haven’t implemented and can you implement these
strategies now? Did you initially face certain barriers (i.e. lack of technology or
financing) that no longer exist and therefore are there ideas that you couldn’t
implement previously, but can be implemented now? Consider all items in
your business plan - marketing/advertising/ financing/IT and update or
develop a new business plan that has a focus towards the growth of your
business.
 Continuously keep an eye on your industry and competition to ensure that you
stay ahead or at least don’t fall behind in products or services that they may
be providing. Consider if there is a different method or way to provide similar
services to give you a competitive advantage and look at trends in your
market.
 Initiate regular brainstorming sessions to determine fresh and new ideas with
your team members to improve the current product or service, or look to offer
new products or services.
 Review current internal processes and determine if they can be modified to

reduce time and costs, which can help to free up your team members to take
on more growth oriented tasks such as research and product development.
 Be sure to actively involve your business advisors in your growth plan. They
will help you identify and address any business, legal, tax or regulatory risks
that your business could face.
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A. WORK WITH RIGHT PROFESSIONALS: Having the appropriate support

system in place when starting out is critical to the success of your private business.
You will need to actively engage with the right professionals who can act as your key
advisors to support you through every stage of your business.
Some individuals that you should consider to include in your professional network
are;
 Lawyers – they are essential to help you ensure that you have appropriate
permits, licences, approvals and certificates from federal, provincial, local,
municipal and foreign governmental, administrative and regulatory authorities.
They will ensure that you have appropriate copyrights, trademarks and
employment contracts in place to ensure that your product or service is
appropriately protected from any current or future competitors.
 External accountants/auditors/advisory professionals – this support

group brings extensive market experience that a young entrepreneur may
lack. They can play a key role as an advisor to your private company to help
navigate through complex business issues. They can provide guidance
around raising capital, and can help you deal with compliance issues such as
income tax, sales taxes and payroll requirements that can be complex,
especially if your business operates across provincial and federal borders.
 Bankers – a trusted banker assist you in the early stages to decide if getting
a bank loan is the right option for you or if you should consider alternative
sources for raising initial funds. If a bank loan is a good option for your private
business, you can benefit from their advice to ensure your business plan
addresses factors used by banks when making loan decisions. This may
increase your chances of getting that initial bank loan to get your business off
the ground.
Every entrepreneurial journey is unique and represents the dedication, sweat and
tears that ultimately lead to success. Remember, your entrepreneurial journey will be
a unique experience and you don’t have to go at it alone. Maintaining a strong focus
on your private company’s vision, along with surrounding yourself with a dedicated
support team will help you achieve your goals and plan for success into the future.
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CHAPTER -18
MOST COMMON REASONS

OF SMALL BUSINESS FAILURE
The possibilities in entrepreneurship are endless. The rewards can be high. And the
risks are undoubtedly high too. Successful business owners must possess the ability
to mitigate business-specific risks while simultaneously bringing a product or service
to market at a price point that meets consumer demand levels. While there are a
number of small businesses in a broad range of industries that perform well and are
continuously profitable, a larger portion of companies fail within the first 18 months of
operation, according to sources. Without the proper tools in place to achieve critical
business objectives, small businesses are on a path to failure.
To safeguard a new or established business from falling into the 80% of failed cases,
it is necessary to understand what can lead to business failure and how each
obstacle can be managed or avoided altogether. Some of them are related to
learnable business skills, others relate to personal attitudes, habits, or self-
sabotaging belief, which are not so easy to change, except through coaching or
through other self-development activities.
1. Mistaking a business for a hobby: Just because you love something doesn’t
mean you should convert it into a business. Too often businesses fail because
the owner feels their passion is shared by others. Research your business idea
and make sure it’s viable. Do others want/need what you're selling at the price
you want to sell it at?
2. Poor planning: Yes, you must have a business plan. It can be a simple three-
page plan or a huge 40-pages plan. You don’t need a business plan just for
outside funding. Business Planning Process forces you to go through all areas
which require careful thinking. Your plan must always be based on realistic
assumptions with careful analysis of future scenarios. The point is that you’ve
looked at all the aspects of your business and are prepared to handle problems
when they arise. Your business plan helps you to focus on your goals and your
vision, as well as setting out plans to accomplishing them. And don’t get mellow
– revisit and revise your business plan annually.
3. Entrepreneurial excitement: Entrepreneurs often get excited about new ideas,

but are unable to determine if they’re "true opportunities" rather than just "an
interesting idea." Or, they have a super idea but can't put it into practice. Test
every new idea against your business plan and mission statement before
deciding whether to undertake it or not, and ask yourself, "Do I have the time,
skills and resources to implement this?"
4. Putting all your eggs in one basket: Too often, small business owners will
have just one product, one service or one big client. They cling tight to this one
thing because it brings in good revenue. But what if the one thing
disappears? Variety and diversification will cushion you against the ebb and
flow of business tides.
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5. Poor record keeping and financial controls: Yes, you have to keep financial
and business records, you have to review your revenue and expense report
each month, and you have to file taxes and other business-related filings. If you
don’t know how to do these, or don’t want to, get help from someone who does.
6. Lack of experience in running a business or in the industry you’re

entering: There are so many hats you have to wear, from marketing and selling
to management and finance, in order to run a business effectively. On top of
that, you have to understand your industry, the skills required to offer your
products and services and the trends in the industry. If you don’t know about
these basic skills, educate yourself. Talk to others who are successfully running
their own businesses, talk to industry leaders, get a book, find a website, get a
coach, do your homework. And keep increasing your business and industry
skills by attending classes or reading new books every year.
7. Poor money management: You need to be able to live for one to two years
without income when getting started; often businesses are very slow to get off
the ground. Also, you have to create and use a realistic business budget and
not constantly drain the business income on personal spending.
8. Wrong location: If your business has a "bricks and mortar" location, you need
to make sure that you are convenient to your customers and near to your
suppliers and your employees. Even something as simple as traffic patterns and
parking can make or break your business.
9. Competition: Customers will go where they can find the best products and
services. Business can face competition from many areas. It’s important for you
to know who your competition is, what they have to offer and what makes your
own products or services better.
10. Procrastination and poor time management: Putting off tasks that you don’t
enjoy will sink your business faster than anything else. You can’t afford to waste
time on unimportant tasks while critical tasks pile up. All tasks need to be done
if you don’t like to do them (or don’t want to spend your time doing them), hire
someone to do them for you. If your time management and prioritizing skills are
rusty, hire a small business coach, take a class, or join a mastermind group to
help you be accountable for getting things done.
11. Ineffective marketing: Learn the basics of marketing and make sure that you
track the success or failure of each marketing technique you use, then dump
those that aren’t working.
12. Ineffective sales techniques: Once you have a potential client, you have to
know how to lead them down the sales path. If you don’t understand the basics
of selling, get some education on it immediately. If a selling technique doesn’t
work, try another one.
13. Poor customer service: Once you have a customer, you have to keep
them. There are two key points here – make sure you pay attention to what the
customer wants (and how these wants can change over time), and make sure
you provide quick return of phone calls and emails, proper billing, win-win
problem solving and an overall pleasant demeanour.
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14. Entrepreneurial burnout: owning your own business requires a huge

investment of time, money, energy and emotion. It’s easy to work long days and
forget to take time off. But in the end, this only causes burnout where your
motivation and creativity will suffer and a pessimistic attitude prevails. You’ll find
yourself unable to balance your business and personal life and both will
suffer. Schedule self-care time into your work week and be religious about
taking time off from your business.
15. Poor cash flow: Let's face it -- having enough cash on hand to pay your bills is
crucial. And having enough cash on hand, or access to capital via a loan, to
launch the next stage of your business growth is mandatory. Too many small
business owners stall because they don't have enough cash.
16. Lack of Expertise in Critical Areas (& not seeking Outside Help) : Another
common reason small business fail involves the lack of business acumen held
by a management team or business owner. No individual, however capable
may be, can’t have expertise in all areas. To compete effectively, Business, on
the other hand, needs expertise in Marketing, Selling, Finance, Purchasing,
Production, Hiring, Motivating and Managing. Small Business Owners,
unfortunately, fail to recognize the need for outside help.
17. Business Expansion without Putting Systems, Processes & Resources in

Place : Business expansion is - unfortunately – one of the common causes of
business failure. Expansion puts a huge amount of additional stress on SMEs.
Apart from Financial & Manpower Resources, the need for Systems &
Processes is greatly enhanced when an SME goes on business expansion
overdrive.
18. Lack of Professionalism : Many opportunities are lost simply because a

number of businesses have still not realized the need for a professionally
designed website. Websites, perhaps, have now become one of the most
important part of customer acquisition process. A carefully designed website
can now automate many tasks relating to routine interactions with Prospects,
Customers, Suppliers as well as prospective employees. You must take
immediate steps if your existing website is not providing you customer leads
and is not designed for Smart Phones & Tablets.
19. Hiring the Wrong People and Firing Them Too Slowly : One of the
biggest mistakes all small business owners have made is to hire people for the
wrong reasons and then take way too long to fire them. By the time you realize
that they really aren’t fit for the job, you’re already attached and you feel bad
letting them go. So, you put it off -- and before you know it, you’ve sunk six
figures into a bad employee.
20. Growing Too Quickly and Spending Too Much Too Soon : One of the
most surprising reasons small businesses fail? They became too successful too
quickly and then their risk assessment skills go right out the window. According
to Study Reports, 74 percent of high-growth start-ups fail due to premature
scaling and, depending on who you ask, scaling too soon too quickly can
actually be a predictor of failure. This really isn’t that surprising. Anytime
anything goes parabolic, the law of markets comes into play -- just as with
stocks, what goes up must eventually come down.
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CHAPTER -19
50 PROFITABLE BUSINESS IDEAS

FOR SMALL TOWNS
There may be several reasons you want to become an entrepreneur and start your
own business. But we all are stuck in one common phase that is searching for the
best Profitable Small business ideas which can generate recurring income. Small
business ideas are those which can be started with low investment and make it as
big. However, while some business ideas can be started anywhere, some business
ideas are suitable only in Small Towns and Rural Areas. The most difficult thing
when it comes to choosing businesses for small towns is to come up with an idea
that will be easy and inexpensive to implement while also quickly generating profits.
Small town businesses can be divided into following three main categories:
 RETAIL BASED : Retailing consists of the activities involved in

selling directly to the ultimate consumer for personal, non-business use. It
embraces the direct-to-customer sales activities of the producer, whether
through his own stores by house-to-house canvassing or by mail-order business.
Retail based business include sector like Grocery Stores, Departmental Stores,
Pharmacies, Clothing Stores, Building Materials, Automobile Spare Parts and
handmade goods (it is better to combine sales through both a brick-and-mortar
location and an online store).
 SERVICE BASED : A Service-based business is any business that offers

services to others without selling tangible products. This type of business
includes maintenance and repair services etc. Service-based businesses allow
you the freedom to leverage your skills and earn a profit.
 DEMAND BASED MANUFACTURING : This category includes the

processing of any products for sale. Self-production includes farming, or any
product that you manufacture directly. Small scale manufacturing business such
as disposable paper cups, plates, paper bags etc. can be a good business idea
as these things are always in high demand. It does not require huge investment,
mostly the capital is invested in raw materials and resources which are easily
available. One can arrange for some good and loyal customers who are always
in need of these things and the business is all set to roll. Timely delivering the
items are very essential for such business to flourish.
Here is a list of 50 Small Town Business Ideas for aspiring entrepreneurs of rural
areas. So, if you are living in a Small-Town or if you are interested in traveling to a
rural area to start your own business, then you might find the Business Ideas
presented here interesting.
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A. RETAIL BASED BUSINESS IDEAS:
1. Grocery Store :
Minimum Rs. 1,00,000.00

Investment
People visit Grocery Store or Kirana Store to re – stock
their homes with household items including food grains
from time to time. This type of business runs successfully
if quality is maintained and the products offered are
reasonably priced. After selecting an ideal location for the
Grocery Store business, it would be desirable to conduct
market survey in order to know the purchasing behaviour
Suitability of the residents in the locality. At an initial stage, you can
Assessment for take a shop on rent to start a Grocery Store. With goodwill,
Small Towns almost every wholesaler provides credit which drastically
reduces the need for working capital. This is one of the
good small town business idea that is simple to set up and
can be started with low to medium investment.
2. Super Market :
Minimum Rs. 10,00,000.00

Investment
Super Markets are readily stored with almost all the
necessary items that a family would require right from
groceries, food items to electronics, stationery, cosmetics
and many other general items. It consists of variety of
Suitability brands where the goods and commodities are normally of
Assessment for high quality as well. This business can be started as a
Small Towns small scale unit and has the potential market to grow with
the right location due to limited competition in the
segment. Usually small towns lack this facility and
therefore owning a supermarket can be a great business
opportunity to start- up.
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3. Pharmacy Store :
Minimum Rs. 5,00,000.00

Investment
With increasing stress levels, the number of diseases and
dependence on medicines are also increasing. Generally
medical items like medicines, small health equipment’s like
sanitizers, syringes etc. are sold in a Pharmacy Store.
Suitability Pharmacy Store business is one of the few retailing
Assessment for businesses that are highly regulated. Before starting this
Small Towns type of business, one need to have a requisite license to
open a pharmacy store. As pharmacy is one of the
essential requirement the chance of getting success in the
pharmacy business is very high. Pharmaceutical
graduates looking towards starting own business against
working for someone else may consider opening a retail
pharmacy store.
4. Fruit and Vegetable Mart :
Minimum Rs. 3,50,000.00

Investment
Vegetable and Fruits are essential items those are sold
throughout the seasons. If you are interested in starting a
retailing business and you live in a community where you
can easily have access to fresh vegetable and fruits, then
Suitability you should consider opening a Vegetable and Fruit mart. If
Assessment for you stock your mart with varieties of fruits and vegetables,
Small Towns you can easily attract customers. It is indeed a simple
business that requires little start – up capital. You can take
a shop on rent and start vegetable and fruit retail or
wholesale business. It is a low-cost business with a very
good profit margin. However, a good business acumen is
desirable.
5. Organic Food Store :
Minimum Rs. 4,00,000.00

Investment
Organic food is a food that is grown naturally without using
fertilizer and chemicals. Organic food is becoming popular
in India with its safe and clean product features.
Particularly in the small town areas, this is a good start up
Suitability with the demands increasing day by day and an
Assessment for entrepreneur can invest in this as a small scale unit and
Small Towns grow gradually with time. It is recommended to enter into
agreement with the local farmers of nearby villages directly
for sourcing a constant food supply of vegetables and
fruits. Thus starting own organic food store could be a
lucrative business option.
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6. Retailing of Frozen Food Mart :
Minimum Rs. 5,00,000.00

Investment
Frozen Food Mart is another typical retailing business
which is indeed a thriving and profitable business venture.
Frozen foods such as fish, chickens, ready to cook snacks
etc. all are generally consumed worldwide. So if you are
Suitability looking for a business to start in a small town; a business
Assessment for that is not capital intensive and simple to manage, then
Small Towns you may consider setting – up a frozen food mart. The
ideal location for this type of business is market place or
residential societies.
7. Tea Stall or Coffee Kiosk :
Minimum Rs. 20,000.00 – Rs. 50,000.00

Investment
Opening a small Tea or Coffee stall is a profitable and self-
rewarding business with minimum investment. Depending
on the investment capacity, one can establish the store of
any size. Also, one can consider buying a franchise. In
Suitability India, every time is Tea time or Coffee time. Mornings in
Assessment for India are incomplete without a cup of Tea or Coffee. India
Small Towns is the highest tea consuming country globally and the
second-largest producer of tea in the world after China.
This business is easy to start for the women entrepreneurs
who want to become financially independent. However,
the business demands hard work, direct customer
interaction and long working hours. A tea stall business is
perfect to start venture not only in the metro cities but also
in small towns.
8. Juice and Ice Cream Parlour :
Minimum Rs. 25,000.00 – Rs. Rs. 50,000.00

Investment
In a country like India where summer days lasts longer,
the demand for Juice and Ice-cream never goes out of
demand. It requires minimum space, basic equipment and
less staffs, making it a one of the best ventures for a small
Suitability town. Owners can chose specific themes of Juice and
Assessment for types of Ice-creams that are not easily available in the city.
Small Towns Ice-cream parlours work great around Multiplexes or
Popular Food Joints. Even if you don’t have the required
capital to rent a space and equip a shop, you can operate
a mobile ice cream cart. Mobile Ice Cream Cart will give
you the opportunity to move from one location to the other
where you know you are likely to generate sales.
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9. Ready-made Cloth Store :
Minimum Rs. 1,00,000.00

Investment
Clothes are a basic necessity of human beings and
therefore, it will be always considered as evergreen
business. Readymade Cloth Store is one of the best
business options for the small town. In readymade cloth
Suitability stores you need to keep readymade cloths. You can keep
Assessment for the cloth for ladies, gents as well as for kids. Like any
Small Towns other business, it will require initial investment to establish
the shop but if the quality of materials is good then you
can get lot of customers. Also, the demand will be high
during festive seasons. Hence, owning a business in
clothing can be really profitable as the margins are high in
this business.
10. Electronics Showroom :
Minimum Rs. 10,00,000.00

Investment
Electronics business is becoming a boom in the business
world for reasons of its demand and increasing value.
Electronic showroom with electronic items such as
television, washing machine, refrigerator etc. can be a
Suitability very profitable business in small town and usually the
Assessment for profit percentage is high in these products. You can keep
Small Towns products of different companies including the local ones
too. It will require some initial investment but you will get
good returns on the same.
11. Cosmetics Shop :
Minimum Rs. 2,50,000.00

Investment
Cosmetic shop is yet another thriving and profitable
business that an entrepreneur can start in a small town.
There is a large market for cosmetics and good enough
the cosmetic business is not meant for women alone only
Suitability but for all genders. If you are looking towards starting a
Assessment for retail business in a small town, then you may consider
Small Towns opening a cosmetic shop. Just like any other retail
business, location is an important factor that determines
the success of the business. So before making a choice as
regards where to rent or lease a shop to start your
cosmetic retailing business; ensure that you conduct
thorough market survey and feasibility studies.
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12. Mobile Phone and Accessories Store :
Minimum Rs. 5,00,000.00

Investment
Mobile has become a very basic need for people all over
the world. Mobile has become an entertainment medium
more than its basic use which is to connect with others.
More and more customers are using their Smart Phones to
Suitability buy products and search for information online. By 2021,
Assessment for 75 percent of people worldwide would own a mobile phone
Small Towns and this number is expected to increase over the next few
years. Along with the increase in the usage of mobile
phone requirements of accessories such as mobile covers,
chargers, headphone and other items are also growing.
Therefore, owning a business in mobile phones and
accessories is a brilliant idea. This is an ideal business
idea for village and small town. One can open a store for
keeping all mobile phone accessories along with Mobile
Handsets. One can go for mobile recharge business too.
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13. Auto Spare Parts Shop:
Minimum Rs. 5,00,000.00

Investment
The use of automobiles on roads is growing rapidly
everyday and the demand for auto spare parts are also on
rise. Auto spare parts business is indeed a profitable
business because the replacement of damaged or worn –
Suitability out auto parts is compulsory if you want your vehicle to
Assessment for continue to be on the road and serve the purpose you
Small Towns bought it for. If you are looking for a business to start in a
small town and you have interest in the automobile
industry, then you should consider starting your own auto
spare parts sale business. One may attend some form of
informal training, by working as an apprentice with
someone who owns an auto spare parts store. It makes it
easier to learn the ropes and how to manage your own
auto spare parts stores. It is important to point out that
auto spare parts business is one the businesses that can’t
go out of fashion simply because of the role it plays in the
auto industry.
14. Book Store :
Minimum Rs. 1,50,000.00

Investment
Book Store a store where books of different genre and
different authors are sold. As our Prime minister is
stressing a lot on education for all and particularly for
women, it is making a lot f difference in the manner people
Suitability have started recognizing the importance of education. If
Assessment for you are considering starting a business in a small town,
Small Towns then one of your options is to open a bookshop. There is a
large market for books especially if you have done your
homework before stocking your bookshop with books. If
you are considering starting this type of business, aside
from the fact that you will be operating your bookshop from
a facility (brick and mortar store) it will be to your
advantage to also maintain an online book shop. It will
give the online community an opportunity to patronize your
bookshop.
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15. Pet Shop :
Minimum Rs. 1,00,000.00

Investment
The Pet industry is growing rapidly worldwide. People are
buying more pet nowadays and spending a lot of money
on them to give ultimate comfort. For many people, a
domestic pet is a loyal friend or even a family member.
Suitability Almost every family has a cat, dog, fish, parrot, chinchilla,
Assessment for turtle or other small creatures. With so many people
Small Towns having Pets instead of children, products and services that
help people care of their four-legged family members are
in almost always in demand. That is why opening a pet
store in a small town can become a big deal. Here, it need
not be confused with a veterinary pharmacy, which
requires training and multiple licenses. We are talking
about a store with pet products, such as treats, leads,
collars and of course small creatures. This business idea
is simple to implement and always in demand among
locals.
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B. SERVICE BASED BUSINESS IDEAS:
16. Pathology Lab/ Diagnostic Centre :
Minimum Rs. 5,00,000.00

Investment
Pathology is a very critical term which explains the art or
science of determining the cause of a particular disease. It
deals with the laboratory examination of samples of body
tissue for diagnostic or forensic purpose. Nowadays for
Suitability every disease, doctors ask the patients to undergo
Assessment for medical tests such as blood test, urine test, etc. All these
Small Towns are carried out at the pathology lab. The need for these
labs has been increasing day by day due to direct increase
in the number of patients. Therefore, setting up a
Pathology lab or diagnostic centres has turned out to be a
real profitable business in small town.
17. Hospital/ Medical Polyclinic :
Minimum Rs. 2.00 Crores

Investment
Lifesaving healthcare is a human right which every
individual deserves. Whether super rich or middle class,
every individual should be at an approachable distance of
good healthcare facilities. Therefore, some of the first
Suitability business options that readily come to mind when it comes
Assessment for to starting a business in a small town is to open a hospital.
Small Towns Realizing that the existing infrastructure is insufficient to
effectively implement its newly launched Pradhan Mantri
Jan Aarogya Yojana (PMJAY), the government has
prepared a draft policy to facilitate opening of private
hospitals across India. But before you establish your
hospital, you must conduct your market survey and
feasibility studies to be sure that there are no hospital in
the community where you intend opening your hospital.
Hospitals are indeed needed in small towns.

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18. Private Ambulance Service :
Minimum Rs. 6,00,000.00

Investment
Accessibility to emergency health services especially
emergency transportation care is an important factor which
can contribute significantly to the improvement of basic
health indicators like Infant Mortality Rate and Maternal
Suitability Mortality Rate and increased levels of safe and
Assessment for institutional deliveries. Ambulance service is an integral
Small Towns part of pre-hospitalization. Ambulance service is an
essential service during emergency for transporting
patients from houses, accident sites and hospitals. It
involves preliminary care (first aid which happens on the
spot), fastest possible transport and care during transit.
The supply chain operation of an ambulance starts with
calling an ambulance and finishes with transferring the
victim. Hospitals and medical facilities should be of top
notch even if it is a rural area or a small town. Therefore,
private ambulance services is a great business idea.
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19. Veterinary Clinic :
Minimum Rs. 6,00,000.00

Investment
Many of us view our pets as an integral part of our
family. Others rely on the health of their animals for
their livelihood. Veterinary clinics ensure our animals
receive the vaccines and care needed to live a long and
Suitability healthy life. There are numerous fulfilling and lucrative
Assessment for career paths for people with a passion for animals and
Small Towns starting a veterinary clinic is one of them. While
many veterinarians choose to work as associates within an
established practice, some decide to venture out on their
own and build a new practice from the ground up. . As a
matter of fact, if you are a veterinary doctor, this is the
most suitable business that you can successfully start in a
small town. Just ensure that you locate your vet clinic
close to a place where there are Pet owners, Animal farms
and Cattle ranches etc.
20. Common Services Centre (CSC) :
Minimum Rs. 50,000.00

Investment
The Govt. of India wants to create a network of CSCs
throughout the country. They are the access points for
delivery of various e-governance services to rural and
remote locations and town areas where connectivity of the
Suitability internet is negligible. If you are looking for good business
Assessment for ideas and thinking about starting a business, it’s a big
Small Towns opportunity, think about it. The CSCs are not just to deliver
services, they are the change agents working for the
promotion of Rural Entrepreneurship, skill development,
digital literacy and more. In fact CSCs are going to be
playing a big role in the implementation of all the important
decisions taken by the govt in the future.
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21. ATM Space :
Minimum Rs. 3,00,000.00

Investment
With growing population across all India, the need for
ATMs is also increasing as getting a basic access to
financial services has become an absolute necessity.
Therefore, setting up an Automated Teller Machine (ATM)
Suitability is a very fast growing investment option in India
Assessment for particularly in Small Towns. If you own a minimum 25
Small Towns square feet of lobby space or 50 square feet of a shop in
an area which needs an ATM or is located in a busy
market area, then renting out commercial space for ATM
or ATM Franchise is a great business idea. Renting out
commercial space for ATMs will give you a monthly fixed
rent but you will have to bear the expense of giving
security deposit at the beginning. On the other hand, if you
take an ATM franchise you can have your own business
without much risk and at a minimal cost. Setting up an
Automated Teller Machine (ATM) is a very fast growing
investment option in India. If the location of your ATM is at
a busy place and the daily footfall is huge, then it is a
profitable business proposition.
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22. On Demand Service :

Investment
On-demand service means you can provide services for
any types of requirements for your customers. On-demand
service may include Home Repair, Plumbers, Drivers, Pest
Control, Carpenters, Mason Works etc. You would simply
Suitability work as a middleman and arrange range of services as
Assessment for per your customer’s need. It is also a type of Service
Small Towns business which you can start with almost zero investment.
To start this small business, all you need is some good link
with the actual service providers in your locality. You may
advertise your business in local newspapers or local
search directories like Justdial.com or sulekha.com.
23. Courier Service :

Investment
Courier Industry is one of the fastest-growing markets in
India. The rise in the e-commerce industry is helping
courier services to grow their business incredibly. Courier
business provides with the complete solution to deliver
Suitability goods in India and across the border. Courier Business is
Assessment for one of the most popular small business concepts for
Small Towns beginners and has huge demands in every place. With the
increasing popularity of online e-Commerce sites like
Amazon or Flipkart, Courier Business is one of the most
lucrative businesses in India. You can partner with big
brands like DTDC, Bluedart, Amazon Flex or E-Kart and
deliver items to your customer’s home.
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24. Travel Agency :

Investment
In travel agency, you need to help people in arranging
travel. You need to help them in ticket booking,
accommodation and food arrangement. Consumers often
choose travel agencies because they help cut down on
Suitability time and are ready to pay charges for good services. A
Assessment for popular trend in the industry is online agencies, which
Small Towns operate mostly or exclusively online. You can also be
an affiliate partner for a big online travel company like
MakeMyTrip or Goibibo and earn a commission from
them. Similarly, you can be an IRCTC official Booking
Agent and earn a commission from Rail Ticket Booking.
25. Home Delivery Service :

Investment
Time has always been a luxury—one that many people
cannot afford. In this busy world no one has time to really
go places to shop so everyone started looking for
businesses that have home delivery services. Smart
Suitability people have learnt to outsource some of the time
Assessment for consuming activities to other people so that they can
Small Towns concentrate on other tasks that they cannot outsource.
You can start the Grocery items delivery Service easily in
local area of your small town. This business idea is getting
very popular in big cities in India nowadays. You can start
taking orders through phone, WhatsApp or online. You can
also advertise your services in local newspapers or any
online local search directory like Justdial.com. Food
Delivery Business is also one of the most lucrative small
business ideas you can start today. You can also create a
Food Delivery app like Swiggy, FreshMenu, Zomato, Uber
Eats or FoodPanda upload food menu or other details
with price and start your own online food delivery start-up.
There is a huge demand these days for delivery services
and the sweet fact is that starting a delivery service
business is extremely easy.
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26. Food Truck& Fast Food Business :
Minimum Rs. 3,00,000.00

Investment
Mobile fast food on wheels is especially popular among
office workers, students, tourists or just busy folk. Food
trucks are not an entirely alien concept to small towns.
Reminiscent of old-world 'Thelas', a food truck is a fast
Suitability food joint on a truck converted into a small kitchen with
Assessment for restaurant equipment. A distinctive feature of this business
Small Towns is the preparation of meals from semi-finished products,
which reduces cooking durations several times over. The
mobility of a food truck allows it to place itself at different
locations at an ideal time. For instance, a food truck can
park outside a school in the afternoon and later in the
evening, outside an office. Food trucks are a perfect low-
cost business option for Small Town as you need not to
invest in real-estate. In this business, you need to modify a
truck or vehicle for accommodating food stoves and other
items. You will need a good cook to help you in this
business. Good taste and the economical price is
important to get success in this business.
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27. Modern Highway Dhaba :
Minimum Rs. 10,00,000.00

Investment
Majorly spotted on the national and state highways, a
Dhaba is basically a roadside restaurant. A good road
network constitutes the basic infrastructure that
accelerates the development process through connectivity
Suitability and opening up of the backward regions to trade and
Assessment for investment. A number of commercial establishments have
Small Towns grew up on the sides of the highway that cater to the day-
today needs of the commuters and the consumers. The
roadside Dhabas are synonymous to a quick place to grab
a bite. Initially frequented by truck drivers or passengers,
eating at a Dhaba is for everyone and loved by most. They
are situated mostly on highways and many modern
Dhabas serve both local as well as international cuisines
including Breakfast, Tiffin, Lunch and Dinner. Road-side
modern Dhabas offer tremendous market potential to
those looking to get into low-cost-high return business
opportunities, considering their growing appeal among the
consumers today. All the highways across the Small
Towns provide ample opportunity for Dhaba business and
is witnessing a steady demand already.
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28. Gym or Fitness Centre :
Minimum Rs. 12,00,000.00

Investment
Social network is as wide in small towns as in metro cities
and fitness is one of the trends that have percolated to
small towns. People are now more aware of the
immeasurable benefits they stand to gain when they enrol
Suitability in a gym or fitness centre. It is now obvious to the general
Assessment for public that they can stay healthy, improve their lifestyle
Small Towns and live longer if they exercise regularly. Though fitness
centres will demand a one-time heavy investment but
pretty low maintenance charges. Things like feasibility
studies, mentorship with an expert or consultant all will
help broaden your horizon.
29. Warehouse for E-Commerce:
Minimum Rs. 60,00,000.00

Investment
E-commerce sites are sprouting left and right and one of
the requisite of running an e-commerce business is that
having an warehouse space. Enterprising business men
often would lease a warehouse or part of a warehouse in
Suitability order to store their unsold stock and among other items.
Assessment for Renting or leasing a few warehouse storage systems
Small Towns provide e-commerce sites a complete order fulfilment and
storage solution, given that it costs less than actually
owning warehouse. This is a business idea with
substantial investment but has good market potential in
Small Town specially in Headquarter towns.

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30. Appliance Repair Service :

Investment
Household appliances like Consumer electrical items and
electronic items are very popular but require servicing and
repairing maintenance at some point of time. With every
society using such appliances, the demand for servicing and
Suitability repairing is bound to increase in the future. Opening an
Assessment for appliance repair shop is another money spinning business
Small Towns that an aspiring entrepreneur who is looking towards starting
a business in a small town should consider starting. One
good thing about this type of business is that you can learn
the technical skills from someone who is already in the
business or from a technical school. All you need to do is to
rent a shop in a good location in a small town and then setup
your shop and advertise your electronics repair business. If
you are lucky to be one of few repair technicians in your
locality, you will sure make good money from this type of
business.
31. Mobile and Smartphone Repairing :
Minimum Rs. 1,00,000.00

Investment
Mobile Phones or Smart Phones have become very
essential items these days that almost every one owns. It
is also true that smartphone is just an electronic device
that breaks or often gets damaged and needs to repair.
Suitability Unlike large cities, small towns don’t often have many
Assessment for mobile repairing shop. In most cases, people have no idea
Small Towns where to have their gadgets repaired after the expiration of
the warranty. The stores where the gadget was purchased
usually recommend using it for spare parts and buying a
new one. Therefore, if there is a lack of service centres in
your town and you are well-versed in the technology or
know people who can perform this work well, then think
about opening this kind of business. This presents a
potential business opportunity for entrepreneurs interested
in starting a mobile and smartphone repair business.

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32. Computer and Laptop Repairing :
Minimum Rs. 1,00,000.00

Investment
Since the introduction of open market economy, popularity
of computer and in recent time laptop has grown
exponentially in India. This coupled with wide spread
computer training has supported it to become a household
Suitability item. Today a significant portion of Indian urban population
Assessment for has one or more than one desktop or laptops at home.
Small Towns Repairing of computers (Desktops and Laptops) is yet
another thriving and profitable business idea that an
entrepreneur who is looking towards starting a business in
a small town can successfully start. All you need to do to
get this business going is to acquire computer repair skills,
purchase the required repair tools and then rent a shop in
a good location. Given the size of country’s population it
creates quite a huge demand for computer and laptop
servicing centres.
33. Automobile Repairing and Servicing Centre :
Minimum Rs. 3,00,000.00

Investment
Automobile repairing and servicing is a most commonly
known activity in almost all urban areas where all types of
motor vehicles like cars, buses, lorries, jeeps, etc. are
periodically sent for repairing and servicing. Improper
Suitability maintenance of vehicles, present conditions of roads,
Assessment for irresponsible driving, using cheaper spare parts, etc. are
Small Towns the main reasons for break-down of the vehicles. Service
station is the most essential unit to vehicle users. This unit
can be established in urban, semi-urban and village areas
to meet the local requirement. Candidates having good
experience or qualified persons can start this unit with low
investment.
34. Two Wheeler Repairing and Servicing Centre :
Minimum Rs. 2,00,000.00

Investment
The number of two wheeler (such as Scooties, Motor
Cycles etc.) owners are increasing every year in both the
rural and urban areas. Due to wear and tear, friction, the
life of vehicles decreases as such, repairing and servicing
Suitability is always required. So the business of providing repair
Assessment for services appears to be very promising. All it needs is a
Small Towns very small place and the manpower who can work with
limited equipment to provide quick repair services to the
two wheelers used in towns.
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35. Gents Saloon :
Minimum Rs. 2,00,000.00

Investment
Hair cutting and hair dressing is a periodic and essential
service for men. There is good scope in running such
services in Small towns. Gents salon that include services
such as facial, massage, herbal therapy, marriage
Suitability functions, etc., are in great demand. Now-a-days, many
Assessment for gents salons have come up and are running well. Market
Small Towns demand for such services is always in demand; therefore,
an entrepreneur can start one with little investment. Since
there is stiff competition from other salons, punctuality in
opening and closing of shop every day, customer dealing,
serving and satisfaction of customers can boost sales.
36. Ladies Beauty Parlour :
Minimum Rs. 3,00,000.00

Investment
Ladies Beauty Parlour is yet another highly thriving and
profitable business that an entrepreneur who is looking
towards starting a business in a small town should
consider starting. Beauty Parlour provide treatment to
Suitability women to increase their beauty such as skin care, facial
Assessment for make up, hair nourishment, model hair cutting, herbal
Small Towns therapy, manicure, marriage functions, etc. Due to change
in lifestyle as well as consciousness about their beauty,
more women are frequenting and availing services
provided by beauty parlours. There is good scope in
starting a beauty parlour by an entrepreneur with minimum
investment.
37. Laundry and Dry Cleaning Service :
Minimum Rs. 30,00,000.00

Investment
Demand for laundry and dry cleaning is increasing day by
day in tune with the population growth in small towns and
rural areas. As more and more people are engaged in
different jobs and time is not available to wash their
Suitability clothes, linens etc., such service can be setup to cater to
Assessment for the demand. There is great potential market opportunity
Small Towns for the new entrepreneurs to set up such servicing units
with minimum investment. Laundry services require a
relatively higher onetime investment but the costs can be
recovered quickly. Initially, you can attract customers with
cheaper yet quality services. A pick and drop service will
be essential to spread the reach of your customer base.
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38. Tent House :
Minimum Rs. 10,00,000.00

Investment
Tent house items (supplying of Pandals, Furniture, Tents,
Utensils etc.) are required by all sectors of society on
social and personal occasions/functions such as marriage,
festivals, political and government functions etc. There is
Suitability good market demand in rural and urban areas for both tent
Assessment for house as well as decorator. There is good prospects and
Small Towns scope in investing in this business unit provided that the
unit maintains the quality service and competitive pricing.
39. Motor Driving School :
Minimum Rs. 3,00,000.00

Investment
A driving school teaches people how to drive a vehicle
offer advisory and consultancy services such as renewing
of license and car documents, technical knowledge of the
vehicle and sale of merchandises etc. Individual interested
Suitability in purchasing a vehicle will need to learn how to drive, so
Assessment for setting up of driving school will enable them to learn
Small Towns driving; therefore, there is good scope for the new
entrepreneur in starting a driving school.
40. Packers and Movers Service :
Minimum Rs. 1,00,000.00

Investment
Nowadays, many people are open for home relocation, be
it for better job opportunities or just because they got
transferred or purchased a new flat in same or another
city. So, the demand for packers and movers services in
Suitability India has increased immensely. And there is a huge
Assessment for opportunity to start and scale packers and movers service
Small Towns business in India with low investment. This business does
not require specific technical skill except the skill to pack
an entire household into a few cardboard boxes. The
business dynamics are good, and the business offers
good operating margin.
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C. DEMAND BASED BUSINESS IDEAS:
41. Yoga Studio :
Minimum Rs. 2,00,000.00

Investment
Yoga studio business is a profitable and lucrative business
opportunity in the health and wellness industry. The
increasing awareness of consumers from remedial care to
a preventive care approach has created an enormous
Suitability potential for initiating a yoga studio for the entrepreneurs.
Assessment for Moreover, this is one of the most lucrative business ideas
Small Towns for small towns.
42. Pre School :
Minimum Rs. 10,00,000.00

Investment
Pre School has become the new essential requirement in
the first steps of education of the children/toddlers.
Preschools generally provide early education and care for
children aged between two to six years. One strong
Suitability disclaimer though, owning a pre-school is a huge
Assessment for responsibility and required undivided attention on the
Small Towns children. Pre-Schools can be opened in domestic spaces
with a onetime investment on safety and educative
materials. In today’s time, as both the parents are working,
the demand for Pre-school facilities is growing and is
expected to increase at a higher pace in near future.
43. Water Refill Station :
Minimum Rs. 4,00,000.00

Investment
Water is essential for our everyday routine life. People
need to drink water in order to live. However,
contamination makes our waters polluted and not potable.
Because of the high demand for cleaner water, starting a
Suitability water refilling station business becomes one of the most
Assessment for promising and profitable business today. If you live in a
Small Towns small town where people find it difficult to access clean
and portable water, then you should consider opening a
water refill station. Water refill station requires low running
cost and it is indeed a profitable business.
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44. Small Scale Manufacturing :
Minimum Rs. 2,00,000.00

Investment
Small scale manufacturing business such as disposable
paper cups, plates, paper bags etc. can be a good
business idea for Small Towns as these things are always
in high demand. It does not require huge investment,
Suitability mostly the capital is invested in raw materials and
Assessment for resources which are easily available. Indeed, products
Small Towns made by small scale industries are in greater demand
since product quality is often higher and prices are
competitive.
81
45. Bakery :
Minimum Rs. 10,00,000.00

Investment
Bakery items have huge demands in every place even
either it is a small town or a big city. The smell of a freshly
baked pastry in the morning will make even the laziest
person in the world get out of the bed and buy fresh bread
Suitability with a crispy crust for breakfast. Bread is an important part
Assessment for of people’s lives and some of us can’t imagine breakfast
Small Towns without Bakery Products like Biscuits, Cookies, Cake and
Bread etc. That is why opening a bakery is a very
profitable option as a small business.
46. Flower Business :
Minimum Rs. 4,00,000.00

Investment
It’s hard to imagine a wedding, birthday, fair or a romantic
date without flowers. To run a successful flower business it
is not necessary to open a huge garden centre or a luxury
flower boutique (although it depends on the audience you
Suitability are targeting). A flower shop does not require huge
Assessment for investments to open, and it has a significant margin that
Small Towns can reach 200–300%. There are also drawbacks in this
business like seasonal sales, perishable nature and the
possibility of damage during transportation. You can
cooperate with suppliers or grow the flowers yourself,
thereby expanding the boundaries of your business. One
can purchase flowers from a rural area and sell them in
the urban area.
82
47. Home Stay Business :
Minimum Rs. 30,00,000.00

Investment
Homestays are private houses providing accommodation
to tourists with homely ambience. It is a living arrangement
offered by a host or host family that involves staying in
their well-maintained house. The Home Stays can be
Suitability offered from an existing home, a renovated home or a
Assessment for building that has been specifically designed to provide
Small Towns overnight accommodation for the tourist at affordable cost.
This business gives an unique opportunity for the local
house-owners, especially the housewives, to find income
opportunities in new destinations and Small Towns with
minimal or no investment. It also plays a central role in
nurturing local communities and in making women
financially independent by earning extra income while
being at home.
83
48. Mini Cold Storage Room :
Minimum Rs. 20,00,000.00

Investment
Cold Storage is a special kind of room, the temperature of
which is kept under controlled condition with the help of
machines and precision instruments. In the absence of
cold storage facilities, the small farmers of rural areas
Suitability mostly sell their produce in the nearby market. In case of
Assessment for surplus production, the farmers are forced to sell at
Small Towns substantially lower prices or sometime the crop is wasted
in the farms. The concept of cold room is to store
vegetables, fruits and flowers for shorter duration for which
a small and marginal farmer can store products and sell it
without deterioration of the product. Farmers will also get
appropriate value of the product. The farmers can
establish cold rooms having 10 MT capacity where the
storing of surplus quantities may vary from 100 quintals.
Since the investment of such cold room is low a farmer
can easily establish a cold room to store his surplus
products. Such cold rooms will have the provision of
utilising solar power as well based on suitability.
84
49. Livestock Farming :
Minimum Rs. 5,00,000.00

Investment
Livestock farming is best suited for small towns as they
can be well managed there in a cost-effective manner. The
only major cost would be to create a hygienic set-up and
transport it to the required location without many delays.
Suitability The basic idea here is to deal with eggs and meat of
Assessment for animals. In this business, you need to take the utmost
Small Towns care in terms of the living environment, feeding and other
basic requirements. It is advisable to gain some
experience before starting livestock farming. It definitely
requires some initial investment but returns are high on it.
50. Organic Farming :
Minimum Rs. 5,00,000.00

Investment
Organic farming means naturally farming of crops without
using fertilizer, pesticides and chemicals. One can start an
organic farming business in the rural area. The major
investments include purchase of land, agricultural tools
Suitability and equipment along with good seeds for a healthy yield.
Assessment for Initially the returns will not be very high, however as time
Small Towns passes you will earn a healthy income by selling the
agricultural products. In a rural area, a lot of lands are
available at a lower cost. If you have expertise in farming
you can enter into an evergreen business of organic
farming.
85
CHAPTER-20
CONCLUSION
Entrepreneurs have many personalities. A number never finished college. Some are
fiery revolutionaries. Some are gentle souls with a good idea. Some are driven but
difficult. Some have grown up in the most difficult circumstances imaginable -
emerging with enormous determination to strive for greatness. Others are pleasant,
personable and compassionate renegades. Generally, there will be a life event, key
motivator or a source of inspiration that causes a person to strike out on their own
rather than work inside a larger company. Sometimes it is cubicle fatigue or, worse,
getting fired. Other times it is an "aha moment" where an insight or innovation into
how an industry or business could be done differently arises. Sometimes it's a bad
boss.
Do you dream of quitting your corporate job in the big city and moving to a small
town to start a small business? Well, You’re not alone! For many people who want to
become entrepreneurs, starting a business in a small town has a lot of appeal. Given
the new economic reality of our time, more people than ever have found the "Job"
they thought was waiting for them doesn't exist. Others come to the conclusion that
they would rather create the kind of work they love or develop to suit with their own
life goals. Most people spend a good deal of their time working for a company and
realizes lately that they can take that experience to make their own way. No matter
what the motivation is to be your own boss, you can start on any day.
Brick-and-Mortar Retail or Online? Service or Manufacturing? Independent or

Franchise ? Consumer or Business-to-Business? There are dozens of different types
of businesses, one can start. However, becoming a successful entrepreneur is not
that easy either, it’s a path full of ups and downs. And fear of failure stops many
entrepreneurs from starting BUT what if you succeed?
Opening a new business is the perfect chance to start gaining experience and
building your skills in sales and operations. Whether you are starting an online
business or a brick-and-mortar model but don't know where to start, don't worry.
Following the important basic steps explained in this E-Book would help transform
your business from a lightbulb above your head to a real entity.
The most important qualities of a good entrepreneur are energy and determination. It
doesn’t hurt to be persuasive, but this can be learned. Entrepreneurship is a form of
enlightened gambling. Skill and tenacity are big factors, but luck plays a big part.
However, as long as you can keep picking yourself up when you get knocked down,
try different things and keep learning, the odds are in your favour. You just have to
dare to chance them.
Starting a Business is somewhat like parenting. Everyone assumes you know what
you’re doing, but babies and companies don’t come with instruction manuals. You
stumble through it, learning as you go.
86
Dream something BIG, Really BIG and dream that with open eyes. If you have
enough courage to dream something, you surely will have the courage to execute it.
Small towns have significant business upsides. First of all, less money and overhead
is necessary to get off the ground. Secondly, it’s simpler to set up a business in a
small town where people know one another and networking is easy. Small towns
have a much lower cost of doing business. They have less taxes, utility costs and
real estate costs compared to an urban environment. For just about any start-up,
keeping costs low is crucial to stay afloat. Furthermore, the internet allows for so
much connectivity, there’s no need to be in a big city to reach potential customers.
Don’t assume that just because you are launching your business in a small town,
you can do the bare minimum and still succeed. Your business will be more visible in
a small town than in a larger community, so any mistakes you make will be
magnified and can be harder to correct. What’s more, just because you currently
own the only Mexican restaurant in town doesn’t mean that will last. Put as much
effort, heart and energy into your small-town start up as you would anywhere else,
and the community will reward you with success.
Hope, by now you are almost determined to be an entrepreneur. Hence from now
onwards, you should invest your time in building yourself, your business by acquiring
new skills, learning from experiences and customer feedback etc.
87

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START YOUR SMALL BUSINESS IN SMALL TOWN

 This Document (E-Book) is also expected to provide general guidance to

 The team members of “Dollar Power Projects” have been developing

CHAPTER-19 50 PROFITABLE BUSINESS IDEAS FOR SMALL 59

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No matter what type of business you start—selling physical products, offering up

PONDERING ABOUT STARTING

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 Opportunity to Make a Difference in the World,

 India has the world’s third largest number of start-ups.

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BUSINESS AND EMERGING TRENDS IN BUSINESS

A business enterprise is an economic institution engaged in the production and/or

There are always risks involved in running a business. Perhaps an insufficient

EMERGING TRENDS IN BUSINESS

Network Marketing : Network marketing is basically a medium of marketing that

Franchising : Franchising is a term which defines the business relationship between

Franchising is a great way to expand a business without incurring additional costs on

Business Process Outsourcing (BPO) : Business Process Outsourcing, popularly

Knowledge Process Outsourcing (KPO) : Knowledge Process Outsourcing

E-Commerce : The standard definition of E-commerce is a commercial

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M-Commerce : M-Commerce or mobile commerce refers to the buying

M-commerce is actually a rapidly growing sector of e-commerce. Nearly 70% of the

THE EASE OF DOING BUSINESS IN INDIA

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12 BENEFITS TO START-UPS BY INDIAN GOVERNMENT :

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Let us understand more about benefits of Start-up India.

1. Equal Opportunity : Equal opportunities will be provided to both start-

2. Simple Process : Start-up India enables companies to register through

4. Easy Access to Funds : A 10,000 crore rupees fund is set-up by

6. Apply for Government Tenders : Start-ups can apply for government

8. No time-consuming Compliances : Various compliances have been simplified

SMALL TOWNS MAKE SENSE FOR BUSINESS

The Business Environment in Small Towns is characterised by following

2. Local Government extends supports and necessary infrastructure facilities like

4. Availability of labour particularly of semi-skilled and unskilled type is easy and

 Skilled labour is a problem in Small Towns. So many people who work in

2. Networking Opportunities : The aspiring business owner can’t deny the

3. Less Competition : One of the most obvious and most beneficial

5. Community Support : The community support found among community

6. An opportunity to Help the Economy of a Small Town : When you start

8. Future Opportunities : Whether you seek it or not but being an entrepreneur

Potentiality of setting up Business Houses in Small Towns

1. Start-ups should be started at Small Towns :

2. MNCs should not stick only to Metropolitan Cities :

3. BPOs should give it a thought :

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START SMALL TO STAY LONGER

Everyone wants their business to be successful, with multiple locations, lots of

Here are 3 most important benefits of starting small;

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BASIC STEPS FOR STARTING A BUSINESS

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A) Exploring the Business Ideas :

i) Observing Markets: Careful observation of markets can reveal a business idea.

iii) Development in other Nations: People in underdeveloped countries generally

i) Government Organisations: Several government organisations nowadays assist

i) Technical Feasibility: It refers to the possibility of producing the product. Technical

ii) Commercial Viability: A cost benefit analysis is required to ascertain the