Starting and Running a Business in India

Are you looking to start a business or running a business now in India? This article is for you. Let’s understand… Is it Really Easy to Start and Run a Business in India?

India is a developing nation having 1.3 billion population where more than 60% of people are below 35 years old that makes the country a very attractive destination to start a business or investing in the Indian economy. However, this is not the complete picture.

Experts believe that India is a young country as the median age is 26.8 years as on 2015 and that’s why this thing enables great opportunities to start a business.

However, there are certain things that make extremely difficult to start and run a business in India.

Today, I will discuss what are the major things that no one talks about the main difference between starting and running a business in a developing nation and a developed nation. You will get to know what about the things you also need to consider before thinking about starting your own venture in India.

However, there are certain things that make extremely difficult to start and run a business in India.

Is it Really Easy to Start & Run a Business in India?

1. Purchasing Power:

The purchasing power of Indians for buying new things is very low compare to other countries.

However, in tier 1 cities, people have decent purchasing power as their income is high and hence their standard of living too.

If I talk about tier 2 and tier 3 cities, here the situation for starting a company is really poor. One may approach to his relatives and friends. Yet, it would not be a sustainable business if a business owner fails to get new consumers other than relatives and friends.

This thing generally happens because most people do not have that much purchasing power.

2. No Value of Free Service:

In order to gain trust, it’s a good strategy to offer a free service or trial product to consumers.

I being a digital marketer, have observed that consumers leverage free service and they appreciate the work. When it time to ask for a paid service or a product, more than 90% people don’t buy even if the products or services we sell are useful for them.

This is based on my personal experience and people around me who have started their business and tried this strategy.

3. Price:

If we consider India as a market, the fifth largest economy is massively price sensitive market.

Also read: How the Gig Economy is Changing India?

Most of the people who live in tier 2 and tier 3 cities generally prefer products and services that have lower price compare to other related goods. Here the quality is not the focused thing.

Let me give you an example.

Because of tremendous competition, a social media marketing company has to reduce the price of its SMM package. In addition, in order to gain more consumers, the company needs to offer more services at cheaper rates compared to competitors.

For instance…

There is a package of 6,000 INR per year. The company offers 200+ images, 54+ articles, 24+ videos and 50+ festival posts!!! What that means is the price of making one image is less than 30 INR and the price of making a video is less than 250 INR!

However, in tier 1 cities, the majority of the people are willing to pay a good amount for the high quality of service.

Another thing I would like to discuss.

Have you ever noticed why most of India’s IT business (small or big) prefer to work with international clients rather than local clients?

I have been providing social media marketing services on Fiverr as a freelancer and I work with international clients only. The clients pay me in USD and 90% of the clients come from the USA and Canada so with whatever I charge for my service.

I have stopped accepting orders from Indian clients.

Why?

While dealing with Indian clients, generally clients want too much from seller at very cheaper rates. In addition, even after providing great service at minimum rates, these clients never give a tip! When it comes to the client from Europe and the US, they give a tip and appreciate our work.

Hence, there is a huge difference between mentality!

Also read: Best Books to Read Before Starting a Business

4. Manpower:

In order to start a business or run a business, high skilled manpower is one of the most essential things.

Because of the poor education system, startups have to take too much time to find the perfect candidate for their companies.

Unemployment is a major concern for India. However, there is a huge demand of skilled employees.

Many times companies spend too much time and money to train their new employees and after 1-2 years, if the employees left a company, it would be a major loss.

As a startup, without having highly skilled employees in a team, it would be nearly impossible to grow and sustain business as well.

5. Company Registration Process:

India’s rank on EASE OF DOING BUSINESS has been really impressive since 2017. However, the rank is based on only two cities of the country. Bengaluru and Mumbai. It is easy to start a business registration in these two cities only.

GST(Goods and Service Tax) is too much complicated that startups need to hire a charted accountant (CA).

Also read: How to Start and Grow Cloud Kitchen Restaurant in India?

Conclusion:

There are people who believe that each and every business should run successfully in India because of the large Indian market. I used to believe the same but after starting a business, I came to know that it is not that easy as it seems.

These could be also the reasons behind why 99% of Indian startups fail within five years in India.

If you are a business owner or willing to start your business, keep all these things in your mind.

One Small Request:

If you have a friend or a family member who is looking to start his own venture, share this article to him.

It would a lot helpful. If you have your opinions regarding this topic, feel free to comment. If you want to share your startup experience, feel free to comment. I would love to read that.

Thank you.