Starting a Small Business - Some Tips to Follow, Including Funding
5 min read | 3 months ago
In the recent years, India’s entrepreneurial spectrum experiences an unprecedented boom. This is due to the rapid growth of both the range of startups themselves and the programs initiated by the state to nurture SMEs. The data provided in the annual report of the MSME Ministry 2020-21 is shocking and greatly inspiring for small business owners.
In India, there are around 6.33 Crore registered MSMEs. Of these, micro businesses make up over 99%, and small businesses are around 0.52%. The presented figures show that micro and small businesses are highly involved in the Indian economy. But, setting up a business, even a micro or small one, comes with its own set of challenges. So, how can you set up a small business effectively? We’ll guide you on that.
Tips on Starting a Small Business
In this era of more modern innovation and technology, opening a business is not simply enough. You should also be aware whether that your business has enough expansion opportunity and market visibility. All of this may appear quite complex and intimidating to you. But it does not have to be so. The following are some helpful recommendations that can lead you in your road to a prosperous small business owner.
Thorough Market Research - In-depth market research is necessary to understand the consumers, market dynamics, and market strategies. It can involve understanding the target consumer’s demographics, behavior, and optimizing the products and services offering to suit the target consumer demands.
Craft a Solid Business Plan - Developing a comprehensive business plan acts as a roadmap by guiding your decision-making process. A business plan should include mission, vision, and values; market overview; product and services description; marketing and sales strategy; organizational structure; operation plan; and projections.
Build a Strong Brand Identity - Having a brand is important for positioning a business image top-of-mind with the target audience. Define your brand's values, personality, and positioning to resonate with your target audience and foster brand loyalty.
Invest in Marketing and Networking - Market yourself as an amazing business that everyone needs to be a part of is essential to grow your business. Network with business advisors, like-minded business builders, suppliers, and customers for insights, ideas, and help with money needs.
Embrace Innovation and Adaptability- In today’s business environment characterized by high levels of turbulence, it is important to innovate the product offering, always keep updated information about the consumers’ sources of product needs, and look at other alternative strategies that benefit the business, including creating e-commerce platforms for products.
But this is not all. While these tips are indeed effective for setting up a small business, there is still one crucial aspect that you should prioritise. So, what is it? It’s funding for your small business. We’ll explain all about funding, how important it is and how you can secure it for you small business.
Funding and How to Raise It
According to the Global Entrepreneurship Monitor (GEM) National Entrepreneurship Context Index (NECI), India stands at an impressive fourth out of 51 countries for the quality of its entrepreneurship ecosystem. However, the journey wasn't without its challenges, particularly during the tumultuous year of 2021, when the pandemic significantly slowed down the economy of the world. India witnessed a dip in its rank, landing at 16th place primarily due to an evident lack of funding. Therefore, it goes without saying. Funding, indeed, is the lifeblood of small businesses, fuelling their growth and sustaining their operations.
If you are a small business owner or planning on starting one, funding is going to be your top-most priority among other things. Now the question is how can you secure funding for your small business? There are quite a few ways for you to choose from. But which ones are the best ways? We’ll list them for you so keep on reading.
Personal Loan: It is a common belief that personal loans are just for purposes like weddings, travel, home renovation, paying hospital bills, etc. However, did you know that they can also be used for funding your business? Yes, you heard that right. Instant personal loans from lenders like Small Finance Banks offer a convenient financing option for entrepreneurs, allowing them to access funds quickly without the need for collateral.
Plus, Small Finance Banks like Unity Small Finance Bank offer collateral-free personal loans up to Rs. 5 Lakhs, for your business operation needs. So, whether you need funding for buying inventory or even work equipment, you can use personal loans for your business necessities.
Government Schemes: The Government of India offers several schemes and initiatives to support small and medium enterprises, including the Pradhan Mantri MUDRA Yojana (PMMY). PMMY provides collateral-free loans up to Rs. 10 Lakhs, to micro and small businesses.
MSME Loans: Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in India's economic growth and development. MSME loans cater specifically to the financing needs of these enterprises, offering flexible terms, competitive interest rates, and tailored repayment options. Eligible businesses can avail of MSME loans to expand their operations, invest in infrastructure, or fulfill working capital requirements.
Business Credit Cards: Business credit cards are a versatile financing tool for small businesses, offering a revolving line of credit for day-to-day expenses, business purchases, and cash flow management. With features like rewards programs, expense tracking, and flexible repayment options, business credit cards provide entrepreneurs with financial flexibility and convenience.
Peer-to-Peer Lending Institutions</b>: Peer-to-peer (P2P) lending platforms facilitate direct lending between individuals or investors and borrowers, bypassing traditional financial intermediaries like banks. By leveraging technology and data analytics, P2P lending platforms match borrowers with suitable lenders, providing transparency, efficiency, and mutual benefit.
Conclusion
Starting a small business in India have both challenges and opportunities, requiring strategic planning and resourcefulness. While the entrepreneurial ecosystem continues to thrive, the need for adequate funding remains vital. By leveraging diverse funding avenues like personal loans and implementing sound business strategies, you can embark on your entrepreneurial journey with confidence and resilience.
FAQs
1. How do I determine the best funding option for my small business?
Assess your needs, explore options like personal loans, grants, investors, and crowdfunding, considering terms, interest rates, and eligibility criteria.
2.What steps can I take to improve my chances of securing funding for my small business?
Develop a solid business plan, maintain accurate financial records, demonstrate market demand, and build a strong personal and business credit history.
3. Are there alternative funding sources besides traditional loans for small businesses?
You can explore angel investors, venture capitalists, government grants, crowdfunding platforms, and peer-to-peer lending as alternative funding sources for small businesses.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
