Which small business is best in India? Small business 30+ stats

Have you wondered which business is the best to start? Or which one has the low investment? Well, you are not alone. Many aspire to start their small business in India but don’t know which path to choose.

That’s why this page has covered key statistics related to small businesses to help you understand the scenario and make the appropriate decisions.

Which are the trending small business ideas in India?

Online search has become the first and foremost point of information for most people. So, we analysed over 2000+ search queries related to starting a business with a focus on the Indian scenario.

We utilised the Ahrefs keyword generator to study this data. The output that we got is showcased via the following chart.

Note: ‘Search Volume’ is the number of times a keyword or term related to a topic is searched online.

Here is what we can summarize from the above chart:

• We found that the 12 small business sectors have the most amount of searches in a month. These 12 sectors are Car rental, Grocery, Tutoring & Education, Salon, Pharmacy, Photography, Gym and Fitness, Clothing, Tourism, Blogging, Food and Catering.
• ‘Food and Catering’ has a massive lead above all other small business sectors. It has a whopping 30k+ searches per month. It just shows the popularity to start a small food outlet or joint.
• Starting a blog and becoming an internet entrepreneur is getting traction with time. It is becoming popular as the initial cost to start a professional blog is low.
• There is no relationship between the number of keywords and search volume. Thus, many people have common search terms/queries and ideas.

Hence, this chart gives the idea about trending business ideas in India. It helps in knowing the competition that you might face in future.

Which are the small business ideas with the lowest investment in India?

We wanted to find out some of the small business ideas that have the lowest investment in a country like India. The process involved some online research and going through the experience of people who have already done it.

Our small research revealed the following chart, which includes the approximate initial investment excluding labour costs.

Here are some important points to remember for the initial investments for each of the above small businesses:

a) Blogging:

Blogging can be started with zero investment. However, for custom domain and basic hosting plans like shared hosting, you have to spend some amount. Also, initial digital marketing and expenditure on important components like themes and plugins can take your initial investment to the north of ₹8,000.

b) Tuition Center (Home):

The chart includes the initial investment for the tuition centre that is started from home. Renting commercial space can double the investment. Also, the study included the cost of class study tables, whiteboards, stationery, and initial spending on print and media marketing. Taking the total cost of starting a tuition centre to ₹15000.

c) Tiffin Service (Home):

The initial spending goes into buying utensils and tiffins that can support cooking on a bigger scale than daily cooking for a family. Also, cooking fuel expenditure must be included along with initial marketing. Thus, a person has to spend a minimum of ₹20,000 to start a home-based tiffin business.

One must also remember that the secret of tiffin service lies in loyal customers and their referrals.

d) Home-based Manufacturing:

Many people venture into home-based manufacturing of things like incense sticks, eatables, candles etc. It does involve buying raw materials and learning the craft. Though the initial cost to start such a business varies with the product, the approximate cost to start such a small business is around ₹30000. However, it is important to hire skilled labourers to make it scalable.

e) Grocery Store:

Starting a daily grocery and vegetable business is something that is done by many, and the space is supersaturated. But it is a business providing essential products and is even allowed to do in an emergency like COVID outbreaks.

The cost to start such a business involves buying vegetables and groceries of bulk quality and selling them at retail price. The initial investment to start a grocery store is around ₹50000, including the cost of rent of the store. You can lower this cost if you start it through the home or pre-owned property.

f) Dropshipping:

Dropshipping is a trending business, and many people are getting into it. It is a business where you set up an online e-commerce store and sell third-party products. For example, if you start an online shoe business, you don’t have to buy and store them first; you can sell shoes made by others through your e-commerce store.

The initial investment includes registering your company, building an online store, and marketing it through an online medium. The space is getting competitive, and you have to spend around ₹50000 to get the online store running and hire third-party services for paperwork, creatives, and marketing.

However, you can lower it down it to ₹10000 if you have the intention to do everything on your own.

g) Photography:

Starting a photography business involves buying a camera, and they are expensive. Also, you have to buy other supporting equipment. You can also lower the initial investment with a second-hand camera purchase. Thus, a photography business takes somewhere around ₹70000 as initial investment, excluding shop, assistant, and other photo processing equipment.

h) Cosmetic & Salon Store:

With a very basic set-up on a rented property, a salon or cosmetic business can be started with an initial investment of ₹100000. Also, our study excluded the cost of training and learning the professional craft. The initial investment may increase as per the location and the products utilised for salon service.

i) Food Joint:

Starting a food joint may take a huge investment if it’s a dine-in. The major chunk goes into kitchen setup, rent, and table setup. Thus, to start a dine-in food joint, it is necessary to have a capital of ₹500000. Many people are now moving towards cloud kitchen and takeaway restaurant models to lower the initial cost.

Why are small businesses important to a country’s economy?

Small businesses are the backbone of the country’s economy as they contribute to countries’ growth and employment. The key metric to track economic growth is GDP. But, it’s difficult to figure out GDP contribution at a micro level. Thus, here is the GDP and employment contribution from sectors under which most of the small businesses of India fall.

Data Source: Invest India

Some point that needs to be mentioned here:

a) Handicraft and textile businesses employ skilled labour, which involves creating hand-made carpets, baskets, crafts etc. Though this sector contributes in the least way, it is an essential medium to keep the rich heritage and history of arts and crafts that is endemic to India.

b) Retail and e-commerce sector include small online stores, and retail shops, which employ at least 3.9 crores of people. Hence, many people have their source of livelihood depends on these small shops around the country that run on a small scale.

c) Tourism and hospitality sector is a key contributor to the economy of India. It brings $7 billion of foreign exchange currency and employs around 3.9 crores of Indians. Many of these people work for small-scale businesses that include hotels, tourism companies etc.

d) Food processing is a huge sector that includes dairy and dairy products, fruits & vegetable processing, and the animal industry. The GDP contribution of 12.8% and 11.8% of countries’ employment contribution is due to big food processing corporations, but this data does include small-scale businesses that either provide raw materials to the big processing plants or produce their products on a micro level.

What business to start in India for women?

In a growing economy like India, opportunities are endless, and women cannot be confined to a particular business. Women can and have started businesses in all sectors and became an inspiration for both men and women. There are women who overcame odds and started businesses in field aviation.

However, we wanted to know about the state of women business owners and entrepreneurs in India. Here is the data that we got:

India has more than one crore of women-owned enterprises. The number does sound good, but it is found that in many of these enterprises, women are just owners on paper. They don’t have active participation in running the business.

Also, a business that is owned and managed by women is more of a solopreneurship than an organization with full-time employees. Here is some data on the same:

Data Source: Bain & Company

As you can see in the line chart,

• More than half of urban and rural businesswomen are working without any staff and a personal capacity.
• Only one per cent of women-owned enterprises generate more than ₹50 lakhs in revenue and hire more than 10 employees.
• Rural have more women-led businesses than urban areas.

Thus, women need to take the initiative and start a business on their own. We have very few thriving women-led businesses, so it doesn’t matter which business sector. Women are capable of success in any sector, and the data shows that there is a need for women-led businesses.

Which is the most profitable small business?

It’s a very difficult task to find out the most profitable business as there are tons of factors that determine the profit margin of an individual business. Also, a complex and diverse market like India makes it very difficult to get the right numbers.

But here is a chart that represents the global data of average net margin for eighteen industries representing small businesses. It can give you an idea about the net profit margin for various sectors. However, it can fluctuate a lot based on the demographics and geography of your market in India.

So here you can find the ten most profitable from eighteen industries based on net profit margin in terms of percentage:

Data Source: Damodaran Online

As you can see the most profitable industries are,

• Real Estate (Development) – 9.09%
• Household Products – 8.64%
• Cable TV – 8.37%
• Homebuilding – 7.51%
• Retail (Building supply) – 6.69%
• Food Processing – 5.96%
• Online Store – 5.77%
• Computer Services – 4.24%
• Footwear – 4.07%
• Farming – 3.84%

Also, here are the eight least profitable from eighteen sectors as per the net profit margin in terms of percentage.

The chart showcases the least profitable industries, that are,

• Paper/Forest Products – 3.42%
• Transportation – 2.87%
• Engineering – 2.31%
• General Store – 2.03%
• Grocery and Food Retail – 1.90%
• Apparel – 1.58%
• Restaurant/Dining – 0.83%

Conclusion

So that’s all the stats we wanted to share with you. Hope that it helps the reader in finding the business that is best suited for them.

The stats and charts clearly show the difference between the trending business and the business that is most profitable. Also as per low investment and good net margin data, household business and the online store look like promising ventures. However, the major driving force is your market reading, business acumen, and hard work.

In case we have missed any important stat, please do share in the comment section.