Problems Coming in Front of Small Businesses in India

Small businesses are one of the most important contributors to the Indian economy. As the pandemic broke out, small businesses turned out to be the worst sufferers. A huge part of small businesses in India shut down in the last two years. Now, when the problem is almost over, what shall small businesses do? Should they take a deep breath of relief or roll up their sleeves for the next? Sadly, they must act as the latter.

Knowing the problem makes it easier to find a solution. It can be helpful to guess what might cause the problem. The purpose of this article is to identify the most chaotic elements that can lead to problems for small businesses in future.

Tech Invasion

Several things including technology succour big businesses while causing trouble for the smaller ones. In reality, the problem is not with the technology but with small businesses not understanding how they can use it to add value. Businesses that do not embrace or adopt technology may lose clients or even close.

Technology helps businesses to market themselves, serve the client and manage things more effortlessly than ever. The ease of access to the internet led to 518 million social media users in India in 2020. Understanding this fact, small businesses need to understand its importance and use it to the fullest.

Even though many businesses are utilizing social media these days, a large part of them is unaware of its benefits. The companies who have already started using social media as one of their main advertising methods have an excellent chance of growing their business and those waiting for some other magic to happen will keep losing money.

Funding Issues

If you want to shut your business, stop putting money into it. The same happens the other way around. Undoubtedly, if you want your business to grow, you must put money into it. It does not have to be a lot of money, but yes, money is important. Businesses require money to run. Maintaining inventory, marketing the brand, and so on require money.

Small businesses often make the mistake of understanding all the money came in as profit. They use their profit in unnecessary wages and end up with a capital shortage. Many small businesses do not plan a backup and put all of their money into the business. Their Financial planning often goes unexecuted.

Improper cash flow management, too much debt and poor tax compliance are some important things that cause problems for small businesses.

New Virus Variants

We saw the damage that covid did to small businesses. The lockdown and social distancing norms forced people to rely on big businesses as they showed themselves as the safest option at the time. Sadly, this led to the shutdown of multiple small businesses while the big one tried and somehow got over it.

Now, when everything is settling back to normal, new variants, said to be more lethal than previous ones, are coming continuously.

 Even though more than one billion people have been vaccinated, people are still afraid of the new variations of the virus. Small business owners should understand the problem and prepare for the next before the situation gets worse.

Low Birth Rate

As published in a report by the ministry of health and family welfare, India crude birth rate is shrinking which will end up generating a demographic time bomb. As of 2021, India's birth rate is 17.377 births per 1000 people, a 1.22% decrease from 2020. India has 36 states and union territories, of which 29 have fertility rates of 1.9 or less. This will soon tackle the replacement level of births and deaths occurring in India. A replacement level of birth and death rate is important to be maintained as it affects the population growth. Slows population growth and gives time to resources to renew.

If the birth rate continues to fall, we will end up with a large number of old people who are not productive and need excessive care in terms of medical expenses. If the birth rate grows up vigorously, the country will have many children. Children are also counted in the productive population and need the same care as old people do. Therefore, the birth rate plays a pivotal role for businesses. Small businesses should understand these demographic trends to target the customers in a more effective and personalized way.