Small businesses are said to be a Major Driver of any economy, and one of the biggest Job Providers, I am sure India is no exception. Despite that government policies are hardly as Friendly to small businesses as they are to big ones, most obvious reason IMO being that small businesses can hardly afford the services of lobbyists required to tilt policy making to favor them :p. But jokes apart, following is an attempt to assemble the problems, or at least the major ones, that are affecting small businesses in India.
Funding, but naturally, remains a problem. Banks do not provide funding till a small business has at least three audited balance sheets and ITR, and fat ones at that. Entrepreneurs are expected to finance their venture through their own resources. Even non banking financial institutions aren't much better either. Citing an example, if an entrepreneur wants to buy a commercial vehicle for starting a car hire service, he can't buy it in installments unless he can produce like 5 commercial vehicle registration certificates. Though funding remains an issue as is ought to be, but it's not the biggest of all problems.
Bigger problem is the well entrenched Crony Capitalism. Most small BtoB enterprises depend on contracts from large companies. Let alone public sector, cronyism is well entrenched even in private companies.
Another major problem is the absence of a one stop shop for Information with regards to legal compliances, forcing them to either pay through their nose to good CAs, consultants, lawyers etc. or make do with cheap sub-standard alternatives who end up complicating their problems even further.
Corruption being in our DNA, at all levels, is another problem that makes matters worse for small businesses already struggling to make ends meet.
Manpower related issues which is a topic in its own right and a major deterrent is another major problem for small businesses.
And these are just some of the problems that occupy a day in the life of small business. I bow to the quintessential Indian entrepreneur who still perseveres against all odds.
Funding, but naturally, remains a problem. Banks do not provide funding till a small business has at least three audited balance sheets and ITR, and fat ones at that. Entrepreneurs are expected to finance their venture through their own resources. Even non banking financial institutions aren't much better either. Citing an example, if an entrepreneur wants to buy a commercial vehicle for starting a car hire service, he can't buy it in installments unless he can produce like 5 commercial vehicle registration certificates. Though funding remains an issue as is ought to be, but it's not the biggest of all problems.
Bigger problem is the well entrenched Crony Capitalism. Most small BtoB enterprises depend on contracts from large companies. Let alone public sector, cronyism is well entrenched even in private companies.
Another major problem is the absence of a one stop shop for Information with regards to legal compliances, forcing them to either pay through their nose to good CAs, consultants, lawyers etc. or make do with cheap sub-standard alternatives who end up complicating their problems even further.
Corruption being in our DNA, at all levels, is another problem that makes matters worse for small businesses already struggling to make ends meet.
Manpower related issues which is a topic in its own right and a major deterrent is another major problem for small businesses.
And these are just some of the problems that occupy a day in the life of small business. I bow to the quintessential Indian entrepreneur who still perseveres against all odds.
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