written by Khatabook | July 13, 2021

Best Small Business Ideas for Rural Areas, Villages, Small Towns in India

With 70% of the Indian population living in small towns and cities, there are a lot of new business opportunities in these areas. Agriculture is the main source of income in rural areas in India. Most of the existing profitable businesses in these areas are agriculture-related. However, there are hug e rural area business opportunities in India.  

Small Business Ideas for Rural Areas: Making India Self-Reliant 

1. Farming Poultry

Starting a chicken farm does not require a lot of money or land. The only responsibility is to rear small chickens for a few weeks before selling them in the market or to wholesalers. Cash investment is needed to start a poultry business; however, returns are not immediate. As a result, it is recommended to start this business on a contractual basis. You can sell both meat and eggs from a poultry farm.

2. Clothes Shop

Because most villages are far from major city areas, a clothes store that sells the latest clothing options and quality fabric will be a success. With the spread of the internet into Indian villages, city-style clothing is becoming popular in villages. Owners of businesses will need to identify garment suppliers that can bring a selection of clothing on commission. This can be a great business idea in village as villagers can't travel to cities often.

3. Store for Electronics, Mobiles, and Accessories

India has one of the largest numbers of mobile users including in our villages and towns. A local electronics and mobile shop can provide the necessary telecom services to most of India's population living in rural areas. Even in villages landlines are slowly going out of use, whereas cellphones have become a necessity in rural areas.

4. Fertilisers and Seed Storage Facility

Farming is the main occupation in Indian villages. Agriculture-related products like pesticides and fertilisers are always in demand. Though farmers get most of their supplies from wholesalers, these wholesale markets are at far off places. A retail outlet will make their lives easier. Small farmers often don't have safe storage spaces, resulting in loss of grain stock. This business idea for small village fits right into the local economy. 

5. Fruits and Vegetables Shop

Not all farmers in Indian villages grow fruits and vegetables. However, villagers need fruits and vegetables for consumption. You can open a single fruits and vegetable shop or ask a group of people to open a chain of shops. These perishables can be bought in bulk from a local grower at wholesale prices. This can create a sustainable model without the farmer or a retailer having to go to a mandi.

6. Milk Centres

A person must contact a dairy farm to build a dairy centre. Milk centres collect milk from villagers and sell it to dairy farms. As most village families own livestock, it is easy to get the supply needed. 

7. Bakery

A bakery can be one of the most profitable small business enterprises. This business can be initiated by owning or renting space. You need to select products as per local demand. 

8. Banana Wafers

Banana wafers are under-mature bananas that can be consumed as snack food or dessert, sliced in pieces dipped in a syrup solution, fried or baked. You can pack them and sell these products in the local market and supply them to urban markets too. You can start this business at a modest scale, making it a great business idea for a small village.  

9. Bridal Store

Wedding ceremonies are a big deal in all Indian cultures and setups. Because quality products are often not available in the local shops, villagers have to travel far to towns or cities to get wedding-related clothing. A bridal shop with suitable wedding dresses and related wedding goods is a profitable business in rural areas.

10. Candle Making

Aromatic decorative candles are popular. It is also used as a gift item. Candle making can be started with minimum cash input as a small business opportunity in rural areas. Women, in particular, can try setting up this business and supply it to the local shops.

11. Coconut-Based Enterprise

Coconut production is critical to the coastal economy. If you live in an area where coconuts are abundant, consider launching a coconut-related business. 

12. Jute Bags Making

Jute is a natural material that is popular and durable. Designer jute bags have a high market demand within India and abroad. Industrial level jute bags are used in packing and transporting all sorts of raw and manufactured products. You can start a jute bag manufacturing unit at home if you have simple machinery. Jute yarn, jute textiles, and other jute items are in high demand due to their eco-friendliness.

Also Read: Top 10 Cities for doing business in India

13. Services for tutoring

The shortage of well-trained instructors in rural areas is a significant issue, and it may be an excellent small business idea in villages. Local government schools are often not skilled enough to pay extra attention to promising students. Due to a lack of awareness within local areas villagers often have to spend big money on education in the city. A tutoring centre with skilled teachers can kill two birds with one stone. It can generate employment and well-educated future generations from rural India, adding to their long-term development.

14. The mode of transportation

Some Indian villages still don't have proper vehicles to travel to other villages and towns. Because a significant portion of transportation in villages lacks organisation or structure, this can be an excellent economic potential. The starting cost of this business is the cash needed for buying vehicles. You can lower your cost by renting out local cars or buying them second-hand. One thing to keep in mind is that the overall income level of the Indian rural population is not very high. As a result, you must ensure that the fares people pay to use your transportation service(s) are not expensive. Lower fares can be set by running shared vehicles. 

15. Providing difficult-to-find things in the village

Several goods are nearly impossible to find in villages. As a result, you will have a grasp on all of those market economies if you start selling goods. These products could include a specific crop and/or grain, computerised and automated devices, and so forth. Indian villages are gradually progressing with technological improvements. Selling electrical items such as cell phones and computers, for example, can be a game-changer, given that practically all Indian villages have electricity. As a result, all you need to do is identify the unique selling characteristics of these things, and you will be able to simply sell them.

Also Read: How to Apply for the Best Business Loan in India? - Types of Govt. Loan Schemes

What are the advantages of small-scale industries in villages?

  • Small businesses in rural areas can help generate employment and have positive effects on the overall economy. 
  • Multiple small businesses in rural areas can significantly change the local standard of living by increasing local income and buying power. 
  • This also helps rural and small-town India to become self-sufficient.
  • It helps city migrants go to cities looking for jobs; if there are jobs available in local areas, they wouldn't have to live away from home.
  • It is easier to start small businesses in rural areas as there is less paperwork, regulatory rules, or other roadblocks to take care of.

Percentage of people engaged in different small businesses in rural areas in India

  • Proprietary – 48.4% 
  • Partnership – 4.7% 
  • Government/ Public Sector – 27.6%
  • Private limited –  6.2%
  • Trust / NGO –  3.1%
  • Others – 9.9% 

Issues Faced by Small Businesses in Villages and Rural Areas

1.  Monetary problem

Small businesses face a massive problem of a lack of capital money. This leads many villagers or small-time businesspersons to either not think about starting a business or shut down an existing one. They often can't apply for loans or other financial help as they don't have a lot of credit value. Small firms have a bad credit rating.

2. The raw material

Businesses require raw materials for production. The final product quality depends on the raw material used. However, due to limited cash, these small businesses can't afford to buy high-quality raw materials for manufacturing.

3. Management abilities

Small businesses from towns or villages rely on a small staff to carry out various tasks. Sometimes the entire business is handled by a single person without any help. This can affect the work quality and business because of no help or backup. 

4. Skilled people

Small businesses usually have to manage with unskilled or semi-skilled staff for any given job. Plus, since the salaries are low, staff members often lack interest in doing the work properly. This decreases production, harming the business, resulting in the shutting down of small businesses. 

5. Commercialisation

The mode of marketing or advertisement in rural areas is still very basic. A flyer or a mobile loudspeaker are ways of letting people know about your products. These are not very effective ways of reaching out to more customers. These businesses also don't have any experience in modern ways of marketing. Due to a lack of sufficient tools, direct marketing is not possible.

Also Read: Top 10 Cities for doing business in India

Conclusion 

There has been a growing number of opportunities in the manufacturing industry and other sectors in urban areas. However, many of the unemployed youth live in towns and villages. Due to this, small-scale industries in villages can take care of two big problems the Indian economy has faced- unemployment and low production of goods.

Some very doable village business ideas can help the local youth find ways of income within their backyards. Small yet profitable, these small business ideas for rural areas can improve rural lives without being dependant on government help and schemes. 

Frequently Asked Questions

1. What do I need to be successful in business?

There are four key requirements for success of a small business: 

  • Communication
  • Marketing
  • Maintaining quality over quantity
  • Ensuring consistency

Most people start a firm with all of these factors. Sound management techniques, industry experience, and technical support planning abilities are required. You can also use your experience and skills or hire skilled labour so that the business can be successful. 

2. How much funds will I require to get started?

You must have enough money on hand to pay running expenses (fixed and variable expenditures) for at least one year after you have taken care of your building and equipment needs. These costs include your compensation as the owner as well as money to repay your debt. Inadequate start-up funding is one of the primary causes of business failure. As a result, you should work together with your accountant to predict your cash flow requirements. Writing a business plan will offer you accurate information about your funding requirements.

3. What about marketing/advertising?

The success of your business will be determined by how successfully you plan and execute an advertising campaign. It must be well-planned and well-financed because it is one of the primary creators of your company's image. Contact local advertising companies or an SBA office in your area for assistance in developing a successful advertising/promotional campaign.

4. Can I run a business from home?

Yes. Analysts have estimated that almost 20% of small businesses are often set up from the owner’s home. You can also get helpful information from local resources or the State Chamber of Commerce regarding conducting business from home. 

5. What distinguishes small enterprises from large corporations?

Because of its flexibility, a small business can outperform a large one. Because of their size and scale, large corporations frequently lose customers because of their lack of customer focus.

Smaller firms, on the other hand, have more personal interactions and interactions with their clients. This means they can provide more excellent customer service, implement immediate product/service development, and adjust to industry changes more quickly than larger competitors.

6. What is the best way to run a small business?

It takes a lot of effort to run a small firm and handle day-to-day operations. Here are ten pointers to help you run a successful small business:

  • Manage your finances and accounts properly.
  • Describe how you intend to expand your business.
  • Reduce your small business expenses.
  • Transfer work that consumes an excessive amount of time.
  • Invest in employee training and development.
  • Reward your employees for excellent performance and ensure that you are legally compliant.
  • Consider renting rather than buying to fill holes left by your competitors.
  • Improve your client service.

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