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A Guide on Starting MSME in India - Part I

Updated on May 14, 2010

 An Overview

Small businesses have been considered the mainstay in countries around the world. Starting a business is one of the most exciting journeys an individual can take. It is reported that over ten million people each year consider starting a business. Starting your own company is definitely one of the hardest things a person can do. Even harder to make it successful. Entrepreneurship is definitely not for everyone. But for those who do venture into it deserves our respect and admiration.

Entrepreneurs are the kingpins of business, not merely men willing to trade for a profit, but are those who create more goods, employment and help in the growth of national income.

At any given moment, millions of would-be entrepreneurs are dreaming of starting a business. Nearly half of all small businesses fail within the first four years. How can you make sure that your small business is part of the 50% that succeed? Too many entrepreneurs underestimate what it takes to start a successful business. The road to launch is seldom easy, but those who arm themselves with the best resources and solutions from the outset have the best chance of success. Small businesses can prove extremely successful when planned properly. Studies suggest that several small businesses, however, close or fail within the first few years of operation. This failure suggests that a majority of small business owners may not have as yet realized the crucial success factors necessary for successful implementation of a small business.

90% of all small business failures can be traced to lack of planning, poor management, and under capitalization. And that is why starting and managing a business takes motivation, desire and talent, research and planning. Success in small business starts with decisive and correct moves. Just being good at one thing doesn't mean it's enough for the business to be successful. The owner should be adept at several things such as hiring, accounting, marketing, public relations, etc. And, although initial mistakes are not fatal, it takes skill, discipline and hard work to regain the advantage.

Despite the important role played by MSME sector in the Indian economy, it is rather difficult to obtain authentic and comprehensive information on various facets of the sector from single source. From taking your own entrepreneurial interest to finding the right business concept, writing a business plan, finding financing, this Guide on Starting MSME in India is your roadmap to small business startup success.

Entrepreneurship development in India

Worldwide, the micro, small, and medium enterprises (MSMEs) have been accepted as the engine of economic growth and for promoting equitable development. The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total export of the country. Further, in recent years the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labour intensity in the MSME sector is estimated to be almost 4 times higher than the large enterprises.

India is world's largest democracy & among the strongest emerging markets in all business field. India now is a liberalized economy with 1.5 billion people with 300 million in the middle class bracket. We have well matured financial and securities market and time-tested judicial systems.

Small Business in India' output contributes almost 40% of the gross Industrial value-added 45% of the total exports from India and is the second largest employer of human resources after agriculture.

The country is seeing buoyant growth in most sectors, and the opportunity to move up the value chain for MSMEs calls for innovation, modernization and promotion of best practices. MSMEs are being seen as the next growth drivers in the country. The domestic micro, small and medium enterprises (MSME) industry is viewed to be to be the fastest growing in the Asia Pacific region. The HSBC Asia-Pacific Small Business Confidence Survey, conducted by the Neilson Group, statistics show that the Indian MSMEs are the ‘most optimistic' about the economy.



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      pauls_boat 7 years ago

      great hub about small business's.

      most people who try to start a small business do not look into the cost of setting up and running it for around 6 months before they will start receiving payments for whatever the business supply's.

      i ran my own small business for around 10 years with good results i sold the company in the end and it is still going well.

      the first thing i found out is if it is possible to set it up without taking a loan from the bank then do it as otherwise you will be working for the bank for many years and not yourself.

    • nkrohini profile image

      Kavitha Rajeev Kumar 7 years ago from India

      Hi Dilipchandra12,Thanks for reading my hub!

    • dilipchandra12 profile image

      Dilip Chandra 7 years ago from India

      nice hub about Micro, Small and Medium Enterprises.. looking forward to read the other hubs too.