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Actionable Growth Strategies for Small Businesses in India

best growth strategies for small businesses in india

Best Growth Strategies for Small Businesses in India You have launched your small business; you call the shots and see your business going in the right direction. But, at some point, as a business owner, you encounter this question, How do I grow my business? How do you rise above the crowd and become the market leader in your niche? Growth continues to be the buzzword in the world of business. And this blog provides you, the ambitious entrepreneur, with a localised strategy for growth. I will try to keep it less generic and instead focus on strategies that are relevant to the Indian market. Observe Your Community Avoid assuming anything when conducting local market research. You could run focus groups, hand out flyers, or even conduct surveys. Research what the customer wants, analyse their spending patterns and other statistics like age, income, population size, etc. You can learn from the businesses that are already successful in your business by analysing how they cater to their customers. Try and identify what they are doing right and the gaps they leave. For example, if you are in the food business and you notice that there is a growing population of people who are health-conscious, you could change your offerings accordingly. Invest in Your People Never underestimate the impact of knowledgeable employees. I would say, train your employees and offer them training programmes that cover different aspects of your business. Go ahead and teach them basic sales strategies. If you are not able to provide them with in-house training programmes, partner with training centres in your locality. When each of your employees embraces an ownership culture, your business becomes empowered. Assign them responsibilities, provide and take constructive feedback, and reward every initiative from them. Happiness and employee empowerment lead to excellent customer service, which is essential in today’s competitive market. One well-known Indian fashion and lifestyle company, Fabindia, places a high value on employee empowerment and training. They spend a lot of money educating their employees about the fine craftsmanship and long history that go into making their goods. This gives them the tools they need to deliver exceptional customer service and instills a feeling of pride and ownership in the staff, which makes the shopping experience for customers more enjoyable. Optimize Your Operations Efficiency is critical to the success of any business. Here’s how you can streamline your operations.  Supply Chain Management: Forge strong relationships with local vendors and suppliers. Strike deals on bulk purchases and create efficient lines of communication to guarantee on-time delivery. To maximise stock levels and prevent product shortages, investigate digital inventory management solutions. Embrace Technology: Automate repetitive tasks with the help of technology. Take into account online accounting software for more efficient financial management, point-of-sale systems for quicker billing, and even delivery management apps for more efficient logistics. Bigbasket, the top online grocery store in India, is a prime example of how technology can streamline processes. Their tech-driven platform enables customers to order groceries from the comfort of their homes, and they make use of a strong network of local suppliers. Timely deliveries are guaranteed by their efficient supply chain, which makes them a popular option for working urban families. 8 Strategies for Growth An entrepreneur once told me, “I asked my son to run the family business.” The son refused to do so. He refused because he had seen my struggles for the past fifteen years and knew that I was struggling. He never saw the company grow. If your business is not growing, it is of no use to you or those around you.” These words are full of truth. Disinterest grows from stagnation. You must welcome growth if you want to keep your company exciting for everyone—employees, customers, and yourself alike. Here are eight key strategies to consider: Market Penetration:  Let’s say you have a product or service and there is a market for it. Market penetration is the process of reaching a wider audience within the same industry with the same good or service. This can be accomplished with the aid of aggressive marketing campaigns, loyalty programmes, or the launch of new product bundles. Consider a small spice shop that sells a wide range of high-quality spices but primarily serves individual customers who buy them for home cooking. To increase sales and market penetration, the spice shop owner could use strategies like bulk discounts, gift baskets, cooking demonstrations, or online ordering. Product/Service Modification: Another strategy is to sell your goods or services by making minor adjustments in response to changing client demands. Think about introducing new, more compact, and more reasonably priced versions of your current products, or offering upgrades. For example, to cater to a growing number of health-conscious customers, a local bakery could offer healthy snack options like sugar-free muffins or multigrain cookies in addition to their regular menu. New Product/Service: Do not be scared to try new things! Create completely new goods or services to expand your clientele and enhance your current lineup. An example of this would be a clothing store that would grow beyond just selling clothes to include personal styling consultations and tailoring services. New Geographical Area: After you have made a name for yourself locally, think about branching out into other cities or areas. You can expand your consumer base and reach a larger market by doing this. For instance, a well-known restaurant chain in Bhopal might expand by opening franchises in Indore or Gwalior, two more major Indian cities. Segment Invasion: Find a new market segment that has requirements that your present products could fill. By doing this, you can increase your reach without having to totally redesign your good or service. For instance, a company that serves well-established businesses might target startups that need varying degrees of support by providing a customised version of their services. Diversification: This is a strategy that involves introducing entirely new products or services to a completely different customer segment. While it carries a higher risk, it

What is Valuation in Shark Tank India?

What is Valuation in Shark Tank India?

What is Valuation in Shark Tank India? Jithin Prem April 14, 2024 Knowhow Image source: @sharktankindia The Shark Tank India is one of India’s favourite shows among aspiring entrepreneurs of all ages. You might have heard the sharks say “Main aapko 10 crore ka nahi, 5 crore ka valuation de sakti hu” (I can’t give you a valuation of 10 crore, but 5 crore). So what is this valuation of a business they discuss in the show? Who decides the valuation of a business? Read on.  In layman’s terms, valuation is how much a business is worth. It is a fancy way of saying how much money a business makes in its lifetime or the future earning potential of that business.   The valuation of your business is more than just the liabilities and the cost of the assets you own.  The name and reputation, the sales that are happening or have happened in the past, and the growth potential are some of the factors that determine the valuation of your business.  Shark Tank Secrets: How is Valuation Decided?  An entrepreneur walks into the tank seeking investment from the sharks.  Once they convince the sharks to invest in their business, they offer either equity or debt.  Simply put, equity means buying a stake in a company and debt is a loan at a fixed interest rate.  But before they decide they discuss the valuation of the business.  Let’s say the entrepreneur offers 5% of his/her business for 10 Lakh rupees, the total valuation of the business would be ₹2 Crore.  How is this calculated?  Valuation of the business: Investment / Equity percentage  Total Valuation:  ₹10 lakh / 5% = ₹2 crore  So, here a 5% stake is worth 10 Lakh rupees and how much it takes to buy 100% of your company is the total value of your business, which is ₹2 Crore.  When the sharks enter the negotiation scene they might counter with strategic offers.  Now think of this scenario. If they think this is a very promising business, but the valuation is on the higher side, and they offer 10 Lakh for a 10% stake.  So, the valuation becomes ₹1 crore.  Total Valuation:  ₹10 lakh / 10% = ₹1 crore  You can see the perceived value of the company is reduced in this case.  However, the entrepreneur can propose a counter-offer and negotiate further.  Valuation Calculator Enter the investment amount and equity percentage offered: Investment Amount (₹): Equity Percentage (%): Calculate Valuation Total Valuation: ₹0 What Sharks Look for in a Startup While this is an easy-to-remember formula to calculate valuation, the sharks do not always stick to this formula explicitly. They consider other factors as well, such as: The growth potential of the business How big is the market for the business? The background of the entrepreneurs Their presentation skills Whether they have any intellectual properties How well-established the brand is? Scalability and more Types of Valuation Approaches in Shark Tank India Revenue-Based Valuation This approach calculates the valuation based on the steady flow of income through a startup.  Multiple times of monthly or annual revenue or industry-specific benchmarks are calculated via a simplified valuation calculator Shark Tank-style.  An example of this approach is Sugar Cosmetics. The valuation stands precisely above the steady revenue flows in a tough beauty industry.  By maintaining consistent sales and increasing market reach, Sugar Cosmetics has emerged as a high-value brand, emphasizing predictable income in valuation discussions. Market Potential and Size  Valuation isn’t just limited to present numbers; it depends on the potential of a company in the future.  Entrepreneurs who appear on Shark Tank look for startups which have immense market potential and scale.  This means analyzing trends in the market, customers’ demand, and their growth projections.  For example, BharatPe’s valuation in rupees portrays its supremacy in India’s rapidly growing digital payments arena. Profit versus Turnover  Although profitability is vital, a high turnover usually means that there’s great market demand, which will always be delayed to the profit.  Shaadi.com uses its huge user base and market presence as bases for valuation.  Its capability to ensure consistent engagement as well as adaptability with regard to market trends places value on the investment although it has delayed profits.  In this sense, this strategy shows that turnover is the main basis for assessing any potential startup.  Key Factors that Determine Valuation  Revenue Multiples It’s seen that if a company is earning consistently and growing, then that company is deemed more valuable.  Sharks compare it with similar businesses to understand if the company has room to grow.  It’s almost like checking if your new cafe is doing better or worse than the one across the street.  Team Composition  The value of a business is increased by a strong team and innovative, adaptable, and hardworking leaders.  It is like having the right crew on a ship; no matter the storm, they keep things on track.  Investors want assurance that the team can handle challenges and keep the business thriving. Assets and Liabilities  This is the balance sheet stuff. Cash, equipment, and even customer goodwill add value.  Liabilities such as loans and debts can pull it down.  But don’t worry; if a business has huge future potential, these liabilities often do not scare investors.  Market Trends and Timing  Timing can really make or break valuation. Cultural shifts such as eco-friendly products might also propel valuations when a business catches the wave of the movement.  It all comes down to being at the right place at the right time.  All these are taken into consideration for the investor to make an educated guess regarding the worth of a business and its future. Finding the valuation is not just a numbers game. Both the sharks and the entrepreneurs want a fair deal. As an entrepreneur or an aspiring entrepreneur, having a deep understanding of your market can help you get a higher valuation for your business even if your sales figures indicate otherwise. 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