How to Start a Small Business in India with Minimal Investment 2021

Small businesses are less capital intensive but have better potential to create jobs. The businesses are classified as micro, small, and medium enterprises (MSMEs). 

The small businesses are technically micro-enterprises. Going by the official definition, a micro-enterprise is one where; 

  • For manufacturing – investment in plant & machinery does not exceed 25 lakh rupees 
  • For service – investment in equipment does not exceed 10 lakh rupees 

If you are still delaying your plans to start a small business under the misconception that it is full of a hassle then it is time to rethink.    

The article lists different small business ideas and elaborates the necessary steps required to start a new small business. 

7 Steps: How to Start a Small Business in India

#1. Do Your Research About the Business 

Once you are ready with your idea, it is better to do a bit of research which will help you understand the potential of the business. 

The success of a small business depends on effectiveness in solving problems, fulfilling a need or offering something the market wants.

Good market research will help you find out who your customers are and where they are.

It will also tell you when they are most likely and willing to purchase your goods or use your services.

While researching you should try to find answers for questions like; 

  • Is there a need for your anticipated products/services?
  • Who needs your product and service?
  • What is the market size? 
  • Are there other companies offering similar services/products now?
  • What is the status of the competition?
  • How much capital would be required? 

#2. Make a Business Plan

A business plan helps define your business objectives, charts out strategies to achieve your goals, manage operations, and finances in a competitive world. Your business plan gives a better perspective to investors and lenders. 

You need not prepare a bulky document.  A simple and crisp business plan will do a better job in keeping you hooked to your goals and prioritizing work for better operational efficiency.

The business plan should contain:

An Executive Summary 

Your business plan must have a very precise vision and mission statements.

It might be a good idea to briefly explain why you’re starting your company and summarize what you expect your business to accomplish in the defined time.

Company Description 

The next section is a company description, which includes key information about the business, your goals, and the customers you plan to serve. How the products and services you’re providing will be helpful to your target customers. 

The description should also discuss how your business will stand out from others in the industry.

Market & Competitive Analysis

Here you need to mention the target market, the statistics related to market growth and how your company fits into it. 

Competitive analysis should contain a comparison of your business to your direct and indirect competitors and reflect upon the strengths and weaknesses.

Management & Organisation

Here you need to outline the organization set up. This section will contain details of the company managers, their skills and job responsibilities. You can also include an organogram to show the relationships between different departments and people. 

Marketing & Sales Plan

The section will describe how you plan to launch and market your products and services in the market. You’ll need to include the budget and the steps you’re going to take to promote products. 

Further, the sales plans would cover the aspect of selling the products and your sales strategy. 


Financials will be the final section, where you’ll elaborate on the financial goals and expectations that you’ve set for your business.

You’ll detail the anticipated revenue for the first 12 months and the projected revenue for the coming years.

#3. Fund Your Business

Setting a small business doesn’t require a lot of money, but it will involve some initial funding as well as the operating expenses. 

Generally, starting an online business in India will require fewer funds as compared to setting up an offline business. 

The amount of money you will require to start a small business will depend on the products and services you are offering.

You can start estimating by adding up one-time cost for licenses and permits, incorporating business, equipment, legal fees, insurance, inventory, trademarking. 

Next, you need to have funds for running the business like rent, utilities, marketing and advertising, production, supplies, travel expenses, and salaries.

These two heads give you the initial investment figure required for starting the business.

You can plan to finance your small business through;

  • Bootstrapping
  • Incubating businesses through government schemes like Stand-Up India, PRISM
  • VC, Angel Funding
  • Bank Finance
  • Government Loans

#4. Pick and Register Your Business Name

Small businesses can be incorporated as a sole proprietorship, a partnership, a limited liability company (LLC) or a private company.

The proprietorship is easiest to form and requires the least cost but has unlimited liability.

The entity you choose will impact your business structure, your liability in the business and the disclosures and filings to regulatory authorities. 

Sole Proprietorship

In a sole proprietorship, a single individual is responsible for the conduct of the whole business, its profits and losses. 

Suitable For – where the market is limited, localized and where customers give importance to personal attention.

The sole proprietorship business form is convenient where the capital required is limited and the risk- involvement is not huge. Popular among the unorganized sector, particularly small traders and merchants.

Partnership Firm

The partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives defined in the Partnership Deed. The partners have unlimited liability for the debts of the business.

Suitable For – Businesses where two or more persons get along with specific skills complementing each other which is relevant for business. 

Partnership entity is also favored by home businesses and professional services firms due to lower costs, ease of setting up and minimal compliance requirements.

Limited Liability Partnership

The main benefit of LLP over the partnership is that it limits the liabilities of its partners to the amount of contribution and offers protection from negligence, misdeeds or incompetence of the other partners.

LLP is relatively cheaper to incorporate as compared to a private limited company and requires less compliance.

Suitable For –  Businesses where there are lots of partners like law firms, large advertising agencies. 

Private Limited Company

Private limited entities have a shareholding (max 50 shareholders) and a capital structure.

The company is required to hold board meetings and file annual returns. Hence, private limited companies are considered more credible than an LLP or General Partnership.

Suitable For – Start-ups and growing businesses because it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables management to offer employee stock options to attract top talent.

#5. Develop Your Product and Service 

Once the ideation, incorporation and funding phase is over, you need to focus on developing the product, i.e the minimum viable product.   

For the manufacturing sector

You need to have actual physical products. You should pay special attention to product quality, packaging design to capture desired attention and meet expectations. 

While crafting takes time to focus on quality and simplicity because that is where your product will stand out from the competitors. 

In product development, if you have an idea and resources you can start crafting on your own and outsource some tasks.  

To have a better understanding you can start learning as much as you can about the production, so you can improve the process. 

For the service sector 

You have to position as an expert on the specific service domain so that people could approach you to seek your help and pay for your services.

You have to build a portfolio of your works to showcase your skills and expertise. This can be a website to show your artwork if you’re an artist, blog if you’re a writer or catalog of the design if you’re a designer.

#6. Get Feedback on Your Product / Service

Before you launch, it is a good idea to get honest feedback about products and services from potential customers to check whether the product actually meets their needs or not. 

Feedback can give some new useful insights on color, functionality, shape, design, features, and performance of the product.   

You can launch a beta product to selective initial customers and seek their feedback and inputs for further development. For example, if you are starting a clothing line, you can give trial products and collect feedback about fit, fabric, colors, and comfort. 

Healthy feedback saves time, energy, and effort as this helps you build better products in the early stage itself.  

#7. Launch and Promote Your Small Business

In today’s hyper-competitive business world you need a very meticulous and effective launch plan to create much-needed publicity. This helps you gain early traction to mobilize sales. 

You can use your creativity in blending traditional ways with modern tools to promote your business. You could use advertising in local newspapers, FM radio and distributing pamphlets, and online promotion.

Online promotion can be done using micro-blogging sites such as Twitter, FB to launch your company and products.

You can also launch videos of your company, products and its services, salient features and other information on Youtube and upload relevant pictures on Instagram. 

You can reach out to bloggers and influencers and ask for some promotion in exchange for a free product sample or service or collaborate for long term business promotion. 

15 Different Type of Small Businesses

Different Type of Small Businesses

#1. Freelance Writer / Editor

Every business requires quality and engaging content to attract traffic from search engines and to position themselves in the minds of potential customers.

If you have good English, it can be a great skill way to start a business as a freelance writer or editor.   

#2. Financial Planner

Your expertise in finance can help people protect and grow their hard-earned money.

People are always on the lookout for new ways to save and earn money which can be a small business opportunity for you.

#3. Gardening Consultant

Your passion for gardening, (more specifically the – kitchen gardening,) can help you find several lots of paying clients. You can help people with flower gardens, vegetable gardens, organic garden or exotic gardening. 

#4. Local Marketing Service

Local businesses often need help for developing and executing the best marketing strategies.

If you have the requisite marketing skills, then you can make it your small business.

#5. Day Care Service

You can have a steady income and valuable business if you have free space and time to care for kids of working couples. 

#6. Graphic / Logo Designer

There is a demand for highly appealing graphic design and logos creators. If you are passionate about design, you can create a business around this idea and have a good regular income.

Both logo and catchy graphics define business brands and attract customers. 

#7. Smartphone Repair

We all know how costly it is to repair a smartphone. 

Starting smartphones and electronic gadgets repair requires investment in equipment and inventory. But you can learn online and start it as a business.

#8. Affiliate Marketing

Affiliate marketing is a better way to monetize a blog and make business.

There are tons of products on Amazon and other affiliate networks like ClickBank, CJ, and ShareASale which you can promote to earn commissions. I have written a detailed article on how to start affiliate marketing

#9. Selling Apps 

If you can handle a bit of technical stuff and coding, then creating and selling unique App online is a great small business idea. 

#10. Content Marketing

Businesses need content to pull traffic and develop a bond with potential customers.

There is a constant demand for content marketers for creating engaging content. You can start a business by helping the content needs of a particular industry. 

#11. E-commerce Business

If you have a passion for clothing, fashion or jewelry, then you can open an online store with Shopify and run an e-commerce business.

#12. SEO Specialist

Every website and business wants to be on the first page of the search result to attract organic traffic. This requires SEO work.

If you have the skills to optimize a website then this could be a great business avenue for you. 

#13. Social Media Specialist

Social media agency business can have a recurring revenue stream as companies need regular posting and engagement on social platforms. 

#14. Digital Marketing Specialist

All the businesses are getting online where they need help on digital marketing like advertising, PPC campaign, SEO, engagement, page optimization or monetization.  

#15. Website Developer

If you have expertise in coding and user interface then you can start a business to develop new or re-launch websites for smaller companies and organizations. 


Starting a business is exciting, and it requires amazing skills to build a strategy to remain ahead of the competition. 

You can use the information provided here to build a business from scratch, but you need to have a firm belief in your entrepreneurial skills and urge to take initiative. 

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