India is the country of small scale industries. More than 90 percent of industrial units are made up of small scale industries. Small scale industries or SSI are units which function on a small scale or a micro level. They provide manufacturing, services or production all at a small scale. They are often unorganized and without any corporate board backing them.
These companies are formed either on an ownership basis or lease basis. A lease of such a company could be similar to a franchise and in today's day and age, when franchising is one of the safest and most profitable businesses, leasing a small scale unit might be a good idea. Let's first look at some features of the small scale industry.
1. Labor-intensive
Small scale industries are often categorized as labor-intensive. Most small scale industries are labor-intensive as they provide employment to local manpower. They focus on manual work due to lack of other resources.
2. Locally Sourced Material
Small scale industries source their raw materials locally and provide products or services to direct consumers or other manufacturers or service providers.
3. One-man Oriented
All small scale industries are owned by a single person or a partnership firm. They are run and managed directly by the owners, which gives them the flexibility and freedom to run the show the way they want. This flexibility enables them to adapt to a constantly changing economic environment.
4. Requires Lesser Capital
Small scale industries require much lesser capital than other business opportunities. These are not as capital-intensive and focus on other resources and cheaper and local methods of production.
These are some of the major defining characteristics of a small scale industry. Investing in a small scale franchise would greatly enhance your portfolio by investing in local resources and creating indigenous products and promoting local resources. Let's look at the factors you should consider before developing a small scale franchise business partnership.
1. The Product
You will have to be very meticulous in choosing a product or service to offer at your small scale unit. The product needs to be able to be produced locally with local resources and manpower. It needs to have little competition in order for your unit to get maximum sales as the area that you may market to might be limited and if there is a lot of competition in the category you would not have scope for much profits. Raw materials required for the product should be easily available. The product should be easy to transport to the market. You also need to ensure that all government clearances for the product are available and there are no objections to the product either locally or from the government.
2. Networking
Networking is an important aspect of any business at any scale but it is even more important for a small scale industry unit as most of your market is done personally or through word of mouth. Forge strong connections and network in your region. You may also need to establish associations with local authorities as smaller businesses need the approval and support of local authorities for everything and some contacts or connections in the local authority body would be extremely helpful. Networking will also help you in finding good local vendors or suppliers or contractors or clients or customers.
3. Location of the Unit
Selecting the location of the unit would require some research and time. You need to evaluate all available locations based on many different factors. Check for the market and economic conditions to understand the demand for your product there. Understand the demographics of the area and find out the consumer habits of the people. If you are creating a product for the end consumer then you will have to study them deeply. Find out about their available disposable incomes, preferences, and lifestyles. The location of the unit can also help in choosing the product or the nature of the business. If the area is rich in a particular natural resource, you could start a small scale unit to exploit the availability of this resource and create your product.
4. Government Incentives
Many small scale industries are heavily incentivized by the government as these industries employ local resources and promote locally made products. It is important to gather information on such government schemes and utilize them and create products with the help of government incentives and subsidies.
5. Choose Your Passion
Since small scale units may not have enough resources for the comfort and the luxury of hiring a huge staff or a refined physical unit, you may have to work in harder conditions than some businesses. In order to succeed in somewhat harsh work environments, you will have to be engaged completely and passionately and so it is imperative that you choose to create products or offer services, which ignite that passion in you.
6. Sustainability
When you choose and build your small scale franchise unit, you have the freedom to choose a product line. Sustainability is one of the features of most small scale industries as they employ local resources and produce goods and services in lesser quantities than larger industries. Today's customers are also more aware of the economic, environmental and social situation of the world and want to use sustainable products. Creating sustainable products will give you an edge over your competitors and will grow your sales. It will also add to the goodwill and the brand value of your product.
Investing in a small scale franchise is one of the most profitable businesses as the business has higher profit margins without reduced costs and more benefits. Small scale franchises receive ample training and support from the parent company and have the freedom to expand their unit. They can engage better with the local community and create something beneficial for the entire community.
People often do not associate franchising with small scale industries but it is one of the most popular businesses today, especially with the numerous government incentives and even government funding in some cases. So do not think twice and start researching more about small scale franchise industry units.
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