We Can Definitely Learn Quite A Few Things By Observing Business Practices In India
We can definitely learn quite a few things by observing business practices in India
If you are in one of developed countries and if you tell your friends that you are going to start a business, most of them would tell you to think twice. This is because most new businesses in developed countries would fail within the first three to five years, and this is supported by statistics. India has a very poor infrastructure and also its political and economical environment is not as stable as that in developed countries; therefore, your intuition tells you that even more new businesses would fail in India. However, the situation is quite the opposite; most of new businesses manage to survive in India. It is rather surprising, but if you look at various aspects of the business operation, you would logically conclude that new businesses in India are much more likely to survive than new businesses in developed countries.
One of characteristics of new businesses in India is that they start with very small capitals or none whatsoever. New businesses spend what they can spend to start; in other words, they have very little or no debt at the beginning. Since there is very little or no debt, new businesses have no obligation to make payments to any lenders; this dramatically increases their chances of survival. On the contrary, new businesses in developed countries often take huge debts to start. It is partly necessary but it is also partly a common practice, although new businesses do not necessarily have to follow the common practice. For example, it is very common for new businesses to heavily invest in new pieces of office furniture, while they are totally unnecessary in most cases.
As I look at individual businesses in India closely, I find that many businesses in India have very low operating costs. I see used computers everywhere. I see old furniture everywhere. Most offices do not spend a whole of money to make them look pretty. Most offices do not spend money for decorations. For example, a friend of mine (in India) runs a printing business; the business produces customized business cards, letterheads, envelops, calendars and booklets. Its office has no landline phone; it has no computer. The office only has bare necessities. This obviously keeps the business’ operation cost very low. On the other hand, many new businesses in developed countries keep their operating costs much higher than necessary. For example, a friend of mine in US used to run a business from his apartment; it was a small business, yet he had a number of equipments, each of which costs thousands of dollars. He had a couple of cell phones, a couple of laptops and a couple of desktop computers. The operating cost was a lot higher than necessary. (He went out of business and the high operation cost was one of reasons.)
Family structure in India is very strong, and this is quite helpful for new businesses. It is difficult for new businesses to find trustworthy people who can help them; it is even more difficult for them to find free help. Since family structure in India is very strong, they can often get help from their family members in many cases. Family members help other family members’ new businesses for free even. This is not exactly the case in developed countries. Family structure is relatively weak, and it is very difficult to get help from family members.
While the political and economical environment in India is not as stable as that in developed countries, there is actually one political advantage. Rules and regulations in India are relaxed when it comes to providing protections and benefits to employees; also licensing costs and other regulatory compliance costs are very low. This makes the recurring cost very low, and this increases new businesses’ chances of survival. While many of developed countries offer very generous social programs, they also put heavy burdens on businesses such as the financial burden of providing protections and benefits to employees. This raises the recurring cost, and this makes new businesses to survive even more difficult.
While we cannot easily change laws, rules and regulations, we can lower our operating costs. We can also start new businesses using whatever money we have instead of borrowing heavily. We can definitely learn quite a few things by observing business practices in India.