Introduction
An investor has various alternative avenues of investment in which he/she can invest the money. To achieve success as an entrepreneur two factors play a crucial role, one is a capital investment and another is available business opportunities. This blog highlights some of the business opportunities in which one can invest. Any investor before entering in the business goes through various pipelines of a process to come to a conclusion on where to invest and where to not. This article talks about the small & medium scale enterprises (SME’s) and example of a business which looks attractive under the SME umbrella, the definition for the same needs to be understood first:
As per the MSMED Act, enterprises are classified into two categories – manufacturing enterprises and service enterprises. Small and medium scale enterprises (SMEs) are understood in India as enterprises where the investment in plant and machinery or equipment is between Rs. 25 Lakhs to Rs. 10 crores for the manufacturing enterprises and between Rs. 10 lakh to Rs. 5 Crores for service sector enterprise.
Once the industry and the business has been targeted to invest in by investors, there are some crucial factors on which emphasize has to be made, below are some of the factors in details WHICH are to be considered while investing in a business.
Factors affecting investment
Resources needed to start manufacturing business
Resources needed to start a service business
Small & Medium Scale Enterprise
Jute and Paper Shopping Bags Manufacturing Enterprise
Introduction: The paper bag market to grow by 4% year-on-year which has been primarily influenced by the reforms in the global paper packaging regulations. Factors like environment-friendly and cost-effective packaging formats are contributing to the build-up of the paper bags market through 2029. Kraft papers are playing a vital role in modern lifestyle, whereas consumer preference for paper bags is increasing due to the factors of its eco-friendly packaging, easy usage and cost-effectiveness.
Market Size: The Indian Paper industry consists of 1.6% of the world’s total production of paper. The size of this industry is more than $6 Billion. Today, Indian paper manufacturers export paper products of more than $54.7 million per annum to developed nations
Investment Opportunities:
Increasing Demand: As per research, the demand for paper bags is being increased year-on-year by 4%. Factors like environment-friendly and cost-effective packaging formats are contributing to building up the market up to 2029. Many supermarkets and big entities are using paper bags to deliver the products for example like McDonald’s.
Plastic getting banned: Government guidelines have been very strict related to the usage of plastic bags and in near future, the best alternative will be the paper bags, as of now many companies have started to adopt it and will get increase year by year.
Toys Manufacturing Enterprise
Introduction: The existence of toys in India comes back from the Indus Valley Civilization around five thousand years ago. The earliest toys included whistles shaped like birds, toy monkeys that could slide down a string, and small carts that were made from materials found in nature such as sticks, clay, and rocks. As technology is updating day-by-day; toy manufacturers are using the technology and building toys based on that. Nowadays there is a huge gap between traditional toys and modern toys.
Market Size: The Indian toys market was worth US$ 1.75 Billion in 2019. By 2023, the Indian toy market may cross the US$ 2.9 billion marks with expected growth in CAGR of 13.9%between 2018-2023.India has one of the largest young populations in the world, owing to which, the toy industry in the country has witnessed rapid growth.
Investment Opportunities:
India’s new policy: Indian government has come up with a new policy related to the toy industry in which they have stated that they will create an industrial ecosystem and establishing hubs, making hikes in import duty, and strengthening quality control checks. This rule clearly indicate the Indian government wants to manufacture toys locally and that’s the reason the UP government has announced to set up a toy manufacturing hub
Import Duty Hike: Earlier in the year, India’s finance ministry had proposed raising the customs or import duty from 20 to 60 percent on toys like tricycles, dolls, and puzzles. This will hit toy retailers and the wholesale market in India, which imports toys worth about INR 25 billion (US$340.17 million) of which 75 percent is sourced from China. Unfortunately, under COVID-19, the retail demand for toys has crashed but the price of toys has shot up by at least 40 percent in the wholesale market due to the import duty hike
Cosmetic Manufacturing Enterprise
Introduction: The cosmetic segment is one of the fastest-growing segments in the world. In the past years, total demand has grown by 60%. As this industry is driven by the high personal disposable income and rising awareness towards the body fitness with an increase in demand for products like herbal cosmetics (which can be better for the skin), this has led towards more and more usage of herbal cosmetic products have led to an annual growth of 15% as people are becoming more and more aware of the skin problems occurring by using chemical formulation based cosmetics.
Market Size: The cosmetic segment accounted for 18% of the total beauty & personal care revenues in 2019. Compared to the previous year, the sales of cosmetics products increased by 4.5% and reached US$ 90 billion. Revenue in the cosmetics segment amounts to US$ 5716.5 million in 2020. The market is expected to grow annually by 8%. In relation to total population figures, per person revenues of US$ 4.14 are generated in 2020.
Investment Opportunities:
An Alluring segment for both men and women customers: When the targeted audience is huge it becomes easy for the businesses to come up with their offering products and services. And in a huge and developing country like India if the new product has quality and uniqueness, chances of the product being successful increases. The main advantage of this industry is it targets both men and women, and the surprise here is the segment of men in the cosmetic industry is increasing continuously year by year.
Booming demand for Herbal and Ayurvedic Products: Nowadays people not only want to look beautiful they also want to live healthily. Earlier people only use cosmetics containing chemicals but when products like Ayurvedic cosmetics and herbal cosmetics products have come they have been so popular. It has been estimated that the market is expected to reach $43.23 million by 2022 and growing at a CAGR of 19%. The reason for increasing this market is people have got an alternative to using chemical products and it is healthy in comparison to other products
Rising Disposal Income: This is the factor that is allowing the customer to spend more and also tospend on different brands and products. The increased premium on personalgrooming, changes in consumption pattern and lifestyle are some other factorsthat will help the industry to elevate in the upcoming time.
Franchising: Franchising has managed to penetrate almost every business sector. So does this concept is famous in the cosmetic industry, the franchise prices are charged based on the quality and popularity of the brand which ranges from 10 lakh rupees to 50 lakh rupees.
E-commerce Enterprise
Introduction: The E-commerce market encompasses the sale of physical goods via a digital channel to a private end-user (B2C). Companies like Amazon, Flip kart, Snap deal, and Myntra and gaining a lot through this business.
Market Size: Revenue in this market is projected to reach US$46,002 in this year of 2020. By 2025, there can be an expected annual growth rate of 11.6% which will result in a volume of US$79, 458 million. The market’s largest segment is Electronics and Media with a projected volume of US$ 14,853 million in 2020. Current penetration is said to be 39.7% and expected to be 65.6% in 2025. The average revenue per user is expected to amount to US$ 83.36.
Investment Opportunities:
Rising Popularity: Three out of every five orders are from tier-2 and smaller towns, a target audience of nearly 200 million online shoppers by 2025. At first, e-commerce was popular in tier-1 cites but from time-to-time, it started to expand and now e-commerce companies are delivering in smaller towns also so there are no limits in terms of the area you want to deliver the product and also people are preferring online purchase over an offline purchase.
High Growth Factors: It has been seen by many ventures the growth of the e-commerce sector has been more than 100-300% per year over the past 3-4 years and many investors are either investing in startups or starting one. Another reason for the high growth factor is an increase in internet expansion and Smartphone adoption. This can also be said as a Smartphone revolution. Since Indians access the internet through their phone 80% of the time (30% of the global average), this state’s how big the opportunity here to invest in the e-commerce market is.
Digital Marketing Enterprise
Introduction: Digital marketing is been done to reach consumers through the internet. Digital marketing is advertising delivered through digital channels. Channels such as social media, mobile applications, email, web applications, search engines, websites, or other digital channels
Market Size: The market for digital advertising in India was around $218.90 million in the financial year 2019 from just $64.30 million in financial 2015. The same is projected to go up to $737.42 million by the financial year 2024. This indicates the continued high growth of the digital marketing industry and year-by-year it is going to increase as companies like BMW and Mercedes have started to spend on advertisements.
Investment Opportunities:
Continues Growth: Digital marketing industry is always showing an upward trend since it has come into the picture. The reason being every corporate company needs to do an advertisement in this competitive world and from small to large companies, everybody is taking the help of digital advertising, be it the big company like Appleor start-up like Swiggy.
Flexibility: The work of digital marketing can be done from anywhere; even in this covid-19 pandemic had not affected this industry as much as it has affected other industries.
Trend: With an increasing trend of social media and usage of Smartphone has been increased drastically, a large number of consumers can be catered from these platforms. Marketing has moved a lot from traditional to online (digital) marketing digital.
Conclusion:
Every investment is inherently connected with risk and has its own benefits. Its existence and diversity among various types of investments are one of the driving forces behind the development of the various business markets. The risk has also caused the emergence and development of various other investments. This article will help the reader in various stages of investment decisions which incorporates the factors while investing like startup cost, Finances, Location, and many more. Other than that, Resources are needed, and lastly the examples of various industries in which investors can invest
Author:
Harsh Pavani – A PGDM Graduate in Finance is associated with J.hirani as a Business Analyst, who is a great believer in ethics and likes to stay quiet and humble. He is always ready to learn something new and has worked closely in the industries of manufacturing and hospitality.
Mamta Balwani: An MBA graduate in associated with J.Hirani as a Business Analyst. An Extrovert by nature, she is always open to new challenges. Her conscientious and straight forward attitude has helped her in achieving success at every project she takes in her hand. She has worked with industries such as Forex, Energy & Power, Apparels, Education, Foundry raw materials and Covid-19 safety products.
