The Truth Behind Entrepreneurship Myths in India
The Indian economy is developing rapidly, and the atmosphere is very conducive to starting new businesses. Several startups with innovative ideas have emerged in the last few years, with several of them making huge profits. But several entrepreneurship myths in India are prevalent that are misguiding people into making wrong decisions. It is essential to learn about these myths and find out the real truths behind them.
Let us find out the facts behind the following widely-believed myths in India:
A Startup Requires a Lot of Capital
This is one of the most-circulated myths about entrepreneurship in India. You can start a business in India for as low as around Rs. 15 to 20 lakhs. There are also several options available for funding your business. However, it would help if you used your capital wisely where it is needed to get success in your business.
Bank Finance is Unavailable for Startups
Recent studies reveal that banks fund most of the Indian companies that are two or less than two years old. Research shows that banks are the highest financing source than others like relatives, friends, venture capitalists, strategic investors, or government agencies. In the case of startups with novel concepts, banks will provide loans but may insist on collateral security on account of the risk involved. Investors owning residential, industrial, or commercial property can get asset-backed loans. Banks also favour giving loans to entrepreneurs for purchase or erection of capital assets like machinery or equipment needed for the business.
Venture Capitalists fund most Businesses
Not all startups require funding by venture capitalists (VCs). Venture capitalists mostly fund only startups that are associated with computers or biotech. Most of the startups that receive VC funding do so at the initial seed or startup stage. An entrepreneur should not make the mistake of planning a business model on seed funding by venture capitalists.
You Cannot Get Debt Financing.
Contrary to the myth, debt financing is more common in India than equity. Research of small enterprise finances conducted by the Federal Reserve reveals that almost 55% of funding for startups less than two years comes from debt, which is more than equity.
All Startups are Successful
Researches reveal that out of the total population, of around 7 billion, only about 300 to 400 million are entrepreneurs. Many people start their businesses but are unable to run them profitably. It takes a lot of commitment to run a business, and along with being self-motivated, a person needs to possess a sufficient amount of resources. Personal sacrifices are also necessary sometimes, like moving to a different country, and such changes may even disrupt a person’s normal life. Startups may require several years to make sufficient profits needed to sustain the business. Generally, businesspeople in India get less income than what corporate employees earn.
All Businesses Have a High Risk
Any business venture requires some amount of risk-taking to be successful. However, entrepreneurs learn by experience to differentiate between high-risk ventures that get high returns and low-risk businesses with low returns. They learn to take calculated risks by carefully evaluating the possible outcomes and taking appropriate action.
You Need a Novel Concept or an Out of the Box Idea
This is another misconception that is popular in India. Even though a basic idea is a must for a business, it is a myth that the concept has to be completely new or innovative. An enterprising person can start any business that enhances the value of an existing one or start an enterprise that provides solutions to people’s existing problems.
Learning about the reality of entrepreneurship myths in India is essential if you want to efficiently and successfully run your business and make huge profits. Our highly-qualified team at 3E Accounting provides comprehensive business setup services for startups and other enterprises. We are leading business setup specialists providing all kinds of support related to incorporation, compliance, taxation, and accounting to entrepreneurs to help them smoothly run their businesses. If you require more details regarding our services, please contact us as early as possible.