establishing a business

[evilwit]

hey guys i want to open a business in coming 2 years.I am thinking to trade in computer parts and mobile phones.some of my friends are saying that its not a viable option as the margin is very less and maintenance cost will show up on the products and make the price unattractive compared to on line sites.So is offline retailing a dying breed?what's the solution?
thanks

 

[Sobirvs]

Online sites have got 8% of business already in electronics. It took them just couple of years to do this. And anyways now companies making exclusive deals with flipkart shows this will triple in probably in a year.

 

[evilwit]

Online sites have got 8% of business already in electronics. It took them just couple of years to do this. And anyways now companies making exclusive deals with flipkart shows this will triple in probably in a year.

Then why are people still opening new shops and shops which are in existence from past few years are not closing?there must be a catch here and there.

 

[Sobirvs]

Then why are people still opening new shops and shops which are in existence from past few years are not closing?there must be a catch here and there.

Catch is lack of education. But then again, customer loyalty, good space and better area shop, cheap rates and many other contributing factors have to be considered. I'm not saying you shouldn't open shops, I myself am not sure about this. My dad still does this type of business. I was just stating info on online business to you. Decision is completely users. It's your life and future.

 

[evilwit]

Catch is lack of education. But then again, customer loyalty, good space and better area shop, cheap rates and many other contributing factors have to be considered. I'm not saying you shouldn't open shops, I myself am not sure about this. My dad still does this type of business. I was just stating info on on line business to you. Decision is completely users. It's your life and future.

you are somewhat right.some people are not aware enough.but do you agree to the fact that if we take selected items which have good margins and try to sell them,we can make some moolah.like selling mobiles is not that profitable but selling mobile accessories is a lot.

 

[Sobirvs]

you are somewhat right.some people are not aware enough.but do you agree to the fact that if we take selected items which have good margins and try to sell them,we can make some moolah.like selling mobiles is not that profitable but selling mobile accessories is a lot.

I have no idea about how much profits there both items have.

 

[nRiTeCh]

@OP Even I'm thinking the same since a long but then reality is what and how much actually are we going to earn in this fast world?? As other described, online sites are fast catching up and people have become lazy to go out, visit stores and get quotation and then decide on final product. This was something which we use to do long time back (I still do that and its fun and knowledgeable).

You need to survey the nearby market in your zone before proceeding. And today you cannot expect to run your shop in profits in <2 years as now it'll take a long time to show profits in your accounts. In fact some time ago I have asked couple of shops @ lamington rd hows its going currently and there answers were not satisfactory either. They said, now that we are into this business we have to run it as far as we can survive coz quitting in between and starting something new isnt viable at this time due to extreme competition. Profit margin has come down considerably in past 5 years and they blame online shopping for all this.

One Eg. they gave me--We sell a m0bo for 10k with say hardly a margin of 600-800 bucks max. The same mobo is available online for 9.5k & with discount coupons lowering the price even further, so how can we afford that to do here??? Who is gonna come at us??? We depend on regular and loyal customers hence we survive somehow. We surely cannot sell that mobo for 9.2k just for 200 bucks profit which isnt a justifiable profit for us. This all is killing our life but we have to sustain as we got no other options.

 

[edge111hussain]

@OP Even I'm thinking the same since a long but then reality is what and how much actually are we going to earn in this fast world?? As other described, online sites are fast catching up and people have become lazy to go out, visit stores and get quotation and then decide on final product. This was something which we use to do long time back (I still do that and its fun and knowledgeable).

You need to survey the nearby market in your zone before proceeding. And today you cannot expect to run your shop in profits in <2 years as now it'll take a long time to show profits in your accounts. In fact some time ago I have asked couple of shops @ lamington rd hows its going currently and there answers were not satisfactory either. They said, now that we are into this business we have to run it as far as we can survive coz quitting in between and starting something new isnt viable at this time due to extreme competition. Profit margin has come down considerably in past 5 years and they blame online shopping for all this.

One Eg. they gave me--We sell a m0bo for 10k with say hardly a margin of 600-800 bucks max. The same mobo is available online for 9.5k & with discount coupons lowering the price even further, so how can we afford that to do here??? Who is gonna come at us??? We depend on regular and loyal customers hence we survive somehow. We surely cannot sell that mobo for 9.2k just for 200 bucks profit which isnt a justifiable profit for us. This all is killing our life but we have to sustain as we got no other options.

Very true. And the fact remains that the profit margins are piss poor. So much so that when i asked for the price of mobo and ram from my regular fella, he politely told me that 'kuch nahi milta', u rather dont waste time asking for quotations and simply buy it from prime or else amazon. All he seemed to be interested in selling is laptop's, accessories and monitors.
I know a guy who sold Hdd's to amazon for 4200. @ days later amazon listed the same @ 3800. Even he was completely baffled at how is amazon doing this.
To cut it short, this is a guy who is 10+ yrs in the business. OP how do u expect yourself to survive?

 

[evilwit]

Unfortunate it is, but its a reality.And if you ask me how I expect to survive,I would say by selling things which fetch me a good and reasonable profit.Like selling mobile accessories or laptop accessories.There are other options tor I would change my profession,study and get a safe pvt. sector job.For me its possible.As I am still young and can change my routes.But here again in the pvt.sector job market not everything is safe.Don't forget when companies kick their loyal employees when they don't need them.

 

[m-jeri]

Before you say you will make profit. Do you know the margin of those items? Even if you get them straight from the manufacturer?

But then again. If you pick from manufacturer, you need to buy in volumes. And you need to sell in volumes. Else you need to consider middle men. Which kills the deal.

Say you manage to get a source with manageable volume and price. Then comes the actual store, stock place, employees. You will need 2 if you plan to do this ALONG a pvt job.

If you go to a remote place, you sell nothing. Or you sell a lot. Its a 50~50. but you wont sell in volumes for sure. Unless you find different vendors willing to buy from you.

Then comes the local politics. Small shops are easy targets for local gundas who demand haftas. Unless you are connected. If you are connected, you need to abide
with set rules. You cannot change it. Meaning someone higher up the food chain.

You clearly are not that higher up the food chain coz you are thinking of opening a mobile accessory shop. No offense. Higher ups, open swanky show rooms. Bars. Etc.
Hard truth but it is true.

 

[evilwit]

Before you say you will make profit. Do you know the margin of those items? Even if you get them straight from the manufacturer?

But then again. If you pick from manufacturer, you need to buy in volumes. And you need to sell in volumes. Else you need to consider middle men. Which kills the deal.

Say you manage to get a source with manageable volume and price. Then comes the actual store, stock place, employees. You will need 2 if you plan to do this ALONG a pvt job.

If you go to a remote place, you sell nothing. Or you sell a lot. Its a 50~50. but you wont sell in volumes for sure. Unless you find different vendors willing to buy from you.

Then comes the local politics. Small shops are easy targets for local gundas who demand haftas. Unless you are connected. If you are connected, you need to abide
with set rules. You cannot change it. Meaning someone higher up the food chain.

You clearly are not that higher up the food chain coz you are thinking of opening a mobile accessory shop. No offense. Higher ups, open swanky show rooms. Bars. Etc.
Hard truth but it is true.

I get your point.I am not talking about opening a small shop.Selling mobile or laptop accessories doesn't mean small all the times.I mean to say I will look around things which can get me a good margin and take them and sell them with it.And if I get a respectable profit by opening a sumptuous showroom,heck i will do it.

 

[m-jeri]

Then you shouldn't be thinking about opening a mobile accessory shop.

If you can afford to open a "sumptuous showroom", there are other and better business ventures you can spend your money on.

Only if you talk how much money you are willing to spend, people can understand how much you can do.

If you have 1.5 to 2Cr to spend, get a Mcd, KFC or kinds franchise. 3 people I know have these. ALL of them are making good money.
One guy actually only own one of the KFC in my city. Even then he makes money.

Or if you can actually start a good restaurant. One guy i know started only with 1Cr. His place is full during 5.30pm to 11.30pm. Its like a middle east/Indo-chinese cross. I said only with 1Cr. To understand the reason, ask someone who actually started a successful restaurant at a good place.

Branded official clothing shops. I dunno if that's cause of Onam in our state though. .

Anyways, my point is avoid "online" affected area.

 

[krishnandu]

Though I don't have much idea about business, but this I say for sure and support other's comments that avoid online affected areas. You see the Mi3 hype? One Plus One hype? Or Nexus 5 or Moto G or Moto E hype? Well those phones can only be bought online (Correct me if I'm wrong). Yes one can get Nexus in LG Shoppe, but that's too uncommon, you may not have one in your locality.

Also, the peoples started believing online shopping sites. Specially after Flipkart. Even a novice who just manage to operate facebook knows about Flipkart. And the sites offering COD made them more believable and bought in the peoples who do not have access to or willing to use Online Banking / Debit Card / Credit Card. And as already stated above, Coupon Codes flourishing everywhere made it much lower.

As already said above, you cannot see profit if you sell in volumes, which these sites do. Even if they don't they have multiple items through which they keep the business running. If you don't make profile in mobile and computer accessories you do not have branded tshirts to sale, or laptops or any other items to sale. If you are crorepati and thinking of Group of Companies type of thing then it's fine.

Peoples are reluctant to go outside now or with the IT jobs, they don't get time. Though I'm not trying to defend myself, but I even order soaps, shampoo, razor blades online. I do find time but too lazy to go out. It's not that I always get cheaper but Rs. 50/- sometimes doesn't matter. Why? I'm too reluctant to wait till morning and go out when I'll again feel lazy and finally when I'll miss the need for the product I'll order online. Believe me max people of today's generation is like this. And the peoples who go out and keep negotiating, are going less in number day by day.

As stated in example above like others, you, me, and other members who are commenting here, too starts fighting for Rs 500/- less in small shops when we get some item cheaper in Flipkart and keep saying "I'm getting this 500/- cheaper in Flipkart" and they would say "What would you do in case you need warranty? If you buy online you won't get warranty" and you'd reply back with "Are you kidding me? Or just trying to sell your product with higher price? Try to find someone else to Troll" and we'd leave the shop. I'm not insulting anyone but this is the real truth.

So, as stated above, think about what's booming and use the same mentality to gain profit. Like as already stated above, Peoples are now going out to restaurants on weekdays. Middle class people who never thought of eating in 5 star restaurants or having a party there, are now going, throwing b'day party and all. Reason? Max 5 star or 4 star restaurants out there offering buffet price which is hardly 600/- and a middle class people can afford this monthly.

So try to think about these type of scenarios where you can actually gain.

It's too long I know but hope that helps

 

[evilwit]

Then you shouldn't be thinking about opening a mobile accessory shop.

If you can afford to open a "sumptuous showroom", there are other and better business ventures you can spend your money on.

Only if you talk how much money you are willing to spend, people can understand how much you can do.

If you have 1.5 to 2Cr to spend, get a Mcd, KFC or kinds franchise. 3 people I know have these. ALL of them are making good money.
One guy actually only own one of the KFC in my city. Even then he makes money.

Or if you can actually start a good restaurant. One guy i know started only with 1Cr. His place is full during 5.30pm to 11.30pm. Its like a middle east/Indo-chinese cross. I said only with 1Cr. To understand the reason, ask someone who actually started a successful restaurant at a good place.

Branded official clothing shops. I dunno if that's cause of Onam in our state though. .

Anyways, my point is avoid "online" affected area.

And what if I want to stick with IT sector?There are still many gadgets or IT products that can yield good output and my moto is to find those products.And if you can help me,I will appreciate it..And how's the idea of opening a showroom of a reputed IT brand.Like a LG showroom.

 

[viva1986]

These days i am seeing that FOOD is the key to make lots of money specially in Delhi, this is what i am seeing and this is because of the huge margins which is not possible in any trade or business and competition is the main reason of that. And for FOOD if you maintain your branding and taste of food then you will surely go on high with time.
Actually i am also in manufacturing business of corrugated boxes and there is so much competition that after increment of 15-20% in the cost of raw materials i only managed to get 6-7% from my Purchasers.
And these days manufacturing is good only if you have monopoly of that item.

 

[m-jeri]

And what if I want to stick with IT sector?There are still many gadgets or IT products that can yield good output and my moto is to find those products.And if you can help me,I will appreciate it..And how's the idea of opening a showroom of a reputed IT brand.Like a LG showroom.

I understand the appeal of IT products. But if you really want to make money in IT products in India. stick to cheap items and govt contracts. Then you will make money.
Only know 2 people in IT businesses. both are 2 of the biggest govt contractors in my state. 1 is like the biggest business in kerala itself. Although that guy gets good individual business also. Mind you they are like 15+ year old establishments now. Most other medium to small businesses in city outskirts and remote areas come to them and get items. So imagine the profit margin. And the 2 guys, they play games. Like if you are direct providers you have more leverages. sometimes you get free items which you can put sticker and bill them.

Do you know the 1st guy whenever some prospective individual negotiates price with him, they wont even bother. Coz they know they will end up selling the same stuff somehow to him.

They all started at the Yuko/PCL/386/486/Creative MM upgrade kit era.

Gosh. the time flew.

Idea of LG showroom. What can you do infront of ebay/snapdeal/amazon/flipkart?
Even nowadays every company is setting up service showrooms. The day of individual brick and mortar shops is coming to an end.

Then again, still many are coming up in my state. but all are like big. I mean 2~3Cr+ investments. I know the numbers coz I know many in this and related areas. and all are multi brand. Onam, diwali... old generation still like to see and buy. Dunno what will the current 90's onwards people feel.

 

[nRiTeCh]

@OP whats your location? As I said even I'm thinking of opening an IT business but constrained due to finance/capital need. Once upon a time my dads office colleague did said he'll finance me any amount I need but then I postponed the idea coz I was working at that time and was earning enough. Now this was almost 7 yrs back. And now that I'm free I've no such luck. The uncle got settled in UK couple of years back and hence no contact for too long.

One of my friend who has many contacts and business mind owns a medical shop and also works in a pvt. co. suggested me to open some fast food eatery like a rolls corner etc. which even he intends to start. This does sounds promising to me coz such businesses never goes in loss unless the stall/shop is opened @ some deserted place.
But again my gear stucks @ financing. I cant asks my parents to finance me. So I have dropped the idea for any business for at least next 4-5 years.

Medical business is one of the most profitable today. But you need a medical license for that. Profit margin is way too much compared to other businesses.

I have some good business ideas but all waste I cant put them to use for my selves due to obvious no business. But I keep helping people around me who are already into some business and are pretty much impressed with my suggestions which have helped them grow. I cannot join hands with them even if invited and they are into diff. fields and lastly coz I want something of my own....wholly and solely.
I though have some friends who can help in need but I need a trustworthy partner who'll withstand all the ups and downs throughout the business life cycle.

 

[deaddevil]

@nRiTeCh, why dont you go to banks for funding? I also am interested in starting own business, but no idea of anything and no money. So basically if I land up starting a business or shop or restaurant it will have to be a loan from a bank...

 

[ashishsahu]

^^ every bank has a set of rules and regulations so stupid that you will wonder why one will opt for them. for ex:

1. business should be atleast 3 years old
2. IT documents of last 3 years should be provided
3. last but not least the business should be in profit for all these 3 years

these are the basic rules for almost all private banks (give or take a few exceptions). Basically banks will not at all offer loans to startups unless you are funded by a VC i guess

 

[ashishsahu]

Here is the requirements for business loan from HDFC
Get details on eligibility criteria & documents required for HDFC Bank Business Loan

Self Employed including Individual Proprietors, Private Ltd. Co. and Partnership Firms involved in the Business of Manufacturing, Trading or Services.

With:

• Minimum Turnover of Rs. 40 Lakhs.
• Years in business: Minimum of 3 years in current business and 5 years total business experience
• Business must be profit making for the last 2 years
• Minimum Annual Income (ITR): Rs. 1.5 Lakhs p.a.
• Age of Applicant: Min 21 years & Max. 65 years at the time of loan maturity.

Documents you will need to submit:

• PAN Card – For Company /Firm/ individual.
• Proof of your identity: Copy of Aadhaar Card/Passport/Voter’s ID card/driving license.
• Proof of your address: Copy of Aadhaar Card/Telephone bill/Electricity bill/Passport.
• Bank Statement (latest 6 months)
• Latest ITR along with computation of income, Balance sheet and Profit & Loss a/c for the last 2 years. Financial should be CA Certified /Audited.
• Proof of continuation (ITR/Trade license /Establishment /Sales Tax certificate)
• Other Mandatory Documents (Sole Prop. Declaration Or Certified Copy of Partnership Deed, Certified true copy of Memorandum & Articles of Association (certified by Director) & Board resolution (Original)

Loan at the sole discretion of HDFC Bank Ltd.