According to the Global Manufacturing Competitiveness Index of Deloitte, India is all set to become the 5th largest manufacturing country in the world by 2020.
The Government aims to increase the manufacturing sector’s contribution to the GDP from 16% currently, to 25% by 2022. It also aims to generate employment for 100 million Indians in due course.
The Gross Value Added (GVA) of the manufacturing sector has grown by 4.34% CAGR from FY12 to FY18.
Various initiatives from the Government and financial assistance packages from lending institutions continue to help an entrepreneur’s dream to be the most profitable manufacturing business in India.
Financing is not the only factor that matters here. Among the first basic requirements for a successful manufacturing business, are an innovative product and its respective market demand. Manufacturing a product which has the potential to drive market demand stands as the first pre-requisite towards taking the business to the next level.
Along with the above, take a look at the following tips:
- Go for the Correct Financing
Capital is a significant factor that will help your manufacturing business come alive. You may have savings as investments for business expansion. However, it is recommended not to utilise all of it and keep an amount for emergencies.
Opt for investors or bring in partners. Both of them will help you fund the business forward.
You can go for a small business loan if you want to run a sole proprietorship entity. NBFCs like Bajaj Finserv provide Business Loans with pre-approved offers which lower the hassle involved in availing financing and help save you time. Pre-approved offers are also available on home loans, personal loans, and other financial products. You only have to provide your name and phone number to check your pre-approved offer.
- Rent and Lease Instead of a Purchase
Buying equipment and purchasing property can involve considerable investment. Such investments can go to vain in case the business performance remains unsatisfactory.
Renting plant & machinery and leasing space can be a better alternative. Rents or leases will leave you with more cash in hand to utilise as working capital.
Nearly every single brand among the most profitable manufacturing business in India today started off with leases and rents before they opted for purchases of machinery or equipment.
Additional read: how to raise capital for business
- Right Location will Play a Significant Role
When leasing a space, it is critical to keep an eye on the location. There is a high chance that your product will not be sold at a place where it is manufactured.
Hence, you have to rent two separate places – a factory for production and a warehouse for storage, preferably adjacent to the selling location. Both of these have to be in prime position for logistics or transportation.
- Choose your Retailers Wisely
Selecting the right retailer who will sell your product is of utmost importance. Selling online is one of the most favourable ways for new manufacturing businesses with the recent advent of e-commerce in India.
You can either sell through existing e-commerce websites or have your own. You may postpone plans to develop and design your own e-commerce website and instead go ahead with a mobile application to reach out to your target customers. Also, you can partner with existing online retailers to sell your product.
You can also add brick and mortar shops in your retailer list. A combination of both online as well offline retail can be the key to become the most profitable manufacturing business in India.
- Operational Excellence is the Key
Your production cycle might not be efficient and quick at the first instance. However, such productivity issues are part and parcel to a new manufacturing business.
What is crucial is to learn as you go. Your primary aim will be to bring operational excellence to your business.
As days pass, you have to find new ways to lower your production cycle, bring changes and adapt to them, and learn from your mistakes.
- Don’t Stop Reinvesting
Don’t let greed take over, once the profits come in. You will have to reinvest a substantial portion of your gains into your business for expansion.
Following these tips and hacks can help you become the best manufacturing business in India in no time. If everything goes well, you might become the next big name in the booming manufacturing businesses in India.