Which is the Best Business to Start in the Slum City Area?

Slums are usually densely populated, and most of the residents are daily wage workers with very little daily wage. There is a lot of scope for improvement in these areas. A person or even a company can start a business, wherein the ultimate consumers are the slum people. Keeping in mind their affordability and tastes, these are some business ideas for slum areas in cities. These ideas are diverse across different customer bases within the slum areas like youth, homemakers, and labourers.

1. Coffee Shop

A coffee shop can be set up on a small scale, with very basic amenities and services, which could have a self-service fast food joint attached to it. People prefer local food, which is cheap but affordable. The coffee shop would require an investment of about Rs.30,000, and this initial investment would yield higher benefits over time. In addition to this, providing fast food in the evenings will add to the value. People prefer to have some snacks with their Coffee or any beverage they consume regularly.

Due to their low income, slum dwellers prefer snacks in the evening since a few of them cannot afford full meals throughout their day. Hence the people prefer to have snacks like these during talks and meetings. This coffee shop can then expand into a fast-food joint by itself after having a certain margin of revenue over a period of time. By this time, the goodwill of the firm would have gained momentum.

At this stage, the expansion would be the right decision since more revenue per day will help in reaping the benefit of economies of scale, wherein there is higher production with lesser costs over time. So a person who can set this business will have to know what the people like, such as their price preferences, food style, food habits, etc.

The owner must be able to procure the materials at a low cost because he/she cannot overprice their product due to their business location. Hence setting up a coffee shop would be the most viable small and profitable business idea.

2. Saloons

One standard small-scale business idea that can be set up and commonly found in urban slums is saloons. Grooming ourselves is very important for every individual. But unlike the people living in the posh areas, the local consumers would prefer not to spend huge amounts on simply grooming themselves. Opening a saloon would require an initial investment of Rs. 1000 to Rs. 10,000 depending on how the person wishes to carry out his business.

This largely depends on the size and location where an individual wants to set up his/her business. It is interesting to note that some people initially start their saloon business under a tree. They just keep a chair, mirror, and a few types of equipment that will allow them to meet their consumer’s requirements. Such setups may require an investment of not more than Rs.1000.

A simple, modest set-up with a few working employees and assisting more customers might require an investment of around Rs.10,000. There is minimum financing which is required to at least cover the purchase of supplies. The basic amenities necessary for a small saloon business are a few chairs, hair tools, washing stations, and styling products.

Sometimes, some businessmen stock inventory that customers might like to purchase and try at home. For example, hair dye, conditioners, and shampoos etc. A successful businessman would be required to keep his set up in a busy market that different individuals are visiting daily. He needs to analyse the trends and styles in the market.

This provides the person with a better idea about consumer preferences and will also let him create a customer base. When the saloon gains momentum, the person may start his business at another bustling market by employing more employees and also keeping more inventory. Hence, saloons in slum areas would be the best business to start with little money.

3. Laundromats in Place of Dhobis

It is very common to see people washing their clothes by hitting them on stones for hours, eventually getting tired after some time. Here is where the small business idea of laundromats could prove to be the game-changer. There can be a business wherein washing machines can be used by the local people to wash their clothes, and this service could be given at an optimal cost of around Rs. 30 per wash, or on a duration basis, such as Rs.10 for 5 minutes. This could be one of the unique business ideas to start in a slum.

This could prove to be a massive success as it is helping the slum dwellers overcome their pain point at a very minimal price. The person who is setting this up must first calculate the number of clothes per day that would fall into the basket since he/she needs to estimate the average number of customers who would visit them every day.

And this can be done on a weighted average basis, where there are two slots, one being weekends and the other being weekdays. This estimation would help in the planning and budgeting process since one would have to look for the size of the area of operations, the number of washing machines, working hours, cost-benefit analysis, etc. We at ok credit provide in-depth analytical details related to how one can start this business from scratch.

Subsequently, the business can diversify into other fields such as selling consumer products like soaps, which could be used in the same laundromats. People can get to buy soaps of different grades and use them in the laundromats to get the wash done. This is also one of the best business ideas to start with little money.

4. Auto Repair Shop

An auto repair shop is a common business that does well in most slum areas. This is because many people in the slum areas are either cart vendors or auto drivers. Many of the slum dwellers take up the auto-rickshaw driving business since it requires low investment and driving skill could be acquired very easily. Hence, this sector is a hotspot in slum areas. This sector can be assisted by the ancillary industry, the Auto-Repair sector.

Setting up an auto repair shop would be one of the best businesses to start in slum areas since it lies in the proximity of almost all the auto drivers since their houses are clustered and close to each other. There might be multiple concerns for the auto drivers since they’re driving their vehicles all day. The physical auto-rickshaw components need a lot of maintenance. Apart from this, major and minor repairs can be made by the mechanic.

Setting up this business requires a lot of technical knowledge. The mechanic needs to be equipped with a lot of practical exposure so that he would be able to work on his own. The mechanic can also grow this business by hiring apprentices since training apprentices are more affordable than getting experts into the field. For setting up this business, the mechanic needs to have quite a good investment amount, ranging from Rs.20,000 to Rs.80,000.

This is because the equipment and tools required to run operations are quite high, and the fixed costs are too high. The mechanic needs to plan his working hours, the size of the area of operations and budget costs accordingly. He also needs to have a pricing strategy to ensure that he provides affordable services to drivers and makes sure that his business grows.

More queries will need to be handled, and the services offered can extend to washing the autos as well. This diversification can help the rickshaw drivers get all the services under one roof, which is highly beneficial for them.

Conclusion

The ideas mentioned above are four of the best businesses to start in the slum areas. With very little investment, entrepreneurs can make the best use of this opportunity to start a business with very little money.

Also read:

1) Online Business Ideas You Can Start Quickly
2) What online business can I do to make money? Here are the top-6 ideas for you.
3) Where Do the Best Business Ideas Come From?
4) Best Home Business Ideas in 2020
5) OkCredit: All you need to know about OkCredit & how it works.

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FAQs

Q. Which is the best small-scale business to start in a slum area?

Ans. A tea/coffee shop is the best small business idea to start in a slum area. Coffee, tea, and snacks demand from people belonging to all the income groups; hence, a profitable business can be established with a very low investment.

Q. Can I establish a profitable business in these slum areas?

Ans. Yes. Most of the entrepreneurs think they might not establish a profitable business in slum areas. Contrary to their opinion, certain businesses could be set up after understanding the needs of these slum dwellers. Such small business ideas would be highly profitable.