The recent researches identified that we can expect a 25% growth in the organic food store industry (TechSci Research, 2019) through 2020. Therefore, starting an organic food store in India is a highly profitable business.
The process of starting an organic food store in India requires the analysis of various factors before store setup and start selling products. An entrepreneur must consider all the internal and external factors to be successful in the organic food store business in India.
Steps to Starting the Profitable Organic Business Idea
Step 1: Identify the Target Customers
The people in the Indian cities have started giving more importance to healthy living in these days. Organic food denotes the riskless and healthy nature of food products which is in high demand among the health-conscious customers. In addition, organic food products are usually costlier than regular food products. Thus, the customers who can able spend for healthy products must be your target customers. Therefore, selecting the organic store location where people live with more health conscious and upper-middle-class economic background is important.
Step 2: Identify a Suitable Store Location
The business startup process must consider the selection of appropriate location, buying the power of customers, the level of competition in that area and also the store rents in that particular location where you wanted to start an organic store business.
Location filled with target customers: Starting an organic store in urban areas rather than suburban or rural areas is a wise choice in general. Usually, customers in urban places spend more on quality food when compared to rural places. Moreover, the business opportunities are also high in urban areas. Therefore starting the organic store in the nearest city where the upper middle class and upper-class economic background customers live. If you are in Tamilnadu, then starting the organic food store business in the cities like Chennai or Coimbatore will give you better opportunities to grow your organic food business.
Accessible Location:The store location must be in an easily accessible place to the customers. The store location with parking facility in a congested market location is an additional advantage that gets in more customers.
Store Rental: You must spend a minimum Rs. 10,000 to per month as the rental for a store with decent space to shelve your organic product varieties. However, make sure that you do not spend more than 4% of your total product sales for store rent.
Competitor Analysis: You need to analyse the competitors in the target location as well. If there are many organic stores located around your store location, then doing profitable business will not be that simple. Perhaps, you have no choice rather than selecting a competitive market location due to the huge demand for organic food products in that selected location, then you must understand the strengths and weaknesses of your competitors in the market. Developing better promotional strategies are more important to face the competition and sustain in the competitive position in the location.
Step 3: Register your company
Select a suitable business structure for your organic food retail business. The business structures in India are “Sole proprietorship, partnership, one person company, limited liability partnership, private limited company, and public limited company”.
If you are a single proprietor of the business, then Sole Proprietorship is the suitable and easiest business structure to register. You can register your organic food store under sole proprietorship at the nearest municipal office.
Note: The proprietor must have the PAN (Permanent Account Number) Card to register the business and get the trade license.
Step 4: Get Trade, Food Safety license and Organic Certification
Apply for a Current Account in your business name in your preferred bank. The legal regulations to get the trade license for starting an organic retail store may vary in every state. PAN Card, Bank Statement and Rental agreement of the store (or any other proof of the premises) are the important documents required to attain trade license.
FSSAI License: If you have a plan to manufacture any of your own organic produce and sell in your organic store, then FSSAI license is necessary for food safety and quality assurance.
Is GST mandatory? GST (Goods and Service Tax) is mandatory only when your organic store business crosses the annual turnover limit of 20 lakhs. You can make the decision on applying for GST after starting your organic food business. However, obtaining licenses or GST could not be easily ignored since your business development also depends on these.
Organic food certification: The National Programme for Organic Production (NPOP) implemented by the government. This progrm governs the organic food certification in India. India Organic certification is offered by the organic testing agents accredited by APEDA (the Agricultural and Processed Food Products Export Development Authority). India Organic label is a must for your own organic food production in order to get recognition as an organic product. You can also sell organic products certified by Usda.
Step 5: Store Setup and Procurement
This stage may consume a major piece of your investment. Setup your store in a smarter way with enough number of racks and shelves. Fill the shelves with the top organic food brands’ products which are the best selling in the market.
Step 6: Adverting and Promotion
In order to be successful in business, you must be different among your competitors. However, as a startup business, selling top selling food brands is the safest decision in the initial stage. However, you can attain customer attraction by reducing your profit margin and price-based promotions like discounts for a limited period to reach a certain market share in your target location.
You can also offer coupons to get more new customers. The best way to promote your business without investment is social media marketing. Promote your business in the local your local community Facebook groups.
Printed pamphlets, Bulk SMS marketing, and Billboard advertisements are the low-cost advertisements and promotional strategy for a start-up business.
Step 7: Evaluate the Sales Performance of your business
You can evaluate your business performance by calculating the net profit attained from your business for every 2 months. Net profit can be calculated by subtracting the overall expenses from the revenue. Expenses include purchase cost of organic products, advertising & promotional cost as well.
[Net profit = Revenue – Total Expenses]
The constant evaluation of your business will help you to understand the efficiency of the business performance. You can consider a further investment or changes in the promotional strategies can be decided based on the net profit attained by the business.
The business development strategies include expanding your organic store business by increasing your organic product varieties in the same location or starting a branch of your store in another location as a market extension can be considered.