Society Mindset

Why Do India’s Unorganized Businesses Are Better Than Organized?

Today, India is the fastest growing economy in the world. What we see on the charts and numbers is all about private companies or public companies. We have never discussed about the Unorganized sector.

There are mainly two types of business area. The first is registered private or public companies which we call formal or organized sector. The second is known as an unorganized or informal business sector. In this article, I am going to discuss UNORGANIZED business industry.

9 Reasons Why Unorganized Businesses Are Better Than Organized?

1. UNORGANIZED > ORGANIZED

The unorganized business area contains street vendor, toy seller, a vegetable seller, flower delivery man, newspaperman, vada pav in the streets etc. Basically, most of these activities are considered as an unorganized business area. Because no one is there to regulate.

In India, it is taking a large part in country’s economy as well. Let’s start with the numbers…

Also Read: Current Scenario of Indian Private Sector

  • 50% GDP (Gross domestic product) of the country is based on informal/unorganized industry.
  • It is contributing more than 90% of the country’s workforce.

2. Discount Rate:

The rate of discount is much higher unorganized than organized. For example, A boy who is selling flowers on the road for 10 ₹ per flower. He will keep 30% margin and if he likes your face, he will directly give you a 50% discount and will decrease his margin.

In organized businesses, the process is too long. The CEO, Product manager and board of directors sit for a meeting to give 5% discount.

3. Bargaining Rate:

Here, we can bargain with the shopkeepers or street vendors. We cannot bargain with the million dollar companies.

4. Seasonal Businesses:

As we can see from the image, this shop is of the products related to the kite festival. There are millions of these kinds of shops all over India. They have to change their businesses in almost 12 times a year because this is a totally seasonal business.

There is no sustainability in these kinds of businesses. Also, they have to change their inventory, supply chain and target segmentation. So they actually change their whole business model throw-out the year. However, they are making a good amount of money to live a decent lifestyle.

Also read : 5 Reasons Why Engineers Can Do Anything?

If any small or big registered companies want to change their whole business model, they will take at least 3-5 years to change the whole ecosystem for their business.

5. Great Entrepreneurs:

As shown in an image, we can definitely find great entrepreneurs rather than giving an example of Silicon Valley. They directly deal with common people and earn money.

6. Relationship with Consumers:

Street vendors or small shop owners are doing the best job to build the relationship with their consumers. They know if consumers are happy with our service, they will come back again to buy new products. For that purpose, they sometimes give free service or product.

7. Equal Opportunity:

Unorganized sector is providing equal opportunities for everyone. We don’t need to invest million dollars to start a business in the unorganized sector.

In the organized sector, very few companies are thinking to take care of their aged employees, handicapped people and transgender. Informal sector respects all the people and giving opportunities to everyone.

Also read : How to Identify Anyone With The Help of Technology?

8. Multiple Business:

One makes breakfast and starts earning in the morning and in the evening he is selling some fast-food and making money. He did two different business in a single day. There are also many examples related to this area.

Practically, this thing is next to impossible in organized/formal businesses.

9. Employment:

As I have discussed above, the unorganized sector is contributing more than 90% of the country’s workforce.

We don’t need two-three 5000 crore companies, what we need is 5000, two-three crore companies.  –  Capt. Raghu Raman

This article inspired from this video… Watch if interested…


If you find this article useful, then let me know in the comment area. Share if you find something informative. 

Thank You ?

Anuj Vohra

Founder of Itsfacile.com and Saral Investment

View Comments

  • It is always a pleasure hearing your motivational speeches. Probably this one touched my heart more because it deals with the common man on streets. But don't you think with the present economic policies they have taken a hit. Particularly the leather, hosiery, and of course the farmers

    • Yeah it effects a lot... But only in mega/metro cities in India... Many people still prefer to buy things from Bazaar.

  • I think such men are free from abstractions. They have thier own lives to think about and this thinking guides them closer to the basic human nature. Unlike the people who do not have to fight for sustainence (rich and well to do sort of men- myself included), they inevitably have a reason for existence.

  • I think it's all about area or count being targeted...if target market is large ...then unorganized one never gonna be successful..

  • Rightly said

    "We don’t need two-three 5000 crore companies, what we need is 5000, two-three crore companies"

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Anuj Vohra

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