Short Story
36-year-old Vikrant runs a clothing store in Mumbai. His store caters to men, women, and children of all ages and sells all kinds of clothing, from Indian to Western. He lives in a rented house with his siblings, wife, and two kids. He hopes to start a wholesale division in this business. His long term goal is to have a larger store and to own a house in the city.
Business
- The store has no tie-ups with specific brands as the purchases are driven by the changing trends and the demand for certain clothing in the market.
- Vikrant hasn’t tried finding business online but wants to sell his products on e-commerce platforms in the future.
- He feels that enlisting his business online is a waste of money because his target market is in and around the area where his shop is located.
A: How did you get the idea to start the business?
V: As a marwari, business was always on the cards. It is the way of life for my kind of people. We don’t necessarily look at what business we start, as long as we are doing a business. But, like I mentioned, I was already working in the same domain. So, starting a business in the same line was something that was inevitable.A: Who are your major customers?
V: I mainly cater to the people and the families living in this chawl. For now, they are my only target customers and I plan to capture more market share within this space.A: Do you take any business advice in times of need?
V: No, there is no such guiding light in my life. I do everything on my own when it comes to the business, and I learn from my mistakes.A: Are you a part of any trader’s association? How does it help with your business?
V: Yes, I am a part of the Poisar Welfare Association. See, these associations don’t generally help with the betterment of the business in any way. These associations just come to your rescue for any kind of support you need for the smooth running of your business. For example, it helps me claim bad debts or advocate the fair running of my business.
Finance & Banking
- The store accepts payments through digital modes because the customers prefer using these modes of payment.
- He visits the bank regularly and has never faced any difficulties with banks for their procedures.
A: How much do you receive through cash/cards?
V: Around 30% of all my inward transactions are through credit/debit cards and the rest through the mode of cash.A: Do you accept QR codes/UPI to accept payment in your store? What was the motivation behind it?
V: Yes, we do accept payments through these digital modes. The only motivation I had for setting this up was the need shown by the customer. I did not really know much about it till customers actually came around asking for this service. That’s when I realised people don’t want to carry cash anymore and instead make payments through these modes. This was about 2 years ago.A: How far is the nearest branch of your bank? How frequently do you visit the bank? Do you face any difficulties?
V: There is an Axis bank about 800 meters from here. I visit the bank quite often, actually. Almost 5 days in a week. And if for some reason I can’t visit the bank, I send one of my boys to do the needful. Honestly, I have never faced any difficulties with banks or their procedures.
Loans
- Vikrant requires a loan at least a month or two before the peak season for his business where he expects business to increase substantially
- The interest rate and the time taken for the amount to get credited into his account are the two parameters that he considers before taking a loan.
A: Where do you use this capital in your business?
V: Mainly, I need capital to purchase more stock so that sales increase and also fulfill the needs or demands of the customer. Moreover, I require immediate sanctions to pay the various vendors whenever the amounts are due.A: What are the amounts that you generally borrow through personal sources?
V: See, I don’t borrow exorbitant amounts, but the general borrowing would be in the range of Rs. 2,00,000-Rs. 4,00,000, depending on the need.A: What are the main difficulties you face due to the lack of funding?
V: See, during the lean periods of the business, the main expenditures are the payments due to various parties. It may be vendors, salaries due or basic utility payments. The lack of cash in hand compels me to go out of my way and raise debt to clear already pending debt.A: Have you ever borrowed for paying off utility bills?
V: Yes, of course, I feel the need to borrow only for such payments. Actually, I end up borrowing once or twice every month.A: If we were to offer you 3 hypothetical products, what would suit your need more?
1. 100 Day Loan
2. Line of Credit
3. Term Loan
V: Honestly, I feel the 100 Day Loan and the Line of Credit attract me the most. But, I would segregate them for fulfilling my short term and long term needs, respectively. For my seasonal requirement, I would opt for the Line of Credit because I can use those amounts as and when required, and just be charged on the amount debited. For making small time payments, I would opt for the 100 Day Loan. But, my only problem is that there might be times I may not have the sufficient amount of transactions, which may create hindrances during repayment. All in all, I would rank these products according to preference as:
1. Line of Credit
2. 100 Day Loan
3. Term Loan
Vendors
- Vikrant purchases stock from different vendors based on the need.
- Instead of placing orders on WhatsApp or over calls, he prefers to visit the vendors. Also, the vendors visit his store once or twice a month.
A: What is the credit cycle you maintain with your vendors?
V: As I had mentioned earlier, I purchase stock from different vendors based on the need of the hour. Now, different vendors have different cycles, while some require upfront payments. Usually, the credit period given is about 45 days, but I end up extending it to 2–3 months, due to the goodwill of my relationship with these vendors.A: How do you place orders with your vendors?
V: We place orders whenever the need of stock arises or the changes in trends compel us to do so. For these purposes, I don’t tend to place orders on WhatsApp or over a call. Since the vendors are not too far, I personally visit them to do the same. They even visit the store, probably once or twice a month.A: How do you make payments for your purchases? Do you accept card payments at your store?
V: I only make payments through cheques to all my vendors. Yes, I accept payments through cash, cheques and cards. But there never is a time I make payments through any cards or online modes.
Accounts & Taxation
- There is no billing system installed for the shop, daily transactions are recorded in a ledger book.
- All the bills/invoices of the store are handwritten and shared with the chartered accountant.
A: How do you keep track of income and expenses at the shop? Do you have a billing system?
V: There isn’t any billing system as such here. We generally maintain a ledger book, where all the day’s transactions are recorded. Also, our bills/invoices are hand written, the records for which the CA maintains.A: What licenses do you have in your business?
V: Other than my GST license, I also have an Udyog Adhar license, which has a one time payment only and does not have to be renewed.
Tech Adoption
- Vikrant maintains accounts in a ledger and doesn’t feel the need to switch to a computer as none of his employees know how to use it.
- Vikrant accepts digital payments as he doesn’t want to lose out on valuable customers.
A: How does a mobile phone/computer aid your business?
V: To be honest, we do not use a computer for any functions of the business. Even when it comes to record accounts or maintain them, we do everything by writing them down. We have ledgers of accounts. Also, I don’t feel the need to switch to computers because none of us has the knowledge to use one. Plus, if I hire someone just to handle the computer, that is an expenditure I don’t want to incur.A: How has your sale been affected due to the digital payment revolution in India?
V: To be honest, these apps like PayTm and GooglePay have become synonymous to credit/debit cards these days. People prefer making payments through these modes and not carry cash on them. If I don’t provide this payment service to my customers, they will actually move on to other stores where such facility is available. But, you have to be in line with such trends, otherwise you tend to lose out on a lot of valuable customers.
Business Goals
- Vikrant would like to buy more stock and fulfill his daily requirement in terms of sale if he had access to greater working capital.
- He hopes to start a wholesale division in this business. He also wants to sell his products on E-commerce websites but their high margins discourage him.
A: Do you think the business has changed over time? What is the reason for the same?
V: Yes, the business has definitely changed over time. The main reason for this is the change in taste and preferences of the customers. Earlier, whatever we suggested to the customers as new stock/trend/fashion, they would rely on us and buy whatever we used to suggest. But now, it is the customers that come into the store asking for specific types of clothes. The fact is that the consumers are very informed these days. Now, I literally place orders according to the needs of these customers and whatever they desire. Obviously, I have enough knowledge on what kind of clothes to sell during which season, but I depend on customers or my vendors to suggest new things which I could sell at my store.A: What are the top three things on your mind with respect to your business?
V: The three main things that are on my mind all the time, which are: there should never be shortage of stock and cash at the store, and the customer should leave the store satisfied. Even though, I do not believe in giving discounts, even during seasons, I believe that the customers should like the stock we have.A: What is your long term goal?
V: The only thing that I would want in the long term would be my own store, which would be bigger in size. Also, I would like to own a house in this city. For now, these are my only aspirations. I feel, one needs these things to think beyond them, in the first place.
Credits:
- Interviewed and transcribed: Ansh Chawla & Nikhil Kambli, Flexiloans
- Analyzed and published for Medium: Geetika Shukla
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About the research
This documentation is a result of the in-person interview, along with the participants’ consent. The interviews might be conducted in their native languages and translated to English in the best possible way to reach a large audience.
Disclaimer: The identities of people and places in this documentation have been changed to honour the privacy of the participants.
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