Business Ideas in Rural Areas: How to Choose Right One & Advantages

India has a lot of potential in rural areas and small towns in terms of business start-ups and cottage industries. The most prominent reason behind that is businesses in rural areas mostly centre on agriculture and other associated sectors on which 90% of the Indian population depend on.

Also, more than 70% of the population inhabits villages and small towns, and an entrepreneur may find ways to fulfil several unmet needs and build up a booming business. So, let’s look at 17 best business ideas for villages.

Here is a list of small business ideas that can work well in a rural setting:

Retail outlets that cater to the different needs of the population can be one of the most profitable small business ideas for rural areas  as there is a shortage of well-planned outlets.

How to Start: To start a small retail shop, one has to come up with a thorough business plan. Other retail stores sell similar merchandise. Then, an entrepreneur must carefully choose a location for the shop. Finally, one has to arrange all necessary permits and licences to start the business.

In villages and small towns using packaged flour is not as popular as it is in the cities. So, there is profitability in opening a flour mill that can supply flour and other grains like oats, corn, sorghum, barley, turmeric and other spices. It can be one of the most lucrative business ideas in rural areas.

How to Start: To start a flour mill, first of all, one must do a thorough investigation of the market and the competitors. If the situation is in favour, an entrepreneur needs the required primary investment for space and machines. Finally, after gathering the required licence and permits, one has to hire experienced workers to get started.

There is always a demand for fashionable clothing and variety for daily use or special occasions in rural areas. Many people depend on city stores for such needs. So, a store with the latest fashion ware and variety can be very profitable.

How to Start: To start a clothing store, an entrepreneur can start by finding a niche where they want to work. Then, one should identify the target market and do a competitor analysis. After sorting out one’s legal necessities, location, products and staff requirements, one can start the journey.  The clothing industry is one of the most profitable businesses in India with a CAGR of 3.34%.

There is always a huge demand for poultry products in villages and cities. One can start with a small farm and gradually build the capacity and variety.

How to Start: To start poultry farming, first, one must gain some knowledge about the job. One can choose a sector or the kind of animal one is going to farm and set a farm location. Apart from all that, one needs to have a proper business plan and investment jotted down.

The village scene is not complete without agriculture, and fertilisers are a crucial part of it. So are the pesticides. It is one of the best small business ideas for rural areas to start a fertiliser and pesticide shop.

How to Start: To open a fertiliser and pesticide shop, one must investigate the kind of crops a target market produces. Then one has to meet the licence and permit requirements from the municipality and state government.

People are increasingly getting aware of the importance of education. In rural areas providing proper education can be a fruitful business idea.

How to Start: One must understand the need for quality in this sector. Then, one can start deciding things about the location and infrastructure. A budding entrepreneur must not hesitate to hire the best teaching staff possible for the centre. The quality will speak for itself, and no promotion will be necessary.

Collecting milk from farms and supplying it to houses can be an effective business plan if one has a shortage of funds to start a business making it one of the most plausible small business ideas for rural areas.

How to Start: To start a dairy centre, one has to learn how a centre is run under the guidance of a mentor. Apart from that, one has to make ties with dairy firms to obtain the role of a supplier.

The market for organic fruits and vegetables is ever-increasing. One can sell the village produce and build up a profitable business.

How to Start: This business requires knowledge of farming and taking care of the produce. Or, one has to set up contracts with farmers for the harvesting part. This business requires a dedicated storage system where the fruit and vegetables can be refrigerated or stored.

The village scenario in India is changing very rapidly. A super shop can provide a magnificent opportunity for the changing customer base and needs.

How to Start: Starting a super shop is difficult but fruitful. One must have a clear business plan jotted out taking any action for the business. Next, one has to gather up all the necessary registrations and licence before investing further in material and human resources.

Nowadays, the use of plastic bottles or jars is very common throughout the whole Indian scene. So, PET bottle production can be one of the most effective small business ideas for rural areas.

How to Start: One must start with proper market research and competitor analysis. After that, one can arrange the necessary funds and buy the required set-up and machinery for bottle manufacturing. Finally, to start production, one needs capable workers and raw materials.

Depending on individual circumstances, one can profit from an iodised salt production farm. An entrepreneur can start their own wholesale salt business and make a comparatively large profit.

How to Start: One can start iodised salt production with a small amount of investment. One has to make a business plan to start the process. Then have to meet the license and permit needs of the trade. One should hire experienced professionals to produce the iodised salt and concentrate on marketing the product.

If one has the skill set or interest in becoming a blogger, they can start and maintain a blog of their own and start earning. Although generating profit out of this business can be slower in the beginning, it is one of the most creative and profitable small business ideas for rural areas.

How to Start: First of all, one has to know the intricacies of writing blogs. To continue being relevant, a writer must follow the changing trends of the present time and link up their niche writing to the trend to stay relevant. Second, one must engage themselves with all marketing strategies to get the profit going.

Packaging needs for various products are constantly increasing in this developing country. One can take advantage of the situation and provide air bubble wrappers for packaging.

How to Start: First, one must consider the market potential for bubble wrap manufacturing business in the locality or possible connections of supply. Second, one has to know how it is produced and what its components are. Third, one has to meet the licence and permits needed for the trade. Finally, one can hire an expert workforce and start production.

Health awareness is increasing in Indian villages and small towns. People always look for reliable diagnostic centres in their vicinity for regular check-ups or emergency purposes.

How to start: One must meet the licence and registration requirements for a diagnostic centre. Then, one has to build the necessary infrastructure and set up a lab. Finally, one has to hire a crew of qualified pathologists for specific services the centre plans to offer.

In India, incense sticks or agarbattis are used on various occasions throughout the year. It is used everyday in many households today. So, it can be one of the fruitful small business ideas for rural areas.

How to Start: One should start by researching the market and competitors. After that, one should consider finding a suitable place for manufacturing the agarbattis. They can rent or buy a place and place the machine. Apart from having a jotted-down business plan and marketing strategy, one has to hire people to start the business.

Going to the gym and staying fit is more than a health-related concern now. It has become a culture. One can profit from this massive trend by opening a gym. It's almost like a one-time investment and lifelong-gain business plan.

How to Start: To start this business, one has to do some research on the current fitness trend and the local inclination towards gymnasiums. Finally, one has to rent a place and buy the essential equipment. One has to keep the pricing in check where a competitor analysis can come into play.

After the ban on plastic carry bags, the demand for paper bags has increased. This can be one of the most beneficial small business ideas for rural areas.

How to Start: First, one should consider finding a suitable place to put the machinery. Second, one must make a proper business plan and invest in machines and raw materials. Finally, after arranging the permit and licence requirements, one can hire experienced workers to start production.

Now let’s look at how to get the advantages of small business ideas for villages.

One should consider certain factors before starting a small business in a village or small-town setting. Here is a list of things to consider:

1. Does it serve the locality?

One should always consider this factor before choosing any small business ideas. If an enterprise does not serve the purpose of the locality, it has no chance of seeing any growth in a region.

However, with a particular purpose to help, a business can become more than a profit-making system.

2. Is it going to stay relevant for a long time?

Apart from serving a purpose, one should also consider if a business will stay relevant for a long time. It can guarantee safer and more consistent running. However, some ideas can be very necessary, effective, and profitable yet short-running. In this context, obtaining life insurance for your business can provide an extra layer of security for unforeseen challenges.

3. What is the risk-to-reward ratio?

Before investing in a small business idea for rural areas, one has to consider the risk-to-reward ratio for that sector.

In some cases, it is high risk and high returns; in others, it is the opposite. Businessmen have to decide for themselves what will be more appropriate for them and decide.

4. What are one’s personal goals?

One’s business idea should always line up with their personal goals. If a business starts to deviate or create resistance in someone’s personal life or inner ambition, it will be hard to continue.

If business lines up with one's personal goals, it can bring synergy into the work and uplift all living beings related to the process.

There are several benefits of starting a small business in a rural area. Let’s look at them one at a time:

1. Ready Access to Raw Material

As villages produce most of the raw materials for businesses, it is easier for a farm to get hold of them. It will help business owners to provide customers with high-quality products at comparatively lower prices.

The proximity to the village produce also helps a business to face lower resistance in manufacturing and helps to maintain a better flow of production.

2. Less Overhead Expense

To run a business, one must continuously invest in various aspects of production. In a village setting these overhead expenses are comparatively lower in a village setting than in urban areas. This factor can play positively for a business.

One can use this opportunity to save money for personal development apart from the business. Or, one can invest it to expand the existing infrastructure or connectivity further. Another smart move could be securing your family’s future with a term insurance plan, ensuring financial protection while you grow your business.

3. Cheaper Mortgages

In rural areas, mortgages are cheaper compared to urban areas. It is due to the fact that a village lacks the concentration of educational institutes, hospitals and shopping malls and therefore it attracts fewer people.

An entrepreneur can use this advantage and establish a small business in rural areas according to a niche that fits his or her disposition.

4. Low Competition

One can expect low competition in rural areas of India. However, it is comparatively lower than the urban areas.

In villages and small towns, one may have a few competitors, and depending on the niche, it may even be lower.