Financial Challenges of Women-Owned Micro-Businesses in India



Women-owned micro-businesses (wMBs) are vital to India's economic fabric, contributing significantly to grassroots-level employment and local economies. However, a recent report titled Decoding the Financial Health of Women-Owned Micro-Businesses (wMB) in India sheds light on the vulnerabilities faced by these enterprises. Conducted by MicroSave Consulting (MSC) in collaboration with Sa-Dhan and supported by JPMorgan Chase, the research surveyed six regions: Delhi-NCR, Gujarat, Maharashtra, Telangana, Karnataka, and Tamil Nadu.

Key Findings

Lack of Savings and Financial Preparedness

45% of women entrepreneurs lack savings for emergencies, leaving them exposed to economic shocks.

Inadequate Record-Keeping

60% of respondents do not maintain written records for their operations.

Among these, 55% consider record-keeping unnecessary due to small profit margins or scale, while others find it too complex.

Employment Limitations

55% of businesses are solo ventures, indicating limited contribution to job creation.

Dependence on Family Support

Approximately 44.3% of women entrepreneurs rely on spouses or family members for business decisions, reflecting a lack of autonomy.

Challenges and Implications

The inability to distinguish between personal and business finances compounds cash flow issues. This lack of financial discipline hinders scalability and long-term growth. Moreover, the absence of written records makes it challenging to evaluate financial health or secure formal credit.

The report underscores that these businesses, with annual revenues between ₹1.5 lakh and ₹9 lakh and employing up to three individuals, often operate on tight margins. The lack of autonomy and dependence on family support further limits their decision-making capacity and growth potential.

Proposed Interventions

The report calls for targeted measures to address these challenges:

Financial Literacy Training: Simplified modules on budgeting, record-keeping, and managing cash flow.

Digital Tools: Affordable, user-friendly platforms for accounting and inventory management.

Access to Credit: Tailored financial products for micro-businesses, coupled with advisory services.

Mentorship Programs: Support networks to build autonomy and reduce reliance on external assistance.

Statistics at a Glance

Metric

Percentage

Lack savings for emergencies

45%

Do not maintain written records

60%

Operate as solo ventures

55%

Depend on family for decisions

44.30%

Conclusion

Women-owned micro-businesses in India are a cornerstone of the economy but face significant hurdles that impede their resilience and growth. Addressing these challenges through financial literacy, improved access to credit, and supportive infrastructure can empower these entrepreneurs and unlock their full potential.

References:

Decoding the Financial Health of Women-Owned Micro-Businesses in India, MicroSave Consulting, Sa-Dhan, JPMorgan Chase.

Data derived from 1,460 interviews and additional desk research.

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