How to Start Entrepreneurship in India in 2023
No matter how big or small, starting your thing might be the best decision you will ever make in your life. However, starting a business requires a well-thought, well-structured business plan with adequate systems and processes in place from the first day of doing business.
Entrepreneurs rely on systems, automation, and employees, and having these processes in place requires a considerable amount of investment in time and money.
It is vital to get into an entrepreneurial mindset and understand the basic know-how. An ideal business should have an original or a better solution to a problem, make you a consistent income, contribute to society, and would help you with personal development as well. Most importantly a successful entrepreneur can possess opportunities with fearlessness and perseverance.
“All our dreams can come true, if we have the courage to pursue them” – Walt Disney.
So, if you have decided to take the leap of faith and start your own business in India, we have an easy detailed guide for you to assist you in taking this decision.
Also Read: 10- Must-Have Skills for an Entrepreneur
STEP 1: RESEARCH AND REFINE YOUR IDEA
Everything starts with an idea, explores it in detail, and makes it see the light of the day with some real work and analysis. Getting an idea and imagining the possibilities for a new business is exciting but it is of utmost importance to validate it with market research. It is good to be passionate but one must not lose objectivity. Decide if you want to be in the service or product industry; take your time to thoroughly explore and research your idea; gather as much information as you can. Obtain a general sense of the type of customer or niche your product or service will appeal to do.
Study your competitors; their branding and pricing strategy. You can even conduct formal research and ask questions like “Where do you currently go for this product or service and why?” and get a better understanding of your competition. Look for collaborators like media, organizations, and other associations who might have an interest in your business and that sell to your customers.
Another approach to evaluating your idea is to do a SWOT analysis which will enable you to understand whether your service or product will sustain in the current environment. Analysis of your service or product will help you decide where you need to go next with your idea. You must be prepared to rework, refine, and rethink your idea before you launch as it will be more painful to do it afterward.
STEP 2: WRITE A DETAILED BUSINESS PLAN
After you have explored and validated your idea with solid research, it’s time to put your business idea on paper. A well-crafted comprehensive business plan will help you determine whether your business idea is likely to succeed and be sustainable. You must spend a considerable amount of time writing out your business plan so that in the future it provides direction to your business, and can also be presented to investors and other potential stakeholders.
Use your business plan as a roadmap for the structure, execution, and growth of your new business. According to SBA, you must include the following key elements in your business plan:
- Executive summary: A snapshot of your company’s mission, vision, and goals.
- Company description: Detailed information about your company.
- Market Analysis: A good understanding and analysis of your industry, competitors, and target market.
- Organization and management: Describe the legal structure of your company and the details of key team members.
- Service or product line: The products or services you are offering and their lifecycle.
- Marketing and sales: Describe in detail how you are going to promote your business and your sales strategy.
- Funding request: Explain how much funding you’ll need over the next 3 to 5 years and what you’ll use it for.
- Financial projections: Clearly explain your projections, and match them to your funding requests.
- Appendix: Provide supporting documents such as credit histories, resumes, product pictures, letters of reference, licenses, permits, or patents, legal documents, permits, and other contracts.
STEP 3: FUNDING/INVESTORS
At this stage, you need to start listing the option to accumulate capital for your business. Funding and fundraising, both are extremely significant in the growth of a business. According to studies, over 94% of new businesses fail during the first year of operation due to a lack of funding.
The first round of funding, popularly known as seed funding is followed by series A, B, and C rounds of funding. Seed funding is the basis of fundraising which includes your own money, business loan, friends and family, angel investors, or venture capitalists. You will probably need outside sources of capital if you want to grow fast and take advantage of market opportunities. It is strongly suggested to invest in good accounting software and keep your finance in order.
As an entrepreneur, it is essential to analyze and have a detailed financial plan required to start and run your business.
Check out these practical-oriented professional courses from IIM SKILLS
- Technical Writing Course
- SEO Course
- GST Course
- CAT Coaching
- Digital Marketing Course
- Content Writing Course
STEP 4: DECIDE THE LEGAL STRUCTURE
While deciding the legal structure, you need to consider your company’s financial need, risk, and ability to grow. Also depending on the type of business and its activities, it may need to be licensed at the local, state, and central level and you may need specific licenses and permits to operate.
There are several types of legal structures you can choose from when setting up a business detailed as follows:
- Sole Proprietor
A sole proprietorship is the simplest business structure where a single person owns and runs the entire business. It is very suitable for any one-person business and allows you to be in complete control. This business type structure includes independent accountants, web developers, and content writers among others. Being a sole proprietor means the individual is entitled to all/any profits of the business and is also liable for any debt/damages incurred. This business structure is the easiest to set up, is a low cost, simple tax deduction, and easy exit with no formal paperwork.
- Limited company
A limited company is a structure wherein the business is a separate entity from the individuals who own it and has its existence in the eyes of the law. This business structure provides limited liability to the owners to the extent of the capital contributed by them. They don’t have to incur losses on behalf of their other partners.
There are two types of limited companies you can incorporate in India.
- Private limited company:
A private limited company is a company which shares are owned privately by the owners and cannot invite the public to apply for its shares. This is the most common and preferred structure for most small businesses in India. It can be formed with just 2 members and 2 directors with a restriction of a maximum of 200 partners and only 50 shareholders. This type of company gains more traction from investors, foreign investors because they can buy/sell stakes easily.
- Public limited company:
A public limited company is a company that is owned by the public and shares are available to the public at large for purchase and ownership. Capital can be raised from the public directly through the issues of shares. It can be formed with a minimum number of 3 directors and 7 shareholders. There is no limit on the maximum number of shareholders. A public limited is a common structure of major companies as the shareholders have limited liability to the extent of the face value of its shares and the premium respectively.
Check out the Top Professional Courses for Skill Upgradation
- Limited liability partnership (LLP)
An LLP is a partnership structure where two or more persons come together in an agreement for a common objective to earn profits. All partners in this structure have unlimited liability and the profit shared among partners is based on the agreed ratio. Although it is not mandatory but advisable to register this partnership in case of various conflicts between partners. This partnership is made up of partners with different skills, knowledge, and who have different responsibilities and exposure regarding the business.
STEP 5: PLAN YOUR FINANCES, ACCOUNTING, AND TAXES
Once you have set up the legal structure of your business, now is the time to figure out several important financial and tax responsibilities. Financial planning is one of the most crucial aspects of starting a business. You must put together a spreadsheet that estimates the cost of your business as well as the ability to cover ongoing expenses before you make a profit.
Before you can start generating any revenue, you are going to need to open a bank account to securely store your business’s capital. You will likely be responsible for filing some form of accounts, filing paperwork, and paying various taxes on an annual or more regular basis as a shareholder, owner, or director. It is essential to run your business properly, being legally compliant, and avoiding hefty fines from the government right from the beginning.
A seamless complete accounting system is necessary to create and manage your budget, set your rates, conduct business with others, file your taxes and provides a clear financial picture of your business.
STEP 6: REGISTER YOUR BUSINESS
It is important to be on the right side of the law when it comes to starting and registering a business. The first step is to choose a business name that is most relevant to your business type. Companies Act 2013, and Companies Incorporation Rules 2014 have laid out some guidelines and limitations for naming a company. Once the name is chosen, you will need to check if it is trademarked or currently in use. Once clear you need to register the business name. Also, don’t forget to register your domain name if your business is going to have an online presence.
To open a bank and income tax filing; PAN/TAN card, company registration certificate, and Labor License/State registration are required to be submitted as proof of the company’s existence.
There are four crucial procedures for registration of the company under the companies’ act 2013 as mentioned:
- Obtaining DIN (Director Identification Number)
- Obtaining a DSC (Digital Signature Certificate)
- Filling a New User Registration or eForm
- Incorporating the company
STEP 7: GET LICENSES AND PERMITS
There are a variety of licenses and permits that may apply depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your business during the process. As a result of your creative caliber, a unique thought process, and the innovative invention of a product or a new technical solution to a problem requires a trademark and patent to your company.
Protecting your Intellectual Property (IP) as a business is crucial to protect your business, brand, product, or service from damages that comes from entities using your IP without your permission. A trademarked company makes sure you legally own the brand and company name and prevents anyone from misusing it.
A patent is an exclusive right only relevant for a new business that has invented innovative technology or product that could be copied by others. A patent grants your business protection and legal ownership and the exclusive right to it.
STEP 8: EXECUTION
After you fulfill all the legal formalities you must focus on launching your business starting with setting up a business location, if required. Whether you have a home office, a shared or private office space, it is important for the operations of your business.
You need to start building your support team; employees, consultants, freelancers, advisors, mentors, or business coaches. One of the top reasons for a startup to fail is not able to hire the right team. You must select a team that helps you scale up your business to the next level. Hire action-takers who can get the job done as startups are grueling and things move at a rapid pace so you a team who can keep up and has core competencies. Successful companies take time to hire and train the right people.
“You can dream, create, design and build the most wonderful place in the world…but it requires people to make the dream a reality” – Walt Disney.
You will further need to set up structure and processes, online tools and infrastructure, stocks, vendors depending on the nature of your business.
STEP 9: DEVELOP LEADERSHIP QUALITIES
As an entrepreneur, it is essential to develop leadership skills when you start your own company, hire a team, deal with investors, or handle new clients. You need to understand how to handle difficult demanding situations while working with others. To assemble a committed team, solid communication is critical for the success of the business. You must ensure your clients and coworkers understand your objective and vision for the business.
As a leader, you need to identify all your barriers and build a flexible team and provide them with the right direction. Everyone should be focused on their particular roles and should be trained well in their jobs.
Friedrich Nietzsche, a German philosopher, once said, “To do great things is difficult, but to command great things is more difficult.”
STEP 10: PROMOTE YOUR BUSINESS
Once your business is set up and running, you need to start attracting clients and customers. The marketing and sales strategy in the business plan is going to be useful now. Marketing or promoting your business has become easy with technology and is the best way to promote your business.
Develop a compelling elevator pitch for your product or service, collaborate with influencers and other businesses, network, build relationships, and create a buzz in the market through media. These strategies will help you engage with potential clients and customers, and ultimately keep your brand top-of-mind. You not only have to spend money on marketing but also put in the time and effort and above all, the relevance it has for your customers.
There are traditional or digital ways mentioned below you can use to promote your business to increase the awareness of your brand and reach new buyers:
- Promote on Social Media such as Facebook, Instagram, Twitter, Quora, LinkedIn
- Promote on video sharing sites such as YouTube
- Create a website or a blog
- Press release
- Use classified sites such as IndiaMart, JustDial, Sulekha, TradeIndia
- List your site on google business and show your business on google map and local search results
Use search engine optimization (SEO) to drive organic traffic to your site
- Find social media influencers who genuinely connect to your brand
You will have all of the most important aspects covered once you have completed all the above-mentioned steps. Always remember that success doesn’t happen overnight; its required consistency and perseverance. Use the plan you have created to consistently work on your business, and you will increase your chances of success.
Consumers are smart and focus more on ideology these days. They connect with companies or brands that are transparent in their objective and operational practices and provide what the customer has been asking for.
Also Read: IIM SKILLS Digital Marketing Course Review
Howard Schultz, Starbucks CEO has rightly said –
“In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic”.