Are you planning to start a business? 7 top points to remember
Planning a business is not an easy task, as there are many factors like business structure, finances, location, products and many more which need to be sorted out first.
Small and medium enterprise sector in India is witnessing a boom, as many young generation entrepreneurs are developing new and unique businesses. The government is also encouraging more people for startups. However, planning a business is not a, easy task as there are list of factors like business structure, finances, location, products and many more which need to be sorted out first. It may seem tough, but may not eventually turn out to be so. It is also likely to be a thrilling phase.
Archit Gupta, Founder & CEO, ClearTax talks about things to keep in mind while starting a business.
According to Gupta, it is not just the big steps like registration process and product launch. There are umpteen ‘minor’ aspects which you tend to ignore during the frazzled phase of ‘starting a business’. These small issues if left unattended and unresolved, can snowball into major roadblocks.
Here’s what you need to remember while starting a business, as per ClearTax.
Select the right business structure
You must have already decided which sector and what product/ service type you want to focus on. But that’s not all. It is important to figure out a business structure that is right and pragmatic for you. How much liability can you bear and what should you register as are some crucial decisions. For instance, it is better to set up your company as private limited structure. It has been noticed that angel investors and venture capitalists prefer to invest in private limited companies. If there are more than one partners, a limited liability partnership can work well.
Don’t waste time, money and effort on irrelevant things
With hundreds of loose ends, it is easy to get overwhelmed and try to move things fast. For instance, in your pursuit to get the business structure in place, do not hire before you have a plan ready. If the idea is still in the nascent stage, do not rush into partnerships. Young entrepreneurs have often ended up having to buy out these entities because the ‘idea’ never materialized. Don’t you think that if they had waited a little, they could have saved a lot of money and time?
Have adequate funds in place first
Regular and sufficient capital flow - this goes without saying. Here are some questions to ask yourself, and yes, honest answers matter. How much can you invest? Do you have enough to meet both business and personal obligations? Do you have enough to cushion the risks, if your business doesn’t do well initially? What about the net-worth? Realistic answers to these can put things in perspective and help you make financial decisions.
Focus on effective, but cost-efficient resource management
Once you sort the resources (both human and machine), the next big question is how to manage them well. Some companies will start off with a smaller but core team in the beginning. For instance, there will be 1-2 digital marketer, 1 finance manager, 1 HR and so on. Later, they build on the team based on new and future requirements. Some companies prefer to start off with the entire departments mapped out beforehand. Only you can decide what works for you and how much.
Analyse potential risks
It's important to understand what factors can cause you to fail in your venture. It is better to investigate possible risks and plan for them now, instead of dealing with setbacks when they crop up. Ask these questions to yourself. If your business faces a specific sectoral or market risk, how will you deal with it? Do you (or your team) have the necessary talent to take up the challenge? Who can you turn to in need of guidance or finance? Who are the competitors? How can you justify the utility of your product/service? Though the list seems endless, you get the gist. Your answers will reveal quite a lot.
Never stop studying the market
Do you know your industry and market? Do you know them really well? There’s a huge difference between these questions. Market evolves continuously. Even if you have worked for 1000 clients, the 1001st clients can surprise you. Customization is the answer - but it’s quite tricky too. No two customer are the same. Your product/service too should reflect this. For instance, 2 investors investing the same amount in the same mutual fund have different financial goals. Your pitch should appeal to both of them. This is what satisfying diverse needs of the market is all about.
Never miss or mess the documentation part
It goes without saying that documents, registrations and business compliance are in place. This ensures legal protection to you and your firm. Not many young entrepreneurs are knowledgeable about compliances like TAN registration to be able to collect tax at source from employees, GST registration, PF registration for employees, trademark and copyright registration to protect the brand identity of your company etc. Some service providers may be willing to do all this for you, hand it over to the experts if you do not have the bandwidth to cover this yourself. Nowadays, it is easy to arrange all the mandatory documents like ID proofs of the directors, residence proofs, specimen signatures, self-declaration of directorship, documents related to registered office etc. Some companies even specialize in giving startups such boost.
Therefore, it is advisable to remember those points if you are planning to start a business. The above mentioned key factors also help solve queries related to business aspect which one tends to never occur in our mind.
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