Whenever I hear about starting a business.. entrepreneur, freedom, courage and passion are the terms that come to my mind. Here’s how to start your own business and be a successful entrepreneur.
To start your own business, you can get inspired by a lot of things. Maybe you are passionate about something and it’s your dream since your childhood.. maybe you don’t want to work under someone and wish to be your own boss…maybe you got inspired by our Prime Minister’s words and wish to open your fritters’ shop.
Reason could be anything, I will tell you everything from the start to end that you need to know to start your own business in this article and to become an entrepreneur in India. Let’s see.
The first step on how to start your own business – The Idea
So friends, the first step to start your business or startup is that you must know what exactly do you wish to do. What’s your idea?
Many people think that I need to think of an idea which no one has ever thought of. But I think it’s wrong thinking. There are two reasons for this, First is that there are very fewer chances of thinking of such an idea which no one has ever thought about. Because there are more than a billion people in the country hence there’s a very less chance of it.
The second and more important reason why you shouldn’t start a business no one has ever thought of is that there is no established customer base, no source of revenue and no one has done trial and error, how revenue comes or problems arises, thus it’s a very new thing and a very risky work.
I would recommend you to not think of an idea which no one has ever thought of.
In fact, you have to think that what do you yourself like to do. Here I would recommend you to focus on two things
first, what’s your passion, your interest what do you like to do.
How can you give value to people from your work and how can you benefit people and give value that they will give you money in return
When these two things are clear, you can see which business already exists which coincides with these two things. Then study what kind of such businesses are already in the market and how do they run.
For example, imagine if you love adventure sports like river rafting that’s the first thing then the second thing is how can you give benefits to people then here you can start an adventure sports company.
If this satisfies you then look at what all kind of adventure sports company already exists in India. How do they function, study them, call and ask them about their business and study their business model.
The Business Plan
Next step after this is to create a business plan.
Once you’ve got the basic idea about what you really want to start with as an entrepreneur, now it’s a time to start jotting it down all.
Start with basics – write down the idea first, write down all your assumptions you’ve made, collect data from similar business and note down all the facts you’ve got. This may include potential opportunities and challenges in business.
Then, plan finances :
Suppose if you are staring your business from tomorrow, then prepare an estimated budget report of full one year from tomorrow to the year-end. Following things shall be considered while making an estimate:
- Money needed to start the business. (Capital & Investment Required)
- Expenses to carry on business for a year & other costs.
- Profit estimated for the year.
Procurement of Funds
How will you finance your business idea? Where will all the money come from?
Will you borrow from your friends, ask your family or take a loan from the bank?
Keep an eye on various schemes and subsidised fundings by the government. The governments are encouraging businesses.
If you’re considering taking a loan make sure you’ve got familiar with all the material facts about the industry you want to indulge into. An improper study of the Industry may lead a non-performing business. So, make sure you lend a minimum.
For a newbie, I’d say start a business where you don’t need to take a loan from the bank or any third person. Start a business where your family is able to afford the initial investment. Because if you get into banks and your business fails then you will have to face a big loss and lots of problems. So think of a business where you are able to invest yourself and you have the capital or your family or friends are ready to give you that amount.
I’m suggesting this for the initial stage, once your business is established then you can think of taking a loan to move it to the next step.
Thus you’ll have minimum risk!
You can borrow the money from anywhere but the business plan that you have made for the year should be as detailed as possible. You may want a CA or Professional Consultant to get you a Detailed Business Report before you face investors or approach any bank.
You should be able to convince the investors that your business will surely work and if invested they won’t incur any loss & will gain only profit from the business.
Now that you have made your one-year business plan then we can move on to the next step.
Registration & Legal Procedures
Once you start your business next step is to register it with the Government. According to the type of your business, there are different ways to register it.
I will not be able to tell you all, but I’ll tell you the main ways.
The First, the oldest and the easiest way to register your business is, “sole proprietorship is a way to register your business where the business’ owner is you whatever will be the profit or loss of the business will be your own profit or loss.so in a way you are personally liable for everything that’s happening with the business.
You may consider to start your business as a sole proprietorship. Small business owners like a shopkeeper use this way and register their shop as sole proprietor
If you want to become a pakode wala then you will register your business as the proprietorship
There are many benefits of proprietorship, here the government regulations are the minimum.
To register your business as the proprietorship you have to go to the local authority.
If live in a city then you have to go to the municipality and if you stay in a village then to the Gram Panchayat.
This is available even online in few cities whereas not in some.
You can apply for proprietorship only if your company is a small scale because it becomes very risky if it’s on a large scale.
Imagine your company is of crores and you have incurred a loss in crores then it will be your own loss of crores. You would not want this hence in this case you should not do proprietorship. If you want to keep your profit and loss different from the profit and loss of the company or want to keep separate legal entity, in such case there are different ways to register. Usully if you are to start your business on huge scale its advised to start as a private ltd company.
One Person Company
So there’s another way called OPC, One person company here you are not personally liable if there’s something happening to the company. So here they can’t come to your house and ask you to leave your house, car to repay against the failure of your company.
The registration cost of this is around 6000rs and more or less indifferent companies
It will take 8-10 days to get registered and since this is a one-person company you will have to be the director and shareholder of this company.
If your company’s name is Chikara Pakodewala then it will be Chikara Pakodewala PVT LTD (OPC) once you have done the registration.
Private Limited Company
Next way to register your company is Pvt ltd company here a minimum of 2 shareholders and 2 directors are required maximum limit of shareholders here is 200 and if you want more than that then you have to make a public limited company. So as the name is private limited it is limited in the same way as one person company is limited.
There’s a limited liability here, so the shareholders have limited liability
If there’s a loss in the company then the shareholders won’t have to pay for the loss personally.
It’s a very reputable and credible way to register and start your own business.
If you do so then the trust of customers and clients on your company and the trust of banks increases manifolds if your company has pvt ltd written
Many start-ups register their company as Pvt ltd or tries to do so as it’s easier to get loans from the banks and the seeds funding, the investors investing in the company becomes easy.
The cost of this is around 10000rs and it takes between 5-10 days to register.
Its obvious as this is very trusted and hence the regulations by the government also increase. But towards the end of this article, I will tell you an easy way to register your company.
Just in case if you want to know more about “Public Companies”
Limited Liability Partnership & Partnerships
I would like to talk about another way to register your company and that is a limited liability partnership. This is useful when you are a professional in a field like doctors, engineers or chartered accountant. This is basically a partnership with the limited liability of partners. Traditional partnership same as that of sole proprietorship has one major disadvantage – Unlimited liability of a partner. Thus an improved version is LLP.
These four ways which I’ve told you are the main ways of registering a business. You need to know that if you want to deal with the corporate field or large companies then the preferrable way is Pvt ltd only. If you want to keep your own small business and don’t want to get into more regulations then proprietorship is the best way.
So, friends, y once you register and start your business the next step is to do the tax registration.
GST registration is at number 1 here, if your company’s turnover is more than 20 lacs in a year then you have to register for GST. In some of the northern states, the minimum turnover is 10 lacs and GST registration is also required if you deal with import-export even within the states. You may also need to get registered under GST if you have a business-related to e-commerce.
If you have an import-export business then you also need to get Import-Export Code Registration done.
In some states, there’s a different kind of tax called as Professional Tax Registration which you have to get done if you reside in such states.
If you have more than 10 employees in your company then you have to get Employee State Insurance Registration done.
If you have more than 20 employees then you have to get even Provident Fund Registration done.
There’s an optional registration called MSME, this is not compulsory but you will get a lot of benefits if you do it.
It will be easier for you to get bank loans, you will get some tax subsidies, exemption schemes and many such benefits so it’s good to get it done.
So, there are so many types of company registration and tax registration as well. There’s an easier way to get it done together.
As the last step friends, I would like to tell you that there are few things which a business has to do every year.
It is Yearly Mandatory Compliances, the first thing is Income Tax Returns, every business has to file an income tax return at the end of the year.
Second thing is Accounting and which you need to do and I would say that you must do it with care.
It’s a balance sheet where all your profit, loss, money received, etc is done on a balance sheet.
You can hire an accountant for this or if your company is small then you can do it yourself.
If you are registered for GST then you have to file GST, It has monthly or quarterly compliance
Next is secretarial compliance which you have to do if your company is OPC, LLP or PVT LTD
Statutory Audit you will have to do if your company is OPC or LLP with the yearly turnover of 40 lacs or more than that.
So, friends now you are ready to become an entrepreneur and to start your own business.
My number one tip will be that always think how can you give value to the people. To give value to the customer, client or to the people or society.
All the businesses that give value to customers will only be able to sustain the competition. Engage in such a business where your interest lies and you enjoy working.
and lastly, there’s no point of doing a business which runs in an unsustainable way which leads to a destruction
So I hope you found this helpful!
Thank you. Let us know if this post answered your query about how to start your own business.