Its a perfect time, if you are thinking of pursuing your startup dream in India. Hundred and thousands of people across the country are taking a leap of faith and taking strides to start their own startup. The path may require lot of handwork, dedication and commitment and many may end up failing. But, those who will survive, will reap the rewards of obstacles that was faced and will be marching ahead in the road to glory.
So you think you are ready for your first startup? Here’s a step-by-step overview of what you will need to make it happen.
It all starts with an idea
Every startup starts with an idea. This might be something which you will be passionate and knowledgeable about, or have identified as gap in the current market space.
Once you’ve narrowed your list of ideas, and then down to one, do a quick search for the existing companies in your chosen industry. Get the understanding of what the current brand leaders are doing and figure out something that you can do better. If you think that your startup can deliver something others companies don’t (it might even be the same thing, but faster and cheaper), you’ve got a solid idea and ready to create a business plan.
Again, startup don’t start just with a simple idea. They start with a problem to be solved and opportunities to do something better. Know your customer inside and out.
Build a business plan
Now that your idea is in place, there are few things that you need to answer yourself. What is the purpose of your startup? What is your vision? What are your end goals? How your startup costs will be financed? And, these can be answered in a well-written business plan.
The plan will help you to figure out where your company is going, how the potential difficulty will be identified, and to sustain in longer run. A well written business plan contains the following aspects –
- What your business is about and how you will accomplish your goals.
- Your research on your target market.
- Organization and management of your company.
- Your extended goals, and how you will fill your market’s needs.
- Strategies for market penetration and growth.
- Your service or product line, including copyright information and R & D activities.
- Estimated costs and funding request (if you need financial assistance).
To help you with it, there are very good business plan template which can give you a good starting point.
Funding for your startup
You would need money to start your business, so you need to determine how you are going to cover those costs. Do you have the means to fund your startup, or will you need to borrow money?
If you are planning to make your new business your full-time job, it’s wise to wait until you have at least some money to put away for startup costs and to sustain yourself in the beginning before you start making a profit.
While many entrepreneurs rely on putting their own money on their new startups, it might be quite possible that you might need to take some financial assistance. A commercial loan through a bank is a good starting point, although these can often be difficult to secure.
Also, if the startup would require lot more funding up-front then you may want to consider venture capital. This is money, usually in the amount of several million dollars, provided to a fledgling company by a firm or business with the expectation that the backers will have a hands-on role in running your business.
Alternatively, you could use an angel investor, a private individual that will provide up to about $1 million for a project, or launch an equity crowdfunding campaign to raise smaller amounts of money from multiple backers.
Credit card to finance your startup isn’t recommended. Entrepreneurs using credit cards should carefully compare interest rates and financing terms, and strongly advised keeping business and personal cards separate from each other.
Right legal structure for your startup
Choosing the appropriate legal structure is a crucial decision for any startup. It is important to explore and understand the full range of options available to an entrepreneur.
The choice of legal structure in India can either be a for-profit entity (i.e. a sole proprietorship or a company or a partnership firm or a limited liability partnership etc.) or not-for-profit entity (i.e. a society or a trust or a company registered under Section 25 of the Indian Companies Act, 1956 etc.) or even a hybrid structure (i.e. affiliate for-profit and not-for-profit entities functioning together as a cohesive business unit and interacting with each other on an arm’s length basis while leveraging their respective synergies).
The choice of legal structure, whether it should be a stand-alone entity or a hybrid structure, or whether for-profit entity or not-for-profit entity, should reflect the business plan of the entrepreneur, and not necessarily vice versa.
Entity structures are intended to foster and facilitate entrepreneurship and factors such as business operational model, regulatory and tax considerations, transaction costs, sector specificity of activities (e.g. microfinance, agriculture etc.), type of funding sought, dynamics between and amongst the various promoters and funders, proposed mechanism for profit sharing or distribution, governance considerations, limited liability aspects etc. collectively govern the choice of legal entity.
Since there are significant regulatory and tax implications arising from the business intent and choice of legal structure, consulting one’s business lawyer and chartered accountant for final approval is extremely important.
Register your startup
To become an officially recognized business entity, you must register with the government. Before registering it can be a sole proprietorship or a partnership but once you take the decision to register, your company can be closed only by legal intervention. Registering a company is long and tedious process, but brings its own advantages and very less disadvantages to you. This might be protection, product and services, raising money and legacy.
If you are working with other people, be sure you understand who really owns your concepts and ideas, familiarize yourself with the basics of the patent laws that have changed dramatically over the past few years.
Build your team
You’re going to need to hire a great team to get your company off the ground. As a entrepreneur you need to focus on people and attention they give to product. Identify the gap from time to time and plan to address them as a top priority.
Figure out how your team will work together, define the roles and responsibilities, how to give feedback, how to work together when not everyone is in the same room will save you from lot of headaches later on.
Do the branding and advertise your startup
A great startup idea won’t do you any good if people don’t know about it. While there’s still a lot of value in word-of-mouth advertising, you’re going to need to do more than just tell your social circles that you’re starting a business. Before you start selling your product or service, you need to build up your brand and get a following of people ready to jump when you open your literal or figurative doors for business.
A company website and social media profiles are practically essential for any small business in today’s world. Create your brands logo, be consistent in using it across, use social media to spread the word about your startup.
You can also take use of promotional tool to offer coupons and discounts to followers once you launch. Keep your contents interesting about your startup and the industry you are operating in.
Also once you have the initial product ready, take it out to the market and testing your product to get feedback from real customer. Sell the minimum viable product, once you have your first few clients, work with them to find the common interests and areas of focus.
Grow your business
Launching your business is just the beginning of your journey as an entrepreneur. In order to make a profit and stay afloat, you always need to be growing your business. It’s going to take time and effort, but you’ll get out of your business what you put into it.
Collaborate with the established brands in your industry, reach out to influential bloggers, and ask for some promotion.