Are you thinking of starting a small business of your own? If YES, this post will definitely guide you in the entire journey of initiating your venture. Actually, the post includes 10 crucial steps on how to start a small business in India.
First of all, we must understand what a small business is all about. Also, what are the specific differences between a large and small business? What are the things that small business owners should or can do and what can’t? Additionally, what are the opportunities and also the limitations?
What are the aspects where you must concentrate and what are the issues that are beyond the control of the small business owners? And finally, what are the most successful and proven small businesses that can inspire an aspiring individual in putting his or her first step in the entrepreneurship journey? Exactly, we intend to include all these crucial aspects of the entire small business ecosystem in this article.
Generally, small businesses are privately-owned organizations. In most cases, an entrepreneur initiates this type of venture as a means of self-employment. Broadly, there are three segments. Whether it’s manufacturing or service-based or retail. Also, the franchise opportunities are very lucrative propositions in initiating a small venture.
10 Steps to Follow to Start a Small Business
#1. Self Assessment of Entrepreneurial Qualities
This is one of the most important aspects of initiating any business. Also, it is the first step that you need to take very carefully.
Often we encounter a question ” what is the most profitable business to start?” However, this is not so important aspect to get concerned with. Rather, you must analyze what business fits most with your character traits. What are the specific areas that you feel interested to work with?
You must be passionate about the work that you are doing on a daily basis. Undoubtedly, this is the most crucial aspect of becoming a successful small business entrepreneur. If a person enjoys gardening and he or she starts a gardening-related business then the chance of getting success is much higher.
Furthermore, it is important to analyze your personal abilities, expertise, skill, knowledge, and experience. And also your ignorance and weaknesses too.
Bottom Line: Every business is profitable. You will need to analyze whether you can make that venture profitable or not.
#2. Selecting Right Business Idea
This is the second most important aspect that you must consider carefully. Depending on your own abilities, market potential, and investment capacity, you must finalize the business that you want to initiate.
According to your area of interest, you may broadly choose the industry segments. Some of the most lucrative industry verticles include Agriculture, Food, Paper, Electrical & Electronics, Plastic & Polymer, Packaging, Printing, Sports, etc.
Bottom Line: Selecting a business idea is the first step of initiating a business.
#3. Check Market Potential
Analyzing market potential is a crucial aspect that you need to check carefully. Whatever the product or service you want to offer, you need to check the demand first. Also, check who is your prospective buyer. Simply, who will be going to buy your product or service and at which cost.
There are a lot of ways to check the demand. First of all, find out the established companies who are offering similar products. and check their advertising activity, product promotion, and pricing. Definitely, you will get a fair amount of ideas about the product. If you are interested in starting an online business then Google is the best place to search for anything. Also, you can check eCommerce sites to get the ideas about popular products.
Bottom Line: You must offer a product or service that has the customer, repeat buyers and that can generate profits.
#4. Prepare Business Plan or Project Report
This is a must if you are planning to start a legally compliant small business in India. Regardless of the size of your business and finance resources, you must have a business plan. A business plan not only helps in securing investment but also guides you in the journey. You can monitor the business on regular basis. Also, it helps you in making crucial HR-related decisions, sales strategy, and product promotion plans.
Bottom Line: A business plan gives the business directions.
#5. Select the Right Location
Regardless you are starting a manufacturing or retail business, location plays a very crucial role. Definitely, there are different aspects of selecting a retail location and a location for manufacturing operations.
On the other hand, a good office location is an absolute necessity in operating a service-based business. And never compromise on the location. If you don’t have your own premises, then it is better to start with a rented space. Don’t spend the startup investment in purchasing a space for your business initially.
Bottom Line: Selecting a business location can be a make-or-break decision in any startup initiative while starting a small business in India.
#6. Register your Business
Registering your business must. If you don’t register your business, then you won’t be able to open even a current bank account. However, for registering, choosing the right form of business organization is most crucial. Some of the most popular options are the proprietorship, partnership, LLP, Pvt Ltd, and Ltd. Company. Choose your form of organization wisely. Only a registered business has got the ability to attend tenders, trade fairs, and availing Govt. subsidies.
Bottom Line: A business without registration doesn’t have a legal identity.
#7. Obtain Business Permissions & Licenses
In India, the requirement of licenses and permissions varies depending on the various aspects. First of all, check whether you want to function in manufacturing or service-based, or retail. Also, the industries like agriculture, food processing, leather, pharmaceuticals, cosmetics, textile, packaging, rubber, polymers have different licensing criteria.
Sometimes it varies from state to state also. And you can’t open a business without having the necessary permissions from the concerned departments. Even, if you want to import or export any type of product, then also you need specific permissions.
Bottom Line: You can’t operate a business even a single day without proper permissions and licenses.
#8. Arrange Required Finance
Practically, you can’t open a business without the fund. So, finance is the most crucial resource that every entrepreneur needs to generate. And definitely, there are several ways you can opt for arranging the finance.
However, it is better to start a small business in India with your own money when the business demands small investments like retail or service-based ventures. On the other hand, if you want to start a medium or large-scale manufacturing business, it is better to avail funds from a third party. Some of the most potential options are bank loans, venture capital funding, angel investment, and even credit cards. Also, business credit cards are very effective in small business operations.
Bottom Line: Any business on this planet needs two different types of investment – fixed capital and working capital.
#9. Business Model & Resources
Preparing the right business model is extremely important for building a successful small business in India. Actually, it clarifies the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural, or other contexts. The simplest model involves creating a product and selling it directly to customers.
However, in India, it doesn’t happen generally in most cases. So, some complex business models include selling wholesale to retailers, selling through distributors, licensing products to other companies, selling online, etc. And you may also use some combination of business models to arrive at a unique model.
Another business model that is getting popular is the franchise business model. Here you can buy a franchise of a reputed brand and carry out business activities under their brand name. The advantage of this model is that one does need to get through the hassles of starting from scratch. The franchisor provides all the support needed to build the business.
Resources are the most vital aspect of running the business smoothly. Right from financial resources, human resources, or software solutions, you must have effective resources with you.
Bottom Line: A business model simply describes how you are going to make money.
#10. Right Promotion & Advertisement
You must have a proper marketing plan and funds for implementing that. According to your target demographic, you must consider promoting your products or services. However, marketing and advertising are two completely different things. Nowadays, there are plenty of opportunities you can promote a product offline, in electronic media, and online. However, the most crucial aspect is choosing the right promotional process in the most cost-effective way.
Bottom Line: No business can get success without promotion.
We hope, this article will definitely help Indian residents as well as foreign individuals to understand the basics of how to start a small business in India.
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Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.