5 Simple Steps to Start a Small Business
It’s a good time to launch new start-ups in India. Key amendments listed in the union budget will come into effect from April 01, 2021, to strengthen the entrepreneurial ecosystem in the country. For instance, the removal of limitation of paid-up capital and turnover for one-person companies (OPC) and the establishment of the Credit Guarantee Fund, to incentivize financial institutions lending to start-ups.
If you are starting a new small business, you will need to make decisions on many aspects, right from legal requirements, business structure,and marketing to funding. For example, will you need personal loans even if you have venture funding? If yes, then where can you find low-interest rate personal loans?
Many aspects will be unique to your business idea. However, there are some common things that all entrepreneurs have to take care of. Let’s look at 5 of them.
Step#1 Assess and Organize Your Ideas
Before setting up a business plan, do a self-assessment of your ideas.
- Why do you want to start a business?
- What is your industry knowledge? What skills you have?
- What problems do you wish to solve?
- In which areas will you need support?
- What will be your degree of commitment?
- What are your revenue goals over the next few months and how do you get there?
Step#2 Make a Business Plan
A business plan is necessary if you intend to get an enterprise loan or a personal loan from the bank. The lender will review your plan to decide whether you are a creditworthy candidate. Also, having a business plan which outlines your roadmap ahead and building a plan of action will let you know if you are headed the right way.
Here are some aspects to consider:
- Structure of the business
- Market research/ target market
- Competitive analysis
- Product or services you will offer
- Marketing plan
- Your funding plan; the debt/equity ratio
- Management team
Step#3 Organize Your Finances
Do you have the funds needed to start a business? Or do you need to borrow money? Do a break-even analysis to understand exactly where revenues will come from so that you can plan and set production goals accordingly. There are various ways to gain funding, based on your creditworthiness, available options, and the amount needed.
Some common sources of funding for small business are:
- Self-financing
- Borrowings from friends and family
- Personal loans at low-interest rates
- Business loans
- Credit Cards
- Venture Capital
Avoid making too many loan applications so that hard inquiries don’t impact your credit score. You can use tools like a personal loan EMI calculator to understand how the loan will impact your monthly finances.
Step #4 Name Your Business and Register it Legally
This is the first step towards making your dream a reality. Whether you intend to set up a sole proprietorship, partnership, or corporation, you need to get registered. Your business will be taxed accordingly. So, make sure you research the pros and cons of various entities. Also,remember to apply for various licenses and permits based upon local regulations.
Step#5 Open Business Accounts in Bank
Find a bank with corporate-friendly terms and set up your business accounts for streamlined processes. Ensure that you can avail of digital banking solutions like online salary transfer, bill payments, mobile banking facilities, online tax payments, and more.
Next, you have to focus on hiring the right people and promoting your business both online and offline. Trust your advisors and always continue to research and improve your products and services. You can slowly work towards a profitable business.