1. Idea and your Business Case
This is the first and the foremost thing. It’s time to tap in to your burning desire to set up your own business. You should have an idea that you believe in. I read at the Phillips Carbon Black Ltd office a quote from Sanjiv Goenka. It goes as – Your business can be best in the world only when you believe it’s the best in the world. So at this stage let me also believe that you have a solid idea. All you are looking for is to transform that into reality. Write down your idea. Prepare a business case. Do a thorough research. Let’s not come unprepared. Even if you come 100% ready with your plan add 25% surprises into it. That’s normal. But let’s not add anymore to this by not doing enough background work. You may follow these steps.
(i) Idea Revalidation
a) Write down your idea clearly.
b) Identify your supplier and customer.
c) Prepare a flow chart for your business process.
(ii) Feasibility Study of your Idea and Target Customer
Now you need to do a thorough feasibility study of your idea. Remember your idea can be great but based on the current situation, location, customer base that may not be transformed into a profitable business model. Similarly if your analysis results into weak revenue model that does not imply the idea is bad. It’s just that park the idea for the time being or look for favorable situations. At this stage follow the steps below.
a) Highlight loopholes.
b) Prepare a SIPOC chart.
c) Do a root-cause analysis for all identified loopholes.
d) Prepare a priority chart.
e) Write down all possible solutions.
f) Do an ease-of-implement analysis
g) Add the identified solutions back to your to-be process flow
Note: This may need an expert’s advice. Depending upon your budget you may hire a consultant.
(iii) Positives / Favorable Sides
Write down all that are in favor of to implement your business plan.
(iv) Negatives / Challenges
Write down where you may face challenges in the course.
(v) Identify all dependencies
Clearly identify all dependencies. To begin with you may have to accept the terms of the 3rd parties but as you grow try to take these dependencies in your favor.
(vi) Your Fund
Clearly write down all sources from where you will receive money. Mention exact/probable dates and amount beside each source.
(vii) Cost Case
Clearly write down all ongoing costs. As you have done for your fund mention exact/probable dates and amount beside each cost item.
(viii) Reserve Fund
You must maintain a reserve fund to handle sudden adverse situation. The amount would depend on your understanding and situation. There’s no rule on how much you should keep in your reserve fund. Roughly you may keep 25% of your total readily available fund into reserve.
Note: Use this fund only to handle unforeseen sudden challenges. Do not touch this fund for your regular business.
(ix) Profit Case
Prepare your profit case carefully. After all, that will earn your living or much more.
Sole proprietorship is the simplest mode to start your business in. You may also consider a partnership mode if a group of friends is launching the business.
There is no such license called sole proprietorship license. Surprised? Puzzled? But don’t take a back foot. Depending upon the nature of your business (service or product based) all you need is a Shop and Establishment license. Apply for the same to the inspector of your area. Contact municipality office. If your business model is very complex and you do not know which type it falls in contact a CA. Your CA should be able to guide you. A license takes about 5 to 10 days. If you are not sure how to do it yourself there are many agencies who can file for your license. Do a research and contact the agency. If you are on a service business you need to pay service tax. Once the income from yearly income from services that you provide exceeds 10 lakh you need to pay service tax. At that time you need to apply for service tax registration. If you are selling products you have to apply for sales tax registration.
3. Rubber Stamp
4. Bank Current Account
You need to open a bank current account in the name of your business. Cheques will be drawn in favor of your business. Do a research and choose a bank that offers maximum facilities and require lowest balanced to be maintained. If your business is small scale nationalized banks are the best options. However, do your own research and visit the bank of your preference right away.
Now that you have set up your business you need clients. Don’t you? And to spread your business you need to promote it to the wider audience. Today, in the days of social media you know how important it is to do a good promotion of your business. Social media have widened the scope for you. But at the same time it has put you in front of a bigger competition. We will talk about the best promotion for your business in the next post.