Starting a business / industry
Preparing yourself
Find out Business Opportunities
Market Survey
Selection of Business Organization
Name & Registration of Business
Selection of Product
Finalizing Location
Identifying & Understanding Target Customer
Infrastructure Setup
Arranging Project Funding
Policies & regulations
1. Find out Business Opportunities
Entrepreneurs should undertake the task of preparing business plan before starting a new venture. One should consult with lawyers, consultants and accountants before reaching any final decision. The nature of business is the most important decision. Businesses providing direct services like tailors, restaurants and professional services like doctors, lawyers are generally organized as proprietary concerns. While, businesses requiring pooling of skills and funds like accounting firms are better organized as partnerships. Manufacturing organizations of large size are more commonly setup as private and public companies.
2. Market Survey
Market study is one of the most essential activity that is required to understand the feasibility of the enterprise to be setup. Market study helps to get a better picture of the prevailing competition, existing gaps in the market, consumer needs and preferences etc. This gives confidence to the entrepreneur that his/her product/service is a niche one, having substantial prospects for growth and capable of attaining a competitive position in the market.
3. Selection of Business Organization
After going through the Market survey, one needs to make the choice of the form of Business Enterprise he/she would want to setup. Making the correct choice is very crucial as it determines the power, control, risk and responsibility of the entrepreneur as well as the division of profits and losses. The various factors that need to be considered are -- Scale of operation, degree of control, amount of capital, volume of risks and liability, tax liability etc.
Some of the forms of Business organizations are:-
Sole Proprietorship
Partnership firm
Co-operatives
Private & Public Limited Company
Societies
Limited Liability Partnership
4. Name & Registration of Business
All the business must be named and registered with the competent authorities as below:-
Sole Proprietorship - Sole Proprietorship is a legal entity and does not require any registration for the name.
Partnership Firm - A partnership firm can be registered with a Partnership deed where in the rights, duties and liabilities of partners are laid down. In absence of a deed, the provisions of The Indian Partnership Act, 1932 would apply
Co-operatives - Co-operatives need to be registered with the Registrar of Co-operatives Societies.
Private and Public Limited Company - Registrar of companies appointed under the Companies Act, 1956 are vested with the duty of registering companies.
Societies - It must be registered with the Registrar of Firm & Societies.
Limited Liability Partnership -- To be registered on the website of Ministry of Corporate Affairs, developed for LLP services.
5. Selection of Product
The choice of a particular product or service to be manufactured by the firm can be done by analyzing the following:-
Assessing the size and structure of the market for the products.
Determining the future demand pattern for each of them.
Comparing their competitive positions in the market.
Graphing the life cycle of each product.
Finding the shelf life of each product.
The ease of availability of raw materials
Technology for production.
Manpower.
Government policies, regulations and incentives by both state and central government
List of some of the important organizations who can help in obtaining an idea about the products and services that can be produced are:-
North Eastern Handicraft & Handlooms Development Corporation Ltd. (NEHHDC).
North Eastern Regional Agricultural Marketing Corporation Ltd. (NERAMAC).
Entrepreneurship Development Institute of India (EDI).
Micro, Small & Medium Development Institutes (MSME-DI).
National Bank for Agriculture and Rural Development (NABARD).
Small Industries Development Bank of India (SIDBI).
North Eastern Development Finance Corporation Ltd. (NEDFi).
Industry.
State Financial Corporations (SFCs).
Department of Industrial Policy and Promotion in the Ministry of Commerce and
District Industries Centre (DIC) located at each district of the state.
Assam Industrial Development Corporation (AIDC)
North Eastern Industrial & Technical Consultancy Organization Ltd. (NEITCO).
Khadi and Village Industries Commission / Board (KVIC / KVIB).
6. Finalizing Location
Location of the business is the most important factor influencing its success or failure. It is a long-term decision which should take into consideration not only the present requirements of the organization but also its future expansion plans. Hence, the most advantageous location is that at which the cost of gathering material and fabricating it plus the cost of distributing the finished product to the customers will be at a minimum.
The choice of location depends on several important factors:-
Availability of required raw materials.
Availability of required grade of labour i.e. skilled, semi-skilled or unskilled.
Proximity to the product market.
Availability of transport facilities
Adequate supply of power and fuel.
Climatic factors based on the product types.
Government regulations and policies.
Law and order situation.
Existence of complementary and competitive industries
7. Identifying & Understanding Target Customer
It is very essential that there is serious thought given behind Consumer taste and preference. Supply is dependent on demand. So it is very important to understand existing customers and find out ways to target new customers. Innovative and creative ideas need to be constantly developed to attract more and more customers. Price, design and utility of the product will have to undergo constant rectifications to align with customer’s needs. Depending on the product a certain segment of the population needs to be targeted. Trying to lure all age/income group might not work out, so it is always advisable to narrow down the target population.
8. Infrastructure Setup
Setting up basic infrastructural facilities for commencing business operations requires Land and Building. For acquisition of the plot of land, the entrepreneur must approach the concerned authority (Municipality, Land Revenue & Settlement Department). The architectural design of the factory must be approved by the concerned authority before starting the construction of the building. The site must be well connected to the nearest transport network i.e. rail, road or port. The availability of the basic amenities like, water, power supply is equally essential. Setting up of a good telecom facility for the industry is necessary for the growth and expansion of the business.
The State and Central Government offers incentives like land and building tax concessions, providing land at cheaper rates through the Government Agencies to new and existing entrepreneurs. It also offers concessions in water tariff, power subsidy, subsidy on generating sets, capital investment subsidy, transport subsidy, insurance subsidy, incentive for pollution control and quality equipment depending on the location, size of investment and category of the industry.
The next step is to select appropriate technology and equipment to produce. In addition to this, the source of raw material has to be decided upon. The requirements of all these can either be met through domestic sources or can be imported subject to the regulatory requirements of the Government.
9. Arranging Project Funding
A business firm requires finance to commence its operations, to continue its operations and for its expansion and growth. Hence, a financial plan needs to be prepared, which indicates the requirements of finance, sources for raising the finance and the application of funds. Financial planning for starting a business begins with estimating te total amount of capital required by the firm for the various need of the business.
A firm may raise funds for different purposes depending on the time periods ranging from very short to fairly long duration and the business can be financed by the following means:-
Investment of own savings
Raising loans from friends and relatives
Loans from Commercial Banks
Loan from Financial Institutions
Public deposits
Reinvestment of Profits
Issue of share -- Equity / Preference
Issue of Debentures
Trade Credit
Discounting Bills of Exchange
Bank O/D & Cash Credit
10. Policies & regulations
Once an entrepreneur has taken all the important decisions relating to starting a business, he/she has to take into account the basic regulatory requirements which are to be followed for setting up the organization. Policies are issued by both, the Central Government and State Governments. Policies can range from being relevant to a multitude of sectors, as well as being specific to a single sector. Policies are of extreme importance as they can determine the growth potential as well as the ease of doing business in a particular industry. Therefore, entrepreneurs should pay close attention to the Government (both Central and State) policies.
The most important policies and regulations are:-
North East Industrial and Investment Promotion Policy (NEIIPP) 2007.
The Micro, Small & Medium Enterprises Development (MSMED) Act, 2006
The Companies Act, 1956 which regulates all the affairs of a company
The Industrial Disputes Act, 1947 is the legislation for investigation and settlement of all industrial disputes.
The Trade Unions Act, 1926 which deals with the registration of trade unions, their rights, liabilities and responsibilities as well as ensures that their funds are utilized properly.
Labour policy, occupational health and safety of workers.
Competition Act, 2002.
Tax Law and Rules.
Excise and Customs Act.
Laws relating to Intellectual Property Rights (IPRs)
Environmental regulations administered centrally by Ministry of Environment and Forests (MoEF) and State Pollution Control Board at state level
Export and Import (EXIM) Policy for foreign trades