Starting A Business in India, A Simple Guide
How to start a business in India? It is never easy. Many of us dream of being our own boss, not all of us prefer to work for someone else. Regardless of which corner of the world you would like to start your business in India, each individual is at different part of life and so we all have different commitments and setbacks which hold us back from taking the next step of starting our own business in India. If you’re among those that are willing to take that leap of faith, here is a guide to start a business in India.
Types of Businesses
If you’re planning to run your business alone, a Sole Proprietorship will be the perfect form of business for you. Your only requirement is a current account. You don’t need a huge investment; a minimal amount should suffice. In this type of company, the owner is personally liable if the business goes into debt and is unable to repay.
Next would be partnership. If you plan to start a business with two or more people, you could consider a partnership. This helps when you need more capital. There are a few things required by the bank to open a current account. You will need the partnership agreement, photographs of all partners, proof of identity and address, details of your office location, PAN details of the company and communication details. The risk is lower compared to a sole proprietorship. All profits and losses including debts are equally shared among partners.
Then we have a Private Limited Company (PLC). Depending on the company model, goods/services provided and the investments involved, you may need to launch your company as a PLC at the start. A PLC is very structured and there is a board of directors to advise the CEO. The obligations are split among several stakeholders, and it is a structured method of doing business whenever more significant investments are at stake.
If a PLC doesn’t suit your needs, then you could take a look at Limited Liability Partnership (LLP) instead. A LLP differs from a PLC in the sense that the restricted obligations of spouses, in case of closed/bankruptcy, the personal resources of the partners are not liable. This has allowed for greater freedom and risk-taking ability for those entrepreneurs. Though it is discouraged by venture capitalists and angel investors due to the limited accountability of the partners involved, LLP has functional advantages such as minor paperwork, easier incorporation, smaller fees, etc.
If all of the above doesn’t suit you, the final option is a One Person Company (OPC). An OPC enables individual entrepreneurs to integrate their business as a separate legal entity with restricted liability. This is similar to that of an LLP and also an option to have just one director. With this option there are more statutory compliance requirements, this form of incorporation is acceptable to individual entrepreneurs. This is a safer approach when it comes to starting a business alone. If you do not want to start a business in India with a factor of risk and trouble yourself later, try an OPC.
Once you know what type of business you would like to operate, you then need to think about the funding required to run that business. There are a few different methods you can raise the funds to start a business in India.
The first option is personal savings, this is the most commonly used method. If you have some money saved up, you can invest in your business. This will make it easier for your business to get loans in the initial stages of business. The second one is a loan for business setup. If your personal savings is insufficient, people generally go for loans from banks. However, the banks are choosy and have a list of requirements you need to fulfil, such as previous career records, business plan, etc, before they would consider approving your loan. The next option is funding from venture capitals. There are venture capitalists that are looking for young and dynamic start-ups to invest in. In the past two years, India has become a booming hub for start-ups. Many international investment firms keen on investing in start-ups that stand out in the crowd. They’re ready to invest huge amounts and will only invest in great business ideas or the founder has prior thriving experience. Business incubators are also another way of helping booming businesses grow. They offer amenities such as co-working spaces, electricity, internet, etc. These are accelerators for start-ups.
Next, you would need to create a strategy on how you want to be identified. This is called branding. There are a few steps to this, such as coming up with a brand name and logo that’s unique and catchy. Then you would need to get a trademark registered, to avoid anyone copies your business or ideas in the future. A website and an email ID is also required as the world is moving online. This will build an online presence as well as communicate and build relationships with your customers.
Marketing the Business
Once you’ve got all of the above settled, it’s time to plan your marketing strategy to let the world know you exist. There are two ways to achieve this, through traditional or digital marketing. Nowadays majority of businesses go with digital marketing since most of us spend most of our time online, this makes it easier to target a specific group of people and it also removes the geographical limitations. You can either set up a website, social media channels or both to create promotional campaigns and communicate with your customers. You will need to be knowledgeable about digital marketing or just hire an expert who can handle your profile. In Digital Marketing we focus on Search engine optimization, Social Media Marketing, Email Marketing, Paid Google Ad Campaigns, etc. If you don’t know how to start a business in India, contact 3E Accounting, we can help you!