Even if you possess the skills of a seasoned entrepreneur, you will still need to consider many important factors before launching your own business. You have probably heard that India has some of the most complicated laws and policies. Which are often difficult to understand because they are written in English without any translation. But don’t worry! In this post, Vanizya will let know all information you need to know about starting a small business in India. It will also help with its Best business management software in India.
Starting a small business is an excellent way to earn some extra money, and it’s a great way to get your foot into the business world. Also gain experience in the field, although you can always pursue bigger endeavours after you conquer this phase.
Here are 10 important steps for how you can start your own small business in India:
Step 1: Understand the type of business you want to start
This is an important step to follow, as if you choose the wrong type of business (or none at all!), it will be difficult for you to gain success in that area. There are three different types of business:
- General Partnership – This is a form where one individual owns 100% of the company.
- Private Limited Company – This is a form of business that is legally separate from the person who owns it. The individual who owns a Private Limited Company is called a Director and holds very little responsibility. It is the company that is deemed responsible for all actions, not the individual.
- Public Limited Company – This form of business requires you to register yourself as a Director with the Ministry of Corporate Affairs, and you are held responsible if your company incurs any fines or debts. Because this type of company comes with greater obligations. It can be difficult to manage if you are on your own, but there are always partners you can hire to help out.
Step 2: Do your research
As an entrepreneur, you will have to be prepared for almost any kind of work. You might be asked to handle finances, direct employees, market the business or even create a new product or service.
You need to know what you are in for before starting up so that you can make informed decisions. For example, if you want to start your business selling products online, you must find out whether the product already has many similar products on the market; otherwise, it is difficult to compete with bigger corporations who have more experience and resources than yourself.
Step 3: Make a business plan
No matter how simple or complex your plan is, you must create a business plan so you can see if your business idea will work. You might not even need a real plan – just a simple document or list that tells you exactly how you are going to achieve success.
Step 4: Get the necessary licences and permissions
You might think this tip is rather obvious, but in India, many laws restrict people from starting a new business until they have acquired certain licences and permissions from the government.
For example, if you want to start a school or college in India, then you will have to apply for the necessary licence from the governing body for education (or even higher boards). In comparison, if you want to start a business that involves the transportation of people or goods. Then you need to get a licence from the appropriate government ministry.
Here is a list of commonly used licenses and permits across the various businesses:
This is a mark, design or symbol that is used and protected by the government to prevent others from using similar forms without paying for it. To register a trademark. You must provide evidence that the use of your brand has been around for at least three years.
2. Trade License
This is required to operate any kind of business that has the potential to cause damage or loss to other people’s interests. For example, if you want to start a hardware store where you sell tools, then you will need a trade license from the local municipality.
3. Tax Number or PAN Card
This is a special number that is used to collect taxes from everyone who earns a living, whether it is through running a business or working for someone else.
4. Sales Tax Registration Certificate
If your business involves selling goods or services, then you will need to apply for this certificate from the Department of Commercial Taxes.
5. Permanent Account Number (PAN) Card
This card is given by the tax department and ensures that you are eligible to run your own business. The government often requires this in case you want to open an account with any financial institution.
Step5: Find an appropriate place to start your business
The first thing you need to do is find a space where you can run your business. This can be in any part of your house, or it could be an actual store in the city or town where you live.
If you want to do something related to food. Then your kitchen must be clean and orderly so that customers don’t get sick from eating food prepared by someone who doesn’t follow proper hygiene standards. However, if you want to start a business with a water purifier. You don’t need to have a store in the city at which you can sell it.
Step 6: Determine the price of your products or services
When creating or distributing any kind of product or service, the most vital part is setting the price at which you will sell it. You should take into account your costs when pricing your product or service. If you set a low price that is too difficult to make a profit on. Then your business won’t be sustainable in the long run.
However, if you decide to set a price that is too high. Then you might lose out on sales and customers. The important thing is to make sure your product or service will be profitable in the long run.
Step 7: Find a way to market your business
When you start up a business, the chances are you will be more focused on getting customers than promoting and marketing your business. But this is already a mistake!
You must develop some kind of plan to publicise your new product or service. Make it known in the area where you live, especially if you are targeting customers who live in another city or town.
One way to do this is by creating an online presence that people can find easily with search engines. You can also create flyers, brochures and pamphlets to distribute around the area so that people can read more about your company.
Step 8: Prepare for unexpected costs
Finally, although you might be diligent in your planning and implementation. There is always the possibility that your plan might not go exactly as you anticipated it. You should always expect the unexpected and try to be prepared for anything. This way, you will be able to stay calm and collected when something else comes up that you hadn’t previously considered.
If possible, it’s a good idea to keep enough money on hand in case of emergencies so that you can get through tough times without worrying about how much money is in your account.
Step 9: Follow the law when starting a business
There are several laws that you will have to abide by when starting a business in India. For example, you might need to register your business with the government’s Ministry of Corporate Affairs (MCA). You will also need to pay a certain amount of taxes per year.
You may also be required to hire employees. Which means you’ll need to seek permission from the government’s Department of Labor and Employment (DoLE). You must also adhere to some other legal regulations.
If you feel that there are still many questions about starting a business in India. Then you should consult with an Indian lawyer.
To start a business in India, certain legal requirements must be met.
An essential requirement is to obtain a trade license from the relevant authority of your state or locality. This is required by the local municipality or town council and can be obtained by filling up a form and submitting the documents required.
This needs to be done before opening a business in India and you need to ensure that all transactions made with your customers (online or offline) can be traced back to your business entity.
Step 10: Be ready for the competition
Starting a business is a competitive endeavour, especially in India, where the competition is fierce. Before you start up your business. It’s good to know who you are competing against and what sets your company apart from them.
For example, if you have chosen to set up a retail shop that sells clothes for children. Then you will be competing with other similar shops in the area as well as online retailers such as Flipkart or Amazon. You must find out who your competitors are so you can develop an effective marketing strategy. Vanizya will help you with its amazing business management tools.
Step 12: Keep records and an accounting of your business transactions
You must keep records so that you can easily verify them whenever necessary. Avoid any major problems down the road with the government or another entity such as a bank. Here are some of the things you will want to record:
- Allocation of profits and losses to each project
- Tracking of sales revenue and expenses for each project
- Expenses for administrative services (e.g. employment, rent, utilities, insurance)
- Capital acquisitions (e.g. equipment, vehicles)
- Taxes (calculation of tax owed and paid to tax authorities for revenue earned)
- Financial results for each project (e.g. profit margins, the break-even point in sales revenue), which can be used as a basis for forecasting purposes
Direct selling and multilevel marketing are two different types of marketing
In direct selling or one-on-one selling, distributors sell products directly to the end consumer through a personal sales force of independent agents or dealers. In multi-level marketing or network marketing. Individuals act as both distributors and consumers as they produce goods or services themselves. Also buy products from other distributors at wholesale prices. Typically, individuals receive commissions for the sale of products they purchased from their “upline.” In some cases, direct selling organizations also have a buyback policy via cash payments or by returning unsold inventory to their distributors for credit.
Is it mandatory to register a business in India?
Yes, registering your business is mandatory under Indian laws. Anyone who is trading in goods or providing services must register their business with the government’s Ministry of Corporate Affairs (MCA).
However, businesses that only earn income from selling shares are not required to register. You will also have to pay taxes on your business income.
Are there any legal requirements for businesses in India?
Yes, several legal requirements must be met when conducting business in India. The following are some of the most commonly followed regulations:
In addition to the above, you may also have to register your business with other government agencies such as the Department of Labor and Employment (DoLE). The Food Safety and Standards Authority of India (FSSAI). For more information about these regulations, you should consult with an Indian lawyer.
If you are a foreigner, then you will have to obtain an Alien Certificate of Registration and apply for a visa to India. This can be done at the Indian High Commission or Consulate in your hometown.
What is the minimum capital invested in starting a business?
The minimum amount of money that needs to be invested when starting up a new business is Rs 50,000-Rs 1 lakh depending on the nature of the business.
However, there are instances where small businesses require much more capital to get off the ground. There are even cases where some larger companies require over Rs 10 crore as working capital for their operations.