According to World Bank’s Doing Business 2018 Report, India’s ease of doing business rank rises from 130th in 2017 to 100th in 2018. The rise in India’s ease of doing business ranking is expected to accelerate economic growth and persuade many entrepreneurs to start new businesses. As an entrepreneur, you must take advantage of the positive economic condition to convert your great business idea into a successful small enterprise. However, you need a robust strategy to build a concrete foundation for the business. At the same time, you also need to understand the key steps in how to start a small business to set up your small business successfully.
How to Start a Small Business: 7 Critical Steps
1) Evaluate Your Business Idea
When you decide to become an entrepreneur, it becomes essential to understand and define your business idea clearly. Your business plan may aim to deliver better products or services to customers. Likewise, it may provide a solution for a specific problem or need of targeted customers. But you must understand exact product, service, or solution your business will provide to decide the right way to precede. If your business idea is ambiguous, there are always chances that you may be distracted from your entrepreneurial ambitions.
2) Perform Elaborate Market Research
In addition to defining your business idea clearly, you also need to supplement the business idea with real-time facts and figures. You must spend some time to evaluate the pros and cons of a business idea based on data and information collected from various sources. The market research will help you to identify the target market and potential customers, assess competition, and determine the resource requirements. Also, the information collected from reliable sources will help you to improve your business idea and customer experience.
3) Make a Business Plan
You cannot implement your business idea appropriately without making a comprehensive business plan. The business plan will help you to identify and procure the resources required to launch a small business. Also, it will clearly define the short-term and long-term objectives of the business. You can even share the business plan with lenders and financiers while raising funds for your enterprise. You can prepare a business plan in a number of ways. But it is always important to keep the business plan document simple, concise, and clear.
4) Understand and Meet the Legal Requirements
You can launch your small business in a number of forms – sole proprietorship, partnership, limited liability partnership, private limited company, and public limited company. The various forms of small businesses differ from each other in the category of number of partners/shareholders, limited/unlimited liability, and ownership transfer options. Hence, you must evaluate the pros and cons of each type of business and decide the form that complements your business idea and plan. At the same time, you need to make the business legal by following the appropriate registration process and paying the necessary fees and stamp duty. You must register your trademark and GST number while taking your business legal.
5) Explore Ways to Reduce Operating Cost
You will need a variety of resources to fulfill your entrepreneurial dreams. Also, you will need adequate fixed and working capital to run and scale the small business smoothly in the long run. But your business plan must focus extensively on acquiring more customers and boost sales, along with keeping operational expenses under control. You can always save money by running the business through co-working spaces instead of setting up a fancy office. Likewise, you must hire skilled employees and make their productive to carry on your business operations smoothly. At the same time, you must explore ways to perform routine various business tasks to reduce operating cost.
6) Register with Tax Authorities
In addition to providing a legal identity to your small business, it is also important to register it with the relevant tax authorities. It is always important to obtain both Permanent Account Number (PAN) and Tax Account Number (TAN) while launching a new business. You can easily obtain PAN by filing an application with the Income Tax department. On the other hand, you will need TAN to deduct and collect tax. You can even consider registering for GST if your turnover is expected to exceed Rs 20 lakhs in a single financial year. The registration with relevant tax authorities will help you to raise finance for the small business.
7) Define Basic Employee Policy
When you decide to start a small business, it becomes essential to recruit and hire skilled employees. You must define a basis employee policy based on various legal provisions to recruit employees without any hassle. It is always important to get your small business registered under the Office of Inspector, Shops, and Establishment Act. You need to register the enterprise with Employees’ Provident Fund Organization once the number of employees exceeds twenty. Additionally, you can consider registering the business with Employees’ State Insurance Corporation if you are planning to provide social security schemes to the employees.
On the whole, you must focus on a number of factors to start a small business successfully. But the steps in starting a small business in India differ from one type of business to another. Likewise, the rules for starting a small business differ from one state to another. Hence, you must understand the legal requirements precisely and customize the business launch strategy launch the small business without any hassle and delay.