8 Steps To Start Your Own Business

By BankBazaar | January 18, 2017

8 Steps To Start Your Own Business

Have you always wanted to be an entrepreneur but didn’t know where or how to begin. Don’t worry! We have you covered.

Starting something of your own can be overwhelming. It would demand all your physical and mental energy. But let’s not make mountains of molehills! Every problem, when broken down, is just an easy task.

Looking for a loan for your business? Check this out.

Here is a step-by-step guide on how to bring your business to life:

  • Evaluate yourself and your idea

Being an entrepreneur is a challenge. While it does come with its own perks, it is imperative to understand the risks that come with it. Ask yourself questions like, “Am I motivated enough?” “Am I good at handling failures?” etc. Some personality types just make better entrepreneurs than others.

Once you’re sure about taking the leap of faith, analyse your idea. Do you want a product or service-based company? Will it be a creative or finance-based project? Who will it cater to? Is it feasible?

Test your idea’s credibility. Will you be able to make money off the idea? Will it meet a certain need in the market? Do you want to be a competitor or a new entry in a completely untouched field? If you are venturing into a niche industry, you must prepare for initial hurdles.

Take the example of Adhil Shetty, CEO of BankBazaar.com.

“When we started off, e-commerce was still finding its feet in India and fintech was practically unheard of anywhere in the world. Today, the situation has changed. The younger generation, especially in the metro cities as well as Tier2 and Tier3 cities, is more internet savvy, mobile, and comfortable shopping for everything on the internet compared with a few years ago. Parallely, the Internet penetration and infrastructure has also increased phenomenally. When we started off 8 years ago, we were barely mobile and even 2G was not always possible. Today, we live in the world of 4G, making the Internet and the mobile the more accessible and convenient option,” says Adhil.

Read more about Adhil’s journey here: A Leap Of Faith That Paid Off

  • Costs and Budget

Once you have your idea in place, determine how much money you will need to start off in the industry. Look at competitors in your field space. Some research on your peers will not only help you understand how money flows in the industry but will also help you grab investors’ attention.

For example, if you are entering the e-commerce scene, you would need to figure out how much it would cost to build a website or an app, partner with payment and shipping associates, marketing plans and more.

  • Financing Your Plan

If you have already saved up and have the money to start investing in your business, you’re set. But can you really predict your expenses?

Take it from Amrita Samant, a passionate photographer, who can’t say enough about the importance of financial planning while starting out on your own:

“When I first started Mommy Shots by Amrita, I was very clear that I wanted to have a minimum of 6 months compensation saved up for me to tap into. What I didn’t foresee was that my venture was a very expensive one (gear et al). So my initial capital was pretty much all of my savings and the years after were all a matter of ‘bootstrapping’. I am still pushing profits back into the business to expand in terms of service quality, locations, etc. Photography is a saturated market, so pricing and in-turn revenue and profits are an everyday challenge. But I believe that if you are passionate and can make a great product or provide great service, the money will follow. So, be smart about your planning and then dive head-on into doing what makes you happy!”

While Amrita relied on her savings to kick-start her venture, not all of us have the financial liberty to fund our own business. If you need financial backup, there are several ways to raise money for your venture.

  • Find an investor

Find an investor to fund your business. This could be anyone – right from a close friend to an investment firm. Investors fall under three categories – private equity, venture capitalists and angel investors.

If you are just starting your business, it’s best to find an angel investor, someone who has the money and is willing to invest in your business plan. You could even approach someone in the industry to fund you. That way, you would not just get the moolah but would also get some insider insights into the industry – more like a guiding light!

Venture Capitalists and Private Equity are bigger financial players. These investors work best when your business is already established and you are looking to expand your portfolio.

  • Get a Business Loan

Getting a business loan is a great way to fund your dream project. Several banks offer specially-crafted loans that offer anything between Rs. 5 lakh and 35 lakh. The interest rates range from 12 to 15 percent depending on the bank. If you want a large amount, you would have to provide something as collateral. This could be anything like gold investments, Fixed Deposits, etc, as long as they are in your name.

Your income, Credit Score, and repayment ability will also be taken into account. You will probably have to pay the amount back in five years. The repayment period, however, differs from bank to bank.

  • Loans Against Property

You could avail a Loan Against Property (LAP) to fund your business as well. Banks like HDFC, Kotak Mahindra and financial institutions like Tata Capital offer some cool LAPs with fixed interest rates that usually range from 12 to 20 percent. You could get a maximum amount of Rs. 30 lakh depending on the bank and your repayment period could be anywhere between 3 and 5 years.

There are several things that could go wrong here. Watch out for some common financial mistakes new entrepreneurs make.

Finding funds for your new business is just one of the hurdles. What comes next?

  • Legal Matters

This is probably one of the most time-consuming and complicated parts of starting a business. Nevertheless, they are as important as your business itself.

To start with, you will need to zero-in on a brand name for your business and register it with the government. Also, determine the type of structure your business would follow. Would it be a partnership, a limited liability or a non-profit company? Can the domain name operate outside your country?

  • Taxes, License, and Permits

Tackling tax issues have become fairly easy as the government of India has introduced a start-up friendly tax system. Startups are 100 percent exempt from taxes for the first three years, with an exception of Minimum Alternate Tax (MAT). New companies that adhere to certain policies of the “Make In India” campaign will not have to pay any taxes on the profits they make.

However, a corporate tax of 25 percent will still be applicable. Excise duty has also been waived off on certain goods to boost manufacturing.

If you are planning on venturing into a manufacturing business, there has never been a better time. Find out more about the taxes in India.

If you are going to operate country-wide or just locally, make sure to obtain the right permits and license from the respective government. This includes foreign trade as well.

  • Insure Your Business

Your business, after all, requires your precious time and effort! Protect it by getting the right insurance, like a policy that covers damage to business assets and theft. You should also consider getting insured yourself! Take a look at some insurance policies on the market right now.

  • Location! Location! Location!

Now that you have everything ready, start by choosing a location to operate from. Get an office space if you absolutely need to or you could just operate from home, depending on the nature of your business.

You can avail commercial property loans from a bank of your choice. However, keep in mind that these loans usually have a low tenure and high interest rates. You could start out of a rented space instead. You could always apply for a Personal Loan or a Credit Card to get a rented property.

  • Look Ahead, Prepare for Risks

Once your business starts generating money, put aside a certain amount to re-invest in your business – be it logistics, marketing or HR. Plan your finances according to your needs and don’t forget to brace yourself for risk. Be prepared for losses, whether warranted or unwarranted.

“…the thing is when you are working for somebody else you know that there is this set amount of money coming into your bank account every month. But when you work for yourself, the biggest challenge is that sometimes it’s going to be profitable sometimes it’s not, so you always have to be prepared for that risk,” Devrath Vijay, Co-Founder of The Outfit, a concept gym in Bengaluru says.

Did you know you can save money and make money off the saved money at the same time? Invest in a Fixed Deposit to get the most of a risk-free investment. It could also bail you out during emergencies.

Say your investors turned you down and you need money immediately to get some cogs and wheels turning. What do you do?

When Manik Taneja, founder of Goodwave Adventures, started the Malabar River Festival, things weren’t really smooth-sailing.

“Things don’t always work out the way you plan. We had to fund the festival from our savings, which meant that we had to be really smart about planning our priorities and our finances. The biggest challenge was that sponsors weren’t very interested because nobody had heard of the festival or the sport.”

But if you have a good product/service at hand and faith in your dreams, you will eventually find a way to make things work.

“In time, we proved our potential and managed to get help from the Kerala Government and some of the biggest adventure related brands…,” Manik says.

The key is to foresee expenses as far as possible.

Words of Wisdom

Take it from a couple of entrepreneurs that have been there.

“Looking back, my advice to anyone pursuing their dreams would be that things don’t always work out as per your plan. So plan ahead and start saving, so that you’re in a position to invest in yourself before others are willing to invest in you.” –  Manik Taneja, Founder, Goodwave Adventures

“Whatever you do, be sure to give it your 100%. Any time you look back and think, you should be able to answer to yourself honestly that you gave your best shot to whatever you did. There shouldn’t be a compromise.” – Adhil Shetty, CEO, BankBazaar.com

In a nutshell, don’t be scared of failure. Always over-deliver and be sure to make the customer your first priority. Success will follow.

Ready to launch your business? Take a look at some loan options.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

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