How starting a Business in the Dynamic era looks like!
Covid has hit the global economy in a way which has never been witnessed before. A survey of 250 start-ups has revealed that the COVID-19 pandemic has affected nearly 70% of small start-ups. Nonetheless, keeping your business relevant in changing business scenarios is a challenge in this dynamic era. Ancient concepts and techniques of doing business are not relevant today. Evolving concepts believe in the fact of “Being Adaptable” for “Being Relevant” as the out-dated works no more.
Shopping malls have been on our fingertips, restaurants have come home, schools & colleges have been restricted to laptops & mobiles and the list can go on & on. The constant changing business scenarios have proved to be disruptive as well as evolving at the same time. In such a dynamic era, the businesses need to be adaptive, innovative and capable enough to rebound on every failure. Fluctuating dynamics of business demands every business to kick start differently to keep up with the pace of growth & development. Let’s run into some important aspects of starting a business in India today.
Drawing a Business Plan
Before venturing onto the planning stage of your business, make sure you’ve invested enough of you and your time in doing the market research and study. Market research is an inevitable step towards launching your business, as it makes you aware about the accomplishment of your idea. It helps you calculate the probability of your idea turning into scalable business. Once you have studied the market scenario, the next step comes in building the foundation of your business via a concrete business plan. Budding ideas often tend to make mistakes while its execution by just rushing into operationalizing the business without a proper roadmap.
Also, look out for the finances and anticipate the initial cash burn while launching the business. If you don’t have that amount on hand, you’ll need to either raise or borrow the capital.
Choosing best suited Business Structure
Subsequent to settling upon the above check points, the next hurdle is to finalize upon the legal structure which would best suit the business line and compliment the basic idea of the context of your business. The legal business structure would not only affect your registrations requirements, but would also impact upon the taxes you’d pay, compliance’s you’d complete and also the personal liability. Let’s understand commonly adopted structures for doing business in India.
Sole Proprietorship
Sole Proprietorship = One Wo-Man Army. Yes, a proprietorship being one of the most go-to/commonly thought of structures is a business owned, managed and controlled by a single person. Sole proprietorships do not produce a separate business entity which means you can be held personally liable for the debts of your business. But sole proprietors are still eligible to go for trade name registration. This structure is easiest to form and maintain through years, as it is most cost efficient, but it lacks advantage of credibility. Sole Proprietorship is most suited to small owners running businesses single handedly like food stalls.
For example: Mr. A, an amazing home baker, starting a dessert delivery business at home.
Partnership Firm
Partnership is a business model in which two or more individuals manage and operate a business as per the terms and objectives set out in the Partnership Deed. Here, partners in the firm are jointly & severally liable for acts of inter-se partners of the firm. Partnership firms are easy to form and cost efficient as compared to other corporate structures. It is most suited for starting business with two or more people coming together to share profits and losses.
For example: Mr. A & Mr. B, two friends, agreeing to share profit & loss, bringing in Rs. 50,000/- each, to start a small Digital Marketing business by entering into mutual partnership agreement.
Limited Liability Partnership (LLP)
The concept of Limited Liability Partnership (LLP) was hurled in India in year 2008 via Limited Liability Partnership Act, 2008. LLP is considered as a semi-corporate structure, as it is a mix of features of both a limited company and a partnership firm. LLP embraces flexibility of a partnership firm in conjunction with limited liability & separate legal identity of a Company. The compliance cost of LLP is higher than above structures but lower and simpler as compared to limited company. Any two individual’s efforting to start their venture in an organized manner can go for LLP registration like Consultancy venture.
For example: Mr. X & Mr. Y bringing in Rs. 20,000/- each, two ex-colleagues of ABC company, registering partnership under LLP Act for carrying out HR Consultancy work, by entering into LLP agreement.
One Person Company (OPC)
OPC = More organized and regularized Sole proprietorship firm. It is a concept recently added in the Company law. It is a hybrid structure comprising features of sole proprietorship and a limited company, wherein company and the owner are considered separate legal entities. OPC is most desirable for those business individual’s, who want to conduct business in an organized manner with sole ownership of control & profit of the business. OPC amalgamates features or organized structure with perks of single ownership like Import-Export Business.
For example: Mr. P, registering One Person Company under Company Law with capital of Rs. 1,00,000/- for starting textile import-export business with obtaining necessary licenses.
Private Limited Company
Private Limited Company is one of the most preferred and convenient business structures to launch your Business idea. It is a pure corporate structure with features of perpetual succession, limited liability, and separate legal entity. But the cost to form a company and keep it active by way of applicable compliance is the highest among all the other structures. This corporate structure has an advantage when it comes to raising capital. If you vision to start a scalable business and are ready to bear the joint costs for maintaining the company, a limited company is the best of all the options.
For example: Mr. X, Mr. Y & Mr. Z, three IT professionals coming together to start an IT business with investment of Rs. 5,00,000/- as capital and registering a Private Limited Company.
Register your Business and its Trade Name
Once you’ve finalized the legal structure of your business, the next step is to go for it’s registration process as per the applicable laws of the country with defined rules and regulations. It may be a tiresome process to collect, collate and submit the needful documents and details, but is inevitable part of venturing your business. The Partnership Firms, is a State-based registration under Registrar of Firms of respective States while Corporate structures like Private Limited & LLP are Central registration, to be completed on MCA website (www.mca.gov.in). You can visit MCA FAQs section for more insights about the process involved in company registration. Upon successful registration of your business structure, the next comes deciding the trade name or brand name of the business.
We know it’s never easy to pick an interesting & perfect name for your business, but for sure this step is going to turn the tables for your business. Giving a brand name to your goods or services not only gives it a unique identity but also reflects you & your vision with the same. Once you settle with the name, it is important you protect it by Trademark registration. Trademarking your Brand name would not only protect your Brand but would also secure the goodwill & reputation attached to it and would curb any unauthorized use of your Brand name.
Applying for necessary Licenses
You are now only one step ahead of actual execution of your idea and kick starting your business. The registration of your business structure and the trade name would lead you towards applying for necessary licenses as per the applicable rules, regulations and laws of the country. Few of the essential licenses may include but are not limited to tax registrations like GST registration, shop & establishment license, license to import or export etc.
Execute and operationalize your idea
Now comes the true test of your business. The exhausting pre-process of starting your business legally in India comes to an end here, and now it turns towards its actual implementation & operationalization. This is the most challenging step towards a successful business, as any great idea can fail due to lack of its proper execution. Start building your product, work on the marketing strategies, use various platforms to promote your product, hire people to assist you but most importantly do your job now to sustain your idea and see turn that idea into a success. Most people fail at this stage, as on paper things look perfect, but actual shortcomings appear only when we operate. Don’t just give up, put your effort, hard-work, intellect, determination & consistency and see how your business flies!!!!
