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The term Entrepreneur means to undertake and pursue opportunities and to
fulfill needs and wants of people through innovation. A person innovates and
combines resources in the form of men, materials and money and brings them
together to make the business venture profitable. Person is prepared to take
risk and face challenges. Thus, innovation and risks are the two basic elements
of a good entrepreneurship. The whole process of starting a business begins with
writing a business plan. A good business plan is the key to setting up a
successful business. Once a plan is prepared, the entrepreneur faces various
challenges while implementing the plan. There exists Commissionrates or
Directorates of Industries are the nodal agencies in different States which
assist and guide new entrepreneurs in starting up an industrial unit in the
concerned State. They provide an interface between industry and other agencies
for industry inputs and enable the entrepreneur to get different industrial
approvals and clearances from various departments at a single point-Single
Window. They sanction incentives to eligible industrial undertakings and create
a transparent and automatic system of allotment of scarce raw materials to
industrial units. Hence, a new entrepreneur must approach the concerned
commissionerate while setting up a business firm. |
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Steps for starting a business |
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Step1:
Create a
business plan |
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Every new venture should have a business plan. A business plan is the formal
written expression of the entrepreneurial vision, describing the strategy and
operations of the proposed venture. The business plan also goes by other names,
depending on its intended audience. Presented to a banker, it may be called a
loan proposal. A venture capital group might call it the venture plan or
investment prospectus.
The advantages of writing a business plan far outweigh the costs. The purpose of
the plan is to enable the top executives of the firm to think about their
business in a comprehensive way, to communicate their objectives to individuals
who may have a stake in the firm's future, to have a basis for making decisions,
and to facilitate the planning process. Hence this should be done very carefully
and keeping future prospects in mind.
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Step2:
Making a product choice |
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After choosing the form of the business organisation the next start up problem
is the choice of the particular product or service to be manufactured by the
firm. It is an important decision because rests of the challenges of setting up
a business are based on the type of the product the firm wants to produce. |
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Step 3:
Setting up the infrastructure |
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A new business enterprise after deciding upon the location of the industry needs
to set up the basic infrastructural facilities for commencing its operations. It
includes, purchasing the land for the construction of the industry. The site
must be well connected to the nearest transport network i.e. rail, road or port.
Besides, the availability of the basic amenities like, water, power supply is
equally essential. Also, setting up of a good telecom facility for the industry
is necessary for the growth and expansion of the business.
The State Government offers incentives like land and building tax concessions,
providing land at cheaper rates through the State Government Agencies to new and
existing entrepreneurs. It also offers concessions in water tariff, power
subsidy, subsidy on generating sets, transport subsidy, incentive for pollution
control and quality equipment depending on the location, size of investment and
category of the industry.
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Step 4:
Naming and registering a company |
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In India, incorporation of a company is governed by the Companies Act 1956. It
is the most important piece of legislation that empowers the Central Government
to regulate the formation, financing, functioning and winding up of companies.
It applies to whole of India and to all types of companies, whether registered
under this Act or an earlier Act. But it does not apply to universities,
co-operative societies, unincorporated trading, scientific and other
societies. The Act is administered by the Central Government through the Ministry
of Corporate Affairs and the Offices of Registrar of Companies, Official
Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc. The
Registrar of Companies (ROC) controls the task of incorporation of new companies
and the administration of running companies. |
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Step 5:
Choosing the form of business |
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A business enterprise can be owned and organized in several forms. Each form of
organization has its own merits and demerits. The ultimate choice of the form of
business depends upon the balancing of the advantages and disadvantages of the
various forms of business. The right choice of the form of the business is very
crucial because it determines the power, control, risk and responsibility of the
entrepreneur as well as the division of profits and losses. Being a long term
commitment, the choice of the form of business should be made after considerable
thought and deliberation. |
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Step 6:
choosing the location |
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Every entrepreneur is faced with the problem of deciding the location for
his/her factory or plant. Location of the business is the most important factor
influencing its success or failure. It is a long-term decision which should take
into consideration not only the present requirements of the organisation but
also its future expansion plans. Errors in location may be very difficult and
expensive to rectify. Location of a plant has a bearing on the layout of
machinery and equipment as well as on the process of production. The objective
of a location plan is to find out the optimum or best location for the
particular plant. Such a location not only results in lowest cost per unit but
also facilitates orderly growth of the firm. Hence, the most advantageous
location is that at which the cost of gathering material and fabricating it plus
the cost of distributing the finished product to the customers will be at a
minimum. It is not necessarily the most favourable location but rather the site
at which all the considerations are optimized. There is no ideal location for
all firms or even for one firm at all times. The choice of location depends on
several important factors. It is influenced by the kind of products being
manufactured, costs of production and distribution. The location of the plant
should also be able to meet the environmental guidelines and other regulations
set by the Government specific to a particular industry. The choice of an
optimum location requires judicious balancing of all these factors. |
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Step 7:
Pricing a product |
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Fixing the right price for a product is the most difficult task as it affects
the volume of sales of the product of the firm as well as the profits of the
firm. Although non-price factors have become more important in recent decades,
price remains one of the important elements in determining the market share and
profitability. Prices are set by a firm by taking into consideration factors
like costs, profit targets, competition and perceived value of products. |
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Step 8:
Regulatory requirements |
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The most important regulation is the Companies Act, 1956, which regulates all
the affairs of a company. It contains provisions relating to the formation of a
company, powers and responsibilities of the directors and managers, rising of
capital, holding company meetings, maintenance and audit of company accounts,
powers of inspection and investigation of company affairs, reconstruction and
amalgamation of a company and even winding up of a company. The Ministry of
Corporate Affairs, earlier known as Department of Corporate Affairs under
Ministry of Finance, is primarily concerned with administration of this Act as
well as other allied Acts and rules & regulations framed there-under. The next
important regulation relates to environment. The environmental regulatory
requirements envisage a wide legislative framework covering every aspect of
environment protection like air, water, noise, forest conservation, wildlife
protection, etc. Also, separate set of laws and rules for emission of hazardous
wastes have been enacted. The Ministry of Environment and Forests (MoEF), is the
nodal agency for regulating all such environmental aspects. It undertakes
conservation & survey of flora, fauna, forests and wildlife; prevention &
control of pollution; afforestation & regeneration of degraded areas. Every
industry has to abide by all such guidelines and parameters for environmental
protection because only this will ensure its sustainable progress and growth. |
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Step 9:
Financing a start up business |
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One needs money to make money. Finance is the lifeline of business. A business
firm requires finance to commence its operations, to continue its operations and
for its expansion and growth. There must be continuous flow of funds in and out
of business. Sound plans, efficient production and marketing are all dependent
on smooth flow of finance. Hence, a financial plan needs to be prepared, which
indicates the requirements of finance, sources for raising the finance and the
application of funds. Financial planning for starting a business begins with
estimating the total amount of capital required by the firm for the various need
of the business. |
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Step 10:
Sourcing process, raw materials, machineries and equipment |
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Once the firm has decided on the foremost issues of which product it wants to
produce and the location of the industry, the next important step is to select
appropriate technology and equipment to produce the same. In addition to this,
the source of raw material has to be decided upon. The requirements of all these
can either be met through domestic sources or can be imported subject to the
regulatory requirements of the Government. The regulatory requirements
pertaining to the import procedures vary depending on the item of import. In
case of raw materials, the Export Import Policy of the Government regulates
imports. However, in the case of technology, the Foreign Direct Investment (FDI)
Policy and the Foreign Technology Transfer Agreements govern the imports. The
firm should do a careful cost and benefit analysis before going ahead with the
process of placing the orders to minimize the production costs and hence
increasing the profit margins. Various sources of Capital should be explored and
the cost of capital should be analyzed cautiously. |
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Step 11:
Hiring human resources |
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Human Resource is also an important determinant of business location and
functioning. Factors such as the availability of labour of different skill
levels, productivity and cost of labour, flexibility of labour, attitude and
behaviour patterns of labour, nature of trade unionism etc. are important to a
business. The whole process begins with the task of hiring manpower for starting
a business for filling the present and prospective vacancies in the company. The
objective of hiring manpower is to procure the right number of employees, with
the required qualifications to do the right type of jobs. The hiring process
involves four main steps i.e. manpower planning, recruitment, selection and
placement. Each of these steps and sub-steps help the employer obtain more and
more information about the candidates and thus help in obtaining the best
possible manpower for the firm. This function must be performed carefully
because any error committed at the time of hiring manpower may prove to be very
costly for the firm both in the short as well as long term. These costs will be
in the form of waste of time, money and energy in repeated hiring process. The
training costs incurred on them will go waste. The efficiency of the
organisation will go down due to hiring of unsuitable candidates. At the same
time the rate of absenteeism and labour turnover will be higher. |
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