Rakhi Acharyya

How to start a Startup in India: A checklist

India start-up

• An idea without a thought…

• Does your idea have something new to offer?

• What is your business goal?

• Who is your target consumer/customer?

• Is there any existing, or potential, competitor?

• What advantages do you have over that competitor?

• A thought without a plan…

• Market Analysis: Analyze who you are selling to and how you can position yourself to make the most of it.

• Competitors: Who are they? What are they doing? How are you different from them? How will your business sustain and develop in their presence?

• Product: What are you selling? How will you design and develop it? How much cost are you looking at?

• Team: Who, and how many, will you need to hire? How much will your team cost? How are they going to play a role in sustenance and development of the business? The best way to go about your business is to let the initial gains be made without too much costs in hiring a sales or marketing team. Let the startup grow organically, at first, and then begin to invest in employees once the business starts showing ROI.

• Technology, Inventory and Raw materials: What do you need? How much do you need it to be? Where will you house it? What will you do to protect it? How much will it cost to buy? How much will it cost to maintain? Plan to invest in technology and inventory in steps rather than in one go. It will help you to evaluate the returns, and requirements without any waste.

• Finance: Putting together all the initial, running, recurring, and maintenance costs to estimate how big of a bullet you will need to bite into.

• A plan without an address…

• Where will you locate your business? Location plays an important role in your marketing/advertizing strategy from its visibility aspect, your transportation and warehousing budget, availability of resources in the area, utility costs, and the general commercial perception of its surroundings. Your business budget needs to factor in not just the cost of renting a place to run your business, but also the costs to keep your business operational while operating from that address.

• If direct walk-in type clients or customers are not essential to your business, or you don’t need immense amount of inventory, you might as well start in your garage. Many tech giants have been born that way.

• The legal aspect

• Sole Proprietorship Company where the founder and owner is the company. This is the most straightforward road to a running business. However, sole proprietorships are not eligible to get funding under the current StartUp India funding scheme.

• Partnership Company where 2 or more people operate a business while sharing management and profits. They can be of the General Partnership or the Limited Partnership sort. Under the General Partnership, partners contribute, run and share the profits, also making them liable to any company losses. While in Limited Partnership (LP), except for one General Partner, the rest of the partners enjoy limited liability, or little to no personal risk other than for the investment into that Partnership.

• Limited Liability Partnerships (LLP) are similar to Limited Partnerships but for one iddy-biddy detail. No partner is liable to the company’s debts or losses.

• Private Limited Company are similar to LLPs in sentiment but generally enjoy way more flexibility in terms of getting outside investors, like Venture Capitalists, for later expansion. LLPs would need to make any investor their partners, a requirement which is relaxed in a Private Limited Company.

• Check please!

• Incubators: They offer resources in exchange for a small equity stake. They come before you even have the seed money to get started and prepare you with mentoring, ideas, expertise, office space and other logistics help.

• Angel Investors: Not sent from heaven really but fairly loaded people or industry professionals who see potential in your venture, in exchange for an equity stake. These are relatively low as compared to Venture Capitalist money.

• Venture Capitalists: The money that may be needed to expand, and grow, after the initial stage can be obtained from VCs. The equity stakes are high and getting to shake hands with a VC is a challenging task in itself.

• Crowdfunding: A nifty way to get set up money by getting a large number of people to give small amounts, online. It is like pitching an idea to the world and letting a variety of people buy into it as investors.

• Bank Loans: Banks may offer loans without any ownership or equity stake angle. All they need are their loans to be repaid and you not be related to Mallya.

• Bootstrapping: This is the lowest risk financing system. You don’t get outside medium to high risk investments, but rather work with what you have. And in doing so you become extremely scrappy with all your resources, making sure every penny is accounted for wisely.