HOW
TO ESTABLISH A STARTUP IN INDIA
Before discussing about the establishment of startups in
India, we need to initially talk about what it is?
What is a Startup?
A startup is a company or a business which is in its initial
stage for undertaking its production. It is usually a small business, which
means that it does not have a great or huge capital invested in its operations.
A startup can be started by an individual person or by a group of people. These
kinds of businesses offer “innovative” products or services which aren’t
offered by another entrepreneur. These kinds of businesses are funded by some
other financial institutions like: a bank, business incubators, angel investors
and many more.
Startup in India:
It is the initiatives taken by the Gov. of India, to make the
talented people a successful entrepreneur without any hurdles and to make their
work easier and help them to approach the targeted customers. Startup India
campaign will help the Indian economy to boost up. This program was
incorporated by the Indian Prime Minister i.e., Narendera Modi in 15th
August, 2015, address from the Red fort, in New Delhi. It was started to
promote the startups in India, to make people reliable on their businesses and
will provide job opportunity to the people of nation.
Types of Startups in India:
There are many types of startups in India. This causes
“problem of choice” to the entrepreneur as he has to choose between many
options available to him. He has to choose the best kind of startup which will
suit his personality.
There are basically 6 types of startups available:
- Lifestyle startups: This type of startup is basically for the people who are self-employed, which means they earn their living by performing their particular work for themselves only. This kind of entrepreneur can be a sole proprietor.
2. Small Business Startups: These kinds
of businesses include local kind of startups, which are established to feed the
family that means these kinds of startups does not need huge amount of capital
to invest. This type of startup includes grocery stores, hairdressers, bakers,
travel agents and many more. Small business entrepreneurship is not designed to
scale.
1 3. Scalable Startups: These kinds of startups are established
in the aim that in mere future they’ll grow and be getting big. We can analyze
that these kinds of startups are going to expand in future. The entrepreneur of
this type startup believes that they will go to change the world. Such kind of
startups hires the brightest and the best people for the job to make their targets
into reality. They always search for repeatable and scalable business models to
boost their determined goals. Uber, Swiggy, Oyo rooms are the examples of
scalable business startups.
1 4. Buyable
Startups: In the past few years, businesses are operating on the webs
and mobile app solutions. Their aim is not to make the company a billion dollar
company but to “Sell” it to the other established companies in exchange of
pretty cash. This trend is getting popular in the meantime.
1 5. Large
Company Startups: To become an entrepreneur of a big established
company, he needs to invest wisely. Large companies have infinite life
duration. To become a large enterprise the entrepreneur needs to analyze all
the market forces and he has to think “Out Of the Box”.
1 6. Social
Startups: These kind of startups are established to make world a better
place through their innovative ideas. The mission of these startups is to stand
out from the rest of the world and have different identity from the others.
Steps to register a startup in India
After discussing about
the different types of startup available, an entrepreneur needs to know the
following steps that should be taken to establish a new business in a legal way.
·
Step 1: Incorporate your
business: When a person thinks
of an idea to begin a startup, the initial step he needs to take is to
incorporate it as a Private Limited Company or a Partnership Firm or a Limited
Liability Company. You have to register your business to the registrar, obtain
a certificate of incorporation, PAN and other required compliance.
·
Step
2: Register Startup India: As the Indian govt. has
introduced a scheme for the innovative entrepreneurs to register their startups
in that scheme, so they can have the benefit associated with those schemes. The
process of registration is simple and online. All you need to do is to go on
the website Startup India and log on it and fill the form with the required
details needed.
·
Step 3: Documents To Be
Uploaded: As the whole registration process is online, and
then all the required documents should be in a PDF format only. When a person
goes to upload the document the first thing he need is i) THE LETTER OF
RECOMMENDATION. After submitting the recommendation letter he needs to submit a
document ice; ii) INCORPORATION/REGISTRATION CERTIFICATE. The last document
that need to be submitted is, iii) DESCRIPTION OF THE BUSINESS IN BRIEF. You
have to describe your business briefly to start your startup peacefully.
·
Step 4: Need To Answer
Whether You Need To avail The Tax Benefits: Startups
have the benefit that they are exempted from income tax for 3 years. But to
avail these benefits, they must have a certification from the Inter-Ministerial
Board (IMB). Startups recognized by DIPP, Govt. of India can now directly avail
the income tax benefits without acquiring any additional certification from the
IMB.
·
Step 5: Must
Self-Certify That You Satisfy All the Conditions:
All the above detailed points should be certify by an entrepreneur that he is
satisfied with all of the above heads. The turnover of the business should not
be more than 25 crores. There must be innovation in the whole idea of the
startup.
·
Step 6: Getting A
Recognition Number: After applying
you will immediately get a recognition number for your startup. This
recognition certificate will be issued after the examination of all your
documents. However, you have to be careful while uploading the referred
documents. If on the verification, it is found that the required document is
not submitted /uploaded or wrong/forged document is submitted then you should
be liable to a fine of 50% of your paid up capital of the startup with the
minimum amount of Rs.25, 000.
·
Step 7: Other Areas: If you need a Trademark for your business or a Patent for
your innovation, then you may approach to anyone from the list of facilitators
issued by the govt. You have to pay just a statutory fee thus getting an 80%
reduction in fees.
Options to raise FUNDS for your startup
After registering your business with the govt. you need to
think about the different options available in the market to raise funds from
for the operation of all the required responsibilities to undertake the
business. Money is the Bloodline of any business. Almost on every stage of
business, entrepreneurs used to ask themselves: How to Finance my startup?
Funding
mostly depends on the nature and largely on the size of the business. There are
many options available in the market to raise funds for your startup.
A. Bootstrapping Your Business: It
is one of the traditional ways to fund your business i.e., by Self-funding AKA
Bootstrapping. You can invest from your own savings and can get your family and
friends to contribute for your startup. This type of funding is easy with fewer
formalities, plus less costly. But this is only suitable if the initial
requirement is small.
B. Crowed Funding: It
is one of the newer ways for funding your business which is gaining popularity
lately. It’s like taking a loan, pre-order, or investment from more than one
person as its names suggest.
That’s how the crowed funding works-an entrepreneur will upload all the
necessary details on the crowed funding platform. He will mention all the
details like; goals of business, profit making strategies, how much funds he
requires, what are the reasons for it and many more. The targeted customer’s
will see it and if they found it interesting and reliable, then they will fund
the required amount of money as they want to and invest it in the startup. Some
of the popular crowed funding sites are: Indiegogo, Wishberry, Ketto etc.
C. Angel Investors In Startup: Angel
investors are the people who have settled down in their businesses and now
willing to help the other entrepreneur’s by providing the capital to them in
exchange of convertible debt or ownership equity. They can offer mentoring or
advice alongside with capital. They prefer to take more risk in investment for
higher returns. Some of the show topper angel investors are here: Indian Angel
Investors, Hyderabad Angels, Mumbai Angels and many more out there.
D. Venture Capitalists: Venture
capitalists are the individual who professionally manage funds to invest in the
startups that have potential to grow in future. They usually invest in a
business against equity and exit when a company issued IPO. This may be
appropriate for the companies who are beyond the startup phases and generating
profits. They look for such companies who are more stable than the companies
who don’t have stability. VCs provide expertise and mentoring to the growing
startups companies. Some of the venture capitalists are here: Canaan, Blume
Ventures, Kalaari Capital and Accel Partners.
E. Business Incubators & Accelerators: Both the two terms can be used interchangeably; Incubators
are the parents to the startups as a child, who nurtures the business providing
shelter tools to the business, training and network to the startups. While
Accelerators are so more or less the same thing, they help a startup to take a
big lead. These kinds of programs normally work for 4-9 months and require time
commitment Startup Village and TLabs.
F. Raise Funds By Winning Contests: Contests are increasing tremendously, where you can win and
have the money for your capital. In this kind of competition you have to build
a plan or prepare a perfect product for the competition. If you won these types
of competitions then, they’ll help you to gain some media coverage. You have to
prepare a business plan idea that will stand out from the other competitors in
order to have the success of your business. It should be comprehensive and
thoughtful in accordance to convince the people that your idea is worth the competition.
Name of some of the known and reputed startups contests NASCOMM’S 10000
Startups, Microsoft BizSparks, Conquest and Lets Ignite.
G. Get Money From Banks: Banks
are the only way to get money from if a person firstly thinks about any
financial helper. The bank provides two kinds of funding to the
companies/startups. Firstly, Working capital requirement loan is a loan that is
required to make all the transactions associated with the business’s day to day
operations. Secondly, Funding from banks it would usually involves the process
of sharing the business plan and the valuation details, along with the project
report, based on which the loan will be sanctioned. Almost every bank in India
offers financing facilities through various programs. For instance, here are
some of the leading banks in India- Bank
of Baroda, HDFC, ICICI and Axis Bank have more than 4-8 options that offer
collateral free business loans.
So,
they were the some of the examples through which you can finance your startups
from. They offer multiple facilities to the entrepreneurs with many benefits in
future. If you want to grow rapidly, you can have these mentors to help you out
and get established in future and earn profits as fast as possible. As we know
that Indian economy is a developing economy which needs startups to help her to
grow faster. Startups in India are growing enormously and having a bright
future ahead. Business is not only about earning profit, but in modern time it
is more related to “INNOVATION”. If you have an innovative idea then starting
up your startup will be the best choice for you.
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