While there are a million factors to consider before you start a business, below are the really important ones to help you get rolling.
What am I trying to achieve through the Business?
Your business venture may either provide a better solution vis-a-vis existing solutions faced by customers or it may provide a solution that never existed before.
If your business falls in the second category, you can expect to charge a premium for your service/products. But at the same time, you need to put in efforts to create a market for your goods/services.
How much money do I need?
This would consist of Initial Setup costs - the amount required to start the business which includes entity set up costs, regulatory registration costs, cost of Plant, Machinery & Equipment etc and the Running Costs or the Working Capital requirements of the business.
Sources of Funding
The initial sources of funding are generally either your savings or contributions from friends and family. It’s when you have a proven idea and business plan in place that you approach third-party equity investors like the High Networth Individuals or Angels or Venture Funds. In the initial stages of the business, its best to stay clear of any kind of Debt funding.
Keep a backup corpus
When you start a new business, expect to be cash flow negative in the beginning. Apart from having to put money into the business, you would need money for your day to day survival. A corpus equivalent to six months of your expenses is the minimum you must keep aside when you decide to start your business.
What is the structure of my Business?
Proprietorship? Partnership Firm? LLP? OPC? Pvt Ltd Company?
There is no right or wrong answer here. If you are starting a business to try out some ideas, it would be good to keep it simple in the beginning and stick to a proprietorship or a partnership firm if you are doing a business jointly.
Once you have clarity on your business and expect to raise funds from equity investors that is when you explore using the more formal Company Incorporation route.
Be Complaint from Day One
A number of regulatory compliances falling under the domain of Central government, State government and local Municipal bodies apply to each business.
Given the extensive use of technology by regulators today, non-compliance is easily detected and the cost of being non-compliant is forbiddingly high these days with penalties being charged on a daily basis with no recourse to their waiver.
Be prepared to be patient
Results are not easy to come by and one needs the patience to taste success in the Entrepreneurial journey. There is a local saying which says that one must persist for 1,000 days before giving up on a venture. That’s the average time it takes for a business to establish itself. Depending on which business you are in, you may taste success earlier.
Do you need a Plan B?
Although there are varied opinions on this, it is best not have or think of a Plan B when you start out. That means you are all-in in your current venture and have no alternatives but to give your best.
You never lose from a failed entrepreneurial venture, if you lose the money you learn the lessons!