Entrepreneurs should undertake the task of preparing business plan before starting a new venture. One should consult with lawyers, consultants and accountants before reaching any final decision. The nature of business is the most important decision. Businesses providing direct services like tailors, restaurants and professional services like doctors, lawyers are generally organized as proprietary concerns. While, businesses requiring pooling of skills and funds like accounting firms are better organized as partnerships. Manufacturing organizations of large size are more commonly setup as private and public companies.
Market study is one of the most essential activity that is required to understand the feasibility of the enterprise to be setup. Market study helps to get a better picture of the prevailing competition, existing gaps in the market, consumer needs and preferences etc. This gives confidence to the entrepreneur that his/her product/service is a niche one, having substantial prospects for growth and capable of attaining a competitive position in the market.
After going through the Market survey, one needs to make the choice of the form of Business Enterprise he/she would want to setup. Making the correct choice is very crucial as it determines the power, control, risk and responsibility of the entrepreneur as well as the division of profits and losses. The various factors that need to be considered are -- Scale of operation, degree of control, amount of capital, volume of risks and liability, tax liability etc.
Some of the forms of Business organizations are:-
All the business must be named and registered with the competent authorities as below:-
The choice of a particular product or service to be manufactured by the firm can be done by analyzing the following:-
List of some of the important organizations who can help in obtaining an idea about the products and services that can be produced are:-
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 organization but also its future expansion plans. 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.
The choice of location depends on several important factors:-
It is very essential that there is serious thought given behind Consumer taste and preference. Supply is dependent on demand. So it is very important to understand existing customers and find out ways to target new customers. Innovative and creative ideas need to be constantly developed to attract more and more customers. Price, design and utility of the product will have to undergo constant rectifications to align with customer’s needs. Depending on the product a certain segment of the population needs to be targeted. Trying to lure all age/income group might not work out, so it is always advisable to narrow down the target population.
Setting up basic infrastructural facilities for commencing business operations requires Land and Building. For acquisition of the plot of land, the entrepreneur must approach the concerned authority (Municipality, Land Revenue & Settlement Department). The architectural design of the factory must be approved by the concerned authority before starting the construction of the building. The site must be well connected to the nearest transport network i.e. rail, road or port. The availability of the basic amenities like, water, power supply is equally essential. Setting up of a good telecom facility for the industry is necessary for the growth and expansion of the business.
The State and Central Government offers incentives like land and building tax concessions, providing land at cheaper rates through the Government Agencies to new and existing entrepreneurs. It also offers concessions in water tariff, power subsidy, subsidy on generating sets, capital investment subsidy, transport subsidy, insurance subsidy, incentive for pollution control and quality equipment depending on the location, size of investment and category of the industry.
The next step is to select appropriate technology and equipment to produce. 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.
A business firm requires finance to commence its operations, to continue its operations and for its expansion and growth. 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 te total amount of capital required by the firm for the various need of the business.
A firm may raise funds for different purposes depending on the time periods ranging from very short to fairly long duration and the business can be financed by the following means:-
Once an entrepreneur has taken all the important decisions relating to starting a business, he/she has to take into account the basic regulatory requirements which are to be followed for setting up the organization. Policies are issued by both, the Central Government and State Governments. Policies can range from being relevant to a multitude of sectors, as well as being specific to a single sector. Policies are of extreme importance as they can determine the growth potential as well as the ease of doing business in a particular industry. Therefore, entrepreneurs should pay close attention to the Government (both Central and State) policies.
The most important policies and regulations are:-