As of early 2021, India has more than 41,000 startups, as per data compiled by the Ministry of Commerce and Industry. To provide a lucrative environment to up-and-coming businesses, the government has also started various schemes and initiatives to build a robust startup ecosystem.
If you are an aspiring entrepreneur who wants to tap into the support offered by the government, here are some of the things to know before starting a business.
- Business idea: Every business, small or big, was once an idea that was planned and executed to become what it is today. Your business idea should be unique and offer some competitive advantage to your venture. There are tons of new business ideas, and your idea should stand out from others.
- Expertise: As an entrepreneur, you need to have a complete know‐how of the industry and the regulations prevalent in that industry. To gain this level of expertise, a lot of research and analysis needs to be done. This is another one of the key things to do before starting a business.
- Demand/Need analysis: No matter how good your product or service offering is, the truth is that your business will not prosper unless there is demand for your product or service. Study your target audience and the market where you plan to launch your business to figure out what your target audience wants.
- Competitive Analysis: There ought to be one or multiple competitors to your business. So, you must know how to proceed with your plan, analyse your competition and curate a pricing structure. These are some of the things to do before starting a business.
- Cost estimation: You must invest some money in your business before you make your first sale. This cost could be in R&D, marketing expenses, rent on your office or warehouse, machinery, raw material, furniture, etc. Estimate this cost and figure out whether you will require a loan for this or you would finance it from your savings or you would have to approach an investor.
- Capital: Business, be it any industry, needs money at the onset, and the requirement can be huge. Bootstrapping is one option where you use your own money to fund these requirements, or apply for a business loan with any lender or ask for seed funding from venture capital or private equity investors. Business loans come at a cost wherein you have to pay interest on them.
If you seek external investors, they might ask for a board position and equity in your business, which might lead to friction in decision-making. So, how can you raise capital for your business? If you do plan to self-finance your business idea, it is always better to start taking steps towards proper financial management. If you plan on starting your own venture in a few years, it is better to start working on your investment portfolio right away so that you have sufficient capital when the investment is needed. It is essential to create a diverse portfolio by investing in stocks and mutual funds so that you can gain capital appreciation to fund your business.
With that being said, it is prudent to explore your options through a financial expert to accumulate capital for your startup. An expert could help you to grow your wealth by suggesting personalised financial plans that are in line with your age, financial standing, investment horizon and appetite for risk.
Reach out to one today and take a step towardsrealising your dream of being an entrepreneur!