How to Start a Business in India | Step By Step Guide
If you’re an entrepreneur with big dreams, India is the place to make them come true.
As a developing country, India has a lot to offer to start ups who want to launch their new business. With the government’s enhancing the ease of doing business and several other positive factors for business prevailing in the country, there are several reasons why you should consider making India the base of your operations. In this article we will discuss how to start a business in India. Let’s hop in and look at the hows and the whys of starting a business in India, and what every entrepreneur should know.
Why choose India for business?
When it comes to start ups, the Indian government is doing a lot to make life easier for business persons. The prevailing conditions in the land also provide several advantages to the aspiring entrepreneur. Here are some of the advantages that India provides, which is why you should choose to India for your venture:
Skilled labour available
India, like China, is primarily dominated by young population. The median age in India is 27.6 years, with 64% of India’s population expected to fall within the working ages of 18 to 59 years by 2021. Each year, more than 1.5 million college graduates are added to the employable generation from engineering colleges alone. Thanks to the high value placed in education in India, these graduates have a good grounding in their field of study, and require only minimal job oriented skills coaching to be a good fit for a real life job. The sheer volumes of the workforce alone, provides sufficient employees for any aspiring business person. Another advantage of the young workforce here is that due to economical reasons, they are more likely to choose a white collar career that pays them even minimum wage. There are more chances for business persons to find high quality, skilled labour here at lower rates as compared to those in most developed countries.
Simple process for a startup registration
Planning to start a business in India – With the startup ecosystem in India growing at a rapid pace, now will be the right time to kick start your dream venture. To encourage more start ups to do business in the country, the Indian government has relaxed a lot of terms and conditions around establishing a start up, and has even offered initial funding. The cost of IPR services is low with the government bearing the facilitator fees so that the startups only have to bear the statutory costs. As a result, startups enjoy discounts of up to 80% in filing patents. There is also a Rs. 10,000 crore venture capital funding set aside by the government specifically for startups. This, together with the tax breaks and other sops that startups can enjoy in India, make it ideal to do business here.
Government policy is targeted to enabling business in India
There have been several recently introduced government policies that have helped businesses gain a more secure foothold in India. One of these is the Make in India policy. According to this policy, infrastructure is provided together with a relaxed tax economy to businesses within the IT, pharma, electronics and textiles, etc. sectors who are investing towards developing their products in India. The Indian government is taking initiatives to support and inspire young entrepreneurs to start a business in India.
The Companies Act has been recently modified by the Finance ministry to allow companies to bypass certain compliances to enable their ease of doing business. The recently introduced Good and Services Tax bill has simplified the taxation process so that it is clearer for companies to understand how to navigate the tax regime. The recent relaxation of norms around foreign direct investments in the retail sector means that it is easier for foreign funded businesses to establish a partnership with businesses in India.
Now that you have fixed on India as the location for your business, you need to reflect inward and see if you have what it takes to set up a shop here.
Some key traits you should exhibit as a budding entrepreneur
If you are keen to start a business in India, things are not going to be easy. In fact, no matter which country you choose, you are bound to meet obstacles in the path of your success when setting up a new venture. You need to be mentally focussed to achieve your goal, you need to show a lot of strength of character and you need to be able to lead a team that believes in your vision. There will be testing times and you need to pull through them. Here are certain traits you should work towards inculcating to be able to succeed as an entrepreneur in India.
How driven are you?
One question you must continually ask yourself as an entrepreneur is: How badly do I want this? How passionate are you to start a business and scale it? Your passion towards achieving your goal is what will determine your success down your path. If you give up early on your quest towards setting up your business, chances are the bigger obstacles you meet further down will prove unsurmountable. The entrepreneurs who survived are those who started out in their parent’s garage, like Steve Jobs, who stayed true to their dream even when things did not always go their way, and who did not immediately meet financial success. Let your drive to succeed be what motivates you to continue down your path even when all hope is lost.
Are you willing to risk it all?
Several successful entrepreneurs have been able to risk everything they possessed in order to carry an idea to fruition. Look at Ramesh Babu, the barber who today owns over 400 luxury cars. In his early days as a barber trying to make ends meet with his salon business. Ramesh invested his meagre savings in his first car, which he then gave out on rent. See, there are numerous ideas that could enable you start a business in India. Seeing the potential of the car rental business in India, he made his next investment in a luxury car, despite all the financial hardships he had to endure, but his risk paid off in the end. He now owns over 400 luxury cars that are given out on rent to various institutions across the country, but still settles down to do the odd barber job on weekends.
Don’t be afraid to get your hands dirty
When it comes to the true entrepreneurial spirit, you should be willing to roll up your sleeves and do some of the hard work yourself, rather than just depending on your lower level employees to work on certain tasks. It might be easy for you to live the fast lifestyle, enjoying the spoils of your labour, but the entrepreneurs who truly fly high are those who get down to doing the coding or the nitty gritty basics side by side with their staff, rather than just lording it over them.
Building these traits can take some time, as it does with any sort of regime. Join some coaching workshops to help you learn more about how to be a successful entrepreneur. Once you are ready, you can take a look at the steps you need to take to register your startup.
Next, Register Your Startup in India
Registering a company is essential regardless whether its a product based or service based company. The most important first step would be to acquire a tax license and then connect this with a current account for your business. You can later follow the steps mentioned below to register your startup. Remember to always properly file your documents and report earnings so that you stay compliant with Indian government norms.
The startup India Initiative is a good way for small companies to establish themselves. As long as you have an innovative business idea and you are willing to go the whole hog to set it up, the Government of India is behind you all the way. Here are the steps involved in registering your startup in India:
Incorporation of the business
The first step will be to establish your business as either a PLC (Private Limited Company), LLP (Limited Liability Partnership) or Partnership. It is at this point when you will have to come up with a unique name for your business that hasn’t already been registered. It can take up to 10 days for you to have the name of your business approved and receive the certificate of incorporation. Once you incorporate your business under any one of these types, you are ready to proceed with all the other procedures involved in registration of your business.
Sign up on the Startup India site
The government of India has simplified the process of registering by making it a fully online process. You just need to log on to the Startup India website to fill in an online form. To apply for startup recognition, there are certain criteria you will have to fulfill and there is information you will have to provide on this site. You need to certainly be able to prove that your business will contribute towards employment creation or wealth generation along with innovation, to proceed further.
Upload your documents
As with any other government process, to register a startup company in India will require you to submit certain documents, which can also be done online. Here are some of the documents you will be required to upload to the site:
Letter of recommendation
A letter of recommendation can be sent from an incubator that is recognised by the Government of India. You can also use a patent filing document that mentions your chosen area of business.
This is the certificate you received upon incorporation of the company.
This is a brief overview of what your company’s vision and goals are.
Apply for tax exemption
All startups are exempt from taxes for the first three years. To avail this tax break, you need to obtain clearance from the Interministerial Board (IMB) and submit the documents to this effect.
After completing your online application, you will receive a recognition number. After verification of all your documents, you will be able to proceed with establishing your startup. Keep in mind that if any of your documents are found to be fraudulent or incorrect, you may have to shell out a fine of Rs. 25,000 or as high as 50% of your capital.
Now that you are done with the paperwork, you are ready to begin! It won’t be an easy path to success, especially in a country with so much diversity. Here are some complications you could initially face along the way.
Challenges you may initially face in running a startup business in India
While it may seem like a glitzy and glam world, the truth is startups have a tough time keeping up with their dreams to succeed beyond the first year. Here are some of the challenges observed with establishing and running a startup in India:
Funding and where it all goes
A lot of startups are attracted by venture capital that governments provide and angel investors. However, as easy as funding may be to come by if you have an idea that has potential, it is easy for that funding to disappear down the lane of misspending. It is important to focus on revenues that are even miniscule and use them to balance the funding that you have received as part of the first or second round of your startup. Get a good financial consultant you can trust so that you can keep tabs on the amount paid out to vendors and returns so that you have proper cash flows.
Hiring employees and then holding on to them
The biggest challenge startups face in India is being able to secure quality talent, and then retain them. As a startup, you neither have the claim to fame that a big brand does, nor do you have the ability to pay a huge paycheck. So what then? You will need to have your HR look out for people who are willing to take up a challenge, who want to be a big fish in a small pond, who have a thirst for innovation and trying out new things. A potential startup employee would be a person who is content with a small paycheck as long as they get to learn new things on the job or get bigger responsibilities than what they had in their previous job.
Marketing your product
You might have the best product in the world, the answer to world hunger, but it is nothing if enough people haven’t heard of your product at all. That’s why marketing is so important for a startup. By investing in a good marketing team, or digital marketing campaign, you still have a fighting chance of making people more aware of your product so that you can take the market head on.
How can eCommerce help you start your business?
If you are keen to get into the world of startups, but do not have a lot of money to invest, you can consider eCommerce as a solution. Through eCommerce, all you need to do is invest a small amount of money towards selling a product or a service online, and then reap the benefits. The main thing to do is to first figure out what it is you are going to sell. Once you are aware of which product or service you can make revenues off, you can then proceed with a business plan and set up your online business. Fortunately, there are plenty of online platforms like Shopnix, which allow you to start an eCommerce business online with only a small subscription fee. In return you get a whole host of features, including inventory management, digital marketing and so on, so that you can be successful in your startup.
Next, over to you
India is a great place to start your business. The land offers plenty of incentives to startups, and also has a good source of a workforce that is skilled, can converse in English and can learn quickly on the job. To start a business in India is a challenge that an entrepreneur can overcome with some key traits. The process of registration of a startup is relatively straightforward and there are certain obstacles that you may face in the early days of doing business. All said and done, you can capitalise on the business opportunities that India offers through eCommerce tools that are readily available online. Are you ready to begin?