Preparing Startups (Focus On Pre-Requisites For Starting)
A competent team is the most important aspect of any new business venture. The team should comprise of compelling and ambitious individuals, who have an understanding of the industry, product or service, etc.
Although establishing any startup is a very exciting proposition, the process can often be very demanding and taxing. It involves a lot of steps ranging from creating a business plan to putting together an effective team, to finding financial support in order to provide the plan with a legitimate structure.
Some of such pre-requisites are as follows:
Coming up with a Business Plan:
The first and foremost requirement for setting up any startup is to have a business plan. Essential components of a business plan include:
• determining and defining the product or service that will be handled by the startup;
• outlining the objects and goals of the business;
• identification of market size and of target customers;
• identification of existing and prospective competition.
Assembling an Efficient Team:
A competent team is the most important aspect of any new business venture. The team should comprise of compelling and ambitious individuals, who have an understanding of the industry, product or service, etc. It is helpful to have a person on the team who has some experience in the field. Co-founders may be selected from this bunch of people.
The important activities undertaken by the team include development of the product or service, designing company logo, devising a plan for marketing of the product, raising loan and capital, communicating with prospective customers, arranging for a work space, ensuring legal compliances, etc. It is also advisable to have a mentor or advisor to supervise the team.
Fulfilling Legal Compliances:
There are certain compliances or requirements under law that must be fulfilled in order to make the startup a legal entity.
• The first step is to determine the form that the startup will take. It can be a private company, a partnership, a limited liability partnership, etc.
• It is imperative that the startup obtains necessary licenses and permits. The startup must apply for and obtain a Permanent Account Number. If registered as a company, it will be provided with a Corporate Identification Number by the Registrar of Companies. Likewise, the directors of the company should have Director Identification Number before being appointed as a director of the company.
• The startup should identify the taxes (both state and central) and charges that it will be liable to pay and register for the same (such as registration for PAN, TAN, Service Tax, VAT).
• Once the form that the entity will take has been decided, it should get registered under applicable law. Certain documents such as the partnership deed, or the shareholders agreement and memorandum and articles of association are required to be formulated.
• The startup should also secure all its intellectual property by registering the same under its name.
A startup needs financial resources in order to kickoff its business. It often becomes difficult for to raise loan through traditional sources due to lack of collaterals. Financial support is often raised through angel investors/angel funds who invest in the startup in turn for a share in capital of the startup. Any investor would agree to invest his or her money in a startup only if certain key parameters are satisfied:
• The idea behind the startup should be such that the business can succeed.
• The team plays an important role in attracting investors. It should be clearly demonstrated how and what contribution can each person make to the business.
• The persons concerned should have a good understanding of the product or service being offered by the startup. The purpose that the product or service purports to serve, or any existing gap that it might fill, the feature that the product or service special must be exhibited.
• The entity should be aware of the market conditions it will face, the competition that its product/service has, the opportunities that it will have, its financial position and requirements, etc. The startup should have a strategy to both overcome the obstacles and to grasp the chances in its way.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
Around The World