InvestorQ : Can you outline some important steps that a typical start-up has to follow to go from a great idea to a successful business model?
Niti Shenoi made post

Can you outline some important steps that a typical start-up has to follow to go from a great idea to a successful business model?

Archita Jajjoo answered.
1 year ago

There are a lot of strategic initiatives required but there are also a number of very specific and procedural initiatives and only a combination can make your start up a successful business model. Let us look at some of the key steps here.

· The first step is to evaluate your idea. Once you have zeroed in on an idea, start analysing whether your business answers some basic questions like:

What problem is your product or service going to address?

Is the product disruptive?

Who will be the target audience?

Will it be a side project or a full-fledged business?

Who will be the competitors and how strong are they?

With the operation focus be online or offline?

Is there an international scope for it?

· The next step is to identify your business structure. When you are clear on all the questions, your next step will be to assess the type of entity that best suits. In India, a start-up can be registered as a Private Limited Company, Limited Liability Partnership, Partnership Firm, Sole Proprietorship or One Person Company. For large scalable set-ups, it is best to opt for an LLC or private limited company

· The next step is the registration of the business. When you have decided on the structure you will need to register the business. The registration process may differ based on the type of entity and below are the steps to register the most common type of entity Private Limited Company. As part of this process, you need to apply for Digital Signature Certificate; Apply for Director Identification Number; Check the company name availability; Apply for PAN (Permanent Account Number) and TAN (Tax deduction Account Number); Get the Incorporation Certificate from ROC; Open a current bank account for all your transactions.

· Now you must focus on getting all the government registrations and other licenses: All mandatory government registrations and licenses required to run a registered entity differ based on the place of business, sector or industry, entity type, number of employees, etc. However, all incorporated business must apply for and obtain PAN and TAN. The former is mandatory for opening of bank accounts and filing income tax returns and TDS returns, while the latter is required by all companies engaged in deducting or collecting tax. Also get registered under the Shops and Establishments Act as well as get GST registered and compliant.

· The next step is maintaining accounts and compliance. One of the most crucial things in a start-up is to get an accounting and compliance system in place. Maintaining your books and financial records help you study the cash flow, display the financial health to stakeholders, plan budgets and take key decisions, report profits and more. This may look mundane but there is where most of the problems arise.

· The next item on your agenda must be to create and nurture an online presence. In this digital era, it is absolutely necessary for your business to create an online presence. Having an interactive website and social media pages help in showcasing your services and products while attracting potential customers. Before developing a website do remember that Terms of Service and Privacy Policy statements are the most important components, especially if you will be collecting customers’ data like email address and contact number. Use multiple channels like website, app presence, Facebook presence, Twitter handles, Instagram presence etc.

· Now you go ahead and form the team. Normally you start with the core team (like Infosys started off with just five directors). If you are looking to hire employees, now it is the right time. Make sure to specify the designation, roles and responsibilities for each position clear enough after a thorough analysis. Many start-ups fail in hiring strategies due to inadequate team, not conducting market analysis, etc. which could be a costly affair. You can also reward your key employees with stock options at an attractive process to get the investors interested. Ensure that your EPF registration is done and dusted.

· Have a clear plan to protect the brand. Brand is one of the key intangible assets of an enterprise, whether it is small, mid-sized or large. Your brand is how a customer perceives your business and identifies in the market. Protecting intellectual property which includes trademark, copyright, patent, industrial designs, software, inventions, etc, is important. Due to lack of awareness regarding the scope and need for intellectual property (IP) protection, start-ups do not prioritise IP management in their early stages. But when you’re trying to woo investors or pitching to potential team members, it is important to protect both the business ideas and the brand.

The last step is to raise funding so as to offer a business continuity by raising funds. To source funds for your start-up, some of the options available are crowd-funding, bootstrapping or self-funding, Angel investment, and venture capital, business incubators, bank loans, government schemes, etc. Getting a business plan with market analysis, organization management, financial projections, marketing and sales strategies help in impressing potential investors