Setting Up a Small Business Enterprise

Setting up a Small Business Enterprise Identifying the Small Business Precaution before starting your own unit: i) Is it viable business proposition on your area. ii) Does it match local cliental iii) Make market research iv) Consult with experts v) Look out for competition vi) Is it sunrise industry vii) Evaluate your business opportunities viii) Project conceptualization

Filtration of Business Opportunities     

Research your Industry Market Assessment Profit Assessment Financial Assessment Legal Assessment

The potential Sector for Business Opportunities  Biotechnology—use of living organism to manufacturing food ,drugs and other products.  Event Management—Client spending more to make events more elaborate and memorable  IT Enabled Services—representing the country globally

The potential Sector for Business Opportunities  Food, Fruits and Vegetables Processing, Refrigeration and Transportation  Mineral Water—Era of potable bottled water.  Insurance Sector  Herbal Sector  Tourism Sector

The potential Sector for Business Opportunities  Telecommunication  Plastic & Chemical  Third Party Logistics (Courier Services) -provide vital link between suppliers &consumers. Cost effective distribution of time-critical-goods  Home based Business

Formalities for Setting Up of a Small Business Enterprise 1.Selection of a Project a) Product or Service selection:  Background and experience of entrepreneurs  Avail. Technology & know-how of project  Marketability  Investment Capacity  Avail. Of plant & mach. And raw material  Sufficient infrastructure

b) Location Selection  Proximity to mkt.  Avail. of raw material,transport ,incentives,  Convenience to the promoters  Government policy.  Infrastructure facilities  Social infrastructure

c) Project Feasibility Study:  Market analysis: i) what would be agg. Demand ii) what would be the market share  Technical analysis: i) To determine whether the prerequisite for the success of project have been considered & reasonably good choice have been made

c) Project Feasibility Study:  Financial analysis: whether viable in the sense of being able to meet the burden of debt service & will satisfy return expectation  Economic analysis: i) Referred to social cost-benefit analysis in terms of shadow prices ii) Impact on I,S and distribution of income  Ecological analysis: damage to environment and restoration cost of it

d) Business Plan Preparation:  Determines where the company needs to go.  Possible roadblocks along the way  Formulate responses to contingencies  Keeps the business on tracks to reach its planned goal

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Strategy of a core business plan: Think competitively throughout Be realistic Involve people Factual & Succinct

e) Project Profile:         

Information heads in a project profile: Introduction Promoters Background Product description Market &marketing Plant &machinery Manpower required Cost of production & profitability Means of finance

Decisions on Constitution A)   

Sole Proprietorship: Vast majority in India Relatively free from formality No legal distinction between you and your business  Easy to set up  Your own boss

b) Partnership(1932 Act.):  Association of two more presons but less than 20.  Effective collection of sole-prop.  But face losses due to others.  All partner contribute capital equally and share profits and losses equally  Raise the level of capital

c) Corporation/Limited Company (Companies 1956 Act.):  Pvt. Ltd-minimum 2 persons & max. 50 persons  Public Ltd-minimum 7 persons and max. no limits  Management structure well defined  Financial liability limited  Bankruptcy does not effect all.  But may be expensive & need professional help.

Requirements for a Private Ltd. Company        

A registered business name A registered office Shareholders Memorandum of association Account Auditors Company seal Registers

d) Cooperatives:  Enterprises owned & controlled by the people working init.  One person one vote  Stipulated qualification  members must benefit primarily  Once in danger of extinct helped by 2002 act.

e) Franchising:  Half way house laying between entrepreneurship & employment  Attraction of running business whilst at the same time eliminating some more unappealing risks.  Franchising of a product or service  Franchising of an entire business enterprise product or service

2.Registration      

Obtain SSI Registration Provisional registration certificate Registration formalities Permanent Registration Certificate Benefits of registration Features of Reg.

4. Clearances from specific Deptt.(s)

5.Arrangement of Land/Shed 6.Arrange for Plant & Machinery 7. Arrange for Infrastructure

3.Prepare Project Report       

Executive summary Existing company details if any Operational details of the existing company Project details The company vis-à-vis related industry Conclusion Annexure

4.Apply and obtain finance:      

Share capital Deposits own/ public Debentures Long term loans Short term loans Working capital loan like cash credit

5.Implement the project & obtain final clearances:      

Construction shed Order for machinery Recruit personnel Arrange for raw materials Marketing Final clearances (product specific)