Professional Documents
Culture Documents
E-Book January 2020
E-Book January 2020
DISCLAIMER
This Document (E-Book) has been developed with the primary objective to
introduce the subject-matter as one of the possible career options among the
aspiring entrepreneurs of small towns and to provide them with a general
understanding of the concept thereby supporting in crucial investment
decisions.
The Document (E-Book) has been compiled through extensive desk research
referring the secondary data relevant to the subject-matter collected from
various reliable sources including Policy Guidelines, Newsletters, Magazines,
Research Articles, Journals and Study Reports etc. and also downloaded
from many websites as well as blogs available in the Internet.
Although due care and diligence has been carried out while developing this
Document (E-Book), the prospective users of this Document (E-Book) are still
encouraged to carry out additional diligence seeking professional guidance
from qualified field experts for making an informed decision.
TABLE OF CONTENTS
CHAPTERS CONTENTS Page
No.
CHAPTER-1 INTRODUCTION 1
CHAPTER-2 PONDERING ABOUT STARTING A SMALL BUSINESS 4
CHAPTER-3 BUSINESS AND EMERGING TRENDS IN BUSINESS 6
CHAPTER-4 THE EASE OF DOING BUSINESS IN INDIA 10
12 BENEFITS TO START-UPS BY INDIAN 11
GOVERNMENT
CHAPTER-5 SMALL TOWNS MAKE SENSE FOR BUSINESS 13
THE BUSINESS ENVRIONMENT IN SMALL TOWNS 13
BENEFITS OF STARTING A BUSINESS IN SMALL 14
TOWNS
POTENTIALITY OF SETTING UP BUSINESS HOUSES IN 15
SMALL TOWNS
CHAPTER-6 START SMALL TO STAY LONGER 17
IMPORTANT BENEFITS OF STARTING SMALL 18
CHAPTER-7 BASIC STEPS FOR STARTING A BUSINESS 19
EXPLORING THE BUSINESS IDEAS 19
DECIDING ON BUSINESS IDEAS SUITABLE FOR SMALL 22
TOWNS
PREPARING A PLAN OF ACTION 24
CHAPTER-8 DEVELOPING A BUSINESS PLAN 30
CHAPTER-9 IMPORTANT TIPS FOR SMALL BUSINESS IN SMALL 32
TOWNS
KEEPING UP WITH EMERGING BUSINESS TRENDS 34
CHAPTER-10 BENEFITS FROM POLICIES AND SCHEMES 35
CHAPTER-11 LEGAL AND REGULATORY ASPECTS 37
CHAPTER-12 STANDARDS AND LICENSES 40
CHAPTER-13 FINANCING YOUR VENTURE 42
FACTORS DETERMINING FIXED CAPITAL 42
FACTORS DETERMINING WORKING CAPITAL 43
SOURCES OF CAPITAL 44
TIPS FOR SECURING A BUSINESS LOAN 45
CHAPTER-14 MANAGING LOAN REPAYMENT 48
CHAPTER-15 HOW TO AVOID DEFAULTING ON YOUR BUSINESS 50
LOAN
CHAPTER-16 MANAGING A BUSINESS 52
CHAPTER-17 GROWING YOUR BUSINESS 54
WORK WITH RIGHT PROFESSIONALS 55
CHAPTER-18 MOST COMMON REASONS OF SMALL BUSINESS 56
FAILURE
CHAPTER-20 CONCLUSION 86
START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-1
INTRODUCTION
Moving from small towns or villages to bigger cities has been the norm since time
immemorial owing to limited job opportunities in Indian small towns and villages. As
per survey findings in India, 25-30 people migrates every minute towards big cities in
search of jobs, livelihood, better income or better business opportunities. One can
visit a Railway Station or Bus Station in mega cities to witness the epic occasional
rush of the home-travellers especially during festivals such as Diwali, Holi and Eid
etc.
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But due to the rapid growth of urban population both natural and through migration,
many Cities in India are already under the pressure of overcrowding, urban air-
pollution, unbearable summer heat, water-logging problem, peak-hour traffic
congestion, urban crimes, reduced living standards etc. The sheer magnitude of the
urban population, haphazard and unplanned growth of urban areas and a desperate
lack of infrastructure has put heavy pressure on public utilities like housing,
sanitation, transport, water, electricity, health, education and so on. Air-pollution is
hitting city life like no other health or environmental crises ever before. City doctors
say it is suppressing our immunity, making us vulnerable to respiratory disorders,
heart attacks, cancer and is reducing the overall life expectancy. Considering the
unpleasant experiences of City Life, a growing number of people are choosing to
move out of big cities either going back to their roots or moving to sparsely populated
good small towns. Call it disillusionment with city life or the availability of better
opportunities in smaller towns/ rural areas, ‘reverse migration’ is a trend that is slowly
catching on in India.
India is among the emerging markets with huge potential as suggested by the
country’s current business environment. The huge potential of India lies in the fact
that it offers a very large customer base to tap into. With the population of India
running into the billions, the scope this offers is tremendous. Thus, the purchasing
power capability of India makes it an area of immense potential and offers a wide
array of avenues to pursue. Such favourable situation offers tremendous
opportunities for entrepreneurs to start up new business and expand the old one.
The opportunities are available in almost all sectors at initiation level as well as
expansion level. The Indian government is also contributing to create opportunities
through “make in India”. Thus, entrepreneurial opportunity is becoming very popular
among many and playing a big role in reverse migration in India.
These days business is not limited to big cities only but small towns and rural areas
too. Moreover, small towns are not small anymore as they are becoming a hub for
low cost businesses to run excellently and gain good profits. Due to internet and
other options, small business start-ups are flourishing even in the small towns. In
fact, there are thriving marketplaces in these towns with urbanesque spaces like
supermarkets, beauty parlours and gymnasiums. They have private schools, medical
clinics, a variety of fast-food eateries, modern tailoring shops, mobile and electronic
stores. Small towns are potentially the biggest market for consumer goods as well as
for e-commerce companies. There’s also the fact that small towns make for such
thriving business centres due to better availability of resources, lower infrastructure
costs and a low attrition rate. Investors say that entrepreneurs from small towns
appear to be more charged to succeed and willing to put in the hard works to make
their start-ups flourish.
Small businesses are plans that needs low investment and can be started by small
town people. But starting a business without planning where you want to reach is like
starting a car journey with no idea of your final destination or a map to get there;
you’re bound to get lost. Many business ideas end up in complete failure as they are
unable to produce the desired results despite all the efforts put in by the founders
sacrificing their personal life, hard-earned savings, career and professional
aspirations to accomplish something. A lot of mistakes are committed by new
businesses rushing into things without pondering the critical aspects of the business.
Business failure because of poor planning is completely avoidable. Once you know
what kinds of planning you should do before you start your small business, it's just a
matter of educating yourself and getting it done.
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CHAPTER-2
Thousands of people set up their own business every year. Some do it because they
want to work for themselves, others because they have a great idea and have
spotted a gap in the market. These are all valid reasons for starting a business.
Different people may have different reasons to start their business, but some of the
most common alluring factors and intrinsic motivations for today’s entrepreneurs
include the following;
The current Indian economic climate is ripe with opportunity for individuals ready to
strike out on their own with a great business idea. With more small business ideas in
India popping up in the scene and people taking an interest, starting a business has
gained a lot of popularity among masses. People are not only ready to take up the
risk but are also ready to do anything that it takes to make their business successful.
Here are some reasons why you should consider starting a small business.
You can start your own business on the side with just a few hours a week and no
experience—even if you have a full-time job. Starting your own business on the side
is one of the most powerful ways to take control of your life and make extra money
month after month. As said, the part of best of all is that you get to choose your
hours, pick projects you find exciting and meet interesting people. And therefore,
getting started isn’t that hard.
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START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-3
To make the business sustainable and profitable there are two important
criteria that must be fulfilled:
1. The business should not harm or degrade the environment in any way. If it does
so it will not be able to continue to operate in the long run.
2. The business must be profitable – this means that the income from the goods or
services sold must be greater than all the costs paid out for materials, labour, rent
and other expenditure.
You run a critical risk if it is unclear who is responsible for different tasks in the
business and if everyone concerned does not agree about how things should be run.
You can minimize risks by preparing and planning everything properly in advance. If
you plan carefully together with stakeholders who would be involved in the business
concerned, the chances of being successful would be much higher.
As technology continues to evolve, new business issues emerge in the corporate world every
passing day that business leaders never had to deal with before. Climate changes are inspiring
new corporate commitments to sustainability. New generations are bringing new values to the
forefront. The emergence of these tide-shifting changes redefines the way business is conducted
and profits are realised. As technology continues to evolve, new issues emerge in the corporate
world every passing day that business leaders never had to deal with before. Climate changes are
inspiring new corporate commitments to sustainability. New generations are bringing new values
to the forefront. The emergence of these tide-shifting changes redefines the way business is
conducted and profits are realized. These changes are referred to as business trends.
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Although the elements of these trends have been around for years, the trends
themselves emerge when the timing is right and when several factors come together.
Now let’s discuss to explore all the latest business trends and their effects in society.
Following are the emerging trends of carrying business and understanding them may help you to
redefine your go-to-market process to capitalize on the new reality.
Network Marketing
Franchising
Business Process Outsourcing (BPO)
Aggregator
Knowledge Process Outsourcing (KPO)
Digital Economy
E-Commerce
M-Commerce
Network Marketing is a type of business opportunity that is very popular with people
looking for part-time, flexible businesses. Network marketing programs has an
advantage of minimum upfront investment-usually only a few hundred rupees for the
purchase of a product sample kit and the opportunity to sell a product line directly to
friend, family and other personal contacts. Some of the best-known American
companies in India are Avon, Oriflamme, Tupperware, Amway and so on, fall under
the network marketing umbrella.
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One point to note here that only non-core activities are usually outsourced. The
companies do not part with their core competencies, they maintain all their focus on
these like manufacturing, marketing etc. However non-core services like after sales
service, customer relations, supply chain management, real-time accounting etc. can
be outsourced to BPOs.
Aggregator : The term finds its origin in the word aggregate, meaning to combine,
amalgamate or bundle up together. So an aggregator is a website or application that
amalgamates homogeneous information or content from the internet. This makes it
easier for the end user to navigate and find the required information from the web.
Nowadays, we witness a big boom in the world of digital marketing. All the big
companies and brands of the world have their own website. They also use social
media (Twitter, Instagram etc.) for advertising and promotions. They have online
brochures and inquiry forms. So a potential customer or internet user has to browse
through many pages and information to fulfil his purpose. And this is where
aggregators step in.
Digital Economy : Digital economy is one collective term for all economic
transactions that occur on the internet. It is also known as the Web Economy or the
Internet Economy. With the advent of technology and the process of globalization,
the digital and traditional economies are merging into one. It essentially covers all
business, economic, social, cultural etc. activities that are supported by the web and
other digital communication technologies. Digital economy has given rise to many
new trends and start-up ideas. Almost all of the biggest companies in the world
(Google, Apple, Microsoft, Amazon) are from the digital world. Let us look at some
important merits of the digital economy.
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START YOUR SMALL BUSINESS IN SMALL TOWN
E-commerce provides the sellers with a global reach. They remove the barrier of
place (geography). Now sellers and buyers can meet in the virtual world, without the
hindrance of location. One other great advantage is the convenience it offers. A
customer can shop 24×7. The website is functional at all times, it does not have
working hours like a shop. It provides quick delivery of goods with very little effort on
part of the customer. Customer complaints are also addressed quickly. It also saves
time, energy and effort for both the consumers and the company.
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part of the world’s population has a mobile phone in their pocket. So the sheer size
of the market is tremendous.
START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-4
The government is very passionate about facilitating the ease of doing business in
India. Some of these initiatives include Start-up India which aims to help promote the
start-up culture in India. In addition, India encourages developing an ecosystem of
entrepreneurs, investors, along with incubation centres linking up with research
institutes as well as mentorship programs, tax and fiscal benefits and patent
registration rights reform. These create a system that helps start-ups help each other
to grow and promote the make in India initiative. Along with this, the government
encourages investment in start-ups with the removal of tax on angel investments and
cutting down taxes on Foreign Venture Capital in Indian Start-ups. Many start-ups
have sprung up all across the country in last few years in a wide variety of sectors of
the economy such as Agriculture, IT, Financial Sectors, Healthcare and Biotech
etc. With the addition of over 1,100 start-ups in the year 2019, India has continued to
maintain its position as the third-largest start-up ecosystem in the world, according to
the industry body NASSCOM.
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3. Reduction in Cost : Patent filing approach has been simplified. The Start-up
will enjoy a rebate of 80% of the fee in the patent application. The start-up will
bear only the statutory fees and the government will bear all facilitator fees. The
government also provides lists of facilitators of patents and trademarks. They will
provide high quality Intellectual Property Right Services including fast
examination of patents at lower fees.
5. Tax Holiday for 3 Years : Start-ups will be exempted from income tax for 3
years provided they get a certification from Inter-Ministerial Board (IMB).
7. R&D Facilities : The Start-up India programme will encourage research and
innovation among students who are aspiring entrepreneurs and seven new
research parks will be set up to provide facilities for start-ups in the R&D sector.
9. Tax saving for Investors : People investing their capital gains in the venture
funds setup by government will get exemption from capital gains. This will help
start-ups to attract more investors.
10. Choose your Investor : After this plan, the start-ups will have an option to
choose between the VCs, giving them the liberty to choose their investors.
11. Easy Exit : In case of exit – A start-up can close its business within 90 days from
the date of application of winding up.
12. Meet other Entrepreneurs : Government has proposed to hold 2 (Two) start-
up fests annually both nationally and internationally to enable the various
stakeholders of a start-up to meet. This will provide huge networking
opportunities.
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START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-5
Small town is neither a village, nor a city. Usually, a small town is considered to be
an urban centre with a population of 50,000 people or less. It is an economic
parlance representing the area providing liaison between rural centres and urban
places of significance. It is here that the forces of demand and supply converge. In a
country like India where agriculture and other primary activities engage more than 70
per cent of population necessarily requires settlements to bridge rural and urban
functionaries. The small towns constitute more than 60 percent of total number of
towns in India.
Small towns don't necessarily mean small business opportunities. If you're able to
launch a business that meets the needs of a small town while providing friendly
service, a small-town business can become a successful and lucrative venture.
Small towns offer business benefits like limited competition and lower operating
costs.
1. Abundant natural resources including land, water, minerals and solar power as
well as wind power.
3. Lower tax burden increases the competitive strength for starting a business.
5. Small Towns are free from air pollution or are less polluted.
When getting into the world of business, entrepreneurs may be tempted by the ultra-
modern atmosphere of the metropolitan cities or other large urban landscapes.
However, many advantages and plethora of benefits exists in small towns too for the
aspiring business owners.
Advantages:-
You don’t have to pay your employees as much as you pay them in
metropolitan cities because the cost of living will be less and they will also be
happier living in their home towns.
Everybody will live a stress-free, healthy and peaceful life. And it will also help
infrastructure development at your workplace
From office rent to labour, everything will cost you less and in a way, will
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increase your profits.
START YOUR SMALL BUSINESS IN SMALL TOWN
Myths:-
Having a business in a small town doesn’t necessarily mean that your business
would run slowly. Small town businesses all over are delivering large orders in a big
way. Let’s take a look at few benefits of starting a business in Small Towns.
1. More Affordable To Start Up : Starting a business in a big city can often require
a lot of costs up front. Real estate prices often match the size of the city, so your big-
city locations will be accompanied by big-city rates. That’s not to mention the cost of
living for you and your employees, nor the cost of doing business, with undoubtedly
more regulations, fees, taxes and potentially higher supply costs. Also, things like
marketing and advertising will also be much higher in a large city, due to your need
to stick out above the competition. However, starting in a small town community will
be far cheaper in almost every way. The land will be cheaper, as will renting or
leasing space. Of course, you should still do your own research on the area you
are considering starting a business in order to ensure that the prices are suitable for
you.
4. You Might Be Closer to The Raw Materials You Need : When most people
think of a rural community area, you might think of farms and the growing/production
of materials. As a result, if your business needs or uses a certain type of material, it
makes a lot of sense to start your business very close to those resources. This could
be anything from using wood for carpentry, using fruits to make jams or jellies, and a
wide variety of other things.
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7. Better Quality of Life : Traffic! Pollution! Crime! We know it’s not impossible to
navigate the difficult hurdles of big-city life, but it’s not easy. Small town living brings
a sense of belongingness, greater community involvement, a slower pace and less
unrest within the economy, all resulting in better quality of life.
If you are planning to launch a start-up that would work for clients abroad or if your
office work only happens in a cubicle with no clients visiting your place, then try
starting your company in a small town than a metropolitan city. This will surely give
others a lot of employment opportunities.
MNCs should start opening their offices in small towns, especially IT companies
which play a significant role in our county’s economic growth, and provide many
employment opportunities. A background check of employees who are already
working at MNCs would give the statistics of people belonging to small towns.
Companies like Infosys have already set an example by starting a training centre in a
city like Mysuru. If a lot more companies made this possible by getting into non-
metropolitan cities all over India, it would lead to more peaceful lives for many more
people.
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It’s high time that BPOs are established in small towns and cities. BPOs look for
good communication skills and there are lot of people from small towns who are
qualified enough to work there. And since everything happens through a phone or a
system, there will be no issues and the place of work won’t really make a difference.
When Start-ups or MNCs etc. start moving to small towns, many other business
vendors, from petty Chai-Wala to Vegetable seller, Rickshaw-Wala to Taxi driver,
Grocery stores to Super markets, will start moving to small towns. In practice, this
change can’t happen overnight, but at least a thought from entrepreneurs and start-
ups will surely make a large difference. The spreading of industries even in small
towns and villages would encourage the habit of thrift and investment among the
people of rural areas.
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CHAPTER-6
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By starting small, you ensure that you can survive the inevitable hiccups associated
with running a small business. Those entrepreneurs who begin with modest
operations can recover and learn from their mistakes without taking on a lot of debt.
If possible, self-fund your business idea and then go for funding when you can create
a growth story. This might cause you to break up your product/service offering into
smaller pieces so you can fund the early stages and get some traction and
experience. Starting small will help your small business grow into a successful
enterprise.
Do you really need a full time bookkeeper or could you do just as much by
outsourcing the task to a third party?
How much money is spent on IT and HR to manage your staff of thirty? Could
that money be spent elsewhere to grow your business?
Do you really need a full time sales team or could you outsource it when you
launch a new product or in times of expansion?
2. Higher chance of Success : Eight out of every ten businesses fail within the
first five years. However according to the findings of research studies, 62 percent of
very small size businesses are over five years old." So it stands to reason that the
smaller the footprint, the higher the chances are for success over the long haul.
3. Ability to Scale and Grow Responsibly :And the third reason, Small
businesses are a good idea, has to do with scaling and growing responsibly. As your
business grows, you are going to pay close attention to your profit margins and
adjust accordingly. It is much easier to hire as you go, then to downsize to maximum
profits. So by starting small and making smart decisions, you can grow into your
business.
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START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-7
Some people might think that it is very easy to start a small business if you have
sufficient amount of money for the business. Talk to any entrepreneur or small
business owner and you'll quickly learn that starting a business requires a lot of
work. It requires so many decisions and steps to be taken at various stages. You
have to take decisions about the nature of business, location of business and
sources of raising necessary capital. You also have to take a decision regarding
physical, monetary and intellectual resources. Generating a business idea is a great
starting point, but an idea doesn't become a business without effort. Some budding
entrepreneurs understand the effort necessary to create a business, but they might
not be familiar with the many steps required to launch a business venture.
If you are also thinking of starting up a business, there are certain basic steps which
may be followed though the procedure for setting up a business is not the same for
all types of businesses. Let us discuss about some of the important steps in setting
up of a small business unit.
While selecting a particular product you have to conduct market and product analysis
from the viewpoint of consumers. The data on consumers’ preference and needs are
to be collected by using various market research techniques. You may survey the
local area to find out the demand for any product. If the existing demand is
substantial or growing in the area then you may consider to select that particular
product. You may also foresee some new opportunities expected to arise in near
future due to any change in social, political and technological activities. The various
developmental initiative of the Government also generate other related activities. In
any case, the selected venture must have the scope for a reasonable quantity of
sales volume and the possibilities for growth.
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A.1. Sources of Ideas: A business idea may be discovered from the following
sources:-
ii) Prospective Consumers: Consumers knows best what he wants and the
habits/tastes which are going to be popular in near future. Contacts with prospective
consumers can also reveal the features that may be converted into a
product/service. These days good business firms generally conduct a survey among
prospective consumers before choosing the product to be manufactured.
A.2. Study of Project Profiles: Many government and private agencies publish
periodic profiles of various projects and industries. These profiles describe in detail
the technical, financial and market requirement and prevailing position. A careful
scrutiny of such project profiles is very helpful in choosing the line of business.
ii) Trade fairs and exhibition; National and international trade fairs are a very good
source of business ideas. A visit to these fairs provides information about new
products/machines. Trade fairs and exhibitions provide opportunities for assessing
the market trends in terms of demand potential and type of products required. It also
helps in assessing the attitude of the competitors in a particular product or marketing
area.
A.3. Process the Ideas: Once business ideas are discovered, screening and testing
of these ideas is carried out. The following considerations are significant in the
evaluation and testing of business ideas.
After preliminary evaluation of the idea, the promising idea is subjected to a thorough
analysis from all angles. Full investigation is carried out in the technical feasibility
and economic viability of the proposed project. Financial and managerial feasibility of
the ideas are tested. At this stage, a lot of information is required. Consultations with
experts in various area of the industry may be necessary to carry out the detailed
analysis.
After the evaluation of a business idea is completed, the findings are presented in
the form of a report known as Feasibility Report or Project Report or Business Plan.
This report helps in the final selection of the project. It is also useful for procuring
licenses, finance etc. from the concerned agencies.
A.4. Idea Selection: The Feasibility report is analysed to finally choose the most
promising idea. Generally the following considerations influence the selection of idea
for a product or service:-
After considering the various factors an entrepreneur should analyse and compare
pros and cons. A selection matrix may be prepared for this purpose. The matrix
indicates the type of diverse data that needs to be collected for each project. It also
throws light on each item that hold some encouraging and some discouraging
factors. The entrepreneur must consider all these factors into account.
A.5. Input Requirement: Once the promoter is convinced of the feasibility and
profitability of the project, he assembles the necessary resources to launce the
enterprise. He has to choose partners/collaborates, collect the required finances,
acquire land and buildings, plant & machinery, furniture and fixtures, patents and
employees etc. Decisions have to be made about the size, location layout etc. of the
enterprise. The form of ownership organisation has to be selected. The main inputs
required for launching enterprise are as follows;
ii) Personnel: People are the most valuable asset of an enterprise and this asset
does not appreciate. An entrepreneur has to make the following decisions
concerning the personnel;
Number of personnel required for management, technical and other positions
in the enterprise.
Qualifications and experience required in the personnel to perform the jobs
effectively.
Sources of recruitment from which the needed staff will be procured.
Procedure and methods of selecting the best candidates.
System and criteria for evaluating the performance of employees.
Procedure and methods of selecting the best candidates.
Policies and methods for remunerating the personnel.
Facilities to be provided by the safety, health, welfare of the staff.
A.6. Establish the Enterprise: This is the last step of entrepreneurial system. It is
very important step. In this phase the entrepreneur integrates the resources and
establishes the enterprise.
B.1. Pay attention to fields that are always in Demand : There are particular
business niches that don’t depend on seasons and crises. For example, people will
always eat and drink, get dressed, take care of themselves and visit doctors.
Basically, everything concerning people’s daily routines and principal needs will
involve businesses that are “recession-proof.” Analyse the availability of shops
and pharmacies in your area. Is there a supermarket in your neighbourhood, or do
you need to go across town? Figure out what is missing and what is already in place,
and then explore how your skills and experience can fill the gaps.
B.2. Consider Purchasing Power : You’ll probably agree that selling certain
exclusive, expensive items may be high-risk. Sophisticated fashion boutiques, car
showrooms, VIP beauty salons, venues like these won’t be a success in every small
town. Similar start-ups may not be good business ideas for small towns because of
the high risk. Instead of getting a profit, you could lose money.
B.3. Attract Tourists : Tourist towns have their own advantages. Look at the
cosy little stores, workshops, cafes and family businesses in small European towns.
You can choose to follow this line in your hometown and turn your business into a
local attraction. You could promote local traditions and crafts, combining them with
souvenirs or unique dining experiences.
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B.5. Go Online : Today the Internet gives business owners more opportunities,
so why not grab them? The type of business and its target audience affects online
results, so before you start make sure you’ll be able to take full advantage of this.
You can be in your small town and operate through online. Keep your small business
feel, while using the internet to reach a broader audience. But, make sure that you
keep a special space for your locals, offer discounts for locals or personalized
services that you can’t find on your site. For example, if you’re thinking about
opening a farm food store, maybe it’s worth complementing the business with a
website and delivery service. Right away, the online presence and delivery service
will make you stand out from your competitors. At the same time, you’re providing
additional opportunities for scaling up your business later. Once your website gains
some traction you can use advertising as a stream of passive revenue.
B.6. Businesses based on Local Products : The idea is that you buy from the
local community and then sell those goods in bigger towns or cities at higher prices.
As a rule, local produce (fresh vegetables, fish and farm produce) is relatively
inexpensive. Popular options for businesses based on local products revolve around
food items such as fresh-baked bread, farmed vegetables or locally harvested
honey.
B.7. Small-scale Production : You can produce goods for sale in other cities or
within your town. This could be anything including furniture, metal working products
or even soap. Use your imagination and explore your town’s market. You’ll likely find
a niche quickly! On a special note, production costs in a small town tend to be much
cheaper.
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In choosing the right forms of business organization for your enterprise, you must
consider the characteristics of an ideal form of organization. These are as follows:
The formation process should be easy and simple. The formation should not
involve many legal formalities and it should not be time-consuming.
The form of organization should facilitate the raising of the required amount of
capital at a reasonable cost. If the enterprise requires a large amount of capital,
the preconditions for attracting capital from the public area) safety of
investment b) fair return on investment and c) transferability of the holding.
The responsibility for management must be in the hands of the owners of the
firm. The day-to-day operation and management operations should take care
of properly.
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Sole Proprietorship;
One Person Company
Limited Liability Partnership
Private Limited Company
Public Limited Company
Joint Hindu Family Business
Co-operative Organisation
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Private Limited Company: A private limited company (Pvt Ltd company) is one of
the most common forms of business organization. Any individual can carry on
business for an entity intending to make a profit and enjoy the benefits of an
incorporated entity, particularly limited liability. A private limited company stands
between partnership and widely owned public company. In addition, there are
several identifying marks of a private limited company. The list includes a name, a
number of members, shares, formation, management, directors, and meetings,
etc. The maximum number of directors shall have to be mentioned in the Articles
of Association. In the grant of privileges and exemptions, the Companies Act has
drawn a distinction between an independent private company and other private
company which is a subsidiary of the other public company.
Joint Hindu Family Business: In JHF business, there must be at least two
members of the family, and family should have some ancestral property. It is not
created by an agreement but by operation of law. The JHF business is a jointly
owned business. Hindu Succession Act 1956 governs this type of organization in
India. Generally, the senior most member of the family (Karta) manages the
business. Other members do not have the right to participate in the management.
The Karta has the authority to manage the business as per his own will.
Additionally, no one can raise question about his ways of managing. If the
coparceners are not satisfied, they can dissolve the HUF status of the family by
mutual agreement.
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C.4. Financial Planning: A business cannot be started and run without sufficient
amount of capital. Capital is required to buy fixed assets like land, building, machines
and equipment. Capital is also required to buy raw material and meet day to day
expenses of the business like salary and wages, electricity charges, telephone bill,
carriage, etc. An estimate has to be made regarding the amount of capital required
for the various purposes and decisions taken regarding the sources and methods of
raising it. The amount to be contributed by the owners and the amount to be
borrowed from financial institutions, banks, etc. must also be decided well in
advance.
C.6. Physical Facilities: Decisions have to be taken regarding Plant & Machinery,
equipment’s to be procured for the business, building and other physical facilities like
Water, Power Supply, and Transportation etc. The factors that may affect the
decisions in this regard are the size of business, techniques of production to be
used, availability of funds, etc.
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C.8. Construction of Physical Building: Once an industrial plot for the unit is
secured, then the next job is that of finding a suitable architect. Design of factory
building has to be in consonance with the type of industry. It should also take care of
the requirement of plant layout. It should be noted again that an architect's estimate
of building construction is essential for loan applications. Further, architect's
certificate for money spent on building is needed for disbursement of loan. After the
construction of building is over the interiors are designed according to the need of
specific industry.
C.9. Getting the utility connections: Among the utilities of prime importance are
power and water. In many cases getting power connection causes delay in setting up
of plant. Therefore it is imperative to commence work on these aspects with diligent
follow up.
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C.11. Plant Layout: After selecting the machinery and equipment required, it is
necessary to decide about their installation in a proper manner. This is called plant
layout. A good layout makes the operations efficient and economical. It reduces the
cost of material handling, storage of inventory, use of space etc. It helps in optimum
utilization of all resources.
C.13 Raw Materials: Raw materials are an important input for producing goods. To
maintain continuity of production, raw materials must be available in adequate
quantity and in nearby areas. On the other hand, non-availability may result in
production hold-ups, idle machine and manpower. For essential imported raw
material whose lead time are large proper planning is all the more essential. The
advice of DIC, SISI and NSIC can also be sought in this regard. Therefore, material
procurement plan should be decided in advance for ensuring their sources of supply.
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CHAPTER-8
Business Plan is not only essential for a start-up, but it's an important tool for
established businesses too. Viable businesses are dynamic; they change and grow.
The company's original business plan needs to be revised as new goals are set.
Reviewing the business plan can also help you see what goals have been
accomplished, what changes need to be made, or what new directions your
company's growth should take.
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Objectives - The short term and long term objectives of the new business
venture.
Market Analysis - The business plan should dwell upon the prevailing
competitive environment with a view to convincing the investor that his/her
product/service is a niche product or service with substantial prospects for growth
and capable of attaining a competitive position in the market.
Quality - The quality control measures to be put into place for ensuring quality of
the product/service.
Financial Plans - A new venture must show projected profit and loss statements
and cash flow statements.
Form of Business - Describe the legal form of your business - whether it is a sole
proprietorship or a partnership, public limited co., private limited co. or society etc.
Critical Risks - As a legal and moral obligation, the entrepreneur must, in the
business plan, envision risks the investor would be undertaking in case he makes
a choice to invest in your business. This will protect you from civil and criminal
liability.
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CHAPTER-9
Lining up Support : You'll look for support from key players of the town. Attend
town committee meetings to meet local politicians and pitch about your business to
them. Their feedback can help you determine the potential viability of your business.
Do what you can to get to know these key figures and give them copies of your
business plan.
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Stay a Step ahead of the Market : The ingredients for success in a small
town are the same as anywhere else, but with a healthy dose of localized flavour.
Businesses that never change are now forgotten. Even if your town never seems to
change, there are always changes in trends, people and technology. Entrepreneurs
not innovating are actually losing ground. Whatever you sell through your business
but ultimately you are going to sell an experience. In today's world of social media
and the internet, people want to know who you are and what makes you outstanding
in your field. When it comes time to open your doors, be sure to make a favourable
lasting impression. Offer a special promotion to entice customers to stop by, for
example by giving away merchandise or holding a contest. You can also give the
residents a feeling of inclusion by presenting them a personalized invitation that they
can redeem for a prize upon visiting your business.
1. Attend two or three industry trade shows a year. There are trade shows for
virtually every industry, from high tech to pest control. Find out about conventions
through industry organizations. Attend to learn about emerging business trends in
your field.
2. Visit other companies. Use contacts made at industry functions to schedule field
trips to study other successful businesses. Companies may not share their best
secrets, but some will talk about their success and emerging trends they have
spotted.
4. Hire people who have worked at other successful companies -- including interns, if
you own a business. Bringing in people who have worked somewhere else is an
excellent way to find out about what other companies are doing. Even an intern who
worked for a leading Wall Street investment firm the previous summer may share
lessons learned about emerging business trends.
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CHAPTER-10
Over the years, the Central Government has formulated policy packages for the
promotion and development of the sector and has been implementing a large
number of schemes and programmes. The policies and programmes implemented
by the Ministry span across different areas of operations of MSMEs, covering credit,
marketing, technology, skill development, infrastructure development, fiscal matters
and legal/regulatory framework. These programmes are implemented through
various organisations under the Ministry, commercial banks, development banks and
the State/UT Government.
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The govt. policies can range from being relevant to multiple sectors or may be
specific to a single sector. Policies are of extreme importance as they can determine
the growth potential as well as the ease of doing business in a particular industry.
Therefore, once an entrepreneur has taken all the important decisions relating to
starting a business, they should pay sincere attention to such govt. policies.
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CHAPTER-11
A.LEGALASPECTS:
It’s critical for entrepreneurs to have basic legal knowledge. While start-ups innovate
to affect society in general and laws of the land have to catch up to them, there are
specific legal aspects that an entrepreneur needs to know about. Nurturing a new
business includes many things. One such stepping-stone is knowing basics of the
start-up laws. Before diving into a deep legal sea, let’s have a look at the vital start-
up laws with which you can start the long journey.
i. Choosing the type of Venture: The most important thing while thinking of starting
a business is knowing what kind of organization you want to set up. It can be a
private limited company, public limited company, partnership firm, or a limited liability
partnership. Before taking this decision, it is indispensable to analyse and ponder
upon the practicality, visibility, sustainability, aptness and related profits that are
expected from this type of organization. Structuring the organization and business
vehicle may take some time. It will vary according to your long term objectives and
vision. Each form of business will be governed by separate laws and not complying
with them means loss in the form of heavy fines before you can even start making
profit.
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ii. Basics of accounting and tax related laws: Running any kind of business
means that one has to pay taxes to the Central/State government or local bodies.
Therefore, it becomes a necessity for every new entrepreneur to be aware about
accounting details and tricky lanes of the taxation world. Different sectors have
diverse tax laws and it is imperative to be acquainted with any recent changes that
have taken place. In fact, tax laws change according to geographical region and the
kind of business/product too. It is always beneficial to keep a record of accounts and
go through them periodically to adopt best practices. Taxation information according
to area and sector of work will help in retaining and improving the financial and legal
strength of any organization.
iii. Securities laws: Familiarity with Securities laws which is carefully regulated by
the Securities and Exchange Board of India (SEBI) will aid in easing out the process
of listing. Keeping a track of various updated regulations issued by SEBI will assist in
managing the various stages of nurturing a new business, including fund-raising.
Foreign direct investment, angel investors, crowd funding, venture capitals and even
joint ventures are areas that a new entrepreneur must be aware about.
iv. Business finance: Business finance means the way you manage your start-up’s
financial needs across its life cycle. This includes everything from FDI (foreign direct
investment), angel investors, VCs (Venture capitals) or even joint ventures. This will
take your business to the next level.
v. Labour laws: Each start-up will eventually have to hire new people. Even if you
plan to outsource or employ independent consultants, every such employee-
employer relationship will be directed by labour legislations. Breaching these will not
only harm you financially but also spreads a negative review about the start-up even
before you initiate it. Productivity of employees and ultimate success of the start-up
are dependent upon how happy your employees are to work for you.
B. REGULATORY ASPECTS:
In regulatory role, the government directs businesses for their actions. This is
executed by standardizing the code of conduct, norms and regulations in domestic
environment. Government of India has the foremost objective of social welfare,
hence they control the business and economic activities in such a way that it benefits
the society and buyers. Regulating it involves ceiling the prices, rationing the goods,
imposing taxation on excess profits, allocation of foreign exchange, adding
restrictions on foreign trade, industrial licensing etc. It is mainly done by two ways:
Discretionary Measures
Non-Discretionary Measures
There are also regulations that relates to quality management by a firm. Bureau of
Indian standards has been set up by the Government for enforcement of quality
standards in the country. It provides a framework for quality management throughout
the processes of producing and delivering products and services for the customer.
The scheme covers a wide range of industry and service sectors. A sound quality
control mechanism ensures that a firm produces products that match prescribed
standards and thus boost the growth of the firm.
An entrepreneur has to take into account the basic regulatory requirements of the
country in order to ensure sustainability of the profits and productivity of his/her
business. These regulatory requirements ensure that the organisation is functioning
as per the statutory framework of the country.
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CHAPTER-12
A. STANDRADS:
Standards are an established norm or requirement. It is usually a formal document
that establishes uniform engineering or technical criteria, methods, processes and
practices. Standards make our lives easier, safer and healthier. Without them, many
everyday actions we take for granted would be unpredictable. Standards help to
make many of the products we use safer and more reliable. They are fundamental
building blocks of society, representing a common commitment to quality, safety and
ethical practice.
Product standards are specifications and criteria for the characteristics of products.
Process standards are criteria for the way the products are made. Social and
environmental standards in agriculture are essentially process standards. These
process criteria might or might not influence the characteristics of the end products.
Process standards can be further divided into management system standards and
performance standards. Management systems standards set criteria for
management procedures, for example for documentation or for monitoring and
evaluation procedures. They do not set criteria for the performance of the
management system in terms of what actually happens in the field or the packing
station. Performance standards, in contrast, set verifiable requirements for factors
such as the non-use of certain pesticides, or the availability of sanitary services.
Types of Standards
1. National Standards
2. International Standards
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B. STATUTORY LICENSES:
An individual who wishes to run a business not only has to research and finalise his
business plan, funding and servicing/product model but also comply with various
regulations and obtain the required licenses in India. Business licenses are primarily
issued by the government to allow individuals to run businesses. It is important to
note that a license would be issued will be based on the business requirements of
the organisation after its registration or incorporation. However, there are various
other factors which may also determine the type of license which has to be issued
such as the type of business ownership, business location and number of employees
among others.
There are various types of business licenses issued in India. For Examples, following
types of licenses and documents (indicative) are required while planning for starting
a new business in India,
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CHAPTER -13
This step essentially involves two things. First is estimating the requirement and then
deciding about the sources and their proportion. You are well aware that business
cannot run without capital. Adequate capital is required to establish any business
whether it is small or big. The capital requirement of a business is of two types, (a)
fixed capital and (b) working capital.
Fixed capital refers to funds required for acquiring fixed assets like land, building,
machinery and equipment’s, whereas working capital is required to meet the routine
expenditure like payment of salary, wages, electricity and telephone bill, purchase of
raw-materials, payment for transport, etc. The amount of capital required by a
business depends upon a number of factors like nature of business, size of
business, production process, technology used etc. Let us now make up some of
these factors.
(a) Nature of Business: The business may be in the form of a manufacturing unit, a
service undertaking, or a trading concern. In a manufacturing firm larger amount of
fixed capital is required for land, building, machines etc. which require more funds to
be invested. In a trading concern fixed capital requirement is lesser as the fixed
assets like furniture etc. do not involve large investment.
(b) Size of business: The amount of fixed capital required also depends upon the
size of business i.e., larger the size greater will be the need for fixed capital.
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Following are the various factors that need to be considered to estimate the requisite
amount of working capital.
(a) Proportion of cost of raw materials to total cost: If the raw materials account
fora major portion of the total cost of the finished product, more working capital is
required.
(b) Cost of labour: If labour intensive methods of production are used more working
capital will be required.
(c) Length of operating cycle: If more time is taken in the completion of the
production process and the sale of the products, higher investment will be required in
inventories and wage bills and hence more working capital will be needed.
(d) Terms of purchase and sale: If raw materials and other services are available
on credit and goods produced are sold for cash, less working capital investment will
be involved. On the other hand, if raw material is to be purchased for cash and
goods produced are sold on credit, larger amount of working capital will be
necessary.
(e) Cash requirements: The amount of cash needed to meet the operating
expenses like wages, rent, freight, taxes etc. also determine the amount of working
capital.
C. SOURCES OF CAPITAL:
The financial requirement of any business can be met from (1) Owners’ capital; and
(2) Borrowed capital. The owners’ capital is provided by the owners from their own
savings. But this may not be sufficient to meet the total capital requirement of
business. So, the business needs to borrow capital from the outsiders. Money can
be borrowed from friends, relatives, moneylenders, and commercial banks. Then
there are some financial institutions which provide capital support on easy terms to
small-scale units. The manufacturers and suppliers of raw materials and goods also
provide support in various ways. In case of certain type of goods in high demand, the
customers may give advance money to the supplier, which also acts as an important
source of finance.
From all the above sources the business can get the required funds in various forms.
For example, commercial banks provide funds in the form of cash credit, overdraft,
discounting of bills and loans. The suppliers and manufactures give trade credit,
instalment credit to the traders.
Look to the following resources to help you with securing start-up capital;
Family and friends – sometimes the people closest to you, who see your
passion for the business, are willing to invest in the company’s future.
Bank loans – while bank loans have typically been considered the most
traditional form of financing for new start-ups, they can be challenging for
young entrepreneurs to obtain due to their limited business and industry
experience, limited credit history and limited equity in the business. However,
many banks are willing to invest in young entrepreneurs, provided you have a
solid business plan that addresses these concerns and demonstrates that you
have a well-thought-out plan to overcome these obstacles.
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Crowd funding – “crowd funding” has become a popular financing option for
private start-ups. The practice of funding a venture by raising monetary
contributions from a large number of people, typically via the internet, has
increased due to the number of websites that provide crowd funding
opportunities. There are several different types of crowd funding: reward-
based (pre-sell a product or service), equity-based (sell unlisted shares) and
credit based (borrow amounts that are subject to interest and principal
repayments). You should work with your business advisors to determine
which option may be best for your company.
Angel investors – angel investors can be another good source for not only
getting funding for your private business, but gaining mentors and industry
experts that are willing to guide you along your business journey. They might
be more willing to provide funding to your business because they have an
interest in your product or service that goes beyond a simple return on their
investment. If you’re considering this source as a financing option, keep in
mind that angel investing firms can require equity in your business and you
may be required to take on partners who could expect to play an active role in
management of the business.
Applying for a business loan can be both stressful and exciting at the same time. If
you are on the verge of starting your business, you need to acquire sufficient capital
for the same. For obvious reasons, your first preference will be banks or government
agencies since they are the most popular sources of funding for any start-up venture.
However, before making an official loan application, there are a few things that you
should know and take into consideration;
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ii. Set a Realistic Budget: Your budget will indicate if you have the sufficient funds
to handle the capital expenditure and business expansion plans. Have a plan in
place to monitor the financial impact of your business decisions and operations. This
will enable you to compare the estimated financial goals with actual numbers. In
essence, it acts as a measure to keep the performance under radar. The budget
should be adjustable with your business loan. You may also split it up in different
departments such as sales, marketing, production etc. Another option is to seek the
help of professionals such as financial advisors or bankers for a more flexible
budget.
iii. A Clean Personal Credit Record is a Must: Your lender would definitely verify
your credit worthiness. They would like to know your credit history. Hence, make a
copy of your credit report before you apply for a loan. If you find your credit report to
be less than perfect, then fix it. You will require some time to rectify the flaws, but
you need to be patient about it if you are to earn the trust of your lender in the very
first meeting. Moreover, you should also consider having personal references too. If
someone who is known and respected can provide good feedback on your behalf, it
will instantly turn things to your favour. Similarly, you should have your tax returns
documents of the past few years beforehand in case the lender wants to review your
personal income history.
v. Repayment Tenure and Interest Rate: Factors to consider while applying for
your business include repayment term length, interest and payment amount. Term
lengths determine how long you have to repay your loan. The longer the repayment
period, the smaller each payment will likely be. However, longer repayment periods
also mean more time for interest to build on the money you’ve borrowed. So while
you may have smaller, more manageable payments, you’ll also end up paying more
money over a longer period of time. The amount of your monthly payments, which
will generally be influenced by term length, is important to keep in mind. Monthly
payments that are too large to manage will leave you with depleted cash reserves
and a taxing debt obligation hanging over your head. In the worst case scenario, you
may simply not be able to keep up with the payments, leading to a default on the
loan and potential loss of your business. Finally, remember the role interest plays in
repayment. The higher the interest you’re being charged, the faster you’ll want to pay
off your loan. More interest means more money spent, and even smaller loans can
end up costing a fortune if the interest charged on them is too high.
vi. Determine the Collateral that You Can Submit: Apart from being credible,
trustworthy, and knowledgeable, the lender will be eager to know that you can pay
him/her back on due time. They will try to figure out what collateral you can use to
back the loan. You can submit anything that can be easily converted into cash, and
is equal in value (or greater) than the borrowed loan amount. Any of your
personal/business assets having tangible value will help you secure the loan and
reduce the exposure to risk.
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vii. Risk Management: A part of your business loan must be saved for any probable
risks. Establish a risk contingency budget for unforeseen circumstances. This budget
will contain funds that can be tapped so that your project doesn’t exhaust the
assigned expenses. Consider two factors while planning a risk contingency fund- the
probability of occurrence of risk and its impact on your project. We hope you are now
in a better place to align your budget with the small business loan.
Sl. Documents
No.
1. Loan Application Form
Latest Bank Statements for last 6 months (in case of First Time Borrower)
and 12 months (in case of Takeover proposals). In case of multiple banking,
statements covering minimum 75% of banking turnover is to be provided.
4. Financials:
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CHAPTER-14
There are at least five ways to manage business loan repayment and improve your
chance of succeeding in business.
i. Minimize your cost of living: Whenever you start a new business, cash flow is
usually the biggest hurdle. You may even start the business with no cash flow at all.
This situation can be at least partially offset by having a substantial amount of cash
reserves that you can live off of for the first few months of operations. Any debt that
you can pay off completely will be one less obligation you will need to cover out of a
limited cash flow. That alone will improve your chances of succeeding in business.
Cash flow is one of the biggest reasons for early business failures, and the better
that you’re able to manage it, the less likely it will be to put an early end to your
business.
ii. Have a clean balance sheet at a time of transition: Any time you start anything
new, you should try to do it from a position of financial strength. A clean balance
sheet is a sign of that kind of financial strength. Balance sheets are comprised
of assets -- physical goods and financial instruments -- that represent the capital that
you have available. On the other side of the balance sheet are liabilities. They
represent liens against those assets, and a reduction of your net worth.
A balance sheet is never very important on a personal level. But once you start a
business it suddenly becomes significant. Not only will future lenders be interested in
the financial strength demonstrated by your balance sheet, but so will potential
vendors, partners and even major customers. Each may want to know that you have
the financial stability necessary to enter into long-term contracts. The time to clean
up your balance sheet is before you start your business. It will be much more difficult
to do so after the fact, when your primary concern will be surviving the early months
and years of building your business.
iii.Clear your head: Once you start your business, you will have concerns that you
never had as a salaried employee. As stated, cash flow will be a constant concern.
But you will also have to worry about marketing, supply chains, coordination with
subcontractors and meeting customer/client obligations. If you also have a bunch of
debts that need to be paid each month, it will add a level of worry to an already
crowded mind. If you have a concern that’s even modest in scope before you start
your business, it will only become more so later on. You have a lot to juggle when
you’re an entrepreneur, so you should do all you can to minimize the number of
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concerns that you have. Paying off debt is an excellent way to keep your head clear,
and fully focused on your business.
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v. You may need to borrow later: When starting a business, most people can
easily envision the need to obtain credit to get the operation up and running. But an
even greater need can arise a year or two later, when you need additional capital to
expand the business. Let’s say that your business is 2 years old, and you’re earning
enough money to live. But if you could buy certain equipment, or move to a more
strategic location, you could double or triple your cash flow. If your ability to borrow
fresh capital is impaired by too many old debts, you may not be able to get the
necessary cash for expansion. Think of getting out of debt as a form of keeping your
powder dry for a more important financing needs later. The success of your business
will rely on long-term thinking and planning. For that reason, you may be well
advised to delay the opening of your business until you have a chance to pay down
debt, and to pay off certain specific debts entirely. The success of your business
could hang in the balance.
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START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-15
Quite a lot of opportunities are available if you are having trouble to repay the loan.
And avoid these situations is advisable than finding resolution for defaulted
payments. Delinquency is the term used by banks and NBFCs when the borrowers
make late payment on the outstanding loan amount. In most of the cases banks will
charge a fee on the late payment and will let go off the delinquency. This is only in
the scenario when late payments happen once in a while, but if you tend to keep
delaying the payments often, then banks will start charging you more and more and
will also add you to the defaulter bucket.
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Though usually in most cases, most banks will categorize a borrower as defaulter
only when there are default of making payments for three instalments. However, it is
totally up to the discretion of the lender to decide when to term the borrower as a
defaulter. While some banks consider you as defaulter right at the very first payment
delay, other might give you couple of chances. If you tend to have too many loan
slips, then the intensity of lender approaching you will go up. This is where the real
issue lies. Again banks have different way of approaching these delayed payments.
Some will directly tag you as the defaulter, while others will appoint third party to
collect repayments from the defaulters.
Here some of the most depressing aspects of loan defaults are covered, but it’s now
time to check how to avoid this situation on your outstanding loan;
i. First of all, Talk to Your Lender: The first best move is always to call up the
lender directly and letting them know your present situation. If you are in a state to
not pay the loan amount for couple of months, then give them the surety that you are
looking to clear of the debts within a specific period of time. This will help in getting
some time from them before they term you as defaulter.
ii. Debt-Consolidation: One of the common problems with every business is short
term debt. In such situations, it is advisable to have a macro view of the problem and
try to clear all the petty ones with one single low-interest big loan. Something like
Debt consolidation is a great option. This has lot of pros and cons thus check the
details before taking this approach for your business loan. Also while doing debt
consolidation, make sure your personal debts are not clubbed with business debts.
iii. Prioritize Your Debts: It’s true that lot of money will go in and out of business but
prioritizing them is very crucial. If you have some payments to be made by end of
month and early this month, it is advisable to clear the early outstanding if you are
expected some additional money to flow into the business. If the case is otherwise,
prioritize which expense is very crucial and clear the same. However, have an open
conversation with those lenders to whom you owe.
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CHAPTER-16
MANAGING A BUSINESS
After a business has been set up and established, it must be managed properly.
Proper management reduces risk of failure by ensuring that the day-to-day business
aspects are handled correctly. Management includes leading the business and
ensuring that the best decisions are made. Management is responsible for handling
employees and ensuring that correct marketing strategies are implemented. Issues
such as taxes, insurance, and human resources are also handled by management.
Business management involves handling legal issues, matters, and concerns.
Financial aspects, such as expanding or growing the business, are the responsibility
of management. As business management is an invaluable component to success, it
is imperative that only those who are qualified fill these positions.
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An entrepreneur with good managerial skills can convert the disorganised resources
of men, money, material and machinery into a productive business enterprise. In a
modern business, different types of skills are required in order to effectively manage
an organisation in a dynamic environment. These skills include:-
Conceptual skills: - comprise the ability to see the whole organisation and
the inter-relations between its parts. Such skills help the entrepreneur to
conceptualise the environment and to take a broad and farsighted view of the
organisation. These skills include the competence to understand a problem
facing the organisation in all its aspects and solving the problem. It is
necessary for rational decision making.
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CHAPTER -17
For many entrepreneurs, growth is the key to opportunity and success. While many
new private business owners enjoy the hands-on approach to managing a business,
sometimes planning for growth needs to incorporate a team approach. Some
strategies for you to consider when planning for growth include;
Consider hiring a management team to take some burden off your shoulders
and to give you sufficient time to continue to grow your business.
Involve your management team to help grow the company by including them
in strategic initiatives such as product development, marketing, financing, IT,
as it can help generate fresh new ideas.
Analyse your initial business plan with your management team members to
determine what has worked well so far and what has not. Have you
implemented all of the ideas that you had in your initial business plan? Are
there strategies that you haven’t implemented and can you implement these
strategies now? Did you initially face certain barriers (i.e. lack of technology or
financing) that no longer exist and therefore are there ideas that you couldn’t
implement previously, but can be implemented now? Consider all items in
your business plan - marketing/advertising/ financing/IT and update or
develop a new business plan that has a focus towards the growth of your
business.
Continuously keep an eye on your industry and competition to ensure that you
stay ahead or at least don’t fall behind in products or services that they may
be providing. Consider if there is a different method or way to provide similar
services to give you a competitive advantage and look at trends in your
market.
Initiate regular brainstorming sessions to determine fresh and new ideas with
your team members to improve the current product or service, or look to offer
new products or services.
Be sure to actively involve your business advisors in your growth plan. They
will help you identify and address any business, legal, tax or regulatory risks
that your business could face.
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Some individuals that you should consider to include in your professional network
are;
Lawyers – they are essential to help you ensure that you have appropriate
permits, licences, approvals and certificates from federal, provincial, local,
municipal and foreign governmental, administrative and regulatory authorities.
They will ensure that you have appropriate copyrights, trademarks and
employment contracts in place to ensure that your product or service is
appropriately protected from any current or future competitors.
Bankers – a trusted banker assist you in the early stages to decide if getting
a bank loan is the right option for you or if you should consider alternative
sources for raising initial funds. If a bank loan is a good option for your private
business, you can benefit from their advice to ensure your business plan
addresses factors used by banks when making loan decisions. This may
increase your chances of getting that initial bank loan to get your business off
the ground.
Every entrepreneurial journey is unique and represents the dedication, sweat and
tears that ultimately lead to success. Remember, your entrepreneurial journey will be
a unique experience and you don’t have to go at it alone. Maintaining a strong focus
on your private company’s vision, along with surrounding yourself with a dedicated
support team will help you achieve your goals and plan for success into the future.
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CHAPTER -18
To safeguard a new or established business from falling into the 80% of failed cases,
it is necessary to understand what can lead to business failure and how each
obstacle can be managed or avoided altogether. Some of them are related to
learnable business skills, others relate to personal attitudes, habits, or self-
sabotaging belief, which are not so easy to change, except through coaching or
through other self-development activities.
1. Mistaking a business for a hobby: Just because you love something doesn’t
mean you should convert it into a business. Too often businesses fail because
the owner feels their passion is shared by others. Research your business idea
and make sure it’s viable. Do others want/need what you're selling at the price
you want to sell it at?
2. Poor planning: Yes, you must have a business plan. It can be a simple three-
page plan or a huge 40-pages plan. You don’t need a business plan just for
outside funding. Business Planning Process forces you to go through all areas
which require careful thinking. Your plan must always be based on realistic
assumptions with careful analysis of future scenarios. The point is that you’ve
looked at all the aspects of your business and are prepared to handle problems
when they arise. Your business plan helps you to focus on your goals and your
vision, as well as setting out plans to accomplishing them. And don’t get mellow
– revisit and revise your business plan annually.
4. Putting all your eggs in one basket: Too often, small business owners will
have just one product, one service or one big client. They cling tight to this one
thing because it brings in good revenue. But what if the one thing
disappears? Variety and diversification will cushion you against the ebb and
flow of business tides.
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5. Poor record keeping and financial controls: Yes, you have to keep financial
and business records, you have to review your revenue and expense report
each month, and you have to file taxes and other business-related filings. If you
don’t know how to do these, or don’t want to, get help from someone who does.
7. Poor money management: You need to be able to live for one to two years
without income when getting started; often businesses are very slow to get off
the ground. Also, you have to create and use a realistic business budget and
not constantly drain the business income on personal spending.
8. Wrong location: If your business has a "bricks and mortar" location, you need
to make sure that you are convenient to your customers and near to your
suppliers and your employees. Even something as simple as traffic patterns and
parking can make or break your business.
9. Competition: Customers will go where they can find the best products and
services. Business can face competition from many areas. It’s important for you
to know who your competition is, what they have to offer and what makes your
own products or services better.
10. Procrastination and poor time management: Putting off tasks that you don’t
enjoy will sink your business faster than anything else. You can’t afford to waste
time on unimportant tasks while critical tasks pile up. All tasks need to be done
if you don’t like to do them (or don’t want to spend your time doing them), hire
someone to do them for you. If your time management and prioritizing skills are
rusty, hire a small business coach, take a class, or join a mastermind group to
help you be accountable for getting things done.
11. Ineffective marketing: Learn the basics of marketing and make sure that you
track the success or failure of each marketing technique you use, then dump
those that aren’t working.
12. Ineffective sales techniques: Once you have a potential client, you have to
know how to lead them down the sales path. If you don’t understand the basics
of selling, get some education on it immediately. If a selling technique doesn’t
work, try another one.
13. Poor customer service: Once you have a customer, you have to keep
them. There are two key points here – make sure you pay attention to what the
customer wants (and how these wants can change over time), and make sure
you provide quick return of phone calls and emails, proper billing, win-win
problem solving and an overall pleasant demeanour.
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15. Poor cash flow: Let's face it -- having enough cash on hand to pay your bills is
crucial. And having enough cash on hand, or access to capital via a loan, to
launch the next stage of your business growth is mandatory. Too many small
business owners stall because they don't have enough cash.
16. Lack of Expertise in Critical Areas (& not seeking Outside Help) : Another
common reason small business fail involves the lack of business acumen held
by a management team or business owner. No individual, however capable
may be, can’t have expertise in all areas. To compete effectively, Business, on
the other hand, needs expertise in Marketing, Selling, Finance, Purchasing,
Production, Hiring, Motivating and Managing. Small Business Owners,
unfortunately, fail to recognize the need for outside help.
19. Hiring the Wrong People and Firing Them Too Slowly : One of the
biggest mistakes all small business owners have made is to hire people for the
wrong reasons and then take way too long to fire them. By the time you realize
that they really aren’t fit for the job, you’re already attached and you feel bad
letting them go. So, you put it off -- and before you know it, you’ve sunk six
figures into a bad employee.
20. Growing Too Quickly and Spending Too Much Too Soon : One of the
most surprising reasons small businesses fail? They became too successful too
quickly and then their risk assessment skills go right out the window. According
to Study Reports, 74 percent of high-growth start-ups fail due to premature
scaling and, depending on who you ask, scaling too soon too quickly can
actually be a predictor of failure. This really isn’t that surprising. Anytime
anything goes parabolic, the law of markets comes into play -- just as with
stocks, what goes up must eventually come down.
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CHAPTER -19
Small town businesses can be divided into following three main categories:
Here is a list of 50 Small Town Business Ideas for aspiring entrepreneurs of rural
areas. So, if you are living in a Small-Town or if you are interested in traveling to a
rural area to start your own business, then you might find the Business Ideas
presented here interesting.
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1. Grocery Store :
2. Super Market :
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3. Pharmacy Store :
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45. Bakery :
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START YOUR SMALL BUSINESS IN SMALL TOWN
CHAPTER-20
CONCLUSION
Entrepreneurs have many personalities. A number never finished college. Some are
fiery revolutionaries. Some are gentle souls with a good idea. Some are driven but
difficult. Some have grown up in the most difficult circumstances imaginable -
emerging with enormous determination to strive for greatness. Others are pleasant,
personable and compassionate renegades. Generally, there will be a life event, key
motivator or a source of inspiration that causes a person to strike out on their own
rather than work inside a larger company. Sometimes it is cubicle fatigue or, worse,
getting fired. Other times it is an "aha moment" where an insight or innovation into
how an industry or business could be done differently arises. Sometimes it's a bad
boss.
Do you dream of quitting your corporate job in the big city and moving to a small
town to start a small business? Well, You’re not alone! For many people who want to
become entrepreneurs, starting a business in a small town has a lot of appeal. Given
the new economic reality of our time, more people than ever have found the "Job"
they thought was waiting for them doesn't exist. Others come to the conclusion that
they would rather create the kind of work they love or develop to suit with their own
life goals. Most people spend a good deal of their time working for a company and
realizes lately that they can take that experience to make their own way. No matter
what the motivation is to be your own boss, you can start on any day.
Opening a new business is the perfect chance to start gaining experience and
building your skills in sales and operations. Whether you are starting an online
business or a brick-and-mortar model but don't know where to start, don't worry.
Following the important basic steps explained in this E-Book would help transform
your business from a lightbulb above your head to a real entity.
The most important qualities of a good entrepreneur are energy and determination. It
doesn’t hurt to be persuasive, but this can be learned. Entrepreneurship is a form of
enlightened gambling. Skill and tenacity are big factors, but luck plays a big part.
However, as long as you can keep picking yourself up when you get knocked down,
try different things and keep learning, the odds are in your favour. You just have to
dare to chance them.
Starting a Business is somewhat like parenting. Everyone assumes you know what
you’re doing, but babies and companies don’t come with instruction manuals. You
stumble through it, learning as you go.
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Dream something BIG, Really BIG and dream that with open eyes. If you have
enough courage to dream something, you surely will have the courage to execute it.
Small towns have significant business upsides. First of all, less money and overhead
is necessary to get off the ground. Secondly, it’s simpler to set up a business in a
small town where people know one another and networking is easy. Small towns
have a much lower cost of doing business. They have less taxes, utility costs and
real estate costs compared to an urban environment. For just about any start-up,
keeping costs low is crucial to stay afloat. Furthermore, the internet allows for so
much connectivity, there’s no need to be in a big city to reach potential customers.
Don’t assume that just because you are launching your business in a small town,
you can do the bare minimum and still succeed. Your business will be more visible in
a small town than in a larger community, so any mistakes you make will be
magnified and can be harder to correct. What’s more, just because you currently
own the only Mexican restaurant in town doesn’t mean that will last. Put as much
effort, heart and energy into your small-town start up as you would anywhere else,
and the community will reward you with success.
Hope, by now you are almost determined to be an entrepreneur. Hence from now
onwards, you should invest your time in building yourself, your business by acquiring
new skills, learning from experiences and customer feedback etc.
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