May 02 • 9 mins read
How to Start a Business: Your Complete 7-Step Guide to Success
If you’re planning to start a business in India, you’re in luck: India is currently the third-largest startup hub in the world, with around 90,000 startups as of 2023. The country’s startup ecosystem has been thriving in recent years, with a 20% increase in the number of startups in 2022 compared to the past 5 years. However, success in the startup world is not just about having a great idea or jumping on the latest trend. It takes a significant amount of hard work, perseverance, and strategic planning to transform a business idea into a prosperous company.
It’s important to keep in mind that starting a business is not a one-size-fits-all process. Your journey will be unique, and it’s vital to stay focused on your goals and vision, rather than comparing yourself to others. Moreover, when the initial motivation fades, developing habits and routines that keep you committed and driven is crucial. Whether you’re an aspiring entrepreneur or an established business owner looking to expand, our guide on how to start a business in India will provide you with the knowledge and tools you need to succeed. So, let’s get started!
How to Start a Business: A Step-by-Step Guide
- Conduct Market Research
- Write a Business Plan
- Financing the Business
- Branding and Marketing
- Hiring and Managing Employees
- Understanding Legal and Tax Obligations
- Launching the Business
Step 1: Conduct Market Research
Market research is a vital aspect of starting and growing a successful business. By blending consumer behaviour with economic trends, you can confirm and improve your business idea. To truly understand your consumer base, you need to gather demographic information to determine opportunities and limitations for gaining customers. This can include data on age, wealth, family, interests, and anything else that is relevant to your business.
To gain a better understanding of your market, you should ask yourself a series of questions. These include questions about demand, market size, economic indicators, location, market saturation, and pricing. By answering these questions, you can gain valuable insight into the specific market share that will impact your profits.
There are two main ways to conduct market research: using existing sources or going direct to consumers. Existing sources can save you time and energy, but may not be specific enough to your audience. Direct research, on the other hand, can be time-consuming and expensive but can give you a nuanced understanding of your specific target audience.
Direct research methods include surveys, questionnaires, focus groups, and in-depth interviews.
These methods allow you to ask consumers about specific aspects of your business, such as their reactions to your logo, improvements you could make to the buying experience, and where customers might go instead of your business. By conducting thorough market research, you can reduce risks and ensure the success of your business idea.
Some Valuable Stats That Can Help You With Market Research
- The top three industries for startups in India are software and services, health and wellness, and fintech.
- According to a report by KPMG, the key areas for growth in the Indian market include e-commerce, healthcare, and education.
- The Indian market is expected to reach $1.3 trillion by 2025, with the e-commerce sector projected to reach $99 billion by 2024.
- According to a survey by Global Web Index, India has the second-highest number of internet users in the world, with over 600 million users as of 2023.
Step 2: Write a Business Plan
A business plan is an essential tool for any successful enterprise as it outlines both current and future goals. By providing a clear roadmap, businesses can organize the direction of their company and make efficient, strategic decisions. To create an effective business plan, consider including the following key elements:
Title Page and Contents
The title page and contents should be well-organized and easy to navigate, as investors and stakeholders use the business plan to gain an understanding of the company.
Statement of Purpose
A clear statement of purpose summarizes the products, market, and business operations. It should also indicate whether or not funding is being sought.
Detailed product or service descriptions should be provided, highlighting the benefits to customers.
An outline of the target demographic, selling trends, and customer expectations should be included to help identify potential opportunities.
Evaluating the strengths and weaknesses of companies with similar products or services can provide valuable insights into how to differentiate your business.
Specify the type of business organization that will be used, such as a sole proprietorship, partnership, LLC, or corporation. This will affect legal and tax requirements, so it is important to choose the right structure for your business.
Risk Management Strategies
Explain the strategies that will be implemented to minimize risk and protect the business, such as insurance coverage, contingency plans, or legal agreements.
In addition to helping focus on goals and strategies, a business plan offers several other benefits, such as identifying potential weaknesses, communicating ideas to stakeholders, organizing important information, and attracting the right employees. Therefore, creating a comprehensive business plan is critical for the success of any business.
Step 3: Financing the Business
The financial requirements of each business are unique, making it impossible to find a single financial solution that works for everyone. According to a report by Tracxn, the total amount of funding raised by Indian startups in 2020 was a whopping $9.3 billion.
Your business’s financial future is shaped by your individual financial circumstances and your vision for its growth. Hence, after determining the amount of funding required for your startup, the next step is to develop a plan for obtaining it.
Here are some potential funding sources that you could consider
The most obvious source of funding for your business is your own personal savings. This may include cash savings, investments, or any other assets that you can liquidate to fund your business. Using your personal savings can be advantageous as it avoids taking on any debt, and you retain full control of your business.
Friends and Family
Another potential source of funding could be your friends and family. They may be willing to invest in your business or offer you a loan. However, it’s important to formalize any financial arrangements and have clear agreements in place to avoid damaging relationships.
Personal loans can be a viable option for funding your business, particularly if you’re unable to secure a traditional bank loan or don’t want to put up collateral. Personal loans are unsecured, meaning you don’t have to offer any assets as collateral, and the funds can be used for any purpose, including starting a business. They typically have a fixed interest rate and a fixed repayment term, which makes it easier to budget and plan your cash flow. You can also obtain personal loans quickly, with many lenders offering online applications and same-day approvals.
The government of India offers various schemes to support small businesses, including the Stand-Up India scheme, the Pradhan Mantri Mudra Yojana, and the Startup India scheme. These schemes offer funding, subsidies, and other incentives to eligible businesses.
Angel Investors and Venture Capitalists
Angel investors and venture capitalists are individuals or firms that invest in startups in exchange for equity or a share of the profits. These investors can provide substantial funding, expertise, and industry connections to your business. Globally, in 2021, the total venture capital funding across all sectors reached a record high of $388 billion, according to PitchBook. The top sectors for funding were software, biotech, and fintech, and the top countries for venture capital investment were the United States, China, and India.
Crowdfunding is a modern method of financing a business by sourcing small amounts of capital from a large number of people, using online platforms such as Indiegogo, Ketto, and Kickstarter. This approach has gained popularity in recent years and can be a useful means of confirming the viability of your business concept while creating a community around your brand.
In addition to considering these funding sources, it’s important to prepare financial projections for your business. Financial projections are estimates of your business’s future income, expenses, and cash flow. They help you to understand the financial viability of your business and provide insights on how your business will function. You can prepare financial projections using tools like Excel or Google Sheets or seek the assistance of a professional accountant.
Step 4: Branding and Marketing
It’s common for business owners to pour a significant amount of money and time into creating their products, leaving them with little to no marketing budget by the time they launch. However, neglecting marketing can hinder a business’s success in reaching its target audience and generating sales.
Hence, here are some tips that you can use to market your business
Create a Website
One effective way to improve a business’s online presence is by creating a website. This can be done quickly and easily, even if the business operates in a physical location. A website can serve as an information hub for customers, offering details about products and services, store locations and hours, FAQs, and contact information.
Focus on SEO
To ensure that the website can be found by potential customers, it’s crucial to optimize it for search engines (SEO). SEO is a long-term strategy that involves incorporating relevant keywords and phrases throughout the website to improve its ranking in search engine results pages.
Create a Social Media Plan
It’s essential to develop a social media strategy to connect with customers and drive traffic to the website. While it’s not necessary to be on every social media platform, having a presence on Facebook and Instagram can be particularly beneficial as they offer e-commerce features that allow businesses to sell directly from their accounts.
Create Engaging Content
Another key aspect of digital marketing is creating engaging and informative content that appeals to the target audience. This can be achieved through blog posts, customer testimonials, videos, and product demos. Consistently posting relevant content on the website and social media platforms can help build brand awareness and keep customers engaged.
Get Listed on Online Directories
In addition to creating a website, getting listed in online directories such as Yelp, Google My Business, and Facebook can help increase a business’s visibility to potential customers.
Step 5: Hiring and Managing Employees
Expanding your business operations may require building a team to delegate tasks to, whether by hiring employees or outsourcing to contractors and freelancers. There are various resources available to help you find the right candidates, including hiring platforms like Glassdoor and Indeed, job boards like Craigslist, and social media platforms such as LinkedIn and Facebook. Additionally, freelance platforms like Upwork, Freelancer, and Fiverr are excellent for finding talented freelancers for one-time or short-term projects.
Partnering with other businesses in your industry can also be a great way to expand your offerings and provide your customers with a one-stop-shop experience. For instance, wedding planners can partner with florists, photographers, catering companies, or venues to offer comprehensive wedding services. E-commerce stores can also benefit from partnerships with fulfilment centres, which can help save money on shipping and storage costs and expedite product delivery.
To find potential partnerships, search for businesses in your industry that complement what you do, serve the same target market as you, or offer different products or services that can enhance your offerings. By building a team and establishing partnerships, you can ensure that your business runs smoothly and provide your customers with the best experience possible.
Step 6: Understanding Legal and Tax Obligations
Starting a business in India can be a thrilling adventure, but it’s essential to stay on top of your legal and tax obligations. As a business owner, you’ll be responsible for a variety of tax payments throughout the year, not just during tax season. However, you’ll also have the opportunity to take advantage of some tax breaks that can help you save money.
To ensure that you’re meeting all of your legal and tax obligations, it’s a good idea to work with a tax professional from the outset. A tax professional can help you navigate the complex tax system in India and ensure that you’re paying the correct amount of taxes at the right time.
When looking for a tax professional to work with, it’s important to find someone who has experience working with small businesses in India. They should be familiar with the tax laws and regulations that apply to your industry, and they should be able to provide you with personalized advice and support.
Step 7: Launching the Business
Congratulations, you’re about to launch your business! The groundwork you’ve done so far has laid a strong foundation for your launch. Now, you can focus on marketing and making your first sale. However, to maximize your chances of success and build traction, it’s crucial to have a plan of attack.
While each launch is unique, there are certain strategies that can help any business in its early days
Leverage Your Network
Use free channels such as your personal social media accounts and contacts list to promote your business. One-on-one emails requesting support can also be highly effective in gaining traction.
Consider Offering Discounts to Early Customers
This can incentivize them to try your products or services and help generate positive reviews and social proof points for your business. Ensure that the discount you offer aligns with your profit margins.
Promote Your Business with Ads
Testing paid ads even with a small budget, can be one of the most efficient ways to reach your ideal audience. Early testing and analysis of results can help you drive initial sales and optimize your ad performance as you scale.
Launching your own business in India can seem like an intimidating process, but by familiarizing yourself with the necessary steps and doing your research, you can make it much easier. With a well-thought-out plan and the right resources, you can be sure to create a successful business that will thrive for years to come. The step-by-step guide provided here should help to get you on the right track and provide you with a foundation for launching your business. So, take the leap and become an entrepreneur!
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