Start up Business in India
Start up business in India calls for understanding what does a startup mean, how to establish a startup, and from where to begin a startup in India. ‘Startup India Action Plan’ from Government of India helps entrepreneurs start up business.
What is a startup?
A startup company or startup or start-up is an entrepreneurial venture or a new business. According to the Startup India Action Plan released by Department of Industrial Policy and Promotion (DIPP) on 16th January 2016 during the #StartupIndia, #StandupIndia launch event, “Startup” has been defined to mean an entity incorporated or registered in India, with an annual turnover not exceeding Rs.25 crore in any preceding financial year, and working towards innovation, development of new products, or services driven by technology or intellectual property.
How to establish a startup?
A start up business can be incorporated commonly as a proprietorship firm, a partnership firm, a Limited Liability Partnership (LLP), or, a private limited company.
Sole Proprietorship is a form of a business entity where a single individual handles the entire business organization. He is the sole recipient of all profits and bearer of all the loses. There is no separate law that governs Sole Proprietorship.
A Partnership is “the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all”. It is governed by the Indian Partnership Act 1932.
Limited Liability Partnership
Under LLP (Limited Liability Partnership) the liability of at least one member is unlimited whereas rest all the other members have limited liability, limited to the extent of their contribution in the LLP. Unlike general partnership, this kind of partnership does not get terminated by the death or insolvency of the limited partners. It is governed by Limited Liability Partnership Act of 2008.
Private Ltd Company
A private company has the following features:
- Restricts the right of the shareholders to transfer their shares
- Has a minimum of 2 and maximum of 50 members
- Does not invite public to subscribe to its share capital
- Must have a minimum paid up capital of Rs. 1 lakh or such a higher amount which may be prescribed from time to time
How to begin your startup journey?
It is very much essential for a founder of a startup to encounter a problem or identify a problem in the real world. As said by Steve Huffman, Founder, Reddit – “Identify a Genuine Need and Fill it“. The more intense the problem is, the better chances to be a successful startup.
Idea Generation or Ideation is a process of generating ideas to provide a solution to the problem identified. The innovative idea with a simplified solution is the key thing to be considered at this stage.
Building a Minimum Viable Product (MVP)
Once the idea is generated and a solution is decided, the next stage is developing the minimum viable product (MVP). A small workable model of the product with minimum features is introduced in a small group of users, early adopters. Regular feedback from these users and pivoting the product as per these feedback leads to a Minimum Viable Product. The process is iterated until a desirable product/market fit is obtained. MVP is the product with the highest return on investment versus risk.
Once the MVP is in place, then comes the role of reaching out to the target group of users of this MVP. This helps in giving traction to the startup.
Traction is a quantitative evidence of market demand. Traction is proof that somebody wants your product. Ideally, it should communicate momentum in the market adoption. Traction is found most convincing when the startup starts getting Profitability, Revenues, Active users, Registered users, Engagement, Partnerships/clients, Traffic etc.
From where to begin a startup journey?
To begin a startup, one must have a place to work, a product to be developed, a market to reach out etc. Along with that, as explained above, one needs to establish the start up business and begin the startup journey.
Qualified professionals and firms of Lawyers and Chartered Accountants help establish a startup. And vendors provide the required infrastructure. Other supporters like mentors, consultants etc. constantly help in giving the right direction to the successful journey of a startup.