Starting & running a business, though a very satisfying & enriching experience, brings along with it a plethora of challenges which need to be addressed at the right time in order to avoid any kind of losses that can financially impact a business. Mismanagement of such situations is one of the primary reasons why many start-ups fail within 5 years of starting their operations. This usually happens because businesses have their hands tied up with their core business functions and they tend to ignore the other areas of work such as taxation, accounting, corporate law & various other compliances. This is especially applicable to small & mid-sized businesses which do not have in house teams for such functions.
While setting up a business, in addition to having an in-depth knowledge of your product or service offering, you must be very well versed with the local rules & regulations which need to be adhered to in order to start your business. Non-compliance with the law of the land can result in major legal battles in the future, which sometimes come with hard financial implications & can be fatal to your business.
Here’s a look at a few of the areas you should be mindful of while STARTING A BUSINESS. These areas come into play after you have studied the viability of your business idea & have a strong business plan in hand to proceed further.
Nature of entity – The type of entity you want to go for is a very important decision you need to make at an early stage of setting up your business. This decision depends upon the nature of your business, number of persons involved, tax liabilities etc. So you must gain through knowledge in this area & can take the advice of a professional if need be.
Business licenses / registrations – The next thing that you need to keep in mind is that you must have all your business licenses & registrations in place. These include Shop & Establishment licenses, MSME certificate, DPIIT recognition, TAN, PAN, FSSAI certification, ISO certification etc. Don’t worry, you do not need all of these! The kind of business licenses & registrations required by you again depend upon the nature of your business. Do bear in mind that most of these are issued by the government authorities & take a lot time in being processed. So understand these requirements well in advance and plan accordingly.
Intellectual Property Rights (“IPR”) – IPR primarily involves safeguarding your ideas. It is as simple as that. Anything that is a result of your intellect is what needs to be protected by you and is an intangible asset of your business. And what kind of protection you require, depends upon the nature of your idea, the kind of product / service you are offering, industry you belong to etc. Intellectual Property Rightsbroadly include trademarks, copyright, patents & industrial designs. Many businesses do not give importance to their IPR at the initial stages and assume that it’s a requirement only once the business grows & prospers. However, this is a myth which needs to be busted! IPR is as important for your business as is any other asset. If you do not safeguard your idea, then you are openly giving others the legal right to steal your idea & replicate your product / service offering to your potential clients, position themselves as you, thereby causing you innumerable losses.
Banking relationships - Having good banking relations goes a very long way in successfully running your business. Banks provide very valuable products & services which are helpful at every stage It can be something as basic as opening a bank account, corporate credit cards, online banking facility to meeting more complex requirements such as funding, credit lines, foreign remittances, mergers & acquisitions, IPOs, valuations, dividend payouts etc. Hence finding a dependable banker right from day one is essential for you to be on the right financial path, which at the end of the day is what you are working for!
E-presence – In todays’ world of technology, being present on the web is of paramount importance. Infact it not only helps you expands your customer base beyond local borders, but also takes you overseas & gives you access to an international clientele, which in many businesses is more promising. With the advent of the internet, we have the privilege of having the entire world as our potential customers which is a whole new opportunity in its’ own self – a complete contrast to what resources our predecessors had at their disposal a decade ago. Hence seize this opportunity & dive into the digital world to explore the ample opportunities that lie beyond borders. So while you are looking into the various compliances which apply to your business, do not forget to consider how you would want your brand to stand out globally. There are various marketing & branding strategies which you can apply to your business & for doing so, you can also take the help of trained professionals. Purchase a domain name & hosting for your business, launch your website & create social media pages for your company. Your online presence talks volumes of what your business stands for, your values, your vision & leaves a lasting impression in the minds of the potential clients.
Now that we have a bird’s eye view on what all needs to be considered to start your business, lets move onto the aspect of what it takes to RUN A BUSINESS. The law of the land requires you to adhere to certain rules & regulations in running your business. The Indian government has also come up with the Startup India initiative in order to give impetus to startups. Such government schemes help budding entrepreneurs to start & run their businesses with ease & efficiency in India. This shows the importance given by the government to new businesses due to the great impact they have on our economy.
Adhering to the local laws & timely compliance with regulatory requirements is the key to surviving in an already competitive environment. The efficiency with which you run the compliances of your business goes a long way in deciding how bright the future of your business is. Undue delays in complying with regulatory requirements can lead to a lot of unnecessary hassle, which at times has such huge financial implications to the extent that it can result in closure of your business. Therefore, always be mindful of this and proceed accordingly.
Ongoing compliances are mandatorily required in areas such as:
Accounting & taxation
Intellectual Property Rights
Sometimes, due to a few unforeseen circumstances, you might find yourself in a legal battle with any of the stake holders involved, due to reasons not in your control. You should never be taken unawares in such a situation. Always seek the legal guidance of a professional in case you face any such unwanted situation.
So this gives you a brief idea on what are the legal requirements & compliances when it comes to starting & running your business. Now let’s talk about scaling up.
As you grow, don’t you have a desire to make your business a better version of what it was yesterday & take a leap to the next level? Well, that’s human nature and we all want to improve ourselves for the better. But sometimes we face roadblocks in doing so due to lack of resources. How can this gap be covered? How can you scale up your operations? The answer is FUNDING YOUR BUSINESS. Innovation is the driving force of our economy today and the good news is that a lot many venture capitalists & angel investors are very open to new ideas & have been very keen on becoming a part of the growth story of such businesses by investing in them. So if you have a good idea and that idea has seen significant success, it might be worth it for you to consider raising funds for your business in order to take it to greater heights.