As per you what are the requirements to start a start a small business or a startup?
Since all of us are so gung-ho about raising funds, let me make my question a little simpler and ask you “Is money the only prerequisite to starting a business?”.
I am sent a lot of A2A on Quora like “I have 100K USD which business can I start or Can I start a business with 1 million USD?”.
The amount varies but the question remains the same.
The inquisitive startup enthusiasts, make it sound like money is the only prerequisite to starting a venture.
I do not have anything against them. It’s just that they have got it all wrong. If money was the only criteria to start a new business, we wouldn’t have so many people looking for new business opportunities (even with millions in their pockets).
No doubt, money is one of the most important things while starting a business.
Without money, you will not be able to pay your bills, salaries, and other expenses.
When I started my business, I was totally lost with what does it take to run a successful business.
All we had was an idea. Limited funding and a rented office provided to us by my dad.
Now which one of the above is more important – I do not know till date. In fact, the only thing I have learned over the years is that you need a lot more than just an idea, money or office premise to start a business.
The steps to starting a business constitute of a lot more than just having an idea, arranging money and renting an office promise.
For ex, if you plan to start life as a freelancer , you do not even need an office 🙂
So how do you start a startup business?
Here are, what I consider as important requirements to start a small business or a startup :
An Idea is important. As they say “An idea can change your life”. Why I mention idea at the top of my list is because, without an idea – you are a headless chicken who does not know what to do with the money available with you.
Are you short of ideas?
How about you get active on a few crowdfunding websites and look at ideas implemented by others to start a startup to start an improved version of products/services offered by these startups or you can take a franchise to start your small business.
Here is a piece of advice before you go down the “Ctrl-C + Ctrl-V” Mode which is replicating the business model of existing startups for the sake of getting successful asap – You will lose all your money and time if you try to be another copy of a successful venture.
Spend some time and think of good ideas and then validate them by different proven methods.
Yeah. You get to smile now. I got your favourite “Money” on the list.
You have the idea. You have the money. Now, all you need is a vehicle (read: brain) to vroom you past the hardships of starting and running a business (cough-2! I mean startup. Sorry business. Whatever!).
Money is important. You can survive with money but you cannot survive with an idea.
I have met such wonderful brains in my life with amazing ideas. Ideas that are as good as it gets.
They could not start or convert their ideas into products because they lacked the money to start a startup.
Ultimately, they turned into frustrated souls cursing every damn successful person on the road. For them, the guilt of not being able to raise money was a big let down.
Hence, Money is important. You need money to start any kind of business or startup.
Plans are a saviour when you start your startup with clear-cut parameters to gauge your performance on. How you write a business plan is another topic dedicated to another blog written by me. I won’t dwell into what it takes to write a business plan.
The idea is to keep the plan simple. Make a plan which speaks clearly to where you need to stand after say 3 months, 1 year.
Use it to judge your progress.
Even if you fall in the lazy bracket of entrepreneurs like me. Move your lazy ass and scribble something on a paper with targets and how you plan to meet them.
A plan acts as a base to where you want your business to be.
This is better than running a business without any targets to speak off.
Evolve your plan as you move along. Trust me. 80% of your plan will change when you are a little down the road.
Don’t get disheartened when things change.
It’s all a part of a plan coming face to face with reality.
You might not be able to reach the magical number in sales. But with a plan, at least you will know why you failed.
It will give you simple, yet concrete points to analyze your failure.
Have a plan for marketing, finance, sales, HR. In a startup, every small thing is important.
On the other hand, Planning can be a pain if you get stuck to it for months, contemplating the whats and hows of your idea.
Government License and Registrations:
First things first. You must be a registered business to do a legit business in any country. You can either register as a proprietorship firm or a private limited company or an LLC business to get started.
In addition, you will need a Tax Number to collect tax on the government’s behalf.
Add to above, all licenses, NOCs and approvals you must have to start the business.
Life can be a little messy if you are opening a business like industry or restaurant which require a series of NOCs from different government departments.
Be prepared to get a proper Business audit done. A process which will require a lot of time and patience (note: if you are staying in any of the third world countries like ours, you can easily speed up the process by greasing few palms. I am in no way teaching you corruption – i am just getting you to face reality. If you know what i mean 😉 )
You have the idea, plan, money and license – all you need is a good infrastructure to help you get started.
Most of us fancy the best location in the town to get started with our business. I will go as far as to say that some of us consider it as the most important requirement to start a business.
I have heard friends tell me “We need a good swanky office to attract the best of talent”. Nothing wrong in the statement. Having been through the drill, I absolutely agree with them but there is a catch “Those who join you seeing your office are the ones who are better suited to MNCs, not startup”.
In your small business or startup, there will be a lot of heavy weightlifting to do. You do not want employees from MNCs who are moulded to do what they are trained to do.
What kind of infrastructure should you start with?
I do not know a lot of about industries as i have never owned one. However, i am someone who has been a part of IT-based startups. Here is what you need:
Estimate the business you plan to get in next one year and now get a plan laid out to calculate the number of people and supporting staff you will need to get the job done.
For ex, you estimate a billing of USD 10,000 per month max in the first year.
Your average hourly rate is $ 10/hour. Assuming 160 working hours in a month – a single employee can do a billing of $ 1600. You will need roughly 7 developers to do that kind of billing,
In addition to the developer, you will need a TL (if you are not the techie guy), a QA, an HR cum office admin, a marketing executive (if you are the techie guy) to get started.
In total, you will need 7 + 1 (TL or marketing executive) + 1 (QA) + 1 (HR cum admin) = 10 seater office with obviously, a swanky cabin for you (just kidding! keep costs in check. Settle for a cabin which can also double up as a meeting room).
I think a covered space of 700 to 1000 square feet should be more than sufficient for you.
Well! That’s how i have always moved forward in life. We recently shifted to a swanky office after slogging for a good 8+ years and i know the place is cool but it comes at a price.
A price i can finally afford. I might sound like a stingy idiot but i have learned my lessons the hard way by overestimating my business and shifting to a bigger office, only to go back to a small place. Trust me, the feeling is not nice.
You are building Rome, my friend and it took a lot more than one person to build the legendary city of Rome. You will absolutely need a Team and a good team that understands your vision and hare the same goals, like you.
There are hundred to startup hiring tips published online to help you find the right team. My simple and only tip is – find people you think have the vision to grow with the company.
We have had hundreds of employees join and leave in the last 8 years. Nevertheless, there are few who have stuck with us through thick and thin of times and they have grown with the company.
I do not know what is their market value but what i know is that we pay them what market pays them because we know their value and as they say “there is no price for loyalty!”.
Desire and passion:
Can you sell ice to an Eskimo?
Can you write 1000 lines of code, despite hating coding?
Can you stand up to your employees and ask them to get their shit in order, if they are screwing you?
Are you open to criticism?
Do you believe in your idea?
Can you survive without any revenue for months?
Can you face your vendors if you fail to make their payments on time?
Can you face adversity like a brave man who has nothing or everything to lose?
Are you a hustler?
In short. Do you have balls of steel?
You better have them. Because when you get down to starting a startup, the passion and wish to succeed is what can help you sail through the tough times.
This, my friends, are the important factors in starting a startup.
For the love of starting a startup, you will succeed if you believe in your startup.
Even if you don’t succeed, you will at least go down with your head held high. (don’t i sound like a war chief inspiring his bunch of soldiers :))
Startups are a result of passion, ideas, etc, etc. I see no reason, why they should not succeed if you are willing to slug it out till the end.
Don’t start a startup for the sake of starting one.
I lost a lot of time and money moving aimlessly in our initial years of business.
We started with limited funds. Our business startup idea was abstract.
And we did not have the Internet to guide us. (Damn)
The only weapon in our arsenal was “passion”. Not an ideal weapon to start. Especially, when you are sailing in an unknown territory.
So start smartly. Cover your bases before you take the plunge.
Before i end, here are few quick tips for starting a small business or a startup (i call it the cheat sheet):
- Learn to live frugally. You will need it as every single penny of your pocket will go in running your business.
- Learn to plan and do not create a fuss about things not going as per plan. You have no time to crib, curse or a shoulder to cry. Your friends from job days won’t understand you. You are a lone fighter – live with it.
- Do not overspend on things. For ex, apple is cool but in the cost of one apply PC, you can buy 4 simple windows based computer. Learn to differentiate in between wants and needs 🙂
- Never hire over expensive resources. They do not have the magic you are looking for.
- You are your best marketing person. Use it to your advantage.
- Learn to multi-task and learn everything to anything. When things go south, you will need it.
And get out of that employee mindset. You are going to start a business not a charity.
Always remember “If you want to make everyone happy, sell ice cream – don’t be a leader.”