Step-by-step approach / Important stages in starting a new venture
An enterprise also means an undertaking, a business firm or venture. Here is a step-by-step approach for starting a new venture. These can be divided into three stages:
- Pre-launch Stage
- Launch Stage
- Post launch Stage
A step by step approach is provided to assist the potential entrepreneur.
1. Pre launch Stage
The following steps are involved in a Pre-launch stage in starting of a new venture.
1. Identify, Analyze and Decide on the business idea.
2. Analysis of strengths, weaknesses, opportunities and threats.
3. Analyze competition and select the positioning strategy.
4. Estimate and forecast the market size, growth and marketing feasibility which involves measurement of demand — supply gap.
5. Whether to be an ancillary unit.
6. Understand the technology, process and selection of the idea.
7. Decide on the size of the enterprise in terms of production capacity, employees.
8. Decide on the location of the venture.
9. Identify the incentives given by the Government to promote the small and medium industries.
10. Understand the relevant laws which are applicable for the business.
11. Analyse the business idea as opportunity in terms of Profit, costs, expenditure, income, sales, market share.
12. Estimation of manpower requirements.
Pre-Launch Stage of a new venture involves collection of information through primary and secondary sources of data. It is a critical stage. The skills that are required are entrepreneurial skills of business opportunity identification and analytical skills.
The functional areas of marketing and finance dominate this stage. Forecasting skills are also required in this stage.
2. Launch Stage
1. Selection of the Name of the enterprise.
2. Hiring or construction of building
3. Deciding on the ownership pattern — sole proprietor, partnership, private or public limited company and limited liability partnership.
4. Registration of the firm. If it is a partnership firm, then agreements has to be signed. The registration processes of SMEs have been streamlined.
Now provisional registration certificate can be obtained online with District Industries Centre.
5. Preparation of business plan and project report.
6. Deciding on the product mix and markets to serve.
7. Application for loan to banks. If private or public, issue of shares.
8. Raising of finance.
9. Ordering and installation of machinery.
10. Recruitment of people.
11. Deciding on the channel of distribution.
12. Sources of raw materials to be finalized and purchases made.
13. Production started.
14. Products to be made available in the market.
In Launch stage of a new venture, operational actions and decisions are taken. It requires managerial skills of coordination with the various agencies. Project management skills are required.
There is lead time from planning to implementation stage. Close monitoring has to be made to see that the launch is as per the plan. Delay will increase the cost and have impact on the finances of the firm.
3. Post Launch
1. Teething problems to be solved.
2. Systems to be developed in all the areas of management
3. Feedback on the product
4. Changes if needed to be introduced.
5. Expansion decisions.
After launch of the business, the gestation period varies from one to three years. The provisional certificate is valid for a year. After commencement of business, permanent certificate is to be obtained from District Industries Centre.
An entrepreneur has to plan and prepare for this critical period. The profits will start flowing once the business settles down. All the businesses may not succeed, so mental preparation for failure and exit route should also be a part of the business plan.