A thread on how to start a business and set yourself up for success in India. Especially if you are already a working professional and have good salary/income, or if you're a student graduating and coming into job market with a job at hand.
1. DON'T QUIT YOUR JOB no matter how pissed off you're at your manager or your team members or the company or work culture. Keep your job. Maybe switch companies, but never quit your job until certain conditions are fulfilled.
You gotta hold on to your job as long as possible, until you see a consistent profitability - profits atleast equaling 2-3x your current salary before you can quit your job and going full time into business. Conservatives should look for 4-5x salary and rainy day funds.
2. When you do quit your job, even though you make 4-5x profits, make sure you have enough savings from your job - that can take care of your expenses for 3-5 years. Don't take money out of business, and reinvest that money into business. Or, invest a portion of profits into
safer investments - land or real estate or even FD/Gold. Just to protect your business in difficult times, you need to put a portion of profits into safer forms of investments. Remaining, reinvest, and take salary very conservatively - only what you need for living, for first 2yr
3. Start your business as a SOLE PROPRIETORSHIP if you're the only person starting. Or as plain partnership. Don't register until you have done the upfront research about all possible ways you can get fucked. Knowing this is of paramount importance as you'll be prepared.
Being prepared to get fucked if push comes to stove is very important as you'd know all possible risks. Research and talking to industry insiders is the only way possible. You will have to get out of comfort zone, and call/connect with 100s of people to get insights out of
atleast 4-5 of them. So you should atleast call/email/contact 500 people (10-20 will respond) to get significant insights and make sure that those aren't outliers - good enough sample size before you start any business.
Most people who are successful have no incentive in helping you. They have been taken advantage of enough and so most people go into a shell and turn selfish - because the system is designed that way. So, most don't care. But don't give up heart because of these rejections.
4. GST registration is not mandatory until you have 20-30 lakhs of turnover I think. Check the limit. But to do business, most clients/vendors require GST to claim credit. So, you'll be forced to get GST. So, get your GST registration done.
5. With a partnership/proprietorship, the legal compliances are negligible. Proprietor pays only self IT and maintains a current account, self-accounting, etc. No auditing required until a certain limit. Partnerships would need PAN/TAN other than GST and current account.
6. Don't get office space or spend on crazy upfront investments. Start very very small, with a least minimum viable product you can. If you're starting in food industry - start with smallest possible space (even at your own home) and test the market after you have done research.
7. Hire people to do the grunt work, local people, neighborhood women, etc., once you have the infrastructure set up. Hire quality freelancers through your professional network if you're in a freelance prevalent field like IT/design, etc.
8. Use Zohobooks for accounting -they offer it for free for all businesses until turnover of 1cr. You just have to account sales and purchases properly and match payments accordingly. All other reports, GST filing formats, P&L statements, cashflow statements, etc., are generated
by zohobooks within the system. It's all on cloud, it makes things very easy, and any need you have in the CRM space, Zoho is by far the best for SME in India. Tally has too much learning curve and Intuit products are not as good as Zoho products. So, check out @zoho
9. Before starting/setting up your business, approach BYST (Bhartiya Yuva Shakti Trust), MSME Bhavan, for advice on how to start. If you have done your homework properly on risks and rewards, and you have a proper business model, BYST and DIC (District industries commission) will
help you get loans upto 10 lakhs (Mudra loan) without collateral. If you are in manufacturing, you get 25% subsidy (gov pays 25% of the loan once you pay 75% of the loan) and if you have women entrepreneur there's an extra subsidy. If the woman is sc/st/bc - 35% subsidy.
10. If you're in services sector, 15-25% subsidy is applicable. Make use of this and go through MSME/DIC/Khadi Village Industries Commission/BYST to get loans approved by banks fast. Take loans from PSUs only - preferably SBI/Canara/IOB etc.
11. Don't ever approach private banks for conducting business related work unless you are at a level like 10-100 crores. Until then make use of PSU banks and loan facilities given by government.
12. Government can extend loans upto 10 lakhs without collateral (guaranteed by CGTMSE - google it), and upto 10 crores with certain portion guaranteed by CGTMSE and some collateral. There are many schemes in many sectors. Check msmeonline website and read everything.
13. GST registration can be done online without the help of a CA. Just go to GST website, look up documents required for registration and once you have those documents, just upload them, generate EVC and validate the application.
14. Sole proprietorship has no registration. You just need an UDYOG AADHAR certificate (which you can generate for free on msme website) and GST Registration (which you can do yourself) - and for this a lot of CAs charge 4000 rupees. There you go - i saved you 4k rupees.
15. For partnership registration, CAs charge like 8k-10k. You don't need CAs for any company registration. Even PVT LTD, you don't need a CA for registration. Go to MCA/ROC website and look up list of documents and file application online with relevant documents.
16. In case of partnership, go to your nearest registrar office, connect with few clerks/typists - talk to them. They will tell you how much bribe is involved to get expedited registration (which is the only way registrations happen). Should be around 1.5-3k depending on location
They will tell you all relevant documents to bring - mostly ID and KYC proofs of partners, office location documents (rent agreement/ownership deed) and stuff. You take them, they will take the 1.5-3k fee + some 500 in gov fee i suppose, and finish registration in two weeks max.
17. BYST is a subsidiary of CII (Confederate of Indian Industries) and help budding entrepreneurs for free. Make use of their service if they are available in your city/state.
18. If you're just starting out, try and use free software, free services, etc., as much as possible and keep your costs low. Fail fast and fail small. Failing or losing something when you're so small is better. And don't TRUST anyone in business. There's no place for TRUST here.
19. Business world in India is mostly hook or crook. You either hunt or get hunted. Even if you're a freelance software developer/website developer, establish a tranch-type agreement payouts for different milestones, and get the agreement signed by the client.
20. If you're in traditional business where usually businesses avoid signing anything (even big ones), be very careful upfront and initially try acquiring as many small clients as possible - as that distributes risk.
This goes against the wisdom of acquiring big clients that help you grow. Do acquire big clients, but before acquiring, do your background research about their reputation within the industry in form of payments, the way they treat their vendors/suppliers, etc/
Trust me, so many big names that seem to have good reputation - like ITC, AB group, etc., also pull off shady shit. Brand visibility and good marketing is the reason. Your responsibility is to clear all that clutter and get to the core of who they are and how ethical they are.
This is actually achievable only with field work - talking to other existing suppliers of that company which takes some digging to find out. But you can. And once you do - ask for reviews, and if there are too many negative reviews, stay away for a while.
I didn't do my ground work with respect to Drunken Monkey and I suffered. The CEO/CFO spoke so obscenely that a woman partner who spoke to them broke down to tears pleading them to return the money - spoke like third class rogues. This can happen with anyone, in any field.
So, KYC - know your clients - is very very very important. Later i came to know that Drunken Monkey franchise ownership/management has a very bad rap - even amongst its franchisees and suppliers and have been conniving people left and right.
21. This may look like a difficult task. But learn accounting, reporting, etc., from the get go and manage your company accounts with a clean book - recording every transaction, accounting every penny that goes in and out of the company. This will help you later.
This will come in handy if you want to get loans or get angel/vc funding. As an entrepreneur, it will also help you know the ins and outs of your business and take prudent financial decisions. So for atleast first two three years, don't outsource the accounts.
22. Also, don't take any service by @Letsvakilsearch or Indiafilings or any such online companies looking at their decently lower costs quoted as opposed to local CAs. They have pathetic service and you will often need to spend more than you'd have paid local CAs to fix things.
Vakilsearch messed up my company's accounts the very first year, accounted wrongly, did the entire invoicing/accounts/recording transactions wrongly. Even despite submitting invoices on a monthly basis from april 2016 - i looked at accounts by feb 2017 and found it empty.
I was filing VAT/CST manually calculating stuff, but these guys hadn't maintained accounts or entered anything at all, despite paying them 20k for it. After february, they did a piss poor job of accounting everything for the FY, and messed up everything, and i had to hire a local
CA and pay her another 25k to fix all that shit and file the compliances and documents with the MCA/ROC, etc. After that CA left her firm, I again went back to Vakilsearch, this time hoping they would do the work properly, hoping they'd have improved, only to be proven wrong.
They delayed IT filing and regulatory filing by 2-3 months, fleeced a lot of money inbetween, quoted exorbitant rates for DIR-3 KYC and other mandatory gov filings that happen every year and didn't do the work even after deadline has crossed. It required me to reach out to the
imbecile, useless CEO four five times after their customer support number puttingme on queue and cutting call after 15-20 mins every fucking time for 100s of times i made the calls. After many hate-filled emails and posts these guys agreed to file things with penalty payments.
After that I decided to never avail services just because it's so cheap. It's cheap coz they under-hire, and hire poor quality people, and run a sweatshop - almost any such cloud based legal services company. Bang based Docket, notarymama and similar firms are also equally worse.
Together because of Docket Tech bangalore (who outsourced my initial legal registration process to a crook CA in Chennai who cheated me out of tens of thousands of rupees in filling his pockets) and Vakilsearch - i have lost close to 3 lakh rupees so far in unnecessary spending.
So, to reiterate - NEVER TRUST ANY-FUCKING-BODY in the world of business. People will sweet talk you into giving them your money no matter how incredulous it is. That's what they do. They market themselves very well, fool you into believing you don't know shit and they are here
to be your saviors and that if you take their services and pay for it whatever they ask, they will do everything to you hassle free. Guess where else this happens? Yep. Twitter MTM traders - webinars, workshops, etc.
The crook of the CA that Dockettech outsourced the work to, also convinced me he'll get me FSSAI license, and instead of getting a manufacturing license, the moron got me a retailer license. End of day, I had to spend over 10k to fix his mistake by approaching FSSAI directly.
So, don't trust anyone, even if it takes some time, one or two months more, learn the legalities, go to gov websites, msme website, GST website, and CAClub website to learn about these things - and educate yourself before you even consider starting a business.
23. As much as possible, try and get clients to sign agreements. Don't issue any products without bill (if you're trying to evade taxes) without collecting 100% upfront payment. I put in personal money and rented the factory as an individual to produce for a milkshake co
since those guys preferred without bill and GST - and they said they will pay within 30 days. It's been five months and we still haven't received payments. When i ask the owner - he says he has to pay rent and other things. When i say i am struggling, he says that's none of his
botheration. When i ask him to avail credit facilities in bank and give me my money back, he has the gall to tell me "why can't you do the same. you avail credit limit in bank and run your business."
He has my money and he's using it interest free, and asking me to get bank help
He has my money and he's using it interest free, and asking me to get bank help
These are some of the types of morons you may unknowingly get into business with - out of trust in goodness of humans. But trust me, no matter how much you believe in human goodness, business is not where you bring trust. You have to be absolutely ruthless.
It's possible to run a business ethically. But the system in India makes sure that you have to be a part of the corruption if you want to grow. Only other way you can succeed in life is by leaving the country. (I tried. I applied for masters in US, but didn't get admit).
When people say that the big companies are all crooks, it's true. When you actually get into business in India, you realise how much of your hard work government takes away. 12-18% in GST, 20-25% in IT, you're left with less than 50% of all that you made.
Go into profit, you pay over 50% of what you make to gov. Go into loss, government won't do shit for you. That's the way this world and Indian government works. Even if you go into loss because of your clients or defaulters etc., they will favor the big guys.
So, what business is better to run in India? Anything that doesn't have to have ties to India compulsorily. Any IT business, IT services, soft e-commerce, design services, website development services, anything you can run from anywhere.
Trading is also a good business to run, only if you would run like a business. 99% of people fail coz they don't know how to run a business, let alone run trading like a business. Only sane level headed people who know the risks and are primarily risk managers succeed in trading.
So, if you want to be an entrepreneur looking at inc magazine, yourstory or whatever - don't be fooled by the rhetoric and glamorous paid advertising (a lot of yourstory articles are paid PR management).
Entrepreneurship is FUCKING HARD that it will make you feel like you'd rather take that shitty job with the shitty manager and the shitty team at the shitty company. If all the rejections, insults, hardships, and deception doesn't break you, your bank balance will.
So, if you still want to be an entrepreneur - try your hand at entrepreneurship initially at a very small scale, at a very small level, while holding on to your job, be small and nimble and agile. Move fast, keep your losses very small, take the hard route even if it takes time.
And once you're decently aware enough of the hooks and crooks in the business, then slowly and sustainably grow. Goodluck.
