2. Session – 1:
Basics on Starting a New
Business & Difference between
Traditional Business & Start-Up
3. Basics on starting a new business
• Problem Identification
Clearly identify a problem and find a disruptive solution.
• Market Survey/Market Analysis
Necessary strategy to find the right market segment i.e. target
market.
Important acronyms in Market Analysis
• TAM - Total Available Market
• SAM - Serviceable Available Market
• SOM – Serviceable Obtainable Market
4. • Ideation
Based on the Problem Identification and your market analysis.
Involves brain storming to find a disrupting solution
• Prototyping
Based on your design thinking process, an initial model built to
test the design
• Feedback Loop/Mechanism
Helps founder to take important decision about the product
development and overall business as a whole.
• Minimum Viable Products
The product which is introduced new in market with some basic
features but enough to solve the basic problem for customer.
5. • Business Plan
A document that defines company’s objectives and how it plans
to achieve its goals.
• Business Model Canvas (BMC)
BMC is ideally a one page document that helps create structural
framework from inception to MVP to Market.
6. • Customer Acquisition
Activities a company takes to acquire new customers. It involves
Identification, setting up of goals, choosing right channels,
Innovating the channels, communication, measuring and
improving.
• Digital Marketing
The new-age, most accurate and cost effective method of
marketing. Includes Website, Social media marketing, content
marketing, email marketing, Ads on Google, Search Engine
Optimization.
• Stages of Funding
Bootstrapping, Pre-Seed, Seed Funding, Series A, Series B,
Series C, Series D, Bridge Loans, IPO
8. • Pitch Deck
A brief presentation that gives potential investors/clients an
overview of your Business plan, products, services, revenue
model, USP and growth traction.
• Intellectual Property Right (IPR)
Any rights associated with intangible assets owned by a
person/company and protected against use without the owner’s
consent. Eg. Patents, Copyrights, Trademark, Trade secrets etc.,
Industrial Designs.
9. • Valuation:
Start-up valuation denotes what is the value of the start-up at
any given time. There are various methods to calculate
valuations of a start-up at different stages.
• Unicorns:
A unicorn is a startup that is valued at over $ 1 billion at a point
of time. Eg. Ola, zerodha, swiggy, Physicswala etc.
10. Difference between traditional business and
Startups
Traditional Business:
• Not easily accessible to customers
• Cost inefficient
• Limited Uniqueness
• Limited scope of expansion
• Limited source of revenue
• Restricted number of customers.
• Slow growth rate and recognition
Startups:
• Easily accessible to customers of
all age group.
• Highly cost effective.
• Highly innovative
• Globally reachable
• Multiple revenue sources
• Customers from across the globe
• Exponential growth rate
12. Up to 10 years from date of incorporation/ registration
Incorporated/ Registered as private limited company or partnership
firm or Limited liability partnership
Turnover not exceeded INR 100 Crores for any FY
Working towards innovation, development or improvement of
products or processes or services, or if it is a scalable business
model with a high potential of employment generation or wealth
creation
Incorporated/ registered in Bihar and having office in Bihar
Entity formed by splitting up or reconstruction of an existing business
shall not be considered a Start-up
Eligibility of the Start-up
13. Types of Business Form
One Person Company
Private Limited Company
Public Limited Company
Sole Proprietorship
Partnership Firm
Limited Liability Partnership
15. 2. Bank Account
Why not to use saving bank account for business:
Any commercial activity, firm, proprietorship or company can’t open
saving banks account.
meant for lower use, only for individuals.
Benefits of current bank account for business:
Being a zero-interest account, generally, businesses that deal with huge
transactions on a regular basis use Current Accounts. Benefits are:
Segregate business finance from personal finance
Professionalism in business
Ability to prove creditworthiness
Overdraft Facility
Ease in banking transactions
16. 3. Founder agreement document creation
Document created by the founders of a company
Establish how the company will function.
Product of pre-incorporation discussions that
should take place among the company’s founders
before they establish the company.
4. Business insurance principles and regulatory framework
Element of uncertainty about the future compels man to take necessary
steps to protect himself against unforeseen calamities.
17. Merger &
Amalgamation
Section 232 deals with Merger and
Amalgamation. Merger, where assets
and liabilities of one company are
transferred to another and the first
company loses its existence.
Amalgamation, where two or more
companies merge into third company.
Section 230 deals with Compromise
and Arrangement. It connotes the
settlement of a conflict by mutual
consent and arrangement or through a
scheme of compromise.
5. Merger and Acquisition
Reason for Merger and Acquisition
Expansion and Diversification
Optimum Economic Benefits
De-risking strategy
Scaling up if operation for competitive advantages
Increase the Market Capitalization
Increasing the efficiencies of operations
Tax benefits
18. Legal Requirements
1. Accounting:
It’s a process of recording financial transactions pertaining to a
business.
Major aspects are Record Keeping, Tracking of Financial Transactions,
Financial Reporting.
Two major methods are Cash System and Accrual System.
Major accounting concepts are Separate Business Entity, Double
Entry Concept, Going Concern Concept, Matching Concept.
Accounting Cycle:
Business Transaction Journal Ledger
Balance Sheet Trading & Profit/Loss account Trial Balance
“Golden Rule” is the basic rule followed for accounting.
19. Type of Audit Private Limited
Company
Limited Liability
Partnership
Partnership
Statutory Audit Applicable
irrespective of
turnover
If turnover in F.Y.
exceeds Rs. 40 Lakhs
or contribution
exceeds Rs. 25 Lakhs
Not required
Tax Audit
(Under section 44 AB
of Income Tax act)
Applicable if Turnover
exceeds Rs. 10 cr. in
case of business / Rs.
50 lakhs in case of
profession.
Applicable if Turnover
exceeds Rs. 10 cr. in
case of business / Rs.
50 lakhs in case of
profession.
Applicable if Turnover
exceeds Rs. 10 cr. in
case of business / Rs.
50 lakhs in case of
profession.
Internal Audit Mandatory if Turnover
exceeds Rs. 200 cr
and or Borrowing
exceeds Rs. 100 cr.
Not mandatory Not mandatory
2. Audit
20. DIRECT TAXATION INDIRECT TAXATION
Corporate Tax/ Income Tax Goods and service Tax
Wealth Tax Custom Duty
Capital Gain Tax Stamp Duty
Securities Transaction Tax Excise on Liquor
3. Taxation:
21. 4. Other Legal Requirements:
Shop and Establishment License-
Applies to all shops, offices, schools, education institutions, hotels,
restaurants, theatres, etc which operates for motive of earn
profit and doing business.
Import/Export License-
Import/Export License are the permissions or licenses required for doing
business with companies / organizations which are present in other
countries.
FSSAI License-
FSSAI stands for ‘Food Safety and Standards Authority of India.
Mandatory for every food business operator involved in the manufacturing,
processing, sale of food products and storage distribution.
22. Udyog Aadhar Registration-
To start and operate a small business – micro, small and medium
enterprises.
Eligibility is based on the investment in plant & machinery.
It can enjoy various subsidies and schemes specially provided by the
Government for helping small businesses in India.
Other Licenses and Registrations-
Certain types of business that involve aspects of dealing or providing
insurance, financial services, broadcasting services, defence related
services, etc., would require approval from regulatory bodies like
Reserve Bank of India, IRDAI, etc.
23. 5. Financial Ratios for Business to Track:
• (Net Income + Depreciation) ÷ Total Debt = Cash Flow to Debt Ratio
Cash Flow To Debt
• (Total Revenue – Total Expenses) ÷ Total Revenue = Net Profit Margin
Net Profit Margin/ Operating Profit Margin
• (Sales – Cost of Goods Sold) ÷ Total Sales = Gross Margin Ratio
Gross Margin Ratio
• (Cash + Marketable Securities + Net Accounts Receivable) ÷ Current
Liabilities = Quick Ratio
Quick Ratio
24. • Share Price ÷ Earning Per Share = P/E Ratio
P/E Ratio
• Total Debt ÷ Total Shareholder’s Equity = Debt Equity Ratio (Measure’s
Financial Leverage)
Debt Equity Ratio
• Net Income÷ Shareholder’s Capital =return on Equity Ratio
Return on Equity Ratio
• Net Sales Average Total Assets = Assets Turnover Ratio
Assets Turnover Ratio
25. 6. Some Important Points:
The Limited Liability Partnership Act,2008-
Sec.4 - Save as otherwise provided, the provisions of the Indian
Partnership Act, 1932 (9 of 1932) shall not apply to a limited liability
partnership.
Sec.5 – Any Individual or Body Corporate may be a partner in a LLP
Sec.9 – A limited liability partnership may appoint a designated partner
within thirty days of a vacancy arising for any reason . if no designated
partner is appointed, or if at any time there is only one designated
partner, each partner shall be deemed to be a designated partner.
Sec. 26 - Every partner of a limited liability partnership is, for the purpose
of the business of the limited liability partnership, the agent of the limited
liability partnership, but not of other partners.
Sec. 34 - Every limited liability partnership shall file within the prescribed
time, the Statement of Account and with the Registrar every year.
Sec. 64 – A LLP may be wound by the Tribunal:
At the discretion of LLP/Tribunal.
Partner is reduced to below 2 for more than 6 months.
Acted against the interest of the sovereignty and integrity of India
Default in filling with the Registrar for any five consecutive Financial
Year.
26. The Companies Act,2013-
Sec.10 A – A company incorporated and having a share capital shall not
commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director within a period of 180 days of
the date of incorporation of the company with the Registrar and
(b) the company has filed with the Registrar a verification of its
registered office.
Sec.43 – The share capital of a company limited by shares shall be of two
type- Equity Share Capital and Preference Share Capital.
Sec. 71- A company may issue convertible Debentures by passing a
Special Resolution at general meeting.
Sec.137 – A copy of Financial Statement duly adopted at the AGM of the
company, shall be filed with the Registrar within 30 days of AGM.
Sec.155 – No individual , who has already been allotted a DIN, shall apply
for, obtain or possess another DIN.
Sec.247 – Where a valuation is required, it shall be valued by a person
having such qualification and experience, registered as a valuer and
being a member of an organization recognized.