Thinking of opening a low-cost business? Here’s how to start

by Anindya Ray on 26/10/2017
Starting a low-cost business is like starting any other small business, but of course with very low investments. Being methodical helps, here are a few steps you have to take to start a low-cost business:

Step 1: Base your decisions on research

Whether you have already decided upon a product or not, you need to make a reality check. Does your idea have the potential to succeed? You will need to run your product through a market validation process to minimise risks. For any business to be successful, it must solve a problem, fulfill a need or offer something new to the market. It also has to take into consideration whether there are similar products in the market and what competition is doing. The only way you can find out is through research.

Step 2: Make a short informal business plan

You need a business plan in order to make your business a success. It is essential to have a blueprint that will guide your business from the very beginning to grow and onwards to success. You need a formal business plan if you are seeking financial assistance from institutions, but a low-cost business which does not require financial assistance may have a simple one-page business plan which gives clarity about what you hope to achieve and how you plan to do it. Some kind of plan in writing will definitely help you run your business.

Step 3: Get an idea of financial implications

Starting a low-cost business doesn't require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you turn profitable. Create a spreadsheet that estimates the one-time startup costs for your business (Registration and permits, equipment, legal fees, branding, research, inventory etc.), as well as what you anticipate you will need to operate the business for at least 12 months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries etc.). Once you have an idea of investments and expenses, you will have to decide whether you need financial assistance or not.

Step 4: Select a business entity

You can start your business as a sole proprietorship business or a partnership. As a low-cost business, you need not go in for a limited liability entity to avoid unnecessary formalities. The business entity you choose will impact factors like your business name, your liability and how you file your taxes. You may choose a business structure to start with, and then reevaluate and change your structure as your business grows and requires change.

Step 5: Select a name and register your business

Your business name is important. It will have a role to play in every aspect of your business. Think through all the potential implications of the name you select as you can’t change the name once it is registered. It is not compulsory to register small businesses in India, but if you do not register, you will not be able to avail complete legal benefits, credit guarantee schemes of the government, exemptions from taxes and different subsidies available for small businesses.

This list of things to do is not comprehensive and covers only the most essential part of starting a low-cost business. Another important aspect will be to select sales channels for your products. You can sell offline as well as online. Amazon.com is one of the most popular online sales channels that can help you sell your products to a large base of potential customers. If you want to sell on Amazon, please register here.

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