Steps in Setting Up an Enterprise

Once an opportunity has been identified and an enterprise selected, the entrepreneur must actually set it up. This is a series of planned steps that turn the idea into a working unit. Though the exact order can vary, the usual steps are:

1. Identifying and selecting the business opportunity. Scan the environment, shortlist ideas and choose the enterprise to start (Sections 5 and 6).

2. Preparing a business (project) plan. Put down in writing the objectives, the product/service, the target market, the plant and machinery, the finance needed, and the expected costs and profits. A project report is prepared for this purpose and is also needed for obtaining loans.

3. Deciding the form of business organisation. Choose whether to run the enterprise as a sole proprietorship, partnership, company or co-operative, depending on capital, risk, control and legal requirements.

4. Deciding the size and location of the enterprise. Fix the scale of operations and select a site — considering nearness to raw materials, market, transport, power, water and labour.

5. Arranging finance. Estimate the fixed capital (for land, building, machinery) and working capital (for day-to-day running), and arrange it from own savings, partners, banks, financial institutions and government schemes.

6. Acquiring plant, machinery, materials and manpower. Buy or install the machinery, arrange raw materials, and recruit the workers and managers needed.

7. Completing legal formalities and registrations. Register the enterprise (including MSME/Udyam registration where applicable), obtain the required licences and permissions, and comply with tax and other legal rules.

8. Launching the enterprise (commencing operations). Start production or the service, market the product, and begin selling to customers. …