Take A Step Ahead, As Economy Takes A Step Back
While raising capital by going public or other funding can finance the growth plans, financial stability through effective utilization of existing funds can make it easier to procure the requisite funds.
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‘Do not figure out big plans at first, but begin slowly, feel your ground and proceed up and up’ goes a famous saying by Swami Vivekananda. The phrase perfectly depicts the ideal approach that must be undertaken by entrepreneurs who aim to contribute and benefit from the overall Indian growth story in prevailing uncertain times. While we witness reports of the economy slowing down, India, which is currently standing at $2.8 trillion, is estimated to join the $5 trillion club over the next decade. Budding entrepreneurs have an unprecedented opportunity to grab a share of this pie by offering unique propositions in line with the needs of the growing economy.
A strong financial base, however, is imperative if one aims to succeed in this endeavour. Hiring, expansion to a new location, scaling product/service offerings, each and every activity requires funding. It is no surprise that most start-up discussions focus on the required funding. While raising capital by going public or other funding can finance the growth plans, financial stability through effective utilization of existing funds can make it easier to procure the requisite funds.
A few steps that an entrepreneur can take towards building a stable business:
Conviction in the business idea
Starting a business has its fair share of challenges. Start-ups in their nascent stage face issues pertaining to the operational aspect which dampens the spirits of these aspiring entrepreneurs. In such a scenario, the conviction of an entrepreneur in the business idea acts as a defining force in overcoming all adversities. A well-defined strategy combined with strong backing will serve as a guide on a journey faced with many roadblocks. Strong conviction enables the entrepreneur to make informed decisions in the interest of the business.
Competition and Market Mapping
While it is essential to have information about all the aspects of the business, analyzing the peers and current market scenario is also a crucial determinant. Creating barriers to entry to discourage new competition from entering the markets equates to higher market share resulting in profitability. Businesses that are relevant to the needs of the customers, innovate to keep up with the evolving times and have impenetrable moat survive the longest and prosper.
Detailed financial plan
A solid financial plan arising out of extensive research defines the funding requirement of a company to forward any growth prospects. A well defined financial plan acts as a blueprint of a start-up journey. It enables one to plan the operations efficiently, assess performance as well as serve as a reference for taking important managerial decisions. A detailed plan brings the needed structure, discipline that ensures optimum utilization of available resources. It also gives clarity by providing a financial understanding to potential investors.
Well established accounting practices
Sound accounting practices enables entrepreneurs to keep a tab on the financial health of the organization. Collecting data, analyzing, estimating gains and risk management does not come easy to all. Hiring a professional or an agency to bring the required amount of accountability and transparency, can help understand the current financial situations and make amendments to meet the future financial goals, all while making optimum utilization of resources.
Plan taxes well and adhere to compliance
Unplanned taxes can drain a business of its financial resources and create a cash crunch. Planning tax can help improve cash flow management and make sure the outflows are in line with the company’s business goals. Government is taking several measures as part of the Make in India and Startup India initiative to encourage start-ups having tax exemption benefits. By projecting the tax payouts, businesses can systematically accumulate enough funds to pay off these obligations when due, without creating a lump sum outflow. Adhering to regulatory requirements can prove demanding but to overlook it can create unnecessary complications. Investors find confidence in investing in an enterprise that is compliant and trustworthy.
Review process on a timely basis
Processes are industry practices that help to streamline the business functions and gather business intelligence to make significant improvisations. It is necessary to check these processes to gauge their business relevance. Processes help gain insights on the overall efficiency gains by cost reduction. It also identifies loopholes which can overcome to stay true to the company’s business and financial goals.
A well-defined strategy combined with careful financial planning can enable entrepreneurs to build and secure a sustainable business environment that we envision for a brighter better India.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.