Mistake 1: Improper Business or Commercial Plan
Many start-ups have very good idea, but they do not know how to shape their idea to BUSINESS IDEA. Too many start-ups start without a basic plan and as a result loose the market which their idea deserves. A start-up should map out a business plan, even it is just for one page. It should include:-
- Targeted Customers
- Operational Cost
- Product or service Cost
- Legal Framework
- Budgeted Cash flows
Mistake 2: Improper Legal Structure
Start-ups should first plan what is the legal form to operate a business. They often start the business without consulting the professionals and as a result they may incur higher taxes or may face problem in due diligence while going for funding. It can be avoided by framing proper legal structure as per their idea and their targeted customers through consultation from professionals.
The types of business forms that are generally available to start-ups are:
- Sole Proprietorship
- Partnership Firms
- Limited Liability Partnership
- Private Limited Company
- One Person Company
Mistake 3: Ignoring proper compliance of taxes
Start-ups need to pay attention to a variety of tax issues applicable for their businesses. Without proper consultation and planning, start-ups can find themselves liable for unintended and unanticipated taxes, fine and penalties. They even don’t know which taxes are applicable over their business. Few of the tax compliance of Indian structure are as follows:
- Registration of PAN
- Deduction of TDS at proper rate before paying to vendors
- Payment of TDS on monthly basis
- Filing of TDS on Quarterly basis
- Payment of Advance Tax on time
- Payment of GST on monthly basis
- Filing of GST return on monthly/Quarterly basis
- Compliance of FEMA/RBI
- Compliance with PF and ESI
- Payment of PF/ESI on monthly basis
- Compliance of Labour laws
- Maintenance of Secreterial records
Mistake 4: Improper Bookkeeping process
Many Start-ups founders begin their work without a proper bookkeeping process in place. Proper bookkeeping helps in making smarter decisions, spot opportunities on time to overcome problems before they become unmanageable. Proper MIS (Management Information system) helps to keep a pulse on your business’s financial health. Proper bookkeeping practice and periodical MIS also ensures that you are top of issues like tax compliance, vendors payment, sales target, cash and fund flows etc. that can get otherwise big trouble to the businesses.
Mistake 5: Ignoring the importance of office and office location
Office location is important because it affects employee job satisfaction and work/life balance. Of all the considerations, start-ups have to consider many factors while considering the office location. If the location is appropriate for employees, then company can more competitively compete for top talent and if it is terrible, then they may loose some of their best workers to businesses with better offices. Here are some of the factors to look when it comes to decide proper office location:-
- Distance of office from public transport like Metros, Railway Stations, Near to highways etc.
- Affordable cost to start-up business
- Flexibility of space for employees
- Refreshment and meal facilities nearby office location
- Attractive look and having meeting room for clients meets.
