Startup business ideas

February 12, 2009 at 9:35 pm | Posted in Entrepreneur, Startup | Leave a comment
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Does sharing an idea really matter? Isn’t it all about execution?

lightbulb-idea

The image is copyright protected. To use this please take permission from peter@peterpohle.com. Source: http://www.turbosquid.com/3d-models/3d-model-of-light-bulb-idea/168157

For Seth Godin’s Alternative MBA program, nine of his friends came up with 111 business ideas each. They say that the ideas are only valuable when someone (like you) makes something happen.

Check out their 999 business ideas, free for the taking: http://www.sixmonthmba.com/2009/02/999ideas.html

Incorporating a Private Limited Company in India

November 9, 2008 at 10:31 am | Posted in Company incorporation, Entrepreneur, Legal, Private limited company, Startup, Strategy | 58 Comments
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Lot of early entrepreneurs and wanna-be entrepreneurs have a basic question in their mind on How do you incorporate a Private Limited Company? What are the various requirements, formalities, costs, check-lists, processes associated with it?

Here I am writing my experiences while incorporating ‘iStrait Software Solutions Pvt Ltd’, in Bangalore (Karnataka). LifeMojo is the name of the product we have, whereas iStrait is the company name.
files

Please note that the information here might not be correct. Its just what I know 😉

In India, a private limited company incorporation, with an authorized capital of Rs 1 lac, will cost you about Rs 15k + the CS professional fee, which varies between 5k-10k. The whole process takes 2-4 weeks.

The Rs 15k here includes Rs 4.8k, which you pay as a tax/duty for the authorized capital of Rs 1 lac.  Rs 1 lac is the minimum authorized capital you need to commit to incorporate the company. It also includes the charges for DIN, Digital Signatures and all the paper work, which is mentioned below in details.

You do not need to invest the entire Rs 1 lac immediately. However, It is the total liability from all the share-holders towards the company, which you can pay anytime later.

Steps for incorporating a company:

1. Get at least 2 directors

Please note that there is no relation between the directors and shareholders. They might be same people or entirely different people. Shareholders appoint directors, who run the company.

You need at least 2 people who will become the first directors of the company. Later, others can be appointed as additional directors. Before becoming a director you need to get a DIN (Director Identification Number). For this required documents are: Address proof, Photo ID Proof, PAN Card and 3 photos.  It costs around Rs 1000 per DIN. As I am writing this article, all the DINs in India are issues from Noida, Delhi. The application is physically couriered to Noida and you get your DIN dispatched from there.

Along with this, at least one of the directors needs to obtain a Digital Signature. This process can go parallel with getting the DINs. A digital signature will cost you around Rs 2500. It is used for uploading various documents to ROC (Registrar of Companies) website.

2. Get a name

You need to think of a name for the company and inform your CS with a list of preferences you have. The CS will get the name blocked/approved as per the availability.

To check the availability, go to http://mca.gov.in/ > “Other Services”  > “Check Company Name”. The law says it should be non-abusive, non-offensive and blah-blah. By the way, “iStrait Software Solutions” and “iStrait Technologies” are treated as two different names.

Ideally, keep the company name different from the product/website name you have. The reason is that the product/website names keep changing. You might even change your business or your domain. But the company stays!

Yes, this adds to a little bit of confusion amongst who hear about you. In our case, it was like “So what is iStrait and what is LifeMojo? Are these two different companies?” But the solution to this is that you never brand/market/advertise yourself with the company name. Always use your product name. Carry your product name on your business card, t-shirts, website etc. Use the company name only on legal/financial documents and in the footers 🙂

The well known job-portal http://www.naukri.com is a product of “Info Edge India Ltd.”. Not many people have heard about the exact company name. They always market themselves by the product name.

3. Get it registered

Once the name is approved and the DINs/Digital Certificates are ready, you need to apply for company registration. You need to provide a registered office address. For a software kind of company (non-polluting) an apartment as a registered address is also OK. But, you need to put a small board once the company is incorporated, as there might be address verifications etc. when you will go for various things like Bank Account, Service Tax number etc.

This is mostly an online process. Here are couple of terms you should know, while applying for registration:

1. MOA (Memorandum of Association): This is a document your CA will prepare, which will have the basic details of a company and the activities with in which the company can function. There will be certain primary objectives and a lot of secondary objectives. Usually the CS guys will put literally every possible business in India in this document, so that you have a scope of changing your business later 😉
Better have a look at the MOA of a company similar to you.

2. AOA (Articles of Association): This is a document which will have rules relating to the management of company’s internal affairs. There are standard templates available for this as well.
You get certificate of incorporation from the ROC, mailed at your registered address…..and you are done! You can commence your business and use the company name as a legal entity.

4. After company registration

– Get your company PAN card.

– Get a rubber stamp. Get letter heads with your company logo. You can chose whatever logo you want. ROC has nothing to do with that.

– Get a current bank account in the name of the company. Try your best to incur all expenses from the company account and receive all the cheques in the name of the company only.

– If you provide any service, you need to charge a service tax and pay it to the state-government. You should get a service tax number before that. Service tax is to be paid to govt on a monthly basis and filed half-yearly.

– If you sell/ship a product, you need to charge VAT and pay it to the state-government. Again, you should get a VAT number before that. Getting a VAT number is quite tedious process as compared to Service Tax number.

– Get a Shop & Establishment License from the state-government. You need to file yearly returns with them.

– If you pay more than 20k per financial year, to a vendor, you need to deduct Tax at source (TDS). This has to be paid to the government on monthly basis and filed quarterly.

– Deduct TDS from your employees’ salary as well (if taxable).

– Pay professional tax for your company and your employees. (Rs 2500 per year for the company and for the employees, it depends on their salary (Usually, Rs 60-200 per month))

PS: Following all these processes prevents you from lot of trouble you might get in future and adds credibility to your company.

Write to me at himanshu[at]lifemojo[dot]com or drop it here itself, if you have any query/comment.

Cheers and all the best!

Finance for Entrepreneurs

October 18, 2008 at 12:44 pm | Posted in Entrepreneur, Finance, IIM Banaglore, NSRCEL | Leave a comment
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On Oct 3 and 4 2008, there was a 2 days workshop/course on Finance for Entrepreneurs, by Prof M Jayadev, IIM Banaglore. It was organized by NSRCEL. Since, I hold the responsibility of handling finances at LifeMojo, so I thought of attending it.

My wife is doing her CA final and I have learnt the basic fundamentals of corporate finance and accounting from her. Having some knowledge of basic fundamentals and then attending this course proved to be very useful. There were case-studies, practice questions etc, which gave me a good hands-on experience. The first thing I did after coming back, was to prepare a balance sheet for LifeMojo myself, and yes, I was able to do that )

There was also a good coverage on company evaluation and what a bank or an investor looks for in a company as well. These were some great discussions and most of these topics were very new for me.

Prof Jayadev gave away copies of a book for self-reading. It was “Finance Sense : Finance for Non-finance executives” by Prasanna Chandra.

Here is what the content of the course was:

  1. Introduction to Basics of Financial Accounting – Balance Sheet
  2. Income statement, Cash Flow Statement and Financial Statement Analysis
  3. Concept of Working Capital, Working Capital Management and Working Capital cycle
  4. Business planning and forecasting
  5. Capital Budgeting and analysis of Investment proposals
  6. Payback period – NPV and IRR
  7. Breakeven Analysis and Sensitivity Analysis
  8. Life cycle costing and business strategy, Target costing and Pricing Strategies
  9. Entrepreneurial finance and financing options

Overall, it was great to be a part of this course. I also recevied a certificate from the Prof, for attending the course 😉

Kleiner’s Laws

September 30, 2008 at 11:24 am | Posted in Entrepreneur, Eugene Kleiner, Startup, Strategy | Leave a comment
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Eugene Kleiner was one of the original founders of Kleiner Perkins. His famous Quote is “There is a time when panic is the appropriate response.

Here is my favorite of the Kleiner’s Laws:

    Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.

    More laws here: http://en.wikipedia.org/wiki/Eugene_Kleiner

    Define: Entrepreneurship

    September 10, 2008 at 1:35 pm | Posted in Entrepreneur | Leave a comment
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    As per wikipedia (clipped on Sep 9, 2008):

    “Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started….”

    However, my definition is that “Entrepreneurship is about following your heart and passionately working on your dreams. Its about putting all your focus, time and money into what you want to do.”

    “Its not just about starting your own company. It may be about aiming to become the next Sachin Tendulkar or the next Dhirubhai Ambani or the next Mother Teresa. Yeah, some might perceive it as a risk but you are certain about it.”

    Free marketing tips for a startup

    August 9, 2008 at 2:57 pm | Posted in Entrepreneur, lifeMojo, Marketing, Morpheus, Startup, Strategy | Leave a comment
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    The other day, Sameer and Nandini from Morpehus Venture visited our apartment/workplace for a discussion. The agenda was the go-to-market strategy for lifemojo. There, we had an interesting discussion on what are the ways for a startup to do free/low cost marketing. Here I am putting my notes of the discussion and overall thoughts.

    Thanks to Sameer and Nandini for their inputs.

    Disclaimer: There is no way for a startup (atleast) to be able to sell a BAD product. Yeah, if you have a lot of money which you can burn in marketing, you may be able to…but no..not in case of a startups.

    So lets see how you can spread the word about a good product in a startup.

    1. The company must have a corporate blog. Share the journey, product roadmap, problems you faced, solutions you got and any relevant information likes company incorporation tips, CA/CS contacts, bootstrap opportunities etc.

    2. All the founders and core members should have their individual blogs. Share your journey as individuals, your experiences in your respective roles.

    3. Have RSS feeds for all your blogs/content on your site.

    4. Share your blogs, digg them, stumble upon your site, blogs, articles.

    5. Attend all the start-up/business events like Barcamp, Proto, Tie Events, OCC, Startup Saturday, Mobile Monday etc. Give your demos there. Talk about your company and exchange visiting cards. Wear T-shirts in all these events with your logo and company name. Have your first name and email Id at the back of the T-shirt.

    6. Update your personal status on the social networks and messengers likes linkedin, orkut, facebook, gtalk, Yahoo etc, with your brand.

    7. Have and update your accounts regularly at friendsfeed,  twitter etc.

    8. There are more than 300 free press release sites available. Put regular posts on them.

    9. Use free media, free postings, free classifieds.

    10. Seed in others blogs, add comments in other’s blogs.

    11. Seed your brand in the articles in traditional media.

    12. Build apps in Orkut, facebook etc. Spread them with-in your community.

    13. See what are the forums/sites/communities related to your focus area. For example, LifeMojo is into preventive health care, so we should find forums/communities related to that and seed our brand there.

    14. Similarly, attend any seminars/conferences related to your focus area. Try to network there. Again carry your brand there along with you.

    15. SEO, ofcourse.

    15. Have “Refer a friend” or “Share it with your friends” kinda features in your site.

    16. Spread the word within your Alumni groups, friends and family. Send mailers to your email groups/communities and ask for a feedback on the product/site.

    17. Tie-ups with companies having related/complementary products/services. Use their user-base, brand and marketing channels.

    I am sure there are more…Will keep updating this section.

    Cheers!

    My first step into Entrepreneurship

    August 8, 2008 at 4:32 am | Posted in Entrepreneur, Finance, lifeMojo, Startup | Leave a comment
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    Here I go.

    I took my first step into entrepreneurship, in May 2008 this year, when I started LifeMojo, along with three of my friends.

    Lifemojo is focussed on prevention of lifestyle diseases and is currently planning to cater Indian/NRI market.

    LifeMojo

    With LifeMojo, we would be selling experts’ consultancy and health products for healthy lifestyle. LifeMojo‘s reach would be through web, GPRS and SMS.

    I will be taking care of the Technology part as far as GPRS and SMS based access from mobile is concerned. I will also be handling the Marketing and Finance part.

    LifeMojo, is in private beta right now and would be moving to public beta, by early October. You can sign up here for a beta access.

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