1. Startups investment advice: Top 6 points entrepreneurs must focus on

Startups investment advice: Top 6 points entrepreneurs must focus on

Startups in India: Startup India phrase has caught the imagination of the country and that is why startups are such an 'in' thing in the country today.

By: | Updated: January 22, 2016 3:52 PM
startup india, startup india action plan, startup india 2015, startup india jobs, startups, startup growth in india, startups in india Startups in India: It is very important to have at least money saved to take care of six months of expenses before any person leaves a job and set up his own enterprise.

Startup India phrase has caught the imagination of the country and that is why startups are such an ‘in’ thing in the country today. However, for every startup that succeeds there are several which fail. There are some basics on finances that startups need to keep in mind and here we take a look at top 6 points entrepreneurs need to focus on:

1. Before starting up

It is very important to have at least money saved to take care of six months of expenses before any person leaves a job and set up his own enterprise. It is also important to curb unwanted expenses to save some money.

It is always safe to have a regular source of income, which ensure financial stability during the startup phase – ideally from an investment source or from a spouse earning a fixed income. Investment products such as, fixed deposit, bonds, debt & gilt mutual funds, rental income etc. could provide a source of regular income during such phase.

2. Insurance for entrepreneurs

While starting up a new enterprises, there are a lot of risk involved and insurance becomes one of the most important factors as it comes in handy to reduce this risk. Uncertain situations such as death, diseases, accidents, etc. could have impact in the regular functioning of the business. These incidents should be insured to ensure that it does not affect the finances of the company and doesn’t erode away the savings for home expenditure. With regards the insured amount, plan for the worst situations and take up an insurance policy which would suffice the needs in bad times. It is always advisable to err on the side of caution and insure for more than you initially think you might need.

3. Investment options for startups

Since startups are considered risky, one should invest in safer avenues to protect the capital put aside ideally in fixed income securities, government bonds, bank deposits, etc. These will safeguard against any sudden drop in business, as the capital is secure and earning an interest – which can be then utilised for any expenses. These could be company bonds, bank fixed deposits, fixed income mutual funds and fixed maturity plans.

4. Planning for contingencies

Along with a best case scenario model, it is always necessary to make a worst case scenario model and make sure that provisions for business failure has been made. This helps in preparing for situations accordingly which might arise if there is a business failure.

5. Startup marketing spends

Marketing and advertising are very important but should be done tactically and not generically. Decide on the target market and choose the media for advertising. A lot of startups have adopted social networking forums such as Facebook, Linkedin, etc. to advertise. It is advisable to reduce expenses on advertising agencies, PR agencies and social media.

6. Saving money

Offer employees an option to work from home. If you are in a business related to information and require heavy human capital, it is better to offer employees to work from home as it will save extensive office space, which in turn can help in bringing down rentals, electricity cost, office equipments and travel expenses.

Keeping a check on office supplies like packaging, postage, printing papers, stationery, etc. is crucial to rein expenses. In most organisations such expenses are often ignored, as they are individually small – but collectively large. If such expenses are controlled and audited then it can be a great cost-control technique. Consider purchasing in bulk, reuse of packaging material, using e-mail instead of regular postal mail.

Start it now: Highlights

Ensure you have six months of living expenses saved up before starting up.

Take adequate insurance cover.

Keep aside some money for Plan B, in case things do not work out.

Track expenses and ensure that it is kept within budget.

The writer is CEO & founder, Right Horizons

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  1. Hemen Parekh
    Jan 23, 2016 at 6:47 am
    HAVE A DEGREE : WILL SWEEP Some 19,000 graduates / post graduates who have applied for the job of sweepers in Amroha Nagar Palika , seem to be saying just that ! But only 114 of these BA / B Sc / MA / MBA / M Tech grads will get those jobs ! Rest will join the rank of 3.5 million graduates who join our work force each year - to remain jobless Now , I am not saying that the job of sweeping streets is " below the dignity " of anyone Why , even our Netas do it , if there is a TV camera around ! But take a look at the following news ( DNA / 11 Sept 2015 ) : Against 368 vacancies of " Peons " advertized by UP Govt , applications received were as follows : * Total Number of applicants.............. 20 lakh { 5,435 applicants for each post ! } * No of PhDs.................................... 201 * No of Master Degree holders............ 20,056 * No of Bachelor Degree holders.......... 1,23,000 * No of 12th Standard p................. 6,00,000 * No of 10th Standard p................. 8,20,000 { Minimum prescribed Edu Qualification = 10th Standard } This scenario repeats , month after month , year after year ! The only hope for these millions of Graduates / Post Graduates, is to apply for admission to some 15,000 Industrial Training Insutes ( ITIs ) for getting " trained " as Electricians / Plumbers / Carpenters / Masons etc ,in order to acquire " skills " which will enable them to get " Self Emplo " But the problem is : * None of these " re-skilled " jobless will qualify as a " START UP ", under Start Up Action Plan announced on 16 Jan 2016 * To start " Self Employment " , no bank will give them a loan of Rs 1 Million, with ZERO interest for first 10 years , and without requiring any securities For turning 10 million jobless into 10 million " Self Emplo "(@ loan of Rs 10 lakh each ) , would require EACH YEAR , disburt of : Rs 10 LAKH*CRORES ! Government just does not have that kind of money But BLACK MONEY ders have ! All we need to do is to " INCENTIVIZE " them to help start a " NEW ECONOMIC ORDER " , where Self Employment is not merely encouraged but it is CELEBRATED ! It does not require ping of any bill in Rajya Sabha to declare : * No questions asked , as to the source , for any CASH deposited in Jan Dhan Bank A/C , provided that account holder , first registers on Income Tax Department web site as a " Self Emplo " person * All payments made out from such " Self Emplo " accounts , must be by Cheques / Credit - Debit Cards / RuPay Cards / Mobile Wallets / Electronic Transfers etc * Levy of a 2% Bank Transaction Tax ( BTT ) on all such payments * Total abolition of Personal Income Tax for these " Self Emplo " * Self Emplo barred from any loans from banking system * Self Emplo not eligible for any incentive / subsidy from Center / States If it does not sound politically correct to call this initiative an " AMNESTY SCHEME ", then call it , " SELF CAPITAL SCHEME " / " ECONOMY KICK-START SCHEME " When , * The entire World is set to lose 11 million jobs in next 5 years * World Economy is in a downward spiral * International Trade is shrinking * Jobless / Economic migrants are marching onto Europe / Australia * Resentment / Intolerance are mere manifestation of jobless poverty , This is the ONLY WAY , India can make 21st Century , an Indian Century ! I hope Shri Narendra Modiji - and his colleagues in Cabinet - has the political will to introduce this in the forthcoming budget on 29 Feb 2016 ! ------------------------------------------------------------------------------------------------------- hemen parekh 23 Jan 2016 / blogs

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