With the advent of the age of better internet connectivity, the Indian subcontinent has seen exponential growth in economic activities throughout the country. Many new and old MSME businesses have pivoted to online business with great results. Internet is being referred to as a platform to spread valuable information about a product or service.
The internet has increased the level of engagement of the producers with their consumers. This has marked an increase in public acceptance and conversions. As a result, the demand for MSME loans has increased by a substantial margin, as it is an efficient financing solution for MSMEs.
Meaning of MSME business
Micro, Small and Medium Enterprises is the MSME full form. It refers to companies whose capital invested does not exceed Rs. 10 Crore threshold.
- Micro – Capital invested is up-to Rs. 25 Lakh.
- Small – Capital invested is Rs. 25 Lakhs to Rs. 5 Crore.
- Medium – Capital invested Is Rs. 5 to Rs. 10 Crore.
Listed below are the essential steps to kick-start an MSME
Step 1: The idea
It is arguably the most important part of starting any kind of business. Ideas can come easily. A business idea should be something that generates value for its customers. It should be able to make life easier for a person. If you have an idea, it is imperative to properly evaluate it and realise it to make life easier for your consumers. Create a product or offer a service which is not just as per consumer demand but also relates to consumer requirements.
Step 2: Business plan
This step involves the basic procedures that you will need to chalk-out before presenting your idea to probable investors. These include:
- Production Planning – It involves careful evaluation of different production methods and selection of the most optimum process that is best suited for your idea. It also includes the way you plan on acquiring the different factors of production and the way you are managing your working capital.
- Revenue Model – This plan includes the identification of your target customers and estimating an approximate annual sales volume. This will give the investors an idea about the scale you are aiming for.
- Valuation – Many suffer due to improper valuation. Valuation refers to the total capital you are aiming to raise. Your valuation must be justifiable by your scale and revenue model.
Step 3: Capital acquisition
The step of acquiring capital is also an indispensable part of this list. It is vital to choose a proper source of funds. If the cost of a loan is too high, the business is bound to suffer in the long run. Various non-banking financial institutions (NBFC) provide low MSME Loan interest rates to get the companies started. Proper start-up valuation of your company is necessary before you start looking for the most suitable alternative to finance your business.
Step 4: Resource acquisition and production
This step marks the beginning of your journey as a business-man. Resources refer to the means of production, namely land, human resource and machinery. You have already planned the kind of machinery and manpower you will need in step 2, this is the step where you execute the plan. You have to purchase machinery, hire employees and form a core team that will assist you in this effort intensive process of production.
Step 5: Marketing strategy
Here you have to choose and execute marketing strategies to create public awareness about your product. There are various ways in which you can market your product to create demand. Digital marketing is an effective way of marketing. One can engage with their consumers and collect feedback in real time. This is helping a lot of businesses to improve and build goodwill on their product. A proper marketing strategy can make a business but a wrong one will certainly break it.
Step 6: Management
Last, but not the least. Once your marketing campaign starts to roll, you will generate sales. Once you start to generate sales, you will have to pay your creditors, employees and manage every other aspect of your business. You will need to have a management plan to efficiently manage your company, or you can hire a professional with special management skills.
The above steps if followed properly will help you to take your business off on a smooth and efficient way.