People with innovative ideas or a new business model especially in fast-growing markets are looking for an opportunity to begin a commercial venture. The biggest requirement of such people is finance for their business. In this article, we are presenting some suggestions for starting a finance company which will be helpful for people starting a company in India or any other robust economy. Finance companies provide loans to commercial as well as individual customers for various reasons. Clients can use these loans to set up a new business or expand an existing one. Beginning a venture like this requires extensive planning and an in-depth understanding of the market. Let’s take a look at the tips for setting up such an institution.
1. Identify The Area Of Specialization
Finance companies usually look to serve clients in a specific niche. Some institutions cater to startups looking for business loans while others provide microfinance services helping individuals and very small business owners. It is essential to know your area of specialization to be able to create a suitable business plan. This will also be useful in identifying the target audience of the new venture which needs to be studied for understanding their requirements. Moreover, it will also give you an idea about the competition in the domain and whether a new business will survive in it or not. Ideally, the new firm must enter an area in which you possess interest and experience. This will be helpful in starting the business on a sure footing.
2. Decide A Suitable Business Structure
One of the most important aspects of setting up a company in India or any other economy of the world is to decide on an appropriate legal type for the new firm. The most common format is the private limited company which is preferred by a large number of investors. These companies are separate legal entities providing the benefit of limited liability. This protects the personal assets of the entrepreneurs which cannot be used settle debts or any other liabilities of the company. You can also start a non-profit organization providing loans and other financial instruments to people. Depending on your area of specialization you may have to get additional registration according to the legal regulations of the jurisdiction. Get in touch with experts who provide legal services for startups to know about the applicable regulations and the relevant procedures for registering a new business.
3. Make An Assessment Of The Business Requirements
A new venture requires infrastructure in the form of office space, human resources, equipment, software solution etc. Depending on your target audience and the business model, you may also need a website and/ or a mobile application. Moreover, the enterprise will need guidance from consultants in law and accounting. Entrepreneurs must make an estimate of the employees they will need apart from the size of the office space. All these estimations are necessary to assess the total costs of running the new company. This will be in addition to the money needed to fund the business. Business owners must also decide whether they want to run the enterprise alone or they need a partner for the purpose. This will have an effect on the revenue-splitting model of the company.
4. Create A Comprehensive Business Plan
People starting a finance company must create a business plan before embarking on the venture. The business plan is the guide which will not only educate investors about your business but also help you in moving in a focused manner on the chosen path. This document must contain the long-term as well as the short-term goals of the business. It must also include the strategies that you feel will help you achieve the stated objectives. Describe your target audience and the products you are going to offer them. Explain how your enterprise is going to be different from the existing players in the domain. Entrepreneurs must also describe how their products are better suited to fulfill the requirements of the target audience. It should also contain information about the organizational structure of the firm.
5. Devise A Suitable Marketing Strategy
Whether you are establishing a business set up in India or anywhere in the world, you need to plan a marketing strategy to attract customers. Identify the best way to communicate your marketing message to potential customers and design promotional material accordingly. Determine the avenues which you want to use for the promotions. This will depend on the nature of the target audience. For example, a technical savvy prospective customer base will require digital marketing methods involving the usage of the internet and other technological tools for brand promotion. In addition to this, a sales strategy must also be framed. The business owner must decide how the sales teams will approach customers and what will be their sales targets.
6. Know About Applicable Regulations
Most startup owners neglect the legal aspect of running a business until they are faced with an issue related to the domain. All business owners must know about all applicable legal regulations before starting the enterprise. There are specific laws which dictate how such institutions can lend money or fix a rate of interest. They must also learn about the taxes they need to pay and the necessary documents they need to maintain to comply with all regulations. Having all this information before starting the firm will help the owner in planning for the future.
Starting a finance company is a sound business idea but careful forethought and extensive planning are needed for successful execution. The suggestions presented here will help entrepreneurs in creating an effective blueprint for their new venture.