How To Set Up and Run Your Own Business

How to Set Up and Run Your Own Business
1. Selection of type of the company.

2. Selection of name for the proposed company.
3. Apply for Directors Identification Number and Digital Signatures.
4. Drafting of Memorandum and Articles of Association.
5. Stamping, digitally signing and e-filing of various documents with the
Registrar.
6. Payment of Fees.
7. Obtaining Certificate of Incorporation.
8. Preparation and filing of Prospectus/Statement in lieu of Prospectus and
e-Form
19/20 (in case of public companies) for obtaining the certificate of
commencement of
Business.
9. Obtaining Certificate of Commencement of business (in case of public
limited
Companies).
Things to remember:
 The first myth to explode about running your own business is the notion that to start
any business requires a lot of money. This idea is believed by almost everyone, strange
as it may seem. Whilst it is true that some types of business require an enormous initial
outlay, most only require a very modest initial investment, and some require virtually no
money at all to start them off!
 The essence of running your own business with success is a matter of good planning. It
is a strategic planning philosophy which works best, as seen in the Direct Drive idea. You
plan what you're going to do, work out what kinds of things might go wrong, and test
the ideas out to see what's practical. If you play chess, apply that chess-playing logic to
life and money, and you are likely to be a success.
 Determination is important. It's best to have an attitude of being persistent in working
on your business. You have to keep on at it even though it's hard work and doesn't have
any immediate reward.
 Avoid PARTNERSHIPS. Especially with your friends! If you decide you must have a
business relationship with someone, make sure it's all written down and everyone
knows exactly what they are supposed to do.
 Your own website. Whether you're an Internet business or not, it's good to have your
own website! This does not have to be expensive. However, having a website is good for
business. Customers are often impressed to see "www." on the company's "premises".
Business Methodology
Doing Business records all procedures that are officially required for an
entrepreneur to start up and formally operate an industrial or commercial
business. These include obtaining all necessary licenses and permits and
completing any required notifications, verifications or inscriptions for the
company and employees with relevant authorities.
After a study of laws, regulations and publicly available information on business

entry, a detailed list of procedures is developed, along with the time and cost of
complying with each procedure under normal circumstances and the paid-in
minimum capital requirements. Subsequently, local incorporation lawyers and
government officials complete and verify the data.
Information is also collected on the sequence in which procedures are to be

completed and whether procedures may be carried out simultaneously. It is
assumed that any required information is readily available and that all agencies
involved in the start-up process function without corruption. If answers by local
experts differ, inquiries continue until the data are reconciled.
To make the data comparable across countries, several assumptions about the
business and the procedures are used.
Assumptions about the business
The business:
 Is a limited liability company. If there is more than one type of limited

liability company in the country, the limited liability form most popular
among domestic firms is chosen. Information on the most popular form is
obtained from incorporation lawyers or the statistical office.
 Operates in the country’s most populous city.
 Is 100% domestically owned and has 5 owners, none of whom is a legal
entity.
 Has start-up capital of 10 times income per capita at the end of 2008, paid
in cash.
 Performs general industrial or commercial activities, such as the production
or sale of products or services to the public. The business does not perform
foreign trade activities and does not handle products subject to a special
tax regime, for example, liquor or tobacco. It is not using heavily polluting
production processes.
 Leases the commercial plant and offices and is not a proprietor of real
estate.
 Does not qualify for investment incentives or any special benefits.
 Has at least 10 and up to 50 employees 1 month after the commencement
of operations, all of them nationals.
 Has a turnover of at least 100 times income per capita.
 Has a company deed 10 pages long.
Procedures
A procedure is defined as any interaction of the company founder with external

parties (for example, government agencies, lawyers, auditors or notaries).
Interactions between company founders or company officers and employees are
not counted as procedures. Procedures that must be completed in the same
building but in different offices are counted as separate procedures. If founders
have to visit the same office several times for different sequential procedures,
each is counted separately. The founders are assumed to complete all procedures
themselves, without middlemen, facilitators, accountants or lawyers, unless the
use of such a third party is mandated by law. If the services of professionals are
required, procedures conducted by such professionals on behalf of the company
are counted separately.
Both pre- and post incorporation procedures that are officially required for an
entrepreneur to formally operate a business are recorded
Procedures required for official correspondence or transactions with public

agencies are also included. For example, if a company seal or stamp is required on
official documents, such as tax declarations, obtaining the seal or stamp is
counted. Similarly, if a company must open a bank account before registering for
sales tax or value added tax, this transaction is included as a procedure. Shortcuts
are counted only if they fulfill 4 criteria: they are legal, they are available to the
general public, they are used by the majority of companies, and avoiding them
causes substantial delays.
Only procedures required of all businesses are covered. Industry-specific
procedures are excluded. For example, procedures to comply with environmental
regulations are included only when they apply to all businesses conducting
general commercial or industrial activities. Procedures that the company
undergoes to connect to electricity, water, gas and waste disposal services are not
included.
Time
Time is recorded in calendar days. The measure captures the median duration
that incorporation lawyers indicate is necessary to complete a procedure with
minimum follow-up with government agencies and no extra payments. It is as-
sumed that the minimum time required for each procedure is 1 day. Although
procedures may take place simultaneously, they cannot start on the same day
(that is, simultaneous procedures start on consecutive days). A procedure is
considered completed once the company has received the final document, such
as the company registration certificate or tax number. If a procedure can be
accelerated for an additional cost, the fastest procedure is chosen. It is assumed
that the entrepreneur does not waste time and commits to completing each
remaining procedure without delay. The time that the entrepreneur spends on
gathering information is ignored. It is assumed that the entrepreneur is aware of
all entry regulations and their sequence from the beginning but has had no prior
contact with any of the officials.
Cost
Cost is recorded as a percentage of the economy's income per capita. It includes

all official fees and fees for legal or professional services if such services are
required by law. Fees for purchasing and legalizing company books are included if
these transactions are required by law. The company law, the commercial code
and specific regulations and fee schedules are used as sources for calculating
costs. In the absence of fee schedules, a government officer’s estimate is taken as
an official source. In the absence of a government officer’s estimate, estimates of
incorporation lawyers are used. If several incorporation lawyers provide different
estimates, the median reported value is applied. In all cases the cost excludes
bribes.
Business Objectives
Objectives give the business a clearly defined target. Plans can then be made to
achieve these targets. This can motivate the employees. It also enables the
business to measure the progress towards to its stated aims.
The most effective business objectives meet the following criteria:
S – Specific – objectives are aimed at what the business does, e.g. a hotel might
have an objective of filling 60% of its beds a night during October, an objective
specific to that business.
M - Measurable – the business can put a value to the objective, e.g. €10,000 in
sales in the next half year of trading.
A - Agreed by all those concerned in trying to achieve the objective.
R - Realistic – the objective should be challenging, but it should also be able to be

achieved by the resources available.
T- Time specific – they have a time limit of when the objective should be
achieved, e.g. by the end of the year.
The main objectives that a business might have are:
Survival – a short term objective, probably for small business just starting out, or
when a new firm enters the market or at a time of crisis.
Profit maximisation – try to make the most profit possible – most like to be the
aim of the owners and shareholders.
Profit satisficing – try to make enough profit to keep the owners comfortable –
probably the aim of smaller businesses whose owners do not want to work longer
hours.
Sales growth – where the business tries to make as many sales as possible. This
may be because the managers believe that the survival of the business depends
on being large. Large businesses can also benefit from economies of scale.
A business may find that some of their objectives conflict with one and other:
Growth versus profit: for example, achieving higher sales in the short term (e.g. by
cutting prices) will reduce short-term profit.
Short-term versus long-term: for example, a business may decide to accept lower
cash flows in the short-term whilst it invests heavily in new products or plant and
equipment.
Large investors in the Stock Exchange are often accused of looking too much at
short-term objectives and company performance rather than investing in a business
for the long-term.
Alternative Aims and Objectives
Not all businesses seek profit or growth. Some organisations have alternative
objectives.
Examples of other objectives:
Ethical and socially responsible objectives – organisations like the Co-op or the
Body Shop have objectives which are based on their beliefs on how one should
treat the environment and people who are less fortunate.
Public sector corporations are run to not only generate a profit but provide a
service to the public. This service will need to meet the needs of the less well off in
society or help improve the ability of the economy to function: e.g. cheap and
accessible transport service.
Public sector organisations that monitor or control private sector activities have
objectives that are to ensure that the business they are monitoring comply with the
laws laid down.
Health care and education establishments – their objectives are to provide a

service – most private schools for instance have charitable status. Their aim is the
enhancement of their pupils through education.
Charities and voluntary organisations – their aims and objectives are led by the
beliefs they stand for.
Changing Objectives
A business may change its objectives over time due to the following reasons:
A business may achieve an objective and will need to move onto another one (e.g.
survival in the first year may lead to an objective of increasing profit in the second
year).
The competitive environment might change, with the launch of new products from
competitors.
Technology might change product designs, so sales and production targets might
need to change.

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How to Set Up and Run Your Own Business

1. Selection of type of the company.

After a study of laws, regulations and publicly available information on business

Information is also collected on the sequence in which procedures are to be

Assumptions about the business

 Is a limited liability company. If there is more than one type of limited

A procedure is defined as any interaction of the company founder with external

Procedures required for official correspondence or transactions with public

Cost is recorded as a percentage of the economy's income per capita. It includes

The most effective business objectives meet the following criteria:

A - Agreed by all those concerned in trying to achieve the objective.

R - Realistic – the objective should be challenging, but it should also be able to be

The main objectives that a business might have are:

Alternative Aims and Objectives

Examples of other objectives:

Health care and education establishments – their objectives are to provide a

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