The various steps involved in setting up a business enterprise will be most complex when it relates to an industrial unit.
The steps in setting up a small industrial enterprise are as follows:
Step # 1. Deciding to go into Business:
This is the most crucial decision a youth has to take, shunning wage-employment and opting for self-employment/entrepreneurship.
Step # 2. Analyzing Strengths/Weaknesses:
Having decided to become an entrepreneur, the young person has to analyze his/her strengths/weaknesses. This will enable him/her to know what type and size of business would be most suitable. This will vary from person to person.
Step # 3. Product Selection:
The next step is to decide what business to venture into, the product or range of products that shall be taken up for manufacture and in what quantity. The level of activity will help in deciding size of business and form of ownership. One could generate a number of project ideas through environmental scanning, short list a few items, closely examine each one of these and zero on to a final products.
Step # 4. Market Survey:
It is easy to manufacture an item but difficult to sell. So it is prudent to survey the market before embarking upon production and satisfy the product chosen is in demand changes in product design required, determining demand-supply gap, extent of competition, your potential share of the market, pricing and distribution policy, etc.
Step # 5. Form of Ownership:
A firm can be constituted as proprietorship, limited company, (public or private) co-operative society, etc. This will depend upon the type purpose and size of your business. One may also decide on the form of ownership based on resources on hand or from the point of saving on taxes.
Step # 6. Location:
The next step will be to decide on the place where the unit is to be located. Will it be hired or owned? The size of plot and covered and the last one identified. This will be useful in determining the machinery and equipment to be installed.
Step # 7. Machinery and Equipment:
Having chosen the technology, the machinery and equipment required for manufacturing the chosen product/s have to be decided, suppliers identified and then costs estimated. One may have to plan well in advance for machinery and equipment especially if it has to be procured from outside the town, state or country that is, have to be imported.
Step # 8. Project Report:
The economic viability and technical feasibility of the product selected has to be established through a project report. A project report that may now be prepared will be helpful in formulating the financial, production, marketing and management plans. It will also be useful in obtaining finance, shed, power, registration, raw material quotas, etc.
Step # 9. Finance:
Money is no problem for starting scale industry. But an entrepreneur has to take certain steps and follow specific procedures to obtain it. A number of financial agencies will give loans on concessional terms. Under TRYSEM and SEEUY schemes, entrepreneurs are also eligible for subsidies which obviate the need for margin money.
Step # 10. Power Connection:
The site chosen should either have adequate power connection or this should be arranged now.
Step # 11. Installation of Machinery:
Having arranged finance, work shed, power, etc. the next step is to procure the machinery and begins its installation.
Step # 12. Recruitment of Manpower:
Once machines are installed manpower will be required to run them. So the quantum and type (skilled, semi-skilled, unskilled, administrative, etc.) of labour have to be determined, sources of getting desired labour identified and labour/staff recruited. Possibly, the labour has to be trained either at the entrepreneur’s premises or in a training establishment.