Launched in 2014, StoryBites is a weekly feature from YourStory, featuring notable quotable quotes in our articles of this past week. This special series of compilations focuses on India’s COVID-19 struggle (see last week’s post here). Share these quotes and excerpts with your networks, and check back to the original articles for more insights.

Food safety issues and the enhancement of health security are of growing national and international concern. – FSSAI report

COVID-19 transformed the fish and meat purchasing behaviour of consumers dramatically. Due to safety concerns, consumers made the habit-forming shift to ecommerce. – Shan Kadavil, FreshToHome

Health is no more about medicines; it is now a way of life. – Sanjaya Mariwala, OmniActive Health Technologies

The COVID-19 pandemic has severely impacted the lives of people with disabilities. Visually impaired persons cannot avoid touch and cannot maintain physical distancing in their true sense. – Prashant Ranjan Verma, NAB

The lockdown period has drastically changed individual behaviours and highlighted the need for safety and comfort. – Paul Abraham, Hinduja Foundation

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The pandemic brought enormous human suffering, but the quarantine and economic fallout brought the cash flow crisis. – Patrick Schwerdtfeger, 'Pandemic, Inc.'

It’s competitive to raise funding in any environment and even more so during a crisis of such a magnitude. If you are in a sector that’s in favour right now, do raise a bit more than required to have some buffer. – Jatin Desai, Inflexor Ventures

Any and every profession involves some risk, whether it is delivering food, working on a desk, or running a company. – Raghav Joshi, Rebel Foods

Leading global bodies project that there will be a contraction in global energy demand over the next few years also. – PM Narendra Modi

The coronavirus pandemic has set women professionals back by more than a decade, further disbalancing gender parity at work. – Anuranjita Kumar, WiT India

The pandemic has given rise to unpaid care work that women provide and there has been a reduction in external investment towards women-led enterprises as businesses continue to be affected due to disruption. – Naghma Mulla, EdelGive Foundation

Being used to the traditional office culture, many people don’t have the right frame of mind to work remotely. It takes time, discipline, and dedication to develop that. – Zahara Kanchwalla Zahara, Rite KnowledgeLabs

Corporate campuses are now allowing extended lunch hours to help mitigate the risk by limiting the number of people who can be present in the cafeteria at a time. – Sandipan Mitra, HungerBox

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COVID-19 has accelerated India's digital transformation and a workforce that is equipped with future-ready skills will be the key to unlocking the country's next phase of growth. – Anant Maheshwari, Microsoft India

As consumers have shifted online, more companies are looking at how they can take advantage of this digital shift and the vast economic opportunities that come with it. – Bhavik Vasa, GetVantage

The blue-collar ecosystem is undergoing massive digital transformation and the ongoing pandemic has accelerated this adoption. – Pravin Agarwala, Betterplace

As the city builds back from COVID-19, there is a demanding need for an accessible, affordable, and safe everyday commute option. – Aravind Sanka, Rapido

During COVID-19 pandemic, consumers began demanding social change in the fashion industry by seeking more sustainable brands. – Rina Dhaka, RE.purposed

Comfort is the priority for most men now especially since most of them are working from home these days. – Prince Kumar, Cantabil Retail

Change and evolution is part and parcel of life – but the beauty of theatre and art is that while nothing stays constant, everything stays the same. – Arundhati Nag, Ranga Shankara

YourStory has also published the pocketbook ‘Proverbs and Quotes for Entrepreneurs: A World of Inspiration for Startups’ as a creative and motivational guide for innovators (downloadable as apps here: Apple, Android).

Original Source: yourstory.com

Starting a new business is a busy time for an entrepreneur. You’re developing a business plan, getting your financial plan in order, and possibly pitching to investors or seeking funding. One thing that can be overlooked but is incredibly vital, is ensuring all legal obligations are met. The failure to do so can result in fines or possibly even court proceedings.

This guide should help you tackle the legal aspects of starting a business in the UK, from choosing a name for your business right at the start all the way to employing staff later on. You can work the relevant legal points into your traditional business plan, or even draw up a separate legal plan or checklist to ensure you have covered everything. 

While the legal processes covered are specific to the UK, the general categories are likely applicable no matter where your business located. That being said, let’s dive in.

Naming your business

You need to choose a unique name for your business, that is not being used already, to avoid running

into problems. If the name is too similar to other businesses, it can suggest there is a connection between the companies and you could be seen as trying to pass your company off as theirs, taking business from them as a result. If they complain or file for trademark infringement, you could be required to change your business name, possibly pay damages, and spend extra time and money re-doing signs, stationery, advertising, etc.

You can easily check to see if your name idea has been taken yet using Made Simple and it’s also wise to verify if a similar trademark already exists.

Choosing the legal status of your business

The legal status you choose determines whether you need to register your business with Companies House, which is the UK’s registrar of companies. The legal status also affects the records and accounts that you have to keep, the amount of tax and National Insurance (NI) you will pay, and your financial liability if the business were to go under. 

It’s also worth noting that in the UK employees pay NI contributions to qualify for certain state benefits and a state pension when they retire. This total will vary based on the legal status of your business. Here are the most common types of legal business structures to choose from when setting up a new business.

Sole trader 

This is the easiest option if you are the only owner (you can still employ people). There is no business registration with Companies House required and keeping records and accounts is simple. Many businesses start off as sole traders and change their legal status later on.

You can benefit from full profit retention and you can complete your own self-assessment tax return online each year, or get an accountant to do it for you. There will be more about paying taxes in the next section. 

If you want to protect the name of your business, you will still need a trademark as no formal registration happens. You will need to weigh up the cost of this to see if it is worth doing.

The downside of being a sole trader is that you have unlimited liability, meaning you are liable for any debts the business has. You could risk your own personal assets, such as your house and savings if the business got into financial difficulty. Sole traders also find it harder to get the funding they need from banks, but it could be the right option for you if your business is low-risk and does not need finance. 

Some people prefer to deal with sole traders over limited companies as the business tends to feel more personal, particularly if the nature of the work is sensitive.

Partnership 

This is the easiest option when there is more than one business owner, and two or more people share the costs, risks, and responsibilities. You do not have to have equal shares and each person’s liability is proportionate to their share.

The downside is that like being a sole trader, partners are not protected financially. If the business goes under you could become liable for your partner’s share of the debt. To avoid this scenario, you can become a Limited Liability Partnership (LLP) so that the LLP is then responsible for any debt and not the business owners.

Limited company 

Most limited companies in the UK are limited by shares. Setting the business up as a limited company means it is a separate legal entity that protects you financially, as the company finances are separate from your own personal finances.

It is more complicated than becoming a sole trader as you need to register the business with Companies House, submit accounts and annual returns to them, and adhere to their record-keeping requirements.

There can be financial advantages in terms of paying tax by becoming a limited company, and it can also be easier to obtain financing. It is best to discuss these specific benefits with an accountant before registering your business.

Paying tax and National Insurance

All businesses must be registered with HM Revenue and Customs (HMRC) as soon as you start trading so that you can pay income tax on your profit and Class 2 and 4 national insurance (NI).

This can be done online and the HMRC will set up an account for you to do your self-assessment. Once complete, they will contact you with a ten-digit Unique Taxpayer Reference (UTR) and send a letter in 2-3 weeks giving you an activation code to access the account.

In order to complete your self-assessment properly, you will need to keep records of your business sales and expenses. To help me stay organized, I have a separate business account that I use to buy the things I need for business operations.

Accepting payment by cash makes keeping track of earnings a bit trickier, and may require keeping and uploading receipts. You can also manage this with your accounting software and add the information to your business financial statements on a monthly basis.

If you are moving to the UK to start a business, you will need to apply for an NI number and can give this number a ring to apply: 0800-141-2075.

Value Added Tax (VAT)

Value Added Tax (VAT) is a tax added to most goods and services. You only need to register for VAT if your VAT taxable turnover is going to exceed the current limit in any rolling 12-month period. The limit is currently is £85,000, and you do not need to include any values from sales that are VAT exempt.

For example, VAT is not added to most food and children’s clothes. Additionally, a lower rate of 5% applies to certain goods and services such as home energy and children’s car seats. The standard VAT rate is 20%.

If you need to register for VAT, there is further information available via www.gov.uk/vat-registration.

Insurance

Some insurance policies are legally required, whereas others are available if you want to protect your business against certain risks. Parts of the business that you can insure include your vehicle, equipment, premises, employees, your products and services, your business idea, and even yourself.

Motor insurance 

Insuring vehicles is always required by law. If you are going to be using your vehicle for work, you will need to make sure you have insured the vehicle for the correct class of use. Any claims would be rejected if you use the vehicle for business purposes without amending your policy to reflect this.

There are other motor insurances available to cover things like tools in a van, that would require Goods in Transit cover. You can compare the costs of these policies via www.confused.com/van-insurance/goods-in-transit.

Professional indemnity 

This insurance is required for certain professions such as accountants and financial advisors. This protects them against claims for losses suffered by customers as a result of mistakes or negligence. Often other professional advisors decide to take this cover out for their own peace of mind in case their customers want to sue them.

Employer’s Liability Insurance

This is mandatory for all businesses with employees. This is to protect you from any claims an employee could make following an accident or illness suffered as a result of working for you.

Additional insurance coverage to consider

Here are some other insurance policies you may want to explore depending on the nature of your business:

Buildings and contentsBusiness Interruption —These policies typically cover any instance where you are unable to operate due to external factors such as inclement weather. The extent of policy coverage fully depends on limitations laid out in your insurance contract. Cyber cover — If you have access to information that would be valuable to fraudsters, this will help manage the cost of the incident and deal with enforcement against you from industry regulators.Employment ProtectionKeyman insuranceMoney in transitProduct LiabilityPublic LiabilityShop insuranceTheft

It is worth remembering that all business insurances are tax-deductible expenses.

As there are so many insurances to think about, it is helpful to go and speak to a local insurance broker to check you have the cover you need. The Association of British Insurers (ABI) website contains a section to help you choose the right insurance for your business.

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Acquire industry-specific licensing

Certain businesses require a license from the local authority to be allowed to trade legally. Some examples include hotels, hairdressers, street traders, boarding kennels, and food outlets.

Contact your local authority and ask to speak to Local Planning or the Building Control Office to find out if you need to register or obtain a license, as failure to do so may qualify as a criminal offense.

Local authorities also have Trading Standards departments who help you understand how to be legally compliant in your business area. You will need to know who the regulator of your industry is and then find a way to keep your knowledge up to date to remain compliant.

Do I need planning permission?

While you investigate whether there is a need for a license from the local authority, also ask them if you need planning permission. Working from home or changing the use of a building can both require planning consent, even if you are not changing the physical building.

You can be fined if you set up a business at home without permission. If your work leads to extra foot traffic and a lack of parking, excess noise, etc. your neighbors may end up reporting you.

Ask the Local Planning or Building Control Office about the plans for your business as soon as you can. Planning consent can take time if it is needed and may cost some money, so it is good to have this figured out early on. 

Employing staff

If you’re going to take on staff you will need to ensure that you comply with certain pieces of employment legislation. Here’s what you need to establish.

Carry out applicant checks 

As an employer, it’s your legal responsibility to make sure you check that any staff has the right to work in the UK. Depending on which sector you work in you may also need to undertake a criminal records check known as a DBS check. Failure to do so can lead to you and your business being liable for a civil penalty.

Register with the HMRC as an employer 

You usually need to register with HMRC within 4-weeks of taking on your first employee. You’ll be responsible for deducting any tax and National Insurance contributions from your staff’s pay. You’ll also be responsible for paying any remaining employee or business taxes at the end of the year if you do not plan accordingly.

National minimum wage 

You must make sure that all staff is paid at least the current national minimum wage per hour for all the hours that they work. The rate does depend on each employees’ age and if they’re an acting apprentice.

Pensions auto-enrolment 

As an employer, you must enroll all eligible staff into a workplace pension scheme. There are different pension types that either require you or the government to add a specific matching dollar value to each employee pension. In most automatic enrollment schemes, employees will make contributions based on total earnings, including:

salary or wagesbonuses and commissionovertimestatutory sick paystatutory maternity, paternity, or adoption pay

Statement of employment 

You will need to issue all staff, who will be with you for more than a month, with a written statement of employment. This document sets out the conditions of their employment, such as hours and pay, and must be given to staff within 8-weeks of their start date. In addition, staff should be given a contract (which can be incorporated with the statement of employment).

The contract sets out details of their rights, responsibilities, and working conditions. Make sure the contract is clear on which terms are contractual and which are not, as this will affect how you can make any changes in the future.

Employers liability insurance 

We mentioned this before, but if you employ staff other than direct family members then you need to take out employers liability insurance. This type of insurance will cover will protect you from claims made by employees if they are injured or fall ill at the workplace.

Health and safety 

All employers are required to provide a safe working environment for their staff. If you have more than 5 staff you will need to have a formal written Health & Safety policy. This includes a safe place to work, safe access to work, safe systems of work, safe equipment procedures, safe interactions between workers, and protection from risks of injury.

Legislation that may affect your business

Legislations are rules and regulations that you must adhere to whilst running your business. I have not listed all of them as not all will apply to every business, but you will need to identify the ones that apply to you. We will touch on the more common ones, but to explore more legislation please visit www.legislation.gov.uk.

Employment law

Employment law is there to protect the rights of employees and their health and safety. We will touch on the main laws to consider for those employing staff.

Health and Safety at Work Act of 1974

Premises and machinery must be safe and not affect the health of workers. If you employ 5 or more staff you need to have a written health and safety policy and conduct risk assessments which need to be documented and communicated to the employees.

Equal Pay Act of 1970 

Employees must be paid equally to those who do work of the same value regardless of their sex.

Sex Discrimination Act of 1975 

Employees cannot be discriminated at any stage of recruitment, training, or employment.

Race Relations Act of 1976

It is illegal to discriminate against a person because of their color, race, or ethnic group.

Employment Protection Act of 1978

Employers must provide employees with a written contract of employment. This is to protect them from unfair dismissal and gives them the right to redundancy pay should their job no longer be required after 2-years.

Consumer Protection

Consumer Protection rights are there to protect customers from unfair business practices.

Sale and Supply of Goods Act 

Goods must be of a decent standard. This applies to any goods that are identified and agreed to be purchased by consumers.

Trade Descriptions Act 

Goods and services must be as advertised and you must not give misleading information.

Distance Selling Act 

Some selling methods, such as online shopping, require you to allow a ‘cooling-off’ period, during which time a customer can change their mind about a purchase and obtain a refund. 

Data Protection Act/GDPR

This will apply to anyone that needs to take any customer details, so it will apply to the majority of businesses. You’ll want to make sure you fully understand the extent of these protections and can check the Information Commissioner’s Office for specifics.

Develop internal legal documents

Developing internal legal documents helps to instill confidence in your business for the benefit of everyone — your customers, employees, and potential investors.

Privacy policy

A privacy policy is a statement that tells your customers how their data will be collected, used, stored, and protected. It should also detail if there may be a need to share any personal information.

Company handbook

Your company handbook is something you will probably change and add to as your business grows. In short, it is really a book to summarise how you do things in your business. It needs to be made available to staff at all times — you could either give everyone a copy or make it otherwise easily available for reference. Here’s what to include.

Your company mission statement

Your employees want to know the goals and reasons for your company’s existence. This is where your mission statement comes into play. Generally, it should include the history of your company, the vision, and the goals you want to achieve.

Your company’s policies 

Your company policies are typically extensions of required legal stipulations along with any additional company-specific policies. This can be anything that is important such as having a clear desk policy outside of office hours to help protect data or even just the way you want staff to answer the phone.

Human resources and legal information related to employment

If you don’t have an HR department to help you outline every policy, you’ll need to address the following:

Joining the company Employee benefitsWorking hours Annual Leave and sickness absenceAbsence management –policy for managing short and long-term absence and requirements for reportingBribery, confidentiality, whistleblowing, and data protectionEqual opportunities and bullying and harassment policiesIT rules (including areas such as social media use both inside and outside of work)Your Health and Safety policy including how you intend for you and your staff to implement this Disciplinary/Grievance proceduresFlexible family-friendly legislation policiesCapability and performance management targets and proceduresTermination of employment including retirement and redundancy

It is a good idea not to make any company policies contractual for staff so you can amend the staff policies in the employee handbook at any time.

Retaining legal counsel

It is useful to have a solicitor on retainer so that you can get advice whenever you need it. When starting and operating a small business you probably won’t need a solicitor often, but having phone support available for when you do will be beneficial.

There are large national organizations that offer this service such as Peninsula Group Limited, but you may prefer to ask a local solicitor or a more friendly and personal service.

Why develop a legal action plan?

Incorporating a legal action plan into your larger business plan may be necessary when pitching to investors or applying for funding. It’s also valuable to incorporate specific legal steps into your milestones to better use as a management tool.

Now, this guide has covered a lot of different legal components, so you may find it easier to write a separate legal action plan. Since Employment Law is such a large part of legal planning, if you do not plan to hire any staff and will operate by yourself, you might just need a simple legal checklist.

In any case, be sure that you have some sort of plan in place to be sure you address everything.

Don’t get overwhelmed by legal requirements

This all may seem daunting as there is so much to think about, but I hope that this guide helps you to plan and meet your legal obligations. It is best to start off small but keep the big picture in mind. Keep referring back to your traditional business plan so as not to lose sight of what you dreamed of.

If you ever have questions or concerns about specific legal requirements, check the official UK government website or reach out directly to a legal expert for assistance. Best of luck with your new venture!

Editors’ Note: This article is purely informational and should not be taken as legal advice. If you have questions regarding specific laws, licensing or protections contact your preferred legal counsel. 

Original Source: articles.bplans.com

States can typically waive repayments of most unemployment insurance if there is no fraud involved. But that’s not the case for the Pandemic Unemployment Assistance program.

Original Source: cnbc.com

Launched in 2012, YourStory's Book Review section features over 250 titles on creativity, innovation, entrepreneurship, and digital transformation. See also our related columns The Turning Point, Techie Tuesdays, and Storybites.

Aspiring entrepreneurs and students wanting to learn about the startup journey and the role of fundraising can find a useful framework and numerous case studies in the book — Funding your Startup — by Dhruv Nath and Sushanto Mitra.

Featured founders of successful startups who raised funds are Nakul Kumar (Cashify), Samant Sikka (SQRRL), Jaineel Aga (Planet Superheroes), Abhishek Barari (MyCuteOffice), Amit Grover (AHA Taxis), and Tushar Agarwal (Uno Finance). The authors also document why some startups did not succeed, such as QACCO, Greymeter, and others, whose names have been changed.

There are brief takeaways as well from successful founders and investors like Sanjeev Bikhchandani (Naukri.com), Deep Kalra (MakeMyTrip), Yashish Dahiya (PolicyBazaar), Dinesh Agarwal (IndiaMART), Nakul Kumar (Cashify), Sairee Chahal (SHEROES), Pradeep Gupta (Indian Angel Network), and Rajul Garg (Leo Capital).

Dhruv Nath is a professor at the Management Development Institute, Gurugram. An IIT Delhi graduate, he is also an angel investor and a Director with Lead Angels. He was earlier SVP at NIIT. Sushanto Mitra is the Founder of Lead Angels. He was earlier the founding CEO of Society for Innovation and Entrepreneurship (SINE), IIT Bombay, and the Director of Hyderabad Angels.

Here are my three key clusters of takeaways from the compelling 240-page book, summarised as well in Table 1. See also my reviews of the related books Angel Investing, The Manual for Indian Startups, Straight Talk for Startups, and Startup Boards.

TaI. The PERSISTENT framework

The authors present a useful startup framework for founders, based on the apt acronym PERSISTENT: Problem, Earnings model, Risks, Size of the market, Innovation, Scalability, Team, Entry barriers, Niche, and Traction.

This framework is applied to seven startups who applied for early-stage funding, and five startups who applied for late-stage funding. The analysis covers successes and failures, both of which are instructive for aspiring founders.

Many founders fail to pass the test of one or more elements of the PERSISTENT framework. These include unit economics not becoming positive, or not exceeding overhead costs, or becoming profitable only after too long a period. Pure discounting cannot be sustained for a long time, and unless there is a moat, there is no sustainable competitive advantage.

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For example, MyCuteOffice showed the viability of the shared-office model in Mumbai and raised Rs 70 lakh in angel funding. The startup reduced the risks of tenants and landlords bypassing the platform and reduced manual interventions by adding ranking and rating features.

It then added a new model of affordable co-working spaces. Founder Abhishek Barari got the idea for the startup while hearing friends complain about office costs. He advises entrepreneurs to keep 50 percent of funds in reserve for difficult times.

Samant Sikka got the idea for micro-savings startup SQRRL while literally watching squirrels storing nuts for a rainier day. He expanded to goal-based saving, thus showing the scalability of the model. Showing skin in the game, he was able to get funds straight from VCs, skipping the angel stage.

He cautions founders that fundraising can take up a lot of time and even draw them away from the core business. The authors also caution that a model based on “get users first then revenues later” will be harder to pitch to investors.

Greymeter began as a platform for assessing and training college graduates for the job market and raised a crore in angel funding. But, it had to shut shop because some assumptions that large companies would pay for testing and training of coding skills did not hold to be true; they conducted such activities themselves.

Another founding team that the authors came across did not make it past the angel round because the founders had only an engineering background and no business orientation. It does not help to have only a love for the product without business sense, the authors caution.

Yet another founder tried to replicate the online wedding gift registry model from the west to India. Though it was a significant niche and solved the problem of unwanted or duplicate wedding gifts, there were risks such as low entry barriers for ecommerce giants.

A founder tried to pitch her business for fashion discussions, ratings, and shopping via social media, but angels did not invest in it since it had no revenue model. Perhaps a super-angel willing to wait longer for a revenue model to emerge could have invested in it, the authors explain.

The authors document how another proposal not accepted by angels was for a sharing platform for toppers’ notes among non-topper students. Though the idea seemed good for this large market, there were concerns over the quality of notes, unauthorised sharing, and ineffective rating of notes.

Dissatisfied with his day job in an equity firm, Jaineel Aga zeroed in on the market need for official merchandise for comic characters and founded Planet Superheroes. But up-front licensing costs were high, and there were cheaper alternatives by pavement sellers.

There was market demand, however, for quality products, and he raised Rs 3 crore from angels and Singapore-based VC DSG Consumer Partners. He moved from online sales to ‘shop in shops,’ exclusive outlets, and franchises. A Japanese gaming company participated in a Series A round next.

The founders of Cashify hit upon the idea of recycling e-waste when they were disposing of empty beer bottles. They refurbished laptops acquired directly from customers instead of buying them from unorganised markets, and moved on to mobiles.

Though angels and VCs initially turned down their funding requests over concerns of being too operations-heavy, they focussed on becoming profitable, though at a slower pace. The VCs then came back, and Cashify raised half a million dollars for its growth plans. The startup makes its own brand of refurbished devices (Phone Pro and Screen Pro) and has 14 hubs in India.

Amit Grover hit upon the idea of one-way fare inter-city taxis when he was forced to go with a two-way booking based on the prevailing model. He founded aggregator AHA Taxis by working with local operators and added an automation moat via analytics for calculating prices, rating of services by passengers, and a bidding system for operators.

Though the first set of angels turned down the startup, the second set invested in the first round. Interestingly, the first set invested in the second round, and the startup was acquired as a strategic investment by US-based eBix Software (it also acquired Yatra.com).

“Keep on building your business and the investors will come,” Amit advises.

Tushar Agarwal’s friend had personal struggles with getting financing for his father’s hospitalisation expenses. Building on his own experience in the finance and health sectors, Tushar founded Uno Finance.

He partnered with hospitals for on-premise marketing and commission rates, and built a risk analytics model based on medical research. The second round of funding helped in further growth.

QACCO (Quality Accommodation) was founded as an aggregator for boutique hotels. Though it raised angel funding, it shut down because of the limited and saturated market. There was also no entry barrier against larger players, the authors explain.

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II. Foundations of funding

Early funding can come from friends and family – usually, because they know the founder, see some promise in their idea, and are willing to take a risk. Angel investors fund startups with the hope of getting better returns than deposits (around seven percent) or stock markets (around 15 percent), the authors explain.

Such investors operate in angel networks, which now even include aam aadmi angel investors who invest smaller amounts like Rs 5 lakh each, as compared to super angels. “Angels invest their own money, whereas VCs typically invest other people’s money,” the authors explain.

VCs invest in late-stage startups (where the business is proven and risks are lower), to the tune of Rs 5-7 crore or more. There are also “micro VCs” such as Blume Ventures, India Quotient, and YourNest Venture Capital. VCs want to see hard numbers and actual results, not just hope and promise; they want to see past performance and not just future projections.

Good investors bring in funding, experience, mentorship, contacts, and credibility. This helps startups build products or grow rapidly. “Don’t chase funding. Build a successful business, and let funding chase you,” the authors emphasise.

Other sources of funding are debts or loans, government grants, and business plan competition prizes. Incubators and accelerators provide funding, as well as access to infrastructure, mentoring, investor connections, and services like patent filing (see YourStory's Startup Hatch series of incubator and accelerator profiles).

Angel networks can be contacted via the city hubs of The Indus Entrepreneurs (TiE), or during demo days of incubators and accelerators. Meetings with angels are in groups, whereas VC meetings are one-on-one.

The authors provide tips on preparing business plans and pitches. The pitch should reinforce the key message of the startup in one phrase, line, or sentence. The structure of the pitch deck can be along the PERSISTENT framework elements, along with information on competition and projections.

Investors may expect to see positive unit economics within a couple of years, and profitability after four years, and accordingly, allot funds in tranches. Founders may ask for a crore in funding to prove the business model, and Rs 2-3 crore for the first phase followed by Rs 7-10 crore for the second phase of growth.

Growth is expected to be rapid and move away from discounting in early periods. “Remember, funding is generally given for growth, and not for survival,” the authors caution. The pitch should explain burn rates and runway periods.

Two chapters cover valuation, term sheets, shareholder agreements, and steps like due diligence. The 12-page appendix provides a sample term sheet; shareholder agreements can be 40 pages long.

Based on thumb rules, the pre-money valuation of a startup can vary from Rs 4-15 crore, depending on revenues. The authors advise founders to read up thoroughly and even get legal help to understand contracts, director rights, board functioning, preference shares, liquidation preferences, right of refusal, buy-back, drag-along rights, and co-sales (tag-along rights).

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III. Expert tips

The book also includes funding tips from seven experts. For example, the COVID-19 pandemic will weed out fragile startups, according to Sanjeev Bikhchandani, Founder of Naukri.com. “Build a solid business, and valuations will follow,” he advises.

“Companies that either get too much money or get it too easily tend to use it suboptimally,” he cautions. Great entrepreneurs will be able to bounce back from failure and raise funds again. “In the final analysis, your reputation is your only asset,” he explains.

Funding is needed to build products and B2C brands quickly, explains Deep Kalra, Founder of MakeMyTrip. Besides, B2B sales cycles can be quite long. Founders should have conviction in the business, and also be willing to pivot when necessary during the tough and frustrating journey.

Investing is a “relay race” between successive waves of entering and existing investors, according to Yashish Dahiya, Founder of PolicyBazaar. He cautions founders not to try “financial jugglery” to fool or lie to investors.

“Creating a business is a long, long process. Just to build an effective moat – or entry barrier – you’ll perhaps take ten years,” he explains.

“All businesses don’t have to be billion-dollar businesses,” says Dinesh Agarwal, Founder of IndiaMART. “The often-used phrase, ‘Go big or go home,’ is definitely not valid,” he adds.

The passion and quality of the team will help the founders win. Funding is not always necessary, despite the media hype and press pressure, he cautions. “In fact, lots of businesses have suffered because of excessive funding,” Dinesh says.

“There must be an alignment of thought between the investor and the entrepreneur, and there must be value-add from the investor – not just the money,” advises Pradeep Gupta, Founder of the Indian Angel Network. He also cautions against founders coming across as “smooth-talkers, smart alecs, braggers without substance, or poor listeners.”

Founders should think of funding in advance, and not just when the need is immediate, advises Sairee Chahal, Founder of SHEROES. She also cautions founders against investors looking only for quick exits, who may put unnecessary pressure on a founder.

“Clarity of thought, the presence of a strong vision, as well as a detailed plan, and the execution ability to take the company there is critical,” according to Rajul Garg, Founder of Leo Capital India Advisors.

The road ahead

Each chapter ends with some discussion on the COVID-19 impact on different startups and sectors. For example, startups in healthcare, education, skill enhancement, e-entertainment, insurance, and ecommerce may do well, but those in travel and tourism will be hard hit.

Companies may have to switch from growth mode to survival mode, and drastically shift from fixed costs to variable cost structures, the authors advise.

In sum, this is a must-read book for aspiring founders and entrepreneurs. The book provides a wealth of insights in an engaging storytelling format. There is also lots of humour, such as references to the power of coffee to help plan, and the power of beer to help dream during brainstorming sessions!

Edited by Suman Singh

India’s most prolific entrepreneurship conference TechSparks is back! With it comes an opportunity for early-stage startups to scale and succeed. Apply for Tech30 and get a chance to get funding of up to Rs 50 lakh and pitch to top investors live online.

Original Source: yourstory.com

There were lots of fantastic questions on the last post so it made the most sense to lay it all out in the same place especially since there may be lots of folks who are considering long term trips right now.

Q – Have you considered renting out your home while you are gone?

A – Yes. There are some big problems with this idea though. First, there are 6 of us in 1,200 sq. ft. and we homeschool. The prospective money we could make off AirBnBing our home didn’t offset the cost/burden of moving out the school room set-up and our personal belongings. That, and in the time of COVID, the liability/risk factor is high. If someone got COVID, could they say it was because we didn’t adequately clean the home between renters? Lots of hassle. Very little reward.

Q – Does your health insurance cover you out of state? Will you get stuck with a huge hospital bill?

A – We have the worst, best insurance out there. We have an HSA which means we pay 100% of all medical expenses out of pocket until we hit our deductible (that’s the bad part). Once we hit our out-of-pocket maximum, our insurance pays 100% of medical and prescription drug costs for the rest of the year (that’s the good part). The out-of-pocket maximum is less than our emergency fund. This would be the same whether we were in-state or out of state but it’s something everyone should look into when traveling, particularly during a pandemic.

Q – Should you use the trip money to pay down your mortgage instead?

A – This is a hard call. We saved up money for a fall trip and my husband got some unexpected side jobs so we aren’t going into our emergency fund or stealing from another budget bucket BUT, I recognize this experience won’t be what it would have been had we not been knee deep in a pandemic. There will be no stops at amusement parks or zoos. There won’t be family dinners at fun restaurants. That makes me sad. But at the same time, I also recognize that I’m in a situation that is unlikely to happen again (please Lord, I HOPE IT WON’T!). I have a huge chunk of time to watch my kids fish in lakes and rivers and explore backcountry. I’ll pay my mortgage for two months longer to take advantage of this opportunity.

Q – Would you like to get into a debate about traveling during a pandemic?

A – As fun as that sounds… No. ; ) I understand that we all have strong opinions and I respect them but I’m not open for a debate. I’ll explain the finances related to traveling during a pandemic but not about the pandemic itself.

A couple more things I think are important when trip planning…

Double Check Your Insurance Coverage

Yes, look at your healthcare but also look at your home insurance and your car insurance. Are the limits right? Do you feel comfortable with your deductibles? Do you have enough insurance? Do you have roadside assistance?

Make Sure Your Affairs Are in Order

Yup. I’m getting morbid on you. Chris and I have very detailed wills. They outline what to do in lots of situations. What happens if we both die? Who gets the kids? Who is the executor? What are our health directives? It’s all there. Before we leave on big trips, we double check to make sure everything is still the way we want it and we call my mom to remind her where the information is. We don’t do it because we are morbid, we do it because the last thing I want my loved ones worrying about when dealing with loss is trying to figure out what to do with my kids or my house or my car. You should have this in place NOW but you should regularly revisit to make sure it’s accurate. Travel is a good reminder to double check.

The post Long Distance/Long Term Travel and Finances appeared first on Blogging Away Debt.

Original Source: bloggingawaydebt.com

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