A country’s economic development depends largely on the IT and software industry, and the same applies to India. If you already have an idea of starting a software company in India, you can read this article carefully and implement the tips given below. Before that, let us read more about software companies in the country.
Generally, there are two types of software companies:
- Service or consultancy-based companies – These companies offer only services relating to software, coding, and other IT-related tasks. Or they might advise you about the IT services and software products you use.
- Product or development-based companies – These companies relate to the development of software products based on a company’s requirements.
Now, let us get into the actual and detailed process of starting a software company in the country.
You have an idea and the reason for starting this business. Now, you don’t have to reflect more on your intention, but take action on it. There are several ways of fund procurement, such as venture capital, angel investing, crowdfunding, and so on.
Create a business plan
Once you figure out where the funds would be coming from, you can create a solid business plan. As you would be using the business plan in two ways, you need to prepare two versions of the same. The detailed plan will be a business plan that is utilized by the business owners to carry out the activities. This version will work as a guide and roadmap and tell you what to do next. The shorter version of the business plan will be used to generate capital from the investors.
You cannot show the detailed version to an investor as most of the aspects will be confidential and not necessary for an investor to know. Hence, we suggest using the shorter version for capital procurement. So, go flexible and create two versions beforehand. Also, you cannot keep the business plan rigid as it is subject to changes in the future. You need to customize it whenever there is a need. And that’s why we suggest making this business plan flexible and not a restriction to certain aspects and tasks.
Before you start operations, you need to decide on a few aspects:
- Type of products or services you want to deal with.
- Target audience – Whom do you want to sell your software products or services?
- Profit or revenue to be generated.
- Business feasibility – how can you fix up systems in your organization to carry out the said business activities?
Determine the organizational structure and the type of software business you want to conduct
You need to decide what kind of organization structure you need to set up. You can start as a sole proprietorship enterprise, but the benefits are limited. You can even start a partnership, limited liability partnership, or a full-fledged company, depending on your preferences.
They also need to consider the type of software business they want to conduct. For instance, you might have to select a niche market and other aspects before you even trade in products or services. So, consider the following points:
- Since the competition in the software industry is stifling, you need to choose a specific niche market in advance. You cannot let the demand forces decide what you will be providing.
- You need to determine the distribution channels to provide products and services to your customers. You can’t use the standard ones since they are utilized by all the companies in the market.
- You need to provide reasonable and effective solutions and always top and perform better than other brands.
You need to create a beta version of the product you want to sell since you will be pitching to the investors and customers. After the creation of a complete product, it should be protected by intellectual property rights. You should use webspace, social media platforms, websites, and other avenues to promote your products well.
Register your company
Yes, while you create the product, you need to have a legal and solid existence for your business as well. You should reserve a good name, an electronic signature, and a direct identification number for their business. Then, you need to complete all the registration formalities as specified by the Registrar of Companies. You will require a few important documents such as a PAN card, Aadhar Card, driving license, or voter’s card for the basic registration process.
You will also need utility bills, rent agreement, and other details to submit to the Registrar. You can then apply for a tax account number from the Income Tax Department. Then, you are required to prepare and draft the important documents, Memorandum, and Articles of Association for the company. Then, open a current bank account to separate personal and professional funds.
Apply for STPI Licenses
Since you own a software company, you need to seek a license from the Software Technology Parks of India to run business operations. You can seek benefits such as no tax expenditure for the five years and no need to pay any duty or charges for import and export of software products. You can even acquire office space at reasonable prices.
Choose office location
The next step is to choose a good office location with the necessary infrastructural facilities. You can rent second-hand furniture, but you will need better quality equipment to run the business.
Hire talented staff
It is a good thing that India hosts talented and skilled software professionals. You can hire qualified staff easily, but you need to ensure that they remain in your business for a longer time.
You cannot succeed if you remain in your comfort zone, and that’s why we suggest collaborating with other like-minded professionals and business enterprises. You can offer better and integrated solutions to your target audience if you know how to collaborate well. You can also seek advice from the industry experts and learn plenty of useful things from them.
In a nutshell, the above steps are mandatory to follow for setting up a software company in India. It is easy, but you need to be dedicated and passionate about it all the time.