Start working ASAP

At my post Legal process to start the company, I had said the following:

When setting up a new business you would like to start giving your service or selling your product immediately so as to begin receiving returns very soon. And it is in deed possible (at least that's what I did)...

And Chitra, a reader of the blog, said in a comment at Final Submission to register your company:

You are right in some sense but clear me one thing if we r going to develop a software company or some what a web development company,then do u think it is possible to start the service(or starting a project)exactly before registration of the firm.
Or in general, for a product based firm it will be tough to set up the machinery before any legal process.

I guess there are two options.

One is dedicate yourself full time to do the process of setting up the company. This way, the process will be quicker and you will perhaps do it better because you will be fully concentrated on it. However, there will be quite a few idle times because you will be just waiting for some of the approvals.

The other option is to work as if the company already existed. You can work in a sole proprietorship basis (which does not require any legal work). Or you can associate with another already setup company which belong to a friend and do the services through that. Or you can start offering the service to clients, invoicing them, if required, in a personal basis, as a professional does. Or you can just tell your clients that you are about to open the Pvt. Ltd. ("I'm just waiting for the final approval") and you will send the invoice at that time. There are countless things you can do.

Besides, during this time, since you are starting, you can have a main focus on the marketing. The only fear could be that you build brand name of a company for which you are not yet the owner, but I think there is little to fear in this respect. You can check availability of the name in the MCA web-site, and besides you will get the approval for the booking of the name (form 1A) in just a few days or maximum weeks. I don't think there are very high probabilities of loosing the name (perhaps the full name yes, but not the main keywords).

Outsourcing and lifestyle

I came across (not by chance) this article today at MercatorNet: Is outsourcing exploitation?. And I think it is quite an interesting read for those of us working in India and who have somebody working under us. Especially of course, if our clients are abroad. And even more importantly, if we have other companies as providers for us.

Outsourcing is definitely helping the life of many people. Slowly the lifestyle is improving in many parts of the world, and the gap between developed and developing countries is becoming smaller.

Some would like it to be quicker: let's work for that. We are the ones supposed to be helping the people working with us or for us to improve society in general.

Legal: About Sole Proprietorship, Partnership Firm and Private Limited

Last Friday, after posting on the blog, I had a meeting with my college-friend with whom I'm setting up the new business. We were deciding whether to go directly for a private limited, or to start by a partnership firm or sole proprietorship for some months before registering the company at the ROC.

Prior to this meeting I had read some information about the two proposed forms of business but still had some doubts, hence we went to visit his CA.

This meeting again proved is important to do your homework... I could understand everything thanks to what I had learnt in the morning.

Either partnership firm or sole proprietorship have the same unstable or shaky or at least non-corporate look to other companies, while a private limited looks more reliable to your possible clients.

However, the difference in costs is quite significant. The upfront cost to set up a Private Ltd is at least Rs.15,000 to 20,000 (very minimum); for a partnership firm is about Rs.8,000; finally, for a sole proprietorship is nil: you just need to go to the bank and open your account in the company's name.

This is, as you can read here, because the sole Proprietorship depends directly on its owner, both for liability as well as taxes; in fact, the company and its owner are one. The same way, it is very similar for a partnership firm but the profits and liability is distributed among the partners.

Our conclusion is that for a business which is beginning and a large amount of investments has already been done, you should go for the Sole Proprietorship or Partnership Firm. But if you have time and money is better to go for Pvt. Ltd. as it will give a much more reliable outlook to your enterprise.

Update on 23-02-11: Would you like to see the Spanish translation? Click here!

From the rising to the first fall of this entrepreneur

Yesterday, while drinking tea and listening to a CD of Carlos Santana, I was reading a chapter of The World is Flat by Thomas Friedman, where he talks about an African proverb which was posted by a manager translated into Mandarin in a Chinese Factory:

Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.
I doesn't matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.

Being an entrepreneur is not easy for anybody and even the biggest guys fall down once in a while. I guess that if you managed not to be eaten by the lion, you will get up, learn from your fall and become stronger, hoping not to fall again.

From my previous post, we had said that the target was to hire some few people to work with us full-time and have many more freelancers doing work for us. This is a system which was working well in Argentina, where we have part of our team, and which we thought could also work in India.

My first year, i.e. 2007, was a great experience in which I learnt many things of which I had no idea (and I will eventually share in this blog). I learnt legal stuff, human resources, production, sales.... the list of the things I learnt could go on, but later on I'll keep on writing on this.

Anyhow, we started only with freelancers and soon afterwards we also got some people sourced by a company in Goa which provides IT man-power (or I should say women-power as they mainly had girls in their team). By the end of 2007 we already had some few people in our team and we started looking for a place on rent in Pune. Even though at the beginning only 5 people would be working from there, the office would fit at least some 25 to 30 developers.

By that time we were running a project on .NET which was supposed to be finished by December 2007 and it was being developed by the guys in Pune who would eventually join the office at the beginning of 2008. The project got delayed, and delayed, and delayed.... and delayed. These delays made me realize that those guys in Pune were wonderful people, but were not the right ones to start a new development office with. In the end, the project was not properly delivered, we cancelled it, I had to say goodbye to those developers, say goodbye to the office we were about to rent, and in fact, due to the loses that we had in that project, we had to say goodbye to many of the other people in the team as well. From here onwards I had to look for a new way to start all over again. This was mid-Jan 2008.
The gazelle tripped and fell, but it was not caught by the lion. It got up, it learnt from its experience, and now runs faster and hopefully will not fall again, at least not in the same way as it did before.

The beginning of the venture

I graduated from Electronics Engineering in Mumbai University on June 2006. One year earlier, I had decided not to go for the placements offered at Campus in my College (CRCE), because sincerely, I thought I was not interested on the kind of jobs they were offering (basically, they were just about coding for big companies in which you become one more in the crowd of Engineers).

Admittedly, later on I went for the placement process of a couple of companies which came late for placements, but mainly so as to know what it all was about. I was called in for a couple of interviews and from the beginning I had to tell them I was not really interested in the job; then had good fun talking for a while to the recruiting people and answering their questions... after that, goodbye.

Few months after I left College (which I mainly spent studying and working with an NGO), I received an e-mail from Luis, a friend in Spain whom I met in 2003 when I went to Madrid for a studies trip. He was interested in opening a branch of his company in India (he had no clue about which city or anything of the sort) and had thought of me... after a long series of contacts he managed to get hold of my e-mail id and write me. Being an entrepreneur has been attractive to me since I was a child.

After a one-month trip in January 2007 to Madrid to know his company (which came up to be much smaller than I had thought, but growing a lot), I came back to Bombay ready to put up a team of developers to give technical support to Luis' company, which is specialized in the e-learning sector and has a leading LMS (Learning Management System) in Spain used by many of the largest corporations over there.

The target was that, by 2008 we would have a development office in India with about 30 full-time developers, plus some 70 people working as freelancers for us...

My first post

This is my first post to my new blog. It is also the first time I'm writing for a blog and I hope it will be interesting and mainly, useful, for many people.

I'll be writing about my experiences as a young-entrepreneur in Mumbai, setting up a company in partnership with a friend from abroad, loosing a lot, gaining a lot, becoming independent... a great experience which I hope will help many other people to take courage and start their own ventures; I'm sure this (starting a new company) will help them and ultimately help society a lot; of course, not without difficulties. But well... I'll talk about this later.

My plan is to upload short articles at least twice a week, so, if you are reading this, do visit this link again in the next few days for my first article.