Mustafa is a baker from Kozhikkode and Abdullah is a hotelier from Tirur. Both have been nursing a business dream for a while now. They have been dreaming of marketing bakery items and different types of juices on a large scale under their own private label.
Finally one day, both decided to consult a lawyer to figure out how to give life to their dream.
"Once you have decided on a business idea and are going ahead with it, the first step is to select a name for the venture as well as one for your product brand," lawyer Ramakrishnan told them, urging them to find out from Controller General of Patents and Designs and Trademarks websites if the selected name is already registered. This prevents duplication and saves a lot of effort and time.
If the selected name is already registered, then one has to come up with a different one. Food products come under class 29, 30, 32 and so on of the Trademarks Act 1999. The name of your venture should be exclusive and new.
The Partnership Act mandates that the partners make a partnership deed. The deed should be made on a stamp paper worth Rs 5,000, as per the Kerala Stamp Act and the same should be registered with the Registrar of Firms in Thiruvananthapuram. The partnership can later be transformed into a limited company.
Three Types of Ventures
Based on the size of investments, plant and machinery (excluding land and building), small scale ventures can be classified into three. Ventures with investment of up to Rs 25 lakh are called micro ventures while those with a capital of Rs 25 lakh - Rs 5 crore are termed small enterprises. Businesses with investments of Rs 5-10 crore form medium scale enterprises. For businesses in the services sector, the slab for classifying businesses from small to medium is as follows – up to Rs 10 lakh (micro ventures), Rs 10-2 crore (small scale ventures) and Rs 2-10 crore (medium scale ventures).
Once the name and the amount of capital are decided on, the next step is to find a proper location and building for the venture. By law, certain types of business activities are to be conducted away from human inhabitation. It is important that the entrepreneur is aware of these rules and sticks to them. Industrial parks set up by KINFRA and Kerala State Industrial Development Corporation offer good facilities for such businesses.
Uninterrupted power supply is very crucial to the success of any business and this is one of the most important factors to look into before deciding on the place to start up. The town planning office is to be communicated for building permissions. Installation permissions should be sought from the respective Panchayats or municipalities, as is applicable. For ventures up to 5 HP, the Panchayat secretary or the Municipal secretary will give approval. Those above the 5-HP-mark need approval in board meeting.
All kinds of businesses need to get Dangerous and Offensive Licences and also clearances from the Pollution Control Board. Apart from these licences business ventures should also get a no objection certificate from the Fire & Rescue Department.
The law makes it compulsory to obtain different types of licences according to the nature of the business. For example, while a business venture dealing in wood requires a no objection certificate from the Forest Department, another one dealing in cosmetics and drugs need an approval from the Drugs Controller.
In the commercial department of most districts there are single window systems set up for providing licence forms. An application as per rule 6, along with a demand draft of Rs 250 should be addressed to General Manager, Chamber of Commerce for procuring licences. Upon submission, a team led by the district collector will visit the business venture to examine it and give the approval if found satisfactory.
Food businesses need licence from Food Safety and Standard Authority of India. For the import and export of raw materials, an import export licence is necessary. Some of the other approvals needed as per the classification of the product include Agmark, ISI, ICO, GMP and so on. An entrepreneur should never forget the fact that child labour is illegal.
The Four Ps of Partnership
Mere enthusiasm to start up something is not good enough for an entrepreneur to be successful. Enthusiasm should be accompanied with proper planning and extensive research. Taking the leap without properly studying the market can be suicidal.
The four Ps that are crucial to the success of any business venture are – product, process, place and partner.
The entrepreneur should ensure the availability of raw materials, the technical know-how necessary for production and also the ease of transport of finished goods to markets. Apart from these, a businessman should be aware of different incentive schemes offered by the government and various agencies and make use of them.
Training for Food Processing Centres
Central Food Technological Research Institute provides training in setting up food processing businesses. Haryana's NIFM also offers several courses related to food and food processing. International Bakery Research and Training Centre trains people in baking and conducting a business of baked products.
There are several institutions that offer financial aid and subsidies to entrepreneurs and they include the Kerala Financial Corporation, Khadi and Village Industries Board and the Backward Class Development Corporation.
Apart from these, most banks have dedicated SME branches that cater to entrepreneurial needs. Other sources of capital include private equity and venture capital funds. There is a different ministry altogether for MSMEs and there are a number of institutions functioning under the ministry to further the cause of entrepreneurship in the country.
(In arrangements with Sampadhyam)