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15 Mistakes to avoid when Starting a Business

Introduction

People enter into business to make money or profits. Business is, therefore, an activity to make one’s livelihood and involves setting up an organization to produce or buy or sell products or services. Building a business is not a very easy task and if you are an entrepreneur you would make mistakes along the way. You learn from these mistakes and try to avoid them in the future.

“You only have to do a few things right in your life so long as you don’t do too many things wrong.” These words of Warren Buffett tell us one simple truth. Avoid mistakes or wrong decisions and the right decision will bring you success. The following 15 mistakes you have to avoid when starting a business.

1.  Wrong choice of Partner

If you are going it alone this issue does not arise, but if you require higher investment you may need a partner to support the business. The choice that you make is critical for your business. Be very careful when you make this choice. The person whom you choose should be able to take up the responsibilities alone and possess the skills to run the business. Most importantly your vision should match. Give this issue very serious thought before you make the decision. There is always the possibility of your partner separating as time goes by.

2.  Starting Business without any Market Research

Whatever business you start, you should know the pros and cons of it and study its market potential.  Thorough market research will give you a clear picture of how you can handle the business. The rule is to test your products or services first before you venture into them. Your idea of how good your product is need not necessarily match the view of your customer.

3.  Starting Business without Planning

Planning is a very vital aspect when you start your business. Planning not only includes the way you operate but also the kind of infrastructure you require. Your focus should be on how to operate and what infrastructure you require.

4.  Starting with an I-know-everything attitude

If you are just stepping into the business world, this I-know-everything attitude will bring you down to your knees. Business is all about learning and maturing from what you have learned. This means that if you have experience in running a business or if you are a novice taking your first step, you must use every opportunity that comes your way to broaden your knowledge.

5.  Not willing to change

Many businessmen have very rigid ideas about how they are going to run their business. They are not willing to change according to the changing times. People change, their habits change and this is shows in the way they do their purchases. This change is bound to reflect in the way you conduct your business. In a highly connected world, these changes occur at a faster pace and we should be prepared to embrace these changes.

6.  Not understanding your Strengths and Weaknesses

Business growth depends upon the rapport you create with your customers. This means you should know your strengths and weaknesses and be prepared to work on your weaknesses. Only then can you set a growth path for your business.

7.  Putting too much emphasis on growth

Many businesses have failed because they focused only on growth and forgot to address another important aspect namely the quality of your service and customer satisfaction.  If these two aspects are neglected your business is bound to fail.

8.  Expecting potential customers to find you

Today’s business environment is bustling with many businesses that actively encourage customers to associate with them. This is the age where you have to be where your customers are. It is your responsibility to find your customers.

9.  Downplaying the importance of Technology

You are living in a connected world that depends tremendously on technology. If you refuse to understand the importance of technology and how it is going to shape your business, then you are bound to fail in a highly competitive world.

10.  Underestimating your Competition

A proper study of the competition is always helpful when you start a business. If you are the kind who ignores competition, you are inviting trouble. Once you have all the information about your competition, you can plan your activities accordingly. One aspect connected with this is market saturation. If there is a saturation of companies marketing the same product, then give serious thought to this aspect. This leaves you with a small portion of the pie in a highly competitive market.

11.  Avoid doing what you Love

People may advice you to do what you love. This may be ill-conceived advice as it is always better to do something that you are talented and good at rather than something that you love. In all probability, you may not be good at what you love. So be very judgemental about this aspect.

12.  Starting a business without adequate investment.

Most businesses will not make profits as and when they start. Making profits is a long drawn process and companies may take years to see a reasonable profit. This means you should have enough funds to manage till you reach a healthy stage in business. Always be prepared for such eventualities as only then can you succeed in your venture.

13.  Not taking your business Online

The Internet has brought tremendous changes in way we do business. We measure market acceptability in terms of how well you are visible online. More and more people now are searching online for things that they need, and if you are missing from this search you are missing a large chunk of customers. Even if you are not having a website, you should have a presence on social media like Facebook or Linkedin. This gives you a better chance for success.

14.  Adopting wrong Marketing Strategies

This is a common mistake among entrepreneurs who feel that they have a great idea but fail to realize that it does not suit the product and the current day marketing scenario.  You should give this aspect very serious thought before you venture into the business. The guidance of an expert could be useful to avoid this mistake.

15.  Fear of Failure

Many entrepreneurs have fear of failure and this prevents them from taking risks. If you plan to become a successful businessman, you have to be prepared to take risks. Mind you, the chance of the risk taken becoming successful is not guaranteed. If you fear failure, then you are bound to fail in your venture. Be prepared for failures. Only then can you achieve success.

GetifyHR started as a Payroll Outsourcing Services provider and is today widely accepted in the industry for its excellent service and support. By integrating HR Outsourcing Services, we achieved greater acceptance and today offer services like attendance Management, Leave Management, Statutory Compliance Services, EPF & ESI Registrations, and Task Management Services. At every point in our growth, we have avoided making mistakes that could hamper our growth. Today we are one of the leading players in the industry.

Conclusion

The above 15 mistakes are the most common mistakes that people make when starting a business. With better clarity and focus on what you have set out to do, and by avoiding these mistakes you can become a successful businessman.

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7 Effective Strategies to Business Success through Goal Setting

A business is the outcome of serious thought and planning to make life successful and significant. Many people set out their plans and step into the shoes of a businessman. The steps that they take thereafter may lead to success or failure and this would fully depend on the action they take to achieve what they have set out to do.

Why set goals?

When you wear a businessman’s shoe, your first and foremost priority is to clearly identify your objective. You should be clear in your mind about where you want to be in the next five years. If you want to succeed in your objective then you have to set clear goals. Without setting goals you will lack focus and be directionless.

Once you set goals, you are in effect taking full control of the direction of your business and life. Goal setting is, therefore, a process that needs careful consideration of what you hope to achieve within a specific time and follows up with a dedicated effort to achieve it.

Your company will be successful only when you have a clear vision of what you want to achieve, how, and when!

How to set goals?

There are different methods by which you can set business goals. Your choice will depend on the nature of your business and whether the method that you adopt fits your culture and approach in handling issues. The following paragraphs set out 7 effective strategies that will bring success to your business.

1.  Objectives and Key Results (OKR)

This is a collaborative goal-setting methodology that drives the entire company right from the top management to the employee level to fully focus on the goal. Everyone in the organization connects to the business goals and this enhances the performance and generates positive results. One advantage of this method is that it creates a greater rapport between the management and the employees, which in turn will push up productivity.

2.  The SMART way

The expansion of the word SMART will give you five actions that you need to implement to achieve your goals.  They are Specific, Measurable, Attainable, Relevant, and Time-Bound. When you use the SMART methodology to achieve goals, you are using a powerful system that drives performance. Normally this method is used to set goals for a year.  For example if you wish to improve your company’s performance by 20% over the last year’s performance, then using this method will help.

i. Setting Specific Goals:

In this method, you first set Specific goals that you hope to achieve. These goals will set the tone for the company and define where you want to be at a specific time.

ii. Setting Measurable goals

Measurable goals are amount and date-specific. You can measure your success by how much you have achieved and within what time frame.

iii. Setting Attainable Goals

The goals that you set should be attainable or achievable. When you set a goal that is way beyond your capacity it will only demotivate you and the people working with you. You will lose your confidence. So be judicious in the goals that you set and see that they are attainable by your team.

iv. Setting Relevant Goals

Set goals that are relevant to what you need in life and your career. This will give you more focus in achieving your goals.

v. Setting Time-Bound Goals

Every goal that you set must be time-bound. When you set a deadline, your focus and dedication to achieve it would be greater.

3. Plan your Action

Without clear planning, all the hard work that you put in will go to waste. Planning is without doubt one of the most important activities on your path to success. If you want to achieve success, you have to plan meticulously.

4.  Avoid Distractions

Distractions are the bane of our society. We have Smartphones, the internet, social media, entertainment media, and so on to distract us from our goals. Under these circumstances, it becomes harder to stay productive and achieve success. Your first step is to identify the distractions and take conscious efforts to eradicate them.  This will go a long way in helping you to achieve your goals.

5.  Time Management

Time management is very vital for achieving one’s goals. Set deadlines for your goals and keep track of them. When you organize time properly or systematically, you will manage your daily routines more effectively and will spend time on things that count. This will enable you to achieve your business goals within a planned time frame.

6.  Prioritize your Tasks

When you prioritize your tasks you will do the most important tasks first and then proceed to complete the other less important tasks. People generally tend to do the easier jobs first and then attempt the harder tasks. This is counter-productive and will stop you from achieving your company goals. The technique is known as  “Eat the Frog” technique and it recommends that you eat the biggest frog first and then proceed to eat the smaller ones; similarly, you take up the most important task first and then complete the lesser tasks.

7.  Monitor your Progress

Constant monitoring of the progress of the activities is a must if you have to achieve your business goals. This will enable you to keep track of your progress and will also help you to make course corrections when you identify some shortfalls. By constantly monitoring the progress, you can evaluate your performance and adjust to the needs to reach your goals.

How setting goals help businesses?

The goals that you set and the focus and dedication you have in achieving them will determine the success of your company. When you follow the steps enumerated here you are sure to achieve the success that you have planned for.

GetifyHR has been a leading player in Payroll and HR Management sector in the country.  Our Payroll Outsourcing Services have been widely accepted in the industry and is the outcome of vast experience and effective goal setting.  Using goal setting techniques, we have been able integrate HR Outsourcing Services within a set time frame.  We have achieved all our further integrations like Statutory Compliance Services, EPF and ESI Registrations, Attendance Management Services, Leave Management Services and Task Management Services by following the goal setting steps enumerated here.

Conclusion

Setting goals, implementing them, unitedly working to achieve them, monitoring and reviewing them to set the path to success, and finally achieving the goals are a continuous process.  This process gets back on track when you set newer goals.  Goal setting in many ways helps the organization and the employees to identify the Key Performance Indicators (KPIs) and update them over a period of time.  These activities facilitates business growth

By deploying these strategies you are not only enhancing the growth and productivity of the company, but you are also encouraging your employees to directly support the priorities of the company. This paves the way for a stronger Management – Employee relationship.

This helps the company to retain talent and reduces employee turnover. Setting goals and succeeding have their benefits. Nothing succeeds like success!

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Understanding the EPF Act, 1952, and EPS & EDLI Schemes

Employees’ Provident Fund Act, 1952

The Directive Principles of State Policy enshrined in the Constitution of India aims at ensuring socio-economic justice to the people and in establishing a Welfare State.  Private sector Employees’ who retired found themselves in trouble to earn a normal livelihood.

The government passed a legislation to introduce a long-term savings scheme that would support them in retirement or superannuation.  This gave them a life of dignity and a strong social security cover. This legislation is the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952.

As a follow-up, in the year 1976, the government introduced the Employees’ Deposit Linked Insurance Scheme (EDLI) as a part of the EPF Act. This paved the way for the nominee of the policy to receive a lump-sum payment in the event of the death during the period of service, of the person insured.

To provide further security, in the year 1995 the government introduced the Employees’ Pension Scheme (EPS) to ensure more support.

Who the Act is Applicable to?

The Act applies to both the Employer and the Employee.

The Employer

The EPF Act provides that any establishment having 20 or more Employees’ comes under the purview of the Act. However, even organizations with less than 20 Employees’ can opt to register for this scheme.

The Employee

The Act mandates that all Employees’ who draw a salary (Basic wages) that is less than INR 15,000/- should become a member under the scheme. For those drawing more than INR 15,000/-, you are given the option to either join or not join as a member. However, once an employee drawing more than INR 15,000/- has become a member, he cannot opt-out of the scheme at a later date.

All the 3 Schemes, EPF, EPS & EDLI are bundled as one package and there is no option to choose as per one’s discretion.

How to contribute?

Both the Employer and the Employee have to mutually contribute to the EPF. Employees’ contribute 12% of their basic salary towards this fund and the employer contributes an equal amount. The entire portion of the contribution of the Employee is allocated to the EPF A/c. This accumulated fund earns interest at a specific rate as declared by the government from time to time.

The Employer also contributes 12% out of which 8.33% of the salary is allocated to the Employees’ Pension Fund (subject to a maximum of INR1250/-) and the remaining 3.67% is allocated to the EPF A/c. In addition to this, the employer also contributes to the Employee Deposit Linked Insurance Scheme. This is 0.50% of the basic pay subject to a minimum of INR 75/- per month per employee.

Apart from this, the employer has to contribute 0.50% of the basic towards the PF Administrative charges subject to a minimum of INR 75/- per month for a non-functional organization without any contributory member and INR 500/- for other establishments.

As mentioned earlier, the three schemes EPF, EPS, and EDLI are bundled schemes with no option to contribute separately as per our choice.

Therefore, we must understand the key functions of the 3 schemes.

Employees’ Provident Fund

This is the main ingredient of the EPF Act 1952. The main purpose of this enactment is to provide security to the employee on retirement. The Employees’ Provident Fund Organization (EPFO) controls this scheme.

In this scheme, the Employee and Employer contribute to the scheme. The Employee contributes 12% of salary (Basic wages) and the Employer contributes 3.67% of basic salary from the 12% that he contributes. The Employees’ Pension Scheme and the Employees’ Deposit Link Insurance scheme share the balance 8.67%.

The EPF scheme is exempt under the Income-tax Act.  This is the EEE exemption. The First E indicates that this investment is exempt from tax; the Second E indicates that the interest earned on this investment is exempt from tax and the Third E indicates that the income generated from this investment will not be taxable at the time of withdrawal.

The Finance Act, 2020, has modified this rule.  The rule now states that if the funds contributed by the employer in any of the schemes go beyond 7.50 lakhs, then the interest income on the incremental contribution is taxable.

Penalty for late payment /non-payment

The Act mandates that the employer has to remit his part of the contribution along with the employee portion on or before the 15th day of every month without fail. In case of default of payment, the employer is liable to pay U/s.7Q of the Act, simple interest at the rate of 12% per annum for each day of the default.

Under Section 14B of the Act, late filing of EPF Challan and contribution will attract the following penalties.

5% interest p.a for a delay of upto 2 months

10% interest p.a for a delay of 2-4 months

15% interest p.a for a delay of 4-6 months

25% interest p.a for a delay of more than 6 months

The PF a/c’s of members will be credited the interest once the penal dues are realized and the employer will be charged penal interest to cover the interest dues and also has to pay a penalty in case the employer is declared bankrupt. This indicates that the EPF dues are more important than any other debts or dues. Non-payment of dues could also attract arrest proceedings. The EPFO has the right to attach the bank a/c of the employer for non-payment of these dues.

Interest Rate on EPF

The interest rate for EPF contributions was 8.5% for the fiscal year 2020-21 and this remains unchanged for the fiscal year 2021-22 also. The interest calculation depends on the monthly running balance and the rate announced by the government.

Employees’ Pension Scheme (EPS)

The Employees’ Pension Scheme is a social security scheme launched in the year 1995 by the Employees’ Provident Fund Organization. The scheme provides a pension to an employee of the organized sector after retirement at the age of 58. This is subject to the employee having being employed for at least 10 years (this need not be continuous years of service).

The following are the criteria to become eligible for the scheme.

  • The employee should be a member of EPFO
  • He should have completed 10 years of service
  • The employee should be 58 years of age

The amount of premium is arrived at using the following computation:

Month Pension = Pensionable service x Pensionable salary /70

The maximum pensionable salary is INR15000/- per month

EPS funds don’t generate any interest.

Employees’ Deposit Linked Insurance (EDLI)

Introduced in the year 1976, the EDLI scheme provides the nominee a lump-sum amount in the event of the death of the person insured during the period of service.

Eligibility and other criteria

  • All EPF members get the benefit of the EDLI scheme
  • The plan is a term plan and the sum insured is variable as it depends on the remuneration of the person insured.
  • The Employer pays the premium amount.
  • The minimum assurance benefit for the scheme is INR 2.5 lakhs and the maximum is capped at INR 7 lakhs.

The Employees’ Provident Fund Act, 1952, the Employees’ Deposit Linked Insurance Scheme, 1976, and the Employees’ Pension Scheme, 1995 provide a strong social security cover to Employees’ in the private sector. These are a means of supporting the livelihood of such Employees’ once they retire from service. They are one among the pillars of a society that believes in being identified as a Welfare State.