Monday 27 June 2016

Draining up of funds for e-com Start-Ups (5 Reasons why this is a blessing in disguise for new Online Business Registration!!!)



Visit us at www.ca4you.in


In my last blog we discussed e-Commerce valuations which, in my humble, opinion does not make much business sense (http://ca4you.in/blog/2016/06/22/the-curious-case-of-e-commerce-valuations-and-online-business-registration/)
Start-Ups are finding real difficult to raise funds and entrepreneurs are facing the heat. Now this can be a blessing in disguise for start-ups by serious entrepreneurs and they can focus on building a sustainable business rather than whiling their time running behind VCs who run behind herds

Start-Up is end of the day a Business and any business can only be run as a business The best (and only) way to run any venture is to make it sustainable (and yes, Scalability and Sustainability can go hand in hand). Let us evaluate 5 basic principles to run a venture successfully.
1-    2 Years Rule: Start the plan with funds for 2 years atleast (Cash, Cash Receivables, Sure Shot Contracts, Firm commitment on funding etc . Expected business growth, a passing commitment by a friend won’t count). Make your budgeting, hiring plan accordingly and the moment the buffer comes to 1 year, go looking again for fund.
2-    Sustainability before Scalability: Focus first on creating a sustainable business before targeting scale. The stronger the foundation, the stronger the monument. Lot of people do the mistake of opening a new branch or launch a new product line before ensuring their existing product line is breaking even.
3-     Marketing ROI: Lot of Start-Ups start spending on every mode of marketing (and when it fails, they justify it by christening it as ‘branding exercise’!!!), In nutshell Spray and Pray policy does not work with Marketing for Start-Ups
4-    Hiring at Right Time: There is no dearth of talent in India and so always hire someone when you have fixed KPIs defined for the employee. Not doing this is unfair to your business, new employee and existing employee
5-    Bottom-line: Business is done to create value for all the Stakeholders and profit generation should always be the Top priority. Everything else would follow.
Get update on not only Accounting/Book-Keeping/Government Compliances but also about all new rules and regulations/opportunities for funds which will be your industry specific
You can like us on Facebook: https://www.facebook.com/ca4youindia
Or Follow us on Twitter: https://twitter.com/ca4you01
We are available on Call @844-7265-465 or at vivek@rrs-group.in
www.ca4you.in  (Company Registration Services/Company Formation Services/Company Registration Consultants in Delhi)

Tuesday 21 June 2016

The Curious Case of e-commerce Valuations and Online Business Registration!!!








Visit us at www.ca4you.in


e-Commerce industry in India came to its own in 2012 when Flipkart and Myntra started showing TV Ads and Online Marketing was not just for the tech-oriented but for the mango people as well. This was the time when Valuations started peaking to 20 times of GMV (currently they are looming at 2~3 times of GMV which speak volumes about the correctness of this method). I will just rewind the clock by 3 more years to 2009 when I took my first job post ISB in a 3rd Party Logistics Company and the world was still recuperating from Lehman fiasco. As part of the strategy team there, I suggested that we should approach e-com companies and my boss replied that we have to be cautious with this segment. So what happened in just 3 years where Online Business status went from ‘Cautious’ to ‘Super-Hot’.
The answer is nothing!. Yeah, right!!! Absolutely ‘nothing’ had happened in these 3 years. Infrastructure sector, headquartered at Hyderabad, was brutally exposed in the downturn, Real Estate, after Sub Prime, was a dangerous proposition, FMCG/Banking/Telecom were ‘stable’ and ‘heavy asset’ model.  This left with VCs firm to direct all their attention on Online Industry and this is what precisely happened. Caution was thrown out of window and any company which had a website, tech backend became HOT. To justify the valuations, new terms were coined and adopted (GMV being one of them) and party continued till mid 2015. A company which is 10 years old is still counted amongst start-ups (Like our middle aged ‘yuva’ politicians)  and promoters boldly proclaimed that they are ‘NOT’ thinking about profits. Co-founder of a start-up, which started as deal site and then became a full fledged e-com site, said that they will invest 2000 Crores in Technology (Well the cost of sending a Rocket to Mars was 450 Crores!!!!).

It was Year 2014 and I happened to work in a Taxi Start-Up and realized that ‘Burn’ is a word which has been very conveniently added in the lexicon of even mid level management. I could see money being splurged on things which a man of limited intelligence like me totally failed to fathom. A company which did not have even 1 Crore as Revenue had 11 level of Hierarchy between CEO and Call Centre Executive and they called themselves as Start-Ups (Irony died thousand times!!!)

Whatever little I remember of my MBA, I do remember being taught about ‘Agency Problem’ which basically says that if there is no pressure to re-pay and no accountability of funds, managers are bound to splurge on unnecessary items…..Guess our VCs must have bunked their Fin Classes!!!

Through a friend of mine who is a Company Registration Consultant based in Delhi, I know of atleast 10 cases where some people have registered a Private Limited Company, built an App (website is too rudimental now) / back end Tech and have started looking for funds. Yes, no effort to find customers, no effort to see of their model is solving any real problem or not. 80% of them were unable to sell their story to a VC/Angel Investors and shut down the shop in less than 3 months. 20% of whom who raised funds hired a Tech Team and started making various Tech Products, all of them either redundant or not user friendly or not even automating any process (To think of it, the basic purpose of IT is to automate processes). In the process they have ‘burnt’ all the money raised and know are again looking for funds!!!. It does not take Rocket Science to figure out that there is some inherent flaw in the whole schema!!!!

Though a grim picture is looming, there is a definite silver lining too. Company Registration Services are still booming and number of Registration of Company in India is at all time high. Which basically means that there is appetite for new ideas and entrepreneurs but with right basics. I will be touching upon some ideas (which in my humble opinion) would start-ups can follow to build a truly sustainable and scalable business.

Get update on not only Accounting/Book-Keeping/Government Compliances but also about all new rules and regulations/opportunities for funds which will be your industry specific
You can like us on Facebook: https://www.facebook.com/ca4youindia
Or Follow us on Twitter: https://twitter.com/ca4you01
We are available on Call @844-7265-465 or at vivek@rrs-group.in
www.ca4you.in  (Company Registration Services/Company Formation Services/Company Registration Consultants in Delhi)

Thursday 16 June 2016

GST and its effect on e-commerce firms (5 points which may affect your Online Business)

Visit us at www.ca4you.in


GST, which has been long in waiting, could finally be implemented in Apr 2017. Though the aura and suspense is still very much intact, but there are some very anxious moments for all the entrepreneurs who are looking to register new company in E-commerce space. Below are 5 points which may affect Online Business Registration:
1-    A clause in GST draft model suggests that for any payment made to a supplier by e-commerce company or market place, Tax Collection at source would be responsibility of e-commerce companies. E-commerce companies would, therefore, need to keep a track of all the sales made through their platform and also file a statement to this effect.
2-    Even a mid sze e-commerce company has atleast 100+ vendors and therefor the compliance burden on e-commerce companies would increase.
3-    As per a major e-commerce company, the proposed law would affect the working capital requirements of the sellers.
4-     Many of these suppliers (vendors) are below the minimum threshold required to file GST and hence e-commerce companies will have to Grapple with additional burden of tax refunds.
5-    As per some sources the threshold for filing would be 9 Lacs

Get update on not only Accounting/Book-Keeping/Government Compliances but also about all new rules and regulations/opportunities for funds which will be your industry specific
You can like us on Facebook: https://www.facebook.com/ca4youindia
Or Follow us on Twitter: https://twitter.com/ca4you01
We are available on Call @844-7265-465 or at vivek@rrs-group.in
www.ca4you.in  (Company Registration Services/Company Formation Services/Company Registration Consultants in Delhi)

Saturday 11 June 2016

Hire Right Chartered Accountant for your Business (5 Points to note before hiring Company Registration Consultants for your business)


Imagine you are desperately trying to call your Chartered Accountant to understand some tax nuances before giving a quote to a client and he is too busy to pick your phone or you have get your Company Registration in Gurgaon through a ‘mega’ Online Company and you have to go through various level of Customer (Un) Care number to leave a brief message. Well not done!! Any business (big or small) requires a Chartered Accountant who is available to give right advice. There are various Company Registration Consultants in Delhi (and in India) but you have to be very sure as whether you have chosen the right Chartered Accountant for your business. We enumerate the reasons to have right Company Registration Consultant for your business.
1-    Having a right Chartered Accountant ensures that your Online Business Registration is completed in timely manner
2-    It is just not sufficient to register new business but you also need that you have taken all the necessary (necessary is the key) Tax Registrations else you can get into major trouble later on
3-    A Chartered Accountant let you know when are the compliances due so that you can do those and avoid penalties
4-    A Chartered Accountant will help you to let know what are various forms of funding options available for your business.
5-    A Chartered Account should be available to take your call (especially if you need any advisory before giving quote to any clients). Imagine you are desperately trying to call your Chartered Accountant to understand some tax nuances before giving a quote to a client and he is too busy to pick your phone or you have get your Company Registration in Gurgaon through a ‘mega’ Online Company and you have to go through various level of Customer (Un) Care number to leave a brief message. Well not done!!
Get update on not only Accounting/Book-Keeping/Government Compliances but also about all new rules and regulations/opportunities for funds which will be your industry specific
You can like us on Facebook: https://www.facebook.com/ca4youindia
Or Follow us on Twitter: https://twitter.com/ca4you01
We are available on Call @844-7265-465 or at vivek@rrs-group.in
www.ca4you.in  (Company Registration Services/Company Formation Services/Company Registration Consultants in Delhi)