How to Start a Business from Scratch

Are you dreaming of building your own business but unsure where to begin? Starting a business from scratch is a bold journey—one that demands vision, grit, and a clear roadmap. In this comprehensive guide, you’ll learn the essential steps to launch your startup, discover funding sources, understand how to approach investors, explore government schemes in India, and gain insights into the current status of the Indian startup ecosystem.

1. Laying the Foundation: Steps to Start a Business

Every successful startup begins with a solid foundation. Here’s a step-by-step approach to turning your idea into a thriving business:

Develop a Business Idea: Identify a problem to solve or a gap in the market. Validate your idea through market research and feedback.
Create a Business Plan: Outline your business model, target audience, value proposition, marketing strategy, and financial projections. A well-crafted business plan is essential for attracting investors and guiding your growth1.
Register Your Business: Choose the right legal structure (sole proprietorship, partnership, LLP, private limited company, etc.) and register with the relevant authorities.
Secure Licenses and Permits: Obtain all necessary licenses, tax registrations, and certifications to operate legally.
Build a Team: Surround yourself with skilled, motivated individuals who complement your strengths and share your vision1.
Set Up Your Operations: Find a location (if needed), set up your office or workspace, and establish operational processes.
Develop Your Product or Service: Use lean startup principles—build a minimum viable product (MVP), test it with real users, and iterate based on feedback1.
Launch and Market: Create a marketing plan to reach your target audience, build your brand, and start acquiring customers.
Plan for Growth: Continuously analyze, adapt, and innovate to scale your business.

2. Where to Get Funding?

Funding is often the lifeblood of a new business. Here are the primary funding options available to Indian startups:

Bootstrapping/Self-funding: Use your own savings or reinvest early revenues. This allows you to retain full control but may limit growth initially23.
Friends and Family: Borrow funds from trusted personal contacts. This is common in the early stages when formal funding is hard to secure2.
Angel Investors: High-net-worth individuals who invest in startups in exchange for equity. They also offer mentorship and valuable connections3.
Venture Capital (VC) Firms: Professional investors who provide larger sums in exchange for equity and often take an active role in business decisions. Leading VC firms in India include Sequoia Capital, Accel Partners, and Blume Ventures3.
Government Schemes & Grants: The Indian government offers various funding schemes, including the Startup India Seed Fund Scheme and SIDBI’s Fund of Funds for Startups34.
Bank Loans: Major banks like SBI, HDFC, and ICICI provide business loans, both secured and unsecured, tailored for startups3.
Crowdfunding: Raise small amounts from a large number of people via platforms like Ketto, Wishberry, and Kickstarter3.
Incubators and Accelerators: These programs offer seed funding, mentorship, and office space. Notable examples include IIM Calcutta Innovation Park, 91Springboard, and T-Hub3.
Corporate Investors: Large companies invest in startups for strategic growth and innovation partnerships3.
Private Equity (PE) Firms: For more mature startups, PE firms offer significant capital in exchange for ownership stakes3.
Revenue-Based Financing (RBF): Raise funds by promising a share of future revenue instead of equity3.

3. How to Approach Investors?

Securing investment is as much about relationship-building as it is about numbers. Here’s how to approach investors effectively:

Identify the Right Investor: Decide whether you need an angel investor, VC, or another type. Research their investment preferences and portfolio5.
Network and Build Connections: Attend startup events, join online communities, and leverage your professional network to meet potential investors5.
Craft a Compelling Pitch: Your pitch should clearly explain your business, the problem you solve, your market opportunity, traction, team, and financial projections. Keep it concise and engaging5.
Personalize Your Outreach: When reaching out (via email, LinkedIn, or introductions), personalize your message based on your research about the investor. Be polite, clear, and confident5.
Leverage Warm Introductions: A referral from a mutual contact increases your credibility and chances of getting noticed5.
Prepare Your Documents: Attach an executive summary or pitch deck with your outreach. Be ready to share your business plan, financials, and any proof of traction5.
Follow Up Professionally: Respect their time, keep communications brief, and always follow up after meetings with a thank you and next steps5.

4. Government Schemes in India to Help Startups

India’s government has launched several initiatives to foster entrepreneurship and innovation. Here are some of the most impactful schemes:

Startup India Initiative: Launched in 2016, this flagship program offers tax exemptions, intellectual property rebates, and self-certification for compliance, making it easier to start and grow a business4.
Startup India Seed Fund Scheme (SISFS): Provides funding up to ₹50 lakh to help startups develop products, test ideas, and scale their businesses4.
Credit Guarantee Scheme for Startups (CGSS): Offers collateral-free loans with a 75% credit guarantee, reducing financial risks for entrepreneurs4.
State-Specific Schemes: Many states have their own startup policies, offering funding, incubation, and mentoring support (e.g., Startup Karnataka, T-Hub)4.
SIDBI Fund of Funds for Startups: Managed by SIDBI, this scheme invests in SEBI-registered Alternative Investment Funds (AIFs), which in turn invest in startups23.
Mudra Loans: Provides microfinance and refinancing support to small businesses and startups3.
Other Benefits: Eligible startups can enjoy a 100% tax rebate for three consecutive years within their first ten years, an 80% rebate on patent fees, expedited patent processing, and direct participation in government tenders4.

To access these schemes, entrepreneurs can apply through the Startup India Portal or respective state portals4.

5. Current Status of Active Startups in India

India’s startup ecosystem is booming, making it the third-largest in the world after the US and UK6. Here’s a snapshot of the current landscape:

Rapid Growth: From just 500 government-recognised startups in 2016, the number has surged to over 1.59 lakh by January 20256.
Unicorns: India is home to more than 100 unicorns (startups valued at over $1 billion), collectively valued at around $300 billion4.
IPO Activity: The Indian startup IPO market saw a flurry of activity in 2024, with 13 new-age tech companies getting listed and raising over INR 29,000 crore. However, 2025 has seen a slowdown, with only one major listing so far, due to market corrections and investor caution regarding profitability and realistic valuations7.
Innovation and Impact: Startups are driving innovation across sectors—fintech, healthtech, edtech, agritech, and more—creating jobs and transforming the economy6.
Challenges: Despite the progress, startups still face hurdles like funding gaps, regulatory complexities, and the need for sustainable, profitable business models47.

Conclusion

Starting a business from scratch in India is both challenging and rewarding. With the right plan, access to funding, government support, and a focus on innovation, you can build a successful startup that makes a real impact. India’s vibrant ecosystem is full of opportunities—so take the leap, leverage available resources, and let your entrepreneurial journey begin!

Are you ready to start your own business? Share your thoughts or questions in the comments below!

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