How to Set-Up an Enterprise

Location of Industry

After deciding the issues of product, the next important question is, where to set up the unit ? For many tiny units and service based units, the home is perhaps the best starting point. But not all type of SSI can be set up in home either due to size or due to nature of the industry. Then the entrepreneurs may like to locate their business in industrial estates, areas, parks, complexes developed by concerned state government organisation or private bodies or in a privately leased land subject to approvals by various state and municipal bodies.

State level Government agencies like DSIDC, HPSIDC, GIDC, TIDCO, UPSIDC assist entrepreneurs in identifying suitable locations/sites for the project, besides helping in the process of getting all the necessary clearances for the project. All utilities such as power, water supply etc. are available at site in case the units are located in any of the industrial estates developed by these agencies. Of late, private sector has also got into development of industrial parks; an example being the Mahindra Auto-ancillary park being developed jointly by the Mahindra group and TIDCO.

Ideally, identify two or three locations and then select a few possible sites at each of these locations. Next, compare these locations/sites in relation to your requirements. Checklist of points to be considered for evaluation of land /sites are as follows :

Checklist for Location and Site Selection

A. General Considerations

• Location (city/town/village)
• Nearest large city (name and distance)
• Connections to nearest and major cities (rail, road, air-distance, frequency)
• Distance from important geographical markets and to relevant ports (in case of export/import oriented enterprises)
• Distance from major raw material sources
• Availability of manpower with required skills and prevailing wage rates
• Law and order situation in the area
• Level of industrial development in the area and anticipated tempo
• Composition on industrial development (in terms of types of industry and size/health of existing enterprises)
• Whether built up factory shed is available at the location and whether its size confirms to your need

B. Industrial Infrastructure Position

• Land: availability and price
• Existence of an organized industrial estate
• Water Supply : source (river, canal, tube well), distance, quality (PH, hardness), rate, common storage facility, operating authority (Public Works Department, Estate-Corporation, Municipality)
• Power supply : nearest substation, feeder type (industrial/rural) availability, quality of power etc.
• Effluent treatment and disposal (if relevant): disposal point (land, sea, river), arrangement for treatment (individual, common), drainage arrangement for conveying the effluent (open, underground), treatment and conveyance charges
• Approach road/internal roads, Street lighting
• Responsibility for maintaining roads, drainage and street lighting (single or multiple agencies)
• Postal, telegram and Telecommunication facility (availability of new telephone connections, manual or automatic exchange, STD facility, telex facility, etc.)
• Bank facility
• Transport-operator facility
• Typing/photocopying
• Warehousing facility (if required)
• Proximity of offices of law-enforcing agencies (excise, sales tax, labour laws, factory inspection, pollution control etc.), Proximity of offices of industry - assisting agencies (State Financial corporation, industrial infrastructure corporation, raw material/marketing corporation, district Industries Centre which sanctions and disburses financial incentives)
• Building/electrical/fabrication contractor facility
• Shops for building material, spare parts and such other things
• Motor-rewinding, painting, gas-supply and such other industrial service
• Professional resource position (management/industrial consultants, financial/legal advisers, management/productivity associations).

C. Financial Incentive Position

• Investment subsidy (Central Govt./State Govt.)
• Income-tax concession
• Sales tax exemption/interest-free sales-tax loan
• Promoter's contribution (margin) and interest-rate policy followed by State Financial Corporation
• Octori-exemption, electricity-duty exemption, local-tax exemption and such other incentives.

D. Social Infrastructure Position

• Housing: availability, quality, price (ownership and rent), public housing (actual and planned housing by State Housing Board, infrastructure corporation or such other agencies)
• Education: primary, secondary and university education facility (quality, number of seats, ease of admission, medium of instruction)
• Health: dispensary, hospitals, specialties

E. Site-specific Considerations

• Vantage or otherwise location (e.g. on the highway), frontage, approach etc.
• Direction of town-growth with reference to the site
• Non-agricultural status of the site
• Site-contours ( levelled, hilly, pits, ravines, brick-kilns), site-shape (regular/irregular)
• Proximity to railway line, national highway, state highway *
• Overhead telephones or power lines or underground water/drainage/gas line passing through the site*
• Access to national/state highway or other roads provided by the state
• Wind direction in relation to the site #
• Soil-type +

Omit the items in list, depending on circumstances, points or items that are not very relevant to your project. Similarly, in many cases just preliminary or qualitative information may be enough.

Note :

* This may imply leaving out some portions of a plot for building purpose.

# In India, normal wind-direction, except during winter, is north-south. If there is a dense population concentration in south, a factory involving gas/smell emission may cause a problem

+ Loose soil may increase construction cost. Top

Business Operating From Homes

There are many businesses especially in the service sector which can be run efficiently from home. A list of some of such industries follows :

• Courier and messenger service
• Outdoor catering service
• Childcare (creche) service
• Mail order retailing
• Beauty parlours
• Health clubs
• Travel agencies
• Clearing and maintenance service
• Data processing
• Medical clinics

A point to be kept in mind while opening an service sector enterprise is that setting up an establishment in service sector is much more than putting a sign board up and waiting for customers to walk in. Setting up also requires negotiating a favourable plot or shed purchase, organising for proper construction or reconstruction of building, design of interiors and finding good deals for equipment and machinery. Most of the items mentioned in the checklist applies for the home based business also.