HOW TO SET UP A SMALL SCALE INDUSTRY
How to set up a small scale industry an Introduction
How to set up a Small Scale Industry is that in which the investment in plant and machinery is under Rs. 25 lakhs to Rs 5.00 crore, whether it may be either ownership or lease basis or on hire basis. It has a major contribution to the development of the economy. However, the government varies the investment of money from time to time.
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A small scale unit is usually a one-man show, and even in the case of a partnership, the activities are mainly performed by the active partner and the rest is the sleeping partner. The area of operation of small units is local, meeting local or regional demand. Small industries are quite intensive with relatively small capital investment as compared to large units. The units under the SSI sector may be more suitable because of the consideration of the capital scarce and abundant supply of labor. The Ministry of Small Scale Industries has now merged with the Ministry of Agriculture and Rural Industries to form the Ministry of Micro, Small and Medium Industries (MSME).
Registration of Small Scale Industries
One of the advantages of small scale industries is that they are more flexible to adapt to changes in a new mode of production, the introduction of new products, etc. Small scale units are more susceptible to change and highly responsive than large scale units and are responsive to socio-economic conditions. The objective of small scale industries is to adapt to the latest technology and to produce better quality products at a lower cost.
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- Even in this type of business, registration is voluntary and not mandatory. However, its registration with the State Directorate or Commissioner of Industries or DIC qualifies the entity to receive various types of government assistance such as financial assistance from the Department of Industries, medium, and long-term from state financial corporations and other commercial banks. Loan, the rent-purchase basis from machinery National Small Industries Corporation, etc.
All states have two types of the registration process
- First, a provisional registration certificate is given, ie, normally valid for five years, and after the commencement of production, a permanent certificate is given, that is, in perpetuity.
- Registration of SSI units is necessary to avail bank loans at lower rates of interest, and exemption in sales tax, excise duty, obtaining capital subsidy side by side obtaining of license and all types of permissions, ISO-9000 certification reimbursement, less one can enjoy many benefits like customs duties. Duties and many other benefits provided by the state government.
Process for how to set up a small scale industry/businesses
Small scale business provides more freedom than large scale business and through this type of business can fulfill their dream of becoming an entrepreneur. This eliminates overhead expenses and the comprehensive planning required in large business ventures. One can establish small scale industries by following simple procedures, which are as follows:
Deciding: how to set up a small scale industry
First of all, you have to prepare the details for the small scale industry that you want to establish. It is necessary to decide whether you want to establish a corporation, ownership, or partnership. The prospective entrepreneur must analyze his / her strengths, weaknesses when deciding for an entrepreneurial career. This analysis helps to know which type and size of business would be most appropriate.
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Scanning of the business environment:
It is very important to understand and study of the current business environment, industrial policy, licensing process legal and technical environments, and economic policies before setting up the business. The environment is greatly impacted by establishing a proper industry.
You need to decide the product you want to manufacture or the service you want. When choosing the product or service you want to offer, you should conduct good market research and learn about the prevailing competition in the market.
You need to choose a location to establish your small scale industry. Such factors such as inflation for the market, availability of raw materials, labor, transport services, modern infrastructure, and other things are considered while selecting the location. The location determines the success or failure of the enterprise.
Technology: how to set up a small scale industry
For the manufacture of any object, technology is used. The entrepreneur should collect information on all available technologies, and identify the most appropriate. It will also be useful to determine the type of machinery and equipment to be installed.
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Project evaluation means the evaluation of a project. It is a technique for pre-analysis of a plan or project while preparing to set up an enterprise; The entrepreneur will have to carefully evaluate the project from economic, financial, technical, market, social and managerial aspects to reach a socially viable enterprise.
Finance is the life-giver of an enterprise. Therefore, the next big step is to arrange finance. Any type of business required capital because no business will be run on zero capital. If you do not have enough finance and then the best way is to take or take a loan.
The SSI unit should be registered with the government. For the purpose, the promoter should obtain the required forms and files from DIC or Directorate of Industry. After duly filled in, he has to apply for the local DIC or Directorate of Industries along with all relevant documents.
The next step in the industry is the management when you start your SSI industry. This includes allocating space for various tasks and choosing their production methods. You need to buy machinery for various departments and hire employees and workers.
Electricity and water connection:
The places where the enterprise will be located must either have an adequate electric connection, or it must be arranged. The power requirements in SSI units are also the main points to calculate the consumption of power and the nearest point from where the enterprise will get power connection. the power connection may affect the installation cost.
Installation of machinery:
After the above formalities completion procurement of plant and machinery and installation should be completed.
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At this stage, it is necessary to have adequate insurance for fixed assets and later also for existing assets.
Once the machines are installed, manpower is required to run them. So, quantum and manpower type have to be decided. The sources for obtaining the desired labor are also important. It follows recruitment, training, and placement.
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The established unit must have an organizational set-up. To work with hope, the organization must employ its manpower, machinery, and methods effectively. There should be no wastage of manpower, machinery, and materials. If the item is exported, the product and its packaging should be attractive.
Marketing is the most important activity as far as entrepreneur development is concerned. Marketing and business advertising is the next big step to establish a small scale industry. Online business directories and various traditional forms of advertising can get exposure to your business. The prices of your products or services are fixed keeping in mind the profit margin.
Before marketing, product quality certification should be obtained based on products from BIS (Bureau of Indian Standards) / AGMARK / HALLMARK, etc. If no quality standards are specified for the products, then the entrepreneur should develop his quality control parameters.
After the small scale unit goes into production and marketing, it becomes eligible to get permanent registration based on its provisional registration from DIC or Directorate of Industries.
Once a product or service is introduced to the market, there is a strong need for continuous market research to assess the needs and areas for modification and enhancement.
Periodic monitoring and evaluation help to know production, quality, and profitability not only in markets but where the firm stands compared to the performance envisaged in the business plan. It also identifies the direction of future development. For setting up an SSI unit the promoter should proceed through the planning. According to the business, at every stage, you need to improve your plan.
It can be concluded that setting up a small scale industry is not a difficult task. The process of small scale industries is simple and easy as compared to large scale industries. So, if an industry wants to set up, it can go for it. It is profitable, easy, and helps in the development of the country’s economy.