Reports worldwide say that India has the second-largest Startup ecosystem in the world. With each passing day, more and more entrepreneurs are trying to get a running start towards their business dreams and getting company registration. As a result, we are witnessing 3 to 4 companies emerging daily. However, most of them can’t achieve the success they envisioned. Many of them fail to scale their businesses to meet the customer base, while others fail to comprehend the needs of their customers.
Why is that the case? How come a business vision of these highly enthusiastic entrepreneurs isn’t coming to fruition.
What is the reason?
It is the challenges that come with incorporating a company in India.
What is Company Registration in India?
Company Registration or Company Incorporation in India is a way to establish a legal entity called a company under the Ministry of Corporate Affairs. As a legal entity, it has all the perks that an entrepreneur needs:
- It lives limited liability to its directors to protect their assets,
- This continues to exist even after death or incapacitation of the directors, and
- It is a separate entity, bearing legal powers such as owning property and filing court cases.
After seeing these points, one might think:-
Why is it a challenge to maintain this business entity?
No one can give you the precise answer to your “why”. However, we can provide you with some that we have deduced after being in this field over the years.
- The act is still new: The Companies Act, 2013 that regulates online company registration, is still a novice. It has gone through several changes over the past years, and from what we can gather, it will continue to go on.
- Budding entrepreneurs are still finding it hard to grasp the regulations: To say that the government hasn’t explained company registration regulations is an understatement. In addition to being unclear, the information provided to the new players of the business domain is also incomplete. As a result, budding entrepreneurs are finding it hard to comprehend the rules around company registration.
Thankfully, business license consultants can help these entrepreneurs understand the regulations in simple terms. Their company registration services assist them in establishing a better business entity.
Despite that, there are challenges that entrepreneurs face as they try to control the reins of their business.
Also Read: Private Limited Company Registration
The 7 Challenges of incorporating a company
The following are the seven core challenges faced by those who have obtained online company registration:
1. The company ecosystem is still growing.
Even though India is overflowing with entrepreneurial opportunities because of rising startups, the acceptance rate is low. This community is still new is still going through development. Because of that, the number of mentors, advisors, accelerators, support organizations and other institutions that can thrust the business ecosystem forward are not present.
2. Managing employees is getting increasingly difficult.
One can’t deny the rising unemployment in India. And the reason is not just lack of opportunities. While opportunities are available, most don’t show any inclination towards a job that has growth opportunities in future but currently pays little. Emerging startups that can’t afford expensive professionals are facing this issue daily.
3. Company Registration is not people-centric
Everything about the new Companies Act is not about the people but the technology. As a result, the budding startups are more interested in competing with foreign business entities rather than uplifting their employees. When technology takes precedence over people, the business becomes more tech-centric. And when the entrepreneur loses sight of who they serve, they lose customers. Consequently, their enterprise can slip off their hands.
4. Company valuation is a difficult task.
It is not a child’s play to evaluate the business in its initial stages. As most of it depends on the investor’s perception of the company, it’s hard to find an investor that gives true worth to your business entity.
5. Overenthusiasm towards the enterprise
Many overly enthusiastic entrepreneurs end up biting more than they can chew. As a result, while they can attain a limited company, their knowledge doesn’t allow them to manage it properly.
6. Inability to accept mistakes
Perhaps the biggest challenge Indian entrepreneurs face is the non-acceptance of their mistakes. However, it almost feels justified. The reason is the strenuous procedure to acquire online company registration in India. It has jaded the minds of many entrepreneurs who don’t see the point of improving themselves and their enterprise.
7. Lack of business registration consultants
Many business professionals have come out of the wood since the introduction of the startup India initiative. However, not all of them possesses the ability to deliver the services. As a result, most entrepreneurs find themselves at a disadvantage when the time arrives to incorporate their business entity.
Also Read: What documents do you need to apply for CDSCO Registration?
Conclusion
The challenges posed by the prospect of establishing a company in India isn’t due to its structure. It is because of the unpreparedness of our entrepreneurs. However, the right business consultants can assist in this regard – making the ordeal of managing a company a delightful affair.
