After one decides the issues of product and process selection one has to answer yet another important question: what place is one going to set the unit up? For a lot of tiny units and service based units, home is perhaps the best starting place.
  • 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
However, a modern small scale unit needs to be located at an industrial area or estate where basic infrastructure facilities are provided. In most cases the location choice is governed by the kind of subsidy and incentive package offered by the state's industrial development corporation.

However if your unit is more like a retail business (e.g. Fashion garments, Consumer durable) then location is not of paramount importance.

Other factors that are usually considered while deciding on the locations are :
  • Proximity to markets
  • Proximity to source of raw materials
Setting up an establishment is much more than putting a sign board up and waiting for customers to walk in. It requires negotiating a favourable plot or shed purchase, organising for proper construction of building, design of interiors and finding good deals for equipment and machinery.
Once an industrial plot for the unit is secured, then the next job is that of finding a suitable architect. Design of factory building has to be in consonance with the type of industry. It should also take care of the requirement of plant layout.

It should be noted again that an architect's estimate of building construction is essential for loan applications. Further, architect's certificate for money spent on building is needed for disbursement of loan. After the construction of building is over the interiors are designed according to the need of specific industry.
Among the utilities of prime importance are power and water. In many cases getting power connection causes delay in setting up of plant. Therefore it is imperative to commence work on these aspects with diligent follow up. Power connections are generally of either LT (Low Tension) or HT (High tension) type. If connected load is upto 75 HP, LT connection is provided. For connected loads of 130 HP or higher only HT connection is provided.

A formal application needs to be made in a specific form to the state electricity board. An electrical inspector is deputed for evaluation of application to factory site, after which the load is sanctioned. In areas of power shortage, it is advisable to augment the power supply with a captive generating set.

Water connection is also obtained likewise by applying in advance in formal forms. The water supply can be augmented by installation of tubewell.

Projections for manpower and staffing is made in the project report. However it is necessary to time the induction of manpower in a planned manner. The engineers and operatives must be available before the installation of the machinery.


Choosing and ordering of right machinery is also of paramount importance. In many cases technology or process provides us with specifications which is not adequate, then an extensive techno-economic survey of machinery and equipment available must be carried out. International trade fairs and engineering fairs are good places to look at available options. The entrepreneur must also consult experts, dealers / suppliers as well as users, prior to making a selection of equipment and machinery. The advice of DIC, SISI and NSIC can also be sought in this regard.


Materials procurement and planning are critical to success, of a start-up with a MSME unit. Inventory management can lead to manageable cash flow situations, otherwise if too much is ordered too soon considerable amount of working capital gets locked up. On the other hand, non-availability may result in production hold-ups, and idle machine and manpower. For essential imported raw material whose lead time are large proper planning is all the more essential.
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