The second step:
 Decision on the type of activity to be undertaken or the identification  of the dream project. Thousands of
manufacturing projects,  service ventures, Business activities are possible under the small industry sector
classified as mechanical, electrical,  electronics, glass, ceramics, hosiery,  food leather, and other categories.
 Entrepreneurs have to carefully think over on the project selection taking  into consideration several factors such as:
 a) His inclination/aptitude towards the project,
 b) His background such as education, technical skills, and training
 c) Potential for making profits
 d) Availability of technical know-how, machinery and raw materials
 e) Substantial market/demand for the products/services planned
 f) Capacity to invest : the project investment requirements should be  within the limits of the entrepreneur.

The third step:
Deciding on the size of the project:
The level of Investment will decide the status of the venture under any of the following categories:
small manufacturing industry, ancillary industry, export oriented unit, tiny sector, service venture or Business enterprise. One has to take this decision depending on one's investment capacity

Fourth Step:
Location of the Project:
The selection of the place to setup venture as to be done taking into consideration the following:
a) Nearness to market b)Availability of basic infrastructures like power, water,  roads, trained labor, communication facilities etc
c) Availability of industrial sheds and so on.

Fifth Step: Preparation of the Project Report-Technical Feasibility
This is an important step which not only describes all the features of the project but also justifies the feasibility of the
dream with all the details to convince not only the entrepreneur but also others who are to commit resources for the project. Many financial institutions prescribe specific formats in which the report has to be prepared. One has to
check and decide the format according to the needs. A study of technical feasibility is to ensure that the activity
proposed can be accomplished and that the inputs are not only adequate but also optimum. However
the project report should cover the entire spectrum of activity and include the following:
a) Land & Building b)  Plant & Machinery c) description of the product/service/business d) production process
and technology e) Inputs required such as raw materials, power, water,  labor f) Plant layout & flow chart
Decision should also be taken on ownership (proprietary/partnership).

Sixth Step: Financial Viability
The project should not only technically feasible but also financially viable. Financial viability means that the products/services can be produced at reasonable cost, marketed at competitive price with decent profit. The project report should contain proposed investments in capital items, working capital needed, &Breakeven level of operation. The Financial feasibility analysis is complete only when the total financial requirements for implementing the project are assessed and sources of financing the project identified. While considering financial feasibility, the ability of the promoter entrepreneur  to bring in his share of contribution must always be kept in view.

To know more on "Feasibility Study"

Step Seven : Arrangement of Finance -
Long Term Finance Funding requirements of a Project are of  Long  term needs for acquiring fixed asses like land & Building,
Plant & Machinery and for security deposits and working capital margin.  Short term advances for working Capital in the form of pledge/hypothetication/cash credit/bills facility. The term Loans for fixed assets land, building, plant & machinery are preferably got from State Financial Corporation.

Step eight : Arrangement of Finance - Working Capital
The Industrial Unit needs short term loans for its working capital requirements. Working Capital is required for:
Purchase of raw materials, Consumable Stores/Spares ,Stock in Process Manufacturing Expenses ,Credit Sales/Bills Receivable

Step Nine : Provisional registration as small industry
District Industries Centers issue the registration based on Project report of the Entrepreneurs. This registration is required to obtain Industrial sheds from Government built Estates, to obtain license from Municipal corporations, to get power connection from electricity board, to apply for loans from Banks.
Step Ten: Acquiring Industrial Shed
Factory Building can be rented or owned. Investment in Land & Building is better to be avoided in the initial stages to prevent locking up of funds and increase of borrowed capital. It is advisable to go in for Industrial sheds in approved areas or estates.
If the factory building is to be constructed it should be ensured that the land is free from encumbrances, it can be used for industrial purposes and all needed infrastructure facilities are available. Before starting construction activities, the entrepreneur has to obtain necessary license from corporation or municipal authorities and should also ensure the plan of the building conform to the norms stipulated by the inspector of factories. The small industry development corporation of the state offer constructed sheds in the industrial estates.
Step Eleven : Purchase of Machinery
The requirements of machinery, spares, tools etc are to be carefully assessed and the proper size of plant & machinery should be decided. Once fixed assets are created it will be difficult to change them. The machinery should be necessary and adequate.
It is some time cheaper and convenient to have some components bought out or got done on job works basis from outside making investments on machinery for making them. The Names of different machines & suppliers be obtained. Then get Quotations, evaluate specifications, quality, delivery time, price and decision to be taken to place orders for machines.
Step Twelve :Raw Materials
Entrepreneur has to ensure timely availability of raw materials for continuous production. Modern Material Management & Inventory methods have to be understood & followed.
Step thirteen: Statutory Licenses
Many product lines if taken up for manufacturing need licenses and one cannot ignore them. Manufacture of drugs & Cosmetics need license from drug controllers, food processing industry from ministry of agriculture, Inspector of factories, Pollution Control Boards, Commercial Tax departments, Collector of Central Excise and so on depending on the products to be made.
Step Fourteen : Man Power Needs
A realistic assessment of the man power requirement in skilled, semiskilled and unskilled category should be made after deciding on the size of operations. Recruitments have to be carefully made at the right time.
Step Fifteen: Synchronizing various aspects
The various aspects of preliminary operations to establish an industry should be synchronized within a time frame. The machinery orders should be placed in such a way that it arrives after the shed is constructed and ready. The man power is to be in place just before the machine arrive and the power connection will be available. The orders for materials and other tools etc be placed at appropriate time. The Statutory clearances should be obtained while the entire exercise is in progress.
Step Sixteen: power Connection
The power connection should be obtained without delays. It is always better to contact the Electricity Board  once the location
is decided and quantum of power needed is estimated  to check availability of power lines. Applications should have been submitted on time and authorities convinced on all procedural aspects.
Step Seventeen: Production
Entrepreneur should  draw blue print of layout of factory, install machinery & plan production. once planned then production to be commenced taking care of quality & time schedules.
Step Eighteen: Sales
Marketing is the most important aspect the entrepreneurs are to plan for. Making a study of Government marketing assistance's programs, appointing distributors, dealers, retailers have all to be carefully done appropriate to products marketing strategy. Watching competitors & taking care of customers are very important.
We congratulate you...If you have read all the 18 Steps - BEST OF LUCK