Thursday, March 25, 2010

CONSIDERATIONS BEFORE STARTING A NEW BUSINESS

To start a business means to encourage oneself in business activity and work. Every work performed before starting a new business is a part of its promotional activities. Promotional work begins with the origin of an idea till the business begins to function as a going concern. The aim of every business is to earn profit through service. As scope of competition has become wider, risk in business has increased considerably. The complexities of business have increased manifold. Thus, before starting new business promoters must consider the following factors in order to survive and earn profits.

(1) Selection of Business : The first thing to be considered before starting a new business is deciding what type of business to start. This is an important consideration before taking a decision on the establishment of a business. There are many types of business available. The businessman has to select carefully whether to start industry or trade. Once a decision is taken and a business is established it becomes very difficult to introduce basic changes in the nature of the business. While selecting business following factors should be considered:
a. Personal internet of the businessman
b. Possibility of earning more profit
c. Less risk and more profitable business
d. Knowledge and skill of the businessman
e. Estimated size and available resources
f. Prevailing level of competition
g. Chances of expansion in future
h. Rising trend of future demand

(2) Detailed Investigation : A business cannot be started only by imagination. So after selecting a business detailed investigation should be done to determine the difficulties and possibility of future progress. The profitability of the proposed business can be found out through market survey. Present and future competition about the decided business should be evaluated. Detailed investigation concerning the consumer’s interest, income and habit of expenditure must be conducted. Detailed investigation sufficient profit. Though it is difficult to find out what is going to happen in the future, yet with the help of the present study, an outline of the future may be prepared. If it found profitable and feasible to start a business further consideration should be taken in this direction.

(3) Form of Business Organization : The determination of the form of business organization is another important decision to be taken before starting a business. Sole proprietorship, partnership and Joint Stock Company are the various forms of business organization. Each forms of business organization has its own merits and demerits. Which type of business organization is suitable for the business depends upon various factors i.e. nature of the business, size, capital, risk, etc. If the business is risky and requires larger amount of capital then Joint Stock Company is most suitable. If business is to be conducted on small scale, sole proprietorship may be ideal. Broadly speaking sole proprietorship for medium business and the company for the big business is the most are more suitable to each other in varying circumstances.

(4) Provision of Capital : Capital is the life blood of business. No business can be established and conducted without capital. But the volume of capital varies according to the nature and size of the business. Hence before starting a new business requirement of capital and the source for collecting capital should be determined. Every business needs fixed capital in the form of land, building, machinery, furniture, etc. In addition, working capital is required to purchase raw materials and to meet day-to-day business transactions. Thus, capital requirement is estimated by ascertaining the amount essential for fixed capital and working capital relating to the establishment of business. The business is less than the requirement, it becomes difficult to conduct the business whereas excess capital cannot earn sufficient profit, which have adverse effect on the business goodwill.

(5) Location of Business : Location means selecting a site for business. For starting a business location is also an important factor. It is very difficult to change the location once the business has been set up. For selecting a location of the business, many factors have to be considered. For trading concern nearness to customers is the main consideration. But for industrial concern special precautions should be taken in selecting the site. Hence location is the best in which production and distribution cost per unit is the least, sales are maximum and maximum profit is possible.

(6) Selections of Staffs : Staffs are needed to perform the various works of the business. According to the size and nature or business staffs are selected. The success of business generally depends upon those staffs. Hence capable, experienced and honest staffs should be selected. For this, the businessman has to estimate manpower requirements. So another problem of a new business is to secure adequate staff—both skilled and unskilled.

(7) Office Equipment : An office is a central place where all sorts of clerical work is done to coordinate and control the affairs of the whole business. For the efficient functioning of an office there is a need for adequate and proper equipment improves the efficiency of the office staff. They play an important role in the efficient, accurate and speedy performance of the office work.

(8) Government Policy : Government makes the business policy for the welfare of the people and for healthy business environment. Hence before starting the business the businessman should study and know the formalities and government policy relating to establishment, running and regulation of business. The businessman should compulsorily follow such rules and regulations of the government.

9 comments:

hotmail said...

thanxxxx i m student in bba from pakistan

Unknown said...

Buying an established business has considerable fewer risks than starting a new business. For this reason I am looking for a business for sale brisbane which is suited to my interests.

Unknown said...

Me and my mother always love and dream to start a business in Europe. I hope this dreams will come true.

Unknown said...

Thanks for posting...!!!!! Get good information about setting up a business

admin said...

Good post. Starting a business is not an easy task but one can nail it if you have killer instints to succeed.
Well other career options are also viable.

Saloni panjwani said...
This comment has been removed by the author.
Saloni panjwani said...

A new venture requires a lot of preliminary formalities and a deep research of various factors. There are many courses available for students who need technical knowledge for start ups.
Follow the link for further details:
https://www.hapchap.in/jee-main-complete-details/

Unknown said...

We hope too

Unknown said...

Thnq so much...it helps me lot

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