Basic Factors of Starting a Business
Starting a business enterprise is similar to any other human effort in which resources are employed to achieve certain objectives. Successful results in business depend largely upon the ability of the entrepreneurs or the starters of a new business to anticipate problems and solve them with minimum cost. Some of the basic factors which must be considered by anybody who is to start the business are:
(i) Selection of line of business: The first thing to be decided by any entrepreneur of a new business is the nature and type of business to be undertaken.
(ii) Size of the firm: Size of the firm or scale of its operation is another important decision to be taken at the start of the business. Some factors favour a large size whereas others tend to restrict the scale of operation.
(iii) Choice of form of ownership: With respect to ownership, the business organization may take the form of a sale proprietorship, partnership, or a joint stock company.
(iv) Location of business enterprise: An important factor to be considered at the start of the business is the place where the enterprise will be located. Any mistake in this regard can result in high cost of production, inconvenience in getting right kind of production inputs or serving the customers in the best possible way.
(v) Financing the proposition: Financing is concerned with providing the necessary capital for starting as well as for continuing the proposed business.
(vi) Physical facilities: Availability of physical facilities including machines and equipment, building and supportive services is a very important factor to be considered at the start of the business.
(vii) Plant layout: Once the requirement of physical facilities has been determined, the entrepreneur should draw a layout plan showing the arrangement of these facilities.
(viii) Competent and committed worked force: Every enterprise needs competent and committed work force to perform various activities so that physical and financial resources are converted into desired outputs.
(ix) Tax planning: Tax planning has become necessary these days because there are a number of tax laws in the country and they influence almost every aspect of the functioning of modern business.