How to Start a Business:
The establishment or start a business is beset with a number of problems. The entrepreneur has to invest huge amounts and naturally he expects a good return on his investment.
He has to consider carefully many factors in order to arrive at a decision to start a business. If all the factors are not carefully considered at the initial stage, the business may have to face problems in the later years.
In order to avoid problems later, every factor affecting the business must be carefully considered in the beginning.
The various factors relating to the start a business:
1. Development of Idea:
The first problem of an entrepreneur is to conceive the idea that there is a specific business opportunity.
The entrepreneur may get the idea from his observation of the goods and services already in the market or from the unexploited natural Business resources or from government facüiües provided for business undertakings.
The process of identifying opportunity is termed as opportunity analysis. The important tool in the identification of business opportunity is the SWOT analysis.
2. Determination of objectives:
The entrepreneur has to determine the main objectives of the business proposed to be established.
The objectives of the concern must be such that it should be possible for the concern to achieve them.
3. Product Analysis and Market Survey:
Product analysis primarily means about the kinds of products to be produced and the different sizes and models in the design and each type of product must be planned after careful study of technical marketing factors.
The ultimate goal of every enterprise is to sell the products in the market. Therefore promoters have to explore the diversity and depth of the market for the products or services proposed to be produced.
The market analysis comprises the study of:
(i) Who will buy?
(ii) where these buyers are?
(iii) What will they buy?
(iv) How much they will buy?
(v) when would they buy?
4. Form of Organisation:
The entrepreneur has also to decide the form of organisation for his business. This factor is important because the power and responsibility of the entrepreneur are determined by the form of organisation used.
In the great majority of cases, the entrepreneurs have to consider a number of factors before deciding upon the form organisation for the proposed business.
5. Size of the Firm:
The next problem relates to the size of the unit. As an already stated small business can be started in the form of a sole trader concern, medium-size business is started on the basis of partnership and large-scale organisation requiring huge capital has to be started only on the basis of a joint-stock company.
The other factors to be considered in deciding the size are the technical, managerial, marketing and financial aspects.
6. Location of the Business:
The success of the business enterprise depends very much on the suitability of the place where the factory is to be located. For selecting the place for locating the business, many factors have to be considered.
I) Transport and communication facilities.
II) Availability of power, fuel and water.
III) Nearness to sources of raw materials.
IV) An adequate supply of labour.
V) Climatic conditions.
VI)Nearness to the market.
VII) Regulations imposed by the government.
7. Physical Facilities:
The entrepreneur has to provide for physical facilities and for proper layout-
(a) Plant, building and equipment: The provision of physical facilities involves a decision regarding the character of the building, yard spaces, acquisition and installation of machinery and equipment-
(b) Layout: For the smooth and efficient performance, proper layout of machinery and equipment is necessary.
Proper layout is important because a faulty arrangement of machinery and equipment may result in unnecessary movement of work from one step to another step.
8. Financial Planning:
For starting a new business, one of the essential requisites is capital. The entrepreneur has to provide capital for fixed investments like land, building, machinery and for working capital to finance labour, materials, etc.
Therefore, assessment of financial needs and arrangements for raising the required finance are üle most crucial tasks of the promoters.
9. Arrangement for Labour Force:
Another problem of new business is to secure adequate labour force — both skilled and unskilled. The entrepreneur has to make an estimate of the requirements of the different categories of workers for various departments and arrange for their recruitment.
10. Building the Organisational Structure:
After solving the abovementioned problems, the entrepreneur has to build the organisationally structure.
This involves dividing the total work of the enterprise into major functions like production, sales, finance, personnel, engineering, etc.