Every individual who is tired of an 8am-5pm job wants to become an entrepreneur. It’s quite encouraging to start a business when one thinks about the freedom of not sitting at one place and working for 9 hours a day, not reporting to a boss and the possibility of earning endless profit. Starting a business can be a good decision however it can be stressful, challenging and not at all simple as it looks like. It needs a lot of research, hard work, planning etc to take the business into higher levels. Most of you have no idea about the investment, planning, knowledge and experience required to run a business.
Here are several factors to consider when starting a business.
- Nature of the business– The foremost thing to decide is the type of your business. Your business must fall under these types- service, merchandising or manufacturing. Let’s understand all three in detail to make the right decision for your business.
- Service- Service is an activity done for a commercial purpose where the company provides professional support to the clients. The performance of a task helps business or an individual in subjects such as maintenance, travelling, hospitality, accounting, consultation, transportation etc.
- Merchandising– It includes the promotion and buying and selling of goods & services. In simple terms, it is referred to as retail, trading or distribution and wholesale. It also includes creation of display designs, developing marketing strategies, setting prices for goods & services.
- Manufacturing- Manufacturing is producing finished goods from raw materials on a large scale for sale. Examples are bakeries, clothing, daily essentials, gadgets, cars etc.
- Target Customers- The next step after deciding the type of business is to find out if there is a market for your product or service. Because just having a product or service will not make your business big if you don’t have any customers to buy. If there is a market, identify your customers.
- Sources of Capital– To start any business, you need proper investment depending upon your business type. There are different sources of capital that you can use to start the process. These sources can be personal funds, banks, friends & family, loans, stock market or a retirement account. Personal funds is considered as the best form of financing used by many startups. It gives you a positive push to run a business without worrying about any kinds of debt payment.
- Partnership– If your business is owned by several individuals, you will need to structure your business as partnership. According to the partnership act, every individual will contribute to all the aspects of the business including property, money, and labour. In return, every individual will get an equal share of profit and loss of the business.
- Formation- After deciding what, whom and where to business, the next step is to decide the formation of your business. One can choose among sole proprietorship, partnership or corporation.
- Single Proprietorship- In this you will be the sole owner of your business.
- Partnership- Your business can be handled by several individuals which you call partners. You need at least two people to form a partnership.
- Corporation- is a group of people which you will call stockholders. You need at least 5 people to form a corporation.
- Legal Requirements-To set up any business, there are several rules and regulations that one needs to follow. One should never overlook these legalities as it may arise major problems later. Some of the important legal requirements are copyright and patent laws,labor laws, environment and sanitation regulations of the municipality. Understand the legality of the business and work accordingly.
- Degree of Risk– A businessman should always be ready to face several challenges and risks. A business is termed as risky when the probability of failure is high. There can be numerous reasons for business failure such as high cost of financing the business, limited market, stiff competition etc.
- Registration of your Business– Once you are settled with capital and expense requirements, make sure to legalize your business by registering it.
- Availability of Resources– If your business comes under manufacturing category, you need several resources such as raw materials, human resources, and machineries and equipment. One needs to figure out the availability of resources that are available in very limited quantities such as sand, clay, abaca, and other natural fiber. It is important to find out the best place for the better availability of good raw materials.
10.Financial Analysis– One must ensure the reliable accounting and financial reporting process when starting a business. It is very important to incorporate a reliable accounting and financial reporting system to know what’s all happening in your business.
11.Bank Account– It is important to consider a separate bank account for your business. This will simplify your records and help in avoiding personal and business transactions. Always go for a reliable and accessible bank to get your work done easily.
12. Marketing– So, you are ready with a business plan, products, market everything but without promoting your products or brand, you will not be able to sell among your customers. Marketing plays a significant role in succeeding the business.
Starting a business is simple but managing it to reach the higher levels is difficult. So, find out smart ways to diversify your business and get success. Planning before you start a business and managing while running a business are two major things to be done properly for a successful business. Dealing with customers, employees and resource providers are also considered as important parts of business.