Consideration before starting the Business
Business means the art of being busy. The aim of business is to earn profit. The higher number of industries has increased competition among investors. Before starting the business, promoters must consider the following factor in order to survive and expand the business.
In a competitive market, it is more difficult to survive, expand and diversify business activities. Therefore it is essential to make a study about business environments before the establishment of any business.
- Identification of business: The first factor that businessman must consider before starting a business is the identification of business. He has to decide about what type of business he wants to start. Identification and selection of particular business are very important for proper involvement and profit. It helps to give personal knowledge, interest, reduced level of risk, size and other values. It helps in the expansion of business and earning the maximum profit.
- Detailed investigation and research: Business cannot be started only by imagination. Proper and detailed study about the scope of business is very vital. It must consider present and future risks and competition. Market survey must be maintained. Investigation and study about raw material, finance, customer, market, employees and interest must be done.
- Forms of business organization: There are different natures of business. The types of business vary with the differences in the capital, interest, merits, demerits, risk sizes size and so on. It must be chosen from various different forms of organization like a sole proprietorship, partnership firm, and joint-stock and so on.
- Provision of capital: Capital means finance. Finance is the blood of business. Business cannot be established without sufficient capital. Volume of capital to be invested is dependent upon the size of a business firm. Source of capital must be properly taken into consideration. Capital is categorized into two groups.
- Fixed capital i.e. Land, building, furniture etc.
- Working capital i.e. raw material, transactions etc.
- Location of business: Location means a place where the business establishes. It is very difficult to migrate from location of business after it has been set up. Location of business where it has been established must have better transportation, communication, water, electricity and other utilities. Production and distribution must have low cost and sales must be high to minimize the profit. Selection of location must be perfect.
- Selection of staff: Business deals with human activities. It is related to the utilization of people to perform different activities. It is also called the staffing function. It helps in the management of human resources. Human activities are the major source to determine the efficiency of the business. Staff should be selected according to the nature of the business. Success of a business depends upon the selection of staff. Capable, skilled, experienced and honest employees must be selected.
- Office equipment: Office is the place where all administrative work of business has to be done. Therefore, the office needs proper types of equipment, machines and resources. For accurate, speedy performance office setup must be good.
- Government policy: Government makes business policy for the welfare of people. It must follow the policy of the government. It must know all the legal rules and regulation formulated by the government.