12 Factors To Consider Before Starting Own Business
Starting own business is more difficult than buying an existing business. To make building a business as easy as possible, small business owner must consider some factors to help setting up a lucrative business. You must consider the following twelve factors before starting a business.
1. Set Objectives. The first factor to consider is to set reasonable objectives for the business. One of the objectives is likely to be that the business must make profit at the end of the period.
2. Evaluate The Market. To evaluate the market is to do market research. Lots of entrepreneurs do not have the skills to conduct this research themselves. Some of them don't have enough money to hire professional market researchers. Many small businesses fail because there is no market for their new products.
3. Find Out The Cost Of Required Assets. Before starting own business, make sure you find out the operating assets and estimates their costs. You can do this by going to the suppliers to get the original cost.
4. Consider The Personnel Requirements. The personnel requirement needs to be put into consideration when planning to starting own business. It will help the industrialist to work out the difficulty in personnel policy on promotion and training.
5. Prepare A Pro-forma Income Statement. A pro-forma income statement shows you how much money the business is expected to make when it begins operation. It gives outline of the estimated or forecasted profit a business is going to make.
6. Select The Right Legal Form. A businessman must decide whether the new firm will be a sole proprietorship, a partnership or a corporation. Many small businesses are sole proprietorship. The industrialist should think about the advantages and disadvantages of each business form before starting own business.
7. Raise The Needed Capital. Several new businesses normally have the problem of raising enough capital to startup a business. You may decide to increase your firm capital base by borrowing from friends, relatives or loans from banks.
8. Choose A Good Business Location. A business should not just be sited where the capitalist or business manager got an empty shop. For a business to make profit, it must be located near the targeted customers, clients and market place.
9. Set Up Good Accounting System. An entrepreneur needs to hire a qualified accountant to set up a good accounting system for the company. Without an acceptable accounting system, there is no way the administrator of the company will know whether the business is making profit or not.
10. Prepare Your Market Plan. At this time, the entrepreneur should have been evaluated the market and the next thing is to prepare a marketing strategy to make the business control the market.
11. Obtain The Required Permits. It depends on the area of your operation. It is very important for the entrepreneur to get required permits before starting a new business.
12. Start The Business And Match Objectives With Performance. The final factor to consider before starting own business is to start the trade and match objectives with performance. If objectives and performance do not match, the small business owner needs to adjust some aspect of the financial management or marketing plan of the firm.