What factors are to be considered while starting a business? Explain.

(i) Selection of line business: The first thing to be decided by an entrepreneur is the nature and type of business to Methods of Dealing with, For instance, the enterprise may decide not to enter into too risky transaction, take preventive measures, like fire fighting devices, to reduce risk and take insurance policy to transfer risk to insurance company etc. (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. It depends on the uncertain market conditions and risks so people would choose the better one.

(iii) Choice of a form of ownership: Concerning ownership, the business organisation may take the form of a sole proprietorship, partnership, or a joint-stock company. Each form has its own merits and demerits. The choice of the suitable form of ownership will depend on such factors as the line of business, capital requirements, the liability of owners division of profit, legal formalities, continuity of business, and transferability of interest and so on.

(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 a 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 business. Capital is required for investment in fixed assets, like land, building, machinery and equipment and in current assets, like raw materials, books, debts, stock of finished goods, etc. Capital is also required for meeting day-to-day expenses.

(vi) Physical facilities: Availability of physical facilities, including machines and equipment, building and supportive services is an important factor to be considered at the start of the business. The decision relating to this factor will depend on the nature and size of the business, availability of funds and the process of production.

(vii) Planning: Once the requirement of physical facilities has been determined, the entrepreneur should draw a layout plan showing the arrangement of these facilities. The layout is an important part of planning that means the physical arrangement of machines and equipment needed to manufacture a product.

(viii) Competent and committed worked force: Every enterprise needs a competent and committed workforce to perform various activities so that physical and financial resources are converted into desired outputs. The plan should be made to identify the requirement of skilled and unskilled workers and managerial staff.

(ix) Tax planning: Tax planning has become necessary these days because there are several tax laws in the country and they influence almost every aspect of the functioning of modern business.

(x) Launching the enterprise: After the decisions relating to the above-mentioned factors have been taken, the entrepreneur can go ahead with actual launching of the enterprise which would mean mobilising various resources, fulfilling necessary legal formalities, starting the production process and initiating the sales promotion campaign.