Factors to be considered while starting a business.

Q1. What are important factors to be considered while starting a business? Explain?


  1. Selection of line of Business: The first thing to be decided by an entrepreneur of  new business is nature and type of business to be undertaken. He will like to enter into branch of industry or to commerce. The decision is influenced by customer requirement in market and kind of technical knowledge for producing products.
  2. Size of firm:  Size of firm is another important decision to be taken while starting a business. Some factors favors large size where as others restrict scale of operation. If market condition are uncertain and risks are high then small size business would be better choice.
  3. Choice of form of ownership: With respect to ownership, business organization may take in form of sole proprietorship, partnership or joint stock company. The form of ownership is depend on factors such as line of business, capital required, transfer-ability of interest and so on.
  4. Location of business enterprise: An important factor to be considered at the part of starting pf business is where enterprise will be located. Any mistake in this regard results in high cost of production. Availability of raw material and labor, power supply and services like banking, transportation, communication, warehousing, etc. are important factors while making choice of location.
  5. Financing the proposition: Financing is considered necessary for capital for starting or continuing business. Capital is required for investment in fixed assets like building, machinery and current assets like raw material, debts, stock of finished goods etc. Capital is also required for meeting day-to-day expenses. Proper financial planning must be done to determine
    • Requirement of capital
    • Source of capital
    • Best way of utilizing capital in firm.
  6. Physical facilities: Availability of physical facilities including machines and equipment, building and services is very important factor to start a business.
  7. Plant Layout: Once physical facilities are determined, the entrepreneur should draw plant layout plan. Layout means physical arrangement of machines and equipment.
  8. Competent and committed worked force: Ever entrepreneur need this so that physical and financial resources are converted into desired outputs. Plans should be made about how employees will be trained and motivated to give best performance.
  9. Tax Planning: It become necessary these days because there are number of tax laws in country and they aspect every functioning of business.
  10. Launching the enterprise: After all these decisions completed, their is launching of enterprise which mean mobilizing various resources, fulfilling necessary legal formalities starting production process etc.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: