FACTORS TO CONSIDER WHEN STARTING A BUSINESS

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Legal

• When starting a business one should think about a business name that will be appropriate for the industry.

• This is to ensure that the business name one intends to use is not in existence and being used by another firm. The other important thing is to incorporate the business in accordance to the law of the state where it is located.

• Incorporation is done by deciding whether the trade will be a sole proprietorship or partnership. One can narrow down to specify whether it is a limited liability company.

• The business should be registered and all relevant information concerning its objectives.

• Tax compliance should be adhered to so that the business can run smoothly without getting into trouble with the authorities.

• Non-disclosure contracts should be prepared by lawyers so that clients can sign them as a precautionary measure to ensure that business is done with confidentiality.

• Building client trust will play a major role in retaining customers.

Social

• Entrepreneurs need to pay attention to the social aspect in their lives during the time of starting up a business.

• A lot of time is spent in the business by businesspersons before the firm stands up on its feet. One may tend to neglect family, friends and entertainment.

• One of the ways of addressing this problem is planning. Schedules should be made and allocation of time.

• One can also define working hours by setting the time for work. Family time can be squeezed in so that the role the entrepreneur plays in the family is not neglected because of overworking.

• Discipline of work should also be practiced by the businesspersons so that they do not go out to spend time with friends during working hours. To be able to advertise networking is encouraged. This enables people to publicize their trade at social gatherings. At the end of the day the best deals are stuck at social gatherings.

Financial

• Finances are what keeps the business going. First, a businessperson needs to have a plan of what kind of trade they want to engage in. One needs capital in order to set up a business.

• The money should be used properly in purchasing the necessary equipment in case of a manufacturing company.

• Where the business to be carried out is sales related, the relevant goods should be purchased according to the budget laid down by the entrepreneur.

• This will help to avoid misappropriation of funds. Labor needs to be factored in the budget too. Depending on the size of the business then one can decide how many workers will be required.

• A decision of the wages to be paid to the laborers should also be addressed. The other plan should be to have a constant system of payment of workers.

• A businessperson should obey the law by paying taxes regularly. Taxes should be planned for in the budget.

GDP, Inflation, Interest Rates and Unemployment

• It is important to evaluate the economy, which one intends to invest in. This gives a clear picture of whether the business will succeed or not.

• In order to do this an entrepreneur can calculate the GDP by considering the expenses, revenue and manufacturing method. The best method to use in calculating the GDP is the production tactic.

• It works on the standard that all the goods in a business should be bought by the person setting up the business. For that reason, the total worth of the goods should be equivalent to the budget made by the businessperson.

• To calculate it one should consider an estimation of the local output in order to determine the transitional consumption. To be able to get the gross cost added one should subtract the transitional consumption from the local output. A sum of the gross cost added is what is considered as the gross domestic product.

• An entrepreneur should also be aware of the inflation rates of the products he is trading in in the market. This will enable him to invest in a business that is not inflated. Interest rates also affect the GDP of a country thus one needs to be well informed on the current interest rates before choosing what method of calculating the GDP they will use.

• Unemployment plays a role when it comes to use the income method of calculation of the GDP of a state.

Elasticity of Demand

• A measure in business to establish the receptiveness or pliability of the extent of demand for products and services with relation to the variation in price.

• It basically gives a picture of what would happen to the demand of products from consumers when there is an increase or decrease in price.

• This test is done when all other factors of production remain at a constant. The general conclusion is always that price pliability results to be undesirable.

• This is because whenever price increases it automatic that the consumers stop purchasing the product and opt to buy the cheaper products.

• A product is believed to be rigid if its price elasticity of demand is below one. • This means that the increase or decrease of price of such a product has little or no effect its magnitude. • The vice versa is true. A product said to be elastic is one, which has its value elasticity above one.

Economies of Scale and Efficiency

• Economies of scale is the price benefits, which firms enjoy because of magnitude, production, or measure of process. In an instance where the price for each production reduces as scale of static price are distributed over a large number of products.

• This is more practical in the manufacturing industry. Here, a company, which produces a large number of goods normally enjoys lesser cost of production calculated per item produced.

• This encourages entrepreneurs to invest in companies, which manufacture many products so that they can produce goods at lower prices.

• On the other hand companies that produce fewer goods spend more on production of the goods. Businesses should be invested to produce a large number of goods so that the price of production can decrease.

• A decrease in the cost of production enables entrepreneurs to make maximum profit. It also makes the business be efficient in production.

• When a business person realizes that he is spending less on production, he or she gets the zeal to even manufacture more goods.

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SWOT

• Swot analysis is an acronym meaning strengths, weakness, opportunities, and threats of a business. • It assists in evaluating the business to find out where among the four does it lay. • An entrepreneur is able to make a more informed decision in determining, which trade to invest his money in. • Interior and exterior factors are considered when carrying out the Swot investigation.• The strengths of a business are those elements that make it more successful as compared to other businesses.

The weaknesses are those shortcomings, which make the business be defeated by its competitors.• The opportunities are the factors, which a business can use to benefit itself. • Threats are the things, which make it difficult for a firm to thrive.• A Swot analysis that is carried out accurately is a good indicator to entrepreneurs because it will be able to

save on time and resources, which will be able to be used towards accomplishing.

Market Structure

• The market structure plays a very significant role when it comes to the success of a business.

• There are a number of market structures. These are cartel, oliogopoly, duopoly, and olgopsony. In a monopoly market where a business caries on trade without competitors.

• It becomes the only service provider. This means that the monopolistic firms make prices without considering the effect it will have on their consumers.

• This courage is drawn from the fact that they are the only businesses providing that service.

• In the Oligopoly structure, the marketplace comprises of many small businesses, which regulate the market at large.

• Duopoly is where the market has only two companies providing goods and services.

• Oligopsony is a marketplace where a large number of service providers and traders are present only that their target consumers are few.

• Monopsony is a situation where there exists one purchaser.

Cost

• Cost is one of the most important factors that entrepreneurs should study before they set out to carry on their businesses.

• This is because it involves money and how it is spent for the benefit of the company.

• It is the money spent in production to see to it that tangible results are produced.

• Further costs are incurred in the transportation of the already finished goods to the place where the intended consumers can easily access them.

• A calculation of costs is also vital. There are two ways to account for costs. These are prospect price and dispatch note.

• A demand for payment is done effected by sending an invoice to the purchasers of the products of a company. Once payment is made then the demand can be said to have been honored.

• Opportunity price is the money, which would have been earned in case the purchaser had made a decision to acquire a certain good or service.

Risk and International Expansion

• When coming up with a business plan, it is advisable for entrepreneurs to know the risks, which come along by investing on the business at hand.

• This enables them to think and come up with strategies on how the firm will be able to survive in a market that is not very friendly.

• An evaluation of what disadvantages could befall the firm can be clearly identified. The businessperson can then take steps to remedy the same.

• International expansion can be more effective by introducing a unique aspect about the product being manufactured.

• Meeting with foreign investors to advertise the product can be very useful because it will expand its market. Online marketing can also help promote products on the international platform.

• These are just a few factors out of many others, which can make a business expand internationally.

References

• Anthony, M. (2004). SWOT Analysis for Business: Business Concepts. America American Press

• George, W. (2006). Legal, Financial, and Financial Factors to Consider When Starting a Business: Economics. Boston: Boston Press.

• Linda, F. (2001). Economies of Scale: Strategic Planning. America: American Press.