what are the basic factors of starting a business
Dear Student,
Important Factors to Consider Before Starting Your Own Business:
Important Factors to Consider Before Starting Your Own Business:
- Knowledge/Expertise: Knowledge and expertise about the product or service are keys to a successful business. The owner should ask himself, “what business should I start?”.
- Market/Demand: Once a decision is taken on the business you intend to start, the next step is to explore the demand/market for the product/service. A seller can sell some products only in the domestic market, other products can be sole overseas as well.
- Total Project Costs: It is important to correctly assess the total project cost required to set up and run the business successfully. A manufacturing business requires high investment as compared to other businesses.
- Competition: Before entering a new business, information about market competition needs to be found out. In case a product is a monopoly then the competition will not matter. Otherwise, the success of the business will depend upon the demand and supply gap. Thus if there is a huge demand then you can enter the business in spite of the market competition.
- Return on Investment: Return on Investment (ROI) is calculated as Net Profit divided by the investment made. It basically means how much return a business gets after investing a specific amount of money in the business. The ROI is low in the initial years and is expected to grow on a year on year basis. The business should invest only in those projects, where the return on investment is high.