question_answer

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

Answer:

Ans.     The Following factors are considered while starting a new business:

1. Selecting the line of business: The first thing to be decided by the entrepreneur is the line and type of business to be undertaken.

2. Scale or size of business: After deciding the line of business the businessman must decide whether he/she wants to set up large scale or small scale business.

3. Choice of form of business organization: The next decision must be taken is to finalise the form of business, i.e., to set up the sale, proprietorship, partnership or joint stock company.

4. Location of business enterprise: The entrepreneur has to decide the place where the business will be located. Before taking this decision he/she must find out availability of raw materials, power, labour, banking, transportation etc.

5. Financial requirement: The businessman must analyse the amount of capital he she might require to buy for fixed assets and for working assets). Proper financia planning must be done to determine the amount of funds needed.

6. Physical facilities: It includes machinery, equipment, building, etc. This decisior depends upon the size, scale and type of business activities he/she wants to carry on.

7. Plant layout: Showing the physical arrangement of machines and equipment needed to manufacture a product.

8. Competent and committed workforce: The entrepreneur must find out the requirement of skilled and unskilled workers and managerial staff to perform various activities.

9. Tax planning: The entrepreneur must try to analyse the types of taxes, because there are a number of tax laws in the country which affect the functioning of business.

10. Setting up the enterprise: After analysing the above mentioned points carefully the entrepreneur can start the business which would mean mobilising various resources and completing the legal formalities.