By establishing a business means to start a new business. Before the industrial revolution, the goods were generally produced for local markets. If was therefore, easy to establish and operate the business. The condition are now entirely changed. The goods are produced by machines. The rate of production has gone up. There is stiff competition for the sale of goods in the market. Goods are produced in anticipation of demand. The risk of business has increased manifold. The entrepreneur, therefore, has to be very careful before undertaking any new business. The main factors or problems which are to be examined before establishing a new business are as follows:


#1) SELECTION OF BUSINESS:

The most important decision before engaging one-self in any business activity is the selection of business. Once a decision is taken and a business in established, it then becomes difficult to change it, So detailed investigations and utmost care should be taken up in the selection of business.

#2) SELECTION OF BUSINESS:

A business should not be taken up on the basis of current demand only. Future trend in demand should be carefully examined. If the demand for a product is irregular, seasonal, uncertain and the margin of profit earned by existing firms is very low, it is no use in starting such a business. For examples, a beauty pariour in fashionable area can do more business than such a pariour in a locally where people of low income are living.

#3) SIZE OF BUSINESS UNIT:

The size of business unit means the scale of business. The size of business unit depends upon the demand for the commodity in the market, the availability of resources, technical and organizational ability of economies in expenses. However, determination of the scale of business is an important factor to be considered before establishing a business.

#4) PROVISION OF CAPITAL:

Capital is the life blood of business before starting a business, the capital needs of the business is to be assessed. The capital needs depends upon its fixed and working capital requirements. After considering the financial requirements, the sources for raising funds for the business should be taken up. In case the full amount of capital required for establishing and operating business cannot be met from owned capital, (own resources) then arrangements shall have to be made for the availability of raising of borrowed capital from banks, friends etc.

#5) LACTATION:

The selection of a suitable place for the establishment of a business is of utmost importance for the success of a business. The availability of raw material, trained labor, banking facilities, telephone, gas, cheap transport, nearness to market of finished products etc. are the important considerations in the selection of site for business.

#6) SELECTION OF PHYSICAL FACILITIES:

The selection of physical facilities depends upon the nature of a new business. In case of a manufacturing concern, the decisions acquiring land, building, machinery, go down etc through purchase, or an rent basis or on lease are to be carefully undertaken. In case of trading concern, the purchase/hire of shop in the shopping center, provision and proper display of goods, etc need proper consideration.

#7) PLAN LAYOUT:

The success of a business particularly manufacturing depends greatly on its plan layout. The plan layout is the setting up of machines and equipment of the factory. If the plan lay out is good, it facilities the flow of work. There is an effective utilization of men, materials and machines.

#8) SELECTION OF STAFF:

A new business has to acquire adequate staff both skilled and unskilled for the operation of a business. Here care should be taken that right persons are selected for the right job.

#9) OFFICE EQUIPMENT:

The provision of office equipment tables, chairs, telephones, calculators, duplicating, air-conditioners machines etc. are essential for a business house. These equipment improve the working and efficiency of the staff.

#10) FULFILLMENT OF LEGAL REQUIREMENTS:

An entrepreneur before starting a business has to fulfill the conditions and rules enforced by the state, if any. The non fulfill of legal requirement may send him to jail.

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