Factors which are considered while starting a business are
(i) Selection of line of business: The first thing to be decided by any entrepreneur of a new business is the nature and type of business to be undertaken. He will obviously like to enter that branch of industry and commerce, which has the possibility of greater amount of profits.
(ii) Size of the firm: Size of the firm or scale of its operation is another important decision to be taken at the start of the business. If the entrepreneur is confident that the demand for the proposed product is likely to be good over time, he can arrange the necessary capital for business and start a large scale business, else, a small scale business is justified.
(iii) Choice of form of ownership: A business organisation may either be * sole proprietorship, partnership or a company. The choice of the suitable form of ownership will depend on such factors as the line of business, capital requirements, liability of owners, division of profit, legal formalities etc.
(iv) Location of business enterprise: An important factor to be considered at the start of the business is the place where the enterprise will be located. Any mistake in this regard can result in high cost of production, inconvenience in getting right kind of production inputs.
(v) Financing the proposition: Financing is concerned with providing the necessary capital for starting as well as for continuing the proposed business. Capital is required for investment in fixed assets like land, building, machinery and equipment.
(vi) Physical facilities: Availability of machines and equipment, building and supportive services is a very important factor for starting of the business. The decision relating to this factor will depend on the nature and size of business, availability of funds and the process of production.
(vii) Plant layout: The entrepreneur should draw a layout plan showing the arrangement of machines and equipment needed to manufacture a product.
(viii) Competent and committed workforce: Since an entrepreneur cannot handle all the operations of a business himself, he must ascertain the requirement of skilled and unskilled workforce and managerial staff.
(ix) Tax planning: since the tax laws and regulations impact the working of an enterprise, the entrepreneur must in advance consider the various tax liabilities and their impact on business decisions.
