Starting a Business – Basic Factors Factors to be considered for starting a business 

1. 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.

2. Size of the firm: 

If the market conditions are favorable, the entrepreneur can start the business at a large scale. If the market conditions are uncertain and risks are high, a small size business would be a better choice. 

3. Choice of form of ownership: 

The selection of a suitable form of business enterprise i.e. Sole proprietorship, Partnership or a Joint-stock company is an important management decision. It depends on factors like the nature of business, capital requirements, liability of owners, legal formalities, continuity of business, etc.

4. Location of business enterprise:

Availability of raw materials and labour, power supply and services like banking, transportation, communication, warehousing, etc., are important factors while making a choice of location.

5. Financing: 

Proper financial planning must be done to determine 

(a) the requirement of capital, 

(b) source from which capital will be raised and 

(c) the best ways of utilizing the capital in the firm. 

6. Physical facilities: 

Availability of physical facilities including machines and equipment, building and supportive services is a very important factor to be considered at the start of the business. 

7. Plant layout: 

Layout means the physical arrangement of machines and equipment needed to manufacture a product.

8. Competent worked force: 

Every enterprise needs competent and committed employees to perform various activities so that physical and financial resources are converted into desired outputs.

9. Tax planning: 

The promoter must consider in advance the tax liability under various tax laws and its impact on business decision