Explain the basic consideration in setting up a business enterprise.
Answers
Explanation:
. Nature of the business
The first you need to think about is what will you offer. What are you going to sell in your business? In general, you can choose to provide the following: service, merchandising or manufacturing.
Service – it can either be selling time and expertise, such as professionals, event organizers, IT, marketing, etc.; or it can also be restaurants, food kiosks, transportation, salon, spa, etc.
Merchandising – also referred to as retail, wholesale, trading or distribution. Buy-and-sell of goods. Examples are grocery and department stores, retail outlets, online resellers, etc.
Manufacturing – combining raw materials, labor and use of equipment, then turn it into a saleable product. Example are manufacturers of cars, gadgets, clothing, bags, daily essentials, etc.
2. Target Customer
Having a service or product to sell is not gonna make you profitable if you do not have customers who will buy it.
If you plan to start a business and you know what to sell, before you begin, study if there is a market for it. Identify who your customers are. Remember the saying, a product or service for everybody is a product or service for nobody.
3. Location
In many business events I’ve attended, I always hear this advice “location is everything”. “Location, location, location”.
Make sure you identify or look for the best location for your business. Your business must be seen by your target customer or at least near them.
4. Formation
Once you’ve identified what to sell, who to sell it to and where to sell it, now think about how you’ll form the business. You can choose on sole proprietorship, partnership or corporation.
Single proprietorship – you’re the sole owner of the business.
Partnership – you can divide the business with another person(s) which you will call partners. You need at least two people to form partnership.
Corporation – you can divide the business with another person(s) which you will call stockholders. You need at least five people to form corporation.
5. Capital
Capital is the amount or value you need to put in the business to get it started and operating. It can be cash or non-cash. To know how much capital you need, list down all the possible spending you need to make to start and operate, such as assets to purchase, renovation, lease payments, operating expenses etc.
6. Asset Requirements
When starting a business, plan the assets that you’ll need to operate. This may include the following example: computers, equipment, furniture, vehicle, etc. List down not only the item but also the quantity and price.
7. Lease, Renovation and Improvements
Next item to consider is if you will rent out a space. When renting, normally lessors require advance rent and security deposits which is equal to three (3) to six (months) of monthly rent. Also, rental space are usually bare and requires renovation and improvements. Consider these costs in your business plan.
8. Suppliers
Identity potential suppliers needed to produce the service or goods you will sell. Consider their price, location, reliability and operating hours.
9. Operating Expenses
Identify and list down all the expenses or spendings you need to operate the business such as salary, rent, office supplies, utilities, etc. Consider the monthly costs in your business plan. This step is also important in your capital requirement because normally you have to keep at least six (6) months to one (1) year of monthly spendings as capital.
10. Hire People or Outsource
In my experience, people management is one of the toughest job of business owners.
HOPE IT HELPS. PLS MARK ME BRAINLIEST ☺️
follow me plz.