Factors to Consider When

Starting a business
PAU3106 Week 5
Novelty of the business idea

Novelty of the business idea refers to the unique

selling points(USP)
 One must consider Novelty of the business idea
How are you going to differentiate your business form
similar businesses in the market??
 Think of what to offer differently- which others can’t,
or don’t do effectively
Market demand
Existence of a good scope market
Ensure that there is demand for your
products/services
 Ensure that your products can serve market needs far
much better that those of competitor
Demand: This means that there is a good market
scope for the product/service. In other words, there is
a gap between the present supply and current or likely
demand.
Is there a market ?
If you’re going to offer a new product or service, you
will either have to be sure that you can create a new
market, or take a slice of an existing market. How are
your potential competitors faring, and what can you
offer customers that they don’t? If you’re entering a
busy market, can you do things better than your
competitors? If you can’t compete on price, can you
compete on quality or something else?
Raw materials
Availability of raw materials: A business opportunity is
said to be viable where raw materials required to
produce the products are available.
Attractive return on investment
Attractive return on investment:
 It is important to determine the level of investment
required for the business opportunity and then compare
that with expected return on investment. If the return
on investment is attractive, then the business
opportunity can be pursued.
Technical/managerial Skills
Technical/managerial requirements: Some businesses
require certain technical and managerial skills. A
business opportunity is said to be present when the
technical and managerial skills are available.
Personal considerations: SWOT – matching your skills
with the business opportunity
Business Finance
Do you have funding?
 Most small businesses start off with personal sources
of funding such as personal savings and/or funds from
family, friends.
 AS the business grows, they may consider loans from
banks and other outside sources.
 Banks will require a business plan and a viable
business model
How much capital will you ned and for what
purposes?
Correct Motivation
Consider the motivation behind the start-up, You
need to be sure that you’re doing it for the right
reasons. Don't start a new business for wrong reason
such as frustration, anger, revenge e.t.c
Have a desire to truly do something new
Time
 Ensure that you have time to focus on the business.
Give your all to the new idea if you really want to
succeed.
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
Formation ( Legal Form)

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
Asset Requirements
When starting a business, plan the assets that you’ll
need to operate. These may include : computers,
equipment, furniture, vehicle, etc. List down not only
the item but also the quantity and price, source and
depreciation rates .
 Lease, Renovation and Improvements

What are your space needs

 Will you Lease?,. Rent?
What improvements will the facility require?
Government Compliance
Another important item to consider, but often
neglected, is the government reporting you need to
comply with every month, quarterly and annually.
payment of taxes, permits, Licenses
Suppliers

Identity potential suppliers needed to produce the

service or goods you will sell. Consider their price,
location, reliability and operating hours
Operating Expenses
Identify and list down all the expenses 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 spending as capital
Web marketing
Consider the use of Web marketing
 Craete your own website
 plan to use social media
Building own networks
However independent you may be, it is important to
share your hopes and concerns with people who
understand what you’re going through. Alongside
friends and family, look for chances to network with
like-minded people.
Join informal and formal networks
 Social ties are very crucial to ant type of a business.