ANSWER:
Before starting a new business venture, an entrepreneur must carefully consider various aspects. He or she must evaluate each aspect, considering various positive and negative consequences. Some of the important factors that must be considered while starting a business are:
i. Selecting the line of business: The line of business is the foremost decision that involves choosing the kind of product to produce, analysing the existing and future market demand and considering the profit margin and the level of technical know how possessed by the entrepreneur.
ii. Scale of business: Once the line of business is selected, the entrepreneur needs to decide upon the scale of business, i.e., the business size (large scale or small scale).
iii. Location: The choice of business location is dependent on numerous factors such as easy and cheap availability of raw materials and labour, well-connected transportation facilities and power and infrastructural facilities.
iv. Financial requirement: Finance is required for every aspect of business—from the purchase of raw materials and machinery to further investment for the growth of the business. Therefore, while starting a business, the availability of alternatives to raise funds should be analysed carefully.
v. Choice of form of ownership: The choice of form of ownership of the business is dependent on numerous factors such as the capacity to manage and control the business, capital requirements, risks involved, continuity and stability.
vi. Raw materials: While starting a business, an entrepreneur has to decide on the availability of raw materials. Also, he/she has to decide on the requirement of raw materials and the quality and quantity in which they are required.
