Setting Up of a Small Business Enterprise Part 3

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Entrepreneurship and the various qualities required for becoming a successful entrepreneur. An entrepreneur does while starting a business unit. If you possess those qualities and confidence that you could be able to perform all those activities, you can now think about your own enterprise. But before you start your business let us study various factors required to be considered while setting up any small business.

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  • Who can start a small business? Anyone can start a small business unit. He may be - an existing entrepreneur or a new one - having a business background or not - educated or uneducated from rural area or urban area.

  • Arrangement of Finance The entrepreneur has to analyse and find out the amount and the duration of finance required as well as the duration for such finance is needed in the business. The entrepreneur requires money to buy machinery, building, raw material, pay wages to labour, etc. Money spent on buying machinery, building, equipment, etc. is known as fixed capital. On the other hand, money spent on buying raw materials and paying wages and salaries, rent, telephone and electricity bills, etc. is known as working capital. The entrepreneur has to arrange for both fixed as well as working capital for his business. The finance can be raised by self-contribution or by borrowing from banks and other financial institutions.

  • Selection of line of business the process of launching a business begins when the entrepreneur start thinking about a line of business, which can be undertaken by him. Having estimated the profitability and risk involved, the entrepreneur has to decide which line of business could be desirable to pursue.

  • Choice of form of organization You have read about different forms of business organization in the earlier lessons. Now you have to choose the best form as per your requirement. Normally, a small business enterprise may preferably be started in the form of sole proprietorship or partnership.

  • Location of the business Special care should be taken while selecting the location of the business. An entrepreneur can start business in his own premises or in a rented premise. It can be located at a market place or in a commercial complex or in an industrial estate. While deciding the location, the entrepreneur should consider various factors like sources of supply of raw material, nearness to the market, availability of labour, transportation, banking and communication facilities, etc. Factories should be preferably located near the source of raw material and at a place that is well connected with rail and road transport facility. A retail business should be started near residential area or in a market place.

  • Availability of labour/workforce/employees an entrepreneur cannot run the business alone. He has to employ people to help him. Skilled and Semi-skilled workers have to be recruited particularly for manufacturing work. Before starting the business, the entrepreneur must find out whether he will be able to get the right type of employees for the activities involved.

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