Critical factors to consider when starting a business

In business, different companies produce different products, and these companies compete to occupy different positions in the market. This is because these companies develop their products differently and around different conditions of production. Therefore there are several factors to consider when you want to start a business. This article will look at a few of these factors, but supposing you are researching for a college assignment or term paper, homeworkdoer is a website that can assist with college assignments promptly. 

For this article, let us look at these factors that will ultimately determine the comparative and competitive advantage that will define how your company will perform in the market.

1.    Financial strength and capacity

The financial capacity of an individual or a group of people will determine the ability to invest in better raw materials, labor, and technology involved in the manufacture of products for the business. Hence, the capital available is the essential first item to consider when planning to start a business. Every other factor will most likely depend on the size of investment that one wants to make.

2.    Availability quality and price of raw materials

Businesses that are in environments where the raw materials needed for production are readily and cheaply available would be better suited to create their products at a lower cost than opposing competitors who would have to procure raw materials and transport them with a hustle. The quality of content used for production affects the general condition of the finished products. For example, in manufactured agricultural products, the quality of the plants or animal product that is used for manufacture is what will determine the grade and quality off the finished products.

3.    Availability and cost of labor

The difference in the availability of labor and resources used to pay for the labor input have a significant effect on the overall opportunity cost of production of a business. Where labor is cheaper, the cost of production lessens. Also, the level of expertise applied to manufacture the products to determine the quality and marketability of the end products.

3.    Technological efficiency

Better technology and machinery used for production means that the energy and time inputs for production are optimized. Better technology ensures you have maximum outputs while using the least amount of input.

4.    Government levies and taxation

A government tax on products affects the overall amount of monetary resources that are invested in the manufacture and release of products. Different countries have different fees that are involved with the production. The states with less taxation position their industries with a comparative advantage over similar industries of competitor countries. Hence, you should figure all the tax that will be involved before taking the primary step.

5.    Transportation

The ease of transport of the business location to and fro the market or source of raw materials is another major factor of consideration. When the raw material is near the production location, transportation is faster and cheaper. That means one can make products more rapid and less expensive. The cost of shipping raw materials and finished products to the market also affects the overall input amount that is invested in manufactured products. Therefore the ideal business location would be at an optimum distance from the raw material source and the intended market.

Conclusion

Starting a business is an exciting and fulfilling venture; however, most companies fail within a short term of commencement because of a lack of consideration of the critical factors that determine the smooth running of them. Make sure to fill out a complete checklist of all determining factors before launching your business to avoid wasting your investment.