Starting a Business: Key Factors and Viability

Posted on Mar 5, 2025 in Business Administration and Innovation Management

Item 13 – Starting a Business: Definition: A draft initiative by a person or group of people who are economically active for financial gain or social aspects. The aim is to carry out the project with:

  • Material resources, financial, and human resources for the creation of the company.
  • Organizational skills, technology, and professional expertise to manage the company.
  • Personal ability to understand a business initiative with responsibility and in an environment of risk, taking risks.

Factors Needed to Develop Productive Activity:

  • Natural resources or factor land, raw materials, energy, supplies, and materials.
  • Work, labor, human labor, physical or psychological.
  • Capital: A set of capital goods needed to carry out production.
  • Organization and Entrepreneurship: management, administration, and the ability to make decisions and take risks.
  • Technology: A set of procedures and production techniques that combine the factors of production.

Human Element: Characteristics of persons:

  • Work experience: They have done similar work or activities known to develop.
  • Learning to improve: Observe and study business initiatives to implement in our project.
  • Develop to innovate: Creating new products, major challenges that want to expand our technological expertise.

Variables of Entrepreneurship:

* Endogenous: Reasons that lead us to implement a project. Domestic items, “entrepreneurial and business capacity, capabilities, and intentions that make people face risks in a responsible and capable of bargaining. Business-Idea: An activity or new business that we will practice. Draft self-employment: unemployment rates lead people to establish their own businesses. -Provision of financial and material resources: the provision of resources often encourages the entrepreneur to carry out a project. -Technical and professional knowledge: know-how. Know-how, is a cause that leads to a business project.

* Exogenous variables: External factors that can encourage entrepreneurship. -Location: the situation itself motivates us to start a project. -Availability of markets: proximity to customers, suppliers, sources of supply, public infrastructure, communications, transportation … the decision to facilitate the creation of a business. “The economic environment: economic environment … leads us to incur less risk. -Favorable institutional environment: government programs, subsidies, …

Feasibility of the Project: It depends on the choice to have or not the company. Within this point are: commercial viability, economic, financial, and other practicalities.

Commercial Viability: To analyze whether the project’s product has potential for development in the market.

  • Market research: Study of environment, competition, and consumers.
  • SWOT analysis (Strengths, Weaknesses, Threats, and Opportunities): Study of the internal and external reality of the project.
  • Marketing plan: Basic guidelines of the company’s business planning (market segment we’re going to spend and 4Ps of marketing mix)

Economic Viability: To determine whether the project will generate revenues or not. Breakeven. CF study, CV, and Price. To calculate the dead pt.

Financial Sustainability: The company’s investment and financing to do the same. * NPV (net present value) and IRR (internal rate of return)

Other Practicalities: Other issues:

  • Technical feasibility, technology, equipment, efficiency, and quality of them.
  • Legal and legal feasibility, legal compliance, legal obligations.
  • Environmental sustainability, respect and conserve the environment.

Report of the Business Plan: A document containing a description of the project organized and justified:

  1. Introduction and presentation of business plan: business idea.
  2. Project developers: people who form the company.
  3. Legal form and governing bodies.
  4. Location and situation.
  5. Market research.
  6. Analysis of business areas or departments.
  7. Investment and financing plan.
  8. Schedule of steps for creating of the company.
  9. Documentary and administrative paperwork.
  10. Conclusion of general comments about the project.