Starting a Business: Key Factors and Viability
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:
- Introduction and presentation of business plan: business idea.
- Project developers: people who form the company.
- Legal form and governing bodies.
- Location and situation.
- Market research.
- Analysis of business areas or departments.
- Investment and financing plan.
- Schedule of steps for creating of the company.
- Documentary and administrative paperwork.
- Conclusion of general comments about the project.