Common Mistakes That Business Start-up Make

by Neptune Dash 21:43:00 0 comments

Every economy basically consists of producers and consumers, and they engage in transactions which is the transfer of goods and services from the producers to the consumers in exchange for money. For the producers to create these goods and services, several processes and activities are involved. All of these activities is collectively known as a business, or a firm. Since production requires various processes and activities, starting a business is not something to be rushed into. It is neither easy nor quick. The following are important questions any business start-up should ask:

What to produce?

Every economy consists of several goods of different kinds. Hence, the would be producer must decide on which of these goods or services are to be produced. The would be producer should ensure that he or she is not going into business for the purpose of personal benefit alone, it should not just be about profiteering. Considering the fact that resources are scarce, goods produced should be used optimally for societal welfare. Meeting the needs of people in a particular economy and solving problems should be the driving force for any emerging business.

How to produce?

Since there is a great possibility of the availability of different methods and models for producing goods or services. It is important that the producer go for the best method and model that will maximally exploit the available resources at minimal cost

How much to produce?

When there is excess of supply, there will be lower price for the commodity produced. This will eventually cause loss instead of profit for the producers. So it is important that businesses should produce quantity enough to cater for the market demand.

The following are very important arsenals every start-up needs to consider before starting into business.

Capital

Enough investment power is needed for kicking off a business. If a producer does not have the required capital he can take loans from financial institutions, or enter into partnership with other investors to get collective investment support. It is also important to know that money is not the only kind of capital you can have for starting business, money is just one being Financial Capital. The following are other kinds of capital that can help one in starting a business:

ü  Social Capital

ü  Intellectual Capital

ü  Real Capital (land, housing and estate), and

ü  Spiritual Capital

 Market Study/Survey  

Having adequate amount of money needed to set up a business is not just enough to start running. There is need for adequate comprehension of the consumption pattern of the target market. Even if the product has high selling probability, research must be done so as to know the best strategy for grabbing the buyer’s attention. Otherwise, consumers might not be fully aware of the product details, thereby turning down the product.

Scale of production

Normally, it takes a series of processes of a distance of time for any business to reach the optimal production level, though some do in a short run but they are very few. This is caused by the fixed inputs of production that cannot be changed according to need. These inputs give rise to fixed costs which cut into the producer’s revenue. However, with time as the business reaches a considerable scale, these fixed inputs disappear and only the variable ones remain, i.e. the producer faces only variable cost.

Delegation of activities

It is impossible to sustain any business on the basis of single showmanship, this is because every business involves several activities which will be too cumbersome for an individual. It is therefore cheaper, more efficient, and necessary to delegate duties to the individuals specializing in those fields.