Starting a New Business
by Julie Millar - BDO Spicers
As advisers to growing businesses we are often asked whether it is better to
set up a business from scratch or buy an existing one. If you are
considering setting up a new business you must consider a number of issues
including:
The Market
· What is the market you intend to enter
· Is it a market in its infancy, maturing or in decline
· Is this market large enough for another business of this type
· Is it easy for further competitors to enter the market
· How long will it take to build up a customer base
· How will your potential customers know you exist
Premises
· Can you secure an appropriate location
· What are the terms of the lease you have to commit to?
Human resources
· Can you find the people you require to operate the business?
Products
· Have you got a reliable source of supply,
· Have you got alternative sources of supply if your preferred supplier lets
you down
· Can you secure a long term relationship with the supplier
· Is exclusivity an issue
· Will the exchange rate be an issue
Financing Issues
· How much do you need to invest in plant and equipment to operate the
business
· How much do you need to spend on advertising and promotion so that the
market knows you exist and what is the most effective medium to use
· What are the working capital requirements (cashflow) the business will
need?
· What are the fixed overheads will the business have on a weekly, monthly
and annual basis
· How many sales does the business have to make before it breaks even
· How long will it take for the business to reach breakeven point, will you
ever reach it.
This article was written by Julie Millar, a partner at BDO Spicers
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