Key Considerations And Critical Issues When Starting Up A Business.

1521 words - 6 pages

When starting up a business, there are many key considerations and critical issues that the business must acknowledge and understand in order to find success. There are a vast amount of considerations and issues which can be focused on, but the key considerations which this essay will be focusing on are the location, staff, and capital. The critical issues which this essay will be focusing on are the importance of the business plan, managing cash flow and identifying and sustaining competitive advantage.Deciding on the location of a business is crucial to its success or failure. All business (whether it is local, national, transnational or international) need to find a suitable location for their business. There are a few factors involved when choosing a location; these include visibility, cost, proximity to customers and proximity to suppliers.Visibility is one of the most important factors for retailing businesses, whereas it isn't that important for non-retailing businesses. Cost is also another factor that needs to be considered when determining the location of the business. If the business relies on passing customer traffic, then the cost would be unavoidable. If the business didn't rely on passing customer traffic, then they would generally search for a location which is less costly. The location of the business should also be near to the suppliers if the business transports bulky goods e.g. manufacturing businesses. The importance of how the proximity to the customers depends on the type of business. A retail business should be located close to it's customers as that is where their main income will flow in. A wholesaling business may decide that it would cost less to transport the product to the customers in bulk.Pumpkin Patch was established in 1991 by Sally Synnott. She opened the first retail store in 1997 at Chatswood and then later on many other stores in other areas followed. The company usually focuses on opening stores in Metropolitan areas around Australia. When deciding where to open a retail store, Pumpkin Patch carefully assesses customer locations and socioeconomic factors. So Pumpkin Patch can be considered one of the businesses that relies on 'passing customer traffic', so the cost of the store would be generally higher.People who decide to start a business usually have some capital of their own to invest into the business. However, personal savings may not be enough to cover the costs and many businesses borrow funds. Capital generally refers to the total value of assets and wealth of a business, both fixed and working. There are two main types of capital finance which include debt finance, and equity finance. Debt finance is money obtained through loans and equity finance is money received from the sale of shares in the business.Debt financing seems is the popular way of obtaining capital finance, as the owner does not have to sell ownership to others and there are also taxation advantages. Debt financing includes loans...

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