Starting a new business unit involves a systematic process to ensure its success. Here’s a detailed yet concise explanation of the steps involved:
Step 1: Idea Generation
- Identify Market Gaps: Entrepreneurs should closely monitor market trends and spot opportunities where needs are unmet.
- Feasibility Study: Assess the potential of the idea through market research, evaluating its practicality and profitability.
Step 2: Define the Nature of Business
- Type of Business: Decide between wholesale, retail, franchise, or trading.
- Offerings: Determine whether to focus on products, services, or a combination.
- Sector Selection: Choose a sector like entertainment, construction, software, fashion, etc.
- Risk Assessment: Analyze potential gains, challenges, risks, and long-term viability.
- Resource Availability: Ensure inputs, resources, and manpower are accessible.
- Feasibility Study: Conduct a thorough study to verify if the idea is workable.
- Business Plan: Develop a comprehensive plan outlining steps to proceed.
Step 3: Determine the Size and Scale of Operations
- Sales Projections: Estimate sales at different price points to ensure cost recovery and profit generation.
- Gradual Growth: Start small, testing the market before expanding.
- Market Suitability: Ensure the chosen size and scale align with available capital and resources.
Step 4: Select a Place for Business
- Location: Choose a location close to inputs, resources, and manpower.
- Infrastructure Needs: Consider transport links, banking, telecommunications, and power supply.
- Convenience for Customers: Ensure the location is convenient for the target market.
Step 5: Choose the Form of Ownership
- Ownership Structure: Decide on sole proprietorship, partnership, or corporation.
- Ease of Operation: Select a structure that is easy to form and manage.
- Future Expansion: Consider the potential for future growth.
Step 6: Determine Financial Requirements
- Capital Needs: Calculate fixed and working capital requirements.
- Expense Planning: Identify and plan for all types of expenses.
- Funding Sources: Determine sources of funds, including bank loans, equity, and personal investments.
Step 7: Plan for Physical Facilities
- Infrastructure Setup: Arrange for necessary physical infrastructure like machinery, equipment, and office space.
- Maintenance and Modernization: Plan for repair and maintenance, and consider modernizing facilities.
Step 8: Select an Appropriate Plant Layout
- Layout Type: Choose between product layout (for large quantities) and process layout (for varied tasks).
- Efficiency: Ensure the layout allows for efficient production flow and safety.
Step 9: Determine Human Resource Requirements
- Staffing Needs: Identify the number and type of employees needed.
- Skill Sets: Ensure the workforce has the necessary technical skills and managerial competencies.
- Recruitment Plans: Develop strategies for hiring and retaining qualified personnel.
Step 10: Legal and Procedural Requirements
- Approvals and Sanctions: Obtain all necessary approvals and sanctions beforehand.
- Taxation and Compliance: Ensure all legal and taxation matters are in order, with assistance from consultants if needed.
Step 11: Launch the Business
- Formal Launch: Once all resources and facilities are in place, formally launch the business unit.
- Marketing: Implement marketing strategies to attract initial customers and create market presence.
- Operations: Start operations, monitoring closely to make adjustments as necessary.
By following these steps, entrepreneurs can systematically establish a new business unit, ensuring thorough planning and preparation to enhance the likelihood of success.