Formation of Sole Proprietorship Business
When an individual plans to start a business, his or her main objective is to earn profit but there are a number of factors to take into consideration. For example, for any business to be successful, proper planning and research is very essential before the business is formed.
A sole proprietor should be very clear about what kind of goods or services he/she wants to deal with. Also, one should consider the kind of capital or investment available to start the business. The sole proprietor should know the size and nature of the business so that the required amount of capital can be raised.
Another important factor is the location of the business. Many businesses are failed or succeeded depending on the location. This again depends on the nature of the business. Then come the legal formalities i.e. the registration of the name of the business, license and some other requirements depending on the kind of business.
Also, the sole proprietor should know the risks involved in that particular type of business. He has to know the kind of customers the business is targeting, for example, is it the students, working people, or the sick. Also important is the time factor because every business has a low and high season. For a shop dealing with school books or uniform will do good business during the back to school season. Those dealing in clothes and shoes will do good business during festive season such as Christmas. These days every business has competition from other people dealing in the same kind of good or service. Therefore, before starting a business it is very important to know the competition and how it will affect the business.