LO 7.1 Discuss the advantages and disadvantages of starting a business from scratch.
when purchasing an existing business. The creation of a new business builds pride of ownership. However, the risk of failure is higher for a start-up because there are more uncertainties regarding the size and existence of a market for the business.
LO 7.2 Describe types of new businesses and discuss the characteristics commonly shared by fast-growth companies.
E-businesses have completely changed the small business landscape. other types of new businesses include home-based businesses and part-time businesses. Some small businesses start with the intention of becoming hypergrowth companies. These companies are generally led by teams of people with prior experience in starting that type of business (usually high-tech manufacturing). They are well financed and constantly looking for opportunities to expand into new markets.
LO 7.3 Evaluate potential start-ups and suggest sources of business ideas.
When a new product idea is introduced to the market, the window of opportunity is open the widest (assuming it is a product that people want and will buy), because little competition exists. As a product progresses through the product life cycle, the window of opportunity closes, as more competition enters the market and demand declines.
When starting a business from scratch, the small business owner is free to establish a distinct competitive advantage. There are no negative images or prior mistakes to overcome, as may occur
Most people get ideas for new businesses from their prior employment. Turning a hobby or outside interest into a business is also a common tactic. Ideas may come from other people’s suggestions or spring from information gained while taking a class. Sometimes business ideas even occur by chance.
LO 7.4 Explain the most important points to consider when starting a new business.
The entrepreneur needs to begin by questioning the feasibility of her idea. Then, to bridge the gap between dream and reality, careful planning is needed. Entrepreneurs need to carefully consider the costs of starting a new business, and they must analyze the market and competitive landscape to ensure that their competitive advantage really exists.
Providing customers with outstanding service during and after the sale of a product is of utmost importance in business start-ups. Customer service is the basis for establishing a long-term relationship with customers.
Start-ups also have legal requirements. Entrepreneurs must file the business name with the state of origin and obtain local business licenses and any industry-specific permits required. They must also apply for a tax identification number to collect and process sales taxes, if necessary.