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Theories Used When Setting Up a New Business

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Theories Used When Setting Up a New Business When setting up a new business many business theories have to be considered and thought about. To enable a successful business set up, many features must be pre planned and thought over carefully. These features are such as: * Business plan * Cash flow forecast * Break-even figure * Entrepreneur skills * Business reasons - why set up the business? * Success - how will they succeed in the market? * Finance - where will it come from? * Government - how can they help? * Setting up - how will they set up the business? * Who will run the business? All of the above 10 business theories are vital and must be considered and thought out carefully in order for business success. Business's that start up without consideration of the above are less likely to survive in their market than those who are set up properly with all the above theories planned and worked out. ...read more.


For this money to be redeemed the amount spent/invested firstly has to be gained back in the form of revenue. The break even point is when the total amount of revenue equals the total amount of money spent. After this point, the revenue will be profit. Entrepreneur Skills: The entrepreneur creates the business idea, and then hires others to carry out the activity. The may also wish to invest some of their personnel money in hope to gain profit out of the business after establishment. They will need skills to ensure that they make the right plans, and hire the right people/organizations to help them. Any wrong actions taken can lead to failure of the business. Reasons to set up: There has to be some reasons as to why a business should be started. Many people start business because they want to be their own boss, they want full control over everything, they want a fresh start, and they have enough experience and want to run their own business. ...read more.


The government may get involved for one of 3 reasons; to control areas of high business congestion, encourage firms to locate in high unemployment areas, or to attract foreign business' to UK. The government does this with various schemes such as enterprise zones where taxes are exempt (for a given period) in order to attract business' into the area. Setting Up: Before setting up the business the businessperson needs to know and decide how they are going to set up the business. Therefore, they would need a business idea, business plan etc. When setting up they can then either decide to set up on their own by taking a loan or investing their personnel money, or setting up the business with a partner. Running the Business: The businessperson must also understand what is required for running a business. He must have adequate staff, enough money to buy stock and pay staff, enough stock to sell, business/product advertising etc. The businessperson must have enough resources (Land, Labour and Capital) to meet all the above needs to keep the business running smoothly. ...read more.

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