Factors to consider when starting a small business

When you finally discover that you will never make it big working for someone else, the idea of starting a business comes up. What should you look at as the best small business to start?  Most entrepreneurs give up at the first step-finding the right small business to start. The following are some of the things that can help you make an informed decision:

Get ideas for small businesses – Sit down with your business partners and brainstorm. Read inspirational accounts of those entrepreneurs that started small and have made it big like Bill Gates, the late Steve Jobs, Richard Branson, to get your creativity flowing. Start out small by keeping your ideas as simple as possible at first. You should focus on margins – the best businesses sell a high volume of high-margin products. Common high margin products tend to look and feel cheap. If you are offering a service such as auto repair-make sure that your company has something that sets it apart from its competitors. Factors to consider when starting a small business

Criteria to consider

Test your ideas against the following criteria:

Starting Capital

  • How much cash do you have on hand to devote to your new business?
  • How is your credit rating?
  • How much more capital will you need from venture capitalists. angel investors, family, friends or the bank to get started?
  • How many years are you willing to dedicate to clawing your way back to profitability?


  • Where will your business flourish?
  • What are the income levels of the average person in the area?
  • Will they find your product too expensive?


Market Saturation

  • Are there similar businesses in the immediate area?
  • What are the advantages and disadvantages your company has compared to competitors?
  • Are there any businesses that your company can complement?

Market Demand

  • Has there been a proven demand for your product or service in the area?
  • Have companies offering the same products attempted and failed before you?
  • Make sure you do a thorough market research both qualitative and quantitative to get an accurate gauge of demand for your proposed product or service .

Growth Potential

  • Find out how long it will take to achieve profitability?
  • Will your business last longer than 5 or 10 years?
  • Once profitability is achieved, how do you plan to grow? like through Expansion, Outsourcing or acquisitions?

Barriers to Entry

  • Can your product or service be easily mimicked or is it a niche product possibly protected by patents or trade secrets?
  • How hard will it be for prospective competitors to chip away at your business?
  • How can you build a protective moat around your company with side businesses to insure that your company business is protected?

Your idea should be able to go through all of the above criteria. Your idea must be sustainable in the long run. Shrewd planning, careful market timing and long-distance foresight are the keys to establishing a successful small business.

You can also read: Important steps to a start-up


Author: John Mulindi

John is very passionate about Digital marketing. He blogs on topics ranging from Social Media marketing, Search Engine optimization, Internet Marketing, Email Marketing, to Personal Development. In free time he likes watching Football, Reading, Listening to music and taking Nature walks.

21 thoughts on “Factors to consider when starting a small business”

  1. Hey John, These are really good points when you start thinking of starting a small business. Thanks for sharing. It is important to have a solid plan for succeeding in today’s world.

  2. These are some good tips and information here about starting a business. I also studied business in college it this information here are pretty much solid. One thing as I could give as advice is you have to be confident about it even if your cracking behind. Believe in it and be optimistic.

  3. This is really good advice. It’s tough to be a small business in today’s big business economy, but these best practices will really help small businesses succeed!

  4. An excellent list of things to ponder when considering becoming a business owner. I have been considering several of these.

  5. Very helpful post for anybody considering starting a business. I especially liked the part about barriers to entry. This is something that is very often over looked. Thanks for sharing.

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