The three challenges identified in starting a new business are capital, quality employees and lack of planning.
Capital can be defined as “assets that add to the long-term net worth of a corporation.” (http://www.merriam-webster.com/dictionary/capital. An essential part of starting and maintaining a successful business is establishing capital. Capital is used to pay for any and all expenses related to the business. Expenses such as rent, insurance, production/ distribution costs, salaries, and loans are just a few of the expenses incurred when embarking on the task of starting a business. To determine the total income potential of a business, an estimate has to be made based upon the actual cost of producing and manufacturing the product and prospective total sales volume. This number will heavily depend on target demographics , competition, and patronage. In general, new businesses’ growth can initially be a slow process, which is why it is important to be patient in the preliminary stages of maintaining a business. It may be tempting to invest too much into equipment and other supplies, sometimes unnecessary in the hopes of turning bigger profits. This can lead to unexpected financial obligations and debt if the business is not successful. Determining which portion of sales will be cash and which will be earned with credit is one of the first steps in assessing capital. Credit sales do not count as immediate capital and the length of time it would take to turn that credit into actual capital has to be determined. Some businesses prefer not to allow credit, and choose to receive all sales upfront, allowing for immediate capitalization on all goods sold. This capital can then immediately be returned to the business for further expenses. It is important to consider all expenses possible long before opening the doors to your business. There are some expenses that will be fairly easy to assess, while others may take research and estimation....