| By :
Dirik Hameed
Do you have a clear idea what your business is prior to new company formation? Do you know what your business objects are and the industry you will be operating in? Many people unfortunately often have a very vague idea of what their business is and what they will really be doing in that industry. People who don't understand their company business must consider this first, preferably in writing. Writing it down on paper helps to clear the mind of vague ideas and clarifies how you define your business. Besides understanding what your business will be engaged in (prior to new company formations), you also have to factor in the level of personal commitment your business will demand from you. You will have to clearly specify the skills needed to run the business as well as what you need to sacrifice for the business to flourish. If you think you need more training in the skills that your company will be depending on, will you be able to go through with it? There may be times when you must recruit staff who have the skills necessary for running your company. Do you have stable finances? Will the new company formations require you to take out a loan? Or will you be using your own funds to finance the company formations? Are you going to rely on investments from family and friends to set up the company? Can you use some assets (such as your house) as the equity collateral needed to provide funding for the business? If you want to hire staff, do you know how much salaries and benefits are required to pay them? You need to research about labor laws, particularly about compensation for your staff. Is entrepreneurship something you are ready for? Can you operate even without the perks of a regular day job? Some people go into business (via company formation) without realizing that the perks and benefits they used to enjoy as employees will not be present in their new company (at least, during the first few years.) You may need to pay yourself a basic salary while your business tries to survive, rather than enjoy a sizeable salary at the beginning. Fifth, have you prepared yourself emotionally and psychologically for the demands of business? To make it more simple, will you stay close to your family and friends despite being an entrepreneur? The new company formations you will go into may require you to often engage in confidential business transactions - which would mean being isolated from family and friends. Can you hack it being on your own while you navigate the tricky waters of entrepreneurship? Once you have understood these 5 key factors that always precede any company formations, then you may be ready to engage in the formal company formations process.
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