5 Questions to Answer Before Starting a Business in 2020

by commitbizadmin 19, Jun 2020

5 Questions to Answer Before Starting a Business in 2020

Venturing into the zone of entrepreneurship and starting a new business has always been a pre-determined goal for many aspiring entrepreneurs. To start a new business and operate it takes an immense amount of dedication; now collaborate that with a mixture of hard work and smart work in the right proportions and few years down the line, Voila, you have a sustainable company up and running. But catering to a vast customer market and negotiating uptight deals with clients and investors is an easier said than done scenario. Therefore, not only is it essential to clarify any doubts concerning the process of business setup but also to ensure that the information being gained is from an accurate source such as a professional consultant/consultancy specializing in the field of business incorporation.

The knowledge vertical is never fulfilled when it comes to running a business. Often questions regarding the direction of the business, the market's reaction and the future of the company remain in a business owner's deep thoughts lingering like intriguing doubts which can only be clarified as time progresses and as the business gains stability. Though it is considered as sound advice to always find answers to a few questions before venturing into the domain of new business ownership rightfully so to ensure that the business is well planned out and has a particular course to follow and preset objectives to achieve.

1. What type of Company Formation should the Business opt for?

Once you have decided the business idea, conducted your market research and are standing at the edge of the cliff ready to dive into new opportunities; it is crucial to determine how you plan to enter the market. This is where the type of company formation comes in. The type of company you decide to incorporate also influences the administrative aspects of the company such as –

  • The legality of business within the location of incorporation.
  • Taxation factors.
  • Limitations and restrictions based on location chosen.
  • Merits that businesses receive via government policies for certain types of companies.
  • Type of company formation influences the number of board members and shareholders of the company.
  • Type of company formation helps to estimate resources required for doing business.
  • Formation type influences the flow of shares and equities of the company.

The most common types of company formations that are followed in most global locations are –

  • Private Limited Companies
  • Professional Firms
  • Branch Offices
  • Representative Offices
  • Public Shareholding Companies

2. Which Location is Most Suitable for the Business?

Most business owners prefer sticking to indigenous markets or simply put their home markets. Still, it is always good to keep an eye out for potential locations where expansion can take place, or new businesses can be incorporated. The location where the company is incorporated plays a massive role in –

  • Deciding how to acquire raw materials based on availability.
  • How to employee a stable workforce.
  • Government policies could prove advantageous and lenient toward new businesses.
  • Opportunities to network with business entities, make connections, crack partnership deals and penetrate markets together.
  • Significant events on global scales could also benefit the growth of new businesses. An excellent example of this could be the upcoming Dubai Expo 2020.
  • Each location favours specific industries and companies more.
  • Location of business also influences the process of company incorporation. For example, the process of business setup in Qatar is very different compared to the operation of the business setup in Canada.
  • The economic situation of a location influences the growth or decline of the business.

3. How to Approach Legal Procedures for Setting up the Business?

Legal procedures can often be a hassle for new business owners primarily because of a lack of clarity and knowledge on how to approach the process. Thus, it is a professional recommendation to opt for company secretarial services so that a legally specialized entity can assist the business in significant administrative activities such as -

  • Registration of business.
  • Drafting company documents such as the memorandum of association, articles of association and partnership deeds.
  • Acquiring various licenses.
  • Registering for taxes.
  • Communicating with auditory bodies.
  • Filing for Intellectual Property Rights.
  • The signing of contracts such as partnership agreements.
  • Representing and defending the company in future legal trials.

4. How to Formulate a Suitable Fund Allocation Plan for Sustaining the Business?

Shareholders often pump funds into the company's capital to ensure that the business operates accordingly and gains targeted revenue. It is in the best interest of the shareholders and the investors that the business owners and key managerial personnel formulate a fund allocation plan to decide how much cash flow will take place at what points in the business lifecycle. This goes to show, just because the money is available at a certain point in time does not mean it has to be spent on business expenses or investments rapidly. Smart business owners always create reserves from their capital. Similarly, investors also suggest funding plans in the form of rounds or series namely –

  • Self-Funding during the pilot stage of the business.
  • Seed funding to take the business a step further.
  • Series A funding
  • Series B funding
  • Series C funding
  • Initial public offerings when companies convert into public limited companies and invite the general public to become minor shareholders in the growing company.

5. Who do I Consult to Know More about the Topics Mentioned above?

Probably the easiest question of the lot. We at Commitbiz, are qualified professionals in the field of business setup in UAE and various other globally recognized business locations. Moreover, we strive to provide quality services to our clients such as – company secretarial services, accounting as well as bookkeeping services, nominee director services, advisory and consultancy services. Contact us to know more about how to start your entrepreneurial journey.