Starting a business involves making key financial decisions and completing a series of legal activities. This includes creating a business plan, registering your company and promoting your product or service.
Whether you are taking your hobby and turning it into a business or have an idea for a new product, the first step is to research your market. This is the only way to determine if there is an audience for your business, product or service and if it is big enough to support you as you grow your business. It also allows you to understand the competition, and learn what they are doing well and how your business can offer something better.
Many businesses are based on a new invention or innovative technology and have the potential to become world-leading in their industry. Others are based on existing products that have been improved and marketed in a unique way. For example, Apple entered the mobile phone market more than a decade ago with an innovative product that offered significant benefits to the customer compared to existing products.
Business creation is a major source of growth and innovation in market economies, but it can also carry substantial social costs in terms of time, effort, and money invested. Consequently, a relatively low proportion of start-up efforts reaches profitability. Understanding the process and identifying policies that can increase the proportion of nascent ventures that reach profitability is therefore important. This article reviews the current state of knowledge about these issues, focusing on representative samples from the U.S. and other countries.