Oxford EAP Elementary A2 --- 10.1

Summary

Starting a new business requires thorough research, especially about market size, customers, competition, and finance. A solid business plan showcasing this research can help secure necessary funding, as many new businesses fail due to lack of capital. Research into available financial options, such as grants, is essential. Government grants, which do not require repayment or interest, are one potential source of funding aimed at stimulating job creation and boosting the economy. However, securing finance can be challenging, as banks may offer high-interest loans or refuse funding without adequate research.

Takeaways

• 😀 Doing proper research is essential when starting a new business.
• 😀 Asking the right questions helps gather the necessary information for business success.
• 😀 Key questions for new businesses include market size, customer demographics, pricing, competition, and funding needs.
• 😀 Understanding the competition and its market share is crucial for business planning.
• 😀 Proper research into funding sources is critical to secure the finance needed to start a business.
• 😀 According to Bloomberg, 80% of new businesses fail within the first 18 months due to running out of money.
• 😀 Many new businesses fail because they don't conduct enough research into financial planning.
• 😀 Banks are often reluctant to give loans to new businesses, and those that do may charge high-interest rates.
• 😀 Doing research into finance options can help secure better funding and avoid high costs.
• 😀 Government grants can be a source of funding for new businesses, offering interest-free and non-repayable financial support.
• 😀 Government grants aim to support new businesses by encouraging job creation and contributing to the economy.

Q & A

Why is research important when starting a business?

Research is critical when starting a business because it helps entrepreneurs understand key factors such as the size of the market, customer demographics, pricing, competition, and financial needs. It provides the information necessary to make informed decisions and create a viable business plan.

What are some key questions to ask when conducting research for a new business?

Some important questions include: How big is the market? Who are my customers? How much will they pay for my product or service? Who are the competitors, and how much market share do they have? What are my financial needs?

What is the importance of asking the right questions during business research?

Asking the right questions ensures that you gather the necessary information to make informed decisions. This process helps identify opportunities, threats, and the resources required to succeed in the market.

What financial challenges do new businesses often face?

Many new businesses fail within the first 18 months due to running out of money. This can be attributed to inadequate research or an unrealistic understanding of the business's financial needs and cash flow requirements.

How does proper research impact access to finance for new businesses?

Proper research demonstrates to potential investors or lenders that the business is well-planned and financially viable. If a business plan shows a clear understanding of financial needs and market conditions, it increases the likelihood of securing necessary funding.

Why do banks typically avoid lending to new businesses?

Banks are often hesitant to lend to new businesses because they are considered high-risk ventures. Many new businesses fail, which makes it difficult for banks to recover loans, leading to reluctance in providing funding.

What kind of loans might new businesses be offered by banks?

If banks do provide loans to new businesses, they typically come with high interest rates, making them expensive for entrepreneurs. This is due to the perceived high risk of new ventures.

What is the significance of doing research into finance for new businesses?

Researching financial options is crucial for understanding the various sources of funding available, such as loans, grants, or investor support. This helps business owners determine the most suitable financial options for their needs.

Can new businesses receive grants, and how do they work?

Yes, new businesses can receive grants, typically from governments or other organizations. Grants are essentially funds given to businesses without the requirement to repay the money, even if the business fails. They are designed to support economic growth and job creation.

Is a government grant the same as an interest-free loan?

No, while a government grant does not require repayment or interest payments, it is not considered a loan. Unlike loans, grants do not need to be paid back, even if the business fails.