I. Introduction.

Setting up a new business means to encourage oneself in business activity

and work. Starting a business and being your own boss can be exciting, and for
many it is the professional goal of a lifetime. The aim of every business is to
earn profit through products and services. Thousands of new businesses are
started every day, yet history shows that a majority of them fail because of a
flawed business concept, inadequate financing or poor management. The
complexities of business have increased manifold. Starting a new business can
be risky. Here are some issues to consider when setting up a new business:
-

II.

Business plan
Structure
Intellectual property
Finance
Market Segmentation
Health & safety
Insurance
Competition

What needs to be taken into consideration when one sets up a

new business?
1. Preparation of business plan.
What is a Business Plan?
A business plan is a critical management tool for the creation or expansion

of any business. It is a game plan - a concise, written record of objectives and

how to obtain them. It describes, at a minimum, a product or service,
customers, competition, management and financial arrangements. It should
also outline production and marketing plans.
Why Plan?
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Planning is essential. It:

helps define goals
outlines roles and responsibilities
sets a benchmark to record and compare progress
provides essential documentation usually required by financial
institutions and government assistance programs.
There are many styles of business plan. However most will include the
following :
1.1.

Assess Your Business Idea

As you begin, examine every aspect of your business carefully and

honestly. Be realistic in assessing what you are capable of and the
opportunities that exist for your success. Consider the following questions.
What is the purpose of my business? (Be able to express it in a couple
of short sentences.)
What is the specific market I want to fill? Are customers willing and
able to purchase my product or service?
Do I have the necessary skills, ability and resources?
How much money do I need at start-up ? Do I have the resources? If
not, where could the funds come from?

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Your answers will help determine the feasibility of your ideas. Some
require personal assessment, others external research. Contact your local
Business Enterprise/Self Help Centre for more information.
1.2.

The Marketing Plan

A marketing plan will help you consider these aspects :

who your customers are
how your products will be priced
how you will promote your product.
Make sure to address these four "P's" of marketing: product, price,
promotion and place (distribution). The plan should also strategically identify
where you are now, where you want to go and how you are going to get there.
1.3.

The Production Plan

This is sometimes called the operating or manufacturing plan. Prepare a

brief outline of your business's basic operation.
Consider including:
how the product is manufactured or how the service is to be provided
where the supplies and material will be purchased
what after-sales service is required (repairs, warranties, etc.)
what land, buildings, facilities and equipment are required, including
costs and financing (lease or own), renovations, local taxes and utility costs
1.4.

The Financial Plan.

The financial plan is the backbone of your business plan. Usually, a

company creates a Financial Plan immediately after the vision and objectives
have been set. The Financial Plan describes each of the activities, resources,

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equipment and materials that are needed to achieve these objectives, as well as
the timeframes involved.
The Financial Planning activity involves the following tasks :
Assess the business environment and business targets.
Identify the types of resources needed to achieve these objectives
Quantify the amount of resource (labor, equipment, materials)
Calculate the total cost of each type of resource
Summarize the costs to create a budget
Identify any risks and issues with the budget set
Performing Financial Planning is critical to the success of any organization.
It provides the Business Plan with rigor , obvious and scientific.
Example :
Vietnam Dairy Products Joint Stock Company
To become one of the most popular milk brand in Vietnam market, this
company had the difficult years of the new date set up. So how did they set up a
business plan?
a) Vision.
Vinamilk will be the fastest and sustainable growing healthy dairy and food
company by building a long-term competitive advantaged product portfolio
across the scale.
b) Mission.
Vinamilk continues to expand its existing geographical coverage and product
portfolios to maintain its sustainably dominant position in the local market and
maximizing its shareholder value.
c) Business strategies.
We aim to maximise shareholder value and pursue a business growth
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strategy based on the following principal components:

Expansion of market share in existing and new markets;
Develop a comprehensive portfolio of dairy products to target a broader
consumer base and expand into higher margin value-added dairy products;
Development of new product lines to satisfy different consumer
preferences;
Brand cultivation;
Continuously enhancing supply chain management;
Development of raw material sources to ensure a reliable and consistent
fresh milk supply base
d) Business philosophy.
Always satisfy customers with high-quality, safe, and diverse products, the
best service and competitive prices.
2. Structure of business.
You can set up a business as a sole trader, as a partnership or as a limited
company. The type of structure you choose depends on the kind of business you
are running, with whom you will be doing business. It is advisable to get the
advice of a solicitor or accountant when considering the structure for your
business.
2.1.
Sole trader:
It is relatively simple to set up as a sole trader but if your business fails, your
personal assets could be used to pay your creditors. Your main legal obligation
is that you must register as a self-employed person with the Revenue
Commissioners (see Tax and PRSI below). If you wish to use a business name
you must register your business name with the Companies Registration Office.
2.2.
Partnership:
This is where 2 or more people agree to run a business in partnership with
each other. The partnership agreement should be drawn up by a solicitor. The
partners are jointly responsible for running the business and if it fails all
partners are jointly responsible for the debt.
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2.3.
Limited company :
If you set up your business as a limited company, the business is a separate
legal entity. If the company gets into debt, the creditors generally only have a
claim on the assets of the company. The company must be registered with
the Companies Registration Office (CRO) and the company reports and
accounts must be returned to the CRO each year.
3. Intellectual Property.
To many, intellectual property (IP) is a rather obscure legal concept that
can only be properly understood and applied by those who are specially trained.
You may be asking yourself why any small and medium-sized enterprise (SME)
and, more so, your SME should pay attention to IP, or what benefits your SME
could possibly draw from using it. The thing we need take into our mind is
Trademark registration. Trademark is a sign for consumers to identify the goods
or services of each company from those of others. In Vietnam, many businesses
today have not paid sufficient attention to trademark protection. Only when
their trademarks would be infringed by other companies or competitors, they
really concern to protect their trademarks and business, and may come to realize
that their trademarks have been registered by others.

Such situation will

negatively impact the business financially. Trademark rights will be protected

within the national territory, therefore when a trademark has been registered in
Vietnam, it will be protected in Vietnam. There are many reasons why the
violation of intellectual property rights exist and increasingly complex. First,
acts of trafficking in counterfeit goods production, always create super profits.
Second, many owners of intellectual property is not really paying attention to
the protection of their rights, do not have high awareness in the registration of
trademarks , few enterprises have specialized departments to take care of the
intellectual property and think as if it is not the task of the business
strategy.Third, the treatment of intellectual property violations primarily stop at
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administrative sanctions, not enough to deter violators.

For enterprises, protecting the intellectual property of your business is
urgent. To protect the brand right from research, design and build objects of
intellectual property, business must take into account technological measures to
protect these objects before registration.
Example :
Vinamilk and Intellectual Property :
Vinamilk is the biggest dairy company in Vietnam. Established in 1976 as
the Southern Coffee-Dairy Company, then renamed to United Enterprises of
Milk Coffee Cookies and Candies I in 1978 and finally Vietnam Dairy
Company was formally established in 1993. In 2003, follows its IPO to the Ho
Chi Minh Stock Exchange, the company legally change its name to Vietnam
Dairy Products Joint Stock Company (Vinamilk). As such, right after
establishing, the company took care of the intellectual property. Undergone
many changes , the brand name Vinamilk has been used since its establishment
and has now become a widely known name in Vietnam, holds 39% of the
market share nationwide.

4. Finance.
What do you do to do your business ideas without money? A good business
idea, excellent business plan without money is not realistic. The largest concern
of any company or business is money. Therefore, don't let a lack of money stop
you from starting a business.
Entrepreneurs often report that getting financing is the most challenging
aspect of starting or growing a business. You may not meet the financial needs
to further run your company. You are looking for money for your business, you
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should start by learning about the different types of financing that are available
and assessing which one best suits your needs. You can reduce your need for
assistance by managing your finances effectively.

Government grants and financing

Find out about government grants, loans, and other financing available for your
business.

Bankers
Borrowing money from the bank is one of the simplest ways to get needed
funds to start or grow your business. By offering a building or assets as
collateral, you can often get low interest rates. However Banks expect their
principal and interest payments every month, on time, whether you make
money or not. If you fail to make timely payments, it is very difficult.
Plus, theywant to see your business plan, as that is the primary document
upon which they make their decision to loan, even to see some business
activities and revenue before they consider you.So you may lose some of your
business control.

Partnerships
If you know a trustwworthy family member or friend might be rich, you can
approach them to borrow some money for your business with very low interest
rateeven non. The borrow process is less complex. However, you just borrow
small amount of money.

Personal assets
See how you can use personal assets to help finance your business.

Financing from non-government organizations

There may be not-for-profit or community-based organizations that can offer
you financing or direct you towards financing.

Individual Investors or Venture Capitalists

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Learn how to develop the plan, the materials and the confidence to go after the
equity financing for your business opportunity
Example:
After setting up your company you
operate well.

must havemanagement capital to

A young Vietnamese may have excellent business ideas. But to bring that
ideas into a company and turn ideas come reality in Vietnam is extremely
difficult. Currently, in Vietnam's big cities, the rent is so high. Of course, along
with that office rents are not cheap. Want to rent a place to do the office at
around tens of million dong for per month. It is too difficult for young people to
establish the company.
Moreover, according to areport of the General Department of Statistics,
Ministry of Planning and Investment for the first 4 months of 2012: there were
706 enterprisesgo bankrupt, of which, 69.4% of companies because of
productionlosses; 28.4 percent of firms going bust due to lack of funds to
business.
So you can probably know the importance of finance to set up, maintain
and develop your own business.

5. Market segmentation.
Market segmentation is a marketing strategy that involves dividing a
broad target market into subsets of consumers who have common needs (and
then be designed and implemented to target these specific customer segments,
addressing needs or desires that are believed to be common in this segment,
using media that is used by the market segment.
While there may be theoretically 'ideal' market segments, in reality every
organization engaged in a market will develop different ways of imagining
market segments, and create product differentiation strategies to exploit these
segments. Successful market segmentation and corresponding product
differentiation strategy can give a firm a commercial advantage, due to the more
effective match between target customer and product.
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Market segmentation plays a very important role to locate the label. It is the
main tool to identify the target consumer groups as well as a hint to identify
important and innovative benefits brand unique differences.
Example:
This explains why the beer brand continuously use the girls to introduce the
product (promotion girls or PG for short) in restaurants, pubs to strengthen the
brand image as well as sales. An ingenious invitation of the ... pretty easy to
make the machine alluring beard form drinking more or try new products.

6. Health & safety.

Working environments that are safe and healthy are an important part of a
successful employment relationship and contribute to a successful business.
As an employer, you need to work with your employees to identify dangers and
manage them.
Every workplace is different. Vietnams legislation recognizes this by
providing a framework for employers to address health and safety in the way
that is most appropriate for each workplace.
Creating a safe and healthy workplace is a basic part of the relationship
between you and your employees.
What are my responsibilities as an employer?
You are responsible for providing a safe workplace, and for ensuring the health
and safety of those working in or visiting the workplace you control. To achieve
this you are expected to:

manage dangers by eliminating or minimizing them

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provide suitable protective clothing (if necessary) and equipment to staff

and ensure it is worn

provide safety information to staff

provide training and supervision so that work is done safely

develop procedures for dealing with emergencies

monitor the health of employees in relation to the dangers of their work

7. Insurance.
7.1. General Liability Insurance: Every business, even if home, needs to
have liability insurance. The policy compensate if you, your employees or your
products or services cause or are alleged to have caused bodily injury or
property damage to a third party.
7.2. Property Insurance: If you own your building or have business
personal property, including office equipment, computers, inventory or tools
you should consider purchasing a policy that will protect you if you have a fire,
theft, smoke damage etc.

You may also want to consider business

interruption/loss of earning insurance as part of the policy to protect your

earnings if the business is unable to operate.
7.3. Business owners policy (BOP): A business owner policy packages all
required coverage a business owner would need. Often, BOPs will include
business interruption insurance, property insurance, vehicle coverage, liability
insurance, and crime insurance . Based on your companys specific needs, you
can alter what is included in a BOP. Typically, a business owner will save
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money by choosing a BOP because the bundle of services often costs less than
the total cost of all the individual coverages.
7.4. Commercial Auto Insurance: Commercial auto insurance protects a
companys vehicles. You can protect vehicles that carry employees, products or
equipment. With commercial auto insurance you can insure your work cars,
SUVs, vans and trucks from damage and collisions. If you do not have
company vehicles, but employees drive their own cars on company business
you should have non-owned auto liability to protect the company in case the
employee does not have insurance or has inadequate coverage. Many times the
non-owned can be added to the BOP policy.
7.5. Workers Compensation: Workers compensation provides insurance to
employees who are injured on the job. This type of insurance provides wage
replacement and medical benefits to those who are injured while working. In
exchange for these benefits, the employee gives up his rights to sue his
employer for the incident. As a business owner, it is very important to have
workers compensation insurance because it protects yourself and your
company from legal complications. State laws will vary, but all require you to
have workers compensation if you have W2 employees. Penalties for noncompliance can be very stiff.
7.6. Professional Liability Insurance: this type of insurance is also known
as Errors and Omissions Insurance. The policy provides defense and damages
for failure to or improperly rendering professional services. Your general
liability policy does not provide this protection, so it is important to understand
the difference.

Professional liability insurance is applicable for any

professional firm including lawyers, accountants, consultants, notaries, real

estate agents, insurance agents, hair salons and technology providers to name a
few..
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7.7. Directors and Officers Insurance: this type of insurance protects the
directors and officers of a company against their actions that affect the
profitability or operations of the company. If a director or officer of your
company, as a direct result of their actions on the job, finds him or herself in a
legal situation, this type of insurance can cover costs or damages lost as a result
of a lawsuit.
7.8. Data Breach: If the business stores sensitive or non-public information
about employees or clients on their computers, servers or in paper files they are
responsible for protecting that information.

If a breach occurs either

electronically or from a paper file a Data Breach policy will provide protection
against the loss.
7.9. Homeowners Insurance: Homeowners insurance is one of the most
important kinds of insurance you need. This type of insurance can protect
against damage to the home and against damage to items inside the home.
Additionally, this type of insurance may protect you from accidents that happen
at home or may have occurred due to actions of your own.
7.10. Renters Insurance: Renters insurance is a sub-set of homeowners
insurance which applies only to those who rent their home. The coverage is
protects against damage to the physical property, contents of the property, and
personal injury within the home.
7.11. Life Insurance: Life insurance protects an individual against death. If you
have life insurance, the insurer pays a certain amount of money to a beneficiary
upon your death. You pay a premium in exchange for the payment of benefits to
the beneficiary. This type of insurance is very important because it allows for
peace of mind. Having life insurance allows you to know that your loved ones
will not be burdened financially upon your death.
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7.12. Personal Automobile Insurance: Another very important type of

insurance is auto insurance. Automobile insurance covers all road vehicles
(trucks, cars, motorcycles, etc.). Auto insurance has a dual function, protecting
against both physical damage and bodily injury resulting from a crash, and also
any liability that might rise from the collision.

8. Competition.
Scope of competition has become wider, risk in business has increased
considerably. A clear understanding of your competition is key to the success of
any business. Even if your product or service fills a unique gap in the market,
there are always other companies offering something similar, or there are other
ways to satisfy the same customers need. The key when thinking about your
competition is to learn what makes the customer choose one product or service
over another. The different options that customers consider are usually
competitors.
Competition can be either direct (competing by selling the same products)
or indirect (competing for the same market). The intensity of that competition,
whether direct or indirect, will affect the overall potential for success of your
business. That is why it's important to consider all types of competition when
planning your business, to ensure that you have the edge over others in your
industry.
Multiple businesses offering similar products and services create direct
competition. Burger King and McDonald's are direct competitors.
For example, hunger creates a need to consume food. A customer may buy
bread, grab some take-out sushi, or pick up a frozen pizza from the grocery
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store and take it home to cook. All three of these products are very different
from each other, but they compete indirectly because they all satisfy hunger.
One More Example
A consumer who needs transportation would logically shop for a car. That
consumer has many vehicles to choose from, including trucks, compact cars,
sports cars. These direct competitors have different prices and satisfy different
needs; some are more spacious, some are faster, and some are more fuel
efficient. However, the consumer could also choose to buy a bicycle, a
motorcycle, or a bus pass; all of these options create indirect competition for car
dealerships. Regardless of which option the consumer chooses, his or her need
for transportation will be satisfied. Evaluating your consumer's many options
will help you assess the level of direct and indirect competition within your
industry.

III. Conclusion.
Setting up a new business may be risky. So these considerations weve
mentioned will help you clear and more confident to start a new business.

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