Three Challenges While Setting a Business

Identify at least three challenges when setting up a business. Explain why they are challenges.

The three challenges when setting up a business are Financing/cash flow, finding a location, and Legal issues. Financing is a very important element in business. The owner has to be sure they have enough cash flow to fund the business as well as other expenses. Sometimes a lot of business owners have enough cash to get the doors open, but often run into trouble because they forget other expenses involved in opening a business.

Finding a location is the second challenge when setting up a business. In the business world location can make or break a business (ex: Urban outfitters put stores near college campus because young adults love trendy clothing spots). The right products within the right location can have a big impact on how successful a business is. Retail stores for example might want to choose locations in cities where there is a lot of foot traffic. Foot traffic refers to how many people walk past a certain area. In this area a business could generate a higher rate of sales, and eventually grow a huge profit for the business.

Legal Issues is the third challenge when setting up a business. A business owner must be sure they have the correct documentation to own a certain business. Trademarks and Patents must be official on unique products (products made specifically for or by the company). The business name cannot be too similar to another business; this could cause confusion with in the businesses. The name must be appropriate and will identify the products and services offered. The name should also be eye-catching to attract people in to the store, for example Fuddruckers is a restaurant with an eye-catching name.

Define what a "niche" product is. Give at least three examples of "niche" products.

A "niche" product is a product that is a small sub segment of a larger product. The "niche" product usually has some special or unique qualities that attract customers. The customers will usually pay extra for these unique qualities in products. Niche products often cannot be provided to larger businesses, the customer attendance is either too small or the product is difficult for mass production. Another way to look a niche product is as a rare product that is uncommonly available, and people will pay lots of to obtain it. The downside to a niche product is that it is harder to grow a business due to limitations on the size of the target market.

The iPhone, Ben & Jerry's ice cream, and the iPod touch are three examples of niche products. The iPhone has a unique interface and applications that can only be offered by one cell phone provider: AT&T. The iPhone is only available to AT&T because Apple wanted to target a particular audience with this product. If a customer really wants an iPhone they must pay what ever price AT&T is offering to use their network. In this situation both Apple and AT&T are able to charge premium prices because both of their products have unique qualities. Ben & Jerry provide ice cream with high fat content and unique flavors that are not produced by mass market ice cream venders. Ben & Jerry provide different and funny names for their products, such as "Chunky Monkey", "Phish Food", and "Chubby Hubby". Their ice cream cartons have unique designs that attract customers to the ice cream. The ice cream is only sold in pint-sized cartons, so customers are tempted to come back for more.

The iPod touch is an mp3 player invented by a company known as Apple. The iPod touch allows the user to listen to music, have access to the internet, and use a personal digital Assistant. The iPod touch is exclusive to iTunes, the digital music downloader created by apple. Customers are limited to only using iTunes to put music on their iPod touch. So tons of money is spent on both the iPod touch itself and iTunes.

Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not?

`A niche company might have an advantage in a market because they would offer something other competitors don't have. This