Mention the steps in forming a business.
Or, Discuss the various steps in setting up of a business organisation.
The steps of forming a business organisation are:
1. Invent possibilities:
With the financial and social changes in the country, new business opportunities arise. The promoter prepares a draft plan of the new business after judging the opportunities and possibilities of the new business. Making that plan a reality is the first step to launching a business. At the time of formation, the promoter has to formulate the plan keeping in mind the country’s situation and environment and considering his own organisational capacity.
2. Investigation:
The second step is to find out whether there are practical opportunities to start and operate the business. Findings have to be judged from both sides. Like – (a) Preliminary Investigation and (b) Detailed Investigation.
(a) Preliminary investigation: If there are more businesses like the business that the promoter is going to introduce if any, the amount of capital, the amount of profit, etc. should be investigated.
(b) Detailed investigation: After the preliminary investigation, if the proposed business is considered profitable, detailed investigation of business location, raw material, machinery, power, market, transportation, management, capital, etc to be done.
3. Firm decision:
Based on detailed investigation, the promoter has to take firm decisions to set up the business. At this stage, he has to take specific decisions about the ownership, production, marketing, financing, etc. of the business organisation.
4. Determining the size of the business:
The size of the business should be determined first whether it will be small, medium, or large. For this purpose, the matters which need to be considered are – demand and nature of goods, supply of capital, market conditions, risks, government regulations, transportation costs, energy requirements, etc.
5. Determination of Ownership:
Determination of ownership depends on the volume of business. Businesses can be of different types in terms of ownership. Like – Sole Proprietorship Business, Partnership Business, Joint Hindu Family Business, Joint Company, Cooperative Business, Government Business, Joint Sector Business, etc.
6. Place selection:
Place selection of business is very important. Availability of raw materials and workers, transportation facilities, financing opportunities, availability of energy resources, etc., should be carefully considered before selecting the place of business.
Important Questions from this Chapter:
- Characteristics of Sole Proprietorship Business
- Characteristics of Company
- Distinguish between Partnership Business and Sole Proprietorship Business
- Features of Private limited Company
- Distinguish between Private limited Company and Public limited Company
- Disadvantages of Partnership Business
- Advantages of registration of Partnership Business
- Disadvantages of Private limited Company
- Merits of Cooperative Societies
- Steps in forming a Business
Liked our post?
We are available with lots and lots of commerce-related content.
[…] Steps in Forming a Business […]
[…] Answer: Click here […]