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Business Organisation

Unit 7

Unit 7

The Process of Setting up a Small Business

Structure: 7.1 Introduction Objectives 7.2 Incorporation and Registration of Business 7.3 Promotion of Business Stages of promotion Promotional decisions 7.4 HR, Finance and Marketing of Products Human resource management Business finance Marketing of products 7.5 Government Approach towards Small Business Protective measures Promotional measures Institutional arrangements 7.6 Summary 7.7 Terminal Questions 7.8 Answers

7.1 Introduction
In the last unit you studied about the different sectors and legal aspects related to different sectors of business. Small business plays an important role in Indian economy. Whether a business enterprise is small/big depends upon the volume of capital invested. Starting a business involves the use of resources to achieve a given objective. Establishing an enterprise is an exercise in risk taking. For example: Television. Developments of business have contributed to the economic development. In the present unit you will study about the process of setting up a small business, by a person or group of persons as a proprietor or partners. The unit covers the key aspects like incorporation and registration of business, promotion of business, HR, finance and marketing of products. The unit also discusses about the growth and government approach towards small business which involves certain measures to solve the problems of small business. It is very easy to establish a sole
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proprietorship business or a partnership firm as there is a few regulations to comply with. But for the establishment of a company, a lot of formalities are to be complied with as required under the Act. The registration of the company is mandatory before starting its operation. A company is said to have been formed only when it has been incorporated or registered under the companies Act, after completion of the formalities as required under the Act. Small business/(industry related) enterprise is also known as small scale service/units. Business enterprise is concerned with the material, monetary resources and human towards efficient management of the enterprise with a view to earn profit out of the business operations. Objectives: After studying this unit, you will be able to: explain the concept of incorporation and registration of business discuss the promotion of business describe the HR, finance and marketing of products state the government approaches toward small business

7.2 Incorporation and Registration of Business


A company being an artificial person comes into existence through incorporation. Incorporation implies the registration of the company as a body corporate when it is duly registered under the Act and a certificate of Incorporation has been obtained from the registrar of companies. It is a legal process through which an enterprise obtains recognition as a separate legal entity. In order to get a company registered or incorporated the following steps\procedures should be taken: 1. To obtain the letter of intent to be converted later into an industrial license under the Industries Act, 1951. 2. To obtain an import license if some machinery or equipment is to be imported for which the license is required. 3. To make the approval of the government for foreign collaboration if necessary. 4. To make agreements with the underwriters, brokers, bankers, solicitors, auditors and signatories to the Memorandum of Association.
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5. To get approval under the Monopolies and Restrictive Trade Practice Act, 1961 if required. 6. To get memorandum and article of associations prepared and printed. 7. To obtain the approval of registrar for the proposed name of the company if required. Once the above steps are completed an application for the registration of the company is made to the Registrar of the Companies of the state in which the registered office of the company to be situated. The application should be in prescribed form and the following documents should be submitted along with the application to the registrar: 1. Memorandum of Association duly signed and stamped. It must be signed by at least seven in case of a public limited company and at least two in case of a private limited company. 2. Articles of Association duly signed by the signatories to the Memorandum and properly stamped. 3. A list of directors with their full name, address, age and occupations. 4. Written consent of the persons who have agreed to act as the first director of the company along with a written undertaking to take up and pay for the qualification shares, prescribed in the Articles. 5. A copy of the letter from the registrar in which the name of the company was approved. 6. Notice of address of the registered office of the company. 7. The agreement if any. 8. A statutory declaration stating that all the legal requirements of the companies act with regard to the incorporation have been duly complied with. When the above mentioned documents have been filed with the Registrar and the necessary fees paid, the Registrar will, if satisfied, enters the name of the company on the Register of Companies maintained by him (s.33) and then will issue a Certificate of Incorporation under his signature in token of registration of the company on the date noted on it (s.34). The issuance of this certificate is the conclusive evidence of the fact that the company is incorporated and the requirements of the Companies Act have been complied with.

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On registration, the company comes into existence as a legal person distinct from its members who constitute it from the earliest moment of the day of incorporation stated in the certificate of incorporation, with rights and liabilities similar to a natural person, competent to enter into contracts (s.34). Self Assessment Questions 1. ______________ certificate serves the purpose of registration a company with which takes birth as a separate legal entity. 2. On registration, the company comes into _____________ as a legal person distinct from its members. 3. A company has been incorporated with illegal objects; the illegal objects would not become legal by the ______________ of the certificate.

7.3 Promotion of Business


Promotion refers to those activities which are undertaken to bring a business enterprise into existence. It is a business term which denotes a number of business operations familiar to the business world by which a company is generally brought into existence. It starts with conceiving an idea of business or discovers an opportunity for doing a business, estimate the finance and then take the necessary steps to launch the business unit. This involves verifying as to whether all the basic requirements such as land, building, raw material, machine, equipments etc. are available or not. If they are available one can assemble them, arrange the necessary funds and set up the business unit to give shape to the initial idea of establishing the business. The whole process is called business promotion and the person who does it is called the promoter of the business. 7.3.1 Stages of promotion The various steps in the process of promotion may be described as under: Discovery of a Business Idea Investigation and Verification Assembling Financing the Proposition Discovery of a business idea The process of business promotion begins with conception of an idea of business opportunity. The idea may relate to the starting of a new business
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or the taking over of an existing undertaking. The idea of setting up a new business may come from an: Unsatisfied demand. An exploited resources Inferior product/from New invention awaiting commercial exploitation. For example, the marketing executive of an electronic company found people busy listening to music holding a big radio on their shoulders while travelling. This particular scene disturbed the marketing executive and he thought how nice would it be if the radio could be reduced to a very small size which can be kept in pocket and a wire be connected to the ear. This idea came up with a new product named as Walkman. Investigation and verification Once the idea has been conceived, a thorough investigation is made to establish the soundness of the proposition, taking into consideration its technical feasibility and commercial viability. For example, in the case of the product Walkman if there was no technology by which the size of the radio could be reduced to small size or no technology to transmit the sound from the radio to the ear through earphone, the plan of producing the Walkman would have been impossible. Similarly, if technology is available but the cost involved in making a Walkman would be so high that no customer could be able to purchase it; or the demand is too limited and the return on investment is low, the idea is not considered as commercially viable. Assembling Once the promoter is convinced of the feasibility and profitability of the proposition, he takes steps in making arrangements for all the necessary requirements such as land, building, machinery, tools, capital, etc. Decision is also to be made regarding size, location and layout etc. for the plant, and make contracts with suppliers for raw materials, enter into agreement with the dealers to purchase equipments, make agreement with bankers to finance and take initial steps for the setting up of a Company. For example, if we are going to set up a sugar mill, first, the owner will have to acquire a land, construct a building, buy machines and install them,
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employ labour to work, buy raw material and then process the sugar cane to produce sugar that will be sold to the customers. Thus, to produce sugar from sugar cane you need to assemble resources like land, building, machinery, labour etc., and put these resources together in action in a systematic way. Then only it becomes possible to produce sugar and sell it to the customers, and earn profit. Financing the proposition At this stage, financial plans are prepared with respect to the amount of capital required, the nature of capital structure i.e., the proportion of capital to be raised from owners fund and that from borrowing from banks and others, and how and when to raise the share capital from the general public are done by promoters. They may come to an Agreement with merchant bankers, underwriters and stock brokers who are to assist the capital issue and so on. 7.3.2 Promotional decisions A business enterprise does not come into existence on its own rather it is the result of initial efforts by promoters. A promoter or an entrepreneur has to take several decisions in order to establish an enterprise. Such decisions are known as entrepreneurial decisions. Entrepreneurial decisions are required to tackle the problems of launching a new business enterprise. A promoter or entrepreneur who wants to establish a new business enterprise has to take the following decisions: 1. Selection of line of business: The first procedural decision involved in setting up of a new enterprise is to select the nature and types of business. The entrepreneur has to decide the type of business in terms of industrial, trading or service. Then he has to select the types of goods and services he will produce or distribute. He has to consider several factors, e.g., nature and source of raw materials, types of technology to be used, source of supply, distribution policy, etc. After deciding the nature of business activity, the promoter has to analyze and forecast the profitability of the proposed business on the basis of probable operating costs and sales revenues. 2. Size of the business: Determination of the size of the firm or scale of operations is an important decision in the establishment of a new enterprise. An attempt should be made to achieve the size at which the
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average cost per unit is minimum. In other words, the entrepreneur should aim at the optimum size keeping in the view the extent of the market, technique of production, nature of product, availability of finance. Competence of management, etc. Large scale operations offer several economies of scale but require huge capital investment and expert managerial skills. For example, the owner of Nirma Industries Limited, Dr. Karsanbhai Patel used to sell washing powder by going around the city on his bicycle in 1980s and with increase in operation it has now become Nirma Industries Limited. 3. Location of business: The location of a business firm is an important decision as it influences the costs, profitability and growth of the enterprise. Moreover, once the site is selected, it is very difficult to change it. An unfavorable location may restrict the growth of the firm in addition to higher costs. The objective of location decision is to find out the optimum location so that the per unit costs of production and distribution are lowest possible. Location is a three stage process as it involves not only the selection of the site. Region is selected on the basis of access to raw material and markets, availability of labour or community is governed by local attitudes, managerial preferences, public facilities, climate, availability of site, financial inducements, etc. selection of the site depends on the cost of land, soil and surface, development costs etc. For example, if a person is going to start his business in a Special Economic Zone (SEZ) then he can avail certain tax deductions and other incentives. Activity 1 Try to identify a small enterprise and discuss the key aspects such as, location, size related to that enterprise. 4. Choice of forms of ownership: The choice of the form of ownership determines the division of profits, authority and liability of owner, continuity of business, transferability of interest, etc. a business enterprise may be organized in three forms, namely, sole proprietorship, partnership and Joint Stock Company. The choice of
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forms of ownership depends on factors like nature and size of the business, degree of risk or liability, continuity of business, capital and managerial requirements, tax burden, legal formalities, etc. A good form of ownership should be easy to form, simple to operate, durable, flexible, free from heavy taxation and legal requirements, etc. in some cases the form of ownership may be prescribed by law. For example, Banking and Insurance business can be carried on only in the forms of a joint stock company. 5. Financial planning: Proper planning and control of finances is essential to achieve success in business. Sufficient funds must be provided at the right time for the start-up and continuity. Financial planning involves advance decisions in the following areas of business finance: a) Determination of the total amount of capital required for the business, keeping in view the cost of establishing the business; cost of fixed assets like land, building, plant, machinery, furniture and fixtures etc. cost of current assets like stock of raw materials; cash, debtors inventory and other operating costs. While estimating capital requirements the present as well as future needs for expansion, modernization, diversification, etc., should be considered. A proper amount of capitalization should be fixed. b) Deciding the form and composition of the securities which are to be issued to raise the estimated capital. The sources of finance have to be settled in terms of ownership securities and creditorship securities. This is the problem of deciding an appropriate capital structure. c) Deciding the time, price and method of marketing securities. d) Administration of funds. 6. Provision of physical facilities: An important decision in launching a new enterprise is the selection of machines, equipments, plants, buildings, and other physical facilities. It also depends on the size of the firm, nature of business, process of production and the availability of funds etc. in the selection of a particular machine or equipment should be made to prove productivity and to reduce costs. The alternative source of supply of physical facilities should be considered.
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Plant layout: After selecting machinery and equipment, it is necessary to arrange them in an efficient manner. Arrangement of physical facilities in the plant is known as plant layout. Good layout is necessary for efficient and economical operations. An efficient layout helps to reduce the costs of material handling, inventory, space, etc. the layout should be such that it results in the optimum utilization of machines, equipment, work force and space. Machinery and equipment should be placed in a proper sequence so as to permit a smooth flow of materials through the necessary operations and in the most direct way possible. Activity 2 From the above identified small business enterprises discuss the layout and its internal structure. 7. Internal organization: Another important managerial decision in the establishment of a new business enterprise is the creation and development of an internal structure. Work is divided among departments like production, marketing, finance, personnel, etc. and arrangements are made for co-ordination among these various departments. An efficient network of authority-responsibility relationships needs to be created for successful operations. Internal organization is a structural frame work consisting of authorityresponsibility relationship among the members of the enterprise. It defines the officials channels of communication and reporting relationship, i.e., who is responsible to whom. In large enterprise, the authority-responsibility relationships are described formally on an organization chart. A sound internal organization facilitates efficient operations, avoids duplication of work, promotes mutual cooperation and coordination, and facilitates expansion and growth of business. It provides the channel through which the organization members communicate with one another. Formation of a whole internal structure involves problems like departmentation, delegation, decentralization, span of control. 8. Personnel: The next step is to estimate the needs of the people or employees to perform different jobs in the internal organization structure. The forecasting of the number and the type of employee is
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known as man power planning or human resource planning. After this, the procurement, development and motivation of the required managers and workers become necessary. Persons with required skills, ability and experience must be recruited and selected. Once the personnel are employed and placed on jobs, they must be motivated to make their best possible contribution towards the accomplishment of organization objectives. Plans are prepared for all these activities at this stage. 9. Tax planning: A business enterprise is subject to direct and indirect taxes of several types. Taxes influence the location, size and forms of ownership of business as well as the type of securities issued to raise finance. The promoter must visualize in advance the various taxes which enterprise will have to pay. Through proper planning, the tax burden on the enterprise can be reduced and maximum benefits can be taken of tax incentives. Income tax and wealth tax are important among the various types of taxes payable by a business enterprise 10. Launching the enterprise: The completion of physical, organizational and financial aspects leads ultimately to the actual launching of the enterprise. Acquisition of required materials, machinery, money, workers and managerial ability, start of production and advertising of products, etc. are functions performed at this stage. According to Shubin, The firm is launched by assembling and organizing the physical facilities, developing operation and production process, advertising its product and initiating a sales promotion campaign, recruiting labour and accumulating inventories. Self Assessment Questions 4. A promoter or an _____________ has to take several decisions in order to establish an enterprise. 5. The entrepreneur has to decide the type of business in terms of ______________, trading or service. 6. _____________ funds must be provided at the right time for the startup and continuity. 7. Internal organization is an important managerial decision in the establishment of a new _____________ .

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7.4 HR, Finance and Marketing of Products


After promoting a business idea, the promoters need to focus on the HR, finance and marketing of the business. The key objectives and functioning of HR, finance and marketing of business are as follows: 7.4.1 Human resource management The human resource functions of the management are concerned with the acquisition, development of and maintenance of an efficient and dedicated work force in the organisation. It involves the recruitment, training, development and appraisal of the personnel. Objectives of the human resource management The basic objectives of the HRM is to create and maintain those relationships which enable all those engaged in an undertaking to make their maximum contribution to the effective working of that undertaking. The key important objectives of HRM are as follows: To build and maintain cordial relations between people working at different level of the organisation HRM ensures the effective utilisation of the available human resources HRM provides the fair working conditions and remunerations to all the employees of the organisation so that they can contribute maximum to increase the profit of the organisation To help the managers to solve their personnel problems 7.4.2 Business finance Finance is the lifeblood of the business enterprises. Whether it is a small business or large, manufacturing or trading or transportation business, money is an essential requirement for every business activity. Money required for any business activity is known as finance. So the term business finance refers to the money required for business purposes and the ways by which it is raised. Thus, it involves procurement and utilisation of funds so that business firms will be able to carry out their operations effectively and efficiently. Every business needs funds mainly for the following purposes: 1. To purchase assets: Every business organisation needs some fixed assets like land and building, furniture, machinery, etc. to start their business. Availability of finance is very important to purchase these assets.
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2. Working capital: Working capital is required to carry out day-to-day operations of a business. For e.g., purchase of raw materials, payment of rent and taxes, telephone and electricity bills, wages and salaries, etc. 3. Business expansion: Every business organisation needs to expand their business for the growth of their organisation. To finance such growth, one needs more funds. 4. To bridge the time gap between production and sales: The amount spent on production is realised only when sales are made. Normally, there is a time gap between production and sales and also between sales and realisation of cash. Hence during this interval, expenses continue to be incurred, for which funds are required. 5. To meet uncertain expenses: Funds are always required to meet the ups and downs of business and for some unexpected problems. Suppose, a manufacturer predicts shortage of raw materials after a period, then he would like to stock the raw materials in large quantity. But he will be able to do so only if sufficient money is available with him. 6. Taking benefits of business opportunities: Funds are also required to avail of business opportunities. Suppose a company wants to submit a tender/contract documentation for which some amount of money is required to be deposited along with the application. In case of non Availability of funds it would not be possible for the company to submit the tender. 7.4.3 Marketing of products The objective of all business enterprises is to satisfy the needs and wants of the society. Marketing is therefore the focal point of all business activities. According to Drucker, Marketing is the distinguishing feature of business. A business is set part from all other human organisations by the fact that it makes a product or services. The American Marketing Association defines marketing as an organisational function and set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders.
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The following are the key important points of marketing: It is the foundation of all business activities. It serves as a source of revenue for business enterprises. It satisfies the needs of the consumers. It determines the pattern of consumption. It helps in improving the standard of living of people. It provides opportunities for gainful employment. It helps in stabilizing prices. Objectives of marketing The following are the key objectives of marketing of products: Provide satisfaction to customers All marketing activities are directed towards customer satisfaction. Marketing starts with ascertaining consumer needs and produce goods that satisfy those needs most effectively. Not only that the pricing and distribution, functions of marketing are also planned accordingly. Increase in demand Through advertising and other sales promotional efforts, marketing aims at creating additional demand for their products. Satisfied customers also help in creating new customers. For example, if you buy a gel pen and feel satisfied, next time also you will buy the same pen and when you tell others about it they will also feel like giving it a try like to buy the same pen. Provide better quality product to the customers This is a basic objective of marketing. The business houses try to update and upgrade their knowledge and technology to continuously provide better products. If they do not do so, they will be phased out through competition. Create goodwill for the organisation Another objective of marketing is to build a good public image and create goodwill for the organisation. This helps in maintaining loyalty to the product and accepting new products of the same company. Generate profitable sales volume The ultimate objective of all marketing efforts is to generate profitable sales volumes for the business. Taking care of customer needs and wants by
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providing the required goods and services at prices they can afford, and at places and timing that are convenient to them ultimately lead to increased sales and profits. Self 8. 9. 10. Assessment Questions HRM ensures the effective utilisation of the available ________. All marketing activities are directed towards _________. __________ is required to carry out day-to-day operations.

7.5 Government Approach towards Small Business


Small scale industries play crucial role in India where more human resource exists but capital required is less. Small scale industries\Small enterprises need credit support on a continuous basis for running the enterprise as well as for its diversification and modernisation. Hence, labour intensive industries are to be developed to create employment and more entrepreneurs for economic growth and development. Recognising the need for a focused financial assistance to such industries, the Government of India, together with the State Governments, has formulated several policy packages including schemes and funds for their growth and development. The Government of India has taken several measures to solve the problems of small scale industries. For example: printing press, rice mills etc. This enables them to play an effective role in the country's economy. These measures may broadly be classified into three categories as described below: 7.5.1 Protective measures These measures are designed to protect small scale industries from the competition of large firms. They are as follows: a) A number of products have been reserved for exclusive production in the small sector. At present the items reserved for small scale sector stand at more than 800. b) An estimate has been imposed on certain products of the organised sector to enable the small scale industries to compete successfully in the market.

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c) The Government of India proposes to provide legislative protection to small scale industries. 7.5.2 Promotional measures Following measures have been taken to promote the growth of the small scale sectors in the country: a) Rare and imported raw materials are provided at reasonable prices and on priority basis. Recently, the government has decided to open depots for buffer stocks and bulk supplies of critical raw materials for the small scale industries. Quota allocations of rare raw material, e.g., steel are secured for the small scale sector on preferential basis. Imported components and equipments are allocated to the small scale industries on priority basis. b) The Government has developed industrial estates to provide industrial sheds to the small entrepreneurs at concessional rates. c) Central and State Government departments extend price preference in the purchase of goods produced by small scale units. DGSD (Director general, supply and development) gives preference to small scale units in making its purchases. d) Increasing sum of money has been designated under the successive five year plans for the development of small scale industries. e) Assistance is provided to small scale units in securing orders from government departments and defence agencies. The National Small Industries Corporation (NSIC) helps small firms in this matter. f) Technical assistance is provided to small scale industries in the adoption and use of improved tools and methods of production in order to improve the quality of their products. In respect of style and finish, assistance is provided in the design and development of products. This technical assistance is provided by the Central Small Industries Organisation through its service institutes and extension centres. Common testing centres have been set up for the benefit of groups of small scale units situated in a particular region. g) The Government has set up the Small Industries Development Bank of India (SIDBI) and Small Industries Development Fund (SIDF) for providing financial assistance to small scale units.
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7.5.3 Institutional arrangements The Central and State Governments have set up several institutions or agencies to provide liberal and varied assistance to small scale industries. Some of these institutions are described below: 1. Small Industries Development Organisation (SIDO): The SIDO is an apex body for promotion and development of small scale industries in the country. Its major activities include: a) b) Advising the Government on formulation of policies and programmes for the small-scale industries. Conducting periodical survey of the small scale industry and generating data/reports on various important parameters/indicators of growth and development of the sector. Maintaining close contact with other Central Ministries, Planning Commission, State Governments, Financial Institutions and other organisations concerned with the development of small-scale industries. Facilitating linkage of small-scale industries as ancillaries to large and medium scale industries. Developing human resource base through training and skill upgradation.

c)

d) e)

2. National Small Industries Corporation Ltd. (NSIC): The NSIC has been established with the objective of promoting, aiding and encouraging the growth of small scale industries in the country. It has been assisting small enterprises through a set of specially created schemes which facilitate marketing support, credit support, technology support and other support services. a) Marketing support schemes: Sound marketing is critical for the growth and survival of small enterprises. NSIC acts as a facilitator to promote small industries products and has devised a number of schemes to support small enterprises in their marketing. Credit support schemes: NSIC facilitates credit requirements of small enterprises in several areas. These include: (i) Equipment financing: through schemes like 'Hire Purchase' and 'Term Loan' for the procurement of equipments.
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b)

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(ii) Financing for procurement of raw material: by facilitating bulk purchase of basic raw materials at competitive rates, import of scares raw materials, etc. NSIC also takes care of all the procedures, documentation and issue of letter of credit in case of imports. (iii) Financing for marketing activities: such as internal marketing, exports and bill discounting, etc. (iv) Financing through syndication with banks: by entering into strategic alliances with commercial banks so as to facilitate fund requirement of the small enterprises. It involves an arrangement of forwarding the loan applications of the interested small enterprises to the banks. (v) Performance and credit rating scheme for small industries: so as to enable the small enterprises to verify the strengths and weaknesses of their existing operations and take corrective measures accordingly. NSIC is operating the scheme through agencies like ICRA, ONICRA, Duns & Bradstreet (D&B), CRISIL, FITCH, CARE and SMERA. Abbreviations for the above terms: ICRA-International centre for agriculture and research; CRISIL-Credit rating information services of India limited; CARE- Credit Analysis and Research Ltd.; SMERAThe Small and Medium Enterprises Rating Agency. c) Technology support schemes: NSIC offers small units various support services through its 'Technical Services Centres' and 'Extension Centres'. The services provided include advise on application of new techniques; material testing facilities through accredited laboratories; energy and environment services at selected centres; classroom and practical training for skill upgradation, etc. At the State level, various State Financial Corporations (SFCs) have been set up by the respective State Governments for providing financial assistance to the small scale industrial units. For this purpose, these institutions have brought out several funds and schemes, from time to time. There are 18 State Financial Corporations (SFCs) operating in the country.

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Self Assessment Questions 11. DGSD gives preference to small scale units in making its purchases. (True/False) 12. NSIC is operating the scheme through agencies like ICRA, ONICRA etc. (True/False)

7.6 Summary
A business enterprise is subject to direct and indirect taxes of several types. Taxes influence the location, size and forms of ownership of business as well as the type of securities issued to raise finance. On registration, the company comes into existence as a legal person distinct from its members who establish it from the earliest moment of the day of incorporation stated in the certificate of incorporation. This way it gives rights and liabilities similar to a natural person, competent to enter into contracts. Arrangement of physical facilities in the plant is known as plant layout. Good layout is essential for efficient and economical operations. Proper planning and control of finances is essential to success in business. Sufficient funds must be provided at the right time for the start-up and continuity. While selecting the lines of business, a number of criteria or factors must be kept in view. First, the expected rate of return must be fair keeping in view the risks involved and the amount of investment required in the enterprise. A promoter or an entrepreneur has to take several decisions in order to establish an enterprise. The entrepreneur has to decide the type of business in terms of industrial, trading or service. It recognizes that prosperity is primarily formed by the action of businesses operating in free markets, and it is not the role of government to either duplicate or substitute for private sector activity. This government expects more of policy makers. More new ideas, more willingness to question inherited ways of doing things, better use of evidence and research in policy making and a better focus on policies that deliver long-term goals. Glossary Incorporation: It is a legal process through which an enterprise obtains recognition as a separate legal entity. Promotion: Promotion refers to those activities which are undertaken to bring a business enterprise into existence.
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Plant layout: Arrangement of physical facilities in the plant is known as plant layout. SIDO: Small Industries Development Organisation. NSIC: National Small Industries Corporation Ltd.

7.7 Terminal Questions


1. 2. 3. 4. Explain incorporation of business. Describe the promotion of business. Write a note on HR, finance and marketing of products. Describe the government approach towards small business.

7.8 Answers
Answers to Self Assessment Questions 1. Incorporation 2. Existence 3. Issue 4. Entrepreneur 5. Industrial 6. Adequate 7. New business enterprise 8. human resources 9. customer satisfaction 10. Working capital 11. True 12. True Answers to Terminal Questions 1. Refer to 7.2 Incorporation implies the registration of the company as a body corporate with the registrar of companies. 2. Refer to 7.3 Promotion refers to those activities which are undertaken to bring a business enterprise into existence. 3. Refer to 7.4 Finance is the lifeblood of the business enterprises. 4. Refer to 7.5 The government of India has taken several protective and promotional measures to promote the small scale business in the country.
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Mini-case British Library Business and IP Centre The Centre supports small businesses and entrepreneurs from inspiration to successfully launch and develop a business: approximately 50% of its users are start-ups or aspiring entrepreneurs. The Centre is unique in offering free access to business and intellectual property information in one place in London, with impartial experts to guide people to the information that they need; the Centre's skills are complemented by around 50 partners. Who help people make the most of the information in the Centre. Its accomplishments are impressive. Since it opened officially in March 2006, the centre has supported over 30,000 small businesses and aspiring entrepreneurs by providing them with up-to-date business and IP information to help them e.g. protect their novel idea, assess a market, pinpoint customers, develop a mailing list and write a business plan. In a recent independent e-survey (based on 230 respondents), over twofifths said that the Centre had helped them to launch their business, a quarter that it had helped them to expand their business and 35% that it had helped them safeguard their business. Nearly two-thirds of respondents had developed or were in the process of developing a new product or service, of which a third had taken measures to protect it via a patent. It was a trademark or registered design and another third were planning for it. Over half the respondents said that the Centre had increased their awareness of the importance of intellectual property. The Centre has delivered, with its partners, over 250 workshops, 1:1 advice and mentoring sessions (either free or highly subsidised) since it opened. There is a very high degree of loyalty with people attending 2.5 events on average and two-thirds saying that they were of immediate practical use. The strength of the British Librarys approach is that it has focused on providing access to key information supported by expertise. Entrepreneurs can access a wealth of other relevant information for their business from the 150 million items at the Library, such as arts and science information and content, newspapers, and images and sound. They can also gain inspiration from exhibitions and events. One entrepreneur has described it as a space that helps her think creatively. It is a substantive service provided by an
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institution that has proven competence. This task force advocates for the British Librarys Centre to serve as a model for other similar centres to be rolled out across the country. Question Analyze the above case and discuss the key aspects related to the case. Hint: The Centre is unique in offering free access to business and intellectual property information in one place in London, with impartial experts to guide people to the information that hey need.

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