Establishing a new business unit is the last process in the series of process for promotions of an entrepreneurial venture, which is like giving birth to a baby, the reason is that just as a mother has to bear various types of pains and problems, before and after the birth of the child, similarly an entrepreneur has also to perform various entrepreneurial functions for establishing of a new business unit.
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The following are the major Functions for Establishing a New Business Unit:
1. The Emergence of the Idea to Establish an Institution or Enterprise
These ideas may be of several types, like, invention or investigation of any new commodity, the idea of any new natural source and its business use, idea to increase the utility, attractiveness or availability of any commodity, idea of preparing substitute commodities for any particular commodity and the idea of taking advantages of the low competition in any market area.
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The entrepreneur should practically and constructively think over establishing any institution/enterprise only on the basis of sound grouds.
2. Selection of Business
The success of the entrepreneur depends upon the selection of the appropriate business.
For that, the entrepreneur should make sufficient use of his experience, knowledge, skills, and foresightedness.
Besides, while taking advice from the experts, he should keep various points in view like – initial investigation, gaining information related to the emerged idea, like product analysis, market analysis, government policy, profitability, availability of resources, technical Knowhow, managerial capabilities, possibilities of the future of the business and business policy, etc.
3. Determination of the Form of Business Ownership
While determining it, elements, like – size, working area, production process, financial requirements, technical requirements, market area, the scale of production, and risks of the business or enterprise are to be considered properly.
4. Determination of Objectives and Working Area of the Business
All functions of the organization are operated only on the basis of these objectives.
Hence, it is essential that these may be very clear and specific.
Besides, the working area of the enterprise should also be well determined.
The working area of the enterprise may be of local, provincial, national, or international levels.
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But, for determining it, sources and size of the enterprise should be kept in view.
5. Determination of Optimum Size of the Business
After the selection of form and determination of objectives and area of the enterprise, by an entrepreneur/manager/promoter, he is should also determine the optimum size of the Enterprise.
6. Initial Contracts
Before establishing a business/enterprise, some initial contacts are required, like
- Contract with the owner of the existing business, if he wants to purchase it.
- The initial contract with the concerned parties for land, and building, copyright, patent rights, etc. if he wants to do his own new business.
- Initial Contracts with office employees, experts, and legal advisors, etc.
- In case of purchase of the ongoing business, decisions regarding payment for the purchase, determination of reputation, and assessment of assets should be done after thoughtfully considering various issues.
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7. Determination of the location of the Business
For it, the entrepreneur should keep various points into consideration, like – proximity to the market, availability of raw materials, means of transportation and communications and sources of energy, etc. Know more: Top Ideas for Businesses You Can Launch for Cheap or Free.
8. Financial Planning
Finance is the lifeblood of the business. It is not possible to operate any business without finance or capital.
For financial planning, capital requirements of the enterprise are to be identified, sources of capital are to be studied and appropriate decisions are taken for capitalization, so that the problems of Undercapitalization and overcapitalization may not arise.
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9. Sound Organisational Structure
The success of a business enterprise depends upon the sound organizational structure also.
It includes determination of functions, departmentalization, delegation of powers, determination of responsibilities, determination of levels of management, employee relations, and determination of system of supervision of the subordinates.
While determining and distributing work, the powers, duties, and responsibilities of the employees should be made very clear, and organizational structure should be framed.
Related: Top 10 Need and Importance of Finance in Business.
In accordance with the goals, policies, objectives, and budget of the enterprise.
Besides it, proper arrangements for required furniture, stationery, time and Labour saving recruitments and computer, etc. should be suitably considered.
10. Completion of Formalities
For the establishment of a new enterprise unit, various legal formalities are to be completed.
These formalities depend upon the nature, size, volume of capital, and type of ownership of the business.
Normally, the legal formalities may be:
- Getting registration of the firm in case of the parties partnership business, registration of shop and office, under shop, and Establishment Act.
- To present various documents before the registrar, to obtain the certificate, in case of the company.
- Getting registration from the Commercial Taxes Department and requirement and selection of the employees and.
- To start the Enterprise.
Thus, now you know how to start a brand new business unit.
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My nephew is looking at starting a new company soon but he has very little knowledge of the business. I’ll share your article with him so that he can find a good industry that he wants to pursue. I think it’s a great idea to research many different fields so that you can pick the right business to go into.
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