Question

Study the following case/situation and express your opinion.

Mr. Ram wants to start a Small Scale business of manufacturing parts of bicycles or machinery.

1. Identify the first step or stage of setting up his Small Scale business.
2. State the different ways of raising the capital for his business.
3. 'Marketing is a necessary step of running a business,’ comment on it.

Answer 1

1. Ram has to first decide whether the setup will be a corporation, a proprietorship, or a partnership. He has to identify his strengths and weaknesses, which can help him to decide what type of business would be most suitable. He has to study the amount of capital required to start his business. Once he gets the idea of the total capital requirement, he can decide what type of business to start.
2. If Ram decides to start as a proprietorship, then he has to raise all the capital by himself. He can get it from his own savings or borrow money from banks or financial institutions. He can also study various government schemes and raise capital through them. If Ram decides to start a partnership firm than he will have to find a person who is ready to invest in his partnership firm as well as he has knowledge about manufacturing parts of the bicycle. They can raise capital by investing their savings, borrowing through financial institutions and borrowing from friends. They can also take help from various government schemes and institutions set up to help SSI. If Ram decides to start a corporation, i.e., a Pvt. Ltd. Company, then he can raise capital by issuing equity shares privately. He has to sell the shares to his friends and relatives. He can also study various government schemes and raise capital through those schemes. Ram can also borrow money from banks, financial institutions, etc. He can also accept deposits from the public in a further stage of his business.
3. Goods are ultimately manufactured for consumers. There is competition among many manufacturers and traders to sell goods in the market. Without selling the goods, the manufacturer cannot earn a profit. Profit is the main motto of business. To sell goods in the market, advertising and publicity are required. To make your brand image in the market, advertising of the quality of your goods is required. Branded goods are easily sold in the market. Marketing can be done in many ways like TV, Radio, Bill Boards, Internet, Websites, Salesman, etc. Thus, marketing is a necessary step in running a business