Promotion of a new enterprise as the birth of a child; principal considerations in starting a business

Promotion as the birth of an enterprise

Promotion is the process of setting up a business enterprise, and the person with the business idea who takes the steps to launch it is the entrepreneur. The comparison with the birth of a child fits in several ways:

• Preparation decides health. A child's start in life depends on care taken before birth; an enterprise's prospects depend on the decisions taken before it opens, and promotion involves many such decisions.
• Some features are fixed at birth. Once a site is chosen it is very hard to change, and a poor location holds back growth and raises costs; the form of ownership chosen fixes the owners' authority and liability, the sharing of profits and the continuity of the business.
• The newborn meets an outside world. Starting a business does not happen on its own; it results from the interaction between a person and the business environment.

Principal considerations in starting a new enterprise

1. The line of business. The entrepreneur first settles whether the venture will manufacture, trade or provide a service, and which goods or services it will offer. Market research shows how many customers there are and what they need, and the product's design, its pricing policy, the way it will be marketed and its distribution channels are settled; the expected return must be fair for the risk and investment involved, and the idea must be technically workable. The choice also rests on the entrepreneur's technical knowledge and interest.
2. Financial planning. Capital is needed for fixed assets such as land, buildings and machines, for current assets such as materials, and for daily expenses. The entrepreneur decides how much capital is required, which securities will raise it and how the funds will be administered.
3. Form of ownership. The choice among a sole proprietorship, a partnership and a joint stock company depends on the nature and size of the business, its risk and its needs for capital and management.
4. Location. A region is chosen for access to raw materials, labour, transport and banking, and then a site, weighing the cost of land and its development; the aim is the lowest cost of producing and distributing each unit.
5. Size of the unit. The best size is the one at which average cost per unit is lowest. Large scale brings economies but needs heavy capital; where risk is high or the idea untried, it is wiser to start small and grow. An entrepreneur sure of steady demand who can raise the capital may start large.
6. People. The number and kind of workers and managers needed are estimated, and they are then recruited, selected, developed and motivated.
7. Tax and legal formalities. The entrepreneur works out in advance the tax liability under the various tax laws and its effect on decisions. A company must be registered, with documents and fees filed with the Registrar, while a partnership need not be registered. The SOL text adds that a public company must also secure a certificate of commencement of business before it starts operations.
8. Physical facilities and layout. Machines, equipment and buildings are chosen according to the nature and size of the business, the production process and the funds available; the plant is laid out so that materials flow quickly and directly and the layout can adapt to change.
9. Launching. With these decisions made, the entrepreneur mobilises resources, completes the legal formalities, starts production and begins promoting sales.

A young couple in Ludhiana planning a small unit for steel kitchen racks would work through each point: whether to make or only trade, how much to borrow, whether to form a partnership or a private company, which industrial area to choose, how many machines and workers to start with, and what taxes and registrations apply.

Conclusion

Like a birth, promotion is a beginning with lasting results, but it is not a single act: it is a process of many linked decisions. Careful attention to each consideration at the start gives the new enterprise a healthy beginning and room to grow.