Building the Foundation of Profit - Essay Example

Business Research Although business means human activity done for profit it involves certain risk factors towards its accomplishments. An entrepreneur has to pay special attention to prevent such risk and to establish a new venture by means of survey, research, minute study of the market and factors of production. He also needs to be careful about public policies governing his establishment via judicious resource management. The study mentioned herein analyses such details prior to set up a small scale garment industry recommended by my uncle. Order: 174723 Deadline: 2007-06-21 00:51 Style: Harvard Language Style: English UK Pages: 6 Sources: 1 Writer ID: 6746 INTRDUCTION: In economics business means human skill of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals to generate profit. Such activity refers to commercially viable and profitable work that needs extensive research, analysis and training before its commencement. In predominantly capitalist economies, businesses are typically formed to earn profit and grow the personal wealth of their owners. The owners of a business have as one of their main objectives “the receipt or generation of a financial returns” in exchange for their work, investment and for their acceptance of “risk”. I am working closely to begin a small scale eco-friendly garment industry to cater the demand local markets with part finance from the family and chiefly with bank loan. BUILDING THE FOUNDATION OF PROFIT Speaking in the terms of economics we need to strengthen first the factors of production to set up a new venture namely land, labour, capital and organization; be it either service oriented or manufacture based or even trading. The first and foremost necessity is the project with clear layers of strategic growth. One has to acquire land that covers building and machinery for the initiation. After the acquisition of the land, the entrepreneur has to move on proper legal documentation such as “Registration of the Firm”. Once the registration is done furnishing its source of fund, annual estimated turn over, chain of man power and delegation of responsibilities we can precede further. Then it is important needs to the source of raw materials that have to be procured from the possible cheapest region with the lowest cost of transportation. Eventually we need a clear road map to market our product. Thus, every entrepreneur set the bridge of profit across the flow of the possible consumers. Book keeping and accountancy to maintain records of financial transactions as well as its balance sheet in the course of business is a must for successful management of the entrepreneurship. Tools of financial accounting have been formulated with the recruitment of experienced accountant. Bank has approved the project to start a garment factory with family land, buildings and with the help of European Investment Fund. The European Investment Fund, established in 1994, is a European Union agency for the provision of finance to SME (small and medium-sized enterprises) headquartered in Luxembourg. It does not lend money to SME directly; rather it provides finance through private banks. Its main operations are in the areas of venture capital and guaranteeing loans. The European Investment Bank is the financing institution of the European Union. The EIB was created on 25 March 1957 by the Treaty of Rome establishing the European Economic Community (EEC) and enjoys its own legal personality and financial autonomy within the Community system. Following the Lisbon European Council of 23 and 24 March 2000, which called for the creation of a friendly environment for starting up and developing innovative businesses, in particular small and medium-sized enterprises, the EIB Board of Governors reached agreement in June 2000 on the constitution of the EIB Group, consisting of the EIB and the EIF and under which the Bank grants medium- and long-term loans and the Fund specializes in venture-capital operations and the provision of guarantees to SME. The Bank has already dispatched the approval letter after their site inspection and verification of the submitted papers. FINANCIAL ADVICE FROM THE BANKS Success of a business set up largely depends on the relationship with the hypothecated banks. Therefore it is utmost necessary to comply with the rational advices of the bank and other financial bodies over the strategic plans of the business. EIB has approved the scheme that was proposed a few weeks before after their official scrutiny and inspection of the business site. They for the mutual safer sides requested me to disburse fund through banker’s cheque to the parties directly who deals with supply and installation except the “Seed Money” for initial capital for raw material and labor cost. They agreed to grant subsidy of four percent from the working capital on electricity consumption. To promote eco friendly business the bank suggested acquiring an agricultural land to rear silk worms for the farm. They accepted my proposal of repayment installment upto next five years. DEALING WITH TRADE ASSOCIATIONS Any business has nothing to do in isolation since it deals with consumers and other people associated with the trading chain. We need a very strong human resource management to resolve any conflict within the organization or outside the business territory. A meticulous judgment of transactions has to be carried out in the presence of legal bindings in order to prevent from commercial frauds. Many a time issues related to labor problem stands acute to threat the business set up. Proper agreement with the second parties with transparent policies may help the industry and its associates for mutual benefits. Firms shouldn’t neglect timely payment of taxes and levies and get other public benefits in return. Good will plays a vital role in business. We can prevent sundry loss and deceive when we check references of the suppliers or customers that want credit that has good will. Entrepreneurs can accelerate financial ties with public bond and shares when they have already built a reputation on their existence. An agreement is made with the suppliers of raw materials. The same party would install the plants with sophisticated machinery. The bank stood as their references. THE SURVEILLANCE UNDER CHAMBERS OF COMMERCE A Chamber of Commerce is a form of business network. Membership in an individual Chamber in an area can range from a few dozen to well over 300,000. Some Chamber organizations in China report even larger membership numbers. Businesses which belong to a chamber of commerce can range from a single city or town Chamber, to a county chamber. In the majority of countries, the use of the term "chamber of commerce" is regulated by federal law. Currently, there are about 13,000 Chambers registered in the official World chambers Network registry, and the Chamber of Commerce network is the largest business network globally. There are basically two Chamber business membership models worldwide-compulsory public law or continental / private law’. Under the compulsory or public law model, companies of a certain area are obliged to become members of the chamber. This model is common in European Union countries (France, Germany, Italy, and Spain). The main tasks of the Chamber are Foreign Trade Promotion, Training and General Services to companies. The Chambers also have a consultative function; this means that the Chambers must be consulted whenever a new law related to industry or commerce is proposed. Under the private model companies are not obligated to become Chamber members. However, companies often become members to develop their business contacts and, regarding the local Chambers to demonstrate a commitment to the local economy. The Department of Trade and Industry ( DTI) has a wide range of responsibilities. There are currently nine main areas covered by the DTI: Company Law, Trade, Business Growth, Innovation, Employment Law, Regional Economic Development, Energy, Science, and Consumer Law. To commence the production of the garment factory, the Chambers of Commerce assured their full cooperation to promote my business especially because my farm complies all the norms laid by the Department of Trade and Industry. CONCLUSION Business success primarily depends on strategic planning and its execution with adequate knowledge and visionary ideas. However none can avoid the risk factors such as natural calamity or labor conflicts. However it is sure that facing a challenge leads to a better prospect along the due acquisition of experience. There has been a full guidance and assistance from the family side as well to encourage me to be an accomplished businessman. REFERENCE Butliboi “Financial Accounting & Consolidation”, 2006 (OUP) Bhagawan Das “Business Venture- the risk management.” 2000 (OUP) Read More