Basic factors to be considered before starting a business

APRIL 28, 2020
DAY 1


Thank you for logging in. Good morning boys! Now we are on the last topic of Chapter 1 which is Factors to be considered before starting a business. There are 10 points given in NCERT but you will only write 6 points which are the main factors.

LEARNING OUTCOMES: At the end of the topic, students will be able to-
1) List all the factors before starting a business.
2) Explain the above factors.

First of all, watch a small video given below and then take down your notes.

Q.19 Explain the factors to be considered before starting a business.
(6)
Ans- 1. Selection of Business Line-
a) Every entrepreneur starts business with an aim to earn maximum profits, the selection of Business depends upon:
i) Branch of industry or commerce which has  possibility of greater profits.
ii)  Customer requirements.
iii) Technical knowledge and interest of the entrepreneur .
2 Size of business -
a) Decision regarding scale of operation and size of business depends upon:
i)  Expected demand of proposed product .
ii) Degree of risk .
iii) Amount of investment available.
3. Choice of form of ownership-
a) The choice of suitable form of business organisation depends upon factors like line of business ,capital requirements, liability of owners,  division of profits ,legal formalities, continuity of business, etc.
b) The entrepreneur can decide to form a business as a:
i) Sole proprietor ii)  Partnership iii)  Joint stock company iv) Cooperative society.
4. Financing the proposition-
a) Finance is the lifeblood of any business enterprise. Right amount of finance is required not only to start but also for successful continuation as well.
b)Proper financial planning must be done with respect to-
i) amount of finance required ii) sources of raising finance and iii) optimum utilisation of available resources.
5. Physical facilities-
a)Now the entrepreneur should plan the availability of physical facilities like land and building, plant and machinery and other supportive services to start and run the business.
6  Plant layout -
a) It is very important that a clear and well planned layout should be made. Plant Layouy is the  physical arrangement of all the physical resources like plant and machinery ,land and building, etc.
b)  This will help in hurdle free  production at minimum cost and wastage.

YESTERDAY'S ANSWERS:

ANS1- TWO CHARACTERISTICS ARE UNCERTAINITY OF RETURN AND ELEMENT OF RISK.
ANS2 - IF AN INDIVIDUAL WISHES TO DO BUSINESS AS AN ECONOMIC ACTIVITY THEN RISK BECOMES COMPULSION. IT IS ALWAYS PRESENT, IT CANNOT BE IGNORED BUT MINIMISED WITH THE HELP OF INSURANCE.
ANS3-COMMERCE IS THE BACKBONE OF INDUSTRY BECAUSE IT PEEFORMS ALL SUCH FUNCTIONS WHICH FACILITATE SMOOTH FUNCTIONING OF BUSINESS ACTIVITIES. WRITE 3 HINDRANCES AND HOW COMMERCE REMOVES IT. 

GOD BLESS YOU ALL!