Unit 5
Mobilizing resources for start-ups
The start-ups need to mobilise the resources for implementation of their projects. Different types of resources mobilised by start-ups are-
Financial resources are mobilised in the organisation to invest in fixed assets and current assets. Funds are acquired from banks, NBFIs, private equity funds etc. and distribute among the assets to implement the project.
2. Human resources:
Human resources are appointed in different designations and assign the responsibility of work according to their education, skills and experiences.
3. Physical resources:
Different types of physical resources like machine, raw materials, devices, equipments etc. are allotted in their respective places to support the production or delivery of services.
4. Raw materials:
Raw materials are carried to the production unit at right time to support the production function.
Accommodation and utilities
The business start-ups required accommodation facility for office space, setting up production plant, warehouse, retail store etc. If the start-up started departmental store/mall than it needs huge accommodation for setting up the store, storage and also for office set up. Similarly the production unit, faming need sizable area for setting up the production unit and farming respectively. On the other hand, if they started business in online mode than they need comparatively small accommodation only for storage and office set up. The accommodation facility may be acquired through lease with proper lease agreement.
The utilities required for the business varies according to the nature of business. Some of the common utilities are-
a) Electricity
b) Internet
c) Stationary
d) Water
e) Raw materials
f) Natural gas etc.
Preliminary contracts with the vendors, suppliers, bankers, principal customers
Vendors are the part of supply chain who supplies/provides goods/materials. The large retail stores like big bazar, Sohum, Vishal and online shopping sites like Flipkart, Amazon, Mynta etc. have list of vendors who supplies the goods to the retail stores and to customers on behalf of the shopping sites. The start- ups contract with the vendors to manage the smooth supply of goods and cost involved in it.
2. Contract with suppliers:
Suppliers are vendors with operate as middlemen to supply the goods/raw materials and other ancillary supplies. The start-ups made contract with suppliers through negotiations and with better price to ensure uninterrupted supply of products. Suppliers are contracted when materials are from far away places like different states or from cross border.
3. Contract with bankers:
Start-ups contract with bankers for opening of account, supply of credit etc. They apply with due procedure for opening of account in the name of bank and for supply of credit.
4. Contract with customers:
Customers are the key for survival and grow in the market. They approach the customers through promotional strategy and also with the data available in the market. Bankers, insurance companies, internet service providers etc. made contract with customers during providing them the services.
Key takeaways
1) The start-ups need to mobilise the resources for implementation of their projects. Different types of resources mobilised by start-ups are- human resources, financial resources, physical resources etc.
2) The business start-ups required accommodation facility for office space, setting up production plant, warehouse, retail store etc. If the start-up started departmental store/mall than it need huge accommodation for setting up the store, storage and also for office set up.
Contract management is the process of managing contract creation, execution and analysis to maximise operational and financial performance of the organisation. It involves the following steps-
Contract is created by the start up with accommodation providers, vendors, suppliers, bankers etc. to set up and implement their business. The entrepreneur must ensure that all the contact is fulfilling all the essential elements of valid contract.
2. Negotiation of the contract:
The start-up should negotiate with other party about the terms of contract regarding consideration, period etc. It help them to make the best deal out of the contract.
3. Approval of contract:
After verifying the contract details the start-up may approve the contract for execution. It allows the implementation of all terms and conditions of the contract.
4. Execution of contract:
Both the parties to the contract execute it by supplying the product/material, supply of finance, paying price, interest etc. Both the parties are legally binding to each other to complete the promises made in the contract.
5. Auditing and reporting:
Auditing of the contract is necessary to track the performance of the contract and report weather all terms and conditions of the project are implemented or not.
6. Renewing of the contract:
If the term of the contract is expired it must be renewed immediately if both the parties are interested to carry the business with each other further.
Key takeaways
1) Contract management is the process of managing contract creation, execution and analysis to maximise operational and financial performance of the organisation.
Some of the basic problems of entrepreneurs are discussed below-
The start-ups find it difficult to arrange the capital required for the project. Generally formal institutions are not like to finance the start-up projects because of risk of failure of the project in future.
2. Poor management:
The star-up may not have the knowledge and experiences in management of the organisation or team. Mismanagement may back-fire the start-ups and create obstacle to achieve the goal.
3. Cash crunch/liquidity:
Start-ups may suffer from liquidity crisis because of poor financial management or less cash inflow. Liquidity crisis affects on payment of salary and wage, electricity bills, internet bills, repair work, procurement of raw materials, payment of rent etc.
4. Product quality:
Start –ups sometimes suffers from poor product quality due to lack technical knowledge, financial crisis, export employees etc. All these impact on their survival in the market.
5. Marketing of product:
Another challenge they are facing is marketing of product due to lack of knowledge and experiences in marketing.
6. Pricing of product:
Fair pricing of product is crucial to attract the target market. The start-ups should carefully consider the competitor, cost of production, profit margin, tax etc. during pricing of product.
7. Dealing with competition:
Start-ups faces competition with the existing produces. The existing produces already capture the market share. Thus they need to improve their quality and target the market with proper promotional strategy to overcome with the competitor.
8. Lack of research and development facility:
They start-ups lacks proper R&D facility because of insufficient technical knowledge, financial problem, less knowledge about the market, laboratory facility etc.
Key takeaways-
1) Basic problems of entrepreneurs are Capital issue, Poor management, Cash crunch/liquidity, marketing of product etc.
References:
1.Enterpreneurial Development by S.S. Khanka
2.Entrepreneurship Development and Small Business Enterprises by M. Charantimath
