Once an entrepreneur decides to establish an enterprise unit, he has to prepare a plan of action and to decide in advance each and every step he is going to take in that connection till it starts functioning which is helpful in avoiding delay at the initial stages of starting business. The following aspects of the action plan should be kept in view before deciding on the course of action.
Selection of the line of business At first decision is to be taken about the line of business. The main considerations will be its profitability, risk involved and the amount of capital required. Everyone consider other business opportunities along with the market demand for the goods.
To decide about the nature of business the entrepreneur wants to launch, he has to consider the following factors:
Whether the business would be profitable,
How much capital would be required,
What would be the degree of risk,
Whether there would be sufficient market demand for the goods,
Whether there would be opportunities to grow and expand.
Advantages and disadvantages of both the forms will have to be considered and decision is to be taken.
As a sole proprietor one will have the authority of managing the business and will be entitled to the entire profit generated, but then he/she will also have to bear the risk of loss involved.
In partnership there will be others to share the risk and contribute capital and help in management. But then the profit earned will also be distributed among the partners.
A company form of organisation may also be considered for the purpose.
Physical facilities Decisions have to be taken regarding plant and machinery and equipments to be used for the business, building and other physical facilities like water and power supply, transportation, etc. The factors that may affect the decisions in this regard are the size of business, techniques of production to be used, availability of funds, etc.
Plant layout After selecting the machinery and equipments required, it is necessary to decide about their installation in a proper manner. This is called plant layout.
A good layout makes the operations efficient and economical.
It reduces the costs of material handling, storage of inventory, use of space, etc. It helps in optimum utilization of all resources.
Production process and operations The whole production process is to be visualized and the various activities of the business operation are to be decided in advance. Action plan should be prepared with great care because it determines the course of action to be adopted in the business.
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