Promotion is a the first stage for formation of a company. Promotion refers to the sum total of all the activities that a promoter performs to bring a company or business into existence.
The steps involved in the promotion are:
Discovery of business idea: First of all the promoters conceives an idea for a business. It could be related to starting a new business or taking over of an existing business.
Preliminary Investigation: After conceiving idea, the promoter makes a rough estimate about the project. He check the viability and profitability of business idea. It is done to ascertain the weakness of business idea.
Detailed Investigation: After preliminary investigation, the promoter makes a detailed investigation of the business idea with the help of experts. The investigation involves study of market forces, i.e. demand and supply, competition, availability of raw materials and other factors of production. It helps to ascertain the capital requirement, location and size of unit, price of product, etc.
Assembling: After a feasibility study, the promoter makes decisions regarding the size, layout, etc. of business. He enters into the contracts for purchase of raw materials, tools, equipment, building, machinery, etc.
Financing of proposition: At this stage, financial requirements are estimated, financial plans are developed. The prospectus is prepared to invite public to subscribe for shares. Agreements with banker, broker, underwriters, etc. are made.
