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Entrepreneurs Vehicle for Success – Part 2 – Indian

In the previous article we looked at the first part of the vehicle which was the team.Now let us look at the next part which is to start the business. What Is A Business? Business is an activity wherein one provides goods or services at a profit. Every business is carried on with this intention such as trade, commerce, craftsmanship and professions. Types of Business in India. A business may be carried on in any one of the following forms viz. Sole Proprietorships, Partnerships, Joint Stock Companies as Private Limited Companies or Public Limited Companies, Cooperatives and Hindu United Family Firms.

Sole Proprietorship is the easiest, simplest and oldest form. The business is owned and controlled by an individual and it has no separate legal entity. Hence it is unlimited liability, undivided risk, individual funding and there is no need to register in India.

Partnerships are formed by two or more people (maximum 10 people in banking and 20 people for non-banking). The formation is done by an agreement known as Partnership Deed. The activity must be lawful business and the profits shared with unlimited liability. The parties are restricted on transfer of interest and based on utmost good faith. The partnership can be dissolved by a number of ways and registration is optional.

Joint Stock Companies

There are two types of companies, one private and two public.

To form a private limited company you need minimum 2 and maximum 50 people. Company name must be “ABC Private Limited” with minimum 2 directors and cannot invite public to buy shares. Must be registered and liability limited.

To form a public limited company you need minimum 7 people and there is no restriction in the maximum number. Company name must be “ABC Limited” with minimum 3 directors and can invite public to buy shares. Must be registered and liability limited.

A cooperative is formed by a group of people who join voluntarily to improve their economic interests. Cooperatives often share their earnings by dividing the profits among the members in the form of dividends.

A Hindu Joint Family or Hindu united family (HUF) or a Joint Hindu Family is an extended family arrangement among Hindus in India, comprising of many generations living under the same roof. The male members are blood relatives and all the women are either mothers, wives, unmarried daughters, or widowed relatives. In Hindu society it is common for families to carry not only family duties together but also all other activities. The family is usually headed by the oldest male, who makes decisions on economic and social matters on behalf of the entire family. The wife generally controls the kitchen, children upbringing and religious activities. All income goes to a common pool and shared by the members. Map of South Asia (see note) This article deals with the geophysical region in Asia. … This types of firms are on the decline. We have included this just for your information and we are NOT too familiar with this type of firms.

In short there are four major types of structures which most small entrepreneurs can consider. These are Sole Proprietorship, Partnership, Companies and Cooperatives. Each type has pros and cons based on the table of comparison. You must choose carefully as to which structure is suitable for you and in the future. You need to know your rights and desired role in the company.

Once you have decided as to which is suitable to you the next step is to arrive at a name. Believe it or not, there are two schools of thoughts. One says the name makes a difference and the other says no. I leave that decision to you.

Now let us take a look at how others got their names. I cannot say for sure if this information is accurate but nevertheless it is useful for us to think about this.


Apple Computers – favourite fruit of founder Steve Jobs. He was three months late in filing a name for the business, and he threatened to call his company Apple Computers if the other colleagues didn’t suggest a better name by 5 o’clock.

CISCO – it’s not an acronym but the short form for San Francisco.

Google – the name started as a joke and boasts about the amount of information the search-engine would be able to search. It was originally named ‘Googol’, a word for the number represented by 1 followed by 100 zeros. After founders Stanford graduate students Sergey Brin and Larry Page presented their project to an angel investor, they received a cheque made out to ‘Google’ !

HP – Bill Hewlett and Dave Packard tossed a coin to decide whether the company they founded would be called Hewlett-Packard or Packard-Hewlett.

Intel – Bob Noyce and Gordon Moore wanted to name their new company ‘Moore Noyce’ but that was already trademarked by a hotel chain. So they had to settle for an acronym of INTegrated ELectronics.

Microsoft – coined by Bill Gates to represent the company that was devoted to MICROcomputer SOFTware. Originally christened Micro-Soft, the ‘-‘ was removed later on.

Yahoo! – the word was invented by Jonathan Swift and used in his book Gulliver’s Travels’. It represents a person who is repulsive in appearance and action and is barely human. Yahoo! founders Jerry Yang and David Filo selected the name because they considered themselves yahoos.

3M – Minnesota Mining and Manufacturing Company started off by mining the material “corundum” which is used to make sandpaper.

In India the Registrar of Companies has the right either to approve or disapprove a name.

1 comment to Entrepreneurs Vehicle for Success – Part 2 – Indian

  • Zulfeqar Ali

    Properly nurtured entrepreneurship can prove to be the key in solving problems like poverty, illiteracy and unemployment.
    Successful entrepreneurs have the potential to spur a nation on along the path of development and prosperity. Kudos to Prof Muthu for these inspiring articles.

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