Market researchers also attempt to find out in what form, shape, colour and package the public will accept the product. They also try to keep track of changing patterns in demand. The successful firm is the one that can commence production today for the needs of tomorrow.

Market research must be distinguished from consumer research. This looks at marketing from the consumers’ point of view. It is concerned with such questions as which of many rival products represent the best value for money, and how best the consumers’ interests can be safeguarded.

Market researchers will, of course, be concerned not only with what products are needed and what will ‘sell* them, but with the peculiarities of the markets with which their firms are concerned. Are there any moral, legal or social reasons why the proposed product should not be marketed in the area under consideration? In what way will demand, and the type of appeal that will have to be made to consumers through advertising, have to take account of the social, linguistic and racial backgrounds of the potential customers?

1. a) You want to set up your own business. The first big problem is where yoirare going to get the capital. Read tbe text “Sources of Finance", complete the diagram, depicting some sources of finance. Choose tbe most suitable for your business and give your reasons.

TEXT 13D

SOURCES OF FINANCE

Introduction

So! You want to set up your own business!

All right - but one big question:

Where are you going to get the capital?

Finding the capital is usually the biggest problem faced by those wishing to set up a business. There are, in feet, two problems involved. One is how much capital will be needed. The other is how it can be raised.

Capital needs •'л/ ^ ±~)

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I In setting up a business, the first thing to do is to estimate how much

capital will be needed immediately. .What fixed assets wjll be needed? What

fcurrent assets? t.¹» -~

There 15 then the question of how long it will be before the product, or

seryice. becMS^rtablished and cash startp,flowing in. This will mean

estuhating carefully tne expenses for this¹ initial period, and how much

working capital will be needed to coyer фмп /, j ^ 1

The amount needed will depend entirely upon the type of business, how

large it is going to be, and how long it will be before the business will begin

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to ‘pay its way’. Once these amounts have been calculated, a serious look can be taken at how the money is to be obtained.

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Sources of finance for a small business

There are a number of sources of capital which can be considered by small business men.

Owner’s private savings

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'The most obvious source is personal savings. Any entrepreneur should have sufficient faith in his project to back it with his own money. If not, he can hardly expect others to risk their money.

The advantage of an owner using his own money is that the business remains free of commitments to partners or outside lenders. It also means that all the profits will be his. They will not have to be shared with partners, nor will heavy interest charges have to be paid on loans.

Personal savings are not, however, ‘free of cost’. The cost is the interest that it could be earning elsewhere. There is also the ‘opportunity cost’ of not being able to do with the money what might otherwise be done. Despite this, personal savings remain the cheapest form of finance availablej

‘Own resources' are not limited to savings. One of the advantages of taking out an endowment life assurance early in life is that, later, it can be used for raising capital either by surrendering it for cash or as security for a loan from the insurance company or the bank.

Personal friends

Capital can sometimes be obtained in the form of loans from friends, neighbours or relatives. One difficulty here is a friend or relative, though not keen to lend the money, may not like to refuse. Another disadvantage is that, with any business, there is always risk. This means that, if money is obtained in this way, the borrower may one day have to look the friend or relative in the face and tell him that all the money has been lost - a distinctly unpleasant task.

Take on a partner

It may be possible to persuade a person with capital to become a partner in the business. This means that the capital would be interest-free and, unlike a loan, would not have to be repaid. Profits, however, would have to be split. This may be particularly frustrating if the partner is a ‘sleeping’ one.

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Loan from a bank [ \j

[All commercial banks are involved in lending money to suitable businesses. The first problem is to convince the bank that the proposed business is likely to succeed. The second is that the bank will probably want some form of ‘security’ for the loan which they can take if the loan is not repaid. Examples include a paid-up life assurance policy, a mortgage on a house or a pledge of reasonably valuable personal possessions.

Banks may lend money by a formal loan or simply by allowing the customer to over-draw his account'(known as an overdraft).

A loan is usually for a fixed, clearly stated period. Interest is charged on the full amount of the loan whether it is taken out of the bank or not. Security for the loan is usually required/

On an overdraft, interest is paid only on the amount actually over­drawn on a day-to-day basis, but the rate is usually higher than on loans. Banks usually retain the right to call an overdraft in (that is, to require re­payment) without notice.

Lease and lease-purebase schemes

Leasing means, simply, renting. The asset does not become the property of the person leasing it. However, many leasing arrangements include a special provision allowing the asset to be purchased for a purely nominal (that is, very small) amount once it has been leased for a substantial period. Strictly, this makes them lease-purchase schemes. For all practical purposes, there is little difference between ‘lease-purchase’ and ‘hire- purchase’, though the respective interest rates should be carefully compared together with the detailed clauses of the agreements. The professional advice of a banker or a lawyer should also be taken regarding the tax position regarding the different types of agreement.

b) Write я summary of the text in English.

To make an English course successful the teacher must know as much as possible about the students, their interests and problems. Complete the

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WRITING PRACTICE

16. earn (v)	31. profit (n)
17. equal (a)	32. purchase (v, n)
18. hence (adv)	33. receipt (n)
19. invest (v)	34. record (n, v)
20. invoice (n)	35. reflect (v)
21. law (n)	36. relative (a, n)
22. ledger (n)	37. sell Щ
23. liability (n)	38. spend (v)
24. loan (n)	39. statement (n)
25. long-term (a)	40. stock (n)
26. loss (n)	41. summarise (y)
27. meet requirements	42. transaction (n)
28. owe (v)	43. transfer (v)
29. own (a)	44. trend (n)
30. premises (n)	45. turn into (v)
1 1. Surname 2. First name 1 3. Permanent address u 1 4. Present address Si What foreion lantnmpes do von spenk? 6. Have yon ever heen !o яп F.nglish-speakinp countrv? 1 7. What results did this course of English help you achieve? 1 8. Would you like to continue your English language studies? о Wbnt noppnls of your English need improving most? 1 10. When and where will you use English?