Lesson 5 - CAPITAL

Some could be the link,
Between manufacturer and customer,
And trade high quality goods,
At prices proper in a timely manner.

UDYAM SHASTRA- Chapter 07,Verse 06
KEY OBJECTIVES:
Reading this module and doing the students activities will enable the students :
To become aware of the concept of capital.
To become awareness about various ways of raising the capital.
To develop ability to estimate the capital for some business.
To develop the ability to decide a means to raise the capital.

ENTERPRISE CONCEPTS:
(Basic instruction regarding E.CONCEPTS to trainers:The trainer is requested to first read and follow the ‘Basic instructions regarding Enterprise Concepts to trainers’ and proceed further thereafter. The trainer should ask a series of leading and thought provoking questions to elicit answers from the students. These answers are expected to make the students understand these E.Concepts in their own words that they recognize and know).

Definitions of the E. CONCEPTS of the module “Capital”

CAPITAL : Wealth in the form of money or property, used or accumulated in a business by a person, partnership, or corporation. Material wealth used or available for use in the production of more wealth.

LOAN: Something lent for temporary use. A sum of money lent at interest.

MORTGAGE: A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.

INTEREST: A charge for a loan, usually a percentage of the amount loaned.

WORKING CAPITAL: Working capital is frequently used to measure a firm’s ability to meet current obligations. A high level of working capital indicates significant liquidity.

PROPRIETOR: someone who owns (is legal possessor of) a business 

PARTNERSHIP: A contract between two or more persons who agree to pool talent and money and share profits or losses.

ENTERPRISE SKILLS:
(Basic instruction regarding E.SKILLS to trainers: The trainer is requested to first read and follow the ‘Basic instructions regarding Enterprise Skills to trainers’ and proceed further thereafter).

The students activity is designed to clarify the CONCEPTS of the module and develop some ‘ENTERPRISE SKILLS’ (E. Skills). The E.Skills included in a module may not be exhaustive but
are only indicative. E.Skills stated in modules elsewhere may also get addressed through the activities of a module.:

RAISING CAPITAL : The ability to arrange money to start a business.

BUSINESS PLANNING : The ability to draw proper plan to convince others of a good business and surety of good profit.

BORROWING : The ability to take money with a promise of good return in future.

MORTGAGES : Keeping a property or a valuable as assurance for the return of money.

PRESENTATION : The ability to explain and convince others about the possibility and surety of good business.

STUDENTS ACTIVITY

Activity 1: "WHO STARTED THE BUSINESS?" 
Before distributing home assignment worksheets, discuss some examples in class to make the concept clear. Example of a doctor or lawyer who is self employed may be given. The cost of purchasing an office or clinic and buying all equipments and furniture is included in the capital. Another example of a PANWALA or Bhelpuriwala may be given where buying a cart or a cabin to start the business is needed. It can also be rented. The money required to buy the ingredients for the first time is also included in the capital. Similarly a factory or a shop or trading business may be explained. Teacher must be careful not give many details but should give enough examples to arouse their curiosity.

Instruction to Students:
  • This is an individual activity and should be completed at home.
  • Write names of five people in your family, relation, friends or neighborhood who, are not employed. In other words they do not take a fixed salary but run their own business or provide consultation to others and earn money.
  • Ask them the following questions and write the answers given by them in your own words.
  • After completing the activity, each group should present and share its main discussion points with the rest of the class.

Q. 1. When did you start this business? How much do you earn per month?
_______________________________________________________________

Q. 2. How much money did you need to start this business? Did you have this money of your own or borrowed it from someone?
_______________________________________________________________

Q. 3. Whom did you borrow it from?
_______________________________________________________________

Q. 4. Do you have to give something in return of that money?
_______________________________________________________________

Q. 5. How and when did you repay that money?
_______________________________________________________________

Q. 6. If we don’t have any one person to give you this money from where can you get?
_______________________________________________________________

Q. 7. Do we need more money to expand the business or make it big?
_______________________________________________________________

Q. 8. How can we get this additional amount of money?
_______________________________________________________________

Bring a written report to class for activity-2 of this module.

Activity 2- “LET’S RAISE THE CAPITAL”
Form groups. Encourage discussions on reports read out by each student. Invite one group after the other to present their business idea. Answer the queries or doubts raised by students. If some students express ambiguous ideas or less clear thoughts stop them to clarify and encourage them to continue their presentation. 

Instruction to Students:
  • Bring a written report to class for activity-2 of this module.
  • Form groups as suggested by the teacher.
  • Listen to the reports of other students also carefully.
  • Decide to start a business for your group.
  • Discuss with your friends to decide what will be the capital needed to start that business. How will you arrange for that money?
  • Will you take loan or take business partners? Why?
  • On teachers invitation share your plan with the class.
  • After completing the activity, each group should present and share its main discussion points with the rest of the class.