Stages in promotion:

There are four main stages in the promotion of a company. A brief description of each is given below.

Discovery of idea:  A person conceiving an idea has a boundless enthusiasm for the creation of his own mind. He is partial to it. For example, an inventor is a man of mechanical skill, cleverness and originality, but he cannot test the work of his invention by determining its economic value. It is for this reason that an inventor is called “an impractical genius.” He has neither “business head” nor the “gift” for organizing” that the trained promoter possesses. It is in his interest to turn over his idea to the impartial investigator, the trained promoter who can weigh the element of success and failure. Promoter’s preliminary investigation will consist in making rough estimates probable revenues and expenditure, and expenditure, and then compares this estimate with actual figures of going concerns. He may then patent the invention for its commercialization. 

Detailed Investigation: The second stage in promotion is detailed investigation of the idea and the plan or proposition to discover hidden weaknesses of the plan. to determine the amount of funds needed and to estimate the operating expenses and probable income. When this investigation is completed, the finding are put in a type written report, giving the data collected, estimates on costs and incomes, and opinions of experts in particulars fields e.g. engineering. During the course of this investigation, an exhaustive research into important problems shall have to be made. These include the production problem, settled by the engineer or chemist, discovery of demand and the proper method to reach is settled by a market analysis expert; the question of proper patents settled by an expert lawyer, the problem of the proper location of the plant, taking into consideration such factors as transport, nearness to raw materials and to markets, satisfactory labor supply and favorable climate etc. settled in consultation with a management consultant, the question of whether the capitalization is sufficient by a financial expert. In short, what is determined by this detailed investigation is whether the estimated income will be large enough to take care of the estimated operating costs, interest on capital invested and compensation to owners for risk and services.

Assembling: After a thorough investigation of the proposition has been made, the promoter decides whether he wants to take the risk of promoter decides whether he wants to take the risk of promotional and decides upon a plan of capitalization. After this, he starts to assemble the proposition. By ‘assembling’ we mean protecting the fundamental idea securing all the men that are selected to fill the chief managerial positions.

Financing the propositional: An idea has been conceived, investigated and assembled, now the promoter has what is known as, “the Prospectus” in order to prospectus contain a detailed discussion of the whole promotion and is supported by copies of the reports by the various experts consulted during investigation. This step is composed of two parts, the parts the first being the formation of the company to take over property and the second being the actual taking over of the property.