Every aspiring entrepreneur starts a business with dreams
of success and growth. But during the whole process of expanding the organisation,
it is possible that he/she is unable continue the business in a profitable
manner on a sustained basis. So it may become necessary for him/her to
change the type/form of the business organisation. This change may be
from a public company to a private company or vice versa. The Companies
Act, 1956 contains the provisions and procedures for such conversions. It is also possible that the entrepreneur has to wind up
or close down his company. Closure of a business unit refers to shutting
down of the various functional as well as non-functional areas of the
company. The various conditions that may be responsible for closing a
company include:-
- Economic recession in the economy
- Intense competition;
- Use of obsolete techniques of production;
- Poor infrastructural facilities in an organisation;
- Dissatisfaction among workers and trade workers, conflict between labour and management, lockouts, strikes,etc;
- Lack of resources/ funds to finance various activities
of as organisation.
Even though, changing a business type or winding up a business
set up is a negative experience for an entrepreneur, but it releases the
resources invested by him/her for more productive and profitable use elsewhere.
In other words, it can mean better opportunities and unexplored challenges
for him/her. Also, the Government of India has enacted several policies
and schemes which not only helps an entrepreneur in easy winding up of
a business, but also helps him/her in reinvesting the resources in newer
avenues.
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