Article I - Legal Awareness Series

Business Startup Initial Stage –Start of Journey Through Relatives & Friends

Any Business Entrepreneur whether small or big – goes through various stages of evolution to achieve his/her pre-determined set of objectives and goals.

Generally, every Entrepreneur starts ventures with the help of his close relatives and friends. These relatives and friends are his first customers. They are the first users and the first admirers/ critics who give their frank opinion about the price/ quality/ quantity of the products and services provided.  These admirations and criticisms provide a base for that Entrepreneur to improve the quality of his products/ services.

In the initial stages of this business development, all his dealings with his prospective customers are always on a personal level and hence often such dealings are done on basis of oral communication between the parties. In all such cases, it is the personal bonding and trust between the parties that make the deals successful rather than any formal communication between the parties. Nevertheless, an entrepreneur provides products/ services on basis of such oral communication and gets paid by the customer.

Over the period these types of transactions result in the building of confidence and trust between the parties and consequently, these relatives and friends refer such business entrepreneurs to their relatives and friends. This results in a chain of actions and reactions gaining business growth and resulting in multifold expansion in the customer base of the business entrepreneur.

As the customer base expands the transactions done through oral communication get replaced over the period by more formal ways of communicating such as through the exchange of messages and emails, where the transactions get added support/protection of “written records” in addition to the personal bonding between the parties.

However, the transactions are still done at a base level as they are mainly through either relatives/friends or contacts gained through referrals from such relatives/friends. At this stage, the quantum and size of transactions are still at a very small scale.

For any query feel free to contact me.

Mahesh Vaidya
M.Com, LLM, ACS, DFM, CAIIB  
Legal Adviser
Cell Number 9769949701 / 9223173695
Email ID maheshvaidya2706@gmail.com