What is resource mobilisation?
A resource is anything a business uses to make and sell its product. Mobilise means "gather and put to work". So resource mobilisation is the process of finding, getting and arranging all resources the enterprise needs, at the right time and the right cost.
Steps: (1) list what is needed, (2) estimate how much, (3) find the best source, (4) get it, (5) use it well and check.
Physical resources
Things you can touch: land and building (shop, factory, office), machinery and tools, furniture and vehicles, and raw materials. The entrepreneur decides to buy, rent or lease them. Renting needs less money at the start; buying costs more but you own it.
Human resources and choosing advisers
People are the most important resource. You need workers with the right skills, and expert advisers:
- Accountant: keeps daily records of money in and out, prepares accounts and tax returns.
- Lawyer: helps with registration, licences, contracts and disputes.
- Auditor: an independent expert who checks that the accounts are true and fair. The auditor must not be the same person who keeps the books.
- Board members (directors) and mentors: experienced people who guide big decisions and bring contacts.
How to choose them: check qualifications and licence, experience with small businesses, honesty and reputation (ask for references), fees you can afford, and whether they explain things clearly.
Financial resources: owner's funds and borrowed funds
Money is needed for fixed capital (long-term things like machines) and working capital (day-to-day costs like salaries, rent, materials).
- Owner's funds: own savings, money from partners or share capital. No interest to pay, no repayment date, but the amount is limited.
- Borrowed funds: bank loans, loans from friends or family, government schemes, trade credit. Must be repaid with interest, often needs security.
- Investors: angel investors and venture capitalists give money in return for a share of ownership.
Interest per year = loan × rate. Borrowed share = loan ÷ total capital × 100%.
Intangible resources
They have no physical body but add great value: brand name and logo, patents, trademarks and copyrights (intellectual property, which stops others copying your idea), goodwill (trust and reputation with customers), know-how and technology, and networks (contacts with suppliers and buyers).
Key formulas and definitions
- Resources = Physical + Human + Financial + Intangible
- Total capital = Owner's funds + Borrowed funds
- Borrowed share (%) = Borrowed ÷ Total capital × 100
- Yearly interest = Loan × interest rate
- Total capital needed = Fixed capital + Working capital
Worked examples
1. Classify: oven, baker, bank loan, shop name "Crusty", flour, trademark, owner's savings, accountant.
Physical: oven, flour. Human: baker, accountant. Financial: bank loan, owner's savings. Intangible: shop name "Crusty", trademark.
2. A bakery needs ₹4,00,000. The owner has ₹2,50,000 and borrows the rest at 12% a year. Find the loan, the borrowed share and the yearly interest.
Loan = 4,00,000 − 2,50,000 = ₹1,50,000. Borrowed share = 1,50,000 ÷ 4,00,000 × 100 = 37.5%. Interest = 1,50,000 × 0.12 = ₹18,000 a year.
3. Fixed capital needed is ₹3,00,000 and working capital for 3 months at ₹40,000 a month. What is the total capital needed?
Working capital = 3 × 40,000 = ₹1,20,000. Total = 3,00,000 + 1,20,000 = ₹4,20,000.
Common mistakes
- Forgetting working capital: many new businesses buy machines but run out of cash for rent and salaries.
- Thinking intangible resources have no value. A brand or patent can be worth more than the building.
- Making the accountant also the auditor. The auditor must be independent to check honestly.
- Borrowing too much: interest must be paid even if sales are slow.