INTRODUCTION TO ENTREPRENEURSHIP

ByR.Megavannan

•Entrepreneurship comes from a French word `Entrependre’ and the German word `Uternehmen’ both meaning individuals who are `undertakers’ i.e. those who took the risk of a new enterprise.

MEANINGAn entrepreneur is an economic change agent with knowledge, skills, initiative, drive and spirit of innovation to achieve goals

DEFINITIONS• According to Economists → An entrepreneur one who brings

resources, labour, material and other assets into combination to produce a socially viable product, and also one who introduces changes, innovation and new order.

• According to Management → A person with a vision and action plan to achieve it is an entrepreneur.

• Peter F. Drucker: An Entrepreneur as one who always searches for change, responds to it and exploit it as an OPPORTUNITY. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for different business or service.

• Arthur Dewing: An Entrepreneur as one who promotes IDEAS into business.

• Robert D. Hisrich: An Entrepreneur is the person who will establish a successful new business venture. Besides, he must also be a VISIONARY-LEADER – a person who has great dreams.

• Martin Luther king: An Entrepreneur should have a DREAM and work against all obstacles to achieve it.

• Hagen. E: An Entrepreneur is an economic man who tries to maximize his profits by innovations and PROBLEM SOLVING.

• The New Encyclopedia Britannica: An Entrepreneur is an individual who bears the risk of operating a business in the face of UNCERTAINTY about future conditions.

CHARATERISTICS OF AN ENTREPRENEUR• Vision – He is able to visualize market demand, socio-economic

environment and the future of business venture.

• Knowledge – He has sound conceptual knowledge about all the technicalities of his business.

• Desire to succeed – He has multiple goals and a seeks opportunities to be productive.

• Independence – He is independent in work and decision making

• Optimism – He knows how to exploit opportunities.

• Value addition – He does not follow the conventional rule of thumb, they have a desire to create, innovate and add value.

• Initiative – He takes the initiative to make an action plan from limited resources.

• Goal setting – He sets realistic goals.

• Problem solver – He is creative in problem solving.

• Good human relations – He is a good leader, motivator and team builder.

• Communication skills – He has the ability to persuade others.

TYPES OF ENTREPRENEUR• i) According to Clarence Banhof →• ♦ Aggressive/Innovative entrepreneur – The one who uses various

combinations of information and factors of production to assemble and engineer new and innovative products.

• ♦ Immitative/Adoptive entrepreneur – The one who simply adopts a successful innovation introduced by other entrepreneurs.

• ♦ Fabian entrepreneur – The one who is timid and cautious in making bold decisions. Such an entrepreneur adopts innovations in his business only when he fears that not innovating may damage his business.

• ♦ Drone entrepreneur – A drone entrepreneur is one who refuses to adopt new innovations even at the cost of reduced returns.

• (ii) According to Authur H. Cole →

• ♦ Empirical entrepreneur – An entrepreneur who does not innovate and follows the rule of thumb.

• ♦ Rational entrepreneur – An rational entrepreneur is one who keeps himself updated with his business, the market and economic conditions, and introduces revolutionary ideas.

• ♦ Cognitive entrepreneur – An entrepreneur that seeks advice and services of experts to make changes which are revolutionary and reflect a complete shift from its existing structure.

• (iii) According to Ownership →

• ♦ Public entrepreneurship – These are individuals who partner with the government to create enterprises which serve the public in innovative ways.

• ♦ Private entrepreneurship – These entrepreneurs are profit oriented and do not enter market which have low monetary rewards associated with it.

• ♦ Large scale entrepreneur – Large scale entrepreneurs are usually found in developed countries. These entrepreneurs introduce revolutionary ideas and are able to sustain high profits and develop new technologies as they possess the financial capacity and necessary resources to do so.

• ♦ Small scale entrepreneur – Small scale entrepreneurs do not have the necessary funds and technology to initiate large scale production and introduce revolutionary ideas.

• Entrepreneurs and Intrapreneurs vary in their level of focus. Whereas an entrepreneur envisions a company from start to finish, an Intrapreneur has a much broader vision for an established company. Because the Intrapreneur works on solving bigger issues within the business, he typically has more directly applicable skills for given tasks and takes more risks within the context of his job.

• Intrapreneurs and Experimentation

• Similar to how entrepreneurs experiment, an intrapreneur possesses the freedom and autonomy for professional growth. An intrapreneur has the independence to analyze and understand trends necessary for planning the company’s future. Intrapreneurs synthesize their findings and determine methods for staying ahead of their competitors.

• Intrapreneurs become a company’s executive leaders over time. They move the business forward and rise to the top as they understand the business from all levels. A company should recognize and promote successful intrapreneurs so the business can succeed and grow. When intrapreneurs work at solving problems, they foster the growth of other talented intrapreneurs and integrate processes for the greater good of the entire company.

Differences Entrepreneur Intrapreneur

Dependency

An entrepreneur is independent in his operations An intraprenuer is dependent on the entrepreneur, i.e. the owner.

Raising of Funds

An entrepreneur himself raises funds required for the enterprise. Funds are not raised by the Intrapreneur.

Risk

Entrepreneur bears the risk involved in the business. An intraprenuer does not fully bear the risk involved in the enterprise.

Operation

An entrepreneur operates from out side On the contrary, an intraprenuer operates from within the organization itself.

Orientation

An entrepreneur begins his business with a newly set up enterprise.

An intrapreneur sets up his enterprise after working someone else’s organization.

Experience

As an entrepreneur establishes new business, so he does not possess any experience over the business.

An intrapreneur establishes his business after gathering experiences through working in the other organizations.

Factor Influencing Entrepreneurship

INFLUENCING FACTORS

INTERNAL FACTORDemographic

VariablesPersonal

characteristicsSocialfactors

·        Age·       Gender·       Birth Order·       Education·       Ethnic background·       Nationality

·       Technical expertise·       Managerial expertise·       Entrepreneurial expertise·       Leadership skills·       Personal values

·       Parental role models·       Cultural role models·       Family support·       Community

Personality traits Cultural Factors Environmental factors

·       Need for achievement·       Focus of control·       Risk taking·       Tolerance ambiguity·       Need for independence

·      Individualism/Collectivism·       Uncertainty avoidance·       Materialism·       Dynamism

·       Lack of employment opportunities·       Little opportunity for advancement·       Economic resources·       Political climate

External Factors1. Political Environment Entrepreneurs will invest only where there is political stability Andhra Pradesh and Karnataka are able to promote

entrepreneurship effectively and many new entrepreneurs are starting their venture there

2. Social and Cultural environment Family environment, social and cultural environment are closely related

The social status counts a lot while making the choice of a career

3. Economic Environment (a) Whether a person  has ancestral property or property earned on his own

(b) details regarding current income (c) standard of living and (d) financial status that he enjoys

Macro Level Factors (a) Market structure(b) Competition(c) Profitability(d) Investments(e) Availability of land(f) Capital(g) Labour(h) Raw materials(i) Market

4. Legal EnvironmentThere are laws, rules and regulations framed by various Acts under

the Constitution which have to be followed by entrepreneurs

5. Technological EnvironmentThe future is heavily weighed in favour of knowledged base business. The new entrepreneurs must have knowledge about the last technological developments and also should be able to predict the life of the technology

Entrepreneurial EnvironmentIn upcoming economies across the world, interest in entrepreneurship is presently more than ever due to burgeoning youth population and a desire to move up the value chain.Three major components are identified in this environment that community leaders need to address −1.Culturei). Appreciation of the values ii). Welcoming entrepreneursiii). Accepting failure iv). Willingness to motivate v). Unconditional support

2. Infrastructure − Moving beyond the traditional notion of layout to involve traditional and non-traditional leadership strategies. For example, educational institutions like community schools, colleges and regional universities, cultural and recreational resources, quality schools, and social enterprises that are different and stress on creativity

3. Entrepreneurial support elements -This involves providing services like i).the Chamber and Small Business Development Centers,ii). Help centers,iii). Counseling office,iv). Networking organizations and opportunities, v).Financing programs,vi). Business incubation services, vii).Mentoring and coaching, and

viii). Youth entrepreneurship education in and outside the schools.

Reasons for Growth of Entrepreneurial Activity in India

• 1. Industry Structure:Performance, in terms of economic growth, is shaped by the

degree to which the prevalent industry structure efficiently utilizes scarce resources. Technological changes in the first three quarters of the previous century had favoured the performance of large centralized units.• 2. New Technologies:

This factor is related to the changes in industry structure. Fundamental changes in nature of technological development have led to diseconomies of scale.

Small technology-based firms are now able to challenge larger companies still dependent on economies of scale

• 3. Deregulation and Privatization:Small firms are dominant in the increase of entrepreneurial

activity in sectors that have been recently deregulated.The collapse of communism in Eastern Europe has led to thriving

entrepreneurship in the new free-market economiesEven in the rest of the world, conservative economic policy has

given way to a brave new approach that has led to broad level deregulation across industries.

Now companies have to deal with less licences and fewer government controls. Many state-owned enterprises have also been privatized leading to a greater role for the private sector in general and entrepreneurs in particular.

4. Formation of New Business Communities:Efficiencies across markets, primarily resulting from use of new

technologies, have led to declining cost of transactions.Business exchanges such as alibaba.com help smaller firms to be

competitive. This promotes setting up of new firms in the new-age business communities.5. Increasing Demand for Variety:

Increased wealth has led to increase in the demand for variety The increasing demand for new products is of advantage to smaller firms.

Changes in consumer tastes are a major reason for growth of entrepreneurship.

People are inclined to products that are specifically de signed to meet their special needs.

6. Services Sector:Increase in per capita income leads to a greater share of the services

sector in the national economy.Interestingly, even for some developing countries such as India,

services account for over half of the total GDP. Growing importance of services in the overall economy has paved

the way for entrepreneurial activity. 7. Government Incentives and Subsidies:

In India, there are incentives being given by both the state and central government.

Many of the incentives are often sector specific, being given by the concerned ministry.

Similarly, entrepreneurship is being encouraged in many countries with a variety of incentives such as tax breaks, preferred sourcing or grants.

8. Increasing Flow of Information:Information is the lifeblood of business. Information is being

increasingly democratized. The Internet has become the chief source of varied information. Search engines such as Google and Yahoo enable you to access information from trade bodies, academic or research institutions, news networks, corporate sites, etc.9. Easier Access to Resources:

Today, it is easier for an entrepreneur to access debt and equity finance than ever before. Not just capital, most other factors of production are now easily available to entrepreneurs.

With greater flow of information, it is easier to contact and to deal with resource providers such as raw material suppliers and dealers of capital goods.

10. Entrepreneurial Education:Many universities and institutes are nowadays offering

entrepreneurship education. A number of institutes have set up successful entrepreneurship centres, which provide help to budding entrepreneurs by conducting formal training and structured mentoring programmes.11. Return on Innovation:

Strengthening of Intellectual Property Rights (IPR) has acted as a major boost to entrepreneurs willing to take a risk on an innovation. Now they feel the confidence in the sanctity of their IPR without feeling the need to be backed up by a large corporation

12. Entrepreneur as a Hero:People like Dhirubhai Ambani and Narayan Murthy have become

heroes to the middle class. The common man reveres them as super-achievers. There is something glorious in the tale of their struggle to create new and enduring businesses that inspire a lot of other people.13. Rising Dissatisfaction at Job:

Employers are finding it hard to retain talented employees. People now have confidence in their abilities, which in turn prompts them to find alternate employment.

For example, the BPO sector in India witnesses employee turnover rates in excess of 60 per cent per annum.

15. Acceptance of Ex-entrepreneurs in the Job Market:Companies are willing to re-employ people who have been

entrepreneurs. Their experience in creating and starting a new enterprise is highly valued by many employers. As a result, a potential entrepreneur perceives a lower risk as there is always the security of a well-paid job in case the venture does not fare well.

Micro, Small and Medium Enterprises Development (MSMED) Act, 2006

• The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 on June 16, 2006 which was notified on October 2, 2006. With the enactment of MSMED Act 2006, the paradigm shift that has taken place is the inclusion of services sector in the definition of Micro, Small and Medium Enterprises, apart from extending the scope to Medium Enterprises.

Definition of Micro, Small and Medium Enterprises:• The MSMED Act, 2006 defines the Micro, Small and Medium

Enterprises based• (i) on the investment in plant and machinery for those engaged in

manufacturing or production, processing or preservation of goods and• (ii) on the investment in equipment for enterprises engaged in

providing or rendering of Services.

The guidelines with regard to investment in plant and machinery or equipment as defined in the MSMED Act, 2006 are

Nature of activity of the Enterprise

Investment in plant and machinery excluding land and building for enterprises engaged in manufacturing or production, processing or preservation of goods

Investment in equipment excluding land and building for enterprises engaged in providing or rendering of services (loans up to Rs 1 crore)

Micro Not exceeding Rs.25.00 Lakhs Not exceeding Rs.10.00 Lakhs

Small More than Rs.25.00 lakhs but does not exceed Rs.500.00 lakhs

More than Rs.10.00 lakhs but does not exceed Rs.200.00 lakhs

Medium More than Rs.500.00 lakhs but does not exceed Rs.1000.00 lakhs

More than Rs.200.00 lakhs but does not exceed Rs.500.00 lakhs

Key highlights of the MSME Sector:

• MSMEs account for about 45% of India’s manufacturing output• MSMEs accounts for about 40% of India’s total exports• The sector is projected to employ about 73 million people in more than 31

million units spread across the country• MSMEs manufacture more than 6,000 products ranging from traditional to high tech items• For FY11, total production coming from MSME sector was projected at ` 10,957.6 billion, an increase of more than 11% over the previous year• For FY12, the MSME sector is estimated to have an average credit off-take of ` 7.16 lacs for 32.2 million units.

Key Challenges faced by the MSME Sector:• Lack of availability of adequate and timely credit• High cost of credit• Collateral requirements• Limited access to equity capital• Procurement of raw material at a competitive cost• Problems of storage, designing, packaging and product display• Lack of access to global markets• Inadequate infrastructure facilities, including power, water, roads• Low technology levels and lack of access to modern technology• Lack of skilled manpower for manufacturing, services, marketing, etc• Multiplicity of labour laws and complicated procedures associated with compliance of such laws.

Characteristics of Small –Scale Enterprises• Labour Intensive• Flexibility• Innovative• Decentralisation• Outlet of Entrepreneurial Spirit

Significance of Small- Scale Entrprise• Utlise locally available human and material resources and expertise/

experience• Create jobs at relatively low cost• Improve the lifestyle and living standard of people• Diversity the industrial structure• Help I increasing the national productivity • Contribute approximately 35 to 45% of export• Prevent the creation of monopoly

• Ensure more equitable income distribution• Attract the utilize indigenous entrepreneurship and encourage woman

entrepreneurs• Develop a pool skilled and semi- skilled workers as a basis of future

industrial expansion • Prevents regional imbalance by their presence in backward, rural, and

exterior most part of country• Adapt appropriate technological managerial approaches optimally• Facilitate a favorable balance of trade

Role of Small- Scale Enterprises in Economic Development• Employment Generation• Higher productivity• Poverty Alleviation• Better Utilization of local resources• Tapping of savings• Utilization of domestic technology• Regional balance and rural development• Export contribution• Contribution to decentralization• Complimentary to large-scale industries.

Prime Minister Employment Generation Programme • A credit linked scheme to facilitate

participation of financial institutions for higher credit flow to micro sector

• Its objectives are to generate continues and sustainable employment opportunities in rural and urban areas of the country through start-ups.

National Manufacturing Competitiveness programmes

To promote growth oriented enterprise interventions like lean manufacturing, design clinic, quality management systems etc

To promote Innovation & Rural Entrepreneurship through rural livelihood incubator, technology business incubator and fund of funds To establish Technology Centre Network to promote Innovation, Entrepreneurship and Agro-Industry

Scheme of Fund for Regeneration of Traditional Industries(SFURTIMaking traditional Industries more productive and competitive by organizing the traditional Industries and artisans into clusters

Performance & Credit Rating Scheme

To create an eco-system of MSEs for easier/ cheaper access to credit for the rated enterprises. The rating done for MSEs generates an awareness about the strengths and weaknesses of the operations and creditworthiness of the enterprise.

Assistance to Training Institution

To promote entrepreneurship and skill development through capital grant for creation/strengthening of infrastructure and programme support for conducting entrepreneurship development and skill development programmes

Marketing Assistance

To assist MSMEs to organise/ participate in exhibition of their products and services in domestic and global markets. Organizing Buyer-Seller Meets, Intensive Campaigns and Marketing Promotion Events are also included

Credit Linked Capital Subsidy Schemes(CLCSS)

To enable micro and small enterprises to adopt modern technology to improve their productivity

Coir Udyami Yojana(CUY)To offer credit-linked subsidy to enterprises in coir sector

Coir Vikas Yojana(CVY)

For adoption of strategic and aggressive product specific and market specific promotional programmes for popularizing coir and coir products in markets abroad

Mahila Coir Yojana(MCY)

To assist women workers in coir sector to adopt modern technology and enhance productivity.

Credit Guarantee Fund Scheme assists MSEs (CGTMSE)

To get collateral free credit from financing institutions. Banks and financial institutions are provided funding assistance under this scheme so that they can in turn lend collateral free credit to MSMEs

Micro and Small Enterprise Cluster Development programmes(MSE-CDP)

MSME Cluster Development programmes aims to enhance and develop cluster infrastructure projects for facilities such as power distribution,water,telecommunication etc

Tool Rooms

Technology Development Centres are providing skilling on cutting edge technology to youths and MSME to face the challenges of Globalisation, through technology upgradation

International Cooperation

IC to promote MSMEs to acquire new markets overseas and exchange business delegations

Surveys, Studies & Policy Research

Schemes Opportunity for Organisations/Institutions conduct studies and surveys encompassing various facets of enterprise creation and policy eco-system

WOMEN ENTREPRENEURS• Definition:

“Women or a group of women who initiate, organize and run a business enterprises.”Government of India:

“An enterprise owned and controlled by a women having a minimum financial interest of 51% of the capital and giving at least 51% of the employment generated by the enterprise to women. ”

Role of Women Entrepreneurs in society“ When women moves forward, the family moves, the village moves, and the nation moves.”

- Pandit Jawaharlal Nehru1. Employment Generation2. Economic Development3. Better Utilization of Resources4. Improved Quality of Life

Steps to Encourage Women Entrepreners• The Government od India and NGOs promote various schemes .• National Alliance of Young Entrepreneurs ( NAYE) which assists women

entrepreneurs in:i) Providing access to capital, infrastructure and marketsii) Development of management and production capabilities iii) Identifying investment opportunities iv) Sponsoring, delegating, participation in trade fairs, exhibitions,

arranging buyer-seller meets and specialized conference, etc.,v) Organizing seminars, workshops and training programmesvi) Lobbying for them in Press, Parliament, State legislatures and etc

• SIDCO and NSIC which loans up to Rs. 25 lakhs will be given to the entreprenerur without insisting on collateral security

• Commercial bank also have ‘Women entrepreneur Cells’ to extend financial assistant to wome.

• The IDBI has set up the Mahila Udyam Nidhi (MUN) and Mahila Vikas Nidhi(MVN)

• MUN provides 15% equity assistance for new project, its cost not exceeding Rs. 10 lakhs

• Indira Mahila Yojana(IMY) was launched in August 1995 to give education, awareness, income generation capacity

• Rashtriya Mahila Kosh(RMK) was established in 1992 with a fund of Rs. 31 cores to meet the needs of poor women by giving them loans.

• Indian Mahila Block Societies (IMBS) provides training, apprenticeship and orientation programmes for trainees.

• Norwegian Agency for International Development(NORAD) was established in 1993 to help educated and uneducated women financially in non-traditional areas of business.

• ARVIND was started by National Bank for Agriculture and Rural Development(NABARD). It provides loan up to Rs. 10 lakhs to women who work collectively agriculture

Problems of Women Entrepreneurs• Problems of Finance• Limited mobility• Lack of Education• Male dominated society• Low risk-bearing society• Social Recognition

Rural Entrepreneurship• Definition:

“any industry located in a rural area, the population of which does not exceed 10,000, which produces any goods or renders any services with or without the use of power and which the fixed capital investment per head of an artisan or a worker does not exceed Rs.1000”

The definition has been modified with population ceiling of 20,000

Investment upper limit of Rs. 3 cores

Classifications of Industry• Mineral• Forest• Agro• Polymer and Chemical• Engineering and non-conventional• Textiles including Khadi• Service Industry

Importance of Rural Entrepreneurship• The reduction in migration of rural to urban areas• Balanced regional growth• Reducing rural-urban gab• Increasing rural income• Reducing the heritage of the country• Reduction the urban pollution• Higher economic growth

Problems of Rural entrepreneurship• Domination of agricultural mindset• Lack of education with low literacy• Poor infrastructure• Lack of information• Lack technical knowhow and skilled labour• Lack of quality control• Attitude of people with mistrust of new comers• Language barriers

• Primitive and low technology• High input cost due to transportation• Management problems• Lack of storage and warehouse facilities• Inadequate finance and credit• Lack of awareness and knowledge about the opportunities• Preference for salaried jobs then self-employed

BUSINESS IDEA GENERATION TECHNIQUESA Business idea is a business seed, which expands and grows into a business tree.

Sources of Business Ideas:1. Technical Sources2. Market Sources

• Technical Sources:- Ideas are generated within the companyi). Scientists working Research and Development departmentii). Engineering working in the production departmentiii). The field staff who may get new ideas while solving problems

These ideas relate to the a). New methods to be adapted for productionb). New product developmentc). New machinery

Business Ideas from Market source1. Focus Groups2. Brainstorming3. Reverse Brainstorming4. Rawlinson Brainstorming5. Problem Inventory Analysis6. Synectics: personal, direct, symbolic and fantasy7. Gorden Method8. Checklist Method9. Free Association

10. Forced Relationship11. Collective Notebook Method12. Heuristics13.Scientific Method14. Value Analysis15. Attribute list16. Matrix Charting17. Big-Dream Approach18. Parametric Analysis19. Morphological Analysis20. Hitchhiking

21. Creative listening22. Trigger Sessions23. The Taguchi Method

Market Entry Strategy A market entry strategy is the planned method of delivering

goods or service to new target market and distributing them there.

Market Feasibility1.Product

-description of product, size , packing, brand or trade name, product mix, PLC2.Supply

-current sources of supply, capacity of supplying companies.- product range, estimated market share

3.Demand 4. Marketing Strategy

-target markets, competitive advantage

5. Pricing 6. Projected Sales and Market Share7. Competition 8. Distribution9.Marketing Organisation10. Sales Promotion/ Marketing Support11. Marketing Agreements

Stages of New Product Development• Idea Generation• Screening• Concept Development and Evaluation• Business Analysis• Product Development and Evaluation• Development and Evaluation of Marketing Mix• Test Marketing• Commercialization of the Product

Financial and Economic Feasibilities• Financial feasibility analysis involves assessing the financial viability of

an enterprise. It also includes estimation of cost as well as review of profit and loss account, break-even point, cash flow statement, balance sheet, and sales plans

• Financial feasibility analysis also determines the requirement of funds, sources of obtain funds, and ways to utilize these funds.

Methods of Evaluation of Financial Feasibility1. Cost of Production and Marketing2. Break Even Analysis3. Assessment of Fixed and Working Capital Requirement4. Capitalisation5. Sources of Finance6. Cost of Capital7. Capital Structure8. Hire Purchasing and leasing

9. Venture Capital10. Export Finance11. Factoring and Bill discounting12. Overdraft13. Cash Credit

Requirement of funds at different stages1. Early-stage financing

a). Seed Capitalb). For start-up

2. Expansion or three Development financinga). Working capitalb). Major expansion of companyc). Public offer

3. Acquisitions financing

Technical Feasibility• Technical feasibility is also known as techno-economic feasibility.• The technical study evaluates the choice of technology, production

process, and location of business.• The contribution of engineers and technicians is quit high in this stage

of evaluation

Methods and Evaluation of Technical feasibility1. Technology Analysis2. Raw Material Analysis3. Make or Buy Decision4. Plant Size and Location

a). Market Oriented Locationb). Material Oriented Location

5. Layout6. Cost-benefit Analysis

Legal Feasibility

• An entrepreneur should have at least the working knowledge of the basic business laws governing factories, taxation and companies.

• An entrepreneur has to follow the rules and regulations as laid down in the various acts as follows

• The Indian Companies Act, 1956• Monopolies and Restrictive Trade Practice Act,1969• Industrial Act,1947• Foreign Exchange Regulation Act, 1973• Foreign Exchange Management Act, 1993• Income Tax Act, 1961• Factories Act, 1948• The workman’s Compensation Act, 1923• Trade Union Act, 1926• Minimum Wages Act, 1948• Employees State Insurance Act, 1948

• Employment Provident Fund Act,1952• Payment of Bonus Act, 1965• Essential Commodities Act, 1955• Drugs and Cosmetic Act, 1940• Consumer protection Act, 1986• Export and Import Act, 1947• Excise Act,1944• Sales Tax Act, 1956

Mangerial Feasibility• As per Indian Law, there are four main ownership forms of

organisations. Those are long term critical decision as they determine the risk, responsibility and control of the entrepreneur as well as the division of profits.

1. Sole proprietorship2. Partnership 3. Joint Stock Company4. Co-operative Societies

Business Model• Meaning

Description of means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, “ How are we going to make money to survive and grow?”

Business Plan• Meaning:

A Business plan refers to a formal statement of plans of an enterprise. It explains business goals of the enterprise and means to achieve those goals.Definition:

“ It’s a document that convincingly demonstrates that your business can sell enough of its product or service to make a satisfactory profit and to be potential backers

- David Gumpert.

Users of Business PlanBusiness Plan

Insider

Entrepreneur/Management Team

Employers

Outsider

Suppliers Customers

Inverstors

Writing a Business Plan

Elements of Business Plan

Title PageTable of Content

Executive Summary

Description of Venture

Market Plan

Equipment and Materials

Description

Market Plan

Operation Plan

Management and Organization Plan

Financial Plan

Contingency Plan

Sample of a Business Plan1. Summary

What is being proposedProduct/ ServiceOwnershipProject CostWhat is requiredFunding PatternAssistance regarding technical collaboration

2. IntroductionCurrent industrial status in the countryCurrent industrial status in the international prospectGrounds for project selection

3. About the PromoterEducational background, work experience, project related experience

4. About the ProjectDescription of product and its useInstalled Capacity A write up on what will distinguish the proposed project and others

Description about legal requirementsClarence from Government

5. About the LocationExact location of the projectVarious alternatives available which have been examinedCriteria for selecting locationLocational advantages including infrastructural facilities

6. Land and BuildingArea of LandConstructed AreaType of ConstructionCost

7. Plant and MachineryCapacityEquipment BalancingSuppliesCostVarious alternative availableCriteria for selecting the proposed equipment

8. Miscellaneous AssetsNature of miscellaneous assets e.g, AC, office automationitemized description of such assets along with cost and source of procuring

9. Production ProcessDescription of production processProcess Flow chatDetails of technology

10. Has the technology been developed indigenously?11. What are the arrangement for technical know-how?12. What are the technology alternative available?13. How these alternative have been evaluated?14.What are the possibilities of change in the tehcnology in the course of time?15. Various Process parameter16. Production Program

Time required to make one unit of the productHow much/ how many in one week, one month, first year, second year, and so on up to 10 years.Input-Output ratioAny national and international standards

17. Raw MaterialList of Raw material neededQuality required for one unit of outputQuality specificationSources of procurementCost of raw materialsSupply position

18. Utilities:Requirments of power,water, steam, compressed air and etc;Source of said materials Position regarding availability

19. ManpowerRequirement of skilled, semi skilled personalrequirement of administrative/ managerial staffCost of Manpower

20. MarketA. Current Market status:What are the major end user of product?Who are the major buyer?What are the trade channels?How the product are differentiate from other product? Etc;B. Proposed approach towards marketingGeographical areaDistribution ChannelsTrade Practice

21. Working Capital Requirement

22. Requirement of Funds23. Cost of Production24. Cash Flow Statement25. Break-Even Analysis26. Implementation Schedule

Identifying the Sources of Finance

An enterprise raises funds for different purposes depending on the time period ranging from short to long duration. The total amount of financial needs of an enterprise depends on the nature and size of the business.

Banking Institutions providing Financial Assistance• Working Capital Finance• Corporate Term loans• Deferred Payment Guarantees• Project Finance• Structured Finance• Traders Loan• Export and Import Finance• Advantage against Shares