Meaning, Definition and Concept of Entrepreneur

Meaning, Definition and Concept of Entrepreneur
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The word “entrepreneur” is derived from the French verb “entreprendre”, which means ‘to
undertake’. This refers to those who “undertake” the risk of new enterprises. An enterprise is
created by an entrepreneur. The process of creation is called “entrepreneurship”.
Meaning
Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of

something new and exploits such ideas into gainful opportunities by accepting the risk and
uncertainty with the enterprise. It is the process of starting a business, a startup company or other
organization. The entrepreneur develops a business plan, acquires the human and other required
resources, and is fully responsible for its success or failure. Entrepreneurship operates within
an entrepreneurship ecosystem.
Definitions
According to A.H.Cole
Entrepreneurship is the purposeful activity of an individual or a group of associated individual,

undertaken to initiate, maintain or aggrandize profit by production or distribution of economic
goods and services.
According to J.A. Timmons
Entrepreneurship is the ability to create and build something from practically nothing.
According to Musselman and Jackson
“Entrepreneurship is the investing and risking of time, money and effort to start a business and
make it successful.
Characteristics of Entrepreneurship
1. Economic and dynamic activity
Entrepreneurship is an economic activity because it involves the creation and operation of an

enterprise with a view to creating value or wealth by ensuring optimum utilization of scarce
resources. Since this value creation activity is performed continuously in the midst of uncertain
business environment, therefore, entrepreneurship is regarded as a dynamic force.
2. Related to Innovation
Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an
individual to continuously evaluate the existing modes of business operations so that more
efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a
continuous effort for synergy (optimization of performance) in organizations.
3. Profit Potential
“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the
risk of developing an idea into an actual business venture.” Without profit potential, the efforts
of entrepreneurs would remain only an abstract and a theoretical leisure activity.
4. Risk Bearing
The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and
implementation of new ideas. New ideas are always tentative and their results may not be
instantaneous and positive. An entrepreneur has to have patience to see his efforts bear fruit. In
the intervening period (time gap between the conception and implementation of an idea and its
results), an entrepreneur has to assume risk. If an entrepreneur does not have the willingness to
assume risk, entrepreneurship would never succeed.
5. Skillful Management
Entrepreneurship involves skillful management. The basic managerial skill is the most important
characteristic feature of entrepreneurship. For effective management of an enterprise, the role of
an entrepreneur is to initiate and supervise design of organization improvement projects in
relation to upcoming opportunities is very much important.
6. Accepting Challenges
Entrepreneurship means accepting challenges amidst risk and uncertainty. While accepting
entrepreneurship as a career the entrepreneur accepts the challenges of all odds and puts his
efforts to convert the odds into viable business opportunities by pooling together the resources of
building and running the enterprise.
7. Goal-Oriented Activity
The entrepreneur who creates and operates enterprises seeks to earn profits through satisfaction
of needs of consumers; hence, entrepreneurship is a goal-oriented activity. Entrepreneurship
emphasizes results, achievements and targets achieved. It is work done not imaginary plans or
paper decisions. Hence entrepreneurship is a goal-oriented activity.
8. Value Creation
Next, we find that the process of creating value is a characteristic in describing entrepreneurship.
Through entrepreneurship, new products, services, transactions, approaches, resources,
technologies, and markets are created that contribute some value to a community or marketplace.
We can also see value created when, through entrepreneurship; resources are transformed into
outputs such as products or services. During this transformation process, value is created because
the entrepreneur is fashioning something worthwhile and useful. Drucker says, “Until
entrepreneurial act, every plant is a seed and every mineral just another rock.
9. Dynamic Process
Entrepreneurship is a dynamic function. Entrepreneur thrives on changes in the environment,

which bring useful opportunities for business. An entrepreneur deals proactively with changing
markets and environment. He looks at the changes as the source of market advantages, not as a
problem. Uncertainties are market opportunities for him. He capitalizes on fleeting market
anomalies.
10. Uniqueness
Other characteristic found in entrepreneurship is that of uniqueness. Entrepreneurship involves

new combinations and new approaches with which entrepreneurs are willing to experiment.
Through Entrepreneurship unique products are created and unique approaches are tried.
Entrepreneurship isn’t merely imitating what others have done. It’s doing something new,
something untested and untried – something unique.
11. Interest and Vision
The first factor for entrepreneurial success is interest. Since entrepreneurship pays off according
to performance rather than time spent on a particular effort, an entrepreneur must work in an area
that interests her. Otherwise, she will not be able to maintain a high level of work ethic, and she
will most likely fail. This interest must also translate into a vision for the company’s growth.
Even if the day-to-day activities of a business are interesting to an entrepreneur, this is not
enough for success unless she can turn this interest into a vision of growth and expansion. This
vision must be strong enough that she can communicate it to investors and employees.
12. Risk and Rewards
Entrepreneurship requires risk. The measurement of this risk equates to the amount of time and
money you invest into your business. However, this risk also tends to relate directly to the
rewards involved. An entrepreneur who invests in a franchise pays for someone else’s business
plan and receives a respectable income, while an entrepreneur who undertakes ground breaking
innovations risks everything on an assumption that something revolutionary will work in the
market. If such a revolutionary is wrong, she can lose everything. However, if she is right, she
can suddenly become extremely wealthy.
Entrepreneurship and Entrepreneurship Development
Entrepreneurship development is the process of improving the skills and knowledge of

entrepreneurs through various training and classroom programs. The whole point of
entrepreneurship development is to increase the number of entrepreneurs.
By doing this, the pace at which new businesses or ventures are made gets better. On a wider
level, this makes room for employment and improves the economy of a business or country. The
steps below will explain how to create an effective entrepreneurship development program and
how to go about enhancing it.
1. Outline the objectives of the program and focus on the venture development
Entrepreneurship development aims at individuals who want to start or possibly expand a

business. Entrepreneurship development also focuses a lot on enhancing the ideas and potential
of an entrepreneur.
The aims of a program have to be clearly explained otherwise the program will never reach its
full potential. The development of a venture also has to be outlined in the program. Without
these two, there will be no clear goal.
2. Select educated people who have high entrepreneurial potential
An entrepreneurship development program requires that various people be selected. However,

most programs tend to look for a specific group of educated people rather than target everyone.
Ideally, you have to look at the education and traits that you are looking for, in an entrepreneur,
and match them with the people who have applied for the program.
Most people say that public funds should be spent on people who need the most help. The
resources of an entrepreneurship development program are usually (and unfortunately) limited. It
is hence better to choose people who will prove to be really useful and benefit the entire
community.
3. Select uneducated people who have high entrepreneurial potential
A development project on women’s entrepreneurship in Nepal was recently conducted. It was

found that women who couldn’t meet the essential needs of their family or themselves were
usually more eager to learn about different ways to earn money as compared to women who were
better off. However, such women usually face many problems.
Even though such women are not educated, they have great entrepreneurship potential because
they have the right motivation. Such people need to be aided by assistance packages where
training can be given on entrepreneurship. This will instill confidence and teach them the skills
they need in order to provide for their family.
4. Identify the local market and search for people who have potential in it
Entrepreneurship development programs should first identify the local market and aid potential
entrepreneurs who know a lot about it. These people need to be able analyze and then design
unique ideas based off the needs of their surroundings.
By concentrating on select local entrepreneurs, the effects of the program can be easily and
quickly seen within the community. Later on, programs can help improve their knowledge in
their sector. In fact, it is creativity and the thirst for innovation that truly matters rather than the
market’s size. In later programs, the introduction of new products and product features can be
added. This will add value and increase the size of the market
5. Provide support through private sector-based organizations
Support should be obtained from private organizations that are both financial and knowledge-
based. This helps reduce the cost of the entrepreneurship development program and increases its
effectiveness.
Private organizations that could support entrepreneurship development programs include

universities, consulting companies and various NGOs. Large enterprises are also encouraged to
support entrepreneurship development programs as this their sponsorship that will help reduce
unemployment.
6. Provide an easy yet detailed methodology that will help entrepreneurs improve in the
short and long-run
Entrepreneurial development programs aim at being simple to understand and teach skills that
entrepreneurs can use after the program. It also contains courses that aim at developing their
skills and ideas. These are required if entrepreneurs wish to successfully exploit the local market.
They also need to be taught how to gather the required resources in order to meet the goals of
their venture. The program also needs to have outlined methods through which entrepreneurs can
improve the performance of their business in the long run.
Entrepreneur development training proves to be highly effective when finance, quality assurance,
marketing and productivity are linked to the training program. As an example, when
development banks are involved earlier in the process of training, an entrepreneur will easily
understand credit processes and the also praises the bank’s business plan.
7. Implement special measures to improve the usefulness of trainers and facilitators
The Success of an entrepreneurship development program also relies on the commitment and
quality of the many facilitators and trainers. Any trainer or facilitator in the program needs to
understand the culture and lifestyle of the group in order to better integrate themselves and serve
the group.
The selection of proper trainers is based on the amount of business experience they have and the
how much knowledge they have about their local business environment. Training facilitators can
significantly improve their usefulness in tackling the needs of entrepreneurs.
8. The selection of areas for pilot programs must be right
Entrepreneurship development programs are usually too restricted in terms of where it is done
and what people are involved in the program. Selecting pilot target areas will usually depend on
the ease at which support institutions are available.
It will also depend on the interest people take in entrepreneurial development programs. These
facts can never be the same for any two geographical locations and hence must be considered
carefully.
9. Launch pilot ED programs and develop as needed
Analyzing pilot feasibility is an effective way of launching a major entrepreneurship

development program. If the program shows signs of high promise, it can be launched on a
national level. By relying on the sponsors for support rather than donor support, the program will
be able to expand past local development while maintaining high quality. This is especially
important when the support of donors starts to fade.
10. A successful entrepreneurship development program requires government policies
Entrepreneurship helps the economy of a country grow and creates new jobs. Government
policies usually have a substantial impact on the number of entrepreneurs in a country.
While there are many governments that say they do support entrepreneurial businesses, they
usually do not have many specific policies and programs that effectively support entrepreneurial
development.
Creating an effective entrepreneurship development program may not be easy but then again, it
is not impossible either. By carefully following the ten points above, you are well on your way to
creating an entrepreneurship development program that not only benefits your company in the
short run but in the long run as well.
The entrepreneurial Mindset

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Entrepreneurial mindset: a way of thinking that enables you to overcome challenges, be decisive,
and accept responsibility for your outcomes. It is a constant need to improve your skills, learn
from your mistakes, and take continuous action on your ideas. Anyone willing to do the work
can develop an entrepreneurial mindset.
The biggest killer of the entrepreneurial mindset is not what you would expect.
It’s not failure, the economy, or bad ideas.
It’s doubt – in ourselves, our surroundings, and our abilities.
Self-doubt kills many dreams, long before any external factors can come into play.
2. Decisiveness
To succeed as an entrepreneur, you must gain the ability to look at a problem or situation, digest
all available data (at that point in time), and make a confident decision to move forward.
Your ability as a decision-maker will make or break your future successes.
In fact, at the opposite end, indecision is one of the greatest causes of business failure.
When you can’t decide what to do, you delay taking action. In other words, you do nothing.
Think about how many dreams (and businesses) failing to take action has killed.
3. Confidence
There are many skills you will need to learn to accomplish everything you want in life.
But how do you act confidently when you don’t know what you are doing?
You learn to act with confidence, the second characteristic of the entrepreneurial mindset. And
one the of the most important qualities of an entrepreneur.
It is essential that you get used to the uncomfortable feeling of knowing that you don’t know
what you’re doing.
3. Accountability
The entrepreneurial mindset comes from taking responsibility for your actions and outcomes.
You need to internalize and accept that:
4. Everything that happens at work – YOU are responsible for.

5. Everything that happens to your business – YOU are responsible for.
6. Whether you succeed or fail, it is YOUR responsibility.
From this moment forward, you must accept responsibility for everything in your life and hold
yourself accountable to it.
5. Resilience
As an entrepreneur, you will need to learn to deal with making mistakes and failing. They are
inevitable and a part of your growth.
If every misstep plummets you into self-doubt, you have to change the way you look at being
wrong.
This mindset shift takes resilience and is foundational to the entrepreneurial mindset.
Success rarely happens in a straight line. Taking wrong turns and making mistakes is something
that happens to everyone.
6. Humility
Humility is freedom from pride or arrogance, and it ties all of the characteristics of
entrepreneurship.
From decisiveness to confidence, humility will keep you focused and centered.
From accountability to resilience, you will continue to move forward through failure, mistakes,
and upsets.
Common myths to becoming to entrepreneur and how to

overcome them
Entrepreneurship can be taught, it should be taught and it is being taught. After 50 years of a

flawed model focused on churning out executives for large corporations, colleges and
universities have turned their attention to promoting and encouraging entrepreneurship. These
schools are focusing on teaching the entrepreneurial lifestyle; one focused on both the mindset
and the skillset required to become an entrepreneur. Everything from university incubators to
mentor programs and pitch sessions are being offered.
Entrepreneurship is not about the risk you take, but the results that you achieve It’s a startling
paradox. Too many good opportunities die prematurely because so many potential entrepreneurs
are risk averse. At the same time businesses are failing because of absurd risks fostered by the
idea that being an entrepreneur is nothing more than a gamble. Entrepreneurs succeed through
determination — not by taking unwarranted risk. Managing risk as you embrace it is critical. Not
all ideas are opportunities and every opportunity is not viable. Managed risk is inherent in the
lean startup focused on getting valuable feedback from potential end users before jumping into a
full-scale operation.
Entrepreneurs need to find work-life balance. Having a strong work ethic and being willing to
put in extended days when required is critical. During your startup phase and later when you
encounter bumps in the road, you will work long hours with great satisfaction. But as things
progress you need to find balance by building your team, easing control and empowering your
staff. You must recharge your batteries to persevere. Never forget: You are your most valuable
human resource. Without balance your performance will suffer, your business will be restrained
and your personal life will be sacrificed unnecessarily.
Failure is not essential. Entrepreneurs manage their risk and avoid failure. Describing failure as
an essential part of success is rational, but many entrepreneurs are motivated more by the fear of
failure than the rewards of success. Failure only happens when we either quit or are forced to
give up. Mistakes are part of the learning curve. We learn from them because we take the time to
analyze them. Success is elating and can mask our faults. Continually improve by understanding
what you do right and correcting what you do wrong in good times and in bad. If you do
experience failure, you can and will bounce back.
Being an entrepreneur is within your reach.You can become a problem solver who is determined
to find a way to make things happen. It is important to understand, we can’t all be
innovators but for every innovation there will be thousands of entrepreneurs finding applications
that solve everyday problems, while producing jobs and gaining independence.
Believe in your own ability. You can establish the mindset of an entrepreneur by eliminating the
word can’t from your vocabulary. You canapproach problems by skipping right over the question
if it can be solved and moving directly to the question of how it will be solved. You can find
opportunity and you can analyze to make sure that opportunity is viable. All of this can be done
within the context of the traditional economy, and you don’t have to be a tech genius to do it. We
are entering a new era of entrepreneurship, which means it is an option for almost anyone.
Factors Affecting Entrepreneurship

Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of

factors. The entrepreneurial activity at any time is dependent upon a complex and varying
combination of economic, social, political, psychological and other factors. These factors may
have been both positive and negative effluences on the emergence of entrepreneurship. Positive
influences constitute facilitative and conductive conclusive for the emergence of
entrepreneurship whereas negative influences create inhibiting milieu to the emergence of
entrepreneurship. Following factors contribute to the success of entrepreneurship:
1. Personality Factors
Personality traits such as inner desire for control of their activities, tolerance for risk, high level
of tolerance to function in adverse situations and background experiences such as the family
environment, level of education, age and work history tolerance for ambiguity are important
personal characteristics that affect entrepreneurship. Individuals who are desirous of working
independently; willing to work for long hours and assume risk; are self-confident and hard-
working are likely to be more successful as entrepreneurs than those who do not posses these
qualities
Personal factors, becoming core competencies of entrepreneurs, include:
(a) Initiative (does things before being asked for)
(b) Proactive (identification and utilization of opportunities)
(c) Perseverance (working against all odds to overcome obstacles and never complacent with
success)
(d) Problem-solver (conceives new ideas and achieves innovative solutions)
(e) Persuasion (to customers and financiers for patronization of his business and develops &
maintains relationships)
(f) Self-confidence (takes and sticks to his decisions)
(g) Self-critical (learning from his mistakes and experiences of others)
(h) A Planner (collects information, prepares a plan, and monitors performance)
(i) Risk-taker (the basic quality).
3. Environmental factors
These factors relate to the conditions in which an entrepreneur has to work. If the environment
that a individual is working in is unsatisfactory, that is, not conducive to his growth needs, it is
likely that the individual will quit his job and start his own business as an entrepreneur.
Unsatisfied personal needs for growth and achievement in employment conditions results in
successful entrepreneurship.
4. Political
Some researchers felt that the growth of entrepreneurship cannot be explained fully unless the
political set-up of a country is taken into consideration. Political stability in a country is
absolutely essential for smooth economic activity. Frequent political protests, strikes, etc. hinder
economic activity and entrepreneurship. Unfair trade practices, irrational monetary and fiscal
policies, etc. are a roadblock to the growth of entrepreneurship
7. Socio-Economic Factors
The entrepreneurial activity at any time and place is governed by varying combination of socio-
economic factors. The empirical studies have identified the following socioeconomic factors:
6. Cast/religion
7. Family background
8. Level of Education
9. Level of perception
10. Legitimacy of Entrepreneurship
11. Migratory character
12. Social Mobility
13. Social Security
14. Investment capacity
15. Ambition/motivation
7. Economic Factor
Factors such as availability of finance, labor, land, accessibility of customers, suppliers are the
factors that stimulate entrepreneurship. Capital is one of the most important prerequisites to
establish an enterprise. Availability of sufficient capital affects the introduction, survival and
growth of a business enterprise. Capital is regarded as lubricant to the process of production. If
we increase in capital investment, capital output ratio also tends to increases. This results in
increase in profit, which ultimately goes to capital formation. Due to this capital supply increase,
entrepreneurship also increases.
7. Other Factors
8. Entrepreneurial Education
More and more people with high academic attainments started joining the ranks of industrialists,
especially the professionals holding qualifications in engineering, law, medicine, cost and
chartered accounting. The newer entrepreneurs have a larger proportion of their floatation in the
traditional sector, but these professionals have by and large preferred to make their investments
in modern sector. The technicians in particular among both old and new entrepreneurs have
entered industries in the modern sector having a bearing of their academic qualifications. Many
universities and institutes are nowadays offering entrepreneurship education. A number of
institutes have set up successful entrepreneurship centers, which provide help to budding
entrepreneurs by conducting formal training and structured mentoring programs.
9. Impact of Services Sector
Increase in per capita income leads to a greater share of the services sector in the national
economy. The average size of firms’ m many sections of the services sector are relatively small.
This in turn promotes entrepreneurial activity across a number of service sector industries. 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. New industries such as software and business process outsourcing have emerged and
these have a large number of entrepreneurial firms.
10. Increasing Demand for Variety
Increased wealth has led to increase in the demand for variety (Jackson 1984). The increasing
demand for new products is of advantage to smaller firms. A number of studies have shown the
comparative advantage of smaller firms in being innovative and coming up with new products .
If the products has unmet demand, it will create a market for itself. The success of
entrepreneurship is, therefore, dependent upon the extent to which the product is in demand.
Changes in consumer tastes are a major reason for growth of entrepreneurship. People are,
inclined to products that are specifically designed to meet their special needs. Mass produced
homogenous goods do not enjoy as wide an appeal anymore.
11. Impact of Ethical Value System
Max Weber was first to point out that the entrepreneurial growth was governed by the ethical
value system of the society concerned. He said that the spirit of rapid industrial growth depends
upon a rationalized technology, acquisition of money and its rational use for productivity and
multiplication of money. These elements depend upon a specific value orientation of individuals.
Entrepreneurship develops rapidly in those societies where ethical values provided independent
capacity of decision-making. No doubt, this view has some truth but it is not accepted
universally.
12. Internal Control System
Entrepreneurship largely depends upon the control system designed for controlling the business
activities. If the control system is effective they will result in optimal inventory, good quality
products and high profit margins. This will have a positive effect on the success of
entrepreneurship.
Characteristics and Skills of an Entrepreneur

1. Leadership skills
Do you possess good leadership skills? Do people like your leadership and does your leadership
style inspire change? As a business owner, you must be able to manage your employees and the
teams involved.
Businesses that are meeting their goals and aspirations have gotten where they are because of
having leaders with the capacity to guide the businesses through the different challenges, but still
come out on the other side having achieved what they set out to do. Being a great leader means
that your employees work with you, question your moves at other times, and basically
communicate well with you just to ensure that your business reaches its goals.
“The quality of a leader is reflected in the standards they set for themselves.” – Ray Kroc
2. Excellent communication skills
For you to get the end product you had in mind when starting, you should be able to clearly
communicate your goals to all the teams involved in the production and processing process. An
entrepreneur needs to understand their employees, know their strengths or weaknesses, then help
them use these effectively, making the business and the employee better. This is only possible
through communication.
Communication must be two way and you should also listen. Good written and spoken
communication skills are important out of the business establishment as well. Communication is
integral when looking for funding, when handling complaints from customers, or when
negotiating new deals.
3. Ambition
To change the world with your business, you need to have ambitious projects. Ambitious
projects are often referred to as the disruptive ventures. To get on top of things and the industry,
yours should be the project that will disrupt the society’s status quo.
As an entrepreneur, your ‘holy grail’ is a product or a service that will shake up the industry
radically. This includes the ability to change the way people view things, interact or label things.
4. Risk taker
An entrepreneur is the definition of a risk taker. Business growth depends on your ability to dive
into the future of uncertainty while embracing all the challenges and the problems that will cross
your path. You should be willing to risk your money, time, and other unknown factors. To deal
with these risks and the unknown, you should set aside resources, bandwidth, and plans to deal
with the unknown.
5. Fearlessness
You cannot run a business when you are afraid of every turn you are about to make. Being a risk
taker requires a fearless spirit. There will be scary moments, but your ability to maneuver and
win over the fear is the power that will propel you and your business to greater heights.
6. Ability to listen to your gut instincts and to trust them
There isn’t one successful entrepreneur who faults or regrets trusting their instincts. In a normal
consumer life as well as the business world, you have to listen to that little voice and step out
when your gut says so.
As a result of the impressive results reported by entrepreneurs who always trust their instincts,
gut instincts have been dubbed the sixth sense. This sixth sense is very powerful and you should
be able and willing to trust and rely on it. It doesn’t matter what the rest of the team thinks.
7. Visionary
You cannot take on the entrepreneurship bull by the head and ride it without falling over or
getting it to trample on you if you have a solid vision in mind. Perceptive and creative business
visionaries tend to twist normal views, distorting reality and eventually change the way people
see the world. To be in the top entrepreneurial league, you should be able to cultivate these
visions in your mind so as to make the big breakthroughs, which could never be envisioned by an
ordinary person.
“The key to realizing a dream is to focus not on success but on significance — and then even the
small steps and little victories along your path will take on greater meaning.” – Oprah Winfrey
8. Motivation and passion
The most important trait ingrained in successful entrepreneurs is passion in what one does and
the motivation to hit the big business storms every day without giving up. Because of passion,
you will stay up late to complete unfinished tasks, wake up earlier for your customers to get their
deliveries in time, work endlessly on the same thing without getting bored, willingness to make
the business better and stronger, and the ability to be in love with that which you wake up to,
every day. Without this and the internal motivation to make things work, you will not succeed in
business.
9. Tech savviness
You don’t have to be a pro in all matters tech and programming but in this digital age, you
should have the least possible capacity to market your products or services online and to connect
to your customers, competitors, or suppliers through social media platforms. Digital marketing is
crucial and you should do some basic SEO. You should also use the company’s and your
personal social media platforms to build and enhance your business brand.
10. Good financial management skills
You need to manage your money. Even when you have a CFO, you still have to control things
and help in making business decisions concerning money. Besides financial management, you
must have the ability and the capacity to raise funds. To get investors interested in your business,
you should be able to show them what you have and what their investment can do for your
business.
In conclusion, the success of your business depends on these skills and traits. A rapidly growing
business is one that is not only disruptive, but also one that leaves a positive impact in society.
Your goal in business shouldn’t just be raising a lot of money, but you should have the vision to
change things around to benefit the whole society.
Entrepreneur V/S Manager
The main difference between Entrepreneur and Manager is their role in the organization.
Entrepreneur is the owner of the company whereas Manager is the employee of the company.
Entrepreneur is a risk taker, they take financial risk for their enterprise. Entrepreneur has a vision
and focuses on achievements and profit.
The responsibility of the Manager is to run the organization, control it and make sure everything
is working smoothly. Manager works for salary and does not take any risks.
Comparison Chart
BASIS FOR
ENTREPRENEUR MANAGER
COMPARISON
Manager is an individual who

Entrepreneur refers to a person who
takes the responsibility of
Meaning creates an enterprise, by taking
controlling and administering the
financial risk in order to get profit.
organization.
Focus Business startup Ongoing operations
Primary motivation Achievement Power

Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse
Evolution of Entrepreneur, Entrepreneurship

The majority of wealth in the hands of the ruling class, owning one’s own business was a rare
sight. The old-world entrepreneurs mostly consisted of merchants and craftsmen. Plenty of
merchants created their own business, but a lot of the time the business and connections were
handed down generation to generation. Skilled craftsmanship was another family affair, but
anyone with the right connections that was lucky enough to land an apprenticeship and succeed
at it we’re able to climb the economic ladder a little higher.
Merchants started to take over be more prominent as the world market grew because of
exploration and sailing and shipping became easier. It wasn’t until the industrial age when the
big business was back in a central location. Inventors were a large part of the entrepreneurial
field. Using new technology, manufacturing, transportation and ingenuity, inventors dominated
the industrial age.
The 20th century was the home of the media kings. Radio, television and film blew up creating
new industries across the globe. Finally, our current Information Age came upon us in the 80’s.
Since then moguls have been materialized from one single good idea worth billions upon billions
of dollars.
Entrepreneurs have shaped the face of business and enterprise since the dawn of man. From the
first wheel to the advent of the internet, these clever businesspeople evolved for centuries into
their most recent incarnation, the social media entrepreneur.
We’re no longer cave-people, but we still have some things in common with our ancestors.
Instead of using the internet as a forum for their business, today’s social media entrepreneurs are
reshaping it to fit their businesses. These social media entrepreneurs thrive on connectivity.
The Evolution of Entrepreneurship
The need and the constant necessity for a good leader is one of the many factors that drive the
evolution of entrepreneurship. Besides this, there are a few other factors:
4. Trading: With the improvement in communication between the countries and the advancement
in transportation, start the process of trading.
5. Advent of stable specialization and communities: When more and more individuals start to
settle in secure communities, a huge change was noticed in their lifestyles. Each group had a leader who
was qualified and specialized in one task and that helped in speeding the development of leadership
skills and innovation.
6. Need of independent career: More and more people are looking for a career path that is totally
independent. The majority started to take risks by developing their own businesses in order to achieve
maximum benefits.
Concepts of Intrapreneurship
An Intrapreneurship is the system wherein the principles of entrepreneurship are practiced within
the boundaries of the firm. An intrapreneur is a person who takes on the responsibility to
innovate new ideas, products and processes or any new invention within the organization.
An intrapreneur is the individual who thinks out of the box and possesses the leadership skills
and does not fear from risk. Thus, an intrapreneur possesses the same traits as that of an
entrepreneur.
The concept of an Intrapreneurship can be well understood in contrast to the entrepreneurship.
7. Intrapreneurship is restorativein nature, i.e. an organization encourages the employees to

practice the entrepreneurial principles to counter stagnation within the firm or transform the slow
growth of the company into a high-growth. Whereas the entrepreneurship is developmental in nature,
i.e. an individual creates something that has never existed before, such as a new product, process or a
new venture itself.
8. In intrapreneurship, the major challenge that individual faces are from the company’s
culture Sometimes, the corporate relationships and the mindsets of employees acts as a hurdle in the
path of an intrapreneur. Whereas, in the case of entrepreneurship, the marketis the only enemy. An
entrepreneur has to scrutinize the market conditions thoroughly to cross the hurdles coming in his way.
9. An intrapreneur has an access to firm’s resources such as funds, manufacturing setups,
marketing facilities, and other supporting activities to give shape to his dreams. Whereas an
entrepreneur has to arrange his own resourcessuch as own funds or the borrowed funds, manufacturing
facilities, marketing facilities, etc.
10. An intrapreneur does not have the ownership of a new venture and isnot even independentto
take decisions, whereas an entrepreneur is the whole sole owner of the new venture established by
him. Also, he is independent to take any decisions with respect to his setup.
Thus, an Intrapreneurship is a practice of creating the entrepreneurial environment within the

organization, thereby enabling the employees to apply their entrepreneurial skills in the job roles;
they are assigned to.
Entrepreneur Intrapreneur
An entrepreneur is independent in his An intraprenuer is dependent on the

operations entrepreneur i.e. the owner.
An entrepreneur himself raises funds required

The Intrapreneur does not raise funds.
for the enterprise.
Entrepreneur bears the risk involved in the An intrapreneur does not fully bear the risk
business. involved in the enterprise.
On the contrary,an intrapreneur operates from

An entrepreneur operates from outside.
within the organization itself.
An entrepreneur begins his business with a An intrapreneur sets up his enterprise after
newly set up enterprise. working someone else’s organization.
As an entrepreneur establishes new business, so An intrapreneur establishes his business after

he does not posses any experience over the gathering experiences through working in the
business. other organization.
Entrepreneurs may find it difficult to get Intrapreneurs have their resources readily
resources available to them.
Entrepreneurs are found anywhere their vision Intrapraneurs work within the confines of an
takes them. organization.
Entrepreneurs know the business on a macro

Intrapreneurs are highly skilled and specialized.
scale.
Types of Entrepreneurs, Functions Of Entrepreneur
An Entrepreneur is a person who has a role of an industrialist and forms an organization for the
commercial use. He is a change agent who transforms the demand into supply by forecasting the
needs of the society.
Types of Entrepreneurs
11. Innovative Entrepreneur: These are the ones who invent the new ideas, new products, new
production methods or processes, discover potential markets and reorganize the company’s structure.
These are the industry leaders and contributes significantly towards the economic development of the
country.The innovative entrepreneurs have an unusual foresight to recognize the demand for goods and
services. They are always ready to take a risk because they enjoy the excitement of a challenge, and
every challenge has some risk associated with it. Ratan Tata is said to be an innovative entrepreneur,
who launched the Tata Nano car at a considerably low cost.
12. Imitating Entrepreneurs: The imitating entrepreneurs are those who immediately copy the new
inventions made by the innovative entrepreneurs. These do not make any innovations by themselves;
they just imitate the technology, processes, methods pioneered by others.These entrepreneurs are
found in the places where there is a lack of resources or industrial base due to which no new
innovations could be made. Thus, they are suitable for the underdeveloped regions where they can
imitate the combinations of inventions already well established in the developed regions, in order to
bring a boom in their industry.
13. Fabian Entrepreneurs: These types of entrepreneurs are skeptical about the changes to be made
in the organization. They do not initiate any inventions but follow only after they are satisfied with its
success rate.They wait for some time before the innovation becomes well tested by others and do not
result in a huge loss due to its failure.
14. Drone Entrepreneurs: These entrepreneurs are reluctant to change since they are very
conservative and do not want to make any changes in the organization. They are happy with their
present mode of business and do not want to change even if they are suffering the losses.
Thus, this classification is done on the basis of the willingness of an entrepreneur to create and
accept the innovative ideas.
Functions of Entrepreneur
Entrepreneurs are broadly classified into/our categories as mentioned below:
5. Entrepreneurial Functions
6. Managerial Functions
7. Promotional Functions
8. Commercial Functions
1. Entrepreneurial Functions:
The major entrepreneurial functions include risk bearing, organizing, and innovation. Since these
are already discussed under the heading 1.2 Evolution of the Concept of Entrepreneur, the same
is, therefore, not discussed here again for the sake of repetition.
2. Managerial Functions:
In simple words, management is getting things working with and through others. Different
experts have defined term management differently. According to Henri Fayol (1949) who is
considered the father of ‘principles of management,’ “management is to forecast, to plan, to
organize, to command, to co-ordinate, and to control.”
In the opinion of George Terry (1953), “management is a distinct process consisting of planning,
organizing, actuating, and controlling performance to determine and accomplish the objectives
by the use of people and resources.”
The significance of management function lies in the fact that enterprises with excellent facilities
and quality resources have floundered and fizzled out due to either no management or poor
management and enterprises with good management but with poor facilities and resources have
flourished and performed exceedingly well. In small-scale enterprises, the entrepreneur who is
the owner of the enterprise also, has to perform the management functions as well.
The management functions performed by entrepreneur are classified into the following five
types:
8. Planning
9. Organizing
10. Staffing
11. Directing
12. Controlling
A brief description of each of these follows in seriatim:
1. Planning:
In common parlance, planning is pre-determined course of action to accomplish the set
objectives. In other words, planning is today’s projection for tomorrow’s activity. Planning
pervades in all aspects of business. An entrepreneur has to make decisions as to what is to be
done, how it is to be done, when it is to be done, where it is to be done, by whom it is to be done
and so on.
The importance of planning lies in the fact that it ensures the smooth and effective completion
and running of a business enterprise. Absence of planning causes confusion which, in turn,
affects the smooth performance of job whatsoever it may be.
How? The following anecdote beautifully demonstrates it:
This is a story about four people named Everybody, Somebody, Anybody and Nobody. There
was an important job to be done. Everybody was sure that somebody would do it. Anybody
could have done it, but nobody did it. Somebody got angry about that because it was
Everybody’s job. Everybody thought anybody could do it, but nobody realized that everybody
would not do it. It ended up that everybody blamed somebody when nobody did what anybody
could have done.
2. Organising:
The organizing function of an entrepreneur refers to bringing together the men, material,
machine, money, etc. to execute the plans. The entrepreneur assembles and organizes the above
mentioned different organs of an enterprise in such a way that these combinedly start functioning
as one, i.e., enterprise. Thus, organizing function of an entrepreneur ultimately provides a
mechanism for purposive, integrated and co-operative action by many people in a joint and
organized effort to implement a business plan.
3. Staffing:
Staffing involves human resource planning and human resource management. Thus, staffing
function of an entrepreneur includes preparing inventory of personnel available, requirement of
personnel, sources of manpower recruitment, their selection, remuneration, training and
development and periodic appraisal of personnel working in the enterprise.
Business history is replete with evidences that it is basically the staff, i.e., personnel working in
the organization that makes all the difference. While appreciating the role of personnel in the
success of an organization, L. F. Urwick had remarked that, “business houses are made or broken
in the long-run not by markets or capital, patents or equipments, but by men.”
Andrew Carniege’s view that “Take my people and leave my factory, soon grass will grow on
the floor. Take my factory and leave my people, soon we shall build a better factory” also
underlines the significance of people or staffing in the making of an organization. However,
staffing function is as crucial for the success of a business enterprise is equally complex as well.
4. Directing:
The functions like planning, organizing, and staffing are merely preparations for setting up a
business enterprise. The directing function of entrepreneur actually starts the setting up of
enterprise. Under the directing function, the entrepreneur guides, counsels, teaches, stimulates
and activates his/ her employees to work efficiently to accomplish the set objectives.
Thus, directing function of entrepreneur concerns the total manner in which an entrepreneur
influences the actions of his / her employees/ workers. It is the final action of an entrepreneur in
making his / her employees actually act after all preparations have been completed.
5. Controlling:
Controlling is the last management function performed by the entrepreneur. In simple words,
controlling means to see whether the activities have been performed in conformity with the plans
or not. Thus, controlling is comparison of actual performance with the target or standard
performance and identification of variation between the two, if any, and taking corrective
measures so that the target is accomplished.
3. Promotional Functions:
1. Identification and Selection of Business Idea:

Every intending entrepreneur wants to start the most profitable and rewarding project. The
selection of the most suitable business project involves a process. The intending entrepreneur,
based on his /her knowledge, experience, and information gathered from friends and relatives,
generates some possible business ideas which can be examined and pursued as a business
enterprise.
This process is also described as ‘opportunity scanning and identification’. Then, the generated
ideas are analysed in terms of costs and benefits associated with them. Having made cost-benefit
analysis of all the ideas, the most beneficial idea is finally selected to be pursued as business
enterprise.
2. Preparation of Business Plan or Project Report:

The entrepreneur prepares a statement called ‘business plan’ or ‘project report’ of what he / she
proposes to take up. In other words, business plan is a well evolved course of action devised by
entrepreneur to achieve the specified objectives within a specified period of time.
In this sense, business plan is just like an operating document. The preparation of business plan
is not must, but it is very much useful for the entrepreneur to establish his / her enterprise in an
effective and smooth manner. But, it is must for those entrepreneurs who intend to apply for
financial assistance from the financial institutions and banks for their enterprises.
It contains information about the intending entrepreneur, location of enterprise, requirement for
land and building, plant and machinery, raw material, utilities, transport and communication,
manpower, requirement for funds including working capital along with its sources of supply,
break-even point and implementation schedule of the project.
16. Requirement for Finance:
The entrepreneur prepares requirement for funds with its detailed structure. The financial
requirement is also classified into short-term and long-term separately. Then, the sources of
supply to acquire the required fund are also mentioned. How much will be the share capital in
terms of equity and preference shares and how much will be borrowed capital from different
financial institutions and banks are clearly determined.
4. Commercial Functions:
1. Production / Manufacturing:
Once the enterprise is finally established, it starts producing goods or offering services,
whichever be the case. Production function includes decisions relating to the selection of factory
site, design and layout, types of products to be produced, research and development, and design
of the product.
The ancillary activities include production planning and control, maintenance and repair,
purchasing, store-keeping, and material handling. The effective performance of production
function, to a large extent, depends on the proper production planning and control.
2. Marketing:
All production is basically meant for marketing. Marketing is the performance of those business
activities that direct the flow of goods and services from producer to consumer or user. Thus,
marketing essentially begins and ends with the customers. It is important to note that marketing
is not just selling. In fact, marketing includes much more than selling. Selling is the last function
in marketing activities.
The examples of marketing activities are market or consumer research, product planning and
development, standardization, packaging, pricing, storage, promotional activities, distribution
channel, etc. The success of marketing function is linked with an appropriate ‘marketing mix’.
Traditionally, marketing mix referred to 4 Ps, namely, product, price, promotion, and physical
distribution. Of late, 3 more Ps namely, packaging, people, and process are also added to
‘marketing mix’.
3. Accounting:
The main objective of any business enterprise is to earn profits and create wealth. Whether the
business is fulfilling its objective or not is ascertained through accounting. What is accounting?
According to the American Institute of Certified Public Accountants, “Accounting is the art of
recording, classifying and summarizing in a significant manner and, in terms of money,
transactions and events which are, in part at least, of a financial character and interpreting the
results thereof.”
Thus, accounting involves a process consisting of the following four stages:
8. Recording the Transactions

9. Classifying the Transactions
10. Summarising the Transactions
11. Preparing the Final Accounts
12. Analysing and Interpreting the Results.
The Profit & Loss Account is prepared for ascertaining whether the business earned profit or
incurred loss during a particular period of time also called ‘accounting year’. The Balance Sheet
is prepared to know the financial position of business during the accounting period. Hence, the
Balance Sheet is also called ‘Position Statement.’
Advantages of Becoming an Entrepreneur

You set your principles
You have all the rights. One of the greatest issues you had with getting a “genuine” employment
was being overseen. It made you unbelievably anxious knowing somebody was always studying
your work, investigating your shoulder and letting you know what to do and when to do it.
Can work any place
It is the reality you can work from anyplace it’s up to you. You don’t have to sit in a boring,
white painted cabin and feel like your life is over. No! You have the capacity to move around
and pick your own office. You can paint it any color and you can even decide the décor on your
own. So basically, you are the king of your workplace as you can work from any place.
Never be exhausted
As a business person, each and every day of your life will be distinctive. Presently, this can be
either an agreeable or frightening experience, contingent upon the person. If you like to
experience, rivalry and the thrill of gambling it all, you’ll like owning your own business.
You won’t get tired of it or won’t get a feeling of exhaustion. You won’t feel like you are done
with your life and those entire negative emotions won’t swipe in and out too often. Yes, an
entrepreneur also gets tired but they know how to pause and refresh their mind rather than to put
a halt to the journey in all.
Can pick individuals you like
Amongst all the other wonderful advantages, this one is too important. Sometimes we hate
people we are working with so being an entrepreneur, you can simply change that. You are free
to work with people you like.
Life is too short to be worried by having customers that drive you nuts and to contract
representatives that don’t get along with you. so you are free to choose it all; isn’t that fun?
Make your own destiny
You can make your own particular open doors by doing things like attending conventions,
organizing with similarly invested individuals on the web and substantially more by picking the
people you work with and join forces with, as your own particular manager. In doing this, you
shape nearly cut out your own destiny.
Go to bat for What You Believe In
Being a business person additionally allows you to defend what you have confidence in, and
spread the news. You have the chance to speak up and say what you feel. You haven’t bossed
around because you are the one who bosses people around.
So whatever you believe in is what you perform at! Unlikely to those employed people who have
to do what their bosses tell them. You are the boss of your own world.
Work Your Own Schedule
In any case, being able to manage when you work, when you’ll be ‘in the workplace’, accessible
for gatherings, and so on… is an opportunity that you essentially never need to relinquish. If you
need to take the evening off to play with your most kids, then you can. You can’t do that
working for another person.
Entrepreneurial Decision-Process, Challenges Faced By

Entrepreneurs
Entrepreneurial Decision-Process
The difference between the entrepreneurial style and the managerial style (administrative
domain) involves five business dimensions.
A. Strategic Orientation
15. The entrepreneur’s strategic orientation depends on his or her perception of the opportunity.
16. When the use of planning systems is the strategic orientation, the administrative domain is
operant.
B. Commitment to Opportunity
9. The entrepreneurial domain is pressured by the need for action and has a short time span in
terms of opportunity commitment.
10. The administrative domain is not only slow to act on an opportunity, but the commitment is
usually for a longer time span.
C. Commitment of Resources
13. An entrepreneur is used to having resources committed at periodic intervals, often based on
certain tasks or objectives being reached.
14. In acquiring these resources the entrepreneur is forced to maximize resource use.
15. In the administrative domain, the commitment of resources is for the total amount needed.
16. Administrative-oriented individuals receive personal rewards by effectively administering the
resources under their control.
D. Control of Resources
17. The administrator is rewarded by effective resource administration and has a drive to own or
accumulate as many resources as possible.
18. The entrepreneur, under pressure of limited resources, strives to rent resources on an as-
needed basis.
E. Managerial Structure
13. In the administrative domain, the organizational structure is formalized and hierarchical in
nature.
14. The entrepreneur employs a flat organizational structure with informal networks.
Challenges Faced By Entrepreneurs
An entrepreneur is one who plays significant role in the economic development of a country.
Basically an entrepreneur can be regarded as a person who has the initiative, skill and motivation
to set up a business or an enterprise of his own and who always looks for high achievement.
Entrepreneurs have to face numerous challenges on the road to success, in particular with regard
to access to finance. All entrepreneurs will at some point feel overwhelmed with the many
responsibilities that fall on their shoulders. The common challenges faced by entrepreneurs are
Overestimating Success, Misplaced Purpose, Negative Mindset, Poor Organization, Jack of All
Trades, Employee Motivation, Lack of Support.
8. Finance
Entrepreneurship means having access to capital, understanding business finance and building
successful relationship with lenders. When starting a venture, however, an unprepared
entrepreneur may encounter cash flow problems when he doesn’t have a network of dependable
lenders or investors. Any successful entrepreneur needs a list of people in and out of the business
world to depend on. An entrepreneur must understand business finance, or risk overpricing
offered services. Overpricing your product causes insufficient sales and cash.
9. Business Management
About one-quarter of entrepreneurs cited management problems as another challenge with

entrepreneurship, explains Researching Small Business and Entrepreneurship. A successful
entrepreneur needs passion to get a business started and make it stable. Thus, personal problems,
such as not setting goals, measuring performance and controlling your time can prohibit your
from managing your business properly. In addition, an entrepreneur must have access to useful
business information. Starting a business venture involves learning as much about your business
and product as you can before securing capital. Managing a business also mean finding and
retaining qualified employees.
10. Marketing the Business
Whether an entrepreneur plans to sell products like computers or services like repairing
computers, she needs to market the business. Entrepreneurship problems can arise when an
effective marketing plan doesn’t exist or you don’t have the ability to actually sell the products
or services. Another problem involves using effective advertising. In a society where placing
flyers on street poles may not gain a customer’s attention, you need an effective and thorough
marketing plan to inform people about your business.
11. Finding the Right Business
Location finding a good business location at the right place is definitely not easy. An efficient
location that has a rapidly growing population, good road network and other amenities at a good
place
12. Unforeseen Business Challenges and Expenses
Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for
unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever
comes in the form of:
13. Unexpected lawsuits

14. Inconsistent government policy
15. Not being able to make payroll
16. Unpaid bills and taxes
17. Unexpected resignation of staff from sensitive office
18. Bad debts from customers
19. Loss of market share
20. Dwindling working capital
21. Inadequate stock or inventory.
13. Finding Good Customers
The sixth challenge an entrepreneur will face in the process of starting a small business from
scratch is finding good customers. In the process of building a business, an entrepreneur will
come to find out that there are good customers as well as bad customers.. Good customers are
really hard to find. A good customer will be loyal to the company and will be willing to forgive
if the business make a mistake and apologize. A good customer will try to do the right thing that
will benefit both him and company mutually.
 Keeping Up With Industrial Changes and Trends
Change in trends is a challenge an entrepreneur must be prepared for when starting a small
business. Trends have made and broken lot of businesses. Profitable businesses that have been
wiped out by slight industrial changes and trends. A typical example is the Dot com trend, where
many established industrial based businesses were wiped out by new web based dot com
companies. Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly
adjust their business to the current trend.
1. Focus
One of the biggest mistakes entrepreneurs make in their early days is trying to be all things to all
people. They attempt to sell their product or service to too wide of a market. Entrepreneurs also
face another challenge in this area. They focus on the wrong things. They spend too much time
building their product without validating that the marketplace wants needs and will actually pay
for it.
1. Finding Good Employees
Most writers and managers crank up the process of finding good employees as an easy task.
They define the process of finding an employee as simply presenting the job description and the
right employee will surface. Business owners know how difficult it is to find a hardworking,
trustworthy employee. Most employees want to work less and get paid more. Finding a good
employee who will be passionate about delivering his or her services is quite difficult. Finding
good employees is a minor task compared to the business challenge of forging the hired
employees into a team.
1. Assembling a Business Team
The third business challenge that an entrepreneur will face in the course of starting a small
business from scratch is assembling the right business management team. The process of
building a business team starts even before the issue of raising initial start-up capital arises. Most
brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as
an individual. A business team is a vital, yet often ignored key to raising venture capital
successfully.
Common Mistakes in Entrepreneurship, Changing Role

of Entrepreneur
Everyone makes mistakes, and it’s no different for entrepreneurs launching a new business.
Getting a little tripped up here and there is natural, but for a startup, even little errors can become
costly down the line.
Luckily, countless entrepreneurs have blazed the startup trail before, and many of them have
committed common mistakes the rest of us can learn from. With a little bit of planning and the
wisdom to learn from the advice of others, you can avoid some typical stumbling blocks.
1. Don’t be afraid to fail
“The biggest mistake you can make is to be afraid of failure. Failure is key to your success, and
jumping into your fear is very positive for your future business. How you pick up after failure
and learn from your mistakes is the key to great success.” – Audrey Darrow,
president, Righteously Raw
2. Get organized
“Being organized is key. Running a small business is like being a circus ringmaster. It’s normal
to have dozens of things happening at once. So, I have a daily task list, things that I need to do.
And I list them by their priority. It sounds simple, but it works, and makes me far more
productive.” – Tara Langdale-Schmidt, founder, VuVatech
3. Don’t misinterpret your market
“The biggest mistake a business owner can make when launching a startup is misinterpreting the
market. Whether it is underestimating [or] overestimating costs, appealing to the wrong target
demographic, or poorly gauging the demand, misinterpreting your market can end your business
before it even starts.” – Nabeel Mushtaq, COO and co-founder, AskforTask
4. Learn how to delegate and avoid micromanaging
“As a startup, there is sometimes a lack of self-awareness. Founders in the early stage are not
great at delegating work to their team members. They try to do everything that they possibly can
to cut costs, but really, in the long run, they should have delegated the things that they are not
good at and focused on their strengths. If you are aiming for multiple targets at once, you are
very unlikely to hit one.” – Matt Pyke, founder and CEO, Fly High Media
5. Don’t hire too soon
“By far, the biggest mistake a startup can make is hiring employees too soon, such as hiring full-
timers when a part-timer might make more sense, or hiring an employee when a subcontractor
could have done the same job/function. It is very easy to run a small business with part-timers,
subcontractors and the services of other professionals.” – Joseph C. Kunz Jr., CEO and
president, Dickson Keanaghan
6. Don’t get tunnel vision when raising money
“[It’s a mistake] focusing on raising money instead of customers and product-market fit. Once
companies have a product, many focus on raising money. But they should focus on customers
and product-market fit, making sure their value proposition and offering resonates with a market
and will get traction.” – BJ Lackland, CEO, Lighter Capital
7. Don’t avoid contracts
“One of the biggest mistakes a business owner/entrepreneur can make when starting a business is
the failure to implement contracts. No matter how good relationships may be, they can come to a
screeching halt when systems and agreements are not put in place.” – Michelle Colon-Johnson,
founder, 2 Dream Productions
8. Don’t give yourself the wrong salary
“Paying yourself too little or too much [is a mistake]. It’s often easier to determine the salary for
a new hire than determining an owner or partner’s pay. Consider paying yourself a percentage of
revenue. Whatever you choose, make figuring out your pay and that of your partners a practice
and foundation to healthy expectation of management.” – Diana Santaguida, co-founder and
creative director, SEOcial
9. Don’t move too slowly
“Having been a first-time founder who made many mistakes, I realize in hindsight that I never
made decisions fast enough. I was slow to recognize that a relationship with a business partner
wasn’t working out, that my customer wasn’t willing to pay enough money to sustain our
business, that investors weren’t interested in funding my business no matter how much they liked
me, etc.” – Sam Rosen, CEO and founder, MakeSpace
10. Grow at the right pace.
“I have had a lot of people who want to invest in my company. One of the biggest mistakes you
can do is partner with someone just because of the money. The investor is more important
than the money. You need to pick someone that shares your vision and morals. It is OK to be
picky when it comes to an investor.” – Tara Langdale-Schmidt, founder, VuVatech
Changing Role of Entrepreneur
Entrepreneurs occupy a central position in a market economy. For it’s the entrepreneurs who
serve as the spark plug in the economy’s engine, activating and stimulating all economic activity.
The economic success of nations worldwide is the result of encouraging and rewarding the
entrepreneurial instinct.
A society is prosperous only to the degree to which it rewards and encourages entrepreneurial
activity because it is the entrepreneurs and their activities that are the critical determinant of the
level of success, prosperity, growth and opportunity in any economy. The most dynamic
societies in the world are the ones that have the most entrepreneurs, plus the economic and legal
structure to encourage and motivate entrepreneurs to greater activities.
For years, economists viewed entrepreneurship as a small part of economic activity. But in the
1800s, the Austrian School of Economics was the first to recognize the entrepreneur as the
person having the central role in all economic activity. Why is that?
Because it’s entrepreneurial energy, creativity and motivation that trigger the production and sale
of new products and services. It is the entrepreneur who undertakes the risk of the enterprise in
search of profit and who seeks opportunities to profit by satisfying as yet unsatisfied needs.
Entrepreneurs seek disequilibrium–a gap between the wants and needs of customers and the
products and services that are currently available. The entrepreneur then brings together the
factors of production necessary to produce, offer and sell desired products and services. They
invest and risk their money–and other people’s money–to produce a product or service that can
be sold at a profit.
More than any other member of our society, entrepreneurs are unique because they’re capable of
bringing together the money, raw materials, manufacturing facilities, skilled labor and land or
buildings required to produce a product or service. And they’re capable of arranging the
marketing, sales and distribution of that product or service.
Entrepreneurs are optimistic and future oriented; they believe that success is possible and are
willing to risk their resources in the pursuit of profit. They’re fast moving, willing to try many
different strategies to achieve their goals of profits. And they’re flexible, willing to change
quickly when they get new information.
Entrepreneurs are skilled at selling against the competition by creating perceptions of difference
and uniqueness in their products and services. They continually seek out customer needs that the
competition is not satisfying and find ways to offer their products and services in such a way that
what they’re offering is more attractive than anything else available.
Entrepreneurs are a national treasure, and should be protected, nourished, encouraged and
rewarded as much as possible. They create all wealth, all jobs, all opportunities, and all
prosperity in the nation. They’re the most important people in a market economy–and there are
never enough of them.
As an entrepreneur, you are extremely important to your world. Your success is vital to the
success of the nation. To help you develop a better business, one that contributes to the health of
the economy, I’m going to suggest that you take some time to sit down, answer the following
questions, and implement the following actions:
What opportunities exist today for you to create or bring new products or services to your market
that people want, need and are willing to pay for? What are your three best opportunities?
17. Identify the steps you could take immediately to operate your business more efficiently,
especially regarding internal operating systems.
18. Tell yourself continually “Failure is not an option.” Be willing to move out of your comfort zone,
to take risks if necessary to build your business.
19. Use your creativity rather than your money to find new, better, cheaper ways to sell your
products or reduce your costs of operation. What could you do immediately in one or both of these
areas?
20. Imagine starting over. Is there anything you’re doing today that, knowing what you now know,
you wouldn’t get into or start up again?
21. Imagine reinventing your business. If your business burned to the ground today, and you had to
start over.
Women Enterprises
Women Entrepreneurs may be defined as the women or a group of women who initiate, organize
and operate a business enterprise.
Government of India has defined women entrepreneurs as an enterprise owned and controlled by
a women having a minimum financial interest of 1% of the capital and giving at least 51% of
employment generated in the enterprise to women.
Problems of Women Entrepreneurs in India/Challenges faced by Women Entrepreneurs
Women in India have faced many problems to get ahead their life in business. Women
entrepreneurs face a series of problems right from the beginning till the enterprise functions. The
problems of Indian women pertains to her responsibility towards family, society and work.
The traditions, customs, socio cultural values, ethics, motherhood, physically weak, feeling of
insecurity etc. are some peculiar problems that the Indian women are coming across while they
jump into entrepreneurship.
Women in rural areas have to suffer still further. They face tough resistance from men. They are
considered as helpers. The attitude of society towards her and constraints in which she has to live
and work are not very conducive.
Besides the above basic problems the other problems faced by women entrepreneurs are as
follows:
22. Family ties
Women in India are very emotionally attached to their families. They are supposed to attend to
all the domestic work, to look after the children and other members of the family. They are over
burden with family responsibilities like extra attention to husband, children and in laws, which
take away a lots of their time and energy. In such situation, it will be very difficult to concentrate
and run the enterprise successfully.
11. Male dominated society
Even though our constitution speaks of equality between sexes, male chauvinism is still the order
of the day. Women are not treated equal to men. Their entry to business requires the approval of
the head of the family. Entrepreneurship has traditionally been seen as a male preserve. All these
put a break in the growth of women entrepreneurs.
17. Lack of education
Women in India are lagging far behind in the field of education. Most of the women (around
sixty per cent of total women) are illiterate. Those who are educated are provided either less or
inadequate education than their male counterpart partly due to early marriage, partly due to son’s
higher education and partly due to poverty. Due to lack of proper education, women
entrepreneurs remain in dark about the development of new technology, new methods of
production, marketing and other governmental support which will encourage them to flourish.
19. Social barriers
The traditions and customs prevailed in Indian societies towards women sometimes stand as an
obstacle before them to grow and prosper. Castes and religions dominate with one another and
hinders women entrepreneurs too. In rural areas, they face more social barriers. They are always
seen with suspicious eyes.
15. Shortage of raw materials
Neither the scarcity of raw materials nor availability of proper and adequate raw materials
sounds the death-knell of the enterprises run by women entrepreneurs. Women entrepreneurs
really face a tough task in getting the required raw material and other necessary inputs for the
enterprises when the prices are very high.
9. Problem of finance
Women entrepreneurs have to struggle a lot in raising and meeting the financial needs of the
business. Bankers, creditors and financial institutes are not coming forward to provide financial
assistance to women borrowers on the ground of their less credit worthiness and more chances of
business failure. They also face financial problem due to blockage of funds in raw materials,
work-in-progress finished goods and non-receipt of payment from customers in time.
10. Tough competition
Usually women entrepreneurs employ low technology in the process of production. In a market
where the competition is too high, they have to fight hard to survive in the market against the
organized sector and their male counterpart who have vast experience and capacity to adopt
advanced technology in managing enterprises
11. High cost of production
Several factors including inefficient management contribute to the high cost of production,
which stands as a stumbling block before women entrepreneurs. Women entrepreneurs face
technology obsolescence due to non-adoption or slow adoption to changing technology, which is
a major factor of high cost of production.
12. Low risk-bearing capacity
Women in India are by nature weak, shy and mild. They cannot bear the amount risk which is
essential for running an enterprise. Lack of education, training and financial support from
outsides also reduce their ability to bear the risk involved in an enterprises.
13. Limited mobility
Women mobility in India is highly limited and has become a problem due to traditional values
and inability to drive vehicles. Moving alone and asking for a room to stay out in the night for
business purposes are still looked upon with suspicious eyes. Sometimes, younger women feel
uncomfortable in dealing with men who show extra interest in them than work related aspects.
22. Lack of entrepreneurial aptitude
Lack of entrepreneurial aptitude is a matter of concern for women entrepreneurs. They have no
entrepreneurial bent of mind. Even after attending various training programmes on entrepreneur
ship women entrepreneurs fail to tide over the risks and troubles that may come up in an
organizational working.
14. Limited managerial ability
Management has become a specializedjob which only efficient managers perform. Women
entrepreneurs are not efficient in managerial functions like planning, organizing, controlling,
coordinating, staffing, directing, motivating etc. of an enterprise. Therefore, less and limited
managerial ability of women has become a problem for them to run the enterprise successfully.
 Legal formalities
Fulfilling the legal formalities required for running an enterprise becomes an upheaval task on
the part of an women entrepreneur because of the prevalence of corrupt practices in government
offices and procedural delays for various licenses, electricity, water and shed allotments. In such
situations women entrepreneurs find it hard to concentrate on the smooth working of the
enterprise.
2. Exploitation by middle men
Since women cannot run around for marketing, distribution and money collection, they have to
depend on middlemen for the above activities. Middlemen tend to exploit them in the guise of
helping. They add their own profit margin, which result in less sales and lesser profit.
2. Lack of self-confidence
Women entrepreneurs because of their inherent nature, lack of self-confidence, which is

essentially a motivating factor in running an enterprise successfully. They have to strive hard to
strike a balance between managing a family and managing an enterprise. Sometimes she has to
sacrifice her entrepreneurial urge in order to strike a balance between the two.
How to Develop Women Entrepreneurs?
Right efforts on all areas are required in the development of women entrepreneurs and their
greater participation in the entrepreneurial activities. Following efforts can be taken into account
for effective development of women entrepreneurs.
2. Consider women as specific target group for all developmental programmes.

3. Better educational facilities and schemes should be extended to women folk from government
part.
4. Adequate training programmes on management skills to be provided to women community.
5. Encourage women’s participation in decision-making.
6. Vocational training to be extended to women community that enables them to understand the
production process and production management.
7. Skill development to be done in women’s polytechnics and industrial training institutes. Skills
are put to work in training-cum-production workshops.
8. Training on professional competence and leadership skill to be extended to women
entrepreneurs.
9. Training and counselling on a large scale of existing women entrepreneurs to remove
psychological causes like lack of self-confidence and fear of success.
10. Counselling through the aid of committed NGOs, psychologists, managerial experts and
technical personnel should be provided to existing and emerging women entrepreneurs.
1. Continuous monitoring and improvement of training programmes.

2. Activities in which women are trained should focus on their marketability and profitability.
3. Making provision of marketing and sales assistance from government part.
4. To encourage more passive women entrepreneurs the Women training programmes should be
organized that taught to recognize her own psychological needs and express them.
5. State finance corporations and financing institutions should permit by statute to extend purely
trade related finance to women entrepreneurs.
6. Women’s development corporations have to gain access to open-ended financing.
7. The financial institutions should provide more working capital assistance both for small scale
venture and large scale ventures.
8. Making provision of micro credit system and enterprise credit system to the women
entrepreneurs at local level.
9. Repeated gender sensitization programmes should be held to train financiers to treat women
with dignity and respect as persons in their own right.
10. Infrastructure, in the form of industrial plots and sheds, to set up industries is to be provided by
state run agencies.
11. Industrial estates could also provide marketing outlets for the display and sale of products made
by women.
12. A Women Entrepreneur’s Guidance Cell set up to handle the various problems of women
entrepreneurs all over the state.
13. District Industries Centers and Single Window Agencies should make use of assisting women in
their trade and business guidance.
14. Programmes for encouraging entrepreneurship among women are to be extended at local level.
15. Training in entrepreneurial attitudes should start at the high school level through well-designed
courses, which build confidence through behavioural games.
16. More governmental schemes to motivate women entrepreneurs to engage in small scale and
large-scale business ventures.
17. Involvement of Non Governmental Organizations in women entrepreneurial training
programmes and counselling.
Social Entrepreneurship
Social entrepreneurship is the attempt to draw upon business techniques to find solutions
to social problems. This concept may be applied to a variety of organizations with different sizes,
aims, and beliefs.
The social entrepreneur is a mission-driven individual who uses a set of entrepreneurial

behaviours to deliver a social value to the less privileged, all through an entrepreneurially
oriented entity that is financially independent, self-sufficient, or sustainable.
Characteristics of Social Entrepreneur
23. The usual ideologies and principals do not holdback social Entrepreneurs. They are always
looking at breaking them.
24. Social Entrepreneurs are impatient. They do not go well with the bureaucracy around them.
25. Social Entrepreneurs have the patience, energy and enthusiasm to teach others.
26. Social Entrepreneurs combine Innovation, Resources and Opportunity to derive solutions to
Social problems.
27. This should be first in the list, Social Entrepreneurs DO NOT loose their FOCUS anytime.
28. Social Entrepreneurs always jump in before having their resources in place. They are not
traditional.
29. Social Entrepreneurs ALWAYS believe that every one can Perform and have the capacity to do
so.
30. Social Entrepreneurs ALWAYS display DETERMINATION
31. Social Entrepreneurs can ALWAYS measure and monitor their results.
Types of social entrepreneurship
1. The Leveraged Non-Profit:
This business model leverages resources in order to respond to social needs. Leveraged non-
profits make innovative use of available funds, in order to impact a need. These leveraged non-
profits are more traditional ways of dealing with issues, though are distinguished by their
innovative approaches.
The entrepreneur sets up a non-profit organization to drive the adoption of an innovation that
addresses a market or government failure. In doing so, the entrepreneur engages a cross section
of society, including private and public organizations, to drive forward the innovation through a
multiplier effect. Leveraged non-profit ventures continuously depend on outside philanthropic
funding, but their longer-term sustainability is often enhanced given that the partners have a
vested interest in the continuation of the venture.
2. The Hybrid Non-Profit:
This organizational structure can take on a variety of forms, but is distinctive because the hybrid
non-profit is willing to use profit to sustain its operations. Hybrid non-profits are often created to
deal with government or market failures, as they generate revenue to sustain the operation
outside of loans, grants, and other forms of traditional funding.
The entrepreneur sets up a non-profit organization but the model includes some degree of cost-
recovery through the sale of goods and services to a cross section of institutions, public and
private, as well as to target population groups. Often, the entrepreneur sets up several legal
entities to accommodate the earning of an income and the charitable expenditures in an optimal
structure. To be able to sustain the transformation activities in full and address the needs of
clients, who are often poor or marginalized from society, the entrepreneur must mobilize other
sources of funding from the public and/or philanthropic sectors. Such funds can be in the form of
grants or loans, and even quasi-equity.
3. The Social Business Venture:

These models are set up as businesses designed to create change through social means. Social
business ventures evolved through a lack of funding—social entrepreneurs in this situation were
forced to become for-profit ventures.
The entrepreneur sets up a for-profit entity or business to provide a social or ecological product
or service. While profits are ideally generated, the main aim is not to maximize financial returns
for shareholders but to grow the social venture and reach more people in need. Wealth
accumulation is not a priority and profits are reinvested in the enterprise to fund expansion. The
entrepreneur of a social business venture seeks investors who are interested in combining
financial and social returns on their investments.
Examples of Social Enterprises
1. Aravind Eye Hospital & Aurolab
Social Entrepreneur: Dr.Govindappa Venkataswamy (Dr. V) & David Green
Type of Organization: Trust
Location: Madurai, India
Website: http://www.aravind.org
Mission: Making medical technology and health care services accessible, affordable and
financially self-sustaining
Founded in 1976 by Dr. G. Venkataswamy, Aravind Eye Care System today is the largest and
most productive eye care facility in the world. From April 2007 to March 2008, about 2.4 million
persons have received outpatient eye care and over 285,000 have undergone eye surgeries at the
Aravind Eye Hospitals at Madurai, Theni, Tirunelveli, Coimbatore and Puducherry. Blending
traditional hospitality with state-of-the-art ophthalmic care, Aravind offers comprehensive eye
care in the most systematic way attracting patients from all around the world.
12. SKS India
Social Entrepreneur: Vikram Akula
Type of Organization: For-profit
Website: http://www.sksindia.com
Mission: Empowering the poor to become self-reliant through affordable loans

SKS believes that access to basic financial services can significantly increase economic
opportunities for poor families and in turn help improve their lives. Since inception, SKS has
delivered a full portfolio of microfinance to the poor in India and we are proud of our current
outreach. As a leader in technological innovation and operational excellence, SKS is excited
about setting the course for the industry over the next five years and is striving to reach our goal
of 15 million members by 2012.
18. AMUL (Anand Milk Union Limited)
Social Entrepreneur: Dr. Verghese Kurien
Type of Organization: Co-operative
Website: http://www.amul.com
Amul has been a sterling example of a co-operative organization’s success in the long term. It is
one of the best examples of co-operative achievement in the developing economy. The Amul
Pattern has established itself as a uniquely appropriate model for rural development. Amul has
spurred the White Revolution of India, which has made India the largest producer of milk and
milk products in the world.
20. Grameen Bank
Social Entrepreneur: Muhammad Yunus
Type of Organization: Body Corporate
Website: http://www.grameen-info.org
Grameen Bank (GB) has reversed conventional banking practice by removing the need for
collateral and created a banking system based on mutual trust, accountability, participation and
creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any
collateral. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in
the over all development of socio-economic conditions of the poor who have been kept outside
the banking orbit on the ground that they are poor and hence not bankable. Professor Muhammad
Yunus, the founder of “Grameen Bank” and its Managing Director, reasoned that if financial
resources can be made available to the poor people on terms and conditions that are appropriate
and reasonable, “these millions of small people with their millions of small pursuits can add up
to create the biggest development wonder.”
As of May 2009, it has 7.86 million borrowers, 97 percent of whom are women. With 2,556
branches, GB provides services in 84,388 villages, covering more than 100 percent of the total
villages in Bangladesh.
16. Shri Mahila Griha Udyog Lijjat Papad
Type of Organization: Society
Website: http://www.lijjat.com
Shri Mahila Griha Udyog Lijjat Papad is a Women’s organization manufacturing various
products from Papad, Khakhra, Appalam, Masala, Vadi, Gehu Atta, Bakery Products, Chapati,
SASA Detergent Powder, SASA Detergent Cake (Tikia), SASA Nilam Detergent Powder, SASA
Liquid Detergent. The organization is wide-spread, with it’s Central Office at Mumbai and it’s
67 Branches and 35 Divisions in different states all over India.
The organization started of with a paltry sum of Rs.80 and has achieved sales of over Rs.300
crores with exports itself exceeding Rs.12 crores. Membership has also expanded from an initial
number of 7 sisters from one building to over 40,000 sisters throughout India. The success of the
organization stems from the efforts of it’s member sisters who have withstood several hardships
with unshakable belief in ‘the strength of a woman’.
Especially since Muhammad Yunus, founder of the Grameen Bank and a renowned example of a
social enterprise, won the Nobel Peace Price in 2006 there is increasing interest in social
entrepreneurship for development yet the current academic literature does not provide is a
sufficient link between social entrepreneurship and economic development policies. How
important are social entrepreneurs for economic development? What value is created by social
entrepreneurship?
The social entrepreneur sector is increasingly important for economic (and social) development
because it creates social and economic values:
10. Employment Development
The first major economic value that social entrepreneurship creates is the most obvious one
because it is shared with entrepreneurs and businesses alike: job and employment creation.
Estimates ranges from one to seven percent of people employed in the social entrepreneurship
sector. Secondly, social enterprises provide employment opportunities and job training to
segments of society at an employment disadvantage (long-term unemployed, disabled, homeless,
at-risk youth and gender-discriminated women). In the case of Grameen the economic situation
of six million disadvantaged women micro-entrepreneurs were improved.
11. Innovation/ New Goods and Services
Social enterprises develop and apply innovation important to social and economic development
and develop new goods and services. Issues addressed include some of the biggest societal
problems such as HIV, mental ill-health, illiteracy, crime and drug abuse which, importantly, are
confronted in innovative ways. An example showing that these new approaches in some cases
are transferable to the public sector is the Brazilian social entrepreneur Veronica Khosa, who
developed a home-based care model for AIDS patients which later changed government health
policy.
12. Social Capital
Next to economic capital one of the most important values created by social entrepreneurship is
social capital (usually understood as “the resources which are linked to possession of a durable
network of … relationships of mutual acquaintance and recognition”). Examples are the success
of the German and Japanese economies, which have their roots in long-term relationships and the
ethics of cooperation, in both essential innovation and industrial development. The World Bank
also sees social capital as critical for poverty alleviation and sustainable human and economic
development. Investments in social capital can start a virtuous cycle.
(1) Endowment
The first job of social entrepreneur is to take whatever endowment of social capital he is given
and to use these relationships to create more social capital,by getting more people and
organizations involved with the project,by building a wider web of trust and cooperation around
the project.
(2) Physical capital

The initial endowment of social capital often brings access to physical capital,usually in the form
of rather run-down buildings.Getting access to a physical base is vital. It provides a focus, a base
for new services and a tangible sign that the project is achieving something.
(3) Financial Capital
The initial network of supporters and helpers is vital to bring access to funds, through
fundraising, donations and corporate giving. The more diverse and richer the network, the easier
it will be to raise the funds.
(4) Human Capital
The project has to recruit and pull in more key people to help it move from start-up into
growth,creating products and services.
(5) Organisational capital
As the project grows,becomes larger and more complex,its management will need to become
more organized.It will need stronger financial systems and legal help.With more staff
involved,people management may become more complicated.So the project needs to develop
organizational capital,a more formalized management structure,financial systems and a stronger
set of relationships with partners.
(6) Paying dividends
In the first phase of project,the social entrepreneur inherits and creates social capital.Then he
starts to accumulate more capital in the form of buildings and finance.Then the capital is invested
in creating new services and products.In the final phase,if the investment has been successful the
project starts to pay dividends in several different forms.Perhaps the most valuable dividend is
yet more social capital,in the form of stronger bonds of trust and cooperation,within the
community and outside partners and funders.
(7) Equity Promotion
Social entrepreneurship fosters a more equitable society by addressing social issues and trying to
achieve ongoing sustainable impact through their social mission rather than purely profit-
maximization. In Yunus’s example, the Grameen Bank supports disadvantaged women. Another
case is the American social entrepreneur J.B. Schramm who has helped thousands of low-income
high-school students to get into tertiary education.
To sum up, social enterprises should be seen as a positive force, as change agents providing
leading-edge innovation to unmet social needs. Social entrepreneurship is not a panacea because
it works within the overall social and economic framework, but as it starts at the grassroot level it
is often overlooked and deserves much more attention from academic theorists as well as policy
makers. This is especially important in developing countries and welfare states facing increasing
financial stress.
Rural Entrepreneurship
Entrepreneurs are people who create and develop enterprises and likewise “entrepreneurship” is
the process through which enterprises are set up. It also charts their growth and progress. But, the
growth and development of rural entrepreneurs are complex issues, which can be tackled by
social, political and economic institutions. The sooner they are established, the better it would be
for the commercial development in the rural sector and the subsequent economic growth of our
country.
In the micro-finance industry, we consider rural areas as places of opportunities for new
entrepreneurs. Despite all the inadequacies in rural areas, we should assess and make good use of
their strengths and strengthen them to make rural areas as ‘places of opportunities’. In a country
like India, there is much to do with the way we see the reality of the rural areas. Rural
psychology is attuned to promoting new ideas and innovation, more so because job opportunities
are limited there. We should encourage entrepreneurs to think positively, creatively and with an
entrepreneurship- building mindset to promote their growth. Young people with such perspective
and with the help of rightly channelized efforts would usher in an era of thriving rural
entrepreneurship.
Rural entrepreneurship will augur well for our country in a number of ways.
First, it will provide employment opportunities. Rural entrepreneurship is labour intensive and
provides a clear solution to the growing problem of unemployment. Development of industrial
units in the rural areas through rural entrepreneurship has high potential for employment
generation and income creation.
Secondly, it can help check the migration of people from rural to urban areas in search of jobs.
Rural entrepreneurship can plug the big gap and disparities in income between rural and urban
people. It will usher in modern infrastructural facilities.
On the other hand PM’s ‘Make in India’ project has induced major initiatives, policy changes
and a slew of reforms that put India on the global industrial map as one of the fastest growing
economies and one of the most attractive investment destinations in the world. So we must think
seriously to promote entrepreneurship in a large scale, reaching out to the every corner of our
country. Micro Units Development and Refinance Agency (MUDRA) was created to refinance
micro business under the scheme titled Pradhan Mantri MUDRA Yojana. It can also create a
balanced regional growth, dispel the concentration of industrial units in urban areas and promote
regional development in a balanced way.
Rural entrepreneurship has the potential to promote artistic activities. A large section of
the bearers of traditional heritage and culture lives in rural areas. They create artistically brilliant
handicraft pieces and are equally good in the performing arts sectors. The age-old rich heritage
of rural India can be preserved by protecting and promoting art and handicrafts through rural
entrepreneurship. Recently, on the occasion of the International Women’s Day we had felicitated
17 successful women entrepreneurs from different areas of our country, they are mainly from
rural or semi-urban areas.
In a country like India, where people are still fighting on the issue of unemployment with 83.3
crore out of the total 121 crore Indians living in rural areas, rural entrepreneurship can awaken
the youth there and expose them to various avenues to adopt entrepreneurship and promote it as a
career option. It will bring in an overall change in the quality of lives of people and address
social ills like illiteracy, child marriage, migration and women empowerment among many
others.
Estimating Financial Funds Requirement

Most businesses, especially when they’re starting up or planning for expansion, face periods
when they need to rely on outside resources to stay afloat. Whether the funds come from the
owner’s pocket, accumulated business profits, or outside funding sources, they provide the
lifeline that keeps the business going when expenses exceed revenue for a prolonged period. Use
the information here to forecast how much money you need- and for how long.
32. Create a realistic forecast of your financial situation.
Follow the steps for preparing a pro forma or estimated statement of income, expenses, and
profit, along with an estimated balance sheet and cash flow statement.
13. Estimate your funding need.
Use your financial forecasts, and especially your cash flow projection, to determine how long
you anticipate expenses to exceed revenue and by how much. Doing so helps you get a handle on
when you expect expenses to be incurred, when you expect revenues to roll in, and the amount of
funding you need in order to cover the gap.
19. Create a funding time frame.
After you establish how much funding you need, create a schedule for how long you need the
funding to last before your business needs to become self-sufficient. This schedule, called
your time frame, should include dates by which you plan to meet revenue-
generating milestones — for example, first customer, first major contract, first $10,000 in sales,
and so on — that you can monitor as indicators that your business is on track to achieve
profitability before funding runs out.
As you forecast how long your funding needs to last, be aware of these terms:
21. Runway: The amount of time funding needs to last before your business becomes profitable and
self-sufficient or until additional funding will be required
22. Burn rate: The speed with which you expect to spend the funding you’ve raised in practical
terms, the amount of cash required each month to cover the costs of staying in business
As every experienced entrepreneur knows, sales are only the result of a long line of business
activities beginning with market research, manufacturing, inventory building, marketing,
fulfillment and customer service. All this costs money, which is supposed to come from revenues
earned in the previous year or from financing. Without the money, nothing happens, so the best
place to start your financial projections is the money you have available.
17. Create a preliminary first-year budget based on your retained earnings and credit available from
your bank. If you’re projecting startup financials and don’t have retained earnings or credit, use the
amount of investment you can reasonably expect to raise, including investment by the founders. A
conservative estimate is best because spending too much money too early can force you to cut back just
as your business begins to pick up.
18. Estimate the cost of producing your product. You can skimp on administrative expenses and hire
sales reps on commission only, but you must pay for any products or services you sell. You also need to
balance your product inventory with customer demand. This takes careful study of your target market’s
demographics, psychographics and buying habits, plus a modest estimation of what percentage of that
market you’ll be able to capture. An established company is able to assign a reasonably accurate
percentage with growth, but a startup must expect at least a quarter of virtually no sales.
19. Estimate your customer acquisition costs by establishing how you’ll market your product and
then pricing out your marketing plan. A startup must develop its brand image and customer awareness
during its first year, with sales demand appearing slowly during its second or third quarter; so, for a
startup, marketing will carry a high priority. A mature company can estimate marketing costs with
respect to its plans for market-share expansion or development of new revenue streams.
20. Adjust your production and marketing costs to fit your budget. The remainder is for
administrative expenses. This gives you a figure of how much revenue will be required to offset your
expenses. There may need to be some further adjustments once you reach this point. Add money to
your marketing, figuring marketing costs at approximately 25 percent of total revenues. Marketing will
produce your customers. Keep your production expenses efficient.
Tip
11. Create a 12-month detailed projection and expand it into three to five years by estimating a
year-over-year growth percentage. Doubling your results year-to-year isn’t realistic, so keep your growth
estimates well under the 100 percent level. A startup’s second and third years might have higher growth
than those of a mature company, but that’s because the first year is a year of experimentation and
customer acquisition. If your growth strategy emphasizes a particular area, adjust your costs to reflect
that. For example, if you plan to introduce more product lines, you might include R&D costs in your
production. If you intend to expand your market share, marketing should receive more funds.
Warning
12. Optimism is a quality of the entrepreneur. This is often seen in overly optimistic financial
projections. Have an accountant, banker or experienced business owner review your projections with a
critical and realistic eye. Negative feedback about overly optimistic projections is what you’re looking
for, so pay full attention to any skeptical comments. Those comments may save your company from
disaster.
Sources of finance: Banks

(A) Internal Self-Finance:
One source, quantitatively of big importance, is the saving of the unit itself. It may be the
household, the business or the government.
Normally, the household not only invests out of its own saving but it also has surplus which it
lends to other units via, financial institutions. Like banks, capital market etc.
The savings of the business, comprised of depreciation and the retained earnings, are normally
short of its investment. Hence it also borrows from financial institutions. Government too
finances a part of their investment from internally generated funds.
These arise from the excess of tax and other income over consumption spending plus transfers.
For the shortfall, if and when it occurs, it also borrows from the financial system. Altogether,
roughly half of all the investment is self-financed.
An advantage of investment through internally generated funds is that it combines the acts of
saving and investment. As such certain costs are internalized and reduced. These costs pertain to
collection of information in respect of borrowers, transactions with them, monitoring the use of
funds, and enforcement of the conditions of borrowing.
These costs would have to be met if these funds were to be lent to someone else. Self- financing
also reduces the risks of lending’s as it does not involve preparation of documents in respect of
contract, collateral or security etc.
The shortcoming of this source is that it may fall short of investment opportunities or its use may
be inefficient. That is funds may not be wholly or partly invested in the most productive lines.
(B) Equity, Debentures and Bonds:
A large part of finance for fixed investments [building, machines, etc.] comes from different
types of equity or shares such as ordinary, cumulative and non-cumulative preference shares.
These shares bear risks of different degrees and are tailored to suit the temperament of different
investors.
The latest trend is to issue shares in small denominations of ten rupees so as to enable the largest
number of people to participate in providing long-term finance. The credit-worthiness of
promoters of industries and profitability of industries, determinate the extent to which savers
invest their money in shares. In this way, industries are not burdened with interest, and therefore
do not get involved in complications on this account during recession or depression.
Often industrial companies also get long-term finance through the issues of debentures and
bonds. These are debt (loans), instruments. The buyers of those debentures and bonds are the
creditors of companies. They get a fixed rate of interest on the money invested in these
securities.
For this reason debentures are safer investments. Till recently, these debt-instruments were not
very popular. At present many industries are tapping this source. Public sector undertakings too
have started depending upon them. Since recently they have raised funds through the sale of
bonds bearing fixed interest.
(C) Public Deposits:
Another source is public deposits. It is also a debt-instrument, mostly for short-term finance.
Under this system, people keep their money as deposit with these companies or managing
authorities for a period of six months, a year, two years, three years or so. Depositors receive a
fixed interest.
They can ask for the refund of money at any time. This money is used by companies to meet
their needs of working capital. However, this source of finance is unreliable because depositors
can seek refund at any time.
And if the refund happens to coincide with the time when a company needs funds most, then it
complicates matters. With the growth of banking habits and increase in dealings with other
financial institutions, the importance of public deposits, as a source of finance, will decline.
(D) Loans from Banks:
Commercial banks can do also provide funds for meeting short-term needs or for working
capital. Loans are given against the guarantee of government securities and stocks with
companies. Loans are advanced in the form of overdraft and credit limit. Commercial banks are
generally reluctant to put their money in the purchase of shares.
The reason is that the deposits that they receive from the public are generally for a short-term
and therefore, banks can ill-afford to take any risk in investing public money in shares. They can,
however, do something by way of buying debentures of companies.
They can earn fixed interest on such investment and at the time of need they can sell these
debentures in the market and recover their money. Still, little has been achieved in this field
because of the fear that banks may find it difficult to cash debenture precisely at a time when
they need.
(E) The Managing Agency System:
The system of industrial finance, peculiar to India, and which prevailed till the recent times, is of
little importance now days. Under this system an individual or a group of individuals finance the
initial stage of the establishment of industries, and manage many activities of the company thus
established very often, one managing agent controls more than one concern and uses fund of one
concern to meet the needs of others under him.
In the past when there was a great shortage of industrial finance and almost complete lack of
financial institutions, and capital market in the real sense had not even come into existence,
managing agents did render a valuable service in the promotion of industries within the country.
Of course, it is true that their funds were mostly used for the establishment of consumer goods
industries.
In due course, however, the system developed certain drawbacks and came to be plagued by
serious shortcomings. The management of so many units, good and bad, and producing a variety
of products led to certain evils.
The payments which managing agents extracted for themselves, interest on their money,
commission for their services etc., were too much and were out of proportion with the paying
capacity of the companies and/or the work performed by those agents. It is for these reasons that
the government put a ban on this system in 1970.
(F) Indigenous Bankers:
Inspite of the establishment of new financial institutions, indigenous bankers also advance
financial help to a few large-scale industries, particularly during the time of stress, both for fixed
capital and working capital. But mainly they have provided finance to small scale industries.
In the absence of adequate institutional finance, these industries have been forced to depend
upon indigenous bankers. These banks charge a very heavy rate of interest, thus making finance
a costly affair. However, the importance of these banks, even as a source of finance for small
industries, is on the decline.
(G) Development Finance Institutions:
Established with the help of the Government to fill-in the gap in industrial finance and to
promote the objective of planning, these institutions cater to the needs of large and small
industries.
The new institutions supplying industrial finance are Industrial Development Bank of India,
Industrial Finance Corporation of India, Unit Trust of India, and General Insurance Corporation
of India, Industrial Reconstruction Bank of India, State Financial Corporations, and State
Industrial Development Corporations.
These institutions provide huge quantity of finances for setting up of new industries, for meeting
their several needs and in several forms. These also ensure and monitor the use of finance in pre-
planned directions. As such these fit well with the modem scenario of industrial development.
(H) Foreign Capital:
As a supplement to domestic finance, external capital too has been made use of in meeting the
needs of industrial finance, mostly for long-term needs. This has taken several forms. There is
the foreign aid (i.e., loans on concessional term) from foreign governments and foreign
institutions (like the World Bank) extended to the Government.
A part of this assistance has also gone to the private sector. A part of foreign funds has come
through foreign companies which have Indian subsidiaries in our country or through
Multinational Corporations which have branches in India.
Some foreign companies have given funds as part of direct investment or as part of
collaborations with Indian companies. There are also non-resident Indians who have invested in
collaboration with Indians. Indian companies have also raised loans from foreign markets.
The sources of industrial finance are thus of various types. And so are the instruments of finance.
A number of them are modem Such as shares, debentures, and loans from the financial
institutions. The old ones like, deposits from public, the finances of managing agents as also of
indigenous bankers are on the decline. This is as it should be for these are neither enough, nor
suitable for meeting the needs of the modern industrial growth.
Capital Markets: Organizations

THEINTACTFRONT5 DEC 20184 COMMENTS
Government Securities Market: This is also known as the Gilt-edged market. This refers to the
market for government and semi-government securities backed by the Reserve Bank of India
(RBI).
Industrial Securities Market: This is a market for industrial securities i.e. market for shares and
debentures of the existing and new corporate firms. Buying and selling of such instruments take
place in this market.
This market is further classified into two types such as the New Issues Market (Primary) and the
Old (Existing) Issues Market (secondary). In primary market fresh capital is raised by companies
by issuing new shares, bonds, units of mutual funds and debentures.
However in the secondary market already existing i.e old shares and debentures are traded. This
trading takes place through the registered stock exchanges. In India we have three prominent
stock exchanges. They are the Bombay Stock Exchange (BSE), the National Stock Exchange
(NSE) and Over The Counter Exchange of India (OTCEI).
Development Financial Institutions (DFIs): This is yet another important segment of Indian

capital market. This comprises various financial institutions. These can be special purpose
institutions like IFCI, ICICI, SFCs, IDBI, IIBI, UTI, etc. These financial institutions provide
long term finance for those purposes for which they are set up.
Financial Intermediaries: The fourth important segment of the Indian capital market is the
financial intermediaries. This comprises various merchant banking institutions, mutual funds,
leasing finance companies, venture capital companies and other financial institutions.
Financing of Small Scale Industries in Developing
Countries
If we look at investor perspective, research suggests that small businesses fail at a higher rate
than big businesses, thus default risk is also high. This is the reason that small businesses have
less access to credit than larger companies because lending to a small business is riskier and
more expensive than lending to larger companies. Additionally, evaluating small companies is
difficult and not very cost effective as its data is not as easily accessible as large companies.
SOURCES OF FINANCE FOR A SMALL BUSINESSES

Following are some of the financing methods that small businesses can use:
OWN CAPITAL / SAVINGS
Number one & the easiest source of finance for a small business is one’s own savings. At any
stage of business, when a business is in need of capital, an entrepreneur can tap into his personal
assets such as – stocks, mutual funds, real estate or jewelry – to raise money. He can either sell
the assets to raise money or take a loan on any of the assets. Entrepreneurs can invest such
personal capital in their business as equity capital, or they can give loans to their own company.
FAMILY & FRIENDS
Parents, sibling, extended relatives & friends who have excess cash to lend may be willing to
finance your business. They may lend the money to the business in the form of a loan or may be
willing to take an equity stake in the company.
BANKS
Banks have a special department dedicated to providing loans to small companies. To get a loan
from a bank, companies have to qualify for bank’s minimum criteria. Every bank has its own
criteria with regards to earning potential, annual turnover, credit scores, etc. There are many
types of loans that banks offer such as working capital loans, term loans, loan against property,
etc. Companies can choose the type of loans as per their requirement.
SMALL BUSINESS LOANS
Each country has certain banks or institutions dedicated to providing loans only to small
businesses, an example of such institute in India is SIDBI, in the USA there is SBA. The main
target of these institutions is to lend money to small businesses who have not been able to obtain
financing on reasonable terms through normal lending channels. These entities usually give
money as loans only.
PERSONAL LOANS
If a company is unable to get a business loan, the entrepreneur might consider getting a personal
loan & using it in their business. The entrepreneur must have a good credit history for raising a
personal loan. We can get a personal loan by mortgaging home, jewelry, etc.
TRADE CREDIT
Some small businesses might have suppliers willing to sell on credit. Such credit may range
anywhere from one month to three months. This is a very good method for small companies to
fulfill short-term funding needs. This is an inexpensive method of finance for any small business.
PRIVATE EQUITY FIRMS
Private equity is a type of equity capital that is not listed on any stock exchange. These firms
raise funds from investors. It then invests these funds to buy capital of promising startups &
small businesses. The drawback of such finance is that the private equity firms will acquire a
controlling position or substantial minority position in a company and then look to maximize the
value of their investment. Thus, the entrepreneur might not have sole control over the business
decisions, which may lead to conflict.
VENTURE CAPITAL FIRMS
Venture capital firms are a type of private equity firms, but venture capitalist provides funds to
only those companies who are in the early stages of their business cycles. These are emerging
small companies with high growth potential. Venture capital firms invest in emerging companies
in exchange for equity, or an ownership stake. Small start-up firms may receive series of rounds
of financing from venture capital firms.
CROWDFUNDING
Crowdfunding is a relatively new method when we consider sources of finance. It is a method of

raising funds by borrowing a small amount of money from a large group of people. A typical
example of crowdfunding is proposing people to invest US$ 10, and even if 1000 people invest,
the company can raise US$ 10,000. Such financing is usually done for a particular project. The
benefit of crowdfunding is that small company can make flexible proposals as per their
requirement. They can offer equity against the money or take the money on loan; they can offer
simple interest payments as against compound interest like most regular loans.
Crowdfunding gained popularity after the rise of social media because it became easier to reach a
number of people by putting minimum effort.
Role of Central Government and State Government in
Promoting Entrepreneurship with Various incentives,
Subsidies, Grants
The Government of India has undertaken several initiatives and instituted policy measures to
foster a culture of innovation and entrepreneurship in the country. Job creation is a foremost
challenge facing India. With a significant and unique demographic advantage, India, however,
has immense potential to innovate, raise entrepreneurs and create jobs for the benefit of the
nation and the world.
In the recent years, a wide spectrum of new programmes and opportunities to nurture innovation
have been created by the Government of India across a number of sectors. From engaging with
academia, industry, investors, small and big entrepreneurs, non-governmental organizations to
the most underserved sections of society.
Recognising the importance of women entrepreneurship and economic participation in enabling

the country’s growth and prosperity, Government of India has ensured that all policy initiatives
are geared towards enabling equal opportunity for women. The government seeks to bring
women to the forefront of India’s entrepreneurial ecosystem by providing access to loans,
networks, markets and trainings.
A few of India’s efforts at promoting entrepreneurship and innovation are:
Startup India: Through the Startup India initiative, Government of India promotes

entrepreneurship by mentoring, nurturing and facilitating startups throughout their life cycle.
Since its launch in January 2016, the initiative has successfully given a head start to numerous
aspiring entrepreneurs. With a 360 degree approach to enable startups, the initiative provides a
comprehensive four-week free online learning program, has set up research parks, incubators and
startup centres across the country by creating a strong network of academia and industry bodies.
More importantly, a ‘Fund of Funds’ has been created to help startups gain access to funding. At
the core of the initiative is the effort to build an ecosystem in which startups can innovate and
excel without any barriers, through such mechanisms as online recognition of startups, Startup
India Learning Programme, Facilitated Patent filing, Easy Compliance Norms, Relaxed
Procurement Norms, incubator support, innovation focused programmes for students, funding
support, tax benefits and addressing of regulatory issues.
Make in India: Designed to transform India into a global design and manufacturing hub, the
Make in India initiative was launched in September 2014. It came as a powerful call to India’s
citizens and business leaders, and an invitation to potential partners and investors around the
world to overhaul out-dated processes and policies, and centralize information about
opportunities in India’s manufacturing sector. This has led to renewed confidence in India’s
capabilities among potential partners abroad, business community within the country and citizens
at large. The plan behind Make in India was one of the largest undertaken in recent history.
Among several other measures, the initiative has ensured the replacement of obsolete and
obstructive frameworks with transparent and user-friendly systems. This has in turn helped
procure investments, foster innovation, develop skills, protect intellectual property and build
best-in-class manufacturing infrastructure.
Atal Innovation Mission (AIM): AIM is the Government of India’s endeavour to promote a
culture of innovation and entrepreneurship, and it serves as a platform for promotion of world-
class Innovation Hubs, Grand Challenges, start-up businesses and other self-employment
activities, particularly in technology driven areas. In order to foster curiosity, creativity and
imagination right at the school, AIM recently launched Atal Tinkering Labs (ATL) across India.
ATLs are workspaces where students can work with tools and equipment to gain hands-on
training in the concepts of STEM (Science, Technology, Engineering and Math). Atal Incubation
Centres (AICs) are another programme of AIM created to build innovative start-up businesses as
scalable and sustainable enterprises. AICs provide world class incubation facilities with
appropriate physical infrastructure in terms of capital equipment and operating facilities. These
incubation centres, with a presence across India, provide access to sectoral experts, business
planning support, seed capital, industry partners and trainings to encourage innovative start-ups.
Support to Training and Employment Programme for Women (STEP): STEP was launched
by the Government of India’s Ministry of Women and Child Development to train women with
no access to formal skill training facilities, especially in rural India. The Ministry of Skill
Development & Entrepreneurship and NITI Aayog recently redrafted the Guidelines of the 30-
year-old initiative to adapt to present-day needs. The initiative reaches out to all Indian women
above 16 years of age. The programme imparts skills in several sectors such as agriculture,
horticulture, food processing, handlooms, traditional crafts like embroidery, travel and tourism,
hospitality, computer and IT services.
Jan Dhan- Aadhaar- Mobile (JAM): JAM, for the first time, is a technological intervention
that enables direct transfer of subsidies to intended beneficiaries and, therefore, eliminates all
intermediaries and leakages in the system, which has a protential impact on the lives of millions
of Indian citizens. Besides serving as a vital check on corruption, JAM provides for accounts to
all underserved regions, in order to make banking services accessible down to the last mile.
Digital India: The Digital India initiative was launched to modernize the Indian economy to
makes all government services available electronically. The initiative aims to transform India
into a digitally-empowered society and knowledge economy with universal access to goods and
services. Given historically poor internet penetration, this initiative aims to make available high-
speed internet down to the grassroots. This program aims to improve citizen participation in the
digital and financial space, make India’s cyberspace safer and more secure,abd improve ease of
doing business. Digital India hopes to achieve equity and efficiency in a country with immense
diversity by making digital resources and services available in all Indian languages.
Biotechnology Industry Research Assistance Council (BIRAC): BIRAC is a not-for-profit

Public-Sector Enterprise, set up by Department of Biotechnology to strengthen and empower
emerging biotechnology enterprises. It aims to embed strategic research and innovation in all
biotech enterprises, and bridge the existing gaps between industry and academia. The ultimate
goal is to develop high-quality, yet affordable, products with the use of cutting edge
technologies. BIRAC has initiated partnerships with several national and global partners for
building capacities of the Indian biotech industry, particularly start-ups and SME’s, and has
facilitated several rapid developments in medical technology.
Department of Science and Technology (DST): The DST comprises several arms that work
across the spectrum on all major projects that require scientific and technological intervention.
The Technology Interventions for Disabled and Elderly, for instance, provides technological
solutions to address challenges and improve quality of life of the elderly in India through the
application of science and technology. On the other hand, the ASEAN-India Science,
Technology and Innovation Cooperation works to narrow the development gap and enhance
connectivity between the ASEAN countries. It encourages cooperation in science, technology
and innovation through joint research across sectors and provides fellowships to scientists and
researchers from ASEAN member states with Indian R&D/ academic institutions to upgrade
their research skills and expertise.
Stand-Up India: Launched in 2015, Stand-Up India seeks to leverage institutional credit for the
benefit of India’s underprivileged. It aims to enable economic participation of, and share the
benefits of India’s growth, among women entrepreneurs, Scheduled Castes and Scheduled
Tribes. Towards this end, at least one women and one individual from the SC or ST communities
are granted loans between Rs.1 million to Rs.10 million to set up greenfield enterprises in
manufacturing, services or the trading sector. The Stand-Up India portal also acts as a digital
platform for small entrepreneurs and provides information on financing and credit guarantee.
Trade related Entrepreneurship Assistance and Development (TREAD): To address the

critical issues of access to credit among India’s underprivileged women, the TREAD programme
enables credit availability to interested women through non-governmental organizations (NGOs).
As such, women can receive support of registered NGOs in both accessing loan facilities, and
receiving counselling and training opportunities to kick-start proposed enterprises, in order to
provide pathways for women to take up non-farm activities.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY): A flagship initiative of the Ministry of
Skill Development & Entrepreneurship (MSDE), this is a Skill Certification initiative that aims
to train youth in industry-relevant skills to enhance opportunities for livelihood creation and
employability. Individuals with prior learning experience or skills are also assessed and certified
as a Recognition of Prior Learning. Training and Assessment fees are entirely borne by the
Government under this program.
National Skill Development Mission: Launched in July 2015, the mission aims to build
synergies across sectors and States in skilled industries and initiatives. With a vision to build a
‘Skilled India’ it is designed to expedite decision-making across sectors to provide skills at scale,
without compromising on quality or speed. The seven sub-missions proposed in the initial phase
to guide the mission’s skilling efforts across India are: (i) Institutional Training (ii) Infrastructure
(iii) Convergence (iv) Trainers (v) Overseas Employment (vi) Sustainable Livelihoods (vii)
Leveraging Public Infrastructure.
Science for Equity Empowerment and Development (SEED): SEED aims to provide

opportunities to motivated scientists and field level workers to undertake action-oriented,
location specific projects for socio-economic gain, particularly in rural areas. Efforts have been
made to associate national labs and other specialist S&T institutions with innovations at the
grassroots to enable access to inputs from experts, quality infrastructure. SEED emphasizes
equity in development, so that the benefits of technological accrue to a vast section of the
population, particularly the disadvantaged.
Export Oriented units: Fiscal & Tax Concessions

Some incentives given to EOUs
33. No import licences are required by the EOU units and import of all industrial inputs exempt from
customs duty.
34. Supplies from the DTA to EOUs are regarded as deemed exports and are hence exempt from
payment of excise duty which means that high quality inputs are available at lower costs.
35. On fulfillment of certain conditions, EOUs are exempted from payment of corporate income tax
for a block of 5 years in the first 8 years of operation. Export earnings continue to be exempt from tax
even after the tax holiday is over.
36. Industrial plots and standard design factories are available to EOUs at concessional rates.
37. Single window clearance for EOU. For example, the State Government of Kerala as well of
Karnataka has constituted single window clearance mechanisms such as District Single Window
Clearance Board (in Kerala) and Karnataka Udyog Mitra (in Karnataka) for the purpose of speedy issue of
various licences, clearances.
38. Private bonded warehouses in the 7 EPZs can be set up for
1. Import and sale of goods including in the DTA, subject to payment of applicable duties
at the time of sale.
2. Trading including re-export after repacking/labeling.
3. Re-export after repair, reconditioning or re-engineering
39. EOUs and EPZs are permitted to sub-contract part of their production processes for job work to
units in the DTA on a case by case basis.
40. Supplies to the DTA under international competitive bidding against payment in foreign
exchange to other EOUs and EPZ units and against import licenses are considered towards fulfilment at
the export obligation.
41. The FOB value of exports of EOUs and EPZ units can be clubbed with that of parent companies
located in the DTA for the purpose of obtaining a Trading or Export House status.
42. EOUs and EPZ units may export goods through Trading and Export Houses or other EOU and EPZ
Units.
Attractive Policy Provisions for EOUs:
14. EOU can also import second hand capital goods without any age limit.
15. 50% of physical exports can be sold in domestic market on payment of concessional duty.
16. EOUs can process and export rice (Basmati & Non-Basmati).
17. EOUs including Gem & Jewellery units are permitted to sub-contract upto 50% of their
production (or) production process in DTA / other EOUs.
18. EOUs are allowed to utilize plant and machinery for job work DTA units provided the goods are
exported directly from the EOU premises.
19. EOUs in Agriculture and allied sectors and in granite sector may transfer the capital goods and
the inputs to the Farms/field/quarries for usage relating to the production in the EOU.
20. In case of new EOUs, Advance DTA sale will be allowed not exceeding 50% of its estimated
exports for the first year except the pharmaceutical units where this will be based on its estimated
exports for the first two years.
21. Simultaneous Advance DTA sale permission is given on quarterly basis for perishable goods like
mushrooms, cut flowers etc.
22. Exports through third party is permitted
23. Exports from the job workers premises is allowed
24. 100% FDI investment permitted through Automatic Route similar to SEZ units
25. EOUs can obtain Foreign currency loans from OBUs situated in the SEZs
26. EOUs have to achieve only positive Net Foreign Exchange (NFE) within 5 years i.e., A – B > 0
where (A) is the FOB value of Exports and (B) is CIF value of imports.
Fiscal Incentives available to 100% EOUs:
20. Exemption from Customs and Central Exciuse duties on import/local procurement of Capital
goods, raw materials, consumables, spares, packing material etc.
21. Reiumbursement of Central Sales Tax (CST) on purchases made from Domestic Tariff Area (DTA)
22. Corporate Tax Holiday upto 2010
23. CENVAT credit on Service Tax paid
24. Re-iumbursement of duty paid on fuels procured from domestic oil companies as per the rate of
Drawback notified by the DGFT from time to time.
Special Package of Incentives for Star Export House EOUs (Fast Track Clearance):
23. Permissions and Customs clearances for both Imports and Exports on self declaration basis.
24. Fixation of Input-Output norms on priority within 60 days.
25. Exemption from compulsory negotiation of documents through Banks.
26. 100% retention of foreign exchange in EEFC account.
27. Enhancement of normal repatriation period from 180 days to 360 days.
28. Exemption from furnishing of Bank Guarantee in Schemes under this policy.
29. Exemption from examination of Import Cargo
30. Install one Fax machine & Two computers in their Administrative/Registered Office on prior
intiation only.
31. Procurement of DG set intimation to the Development Commissioner/Jurisdictional
Customs/Central Excise authority
32. Remove their Capital goods (or) part thereof for repairs under prior intimation to the
jurisdictional Asst./Deputy Commissioner of Customs & Central Excise authority
33. DTA clearance of rejects on priority basis
34. Personal carriage of samples of Gems & Jewellery without a need for prior permission
35. DTA sale of finished products on prior intimation only
36. Participation in exhibition for export promotion on prior intimation only
Overview of MSME Policy of Government in India

Note: Policy changes time to time, You need to update your data by Yourself.
Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which was notified on
October 2, 2006, deals with the definition of MSMEs. The MSMED Act, 2006 defines the
Micro, Small and Medium Enterprises based on
43. The investment in plant and machinery for those engaged in manufacturing or production,
processing or preservation of goods and
44. 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:
Investment in plant and machinery Investment in equipment excluding

Nature of
excluding land and building for enterprises land and building for enterprises
activity of the
engaged in manufacturing or production, engaged in providing or rendering
Enterprise
processing or preservation of goods of services (loans up to Rs 1 crore)
Micro Not exceeding Rs.25.00 Lakhs Not exceeding Rs.10.00 Lakhs
More than Rs.25.00 lakhs but does not More than Rs.10.00 lakhs but does
Small
exceed Rs.500.00 lakhs not exceed Rs.200.00 lakhs
More than Rs.500.00 lakhs but does not More than Rs.200.00 lakhs but does
Medium
exceed Rs.1000.00 lakhs not exceed Rs.500.00 lakhs
Note: The investment in plant and machinery is the original cost excluding land and building and
other items specified by the Ministry of Small Scale Industries vide its notification no. S.O. 1722
(E) dated 05.10.2006.
Update: In 2018, the Cabinet approved a draft which proposes to change the definition of
MSMEs. As per the new proposal, MSMEs should be defined based on annual sales
turnover instead of the investment criterion. Also, there will be no distinction between
manufacturing and service unit.
The proposed thresholds are Micro – up to Rs 5 crore; Small – up to Rs 75 crore and Medium –
up to Rs 250 crore.
However, this proposal is yet to be implemented. To be effective, the proposal will need
amendment in the MSMED Act and passed through the Parliament.
List of enterprises that are engaged in providing or rendering services
The illustrative lists of enterprises that are engaged in providing or rendering services are:
27. Small road and water transport operators (original investment in vehicles up to Rs.200.00 lacs
under Priority sector)
28. Retail trade (with credit limits not exceeding Rs.20.00 lakhs)
29. Small business (whose original cost price of the equipment used for the purpose of business
does not exceed Rs.20.00 lakhs
30. Professional and self-employed persons (whose borrowing limits do not exceed Rs.10.00 lakhs
of which not more than Rs.2.00 lakhs should be for working capital requirements except in case of
professionally qualified medical practitioners setting up of practice in semi-urban and rural areas, the
borrowing limits should not exceed Rs.15.00 lakhs with a sub-ceiling of Rs.3 lakhs for working capital
requirements)
Significance of MSMED Act 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.
Share of MSMEs in India
The Micro, Small and Medium Enterprises occupies strategic importance in terms
of output (about 45% of manufacturing output), exports (about 40% of the total exports) and
employment (about 69 million persons in over 29 million units throughout the country) based on
the Planning Commission, 2012. It is observed worldwide that as income increases the share of
the informal sector decreases and that of the formal SME sector increases.
Worldwide Trends in the SME Sector
25. Japan: SMEs employ 70% of the wage earners and contribute 55% of the value-added.
26. Thailand: SMEs employ 60.7% of the population while contributing 38% to the GDP.
27. China: SMEs contribute to over 68% of the exports – in the last 20 years created more SMEs
than the total number of SMEs in Europe and the US combined.
Note: In China, an industrial SME is defined as having up to 2,000 employees, while a small
business has less than 300 employees and a medium-sized business has employees between 301
and 2,000.
What is the Importance and role of MSMEs in the Indian Economy?
To generate large scale employment
In India, capital is scarce and labour abundant. MSMEs are thought to have lower capital-output
and capital-labour ratios than large-scale industries, and therefore, better serve growth and
employment objectives. The MSME sector in India has grown significantly since 1960 – with an
average annual growth rate of 4.4% in the number of units and 4.62% in employment (currently
employing 30 million). Not only do MSMEs generate the highest employment per capita
investment, but they also go a long way in checking rural-urban migration by providing people
living in isolated areas with a sustainable source of employment.
To sustain economic growth and increase exports
Non-traditional products account for more than 95% of the MSME exports (dominating in the
export of sports goods, readymade garments, plastic products etc.). Since these products are
mostly handcrafted and hence eco-friendly, there exists a tremendous potential to expand the
quantum of MSME led exports. Also, MSMEs act as ancillary industries for Large Scale
Industries providing them with raw materials, vital components and backward linkages e.g. large
scale cycle manufacturers of Ludhiana rely heavily on the MSMEs of Malerkotla which produce
cycle parts.
Making Growth Inclusive
MSMEs are instruments of inclusive growth which touch upon the lives of the most vulnerable
and marginalized. For many families, it is the only source of livelihood. Thus, instead of taking a
welfare approach, this sector seeks to empower people to break the cycle of poverty and
deprivation. It focuses on people’s skills and agency. However, different segments of the MSME
sector are dominated by different social groups.
The Twelfth Plan has listed the following as the objectives for the MSME sector
37. Promoting competitiveness and productivity in the MSME space.

38. Making the MSME sector innovative, improving technology and depth.
39. Enabling environment for promotion and development of MSMEs.
40. Strong presence in exports.
41. Improved managerial processes in MSMEs.
Evolution and Performance of the MSME Sector in India
Pre-Liberalization
21. During the post-Independence period, small firms were expected to play an important role in
the development process, especially in absorbing surplus labour and achieving an equitable income
distribution. This is the traditional stylized role assigned to small industries.
22. At the beginning of the industrialization process, flexibility in production and the ability to offer
differentiated products allow smaller firms to grow rapidly.
23. Later, large-scale firms come to dominate the size distribution, making up a greater share of
output, employment, and value-added because of scale economies, managerial efficiency, better access
to finance and infrastructure, and a favourable tariff structure.
Post-Liberalization
12. The growth rate of MSME, on an average, has declined considerably in terms of units and even
employment but has improved marginally in terms of output and exports, in the post-liberalization
period compared to the pre-liberalization period.
13. This could be probably due to – (a) With the threat of competition, new MSME units would not
have come up as significantly in the liberalization period as compared to the pre-liberalization period (b)
The new MSME units that came up after liberalization may have been much more capital intensive than
those that have come up in the past – with some proportions of the existing MSME units having
modernized themselves to rely less on labour and also to take advantage of developments in the global
market (c) Unable to face the competition some MSMEs exited the market, thereby affecting MSME
employment and output initially.
14. However, though it appears that the MSME growth performance (in terms of employment,
output, and exports) might have suffered initially it has been able to recover impressively subsequently
in the decade of 2000s.
15. The share of the registered MSMEs in India’s GDP more than doubled during this period and its
share in total organized sector employment increased to 34% during the same period. Although the
share of registered MSME exports declined sharply initially, it bounced back to 12% in 2006-07.
16. The improved economic health of registered MSME sector is reflected in another parameter i.e.
industrial sickness. Sickness in the registered MSME sector has declined both absolutely and relatively.
This may be the outcome of improvements in management deficiencies, insufficient financial control,
research and development, obsolete technology, inadequate demand, shortage of raw materials,
infrastructure bottlenecks, etc.
17. There are two more issues concerning MSME performance:
13. Ancillarisation: The promotion of inter-firm linkages between large firms and MSME through
subcontracting and ancillarisation in both public and private sectors has been an important dimension of
India’s MSME policy. Any growth of ancillarisation and sub-contracting would be advantageous to the
MSME sector by way of assured marketing, covered technical assistance, finance, and supply of raw
materials and training. During this period the percentage of ancillary units increased from 5 percent.
Note that however a significant proportion of MSME subcontracting and ancillarisation are informal in
nature. The growing inter-firm linkages, formal as well as informal, would have benefited the economic
performance of the MSME sector.
14. The degree of internationalization: The world over, an export strategy has been the primary
foreign market entry mode adopted by MSMEs in their internationalization efforts this has been
observed in the Indian context as well. At the national level, several factors contributed to the increasing
trend of MSME internationalization like – structural shift in the composition of MSME exports from
traditional to non-traditional items, modes of entry such as MNCs and e-Commerce etc.
Policy Towards Small-Scale Industries
13. Though MSMEs were recognised as important for employment generation and equitable
distribution of income from the earliest days of Indian Independence, it appears that the objectives of
policies stressing the role of MSMEs are not being realised.
14. Since independence in 1947, especially since the late 1950s, development has been wide-
ranging, both in terms of programs and regions. Policy measures included inter-alia fiscal concessions,
subsidized and directed bank credit, and technical and marketing support, along with reservations of
products for exclusive production by the MSME sector.
15. These policy measures were in tune with the other policies such as the domestic investment and
foreign trade policies that became more restrictive over the years.
16. Since the mid-1980s there has been a gradual turnaround in policy, including reforms in the tax
system and liberalization of import policy.
17. The shift in MSME policy emphasis from protection to the promotion of competitiveness began
with the introduction of an exclusive policy for MSME in 1991. Since then, the policy support in the
1990s and early 2000s has been large to enable the MSMEs to overcome key challenges to their
performance and growth, namely, finance, technology, and marketing, among others.
18. To operate these programs and to monitor their progress, new agencies and institutions have
been set up, and the existing ones strengthened at the national, regional, state, and lower levels. There
is also a special bank for MSMEs – SIDBI. The SSIs have their own associations and are also represented
in the national and state-level associations of large-scale industries.
Evaluation of the Reservation Policy
13. The policy of reserving products for exclusive manufacture in the small-scale sector was started
in 1967 with forty-seven items; the list of reserved items rose to 873 in 1984.
14. The number of items on the reserved list for the SSI sector was brought down to 836 by 1989.
15. The pace of reforms accelerated after 1991: average tariff rates have been steadily lowered,
quantitative restrictions have been removed, and domestic investment policies have been liberalized.
16. Over time, the number of items on the reserved list has also been reduced and stands at 605 in
2005.
17. With liberalization, since all the items on the reserved list can now be imported, MSMEs face
competition from foreign enterprises even though large scale industries in India cannot produce these
products.
18. The Censuses of the SSIs also suggest that the policy of reserving goods for production by SSIs
has not been very effective. The number of units making reserved products was small compared to the
overall size of the MSME sector, and the reserved products account for a small share of the total value
of output in the MSME sector.
19. Also, it appears that the export performance of India may have suffered because of the
reservation policy. Most growing economies witness a changing structure of exports, with high growth
of exports of labour-intensive and resource-based industries. The export structure of India has not
changed much in the last two decades, and this may be because many commodities in the potential
high-growth category come under the reserved list.
What are the challenges of MSME?
14. Most of the unregistered MSMEs would predominantly comprise micro-enterprises, particularly
confined to rural India, operating with obsolete technology, limited access to institutional finance etc.
And there is a need to transform the huge unregistered MSME into registered MSME.
15. Need to improve the competitiveness of the overall MSME sector.
16. Access to technology.
17. IPR related issues.
18. Design as a market driver.
19. Wasteful usage of resources/manpower.
20. Energy inefficiency and associated high cost.
21. Low ICT usage.
22. Low market penetration.
23. Quality assurance/certification.
24. Standardization of products and proper marketing channels to penetrate new markets.
25. The definition for MSMEs must be updated – considering inflation and availability of better
technologies since the last change in 2006.
Recent Initiatives
23. As part of the National Manufacturing Competitiveness Programme (NMCP) 10 specific

initiatives were taken to enhance the competitiveness of the entire value chain of the MSME sector.
24. Limited Liability Partnership (LLP) Act, 2008 was introduced to enable early corporatization of
MSMEs and tap the capital market for fund raising. Accordingly, MSME platforms are created in BSE and
NSE in 2012.
25. To develop a roadmap for the development and promotion of MSMEs, a task force was created
by the Prime Minister of India in 2009. The Task Force, which comprised, among others, six specific
theme-based sub-groups (on credit, marketing, infrastructure, technology, skill development, exit policy,
labor, and taxation) submitted its report in 2010 suggesting: (1) Immediate policy measures (2) Medium-
term institutional measures (3) Legal and regulatory structures to create a conducive environment for
entrepreneurship and growth of MSMEs.
15. The Inter-Ministerial Committee for Accelerating Manufacturing in Micro, Small and Medium
Enterprises made recommendations on (a) the promotion of start-ups (b) facilitating operation and
growth (covering credit, technology, and marketing) (c) closure and exit (d) labour laws and regulations.
16. These policy initiatives are clear and consistent, aimed at transforming the ecosystem for the
MSMEs sector by influencing: (1) Birth (encouraging Start-Ups) (2) Operations and growth (by simplifying
laws and regulations, and facilitating their access to credit. Better technology and dynamic markets,
apart from skilled labour and reliable infrastructure) (3) Orderly and easy exit
 Thus, the emerging focus of India’s MSME policy aims at covering the entire lifecycle of MSMEs
to ensure a healthy, vibrant and competitive MSME sector.
Summary
The guidelines with regard to investment in plant and machinery or equipment as defined in the
MSMED Act, 2006 are:
Investment in plant and machinery Investment in plant and machinery

Nature of excluding land and building for excluding land and building for
activity of the enterprises engaged in manufacturing or enterprises engaged in providing or
Enterprise production, processing or preservation of rendering of services (loans up to Rs
goods 1 cr.
Micro Not exceeding Rs. 25 Lakhs Not exceeding Rs. 10 Lakhs
More than 25 Lakhs but less than 500 More than 10 Lakhs but less than
small
Lakhs 200 Lakhs
More than 500 Lakhs but less than 1000 More than 200 Lakhs but less than
Medium
Lakhs 500 Lakhs
Recent initiative
Access to Credit
The biggest achievement for the government here was the launch of the 59-minute loan portal to
enable easy access to credit for MSMEs. During the launch Modi said loans upto Rs 1 crore can
now be granted in-principle approval through a dedicated portal launched for this purpose.
Bringing relief to GST compliant MSMEs, Modi had further announced a two-percent interest
subvention for all GST registered MSMEs, on fresh or incremental loans. To help ease working
capital woes of exporting fraternity, Modi also announced an increase in interest rebate from
three percent to five percent for exporters who receive loans in the pre-shipment and post-
shipment period.
Access to Markets
According to the government another significant measure aimed at enhancing access to markets
for entrepreneurs, Modi said that Public Sector Companies have now been asked to compulsorily
procure 25 percent, instead of 20 percent of their total purchases, from MSMEs.
Additionally, to support women entrepreneurs, the government has maintained that, out of the 25
percent procurement mandated from MSMEs, three percent must now be reserved for women
entrepreneurs.
Technology Upgradation
On technological upgradation front, keeping into account the importance of tool rooms as a vital
part of product design, Modi announced that 20 hubs, and 100 spokes in the form of tool rooms
will soon be introduced across the country.
Ease of Doing Business
For facilitating a more conducive business environment for MSMEs, a number of measures have
been introduced by the government last year. Noteworthy is, as part of the changed norm, the
return under eight labour laws and 10 Union regulations must now be filed only once a year.
Social Security for MSME Sector Employees
During last year, the government highlighted the need for introducing social security for the
MSME sector employees. The finance ministry note says that a mission will be launched to
ensure that they have Jan Dhan Accounts, Provident Fund and Insurance. Modi added that the
implementation of such an ‘Outreach Programme’ for monitoring Social Security for MSME
Sector Employees will be intensively monitored over the next 100 days.
Role of Agencies Assisting Entrepreneurship: DICs, SSIs

The ‘District Industries Centre’ (DICs)programme was started by the central government in 1978
with the objective of providing a focal point for promoting small, tiny, cottage and village
industries in a particular area and to make available to them all necessary services and facilities
at one place. The finances for setting up DICs in a state are contributed equally by the particular
state government and the central government. To facilitate the process of small enterprise
development, DICs have been entrusted with most of the administrative and financial powers.
For purpose of allotment of land, work sheds, raw materials etc., DICs functions under the
‘Directorate of Industries’. Each DIC is headed by a General Manager who is assisted by four
functional managers and three project managers to look after the following activities :
Activities of District Industries Centre (DIC):
45. Economic Investigation

46. Plant and Machinery
47. Research, education and training
48. Raw materials
49. Credit facilities
50. Marketing assistance
51. Cottage industries
Objectives of District Industries Centre (DIC):
The important objectives of DICs are as follow :
31. Accelerate the overall efforts for industrialisation of the district.

32. Rural industrialisation and development of rural industries and handicrafts.
33. Attainment of economic equality in various regions of the district.
34. Providing the benefit of the government schemes to the new entrepreneurs.
35. Centralisation of procedures required to start a new industrial unit and minimisation- of the
efforts and time required to obtain various permissions, licenses, registrations, subsidies etc.
Functions of District Industries Centre (DIC):
28. Acts as the focal point of the industrialisation of the district.

29. Prepares the industrial profile of the district with respect to :
30. Statistics and information about existing industrial units in the district in the large, Medium,
small as well as co-operative sectors.
31. Opportunity guidance to entrepreneurs.
32. Compilation of information about local sources of raw materials and their availability.
33. Manpower assessment with respect to skilled, semi-skilled workers.
34. Assessment of availability of infrastructure facilities like quality testing, research and
development, transport, prototype development, warehouse etc.
35. Organises entrepreneurship development training programs.
36. Provides information about various government schemes, subsidies, grants and assistance
available from the other corporations set up for promotion of industries.
37. Gives SSI registration.
38. Prepares techno-economic feasibility report.
39. Advices the entrepreneurs on investments.
40. Acts as a link between the entrepreneurs and the lead bank of the district.
41. Implements government sponsored schemes for educated unemployed people like PMRY
scheme, Jawahar Rojgar Yojana, etc.
42. Helps entrepreneurs in obtaining licenses from the Electricity Board, Water Supply Board, No
Objection Certificates etc.
43. Assist the entrepreneur to procure imported machinery and raw materials.
44. Organises marketing outlets in liaison with other government agencies.
Small – Scale Industries of India (SSIs)
An industrial undertaking is graded as small-scale industrial undertaking in which the investment

in fixed assets in plant and machinery, whether held on ownership terms, on lease or on hire
purchase, does not exceed R.s 10 million.
As the economy improved, the Government of India raised the investment limit and thus
redefined the SSI sector. For example, in the year 1970, the investment limit in SSI was only 7.5
lakh which was raised to 10 lakh in 1975, 20 lakh in 1980, 35 lakh in 1885, 60 lakh in 1991 and
300 lakh in 1997. It was brought down to 100 lakh in 1999, which continues till date. Likewise,
investment limit in ‘tiny industrial unit’ in the year 1977 was 1 lakh which has risen to 25 lakh.
A small-scale industrial unit/industry-related service or business enterprise, managed by one or

more women entrepreneurs in proprietary concerns, or in which she/they individually or jointly
have a share capital of not less than 51 per cent has been treated by the government as a
women’s enterprise. Women entrepreneurship enjoys special benefits from the government.
The small-scale industry sector has been India’s engine of growth and continues to be so in the
new millennium. By the end of March 2000, the SSI sector accounted for nearly 40 per cent of
gross value of output in the manufacturing sector and 35 per cent of total exports from the
country. Through over 32 lakh units that exist, the sector provided employment to about 18
million people.
The office of the Development Commissioner (SSI) has till date conducted three censuses of
registered SSI units. The first census was conducted in 1973-74 and found 2.58 lakh units regis-
tered up to 30 November, 1973.
The reference year for this census was the calendar year 1972. During this census, only 1.4 lakh
units were found working. The second census was conducted during 1989-91and was found that
9.87 lakh units were registered up to 31 March, 1988.
The reference year for this census was 1987-88. During this census, only 5.82 lakh units were
found working. The Third All-India Census was conducted during 2002-03 and it was found that
22.62 units were registered up to 31 March, 2001. The reference year for this census was 2001-
02. During this census, only 13.75 lakh units were found working.
It is significant to note that the entrepreneurial supply to India, as is apparent from the above
statistics, has been sluggish. In a period of forty years since independence, the country could
produce only six lakh successful entrepreneurs. It is only after India adopted the New Economic
Reforms in 1991 that the supply of entrepreneurs gathered momentum.
Thus the speedy growth of entrepreneurship in the country may be attributed to mainly two
conditions:
42. Economic Reforms Policy, 1990, which liberalized the industrial policy by doing away with the
compulsory cumbersome licensing system and making trade practices easier.
43. Cumulative impact of urbanization and modernization processes in the country.
Role of Agencies Assisting Entrepreneurship: NIESBUD,

NEDB
It was established in 1983 by the Government of India. It is an apex body to supervise the
activities of various agencies in the entrepreneurial development programmes. It is a society
under Government of India Society Act of 1860.The major activities of institute are:
i) To make effective strategies and methods
ii) To standardize model syllabus for training
iii) To develop training aids, tools and manuals
iv) To conduct workshops, seminars and conferences.
v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial Development.
vi) To help support government and other agencies in executing entrepreneur development
programmes.
vii) To undertake research and development in the field of EDPs.
The main objective of the National Entrepreneurship Development Board (NEDB) is promotion
of entrepreneurship for encouraging self-employment in small scale industries and small
business.
Salient Features:
(i) To identify and remove entry barriers for potential entrepreneurs (first generation and new

entrepreneurs) including study on entrepreneurship development.
(ii) To focus on existing entrepreneurs in micro, tiny and small sector and identify and remove
constraints to survivals, growth and continuously improve performance.
(iii) To facilitate the consolidation, growth and diversification of existing entrepreneurial venture

in all possible ways.
(iv) To support skill up gradation and renewal of learning processes

among practicing entrepreneurs and managers of micro, tiny, small and medium enterprises.
(v) To support agencies in the area of entrepreneurship about the current requirement of growth.
(vi) To act as catalyst to institutionalize entrepreneurship development by supporting

and strengthening state level institutions for entrepreneurship development as most
entrepreneurship related activities take place at the grass root level and removing
various constraints to their effective functioning.
(vii) Setting up of incubators by entrepreneurship development institutions and

other organizations devoted to the promotion of entrepreneurship development.
Entrepreneurship Development Institute (EDI)

Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit

institute, set up in 1983, is sponsored by apex financial institutions – the IDBI Bank Ltd., IFCI
Ltd., ICICI Bank Ltd. and the State Bank of India (SBI). EDI has helped set up twelve state-level
exclusive entrepreneurship development centres and institutes. One of the satisfying
achievements, however, was taking entrepreneurship to a large number of schools, colleges,
science and technology institutions and management schools in several states by including
entrepreneurship inputs in their curricula. In the international arena, efforts to develop
entrepreneurship by way of sharing resources and organizing training programmes, have helped
EDI earn accolades and support from the World Bank, Commonwealth Secretariat, UNIDO,
ILO, British Council, Ford Foundation, European Union, ASEAN Secretariat and several other
renowned agencies. EDI has also set up Entrepreneurship Development Centre at Cambodia, Lao
PDR, Myanmar and Vietnam and is in the process of setting up such centres at Uzbekistan and
five African countries.
Currently focusing on:
(1) Entrepreneurship education and research;
(2) Micro-enterprises, micro-finance and sustainable livelihood;

(3) SMEs and business development services;
(4) Cluster competitiveness, growth and technology;
(5) Social entrepreneurship and CSR and
(6) Women entrepreneurship and gender studies.
In the near future, EDII will focus on creating and assisting more start-ups with emphasis on
innovation, technology and global competitiveness. EDII has set up its own Technology
Business Incubator named as the Centre for Advancing and Launching Enterprises (CrAdLE).
Role of Central Government and State Government in

Promoting Entrepreneurship with Various incentives,
Subsidies, Grants
The Government of India has undertaken several initiatives and instituted policy measures to
foster a culture of innovation and entrepreneurship in the country. Job creation is a foremost
challenge facing India. With a significant and unique demographic advantage, India, however,
has immense potential to innovate, raise entrepreneurs and create jobs for the benefit of the
nation and the world.
In the recent years, a wide spectrum of new programmes and opportunities to nurture innovation
have been created by the Government of India across a number of sectors. From engaging with
academia, industry, investors, small and big entrepreneurs, non-governmental organizations to
the most underserved sections of society.
Recognising the importance of women entrepreneurship and economic participation in enabling

the country’s growth and prosperity, Government of India has ensured that all policy initiatives
are geared towards enabling equal opportunity for women. The government seeks to bring
women to the forefront of India’s entrepreneurial ecosystem by providing access to loans,
networks, markets and trainings.
A few of India’s efforts at promoting entrepreneurship and innovation are:
Startup India: Through the Startup India initiative, Government of India promotes

entrepreneurship by mentoring, nurturing and facilitating startups throughout their life cycle.
Since its launch in January 2016, the initiative has successfully given a head start to numerous
aspiring entrepreneurs. With a 360 degree approach to enable startups, the initiative provides a
comprehensive four-week free online learning program, has set up research parks, incubators and
startup centres across the country by creating a strong network of academia and industry bodies.
More importantly, a ‘Fund of Funds’ has been created to help startups gain access to funding. At
the core of the initiative is the effort to build an ecosystem in which startups can innovate and
excel without any barriers, through such mechanisms as online recognition of startups, Startup
India Learning Programme, Facilitated Patent filing, Easy Compliance Norms, Relaxed
Procurement Norms, incubator support, innovation focused programmes for students, funding
support, tax benefits and addressing of regulatory issues.
Make in India: Designed to transform India into a global design and manufacturing hub, the
Make in India initiative was launched in September 2014. It came as a powerful call to India’s
citizens and business leaders, and an invitation to potential partners and investors around the
world to overhaul out-dated processes and policies, and centralize information about
opportunities in India’s manufacturing sector. This has led to renewed confidence in India’s
capabilities among potential partners abroad, business community within the country and citizens
at large. The plan behind Make in India was one of the largest undertaken in recent history.
Among several other measures, the initiative has ensured the replacement of obsolete and
obstructive frameworks with transparent and user-friendly systems. This has in turn helped
procure investments, foster innovation, develop skills, protect intellectual property and build
best-in-class manufacturing infrastructure.
Atal Innovation Mission (AIM): AIM is the Government of India’s endeavour to promote a
culture of innovation and entrepreneurship, and it serves as a platform for promotion of world-
class Innovation Hubs, Grand Challenges, start-up businesses and other self-employment
activities, particularly in technology driven areas. In order to foster curiosity, creativity and
imagination right at the school, AIM recently launched Atal Tinkering Labs (ATL) across India.
ATLs are workspaces where students can work with tools and equipment to gain hands-on
training in the concepts of STEM (Science, Technology, Engineering and Math). Atal Incubation
Centres (AICs) are another programme of AIM created to build innovative start-up businesses as
scalable and sustainable enterprises. AICs provide world class incubation facilities with
appropriate physical infrastructure in terms of capital equipment and operating facilities. These
incubation centres, with a presence across India, provide access to sectoral experts, business
planning support, seed capital, industry partners and trainings to encourage innovative start-ups.
Support to Training and Employment Programme for Women (STEP): STEP was launched
by the Government of India’s Ministry of Women and Child Development to train women with
no access to formal skill training facilities, especially in rural India. The Ministry of Skill
Development & Entrepreneurship and NITI Aayog recently redrafted the Guidelines of the 30-
year-old initiative to adapt to present-day needs. The initiative reaches out to all Indian women
above 16 years of age. The programme imparts skills in several sectors such as agriculture,
horticulture, food processing, handlooms, traditional crafts like embroidery, travel and tourism,
hospitality, computer and IT services.
Jan Dhan- Aadhaar- Mobile (JAM): JAM, for the first time, is a technological intervention
that enables direct transfer of subsidies to intended beneficiaries and, therefore, eliminates all
intermediaries and leakages in the system, which has a protential impact on the lives of millions
of Indian citizens. Besides serving as a vital check on corruption, JAM provides for accounts to
all underserved regions, in order to make banking services accessible down to the last mile.
Digital India: The Digital India initiative was launched to modernize the Indian economy to
makes all government services available electronically. The initiative aims to transform India
into a digitally-empowered society and knowledge economy with universal access to goods and
services. Given historically poor internet penetration, this initiative aims to make available high-
speed internet down to the grassroots. This program aims to improve citizen participation in the
digital and financial space, make India’s cyberspace safer and more secure,abd improve ease of
doing business. Digital India hopes to achieve equity and efficiency in a country with immense
diversity by making digital resources and services available in all Indian languages.
Biotechnology Industry Research Assistance Council (BIRAC): BIRAC is a not-for-profit

Public-Sector Enterprise, set up by Department of Biotechnology to strengthen and empower
emerging biotechnology enterprises. It aims to embed strategic research and innovation in all
biotech enterprises, and bridge the existing gaps between industry and academia. The ultimate
goal is to develop high-quality, yet affordable, products with the use of cutting edge
technologies. BIRAC has initiated partnerships with several national and global partners for
building capacities of the Indian biotech industry, particularly start-ups and SME’s, and has
facilitated several rapid developments in medical technology.
Department of Science and Technology (DST): The DST comprises several arms that work
across the spectrum on all major projects that require scientific and technological intervention.
The Technology Interventions for Disabled and Elderly, for instance, provides technological
solutions to address challenges and improve quality of life of the elderly in India through the
application of science and technology. On the other hand, the ASEAN-India Science,
Technology and Innovation Cooperation works to narrow the development gap and enhance
connectivity between the ASEAN countries. It encourages cooperation in science, technology
and innovation through joint research across sectors and provides fellowships to scientists and
researchers from ASEAN member states with Indian R&D/ academic institutions to upgrade
their research skills and expertise.
Stand-Up India: Launched in 2015, Stand-Up India seeks to leverage institutional credit for the
benefit of India’s underprivileged. It aims to enable economic participation of, and share the
benefits of India’s growth, among women entrepreneurs, Scheduled Castes and Scheduled
Tribes. Towards this end, at least one women and one individual from the SC or ST communities
are granted loans between Rs.1 million to Rs.10 million to set up greenfield enterprises in
manufacturing, services or the trading sector. The Stand-Up India portal also acts as a digital
platform for small entrepreneurs and provides information on financing and credit guarantee.
Trade related Entrepreneurship Assistance and Development (TREAD): To address the

critical issues of access to credit among India’s underprivileged women, the TREAD programme
enables credit availability to interested women through non-governmental organizations (NGOs).
As such, women can receive support of registered NGOs in both accessing loan facilities, and
receiving counselling and training opportunities to kick-start proposed enterprises, in order to
provide pathways for women to take up non-farm activities.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY): A flagship initiative of the Ministry of
Skill Development & Entrepreneurship (MSDE), this is a Skill Certification initiative that aims
to train youth in industry-relevant skills to enhance opportunities for livelihood creation and
employability. Individuals with prior learning experience or skills are also assessed and certified
as a Recognition of Prior Learning. Training and Assessment fees are entirely borne by the
Government under this program.
National Skill Development Mission: Launched in July 2015, the mission aims to build
synergies across sectors and States in skilled industries and initiatives. With a vision to build a
‘Skilled India’ it is designed to expedite decision-making across sectors to provide skills at scale,
without compromising on quality or speed. The seven sub-missions proposed in the initial phase
to guide the mission’s skilling efforts across India are: (i) Institutional Training (ii) Infrastructure
(iii) Convergence (iv) Trainers (v) Overseas Employment (vi) Sustainable Livelihoods (vii)
Leveraging Public Infrastructure.
Science for Equity Empowerment and Development (SEED): SEED aims to provide

opportunities to motivated scientists and field level workers to undertake action-oriented,
location specific projects for socio-economic gain, particularly in rural areas. Efforts have been
made to associate national labs and other specialist S&T institutions with innovations at the
grassroots to enable access to inputs from experts, quality infrastructure. SEED emphasizes
equity in development, so that the benefits of technological accrue to a vast section of the
population, particularly the disadvantaged.
Idea Generation: Sources and Methods

Stage #1: Generation
For a lot of companies, making use of ideation to address a specific problem or requirement is
frequently a good starting point. The majority of companies can easily identify these kinds of
needs – the main decision is whether they contribute to an ideation approach. After problem-
solving, come two other key chances for utilizing ideation: core competencies and consumer
insights.
Core competencies, in reference to ideation, have to do with leveraging ideation to develop upon
a company’s abilities. In this kind of ideation, the organization is looking for fresh applications
or new markets for existing services/products.
Consumer insights, with reference to ideation, have to do with utilizing principles of
conventional market research (for example: focus groups and surveys) and implementing them in
the context of a joint idea-sharing milieu. Surveys are effective though there are a few
drawbacks: respondents would not be able to view other replies (to vote up/down or comment)
and the response rates are usually pretty low. Even focus groups are effective though they fail to
reach the heights of online ideation owing to factors such as price constraints that hinder them
from accessing a bigger participant pool.
Stage #2: Selection
Picking the best ideas starts much before the beginning of the ideation process. It is essential that
you fix the criteria by which the ideas are to be assessed, who would be responsible for
evaluating the ideas, and how the top ideas would be given to the concerned internal teams for
further assessment or execution. A proper selection process begins with the use of tags or labels
to arrange the ideas into meaningful clusters. An example would be labels being arranged along
product lines (such as phone, laptop, tablet) and tags being a level lower, concentrating on
attributes (easy navigation, portable, long battery life, lightweight) and/or on features (display,
operating system, interface). Labeling and tagging should be followed by prioritization to be
certain that the most essential ideas reach the stage of application/execution.
Stage #3: Implementation
The success of implementation is dependent on an organization’s ability to choose the top ideas
and take action based on them. It also depends on the organization having appropriate workflows
in place so that the right groups take part at the appropriate time in the three steps of the ideation
process. The makeup of these workflows (that call out particular roles and aspects of
responsibility) is very essential for organizations if they are to start any ideation endeavor. The
people in the roles called out should be ready to take in new ideas that don’t come from within
the company and possibly can be incentivized or otherwise acknowledged for their readiness to
implement the new approach.
18 KILLER IDEA GENERATION TECHNIQUES
52. SCAMPER
SCAMPER is an idea generation technique that utilizes action verbs as stimuli. It is a well-
known kind of checklist developed by Bob Eberie that assists the person in coming up with ideas
either for modifications that can be made on an existing product or for making a new product.
SCAMPER is an acronym with each letter standing for an action verb which in turn stands for a
prompt for creative ideas.
S – Substitute
C – Combine
A – Adapt
M – Modify
P – Put to another use
E – Eliminate
R – Reverse
36. Brainstorming
This process involves engendering a huge number of solutions for a specific problem (idea) with
emphasis being on the number of ideas. In the course of brainstorming, there is no assessment of
ideas. So, people can speak out their ideas freely without fear of criticism. Even bizarre/strange
ideas are accepted with open hands. In fact, the crazier the idea, the better. Taming down is
easier than thinking up.
Frequently, ideas are blended to create one good idea as indicated by the slogan “1+1=3.”
Brainstorming can be done both individually and in groups. The typical brainstorming group
comprises six to ten people.
45. Mindmapping
Mindmapping is a graphical technique for imagining connections between various pieces of

information or ideas. Each fact or idea is written down and then connected by curves or lines to
its minor or major (previous or following) fact or idea, thus building a web of relationships. It
was Tony Buzan, a UK researcher, who developed the technique “mind mapping” discussed in
his book ‘Use your Head’ (1972). Mind mapping is utilized in brainstorming, project planning,
problem solving and note taking. As is the case with other mapping methods, the intention
behind brain mapping too is to capture attention and to gain and frame information to enable
sharing of concepts and ideas.
To get started with mindmapping, the participant just has to write a key phrase or word in the
middle of the page. Then, he must write anything else that comes to his mind on the very same
page. After that, he must try to make connections as mentioned in the previous paragraph.
44. Synectics
Synectics is a creative idea generation and problem solving technique that arouses thought
processes that the subject may not be aware of. It is a manner of approaching problem-solving
and creativity in a rational manner. The credit for coming up with the technique which had its
beginning in the Arthur D. Little Invention Design Unit, goes to William J.J. Gordon and George
M. Prince.
The Synectics study endeavored to investigate the creative process while it is in progress.
According to J.J Gordon, three key assumptions are associated with Synectics research.
It is possible to describe and teach the creative process
Invention processes in sciences and the arts are analogous and triggered by the very same
“psychic” processes
Group and individual creativity are analogous
24. Storyboarding
Storyboarding has to do with developing a visual story to explain or explore. Storyboards can
help creative people represent information they gained during research. Pictures, quotes from the
user, and other pertinent information are fixed on cork board, or any comparable surface, to stand
for a scenario and to assist with comprehending the relationships between various ideas.
18. Roleplaying
In the role playing technique, each participant can take on a personality or role different from his
own. As the technique is fun, it can help people reduce their inhibitions and come out with
unexpected ideas.
15. Attribute listing
Attribute listing is an analytical approach to recognize new forms of a system or product by

identifying/recognizing areas of improvement. To figure out how to enhance a particular product,
it is broken into parts, physical features of each component are noted, and all functions of each
component are explained and studied to see whether any change or recombination would damage
or improve the product.
19. Visualization and visual prompts
Visualization is about thinking of challenges visually so as to better comprehend the issue. It is a

process of incubation and illumination where the participant takes a break from the problem at
hand and concentrates on something wholly different while his mind subconsciously continues to
work on the idea. This grows into a phase of illumination where the participant suddenly gets a
diversity of solutions and he rapidly writes them down, thereby creating fresh parallel lines of
thought.
Picture prompts help a lot when it comes to enabling one’s brain to establish connections. These
prompts can help to surface emotions, feelings and intuitions. This makes them particularly
useful for brainstorming solutions to innovative challenges involving people, and issues with a
deep psychological or emotional root cause.
To get started with using picture prompts, the facilitator distributes a set of pre-selected images –
each participant gets one. He also asks the participants to write down whatever ideas come to
their mind when they look at the image in their possession. According to Bryan Mattimore
(presently co-founder of The Growth Engine Company), the images should be visually
interesting, portraying a multiplicity of subject matter and must depict people in lots of varied
kinds of relationships and interactions with other people.
After this, participants pair off and use additional time, sharing and talking about the ideas they
have come up with and brainstorming more solutions to the existing problem/challenge. Lastly,
the various pairs present their ideas to the rest of the group.
Mattimore suggests tailoring the visuals to the character of the challenge the participants have to
solve. So, if the challenge pertains to the manufacturing industry, you could consider having
images of an industrial nature. However, you should definitely include some irrelevant or
random images as well because it may be these kinds of images that trigger the most innovative
solutions.
20. Morphological analysis
Morphological analysis has to do with recognizing the structural aspects of a problem and
studying the relationships among them. For example: Imagine the problem is transporting an
object from one place to another by way of a powered vehicle. The significant dimensions are:
the kind of vehicle (cart, sling, bed, chair); the power source (internal-combustion engine,
pressed air, electric motor); and the medium (air, hard surface, rails, rollers, oil, water). Thus, a
cart-kind of vehicle moving over rough services with an internal-combustion engine to power it
is the automobile. The expectation is that it would be possible to determine some novel
combinations.
26. Forced relationships
It is an easy technique involving the joining of totally different ideas to come up with a fresh
idea. Though the solution may not be strictly unique, it frequently results in an assortment of
combinations that are often useful. A lot of products we see today are the output of forced
relationships (such as a digital watch that also has a calculator, musical birthday cards and Swiss
army knife). Most of these ideas may not be revolutionary discoveries but they are still
advantageous products and usually have a prospective market in society. Robert Olson provided
an example for forced analogy in his book ‘The Art of Creative Thinking.’ He compares
different aspects of a corporate organization structure to the structure of a matchbox.
26. Daydreaming
Though mostly not met with approval, daydreaming is truly one of the most fundamental ways to
trigger great ideas. The word “daydream” itself involuntarily triggers an uninhibited and playful
thought process, incorporating the participant’s creativity and resourcefulness to play around
with the present problem. It enables a person to establish an emotional connection with the
problem, which is beneficial in terms of coming up with a wonderful idea. The focus of
productive daydreaming is a particular goal irrespective of whether it seems to be an impractical
task. Plenty of famous inventors have engaged in daydreaming in the past, thereby setting off
ideas that contributed to life altering inventions. The airplane is the most notable example for
this. If the Wright brothers had not let their imagination run wild thinking about flight, we would
probably still be traveling by ferry.
17. Reverse thinking
As the term ‘reverse thinking’ itself suggests, instead of adopting the logical, normal manner of
looking at a challenge, you reverse it and think about opposite ideas. For example: ‘how can I
double my fan base?’ can change into ‘how do I make sure I have no fans at all?’ You may
notice that the majority of participants would find it easier to produce ideas for the ‘negative
challenge’ simply because it is much more fun. However, don’t spend too much time on the
reverse idea-generation – about 10 to 15 wrong ideas is fine. After one session is over, you can
either continue in the reverse idea atmosphere with a new challenge or else do the reversal once
more to make it stronger. An example for the latter is “I am never going to update any of my
social networks” changing into “I am going to always update all of my social networks.”
 Questioning assumptions
The majority of industries have an orthodoxy – unspoken but deeply-held beliefs that everyone
stands by for getting things done. Sadly, they fail to realize that by questioning assumptions at
every step of service or product development, they can actually enable the birth of fresh
possibilities and ideas.
Here’s how Mattimore suggests one go about questioning assumptions: The participants should
start by settling on the framework for the creative challenge. After this, they should produce 20
to 30 assumptions (irrespective of whether they are true or false). The next step is to select
several assumptions from the many generated, and utilize them as idea triggers and thought
starters to engender fresh ideas.
3. Accidental genius
Accidental genius is a relatively new technique that utilizes writing to trigger the best ideas,
content and insight.
3. Brainwriting
Brainwriting is easy. Instead of asking the participants to shout out ideas, they are told to pen
down their ideas pertaining to a specific problem or question on sheets of paper, for a small
number of minutes. After that, each participant can pass their ideas over to someone else. This
someone else reads the ideas on the paper and adds some new ones. Following another few
minutes, the individual participants are again made to pass their papers to someone else and so
the process continues. After about 15 minutes, you or someone else can collect the sheets from
them and post them for instant discussion.
11. Wishing
This technique can be begun by asking for the unattainable and then brainstorming ideas to make
it or at least an approximation of it, a reality. Start by making the wishes tangible. There should
be collaboration among the members of the team to produce 20 to 30 wishes pertaining to your
business. Everyone’s imagination should be encouraged to run wild – the more bizarre the idea,
the better. There should be no restrictions on thinking.
The next step is concentrating on a number of these unattainable wishes and utilizing them as
creative stimuli to trigger ideas that are new but more practical. Mattimore suggests getting the
team to challenge the problem from diverse perspectives (imagine how a person from another
planet or from another industry or profession would view it) or reflect on it. This type of role
playing assists with moving away from conventional thinking patterns to see fresh possibilities.
18. Socializing
If employees only hang around with colleagues and friends, they could find themselves in a
thinking rut. Let them utilize all those LinkedIn connections to begin some fantastic
conversations. Refreshing perspectives will assist with bringing out new thinking and probably,
one or two lightning bolts. Socializing in the context of ideation can also be about talking to
others on topics that have nothing whatsoever to do with the present problem.
1. Collaboration
As the term indicates, collaboration is about two or more people joining hands in working for a
common goal. Designers frequently work in groups and engage in collaborative creation in the
course of the whole creative process.
Identification and Classification of ideas

In general sense, the term opportunity implies a good chance or a favourable situation to do
something offered by circumstances. In the same vein, business opportunity means a good or
favourable change available to run a specific business in a given environment at a given point of
time.
The term ‘opportunity’ also covers a product or project. Hence, the identification of an
opportunity or a product or project is identical and, therefore, all these three terms are used as
synonyms. The Government of India’s “Look East Policy” through North East is an example of
‘opportunity’ to do business in items like tea, handicrafts, herbals, turmeric, etc.
Opportunity identification and selection are like comer stones of business enterprise. Better the
former, better is the latter. In a sense, identification and selection of a suitable business
opportunity serves as the trite saying ‘well begun is half done.’ But, it is like better said than
done. Why? Because if we ask any intending entrepreneur what project or product he/she will
select and start as an enterprise, the obvious answer he/she would give is one that having a good
market and is profitable. But the question is how without knowing the product could one know
its market?
Whose market will one find out without actually having the product? Whose profitability will
one find out without actually selling the product? There are other problems, besides. While
trying to identify the suitable product or project, the intending entrepreneur passes through
certain processes.
The processes at times create a situation, or say, dilemma resembling ‘Hen or Egg’ controversy.
That is, at one point, the intending entrepreneur may find one product or project as an
opportunity and may enchant and like it, but at the other moment may dislike and turn down it
and may think for and find other product or project as an opportunity for him/her. This process of
dilemma goes on for some intending entrepreneurs rendering them into the problem of what
product or project to start. Then, how to overcome this problem of product identification and
selection?
One way to overcome this dilemmatic situation is to know how the existing entrepreneurs
identified the opportunity and set up their enterprises. An investigation into the historical
experiences of Indian small enterprises in this regard reveals some interesting factors.
To mention the important ones, the entrepreneurs selected their products or projects based on:
53. Their own or partners’ past experience in that business line;

54. The Government’s promotional schemes and facilities offered to run some specific business
enterprises;
55. The high profitability of products;
56. Which indicate increasing demand for them in the market?
57. The availability of inputs like raw materials, labour, etc. at cheaper rates;
58. The expansion or diversification plans of their own or any other ongoing business known to
them;
59. The products reserved for small-scale units or certain locations.
Now, having gained some idea on how the existing entrepreneurs selected products/projects, the
intending entrepreneur can find a way out of the tangle of which opportunity/product/project to
select to finally pursue as one’s business enterprise.
One of the ways employed by most of the intending entrepreneurs to select a suitable
product/project is to firstly generate ideas about a few products/ projects. Accordingly, what
follows next is a discussion idea generation about products.
Idea Generation:
Sources of Ideas:
In a sense, opportunity identification and selection are akin to, what is termed in marketing
terminology, ‘new product development.’ Thus, product or opportunity identification and
selection process starts with the generation of ideas, or say, ideas about some opportunities or
products are generated in the first instance.
The ideas about opportunities or products that the entrepreneur can consider for selecting the
most promising one to be pursued by him/her as an enterprise, can be generated or discovered
from various sources- both internal and external.
These may include:
(i) Knowledge of potential customer needs,
(ii) Watching emerging trends in demands for certain products,
(iii) Scope for producing substitute product,
(iv) Going through certain professional magazines catering to specific interests like electronics,
computers, etc.,
(v) Success stories of known entrepreneurs or friends or relatives,
(vi) Making visits to trade fairs and exhibitions displaying new products and services,
(vii) Meeting with the Government agencies,
(viii) Ideas given by the knowledgeable persons,
(ix) Knowledge about the Government policy, concessions and incentives, list of items reserved
for exclusive manufacture in small-scale sector,
(x) A new product introduced by the competitor, and
(xi) One’s market insights through observation.
In nutshell, a prospective entrepreneur can get ideas for establishing his/ her enterprise from
various sources. These may include consumers, existing products and services presently on offer,
distribution channels, the government officials, and research and development.
A brief mention about each of these follows in turn:
Consumers:
No business enterprise can be thought of without consumers. Consumers demand for products
and services to satisfy their wants. Also, consumers’ wants in terms of preferences, tastes and
liking keep on changing. Hence, an entrepreneur needs to know what the consumers actually
want so that he/she can offer the product or service accordingly. Consumers’ wants can be
known through their feedback about the products and services they have been using and would
want to use in future.
Existing Products and Services:
One way to have an enterprise idea may be to monitor the existing products and services already
available in the market and make a competitive analysis of them to identify their shortcomings
and then, based on it, decide what and how a better product and service can be offered to the
consumers. Many enterprises are established mainly to offer better products and services over the
existing ones.
Distribution Channels:
Distribution channels called, market intermediaries, also serves as a very effective source for
new ideas for entrepreneurs. The reason is that they ultimately deal with the ultimate consumers
and, hence, better know the consumers’ wants.
As such, the channel members such as wholesalers and retailers can provide ideas for new
product development and modification in the existing product. For example, an entrepreneur
came to know from a salesman in a departmental store that the reason his hosiery was not selling
was its dark shade while most of the young customers want hosiery with light shade. The
entrepreneur paid heed to this feedback and accordingly changed the shade of his hosiery to light
shade. Entrepreneur found his hosiery enjoying increasing demand just within a month.
Government:
At times, the Government can also be a source of new product ideas in various ways. For
example, government from time to time issues regulations on product production and
consumption. Many a times, these regulations become excellent sources for new ideas for
enterprise formation.
For example, government’s regulations on ban on polythene bags have given new idea to
manufacture jute bags for marketing convenience of the sellers and buyers. A prospective
entrepreneur can also get enterprise idea from the publications of patents available for license or
sale.
Besides, there are some governmental agencies that assist entrepreneurs in obtaining specific
product information. Such information can also become basis for enterprise formation.
Research and Development:
The last but no means the least source of new ideas is research and development (R&D) activity.
R&D can be carried out in-house or outside the organization. R&D activity suggests what and
how a new or modified product can be produced to meet the customers’ requirements.
Available evidences indicate that many new product development, or say, new enterprise
establishments have been the outcome of R&D activity. For example, one research scientist in a
Fortune 500 company developed a new plastic resin that became the basis of a new product, a
plastic molded modular cup pallet. Most of the product diversifications have stemmed from the
organization’s R&D activity.
Methods of Generating Ideas:
As seen above, there could be variety of sources available to generate ideas for enterprise
formation. But, even after generating ideas to convert these into enterprise is still a problem for
the prospective entrepreneur. The reason is not difficult to seek.
This involves a process including first generating the ideas and then scrutinizing of the ideas
generated to come up with an idea to serve as the basis for a new enterprise formation. The
entrepreneur can use several methods to generate new ideas. However, the most commonly used
methods of generating ideas are: focus groups, brainstorming, and problem inventory analysis.
These are discussed as follows:
Focus Groups:
A group called ‘focus group’ consisting of 6-12 members belonging to various socio-economic
backgrounds are formed to focus on some particular matter like new product idea. The focus
group is facilitated by a moderator to have an open in-depth discussion. The mode of the
discussion of the group can be in either a directive or a non-directive manner.
The comment from other members is supplied with an objective to stimulate group discussion
and conceptualize and develop new product idea to meet the market requirement. While focusing
on particular matter, the focus group not only generates new ideas, but screens the ideas also to
come up with the most excellent idea to be pursued as a venture.
Brainstorming:
Brainstorming technique was originally adopted by Alex Osborn in 1938 in an American

Company for encouraging creative thinking in groups of six to eight people. According to
Osborn, brainstorming means using the brain to storm the issue/problem. Brainstorming
ultimately boils down to generate a number of ideas to be considered for the dealing with the
issue/problem.
However, brainstorming exercise to be effective needs to follow a modus operandi involving

four basic guidelines:
37. Generate as many ideas as possible.

38. Be creative, freewheeling, and imaginative.
39. Build upon piggyback, extend, or combine earlier ideas.
40. Withhold criticism of others’ ideas.
There are two principles that underlie brainstorming. One is differed judgment, by which all
ideas are encouraged without criticism and evaluation. The second principle is that quantity
breeds quality. The brainstorming session to be effective needs to work like a fun, free from any
type of compulsions and pressures.
Each member needs to have willingness and capacity to listen to others’ thoughts, to use these
thoughts as a stimulus to spark new ideas of their own, and then feel free to express them. As
such, efforts are made to keep the brainstorming session free from any sort of dominance and
obstruction derailing and inhibiting discussion to proceed in a desired manner to serve its
purpose. A normal brainstorming session lasts for from ten minutes to one hour and does not
require much preparation.
Here is an example of brainstorming used to generate ideas to make the organizations presence
noticed.
A national level institute of the Government of India took its faculty to a resort in Himachal
Pradesh for a brainstorming session for two days to generate ideas on what it can do to be
known, noticed and recognized at the national and international arena.
The seven major ideas generated were to:
(i) Open courses like PGDM for the general public,
(ii) Introduce new courses to meet the emerging market requirements,
(iii) Introduce research activity in terms of research projects and fellow programme,
(iv) Sign Memorandum of Understanding (MOUs) with reputed national and international
academic institutions,
(v) Start courses in collaboration with the Government and industry,

(vi) Nominate especially young faculty members to join the Faculty Development Programmes
conducted by the Indian Institute of Management, Ahmedabad (IIMA), and
(vii) Publish the Institute’s research journal.
Problem Inventory Analysis:
Problem Inventory analysis though seems similar to focus group method, yet it is somewhat
different from the latter in the sense that it not only generates the ideas, but also identifies the
problems the product faces. The procedure involves two steps: One, providing consumers a list
of specific problems in a general product category.
Two identifying and discussing the products in the category that, suffer from the specific
problems. This method is found relatively more effective for the reason that it is easier to relate
known products to a set of suggested problems and then arrive at a new product idea.
However, experiences available suggest that problem inventory analysis method should better be
used for generating and identifying new ideas for screening and evaluation. The results derived
from product inventory analysis need to be carefully screened and evaluated as they may not
actually reflect a genuine business opportunity.
For example, General Foods’ introduction of a compact cereal box in response to the problem
that the available boxes did not fit well on the shelf was not successful, as the problem of
package size had little effect on actual purchasing behaviour. Therefore, to ensure the better if
not the best results, problem inventory analysis should be used primarily to generate product
ideas for evaluation.
All of above sources and methods may give a few ideas about the possible projects to be
examined as the final project or product.
Following are some illustrative sources of generation of business ideas:
46. Realizing that especially service class people find it inconvenient to take milk pot with them to
office that they need to buy milk while coming back from the office in the evening, to provide milk in
sachets or tetra packs could be a new business idea.
47. Having faced difficulty in finding out accommodation and transport facility while on visits to a
new/tourist place may give one an idea to start a travel agency providing complete package of facilities
to the visitors to a new / tourist place.
48. Knowing that many people have hobby or even develop passion for gardening may give rise to
an idea of setting up one’s own nursery.
49. Seeing that most of the people coming from outside to a particular place buy its unique items as
souvenir like tea from Assam, the Model of Taj from Agra, etc. may give idea to produce the local item
as souvenir.
50. Recognizing the increasing application of computers in offices as well as business organizations,
irrespective of its size, may give an idea to set-up a computer-training centre.
Once ideas have being generated following the above process, the next step comes is
identification of above generated ideas as opportunities.
Opportunity/Product Identification:
After going through above process, one might have been able to generate some ideas that can be
considered to be pursued as ones business enterprise.
Imagine that someone have generated the five ideas as opportunities as a result of above
analysis:
45. Nut and bolt manufacturing (industry)

46. Lakhani Shoes (industry)
47. Photocopying unit (service-based industry)
48. Electro-type writer servicing (service-based industry).
49. Polythene bags for textile industry (ancillary industry)
An entrepreneur cannot start all above five types of enterprises due to small in size in terms of
capital, capability, and other resources. Hence, he/she needs to finally select one idea which
he/she thinks the most suitable to be pursued as an enterprise. How does the entrepreneur select
the most suitable project out of the alternatives available? This is done through a selection
process discussed subsequently.
Having gone through idea generation, also expressed as ‘opportunity scanning’ and opportunity
identification, we can distinguish between an idea and opportunity. We are giving below the two
situations that will help you understand and draw the line of difference between an ‘idea’ and an
‘opportunity’.
Situation I Situation II
Having completed their Master of Business On completion of his engineering degree, Tridip
Administration (MBA), Mrinmoy and Chandan got a job in Assam State Transport Corporation.
met after about six months. The two were He was the in-charge of the purchase
conversing with each other about who is doing department. Having worked in the purchase
what. Mrinmoy is running his business of travel department for over ten years, he had gained
agency and Chandan is still searching for a job. good idea about which components have more
Mrinmoy suggests Chandan to start some demand and who are the buyers of these parts
business. Observe and read the market scenario in bulk. He, therefore, thought good prospects
and produce what the consumers actually want. of manufacturing of some of the components
having good demand in bulk.
Now, it is clear that, in the above mentioned two satiations, situation I is at the ‘idea stage’ and
situation II at the ‘opportunity stage’. At the idea stage, there is simply an idea about what to do.
But at the opportunity stage, idea has actually been germinated about what to start/do. The
understanding of such a difference between an ‘idea’ and ‘opportunity’ is very important for the
intending entrepreneurs who are seriously trying to identify an ‘opportunity’ to be pursued as an
enterprise.
Individual Creativity: Roles and Process

Creativity fills one gaping hole: our need to communicate and to create new ideas and new
knowledge. The term knowledge is used here in its broadest sense, to encompass what we call
knowledge, expertise, skills and information (Faulkner, 1994: 426).
However, my main concern in this article is narrowly focused, on the cognitive features of
knowledge generated by creative processes. This knowledge is intimately related to questions of
who has particular knowledge and how easily it is to make use of this knowledge in an
organization laden with instantaneous demand and response times. Are individuals defined by
their knowledge rather than how they apply it? Are we finding a new pace, time, space and depth
to how we innovate?
Individual Creativity
As old products are replaced by new, creativity is the identifying factor changing the way we do
things? Creativity drives entrepreneurship at all levels anticipating profits through early product
innovation. Whether radical or incremental innovation, creative dynamism at the individual level
has a cumulative effect on the innovation process.
A pervasive image of innovation casts a scenario centering on the individual innovator.
Indeed, as authors Cameron Ford and Dennis Gioia, emphasize in their book of collected
essays, Creative Action in Organizations (1995) those searching for the fountain of creativity
have traditionally focused on the solitary inventor. A single person-centered view has outlived its
usefulness. Even the most legendary inventor, such as Thomas
Edison, is often a team in disguise (Kelley, 2001). The idea of a lone genius distracts us from the
more useful focus on the higher potential source of creativity: the organization as a collective of
creative people working as a team. To promote organizational creativity among individuals
attempt to remove barriers and obstacles that hinder creativity and denote the lone inventor as a
myth.
Creativity does not just happen. It is a cognitive process that produces new ideas or transforms
old ideas into updated concepts, according to Brussels Free University psychology professor
Liane Gabora. Scientists such as Jacques Hadamard and Henri Poincaré studied the creative
process and contributed to the Creative Process Model, which explains how an individual can
form seemingly random thoughts into an ideal combination or solution, according to the website
The Information Philosopher.
The Preparation Step of the Creative Process Model
During the preparation step of the creative process model, an individual becomes curious after
encountering a problem. Examples of problems can include an artistic challenge or an
assignment to write a paper. During this stage, she may perform research, creates goals, organize
thoughts and brainstorm as different ideas formulate. For example, a marketing professional may
prepare for a marketing campaign by conducting market research and formulating different
advertisement ideas.
The Incubation Step of the Creative Process Model
While the individual begins to process her ideas, he begins to synthesize them using his
imagination and begins to construct a creation. Gabora states that during this step, the individual
does not actively try a find a solution, but continues to mull over the idea in the back of his head.
The Illumination Step of the Creative Process Model
As ideas begin to mature, the individual has an epiphany regarding how to piece her thoughts
together in a manner that makes sense. The moment of illumination can happen unexpectedly.
For example, an individual with the task of putting together an office party may have an idea for
a theme while driving home from work.
The Evaluation Step of the Creative Process Model
After a solution reveals itself in an epiphany, the individual then evaluates whether the insight is
worth the pursuit. He may make changes to his solution so it is clearer. He may consult with
peers or supervisors regarding his insights during this step before pursuing it further. If he works
with clients, he may seek a client’s input and approval before moving on to the next step.
The Implementation Step of the Creative Process Model
The implementation of an idea or solution in the creative process model is when an individual
begins the process of transforming her thoughts into a final product. For example, during this
step, a painter may begin outlining shapes on a canvas with charcoal before applying oil paints to
the medium. According to Gabora, an individual may begin this step more than once in order to
reach the desired outcome.
Entrepreneurial Motivation, Meaning of Entrepreneurial
Competencies
Entrepreneurial Motivation
The entrepreneurial motivation is the process that activates and motivates the entrepreneur to
exert higher level of efforts for the achievement of his/her entrepreneurial goals. In other words,
the entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect the
direction, intensity, and persistence of his / her voluntary behaviour as entrepreneur. So to say, a
motivational entrepreneur will be willing to exert a particular level of effort (intensity), for a
certain period of time (persistence) toward a particular goal (direction).
Motivation is regarded as “the inner state that energizes activities and directs or channels
behavior towards the goal”.
Motivation is the process that arouses action, sustains the activity in progress and that regulates
the pattern of activity.
Nature of Motivation
The nature of motivation emerging out of above definitions can be expressed as follows:
1. Motivation is internal to man

Motivation cannot be seen because it is internal to man. It is externalized via behaviour. It
activates the man to move toward his / her goal.
2. A Single motive can cause different behaviours

A person with a single desire or motive to earn prestige in the society may move towards to join
politics, attain additional education and training, join identical groups, and change his outward
appearance.
3. Different motives may result in single behaviour

It is also possible that the same or single behaviour may be caused by many motives. For
example, if a person buys a car, his such behaviour may be caused by different motives such as
to look attractive, be respectable, gain acceptance from similar group of persons, differentiate the
status, and so on.
4. Motives come and go

Like tides, motives can emerge and then disappear. Motives emerged at a point of time may not
remain with the same intensity at other point of time. For instance, an entrepreneur overly
concerned about maximization of profit earning during his initial age as entrepreneur may turn
his concern towards other higher things like contributing towards philanthropic activities in
social health and education once he starts earning sufficient profits.
5. Motives interact with the environment

The environment in which we live at a point of time may either trigger or suppress our motives.
You probably have experienced environment or situation when the intensity of your hunger
picked up just you smelled the odour of palatable food.
You may desire an excellent performance bagging the first position in your examination but at
the same time may also be quite sensitive to being shunned and disliked by your class mates if
you really perform too well and get too much of praise and appreciation from your teachers.
Thus, what all this indicates is that human behaviour is the result of several forces differing in
both direction and intent.
Entrepreneurial Motivating Factors
Most of the researchers have classified all the factors motivating entrepreneurs into internal and
external factors as follows:
Internal Factors
These include the following factors:
60. Desire to do something new.

61. Become independent.
62. Achieve what one wants to have in life.
63. Be recognized for one’s contribution.
64. One’s educational background.
65. One’s occupational background and experience in the relevant field.
External Factors
41. Government assistance and support.

42. Availability of labour and raw material.
43. Encouragement from big business houses.
44. Promising demand for the product.
Meaning of Entrepreneurial Competencies
The business operation is considered to be very complex in a competitive business environment,

which is constantly changing with fast technological advancements. An entrepreneur is expected
to interact with these environmental forces which require him to be highly competent in different
dimensions like intellectual, attitudinal, behavioral, technical, and managerial aspects.
Entrepreneurs are therefore permanently challenged to deploy a set of competencies to succeed
in their entrepreneurial endeavors. Entrepreneurial competencies are defined as underlying
characteristics possessed by a person, which result in new venture creation. These characteristics
include generic and specific knowledge, motives, traits, self-images, social roles, and skills that
may or may not be known to the person. That is, these characteristics may be even unconscious
attributes of an individual. Some of these competencies are innate while others are acquired in
the process of learning and training and development.
Entrepreneurial competencies can be defined as underlying characteristics such as generic and

specific knowledge, motives, traits, self-images, social roles, and skills that result in venture
birth, survival, and/or growth.
– Bird (1995)
“Total ability the entrepreneur to perform this role successfully. Several studies have found
positive relationship between existences of competencies and venture performance”.
– Man, Lau& Chan

Major Entrepreneurial Competencies
Types of Competencies
The competencies may be classified into following categories:
1.Personal entrepreneurial competencies
2.Venture initiation and success competencies
a) Enterprise launching competencies
b) Enterprise management competencies
1.Personal Entrepreneurial competencies
It is the personal characteristics of an individual who possess to perform the task effectively and
efficiently.Personal entrepreneurial competencies include the following:
a) Initiative
The entrepreneur should be able to take actions that go beyond his job requirements and to act
faster. He is always ahead of others and able to become a leader in the field of business.He Does
things before being asked or compelled by the situation and acts to extend the business into new
areas, products or services.
b) Sees and acts on opportunities
An entrepreneur always looks for and takes action on opportunities. He Sees and acts on new
business opportunities and Seizes unusual opportunities to obtain financing, equipment, land,
work space or assistance.
c) Persistence
An entrepreneur is able to make repeated efforts or to take different actions to overcome an

obstacle that get in the way of reaching goals. An entrepreneur takes repeated or different actions
to overcome an obstacle and Takes action in the face of a significant obstacle.
d) Information Seeking
An entrepreneur is able to take action on how to seek information to help achieve business
objectives or clarify business problems.They do personal research on how to provide a product
or service.They seek information or ask questions to clarify what is wanted or needed.They
personally undertake research and use contacts or information networks to obtain useful
information.
e) Concern for High Quality of Work
An entrepreneur acts to do things that meet certain standards of excellence that gives him greater
satisfaction. An entrepreneur states a desire to produce or sell a top or better quality product or
service. They compare own work or own company’s work favourably to that of others.
f) Commitment to Work Contract
An entrepreneur places the highest priority on getting a job completed.They make a personal
sacrifice or take extraordinary effort to complete a job.They accept full responsibility for
problems in completing a job for others and express concern for satisfying the customer.
g) Efficiency Orientation
A successful entrepreneur always finds ways to do things faster or with fewer resources or at a
lower cost.They look for or finds ways to do things faster or at less cost.An entrepreneur uses
information or business tools to improve efficiency. He expresses concern about costs vs.
benefits of some improvement, change, or course of action.
h) Systematic Planning
An entrepreneur develops and uses logical, step-by-step plans to reach goals.They plan by
breaking a large task into subtask and develop plans,then anticipate obstacles and evaluate
alternatives.They take a logical and systematic approach to activities.
i) Problem Solving
Entrepreneurs identify new and potentially unique ideas to achieve his goals.They generate new
ideas or innovative solutions to solve problems and they take alternative strategies to solve the
problems.
j) Self-Confidence
Entrepreneur with this competency will have a strong belief in self and own abilities.They
express confidence in their own ability to complete a task or meet a challenge.They stick to their
own judgment while taking decision.
k) Assertiveness
An entrepreneur confronts problems and issues with others directly.Entrepreneur with this
competency vindicate the claim to asset their own rights on others.They demand recognition and
disciplines those failing to perform as expected.They asset own competence,reliability or other
personal or company’s qualities.They also assert strong confidence in own company’s or
organization’s products or service.
l) Persuasion
Entrepreneurs with this competency successfully pursue others to perform the activities
effectively and efficiently.An entrepreneur can persuade or influence others for mobilizing
resources, obtaining inputs, organizing productions and selling his products or services.
m) Use of Influence Strategies
An entrepreneur is able to make use of influential people to reach his business

goals.Entrepreneurs with this competency influence the environment (Individuals/Institution) for
mobilizing resources organizing production and selling goods and services to develop business
contacts.
n) Monitoring
Entrepreneurs with this competency normally monitor or surprise all the activities of the concern
to ensure that the work is completed by maintaining good quality.
o) Concern for Employee Welfare

Entrepreneurs with this competency take action to improve the welfare of employees and take
positive action in response of employee’s personal concerns.
2. Venture Initiation and success Competencies
In addition to personal competencies Entrepreneur must also possess the competencies required
to launch the enterprise and for its growth and survival.
It is further divided into two categories of competencies:
66. Enterprise launching competencies
67. Enterprise management competencies
1) Enterprise launching competencies
45. Competency to understand the nature of business
-To analyse the personal advantage of owning a small business.
-To analyse the personal risks of owning a small business.
-To analyse how to maximize the opportunities and minimize the risks of owning a business.
51. Competency to determine the potential as an entrepreneur
-To consider the personal qualification and abilities needed to manage own business.
-To evaluate the own potentials for decision-making,problem solving and creativity.
-To determine own potential for management,planning,operations,personnel and public relations.
50. Competency to develop a business plan
-To identify how a business plan helps the entrepreneur.
-To recognize how a business plan should be organized.
-To identify and use the mechanisms for developing a business plan.
25. Competency to obtain technical assistance
-To prepare for using technical assistance.
-To select professional consultants.

-To work effectively with consultants.
19. Competency to a choose the type of ownership
-To analyse the type of ownership of business.
-To follow the steps necessary to file for ownership of the business.
-To define politics and procedures for a successful multi-owner.
16. Competency to plan the market strategy
-To use goods classification and life cycle analysis as planning tools for marketing.
-To develop and modify marketing mixes for a business.
-To use decision making tools and aid in evaluating marketing activities.
-To evaluate operations to improve decision making about marketing.
20. Competency to locate the business
-To analyse customer transportation,access,parking and so forth. i.e. relative to alternative site
locations.
-To complete a location feasibility study for the business.
-To determine the cost of renovating or improving a site for the business.
-To prepare an occupancy contrast for the business.
21. Competency to finance the business
-To describe the source of information available to help in estimating the financing necessary to
start a new business.
-To determine the finance necessary to start a new business.
-To prepare a project profit and loss statement and a projected cash flow statement for the new
business.
-To prepare a loan application package.

27. Competency to deal with the business
-To determine the need for legal assistance.
-To select the provisions that is desired in the lease.
-To prepare sales contract(such a s credit sales or long term sales) that may be utilized in the
contracts
-To evaluate contracts.
-To determine the need for protection of ideas and intentions.
27. Competency to comply with government regulations
-To appraise the effects of various regulations on the business operations.
-To acquire the information necessary to comply with the various rules and regulations affecting
the business.
-To develop policies for the business to comply with the Government rules and regulations.
2) Enterprise Management Competencies
18. Competency to manage the business
-To plan goals and objectives for the business.
-To develop a diagram showing the organizational structure for the business.
-To establish control practices and procedures for the business
 Competency to manage human resources
-To plan goals and objectives for the business.
-To develop a diagram showing the organizational structure for the business.
-To establish control practices and procedures for the business.
4. Competency to manage human resources
-To write a job description for a position in the business.

-To develop a training programme online for employees.
-To develop a list of personnel for employees in the business.
-To develop an outline for an employee evaluation system.
-To plan a corrective interview with an employee concerning a selected problem.
4. Competency to promote the business
-To create a long-term promotional plan.
-To describe the techniques used to prepare advertising and promotion
-To analyse competitive promotional activities.
-To evaluate promotional effectiveness.
-To plan a community relations programme.
12. Competency to manage sales efforts.
-To develop a sales plan for the business.
-To develop policies and procedures for serving the customers.
-To develop a plan for training and motivating sales people.
19. Competency to keep business records
-To determine who will keep the books for the business and how they will be maintained.
-To describe double-entry bookkeeping.
-Select the types of journals and ledges that you will use in the business.
-To identify the types of records that will be used in the business to record sales,cash
receipts,cash disbursements,accounts receivable,accounts payable,payroll,petty
cash,inventory,budgets and other items.
-To evaluate the business records.
-To identify how a micro-computer may be used to keep he business records.

2. Competency to manage the finances
-To explain the importance of cash flow management.
-To identify financial control procedures.
-To describe how to find cash flow patterns.
-To analyse trouble spots in financial management.
-To describe how to prepare an owner’s equity financial statement.
-To analyse financial management ratios applicable to a small business.
-To identify the components of break even point problem.
-To review microcomputer application for financial management.
1. Competency to manage customer credit and collection
-To analyse the legal rights and resource of credit guarantors.
-To develop a series of credit collection reminders and the follow up activities.
-To develop various credit and collection policies.
-To prepare a credit promotion plan.
-To discuss information resources and systems that apply to credit and collection procedures.
1. Competency to protect the business
-To prepare policies for the firm that will help minimize losses due to employee theft, vendor
theft, bad cheques, shoplifting, robbery, injury or product liability.
Developing Entrepreneurial Competencies

The competency results in superior performance. This is exhibited by one’s distinct behaviour in
different situations. The popular Kakinada experience conducted by McClelland and winter
(1969) has proved beyond doubt that the entrepreneurial competency can be injected and
developed in human minds through proper education and training. Competency finds expression
in human behaviour.
How to develop and sharpen the entrepreneurial competency is suggested in the following
method or procedure consisting of four steps:
68. Competency Identification and Recognition

69. Competency Assessment
70. Competency Mapping
71. Development Intervention
A brief description about each of these follows in turn:
1. Competency Identification and Recognition:

Acquisition of a new behaviour like entrepreneurial behaviour begins with understanding,
identifying and recognizing of what entrepreneurial behaviour means. In other words, the first
step involved in developing the entrepreneurial competency is first to identify and recognize the
set of competencies required to effectively behave like an entrepreneur.
2. Competency Assessment:
Once the set of competencies is identified and recognized to behave like an entrepreneur, the
next step is now to see what entrepreneurial competencies the person actually possesses. In other
words, the actual competencies possessed by an entrepreneur are examined against the required
set of competencies to effectively behave or act like an entrepreneur.
Where one stands with respect to a set of required competencies to act like an entrepreneur or
what is the level of one’s competence can be ascertained by asking the relevant questions to a
competence.
3. Competency Mapping:
Now, the actual competencies possessed by an entrepreneur are compared with the competencies
required to become a successful entrepreneur to ascertain the gap in the entrepreneurial
competencies of an entrepreneur (Cooper 2000). This is called in the human resource training
and development lexicon as ‘Competency Mapping.’ In other words, this is just like ‘training
needs identification’ in case of HR training.
This is presented as follows:

A popular performance tool used to map the (entrepreneurial) competency is based on “Skill to
Do / Will to Do’ chart.”Skill to Do’ refers to the entrepreneur’s / individual’s ability to do the job
and to Do’ refers to the entrepreneur’s individual’s desire or motivation to do the job.
In other words, the ‘Ability to Do / No Ability to Do’ dimension of this comes within the
purview of the “Entrepreneurial Competence’ and the “Will to Do /No Will to Do’ dimension
comes within the purview of the ‘Entrepreneurial Commitment.’
This may result in four possible situations as shown in the following Figure 11.2:
These four situations mean the following:
(A) Ability to Do / Will to Do:
Among all four situations, this is the ideal one. The entrepreneur is fully able, i.e. qualified and is
performing his job as designed and desired. He is supposed to be star or ideal performer as an
entrepreneur.
(B) No Ability to Do / Will to Do:
In this situation, the entrepreneur is putting out his efforts to perform the job, but is not getting
the desired results out of his efforts. It means he is lacking ability or skill to perform the job.
Thus, it implies that the entrepreneur needs training, or say, ‘competency building.
(C) Ability to Do / No Will to Do:
Here, the entrepreneur is qualified or possesses the ability to do his job but is not willing to
perform the same. This implies the lack of desire or motivation. Thus, the entrepreneur needs to
be motivated to perform his job.
(D) No Ability to Do / No Will to Do:

The entrepreneur has deficiency in both ability and will (motivation). In a sense, he is just like
deadwood and his entrepreneurial job is in jeopardy. Thus, the entrepreneur either needs to
continue like this or disappear from the entrepreneurial role.
4. Development Intervention:
After understanding, internalising and practicing a particular behaviour or competence, one
needs to make an introspection of the same in order to sharpen and strengthen one’s competency.
This is called ‘feedback’.
In simple terms, feedback means to know the strengths and weaknesses of one’s new behaviour.
This helps one know how the new behaviour has been rewarding. This enables one to sustain or
give up the exhibition of a particular behaviour or competence in his future life.
Opportunity Assessment
Today’s brands are under relentless pressure to stay relevant in an increasingly crowded and
competitive market place. In order to be successful, brands need to understand how to connect
new products or services with the life of the consumer. By understanding the market and
maintaining a consistent awareness of challenges or barriers to entry or growth, businesses have
the data they need to build accurate go-to-market strategies and business plans.
Typical outputs from a market and opportunity assessment include:
72. Market sizing and growth projections

73. Industry and segment attractiveness assessments
74. Competitive Landscape
75. Market sizing and growth projections
76. SWOT assessment
77. Market requirements and barriers to entry
78. Go-to-market strategy
Market and opportunity Assessment Methods
Market and opportunity research oftentimes uses a combination of qualitative and quantitative
methods—depending on the type and complexity of offering, the market being evaluated, and the
stage in the assessment process:
46. In-depth interviews are utilized typically in the early stages and are most useful for very complex
products and for gathering feedback from executives or subject matter experts.
47. Qualitative techniques such as focus groups and in-depth interviews are used at when there is a
need for a broad exploration of potential opportunities.
48. Quantitative surveys are used further along the evaluation process when there is a need for
concrete numbers for market sizing analyses, business case presentations, or testing market hypothesis.
Business opportunities in Various Sectors
The various business opportunities, for example, available in the environment include but are not
confined to the following only:
1. Tourism:
By now, tourism has emerged as number one largest smokeless and fast growing industry in the
world due to its ample promises and prospects. Presently, it accounts for 8% of the world trade
and around 20 % of service sector in the world.
Evidences indicate that many countries have progressed from backward to developing to
developed, mainly due to tourism development. For example, tourism industry contributes to
more than 70% of the national income of some of the countries like Malaysia and Singapore.
However, its share to the national income of India is still dismally low at 2.5%.
Though India shelters around 15 % of the world population with its 2.5% of the world territory,
it accounts for only 0.40 % in the world tourism market. However, the prognostic picture of the
Indian tourism is not because of lack of tourism potential, but because of unleashing of the ample
tourism potential she is endowed with.
In fact, India too is a treasure trove for tourism development. She possesses long, unspoiled
beaches of golden sands and swaying coconut trees; from winding trails that take you gently up
the snowy slopes of a great mountain range like the Himalayas unfurling images of quaint,
timeless communities; from sprawling forts and breathtaking palaces that hide in their bosoms so
many tales of intrigue and ambitions, love and betrayal; from wildlife sanctuaries and sea worlds,
Disney lands and shopping festivals.
There hardly appears to be a thing that is not worthy of some showering of tourist’s attention and
attraction. Recognizing the India’s vast tourism potential, the World Travel and Tourism Council
(WTTC) has predicted: “India has potential to become number one tourist destination in the
world with the demand growing at 10.1% per annum.”
2. Automobile:
India has made much headway in automobile industry and by now has emerges as a hot spot for
automobiles and auto-components. A cost- effective hub for auto components sourcing for global
auto makers, the automobile sector is by all indications a potential sector for entrepreneurs in
India.
This is confirmed by a record increase registered by automobile industry in India. The

automobile industry recorded a 26 per cent growth in domestic sales in the year 2009-10. It is
India’s strong sales that have made her the second fastest growing automobile market after China
in the world.
India being one of the world’s largest manufacturers of small cars with a strong engineering base
and expertise, there are still many segments untapped and un-served those entrepreneurs can
focus on in India’s automobile and auto components sector in future.
3. Textiles:
India is famous for its textiles since long time. What is worth mentioning that the style of apparel
is unique from region to state, thus, offering a diversified market for apparel / textile products in
the country? In view of this, India holds good potential to grow as a preferred location for
manufacturing textiles taking into account the huge demand for garments.
Places like Tripura and Ludhiana are, for example, now export hubs for textiles in the country. A
better understanding of the textiles markets and the varied customer needs can greatly help
unleash the potential this sector holds in our country.
4. Social Ventures:
Like many other developmental activities, entrepreneurship development is also context-specific.
The recent social issues providing a different entrepreneurial context has given emergence to yet
another breed of entrepreneurship called’ social entrepreneurship. With a view to ameliorate the
social fabric of the society, increasing number of entrepreneurs has started their social ventures.
SEWA and Lizzat Pappad, for example, are such two social ventures hardly get missed while
mentioning about social entrepreneurship. Muhammad Yunus’s ‘Gramin Bank’ in Bangladesh is
the worldwide known social venture of the recent times.
There is myriad of social issues or problems in the countryside in India, thus, offering
opportunity to young entrepreneurs to plunge into this sector. However, plunging into social
ventures is as much useful is so much challenging also.
5. Software:
India is known for its largest pool of world class software engineer’s world over. IT sector has
contributed substantially to the Indian economy. With one of the largest pool of software
engineers, Indian entrepreneurs can set higher targets in hardware and software development.
With more overseas companies outsourcing contracts to India, business to business solutions and
services emerge as potential activities for the knowledge-based entrepreneurs in future.
Entrepreneurs can cash in on the rise in demand for IT services with innovative and cost
effective solutions.
6. Engineering Goods:
India continues to be one of the fastest growing exporters of engineering goods, growing at a rate
of 30.1 per cent. The government has set a target of $110 billion by 2014 for total engineering
exports. Entrepreneurs must capitalise on the booming demand for products from the engineering
industry.
7. Franchising:
As a boon of New Economic Policy 1991 of the Government of India, India is now well
connected with the world economies. Hence, franchising with leading brands to spread across the
country could also offer ample opportunities for young entrepreneurs especially in services
sector like education and health. With many small towns developing at a fast pace in India, there
is vast scope for spreading franchising business in the countryside in future.
8. Education and Training:

Knowledge being power, on the one hand, and Government’s increasing emphasis on spreading
education, on the other, there is a good demand for education and online tutorial services in the
country. With good facilities at competitive rates, India can attract more students from abroad in
coming years signs of which have already started. Need-based educational programmes with
innovative teaching methods can help in a big way make education develop and flourish as an
industry in the country.
9. Food Processing:
Broadly, food processing industries include cannery, meat packing plant, slaughterhouse, sugar
industry, vegetable packing plants, industrial rendering, etc. India’s mainstay is agriculture.
Entrepreneurs can explore many options in the food-grain cultivation and marketing segments.
Inefficient management, lack of infrastructure, proper storage facilities leads to huge losses of
food grains and fresh produce in India.
Unfortunately, very small portion of our food production is processed for manufacturing
purposes as is evident from the following figures:
Likewise, the level of processing in perishable foods like fruits and vegetables (2.2%), milk and
milk products (35%), meat (21%), poultry (6%) and marine products (8%) is also at a quite low
level of total production. Thus, it is evident from above figures that there remains a lot of scope
for agri-business or agri- preneurship development in the country. As such, entrepreneurs can
add value to these produce with proper management and marketing initiatives. The processed
food market opens a great potential for entrepreneurs be it fast food, packaged food or organic
food.
That there will be more and more demand for readymade or processed food in coming days is
already indicated by the meteoritic growth of Mumbai’s Dabbawala. Thus, food processing
industry offers yet more opportunities for entrepreneurship development to establish and run
food-based industries.
79. Corporate Demands:
There will be a good demand for formal attire with more companies opening their offices in
India. People who can meet this demand in a cost-effective way can make a good business. With
corporate gifting getting very popular, this is also a unique business to explore in growing urban
culture in India.
11. Ayurveda and Traditional Medicine:

India is well known for its herbal and Ayurvedic products. With increasing awareness about the
ill-effects of allopathic medicines, there will be a huge demand for cosmetics, natural medicines
and remedies in coming time.
12. Organic Farming:
Organic farming has been in practice in India for long time. That the importance of organic
farming will assume increasing importance in the country is evident by the fact that increasing
number of consumers especially foreigners have been preferring to only organic products.
Therefore, the prospective entrepreneurs can focus on business opportunities in this promising
sector of the country. Yes, many small-time farmers have already adopted organic farming but
the huge demand is still unmet which offers good opportunities for those agri-preneurs who can
promote organic farming on a large-scale in the country.
13. Media:
The media industry has also huge opportunities to offer to young entrepreneurs. With the huge
growth of this segment, any business in this field will help entrepreneurs reap huge benefits.
Television, advertising, print and digital media have seen a boom in business in the recent times
and is likely to grow more in coming times.
According to a report prepared by the Federation of Indian Chamber of Commerce and Industry
(FICCI), digitisation, regionalisation, competition, innovation, process, marketing and
distribution will drive the growth of India’s media and entertainment sector furthermore in
coming times.
14. Packaging:
With China invading the markets with cheap plastic goods and packaging materials, there is a
good opportunity to develop good packaging materials to meet domestic and foreign demand.
There is a huge demand from various sectors like agriculture, automotive, consumer goods,
healthcare infrastructure and packaging sectors for plastics.
15. Floriculture:
India’s floriculture segment is small and unorganized. There is a lot to be done in this lucrative
sector. The global trade in floriculture products is worth $9.4 billion. With a 8 per cent growth, it
is expected to grow to $16 billion by 2010. India’s share in world trade is just 0.18 per cent. This
is a huge market to be tapped considering the rising demand for fresh flowers. More awareness
and better farming and infrastructure can boost exports of flowers in coming times.
16. Toys:
Another evergreen industry is toy manufacturing. India has potential to manufacture cost-
effective and safe toys for the world. With Chinese toys being pulled up for toxins, the market
for safe and good quality, toys beckons Indian entrepreneurs.
49. Healthcare Sector:
India’s healthcare sector dismal till the other day has now good prospects to develop in future.
The private sector, that is, individual entrepreneurs can play a vital role in developing this sector.
With medical tourism also gaining momentum, the sector can attract foreigners who are looking
for cost- effective treatment in countries like India.
18. Biotechnology:
After the software sector, biotechnology opens a huge potential for entrepreneurs in India.
Global evidences confirm that agricultural biotechnology has a major impact on agricultural
productivity. That is why increasing emphasis has been given to research and development in the
agro-biotech sector with an aim to produce crops with high level of tolerance against cold, heat
and salinity.
A number of improved food products have also been developed. It is expected that with increase
in investment in research and development in India, agro-bio technology will further develop
and, in turn, Indian agriculture will develop. The future entrepreneurs can, therefore, look at a
plethora of options available with the application of biotechnology in agriculture, horticulture,
sericulture, poultry, dairy and production of fruits and vegetables.
52. Energy Solutions:
In a power starved nation like ours, the need to develop cost-effective and power-saving devices
is gaining ever increasing significance. There is a huge demand for low-cost sustainable energy
saving devices as well. The government has already unveiled the National Solar Mission which
has set a target of 20,000 MW of solar generating capacity by the end of the 13th Five Year Plan.
Prime Minister Manmohan Singh had urged the industry to see the huge business opportunity
and set up ‘Solar Valleys’ on the lines of the Silicon Valleys. These solar valleys can become
hubs for solar science, solar engineering and solar research, fabrication and manufacturing. So
there is a big opportunity for entrepreneurs in this sector as well in our country.
20. Recycling Business:
E-waste will rise to alarming proportions in the developing world within a decade, with
computer waste in India alone to grow by 500 per cent from 2007 levels by 2020, according to a
UN study. Therefore, this sector also opens new vistas of viable business opportunity for
entrepreneurs in terms of e-waste management and disposal activities in large size.
Recently, a national level conference on entrepreneurship called Entrepreneur India 2011 was
held on July 15th and 16th at Hotel Claridges, New Delhi. The conference was built across the
seven I’s of entrepreneurship:
(i) Inspire,
(ii) Ideate,
(iii) Individual,
(iv) Incubate,
(v) Innovate,
(vi) Invest, and
(vii) Internationalize to discuss and deliberate on Innovation and Entrepreneurship for unleashing
business opportunities available in the country.
: Challenges of New Venture Start-Up

An entrepreneur is one who plays significant role in the economic development of a country.
Basically an entrepreneur can be regarded as a person who has the initiative, skill and motivation
to set up a business or an enterprise of his own and who always looks for high achievement.
Entrepreneurs have to face numerous challenges on the road to success, in particular with regard
to access to finance. All entrepreneurs will at some point feel overwhelmed with the many
responsibilities that fall on their shoulders. The common challenges faced by entrepreneurs are
Overestimating Success, Misplaced Purpose, Negative Mindset, Poor Organization, Jack of All
Trades, Employee Motivation, Lack of Support.
80. Finance
Entrepreneurship means having access to capital, understanding business finance and building
successful relationship with lenders. When starting a venture, however, an unprepared
entrepreneur may encounter cash flow problems when he doesn’t have a network of dependable
lenders or investors. Any successful entrepreneur needs a list of people in and out of the business
world to depend on. An entrepreneur must understand business finance, or risk overpricing
offered services. Overpricing your product causes insufficient sales and cash.
50. Business Management

About one-quarter of entrepreneurs cited management problems as another challenge with
entrepreneurship, explains Researching Small Business and Entrepreneurship. A successful
entrepreneur needs passion to get a business started and make it stable. Thus, personal problems,
such as not setting goals, measuring performance and controlling your time can prohibit your
from managing your business properly. In addition, an entrepreneur must have access to useful
business information. Starting a business venture involves learning as much about your business
and product as you can before securing capital. Managing a business also mean finding and
retaining qualified employees.
53. Marketing the Business
Whether an entrepreneur plans to sell products like computers or services like repairing
computers, she needs to market the business. Entrepreneurship problems can arise when an
effective marketing plan doesn’t exist or you don’t have the ability to actually sell the products
or services. Another problem involves using effective advertising. In a society where placing
flyers on street poles may not gain a customer’s attention, you need an effective and thorough
marketing plan to inform people about your business.
51. Finding the Right Business
Location finding a good business location at the right place is definitely not easy. An efficient
location that has a rapidly growing population, good road network and other amenities at a good
place
26. Unforeseen Business Challenges and Expenses
Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for
unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever
comes in the form of:
20. Unexpected lawsuits

21. Inconsistent government policy
22. Not being able to make payroll
23. Unpaid bills and taxes
24. Unexpected resignation of staff from sensitive office
25. Bad debts from customers
26. Loss of market share
27. Dwindling working capital
28. Inadequate stock or inventory.
17. Finding Good Customers
The sixth challenge an entrepreneur will face in the process of starting a small business from
scratch is finding good customers. In the process of building a business, an entrepreneur will
come to find out that there are good customers as well as bad customers.. Good customers are
really hard to find. A good customer will be loyal to the company and will be willing to forgive
if the business make a mistake and apologize. A good customer will try to do the right thing that
will benefit both him and company mutually.
21. Keeping Up With Industrial Changes and Trends
Change in trends is a challenge an entrepreneur must be prepared for when starting a small
business. Trends have made and broken lot of businesses. Profitable businesses that have been
wiped out by slight industrial changes and trends. A typical example is the Dot com trend, where
many established industrial based businesses were wiped out by new web based dot com
companies. Seasoned entrepreneurs know that trend is a friend and are always willing to swiftly
adjust their business to the current trend.
22. Focus
One of the biggest mistakes entrepreneurs make in their early days is trying to be all things to all
people. They attempt to sell their product or service to too wide of a market. Entrepreneurs also
face another challenge in this area. They focus on the wrong things. They spend too much time
building their product without validating that the marketplace wants needs and will actually pay
for it.
28. Finding Good Employees
Most writers and managers crank up the process of finding good employees as an easy task.
They define the process of finding an employee as simply presenting the job description and the
right employee will surface. Business owners know how difficult it is to find a hardworking,
trustworthy employee. Most employees want to work less and get paid more. Finding a good
employee who will be passionate about delivering his or her services is quite difficult. Finding
good employees is a minor task compared to the business challenge of forging the hired
employees into a team.
10. Assembling a Business Team
The third business challenge that an entrepreneur will face in the course of starting a small
business from scratch is assembling the right business management team. The process of
building a business team starts even before the issue of raising initial start-up capital arises. Most
brilliant ideas and products never get funded because the entrepreneur is trying to raise capital as
an individual. A business team is a vital, yet often ignored key to raising venture capital
successfully.
Reasons for failure of New Venture

Entrepreneurial success is not the result of a single person’s efforts. There is always a team
involved. The team is made up of other investors, working partners, employees, vendors, and
clients. All play an important part in the success of the enterprise. Although other people are
involved, there is a tendency to believe that they play far less important roles and are easily
replaced. At the end of the day, success or failure of the enterprise will be largely attributed to
the entrepreneur.
Because of limited resources, high levels of uncertainty and inexperienced management and
employees, new ventures suffer from a very high rate of mortality- much higher than that of
larger, well-established firms. There are a number of reasons for failure of a new venture, which
are discussed below. Usually, there is a combination of reasons rather than one single reason.
1. Lack of Experienced Management:

One of the main problems faced by new enterprises is that the management team is usually very
new to this role. The entrepreneur and his/her top management usually have no prior record of
being in charge of the fortunes of a whole company.
Even in some rare cases, when the management has some individuals who have led a company in
the past, they are now faced with a new situation where the company itself has no previous track
record. It is a very different kind of situation.
2. Few Trained or Experienced Manpower:

Shortage of skilled and experienced manpower is faced by new ventures, which represent a
riskier job opportunity. Most people prefer to work with a well-established organization
employing hundreds of employees and having a stable track record.
New ventures are also reluctant to use manpower for and to invest in training. Lack of
experienced and skilled manpower can lead to a general drop in productivity and quality of
output. The absence of quality manpower is particularly felt during a crisis.
3. Poor Financial Management:

Operational issues keep an entrepreneur busy and as a result, financial management is likely to
get neglected. Often, the entrepreneur may find the technicalities of accounting and finance
intimidating and avoid looking deep into it. Common errors in financial management can be bad
receivables management, unproductive investments, and poor budgeting decisions.
4. Rapid Growth:
Sudden unplanned growth is not always a desirable situation. Higher growth will mean greater
stress on production facilities, manpower, and marketing channels. Sometimes, these will not be
designed to cater to the rise in volumes and might need further capital investments. It will lead to
a stage of continuous fire-fighting and ultimately, many things may not keep pace with the
growth. Most commonly, the organization may run out of money.
5. Lack of Business Linkages:
Existing working relationships with vendors, customers, and others is a huge advantage to
established businesses. A new venture will have to forge new relationships and work hard at
strengthening them before coming to an equal footing with the entrenched players. Such business
linkages help in smooth conduct of business and are invaluable at times of distress.
6. Weak Marketing Efforts:

Entrepreneurial firms are very reluctant to spend on marketing efforts. Investing in a marketing
campaign is not going to give you assured returns and the link between the marketing
expenditure and the sales is not very easy to establish. An investment of Rs. X in raw material
will give you a very tangible Y kg of output but a similar investment of Rs. X in a newspaper
insert will not give you a sale of Y units, which you can demonstratively tie into the newspaper
insert.
7. Lack of Information:
Even in this era of free-flowing information, the quality of information available to large
corporations is far superior to that available to new small entrepreneurial ventures. There is a
cost to information and small ventures may not be able to invest so much in getting the high-
quality information.
For example, before entering a new market, the new venture may send some salespersons to
interview some customers, shopkeepers, and wholesalers. On the other hand, the large
corporation may engage the services of a market-research firm and carry out a thorough inves-
tigation of the potential and the problems of the new market.
8. Incorrect Pricing:
An entrepreneur does not pull the pricing out of thin air, but it may not be very rigorously
thought-out either. The price is most likely close to that of the competition and takes care of
costs leaving a modest or seemingly generous margin.
There are many sophisticated pricing policies a new venture can adopt, taking into account its
cost structure, nature of demand, and extent of competition. The entrepreneur can introduce new
innovative pricing systems too. For example, Deccan Airways revolutionized airline pricing in
India by introducing low-priced seats and yield management techniques are being used by low-
cost earners in Europe and the USA.
9. Improper Inventory Control:

Improper inventory control can lead to myriad problems. Production can be halted due to
insufficient inventory, whereas excess inventory can lead to wastages and damages. In case of
perishable goods, high inventory can lead to expiration of stock. In high-tech industries or
industries influenced by fads, goods become obsolete very soon. Inflated valuation of inventory
can give a very wrong picture of the financial position of the firm.
10. Short-term Outlook:
A number of small new ventures face huge problems on a regular basis. In the early days of a
firm, these problems can threaten the very existence of the venture. In such circumstances, the
management and employees of the venture focus on surviving the immediate crisis and the long-
term vision and strategy of the firm are soon forgotten. If this continues for long, the danger is
that long-term plans are discarded as impractical or irrelevant. Ultimately, the firm acquires a
shape very different from what was originally envisaged by the entrepreneur.
How to begin with Low investment

Indian small towns are struggling with job opportunities. There is a high influx towards big cities
for jobs in multinational companies or better business opportunities. But with urban landscapes
failing to provide relief in terms of living standards, a lot of young working people are
considering going back to the good old small town. But how do you deal with the lack of job
opportunities? You create them.
Though India features among the top three start up hubs of the world, Indian small towns are still
reluctant towards new avenues in business. Unlike big urban settlements, small towns react to
start-ups in a very different way. Each city has a certain character to it and hence different
requirements.
Here are 10 low-investment business ideas that will help you grow in a small town:
Food Trucks
Food trucks are not an entirely alien concept to small towns. Reminiscent of old-world ‘thellas’,
food trucks are mobile eating joints that can offer unique cuisines at a fairly reasonable price.
The mobility of a food truck allows it to place itself at different locations at an ideal time. For
instance, a food truck can park outside a school in the afternoon and later in the evening, outside
an office.
Food trucks are a perfect small budget business as you need not to invest in real-estate.
Ice Cream Parlours
Ice cream never goes out of demand. A tiny little ice-cream parlour is an ideal low-investment
venture. They need minimal space, basic equipment and low-staffing, making it a perfect small
investment option. Owners can chose specific themes and types of ice-creams that are not easily
available in the city. Ice-cream parlours work great around cinema-theaters or a popular food
joints.
Pre-Schools
Pre schools can be opened in small domestic spaces with a onetime investment on safety and
educative material. A good pre-school which is innovative in its ways of teaching will surely
attract working parents. One strong disclaimer though, owning a pre-school is a huge
responsibility and required undivided attention on the children.
Laundry Services
Laundry services require a relatively higher onetime investment but the costs can be recovered
quickly. Initially, you can lure customers with cheaper yet quality services. A pick and drop
service will be essential to spread the reach of your customer base. To attract the eye of
customers you might want to offer complementary services like a small cafe or reading room for
people who’d like to wait while the washing happens.
Bookshops+Cafe
Combination of bookshops and cafes has been a big hit in a few metro cities but most Indian
small towns are yet to experiment with this idea. With a growing culture of dating, these
bookshop-cafes can prove to be an ideal meeting point to meet a person for the first time.
House cleaning services
Applications like UrbanClap and Haptik have opened a whole new dimension of how we work
around cooking and cleaning services. But these services are severely limited to big cities and
even restricted to only certain parts of the metro cities. Opening a new cleaning services via a
website or a telephone service shouldn’t demand for huge sums of investment.
Tourism
Though this option is highly dependent on the location of the small town, most Indian towns
have enough character to attract tourists, especially old cities. Venturing out for detailed city-
tours, heritage walks etc. can be prove to be a profitable low investment, but involves high stakes
in terms of time and knowledge. Opening themed stay options is another good way to cash-in the
tourist influx.
Fitness Centers
Social network is as big in small cities as in metro cities like Delhi and Mumbai and fitness is
one of the trends that have percolated to small towns. Though fitness centers will demand a one-
time heavy investment and pretty low maintenance charges.
Internet Services
Big or small, no town can survive without this commodity. The internet has made it big in all
towns in our country with smartphones granting reach to the narrowest of avenues. Despite
service providers like Airtel, Vodafone and now Jio, there is a serious dearth of good internet
service providers for home appliances and PCs. This can be turned into a serious business
opportunity. Though this particular business might involve a slightly higher investment, the
returns are assured, given the service is good.
Trash Management
Where this might seem too unglamorous for many, it is definitely a need of the hour. Most cities
are plagued with bad trash management. Segregation at the base level is crucial to better waste
management and surprisingly it also provides a good margin. People interested in such a venture
can even collaborate with local authorities to maximise profit and minimise effort.
Venture Capital
Venture Capital is financing that investors provide to startup companies and small businesses
that are believed to have long-term growth potential. Venture capital generally comes from well-
off investors, investment banks and any other financial institutions. However, it does not always
take just a monetary form; it can be provided in the form of technical or managerial expertise.
Though it can be risky for the investors who put up the funds, the potential for above-average
returns is an attractive payoff. For new companies or ventures that have a limited operating
history (under two years), venture capital funding is increasingly becoming a popular – even
essential – source for raising capital, especially if they lack access to capital markets, bank loans
or other debt instruments. The main downside is that the investors usually get equity in the
company, and thus a say in company decisions.
In a venture capital deal, large ownership chunks of a company are created and sold to a few
investors through independent limited partnerships that are established by venture capital firms.
Sometimes these partnerships consist of a pool of several similar enterprises. One important
difference between venture capital and other private equity deals, however, is that venture
capital tends to focus on emerging companies seeking substantial funds for the first time ,
while private equity tends to fund larger, more established companies that are seeking an equity
infusion or a chance for company founders to transfer some of their ownership stake.
Features of Venture Capital Investments
81. High Risk

82. Lack of Liquidity
83. Long term horizon
84. Equity participation and capital gains
85. Venture capital investments are made in innovative projects
86. Suppliers of venture capital participate in the management of the company
Methods of Venture Capital Financing
51. Equity
52. Participating debentures
53. Conditional loan
Advantages of Venture Capital
54. They bring wealth and expertise to the company.

55. Large sum of equity finance can be provided.
56. The business does not stand the obligation to repay the money.
57. In addition to capital, it provides valuable information, resources, technical
assistance to make a business successful.
Disadvantages of Venture Capital
52. As the investors become part owners, the autonomy and control of the founder is
lost.
53. It is a lengthy and complex process.
54. It is an uncertain form of financing.
55. Benefit from such financing can be realized in long run only.
Angel Investors
For small businesses, or for up-and-coming businesses in emerging industries, venture capital is
generally provided by high net worth individuals (HNWIs) – also often known as ‘angel investors’
– and venture capital firms. The National Venture Capital Association (NVCA) is an organization
composed of hundreds of venture capital firms that offer funding to innovative enterprises.
Angel investors are typically a diverse group of individuals who have amassed their wealth
through a variety of sources. However, they tend to be entrepreneurs themselves, or executives
recently retired from the business empires they’ve built.
Self-made investors providing venture capital typically share several key characteristics. The
majority look to invest in companies that are well-managed, have a fully-developed business
plan and are poised for substantial growth. These investors are also likely to offer funding to
ventures that are involved in the same or similar industries or business sectors with which they
are familiar. If they haven’t actually worked in that field, they might have had academic training
in it. Another common occurrence among angel investors is co-investing, where one angel
investor funds a venture alongside a trusted friend or associate, often another angel investor.
Angel Investing
Angel investors, also called private investors, are wealthy individuals who infuse a startup
company or an entrepreneur with cash or capital in exchange for ownership or convertible debt
because they believe in the company and think it will succeed. Angels are different than venture
capitalist because they fund the endeavors personally and usually want to entrepreneur and
business to succeed for more reasons than just profits.
These investors participate in the funding of a startup company because they believe in the
business idea or in the person who invented it and they offer a one-time investment to get the
business moving. Alternatively, they may fund a business on an ongoing basis, especially if there
are hardships at the early stages.
Besides funding the business in significantly better terms than a bank or other lender, an angel
investor offers expertise and a valuable network of contacts, seeking to see the business propel.
Understanding Angel Investors
Angel investors are individuals who seek to invest at the early stages of startups. These types of
investments are risky and usually do not represent more than 10% of the angel investor’s
portfolio. Most angel investors have excess funds available and are looking for a higher rate of
return than those provided by traditional investment opportunities.
Angel investors provide more favorable terms compared to other lenders, since they usually
invest in the entrepreneur starting the business rather than the viability of the business. Angel
investors are focused on helping startups take their first steps, rather than the possible profit they
may get from the business. Essentially, angel investors are the opposite of venture capitalists.
Angel investors are also called informal investors, angel funders, private investors, seed
investors or business angels. These are individuals, normally affluent, who inject capital for
startups in exchange for ownership equity or convertible debt. Some angel investors invest
through crowdfunding platforms online or build angel investor networks to pool capital together.
Sources of Funding
Angel investors typically use their own money, unlike venture capitalists who take care of
pooled money from many other investors and place them in a strategically managed fund.
Though angel investors usually represent individuals, the entity that actually provides the funds
may be a limited liability company (LLC), a business, a trust or an investment fund, among
many other kinds of vehicles.
Crowdfunding
Crowdfunding refers to the practice of funding a project by raising money from a large group of
people. It is relevant for a particular cause.
87. It is a way of raising capital using the internet or social networking like Facebook or Twitter or by
using some crowdfunding-dedicated websites.
88. It helps to improve the presence of small businesses and startups in social media, increases their
investment base, and funding prospects.
89. There are different types of crowdfunding like debt based, equity-based, cause-based, rewards
based, software value token, donation based, litigation, etc.
90. Public-Private Partnership based on the equity-based model is practised in crowdfunding in
India.
Crowdfunding Platforms
54. Wishberry, Milaap, Miracle Foundation, RangDe CrowdCube and Seedrs are some of the leading
crowdfunding platforms in India.
55. Wishberry funds for creative artists. Milaap is a platform for Charities and Miracle Foundation
works for orphans. RangDe is an internet-based peer-to-peer micro-lending platform that facilitates low-
cost loans to rural entrepreneurs across India. CrowdCube and Seedrs are Internet platforms which
enable small companies to issue shares over the Internet and receive small investments from registered
users in return.
56. A number of other platforms have also emerged recently which are specialized in the funding of
scientific projects, such as experiment.com, and The Open Source Science Project.
Benefits
58. With crowdfunding, there is no formal banking system and hence no tedious procedure
required.
59. It is efficient and consumes less time.
60. It enhances the productivity of innovation and entrepreneurship.
61. It helps in elevation and progress of small and medium scale industries.
62. It helps in improving the ease of doing business policy.
63. It has various applications like it is being explored as a potential funding mechanism for creative
work such as blogging and journalism, music, independent film, for funding startup companies etc.
64. It is a way to give back to society.
65. It allows creators to attain low-cost capital.
66. A greater publicity, stronger customer base, and an easier time finding employees is the result
of crowdfunding.
67. Allow people to donate or invest in food- and agriculture-related opportunities. AgFunder is one
of such global platforms.
68. It bypasses caste or gender prejudice to community network and hence inclusiveness is
enhanced.
69. It reduces costs. The platforms reduce search and transaction costs, which allow a higher
participation in the market.
70. It opens up some of the neglected markets to individual investors.
71. Investors add value to companies and hence the value of companies is increased with
crowdfunding.
Concerns
56. It is risky for the new small-scale investors and entrepreneurs and hence they often fail in their
novice ventures.
57. Reputation is damaged if there is a failure to meet goals and targets or to generate interest
which results in a public failure.
58. Intellectual Property (IP) protection can be an issue as creators who engage in crowdfunding are
required to release their product to the public in early stages of funding which exposes them to the risk
of copy by competitors.
59. There is a risk that if the same network of supporters is reached out to multiple times, that
network will eventually cease to supply necessary support and hence all the effort would go in vain in
the end.
60. Since it is without a regulatory framework there is a fear of public misuse.
61. Since it is not formal banking system, chances of fraud and money laundering are high here.
62. There is a problem of creditworthiness and enforceability.
63. There is lack of expertise as the ratio of a novice is high here.
64. There is immaturity in startup sector in India and hence the chances of failure are very high.
Environmental Scanning and SWOT Analysis

Environmental Analysis is described as the process which examines all the

components,internal or external that has an influence on the performance of the organization.
The internal components indicate the strengths and weakness of the business entity whereas the
external components represent the opportunities and threats outside the organization.
To perform environmental analysis, a constant stream of relevant information is required to find

out the best course of action. Strategic Planners use the information gathered from the
environmental analysis for forecasting trends for future in advance. The information can also be
used to assess operating environment and set up organizational goals.
It ascertains whether the goals defined by the organization are achievable or not, with the present
strategies. If is not possible to reach those goals with the existing strategies, then new strategies
are devised or old ones are modified accordingly.
Advantages of Environmental Analysis
The internal insights provided by the environmental analysis are used to assess employee’s
performance, customer satisfaction, maintenance cost, etc. to take corrective action wherever
required. Further, the external metrics help in responding to the environment in a positive
manner and also aligning the strategies according to the objectives of the organization.
Environmental analysis helps in the detection of threats at an early stage, that assist the
organization in developing strategies for its survival. Add to that, it identifies opportunities, such
as prospective customers, new product, segment and technology, to occupy a maximum share of
the market than its competitors.
Steps Involved in Environmental Analysis
1. Identifying
First of all, the factors which influence the business entity are to be identified, to improve its
position in the market. The identification is performed at various levels, i.e. company level,
market level, national level and global level.
2. Scanning
Scanning implies the process of critically examining the factors that highly influence the
business, as all the factors identified in the previous step effects the entity with the same
intensity. Once the important factors are identified, strategies can be made for its improvement.
3. Analysing
In this step, a careful analysis of all the environmental factors is made to determine their effect
on different business levels and on the business as a whole. Different tools available for the
analysis include benchmarking, Delphi technique and scenario building.
4. Forecasting
After identification, examination and analysis, lastly the impact of the variables is to be
forecasted.
Environmental analysis is an ongoing process and follows a holistic approach, that continuously
scans the forces effecting the business environment and covers 360 degrees of the horizon, rather
than a specific segment.
Environmental analysis is the study of the organizational environment to pinpoint

environmental factors that can significantly influence organizational operations. It is a process of
gathering, analysing and dispensing information for effective purpose.
Scanning means detection. Environmental scanning means having a detailed investigation of the
environment. Environmental scanning can also be termed as SWOT analyses. In order to survive
and grow in a competitive business environment, it is essential for every business firm to
undertake SWOT analyses.
This is the process in which the enterprise monitors environmental factors to identify
opportunities and threats of the business. Environmental scanning is essential to understand
current and probable changes in the business environment comprising economic, political,
technological, cultural etc.
SWOT Analysis stand for:
S – Analysing Strength of the firm
W – Analysing weakness of the firm
O – Analysing opportunities of the firm
T – Analysing threats of the firm
It is rightly said that, the firm should maximise the strength, minimise the weakness, grab the
opportunities and diffuse off the threat for survival and growth of the business firm.
SWOT Analysis:
The internal analysis of the firm identifies strength and weakness, and the external analyses helps
to observe opportunities and threats coming the way of business.
Positive Negative
Strength (Internal) Weakness (Internal)
1. Technological skills 1. Absence of employee skill
2. Leading brands 2. Unreliable product
3. Distribution channels 3. Poor access to distribution
4. Customer relationship and Loyalty 4. Low customer retention
5. Management 5. Poor management
Opportunities (External) Threats (External)
1. Changing & unfulfilled customer 1. Changing customer taste & emergence of

need substitute product.
2. Technological advances 2. Arrival of new technologies
3. Favorable change in government 3. Unfavorable change in government policies

policies
4. Liberalization of market 4. Closing of market
The Business Plan as an Entrepreneurial Tool

An entrepreneur trying to start their own business needs to have a business plan. The business
plan is a guide helps business owners stay focused on their goals and serves as a tool to lure
investors and lending institutions to finance the business. To write an effective business plan,
you need to complete several steps to ensure that the final plan includes the necessary elements.
91. Use the outline format of any word processing program to create a business plan. An outline
format makes the plan easier to read and easier to fill in any details you need to add later.
92. Describe your business in the first section. Explain the kinds of products or services your
business will offer, how you plan to manufacture the product or administer the service and what
materials you will need. Include details about the kind of facility you will need and the types of
equipment required.
93. Create a business budget and break it down into three parts: start-up costs, ongoing operating
costs and a breakdown of the overhead into sections such as manpower and materials. Provide as many
details as possible in the budget section. Forecast your budget needs for ongoing operating costs for at
least three years. Break the budget down by department, including sales, marketing, production and
support.
94. Develop a profit projection that shows the percentage growth you expect for the next three
years. Cite reasons for your forecast and give examples of how you intend to grow your company.
95. Present a sales and marketing plan that includes detailed analysis of your competition, how you
intend to address the competition and a detailed explanation of how you will bring your product or
service to the marketplace.
96. Create a biographical section that features information about all executives and partners who
will be involved in the company. Include compensation plans, detailed job descriptions for each person
and resumes that outline past experience within the industry.
Things Needed
57. Computer
58. Word processing software
59. Printer
60. A business plan is a road map that helps navigate a company to success. It describes all aspects
of your business, including history, products, services, marketing and finance. The plan indicates that a
qualified management team exists. It communicates information to those interested in your business,
such as an investor who reviews your plan to determine the likelihood of receiving a good return on an
investment. Without a plan, a business will likely fail.
61. Create a mission statement about why your business exists. For example: “Develop Internet-
based software that provides easy project management.”
62. Define a vision of what your business wants to become. For example: “To become a respected
software vendor that possesses 60 percent of the market for project management software.”
63. Define the market that your business will serve. Include the business outlook for your industry,
what customer needs are addressed and a profile of targeted customers. For example: “Customers are
project managers who manage multiple projects at construction businesses.”
64. Describe products and services, including their pricing. Include what makes the products and
services competitive.
65. Describe the company’s legal and management structures. Explain how business activities are
accomplished. Indicate what permits and licenses your business maintains. Include biographies of key
managers.
66. Define marketing strategy, including pricing and promotion. Include customer groups whose
needs are met by your products and services.
67. Provide a balance sheet, which is a snapshot of the company’s value. For an existing business,
this should cover the past three years.
68. Provide an income statement, which indicates the profit or loss over a period. For an existing
business, cover the past three years.
69. Provide a cash flow statement, which indicates revenue, expenses and available cash. These are
projected amounts if the plan is for a startup business. For an existing business, provide amounts for the
past 12 months. Actual and projected amounts are used to project working capital.
70. Provide each principal’s personal financial statement and prior year’s federal tax return if your
business is applying for financing.
71. Append miscellaneous information that helps define your company. Include marketing
materials, contracts and key employee resumes, for instance.
72. Write an executive summary that defines what your business does and why. This becomes the
first section in the plan.
Elements of Business Planning Process

Your well-thought-out business plan lets others know you’re serious, and that you can handle all
that running a business entails. It can also give you a solid roadmap to help you navigate the
tricky waters. The seven components you must have in your business plan include:
97. Executive Summary

98. Business Description
99. Market Analysis
100. Organization Management
101. Sales Strategies
102. Funding Requirements
103. Financial Projections
All of these elements can help you as you build your business, in addition to showing lenders and
potential backers that you have a clear idea of what you are doing.
1. Executive Summary
The executive summary is basically the elevator pitch for your business. It distills all the
important information about your business plan into a relatively short space. It’s a high-level
look at everything and should include information that summarizes the other sections of your
plan.
One of the best ways to approach writing the executive summary is to finish it last so you can
include the important ideas from other sections.
Coffee House, Inc.’s executive summary focuses on the value proposition of the business. Here’s
what they’ve written into their plan:
“Market research indicates that an increasing number of consumers in our city are interested in
the experience of coffee. However, there isn’t a viable place for them to meet and learn locally.
Instead, they only have access to fast coffee. Coffee House, Inc., provides a place for people to
enjoy fresh-ground beans and truly enjoy their cup.
“Coffee House, Inc., provides a hub for a subculture of coffee, offering customers a place to
purchase their own coffee-grinding supplies in addition to enjoying the modern atmosphere of a
coffee house.
“The founders of Coffee House, Inc., are coffee aficionados with experience in the coffee
industry and connections to sustainable growing operations. With the experience and expertise of
the Coffee House team, a missing niche in town can be fulfilled.”
2. Business Description
This is your chance to describe your company and what it does. Include a look at when the
business was formed, and your mission statement. These are the things that tell your story and
allow others to connect to you. It can also serve as your own reminder of why you got started in
the first place. Turn to this section for motivation if you find yourself losing steam.
Some of the other questions you can answer in the business description section of your plan
include:
73. What is the business model? (What are your customer base, revenue sources and products?)
74. Do you have special business relationships that offer you an advantage?
75. Where are you located?
76. Who are the principals?
77. What is the legal structure?
78. What are some of the market opportunities?
79. What is your projected growth?
Answering these questions narrows your focus and shows potential lenders and backers how
you’re viewing your venture.
3. Market Analysis
This is your chance to look at your competition and the state of the market as a whole. Your
market analysis is an exercise in seeing where you fit in the market — and how you are superior
to the competition.
As you create your market analysis, you need to make sure to include information on your core
target market, profiles of your ideal customers and other market research. You can also include
testimonials if you have them.
Part of your market analysis should come from looking at the trends in your area and industry.
Coffee House, Inc., recognizes that there is a wide trend toward “slow” food and the idea of
experiencing life. On top of that, Coffee House surveyed its city and found no local coffee
houses that offered fresh-ground beans or high-end accessories for do-it-yourselfers.
Coffee House can create an ideal customer identity. The ideal customer is a millennial or
younger member of Gen X. He or she is a professional and interested in experiencing life and
enjoying pleasures. The ideal customer probably isn’t wealthy, but is middle class, and has
enough disposable income to have a hobby like coffee. Coffee House appeals to professionals
who work (and maybe live) in a downtown area. They meet their friends for a good cup of
coffee, but also want the ability to make good coffee at home.
4. Organization and Management
Use this section of your business plan to show off your team superstars. In fact, there are plenty
of indications that your management team matters more than your product idea or pitch.
Venture capitalists want to know you have a competent team that has the grit to stick it out. You
are more likely to be successful and pivot if needed when you have the right management and
organization for your company.
Make sure you highlight the expertise and qualifications of each member of the team in your
business plan. You want to impress.
In the case of Coffee House, Inc., the founders emphasize their connections in the world of
coffee, particularly growers that use sustainable practices. They can get good prices for bulk
beans that they can brand with their own label. The founders also have experience in making and
understanding coffee and the business. One of them has an MBA, and can leverage the executive
ability. Both have worked in marketing departments in the past, and have social media
experience, so they can highlight their expertise.
5. Sales Strategies
How will you raise money with your business and make profits a reality? You answer this
question with your sales strategy. This section is all about explaining your price strategy and
describing the relationship between your price point and everything else at the company.
You should also detail the promotional strategies you’re using now, along with strategies you
hope to implement later. This includes your social media efforts and how you use press releases
and other appearances to help raise your brand awareness and encourage people to buy or sign up
for your products or services.
Your sales strategy section should include information on your web development efforts and
your search engine optimization plan. You want to show that you’ve thought about this, and
you’re ready to implement a plan to ramp up sales.
Coffee House needs to make sure they utilize word of mouth and geolocation strategies for their
marketing. Social media is a good start, including making Facebook Live videos of them
demonstrating products and how to grind beans. They can encourage customers to check in when
visiting, as well as offer special coupons and promotions that activate when they come to the
house to encourage sales.
6. Funding Requirements
Here’s where you ask for the amount of money you need. Make sure you are being as realistic as
possible. You can create a range of numbers if you don’t want to try to pinpoint an exact number.
Include information for a best-case scenario and a worst-case scenario. You should also put
together a timeline so your potential funders have an idea of what to expect.
It can cost between $200,000 and $500,000 to open a coffee house, and profit margins can be
between 7 and 25 percent, depending on costs. A well-run coffee house can see revenues of as
much as $1 million a year by the third year, according to the Chronicle. Some of the things
Coffee House, Inc., would include in its timeline are getting premises, food handlers’ permits
and the proper licenses, arrange for regular supply and get the right insurance. How long these
items take depend on state and local regulations. No matter your business, get an idea of what
steps you need to take to make it happen and how long they typically take. Add it all into your
timeline.
7. Financial Projections
Finally, the last section of your business plan should include financial projections. Make sure
you summarize any successes up to this point. This is especially important if you hope to secure
funds for expansion of your existing business.
Your forward-looking projections should be based on information about your revenue growth
and market trends. You want to be able to use information about what’s happening, combined
with your sales strategies, to create realistic projections that let others know when they can
expect to see returns.
Even though it can be time-consuming to create a business plan, your efforts will be rewarded.
The process is valuable for helping you identify potential problems, as well as help you plan
ahead. You’ll be more organized and better prepared for success.
Preparation of Project Plan

Step 1: Explain the project plan to key stakeholders and discuss its key components
One of the most misunderstood terms in project management, the project plan is a set of living
documents that can be expected to change over the life of the project. Like a roadmap, it
provides the direction for the project. And like the traveler, the project manager needs to set the
course for the project, which in project management terms means creating the project plan. Just
as a driver may encounter road construction or new routes to the final destination, the project
manager may need to correct the project course as well.
A common misconception is that the plan equates to the project timeline, which is only one of
the many components of the plan. The project plan is the major work product from the entire
planning process, so it contains all the planning documents for the project.
Typically many of the project’s key stakeholders, that is those affected by both the project and
the project’s end result, do not fully understand the nature of the project plan. Since one of the
most important and difficult aspects of project management is getting commitment and buying,
the first step is to explain the planning process and the project plan to all key stakeholders. It is
essential for them to understand the importance of this set of documents and to be familiar with
its content, since they will be asked to review and approve the documents that pertain to them.
Components of the Project Plan Include:
Baselines. Baselines are sometimes called performance measures, because the performance of

the entire project is measured against them. They are the project’s three approved starting points
and include the scope, schedule, and cost baselines. These provide the ‘stakes in the ground.’
That is, they are used to determine whether or not the project is on track, during the execution of
the project.
Baseline management plans. These plans include documentation on how variances to the

baselines will be handled throughout the project. Each project baseline will need to be reviewed
and managed. A result of this process may include the need to do additional planning, with the
possibility that the baseline(s) will change. Project management plans document what the project
team will do when variances to the baselines occur, including what process will be followed,
who will be notified, how the changes will be funded, etc.
Other work products from the planning process. These include a risk management plan, a quality
plan, a procurement plan, a staffing plan, and a communications plan.
Step 2: Define roles and responsibilities
Not all key stakeholders will review all documents, so it is necessary to determine who on the
project needs to approve which parts of the plan. Some of the key players are:
104. Project sponsor, who owns and funds the entire project. Sponsors need to review and approve
all aspects of the plan.
105. Designated business experts, who will define their requirements for the end product. They need
to help develop the scope baseline and approve the documents relating to scope. They will be quite
interested in the timeline as well.
106. Project manager, who creates, executes, and controls the project plan. Since project managers
build the plan, they do not need to approve it.
107. Project team, who build the end product. The team needs to participate in the development of
many aspects of the plan, such as identifying risks, quality, and design issues, but the team does not
usually approve it.
108. End users, who use the end product. They too, need to participate in the development of the
plan, and review the plan, but rarely do they actually need to sign off.
109. Others, such as auditors, quality and risk analysts, procurement specialists, and so on may also
participate on the project. They may need to approve the parts that pertain to them, such as the Quality
or Procurement plan.
Step 3: Hold a kickoff meeting
The kickoff meeting is an effective way to bring stakeholders together to discuss the project. It is
an effective way to initiate the planning process. It can be used to start building trust among the
team members and ensure that everyone’s idea are taken into account. Kickoff meetings also
demonstrate commitment from the sponsor for the project. Here are some of the topics that might
be included in a kickoff meeting:
80. Business vision and strategy (from sponsor)

81. Project vision (from sponsor)
82. Roles and responsibilities
83. Team building
84. Team commitments
85. How team makes decisions
86. Ground rules
87. How large the group should be and whether sub-groups are necessary
Step 4: Develop a Scope Statement
The Scope Statement is arguably the most important document in the project plan. It’s the
foundation for the rest of the project. It describes the project and is used to get common
agreement among the stakeholders about the scope. The Scope Statement clearly describes what
the outcome of the project will be. It is the basis for getting the buy-in and agreement from the
sponsor and other stakeholders and decreases the chances of miscommunication. This document
will most likely grow and change with the life of the project. The Scope Statement should
include:
72. Business need and business problem

73. Project objectives, stating what will occur within the project to solve the business problem
74. Benefits of completing the project, as well as the project justification
75. Project scope, stated as which deliverables will be included and excluded from the project.
76. Key milestones, the approach, and other components as dictated by the size and nature of the
project.
It can be treated like a contract between the project manager and sponsor, one that can only be
changed with sponsor approval.
Step 5: Develop scope baseline
Once the deliverables are confirmed in the Scope Statement, they need to be developed into a
work breakdown structure (WBS), which is a decomposition of all the deliverables in the project.
This deliverable WBS forms the scope baseline and has these elements:
65. Identifies all the deliverables produced on the project, and therefore, identifies all the work to
be done.
66. Takes large deliverables and breaks them into a hierarchy of smaller deliverables. That is, each
deliverable starts at a high level and is broken into subsequently lower and lower levels of detail.
67. The lowest level is called a “work package” and can be numbered to correspond to activities and
tasks.
The WBS is often thought of as a task breakdown, but activities and tasks are a separate
breakdown, identified in the next step.
Step 6: Develop the schedule and cost baselines
Here are the steps involved in developing the schedule and cost baselines.
27. Identify activities and tasks needed to produce each of the work packages, creating a WBS of
tasks.
28. Identify resources for each task, if known.
29. Estimate how long it will take to complete each task.
30. Estimate cost of each task, using an average hourly rate for each resource.
31. Consider resource constraints, or how much time each resource can realistically devoted to this
project.
32. Determine which tasks are dependent on other tasks, and develop critical path.
33. Develop schedule, which is a calendarization of all the tasks and estimates. It shows by chosen
time period (week, month, quarter, or year) which resource is doing which tasks, how much time they
are expected to spend on each task, and when each task is scheduled to begin and end.
34. Develop the cost baseline, which is a time-phased budget, or cost by time period.
This process is not a one-time effort. Throughout the project you will most likely be adding to
repeating some or all of these steps.
Step 7: Create baseline management plans
Once the scope, schedule, and cost baselines have been established, you can create the steps the
team will take to manage variances to these plans. All these management plans usually include a
review and approval process for modifying the baselines. Different approval levels are usually
needed for different types of changes. In addition, not all new requests will result in changes to
the scope, schedule, or budget, but a process is needed to study all new requests to determine
their impact to the project.
Step 8: Develop the staffing plan
The staffing plan is a chart that shows the time periods, usually month, quarter, year, that each
resource will come onto and leave the project. It is similar to other project management charts,
like a Gantt chart, but does not show tasks, estimates, begin and end dates, or the critical path. It
shows only the time period and resource and the length of time that resource is expected to
remain on the project.
Step 9: Analyze project quality and risks.
Project Quality: Project quality consists of ensuring that the end product not only meets the
customer specifications, but is one that the sponsor and key business experts actually want to
use. The emphasis on project quality is on preventing errors, rather than inspecting the product at
the end of the project and then eliminating errors. Project quality also recognizes that quality is a
management responsibility and needs to be performed throughout the project.
Creating the Quality Plan involves setting the standards, acceptance criteria, and metrics that will
be used throughout the project. The plan, then, becomes the foundation for all the quality reviews
and inspections performed during the project and is used throughout project execution.
Project Risks: A risk is an event that may or may not happen, but could have a significant effect
on the outcome of a project, if it were to occur. For example, there may be a 50% chance of a
significant change in sponsorship in the next few months. Analyzing risks includes making a
determination of both the probability that a specific event may occur and if it does, assessing its
impact. The quantification of both the probability and impact will lead to determining which are
the highest risks that need attention. Risk management includes not just assessing the risk, but
developing risk management plans to understand and communicate how the team will respond to
the high-risk events.
Step 10: Communicate!
One important aspect of the project plan is the Communications Plan. This document states such
things as:
29. Who on the project wants which reports, how often, in what format, and using what media.
30. How issues will be escalated and when.
31. Where project information will be stored and who can access it.
For complex projects, a formal communications matrix is a tool that can help determine some of
the above criteria. It helps document the project team’s agreed-on method for communicating
various aspects of the project, such as routine status, problem resolution, decisions, etc.
Once the project plan is complete, it is important not just to communicate the importance of the
project plan to the sponsor, but also to communicate its contents once it’s created. This
communication should include such things as:
18. Review and approval of the project plan.

19. Process for changing the contents of the plan.
20. Next steps—executing and controlling the project plan and key stakeholder
roles/responsibilities in the upcoming phases.
Components of an ideal Business Plan-Market Plan,

Financial Plan
1. Overall Summary of the Business Model
Without prior knowledge regarding what the business is supposed to do, an

entrepreneur can’t achieve his or her goals.
The executive summary should define the overall details of what the business is all
about and the goals and objectives.
It should be clear with the core values and the positioning in the market. It must clearly
explain how the brand will enter the local market followed by the international market –
if ultimate ambitions stretch that far. This can be done by maintaining its equipment
base, input/output process and the good quality of items. It further focuses on the
generation of financial resources.
2. A Strategy That Must Be Followed
You should be clear with your product strategy, which must be based on consumer
needs. He/she should survey the situation using various details of their customers.
A few of the elements that must be included are:
110. Company or product mission

111. Marketing and Financial objectives
112. Resource availability
113. Cashflow analysis
114. Competitive analysis
3. Availability of Products and Services
Entrepreneurs should have a full understanding of how their products or services will
reach their target audience.
Designing good products and services to customers is just one part of the whole plan,
however. The aim must be making it available that too in a cost-effective manner. And it
should be the ultimate goal of an entrepreneur. It can be achieved by making the best
use of the team, promotional activities used for sales, advertising methods and other
tools that are being used for communication.
4. Pricing Strategy
The most important stage of any business model is its pricing. Price can be the maker
or breaker of a product. It is the one element of the marketing mix that produces
revenue. All other elements fall on the opposite side of the ledger. People should design
their product or brand so that it commands a premium price and reaps big profits. It
should also reflect a value that the consumers are willing to pay and a benefit that
outweighs the cost.
5. Awareness of the Product
Always plan how you intend to make your product or service known to your intended
customer base. You could have the best offering in your industry or niche, but if nobody
has heard of it or you, you’re as good as sunk.
The time to plan your social media, content marketing and advertising campaigns is not
when you are ready to go to market!
6. Who Will Benefit From Your Offering?
Segmentation, targeting and positioning are the essences of Marketing. Your target
customer base will go some way to determining the price you can ultimately charge. It
will also determine how you can best communicate your offering to them and where you
will find them.
7. Short Term and Long Term Objectives
Entrepreneurs must have a clear vision of their mission, marketing and financial
objectives. They need to be specific about how their brand will satisfy the target market.
Nobody can expect immediate profit. But planning must include short, medium and
long-term goals. You need to be clear regarding how your business will proceed as per
the life cycle of whatever you are selling. And you need input from other areas of
marketing. Nobody can think of or execute everything entailed in pushing an offering to
market.
8. SWOT Analysis
Before designing a complete project, a pilot project needs to be designed and

implemented. An entrepreneur should know everything – including any flaws that may
become apparent. Also, the project strength, shortcomings, appropriate options for
progressing and warnings can be tested in the pilot project itself for the successful
completion or execution of the main project. For this, you need to do a thorough SWOT
(Strengths, Weaknesses, Opportunities, Threats) analysis.
9. PEST Analysis
SWOT Analysis will give you the inner view of the business model. However, it is very
important to determine how a business will run in the changing economic scenario.
Hence, a detailed PEST analysis needs to be done to know how your model will run in
the changing Political, Economic, Social and Technological Environment.
Financial Plan
The financial section of your business plan determines whether or not your business
idea is viable and will be the focus of any investors who may be attracted to your
business idea. The financial section is composed of three financial statements:
the income statement, the cash flow projection and the balance sheet and a brief
explanation/analysis of these three statements.
This article will guide you in the preparation of each of these three financial statements.
Before you begin, however, you must gather the financial data you will need including all
of your expenses.
Taking Stock of Expenses
Think of your business expenses as two cost categories; your start-up expenses and
your operating expenses. All the costs of getting your business up and running should
be considered start-up expenses. These expenses may include:
88. Business registration fees

89. Business licensing and permits
90. Starting inventory
91. Rent deposits
92. Down payments on property
93. Down payments on equipment
94. Utility setup fees
This is just a sample of startup expenses; your own list will expand as soon as you start
to itemize them.
Operating expenses are the costs of keeping your business running. Think of these as
your monthly expenses. Your list of operating expenses may include:
77. Salaries (including your own)

78. Rent or mortgage payments
79. Telecommunication expenses
80. Utilities
81. Raw materials
82. Storage
83. Distribution
84. Promotion
85. Loan payments
86. Office supplies
87. Maintenance
Once again, this is just a partial list. Once you have listed all of your operating expenses,
the total will reflect the monthly cost of operating your business. Multiply this number
by 6, and you have a six-month estimate of your operating expenses. Adding this
amount to your total startup expenses list, and you have a ballpark figure for your
complete start-up costs.
Now you can begin to put together your financial statements for your business plan
starting with the income statement.
Components of an ideal Business Plan: Operation Plan

The operations section of your business plan is where you explain – in detail – you company’s
objectives, goals, procedures, and timeline. An operations plan is helpful for investors, but it’s
also helpful for you and employees because it pushes you to think about tactics and deadlines.
In the previous course, you outlined your company’s strategic plan, which answers questions
about your business mission. An operational plan outlines the steps you’ll take to complete your
business mission.
Your operations plan should be able to answer the following:
115. Who: The personnel or departments who are in charge of completing specific tasks.
116. What: A description of what each department is responsible for.
117. Where: The information on where daily operations will be taking place.
118. When:The deadlines for when the tasks and goals are to be completed.
119. How much: The cost amount each department needs to complete their tasks.
In this session, we explain each item to include in your operations plan.
Goals and Objectives
The key to an operations plan is having a clear objective and goal everyone is focused on
completing. In this section of your plan, you’ll clearly state what your company’s operational
objective is.
Your operational objective explains how you intend to complete your strategic objective.
In order to create an efficient operational objective, think SMART:
95. Specific– Be clear on what you want employees to achieve.

96. Measurable– Be able to quantify the goal in order to track progress.
97. Attainable & Realistic– It’s great to be ambitious but make sure you aren’t setting your team up
for failure. Create a goal that everyone is motivated to complete with the resources available.
98. Timely– Provide a deadline so everyone has a date they are working towards.
Different departments will have different operational objectives. However, each department
objective should help the company reach the main objective. In addition, operational objectives
change; the objectives aren’t intended to be permanents or long term. The timeline should be
scheduled with your company’s long-term goals in mind.
Let’s look at the following example for a local pizza business objective:
88. Strategic objective: To deliver pizza all over Eastern Massachusetts.

89. Technology department operational objective: To create a mobile app by January 2017 to offer a
better user experience.
90. Marketing department operational objective: To increase website visitors by 50% by January
2017 by advertising on radio, top local food websites, and print ads.
91. Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of
Massachusetts’s largest counties.
Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of

Massachusetts’s largest counties.
Production Process
After you create your objectives, you have to think strategically on how you’re going to meet
them. In order to do this, each department (or team) needs to have all the necessary resources for
the production process.
Resources you should think about include the following:
68. Suppliers– do you have a supplier (or more) to help you produce your product?
69. Equipment & Technology– does each department have the necessary equipment, technology
and software to meet objectives? For instance, in keeping with the pizza business objective above,
necessary tools might include:
1. Technology team: app developing software
2. Marketing team: software licenses for website analytical tools
3. Sales team: headsets, phone systems or virtual phone system technology
70. Cost– what is the budget for each department?
In addition to the production process, you’ll also need to describe in detail your operating
process. This will demonstrate to investors that you know exactly how you want your business to
run on a day-to-day basis.
Items to address include:
35. Location– where are employees working? Will you need additional facilities?
36. Work hours– will employees have a set schedule or flexible work schedule?
37. Personnel– who is in charge of making sure department tasks are completed?
Timeline
Creating a timeline with milestones is important for your new business. It keeps everyone
focused and is a good tracking method for efficiency. For instance, if milestones aren’t being
met, you’ll know that it’s time to re-evaluate your production process or consider new hires.
Below are common milestones new businesses should plan for.
Hiring
When you completed your Management Plan Worksheet in the previous course, you jotted down
which key hires you needed right away and which could wait. Make sure you have a good idea
on when you would like those key hires to happen; whether it’s after your company hits a certain
revenue amount or once a certain project takes off.
Production Milestones
Production milestones keep business on track. These milestones act as “checkpoints” for your
overall department objectives. For instance, if you want to create a new app by the end of the
year, product milestones you outline might include a beta roll out, testing, and various version
releases.
Other product milestones to keep in mind:
32. Design phase

33. Product prototype phase
34. Testing
35. Product launch
36. Version release
Market Milestones
Market milestones are important for tracking efficiency and understanding whether your
operations plan is working. For instance, a possible market milestone could be reaching a certain
amount of clients or customers after a new product or service is released.
A few other market milestones to consider:

21. Gain a certain amount of users/clients by a certain time
22. Signing partnerships
23. Running a competitive analysis
24. Performing a price change evaluation
Financial Milestones
Financial milestones are important for tracking business performance. It’s likely that a board of
directors or investors will work with you on creating financial milestones. In addition, in
startups, it’s common that financial milestones are calculated for 12 months.
Typical financial milestones include:
22. Funding events

23. Revenue and profit goals
24. Transaction goals
Feasibility Analysis Aspects

A well-designed study should offer a historical background of the business or project, such as a
description of the product or service, accounting statements, details of operations and
management, marketing research and policies, financial data, legal requirements, and tax
obligations. Generally, such studies precede technical development and project implementation.
Five Areas of Project Feasibility
A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is
an important factor in the credibility of the study for potential investors and lending institutions.
There are five types of feasibility study—separate areas that a feasibility study examines,
described below.
120. Technical Feasibility – this assessment focuses on the technical resources available to the
organization. It helps organizations determine whether the technical resources meet capacity and
whether the technical team is capable of converting the ideas into working systems. Technical feasibility
also involves evaluation of the hardware, software, and other technology requirements of the proposed
system. As an exaggerated example, an organization wouldn’t want to try to put Star Trek’s transporters
in their building—currently, this project is not technically feasible.
121. Economic Feasibility – this assessment typically involves a cost/ benefits analysis of the project,
helping organizations determine the viability, cost, and benefits associated with a project before
financial resources are allocated. It also serves as an independent project assessment and enhances
project credibility—helping decision makers determine the positive economic benefits to the
organization that the proposed project will provide.
122. Legal Feasibility – this assessment investigates whether any aspect of the proposed project
conflicts with legal requirements like zoning laws, data protection acts, or social media laws. Let’s say an
organization wants to construct a new office building in a specific location. A feasibility study might
reveal the organization’s ideal location isn’t zoned for that type of business. That organization has just
saved considerable time and effort by learning that their project was not feasible right from the
beginning.
123. Operational Feasibility – this assessment involves undertaking a study to analyze and determine
whether—and how well—the organization’s needs can be met by completing the project. Operational
feasibility studies also analyze how a project plan satisfies the requirements identified in the
requirements analysis phase of system development.
124. Scheduling Feasibility – this assessment is the most important for project success; after all, a
project will fail if not completed on time. In scheduling feasibility, an organization estimates how much
time the project will take to complete.
When these areas have all been examined, the feasibility study helps identify any constraints the
proposed project may face, including:
99. Internal Project Constraints: Technical, Technology, Budget, Resource, etc.

100. Internal Corporate Constraints: Financial, Marketing, Export, etc.
101. External Constraints: Logistics, Environment, Laws and Regulations, etc.
Benefits of Conducting a Feasibility Study
The importance of a feasibility study is based on organizational desire to “get it right” before
committing resources, time, or budget. A feasibility study might uncover new ideas that could
completely change a project’s scope. It’s best to make these determinations in advance, rather
than to jump in and learning that the project just won’t work. Conducting a feasibility study is
always beneficial to the project as it gives you and other stakeholders a clear picture of the
proposed project.
Below are some key benefits of conducting a feasibility study:
92. Improves project teams’ focus

93. Identifies new opportunities
94. Provides valuable information for a “go/no-go” decision
95. Narrows the business alternatives
96. Identifies a valid reason to undertake the project
97. Enhances the success rate by evaluating multiple parameters
98. Aids decision-making on the project
99. Identifies reasons not to proceed
Apart from the approaches to feasibility study listed above, some projects also require for other
constraints to be analyzed –
Internal Project Constraints: Technical, Technology, Budget, Resource, etc.

Internal Corporate Constraints: Financial, Marketing, Export, etc.
External Constraints: Logistics, Environment, Laws and Regulations, etc.
Economic Analysis
An economic analysis is a process in which business owners gain a clear picture of the existing
economic climate, as it relates to their company’s ability to thrive. Economists, statisticians, and
mathematicians often carry out this analysis on behalf of for-profit and nonprofit businesses.
These types of economic evaluation consist of an in-depth appraisal of the strengths and
weaknesses of the market. An economic analysis isn’t limited to medium or large-sized
businesses, it’s valuable for small companies as well. In fact, small businesses probably need to
perform economic analysis more often than businesses that have enough built-in capital and
resources to sustain an economic downturn. There are several types of economic evaluation
methods business owners can use to gain a comprehensive view of how their companies will fare
in the future.
Cost-Benefit Analysis
One of the most effective types of economic evaluation is the cost-benefit analysis, also referred
to as a benefit-cost analysis. This is a technique used to determine whether a project or activity is
feasible by weighing the monetary cost of doing the project or activity versus the benefits. A
cost-benefit analysis will always compare the cost of the effort against the benefits that result
from that effort. Because it deals solely in monetary terms, a cost-benefit analysis is one of the
most bottom-line types of economic evaluation. It can provide valuable insight in comparing and
contrasting work projects, help determine whether an investment opportunity is ideal, and help
assess the consequences of implementing changes to your business. However, there is a
drawback to this analysis as it is difficult to place a monetary value on some activities such as the
benefits of increased public safety versus the cost to increase law enforcement presence in major
cities. After performing the cost-benefit analysis, a small business owner can make an educated
business decision.
Cost-Effective Analysis
In a cost-effective analysis, you weigh the effectiveness of a project against its price. Unlike with
cost-benefit analysis, however, a low cost doesn’t mean high effectiveness, and the reverse is
also true. For example, let’s say you’ve determined that installing an automated system that can
handle customer orders 24-hours a day, seven days a week, is the cheapest way to boost your
incoming orders. After research, however, you determine that many calls that come into the
automated system are not complete, because callers hang up when they hear the automated voice
on the system. Your market research also indicates that your customers want to speak to a live
representative. A cost-effective analysis would tell you that the cheaper route of installing an
automated system is not effective in processing more orders. Depending on the type of business
you own, you may find that saving money doesn’t result in creating a desirable effect on your
business.
Cost-Minimization Analysis
As the term suggests, cost-minimization analysis focuses on finding the cheapest cost to
complete a project. This is one of the economic evaluation methods that business owners use
when cost savings are at a premium and outweigh all other considerations. It is also used when
there are two or more ways to accomplish the same task. Cost-minimization analysis is most
often used in healthcare. For example, drug manufacturers may compare two drugs that have
been shown to produce the same effect in patients, or a pharmaceutical company may implement
cost-minimization analysis, to determine which of two medications that treat the same illness
will cost the least amount of money to produce. In many instances, the generic equivalent of a
name-brand drug is the least expensive drug to manufacture, especially if it produces the same
therapeutic effect in patients.
Financial Analysis
Financial analysis is the process of evaluating businesses, projects, budgets and other finance-
related entities to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid or profitable enough to warrant a
monetary investment. When looking at a specific company, a financial analyst conducts analysis
by focusing on the income statement, balance sheet, and cash flow statement.
Financial analysis is used to evaluate economic trends, set financial policy, build long-term plans
for business activity, and identify projects or companies for investment. This is done through the
synthesis of financial numbers and data.
One of the most common ways to analyze financial data is to calculate ratios from the data to
compare against those of other companies or against the company’s own historical performance.
For example, return on assets (ROA) is a common ratio used to determine how efficient a
company is at using its assets and as a measure of profitability. This ratio could be calculated for
several similar companies and compared as part of a larger analysis.
Financial analysis can be conducted in both corporate finance and investment finance settings. In
corporate finance, the analysis is conducted internally, using such ratios as net present value
(NPV) and internal rate of return (IRR) to find projects worth executing. A key area of corporate
financial analysis involves extrapolating a company’s past performance, such as gross revenue or
profit margin, into an estimate of the company’s future performance. This allows the business to
forecast budgets and make decisions based on past trends, such as inventory levels.
In investment finance, an outside financial analyst conducts a financial analysis for investment
purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-
down approach first looks for macroeconomic opportunities, such as high-performing sectors,
and then drills down to find the best companies within that sector. A bottom-up approach, on the
other hand, looks at a specific company and conducts similar ratio analysis to corporate financial
analysis, looking at past performance and expected future performance as investment indicators.
Technical and Fundamental Analysis
There are two types of financial analysis: technical analysis and fundamental analysis. Technical
analysis looks at quantitative charts, such as moving averages (MA), while fundamental analysis
uses ratios, such as a company’s earnings per share (EPS).
For example, technical analysis was conducted on the GBP/USD exchange rate after the results
of the Brexit vote in June 2016. Looking at the exchange rate chart, it was determined that the
rate dropped significantly after the vote on June 23, 2016, and then it recovered over a 48-hour
period by 375 basis points (bps).
As an example of fundamental analysis, Discover Financial Services reported first-quarter 2016

results on July 19, 2016. The company had an EPS of $1.40, up from an EPS of $1.33 for the
same quarter in 2015, which was a good sign.
Market and Technological feasibility

125. Detailed interviews with stakeholders: The market feasibility study begins with an in-depth
interview with the stakeholders. This is a perfect starting point. The market research team will be able to
familiarize themselves with the projects and its objectives by using an open-discussion format. This first
step is beneficial to both the parties. A stakeholder can be a key personnel in the enterprise or outside
the company. It could also be a person involved in the local economy or any other key person who plays
an in important role in the enterprise’s business plan and who can provide the market research team
with valuable feedback.
126. Meticulous demographic assessment and trend analysis: Demographics assessments are used to
conduct secondary research, analyse the market and perform demand modelling and estimates.
Information like consumer expenditures, population trends, education, age and other such relevant
demographic statistics are collated about the market that you wish to enter into. A detailed trend
analysis is then conducted to search for current industry trends. Important ancillary data is made a note
of. Both these processes can be conducted seamlessly over the internet with the use of search engines.
127. In-depth quantitative survey: A quantitative survey is used to collect primary data from among
the end-users. The questions that are asked are focussed on the current usage, the predicted usage and
a clear understanding of the impact of the new business idea on the market. This is a very important
step in a market feasibility study, as the questions asked during the quantitative surveys serves as a
foundation for the future demand model and estimate.
128. Careful assessment of competitors: A competitive assessment is created to analyse the
enterprise’s competitors in the proposed market area. Detailed profiles of each competitor is created by
the research team. Mystery shopping calls will be made. Personal visits will also be conducted to collect
non-publically available information, which at times, will not be available online. By performing an in-
depth analysis on competitors, it will help the client spot service/product gaps, in which they can
successfully market themselves in.
129. Demand model with estimates and recommendations: The final step in a market feasibility study
is to compile the first four components and use the findings from each step to develop a demand model.
This model will be used to predict the likelihood and habits of end-customers for the new business
service/product that you wish to market. Predictive modelling will be used to offer you a figure based on
a combination of known factors and assumptions. Based on the estimate, you can either decide to go
ahead or end ties with the proposed business venture.
Steps involved in Launching a Business (Process Charts)

Here are 10 steps that are required to start a business successfully. Take one step at a time, and
you’ll be on your way to successful small business ownership.
Step 1: Do Your Research
Most likely you have already identified a business idea, so now it’s time to balance it with a little
reality. Does your idea have the potential to succeed? You will need to run your business idea
through a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer
something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and
even trial and error. As you explore the market, some of the questions you should answer
include:
130. Is there a need for your anticipated products/services?

131. Who needs it?
132. Are there other companies offering similar products/services now?
133. What is the competition like?
134. How will your business fit into the market?
Don’t forget to ask yourself some questions, too, about starting a business before you take the
plunge.
Step 2: Make a Plan
You need a plan in order to make your business idea a reality. A business plan is a blueprint that
will guide your business from the start-up phase through establishment and eventually business
growth, and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional
business plan is a must. This type of business plan is generally long and thorough and has a
common set of sections that investors and banks look for when they are validating your idea.
If you don’t anticipate seeking financial support, a simple one-page business plan can give you
clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a
working business plan on the back of a napkin, and improve it over time. Some kind of plan in
writing is always better than nothing.
Step 3: Plan Your Finances
Starting a small business doesn’t have to require a lot of money, but it will involve some initial
investment as well as the ability to cover ongoing expenses before you are turning a profit. Put
together a spreadsheet that estimates the one-time startup costs for your business (licenses and
permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking,
grand opening events, property leases, etc.), as well as what you anticipate you will need to keep
your business running for at least 12 months (rent, utilities, marketing and advertising,
production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small
business, including:
102. Financing
103. Small business loans
104. Small business grants
105. Angel investors
106. Crowdfunding
You can also attempt to get your business off the ground by bootstrapping, using as little capital
as necessary to start your business. You may find that a combination of the paths listed above
work best. The goal here, though, is to work through the options and create a plan for setting up
the capital you need to get your business off the ground.
Step 4: Choose a Business Structure
Your small business can be a sole proprietorship, a partnership, a limited liability company
(LLC) or a corporation. The business entity you choose will impact many factors from your
business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as
your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from
an attorney or CPA to ensure you are making the right structure choice for your business.
Step 5: Pick and Register Your Business Name
Your business name plays a role in almost every aspect of your business, so you want it to be a
good one. Make sure you think through all of the potential implications as you explore your
options and choose your business name.
Once you have chosen a name for your business, you will need to check if it’s trademarked or
currently in use. Then, you will need to register it. A sole proprietor must register their business
name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically
register their business name when the formation paperwork is filed.
Don’t forget to register your domain name once you have selected your business name. Try these
options if your ideal domain name is taken.
Step 6: Get Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation,
depending on the type of business you are starting and where you are located. You will need to
research what licenses and permits apply to your business during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place. One of the most
important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates
and prices, conduct business with others, and file your taxes. You can set up your accounting
system yourself, or hire an accountant to take away some of the guesswork. If you decide to get
started on your own, make sure you consider these questions that are vital when choosing
accounting software.
Step 8: Set Up Your Business Location
Setting up your place of business is important for the operation of your business, whether you
will have a home office, a shared or private office space, or a retail location.
You will need to think about your location, equipment, and overall setup, and make sure your
business location works for the type of business you will be doing. You will also need to
consider if it makes more sense to buy or lease your commercial space.
Step 9: Get Your Team Ready
If you will be hiring employees, now is the time to start the process. Make sure you take the time
to outline the positions you need to fill, and the job responsibilities that are part of each position.
The Small Business Administration has an excellent guide to hiring your first employee that is
useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is
the time to work with an attorney to get your independent contractor agreement in place and start
your search.
Lastly, if you are a true solopreneur hitting the small business road alone, you may not need
employees or contractors, but you will still need your own support team. This team can be
comprised of a mentor, small business coach, or even your family, and serves as your go-to
resource for advice, motivation and reassurance when the road gets bumpy.
Step 10: Promote Your Small Business
Once your business is up and running, you need to start attracting clients and customers. You’ll
want to start with the basics by writing a unique selling proposition (USP) and creating a
marketing plan. Then, explore as many small business marketing ideas as possible so you can
decide how to promote your business most effectively.
Once you have completed these business start-up activities, you will have all of the most
important bases covered. Keep in mind that success doesn’t happen overnight. But use the plan
you’ve created to consistently work on your business, and you will increase your chances of
success.
Various Forms of Business Ownership

1. Single Ownership:
Ownership when applied to an industrial enterprise means title to and possession of the assets of
the enterprise, the power to determine the policies of operation, and the right to receive and
dispose of the proceeds.
It is called a single ownership when an individual exercises and enjoys these rights in his own
interest. A business owned by one man is called single ownership. Single ownership does well
for those enterprises which require little capital and lend themselves readily to control by one
person.
Examples of enterprises run by single owner are printing press, auto repair shop, wood working
plant, a small fabrication shop, etc., Le., retail trades, service industries and small engineering
firms. In single ownership, one person contributes the original assets to start the business,
maintains and controls business operations, reaps full benefit in terms of profit and is fully liable
for all debts associated with the business.
Advantages of Single Ownership:
135. Easy to establish as it does not require to complete any legal formality.
136. Simplicity of organization.
137. The expenses in starting the business are minimal.
138. Owner is free to make all decisions.
139. This type of ownership is simple, easy to operate and extremely flexible.
140. The owner enjoys all the profits, thus,
141. There is a great deal of personal motivation and incentive to succeed.
142. Minimum legal restrictions are associated with this form of ownership.
143. Owner can keep secrecy as regards the raw materials used, method of manufacture, etc.
144. Single ownership associates with it the great ease with which the business can be discontinued.
Disadvantages of Single Ownership:
107. The owner is liable for all obligations and debts of the business.
108. The business may not be successful if the owner has limited money, lacks ability and necessary
experience to run the business.
109. Because of relatively unstable nature of the business, it is difficult to raise capital for expanding
the business.
110. If the business fails, creditors can take the personal property as well as the business property of
the (single) owner to settle their claims. This means single ownership involves unlimited liability for
debts and losses.
111. There is limited opportunity for employees as regards monetary rewards (e.g., profit sharing,
bonuses, etc.) and promotions.
112. Generally, single ownership firm has limited life, i.e., the firm may cease to exist with the death
of the proprietor. This is the cause of unstable nature of the firm (refer 3 above).
Applications of Single Ownership:
Single ownership is suitable:
100. For retail trades, service concerns and small engineering firms which require relatively small
capital to start with and to run.
101. For those businesses which do not involve high risks of failure.
102. When the business can be taken care by one person.
2. Partnership:
A single owner becomes inadequate as the size of the business enterprise grows. He may not be
in a position to do away with all the duties and responsibilities of the grown business. At this
stage, the individual owner may wish to associate with him more persons who have either capital
to invest, or possess special skill and knowledge to make the existing business still more
profitable.
Such a combination of individual traders is called Partnership. Partnership may be defined as the
relation between persons who have agreed to share the profits of a business carried on by all or
any of them acting for all.
Individuals with common purposes join as partners and they put together their property, ability,
skill, knowledge, etc., for the purpose of making profits. In brief, partnership is an association of
two or more (up to 20) persons to carry on as co-owners of a business for profit.
Partnerships are based upon a partnership agreement which is generally reduced to writing. It
should cover all areas of disagreement among the partners. It should define the authority, rights
and duties of each partner. It should specify- how profits and losses will be divided among the
partners, etc.
Kinds of Partners:
(i) Active Partners who take active part in the management of the business enterprise.
(ii) Sleeping Partners who do not take any active part in the conduct of the business. Both Active
and Sleeping partners are responsible for the debts of the Partnership.
General Duties of Partners:
Partners should:
(i) Be just and faithful to one another.
(ii) Render true accounts and full information about everything that affects any partner.
(iii) Cooperate and accommodate each other.
(iv) Have confidence in each other and better mutual understanding.
(v) Respect the views of one-another.
Types of Partnership:
(i) General Partnership:
Whatever has been discussed above so far pertains to General Partnership; besides that in a
general partnership, each partner has full agency powers and may bind the partnership by any
act, i.e., each partner may act as though he were an individual proprietor.
General partnership differs from single ownership in that the actions of any partner not only
affect himself but they affect other partners also. As the partnership grows or personnel changes
occur, additional partners can be had with the consent of all old partners.
Advantages of General Partnership:
(i) Large capital is available to the firm.
(a) The firm possesses much better talents, judgment and skills.
(iii) General partnership is easy to form and is relatively inexpensive in terms of organization
cost.
(iv) Incentive for success is high.

(v) There is a definite legal status of the firm.
(vi) Partners have full control of the business and possess full rights to all profits.
(vii) Partnership associates tax advantages with it.
(viii) Partnership firms can borrow money quite easily from the banks.
(ix) For all losses, there are more than one person to share them.
Applications of General Partnership:
General Partnership does very well in
Law firms,
Retail trade organisation,
Medical clinics,
Small engineering firms, etc.
Disadvantages of General Partnership:
(i) Each partner has unlimited liability for the debts of the firm,
(ii) Danger of disagreement and distrust among the partners,
(iii) Authority being divided among the partners,
(iv) Partnership lacks permanence and stability; it has limited life. Partnership may dissolve if a
partner dies,
(v) Investors and lenders hesitate to provide money because of the lack of stability of a
partnership firm, and
(vi) All partners suffer because of the wrong steps taken by one partner.
(ii) Limited Partnership:
Limited partnership type of ownership overcomes the two main disadvantages [e.g. number (i)
and (v) mentioned above] of general partnership. Limited partnership is an association of one or
more general partners who manage the business and one or more limited partners whose liability
is limited to the capital they have invested in the business.
Limited partners share the profit but they do not participate or interfere with the control or
management of the firm. Moreover limited partners have their liabilities limited to the amount of
their investment.
Thus, those investors and lenders who used to hesitate investing in the venture can do so without
much risk. Limited partnership type of ownership is easy and less costly to form, and personal
incentive to succeed is retained. A disadvantage associated with limited partnership is that the
limited partner, though he invests in the business, has no voice in the management.
3. Joint Stock Company:
Joint Stock Company overcomes many of the disadvantages associated with Partnership types of
industrial ownership, such as:
(i) Difficulties in raising capital,
(ii) Easy disruption,
(iii) Lack of facility for centralised management, and
(iv) Unlimited liability, etc.
A joint stock company is an Association of individuals, called shareholders, who join together
for profit and agree to supply capital divided into shares that are transferable for carrying on a
specific business. Death, insolvency, disablement or lunacy of the shareholders does not affect
the joint stock company. A joint stock company consists of more than twenty persons for
carrying any business other than the banking business.
These persons give a name to the company, mention the purpose for which it is formed, and state
the nature and the amount of capital (shares) to be issued, etc., and submit the proposal to the
Registrar of Companies. As the registrar issues a certificate in this connection, the company
starts operating. The managing body of a joint stock company is Board of Directors elected by
the shareholders.
The Board of Directors:
(i) Makes policies;
(ii) Takes decisions; and
(iii) Runs the company efficiently.

The liability of the members (or shareholders) of a joint stock company is limited to that capital
only of which they hold the shares. Finance is raised by issuing shares, debentures, bank loans,
loans from industrial and finance corporations.
Types of Joint Stock Company:
There are two types of joint stock companies:
(a) Private Limited Company:
(i) The capital is collected from the private partners; some of them may be active while others
being sleeping.
(ii) Private limited company restricts the right to transfer shares, avoids public to take up shares
or debentures.
(iii) The number of members is between 2 and 50, excluding employee and ex-employee
shareholders.
(iv) The company need not file documents such as consent of directors, list of directors, etc.,
with the Registrar of Joint Stock Companies.
(v) The company need not obtain from the Registrar, a certificate of commencement of business.
(vi) The company need not circulate the Balance Sheet, Profit and Loss Account, etc., among its
members; but it should hold its annual general meeting and place such financial statements in the
meeting.
(vii) A private company must get its accounts audited.
(viii) A private company has to send a certificate along with the annual return to the Registrar of
Joint Stock Companies stating that it does not have shareholders more than fifty excluding the
employee and ex-employee shareholders.
Actually, a private joint stock company resembles much with partnership and has the advantage
that big capital can be collected, than could be done so in partnership.
(b) Public Limited Company:
(i) In Public limited company, the capital is collected from the public by issuing shares having
small face value (Rs. 50,20,10).
(ii) The number of shareholders should not be less than seven, but there is no limit to their
maximum number.
(iii) A public limited company has to file with the Registrar of Joint Stock Companies,
documents such as consent of the directors, list of directors, director’s contract, etc., along with
the memorandum of association and articles of association.
(iv) A public company has to issue a prospectus to the public.
(v) It has to allot shares within 180 days from the date of prospectus.
(vi) It can start only after receiving the certificate to commence business.
(vii) It has to hold a Statutory Meeting and to issue a Statutory Report to all members and also to
the Registrar within a certain period.
(viii) There is no restriction on the transfer of shares. (be) Directors of the company are subject
to rotation.
(x) The public company must get its account audited every year by registered auditors.
(xi) It has to send financial statements to all members and to the Registrar.
(xii) It has to hold a general meeting every year.
(xiii) The Managing Agent gets a fixed percentage of net profit as remuneration.
Advantages of Joint Stock Companies:
(i) A huge sum of money can be raised.
(ii) It associates limited liability with it.
(iii) Shares are transferable.
(iv) Company’s life is not affected by the life (death) of shareholders.
(v) Services of specialists can be obtained.
(vi) Risk of loss is divided among many shareholders.
(vii) The company associates with it stability, efficiency and flexibility of management.
Disadvantages of Joint Stock Companies:
(i) A good deal of legal formalities is required for the formation of a joint stock company.
(ii) Company is managed by big shareholders only.
(iii) High paid officials manage the whole shows; they cannot have as high interests in the
company as the proprietors can have.
(iv) People can commit frauds with the company.
(v) Board of directors and managers who remain familiar with the financial position of the
company may sell or purchase shares for their personal profits.
(vi) It is difficult to maintain secrecy as in partnership.
(vii) The team spirit with which partnership works, is lacking in a joint stock company.
(viii) Divided responsibility.
Applications of Joint Stock Companies:
(i) Steel mills,
(ii) Fertiliser factories, and
(iii) Engineering concerns, etc.
4. Cooperative Organisation (Or Societies):
It is a form of private ownership which contains features of large partnership as well as some
features of the corporation. The main aim of the cooperative is to eliminate profit and provide
goods and services to the members of the cooperative at cost.
Members pay fees or buy shares of the cooperative, and profits are periodically redistributed to
them. Since each member has only one vote (unlike in joint stock companies), this avoids the
concentration of control in a few hands.
In a cooperative, there are shareholders, a board of directors and the elected officers similar to
the corporation. There are periodic meetings of shareholders, also. Special laws deal with the
formation and taxation of cooperatives.
Cooperative organisation is a kind of voluntary, democratic ownership formed by some moti-

vated individuals for obtaining necessities of everyday life at rates less than those of the market.
The principle behind the cooperative is that of cooperation and self-help.
Forms of Cooperative Enterprises:

(i) Consumer’s Cooperatives, in retail trade and services.
(ii) Producer Cooperatives, for group buying and selling such items as dairy products, grain,
fruit, etc.
(iii) Cooperative farming for more and good quality yield from the farms.
(iv) Cooperative housing for constructing and providing houses to the members of the
association at relatively lesser rates.
(v) Cooperative credit society, to provide loans to the needy individuals.
Advantages of Cooperative Enterprises:
(i) Daily necessities of life can be made available at lower rates.
(ii) It is the democratic form of ownership.
(iii) Overheads are reduced as members of the cooperative may render honorary services.
(iv) It promotes cooperation, mutual assistance and the idea of self-help.
(v) The chances of large stock-holding (hoarding) and black marketing are eliminated.
(vi) No one person can make huge profits.
(vii) Common man is benefited by cooperatives.
(viii) Monetary help can be secured from government.
(ix) Goods required can be purchased directly from the manufacturers and therefore can be sold
at less rates.
Disadvantages of Cooperative Enterprises:
(i) Since the members of the cooperative manage the whole show, they may not be competent
enough to make it a good success.
(ii) Finance being limited, specialist’s services cannot be taken.
(iii) Conflict may arise among the members on the issue of sharing responsibility and enjoying
authorities.
(iv) Members who are in position may try to take personal advantages.
(v) Members being in services may not be able to devote necessary attention and adequate time
for supervising the works of the cooperative enterprise.
5. Public Sector:
Concept of Public Sector:
A public enterprise is one that is:
(1) Owned by the state,
(2) Managed by the state, or
(3) Owned and managed by the state.
The sector of public enterprises is popularly known as the Public Sector. Public enterprises are
controlled and operated by the Government either solely or in association with private
enterprises. Public enterprises are controlled and operated by the Government to produce and
supply goods and services required by the society. Ultimate control of public enterprises remains
with the state and the stale runs it with a service motto.
Its sphere embraces all units, irrespective of risks involved and profit expected. There is no
dearth of capital in public sector and business expansion is not difficult. Public sector prevents
concentration and unbalanced growth of industries.
Public sectors are accountable in terms of their results to Parliament and State Legislature. A
public enterprise is seldom as efficient as a private enterprise; wastage and inefficiency can
seldom be reduced to a minimum.
Evolution of Public Sector:
The Industrial Revolution gave rise to many bitter social evils. It also gave birth to private
capitalism. Consumers and workers were exploited and, therefore, there arose the need of State
Intervention in industrial field. The intervention led to evolution of public sector/enterprises. The
evolution of public sector in India is recent.
Prior to 1947, there was virtually no public sector barring the field of transport and
communication, i.e., Railways, Posts and Telegraphs etc., are being managed by the Central
Government since pre-independence period. Since independence, a large number of public
enterprises have been established both by Central and State Governments.
The Hindustan Shipyard, The Hindustan Steels, the Hindustan Machine Tools, The Bharat
Heavy Electricals, Indian Telephone Industries, Indian Airlines, Life Insurance Corporation are a
few examples of public sector.
Objectives of Public Sector:
(1) To provide basic infrastructure facilities for the growth of economy.
(2) To promote rapid economic development.
(3) To undertake economic activity strategically important for the growth of the country, which
if left to private initiative would distort the national objective.
(4) To have balanced regional development and even dispersal of economic activity throughout
the country.
(5) To avoid concentration of economic power in a few hands.
(6) To create employment opportunities on an increasing scale.
(7) To earn foreign exchange in order to export commodities not available in the country e.g.,
petroleum oil, sophisticated weapon systems etc.
(8) To look after well-being and welfare of public.
(9) To minimize exploitation of workers and consumers.
Merits of Public Sector:
(1) Public sector helps in the growth of those industries which require huge amount of capital
and which cannot flourish under the private sector.
(2) Public sector helps in the implementation of the economic plans and enables them to reach
the target of achievement within a prescribed period by taking initiative in- the establishment of
industries of its own accord.
(3) Due to the absence of project motive in the public sector, the consumers are benefitted by
greater, better and cheaper products.
(4) Public enterprise prevents the concentration of wealth in the hands of a few and paves the
way for equitable distribution of wealth among different sections of community.
(5) Public enterprise encourages industrial growth of under-developed regions in the country.
(6) Profits earned by public sector may be used for the general welfare of the community.
(7) Public sector offers equitable employment opportunities to all; there is no discrimination, as
may be in a private sector.
(8) Capital, raw material, fuel, power and transport are easily made available to them.
Demerits of Public Sector:
(1) Public sector can rarely attain the efficiency of a private enterprise; wastage and inefficiency
can seldom be reduced to a minimum.
(2) Due to heavy administrative expenses, state enterprises are mostly run at a loss leading to
additional burden of taxation on the people.
(3) There is too much interference by the Government and Politicians in the internal affairs of the
public enterprises. As a result inefficiency increases.
(4) Delay in decisions is a very common phenomena in public enterprises.
(5) Incompetent persons may occupy high levels.
(6) Workers (unlike in private concerns) shirk work.
6. Private Sector:
Private sector serves personal interests and is a non-government sector. Profit (rather than
service) is the main objective. Private sector constitutes mainly consumer’s goods industries
where profit possibilities are high. Private sector does not undertake risky ventures or those
having low-profit margin. Private enterprises are run by businessmen, capital is collected from
the private partners.
Merits of Private Sector:
(i) The magnitude of profits incurred is high.
(ii) The efficiency of the private enterprise is high,
(iii) Wastage of material and labour is minimum.
(iv) Decision-making is very prompt.
(v) There is no interference in its internal affairs by politicians or Government.

(vi) Competent persons occupy high levels.
Demerits of Private Sector:
(i) There is exploitation motive, the workers and the consumers may not receive fair deal.
(ii) There is dearth of capital to expand the business.
(iii) Private enterprise leads to concentration of wealth in the hands of a few.
(iv) Private enterprises lead to unbalanced growth of industries.
Registration of business units

To begin is to succeed. Starting a business in India is not a fairy tale story, but the Nation has
made tremendous progress in the recent days and made starting a business, very easy for
Entrepreneurs. Today, we will look at the most commonly referred to licenses and registrations
required for a business in India.
The process of obtaining license changes from one type of business to the other, based on
various determining factors like the number of employees, sector, the type of business, the place
of business etc. In this little article, we look at some of the most commonly obtained licenses or
registrations for a business. To determine the exact requirement for your business, get in touch
with an IndiaFilings Business Advisor.
Company or LLP Registration
Most businesses in India are started as proprietorships or partnership firms, without any
registration from the Central Government. The Ministry of Corporate Affairs regulates the
registration of a company and LLP. It is advisable for Entrepreneurs who have plans for
operating a business with an annual turnover of more than Rs.20 lakhs to obtain a LLP or
Company registration. Once, a company or LLP is registered, the entity would have a separate
legal identity and the promoters would enjoy limited liability protection. Further, the business
would also become easily transferable and the entity would have perpetual existence. Hence,
before starting a business, its best to consult and expert and register a company or LLP.
GST Registration
All types of entities and individuals who have an aggregate annual turnover of more than Rs.20
lakhs in most State and Rs.10 lakhs in Special Category States are required to obtain GST
Registration. Further, any person supplying goods involved in intra-state supply is required to
obtain GST Registration, irrespective of turnover. In addition to the above criteria, various other
criteria has been provided under the GST Act, establishing the criteria’s for GST registration. It
is important for all Entrepreneurs to understand the criteria’s and obtain GST registration within
30 days of starting a business.
Udyog Aadhar Registration
This is a registration available for entrepreneurs who want to start and operate a small business –
micro, small and medium enterprises. The eligibility criteria for obtaining Udyog Aadhaar
registration is based on the investment in plant & machinery made by a manufacturing concern
or investment in equipment made by a service provider. Once, Udyog Aadhaar registration is
obtained for a business, it can enjoy various subsidies and schemes specially provided by the
Government for helping small businesses in India.
FSSAI License or Registration
“Food safety and standard authority of India”(FSSAI), is responsible to verify the safety and
standardization of food products nationwide. Retail stores, restaurants, modern trade outlets,
kiosks and consumers alike look for this five letter word in their food packets or containers.
Under FSSAI, the license or registration is divided into three categories namely:
FSSAI Central License
FSSAI State License
FSSAI State Registration
Import Export Code
Any person involved in import or export of goods/services from India must obtain Import Export
Code from the DGFT Department. To obtain Import Export Code, it is mandatory for the
business to have a PAN and a Current Account in a bank.
Shop and Establishment Act License
“The Shop and Establishments Act”, was created for regulating the conduct of business like the
hours of work, child labor, payment of wages, safety and general health of the employees. Shop
and Establishment Act license or registration is issued by the State Governments and varies from
States. Hence, based on the State in which the business is situated, the concerned State
Government authority must be approached for obtaining Shop and Establishment Act License.
Other Licenses and Registrations
Certain types of business that involve aspects of dealing or providing insurance, financial
services, broadcasting services, defence related services, etc., would require approval from
regulatory bodies like Reserve Bank of India, IRDAI, etc.,
Further, a business may also have ot obtain permits from the fire department, or the pollution
control board, or maybe the local healthcare system. It all depends on the type of business you
are willing to operate. Hence, prior to starting a business, make sure you discuss your business
with a Professional to determine and understand the legal and regulatory requirements.
Start-up to going IPO

145. “Net tangible assets” of at-least ₹3 crores in each of the last 3 years, of which not more than
50% is held in monetary assets. The only exemption available to the 50% monetary assets is that a
company must have firm commitments to utilize the excessive amount for the business in the
future. (Indian laws favor asset heavy businesses).
146. The total paid up capital shall not be less than ₹10 Cr. and the market capitalization shall not be
less than ₹25 crores.
147. The company must have delivered profits in at-least 3 out of the last 5 years subject to the
exclusion of extraordinary items like sale of land or key parts of the business.
148. It has to have a minimum net worth of at-least ₹1 crore in each of the last 3 years (12 preceding
months).
149. The total issue size should not exceed more than 5 times it’s latest net worth.
150. If the company’s name has been changed in the last 1 year, at-least 50% of its revenues of the
last 1 year should be earned after the name was changed. There are many other rules & regulations to
comply with. I suggest you read them directly on NSE website& BSE website
Entrepreneurs are usually focused on growing their business and when they’re ready to launch an
IPO, such rules generally hamper and delay progress. Keep in mind, that these rules are age-old
so the effect of inflation has reduced the entry barriers. Since, money has lost it’s value due to
inflation, the entry barriers seem small as on today. This is one of the main reasons why the
number of listed companies has increased substantially over time. Please note that these rules are
subject to change from time to time and I might not be able to update them in real-time.
Qualifications for listing Initial Public Offerings (IPO) are as below:
113. Paid up Capital

The paid up equity capital of the applicant shall not be less than 10 crores and the capitalisation of the
applicant’s equity shall not be less than 25 crore.
114. Conditions Precedent to Listing:
The Issuer shall have adhered to conditions precedent to listing as emerging from inter-alia from
Securities Contracts (Regulations) Act 1956, Companies Act 1956, Securities and Exchange Board of India
Act 1992, any rules and/or regulations framed under foregoing statutes, as also any circular,
clarifications, guidelines issued by the appropriate authority under foregoing statutes.
115. Atleast three years track record of either:
103. the applicant seeking listing; or

104. the promoters/promoting company, incorporated in or outside India or
105. Partnership firm and subsequently converted into a Company (not in existence as a Company for
three years) and approaches the Exchange for listing. The Company subsequently formed would be
considered for listing only on fulfillment of conditions stipulated by SEBI in this regard.
For this purpose, the applicant or the promoting company shall submit annual reports of three
preceding financial years to NSE and also provide a certificate to the Exchange in respect of the
following:
71. The company has not been referred to the Board for Industrial and Financial Reconstruction
(BIFR).
72. The networth of the company has not been wiped out by the accumulated losses resulting in a
negative networth
73. The company has not received any winding up petition admitted by a court.
38. The applicant desirous of listing its securities should satisfy the exchange on the following:
37. No disciplinary action by other stock exchanges and regulatory authorities in past three years
38. Redressal Mechanism of Investor grievance
39. Track Record of Director(s) of the Company
40. Distribution of shareholding
41. Details of Litigation
ED/U5 Topic 5 Revival, exit and end to a Venture


Meaning, Definition and Concept of Entrepreneur

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Meaning, Definition and Concept of Entrepreneur

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What are the characteristics of entrepreneurship?

What are the characteristics of entrepreneurship?

What are the conditions for listing an Initial Public Offering (IPO)?

What are the conditions for listing an Initial Public Offering (IPO)?

Meaning, Definition and Concept of Entrepreneur

AKTUTHEINTACTONE21 MAR 20195 COMMENTS

Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of

Entrepreneurship is the purposeful activity of an individual or a group of associated individual,

According to J.A. Timmons

According to Musselman and Jackson

1. Economic and dynamic activity

Entrepreneurship is an economic activity because it involves the creation and operation of an

Entrepreneurship is a dynamic function. Entrepreneur thrives on changes in the environment,

Other characteristic found in entrepreneurship is that of uniqueness. Entrepreneurship involves

11. Interest and Vision

12. Risk and Rewards

Entrepreneurship development is the process of improving the skills and knowledge of

Entrepreneurship development aims at individuals who want to start or possibly expand a

2. Select educated people who have high entrepreneurial potential

An entrepreneurship development program requires that various people be selected. However,

3. Select uneducated people who have high entrepreneurial potential

A development project on women’s entrepreneurship in Nepal was recently conducted. It was

5. Provide support through private sector-based organizations

Private organizations that could support entrepreneurship development programs include

7. Implement special measures to improve the usefulness of trainers and facilitators

8. The selection of areas for pilot programs must be right

9. Launch pilot ED programs and develop as needed

Analyzing pilot feasibility is an effective way of launching a major entrepreneurship

10. A successful entrepreneurship development program requires government policies

The entrepreneurial Mindset

It’s not failure, the economy, or bad ideas.

It’s doubt – in ourselves, our surroundings, and our abilities.

Your ability as a decision-maker will make or break your future successes.

You need to internalize and accept that:

4. Everything that happens at work – YOU are responsible for.

This mindset shift takes resilience and is foundational to the entrepreneurial mindset.

From decisiveness to confidence, humility will keep you focused and centered.

Common myths to becoming to entrepreneur and how to

Entrepreneurship can be taught, it should be taught and it is being taught. After 50 years of a

Factors Affecting Entrepreneurship

Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of

Personal factors, becoming core competencies of entrepreneurs, include:

(a) Initiative (does things before being asked for)

(b) Proactive (identification and utilization of opportunities)

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

(f) Self-confidence (takes and sticks to his decisions)

(g) Self-critical (learning from his mistakes and experiences of others)

(h) A Planner (collects information, prepares a plan, and monitors performance)

(i) Risk-taker (the basic quality).

9. Impact of Services Sector

10. Increasing Demand for Variety

11. Impact of Ethical Value System

12. Internal Control System

Characteristics and Skills of an Entrepreneur

6. Ability to listen to your gut instincts and to trust them

10. Good financial management skills

Manager is an individual who

Focus Business startup Ongoing operations