Entrepreneurship

Entrepreneurship is the act of being an entrepreneur, which is a

French word meaning "one who undertakes an endeavour". Entrepreneurs
assemble resources including innovations, finance and business acumen in an
effort to transform innovations into economic goods. This may result in new
organizations or may be part of revitalizing mature organizations in response to
a perceived opportunity. The most obvious form of entrepreneurship is that of
starting new businesses; however, in recent years, the term has been extended to
include social and political forms of entrepreneurial activity. When
entrepreneurship is describing activities within a firm or large organization it is
referred to as intra-preneurship and may include corporate venturing, when
large entities start spin-off organizations.

Entrepreneurship is often a difficult undertaking, as a vast majority of new

businesses fail. Nevertheless such undertaking supposes the development of
more than just a business venture. Entrepreneurial activities are substantially
different depending on the type of organization that is being started.
Entrepreneurship ranges in scale from solo projects (even involving the
entrepreneur only part-time) to major undertakings creating many job
opportunities. Many "high value" entrepreneurial ventures seek venture capital
or angel funding in order to raise capital to build the business. Angel investors
generally seek returns of 20-30% and more extensive involvement in the
business. Many kinds of organizations now exist to support would-be
entrepreneurs, including specialized government agencies, business incubators,
science parks, and some NGOs. Lately more holistic conceptualizations of
entrepreneurship as a specific mindset (see also entrepreneurial mindset)
resulting in entrepreneurial initiatives e.g. in the form of social
entrepreneurship, political entrepreneurship, or knowledge entrepreneurship
emerged.
Definition entrepreneurship

Capacity and willingness to undertake conception, organization, and

management of a productive venture with all attendant risks, while seeking
profit as a reward. In economics, entrepreneurship is regarded as a factor of
production together with land, labour, natural resources, and capital.
Entrepreneurial spirit is characterized by innovation and risk-taking, and an
essential component of a nation's ability to succeed in an ever changing and
more competitive global marketplace

History:
The entrepreneur is an actor in microeconomics, and the study of
entrepreneurship reaches back to the work of Richard Cantillon and Adam
Smith in the mid-16th century, but was largely ignored theoretically until the
late 19th and early 20th centuries and empirically until a profound resurgence in
business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the

work of economist Joseph Schumpeter in the 1940s and other Austrian
economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek.
In Schumpeter, an entrepreneur is a person who is willing and able to convert a
new idea or invention into a successful innovation.[3] Entrepreneurship employs
what Schumpeter called "the gale of creative destruction" to replace in whole or
in part inferior innovations across markets and industries, simultaneously
creating new products including new business models. In this way, creative
destruction is largely responsible for the dynamism of industries and long-run
economic growth. The supposition that entrepreneurship leads to economic
growth is an interpretation of the residual in endogenous growth theory and as
such is hotly debated in academic economics. An alternate, description posited
by Israel Kirzner suggests that the majority of innovations may be much more
incremental improvements such as the replacement of paper with plastic in the
construction of a drinking straw.

For Schumpeter, entrepreneurship resulted in new industries but also in new

combinations of currently existing inputs. Schumpeter's initial example of this
was the combination of a steam engine and then current wagon making
technologies to produce the horseless carriage. In this case the innovation, the
car, was transformational but did not require the development of a new
technology, merely the application of existing technologies in a novel manner.
It did not immediately replace the horse drawn carriage, but in time,
incremental improvements which reduced the cost and improved the technology
led to the complete practical replacement of beast drawn vehicles in modern
transportation. Despite Schumpeter's early 20th-century contributions,
traditional microeconomic theory did not formally consider the entrepreneur in
its theoretical frameworks (instead assuming that resources would find each
other through a price system). In this treatment the entrepreneur was an implied
but unspecified actor, but it is consistent with the concept of the entrepreneur
being the agent of x-efficiency.

Different scholars have described entrepreneurs as, among other things, baring
risk. For Schumpeter, the entrepreneur did not bare risk: the capitalist did.

Some notable persons and their works in entrepreneurship history.

For Frank H. Knight [4] (1921) and Peter Drucker (1970) entrepreneurship is
about taking risk. The behavior of the entrepreneur reflects a kind of person
willing to put his or her career and financial security on the line and take risks
in the name of an idea, spending much time as well as capital on an uncertain
venture. Knight classified three types of uncertainty.

• Risk, which is measurable statistically (such as the probability of drawing

a red colour ball from a jar containing 5 red balls and 5 white balls).
 • Ambiguity, which is hard to measure statistically (such as the probability
of drawing a red ball from a jar containing 5 red balls but with an
unknown number of white balls).

• True Uncertainty or Knightian Uncertainty, which is impossible to

estimate or predict statistically (such as the probability of drawing a red
ball from a jar whose number of red balls is unknown as well as the
number of other coloured balls).

The acts of entrepreneurship is often associated with true uncertainty,

particularly when it involves bringing something really novel to the world,
whose market never exists. However, even if a market already exists, there is no
guarantee that a market exists for a particular new player in the cola category.

The place of the disharmony-creating and idiosyncratic entrepreneur in

traditional economic theory (which describes many efficiency-based ratios
assuming uniform outputs) presents theoretic quandaries. William Baumol has
added greatly to this area of economic theory and was recently honored for it at
the 2006 annual meeting of the American Economic Association.[5]

The entrepreneur is widely regarded as an integral player in the business culture

of American life, and particularly as an engine for job creation and economic
growth. Robert Sobel published The Entrepreneurs: Explorations Within the
American Business Tradition in 1974. Zoltan Acs and David Audretsch have
produced an edited volume surveying Entrepreneurship as an academic field of
research, [6] and more than a hundred scholars around the world track
entrepreneurial activity, policy and social influences as part of the Global
Entrepreneurship Monitor (GEM)[7] and its associated reports.like cock

Being an entrepreneur is about more than just starting a business or

two, it is about having attitude and the drive to succeed in business.
All successful Entrepreneurs have a similar way of thinking and
posses several key personal qualities that make them so successful in
business. Successful entrepreneurs like the ambitious Richard
Branson have an inner drive to succeed and grow their business,
rather than having a Harvard Business degree or technical knowledge
in a particular field.

7 Key Qualities of a Successful Entrepreneur:

1. Inner Drive to Succee: Entrepreneurs are driven to succeed and expand

their business. They see the bigger picture and are often very ambitious.
Entrepreneurs set massive goals for themselves and stay committed to achieving
them regardless of the obstacles that get in the way.

2. Strong Belief In Themselves: Successful entrepreneurs have a healthy

opinion of themselves and often have a strong and assertive personality. They
are focused and determined to achieve their goals and believe completely in
their ability to achieve them. Their self optimism can often been seen by others
as flamboyance or arrogance but entrepreneurs are just too focused to spend too
much time thinking about un-constructive criticism.

3. Search for New Ideas and Innovation: All entrepreneurs have a

passionate desire to do things better and to improve their products or service.
They are constantly looking for ways to improve. They're creative, innovative
and resourceful.

4. Openness to Change: If something is not working for them they simply

change. Entrepreneurs know the importance of keeping on top of their industry
and the only way to being number one is to evolve and change with the times.
They're up to date with the latest technology or service techniques and are
always ready to change if they see a new opportunity arise.

5. Competitive by Nature: Successful entrepreneurs thrive on competition.

The only way to reach their goals and live up to their self imposed high
standards is to compete with other successful businesses.

6. Highly Motivated and Energetic: Entrepreneurs are always on the

move, full of energy and highly motivated. They are driven to succeed and have
an abundance of self motivation. The high standards and ambition of many
entrepreneurs demand that they have to be motivated!

7. Accepting of Constructive Criticism and Rejection:

Innovative entrepreneurs are often at the forefront of their industry so they hear
the words "it can't be done" quite a bit. They readjust their path if the criticism
is constructive and useful to their overall plan, otherwise they will simply
disregard the comments as pessimism. Also, the best entrepreneurs know that
rejection and obstacles are a part of any leading business and they deal with
them appropriately.
True entrepreneurs are resourceful, passionate and driven to succeed and
improve. They're pioneers and are comfortable fighting on the frontline The
great ones are ready to be laughed at and criticized in the beginning because
they can see their path ahead and are too busy working towards their dream.

25 Common Characteristics of Successful Entrepreneurs:

1. Do what you enjoy.

What you get out of your business in the form of personal satisfaction, financial
gain, stability and enjoyment will be the sum of what you put into your
business. So if you don't enjoy what you're doing, in all likelihood it's safe to
assume that will be reflected in the success of your business--or subsequent lack
of success. In fact, if you don't enjoy what you're doing, chances are you won't
succeed.

2. Take what you do seriously.

You cannot expect to be effective and successful in business unless you truly
believe in your business and in the goods and services that you sell. Far too
many home business owners fail to take their own businesses seriously enough,
getting easily sidetracked and not staying motivated and keeping their noses to
the grindstone. They also fall prey to naysayers who don't take them seriously
because they don't work from an office building, office park, storefront, or
factory. Little do these skeptics, who rain on the home business owner's parade,
know is that the number of people working from home, and making very good
annual incomes, has grown by leaps and bounds in recent years.

3. Plan everything.
Planning every aspect of your home business is not only a must, but also builds
habits that every home business owner should develop, implement, and
maintain. The act of business planning is so important because it requires you to
analyze each business situation, research and compile data, and make
conclusions based mainly on the facts as revealed through the research.
Business planning also serves a second function, which is having your goals and
how you will achieve them, on paper. You can use the plan that you create both
as map to take you from point A to Z and as a yardstick to measure the success
of each individual plan or segment within the plan.

4. Manage money wisely.

The lifeblood of any business enterprise is cash flow. You need it to buy
inventory, pay for services, promote and market your business, repair and
replace tools and equipment, and pay yourself so that you can continue to work.
Therefore, all home business owners must become wise money managers to
ensure that the cash keeps flowing and the bills get paid. There are two aspects
to wise money management.

1. The money you receive from clients in exchange for your goods and services
you provide (income)

2. The money you spend on inventory, supplies, wages and other items required
to keep your business operating. (expenses)
5. Ask for the sale.
A home business entrepreneur must always remember that marketing,
advertising, or promotional activities are completely worthless, regardless of
how clever, expensive, or perfectly targeted they are, unless one simple thing is
accomplished--ask for the sale. This is not to say that being a great salesperson,
advertising copywriting whiz or a public relations specialist isn't a tremendous
asset to your business. However, all of these skills will be for naught if you do
not actively ask people to buy what you are selling.

6. Remember it's all about the customer.

Your home business is not about the products or services that you sell. Your
home business is not about the prices that you charge for your goods and
services. Your home business is not about your competition and how to beat
them. Your business is all about your customers, or clients, period. After all,
your customers are the people that will ultimately decide if your business goes
boom or bust. Everything you do in business must be customer focused,
including your policies, warranties, payment options, operating hours,
presentations, advertising and promotional campaigns and website. In addition,
you must know who your customers are inside out and upside down.

7. Become a shameless self-promoter (without becoming obnoxious).

One of the greatest myths about personal or business success is that eventually
your business, personal abilities, products or services will get discovered and be
embraced by the masses that will beat a path to your door to buy what you are
selling. But how can this happen if no one knows who you are, what you sell
and why they should be buying?

Self-promotion is one of the most beneficial, yet most underutilized, marketing

tools that the majority of home business owners have at their immediate
disposal.
8. Project a positive business image.
You have but a passing moment to make a positive and memorable impression
on people with whom you intend to do business. Home business owners must
go out of their way and make a conscious effort to always project the most
professional business image possible. The majority of home business owners do
not have the advantage of elaborate offices or elegant storefronts and
showrooms to wow prospects and impress customers. Instead, they must rely on
imagination, creativity and attention to the smallest detail when creating and
maintaining a professional image for their home business.

9. Get to know your customers.

One of the biggest features and often the most significant competitive edge the
home based entrepreneur has over the larger competitors is the he can offer
personalized attention. Call it high-tech backlash if you will, but customers are
sick and tired of hearing that their information is somewhere in the computer
and must be retrieved, or told to push a dozen digits to finally get to the right
department only to end up with voice mail--from which they never receive a
return phone call.

The home business owner can actually answer phone calls, get to know
customers, provide personal attention and win over repeat business by doing so.
It's a researched fact that most business (80 percent) will come from repeat
customers rather than new customers. Therefore, along with trying to draw
newcomers, the more you can do to woo your regular customers, the better off
you will be in the long run and personalized attention is very much appreciated
and remembered in the modern high tech world.

10. Level the playing field with technology.

You should avoid getting overly caught up in the high-tech world, but you
should also know how to take advantage of using it. One of the most amazing
aspects of the internet is that a one or two person business operating from a
basement can have a superior website to a $50 million company, and nobody
knows the difference. Make sure you're keeping up with the high-tech world as
it suits your needs.. The best technology is that which helps you, not that which
impresses your neighbors.

11. Build a top-notch business team.

No one person can build a successful business alone. It's a task that requires a
team that is as committed as you to the business and its success. Your business
team may include family members, friends, suppliers, business alliances,
employees, sub-contractors, industry and business associations, local
government and the community. Of course the most important team members
will be your customers or clients. Any or all may have a say in how your
business will function and a stake in your business future.

12. Become known as an expert.

When you have a problem that needs to be solved, do you seek just anyone's
advice or do you seek an expert in the field to help solve your particular
problem? Obviously, you want the most accurate information and assistance
that you can get. You naturally seek an expert to help solve your problem. You
call a plumber when the hot water tank leaks, a real estate agent when it's time
to sell your home or a dentist when you have a toothache. Therefore, it only
stands to reason that the more you become known for your expertise in your
business, the more people will seek you out to tap into your expertise, creating
more selling and referral opportunities. In effect, becoming known as an expert
is another style of prospecting for new business, just in reverse. Instead of
finding new and qualified people to sell to, these people seek you out for your
expertise.

13. Create a competitive advantage.

A home business must have a clearly defined unique selling proposition. This is
nothing more than a fancy way of asking the vital question, "Why will people
choose to do business with you or purchase your product or service instead of
doing business with a competitor and buying his product or service?" In other
words, what one aspect or combination of aspects is going to separate your
business from your competition? Will it be better service, a longer warranty,
better selection, longer business hours, more flexible payment options, lowest
price, personalized service, better customer service, better return and exchange
policies or a combination of several of these?

14. Invest in yourself.

Top entrepreneurs buy and read business and marketing books, magazines,
reports, journals, newsletters, websites and industry publications, knowing that
these resources will improve their understanding of business and marketing
functions and skills. They join business associations and clubs, and they
network with other skilled business people to learn their secrets of success and
help define their own goals and objectives. Top entrepreneurs attend business
and marketing seminars, workshops and training courses, even if they have
already mastered the subject matter of the event. They do this because they
know that education is an ongoing process. There are usually ways to do things
better, in less time, with less effort. In short, top entrepreneurs never stop
investing in the most powerful, effective and best business and marketing tool at
their immediate disposal--themselves.

15. Be accessible.
We're living in a time when we all expect our fast food lunch at the drive-thru
window to be ready in mere minutes, our dry cleaning to be ready for pick-up
on the same day, our money to be available at the cash machine and our pizza
delivered in 30 minutes or it's free. You see the pattern developing--you must
make it as easy as you can for people to do business with you, regardless of the
home business you operate.

You must remain cognizant of the fact that few people will work hard, go out of
their way, or be inconvenienced just for the privilege of giving you their hard-
earned money. The shoe is always on the other foot. Making it easy for people
to do business with you means that you must be accessible and knowledgeable
about your products and services. You must be able to provide customers with
what they want, when they want it.

16. Build a rock-solid reputation.

A good reputation is unquestionably one of the home business owner's most
tangible and marketable assets. You can't simply buy a good reputation; it's
something that you earn by honouring your promises. If you promise to have
the merchandise in the customer's hands by Wednesday, you have no excuse not
to have it there. If you offer to repair something, you need to make good on
your offer. Consistency in what you offer is the other key factor. If you cannot
come through with the same level of service (and products) for clients on a
regular basis, they have no reason to trust you . . . and without trust, you won't
have a good reputation.

17. Sell benefits.

Pushing product features is for inexperienced or wannabe entrepreneurs. Selling
the benefits associated with owning and using the products and services you
carry is what sales professionals worldwide focus on to create buying
excitement and to sell, sell more, and sell more frequently to their customers.
Your advertising, sales presentations, printed marketing materials, product
packaging, website, newsletters, trade show exhibit and signage are vital. Every
time and every medium used to communicate with your target audience must
always be selling the benefits associated with owning your product or using
your service.

18. Get involved.

Always go out of your way to get involved in the community that supports your
business. You can do this in many ways, such as pitching in to help local
charities or the food bank, becoming involved in organizing community events,
and getting involved in local politics. You can join associations and clubs that
concentrate on programs and policies designed to improve the local community.
It's a fact that people like to do business with people they know, like and
respect, and with people who do things to help them as members of the
community.

19. Grab attention.

Small-business owners cannot waste time, money and energy on promotional
activities aimed at building awareness solely through long-term, repeated
exposure. If you do, chances are you will go broke long before this goal is
accomplished. Instead, every promotional activity you engage in, must put
money back in your pocket so that you can continue to grab more attention and
grow your business.

20. Master the art of negotiations.

The ability to negotiate effectively is unquestionably a skill that every home
business owner must make every effort to master. It's perhaps second in
importance only to asking for the sale in terms of home business musts. In
business, negotiation skills are used daily. Always remember that mastering the
art of negotiation means that your skills are so finely tuned that you can always
orchestrate a win-win situation. These win-win arrangements mean that
everyone involved feels they have won, which is really the basis for building
long-term and profitable business relationships.
21. Design Your workspace for success.
Carefully plan and design your home office workspace to ensure maximum
personal performance and productivity and, if necessary, to project
professionalism for visiting clients. If at all possible, resist the temptation to
turn a corner of the living room or your bedroom into your office. Ideally, you'll
want a separate room with a door that closes to keep business activities in and
family members out, at least during prime business and revenue generating
hours of the day. A den, spare bedroom, basement or converted garage are all
ideal candidates for your new home office. If this is not possible, you'll have to
find a means of converting a room with a partition or simply find hours to do
the bulk of your work when nobody else is home.

22. Get and stay organized.

The key to staying organized is not about which type of file you have or
whether you keep a stack or two of papers on your desk, but it's about managing
your business. It's about having systems in place to do things. Therefore, you
wan to establish a routine by which you can accomplish as much as possible in
a given workday, whether that's three hours for a part-time business or seven or
nine hours as a full-timer. In fact, you should develop systems and routines for
just about every single business activity. Small things such as creating a to-do
list at the end of each business day, or for the week, will help keep you on top
of important tasks to tackle. Creating a single calendar to work from, not
multiple sets for individual tasks or jobs, will also ensure that jobs are
completed on schedule and appointments kept. Incorporating family and
personal activities into your work calendar is also critical so that you work and
plan from a single calendar.

23. Take time off.

The temptation to work around the clock is very real for some home business
owners. After all, you don't have a manager telling you it's time to go home
because they can't afford the overtime pay. Every person working from home
must take time to establish a regular work schedule that includes time to stretch
your legs and take lunch breaks, plus some days off and scheduled vacations.
Create the schedule as soon as you have made the commitment to start a home
business. Of course, your schedule will have to be flexible. You should,
therefore, not fill every possible hour in the day. Give yourself a backup hour or
two. All work and no play makes you burn out very fast and grumpy customer
service is not what people want.

24. Limit the number of hats you wear.

It's difficult for most business owners not to take a hands-on approach. They try
to do as much as possible and tackle as many tasks as possible in their business.
The ability to multitask, in fact, is a common trait shared by successful
entrepreneurs. However, once in a while you have to stand back and look
beyond today to determine what's in the best interest of your business and
yourself over the long run. Most highly successful entrepreneurs will tell you
that from the time they started out, they knew what they were good at and what
tasks to delegate to others.

25. Follow-up constantly.

Constant contact, follow-up, and follow-through with customers, prospects, and
business alliances should be the mantra of every home business owner, new or
established. Constant and consistent follow-up enables you to turn prospects
into customers, increase the value of each sale and buying frequency from
existing customers, and build stronger business relationships with suppliers and
your core business team. Follow-up is especially important with your existing
customer base, as the real work begins after the sale. It's easy to sell one product
or service, but it takes work to retain customers and keep them coming back.
 INTRODUCTION:

J.R.D.TATA had remarked “if mere words could create wealth, the streets of
India would be proud with gold. It takes more than words and wishes to
generate wealth for a nation. A nation’s wealth comes out of vision and hard
work of its entrepreneur.”

Before establishing and starting any business activity, an entrepreneur has to

take a note of the resources available to him objectively. Any project to be
undertaken is bound to be affected by the environment as well as the resources
are plenty and easily accessible.

A resource could be defined as a variable quantity raw material, equipment,

spare and funds available for carrying out a project or the starting a business
activity. A very critical analysis of the available resources is necessary because
then alone it will be possible to take correct decisions regarding the selection
and starting of any project.

The resource allocation at the unit level is an important decision in project

planning. Resources being limited are required to be allocated judiciously. The
objective of optimum use of the resources ensuring maximum productivity,
profitability or the best performance must be fulfilled.

The allocation of resources at the unit level depends on the existing

environment because it decides the framework under which the business
activity is possible. Usually the large firms are in a better position to allocate the
resources for any project as compared to small size firms.

WHAT IS A VENTURE?

Venture capital (also known as VC or Venture) is a type of private equity

capital typically provided for early-stage, high-potential, growth companies in
the interest of generating a return through an eventual realization event such as
an IPO or trade sale of the company. Venture capital investments are generally
made as cash in exchange for shares in the invested company. It is typical for
venture capital investors to identify and back companies in high technology
industries such as biotechnology and ICT (information and communication
technology).

Venture capital typically comes from institutional investors and high net worth
individuals and is pooled together by dedicated investment firms.

Venture capital firms typically comprise small teams with technology

backgrounds (scientists, researchers) or those with business training or deep
industry experience.

A core skill within VC is the ability to identify novel technologies that have the
potential to generate high commercial returns at an early stage. By definition,
VCs also take a role in managing entrepreneurial companies at an early stage,
thus adding skills as well as capital (thereby differentiating VC from buy out
private equity which typically invest in companies with proven revenue), and
thereby potentially realizing much higher rates of returns. Inherent in realizing
abnormally high rates of returns is the risk of losing all of one's investment in a
given startup company. As a consequence, most venture capital investments are
done in a pool format where several investors combine their investments into
one large fund that invests in many different startup companies. By investing in
the pool format the investors are spreading out their risk to many different
investments versus taking the chance of putting all of their monies in one start
up firm.

A venture capitalist (also known as a VC) is a person or investment firm that

makes venture investments, and these venture capitalists are expected to bring
managerial and technical expertise as well as capital to their investments. A
venture capital fund refers to a pooled investment vehicle (often an LP or
LLC) that primarily invests the financial capital of third-party investors in
enterprises that are too risky for the standard capital markets or bank loans.

Venture capital is also associated with job creation, the knowledge economy
and used as a proxy measure of innovation within an economic sector or
geography.

Venture capital is most attractive for new companies with limited operating
history that are too small to raise capital in the public markets and have not
reached the point where they are able to secure a bank loan or complete a debt
offering. In exchange for the high risk that venture capitalists assume by
investing in smaller and less mature companies, venture capitalists usually get
significant control over company decisions, in addition to a significant portion
of the company's ownership (and consequently value).

Young companies wishing to raise venture capital require a combination of

extremely rare yet sought after qualities, such as innovative technology,
potential for rapid growth, a well-developed business model, and an impressive
management team. VCs typically reject 98% of opportunities presented to them[
reflecting the rarity of this combination.
 BUSINESS PLAN:

A business plan is a comprehensive set guideline for a new venture. Planning is

essential and it must be done in a reasonable manner. Therefore, feasibility
planning is used as a way of moderating the concept of a comprehensive
business plan.

Every business is unique. Therefore no plan is going to provide an absolute

prescription for success. A feasibility plan is an outline of potential issues to
address and a set of guidelines to help to help an entrepreneur make better
decisions.

A well written plan should clearly identify the product, service, market and the
founders. A feasibility plan should be prepared in a quality manner.

The plan should be easy to read and must be complete and accurate. There
should be no misspellings, improper grammar or mistakes in the data.

Effective plans avoid emotion packed phrases and abstract language.

Entrepreneurs who know how to write a good plan will avoid saying “think”
there is a market or they ‘believe’ a product will work. Instead, they will use
facts to support their assertions.

PROJECT:

A project is work plan to achieve certain objectives within a specific period.

It may be defined as definite and complete scheme or plan of action for

achieving definite objectives or target. It is scheme or plan for investing money
and other resources for starting a new business enterprise or for expanding the
existing one.

A project may be prepared for starting a new factory or a plant or it may be

prepared for expansion or modernisation of the existing enterprise.
 PROJECT PLANNING:

It means determining the route or the manner in which the project or the scheme
is to be executed. Project planning starts with the discovery of a business starts
with discovery of a business opportunity and ends with the completion of all
details required for the execution.

Project planning is the result of the detailed investigation of various aspects

such as technical, managerial marketing and financial of the proposed business
activity.

It is essential in case of new projects as it gives the basic data required for the
execution project.

The entire plan of the project is noted in a written document called project
report.

STEPS IN PROJECT PLANNING:

(1) DISCOVERY OF BUSINESS OPPORTUNITY: The discovery of

business opportunity usually relates to market, raw materials, and needs of
the consumers and so on. The process of setting up of a business enterprise
gets clear direction only when a promising business opportunity is
discovered.

(2) PRELIMINARY INVESTIGATION OF THE PROJECT: Investigation

relates to certain broad economic aspects such as market demand, investment
required and margin of profit likely to be available. The preliminary
investigation of the project is desirable in order to find out the possible
success of the project after execution. Preliminary scrutiny facilitates the
elimination of the unsound project at an unsound project at an early stage.
(3) TECHNICAL REQUIREMENTS STUDY: Requirements include land,
machinery, raw material, fuel, power, waste disposal, manpower and
 transportation. This study needs to be conducted with help of technical
consultants such as consulting engineers.

(4) INITIAL FEASIBILITY STUDY: It is a part of project planning. The

basic purpose is to verify the practical market standing of the project. If the
initial feasibility study is favourable the promoters can go ahead with the
final preparatory step in project planning.

(5) FINAL PREPARATORY STEP: In the final preparatory stage certain

details of the project have to be worked out. The final preparatory step
includes:

(a)DETERMINIG CAPITAL REQUIREMENT: Project planning

involves calculation of required capital for the project which includes fixed
and working capital. Capital is required for the execution of the project.

(b) FRAMING POLICIES: They are action paths and enable mangers to
achieve the targets of the project in an orderly manner. They are useful for
orderly execution of the project.

(c) PREPARINIG PROGRAMMES: Programme is the time table for

conducting a particular activity in the project. Such programmes should be
integrated properly and their timings and sequence should be adjusted
accurately.

(d) PREPARINIG DESIGNS OF STRUCTURES AND PROCESSES:

Design of the process equipment is prepared. Detail plan for layout roads, water
supply, waste disposal, etc. are also prepared.
(e) DETERMINIG THE WORK-FLOW: The flow of work is a time
schedule for different activities so as to complete the entire project efficiently
and quickly.

PROJECT REPORT:
The project report is a summary of project planning. It is prepared by experts
after completing the project a planning. It serves as a base for feasibility studies
and actual execution of project.

The report deals with the different aspects of the proposed project. It is
generally prepared by a team of experts including engineers, technicians and
financial experts.

Project report contains details regarding technical, financial, marketing and

managerial aspects of a project. The purpose of project report is to place all
necessary data for consideration of experts. The lending institutions desires to
study the soundness of proposed project before granting loan.

CONTENTS OF PROJECT REPORT:

(1) Name, address and other details of sponsoring agency.

(2) Brief history and summary of the propose project.
(3) Technical details of the project which include details of plant layout,
location, manufacturing process, products, etc.
(4) Cost of production and profitability.
(5) Manpower requirement of the project.
(6) Financial aspects of the project, which include cost of project, fixed
assets, fixed assets, working capital requirement and sources of finance.
(7) Total income, operative profit and net profit.
(8) Importance regarding marketing.
(9) Importance of the project to national economy, export promotion.

ADVANTAGES OF PROJECT REPORT:

 (1) Project report is useful for taking bank loans and submitting proposals
for govt. license and permission.

(2) It is useful for quick reference during the process of execution of the
project.

(3) It is useful as a controlling device.

(4) Project report is useful for modification or for improvement in the

proposed project during the course of feasibility study or a appraisal of
the project.

(5) It is a base for feasibility study.

FEASIBILITY STUDY:

Feasibility study of project means to find out the practical utility or the future
prospects of a project. It is necessary to study the practical utility in an impartial
manner. Feasibility study gives more safety and security to the sponsor of the
project. It avoids possible failure after execution.

The banks and financial institutions undertake such study in an impartial

manner for the safety. Such appraisal is necessary and useful in the case of the
large projects, which need huge financial investment.

The basic purpose of feasibility study is to find out whether the project is
technically, economically, financially and managerial sound.

AREAS OF FEASIBILITY STUDY:

(1) TECHNICAL FESIBILITY STUDY: Location, size, layout and

technology are the important technical aspects which are considered in
technical study. All technical details are evaluated in this area feasibility
study. The extent of technical soundness of the project is available from
technical feasibility study.

(2) ECONOMIC\MARKET FEASIBILITY STUDY: Economic

feasibility relates to the market and marketing for the proposed product.
The success and the profit of a project largely depend on the market
available for the present and in the future. Due to rival producers,
substitutes available and market competition the study is extremely
complicated. During the economic feasibility study market analysis or
forecast must be conducted with reasonable accuracy.

(3) COMMERCIAL\FINANCIAL STUDY: It relates to the financial

aspect of the project. The success of the project depends on its
profitability in the present and future. This study is concerned with
capital cost estimates, sales revenue, working capital needs, earning
estimates, cash flow studies and availability of funds for the execution of
 the project. Since the purpose behind executing the project is to earn
profit the commercial feasibility study gain importance.

(4) MANAGERIAL FEASIBILITY STUDY: Even if the project is to be

economically, technically and financially feasible it can still fail if the
people who implement or manage it are not capable. The success and the
profitability of the project partly depend on managerial competence and
so the lending institutions give special importance to this area of
feasibility study.

FEASIBILITY REPORT:

It is a document prepared after completing different types of feasibility studies.

It is prepared by the sponsors or even by banks or lending agency for the safety
of their funds. It is prepared after the project report.

It gives full analysis of the projected inputs and outputs covering all information
upon which promoters can take final decision about the proposed project.

Feasibility report may suggest certain modification in the proposed project. It is

desirable to modify the project in the light of such modifications.

Feasibility report is also useful for improving the proposed project and making
it more safe and promising.

INFRASTRUCTURAL FACALITIES:

It was the vision and foresight of India’s first Prime Minister, Pandit
Jawaharlal Nehru that paved the way for industrialisation in India. The five-year
plans were designed from time to time to ensure the industrial growth of our
nation. As a matter of industrial policy, therefore Pandit Nehru insisted on the
balanced regional growth and advocated that the necessary infrastructure should
be provided to place industries on a sound footing.

The central and the state government established several industrial estates
and offered many infrastructural facilities for the industrial growth of our
nation.

It was necessary that the backward regions should be developed so that

there is no lop sided development of industries. The Government of India on
one hand offered certain concessions to the entrepreneurs for starting new units
in those areas and also tried to extend positive help by way of providing the
infrastructure.

Infrastructure is the background against which the industrial units could

stand. In order that the states should have their balanced regional growth, the
government built roads for transport of goods and the people to and from those
areas. Regular and sufficient water supply was ensured. Sewage for protection
from the polluted water was arranged.

The infrastructure includes an “AIDS TO TRADE”.

For an example besides transports facilities the entrepreneur requires banking,
insurance, communication, warehousing a services of mercantile agents.
Electricity, lighting on the roads fine brigades, security, etc. become a must.

The Government also tries to provide financial and raw material, labour
and a market for the products produced.

The industrial sector developed by the Maharashtra Industrial

Development Corporation provides a number of infrastructure facilities. The
entrepreneur prefer to set up their units in these zones because

1) It is not necessary to obtain permission for non-agricultural business.

2) There is no lien on the land.

3) The land is owned by the Government but it is given under the lease
agreement for 95 years.

4) MIDC ensures that each plot of land would be offered pure water out of
its reservoirs.

5) The state electricity board offers easy electric supply.

6) MIDC offers plots and sheds for small-scale producers and electronic
industries.
7) Separate sections are created for engineering chemical and electronic
industrial units.
8) There is systematic planning to help small scale, medium scale and large-
scale industries and commercial complexes so that the environment is
conducive to the growth of industries.
 Proper infrastructural facilities provided can ensure the
entrepreneur to start new ventures and see that the same are established
and proper.
This is in the interest of the entrepreneurs as well as the state. If no
such facilities are available the entrepreneurs may not be interested to
take risk.
Some times because of the insecurity and lack of infrastructure
facilities there is a flight of industries from one state to another.
Thus for some times the industrialists in Maharashtra were lured by
the state of Gujarat by offering them a number of infrastructural facilities
and also financial aid in terms of subsidies etc. The states, which are
lacking the infrastructure and also are infested with insecurity, are slow in
entrepreneurial growth. The state of Bihar in the recent times is an
example.

LOCATION OF A BUSINESS UNIT:

The profitability and the performance of a business unit are very

much influenced by the size of the business, location and the layout. The
location and the environmental factors are nowadays-prime consideration
for the establishment of a business unit.
The location of a business unit can decide the earning capacity and
the cost control. It is the location, which can decide whether the business
will be stable or otherwise. Recently the famous ENRON project in India
came in trouble because of a particular location which it is feared would
cause tremendous pollution. It was opposed and the government of
Maharashtra had decided to cancel the agreement but due to the central
Govt. interference the project was cleared.
If the decision regarding the choice of a location is not taken on
scientific basis there could be many difficulties to be faced in future. The
location refers to a particular area or site place selected for establishing of
setting a business unit. A number of factors are required to be considered
before the decision regarding location is finalized. Thus the decision
regarding the location could be directed by the Government for securing
balanced regional growth of industries. It may establish industrial estates
and offer a number of aids to support various units.
Sometimes the pioneers in an industry prosper at a particular place.
The important of convenient location cannot be ignored. The maximum
convenience, minimum cost and the optimum efficiency are usually the
guiding factors in deciding upon the location of a business unit.

BENEFITS OF SCIENTIFIC LOCATION:

According to I.I.Lundy the location decisions could have nearly 10% on

the transport and distribution cost. The following are the benefit of a good
location selected on scientific basis.
1) Better performance and maximum efficiency: It is possible to have
raw material from the local area thus reducing the cost of transport. If
the market is near the location of the production unit, less expenses
would be incurred in reaching the finished products to have market.

2) Cost control: More profits could be also available because of

reduction in cost on administration transport, marketing and fuel.

3) Smooth working: Because of the ready availability of raw material as

well as disposal of effluents and quick delivery of the finished
products the production as well as the marketing is carried out
smoothly.

4) Expansion and diversification: When the business is established and

starts prospering, the entrepreneur thinks of expansion and
diversification. There are cases where such decisions are well
supported by the location selected earlier by a visionary entrepreneur.
 5) Ability to face competition: Since the location can help reduction of
costs, the entrepreneur can have an edge over his competitors and can
grab a bigger share of the market.

WEBER’S THEORY OF LOCATION:

The theory was put forth in 1909 and was popular in England in 1929.
However, subsequently it lost its grounds because of practical considerations.
The importance of this theory lies in the fact that it led the primary efforts to
discuss the issue of location on somewhat scientific basis.
 Mr. Alfred Weber advocated that the factors deciding the
location of a business unit could be divided as:
(A)Primary factors which included,
a. Transport cost and
b. Labour cost and,
(B)Secondary factors, which included
a. Existence of skilled labour in the region,
b. Existence of auxiliary industries,
c. Facilities of technical research
d. Momentum of an early, start and
e. Banking, insurance and transport facilities.

The secondary factors were also known as Agglomerative and

Deglomerative factors Mr. Weber provided a mathematical formula as:

Location Material Index=Weight of localized material

Weight of finished products

If the index is less than one then the location should be near the
market or place of consumption and if it is higher than one the cost need not be
taken into account while locating a plant. However, Weber’s assumption
regarding transport cost, fixed labour centres and fixed market places are
unrealistic and hence, it is said that this theory has now only a historical
importance.

FACTORS INFLUENCING THE LOCATION OF A BUSINESS

UNIT:

The following are the primary factors of location:

(a) Availability of raw material.

 (b) Transport and communication facilities.
(c) Cheap labour.
(d) Proximity to market.
(e) Power, fuel and water supply.

Secondary factors:

(a) Climatic conditions.

(b) Financial facilities.
(c) Personal factors.
(d) Government and tax exemptions, land loan, etc.
(e) Scope for expansion.
(f) Industrial environment.
(g) Existence of auxiliary industries.
(h) Fire fighting facilities and amenities to employees.

STEPS IN THE SELECTION OF LOCATION:

An entrepreneur usually consults an engineer or and industrial

economists before taking the decision regarding the selection of a
location.

There are three stages in the selection of a location:

(1) Selection of a region: Usually the consideration of a region is done in
the context of the suitability for industry. The entrepreneur consider:
a. The availability of raw material.
b. The proximity to the market.
c. Transport and communication facilities.
d. Availability of power, fuel and water and,
e. Miscellaneous factors like suitable climate, law and order
situation and industrial atmosphere, essential supplies like
labour, banking facilities, etc.

(2) Selection of locality: After selection of the region, the entrepreneur

tries to select the locality in the region. He tries to consider the locality
in that region. The following factors are considered:
a. The availability of the adequate quantity and quality of labour.
b. Prevailing wage scales in the industry.
c. General attitude of the community towards industries. Enron
was opposed by the people in the area on account of fear of
pollution
d. Types of industries available in the locality.
e. Living conditions on the locality.
f. Government reductions, tax concession, etc.
g. Availability of banking transport and research facilities.
h. Police protection and provision of fire fighting facilities.

(3) Selection of Site: The selection of exact site is done after deciding
upon the locality. In other words, we start with macro and end with
micro considerations. Here a number of alternative sites are compared.
A city, a village or an industrial estate is to be selected. The cost of
land can differ with different sites. The roads and the railway should
 be suitable. There should be facilities for good water supply and
affluent and also a favourable surrounding.

The state regulations regarding the industrial location are to be

considered seriously because they can provide favourable or
unfavourable industrial weather.

The concentration of industries can create a number of problems

like slums and social insecurity for reason like defence considerations,
certain areas are prohibited areas. In other words, particularly for an
industrial entrepreneur the decision regarding location is to be taken with
‘care and caution’.

ENVIRONMENTAL PROBLEMS:

Business environment cannot be neglected by an entrepreneur. It can

make or mar the business. According to Keith Devis business
environment is the aggregate of all the conditions, events and influence
that surround and affect it. It consists of all external and internal factors
that influence the complex interaction of the market, finance and
production.

Business environment is ever changing and hence can create as

well as solve problems. A change in the government could be favourable
 for some entrepreneurs, while it may create obstacles for others.
Environment can create new opportunities and also new threats. Business
planning is closely connected with business environment.

The strength, weakness, the opportunities and the threats created

by existing environment must be studied seriously before launching a
project. The survival, growth, expansion and diversification are always
influenced by the environment and therefore in study is a must for any
entrepreneur who wishes to be successful in his venture.

The following are the important types of environment:

(1) Political environment: The political environment is created by the

political ideology or the system adopted by a county. The provisions
of the constitution, various political parties in power and its opposition
and the various political events affect the business. On the arrival of
the election the business environment is tensed as uncertainty prevails.
In India the Congress Government has been stable for quite some
times. When Janata party won the elections, the industrial policy
also underwent a change.

The congress party was in favour of heavy industry. The Janata government
encouraged small scale and tiny industries in order to provide employment to a
large section of the society living in villages. The businessman has to keep a
close watch over the political events and adjust themselves accordingly.

(2) Economic environment: the economic environment is supplementary to

political environment. The government industrial policy, export-import policy,
fiscal policy, banking policy, etc. create new problems and opportunities for
entrepreneur. The government may through its budgetary provisions create an
environment which is conducive to the growth of private enterprise. The legal
measures like FERA, MRTP and institutes like SEBI are responsible for
creating a particular business environment.
 The entrepreneur should be interested in exercising their influence on the
government through bodies like chambers of commerce and trade associations
so that the economic environment is helpful to the industries.

(3) Social and cultural environment: Social and cultural environment too can
create certain problems. The increasing consumer awareness, education
progress of the ladies, changes in faith of the middle class opportunities on one
side and problems on the other side. The emergence of the middle class as a
powerful socio-economic group in the Indian market scene needs special
attention by the business enterprise.

Cultural factors include beliefs, arts, moral, customs, etc.. Cultural changes
take place gradually. In brief, cultural factors contribute for the creation of
social environment.

(4) Technological environment: The technological environment creates a

problem of obsolescence. New technology is always preferred to the old one.
Costly machinery can become junk or outdated. It is said that the technology of
today are the junk of tomorrow.

People find Xeroxing more convenient as compared to cyclostyling. The use

of computers is growing. The electronic equipment’s are becoming the order of
the day and therefore the entrepreneur who cannot keep pace with changing
technological development will be lagging behind.

(5) Demographic environment: The demographic environment tells us about

the age and sex compositions, family size, religion and economic status of the
population. The growth of industries raises the standard of living and the
expectations of the people. The entrepreneur has to study the changing pattern
of the demographic set up. It is the people who make the market.
 The shift of the rural population to the urban areas can create new challenges
to the entrepreneurs.

(6) Natural or physical environment: it speaks about the geographical factors

like weather and climatic conditions. The hills, rivers, oceans, land, soil, the
flora and the fauna all constitute the physical on the background of which the
business flourishes.

This environment is very important as it can create shortage of raw material.

If the rains are scanty the crop could burn. The famines and earthquakes, excess
rain or draught could create problematic situation for the entrepreneur. This is
also known as ecological environment and its consideration is inevitable.

(7) International environment: Today the international environment plays a

dominant role in deciding the fate of many entrepreneurs.

The policy of liberalization and the steps towards globalization is a topic of

serious discussion today. The entry of multinational in Indian is posing a big
challenge to the Indian entrepreneur.

Obtaining ISO 9000 certification has become a must to compete in the

international market.

The policy of big powers like USA, Japan and China has been greatly
affecting the business environment.

In short since the whole world is becoming a village due to economic and
political changes, modern entrepreneur should always be alert. He has to be
ready to face the changing international scenario and take faster decisions to
maintain his success.
ROLE OF INDUSTRIAL FAIRS:

International fairs are the fairs at which industrialists exhibits their products.
These fairs are organized at regional, national and international levels. A large
number of people from industry and trade visit these fairs. Such type of
interaction is very helpful in promoting and sustaining entrepreneurship.

The following are the main advantages of industrial fairs:

i. Dissemination of information concerning new/improved products.

ii. Booking of orders for supply of products.
iii. On the spot sale of product.
iv. Ideas for developing new/better related products.
v. Foreign collaborations for technical know-how.
vi. Assessing the trends in competition.
vii.Contracts for dealership Import or Export.
EXAMPLE OF RELIANCE TECHNOLOGY VENTURE
LIMITED
 Reliance Technology Ventures Limited was launched in 2006
with an investment mandate to incubate new business ideas and invest
in emerging and high-growth technologies. We seek out and invest in
promising technology (IT, ITES, hardware and semiconductors), media
& entertainment, and telecom (TMT) companies worldwide. Our
investment focus is both - on established and new technologies, that
advance the computing, communications, media and convergence
platforms. While financial return is imperative, our greater mission is to
spur innovation and inspire the entrepreneurial spirit to thrive.

In going with our belief that we would like to be the preferred choice
and premier partner of all our investee companies, RTVL works with an
unlimited pool of funds and guarantees its full commitment to its
investees over an unlimited period of time.
Dhama Apparel Innovations has developed
technology that can be incorporated into apparel
or accessories to provide thermal comfort.
Dhama’s patented technology provides heating /
cooling solutions to people living and working
in difficult climatic environments. It's current
ClimaCon technology provides heating and
cooling solutions on demand and can be
incorporated into any kind of apparel. Dharma’s
patented technology has won the prestigious
Gold Medal at Lockheed Martin’s Innovator’s
competition in 2008 and MIT Business Plan
Competition in 2005.
Scalable Display Technologies, Inc., located in
Cambridge, Massachusetts, is a leading
provider of auto-calibration software used to
create edge-blended displays. The technology
patented by MIT, simplifies the creation of
super-resolution, multi-projector displays of
highest quality and scalable size. Their ‘Easy
Blend’ software opens the door to wide-spread
use of multi-projector displays for a new class
of simulators based on off the shelf
components, as well as supporting new forms of
digital signage and data visualization tools.
Suvidhaa Info serve is the pioneer of the
Service Commerce (“S-Commerce”) revolution
in India. The company empowers both small
convenience stores and allied services providers
with a host of customized services, on a single
electronic distribution platform, that they can
conveniently offer their customers. These
services span multiple industries including
travel, telecommunications, entertainment,
lifestyle, financial services, utilities, education,
health, and many more.

Pelago, Inc. is developing a new generation of

consumer experiences based on breakthrough
technology, including ‘Whrrl’, a new mobile
and web-based service at the intersection of
social networking and local discovery.

RTVL has advised in the acquisition of Vanco

Plc by Reliance Globalcom. Vanco is a UK
headquartered Global Network Operator, and
offers enterprise clients across 230 countries,
with cost-effective, optimized and fully
managed network solutions.

RTVL has advised in the acquisition of eWaves

World by Reliance Globalcom. EWave World
is a UK headquartered telecom company,
focused on the rapidly developing market for
wireless telephony services using the WiMAX
technology standard.

SEQUANS Communications is a leading

supplier of subscriber station and base station
chips for both fixed and mobile WiMAX, based
on IEEE 802.16-2004 and 802.16e-2005
standards. SEQUANS has won multiple awards
for its innovative SoC designs, including the
best chip design award from WIMAX WORLD
USA 2007 and the Red Herring 100 Global
award for 2007.

Stoke develops carrier-class multi-access

convergence gateways to help fixed, mobile and
Internet-based operators realize the economic
benefits and competitive advantages of network
convergence.

E-Band Communication Corporation is a

leading developer of multi-gigabit capacity
wireless communication systems based on
70/80 GHz millimeter wave radio technology.
EBCC’s ‘E-Link™' system enables wireless
service providers to backhaul vast amounts of
digital IP-based wireless traffic and serve as a
substitute for fiber in last mile metropolitan
access networks.

RTVL has advised in the acquisition of Yipes

Holdings Inc. by Reliance Communications, in
an all-cash deal valued at Rs.1,200 crores [$300
million]. Yipes is now known as Reliance
Globalcom Services, Inc. and is the leading
provider of managed network and application
delivery services for the global enterprise.
 Yatra.com is India’s largest online travel portal,
a feat achieved within a span of 8 months from
launch.

Seed fund provides early-stage capital to

startups in India and is led by an experienced
team of entrepreneurs who have built hugely
successful companies such as Hinditron,
Channel V, CKS/US Web, IndiaBulls,
Indiagames, Pinstorm and Geodesic.

RTVL has also led the investment in an

unnamed technology company which formed
Other investments the basis of the largest venture capital
transaction in India.
Approach - Investment Process

What we look for?

People:
We encourage entrepreneurs and teams who have the ability to translate
Reliance ADA Group’s philosophy, "Think Bigger, Think Better“, into
an action plan, and execute as per world’s best standards or better.
Competitive Edge:
We look for compelling, IP-rich products, and services and business
models, with a defensible strategy, and with a significant market
opportunity.
Financials:
We look for financial plans to demonstrate the ability to generate the
highest potential return on our investment.
Approach - Focus Sectors

We are constantly on the lookout for ideas with promise to invent new business
categories or radically alter existing ones. Our passion is for new technologies A
and new applications of technology that will drive high impact change. Se
pp
mi
lic
In
We like to explore promising innovative ideas that invent or inherently change ati
co Sys
te
tem
business categories. Our investment focus falls into the following broad sectors on
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Approach - Business Plan Submission

Area of
company
business
Business
strategy
Company
mission
statement

Historical &
projected size in
dollars
Underlying
market drivers
fuelling growth

Product
differentiation –
intellectual
property –
ownership of
IP
Revenue
model
Product /
solution
pipeline or
roadmap

Key
competitors
Competitive
advantages
Barriers to
entry

Roles &
responsibilities
Background
of team
members
Board
composition

Historical &
forecasted
financials [2
years if
available]
Projected cash
flows
Current
balance sheet (if
at all) and
projected
balance sheet