Module II:

Setting up of a small Business Enterprise: Identifying the Business Opportunity: How to Identify Business Opportunity: A Business Opportunity may be defined as a business proposal an entrepreneur would like to pursue considering risk and the reward involved in the proposal which may be manufacturing or servicing or trading. How do people generally identify business opportunity? World wide most of the entrepreneurs identify the Business Opportunity based on the following three simple ways: y father or someone in my family is doing it successfully! so " want to do the same. " have related e#perience$ hence " am pursuing this opportunity %omeone is doing it successfully whom " know. Hence! " am pursuing this Opportunity. "f the line of thinking continues to this then the number of sellers will be more than buyers which has already led to unhealthy competition. &his is the cause for high mortality rate in micro enterprises. "n order to rectify this problem! there is need for a scientific approach to identify business opportunities. &his approach calls for a scientific way of classifying Business Opportunity based on its origin! application! user or source. Based on this! it has been categori'ed under the following broad nine categories. &hey are: ( )esource based ( *emand based ( %kill based ( Ancillary+ vendor ( "nputs to primary sector ( "nputs to secondary sector ( "nputs to tertiary sector ( Waste based ( "nnovative Resource based "ndustries which are based on available local resources are called as resource based industries. ,or e#ample! as far as andya *istrict is concerned! rice mill! -aggery units! milk processing units comes under this category.

Demand based "ndustries which cater to the local re.uirement! availability of resources is not a prere.uisite! such a category of industries are placed under this sector. /.g. series light sets in local demand. S ill based &hese are the industries where skills available with the local people are used to manufacture various goods and services. ,or e.g. 0roduction of wooden toys in 1hennapatna! near Bangalore! sarees at "lkal etc. !ncillary" #endor As per the approved definition of 2overnment of "ndia! any "ndustry supplying raw material or components to any medium or large industry at least to an e#tent of one shift load of its installed capacity 3per day4! such industries are categori'ed as Ancillary industry. Inputs to primary sector ining! agriculture! sericulture! horticulture! cattle rearing! a.ua culture etc.! comes under primary sector. "ndustries which cater to the re.uirement of these sectors are categori'ed as input to primary sector. ,or eg.! production of vermicompost! agri clinics! sprayer service centers 5 these are all input to agriculture sector. "nputs to secondary sector /#isting industries offer ample opportunities in terms of spares! packing materials etc. "ndustries which are manufacturing goods and services as per the re.uirement of e#isting industries immaterial whether it is large! medium or small are categori'ed under this category. ,or eg supply of corrugated bo#es! 00 caps! washed glass bottles to a 0harmaceutical unit. "nputs to tertiary sector /#isting trade and commerce offers ample scope for supplying goods and services 5 particularly the service sector has a pivotal role to play. /g. A computer accounting system catering to the re.uirement of e#isting trade and commerce 6 this type of service providers are classified under this category. $aste based While harvesting the resources lot of waste materials are generated. &hese unused materials offer ample opportunity to convert as a value added goods. "ndustries which are engaged in such activities are categori'ed as waste based industries. Inno#ati#e &hese are the created goods and services by innovative entrepreneurs. &hese are the services which are non5e#istent till they are launched. )esource based "ndustries )esources of a place offer ample opportunity to produce goods and services on a sustainable basis. "n order to identify possible business opportunities under this category anufacturing andya district for which raw material is not available locally but there is

there is need to categori'e the resources according to their origin. &hey are broadly classified as Agriculture resources! ,orest resources! resources. !griculture Resources Agriculture resources are broadly classified as: ( 1ereals eg. )ice! wheat! jowar! mai'e! ragi ( 0ulses e.g. &ur! Bengal gram! Blackgram! Horsegram! 0eas! 2reengram etc.! ( Oilseeds e.g. 2roundnut! %unflower! %afflower! &il! %oyabean! ( 0lantation e.g. Areca! 1oconut! )ubber etc.! ( 1ommercial e.g. %ugarcane! 1otton! &obacco etc.! ( %pices e.g. 2inger! 1hilli! 0epper! 1ardamom! 1oriander etc. ( 7egetables e.g. gourds! leafy vegetables! ethnic vegetables! roots etc. ( ,ruits e.g Banana! ango! %appota etc. "n order to identify Business Opportunities based on agriculture resource! first one has to list down agriculture resources available in the location where he+she wants to set up a unit. 1are should be taken to plan meticulously and go step5by5step manner as suggested above. 2ive priority to those produces which are produced in large+economically viable .uantities. Once this e#ercise is completed! decide what shape or form of the raw produce is to be used. ,or e.g. ost of us eat rice 6 origin for rice is paddy. Hence! the opportunity to convert paddy to rice e#ists which may be accomplished by pounding! hulling or by milling. %orest Resources )esources available in ,orests are both renewable and non5renewable in nature. "t is unfortunate that most of the entrepreneurs+ 2overnment focus more on non5renewable forest resource like timber. "n fact! renewable forest resources like leaves! fruits! flower! barks and tree oo'ing offer a good scope for establishing forest based industries without destroying the forest. Marine based Resources 8arnataka is blessed with coastal line and offers good marine resource base for entrepreneurs to e#ploit on a sustainable basis. &hese marine resources can be classified into living and non5living things. ,ish! corals comes under living things while sea shells come under non5living things. ineral based )esources inerals are classified as ma-or and minor minerals. "ron! cobalt! manganese containing ores is classified under ma-or minerals while limestone! sand! grey granite is classified as minor minerals. &o identify business opportunities under this category! list down and .uantify various minerals that are available locally. 1onsult an e#pert who can help you in listing down possible business opportunities. ustard etc.! arine resources! ineral resources and 1attle

&attle Resources 1attle rearing is an age old tradition in this country which is almost a ma-or economic activity undertaken by villages. &hese animals provide us perennial outputs and nonrenewable outputs e.g. milk! wool is perennial outputs while meat! hides! blood! horns are non5renewable. Demand based &he criteria for opting to this sector are the local re.uirement. )aw material may not be available and re.uired raw material may be imported from neighbouring areas wherever it is available e.g. production of plastic pots. &o identify goods and services under this category -ust list down various ob-ects+ goods+ services which you use or see around you. With this an e#haustive list of demand based products could be listed. S ill based 9ist the skills available with local people. &hink how best this skill could be commerciali'ed. ,or e.g. if there is a cluster of carpenters! generally these people are engaged in the manufacture of wooden furniture to meet the local demand. "nstead these carpenters may be encouraged to produce high value toys! industrial products like wooden bobbins! electrical accessories etc. !ncillary 9arge and medium scale industries e#isting locally may be assessed for their goods and services re.uirement. ,or e.g. e#isting 9 : industry. Input to primary sector &he key player under this sector is agriculture. &o identify business opportunities under this category! list the various goods and services needed by the agriculture sector. &hese goods and services includes seeds for sowing purpose! saplings! implements! hand tools! fertili'ers! pesticides! insecticides! baskets! irrigation systems etc. Input to secondary sector /#isting local industries irrespective of their si'e offers good number of opportunities. ,or e.g. if there are a number of bakeries! list the various goods and services needed by these bakers. 2enerally! bakers need dry fruits! bakery flour! sugar powder! khoa etc. Input to tertiary sector &rade and commerce re.uire lot of support from goods and services. ,or e.g. packed food grains! spices etc. are needed by departmental stores and provision stores. 0ickles! papads are needed by hotels. 9aundry services are needed by lodgers! nursing homes etc.! and Accounting services are needed by all traders. Waste based "ndustries may be offering lunch to their employees. &his may be e#ploited by locals and ready packed foods are supplied to parent

"n every day life lot of wastes are generated. &hese waste become a threat to living beings because it is not being managed properly or put to different applications. ,or e.g.! blood obtained in a slaughter house is a waste and disposing is a problem but a high value blood product could be manufactured by using this waste. "nnovation &hese are the new goods and services created by a few innovative entrepreneurs to create new goods and services. &hink of problems confronted day in and day out or in an e#isting product. &hese problems can be converted to lucrative pro-ects. &he overriding reason for anyone to think of establishing a %%" unit can be summari'ed in one word 6 opportunity. &he opportunity to be your own boss! so provide a product or service! to implement your ideas! which can generate sufficient surplus! is reason to think of an %%" unit. %tarting a small business takes a lot of courage. &o be successful 6 to stay in business 6 you need a combination of hard work! skill! and perseverance. 2enerally! people who want to start their own business can be grouped in to two broad categories. &he first group consists of people! who e#actly what they want to do and are merely looking for the opportunity or resources to do it. &hese people may have already developed many of the skills necessary to succeed in their chosen field and are also likely to be familiar with industry customs and practices! which help during the start5up phase of a new business. &he second group consists of people who want to start their own business! but do not have any real definite ideas about what they;d like to do. &hey may have developed skills in the course of their employment or education! but may not be interested in opening a business in the same field of endevour. Business opportunities in #arious sectors: Industries and Ser#ices have acted as twin engines propelling overall growth in an economy. &hey are attracting large inflow of capital and foreign investments into the country from all over the world. &hey play a vital role in accelerating socio5economic development of a nation! thereby providing several categories of goods and services 3both tangible and intangible4 and catering to the diverse needs of the masses. &hese sectors are the largest generator of employment opportunities in the country and a facilitator of trade and commerce with other countries. "n other words! besides agriculture! they are the basis of almost all the ma-or policy initiatives! incentives and schemes as well as programmes and plans! both at the <ational and the %tate level.

&he industrial sector mainly consisting of heavy and light engineering! steel! automotive! biotechnology! drugs and pharmaceuticals! food processing! mines and minerals! fertili'ers! etc. provide immense potential for developing ade.uate market infrastructure in the economy. &hese industries are involved in production of several good .uality and skill intensive products! in bulk .uantities and at much reasonable prices. &hey are governed and administered by their respective inistries+ *epartments. However! the =*epartment of inistry of 1ommerce and "ndustry! is the "ndustrial 0olicy and 0romotion 3*"004=! under the

main agency for monitoring the entire industrial growth and production in general. "t plans for moderni'ation and technological up gradation of the "ndian industry in order to keep pace with the international developments in industrial technology on a continuing basis. "t also studies! assesses and forecasts the need for technological development in some specific industrial sectors like cement! light engineering sectors! etc. *"00 has been announcing industrial policy! from time to time! to foster and facilitate the growth of "ndian industry. %uch policy framework set certain limits and norms for the conduct of business in the country. Ser#ices sector has always been an attractive investment option for the corporate world. "t has facilitated the creation of several infrastructural facilities in the country as well as enhanced the productivity of various industries. "t not only helps in economic upliftment of the society! but also promote political and social well5being among the masses. &he service industry comprising of information technology 3"&4! education! health! media! tourism! etc. helps to shape the people=s opinion about various national and international issues as well as increase their awareness by giving them participative role in formulation of policies+ schemes+ programmes + plans. "n other words! a country cannot achieve a higher growth rate without a larger proportion of services in gross domestic product 32*04. Accordingly! the concerned authorities have been making all efforts to strengthen the pace of development of the sector in a sustainable manner. An important segment of "ndian industrial set up has been the micro' small and medium enterprises (MSMEs)! which have been accepted worldwide for promoting e.uitable growth in the economy. &he = inistry of icro! %mall and edium /nterprises= is responsible for overall development of "ndia=s small and medium sectors. "t has accorded the sectors a top most priority and have! accordingly! undertaken several policy initiatives for protecting their interest such as reservation of items for e#clusive manufacture by them. &he ma-or advantages of the industry are its labour intensive nature! generating highest rates of employment growth as well as production at low capital cost. and e#ports. % /s! constituting larger number of total enterprises in the economy! account for a ma-or share of industrial production

Manufacturing Sector (Industries): "ndustrial development plays a crucial role in "ndia=s development strategy. "t aims at

achieving various socio5economic ob-ectives such as reducing debt burden! promoting foreign direct investment 3,*"4 inflow! enhancing self5reliant production and distribution as well as diversifying and moderni'ing the e#isting economic set up. &he industrial base has been widely e#panded! covering broadly the entire range of consumer! intermediate and capital goods. "t has made considerable achievement in terms of output and employment. &he 2overnment of "ndia has been undertaking several policy measures and incentives! from time and time! in order to promote rapid industriali'ation in the country. &he ma-or step in this direction has been the announcement of "ndustrial 0olicy )esolution! initially passed in >?@A and then in >?BC and thereafter in >??>. %uch industrial policies have been designed to accelerate the development process in the "ndian industry. &heir broad ob-ectives are to:5 aintain a sustained growth in productivity /nhance gainful employment Achieve optimal utili'ation of human resources Attain international competitiveness and to transform "ndia into a ma-or partner and player in the global arena. &hey focus on deregulating "ndian industry as well as allowing it fle#ibility in responding to market forces. *reen Business: 2reen entrepreneurship is a bu''word in the present business scenario that si gnifies an industrial or business acti#ity with the least ad#erse impact in the indoor as well as the outdoor en#ironment+ ,he concept of green entrepreneurship stresses upon the pre#ention of the waste at source rather than treating the waste at the end of a process+ One of the important strategies towards green entrepreneurship is waste minimi-ation . is a new and creati#e way of thin ing about products and processes that ma e them less polluting+ It is achie#ed by the continuous application of strategies to minimi-e the generation of wastes and emissions+ !dopting waste minimi-ation strategies results in creation of new mar et opportunities by opening new a#enues for by.products' which were earlier banned due to use of non. en#ironment.friendly technology+ !utomoti#e Industry: Automotive industry is the key driver of any growing economy. "t plays a pivotal role in country=s rapid economic and industrial development. "t caters to the re.uirement of e.uipment for basic industries like steel! non5ferrous metals! fertili'ers! refineries!

petrochemicals! shipping! te#tiles! plastics! glass! rubber! capital e.uipments! logistics! paper! cement! sugar! etc. "t facilitates the improvement in various infrastructure facilities like power! rail and road transport. *ue to its deep forward and backward linkages with almost every segment of the economy! the industry has a strong and positive multiplier effect and thus propels progress of a nation. &he automotive industry comprises of the automobile and the auto component sectors. "t includes passenger cars$ light! medium and heavy commercial vehicles$ multi5utility vehicles such as -eeps! scooters! motor5cycles! three wheelers! tractors! etc$ and auto components like engine parts! drive and transmission parts! suspension and braking parts ! electrical! body and chassis parts$ etc. "n "ndia! automotive is one of the largest industries showing impressive growth over the years and has been significantly making increasing contribution to overall industrial development in the country. 0resently! "ndia is the world=s second largest manufacturer of two wheelers! fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors. "t is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer. &he installed capacity of the automobile sector has been ?!B@D!DDD vehicles! comprising >!B?D!DDD four wheelers 3including passenger cars4 and E!?BD!DDD two and three wheelers. &he sector has shown great advances in terms of development! spread! absorption of newer technologies and fle#ibility in the wake of changing business scenario. Biotechnology: Biotechnology is among the fast growing knowledge5based industrial sectors which have the immense potential to revolutioni'e agriculture! healthcare! industrial processing and environmental sustainability. &he =*epartment of Biotechnology 3*B&4= is an ape# authority for the development of biotechnology sector in the country and is accordingly setting up biotech parks and incubators centers in various %tates and organi'ations. While! the rapid build5up of fertili'er production capacity in the country has been achieved as a result of a favourable policy environment. &he =*epartment of ,ertili'ers= is a nodal agency for planning! promoting and developing the fertili'er industry in "ndia. Drugs and /harmaceuticals: *rugs and pharmaceutical is another significant industry showing considerable progress over the years. "ndia holds fourth position in terms of volume and thirteenth position in terms of value of production in pharmaceuticals. &he *epartment of 1hemicals and 0etro5 1hemicals! under the inistry of 1hemicals and ,ertili'ers! is responsible for planning! developing and regulating the industry. %everal policies have been announced like drug and pharmaceutical policies! which aim to ensure abundant availability! at reasonable prices! of essential life saving and prophylactic medicines of good .uality.

*rugs and pharmaceutical industry plays a vital role in the economic development of a nation. "t is one of the largest and most advanced sectors in the world! acting as a source for various drugs! medicines and their intermediates as well as other pharmaceutical formulations. Being the intense knowledge5driven industry! it offers innumerable business opportunities for the investors+ corporate the world over. &he e#istence of well5defined and strong pharmaceutical industry is important for promoting and sustaining research and developmental 3):*4 efforts and initiatives in an economy as well as making available the .uality medicines to all at affordable prices. &hat is! it is essential to improve the health status of the individuals as well as the society as a whole! so that positive contributions could be made to the economic growth and regional development of a country. Herbal Sector: &he age5old practices Ayurveda and other "ndian systems of medicine depend hea#ily on herbal preparation+ Such systems are gaining wider acceptance now and scientists should e0plore this opportunity+ ,he worldwide herbal mar et is e0panding and can easily earn re#enue by e0porting herbal products+ In fact' India can compete with &hina in this field and earn re#enue+ ,his sector pro#ides ample opportunities for entrepreneurs+ ,elecommunications: &elecommunications is widely recogni'ed as the prime support services needed for rapid growth and moderni'ation of various sectors of the economy. *evelopment of sound telecom infrastructure plays an important role in meeting the diverse needs of people and improving their .uality of life. &elecommunication covers a very wide variety of services such as sound : television broadcasting$ space communications$ aeronautical and maritime mobile communications$ meteorological aids and services$ radio amateurs$ as well as the public telecommunications services. 0rovision of telecom services to the rural areas has been recognised as another thrust area to attain the goal of accelerated economic development. "ndia=s telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. "t is also amongst the fastest growing telecom markets in the world. Our telecom industry manufactures a complete range of telecom e.uipments using the state of the art technologies designed specifically to match the diverse terrain and climatic conditions. 0roduction of telecom e.uipment has increased from )s. >E!AFF crore in GDDB5DC to )s. GF!CBC crore in GDDC5DE. As a result! "ndia is e#pected to become a manufacturing hub for telecom e.uipment. &ele5density! the most important factor in determining the penetration of telephone lines in a country has been increasing over the years! from >C.AF per cent in *ecember GDDC to GF.A? per cent in *ecember GDDE. &he total

number of telephones has increased from >A?.?G million as on *ecember F>! GDDC to GEG.AE million as on *ecember F>! GDDE. 1ight Engineering Industry: 9ight engineering industry is one of the largest segment of the overall industrial growth of a nation. "t is an intermediate unit whose demand depends on a variety of end5user industries such as power! mining! oil and gas! consumer goods! automotive and the general manufacturing sector. "n other words! the products covered under this industry are largely used as inputs to the capital goods + heavy engineering industries. Being highly labour intensive! the light engineering sector generates ample employment opportunities in the economy! especially into the areas where there is an abundant supply of skilled and semi5 skilled labour. "ndia has a strong engineering and capital goods base. "t is a ma-or e#porter of light engineering goods which include a wide range of items! such as forgings! fasteners! bearings! steel pipes and tubes! diagnostic medical instruments! etc. &he presence of well5 developed and sound =light engineering= sector is of high importance to the "ndian economy and is the basis of almost all productive and business activities in the country. &he si'e of "ndian light engineering industry is estimated at around H% I E billion. &he ma-or suppliers to this industry are the companies supplying them with raw materials like steel! aluminum! etc. %ood /rocessing: ,ood processing industry is one of the largest in the world in terms of production! consumption! e#port and growth prospects. Automatic approval for foreign e.uity upto >DD per cent is available for most of the processed food items! e#cepting alcohol and beer and those reserved for small scale sector. &he = inistry of ,ood 0rocessing "ndustries= is the nodal agency for developing a strong and vibrant food processing sector in the country. any new items like ready5to5eat food! beverages! processed and fro'en fruit and vegetable products! marine and meat products! etc. are being produced as well as cold storage facilities! food parks! packaging centres! etc. are being set up. &hus! industries are the mainstay of the "ndian economy. &hey help to promote regional development! eradicate poverty as well as uplift the standard of living of the people. "ndia=s vast domestic market! skilled and technical manpower as well as low production and ):* costs have been making "ndia a manufacturing hub. ,ood processing sector is indispensable for overall development of an economy as it provides a vital linkage and synergy between the agriculture and industry. "t helps to diversify and commercialise farming$ enhance income of farmers$ create markets for e#port of agro foods as well as generate greater employment opportunities. &hrough the presence of such

industries! a wider range of food products could be sold and distributed to the distant locations. &he term =food processing= is mainly defined as a process of value addition to the agricultural or horticultural produce by various methods like grading! sorting and packaging. "n other words! it is a techni.ue of manufacturing and preserving food substances in an effective manner with a view to enhance their shelf life$ improve .uality as well as make them functionally more useful. "t covers spectrum of products from sub5sectors comprising agriculture! horticulture! plantation! animal husbandry and fisheries. &he "ndian food processing industry is one of the largest in the world in terms of production! consumption! e#port and growth prospects. /arlier! food processing was largely confined to the food preservation! packaging and transportation! which mainly involved salting! curdling! drying! pickling! etc. However! over the years! with emerging new markets and technologies! the sector has widened its scope. "t has started producing many new items like ready5to5eat food! beverages! processed and fro'en fruit and vegetable products! marine and meat products! etc. "t also include establishment of post5harvest infrastructure for processing of various food items like cold storage facilities! food parks! packaging centres! value added centres! irradiation facilities and modernised abattoir. Mines: 2rowth and prosperity of a nation depends on the search! development and management of its mineral resources. inerals constitute an important raw material and a valuable natural resource in the industrial development of the country. *ue to increased competition! liberalisation and globalisation world5wide! the markets for minerals have been growing both in diversity and magnitude terms. &he minerals and mining industry is a key segment of the "ndian economy! with "ndia being highly endowed with vast mineral resources. &he country=s accelerated growth rate warrants a rapid development of the mining sector! on which most of the basic industries in the manufacturing sector depend. /#traction and development of minerals are closely interlinked with other natural resources like land! water! air and forest. Hence! the management of this precious resource and its optimal and economical use are matters of national importance. &hree kinds of mineral concessions are recogni'ed in "ndian law. &hey are:5 Reconnaissance /ermit (R/) 5 granted for preliminary prospecting of a mineral through regional ! aerial! geophysical or geochemical surveys and geological mapping. /rospecting 1icense (/1) 5 granted for undertaking operations for purpose of e#ploring! locating or proving mineral deposit and

Mining 1ease (M1) 5 granted for undertaking operations for winning any mineral. &he main opportunities in the mining sector are in the development and production of surplus commodities such as iron ore and bau#ite! mica! potash! few low5grade ores! mining of small gold deposits! diamonds! and platinum group of metals and other rare metals! etc.

Steel: %teel plays a vital role in accelerating growth and development of a nation. "t is used as a basic material in the manufacture of metal products! electrical machinery! transport e.uipment! te#tile! etc and thus considered to be the backbone of the human civilisation. "t is a product of large and technologically advanced industry having strong forward and backward linkages in terms of material flow and income generation. "n other words! the production and per capita consumption of steel is a ma-or contributor to a country;s gross domestic product 32*04 and an indicator of its industrial and economic strength. "ron ore! manganese ore and chrome ore are the critical raw material inputs for the steel industry. &heir timely and assured availability in ade.uate .uantity and .uality! on long term basis! is a prere.uisite for the rapid and orderly growth of the sector. "ndia has emerged as the fifth largest crude steel producing country in the world in the year GDDC as against eighth position three years back. "t is endowed with richest iron and coal ore mines. "ts cost of production of steel is comparatively much lower than that in other countries. "t has also maintained its lead position as the world;s largest producer of direct reduced iron or sponge iron. %ponge iron production grew at a 1A2) of GGJ to reach a level of >A.FB million tonnes in GDDC5DE compared to E.AC million tonnes in GDDG5DF. However! "ndia is e#pected to become the second largest producer of steel in the world by the year GD>B. "t is also likely to achieve a steel production capacity of nearly >G@ million tonnes by the year GD>>5>G. /ower: /lectricity is a key driver of rapid economic growth and industriali'ation in the country. "t is one of the critical infrastructure on which development of several economic sectors depend. "ndia is the world=s si#th largest energy consumer accounting for about F.BJ of the world=s total annual energy consumption. Availability of reliable and .uality power at competitive rates to "ndian industry is necessary to make it globally competitive and to enable it to e#ploit the tremendous potential of employment generation. Over the years! "ndian power industry has shown considerable growth. ,oreign direct investment 3,*"4 upto >DD percent has been permitted through automatic route in generation! transmission and distribution segments.

&he =Ministry of /ower= is the main authority for the overall development of electrical energy in the country. "t is responsible for planning and policy formulation$ processing of pro-ects for investment decision$ monitoring and implementation of power pro-ects$ as well as administration and enactment of legislation in regard to power generation! transmission and distribution. &ement: 1ement is one of the core industries which plays a vital role in the growth and e#pansion of a nation. "t is basically a mi#ture of compounds! consisting mainly of silicates and aluminates of calcium! formed out of calcium o#ide! silica! aluminium o#ide and iron o#ide. &he demand for cement! being a derived one! depends primarily on the pace of activities in the business! financial! real estate and infrastructure sectors of the economy. 1ement is considered preferred building material and is used worldwide for all construction works such as housing and industrial construction! as well as for creation of infrastructures like ports! roads! power plants! etc. &hus! it can said to be a significant contributor to the 2overnment=s revenue collection and a pillar of overall planned development of an economy. &he "ndian cement industry is e#tremely energy intensive and is the third largest user of coal in the country. "t is modern and uses latest technology! which is among the best in the world. Only a small segment of industry is using old technology based on wet and semi5dry process. Also! the industry has tremendous potential for development as limestone of e#cellent .uality is found almost throughout the country. "n other words! it is e#periencing a boom on account of overall growth of the "ndian economy! cost control continuous technology up gradation! etc. &his has immensely helped it to conserve energy and fuel as well as to save materials substantially. %ertili-ers: &he increasing pressure of population on the available land resources! necessitates higher agricultural productivity! which can be achieved through more intensive use of fertili'er nutrients. ,ertili'er is generally defined as any material 3organic or inorganic$ natural or synthetic4 which supplies one or more of the essential chemical elements to the plants. Broadly! si#teen elements have been identified as necessary for plant growth! of which nine are re.uired in macro .uantities and seven in micro .uantities &he primary and secondary nutrients are re.uired in =macro .uantities=. =0rimary nutrients= include nitrogen 3<4! phosphorus 304 and potassium 384. "ndian soils are deficient in nitrogen and phosphorus. Hence! chemical fertili'ers are used to meet the deficiency of these elements. ,or e#ample! ammonium sulphate! ammonium chloride! ammonium nitrate! calcium ammonium nitrate! urea! etc are a source of nitrogen. 1alcium314! magnesium 3 g4 and sulphur 3%4 are called =secondary nutrients= and are re.uired for plant growth in relatively

smaller .uantities than the primary nutrients. But! any deficiency of the secondary nutrients reduces the efficiency of primary nutrient by restricting the yield to low levels. &herefore! to obtain optimum results! crops have to be supplied with secondary nutrient in addition to primary nutrients. "ron! 'inc! manganese! copper! boron! molybdenum and chlorine are a group of =micronutrients= which are re.uired by the plants in small .uantities. "ntensive cropping deplete all nutrients including micronutrients from the soil at a fast rate. &herefore selective use of micronutrients is necessary for increasing agricultural production. ineral Water: We are entering an era when portable bottled water will find place in almost all general stores and it will become an unavoidable e#penditure for people at large. %tatistics reveal that the si'e of "ndian mineral industry during >??? was of the order of appro#imately )s. ADD crore and it has grown to the si'e of >DDD crore in the year GDDB. many small5scale entrepreneurs can find business opportunities in this fast growing market. 0lastic: 0lastics are perhaps the most versatile of all the materials known. Being synthetic! they can be tailor made to meet very specific performance re.uirements of the end use. %ome of the ma-or advantages of plastics are that they are eco5friendly and be recycled and reused$ they re.uire a fraction of energy for conversion to an end product or for recycling as compared to any alternate material. &hey are easier to handle and process with strictest dimensional tolerances and are abundantly available. By virtue of their versatility! plastics are replacing conventional materials such as wood! glass! metal! paper! and so on! in varied segments like packaging! house ware! business electronics! engineering! agriculture! irrigation! automobiles! telecommunications! and white goods industry. &his sector provides tremendous opportunity for the entrepreneurs.

Ser#ices Sector
&he service industry forms a backbone of social and economic development of a

region. "t has emerged as the largest and fastest5growing sectors in the world economy! making higher contributions to the global output and employment. "ts growth rate has been higher than that of agriculture and manufacturing sectors. "t is a large and most dynamic part of the "ndian economy both in terms of employment potential and contribution to national income. "t covers a wide range of activities! such as trading! transportation and communication! financial! real estate and business services! as well as community! social and personal services. "n "ndia! services sector! as a whole! contributed as much as CA.C per cent of the overall average growth in gross domestic product 32*04 between the years GDDG5DF and GDDC5DE.

Information ,echnology and I, Enabled Ser#ices: "nformation technology 3"&4 is amongst the fastest growing sectors in the country. "ts contribution to 2*0 rose from >.G per cent in >???5GDDD to B.G per cent in GDDC5DE and to an estimated B.B per cent in GDDE5DA. 2rowth of "ndian "& industry has been driven by the "& software and services 3"& services4 and "& enabled services 3"&/%4. &he software and services 3"& services4 industry of "ndia has been moving up the value chain! giving "ndia formidable brand e.uity in the global markets. &he "ndian software and services e#ports including "&/%5B0O are estimated at H%I @D.F billion 3)s. >CF!DDD crore4 in GDDE5DA as compared to H%I F>.@ billion 3)s. >@>!DDD crore4 in GDDC5DE! showing an increase of GA.F per cent in dollar terms and >B.C per cent in rupee terms. Business 0rocess Outsourcing 3"&/%5B0O4 sector has emerged as a key driver of growth for the "ndian software and services industry. "t has become the biggest employment generator amongst young college graduates. &he total number of "& and "&/%5B0O professionals employed in "ndia has grown from GA@!DDD in >???5GDDD to over >.CF million in GDDC5DE. "n addition! the industry helps to create millions of -ob opportunities through direct and induced employment in telecom! power! construction! facility management! "&! transportation! catering and other services. "ndian companies are e#panding their service offerings! enabling customers to deepen their offshore engagements and shifting from low5end business processes to higher ones. &hey are also enhancing their global service delivery capabilities through a combination of 2reenfield initiatives! cross5border mergers and ac.uisitions! as well as partnerships and alliances with local players. &his has helped them e#ecute end5to5end delivery of new services. Also! a ma-ority of companies have already aligned their internal processes and practices to international standards such as "nternational Organi'ation for %tandardi'ation 3"%O4$ 1apability aturity odel 31 4$ and %i# %igma. &his has helped establish "ndia as a credible sourcing destination. As of *ecember GDDE! over @?A "ndia based centers 3both "ndian firms as well as aturity ,ourism: &ourism has always been a ma-or social phenomenon of any society. "t is motivated by the natural urge of every human being for new e#perience! adventure! education! knowledge and entertainment. "n order to understand each other=s cultures and values as well as to cater several other social! religious and business interests! it has resulted in development of many tourist and infrastructure facilities. &his! along with the progress of proper transportation network globally! especially of airways and waterways! has encouraged odel 31 <1 owned captives4 have ac.uired .uality certifications with AB ellon 1apability companies certified at %oftware /ngineering "nstitute 3%/"4! 1arnegie 4 9evel B 3higher than any other country in the world4.

people to venture out to the foreign lands. "t has facilitated the trade and commerce between the different regions of a country and between the different countries. As a result! over the years! it has ac.uired the status of a service industry. &ourism! being one of the largest industry! plays a key role in achieving the socio5 economic goals of the development plans of a nation. "t is an important service5oriented sector which has made rapid strides globally in terms of gross revenue and foreign e#change earnings. "t is a composite of service providers! both public and private! which includes travel agents and tour operators$ air! rail and sea transportation operators$ guides$ owners of hotels! guest houses and inns! restaurants and shops$ etc. &hey are involved in meeting the diverse interests and re.uirements of domestic and international tourists. &he tourism industry provides incentives to foster the .uality of environment! generates more employment opportunities 3particularly in remote and backward areas4 as well as develops necessary infrastructure facilities like roads! telecom and medical services! in the economy. "n "ndia! tourism industry holds special position as it not only have potential to grow at a high rate! but also stimulate other economic sectors through its backward and forward linkages and cross5sectional synergies with sectors like agriculture! horticulture! poultry! handicrafts! transport! construction! etc. &hat is! it can provide impetus to other industries in the country and generate enough wealth to help pay off the international debt. "t is the third largest net earner of foreign e#change for the country. &he travel and tourism sector contributes to the national integration$ preserves natural and cultural environments$ as well as enriches social and cultural lives of the people. "t has the capacity to create substantial -ob opportunities! particularly for unskilled and semi5skilled workers as well as to alleviate the poverty in the country. &hat=s why$ it has been regarded as the core sectors of the "ndian economy. Media: = edia= is the medium of carrying information! education and entertainment to the masses. "t is an easier and efficient means of communication which plays a key role in the overall development of an economy. "n an era where knowledge and facts are the tools for economic! political and cultural e#change! presence of the strong and constructive media in a country is important for catering to the diverse needs of individuals! society as a whole! small and large business and production houses! various research organi'ations! private sectors as well as the public sectors. edia is a conscience5keeper of the nation and has many tasks to perform in our day5to5day lives. "t helps the 2overnment to achieve various socioeconomic and political goals$ educate urban and rural masses$ instill a sense of responsibility among the people$ as well as provide -ustice to the needy. "t largely consists of print media like newspapers! maga'ines! -ournals and other publications! etc. as well as electronic media like

radio! television! internet! etc. With the changing scenario of the world! it has ac.uired the status of an industry. "n "ndia! the media and entertainment industry is undergoing remarkable change and is one of the fastest growing sectors. &he main factors responsible for this are rising per capita+ national income$ high economic growth and strong macro5economic fundamentals$ and democratic set up! good governance as well as law and order position in the country. %pecifically! spectacular growth of the television industry! new formats for film production and distribution! privatisation and growth of radio! gradually liberali'ing attitude of 2overnment towards the sector! easier access to and for international companies as well as advent of digital communication and its technological innovations are the other attributes of the growth of the sector. &he media industry plays an important role in creating people=s awareness about national policies and programmes by providing information and education! besides creating healthy business environment in the country. &hus! it helps people to be active partners in the nation5building endeavour. Health: Health has always been a high priority area in any country. "t has been recogni'ed as an important component in the process of economic and social development. "t does not simply mean absence of diseases$ rather it is a state of complete physical! mental and social well5being. %anitation and hygiene! nutrition as well as safe drinking water are the basic determinants of good health. &he indicators like infant mortality and maternal mortality rates! life e#pectancy and nutrition levels! birth rate and death rate! along with the incidence of communicable and non5communicable diseases reflects the health status in an economy. &he e#istence of proper and well5defined health care facilities are vital not only for having a healthy productive workforce and promoting general welfare! but also for attaining the goal of population stabili'ation as well as enhancing the overall .uality of life of people. Over the years! "ndia has built up a vast health infrastructure and manpower! with a wide variety of hospitals and dispensaries being set up at different levels and run both by public and private sectors. &hey are being managed by .ualified doctors and trained nurses. /#pansion in access to healthcare services combined with technological advancements in this field has resulted in substantial improvement in health indices of the population and a steep decline in mortality rates. Hnder the mandate of <ational 1ommon special focus on primary health care. &he health sector in "ndia has been fragmented between the 1entre and the %tates. "tems like public health! hospitals! sanitation! etc. comes under the %tate list of the 1onstitution! while the items having wider ramification at the national level like population inimum 0rogramme 3<1 04 of the 2overnment of "ndia! health is one of the ma-or thrust areas with

control and family welfare! medical education! prevention of food adulteration! .uality control in manufacture of drugs etc. have been included in the 1oncurrent list.
Retailing:

)etailing is defined to include all the business activities relating to selling of goods and services to the final consumers. "t is the final link in a product supply chain. "n "ndia! retailing is one of the fastest growing industries. "t is estimated to be the largest single sector 3after agriculture4 both in terms of turnover as well as employment. After leading the "& bandwagon! "ndia is poised to grow as a retail hub. &he "ndian retail sector is highly fragmented with about >B million retailers. Out of the large number of total retail outlets in the country! ma-ority of them relate to the food items. %ince >??Ds! big industrial houses like )ahe-as! 0iramals! &atas! etc have started entering the retail industry. Besides! several "ndian and foreign companies have been franchising for establishing e#clusive outlets for their brands! both within the country and overseas. ,or instance! =Bharati 2roup= had entered into a -oint venture with the world=s largest retail chain the =Wal5 art=. As a result! the "ndian retail sector has been undergoing a rapid transformation in the past few years. &he traditional formats of kirana stores! hawkers! grocers! etc are being gradually taken over by the modern formats of department stores! discount stores! malls! supermarkets! convenience stores! fast food outlets! specialty stores! warehouse retailers! hypermarkets! etc. ,or e#ample! 0antaloon started the =Big Ba'aar= discount stores in GDDG$ )eliance opened its first supermarket named =)eliance ,resh= outlet in Hyderabad and has since fanned out to several %tates$ %ubhiksha outlets have been fast spreading across the nation$ etc. &hus! the current face of "ndian retail comprising the unorganised small and medium retailers is slowly changing into a more organised form of retailing. As per the available estimates! of the )s. >!FFD!DDD crore retail market! food and grocery retail is the single largest block estimated to be worth )s. E!?G!DDD crore 3with B?.B per cent share4! but the share of organi'ed sector in this is miniscule. 1lothing! te#tiles and fashion accessories constitute the second largest block with a ?.? per cent share at )s. >!F>!FDD crore. But the largest segments as far as organised retailing is concerned are the time wear 3@A.? per cent share4 and footwear 3@A.@ per cent share4 sectors . "n GDDE! the share of organi'ed retail was estimated to be B.? per cent! which was )s. EA!FDD crore. &his retail is e#pected to touch )s. G!FD!DDD crore 3at constant prices4 by GD>D! constituting roughly >F per cent of the total retail market. However! the modern retail segment grew at the rate of @G.@ per cent in GDDE and is e#pected to maintain a faster growth rate! especially in view of the fact that ma-or global players and "ndian corporate houses are entering into the market in a big way. &his growth in modern retailing is linked to several factors particularly! the increasing purchasing power$ rapid global interaction and integration as well as the

changing consumer needs! lifestyle and attitude. ,urther! shopping centre business alone is estimated to become a )s. @D!DDD crore business by GD>D5>>. Education: /ducation is the most crucial investment and an essential element in human resource development. "t has always been accorded an honoured place in every economy. "t implies ability of the people to read! write and understand. "t has the fundamental aspects of imparting knowledge! wisdom and culture. "t helps in drawing out the latent potentials and talents of an individual. A well5defined educational system holds the key to economic growth! social transformation and moderni'ation integration of a country. "t develops manpower for different segments of the economy and is the substrate on which innovation! research and development flourish. &hus! education helps the country in achieving social! political and economic goals on national and international levels. "t also strongly influences improvement in health! hygiene! demographic profile! productivity and .uality of life. /radication of illiteracy has been one of the ma-or national concerns of the 2overnment of "ndia since independence. Hnder the 1onstitution of "ndia! initially! education was a %tate sub-ect! that is! it was the e#clusive responsibility of the %tates. But! the @Gnd Amendment Act of >?EC! shifted it from the =%tate list= to the =1oncurrent 9ist=. &his step gave both 1entral and %tate 2overnments -urisdiction over it concurrently. While the role and responsibility of the %tates in education remained largely unchanged! the 1entral 2overnment accepted a larger responsibility of reinforcing the national and integrated character of education! maintaining .uality and standards for all areas including those of the teaching profession! as well as studying and monitoring of the educational re.uirements of the country. "n other words! it aimed at promoting e#cellence at all levels of the educational pyramid by developing efficient manpower base! catering to the needs of research and advanced study as well as looking after the international aspects of education. Real Estate: )eal estate sector covers residential housing! commercial offices! retail outlets! trading spaces such as theatres! hotels and restaurants! industrial buildings such as factories and government buildings. "t involves the purchase! sale! and development of land as well as residential and non5residential buildings. &he activities of the real estate sector encompass the housing and construction sectors also. "n "ndia! the real estate and construction is a I>C billion 3GDDC4 3by revenue4 industry. "t is a ma-or employment driver! being the second largest employer ne#t only to agriculture. &his is because of the chain of backward and forward linkages that the sector has with the other sectors of the economy. But! the "ndian real estate market! as compared to the other

more developed Asian and Western markets is characteri'ed by smaller si'e! lower availability of good .uality space and higher prices. "nsurance %ector: 0rior to privati'ation of insurance in "ndia! only two 2ovt.5owned 0ublic 1ompanies 6 9"1 of "ndia and 2eneral "nsurance 1orporation operated in the market to carry out insurance business. Almost GD insurance companies have entered the insurance fray. ost of the companies have collaboration with world5class insurance companies. "nsurance business is e#pecting a growth rate of GD5GB 6 percent per annum. "n days to come the insurance industry will provide abundant business opportunities to insurance brokers! agents! salespersons! insurance claim processors! loss assessors!! insurance surveyors! and many others! who will provide indirect support to the industry. Micro' Small and Medium Enterprises: icro! small and medium enterprises 3 % /4 sector has been recognised as an engine of growth all over the world. &he sector is characteri'ed by low investment re.uirement! operational fle#ibility! location wise mobility! and import substitution. "n "ndia! the Micro' Small and Medium Enterprises De#elopment (MSMED) !ct' 2334 is the first single comprehensive legislation covering all the three segments. "n accordance with the Act! these enterprises are classified in two:5 3i4 manufacturing enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the "ndustries 3*evelopment and regulation4 Act! >?B>. &hese are defined in terms of investment in plant and machinery$ 3ii4 service enterprises engaged in providing or rendering of services and are defined in terms of investment in e.uipment. "ndia has a vibrant micro and small enterprise sector that plays an important role in sustaining the economic growth! by contributing around F? per cent to the manufacturing output and F@ per cent to the e#ports in GDD@5DB. "t is the second largest employer of human resources after agriculture! providing employment to around G?.B million people 3GDDB5DC4 in the rural and urban areas of the country. &heir significance in terms of fostering new entrepreneurship is well5recogni'ed. &his is because! most entrepreneurs start their business from a small unit which provides them an opportunity to harness their skills and talents! to e#periment! to innovate and transform their ideas into goods and services and finally nurture it into a larger unit. Over the years! the small scale sector in "ndia has progressed from the production of simple consumer goods to the manufacture of many sophisticated and precision products like electronics control systems! micro wave components! electro medical e.uipments! etc. &he process of economic liberali'ation and market reforms has further e#posed these enterprises to increasing levels of domestic and global competition. &he formidable challenges so

generated for them have led to a novel approach of cluster development for the sector. As a result! private and public sector institutions! both at the 1entral and %tate levels are increasingly undertaking cluster development initiatives. &lusters are defined as sectoral and geographical concentration of enterprises! particularly! small and medium enterprises! faced with common opportunities and threats which give rise to e#ternal economies$ favour the emergence of speciali'ed technical! administrative and financial services$ create a conducive ground for the development of inter5 firm cooperation to promote local production! innovation and collective learning. 1lustering and networking has helped the small and medium enterprises in boosting their competitiveness. "ndia has over 533 SME clusters and about 2333 artisan clusters. "t is estimated that these clusters contribute CD per cent of the manufactured e#ports from "ndia. Almost the entire gems and -ewellery e#ports are from the clusters of %urat and umbai. %ome of the small scale enterprise clusters are so big that they account for ?D per cent of "ndia=s total production output in selected products. ,or e#ample! the clusters of 1hennai! Agra and 8olkata are well known for leather and leather products. &he 2overnment has been encouraging and supporting the sector through policies for infrastructural support! technology up gradation! preferential access to credit! reservation of products for e#clusive manufacture in the sector! preferential purchase policy! etc. "t has been offering packages of schemes and incentives through its speciali'ed institutions in the form of assistance in obtaining finance$ help in marketing$ technical guidance$ training and technology up gradation! etc. Business Opportunities need to be filtered through a ,ive 6 9ayer %ieve: Researching your Industry: How can you learn more about your chosen industry and resources that are available to help you? Mar et !ssessment: "s there a market for your product or service? "f so! how much income can you e#pect to derive from it? 0rofitability Assessment: flow? 1an you afford to fail? ,inancing AssessmentL 9egal Assessment: Will you be able to obtain the necessary financing for your business? "f so! from where. What potential legal liabilities are you e#posing yourself to by starting a new business? Are the costs of protecting yourself worth the trouble? How much will starting a new business cost you? 1an you afford a lengthy Kred inkL period following start5up! as well as periodic lulls in cash

%ormalities for setting up Small Business Enterprises: >. %election of 0ro-ect a. 0roduct or service selection b. 9ocation selection c. 0roduct feasibility study d. Business plan preparation e. 0repare pro-ect profile C. Arrange for 0lant And achinery G. *ecide on the constitution

A. 0repare 0ro-ect report

F. Obtain %%" )egistration

@. Obtain clearance from *epts. as applicable

?. Apply and Obtain ,inance

B. Arrange for 9and+%hed

>D4 a. 0roceed to "mplement b. Obtain ,inance 1learance

E. Arrange for "nfrastructure

6+

Selection of a /ro7ect:

A strong entrepreneur is the most vital aspect of every successful pro-ect. "n order to set up a small5scale industry! a suitable pro-ect has to be decided upon. &his involves selecting a product or service! and a location for the unit. Based on these selections! a pro-ect feasibility study has to be conducted and then a brief profile has to be prepared for the proposed sub-ect. &hen an entrepreneur has to prepare a business plan. *epending upon the type of pro-ect! location! investment involved! and so on! the entrepreneur has to proceed to take further steps in establishing the unit. 0ro-ect selection is the initial decision! which an entrepreneur has to make. 0ro-ect selection and preliminary activities involve the following: a. 0roduct or service selection b. 9ocation selection c. 0ro-ect feasibility study d. Business plan preparation e. 0reparation of a pro-ect profile.

(a)

/roduct or Ser#ice Selection: &he entrepreneur has to decide on a suitable product or a service based on which a pro-ect can be started. He has to consider various factors before deciding on a suitable pro-ect. &he main factors are as follows: Background and e#perience of the entrepreneur3s4 Availability of the technology and know5how for the pro-ect arketability of the product+service "nvestment capacity Availability of the raw materials Availability of the proper infrastructure facilities 3land + shed! water! transport! and so on4.

ake a suitable and careful analysis of the product or service you are choosing. 1arefully analy'e the future demand and supply position of the products and services in the short run as well as in the long run. &here are many organi'ations which are in possession of business opportunities+ Mou can contact these organi'ations to get an idea about a product or service. i. ii. iii. iv. v. vi. vii. viii. *istrict "ndustry 1enters &echnical 1onsultancy Organi'ations 1enters for /ntrepreneurship *evelopment %mall "ndustry %ervice "nstitutes 9eading Banks "ndustrial /#tensions Bureaus <ational "ndustrial *evelopment 1orporation %mall Business *evelopment Bank of "ndia etc.!

&his information could be in the form of: 0ro-ect profiles ,easibility %tudies "ndustry studies Area development studies

"n pro-ect conceptuali'ation stage while making a product choice! the following factors related to the product to be considered. /asy availability of the raw materials 0rocess technology /asy accessibility in the market "ncentive and support from government 0roduct line! depth! width arket information 0ackaging Branding Warranties

After sales service

Another point to keep in mind while deciding on products is to avoid the ones that are likely to have a number of players in the market. "ncase the entrepreneur is looking for a product which has e#port potential! he+she should consider the following .uestions. What should be contents of e#port5product portfolio? What are the special re.uirements for packaging! if one has to e#port the products? What product adaptations are needed to be made for e#porting a product to a specific country? *oes it meet the product;s .uality specification of the country concerned?

1onsider the following four parameters that can influence the development of e#port5product portfolio. /#ternal *emand 1onditions "nternal supply capability 1omple#ity of marketing task Amount of investment re.uired to penetrate the market.

An analysis can be made using this four5dimensional model. A product which scores high on first two parameters should be chosen. (b) 1ocation Selection:

One of the ma-or decisions an entrepreneur has to make about is the location of the pro-ect5where to set! the unit. %ome of the ma-or aspects to be considered before deciding on the location of the pro-ect are 0ro#imity to the market Availability of the raw material Availability of transportation and communication facilities Availability of incentives+concessions 2overnment policies Availability of suitable infrastructure facilities$ and 1onvenience for the promoter.

,or many tiny units and service based units! home is perhaps the best starting point. However! not all types of %%" units can be set up at home either due to si'e or the nature of the industry. &han the entrepreneurs may like to locate their business in industrial estates! areas! parks! comple#es developed by the concerned %tate government organi'ation or private bodies or in privately leased land sub-ect to approvals by various %tate and unicipal bodies.

%tate level government agencies assist entrepreneurs in identifying suitable locations+sites for the pro-ect! besides helping in the process of getting all the necessary clearances for the pro-ect. "deally! identify two or three locations and then select a few possible sites at each of these locations. <e#t! compare these locations+sites in relation to your re.uirements. 1hecklists of points to be considered for evaluation of lands+sites are as follows: *eneral &onsiderations: 9ocation 31ity+&own+7illage4 <earest large city 3name and distance4 1onnections to nearest and ma-or cities 3rail! road! air4 *istance from important geographical markets and to relevant ports *istance from ma-or raw material sources Availability of manpower with re.uired skills and prevailing wage rates 9aw and order situation in the area 9evel of industrial development in the area and anticipated speed of development 1omposition on industrial development 3in terms of types of industry and si'e+health of e#isting enterprises4 Whether built5up factory shed is available at the location and whether its si'e conforms to your end.

Industrial Infrastructure /osition: 9and: availability and price /#istence of an organi'ed industrial estate Water supply: source 3river! canal! tube well4! distance! .uality 3ph! hardness4! rate! common storage facility! operating authority 3public works dept.! estate5 operation! municipality4 0ower supply: nearest substation! feeder type 3industrial+type4 availability! .uality of power /ffluent treatment and disposal 3if relevant4: disposal point 3land! sea! river4! arrangement of treatment 3individual! common4! drainage arrangement for conveying the effluent 3open! underground4! treatment and conveyance charges Approach road+internal roads! drainage and street lighting 3single or multiple agencies4 0ostal! telegram and telecommunications facility Bank facility &ransport5operator facility Warehousing facility 0ro#imity of offices of law5enforcing agencies Building+electrical+fabrication contractor facility %hops for building material! spare parts and other such things 0rofessional resource positions 3management + industrial consultants! financial + legal advisors4.

 %inancial Incenti#e /osition: "nvestment subsidy 31entral government+%tate government4 "ncome ta# concession %ales ta# e#emption + interest free sales ta# loan 0romoter;s contribution 3margin4 and interest rate policy followed by %tate ,inancial 1orporation Octroi e#emption! electricity duty e#emption! local ta# e#emption! and other such incentives.

%ocial "nfrastructure 0osition: Housing: availability! .uality! price 3ownership : rent4! public housing /ducation: primary! secondary and university education facility Health: dispensary! hospitals! specialties.

Site Specific &onsiderations: 7antage or otherwise location *irection of town growth with reference to the site <on5agricultural status of the site %ite contours 3leveled! hilly! pits! brick kilns4! sight shapes 0ro#imity to railway line! national highway! state highway Wind direction in relation to the site %oil type 3loose soil may increase construction cost4

Omit the items in list! depending on circumstances! points or items that are not very relevant to your pro-ect. (&) /ro7ect %easibility Study: &he important facets of a pro-ect feasibility study are as follows: arket analysis &echnical analysis ,inancial analysis /conomic analysis /cological analysis

Mar et !nalysis:

arket analysis is concerned primarily with two .uestions: What would be the aggregate demand of the proposed product+service in future? What would be the market share of the pro-ect under appraisal?

&o answer the above .uestions! a market analyst re.uires a wide variety of information and appropriate forecasting methods. &he kinds of information re.uired as given below. 1onsumption trends in the past and the consumption level 0ast and present supply position 0roduction possibilities and constraints "mports and e#ports %tructure of competition 1ost structure /lasticity of demand 1onsumer behavior! intentions! motivations! attitudes! re.uirements *istribution channels and marketing policies in use Administrative! technical! and legal constraints.

preferences!

and

,echnical analysis:

Analysis of the technical and engineering aspects of a pro-ect needs to be done continually when a pro-ect is formulated. &echnical analysis seeks to determine whether the prere.uisites for the successful commissioning of the pro-ect have been considered and reasonably good choices have been made with respect to location! si'e! process! and so on. &he important .uestions raised in technical analysis are given below. Have the preliminary tests and studies been done or provided for? Has the availability of raw materials! power! and other inputs been established? "s the selected scale of operation is optimal? "s the production process chosen suitable? Are the e.uipment and machines chosen appropriate? Have the au#iliary e.uipment and supplementary engineering works been provided for? Has provision been made for the treatment of effluents? "s the proposed layout of the site! building! and plant sound? Have the work schedules been drawn up realistically? "s the technology proposed to be employed appropriate from the social point of view?

%inancial !nalysis: ,inancial analysis seeks to ascertain whether the proposed will be financially viable in the sense of being able to meet the burden of servicing debt and whether the pro-ect will satisfy the return e#pectations of those who provide the capital. &he aspects which have to be looked into while conducting a financial appraisal are as follows: "nvestment outlay and cost of pro-ect eans of financing 0ro-ected profitability Break5even point

1ash flows of the pro-ect "nvestment worthiness -udged in terms of various criteria of merit 0ro-ected financial position 9evel of risk

Economic !nalysis:

/conomic analysis! also referred to as social cost5benefit analysis! is concerned with -udging a pro-ect from the larger! social point of view. "n such an evaluation the focus is on the social costs and benefits of a pro-ect! which may often be different from its monetary costs and benefits. &he .uestions sought to be answered in social cost benefit analysis are as follows: What are the direct economic benefits and costs of the pro-ects measured in terms of shadow 3efficiency4 prices and not in terms of market prices? What would be the impact of the pro-ect on the level of saving and investment in the society? What would be the impact of the pro-ect on the distribution of income in the society? What would be the contribution of the pro-ect towards the fulfillment of certain criteria like self5efficiency! employment and social order? Ecological !nalysis:

"n recent years! environmental concerns have assumed a great deal of significance. /cological analysis should be done! particularly for ma-or products which have significant ecological implications like power plants and irrigation schemes! and for environment5 polluting industries 3like bulk drugs! chemicals! and leather processing4. &he key .uestions raised in ecological analysis are as follows: What is the likely damage caused by the pro-ect to the environment? What is the cost of restoration measures re.uired to ensure that the damage to the environment is contained within acceptable limits? Business /lan /reparation:

(d)

A business plan is a document where you plan your business to have an organi'ed and effective response to a situation which may arise in future. Business plan is not -ust for a start5up company but also for those which are growing. "t can be used it to establish realistic goals or targets to achieve and to determine the current position. A business plan is used 5 to help make crucial start5up decisions$ 5 to reassure lenders! investors and brokers$ 5 to measure operational progress$ 5 to test planning assumptions$ 5 to ad-ust forecasts$ and 5 to set the standard for good operational management. ! wor able business plan has the following features: *etermines the company needs to go

,orewarns of possible roadblocks along the way ,ormulates responses to contingencies 8eeps the business on track to reach its planned goals.

%tart a business plan with describing your business and product or services. "ndicate the market you are targeting and the stage of development your company is in. "f you get stuck at a particular part of the plan! leave it for a while and get backs to t later and finish it. Mou cannot make a perfect first draft. %o -ust get some thoughts down to start the business. Mou can always come back and change it for polish it up later. While making a business plan keep the following points in mind. 8eep target audience in #iew:

While writing your business plan! keep in mind the intended audience and why you are writing the plan. ,or e#ample! if you are trying to get debt financing! the emphasis should not be on the huge profit potential but on the certainty that the debt can be repaid. "f you are writing a plan to help you run the business better! you may start with general background information on the company and the industry! and focus on the areas of your plan that are currently most important to you. Strategy.core of a business plan:

Basically! the first part of the business plan should be geared towards helping develop and support solid business strategy. &he plan should explain the market, the industry, target customers, and competitors. Write about the customer needs and benefits of current products or services. /valuate the strengths and weaknesses of each competing firm and draw out the opportunities for your product or services in the market place. All the steps largely aim to help you in creating a strategy for your business. &he second half of the business plan should e#plain how to e#ecute your selected business strategy. Mour products! services! marketing and operations should all closely tie in with your strategy. Have a strategy that will set the course for your business rather than having a smart5sounding strategy for your plan. ,hin competiti#ely throughout:

"n the competitive market! you would probably be facing some serious competition sooner or later no matter how uni.ue your business idea is. Mou need to think competitively through your business plan. As an entrepreneur! you need to identify! where will you do things in a manner similar to your competitors and where will you do things differently! what will be your real strengths and real weaknesses! where will you create your niche. ,ocus your plan on being different than your competitors; and compete with e#isting players less directly. ,ind a particular market niche to focus on. Be realistic:

9ots of business plans sound good on paper! but do not work in the real world marketplace. "t is difficult to attract people to a new product or service -ust because it is better. 0eople or companies have established buying patterns and would be doing business with someone else. "t takes more than attracting them to do business with you. Mou have to steal your customers from someone else;s business and create your own base of loyal customers. &here are always going to be some unseen e#penditure! hefty cost overruns! e#pensive problems! and items that you simply overlooked. %o forecast conservatively and try to have an e#tra cushion of cash tucked in reserve. In#ol#e people:

&here are two types of business plans5 one! those intended as roadmaps for starting! operating! and growing a business and two! who those intended as sales documents for raising capital! attracting investors! securing bank loans or securing an operating line of credit from suppliers. "nvolve key employees or e#pert opinion to create the business plan. &hen work with them until you are satisfied. Have key people get together! to get the plan in synchroni'ed fashion! and try to get any disagreements! out in the open. &he more input people have in creating the plan! the more responsibility they will feel towards it. ,actual and succinct:

8eep your business plan factual and succinct. *o not use hyperbole or generali'ation to describe the potential of your business plan. *o not put too much detail when creating plans. "f a business plan is too long! it might be skimmed and focus on what is really important might be lost. ,able of contents of a Business /lan: I+ II+ ,itle /age E0ecuti#e Summary: 7ision and ission %tatement ,act %heet 1ompany 0lan: 1ompany *escription erchandising 0lan Operating 0lan Organi'ational 0lan Mar eting /lan: arket *escription and target market 1ompetition analysis ethods of distribution Advertising 0ricing 0roduct+service design &iming of market entry

""".

I9+

9+

9I+

"ndustry trends %inancial /lan: %ummary of financial trends %ources and uses of funds 1ash flow statements &hree income pro-ection Break even analysis Balance sheet "ncome statement )isk assessment Business financial history Supporting Documents 0ersonal resumes 0ersonal financial statements 1redit reports 1opies of leases 9etters of reference

$hy Some Business /lans %ail: i. ii. iii. iv. v. vi. vii. (e) 2oals set by the entrepreneur are unreasonable. 2oals are not measurable. &he entrepreneur has not made a total commitment to the business or to the family. &he entrepreneur has no e#perience in the planned business. &he entrepreneur has no sense of potential threat or weakness to the business. <o customer need was established for the proposed product or service.

/ro7ect /rofile:

A pro-ect profile gives a bird;s eye view of the proposed pro-ect. &his may be used for obtaining the 0rovisional registration 1ertificate 30)14 from the *istrict "ndustries centre and for making! applying for "ndustrial Areas *evelopment Board for land or %tate %mall "ndustries *evelopment 1orporation 3%%"*14 for shed and other infrastructures.

2+

Decide on the &onstitution:

any first time entrepreneurs do not have a clear perspective of the issues! legal or otherwise! involved in choosing one or the other form of a business. &his often results in avoidable mistakes! which late cost time and money to rectify. "n "ndia setting up a private limited company is the most popular choice among entrepreneurs. &o start an industry! the promoter3s4 have to decide on the constitution of the unit. &here are four ma-or alternatives. a. %ole proprietorship

b. c. d. e.

0artnership 1orporation+9imited 1ompany 1o5operatives ,ranchising

&he constitution of the unit has to be decided at the initial stages of the pro-ect and the necessary formalities should be completed by the time the application for 0rovisional )egistration 1ertificate is made. (a) Sole /roprietorship: A single individual is the owner of such a unit. &he form has the merit of being relatively formality free$ there are no rules about the records to keep. <or is there a re.uirement for the accounts to be audited or for financial information on the business to be filed with the registrar of companies. &he proprietor may proceed to obtain a 0rovisional )egistration 1ertificate form the *istrict "ndustries 1entre. !d#antages: /asy to set up. Mou can start the business in a small way! from your home if you want. Mou are the boss of your business. Mou only keep the profits. Mou can offset some business e#penses against earnings for ta# purposes. <o public disclosure of your affairs. 0rofit or loss in one trade can be set off against profit and loss in any other business you run.

Disad#antages: Mou are totally responsible for any debts your business incurs. "t can be lonely. Mou have to be fle#ible.

(b) /artnerships: A partnership firm is an association of two or more persons! sub-ect to a ma#imum of GD persons. 0artnership firms are governed by the "ndian partnership Act! >?FG! and rules framed there under by the %tate 2overnment. "t is advisable to have a 0artnership *eed Agreement. 0artnerships are effectively collection of sole proprietors and! as such! the legal problems are not attached to personal liability. &here are few restrictions to setting up a business with another person3s4 in partnership! and there are several define advantages. By pooling resources you may have more capital. Mou will be bringing! it is to be hoped! several sets of skills to the business. "f you are ill! the business can still carry on. &here are two serious drawbacks that merit particular attention. ,irst! if your partner makes a business mistake! perhaps by signing a disastrous contract! without your knowledge or consent! every member of the partnership must shoulder the conse.uences. Hnder these

circumstances! your personal assets could be taken to pay the creditors even though the mistake was no fault of yours. %econd! if your partner goes bankrupt in his personal capacity! for whatever reason! his creditors can sei'e his or her share of the partnership. As a private individual you are not liable for your partner;s private debts! but having to buy him or her out of the partnership at short notice could put you and the business in financial -eopardy. /ven death may not release you from partnership obligations and in some circumstances your estate can remain liable. Advantages of 0artnership: A means of starting up with increased capital! Mou might not feel confident to start a business entirely on your own and would prefer to share the responsibilities with someone else! Mou have complementary skills 6 one of you may have specialist skills and the other management flair! or one the money! the other is the ideas. (&) &orporation"1imited &ompany

1ompany: A company may be either private limited or public limited. A private limited company can be formed with a minimum of G persons and a ma#imum of BD persons. A public limited company can be formed with a minimum of seven persons and the ma#imum of persons is unlimited. &he companies are governed by the 1ompanies Act! >?BC. As the name suggests! in this form of business your liability is limited to the amount you contribute by way of share capital. A company registered in accordance with the 1ompanies Act is a separate legal entity! distinct from its share holders! directors and managers. &he liability of the shareholders is limited to the amount paid or unpaid on issued share capital. A company has unlimited life and no limits is placed on the number of shareholders. &he companies Act does! however! place many restrictions on the company. "t must maintain certain books of accounts! appoint an auditor! and file an annual return with the registrar of companies! which includes the accounts as well as details of directors and mortgages. !d#antages of the 1imited &ompany: embers; financial liability is limited to the amount of money they have paid for shares. &he management structure is clearly defined! which makes it easy to appoint! retire! or remove directors. "f e#tra capital is needed! it can be raised by selling more shares privately. "t is simple to admit more members. &he death! bankruptcy or withdrawal of capital by one member does not affect the company;s ability to trade. *isposal of the whole or part of the business is easily earned.

Disad#antages: )e.uirement to register the company with the registrar of companies and provide annual returns and audited accounts. All details of the company are available for

public inspection! so there can be no secrecy. &here are penalties for failing to file returns. 1an be more e#pensive to set up. ay need professional help to set up. As a director you are treated as an employee and must pay ta#. Banks! finance house! landlords and suppliers who re.uire personal guarantees from the directors before they will do business are increasingly undermining the advantages of limited liability status.

Re:uirements for a Registered 1imited &ompany: >. A registered business house G. A registered office F. %hareholders @. %hare capital B. emorandum of Association C. Articles of Association E. 1ertificate of "ncorporation A. Auditors ?. Accounts >D. )egisters >>. 1ompany seal (d) &o.operati#es:

A co5operative is an enterprise owned and controlled by the people working in it. Once in danger of becoming e#tinct! the workers; cooperative is en-oying something of a comeback. 15operatives are governed by the %tate 1o5operative %ocieties Act and ulti5%tate 1o5 operative Act! GDDG! the main provisions of which state that5 /ach member of the cooperative has e.ual control through the principle of Kone person one voteL. embership must be open to anyone who satisfies the stipulated .ualification! 0rofits can be retained in the business or distributed in proportion to members; involvement! for instance! hours worked! embers must benefit primarily from their participation in the business and "nterest on loan or share capital is limited in some specific way! even if the profits are high enough to allow a greater payment. "t is certainly not a legal structure designed to give entrepreneurs control of their own destiny and ma#imum profits. However! if this is the system to be adopted! you can register with the register with the )egistrar of 1ompanies. Mou must have at least seven members the outset. (e) %ranchising: ,ranchising is something of a halfway house! lying between entrepreneurship and employment. "t holds many of the attractions of running a small business whilst at the same time eliminating some of the more unappealing risks. A franchise is a system of distribution that enables the supplier 3called the franchiser4 to arrange for a dealer 3called the franchisee4 to handle a specific product or service under certain mutually agreed upon conditions. &he franchiser is a company which has developed

and thoroughly tested its business methods and has decided the si'e of its business by offering individuals! the franchisees! the right to trade under its business name. Business %ormat %ranchising: Business ,ormat ,ranchising is the name given to a relationship in which the owner of a product! process! or service allows a local operator to set up a business under that name! for a specified period of time. &he local operator 3franchisee4 pays the parent organi'ation 3franchiser4 an initial fee and! usually! continuing royalties for privilege. &he franchiser lays down a blueprint on how the business should be operated: the content and nature of goods and services being offered! the price and .uality of these goods! and even the location! si'e and layout of any premises to be used. &he franchiser also provides the franchise with training and other back5up support! such as accounting systems! advertising programmes! and personnel re.uirement and selection advice. "n essence! franchising thrives! because it merges the incentives of owning a business with the management skills of a big business. And personal ownership is one of the best incentives yet created to spur hard work. Ma7or %actors Influencing %ranchising: A leveling off of sales growth among franchise outlets in the traditional fields such as fast food! hotels! bakeries! greeting cards! and gift shops. 1ontinuing rapid growth and e#pansion of service type business! for e#ample! childcare! business aids and services. 1onversion of independent business to franchises 6 like shirt brands. 2lobalisation of franchising. An increasingly mature and diversified franchise company. ,ypes of %ranchising !rrangements: >. %ranchising of a product or ser#ice: "n this type of franchising! the franchise receives a product from the franchiser and sells it through a wholesale or retail outlet. "f it is a service! he+she agrees to provide the service from his own premises with a license from the franchiser for using the trade name. %ranchising of an entire business enterprise: Here the franchisee operates under the trade name of the franchiser in a particular area mutually agreed upon! for e#ample! c*onald;s in *elhi! umbai! Bangalore and other cities. "n this type of a case! the business operation! appearance of establishment! merchandise! and even operating procedures and service are standardi'ed to a high degree.

G.

,he %ranchiser: !d#antages: ,rom the franchiser;s point of view! the advantages are that he does not have any direct investment in an outlet bearing his name. &he inventory and e.uipment are owned by the franchisee. Because of the shortage of the prime sites! there is growing trend for franchisers to ac.uire leases on behalf of franchisees or! at any rate! to stand as guarantors.

<evertheless! the effect on the li.uidity of the franchiser! in contrast to e#pansion by opening branches! is enormous. Disad#antages: &he disadvantages are that! although the failure of an individual franchise may reflect badly on the franchise operation as a whole! all the franchiser can control is the format itself. "n e#treme cases! the franchise may terminate the agreement at any rate not renew it! but he cannot throw the franchise out as if were an employee. &he franchiser is therefore dependent on the willingness of the franchisee to observe the rules and play the game. ,ailure to do so can be damaging to the franchiser and the franchisee as a whole. ,he %ranchisee: Advantages: A business format or product which has already been market tested and presumably! been found to work. As a conse.uence! ma-or problems can be avoided in the start5 up period. A recogni'ed name of which the public is already aware and which has credibility with the suppliers. 0ublicity! both direct! in that the franchiser advertises his product or services! and indirect promotion through signage and other corporate image promotion! in all the franchiser;s outlets. *irect and close assistance during the start5up period. A period of training on production and management aspects. A set of standard management! accounting! sales and stock control procedures incorporated in an operating manual. &he benefit of the franchiser;s research and development in improving the product. ,eedback throughout the network on operating procedures and the facility to compare notes with other franchisees. Help with the site selection! negotiating with the planning officers and developers. &he protected or privileged rights to the franchise within a given area. "mproved prospects of obtaining loan facilities from the bank. Disad#antages: Business format franchising is! of necessity! something of a cloning e#ercise. &here is virtually no scope for individual initiative in matter of product! service or design. &he franchiser will demand uniformly high standards of maintenance! appearance and packaging in whatever the franchise entails. &hese are usually monitored by regular inspection. &he royalty paid to the franchiser. &his is usually based on gross turnover or profit. &he problem here is that if the franchiser is not pulling his weight! or if the franchisee is not pulling his weight! or if the franchisee does not feel this to be the case! the royalty can be sub-ect to bitter dispute. &he franchisee may feel then -ustified in withholding all part the royalty on the grounds of non5performance by the franchiser! but this is always a difficult matter to prove in the courts. A further problem is that a high turnover does not necessarily imply a highly profitable operation. "f the franchiser;s income is wholly or partially based on turnover! he or she may try to push for this at the e#pense of profitability.

&he franchisee is not absolutely at liberty to the sell franchise even though he is in many respects operating the business independently. &he sale has to be approved by the franchiser! who is also entitled to vet the vendor and charge the cost of any investigation made to the e#isting franchise. &erritory agreements may be difficult to enforce in practice. ,or instance! a hypothetical firm called 1alorie 1ountdown may have the e#clusive rights in the suburb in which it is located! but there is nothing to prevent the citi'ens of that suburb from buying their slimmer;s meals in some other neighbouring 1alorie 1ountdown outlet. &he franchise! as well as paying a royalty to the franchiser! may be obliged to by goods and services from him as well as possibly at disadvantageous rates. &he failure of a franchiser may leave the franchisee with a business which is not viable in isolation.

;+

Registration:
Obtain SSI Registration: %mall 5 scale and ancillary units that are undertakings with investment in plant and machinery of less than )s. > crore! should seek registration with the *irector of "ndustries of the concerned 2overnment. /ntrepreneurs desiring to start a small scale industry have to initially obtain a 0rovisional )egistration 1ertificate. Once the unit goes into production! the 0)1 has to be converted into a 0arliament )egistration 1ertificate 30 14. /ro#isional Registration &ertificate (/R&): A provisional )egistration 1ertificate is the initial registration for starting a small scale industry. "t enables the entrepreneur to initiate necessary steps to bring the units into e#istence. &he entrepreneur should apply and obtain a 0)1 after the selection of the pro-ect and deciding on the location of the unit. A 0)1 is necessary for applying for infrastructure facilities isuch as land! shed etc.4! finance and so on. Registration %ormalities: &he entrepreneur should make an application in the prescribed application form 3in duplicate4 along with the following: i. 0rescribed court fee stamp ii. 1opy of the pro-ect profile iii. 0artnership deed + emorandum and Articles of Association! as the case may be. iv. Affidavit! as per the format on appropriate stamp paper. &he 0)1 will be normally issued immediately! across the table on submission of the application. &he initial validity of the 0)1 is for two years and it can be renewed subse.uently! if needed.

/ermanent Registration &ertificate (/M,): An %%" unit can get a 0ermanent )egistration 1ertificate 30 &4 when it goes into commercial production. "n the initial stages! it would have obtained a 0rovisional

)egistration 1ertificate and it would be converted to 0 & when the unit goes into production. &he 0 & registration will help %%" units in several ways! listed below. i4 ii4 iii4 iv4 &o apply for scarce raw materials and for imported raw materials &o get working capital from banks+financial institutions &o obtain 1entral e#cise duty concessions &o apply for incentives including sales ta# e#emption! wherever applicable

A 0ermanent )egistration 1ertificate enables the unit to get the following incentives+concessions. "ncome5ta# e#emption and sales ta# e#emption as per the %tate 2ovt. policy "ncentives and concessions in power tariff and so on 0rice and purchase preference for goods produced Availability of raw materials depending on e#isting policy 0ermanent registration of tiny units should be renewed after five years. Registration %ormalities: &he application in the prescribed form 3in duplicate4 along with the following is to be submitted by the entrepreneur. a. 0rescribed court fees stamp b. Affidavit! as per format on appropriate stamp paper &he 0ermanent )egistration 1ertificate is normally issued immediately! across the table on submission of the application. Registering an SSI <nit: &he main purpose of registration is to maintain statics and maintain a roll of such units for the purpose of providing incentives and support services. %tates have generally adopted uniform registration procedures as per guidelines. However! there may be some modifications in different %tates. "t must be noted that small industries is basically a %tate sub-ect. %tates use the same registration scheme for implementing their own policies. "t is possible that some %tates may have a N%"*O registration scheme; and a N%tate registration scheme;. Benefits of Registering: &he registration scheme has no statutory basis. Hnits normally get registered to avail some benefits! incentives or support given either by the 1entral or %tate 2ovt. &he regime of incentives offered by the 1entre generally contains the following: 1redit prescription! differential rates of interest! and so on. /#cise e#emption scheme /#emption under direct ta# laws %tatutory support such reservation and "nterest on *elayed 0ayments Act. Ob7ecti#es of the Registration Scheme: &o enumerate and maintain a roll of small industries at which the package of incentives and support are targeted. &o provide a certificate enabling the units to avail statutory benefits mainly in terms of protection.

&o serve the purpose of collection of statistics. &o create nodal centers at the 1entre! %tate and *istrict levels to promote %%".

%eatures of Registration Scheme: *"1 is the primary registering centre. )egistration is voluntary and not compulsory &wo types of registration is done in all %tates. A provisional registration certificate is given first. After commencement of production! a permanent registration certificate is given. 0)1 is normally valid for five years and permanent registration is given in perpetuity. Basis of E#aluation: &he unit has obtained all necessary clearances! whether statutory or administrative Hnit does not violate any location restrictions in force at the time of evaluation. 7alue of plant and machinery is within prescribed limits. Hnit is not owned! controlled! or a subsidiary of any other industrial undertaking as per notification. D.registration: A small scale unit can violate the regulations in the following ways! which will make it liable for de5registration. "t crosses the investment limits. "t starts manufacturing a new item or items that re.uire an industrial license or other kind of statutory license. "t does not satisfy the condition of being owned ! controlled! or being of a subsidiary of any other industrial marketing.

5+

&learances from specific Departments:

%everal clearances are re.uired from different authorities depending upon the type of industry and the location of the unit. Agricultural land conversion Hrban land ceiling clearance Building plan approval ,actories Act &rade license 0ollution 1ontrol Board clearance %ales ta# registration 1entral /#cise registration Bureau of "ndian %tandards 3B"%4 certificate ,ruit 0roducts Order 3,0O4 license ,ood Adulteration Act license 0ower loom registration /lectronics industries registration

*rugs and cosmetics license Approvals of hotels >DD percent e#port5oriented unit

=+

!rrange of 1and"Shed:

,or any industrial pro-ect! a suitable industrial site or a ready industrial shed is re.uired. &he promoters of the unit could consider taking an industrial site and constructing a shed as per their re.uirement. Alternatively! they could consider taking a ready industrial shed on or on ownership. Industrial 1and: Once the location of the unit is decided! the land for the pro-ect could be conveniently taken from the %tate "ndustrial Areas *evelopment Board. However! private land could also be purchased! but it has to be converted for industrial purpose and other necessary legal formalities will have to be completed. Industrial Shed: ,or setting up an %%"! the promoters could consider using a ready industrial shed. &his could be on rent or on ownership. )ental sheds have to be arranged from private owners. 0urchase of industrial sheds has to be arranged from private owners. 0urchase of industrial sheds is possible under outright purchase or hire purchase scheme.

4+

!rrange for /lant and Machinery:

&he plant and machinery re.uired for the pro-ect could be purchased from recogni'ed manufacturers+dealers. &he plant and machinery could also be taken on a hire purchase scheme operated by the <ational %mall "ndustries 1orporation 3<%"14. &his is a 2overnment of "ndia corporation. Direct /urchase: &he entrepreneur has to select and buy the re.uired plant and machinery from recogni'ed and approved manufacturers or dealers. Banks and %tate ,inancial 1orporation 3%,14 maintain a list of approved machinery suppliers. &he entrepreneur is advised to refer to such a list before deciding on the supplier. &he entrepreneur should compare the .uality! performance! and service terms! price! and other details of the alternate plant machinery that may be available in the market. &hen they should decide on appropriate plant and machinery for their proposed pro-ect. *etailed .uotations should be taken for preparing the pro-ect report and also for submission to %tate ,inancial 1orporations along with the loan application. Raw Materials: aterial procurement and planning are critical to the success of a start5up %%" unit. "nventory management can lead to manageable cash5flow situations$ otherwise if too much is ordered too soon! considerable amount of working capital gets locked up. On the other hand! non5availability may result in production hold5ups! idle machine and manpower! hence increased cost. ,or essential imported raw materials! whose lead5time is large! proper planning is all the more essential. )aw materials must be bought from reputed dealers and agencies only and before ordering prices must be compared and three to four .uotations invited. "t is also

necessary to check whether the price is inclusive or e#clusive of transportation co prescribed by the st. While receiving the delivery! .uality and .uantity of the materials must be checked. Machinery and E:uipments: 1hoosing and ordering the right machinery is of paramount importance. "n many cases! technology or process specifications are provided. When not provided! an e#tensive techno5economic survey of machinery and e.uipment available must be carried out. "nternational trade fairs and engineering fairs are good places to look at available options. &he entrepreneur must also consult e#perts! dealers+suppliers as well as users! prior to making a selection of e.uipment and machinery. &he advice of *"1! %"%"! and <%"1 can also be bought. >+ !rrange for Infrastructure: &he main infrastructure facilities re.uired for a %%" unit are land or shed for the pro-ect! power connection! water supply! and telephone facility. %ingle Window Agencies 3%WA4 are set up at district level for the benefit of small5scale industries. &he %WA provides clearances for various infrastructures and other facilities for the tiny and small5scale industries. &he assistance provided by the %WA is given below: 2rant of land in industrial areas and allotment of sheds in the industrial estates for all tiny and small5scale units. 2rant of power up to the limit prescribed by the %tate 2overnment. &o review and recommend sanction of term loans and working capital loans by the %tate ,inancial 1orporation and commercial banks within the district for the new and e#isting tiny and small5scale industries. 2rant and distribution of all incentives and concessions for tiny and small5scale industries. &o generally review the position regarding problems faced by entrepreneurs and e#isting small5scale industries within the district and to do such other work as may help promotion of the industries. 1and and &onstruction of Building: After deciding the location and site! three important factors have to be kept in mind before purchasing+leasing the land. Availability of basic amenities like power! water. 1onnectivity to nearest rail! road! or port. 0rice of the land. 0urchase+lease the land -udiciously! because once you have committed! most probably you will be working there for the ne#t >D years or so. Once an industrial plot for the unit is secured! the ne#t -ob is that of finding a suitable architect to design the outlay of area and factory. *etting the <tility &onnections: Among the utilities! of prime importance are power and water. Other utilities that might be re.uired are steam! compressed air! and fuel. Assess your re.uirement of such utilities! make arrangements to get these and ascertain the cost of consuming these.

$ater Supply: i. 1heck out the source of water supply. "s it river! canal! tube well or some other source. ii. How far is it from your land? iii. What is the .uality of the water 3pH! hardness4? iv. *oes it meet your specific re.uirements? v. What is the rate+water charge applicable? vi. "s it a common storage facility? vii. Who is the operating authority? /ower Supply: i. 1heck out the nearest substation from where! you will get power! ii. 0ower tariff rate! iii. ,eeder type availability! iv. Ouality of power duration and so on. "n many cases! getting a power connection causes a delay in the setting up of the plant. &herefore! it is imperative to commence work on these aspects and follow up diligently. ?+ /repare /ro7ect Report:

,or any pro-ect or venture! proper planning is necessary. A detailed pro-ect report provides such a plan for the pro-ect. &he report is useful to the entrepreneur for planning and implementing the pro-ect. "t is essential for obtaining finance and other clearances for the pro-ect. &he pro-ect report gives a detailed insight of the pro-ect and indicates the techno5 economic viability of the pro-ect. &he general points to be kept in mind while preparing a pro-ect report are given below: /#pected use of the pro-ect report /laborate details but retaining the confidential data 0roper validation of the data and information based on reliable sources /ffective presentation by use of charts! graphs! and pictorial forms 1ost minimi'ation and timeliness 0roper estimation of the re.uirement of number of copies &he pro-ect report is a document created through systematic recording of all the details about a pro-ect! with an analysis and validation of data+information. &his is the most important document of any pro-ect. &he pro-ect report must imbibe the following characteristics: %tandard format 1omplements of data 0roper definitions of assumptions "mparting of data+information from reliable sources /mphasis on the main ob-ectives of the report %cientific analysis of the data 0reservation of confidential data+information /ffective presentation and avoiding repetition 1ost effectiveness

 &imeliness Before preparing a pro-ect report! some homework on the following points is very necessary. "dea about the new task %tatutory regulations and restrictions &echnical details about production 0rocess chart )e.uirement of manufacturing facilities like land! building! plant and machinery! au#iliary services and so on arketing of finished goods Organi'ation chart anpower re.uirement Availability of raw materials! consumables! power and other services Ouotations for creation of assets &echnical collaborations+agreements Other financial details 0romoter;s bio5data *etails about the e#isting unit in similar line od activity and similar product or services 8nowledge about debt market.

@+

!pply and Obtain %inance: &here are various sources of funds. &hey are as follows: %hare capital "nternal accruals *eposits 6 own+public *ebentures %hort5term borrowings Bridge loans Working capital loans like cash credit

%mall scale industries+units can obtain finance for their pro-ects under two main categories: i4 term 9oans ii4 Working 1apital 9oans ,erm 1oans: ,or starting a %%" unit! term loan finance for fi#ed assets can be availed. &erm loans can be availed from the %tate ,inancial 1orporations or from 1ommercial Banks. &he term loan is usually decided eon the basis of the fi#ed assets re.uired for the pro-ect. &he fi#ed assets of a pro-ect are land! building and plant and machineries. &he e#tent of loan depends on the pro-ect cost and the entrepreneur;s background. &he repayment of loan advanced is generally spread over a period of five to eight years. &he repayment period and si'e of the installments are based on estimated cash generation and profitability of the pro-ect. $or ing &apital 1oan: %uch a loan is needed for the day5to5day operation of the business unit. Working capital is re.uired for the raw material purchase! credit sales! for the product+goods in the process of manufacture! for the finished goods kept in stock and for

working e#penses. ,or such purposes commercial banks provide working capital loan. ,or working capital loans! banks re.uire the industries+%%" units to bring in a certain amount of margin money. &he margin money re.uirement varies for different types of securities offered or for different purposes. &he banks! however! will assess the working capital needs of the individual while sanctioning a working capital loan. !rranging %inance: &o start and set up business! all %%" units need monetary support. Before seeking fund! estimate the cost including that of working capital re.uired for a minimum of si# to eight months and always keep a provision for buffer. Mou can take the help of a 1hartered Accountant or the concerned officials in the /ntrepreneurship *evelopment "nstitutes to workout the total financial cost of your pro-ect. *ecide the form in which you are going to raise the capital 6 e.uity finance! loans! or a combination of these. ,inancial assistance in "ndia for %%" units is available from a variety of institutions. &he important ones are as follows. %mall "ndustries *evelopment bank of "ndia 3%"*B"4 %tate ,inancial 1orporations <ational %mall "ndustry 1orporation %mall "ndustries *evelopment 1orporations of various %tates 1ommercial+1o5operative Banks *istrict "ndustry 1entre "n addition! large term loans are available from All "ndia ,inancial "nstitutions such as "*B"! ",1"! and "1"1"

&his need for finance can be classified in to the following types$ 9ong term and medium term loans %hort term or working capital re.uirements )isk capital %eed capital+marginal money Bridge loans A formal application needs to be made for loan from financial institutions and commercial banks. &he details of information that need to be provided with the loan application are given below: Balance and 0rofit : 9oss statement for the previous three consecutive years of firm held by promoters "ncome &a# assessment certificate of partners+directors 0roof of possession of land+building Architect;s estimate for construction cost 0artnership deed + memorandum and Articles of Association of company 0ro-ect report Budgetary .uotations of plant and machinery. A sanction or re-ection letter is issued by the bank after its assessment of the application.

63+

Implement the /ro7ect and Obtain %inal &learances:

&he entrepreneurs will have to take necessary steps to physically implement the pro-ect after obtaining the various licenses! clearances! infrastructure facilities and so on. &he following are the ma-or activities that the entrepreneurs have to undertake for implementing the pro-ect: 1onstruct shed Order for machineries )ecruit personnel Arrange for raw materials arketing /rection and 1ommissioning Obtain final clearances.

En#ironment /ollution Related &learances:

6+ /ollution Board: A <o Ob-ection 1ertificate 3<O14 should be obtained from the %tate 0ollution 1ontrol Board before commencement of constriction activity. "n case the industry highly polluting category! a full5fledged or rapid /nvironment "mpact Assessment 3/A"4 has to be carried out and submitted to the %tate 0ollution 1ontrol Board for approval! after which the construction can commence. 2+ Industries re:uiring $ater and affecting Effluent Disposal: A <o Ob-ection 1ertificate should be obtained from the %tate 0ollution 1ontrol Board before commencement of construction activity. ;+ %or units functioning outside the industrial area: 0ermission has to be sought from the municipal corporation+municipality+panchayat. "n case private agricultural land is purchased for the pro-ect! the land would have to be re'oned as industrial 'one. 0ermission to convert such agricultural land to industrial area would have to be obtained from the local office of the *irectorate of &own and 1ountry 0lanning before the actual start of the construction. 5+ Registration and 1icensing of a Boiler: %afety clearances of the 1hief /lectrical "nspector and the 1hief "nspector of Boilers are re.uired before commencing operations with electrical and pressure vessels 3boilers4 respectively. =+ %or registration as a 633 percent E0port A Oriented <nit (EO<) which can en-oy many additional concessions! the clearances of the *evelopment 1ommissioner of the /#port processing Pone 3/0P4 is re.uired. "f the company wishes to offer e.uity shares to the public! the clearance of the %ecurities /#change Board of "ndia 3%/B"4 has to be taken.

$riting a Business /lan:

A business plan is a formal statement of a set of business goals! the reasons why they are believed attainable! and the plan for reaching those goals. "t may also contain background information about the organi'ation or team attempting to reach those goals. Business /lan A &orporate %itness: ,able of &ontents: 6+ E0ecuti#e Summary 6+6 Ob7ecti#es 6+2 Mission 6+; 8ey to Success

2+ &ompany Summary &ompany Ownership Start.up Summary &ompany 1ocation and %acilities ;+ Ser#ices Ser#ice Description &ompetiti#e &omparison %ulfillment 5+ Mar et !nalysis Summary Mar et Segmentation Ser#ice Business !nalysis Business /articipants Distribution /atterns Main &ompetitors =+ Strategy and Implementation Summary Mar eting strategy /ricing Strategy /romotion Strategy Sales Strategy 4+ Management Summary Organi-ational Structure Management ,eam management ,eam *aps /ersonnel /lan

>+ %inancial /lan Important !ssumptions 8ey %inancial Indicators Brea .e#en !nalysis /ro7ected /rofit and 1oss /ro7ected &ash %low /ro7ected Balance Sheet Business Ratios

&ontent Business plans are decision5making tools. &here is no fi#ed content for a business plan. )ather the content and format of the business plan is determined by the goals and audience. A business plan represents all aspects of business planning process$ declaring vision and strategy alongside sub5plans to cover marketing! finance! operations! human resources as well as a legal plan! when re.uired. A business plan is a bind summary of those disciplinary plans. ,or e#ample! a business plan for a non5profit might discuss the fit between the business plan and the organi'ation;s mission. Banks are .uite concerned about defaults! so a business plan for a bank loan will build a convincing case for the organi'ation;s ability to repay the loan. 7enture capitalists are primarily concerned about initial investment! feasibility! and e#it valuation. A business plan for a pro-ect re.uiring e.uity financing will need to e#plain why current resources! upcoming growth opportunities! and sustainable competitive advantage will lead to a high e#it valuation. 0reparing a business plan draws on a wide range of knowledge from many different business disciplines: finance! human resource management! intellectual property management! supply chain management! operations management! and marketing! among others.QCR "t can be helpful to view the business plan as a collection of sub5plans! one for each of the main business disciplines. S... A good business plan can help to make a good business credible! understandable! and attractive to someone who is unfamiliar with the business. Writing a good business plan can;t guarantee success! but it can go a long way toward reducing the odds of failure.S

ESSEB,I!1 &OM/OBEB,S O% B<SIBESS /1!BS

Business plans have a well defined form that shouldn=t be changed by anyone. Business plans include several elements that shouldn=t be modified! because otherwise they won=t have the e#pected results. When you want to write your business plan remember to stick to its original form. &hose that will read it will e#pect to see a certain format. "n the case that they won=t notice the elemental components then they won=t take your plan into consideration even if you=ve presented a great idea. &he business plans have five fundamental components:

&he e#ecutive summary section! &he business section! &he market analysis section! &he financing section! and &he management section.

,he e0ecuti#e summary section is the first section in all business plans. &hose business plans with a good e#ecutive summary will have greater chances to be successful. &he audience will be convinced to read the whole business plan if you=ll come with an e#cellent e#ecutive summary. ,or successful business plans the e#ecutive summary is very important. All business plans should include in this section the nature of your new venture and the need you want to satisfy. Also! describe your potential market and why is your product or service needed. *on=t forget to describe how is your business organi'ed! your management team! and include a briefly summary of your marketing plan. Also! remember that the audience wants to see the amount of capital that you need! your sales e#pectations and how are you e#pecting to pay back the debt. "f the audience is pleased by what you have written till now then they will continue reading the whole plan. But if you couldn=t capture their attention then they will re-ect your plan no matter how good is your idea. ,he business section of business plans should include the legal name! physical address and full description of the nature of the business. ,irstly! keep in mind that business plans should contain a general terminology. &hose that read the plan don=t necessarily have the same level of knowledge like those that write the plan. Also! you should try to e#plain why your idea is better than that of your competitors. ,he mar et analysis section helps you understand better the market on which you want to enter. &his section is more like a marketing plan description. All business plans should include in the market analysis section the estimated demand of the product or service! the market target! the industry=s trends! the pricing plan that you will follow and the description of the company=s policies. In the financing section you should prove to the audience that you really want to make your business work. /#plain e#actly how much money from the personal funds do you have and their sources. Also! mention the amount that you need to borrow and how are you going to repay it. Any relevant financial worksheets like annual income pro-ections! a break5 even worksheet! predictable cash flow statements and a balance sheet are important and should be included in all business plans. 2ood business plans contain in the management section information about the organi'ational structure of the business and about the management team. Also! it contains resumes and biographies of key members of the management team. &here are some persons that might consider that business plans re.uire a lot of time and effort. But! they don=t reali'e that the time spent writing the plan is well spent. Also! there is a

business plan building software that helps people make their business plans. &his software is easy to use and at an affordable price and will help you obtain some great business plans.

Determining Ban ability of the /ro7ect

KAlmost any pro-ect can be made bankable if the desire and commitment to see the pro-ect through to completion is evident.L When we think of Nbankability; of a pro-ect we tend to veer towards the traditional yardsticks of a positive net present value and an acceptable internal rate of return to the private sector. However! almost any pro-ect can be deemed to be bankable if the pro-ect itself is sufficiently well defined and the pro-ect environment provides sufficient incentive. "n this conte#t! there are either no bankable pro-ects or all pro-ects can be considered bankable. "t therefore becomes imperative that private sector concerns are ameliorated by strong government support and political buy5in. ,or e#ample! with a toll road! if the private sector has to fund development! land ac.uisition and construction costs on the terms that it has to take all the planning risks and recover its investment only through raising user fees! even though these fees are capped and forecasts indicate that traffic would be low! the pro-ect would not be bankable. "f! however! the public sector takes all the planning risks! pays cost overruns and agrees to repay the private sector through a cost plus fee system! virtually all pro-ects of this type would become bankable. &ypically! economic benefits are generated by increased levels of service for the users and mainly take the form of savings in! for e#ample! vehicle operating costs! reduced travel time! mitigated impact on the environment! better .uality health care and education. &he benefits are often difficult to .uantify but clearly fit into government;s long5term strategic ob-ectives. ,or e#ample! the long5term benefits of moving towards a public transportation system may not immediately yield the desired financial rewards! but the long5term gains such as increased productivity! reduced carbon emissions! etc will often play a big part in the decision5making process. &he private sector investor+pro-ect finance partner would generally be looking for: 0olitical stability and Nbuy5in; by all political stakeholders 1ontinuous high level political support 0ipeline of attractive! viable pro-ects ,air! reliable transparent procurement with open competition /nforceable contracts %hared risks commensurate with return Well defined and consistently applied Nrules of the game; 0ro-ects that lead to new opportunities.

Bankability is determined by how the pro-ect is defined and the constraints that are imposed! or the incentives that are provided! in respect of the implementation through the concession contract or regulations. &he process of selecting bankable pro-ects consists of selecting pro-ects that can be given a serious chance of success with sufficient incentives through 2overnment support and regulations 3if re.uired4! while keeping these incentives within acceptable limits and in line with risk transfer ob-ectives. B!B8!B1E /ROCE&,S:

&he selection of bankable pro-ects is essential if 000 pro-ects involving 0ro-ect ,inance are to become a success. However since SbankableS depends largely on the constraints and opportunities of both the definition of the pro-ect and the environment in which this pro-ect is to be implemented! there are either no bankable pro-ects! or all pro-ects can be considered as bankable. ,or e#ample! if the private sector has to fund development! land ac.uisition and construction costs on the basis that it has to take all the planning risks and can recover the investment only through raising tolls even though tolls are capped and all pro-ections indicate that traffic would be low! there will probably be no pro-ect that is bankable. "f! on the other hand! the public sector takes all the planning risks! pays cost overruns and agrees to repay the private sector through a cost plus fee system! virtually all pro-ects may be considered bankable. Bankability is therefore determined by how the pro-ect is defined 3e.g. starts after land has been ac.uired by public sector following the completion of the planning process4 and the constraints that are imposed! or the incentives that are provided! in respect of the implementation through the 1oncession 1ontract or )egulations. &his means that many pro-ects could be made bankable if well defined and if the environment provides sufficient incentive. &he process of selecting bankable pro-ects! therefore! comprises selecting pro-ects that can be given a serious chance of success by providing sufficient incentives through 2overnment support and )egulations! whilst keeping these incentives within acceptable limits and in line with risk transfer ob-ectives. An approach that could be used in structuring a bankable pro-ect is provided in odule G 5 ,inance.

*o#ernment Support: 2overnment support to a 000 pro-ect can be provided in various forms and serves primarily to facilitate its financing. &he instruments and level of support provided depend on the risks involved for transfer to the private sector and the financing re.uirements of the pro-ect once a risk allocation structure has been established. &hese instruments do not however include structures whereby the public sector is >DDJ responsible for either funding or cost recovery.

2overnment support could be provided in the general framework for 000 solutions 3,inancial regulation4 or as a result of direct negotiations in setting up the 000 structure for a particular pro-ect. "t consists of: ,angible support: Direct Financial Support in the form of grants! capital and operating subsidies! ta# holidays! provision of land! provision of e#isting roads! 7A& relief! etc. Direct financial support Contingent Financial Support &he most common form of contingent liabilities are guarantees. Met other forms of contingent support instruments are: %tate insurance schemes! bailout of subnational entities or financial system! and disaster relief! among others. 2uarantees can be structured in respect of debt! foreign e#change! demand! construction cost! interest rates! etcT *uarantees Intangible support dealing with the implementation of restrictions on using e#isting parallel roads 3for e#ample weight restrictions for long distance traffic4! the creation of new parallel 3free4 roads! introducing tolls on connecting roads! ma-or changes in law or regulations affecting the pro-ect economics! etc. ost of the intangible support items are very pro-ect specific and+or are difficult to define when creating the pro-ect and establishing the public5private partnership. Whereas for e#ample the public sector can accept the conse.uences if parallel roads are created! it can never fully guarantee that such roads are not built. &his means that if the construction cannot be avoided! the partners will review in good faith their contractual relationship! whereby the e#tent to which such a review will take place depends on the .uality and impact of other forms of support that may have been put in place. &he chart below compares in schematic way the various types of 2overnment support to 000s.

%I9E S,E/S ,O DE,ERMIBE /ROCE&, %E!SIBI1I,D Is your pro7ect feasibleE &he best way to find out whether your pro-ect is feasible is to complete a ,easibility %tudy. &his process helps you gain confidence that the solution you need to build can be implemented on time and under budget. %o here=s how to do it in B simple steps... &ompleting a %easibility Study A ,easibility %tudy needs to be completed as early in the 0ro-ect 9ife 1ycle as possible. &he best time to complete it is when you have identified a range of different alternative solutions and you need to know which solution is the most feasible to implement. Here=s how to do it... Step 6: Research the Business Dri#ers "n most cases! your pro-ect is being driven by a problem in the business. &hese problems are called Sbusiness driversS and you need to have a clear understanding of what they are! as part of your ,easibility %tudy. ,or instance! the business driver might be that an "& system is outdated and is causing customer complaints! or that two businesses need to merge because of an ac.uisition. )egardless of the business driver! you need to get to the bottom of it so you fully understand the reasons why the pro-ect has been kicked off. ,ind out why the business driver is important to the business! and why it=s critical that the pro-ect delivers a solution to it within a specified timeframe. &hen find out what the impact will be to the business! if the pro-ect slips. Step 2: &onfirm the !lternati#e Solutions <ow you have a clear understanding of the business problem that the pro-ect addresses! you need to understand the alternative solutions available. "f it=s an "& system that is outdated! then your alternative solutions might include redeveloping the e#isting system! replacing it or merging it with another system. Only with a clear understanding of the alternative solutions to the business problem! can you progress with the ,easibility %tudy.

Step ;: Determine the %easibility Mou now need to identify the feasibility of each solution. &he .uestion to ask of each alternative solution is Scan we deliver it on time and under budget?S &o answer this .uestion! you need to use a variety of methods to assess the feasibility of each solution. Here are some e#amples of ways you can assess feasibility: )esearch: 0erform online research to see if other companies have implemented the same solutions and how they got on.

0rototyping: "dentify the part of the solution that has the highest risk! and then build a sample of it to see if it=s possible to create. &ime5bo#ing: 1omplete some of the tasks in your pro-ect plan and measure how long it took vs. planned. "f you delivered it on time! then you know that your planning is .uite accurate.

Step 5: &hoose a /referred Solution With the feasibility of each alternative solution known! the ne#t step is to select a preferred solution to be delivered by your pro-ect. 1hoose the solution that$ is most feasible to implement! has the lowest risk! and you have the highest confidence of delivering. Mou=ve now chosen a solution to a known business problem! and you have a high degree of confidence that you can deliver that solution on time and under budget! as part of the pro-ect. Step =: Reassess at a lower le#el "t=s now time to take your chosen solution and reassess its feasibility at a lower level. 9ist all of the tasks that are needed to complete the solution. &hen run those tasks by your team to see how long they think it will take to complete them. Add all of the tasks and timeframes to a pro-ect plan to see if you can do it all within the pro-ect deadline. &hen ask your team to identify the highest risk tasks and get them to investigate them further to check that they are achievable. Hse the techni.ues in %tep F to give you a very high degree of confidence that it=s practically achievable. &hen document all of the results in a ,easibility %tudy report. After completing these B steps! get your ,easibility %tudy approved by your manager so that everyone in the pro-ect team has a high degree of confidence that the pro-ect can deliver successfully.