ENTREPRENURSHIP

• 1. Understanding entrepreneurship
• 2. Entrepreneurial profile
• 3. Manager Vs Entrepreneur
• 4. Idea generation
• 5. Legal Aspects for Entrepreneur
• 6. Marketing Plan
• 7. Organizational Plan
• 8. Financial Plan
• 9. Sources of Capital
• 10. Strategies to manage the growth
 1. Understanding entrepreneurship
• Nature and development of entrepreneurship
• The entrepreneurial process
• Entrepreneurial thinking
• Learning from failure
 2. Entrepreneurial profile
• Background and characteristics
• Role models
• Support System
 3. Manager Vs Entrepreneur

MANAGER ENTREPRENEUR
•Employee •Owner
•Do not take risks •Risk taker
•Salary seeker •Profit seeker
•Formal •Informal
•Selective functions •All functions
•Executive •Innovator
•Can not bear failures •Welcome failures
•Daily smooth tasks •Expansion of business
•Calculative in decision making •Intuitive in decision making
 4. Idea generation
•Sources of new ideas
•Methods of generating ideas
•Creative Problem Solving
•Innovation and its types
1. Breakthrough innovation(Penicillin, steam
engine)
2. Technological innovation(pictures, voice, text)
3. Ordinary innovation(extend an existing
innovation)
 5. Legal Aspects for Entrepreneur
• Intellectual Property( intellectual property is a collection of
ideas and concepts, not tangible things.)

• Patents (Legal right to exclude symbols, names, characters and

visions of brands from other for a limited time period)

• Trademark (Symbol, design or sign used by a particular brand)

• Copyrights (a permission from original creator to use his invention
under some conditions)
Week: 11

UNDERSTANDING
MARKETING PLAN
DIFFERENCE

Marketing Plan Business Plan

•Short time period •Long time period

•Only covers marketing •Covers all the strategies

strategies including marketing

•Focuses on target marketing, •Focuses on all financial,

segmentation and other operational, marketing,
marketing strategies managerial and growth
strategies
DEFINITION
Marketing Plan

How the product and service will be

•priced
•promoted
•distributed
DEFINITION
Marketing Plan

How the product and service will be

•priced
•promoted
•distributed
DEFINITION
Marketing Plan

How the product and service will be

•priced
•promoted
•distributed
 3 BASIC Q’s

1.

Where HAVE WE BEEN

?
 3 BASIC Q’s

2.

Where WE WANT
TO GO ?
 3 BASIC Q’s

3.

How DO WE GET
THERE ?
Characteristic

Flexibility
Accomplishing
s missions and goals

Allocation of all Target Market should

existing resources known

Simple and CONSISTENCY

Short

Strengths and weaknesses Monitored and

should known Controlled
 Definition of marketing mix
"set of marketing tools that the firm uses to
pursue its marketing objectives in the target
market".
MARKETING
•FEEDBACK
MIX •Marketing strategies directed to customers
•Purchase decisions of customers
•Entrepreneurship
•Market planning decisions

EXTERNAL FACTORS INTERNAL FACTORS

•Demand •Financial resources
•Competition •Management Teams
•Economy •Suppliers
•Technology •Company Goals
•Raw materials etc… •Objectives
STEPS

• Defining the business situation

• Defining the target market
• Considering strengths and weaknesses
• Establishing goals and objectives
• Defining Marketing Strategy and Action Program
✔ Product or Service
✔ Pricing
✔ Distribution
✔ Promotion
STEPS

• Marketing Strategy: Consumer versus

Business-to-Business Markets
• Budgeting the Marketing Strategy
• Implementation of the Market Plan
• Monitoring the Progress of Marketing Actions
CHAPTER: 09

UNDERSTANDING
ORGANIZATION PLAN
DEFINITION

Organizational Plan
WHA HOW
T

•Identify the objectives

•Formulating and monitoring
•Achievement
DEFINITION

Organizational Plan
WHA HOW
T

•Identify the objectives

•Formulating and monitoring
•Achievement
DEFINITION

Organizational Plan
WHA HOW
T

•Identify the objectives

•Formulating and monitoring
•Achievement
 LEGAL
FORMS
1. Sole proprietorship

2. Partnership

3. Corporation
 LEGAL
FORMS
1. Sole proprietorship

‘’A sole proprietorship is a

unincorporated business owned
by one individual.’’
 ‘’A partnership is a formal
LEGAL
arrangement in which two or
FORMS
more parties cooperate to
manage and operate a
business.’’

2. Partnership
 LEGAL
FORMS
‘’A form of business operation
that declares the business as a
separate, legal entity guided by a
group of officers known as the
board of directors.’’

3. Corporation
 FACTORS SOLE PARTNERSHIP COORPORATION
PROPRIETORSHIP
OWNERSHIP Proprietor No limitation No limitation
Minimum 2
LIABILITY OF OWNERS Individual is liable for All individuals are Liability depends on
business liabilities liable for business contribution of
liabilities shareholder
CAPITAL REQUIRED Undefined Agreement, legal Statute, Articles of
FOR STARTUP costs, and minor filing incorporation, filling
fees for trade name fees and taxes
CAPITAL By loan or by By loan or by partner’s By sale of stock or
REUIREMENTS Proprietor itself contribution bonds or by borrowing
(debt)
MANAGEMENT Proprietor makes all All partners have May be stakeholders,
CONTROL decisions equal control may be management
DISTRIBUTION OF Proprietor receives all Depends on Shareholders can
PROFIT AND LOSS profits and loss partnership share in profits by
agreement receipt of dividends
ATTRACTIVENESS FOR Depends on capability Depends on capability more attractive as an
RAISING CAPITAL of proprietor of partners investment
opportunity.
 FACTORS SOLE PARTNERSHIP COORPORATION
PROPRIETORSHIP
CONTINUITY OF Death dissolves the Death or withdrawal Greatest form of
BUSINESS business of partners continuity

TRANSFERIBILITY OF Complete freedom Transference with Most flexible.

INTEREST consent of all other Stockholders can sell
general partners or buy stock at will
 TO UNDERSTAND THE
TEAMS IMPORTANCE AND
MANAGEMENT OF TEAMS
 TEAM’S
IMPORTANCE
‘’TEAMWORK
MAKES THE

WORK’’
3 FUNCTIONS
OF TEAM
These are the 3 complementary functions
a Team should must do:

1) Execute the business plan.

2) Identify fundamental changes in the business as

they occur.

3) Make adjustments to the plan based on

changes in the environment and market that will
maintain profitability.
BUILDING A
BY FOLLOWING STEPS:
TEAM

To create appropriate
STEP 1

organizational
environment which
should be according to
a particular business
plan
BUILDING A
TEAM

TO CREATE A
STEP 2
MOTIVATING AND
REWARDING
ENVIRONMENT

WIN-WIN
SITUATIO
N
BUILDING A
TEAM

TO CREATE FLEXIBLE
STEP 3

AND
UNDERSTANDING
WITH
FOR EXAMPLE:
EMPLOYS
•Relax the employs with fun activities
•Provide leaves if required
•Value their ideas
•Reward them for effective work
BUILDING A
TEAM
STEP 4
JUDGE WELL BEFORE
CHOOSING A TEAM
MEMBER TO AVOID
LATER REGRETS
BUILDING A
TEAM

ENTREPRENEUR
STEP 5
SHOULD NEED THE
SIGNIFICANCE OF
LEADERSHIP

‘’LEADERSHIP is the capacity to

transfer vision into reality’’
 Sources and applications
BREAK-EVEN ANALYSIS
BALANCE SHEET
CASH FLOW
PRO FORMA INCOME STATEMENTS
Importance

AL
PLAN
FINANCI
 FINANCIAL PLAN SHOWS…
How much and When funds are coming into the

Importance
organization

Where funds are going

How much cash is available

Projected financial position of the firm.

 FINANCIAL PLAN CAN MAKE FOLLOWING
STEPS EASY

Manage income

Importance
Increase cash flows

Increase in capital

Greater risk tolerance

Saving becomes easy etc…

 OPERATING AND CAPITAL BUDGETS
(Simple OR rough form of pro forma income statements)

FOR EXAMPLE

Importance
A sales budget may be prepared by a sales manager.

A manufacturing budget by the production manager, and so

on.

BUT Final determination of these budgets will prepared by

the owners or entrepreneurs.
 OPERATING AND CAPITAL BUDGETS
(Simple OR rough form of pro forma income
statements)

Importance
 OPERATING AND CAPITAL BUDGETS
(Simple OR rough form of pro forma income
statements)

Importance
 FORECASTING SALES

‘’Sales forecasting is the process of

estimating future sales.

Importance
Accurate sales forecasts enable
companies to make informed
business decisions and predict
short-term and long-term
performance.’’
 PRO FORMA INCOME STATEMENTS

‘’Projected net profit calculated from

projected revenue minus projected costs and
expense’’

•The pro forma financial statements present

the impact of these changes on the
company's financial position as depicted in
the income statement, balance sheet, and
the cash-flow statement.
PRO FORMA INCOME STATEMENTS
 ‘’The total amount of
CASH FLOW money being transferred

PRO FORMA INCOME STATEMENTS

into and out of a business,
especially as affecting
liquidity.’’

Projected cash accumulations

-
Projected cash disbursements
=
Projected cash available
CASH FLOW

PRO FORMA INCOME STATEMENTS

BALANCE
SHEET

BREAK-EVEN
ANALYSIS
PRO FORMA INCOME STATEMENTS
BALANCE ‘’Summarizes the

PRO FORMA INCOME STATEMENTS

SHEET projected assets,
liabilities, and net
worth of the new
venture’’
Asset = Liabilities + Equity.
The amount
Items that are Money that is
owners have
owned or owed to
invested
available to be creditors
and/or
used in the
retained from
venture
the venture
operations
operations
PRO FORMA INCOME STATEMENTS
 ‘’Volume of sales
BREAK-EVEN where the venture

PRO FORMA INCOME STATEMENTS

ANALYSIS neither makes a
profit nor incurs a
loss’’
 ‘’Volume of sales
BREAK-EVEN where the venture

PRO FORMA INCOME STATEMENTS

ANALYSIS neither makes a
profit nor incurs a
loss’’
(Sources Of Capital)

Entrepreneurs have to collect

Financing

to create new venture

 Financing

Debt Financing Equity Financing

‘’Obtaining ‘’Obtaining funds
borrowed funds for the company in
for the company’’ exchange for
ownership’’
Debt Financing Equity Financing

•Keep full ownership •Less risk than debt

•No obligations after •No paying back funds

paying debt
•Gain credibility through
•Interest is Tax investor networks
deductible
•Don’t requires any
•Requires some asset COLLATERAL
as COLLATERAL
•Fixed payment for better
•More cash on hand budgeting
 Collateral = (‫) ﮔروی رﮐﮭﻧﺎ‬
Security, Guarantee
FOR EXAMPLE: Car, land, house, machine or plant etc…
 EXTERNAL INTERNAL
FUNDS FUNDS

From inside of From outside of business

business
•self, family and friends,
•profits, sale of assets, commercial banks, private
reduction in working investors (angels), R&D
capital, extended limited partnerships,
payment terms, and government loan programs
accounts receivable and grants, venture capital,
and private placement
 PERSONAL
FUNDS

Sources of personal funds include:

• Savings

• Life insurance

• Mortgage on a house

• Car
 FAMILY AND
FRIENDS

•Most likely to invest.

•Easy to obtain money from family and friends.

•Negative impact on the relationships.

•To avoid problems, the entrepreneur needs to

present all aspects clearly to the family/friends.
 GOVERNMENT
GRANTS

•Federal
•State LEVELS
•Local
 GOVERNMENT
GRANTS

• SBIR(Small Business Innovation Research) is a

program grants from the (U.S.) government to small
technology-based businesses.

•Twelve federal agencies are involved in the program.

Each agency develops topics and then it is decided
that how much funding is required.
 PRIVATE
FINANCING

Private investors = Angels

Family
Friends OR
Any wealthy individual
 Types of
Investors

1) Private Offerings

“A formalized method for

obtaining funds from
private investors”
 Types of
Investors

2) Regulation D

“Laws governing a private

offering”