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In early 19th century the term entrepreneur

originated
from
the
French
word
entreprendre which means to undertake.
Irish-French

economistRichard
Cantillondefined it first in hisessay on The
Nature of Trade in General.

Credit for coining the termentrepreneur

generally goes to the French economistJean


Baptiste.

Who is an
Entrepreneur?

An individual who, rather than working as an

employee, runs a business and assumes all


the risk and reward of a given business
venture, idea, or goods or service offered for
sale.

person

who

sets

up

business

or

businesses, taking on financial risks in the

What is the definition of MSME?


The Government of India has enacted the Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006 in terms
of which the definition of micro, small and medium
enterprises is as under:

(i) A micro enterprise is an enterprise where investment


in plant and machinery does not exceed Rs. 25 lakh.
(ii) A small enterprise is an enterprise where the
investment in plant and machinery is more than Rs. 25
lakh but does not exceed Rs. 5 crore.
(iii) A medium enterprise is an enterprise where the
investment in plant and machinery is more than Rs.5
crore but does not exceed Rs.10 crore.
and

(i) A micro enterprise is an enterprise where the


investment in equipment does not exceed Rs. 10 lakh.
(ii) A small enterprise is an enterprise where the
investment in equipment is more than Rs.10 lakh but
does not exceed Rs. 2 crore.
(iii) A medium enterprise is an enterprise where the
investment in equipment is more than Rs. 2 crore but
does not exceed Rs. 5 crore.

MSME is having two Divisions called Small & Medium

Enterprises (SME) Division and Agro & Rural Industry


(ARI) Division.
The SME Division is allocated the work, of

administration, vigilance and administrative


supervision of the National Small Industries
Corporation (NSIC) Ltd.
The ARI Division looks after the administration of two

statutory bodies viz. the Khadi and Village Industries


Commission (KVIC), Coir Board and a newly created
organization called Mahatma Gandhi Institute for
Rural Industrialization (MGIRI).

The Implementation of policies and various programmes

schemes

for

providing

infrastructure

and

support

services to MSME's is undertaken through its attached


office, namely the
Office of the Development Commissioner (OODC

MSME),
National Small Industries Corporation (NSIC),
Khadi and Village Industries Commission (KVIC)
Coir Board and three training institutes viz.,
National Institute for Entrepreneurship Small Business

Development (NIESBUD) Noida.

National

Institute

for

Micro,

Small

and

Medium

Enterprises (NI-MSME), Hyderabad.


Indian Institute of Entrepreneurship (lIE), Guwahati.
Mahatma Gandhi Institute for Rural Industrialization

(MGIRI), Wardha a society registered under Societies


Registration Act, 1860.
The National Board for Micro, Small and Medium

Enterprises

(NBMSME)

was

established

by

the

Government under the Micro, Small and Medium


Enterprises Development Act, 2006 and Rules made
there under.

Small Scale Business

A small-scale industry is a project or firm


created on a small budget or for a small group
of people or an individual.
A small-scale
industry produces its goods using small
machines, less power and hired labour. It is
located within a single place and produces
goods meant for few people.
A small enterprise is the one where, investment in

plant and machinery is more than Rs. 25 lakh but


does not exceed Rs. 5 crore.
A small enterprise is the one where, investment in
equipment is more than Rs.10 lakh but does not
exceed Rs. 2 crore.

Role of Small Enterprise


1. Employment generation
2. Mobilisation of resources and entrepreneurial

skill
3. Equitable distribution of income
4. Regional dispersal of industries
5. Provides opportunities for development of
technology
6. Indigenisation
7. Promotes exports
8. Supports the growth of large industries
9. Better industrial relations
10. Rural development

Small Enterprise - Weaknesses


1. Financial Limitation
2. Staffing Problems
3. High Direct Cost
4. Lack of Credibility
5. Outdated Technology
6. Marketing Budget
7. Online Presence
8. Too dependent on owner or one key person
9. Lack of differentiation
10. Business is too dependent on one or two big customers

Small Enterprise - Strengths


1. Personal Touch
2. Greater Motivation
3. Greater Flexibility
4. Less bureaucracy
5. Unobtrusive
6. Better time Management is possible
7. Generally distribution system is more effective

Traits of a successful entrepreneur

1. Strong leadership qualities


2. Highly self-motivated
3. Strong sense of basic ethics and integrity
4. Willingness to fail
5. Serial innovators
6. Know what you don't know
7. Competitive spirit
8. Understand the value of a strong peer network

9. Limit the number of hats you wear


10.Follow-up constantly
11.Get and stay organized
12.Master the art of negotiation
13.Create a competitive advantage
14.Become known as an expert
15.Project a positive business image
16.Remember it's all about the customer

How to develop an Entrepreneur


Critical and creative thinking skills.
1. Creative Thinking
2. Problem Solving
3. Recognizing Opportunities
.Practical skills.
1.
2.
3.
4.
5.
6.
7.

Goal Setting
Planning and Organizing
Decision Making
Business knowledge
Entrepreneurial knowledge
Opportunity-specific knowledge
Venture-specific knowledge

Interpersonal skills.
1. Leadership and Motivation
2. Communication Skills
3. Listening
4. Personal Relations
5. Negotiation
6. Ethics
.Personal characteristics.
1. Optimism
2. Vision
3. Initiative
4. Desire for Control
5. Drive and Persistence
6. Risk Tolerance
7. Resilience

Business Plan
A business plan is a document that describes

what you plan to do and how you plan to do it.


The plan includes the overall budget, current and

projected financing, a market analysis and its


marketing strategy approach, a business owner
projects revenues and expenses for a certain
period of time and describes operational activity
and costs related to the business.

Why do we need a Business Plan?

- Is the new venture technically feasible & financially


viable?
- Sources of fund for the venture?
- Is the new venture's product or service feasible?
- Does the market want the product or service?
- Can the product or service be profitably sold?
- Is the return on the venture adequate for prospective

investors?

How to prepare a business plan?


1. Cover Page
- Your contact information so potential investors can easily reach
you.

2. Executive Summary
- Concisely describe what your business does
- What market need it solves
- Describe your unique success factors
- List out the reasons why your business will be successful
- Highlight your financial projections and amount of money you are
seeking to raise through various sources.

3. Company Overview
- Give a profile of your company
- Answer questions such as:
Where you are located?
When you were formed?
What is your legal entity form?
- Describe the stage of your company:
Beginner
What your company has achieved so far

4. Industry Analysis
- Describe the market in which you are competing?
- How large it is, and what trends are affecting it?

5. Customer Analysis
- Identify who your target customers are and their needs.
- Specify the demographic and psychographic make-up of your
customers.

6. Competitive Analysis
- Identify your competitors and their key strengths and weaknesses
- Identify your competitive advantages
7. Marketing Plan
. Describe your products and/or services
. Desired brand positioning
. Detail your promotions plan
. Discuss your distribution plan
8. Operations Plan
. Describe the key daily operational processes your organization
needs
. Identify the milestones you need to accomplish over the next 1-3
years
9.ManagementTeam
- The Management Team section must prove why the key company

10. Financial Plan


. Identify the ways in which your company generates revenues.
. Key assumptions which govern your financial projections.
. If you are seeking funding, identify the sources.
. Specify how much money you need to start and/or run your
business, and the primary uses of these funds.
11. Appendix
. Include your full financial projections, including your projected
income statements, balance sheets and cash flow statements.
. Include any additional details, such as patent information,
customer lists, etc., that help prove to investors that your
company is a great investment opportunity.

Why do companies need to do Marketing


Research?
1. Marketing research (MR) provides valuable data.
2. It studies and provides data about consumer

behaviour.
3. It helps to select suitable sales promotional

techniques.
4. It suppliesmarket-related information.
5. It helps a company to evaluate its marketing

performance.

Operating Plans
Operating plan is the section of your business

plan where you dig into more of the nuts and


bolts of your business areas like: production,
manufacturing, inventory, and distribution.
An operational plan will always vary based upon
the type of business you run. If you are planning
to start a retail shop then you need to take care of
things like inventory, distribution etc.
But if you are planning to start an IT firm, you will
focus more on how to keep the data confidential,
securing the office space and the equipments etc.

Financial Plans
A financial plan explains what your business can

afford, how it can afford to do it, and what the


expected profits will be.
A well written business plan can be the difference

between you carrying the business or the


business carrying you.

What is Cluster financing?


A cluster based approach may be more beneficial

(a) in dealing with well-defined and recognized


groups (b) availability of appropriate information
for risk assessment (c) monitoring by the lending
institutions and (d) reduction in costs.
Cluster based approach to lending is intended to

provide a full-service approach to cater to the


diverse needs of the MSE sector which may be
achieved through extending banking services to
recognized MSE clusters.

United Nations Industrial Development

Organisation (UNIDO) has identified 388 clusters


spread over 21 states in various parts of the
country.
The Ministry of Micro, Small and Medium

Enterprises has also approved a list of clusters


under the Scheme of Fund for Regeneration of
Traditional Industries (SFURTI) and Micro and
Small Enterprises Cluster Development
Programme (MSECDP) located in 121 Minority
Concentration Districts.

Types of Entrepreneurs
1.
2.
3.
4.
5.
6.

Innovating entrepreneurs.
Adoptive entrepreneurs.
Fabian Entrepreneurs.
Drone Entrepreneurs.
Entrepreneurs by inheritance.
Forced entrepreneurs.

Advantages of acquiring an established


business
The difficult start-up work has already been done.
Buying an established business means immediate

cash flow.
The financial history of the company will help it
easier to secure loans, and attract investors.
You will existing customers, goodwill, suppliers,
contacts, staff, plant, equipment and stock.
Your product is established in the market, so
publicity effort is reduced.
The staff there will be having their experiences to
share.

Disadvantages of acquiring an established


business
Business might need major improvements to old
plant & machinery.
Initially you need to invest large amount
especially for the professionals and accountants.
The business might be poorly located, badly
managed, and with low staff morale.
Increasing competition or declining industry can
affect the future growth.
Underperforming business needs a lot of
investment to make it profitable.
The relation with the dealers & suppliers might
get affected.

Business Opportunity
A business opportunity can be defined as a sound
business idea which forms the basis upon which
an entrepreneur makes an investment decision.

Considerations for evaluation business


opportunities
1. Potential for growth.
2. Infrastructure.
3. Market for goods & services.
4. Rewarding the Investor.
5. Price Structure.
6. Competition.
7. Competitive advantage.
8. Incentives.
9. Legal Considerations.
10. Financial Viability.
11. Personnel training & management.

Valuation of a business
Business valuation is process and a set of
procedures used to
estimate the economic value of an owners interest.
Elements of business valuation
1. Economic conditions.
2. Financial analysis.

Business Valuation Methods


1. Income approach.
This approach relies upon the economic principle of
Expectation ie, the value of business is based
on the
expected economic benefit and the level of risk
associated
with the Investment. The mainly used income
approaches
are:
. Capital Asset Pricing Model.
. Modified Capital asset Pricing Model.
. Weighted Average Cost of Capital.

2. Asset Based Approach

This approach is based on the principle of


Substitution,

as no rational investor will pay more for the


business assets than the cost of procuring the
asset of similar economic utility. The two main
methods followed by this approach are:
.
Net book value
.
Fair market value

3. Market Approach

The market approach is based upon the


economic principle of Competition ie, in a
free market, the supply and demand forces will
drive the price of business assets to a certain
equilibrium.

Franchising
Franchising is the practice of the right to use a
firms
business model and brand for a prescribed period
of time.
What are the Franchisees perspective?
1. A documented tested and profitable business

idea.
2. Support, counselling & education.
3. Economy of scale.
4. Network of other practitioners.

What are the Franchisors perspective?


1. Lesser capital needs.
2. Shared risk.
3. Quicker expansion.
4. Local motivation, opportunity & risk.
5. Effective division of work generates less

overhead and less risk.