ENTREPRENEURSHIP

INTRODUCTION
Entrepreneurship is the process of designing,
launching and running a new business, which is
often initially a small business. The people who
create these businesses are called entrepreneurs
CONCEPT & CHARACTER OF ENTREPENUER

 Entrepreneurship is the act of setting out on your

own and starting a business instead of working for
someone else in his business. While entrepreneurs
must deal with a larger number of obstacles and
fears than hourly or salaried employees, the payoff
may be far greater as well.
 Organization and Delegation

 While many new businesses start as a one-man show,

successful entrepreneurship is characterized by quick
and stable growth. This means hiring other people to do
specialized jobs. For this reason, entrepreneurship
requires extensive organization and delegation of
tasks. It is important for entrepreneurs to pay close
attention to everything that goes on in their companies,
but if they want their companies to succeed, they must
learn to hire the right people for the right jobs and let
them do their jobs with minimal interference from
management.
 Risk and Rewards

 Entrepreneurship requires risk. The measurement of this

risk equates to the amount of time and money you
invest into your business. However, this risk also tends to
relate directly to the rewards involved. An entrepreneur
who invests in a franchise pays for someone else's
business plan and receives a respectable income, while
an entrepreneur who undertakes groundbreaking
innovations risks everything on an assumption that
something revolutionary will work in the market. If such
a revolutionary is wrong, she can lose everything.
However, if she is right, she can suddenly become
extremely wealthy.
 FUNCTIONS

OF

ENTREPRENEUR
4 Main Functions of an Entrepreneur

 Entrepreneurial Functions

 Managerial Functions

 Promotional Functions

 Commercial Functions
 Entrepreneurial Functions:

 The major entrepreneurial functions

include risk bearing, organizing,
and innovation.
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling
 Managerial Functions:

In simple words, management is getting things

working with and through others. Different
experts have defined term management
differently.

According to Henri Fayol (1949) who is

considered the father of ‘principles of
management,’
“management is to forecast, to plan, to
organize, to command, to co-ordinate, and to
control.”
 The significance of management function lies in the
fact that enterprises with excellent facilities and
quality resources have floundered and fizzled out
due to either no management or poor management
and enterprises with good management but with
poor facilities and resources have flourished and
performed exceedingly well. In small-scale
enterprises, the entrepreneur who is the owner of
the enterprise also, has to perform the management
functions as well.
The management functions performed by entrepreneur
are classified into the following five types:

 1. Planning:
 In common parlance, planning is pre-determined course
of action to accomplish the set objectives. In other
words, planning is today’s projection for tomorrow’s
activity. Planning pervades in all aspects of business. An
entrepreneur has to make decisions as to what is to be
done, how it is to be done, when it is to be done, where
it is to be done, by whom it is to be done and so on.
 The importance of planning lies in the fact that it
ensures the smooth and effective completion and
running of a business enterprise. Absence of planning
causes confusion which, in turn, affects the smooth
performance of job whatsoever it may be.
 2. Organizing:
 The organizing function of an entrepreneur refers to
bringing together the men, material, machine,
money, etc. to execute the plans. The entrepreneur
assembles and organizes the above mentioned
different organs of an enterprise in such a way that
these combined start functioning as one, i.e.,
enterprise. Thus, organizing function of an
entrepreneur ultimately provides a mechanism for
purposive, integrated and co-operative action by
many people in a joint and organized effort to
implement a business plan.
 3. Staffing:
 Staffing involves human resource planning and human resource
management. Thus, staffing function of an entrepreneur includes
preparing inventory of personnel available, requirement of
personnel, sources of manpower recruitment, their selection,
remuneration, training and development and periodic appraisal of
personnel working in the enterprise.
 Business history is replete with evidences that it is basically the staff,
i.e., personnel working in the organization that makes all the
difference. While appreciating the role of personnel in the success
of an organization, L. F. Urwick had remarked that, “business houses
are made or broken in the long-run not by markets or capital,
patents or equipments, but by men.”
 Andrew Carniege’s view that “Take my people and leave my
factory, soon grass will grow on the floor. Take my factory and leave
my people, soon we shall build a better factory” also underlines the
significance of people or staffing in the making of an organization.
However, staffing function is as crucial for the success of a business
enterprise is equally complex as well.
 4. Directing:
 The functions like planning, organizing, and staffing are
merely preparations for setting up a business
enterprise. The directing function of entrepreneur
actually starts the setting up of enterprise. Under the
directing function, the entrepreneur guides, counsels,
teaches, stimulates and activates his/ her employees to
work efficiently to accomplish the set objectives.
 Thus, directing function of entrepreneur concerns the
total manner in which an entrepreneur influences the
actions of his / her employees/ workers. It is the final
action of an entrepreneur in making his / her
employees actually act after all preparations have
been completed.
 5. Controlling:
 Controlling is the last management function
performed by the entrepreneur. In simple words,
controlling means to see whether the
 activities have been performed in conformity with
the plans or not. Thus, controlling is comparison of
actual performance with the target or standard
performance and identification of variation
between the two, if any, and taking corrective
measures so that the target is accomplished.
3. Promotional Functions:
 1. Identification and Selection of Business Idea:

 2. Preparation of Business Plan or Project Report:

 3. Requirement for Finance:

3. Promotional Functions:

 1. Identification and Selection of Business Idea:

 Every intending entrepreneur wants to start the most profitable and
rewarding project. The selection of the most suitable business project
involves a process. The intending entrepreneur, based on his /her
knowledge, experience, and information gathered from friends and
relatives, generates some possible business ideas which can be
examined and pursued as a business enterprise.
 This process is also described as ‘opportunity scanning and
identification’. Then, the generated ideas are analyzed in terms of
costs and benefits associated with them. Having made cost-benefit
analysis of all the ideas, the most beneficial idea is finally selected
to be pursued as business enterprise.
 2. Preparation of Business Plan or Project Report:
 The entrepreneur prepares a statement called ‘business plan’ or
‘project report’ of what he / she proposes to take up. In other
words, business plan is a well evolved course of action devised by
entrepreneur to achieve the specified objectives within a specified
period of time.
 In this sense, business plan is just like an operating document. The
preparation of business plan is not must, but it is very much useful
for the entrepreneur to establish his / her enterprise in an effective
and smooth manner. But, it is must for those entrepreneurs who intend
to apply for financial assistance from the financial institutions and
banks for their enterprises.
 It contains information about the intending entrepreneur, location of
enterprise, requirement for land and building, plant and machinery,
raw material, utilities, transport and communication, manpower,
requirement for funds including working capital along with its
sources of supply, break-even point and implementation schedule of
the project.
 3. Requirement for Finance:
 The entrepreneur prepares requirement for funds
with its detailed structure. The financial requirement
is also classified into short-term and long-term
separately. Then, the sources of supply to acquire
the required fund are also mentioned. How much
will be the share capital in terms of equity and
preference shares and how much will be borrowed
capital from different financial institutions and
banks are clearly determined.
4. Commercial Functions:

 1. Production / Manufacturing:
 Once the enterprise is finally established, it starts
producing goods or offering services, whichever be the
case. Production function includes decisions relating to
the selection of factory site, design and layout, types of
products to be produced, research and development,
and design of the product.
 The ancillary activities include production planning and
control, maintenance and repair, purchasing, store-
keeping, and material handling. The effective
performance of production function, to a large extent,
depends on the proper production planning and control.
2. Marketing:
 All production is basically meant for marketing. Marketing is
the performance of those business activities that direct the
flow of goods and services from producer to consumer or
user. Thus, marketing essentially begins and ends with the
customers. It is important to note that marketing is not just
selling. In fact, marketing includes much more than selling.
Selling is the last function in marketing activities.
 The examples of marketing activities are market or
consumer research, product planning and development,
standardization, packaging, pricing, storage, promotional
activities, distribution channel, etc. The success of marketing
function is linked with an appropriate ‘marketing mix’.
Traditionally, marketing mix referred to 4 Ps, namely,
product, price, promotion, and physical distribution.
 3. Accounting:

 The main objective of any business enterprise is to

earn profits and create wealth. Whether the
business is fulfilling its objective or not is ascertained
through accounting. What is accounting? According
to the American Institute of Certified Public
Accountants, “Accounting is the art of recording,
classifying and summarizing in a significant manner
and, in terms of money, transactions and events
which are, in part at least, of a financial character
and interpreting the results thereof.”
THEORIES OF ENTREPRENEURSHIP

 Definition- An entrepreneur puts together a

business and accepts the associated risk to
make a profit. While this definition serves as a
simple but accurate description of
entrepreneurs, it fails to explain the phenomena
of entrepreneurship itself.
 Economic Theories

 Psychological Theories

 Sociological/Anthropological Theories

 Opportunity-Based Theory

 Resource-Based Theories
Economic Theories

Economic entrepreneurship theories date

back to the first half of the 1700s with
the work of Richard Cantillon, who
introduced the idea of entrepreneurs as
risk takers.
Psychological Theories

 Psychological theories of entrepreneurship

focus on the individual and the mental or
emotional elements that drive
entrepreneurial individuals.
Sociological/Anthropological Theories

 The anthropological model approaches the question

of entrepreneurship by placing it within the context
of culture and examining how cultural forces, such as
social attitudes, shape both the perception of
entrepreneurship and the behaviors of
entrepreneurs.
Opportunity-Based Theory

 The Entrepreneurs excel at seeing and taking

advantage of possibilities created by social,
technological and cultural changes. For example,
where a business that caters to senior citizens might
view a sudden influx of younger residents to a
neighborhood as a potential death stroke, an
entrepreneur might see it as a chance to open a
new club.
Resource-Based Theories
 Resource-based theories focus on the way individuals
leverage different types of resources to get
entrepreneurial efforts off the ground. Access to capital
improves the chances of getting a new venture off the
ground, but entrepreneurs often start ventures with little
ready capital. Other types of resources entrepreneurs
might leverage include social networks and the
information they provide, as well as human resources,
such as education. In some cases, the intangible
elements of leadership the entrepreneur adds to the
mix operate as resource that a business cannot replace.
ROLE & IMPORTANCE OF ENTREPRENEUR IN
ECONOMIC GROWTH
1. Wealth Creation and Sharing
 : By establishing the business entity, entrepreneurs
invest their own resources and attract capital (in the
form of debt, equity, etc.) from investors, lenders
and the public. This mobilizes public wealth and
allows people to benefit from the success of
entrepreneurs and growing businesses. This kind of
pooled capital that results in wealth creation and
distribution is one of the basic imperatives and
goals of economic development.
2. Create Jobs
 : Entrepreneurs are by nature and definition job creators, as
opposed to job seekers. The simple translation is that when
you become an entrepreneur, there is one less job seeker in
the economy, and then you provide employment for multiple
other job seekers. This kind of job creation by new and
existing businesses is again is one of the basic goals of
economic development. This is why the Govt. of India has
launched initiatives such as StartupIndia to promote and
support new startups, and also others like the Make in
India initiative to attract foreign companies and their FDI
into the Indian economy. All this in turn creates a lot of job
opportunities, and is helping in augmenting our standards to
a global level.
3. Balanced Regional Development
 Entrepreneurs setting up new businesses and industrial units help with
regional development by locating in less developed and backward
areas. The growth of industries and business in these areas leads to
infrastructure improvements like better roads and rail links, airports,
stable electricity and water supply, schools, hospitals, shopping malls
and other public and private services that would not otherwise be
available.
 Every new business that locates in a less developed area will create
both direct and indirect jobs, helping lift regional economies in many
different ways. The combined spending by all the new employees of
the new businesses and the supporting jobs in other businesses adds
to the local and regional economic output. Both central and state
governments promote this kind of regional development by
providing registered MSME businesses various benefits and
concessions.
4. GDP (Gross domestic product) & Per Capita Income

 India’s MSME sector, comprised of 36 million units

that provide employment for more than 80 million
people, now accounts for over 37% of the country’s
GDP. Each new addition to these 36 million units
makes use of even more resources like land, labor
and capital to develop products and services that
add to the national income, national product and
per capita income of the country. This growth in
GDP and per capita income is again one of the
essential goals of economic development.
5. Standard of Living:
 Increase in the standard of living of people in a
community is yet another key goal of economic
development. Entrepreneurs again play a key role in
increasing the standard of living in a community. They
do this not just by creating jobs, but also by developing
and adopting innovations that lead to improvements in
the quality of life of their employees, customers, and
other stakeholders in the community. For example,
automation that reduces production costs and enables
faster production will make a business unit more
productive, while also providing its customers with the
same goods at lower prices.
6. Exports
 : Any growing business will eventually want to get
started with exports to expand their business to
foreign markets. This is an important ingredient of
economic development since it provides access to
bigger markets, and leads to currency inflows and
access to the latest cutting-edge technologies and
processes being used in more developed foreign
markets. Another key benefit is that this expansion
that leads to more stable business revenue during
economic downturns in the local economy.
7. Community Development:
 Economic development doesn’t always translate into
community development. Community development requires
infrastructure for education and training, healthcare, and
other public services. For example, you need highly
educated and skilled workers in a community to attract new
businesses. If there are educational institutions, technical
training schools and internship opportunities, that will help
build the pool of educated and skilled workers.
 So, there is a very important role for entrepreneurs to spark
economic development by starting new business, creating
jobs, and contributing to improvement in various key goals
such as GDP, exports, standard of living, skills development
and community development.
Entrepreneurial Motivation

MOTIVATION IS INTERNAL TO MAN

A Single motive can cause different

behaviors

Different motives may result in single

behavior

Motives come and go

Motives interact with the environment

Entrepreneurial Motivating Factors

 Most of the researchers have classified all the

factors motivating entrepreneurs into internal
and external factors as follows:
 There are 2 types of factors
 1. Internal Factors
 2. External Factors
INTERNAL FACTORS
 Desire to do something new.
 Become independent.
 Achieve what one wants to have in life.
 Be recognized for one’s contribution.
 One’s educational background.
 One’s occupational background and experience in
the relevant field.
EXTERNAL FACTORS

 Government assistance and

support.
 Availability of labour and
raw material.
 Encouragement from big
business houses.
 Promising demand for the
product.
Importance of Risk Taking Abilities for
Entrepreneurs

 Risk can be defined as possibility of failure or loss or

other adverse consequences in pursuing some activity or
venture. Risk bearing and entrepreneurship are
inseparable from each other. Risk, as an attribute,
affects entrepreneurial behavior. It is, among other
things, the element of risk involved in entrepreneurial
career, many people become hesitant to become
entrepreneur.
 Even those who take risk by joining entrepreneurship
differ in the degree of risk taking ability and
willingness.
Depending on the degree of risk, risks can be categorized
as high risk, moderate risk, and low risk. All three types of
risks influence entrepreneurial behavior differently.
INNOVATION & ENTREPRENEUR
 Digging down into the nature of innovation
 “It’s the introduction of novelty in a given market or
industry, such as new products, services, methods,
sources of supply or organization,”
 “At the same time, there’s a strong emphasis on
successful commercialization - that is, an innovation
is more than an idea or an invention, it’s the result
of taking it to market.”
THE ROLE OF TECHNOLOGY AND DIGITAL MEDIA IN
INNOVATION AND ENTREPRENEURSHIP

 Whether a knack for innovation is instinctive or

something that’s refined through practice and
experience, one thing that’s always helped grease
the wheels of entrepreneurial creativity is
technology. “Technology has, throughout history,
been a major source of discontinuity —displacing
incumbents and replacing them with something
faster, bigger and better,”
HELPING ENTREPRENEURS DEVELOP INNOVATION-
BASED GROWTH AND RENEWAL STRATEGIES

 Whatever part technology plays

in a business enterprise, nothing
can substitute the fundamental
knowledge and set of skills an
entrepreneur will need to be
successful.
Entrepreneurial Development in India:

 HISTORY-
Indians have always been entrepreneurial in
nature, its just only recently that this word is
being used so often
 In the pre colonial times the Indian trade and
business was at its peak. Indians were experts in
smelting of metals such as brass and tin.
Entrepreneurial Development in India:
 Stages of Entrepreneur Growth

 The Five Stages of

Entrepreneur
Growth
 (1) Employee
 (2) Self-Employed
 (3) Entrepreneur
 (4) Investor
 (5) Philanthropist;
(1) The Employee Stage
 Focus 80% of your time and effort on your current
stage, and 20% on your next phase.
 Excellent leaders first learn to be excellent
followers. And, for the entrepreneurially minded,
employment offers a low-risk opportunity to learn
skills and test your interest in a particular activity or
industry.
What Entrepreneurial Employees Should
Focus On
 1. Habits and routines. Benjamin Franklin wrote that these above all
else determine one’s success, and are as true today as they were
when he wrote them 250 years ago. Keep an hourly calendar, and
practice prioritizing daily tasks as well as ending the day with an
objective review.
 2. Building Your ‘Inner Game.’ “Your attitude determines your
altitude” was a favorite quote of Zig Ziglar, and it’s true. Start a
life-long habit of reading and meditating on aspirational and
motivating quotes and images — they make a wonderful way to
start your day.
 3. Learning the Business. What are your employer’s strengths and
weaknesses? Will businesses like it be around in ten years (or fifty)?
If not, why not? How would you improve the business, and how would
you manage its weaknesses (and if your employer has the maturity
to not take such feedback personally, share your thoughts — at the
very least you’ll get insightful feedback, and perhaps a special
insight).
(2) The Solopreneur / Self-Employed
Stage
 Most entrepreneurs start their first business as sole
proprietors — as single owners whose supporting
employees are not directly profit generators. From
doctors and lawyers to carpet cleaners and event
planners, the self-employed Solopreneur forms what
is traditionally the backbone of society. In fact,
when you were young, when you thought of a
business owner, you probably thought of a
Solopreneur.
What Entrepreneurial Solopreneurs
Should Focus On
 join a community of startup entrepreneurs
 listen to podcasts, take classes, and read constantly
about startup activity
 consider joining an accelerator or co-working space
 explore business models with you mentors, and by
experimenting
 learn the pros/cons of outside investment
 begin engaging professionals to manage your
regulatory environment
(3) The Entrepreneur Stage
 So, you've got a business you can scale, and when you scale
it you have tested assumptions so that you know what your
expenses and new revenues should be? Congratulations!
You are an entrepreneur!
 You've learned to manage risks, so while you have more on
the line, you're doing it smart — with intention.
Unfortunately, your challenges are far from over. As you
add employees and customers you add a new plate of
issues
 Entrepreneurs are driven to grow their business and bring
their passion to more and more people. To outsiders, growth
looks like success — particularly because ”winners have a
thousand fathers, failures are orphans.” Because success is
publicized and failure takes place in a quiet courtroom, it
seems like every business succeeds.
What Entrepreneurial Solopreneurs
Should Focus On
 Professional Outsourcing: find professionals who've
worked with businesses like yours; in particular, begin
using specialized professionals to solve specific pressing
issues most effectively
 · Networking: your local SBA likely has a cadre of
“SCORE counselors” with experience in your business
area, now is a particularly useful time to engage them
(if you haven't already)
 · your local SBA likely has a cadre of “SCORE
counselors” with experience in your business area, now
is a particularly useful time to engage them (if you
haven't already)
(4) The Investor Stage
 At last, you have a business that practically runs
itself, and you're ready to invest your time and
diversify your holdings as an entrepreneur.
 Unlike ”professional” investors who manage
primarily the funds of others, you're motivated to
put your own money at risk on people, ideas,
markets and plans you believe in. Way to
go! You're an Angel Investor.
What Investors Should Focus On

 · Marketplace and Innovation Awareness:

anticipating trends replaces recognizing trends
 · Practice Investing: like stock market investors
paper-trade, make a few ”paper investments” in
deals other angel investors you know are getting
into, before jumping in with your wallet
 · Mitigate Tax Consequences: Consider creating a
charitable trust, and make your investments after
consulting with your tax advisor
(5) The Philanthropist Stage

 Eventually, investors want to make an even

bigger direct impact on others. Here is where most
entrepreneurs are misunderstood: almost all
entrepreneurs want to make a positive impact on others
— very few do what they do to chase a dollar. Here,
the nature of the desired impact changes as a result of
both financial success, and the realization that we have
limited time on this planet.
 At this stage, you simply get tired of watching your
investments take time to grow. Now, you take
responsibility for making a direct improvement “now,”
even if perhaps a larger impact could be made over
time some other way.
As a philanthropist, your biggest
challenges arise from
 (1) not being taken advantage of (conmen thrive in
the philanthropic world)
 (2) the personal relationships that you will often
upend by your charity (yes, some friends and family
members will be offended that you've financially
supported a cause, and not their cause).
Small Scale Industries (SSIs)

Definition of SSIs
 Conventional

 Operational

 National Income Accounting

 CONVENTIONAL DEFINITION- cottage & handicraft
industries that employ conventional labor- oriented
method to produce conventional products, mainly in the
rural areas. Some examples are handloom and
handicrafts
 OPERATIONAL DEFINITION- All the undertaking having
an investment in fixed assets in plants and machinery,
whether held on ownership terms or by lease or hire-
purpose, not exceeding Rs. 60 lakhs.
 National Income Accounting- A unit engaged in
manufacturing servicing, processing and preservation of
goods having investment in plant and machinery, at an
original cost not exceeding Rs. 60 lakh
 CHARACTERSTIC OF SSIs
 . Capital investment is small and most of them have
small number of workers
 . Generally owned by a single or at the most tow
persons and engaged in production of small goods
 . Most of them are family owned industries
 Workers are not well recognize and they may do
different types of works as need arises
 . Funded by owner’s saving or short term loans
 . Small scale industrial activity is mainly dependent on
owner’s entrepreneurship.
 Exploitation of natural resources and human resources
 . Generally management and organization are very
poor or non existent in SSIs
 . Incidents of early closure are of highest order.
 Profit margins are less to competition.
 Innovation and risk bearing are high in SSIs
 Faces cut throat competition
 Few of them many grow as medium scale industries.
 Generally found in urban or semi urban area
NEED AND RETIONALE OF SSIs

 . Innovative
 . Self satisfaction
 . Caters to individual taste and style
 . Small in operation
 . Strength of nation
 . Spread over wide areas
OBJECTIVES OF SSIs
 . Creations of employment opportunity
 Improvement of output, income and better standard
of living
 . Elimination of economic, backwardness of rural
and underdevelopment areas.
 . To reduce imbalance.
 . To provide employment and means of a regular
sources of income to the needy people living in the
rural and semi urban areas.
 . To improve the quality of industry products
produced in cottage industries and increase
production and profits.
 . To facilitate import substitute
 . To encourage entrepreneurship and self reliance.
 . To mobilize regional resources of capital
SCOPE OF SSIs
 . Manufacturing activities
 Servicing / repairing activates
 Construction activities
 Financial activities
 Retailing activities
 Wholesale business
 Transport activities
 Public utilities
 Communication
SOME OF THE INDUSTRIES RESERVED FOR EXCLUSIVE
DEVELOPMENT IN THE SMALL SECTOR ARE:

 FOOD & ALLIED Industries

 Clock and watches
 Stationery Items
 Textile Products
 Sports Goods
 Leather & lather products including
 Mathematical & survey instruments
 Rubber and plastic products
 Miscellaneous transport equipments
 Chemical products
 Glass and ceramics
 Natural essential oils
 Electrical appliances, Electronics components and
equipments
 Organic chemicals and chemical products
 Metal cabinets
 Boats and truck building
 Mechanical Engineering and transport Equipment etc
ADVANTAGES OF SSIs
 SSIs don’t require to a high level technology
 They don’t require large capital
 The source and capabilities of under employed and
unemployed people can be used for productive
purpose.
 The project related to SSIs can be completed in short
period.
 SSIs can be based on the processing of locally
produced raw materials like agriculture goods, forest
and minerals recourses etc.
 Possibility of earning and saving foreign exchange by
exporting goods produced from local resources
Government Policies for Development &

Promotion of Small-Scale Industries in India

 1. Industrial Policy Resolution (IPR) 1948:

 2. Industrial Policy Resolution (IPR) 1956:

 3. Industrial Policy Resolution (IPR) 1977:

 4. Industrial Policy Resolution (IPR) 1980:

 5. Industrial Policy Resolution (IPR) 1990:

Government Policies for Development
and Promotion of Small-Scale
Industries in India
 Some of the Government Policies for development and
promotion of Small-Scale Industries in India are: 1.
Industrial Policy Resolution (IPR) 1948, 2. Industrial
Policy Resolution (IPR) 1956, 3. Industrial Policy
Resolution (IPR) 1977, 4. Industrial Policy Resolution (IPR)
1980 and 5. Industrial Policy Resolution (IPR) 1990.
 Since Independence, India has several Industrial Policies
to her credit. So much so that Lawrence A. Veit tempted
to say that “if India has as much industry as it has
industrial policy, it would be a far well-to-do nation.”
With this background in view, in what follows is a
review of India’s Industrial Policies for the development
and promotion of small-scale enterprises in the country.
 1. Industrial Policy Resolution (IPR)
1948:
 The importance of SSIs in overall industrial development
of the country was accepted for the first time in IPR
1948
 It was well recognized that SSIs are particularly suited
for using the local resources and to create employment
for rural
 Initially SSI faced lot of problem like shortage of raw
materials and capitals
2. Industrial Policy Resolution (IPR)
1956:
 The main contribution of the IPR 1948 was that it set
in the nature and pattern of industrial development
in the country. The post-IPR 1948 period was
marked by significant developments taken place in
the country. For example, planning has proceeded
on an organized manner and the First Five Year
Plan 1951-56 had been completed. Industries
(Development and Regulation) Act, 1951 was also
introduced to regulate and control industries in the
country.
Besides, the Small-Scale Industries Board (SSIB) constituted
a working group in 1959 to examine and formulate a
development plan for small-scale industries during the,
Third Five Year Plan, 1961-66. In the Third Five Year Plan
period, specific developmental projects like ‘Rural
Industries Projects’ and ‘Industrial Estates Projects’ were
started to strengthen the small-scale sector in the country.
Thus, to the earlier emphasis of ‘protection’ was added
‘development.’ The IPR 1956 for small-scale industries
aimed at “Protection plus Development.” In a way, the IPR
1956 initiated the modem SSI in India.
3. Industrial Policy Resolution (IPR)
1977:
 During the two decades after the IPR 1956, the
economy witnessed lopsided industrial development
skewed in favour of large and medium sector, on
the one hand, and increase in unemployment, on the
other. This situation led to a renewed emphasis on
industrial policy. This gave emergence to IPR 1977.
The IPR 1977 accordingly classified small
sector into three broad categories:

 1. Cottage and Household Industries which provide

self-employment on a large scale.
 2. Tiny sector incorporating investment in industrial
units in plant and machinery up to Rs. 1 lakh and
situated in towns with a population of less than
50,000 according to 1971 Census.
 3. Small-scale industries comprising of industrial
units with an investment of upto Rs. 10 lakhs and in
case of ancillary units with an investment up to Rs.
15 lakhs.
The measures suggested for the
promotion of small-scale and cottage
industries included:
 (i) Reservation of 504 items for exclusive production in
small-scale sector.
 (ii) Proposal to set up in each district an agency called
‘District Industry Centre’ (DIC) to serve as a focal point
of development for small-scale and cottage industries.
The scheme of DIC was introduced in May 1978. The
main objective of setting up DICs was to promote under
a single roof all the services and support required by
small and village entrepreneurs.
 What follows from above is that to the earlier thrust of
protection (IPR 1948) and development (IPR 1956), the
IPR 1977 added ‘promotion’. As per this resolution, the
small sector was, thus, to be ‘protected, developed, and
promoted.’
4. Industrial Policy Resolution (IPR)
1980:
 The Government of India adopted a new Industrial
Policy Resolution (IPR) on July 23, 1980. The main
objective of IPR 1980 was defined as facilitating
an increase in industrial production through optimum
utilization of installed capacity and expansion of
industries.
As to the small sector, the resolution
envisaged:
 (i) Increase in investment ceilings from Rs. 1 lakh to Rs. 2
lakhs in case of tiny units, from Rs. 10 lakhs to Rs. 20 lakhs in
case of small-scale units and from Rs. 15 lakhs to Rs. 25
lakhs in case of ancillaries.
 (ii) Introduction of the concept of nucleus plants to replace
the earlier scheme of the District Industry Centers in each
industrially backward district to promote the maximum
small-scale industries there.
 (iii) Promotion of village and rural industries to generate
economic viability in the villages well compatible with the
environment.
 Thus, the IPR 1980 reemphasized the spirit of the IPR 1956.
The small-scale sector still remained the best sector for
generating wage and self-employment based opportunities
in the country.
5. Industrial Policy Resolution (IPR)
1990:
 The IPR 1990 was announced during June 1990. As
to the small-scale sector, the resolution continued to
give increasing importance to small-scale
enterprises to serve the objective of employment
generation.
The important elements included in
the resolution to boost the
development of small-scale sector
were as follows:

 The IPR 1990 was announced during June 1990. As

to the small-scale sector, the resolution continued to
give increasing importance to small-scale
enterprises to serve the objective of employment
generation.
The important elements included in
the resolution to boost the
development of small-scale sector
were as follows:
 (i) The investment ceiling in plant and machinery for
small-scale industries (fixed in 1985) was raised from
Rs. 35 lakhs to Rs. 60 lakhs and correspondingly, for
ancillary units from Rs. 45 lakhs to Rs. 75 lakhs.
 (ii) Investment ceiling for tiny units had been increased
from Rs. 2 lakhs to Rs. 5 lakhs provided the unit is
located in an area having a population of 50,000 as
per 1981 Census.
 (iii) As many as 836 items were reserved for exclusive
manufacture in small- scale sector.
 (iv) A new scheme of Central Investment Subsidy exclusively
for small-scale sector in rural and backward areas capable
of generating more employment at lower cost of capital had
been mooted and implemented.
 (iv) With a view, to improve the competitiveness of the
products manufactured in the small-scale sector;
programmes of technology up gradation will be
implemented under the umbrella of an apex Technology
Development Centre in Small Industries Development
Organisation (SIDO).
 (v) To ensure both adequate and timely flow of credit
facilities for the small- scale industries, a new apex bank
known as ‘Small Industries Development Bank of India
(SIDBI)’ was established in 1990.
 (vi) Greater emphasis on training of women and youth
under Entrepreneurship Development Programme (EDP)
and to establish a special cell in SIDO for this purpose.
 (vii) Implementation of delicencing of all new units with
investment of Rs. 25 crores in fixed assets in non-
backward areas and Rs. 75 crores in centrally notified
backward areas. Similarly, delicensing shall be
implemented in the case of 100% Export Oriented
Units (EOU) set up in Export Processing Zones (EPZ) up
to an investment ceiling of Rs. 75 lakhs.
Project Feasibility Analysis: Business Ideas

 The project feasibility is an analysis or study or new

business or product idea and covers the discussions,
analysis, and study of the different aspects (almost
every aspect) of the feasibility of a START-UP
businesses.
 A visibility report focuses on the various aspects of
the survivability of the start-up business such as
product feasibility, financial feasibility, Market
feasibility, Plant/Machinery feasibility, Manpower
feasibility, location feasibility etc.
The three amazing benefits of having
feasibility study or analysis:
 1.Specific
 Being focused and specific a feasibility study or
analysis starts with a single question—asking whether
the idea, event or action is a viable solution—and
force you to focus solely on that question to the
exclusion of everything else, drilling down to explore
possible outcomes.
 A feasibility analysis is different than the business plan.
A feasibility study is an investigative tool that might
cause you to discount an idea, whereas a business plan
is a call to action. Generally, feasibility analysis is used
as a predecessor to creating a business plan.
2.The Big Picture
 Feasibility study or analysis force you consider the big
picture first and then think of a top-down approach. In
this way, one or two general starter questions lead to a
host of additional, more detailed questions that become
increasingly narrower in focus as you get closer to
reaching an ultimate answer. For example, asking
whether anyone will buy your new-and-improved
product and whether it will generate a profit creates
additional questions that force you to consider customer
need and possible competition, and to identify risks that
you may face.
 You must also describe the followings: -
 –Your product and its benefits,
 – Your target market, and
 – Cost along with break-even and profit points.
3.Alternative Solutions

 Feasibility study or analysis offer you the chance to

“get it right” before committing time, money and
business resources to an idea that may not work in the
way you originally planned, causing you to invest even
more in correcting flaws, removing limitations, and then
simply try again. Feasibility studies may also open your
eyes to new possibilities, opportunities, and solutions you
might never have otherwise considered. There are no
right or wrong answers to the questions you ask, but an
answer you don’t necessarily want or expect can create
new profit potential.
The Usability and inclusion of a
feasibility report:
 Feasibility studies do not dive into, in-depth long-
term financial projections. In basic terms, investor or
start-up owner should have a foresight if he will
make or lose money during this project. The investor
decides to proceed or not, considering the outcomes
of the feasibility study.
 Accordingly, a successful feasibility study should do
a basic break-even analysis to see how much money
would be necessary to meet the operating expenses
of the business idea.
So, there are two main elements to
take into consideration:
 1.Cost = Money + Time + Effort
 2.Value expected to be delivered by business idea
 That being said, a feasibility study dives into four major
areas:
 1.Market Analysis
 2.Organizational Setup
 3.Technical Issues
 4.Financial Analysis
 As the first step of a feasibility study, the market
analysis should be done in order to have an idea about
supply & demand balance of your product or service.
Market Analysis:

 Units to be Sold: How many units do you project to sell each month?
 Supply Projection: What is the projected supply in your area of the
products or services needed for your project?
 Identification of Target Market and Target Customer: What are
your target market and target customer? How many are they, your
potential customers?
 Competition Analysis: What competition exists in this market? Can
you establish a market niche which will enable you to compete
effectively with others providing this product or service?
 Location: Is the location of your proposed business or project likely
to affect its success? If so, is the identified site the most appropriate
one available?
Organizational Setup:

 As the next step to market analysis, right

organizational structure and organizational
qualifications to manage the business should be
determined. People to be on board, in management
and other positions should be carefully thought and
assigned. In this step, in order to illustrate your
organizational structure on an org chart, as a quick
and simple solution, use an.
 Technical Issues:
 Depending on the nature of your business idea,
technology and equipment may become one of the
biggest cost element. So you need to decide
on technology and equipment needed. On the other
hand, you should consider the date when you will obtain
those since they will directly affect your start-up timeline.
 Financial Analysis:
 As a final step, you should analyze key financial
parameters as following:
 Variable Costs: These are the costs incurred in starting up
a new business, including COGS
 Fixed Costs: Here you will define OpenX and Capex
 Logistics & Inventory
 Sales Projections and Target Realization Reporting: This is
your monthly sales amount projection.
 Sales Channels: You should define how much of sales will
be distributed on which channel and sell out prices for each
channel
 Pricing: Considering competition, the most appropriate price
positioning for your product or service should be
determined.
 Profit and Loss Statement Report: This is for finding the
break-even point for the proposed business, considering the
costs and revenue generated.
 As a conclusion, your feasibility study should give a clear
idea whether your business idea deserves investment or not.
If you want to ease your feasibility study process, using
ready-to-use Feasibility Study Kit for Start-ups which include
all above will be a smart solution for you.
Legal Formalities and Documentation.

Starting a new business has always

been a challenging and exciting
process. Here’s a step-by-step
guide to starting a business in India:
 1. Obtain Director Identification Number (DIN)
 Obtain the provisional DIN by filing application Form
DIN-1 online. The application form must then be printed
and signed and sent for approval to the ministry along
with proof of identity and address. Upon verification
and approval, a permanent DIN is issued.
 2. Obtain Digital Signature Certificate
 The digital signature certificate can be obtained from
one of six private agencies authorized by MCA 21.
Company directors must submit the prescribed
application form along with proof of identity and
address.
 3. Reserve the company name online
 Company name approval must be done electronically. The
applicant can check the availability of the desired
company name on the MCA 21 web site. A maximum of 6
names may be submitted. Once approved, the selected
name appears on the website.
 4. Stamp the company documents
 The request for stamping the incorporation documents
should be accompanied by unsigned copies of the
Memorandum and Articles of Association (MAA), and the
payment receipt. The Superintendent returns the copies,
one of which is duly stamped, signed, and embossed.
Then the MAA must be signed by the company promoters
and required information filled in their own handwriting.
 5. Get the Certificate of Incorporation
 Forms e-form 1; e-form 18; and e-form 32 are required to be
electronically filed on the website of the Ministry of Company
Affairs: Scanned copies of the consent of the initial directors,
and also of the signed and stamped form of the MAA must be
attached to Form 1. One copy of the MAA, Articles of
Association, Form 1, Form 32, Form 18 and the original name
approval letter, consent of directors and stamped power of
attorney must be submitted to the Registrar of Companies. The
certificate of incorporation is sent automatically to the
registered office of the company by registered mail.
 6. Make a seal
 Companies require a seal to issue share certificates and other
documents. The cost depends on the number of words to be
engraved, the number of seals required, and the time period
for delivery.
 7. Obtain a Permanent Account Number (PAN)
 The PAN application is made using Form 49A. After PAN
is obtained a printed PAN card would be delivered. The
application for PAN can also be made online but the
documents still need to be physically sent for
verification.
 8. Obtain a Tax Account Number (TAN)
 The application for TAN must be filed using Form 49B
and submitted at any TIN Facilitation Center. After
verification of application, the same is sent to the Income
Tax Department and the TAN is issued. The application
for a TAN can be made either online through the NSDL
website or offline.
 9. Register with the Office of Inspector, Shops and
Establishment Act (State/Municipal)
 A statement containing the employer’s and manager’s
names and the establishment’s name, postal address,
and category must be sent to the local shop inspector
with the applicable fees. Establishments must be
registered within 30 days of the opening of the
business.
 10. Register for GST
 Every business whose Annual turnover exceeds Rs 20
lakh (for special states, the amount is Rs 10 lakh) has to
register for GST. Please go to the GST portal and
follow the procedure instructed.
 11. Register for Profession Tax at the Profession Tax
Office (State)

 According to section 5 of the Profession Tax Act, every

employer (not being an officer of the government) is
liable to taxation and shall obtain a certificate of
registration from the prescribed authority. The company
is required to apply to the registering authority using
Form 1.
 12. Register with Employees’ Provident Fund
Organization (National)
 The employer is required to provide necessary
information to the concerned regional Provident Fund
Organization (EPFO) in the prescribed manner for
allotment of Establishment Code Number. No separate
registration is required for the employees.
 13. Register for Medical Insurance
 Registration is the process by which every paid
employee is identified for insurance purposes and
their individual records are set up for them. As per
the Employees’ State Insurance (General), Form 01
must be submitted by the employer for registration
after which the Employer Code Number is issued.
BEFORE START ONLINE SELLING
 Selling online in India or in any country for that
matter involves various costs. Its important to first
find out if you can make good profits after
considering all those costs. Lets look at some of the
important costs:
 Shipping Cost – Visit your nearest courier or
shipping company and find out how much it would
cost to ship your product in various parts of India.
Make a list of states and shipping.
 Packaging Cost – Depending on the type of product
you are planning to sell, you will need to consider the
packaging cost. Check the different packing material
and calculate how much you will need for one product.
Calculate the total cost per product accordingly.
Normally its between 0.5% to 2% of the product cost.
 Payment Gateway Cost – If you planning to setup your
own store, you will need a payment gateway. These
sites normally charge between 1.5% to 5% of the total
transaction. There could be one time setup fee and
recurring annual maintenance fees. Last time when I
checked, most payment gateway providers had waived
off these fees. You can negotiate the transaction fee if
you have higher volume.
 Storage Cost – Depending on the product, you
might need to rent warehouse or some storage
space for your products. Find out this cost as well.
Some online marketplaces like Amazon let you use
their warehouses at a small fee.
 Marketing Cost – Like any other business, you will
have to tell the world that you have arrived. Surely,
there are free ways to promote your business but at
some point of time you will have invest in paid
marketing channels. Google’s AdWords is a good
platform to start with online ads and it also
offers tools to calculate the costs.
2) Create digital catalogue of your
products
 Assuming you have passed the profit margin test, its time to
take the next step. You will need to create a list of products
in a spreadsheet. Later you will be able to import that list to
eCommerce marketplaces or self hosted shopping cart. This
list should contain Product Code (or SKU), Product Name,
Description, Category, Selling Price, Discount (If any), Brand,
Colour and other applicable attributes.
 Once this is done, take 3-4 good quality photographs of the
product from different angles, preferably in white
background. Product images play a vital role in online
selling, so its recommended to take help from a professional.
In some case, you can get these photos from the
manufacturer as well
3) Setup End to End Process

 Its better to get organized from the day one. Do

you know how event management companies
manage huge events without any goof up? Well,
they play the entire event in their minds before they
start working on it. You can do the same and lay out
a process describing steps from getting an order to
shipping the goods.
 It could be a simple checklist for doing quality
checks, packaging, invoicing, etc. This will help also
help your staff when you are not around.
4) Use A Good Inventory Management
Software
 As you will be dealing with inventory everyday, it
might become painful to manage inward and
outward stock movement manually. Start using
a good inventory management software to track
your inventory. Some of the software even provide
inventory sync option with your shopping cart or
marketplace account.
5) Be discoverable online

 Your customers are more likely to search for your

business before they make any purchase. If they
can’t find product reviews or any other information
about your business, they might drop off. So, its
important to have online presence in the form of
company website, social media account or any other
channel.
Selling On Marketplaces Vs Own Web
Store
 Now that you are ready to sell online, its time for a big
decision. Should you sell on online ecommerce marketplaces
like Flipkart or Amazon or should you setup your own web
store?

 Lets evaluate the first option:

 Sell online using ecommerce Marketplaces:
 This one is perhaps the most simple option. Process of selling
on these marketplaces is very simple and you can start
selling within a week.
 Your options –
Flipkart, Amazon, eBay, Snapdeal, Shopclues and PayTM.
 Process Involved
 All you have to do is to visit seller-registration
pages of these sites by clicking on the links above
and submit your business details. You will need to
keep VAT registration number, PAN number and
Bank details handy. Some sites need address proof
as well. You can upload scanned copies of these
documents. Verification is completed normally in
couple of days.
 Advantages
 You can save big on the marketing cost. All of these
marketplaces attract millions of visitors everyday
and have a loyal user base. You also don’t need to
worry about the payment gateway and shipping.
Most of these portals provide packing material as
well.
Disadvantages
 These marketplaces charge higher commission on
every sale. For some items, it could go up to 15-
20%. Apart from this, you have a little control over
how your product is displayed on their sites.
As you can see, selling on ecommerce marketplaces
is fairly simple and straight forward process. It
takes less time and you can save on your marketing
costs.
 THANK YOU