Entrepreneurship Development notes

Entrepreneurship Development

ANUJITH

Small and medium-sized enterprises Small Business

Small and medium-sized enterprises (SMEs; sometimes also small and medium enterprises) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits.

Small enterprises outnumber large companies by a wide margin and also employ many more people.

SMEs are also said to be responsible for driving innovation and competition in many economic sectors.

Definition of MSMEs in India

Role of SMEs in Nation development

High contribution to Domestic Production, Significant Export Earnings

Low Investment Requirements

Operational Flexibility

Location Wise Mobility

Low Intensive Imports

Capacities to Develop Appropriate Indigenous Technology

Import Substitution

Contribution towards Defence Production

Technology – Oriented Industries

Competitiveness in Domestic and Export Markets thereby generating new entrepreneurs by providing knowledge and training.

Advantages of MSMEs

Employment generation

Use of local raw materials

Balanced regional development

Decentralisation of industries

Mobilisation of capital

Developing entrepreneurship

Equitable distribution of wealth

Efficient use of production factors

Promotion of export

Better adaptability

Innovation

Threats for SMEs

Sub-optimal scale of operation

Technological obsolescence

Supply chain inefficiencies

Increasing domestic and global competition

Fund shortages

Change in manufacturing strategies and turbulent and uncertain market scenario.

Problems faced by SMEs

Absence of adequate and timely banking finance

Non availability of raw materials

Limited capital and knowledge

Non-availability of suitable technology

Low production capacity/ under utilisation of capasity

Ineffective marketing strategy

Identification of new markets

Constraints on modernisation & expansions

Non availability of highly skilled labour at affordable cost

Follow-up with various government agencies to resolve problems etc

Creating competitive advantage

To survive with such issues and compete with large and global enterprises, SMEs need to adopt innovative approaches in their operations.

Characteristics of an Ideal SME

Innovative

Inventive

International business outlook

Strong technological base

Competitive spirit

Willingness to restructure themselves can withstand the present challenges

Supporting agencies of SMEs

Small Industries Development Organization (SIDO)

National Small Industries Corporation Ltd. (NSIC)

Small Industries Development Bank of India (SIDBI)

Confederation of Indian Industry (CII)

Laghu Udyog Bharti (LUB)

Federation of Indian Chamber of Commerce and Industry (FICCI)

Associated Chamber of Commerce and Industry of India (ASSOCHAM)

National Institute of Small-Industry Extension Training (NISIET)

World Association for Small and Medium Enterprises (WASME)

Small Scale Industries Board (SSIB)

PHD Chamber of Commerce and Industry (PHDCCI)

Federation of Indian Exporters Organization (FIEO)

Federation of Associations of Small Industries of India (FASII)

Role of MSME in India

The Micro, Small and Medium Enterprise (MSME) sector is crucial to India’s economy.

There are 29.8 million enterprises in various industries, employing 69 million people.

In all, the MSME sector accounts for 45 percent of Indian industrial output and 40 percent of the exports.

Although 94 percent of MSMEs are unregistered, the contribution of the sector to India’s GDP has been growing consistently at 11.5 percent a year, which is higher than the overall GDP growth of 8 percent

MSMEs share by sector

Growth Performance of SMEs or MSMEs in India

Employment in MSME Sector

Sector wise MSME

Entrepreneurship

Entrepreneurship is the process of starting a business or other organization.

The entrepreneur develops a business model, acquires the human and other required resources, and is fully responsible for its success or failure.

Entrepreneurship operates within an entrepreneurship ecosystem.

In elementary economics, there are four factors of production namely land, labour, capital and the entrepreneur.

The Entrepreneur according to economic theory is the person who coordinates the other three factors of production.

Qualities / Skills of an Entrepreneur

To be a successful and ideal entrepreneur, one should have certain qualities or skills as given below :-

Ability to organize

Risk bearer

Innovative

Decision Making

Negotiation skills

Foresight

Organizing capability

Effective Communication

Perseverance

Functions of Entrepreneur:-

(I) Primary Function

(II) Other Function

(I) Primary functions:-

(a) Planning:- Planning process covers steps:-

i. Scanning of the best suitable idea.

ii. Selection of product line.

iii. Determination of business organization.

iv. Estimation of the capital needed.

v. Selection of capital resources

vi. Selection of location.

vii. Studying the govt. rules relations & policies.

viii. Selecting the way to fulfill the govt. facilities.

ix. Study of availability of work force.

x. Study of market strategy to be adopted.


(b) Organizations:- co-coordinators- land, labour and capital.

(c) Decision – Making:-

- Determination of the business objectives of the enterprise.

- Decision regarding procurement of machine, material, men, money and market.

- Decision regarding requisition of efficient technology & new equipments.

- Decision regarding development of a market for the product.

- Maintenance of good relations with public authorities & with society at large.

(D) Management:- Men, Machine, Material, Money, Land, Labour & Capital for the enterprise.


(E) Innovation:- Implies “doing of new things or doing of things that are already being done in a new ways”.

- Launching of new product in the market.

- Introduction of new technology in the production.

- Creation of new market

- Discovery of new & better resources of raw material.

- Creation of monopoly or breaking up monopoly.

(F) Risk Baring

(G) Uncertainty Bearing (Trade Credits, trends of market.)


(II) Other Functions:-

(a) Diversification of production)

(b) Expansion of the enterprise

(c) Maintaining cordial employer-employee relations

(d) Tackling of labour problems.

(e) Co-ordination with outside agencies.

Functions of an entrepreneur

The functions of an entrepreneur is classified into five broad categories:

Risk-bearing function,

Organisational function,

Innovative function,

Managerial function, and

Decision making function.

Importance of Entrepreneur in Economic Development:

Employment Generation

Contribution to National Income

Balanced Regional Development

Harness Locally available resources and entrepreneurship

Improvement in living standards

Management of Scarce resources

Types of Entrepreneurs

1. Adviser

2. Administrator/Organizer

3. Builders/Creators

4. Caretaker

5. Communicator/Trainer

6. Entertainer/Host

7. Investor/Owner: If you have money to invest you can put your capital to work for you investing in stocks, real estate or businesses.

8. Seller: This covers salespeople and brokers in our purchases, from real estate to insurance to art.

9. Technologist/Engineer

How can we say that an entrepreneur contributes to social development?

Entrepreneurs contribute to social development through the following activities.

For Individual

They provide new employment opportunities

They improve the standard of living of the people.

For Investors

They provide investment opportunities for the investors and generate the wealth and distribute it to the investors. Thus helping the investors to grow their wealth.

For the nation

They contribute to the GDP of the nation directly.

They contribute to the area development by re-investing in projects.

They will be responsible for industrial and technical developments.

Characteristics of successful entrepreneurs

Successful entrepreneurs tend to have one or more of the following characteristics:

Passionate about their product or service and about getting things right for the customer

Visionary – they have faith in what they are trying to do. They tend to not get too bogged down in the fine detail of day-to-day business

Energetic and driven – prepared to work consistently long hours, especially in the early stages

Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to take the initiative, spotting opportunities early and taking decisions quickly

Calculated risk-takers – not reckless; they are prepared to take a risk in order to maximise the rewards

Characteristics of successful entrepreneurs

Multi-tasking – able to take on more than one role (product development, selling, recruitment)

Resilient and determined – able to handle problems and overcome hurdles. Setting up a business is difficult and time-consuming

Focused – sets clear goals and self-imposed high standards

Results-orientated – take pleasure from achieving targets and setting the bar higher. Entrepreneurs tend to set clear objectives for their business which then feed into relevant business planning

Persuasive – entrepreneurs are good at bringing other people and businesses “along with the idea”; persuading suppliers to supply a new business, or an employee to leave a current job and join the start-up

Leadership – an entrepreneur leads his or her own business (often working alone in the early stages). As the business develops, the skills of leading others become even more important

Entrepreneurs vs. Managers

Entrepreneurs are the change agents.

Managers are the maintainers.

In times of accelerated change organizations need innovators and entrepreneurs. In more stable times, organizations need managers.

Entrepreneurs vs. Managers

Entrepreneurs Professional Managers

1. Perception of an/opportunity2. Risk-taking3. Tactical Planning4. Interpersonal communication5. Negotiating6. Troubleshooting7. Making it a growing concern8. Innovator9. Motivator10. Determined11. Idealist12. Committed13. Visionary14. Planner

1. Setting of objectives2. Policy formulation3. Strategic Planning4. Formal communication5. Organising 6. Motivating7 Controlling8. Administrator9. Skilled, knowledgeable10. Confident11. Specialist12. Loyal13. Planner14. Implementer


ANUJITH KR

Typical questions addressed by a business plan for a start up venture

What problem does the company's product or service solve? What niche will it fill?

What is the company's solution to the problem?

Who are the company's customers, and how will the company market and sell its products to them?

What is the size of the market for this solution?

What is the business model for the business (how will it make money)?

Who are the competitors and how will the company maintain a competitive advantage?

How does the company plan to manage its operations as it grows?

Who will run the company and what makes them qualified to do so?

What are the risks and threats confronting the business, and what can be done to mitigate them?

What are the company's capital and resource requirements?

What are the company's historical and projected financial statements?

Business Plan Outline

1.0 Executive Summary

1.1 Objectives1.2 Mission1.3 Keys to Success

2.0 Company Summary

2.1 Company Ownership2.2 Company History (for ongoing companies) or Start-up Plan (for new companies)2.3 Company Locations and Facilities

3.0 Products and Services

3.1 Product and Service Description3.2 Competitive Comparison3.3 Sales Literature3.4 Sourcing and Fulfilment3.5 Technology3.6 Future Products and Services


4.0 Market Analysis Summary

4.1 Market Segmentation

4.2 Target Market Segment Strategy4.2.1 Market Needs4.2.2 Market Trends4.2.3 Market Growth

4.3 Industry Analysis4.3.1 Industry Participants4.3.2 Distribution Patterns4.3.3 Competition and Buying Patterns4.3.4 Main Competitors


5.0 Strategy and Implementation Summary

5.1 Strategy Pyramids5.2 Value Proposition5.3 Competitive Edge 5.4 Marketing Strategy

5.4.1 Positioning Statements5.4.2 Pricing Strategy5.4.3 Promotion Strategy5.4.4 Distribution Patterns5.4.5 Marketing Programs

5.5 Sales Strategy5.5.1 Sales Forecast5.5.2 Sales Programs

5.6 Strategic Alliances5.7 Milestones


6.0 Management Summary

6.1 Organizational Structure

6.2 Management Team

6.3 Management Team Gaps

6.4 Personnel Plan

7.0 Financial Plan

7.1 Important Assumptions7.2 Key Financial Indicators7.3 Break-even Analysis7.4 Projected Profit and Loss7.5 Projected Cash Flow7.6 Projected Balance Sheet7.7 Business Ratios7.8 Long-term Plan

8.0 Appendix

Entrepreneurship DevelopmentAssignment Project – Business Plan

Select a business of interest

Study the industry, and already existing players in the market (competitor analysis)

Conduct a feasibility study

Develop a business plan with reference to the above

Details of the Project Report

Company Profile

Vision, Mission, Objectives

About products/ services

Study of the industry/ Market Analysis

SWOT Analysis

Study of competitors

Organisational Structure

Marketing Plan/ Promotional activities

Financial Management Plans

Conclusion


SESSION-3

ANUJITH KR

Feasibility planning

Feasibility planning is the process of determining whether a business idea is viable.

It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

Feasibility analysis takes the guesswork (to a certain degree) out of a business launch, and provides an entrepreneur with a more secure notion that a business idea is feasible or viable

Feasibility Planning - Need

Feasibility analysis

Types of Feasibility Planning

Product/ Service Feasibility

Is an assessment of the overall appeal of the product or service being proposed.

The idea is that before a prospective firm rushes a product or service into development, it should be confident that the product or service is what its prospective customers want.

The two components of a product/service feasibility analysis are:

Concept testing

Usability testing

Industry/Market Feasibility

Is an assessment of the overall appeal of the market for the product or service being proposed.

For industry/market feasibility analysis, there are three primary issues that a proposed business should consider:

industry attractiveness

market timeliness

identification of a niche market

Industry/Market Feasibility

Organizational Feasibility Analysis

Is concerned with determining whether the business itself has sufficient skills and resources to bring a particular product or service idea to market successfully.

The factors to be considered are:

management expertise

organizational competence

resources

Financial Feasibility

For feasibility analysis, a quick financial assessment is usually sufficient.

The most important issues to consider at this stage are:

Total start‐up cash needed.

Financial performance of similar businesses.

Overall attractiveness of the proposed venture.

Stages of Growth Model

Marketing Research

Business owners and entrepreneurs acquire information through marketing research that helps identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.

Purpose of marketing research

One of the difficulties companies face with marketing occurs when the owner/manager thinks he or she knows what the customer wants, how they want it, where they want it and when they want it.

Not enough customers, insufficient revenues and excessive inventories indicate that the customer's needs are not being met.

Marketing research can help find the problem and identify a solution. I

t helps managers to look outside of themselves for solutions.

Areas addressed through marketing research studies

What should you market goods, services or both?

Should your marketing feature some sort of price advantage?

Should you emphasize your self, your quality offerings, your selection, your service or merely the existence of your business?

Should you take on your competition or ignore all competitors?

Exactly who are your competitors?

What are your best prospects?

What income groups do they represent?

What motivates them to buy?

Where do they live?

What do they read or watch or listen to in the way of media?

Types of Research

Qualitative

Quantitative


SESSION-4

ANUJITH KR

Stages of Growth Model

Marketing Research

Business owners and entrepreneurs acquire information through marketing research that helps identify and define marketing opportunities and problems; generate, refine and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process.

Purpose of marketing research

One of the difficulties companies face with marketing occurs when the owner/manager thinks he or she knows what the customer wants, how they want it, where they want it and when they want it.

Not enough customers, insufficient revenues and excessive inventories indicate that the customer's needs are not being met.

Marketing research can help find the problem and identify a solution. I

t helps managers to look outside of themselves for solutions.

Areas addressed through marketing research studies

What should you market goods, services or both?

Should your marketing feature some sort of price advantage?

Should you emphasize your self, your quality offerings, your selection, your service or merely the existence of your business?

Should you take on your competition or ignore all competitors?

Exactly who are your competitors?

What are your best prospects?

What income groups do they represent?

What motivates them to buy?

Where do they live?

What do they read or watch or listen to in the way of media?

Types of Research

Qualitative

Quantitative

Entrepreneurial Marketing Concepts

Entrepreneurship Development notes

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