What is Entrepreneurship ?

First concept developed in the year 1700s The term comes from French verb
entrprendre and German word unternehmen , both means to undertake

 Bygrave and Hofer in 1891 defined the

entrepreneurial process as involving all the functions, activities, and actions associated with the perceiving of opportunities and the creation of organisations to pursue them

According to Joseph Schumpter the carrying

out of new combinations we call enterprise, and the individuals whose function it is to carry them out we call entrepreneurs.

 Schumpter tied entrepreneurship to the

creation of five basic new combinations namely introduction of a new product, introduction of a new method of production, opening of a new market, the conquest of a new source of supply and carrying out of a new organization of industry.

 Peter Drucker (1985) proposed that

entrepreneurship is a practice.. Entrepreneurship begins with action, the creation of a new organisation. When individuals create a new organisation, they have entered the entrepreneurship paradigm

 Entrepreneurship ---mindset covers motivation and capacity identify an opportunity produce new value or economic success creativity or innovation to compete

 Entrepreneurial traits and Motivation

A successful entrepreneur must be a person with technical competence, initiative, good judgment, intelligence, leadership qualities, selfconfidence, energy, attitude,creativeness,fairness,honesty, tactfulness and emotional stability

 Mental ability Clear objective Business secrecy Human relations ability Communication ability Technical knowledge

 Motivator Self confidence Long-term involvement High energy

Characteristics of small scale entrepreneurs

They are young men They are energetic/zealous/enthusiastic They have minimum basic education They are pleasant mannered They are hard working They are determined They are systematic

 They are self made men They are self-confident They are disciplined men They follow a planned approach They are trained/experienced They have entrepreneurial zeal They have meager capital

 Their area of operation is small Generally they deal in one product They employ a few people Their turnover is small They are flexible

Financial Resources for New Venture

Asset Management
cash is the most important asset to manage To generate cash , business must generate sales Generate sales---must have inventory, facilities What assets to obtain, when they must be obtained and how to gain access to them

 Inventory decisions Accounts receivable decisions Equipment decisions Facilities decisions

 Types of industrial finance Short term finance ( one year / two-

banks, trade credit, installment credit and customer advances) Required to meet variable expenses, seasonal / temporary WC

 Medium term finance ( one to five

years) -- for permanent WC small expansions replacement Modernizations etc (issue of shares, debentures, banks, financial institutions, sloughing back of profits ( for existing )

 Long term finance (Exceeding five years)

to procure fixed assets establishment of new business expansion modernization Sourcesissue of shares, debentures, loans, ploughing back of profits

 Govt. schemes
Technicians scheme: technically qualified or experienced professions up to Rs 7.50 lakhs

Special capital schemes:-soft loan assistance up to Rs 4 lakhs is available on soft terms along with term loan for technically qualified or experienced persons

 Seed capital scheme: assistance towards

equity on soft terms up to Rs 15 lakhs along with term loan for technically qualified or experienced persons Composite Loan Scheme: Both equipment finance and working capital up to Rs 50000 for artisans and rural industries

 Disabled entrepreneurs: 100% finance up

to 50000 to disabled entrepreneurs Modernization: for replacement / renovation of equipment for successful units which are in existence since 5 years assistance up to Rs 90 lakhs Electro Medical equipment : for doctors/private nursing homes up to rs 90 lakhs

 Equipment finance; for procurement of

new machinery / equipment by existing industrial units up to Rs 90 lakhs Quality control equipment : 100% assistance for setting up quality facility by existing and new SSI units-up to rs.7.50 lakhs

 Assistance to ex servicemen;- Term loan

up to rs 9 lakhs and seed capital up to rs 1.80 lakhs for gaining self employment Single window scheme: Both term loan and working capital together to new tiny and small scale industrial units up to rs 7.50 lakhs towards term loan and up to Rs 3.75 lakhs onwards working capital

 Mahila Udyam Nidhi scheme-- to s et up new

industrial projects in SSI sector by women entrepreneurs

National Equity fund Scheme: Assistance

towards equity for new projects tiny and small scale sector up to Rs 75000 Assistance for marketing : Maximum assistance up to Rs 3 lakh per sales van, not exceeding six vehicles per borrower, assistance up to Rs 7.50 lakhs for setting up new sales out lets

Working Capital management

Integral part of overall corporate
management WC is the amount of funds which a small scale industry must have to finance its day to day operations. Portion of total capital which is employed in short term operations

 Effective utilisation of working capital

results in the maximization of productivity and profits A proper WCM helps to maintain minimum cash reserve Profitability and solvency are the two objectives of the WCM

 Constituent parts of working capital--Current Assets: Inventories, Raw materials, components Work in progress, Finished goods, Etc., Loan and advances and other debtor balances, s.debtors,prepayments, cash and bank balances

 Current liabilities:
Loans, trade dues,S.creditors, advance received **Gross WCtotal of all the current assets of the enterprise **Net WCdifference between the current assets and current liabilities

 Commercial banks provide credit facilities

to meet working capital requirements to facilitate production WC facilities could be--Lock and key pledge of stocks Hypothecation advances advances against stock in process advances against bills packing credit to exporters

 Banks provide both term-loan and working

capital together n composite loans

The total cost of the SSI project os

computed as under 1. The cost of fixed asses proposed to be acquired 2.Total working capital requirements 3. Preliminary and preoperative expenses

 Factors Determining the Amount of

Working Capital Size of the small scale unit Process of production Proportion of raw materials to total cost Terms of purchase and sales Turnover of inventories Importance of labour

 Cash requirements Seasonal variations Banking facilities