Entrepreneurship ± Meaning and Concept

‡ Entrepreneurship is the act of being an entrepreneur. ‡French word µEntrependre¶ and German word µuternehmen¶ both referring to individuals who undertakes an µendeavor¶. ‡Hence, anyone who exhibits the characteristics of self-development, creativity, self-decision making and risk taking. ‡ According to oxford dictionary Entrepreneur is µone who organizes and manages enterprise involving high risk¶. But researches indicates that entrepreneurs need not necessarily be high risk takers, however, they reduce risk and increase likelihood of success.

Entrepreneur ± Different Perspective-Nature
‡ An Economist defines an entrepreneur as one who brings resources, labour, material and other assets in to combinations that make their value greater than before and also one who introduces changes, innovations and a new order. ‡A Psychologist defines an entrepreneur as a person who is typically driven by a psychological force, which create a desire to obtain or attain something. ‡As per sociologist a person whose actions would determine social status & contribute to societal dev. ‡As per Management expert a person who has a vision and generates action plan to achieve it.

Concept - Changing Definition
1. Richard Cantillon (1755)
‡ ‡ Entrepreneur is a person bearing risk. First person to recognise the role of entrepreneur in economy as a economic function than social function. Stated farmer as a entrepreneur, who promises to pay fixed sum of money to landowner, with out assurance of the profit he will drive. Function of entrepreneur and not his personality

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Say did not emphasize uncertainty in his definition. Jean Baptiste Say (1800) ‡ An Agent combining all factors of production. ‡Analysed central function of the entrepreneur independent of any other social framework . Cantillon. ‡ Special personal qualities ‡Unlike.2.

3.Doing things and actual execution of activity. becomes in real sense a secondary part. ‡Discusses uncertainty and risk. Pure profit is bearing the cost of uncertainty. Frank Knight (1921) ‡ Recipient of pure profits. Primary problem or function is deciding what to do and how to do b. . ‡Involves primary and secondary part : a.

Kirzner (1973) . Ability to identify new opportunities Bearer of the mechanism of change the economy Contributes to movement toward equilibrium by pursuing opportunities. automatic & mechanical. Understanding human actions as active and creative rather than passive.4. Joseph Schumpter (1934) ‡ ‡ ‡ ‡ 6. charity of vision and ability to act. 5. Max Weber (1930) ‡ Innovator with unusual will and energy.

Gartner (1990) ‡ ‡ . Accumulation and deployment of resources and building Org Structure to pursue opportunities. Relentless pursuit of opportunity without regard to resources currently enrolled. Motivated by self-interest. Stevenson and Sahlman (1987). 9. Actions taken to create organisations. Mark Casson(1982) ‡ ‡ ‡ ‡ Specialize in making judgmental decisions for coordinating scare resources. Decision making as personal quality. 8.7.

Recent Trends ‡ Societal and environmental issues ‡As per Global Entrepreneurship Monitor (2005) more mgt qualified and young achievers likely to be into entrepreneurship in comparison to 1998 findings. moderate risk. Service. IT as resource. Bygrave and Hofer (1991) ‡As a process involves all functions. ‡EDP . profession ‡Quality. Institutes.10. separate discipline. CVF. activities and actions associated with the perceiving of opportunities and the creation of organizations to pursue them. sustainable. institutes. strategist. collaborative relationship . financing. 11.

And they need to know and apply the principles of successful innovations. It is capable of being presented as a discipline. capable of being learned and practiced. must be market focused /driven.´ ‡ Innovation at work. Entrepreneurs need to search purposefully for the sources of innovation. . the means by which they exploit changes as an opportunity for a different business or a different service.Drucker¶s Views on Entrepreneur ³Innovations is the specific tool of entrepreneurs. the changes and their symptoms that indicate opportunities for successful innovation.

discrimination. innovation and communication´ Henry Reed As early as1950s. McClelland(1961) found that entrepreneurs have higher need for achievement than nonentrepreneurs. ‡ ‡ ‡ . researcher began looking personal attributes common among sucessful entrepreneur. organisation.Personal attributes of a successful entrepreneur ‡ ³ The five essential entrepreneurial skills for success are concentration. A hreat deal of research in 1990s.

Entrepreneurs have the drive to get more done in less time and if necessary.‡ 1. 2. they pull their own strings(Control their own lives. Thomas Begley and David Boyed in mid 1980s have identified five dimentions unique to entrepreneurs: Entrepreneurs are high in need-achievement Entrepreneurs like to think. 5. 4. . Entrepreuners have the ability to tolerate ambiguity. despite the objections of others. 3. as may be doing certain things for the first time. not luck or fate) Entrepreneurs are willing to take moderate risk. This enable to earn higher returns on assets.

‡Timmons(1994) conducted more than 50 studies and found consensus for six general characteristics ± 1.Creativity.Opportunity Obsession 4.Leadership 3.Tolerance of Risk. ambiguity and uncertainty 5.Commitment and determination 2. self-reliance and ability to adapt 6.Motivation to excel .

6. .‡Bianchi(1993) review indicates following characterstics: 1.Being an immigrant or a child of immigrant 4.Being an offspring of self-employed 2.Being a eldest child in the family.Previous employment in a firm with more than 100 people.Being fired from more than one job 3.Being a college graduate. 5.

John Hornday of Bobson College has developed a composite list of entrepreneurial traits: Self Confidence and optimism Positive response to challenges Ability to take calculated risk Flexibility and ability to adapt Knowledge of markets Ability to get along with others better Independent mindedness Versatile knowledge . 8. 5. 7. 4. 6. 3.‡ 1. 2.

Response to critisism . Response to suggestions 13. Perceptive and foresight 16. need to achieve 11. Dynamic leadership 12. Resourceful and persevering 15. Energy and efficiency 10. Creativity. Take initiatives 14.9.

operational. Vision : Dream and visualizing the ways and means to achieve. visualizing market demands. socio-economic and technological environment ‡ Without the vision of making a big mark on the mobile industry Dhirubhai and now Anil Ambani could not have made what Reliance Communication (An Anil Dhirubhai Ambani Group) is today. ‡ Without sound knowledge of computers Naryanmurthy could not have made Infosys. .Entrepreneurial Characteristics ± Indian Perspective 1. 2. financial & market dynamics. Knowledge : Conceptual knowledge and technicalities of technological.

Real Estates and Biotech.com 4.com and Arzoo. Desire to Succeed ‡ ‡ Constantly work to achieve higher goals. Without a desire for independence. Without a desire to succeed constantly Mukesh Ambani would not have planned to ventured into Retail. Independence ‡ ‡ .3. Needs independence in work and decision making without following rules of thumb and make their own rules and destiny. Sabeer Bhatia would not have quit his job to start enterprise own his own and created Hotmail.

Create. but a constant desire to introduce something new to existing business. Not rule of thumb . Value Addition ‡ ‡ ‡ .5. Optimism ‡ ‡ Highly optimistic about achieving their vision. Without optimism Narayanmurthy (who took loan from his wife as not having enough finances) would not have left a lucrative job and created Infosys. innovate or even add value to the existing products. Without alue addition of µlife time free incoming calls¶ Tata Indicom would not have been able to create space in already saturated mobile markets. 6.

initiative to implement plans.7. good decisionmakers. Good Communication Skills. result oriented 8. ‡ Do not believe in luck or destiny but create their own destiny. . Desire to control over their own fate ‡ Do not move in herds like sheep but pave own paths. Organizers. Empathetic toward their employees. ‡ Continuous efforts to achieve success and know that there is no substitute for hard work 9. ‡ Leadership Exhibits qualities of a leader -Good Planners. Hard working ‡ At time also called as workaholics.

. Risk-Taking Ability ‡ Frank Night has identified risk-taking ability as the most integral element in defining entrepreneurial characteristics. psychological risk(Stress). financial risk.10. ‡View risk as Career risk.

‡Group Skills ±work and learn together. manage change. persistent.Attributes and Skills ‡ These so called entrepreneurial characteristics can be looked at to determine a set of skills useful for entrepreneur to possess. innovative. organising. writing. . DM and analytical skills ‡Personal Entrepreneurial Skills. ‡Business mgt skills. project teams ‡Technical Skills ± technological. visionary. task force. mgt.risk.

confidence. dealing with failure. ‡ After qualitative assessment of the skill-set. Initiative. confrontations. entrepreneur may try to access by forming foundation team or by attracting partner or employees. willingness to learn. leadership.. discipline etc. In addition to the skills entrepreneur also make some attitudinal adjustments such as adaptability to lifestyle changes. open mindedness.‡Behavioral Skills ± Motivation. . patience to start from scratch. educational interest. ‡Communication Skills and Listening skills ‡Soft Skills . ethics.eg PEOPLE‡Problem solving. persuasiveness. judgment.

.Classification of Entrepreneurs ‡ Entrepreneurs are broadly classified according to the types of business. motivation. ‡In fact. growth and stage of development. use of profession skills. some other have classified on the basis of their functions and characteristics. differences in various groups and factors and consequences of entrepreneurship in different population. differentiating between entrepreneurs is to study similarity in grouping. ‡Clearence Danhof classifies entrepreneurs on the basis of stage of economic development.

Experienced ‡ Spent a few yrs in family business or a large company. Narayan Murthy together with his like minded professionals started Infosys at the age of 35 years . b. at the age of 14. the venture is related to the same business as previously engaged in. ‡ ‡ ‡ ‡ ‡ Usually. According to timing of venture creations a. Early Starters Start venture with little or no full-time work experience Often from family business Suhas Gopinath started his company Gopals Inc. in USA as Indian laws do not permit a minor to run a company.1.

ex-CEO of Hyundai India. Mature ‡ Very senior professionals. .c. ‡ Ashok Soota and Subroto Bagchi quit Wipro to start Mindtree. recently started a venture that brought the plant of Daewoo in India. some at the level of CEO ‡ Very high confidence and desire to do things in a way that may not be totally acceptable to their earstwhile employers. ‡ BVR Subbu.

readymade garments or confectionary. advertising agency.2. ‡ Oftenly small business entrepreneurs with small business units eg. Business Entrepreneurs : ‡ Conceive an idea for a new product/service and then create business to materialise idea in reality. textile processing house. According to type of business a. Printing press. . ‡ Tap both production and material resources to develop new business opportunity.

‡ Can be engaged in both domestic &overseas trade. Trading entrepreneur ‡ Trading Activities not manufacturing work ‡ Identifies potential markets. c. retail trade. stock trading. real estate. identifies potential needs and starts industrial units for new products.b. . ‡ Whole sale trade. Mall trading. exporters. Industrial Entrepreneur ‡ Ability to convert economic resources and technology into profitable venture ‡ Essentially a manufacturer. stimulates demand and creates interest and demand among buyers to go in for his product. importers.

develops & manages a corporate body. Company regd under companies act. one body of many individuals. Agricultural entrepreneur ‡ Agricultural activities such as raising & marketing of crops. large corporations. ‡ Motivated to raise the productivity through mechanization and technology. . Corporate Entrepreneur ‡ Individual who plans. ‡ Corporate body is a form of business organisation. or trust under trust act. e. which are registered as separate legal entity under some statute or act eg. fertilizers and other inputs of agriculture.d.

Non-technical Entrepreneur ‡ Not concerned with technical aspect of production. horticulture. develops high quality goods due to craftsmanship. According to use of technology a. dairy. ‡ Concentrates more on production than marketing. innovations for production. but developing alternative distribution strategies to promote their business. Technical Entrepreneur ‡ Essentially an entrepreneur of craftsman type. poultry. forestry. . seeds. animal husbandry.‡ Plantation. b. floriculture. 3. ‡ Introduction techniques.

. ‡ Professional entrepreneur sells out running business and starts another venture with the sales proceeds. ‡ Such an Entrepreneur is dynamic who conceives new ideas to develop new projects. Professional Entrepreneur ‡ Interested in establishing a business but does not have interest in managing or operating once it established.c.

ego or status. Induced Entrepreneur ‡ Induced to take entrepreneurship due to policy measures of the govt that provides assistance. incentives. According to Motivation a. concessions and overhead facilities to start ventures. Pure Entrepreneur ‡ Motivated by psychological and economic rewards. satisfaction in work.4. . ‡ Undertakes entrepreneurial activities for personal. b.

c. . further motivated by reward in term of profit. boldness and confidence as motivation ‡ Strong conviction and confidence in their ability. Spontaneous Entrepreneurs ‡ Start business out of their natural talents ‡ Initiative. Motivated Entrepreneur ‡ Desire for self-fulfillment is the motivation ‡ Making and marketing new products for consumers ‡ If successful. d.

. b. ‡ The growth performance is identified by the profitability and liquidity of funds. ‡ ‡ According to Growth Growth Entrepreneur Takes up a high growth industry Chooses an industry which has sustained growth prospects. a.5. Super-Growth Entrepreneur ‡ Those entrepreneur who have shown enormous growth of performance in their venture.

combining different skills and technologies to produce marketable products or service. a. ‡ ‡ According to stage of development First-generation Entrepreneur One who starts not from family business Innovator. . Modern Entrepreneur ‡ One who undertakes those ventures which go well along with changing demand and suit in the current marketing needs.6. b.

‡ Stereotype who aims to maximize economic returns at a consistent level with the survival of the firm with or without the element of the growth. Classical Entrepreneur ‡ Concerned with customer and marketing needs through the development of self-supporting ventures. .c.

. Classification based on Socio-cultural Variables a. Gugrati. Parsee. ‡ Entrepreneurship is easier for someone from business family or business community as having solid support structure. prominently . Entrepreneurs from business family ‡ Few socio-cultural groups have dominated business scene in India. Marwadi. Wadias and Singhanias are all from business community.7. Birlas. Tatas. Sindhi communities.

‡ Kiran Majumdar Shaw founded Biocon.. women empowerment.b. a global non-profit organization. social unprivileged. Social Entrepreneurs ‡ As per Ashoka ± Innovators.child upliftment. Jeroo Billimoria of childline(toll free help) . Rippan Kapur of CRY. which is now a leading Biotech firm in India. c. ‡ Verghese kurien of Amul. Women entrepreneurs ‡ Progressive laws & incentives have boosted women presence in entrepreneurial activities in diverse fields. blind. environment. a social entrepreneur is one who recognizes the part of society which is stuck and provides new ways to get it unstuck.

no will to introduce change or new method. Adoptive or Imitating Entrepreneurs ‡ Readiness to adopt successful innovation. ‡ Follow innovators. Innovative Entrepreneurs ‡ Aggressive assemblage of information and analysis of results from combination of factors. c. Fabian Entrepreneurs ‡ Great caution and scepticism in practicing change.imitate techniq & technologies. b.8. ‡ Aggressive in experimentations and one who see and explore opportunity. Other Categories a. ‡ Shy & lazy. .

d. yet not made the leap from their current employment into the uncertainty of a startup. . Drone Entrepreneurs ‡ Refusal to adopt and use new opportunities to make changes in production methods. products losses its marketability and operations becomes uneconomical. e. ‡ Traditional ways. Aspiring Entrepreneurs ‡ Have dream of starting a business.

i. portals. Entrepreneurs . WWW. kundli. IT Entrepreneurs ‡ DBMS.f. Lifestyle Entrepreneurs ‡ Develop an enterprise that fits their individual circumstances and style.intra+entrepreneur ‡ Person within large corporations who takes direct resp -onsibility for turning an idea into profitable finished products through innovations & assertive risk taking . Mompreneurs ‡ Homemaker entrepreneur h. g. KIOSKs. hotmail. ‡ Basic intention is to earn an income for themselves & their families.

researches external environment to list O&T.Business Plan ‡ Blueprint of step-by-step procedure to convert business idea into a business venture. identifies internal strength and weakness. assesses feasibility of the idea and than allocate resources( production /operation. HRs) followed successful . ‡ First of all Identify an innovative idea. finance.

and financing intentions ± ‡Is it feasible to operate my own business? ‡Is my business idea feasible? . organizing.‡A business plan is a written description of the goals and objectives of the business and how they are going to be achieved. marketing. It includes the mission of the business along with the production.

 The business plan communicates to others how successful you are going to be. A good business plan is your road map to success!  Implementing the plan Objective evaluate the prospects of the business . .  Lending institutions require them to support loan applications. the majority that fail do not. and projected growth rate.TOWS Resource requirement for implementation To document owenership arrangement.Why Develop a Business Plan? Or objectives of a business plan A business plan is a very important tool if you are starting a new business or expanding an existing one. future prospects. Experience shows that successful businesses have a plan.

BP Process Preliminary Investigation Idea Generation Environmental Scanning Feasibility Analysis Project Report Preparation Evaluation Control and Review .

dealers. mails or internet. commercializing inventions. product or service also incremental value addition. retailers. existind companies. Idea Generation ‡ Innovative idea. R&D. GD. employees. invitation of ideas through advertisements. market research. business bazigar on Star TV. ‡Sources of new ideas ± consumers. data collections. business contests.contest business plans . fests. feedback. new concept. ‡Methods of generating new ideas ± brain storming.1.

2. Environmental Scanning
‡After idea generation, next phase, ‡Environment scanning - both external and internal that includes analysis of perspective TOWS of business enterprise. ‡Sources of information can be both informal(family, friends and colleagues) and formal(bankers, magazines, newspapers, govt deptts, seminars, suppliers, competitors, dealers. ‡Environment scanning focus on maximizing information because more supportive the information, greater is the confidence regarding the success of the business.

External Environment
1. Socio-cultural Appraisal : Social and cultural norms, beliefs, value system, open or close culture, level of rigidity/flexibility of a society toward product /service/concept. Eg Americans are experimenting and adventurous whereas Arabs are conservative. For a innovative product like Bungee jumping acceptability would be more in USA than UAE. 2. Technological know-how to convert the idea into a product, modern technologies expected in the future. Eg. Idea of manufacturing tobacco-free cigarettes, technological appraisal can assess whether this kind of a product is possible or not.

3. Economic Appraisal : Assessment of economy in a given society in terms of inflation, per capita income and consumption pattern, balance of payment, consumer price index etc. Healthy economy offers greater opportunities for growth and development of industry together with confidence to the entrepreneur about the success of his business venture. 4. Demographic Appraisal : OA population pattern in a given geographical region. It includes variables like age, profile, distribution, sex, education profile, income distribution etc. Demographic appraisal help in identifying size of target market

formulated by government for a particular industry. procedures etc. incentives. Uttranchal is a proffered state for setting up manufacturing units in comparison to UP. grants. Government policies of subcidised electricity in Uttranchal is an added advantage for setting up industry due to its heavy dependence on power. subsidies.5. increases cost of the product. electricity is not only expensive but is also of acute shortage. Government Appraisal : Assessment of legislation. policies. ‡ Outcome of the other policies too be taken in to consideration while conducting govt appraisal. Whereas in UP. which led entrepreneurs to depend on personal generators. For eg. .

fixed expanses and running expanses. equipments. Finance : Assessment of total requirement of finances in terms of start-up expanses. if not adequate/ shortage. where is the nearest source and cost involved therein. serious concern. It also indicates source of finance that can be approached for funding ‡ ‡ .Internal Environment ‡ Raw Material : Assess availability of raw material at present and future. tools and techniques required for production/ operations. Production/Operation : Availability of machineries.

‡ . Human Resource : Assessment of the kind of the human resources required and its demand and supply in the market.‡ ‡ Market : It asses the present. This helps in estimating the cost and level of competition in hiring and retaining the human resources. Objective of the environment scanning should be Maximizing information from maximum sources for enhanced possibility of success in the business. potential and future demands of the market.

3. Feasibility Analysis ‡ Feasibility study is done to find whether the proposed project (considering the above discussed environment appraisal) would be feasible or not. The variable/dimensions of feasibility analysis Market Analysis Technical/Operational Analysis Financial feasibility Drawing functional plan ‡ ‡ 1. 4. 2. Feasibility study is dependent on environment appraisal yet it is far more descriptive. 3. .

‡A preliminary discussions with consumers. and practices of distributors. distributors.consumption pattern. marketing mix of competitors. strategy of competitors. competitors. existing and potential demands. geographic and seasonality distribution of the demand. retailers etc. availability of substitute goods/service. competition etc. accepted marketing mix of consumers. retailers. .1.. present and prospective consumers. suppliers is carried to understand consumer preferences. Market Analysis ‡M A is conducted to estimate the demand and market share of the proposed product/service in future. ‡Demand analysis and market share is based on number of factors .

from where this technology and equipments be obtained. Key questions to be answered are. from where the raw material be obtained.what are the technological and equipments needs. ‡ ‡ Technical/Operational Analysis ‡ a) b) c) d) e) Done to assess operational ability of the proposed business enterprise.2. T/O analysis collects information about : Material availability & requirement planning Plant location Plant capacity Machinery and equipment Plant layout .

Quality and quantity of raw material Factors influencing availability of raw material Price sensitivity of raw material Perishable time of raw material Material Requirement Planning i.e. quantity of material required to let the production run smoothly.a) Material availability & requirement Planning ‡ ‡ ‡ ‡ ‡ ‡ Assessment of the raw material required for production of goods/service. .

impact of environment. capacity of the plant. ‡ Answers whether a technology for the product exists or not.b) Analysis of choice of technology ‡Identify whether product developed at the idea generation stage is technologically feasible or not. amount of investment. latest development. ‡Choice of the technology would be affected by . . if exists in more than one form. which one would be more profitable to the company. production cost. quantity of planned production.

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b) Analysis of choice of technology ‡ ‡ Identify whether product developed at the idea generation stage is technologically feasible or not. if exists in more than one form. ‡ . amount of investment. latest development. capacity of the plant. quantity of planned production. Answers whether a technology for the product exists or not. production cost. impact of environment. Choice of the technology would be affected by . which one would be more profitable to the company.

safety of personnel.‡ Plant location : Area(broad) where the enterprise is to be established. like city. iii) Favorable government policies . minimum production cost. proper space utilization etc. transportation. water. scope of expansion. industrial zone or coastal area. Plant location is the physical layout of the business and is affected by process of production. Location choice is influenced by following factors : i) Proximity to raw material and markets ii) Availability of infrastructure like power. communication means.

availability of manpower etc. investment cost of buying. . Machinery and equipment : Machinery and equipment is dependent on production technology. maintenance and running cost. plant capacity.i) ‡ Other factors like climate conditions. .

taken on lease or purchased. iii) Preliminary cost estimation ± cost required for conducting market survey. the land and building can be hired. expenses involved in raising capital from public & other misc expanses. ii) Cost of plant & machinery-estimating cost of plants & machineries and their running & maintenance.Financial Feasibility ‡ Financial feasibility is done for financial assessment of the proposed business venture. registration expenses. preparing feasibility report. . Following cost estimates have to be carried out : i) Cost of land and building ± depending upon the requirement and availability of funds.

expenses involved in raising capital from public & other misc expanses. registration expenses. Following cost estimates have to be carried out : i) Cost of land and building ± depending upon the requirement and availability of funds. the land and building can be hired. preparing feasibility report. ii) Cost of plant & machinery-estimating cost of plants & machineries and their running & maintenance. taken on lease or purchased. .Financial Feasibility ‡ Financial feasibility is done for financial assessment of the proposed business venture. iii) Preliminary cost estimation ± cost required for conducting market survey.

overhead expanses. vii) Sales and Production estimates : Based on the plant capacity the production and sales estimates are made which help in estimating profitability. v) Working capital estimates for running the business are also made.iv) Provision of Contingencies : Needs to be made to cover certain unexpected expanses which can emerge due to change in external environment like increase in the price of the raw material. fuel etc. labour cost. transportation costs. petrol price. water. . vi) Cost of Production ± It include raw material cost. utilities like power.

Sale expenses c. Administrative expanses d. Cost of production b. Calculation of the above gives gross profit . Expected sales e.vii) Profitability projections are made on the following parameters a.

which helps in laying down the strategies for market segmentation.Drawing Functional Plan ‡ After feasibility study. . potential/present demand of customers. functional plans are drawn which means developing plans and strategies for all operational areas : marketing. HR and production. identification of target market and laying down strategies for the target market. From the market feasibility study and marketing research. finance. a) Marketing Plan : MP lays down the strategies of marketing (Marketing mix) which can lead to success of business.

capacity mgt. raw material 4. Cost & availability of machinery. distributors. Production scheduling. Cost of manufacturing / running operations 6.b) Production/operation Plan : Production plans are drawn for manufacturing whereas operational plans are for service sector. Quality management 7. 5. Location and reasons for selecting the locations 2. equipments. Physical layout 3. List of suppliers and if possible. It includes strategies for following parameters : 1.inventory mgt .

Cost incurred in smooth running of all the plans ± financial. organization structure and proposes HRM practices that would govern the successful running of proposed business enterprise. for production plan it includes cost of goods. Cost incurred in the marketing plan would include forecasting sales. For eg. marketing. . for organizational plans it includes cost of compensation to employees. d) Financial Plan : Financial Plan indicates the financial requirement of the proposed business 1. operations and HRs.c) Organisational Plan : Defines the type of ownership.

Projected Balance sheet. 6.2. 3. Projected income statement Projected break-even point Projected ratios. Projected cash flows. 4. 5. .

Project Report Preparation ‡Written document that describes sep-by-step. ‡ Helps to monitor whether the business is going to be as projected in the business plan or not. strategies involved in starting and running a business. problems and weakness of the business. ‡ It guides the entrepreneur in actually starting up and running the business venture. ‡Handy tool to persuade investors and financial institutions to fund a project. ‡Project report helps to understand the opportunities. . ‡ Helps in documenting cost estimates of the business.

Should justify financial needs & financial positions Should also justify market prospects and demands Should be attractive to the financial agencies and investors. . It should be exhaustive(covering all the details). The project report should be sequentially arranged. Should logically & objectively explain projections Projections should be appropriately for 2 to 10 yrs Should professionally made to demonstrate that promoters posses entrepreneurial acumen. 6. 2. 4. experience. 9. 8. Should also have a high aesthetic value. 5. 7. 3.Essentials of a Project Report 1.

III or A.B. .3 or I.C and each section into subsections eg. Cover Sheet : It mentions the name of the project.3 or I-i. Table of Contents : A Good Project report should be divided in to sections eg. 2. 1. 1. II.Preparing a Project Report 1.1. address of the headquarters (if any) and name and address of the promoters.A-c.I-iii or A-a.2. 1. No matter which method is used for classification but once a method is selected than uniformly adopted for entire project report.2.A-b. 1. I-ii.

brief history about the past performance. The Business : This will give the details about the business concept. Briefly describe the company. .3. form of ownership along with the proposed headquarters. It will discuss the objective of the business. Executive Summary : A brief summary should about 2 to 3 pages. mention some financial figure and some salient figures of the project. Generating interest in the minds of the readers is the prime motive of the executive summary. 4.

6. product range. Debt equity ratio can give an indication about how much finance would company require and how it would like to fund the project. Funding Requirement : To address to the investors and financial institutions. and advantages in comparison to available product in market. funding requirement should be documented. franchise & licensing agreements. trademarks. copyrights. a careful. It is also necessary to project how these requirements would be fulfilled.5. features. .It also give details about patents. well planned. The Product/Services : Description of product/ service.

promotion. distribution. SWOT of market and competitors. human resources. price. finance.7. . Marketing Plan : Marketing mix strategies on the basis of MR MR ± market characteristics and demography. Marketing mix strategies for product/service. Function plans : Functional plans for Marketing. and operations. The budget for the marketing plan are drawn at an end. a.

or does it have advantages of the govt. labour. availability of raw material. subsidies or any other. suppliers. inventory management and quality quality control are drawn for identifying further costs and intricacies of the business. ii) Plant layout to provide a pattern of arrangement of the organisation and would indicate exhaustive planning of the business. iii) Plan for material requirement. Operational plan : Give information about i) plan location. Finally the budget for operational plan is also drawn.b. machinery. reason for the selection thereof ± vicinity of the market. .

Organisational Plan : The organisationa plan indicates the pattern of flow of responsibilities and duties amongst people in the org. the following projections are drawn . Financial Plan : Usually drawn for 2 to 5 years for a existing company.c. d. . it can also enlist the manpower plan that would be required to put life into the company and it will also enlist laws that would be governed in managing the employees of the org. A summary of financial data is given. whereas for new org. In the end the org plan is also budgeted. Detail about the BOD.

viii)Projected ratios. vi) Projected cash flows. vii) Projected fund flow.i) Projected sales ii) Projected Income and expenditure statement. . v) Projected Balance sheet. iii) Projected break even point iv) Projected profit and loss statement.

MOU. Appendix : Information about the CV of the owners. . 10. It further help in measuring the risk involved in investing. ownership agreement. Critical Risks : The investors are interested in knowing the tentative risks to evaluate the viability of the project and to measure the risk involved in the business.8. AOA and all other supporting agreements/documents that can help in marketing the project viability at large. certificate from pollution board. Exit Strategy : Details about how the organization would be dissolved. what would be the share of the each stakeholder in case of winding-up of the organization. 9.

the Company. and the Products Market Research and Analysis Marketing Plan Operating Plan Management Team Financial Plan .Key Components of a Business Plan The business plan covers six key areas: The Industry.

You must clearly describe:  The nature of the industry  The proposed business  The product the business plans to offer . and the Products This section of the business plan describes the business venture in a detailed but concise manner.The Industry. the Company.

 New products and developments  New markets and customers  General trends affecting the business  Identify sources of information used to describe trends .The Industry Present the current status and outlook for the industry in which the business will operate.

The Company Write a detailed description of the proposed business venture.  Mission statement with goals and objectives  Ownership and legal form of the company  Reasons why the business will be successful . and the principal customers. the products and services it will offer.

Benefits to the customers Competitive advantages Unique features Current state of development .The Products or Services Describe in detail the products or services to be sold. as well as the application of the product or service.

 Customers  Market Size and Trends  Competition  Market Share and Sales .Market Research and Analysis This section of the business plan presents enough facts obtained through market research and analysis to determine if the product or service has a substantial market in a growing industry despite a competitive market.

Types of Market Research PRIMARY RESEARCH = DO IT YOURSELF:  Observation  Surveys  Interviews SECONDARY RESEARCH = USE EXISTING DATA:         Public Library College or Universities Chamber of Commerce Business Publications Trade Shows The Internet Census Information Sales Tax Data .

Types of Market Analyses The information obtained through primary and secondary research techniques can be analyzed in a variety of ways.  Economic Trend Analysis  Political and Social Analysis  Customer Analysis  Market Potential Analysis  Competitive Analysis .

Demographic profile Lifestyle patterns Expectations .Customers Identify your target market and develop a customer profile.

Customer Profile ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Age Income Education Gender Stage of business Type of business Size of business Location Behavior patterns Customer expectations Other ???  Who is your target audience?  How will you reach this audience? .

Market Size and Trends Describe the primary market for the product.  Describe seasonal fluctuations  Discuss potential for growth  Discuss factors affecting growth . both geographically and in terms of sales volume.

performance. quality. etc.Competition List the strengths and weaknesses of competitive products and services and list the companies that supply them.  Identify and list current and future competitors  Assess the competition on the basis of price. service.  Discuss advantages and disadvantages of competing products or services .

 Identify and list major customers and estimate potential sales  Estimate share of the market  Estimate sales in units and dollars for the next two to five years .Market Share and Sales Summarize what it is about your product or service that will make it sell in the face of current and future competition.

Marketing Plan This section of the business plan describes the company¶s marketing goals and objectives and how they will be achieved.  Overall Market Strategy  Pricing  Sales Tactics  Advertising and Promotion  Packaging  Marketing Plan Outline .

Overall Market Strategy Describe the general marketing philosophy and strategy of the company. 4 Derived from market research and analysis results 4 Include discussion of markets targeted for sales promotions 4 List short-term and long-term marketing objectives 4 Discuss specific marketing tactics .

Pricing
The pricing strategy selected can mean the difference between success and failure.  Provide a detailed description of the pricing strategy for each product or service  Outline factors considered in developing pricing strategies  Discuss wholesale vs. retail pricing strategies  Discuss price levels, geographic terms, discount policies, etc.

Sales Tactics

Describe specific actions that will be taken to generate sales and distribute the product or service to customers.  Analyze effectiveness of everything available within the sales system  List channels such as salespeople, agents, dealers, and direct mail services  Describe methods that will be used to distribute products to customers  Describe merchandising techniques

Advertising and Promotion

Describe approaches the company will use to bring the product or service to the attention of the target market. List advertising methods along with benefits and costs Discuss promotional efforts and strategies Publicity

Packaging Describe how the product will be packaged for the target market. Package design Package labeling Packaging materials .

Marketing Plan Outline A marketing plan outline is a useful tool for pulling together information related to the marketing plan. The marketing plan outline should include information on the following:  Marketing situation  Marketing objectives  Marketing Strategies  Budget  Action plan  Evaluation .

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