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



‡ Special personal qualities ‡Unlike. 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 .2. Cantillon.

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

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

Mark Casson(1982) ‡ ‡ ‡ ‡ Specialize in making judgmental decisions for coordinating scare resources. 8. 9. Accumulation and deployment of resources and building Org Structure to pursue opportunities. Gartner (1990) ‡ ‡ . Motivated by self-interest. Decision making as personal quality. Relentless pursuit of opportunity without regard to resources currently enrolled. Actions taken to create organisations. Stevenson and Sahlman (1987).7.

profession ‡Quality. collaborative relationship . CVF. Service. financing. sustainable. 11.10. 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. institutes. strategist. IT as resource. activities and actions associated with the perceiving of opportunities and the creation of organizations to pursue them. ‡EDP . separate discipline. Bygrave and Hofer (1991) ‡As a process involves all functions. moderate risk. Institutes.

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

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

3. 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. Entrepreneurs have the drive to get more done in less time and if necessary. 2. they pull their own strings(Control their own lives. Entrepreuners have the ability to tolerate ambiguity.‡ 1. 4. . as may be doing certain things for the first time. despite the objections of others. not luck or fate) Entrepreneurs are willing to take moderate risk. This enable to earn higher returns on assets. 5.

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

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

4. 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 . 2. 8. 6. 7.‡ 1. 3. 5.

Creativity. Response to suggestions 13. need to achieve 11. Response to critisism . Take initiatives 14. Perceptive and foresight 16. Dynamic leadership 12. Energy and efficiency 10. Resourceful and persevering 15.9.

. ‡ Without sound knowledge of computers Naryanmurthy could not have made Infosys. financial & market dynamics. visualizing market demands. Knowledge : Conceptual knowledge and technicalities of technological. 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. Vision : Dream and visualizing the ways and means to achieve. operational.Entrepreneurial Characteristics ± Indian Perspective 1. 2.

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

but a constant desire to introduce something new to existing business. Value Addition ‡ ‡ ‡ . Create. 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. Without alue addition of µlife time free incoming calls¶ Tata Indicom would not have been able to create space in already saturated mobile markets.5. innovate or even add value to the existing products. 6. Not rule of thumb .

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

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

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

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

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

b. in USA as Indian laws do not permit a minor to run a company. at the age of 14. Early Starters Start venture with little or no full-time work experience Often from family business Suhas Gopinath started his company Gopals Inc.1. ‡ ‡ ‡ ‡ ‡ Usually. According to timing of venture creations a. 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 . the venture is related to the same business as previously engaged in.

c. . recently started a venture that brought the plant of Daewoo in India. ex-CEO of Hyundai India. ‡ Ashok Soota and Subroto Bagchi quit Wipro to start Mindtree. ‡ BVR Subbu. 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. Mature ‡ Very senior professionals.

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

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

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

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

‡ 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.

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

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

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

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

c. . Classical Entrepreneur ‡ Concerned with customer and marketing needs through the development of self-supporting ventures. ‡ 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.

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

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

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

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

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

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

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

future prospects.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.  Lending institutions require them to support loan applications. Experience shows that successful businesses have a plan. A good business plan is your road map to success!  Implementing the plan Objective evaluate the prospects of the business . the majority that fail do not. and projected growth rate.TOWS Resource requirement for implementation To document owenership arrangement. .  The business plan communicates to others how successful you are going to be.

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

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

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

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

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

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

2. 3.3. Feasibility Analysis ‡ Feasibility study is done to find whether the proposed project (considering the above discussed environment appraisal) would be feasible or not. Feasibility study is dependent on environment appraisal yet it is far more descriptive. The variable/dimensions of feasibility analysis Market Analysis Technical/Operational Analysis Financial feasibility Drawing functional plan ‡ ‡ 1. . 4.

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

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

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. 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.

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


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

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

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

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

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

transportation costs. vi) Cost of Production ± It include raw material cost. petrol price. v) Working capital estimates for running the business are also made. fuel etc.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. . utilities like power. water. labour cost. vii) Sales and Production estimates : Based on the plant capacity the production and sales estimates are made which help in estimating profitability. overhead expanses.

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

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

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

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

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

‡Project report helps to understand the opportunities. ‡Handy tool to persuade investors and financial institutions to fund a project. ‡ 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.Project Report Preparation ‡Written document that describes sep-by-step. . ‡ It guides the entrepreneur in actually starting up and running the business venture. problems and weakness of the business. ‡ Helps in documenting cost estimates of the business.

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

address of the headquarters (if any) and name and address of the promoters. 1.Preparing a Project Report 1. 2. 1. III or A. 1. No matter which method is used for classification but once a method is selected than uniformly adopted for entire project report.2.1.I-iii or A-a.B.C and each section into subsections eg.2.A-c. 1.3 or I-i. .A-b.3 or I. Table of Contents : A Good Project report should be divided in to sections eg. II. Cover Sheet : It mentions the name of the project. I-ii.

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

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

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

suppliers.b. Operational plan : Give information about i) plan location. machinery. Finally the budget for operational plan is also drawn. or does it have advantages of the govt. 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. reason for the selection thereof ± vicinity of the market. inventory management and quality quality control are drawn for identifying further costs and intricacies of the business. subsidies or any other. availability of raw material. labour.

A summary of financial data is given. d. Financial Plan : Usually drawn for 2 to 5 years for a existing company.c. whereas for new org. the following projections are drawn . Detail about the BOD. 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. . Organisational Plan : The organisationa plan indicates the pattern of flow of responsibilities and duties amongst people in the org. In the end the org plan is also budgeted.

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

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

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

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

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

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

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.  Customers  Market Size and Trends  Competition  Market Share and Sales .

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? .

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

etc. performance. quality.  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 .Competition List the strengths and weaknesses of competitive products and services and list the companies that supply them.

 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 .

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 .Overall Market Strategy Describe the general marketing philosophy and strategy of the company.

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

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

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

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