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Entrepreneurship

Entrepreneurship

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10/17/2012

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Sections

  • Concept -Changing Definition
  • 2.Jean Baptiste Say (1800)
  • 3.Frank Knight (1921)
  • Drucker¶s Views on Entrepreneur
  • 3.Desire to Succeed
  • 10. Risk-Taking Ability
  • Attributes and Skills
  • Classification of Entrepreneurs
  • Business Plan
  • BP Process
  • 1. Idea Generation
  • 2.Environmental Scanning
  • External Environment
  • Internal Environment
  • 3.Feasibility Analysis
  • 1.Market Analysis
  • Drawing Functional Plan
  • Project Report Preparation
  • Essentials of a Project Report
  • Preparing a Project Report
  • Customer Profile

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

‡

‡

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

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

automatic & mechanical. Kirzner (1973) . Max Weber (1930) ‡ Innovator with unusual will and energy. charity of vision and ability to act. Understanding human actions as active and creative rather than passive. Ability to identify new opportunities Bearer of the mechanism of change the economy Contributes to movement toward equilibrium by pursuing opportunities. 5.4. Joseph Schumpter (1934) ‡ ‡ ‡ ‡ 6.

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

profession ‡Quality.10. sustainable. CVF. strategist. Bygrave and Hofer (1991) ‡As a process involves all functions. Service. Institutes. separate discipline. collaborative relationship . institutes. 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. ‡EDP . IT as resource. activities and actions associated with the perceiving of opportunities and the creation of organizations to pursue them. 11. moderate risk. financing.

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

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

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

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

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

‡ 1. 3. 2. 7. 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 . 5. 6. 4. 8.

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

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

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

Value Addition ‡ ‡ ‡ . but a constant desire to introduce something new to existing business. 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. Without optimism Narayanmurthy (who took loan from his wife as not having enough finances) would not have left a lucrative job and created Infosys.5. 6. Create. Not rule of thumb . Optimism ‡ ‡ Highly optimistic about achieving their vision.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

. ‡ ‡ 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. a.6. combining different skills and technologies to produce marketable products or service. b.

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

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

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

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

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

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

researches external environment to list O&T. ‡ First of all Identify an innovative idea. 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. HRs) followed successful . finance. identifies internal strength and weakness.

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.

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

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

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

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

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

fixed expanses and running expanses. where is the nearest source and cost involved therein. 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. equipments. if not adequate/ shortage. serious concern. tools and techniques required for production/ operations. Production/Operation : Availability of machineries. It also indicates source of finance that can be approached for funding ‡ ‡ .

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. ‡ . potential and future demands of the market.‡ ‡ Market : It asses the present.

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. Feasibility study is dependent on environment appraisal yet it is far more descriptive. 2.3. 4. .

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

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

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 material required to let the production run smoothly.e.a) Material availability & requirement Planning ‡ ‡ ‡ ‡ ‡ ‡ Assessment of the raw material required for production of goods/service.

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

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

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

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

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

Financial Feasibility ‡ Financial feasibility is done for financial assessment of the proposed business venture. registration expenses. iii) Preliminary cost estimation ± cost required for conducting market survey. taken on lease or purchased. the land and building can be hired. ii) Cost of plant & machinery-estimating cost of plants & machineries and their running & maintenance. 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.

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

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

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

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

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

6. Projected income statement Projected break-even point Projected ratios. .2. Projected cash flows. 4. 3. Projected Balance sheet. 5.

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

7. 4. . Should also have a high aesthetic value. 6. Should logically & objectively explain projections Projections should be appropriately for 2 to 10 yrs Should professionally made to demonstrate that promoters posses entrepreneurial acumen. 9. 3. 8. 5. experience.Essentials of a Project Report 1. 2. The project report should be sequentially arranged. 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).

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

4. form of ownership along with the proposed headquarters. brief history about the past performance. . It will discuss the objective of the business.3. mention some financial figure and some salient figures of the project. 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. The Business : This will give the details about the business concept.

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

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

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

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

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

9.8. Exit Strategy : Details about how the organization would be dissolved. AOA and all other supporting agreements/documents that can help in marketing the project viability at large. ownership agreement. It further help in measuring the risk involved in investing. certificate from pollution board. . MOU. 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. 10. 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.

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

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

 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.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.

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 .

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

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.

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

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.  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 .

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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