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

.3. Frank Knight (1921) ‡ Recipient of pure profits. ‡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. becomes in real sense a secondary part. ‡Involves primary and secondary part : a.Doing things and actual execution of activity.

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

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

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

.Drucker¶s Views on Entrepreneur ³Innovations is the specific tool of entrepreneurs. capable of being learned and practiced.´ ‡ Innovation at work. Entrepreneurs need to search purposefully for the sources of innovation. must be market focused /driven. And they need to know and apply the principles of successful innovations. 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. the changes and their symptoms that indicate opportunities for successful innovation.

discrimination. McClelland(1961) found that entrepreneurs have higher need for achievement than nonentrepreneurs. organisation.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. A hreat deal of research in 1990s. innovation and communication´ Henry Reed As early as1950s. ‡ ‡ ‡ .

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

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

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

3. 8. 6. 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.‡ 1. 5. 7.

Perceptive and foresight 16.9. Take initiatives 14. Resourceful and persevering 15. Energy and efficiency 10. need to achieve 11. Response to critisism . Creativity. Response to suggestions 13. Dynamic leadership 12.

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

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

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

7. good decisionmakers. ‡ 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. . initiative to implement plans. ‡ Do not believe in luck or destiny but create their own destiny. result oriented 8. Good Communication Skills. Desire to control over their own fate ‡ Do not move in herds like sheep but pave own paths. Organizers. Empathetic toward their employees.

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

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

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

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

According to timing of venture creations a.1. 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. Narayan Murthy together with his like minded professionals started Infosys at the age of 35 years . Experienced ‡ Spent a few yrs in family business or a large company. b. in USA as Indian laws do not permit a minor to run a company. the venture is related to the same business as previously engaged in. ‡ ‡ ‡ ‡ ‡ Usually.

c. ‡ BVR Subbu. ‡ 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. . ex-CEO of Hyundai India. Mature ‡ Very senior professionals.

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

stock trading. c. Mall trading. retail trade. Trading entrepreneur ‡ Trading Activities not manufacturing work ‡ Identifies potential markets. 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. exporters. ‡ Whole sale trade. importers. ‡ Can be engaged in both domestic &overseas trade. real estate. identifies potential needs and starts industrial units for new products. .b.

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

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

c. . Professional Entrepreneur ‡ Interested in establishing a business but does not have interest in managing or operating once it established. ‡ 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.

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

further motivated by reward in term of profit.c. boldness and confidence as motivation ‡ Strong conviction and confidence in their ability. 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.

a.5. Super-Growth Entrepreneur ‡ Those entrepreneur who have shown enormous growth of performance in their venture. 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. .

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

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. .

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

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

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

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

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

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

‡A business plan is a written description of the goals and objectives of the business and how they are going to be achieved. organizing. marketing. and financing intentions ± ‡Is it feasible to operate my own business? ‡Is my business idea feasible? . 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 . .  The business plan communicates to others how successful you are going to be. Experience shows that successful businesses have a plan.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. and projected growth rate.TOWS Resource requirement for implementation To document owenership arrangement. the majority that fail do not.  Lending institutions require them to support loan applications.

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

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

For eg. grants. increases cost of the product. Uttranchal is a proffered state for setting up manufacturing units in comparison to UP. .5. 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. Government policies of subcidised electricity in Uttranchal is an added advantage for setting up industry due to its heavy dependence on power. Whereas in UP. formulated by government for a particular industry. procedures etc. policies. which led entrepreneurs to depend on personal generators. Government Appraisal : Assessment of legislation.

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

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. ‡ . 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.‡ ‡ Market : It asses the present.

3. .3. 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. 2. 4. Feasibility Analysis ‡ Feasibility study is done to find whether the proposed project (considering the above discussed environment appraisal) would be feasible or not.

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

2. Key questions to be answered are. T/O analysis collects information about : Material availability & requirement planning Plant location Plant capacity Machinery and equipment Plant layout . 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. from where this technology and equipments be obtained.

a) Material availability & requirement Planning ‡ ‡ ‡ ‡ ‡ ‡ Assessment of the raw material required for production of goods/service. quantity of material required to let the production run smoothly. . 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 planned production. production cost. ‡ Answers whether a technology for the product exists or not. if exists in more than one form. impact of environment. ‡Choice of the technology would be affected by . capacity of the plant. amount of investment. which one would be more profitable to the company. latest development.b) Analysis of choice of technology ‡Identify whether product developed at the idea generation stage is technologically feasible or not. .

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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. Choice of the technology would be affected by . quantity of planned production. capacity of the plant. amount of investment. impact of environment. Answers whether a technology for the product exists or not. production cost. if exists in more than one form. latest development.

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

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. .

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

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

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

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

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

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

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

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

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

1.C and each section into subsections eg.Preparing a Project Report 1.2. 2. 1.2.I-iii or A-a. II. Cover Sheet : It mentions the name of the project. III or A. 1. address of the headquarters (if any) and name and address of the promoters. .3 or I. 1. 1. I-ii.A-b. Table of Contents : A Good Project report should be divided in to sections eg.A-c. No matter which method is used for classification but once a method is selected than uniformly adopted for entire project report.B.3 or I-i.

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

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

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

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

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

vi) Projected cash flows.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. v) Projected Balance sheet. .

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. Appendix : Information about the CV of the owners. 10.8. 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. 9. MOU. It further help in measuring the risk involved in investing. ownership agreement.

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 . the Company.

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

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

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

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

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 .

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

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. both geographically and in terms of sales volume.  Describe seasonal fluctuations  Discuss potential for growth  Discuss factors affecting growth .

performance.  Discuss advantages and disadvantages of competing products or services . etc. service.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. quality.

 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.

 Overall Market Strategy  Pricing  Sales Tactics  Advertising and Promotion  Packaging  Marketing Plan Outline .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 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

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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