Decision to be an Entrepreneur
It All Begins with an Idea The overriding reason for anyone to think of establishing a SSI unit can be summarised in one word - opportunity. An opportunity to be your own boss, to provide a product or service, to implement your ideas which can generate sufficient surplus is reason to think of starting up a SSI unit. Starting a small business takes a lot of courage. To be successful - to stay in business you need a combination of hard work, skill and perseverance. Generally, people who start their own businesses can be grouped into two broad categories. The first group consists of people who know exactly what they want to do and are merely looking for the opportunity or resources to do it. These people may have already developed many of the skills necessary to succeed in their chosen field and are also likely to be familiar with industry customs and practices, which can help during the startup phase of a new business. The second group consists of people who want to start their own business, but don't have any real definite ideas about what they'd like to do. They may have developed skills in the course of their employment or education, but may not be interested in opening a business in the same field of endeavour. How a person will proceed depends on, mainly, to which group they belong to. To evaluate the aptitude for small business ownership, an entrepreneur needs to: Understanding the Responsibilities of Ownership. Before starting a business entrepreneur should know what's involved in owning a business and what are the roles s(he)'ll have to play if they start on their own one? Most important fact to keep in mind is - Owning a small business is not just another job but a lot more than that. You are totally and completely responsible for its growth, development and its future. It's a completely different lifestyle. Entrepreneurs have to ask themselves whether they are ready for a complete commitment to the success of their business. As a small business owner, entrepreneurs are going to have less time for their personal life and probably be using much of what they own as collateral to raise money for the business. The pros and cons of owning a business are listed below. Pros:
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You'll be your own boss and the boss of other people and make the decisions that are crucial to the business' success or failure. You'll have the chance to put your ideas into practice. You will make money for yourself rather than for someone else. You may participate in every aspect of running a business and learn more about every aspect of a business and gain experience in a variety of disciplines. You'll have the chance to work directly with your customers. You'll have the personal satisfaction of creating and running a successful business.
You'll be able to work in a field or area that you really enjoy. You'll have the chance to build retirement value (for example, by selling the business when you retire). ● Last but not the least no one can fire you.
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You may have to take a large financial risk and will probably have to work long hours and may have fewer opportunities to take vacations. You may end up spending a lot of your time attending to the details of running a business and less time on those things you really enjoys. You may find that your income is not steady and that there are times when you don't have much income coming in at all. You may have to undertake tasks you find unpleasant, such as firing someone or refusing to hire a friend or relative. You may have to learn many new disciplines, such as filing and bookkeeping, inventory control, production planning, advertising and promotion, market research, and general management. Your startup costs will be lower. Your operating costs will be lower than they would if you were renting space and paying utilities. Your commute will be shorter. If your location is unimportant to your business, you can theoretically live anywhere and still operate your business. You may be more flexible in your schedule if your business can be conducted at your convenience or outside "normal" weekday business hours. On the other hand, you're much more vulnerable to interruptions from family members, neighbors, and door-to-door salespeople. You may have trouble attracting qualified employees. You may be less accessible to suppliers. You may have an image problem, although with the growing popularity of home businesses, that's less common. You may run out of space at home if your business grows.
Special Pros And Cons Of The Home-Based Business:
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Ability To Set Your Goals What do you want from your business? If you want to "succeed," how will you know if you get there? What should be the next goal once you reach the initial goal. Knowing what you want from your business permeates all of the other decisions you'll have to make in starting a new business. It will affect which business you choose, how you evaluate your chances for success, and how you determine if you have the right skills. Estimate The Impact On Your Everyday Life Your life will change completely once you start your own business. Try to comprehend the degree to which your life is going to change when you become a business owner? Many of the more "secure" aspects of employee life does not exist/ will vanish once you open up your own business. You might have to be perform more than one function, work
While evaluating yourself. By evaluating yourself. An entrepreneur needs to maintain his/her calm even in face of adversity. where generally management resides in hand of 1 or 2 person. They strive to exert whatever influence they can over future events. you have to continue to work into the evening. Once they achieve a goal. Self-Control Most entrepreneurs believe they can do the job better than anyone else and will strive for maximum responsibility and accountability. juggle between business and household demands. They have a compelling
. you like to do things you are good at and you don't like doing things you're not good at. It's a simple approach. In small businesses. the leader must be there. good health is a must. Evaluate Your Skills Evaluate your own skills and make judgments about whether you're ready to own your own business. work and personal life. They build their businesses around their strengths and they compensate for their weaknesses. and therefore he will need to work long hours. which test your entrepreneurial capabilities. and while they are in the process of building their business. checking out days work and chalk out strategy to deal with challenges and problems. developing new business ideas. you are making a list of what you like to do and what you don't like to do. The key to success is not so much in having every skill as it is in finding ways to compensate for those weaknesses. Entrepreneur realises loosing temper won't help the situation. but it should help you start to focus. you'll have to be able to identify what you do well and what you don't do so well. At the end of the eight-hour day.at all irregular hours. don't panic if you discover that you have weaknesses. Also. when everyone else leaves for home. In a new start up entrepreneur cannot afford a support staff to cover all business functions. Assessing Your Strengths Successful small business owners know their own strengths and weaknesses. You will need to reprioritise your schedule. Every one including small business owner has them. If you're to succeed. they quickly replace it with a greater goal. There are many entrepreneurial quizzes available on the net and with Entrepreneurship Development Institute. Entrepreneurial Characteristics Though the list is not exhaustive it does tell you about the major characteristic of a entrepreneur. Generally. Goal setting Entrepreneurs enjoy creating business strategies and thrive on the process of achieving their goals. They need to work for extended periods of time. be honest otherwise you'll only hurt yourself if you're not. Good health Entrepreneurs keep themselves physically resilient and in good health.
and suppliers. and uneasy. Self-Confidence Entrepreneurs are self-confident and tackle problems immediately with confidence and are persistent in their pursuit of their objectives. They will verify any information they receive before they use it in making a decision. They identify problems and begin working on their solution. they accept things as they are and deal with them accordingly. and working on multiple business ideas simultaneously. When they need help.
. Most are at their best in the face of adversity. since they thrive on their own self-confidence. entrepreneurs will concentrate their resources and energies on essential business operations. and they will continuously review all possibilities to achieve their business objectives. Inactivity makes them impatient. They want to be where the action is and will not stay in the office for extended periods of time. They generally avoid becoming personally involved and will not hesitate to sever relationships that could hinder the progress of their business. They thrive on activity and are tireless in the pursuit of their goals. they will not hesitate to admit it especially in areas that are outside of their expertise. It will show when you will meet your future customer. Status Requirements Entrepreneurs like the business they have built to be praised. they devote their energy to completing the tasks immediately before them. They will change their direction when they see that change will improve their prospects for achieving their goals. tense. Sense of Urgency Entrepreneurs have a never-ending sense of urgency to develop their ideas. making strategic decisions.need to do their own thing in their own way. They quickly identify an alternative problem-solving approach. During tough business periods. Realism Entrepreneurs are realistic. Before anyone else you have to believe in yourself and your product or services. At the same time. They are farsighted and aware of important details. Interpersonal Relationships Entrepreneurs are more concerned with people's accomplishments than with their feelings. Comprehensive Awareness Successful entrepreneurs should have ability to comprehend complex situations that may include planning. Entrepreneurs are natural leaders and are usually the first to identify a problem to be overcome. They need the freedom to choose and to act according to their own perception of what actions will result in success. Conceptual Ability Entrepreneur should possess the ability to identify relationships quickly in the midst of complex situations. They are not troubled by ambiguity and uncertainty because they are used to solving problems.
and they will delegate very few key decisions. the divorce rate among entrepreneurs is about average. You might possess three or more of the characteristic listed above. Their moderate interpersonal skills are often inadequate to provide for stable relationships.
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Does the idea fire up your motivation and is it adequate enough to keep you going for next 1-2 years? Is it a viable business proposition in your area? Does it match the needs of your clientele. Entrepreneurs need good interpersonal skills to be able to adjust and survive as their organization grows and becomes more structured.Entrepreneurs are impatient and drive themselves and everyone around them. Top Emotional Stability Entrepreneurs should have a considerable amount of self-control and should be able to handle business pressures. Once you've decided that you have the right stuff to be an entrepreneur. check out the following prime considerations for determining if your business idea has a chance to succeed before you pump your life savings into a small business.how can you learn more about your chosen industry and about the resources that are available to help you? Market assessment. ideas need to be filtered through a 5-layer sieve of Researching your industry. They are not content to leave well enough alone. However. local or otherwise? Check it out with basic market research. They don't have the tolerance or empathy necessary for team building unless it's their team.what potential legal liabilities are you exposing yourself to by starting a new business? Are the costs of protecting yourself worth the trouble?
. Test it out at market place Consult with the experts Look out for competition in the field Is it a sunrise industry? Your business opportunity Project conceptualisation
In short.how much will starting a new business cost you? Can you afford a lengthy "red ink" period following startup. Entrepreneurs tend to handle people problems with action plans without empathy.is there a market for your product or service? If so. you don't necessarily need them all use your strengths to compensate for your weaknesses.will you be able to obtain the necessary financing for your business? If so. as well as periodic lulls in cash flow? Can you afford to fail? Financing assessment. They'll frequently find some new activity on which to vent their pent-up energy. how much income can you expect to derive from it? Profitability assessment. They should learn to relax in stress situations and are challenged rather than discouraged by setbacks or failures. Entrepreneurs are uncomfortable when things are going well. from where? Legal assessment.
involved in choosing one or the other form of a business. Partnerships. This often results in avoidable mistakes. targets and identify the strengths and weaknesses. three main types of legal forms are used predominantly to run small business organisations. in its governance and direction. which nevertheless has a part to play in the small business world in some countries. in theory at least. It will help you establish goals. or for financial information on your business to be filed at the registrar of companies. where two or more people band together to finance or run a venture.Once the ideas are screened and a viable business opportunity emerges the project has to be conceptualised in all its dimensions.
The co-operative is a fourth and minority legal form.
Choosing your form of Business Organisation
Provisional Registration of the unit in the concerned State /Union Territory Permanent Registration of the unit in the concerned State /Union Territory Documents required for registration on a provisional basis Many first time entrepreneurs do not have a clear perspective of the issues. there are no rules about the records you have to keep. Sole Proprietorship The vast majority of new businesses set up each year in Indian choose to do so as sole proprietors. In India setting up a private limited company was the most popular choice among our sample of entrepreneurs. Throughout in most of the parts of world. An extensive overview of its features is provided since it is believed that it will grow the same way in India as it has abroad. which later cost time and money to rectify. Size and Nature) Process (Technology to produce the product) Place (Location of Plant) Partner (Technological or Financial Collaborator)
Having a business plan will help you in defining these 4 P's and chalking out the strategy for future of your business. Nor is there a requirement for your accounts to be audited. The 4 P's of Project Conception are:
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Product (Shape. These forms are as follows :
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Sole proprietorship where generally only one person funds the business activities. legal or otherwise. Franchising is also emerging as a major business format. Corporations/limited companies where it is possible for many thousands to subscribe for a share in business ownership and.
. The options of the form of business with their pros and cons have been explained below. The form has the merit of being relatively formality-free.
which has the attraction of being risk free. subject only to the provisions of the bankruptcy Act (these allow you to keep only a few absolutely basic essential for yourself and family). it is sensible to do the following : Open separate bank accounts for the business. from your home if you want to. Your keep the profits. your creditors are entitled to size and sell your possessions-personal as well as business.As a sole proprietor. You can run the business at your own pace and in your own way. Do not pay for business expenses from personal accounts.) However. If you go bankrupt. (You must be solvent when the transfer is made.
Disadvantages You are totally responsible for any debts your business incurs.
. No public disclosure of your affairs. ● It can be lonely. You are the boss. just as your house or car is. and that transfer must have been made at least two years prior to your business running into trouble. withdraw your personal expenses regularly from the business accounts. subject only to declaring your profits on your tax return. but also to your personal assets. against whom your creditors have no claim. there is no legal distinction between you and your business-your business is one of your assets. ● Take out full insurance cover against possible loss or damage to any equipment-if you have invested in any. There is no access to equity capital. ● You have a low status. In return for these drawbacks you can have the pleasure of being your own boss immediately. ● Get your accountant to give you some indication of allowable business expenses. Profit or loss in one trade can be set off against profit and loss in any other business your run. It is possible to avoid the worst of these consequences by ensuring that your private assets are the legal property of your spouse. You can offset some business expenses against earnings for tax purposes. It follows from this that if your business should fail your creditors have a right not only to the assets of the business.) Although there is nothing you are required to do legally as a sole proprietor. to be effective such a transfer must be absolute and you can have no say in how your spouse chooses to dispose of his or her new-found wealth! The capital to get the business going must come from either you or from loans. ● Take out personal injury/illness insurance. Also.
The advantages and disadvantages of being a sole proprietor are as follows : Advantages
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Easy to set up-you can start the business in a small way. (In practice you would be wise to take professional advice before doing so.
Under these circumstances your personal assets could be taken to pay the creditors even though the mistake was no fault of your own. husbands and wives may be jointly responsible. without your knowledge or consent. in France where nearly 70 per cent of all active businesses are operated as sole trader ships. Second.Most countries have sole proprietorship as a legal structure in the way described here. The Act merely provides a framework of agreement. Partnerships Partnerships are effectively collections of sole proprietors and. By pooling resources you may have more capital. The legal regulations governing this field are set out in the Act. and several definite advantages. perhaps by signing a disastrous contract. Why you Might Consider a Partnership. Even death may not release you from partnership obligations and in some circumstances your estate can remain liable. and if you are ill the business can still carry on.)
. There are two serious drawbacks that merit particular attention.
It is unlikely that all these provisions will suit you so you would be well advised to get a `partnership agreement' drawn up in writing by a solicitor at the outset of your venture. Unless you take `public' leave of your partnership by notifying your business contacts. his or her share of the partnership can be seized by his creditors. you will remain liable indefinitely. you will be bringing. Some countries have variations on the same theme. which in essence assumes that competent businessmen and women should know what they are doing. All partners share profits and losses equally. As a private individual you are not liable for your partner's private debts. No partner shall be paid a salary. There are very few restrictions to setting up in business with another person (or persons) in partnership. but having to buy him or her out of the partnership at short notice could put you and the business in financial jeopardy. In the United Kingdom husbands and wives would need to form either a partnership or a limited company to share the `ownership' of a venture. several sets of skills to the business. which applies `in the absence of agreement to the contrary'. as such.
As a means of starting up with increased capital (presuming both you and partners put money in. No partner shall have interest paid on his or her capital. First. if your partner makes a business mistake. All partners have an equal say in the management of the business. every member of the partnership must shoulder the consequences. the legal problems attached to personal liability. it is to be hoped. and advertising your retirement. for whatever reason. It follows from this that many partnerships are entered into without legal formalities-and sometimes without the parties themselves being aware that they have entered a partnership! The main provisions of the partnership Act are as follows :
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All partners contribute capital equally. For example. if your partner goes bankrupt in his personal capacity.
There are no hard-and-fast rules about selecting a partner. the provisions of the partnership Act apply if there is no other agreement between the partners. for example. Profit Sharing: How profits and losses are to the divided. or you might decide to distribute profits according to the number of contracts completed. It should cover the points listed below. the other the ideas. if things go wrong regardless of whose fault it iscreditors can claim the personal possessions of each and every partner. Partnership Agreements As already stated. If. `I' am better off on my. For instance. ask yourself first if you have the right temperament to be a partner. become a joint project. So the choice of partner must be made with as much care as selecting a wife or husband! If you are considering a partnership. or by some other methods. Mr. to get a solicitor to draw up a deed of partnership between you and your partners. since you and your partner(s) have unlimited financial liability for the firm. Dave agrees that his personality was the problem. Dave opted out of the highly successful computer business he had painstakingly set up and nurtured for seven years within a year of taking a partner. Some people are too independent to be able to cope with pooling their ideas and resources on an equal footing. He took the partner because he needed additional capital for expansion but he couldn't tolerate what he saw as the partner's `interference' with the way the business was run. the number of hours worked. but it is sensible. if is essential that the partners trust each other and can work together harmoniously. if not essential.
. ● You have complementary skills-one of you may have specialist skills and the other management flair.
Choosing a Partner If the business is going to have any chance of success. one partner has sunk more capital into the business than the other. ● Withdrawing Money: It is important to limit the amount of money each partner can take out of the business each month. otherwise you may find you have insufficient working capital.You might not feel confident to start a business entirely on your own and would prefer to share the responsibilities with someone else. profits won't be shared in equal proportions.' he admits. This documents also regulates exactly how the business is run. or the combination may be of an ideas person with a down-to-earth sort of person who can implement the ideas. You may want to vary the rules laid down in the 'partnership Act and to cover points not mentioned. as the case that follows illustrates. but the most successful partnerships do seem to be those where the partners have known each other for some time-either as friends or business associates-and where they have complementary skills and personalities. He now admits-with hindsight-that the partner was perfectly entitled to express his views on what had. Also. or one the money. Mr. Matching entrepreneurial skills also helps in selecting a partner. one partner may be a technical person who looks after the manufacturing side of the operation while the other is good at dealing with people and looks after sales. after all. A partnership is therefore almost as close a relationship as a marriage.
three months' notice. If you discover your partner has given you false information you may apply to the court to rescind the partnership agreement. If there aren't enough assets partners must make up the deficiency in the proportions in which they shared profits. Duration of Partnership: How long do you want your partnership to last-one. if you are withdrawing. Advertise the fact in the newspaper. It might be sensible to provide for limited partnerships. say your wife.●
Time off: The length and frequency of holidays should be laid down. say. If you want the right to have a relative.
The proceeds from the sale of assets must be applies in the following order.
Limited Liability Companies As the name suggests. Getting Capital Out: When dissolution occurs. three. admitted as a partner later. --Payment of creditors who are not partners --repaying loans made by the partners --paying back partners their capital contribution --surplus divided among partners. a partner is entitled to have the partnership property sold and all assets distributed. Give notice to all customers and suppliers that you are withdrawing and make sure your name is removed from the stationery. as well as what rules apply if a partner is incapacitated through illness. Remember. that you are still responsible for all obligations. Admitting or Expelling a Partner: The consent of every partner is necessary before a new partner can be admitted. the partnership deed can vary this. which competes with the partnership business. this should be stated in the agreement. ● Conflicting Interests: Partners are free to engage in other business activities unless the partnership agreement prohibits this.
. After the assets have been realised and outstanding debts paid. although. Dissolving or Rescinding The Partnership: Dissolution will occur automatically on the death or bankruptcy of a partner-unless the partnership agreement provides otherwise. so you may consider it important to stipulate a time limit after which the partnership can be dissolved. However. again. in this forms of business your liability is limited to the amount you contribute by way of share capital. Notice of Withdrawal From A Partnership: The agreement should state how much notice should be given to each of the other partners if one partner wants to withdraw. you must get a court order if you want to expel a partner. any surplus must be distributed among the partners in equal shares-unless you make a different arrangement in the partnership deed. so the partnership deed should set out in detail the circumstances in which a partner can be expelled. terminating after. which your firm incurred while you were a partner. no partner may engage in any activity. five or ten years? Or you might prefer it to be for an indefinite period. The partner will be entitled to a share of the profits. Unless the agreement states otherwise.
The company name must be
. may invite the public to subscribe for its shares. finance house. The Companies Registration Office exercises some control over the choice of name-it can't be identical (or very similar to) the name of an existing company. A Registered Business Name: This must be followed by the world Limited or Ltd. There are penalties for failing to make returns. however. It must maintain certain books of accounts. If extra capital is needed it can be raised by selling more shares privately. Advantages of the limited company
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Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid for shares. landlords and suppliers who require personal guarantees from the directors before they will do business. The advantages of limited liability status are increasingly being undermined by banks. distinct from both its shareholders. directors and managers. bankruptcy or withdrawal of capital by one member does not affect the company's ability to trade. is called `private'. The management structure is clearly defined. The liability of the shareholders is limited to the amount paid or unpaid on issued share capital. As a director you are treated as an employee and must pay tax. A company has unlimited life and no limit is placed on the number of shareholders. `National') can only be used in certain circumstances. Any company. Companies pay `corporate tax' on their taxable profits. The disposal of the whole or part of the business is easily arranged. High status. All details of the company are available for public inspection so there can be no secrecy.
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Requirements For A Private Limited Company 1. `Institute'.A company registered in accordance with the companies Act is a separate legal entity. most companies start life as `private' and only become `public' when they need funds from a wider range of shareholders. The death. Can be more expensive to set up. The companies Act does. Public companies have further onerous legal requirements and restrictions placed upon them. May need professional help to form. retire or remove directors. Requirement to register the company with the registrar of companies and provide annual returns and accounts-which must be audited. This is a company which. place many restrictions on the company. Generally. A minimum of there shareholders and one of these as managing director is required to form a company. appoint an auditor and file an annual return with the registrar of companies which includes the accounts as well as details of directors and mortgages. according to its memorandum of association. The first is a `public company (plc) which has a minimum authorised and allotted share capital. which makes it easy to appoint. which is not `public'. It is simple to admit more members. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example. There are in fact two types of company limited by shares.
and audited set of accounts must be laid before the shareholders at a general meeting and a set delivered to the registrar of companies. The articles must be signed by the initial shareholders. most importantly. 3. 2. Auditors: Every company must appoint a qualified auditor. or other premises where the company carries out business. Nevertheless. 8. The memorandum must be signed by at least three shareholders. where all official correspondence will go. Share Capital: The company must be formed with a stated. the object for which the company has been formed. its share capital.100. 6. 4.
. and they hold office from the conclusion of the meeting until the next general meeting. the company can only operate in the areas mentioned in the objects clause but in practice the clause is drawn to cover as wide an area as possible. and anyway a 75 per cent majority of the members of the company can change the objects whenever they like. it is worth bearing in mind that directors of the company will incur personal liability if the company engages in a type of business which is not authorised by the objects clause. Small companies are frequently formed with a nominal share capital of Rs. Memorandum of Association: The memorandum is the company's charter. Every company must maintain a set of records. 7. It states the company's name. through. Act. nominal share capital divided into shares of fixed amounts. The auditor's duty is to report to the treasurer whether or not the books of the company have been properly kept. A new company's accounting reference period beings on its incorporation and runs until the following 31 March-unless the company notifies the registrar of companies otherwise. which show the financial position at any one time with reasonable accuracy. the situation of its registered office. Within ten months of the end of an accounting reference period. the fact that liability is limited and. A private company can have up to fifty shareholders. This is the address. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented. Quite frequently the address used for the registered office is that of the firm's solicitor or accountant. Certificate of Incorporation: This is the document. 5. Many companies don't bother to draw up their own articles but adopt (sometimes with some modifications) articles set out in the companies. Shareholders: There must be a minimum of two shareholders (also described as `members' or `subscribes').displayed in a conspicuous place at every office. When you receive this document your company legally exists and is ready to trade. Articles of Association: The document contains the internal regulations of the company-the relationship of the company to its shareholders and the relationship between the individual shareholders. and that the balance sheet and profit and loss account presents (or doesn't present) a true and fair view of the company's affairs and complies with the companies Act. Accounts: The companies Act lays down strict rules on accounting. which are quire satisfactory for the majority of private companies. which the registrar of companies issues to you once he has approved you choice of name and your memorandum. 9. The accounts comprise a profit and loss account and balance sheet with the auditors' and directors' reports appended. In theory. A Registered Office: This need not necessarily be the same address as the business is conducted from.
Member must benefit primarily from their participation in the business. and production of farm-related products. a register of directors and secretaries. as it isn't mandatory. Not all cooperatives bother to register. a register of debenture holders. Co-operatives are governed by an Act. establishing dairies. Company Seal: All companies must have an engraved seal. They do not have to be full-time workers at first. However. but there is no charge for this. a registered co-operative has limited liability (see under limited liability companies) for its members and must file annual accounts. This must be impressed on share certificates and must be used whenever the company has to execute a deed. whose main provisions state:
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Each member of the co-operative has equal control through the principal of `one person one vote'. in which case they are treated in law as a partnership with unlimited liability. the failure rate
. The co-operative movement started at the turn of the century in the farming industry. although some countries provide for companies with a structure similar to the Indian-style cooperatives For example. companies are required to have: a register of members and share ledger. Again. Franchising Franchising is something of a halfway house. It holds many of the attractions of running a small business whilst at the same time eliminating some of the more unappealing risks. this is included in the ready-made company package. For example. 11. This will be provided automatically if you buy a running concern. You must have at least seven members at the outset. the workers' co-operative is enjoying something of a comeback. a book can be purchased to hold all of the above. slaughterhouses and other manufacturing units. even if the profits are high enough to allow a greater payment. etc. Membership must be open to anyone who satisfies the stipulated qualification. Co-operatives A co-operative is an enterprise owned and controlled by the people working in it.
It is certainly not a legal structure designed to give entrepreneurs control of their own destiny and maximum profits.10. often officially controlled by the consumers. Interest on loan or share capital is limited in some specific way. hours worked. As in a limited company. a register of share transfers. lying somewhere between entrepreneurship and employment.: In addition to the accounts books. in Denmark the AMBA is a special kind of limited company: a tax-free cooperative with its own legal regulations. Registers. Profits can be retained in the business or distributed in proportion to members' involvement. for instance. a register of charges. Once in danger of becoming extinct. They also include some wholesale and retail distribution channels for daily consumption goods. if this is to be the system adopted you can register with the registrar of companies. Co-operatives are not common throughout the entire entrepreneurial world.
says or represents to third parties is binding on the principal in question. The realisation that a `personality' can sell things bearing his or her name came about principally through the extensive exposure given to sports in the medial. which are described under the general heading franchises. to cash in on the advertising spin-off from the media coverage they get. and even though he or she may have an agency for the products and services of more than one principal. Let us look at the various types of relationship between licensee and licenser. In the 1930s there were some attempts to capitalise on movie stars' names in a similar way-an early poster associating Ronald Reagan with a brand of cigarettes has been much reprinted since he become prominent in another sphere-but sports persons have been more ready. such as a make of car. as vendor and purchaser. A distributorship. backed up by the vendor's advertising. in exchange for certain exclusive territorial rights. at least for a while. except that the purchaser. A Distributorship This could be for a particular product. A name can be franchised. of equipment associated with the sports person's field of sport and bearing his or her name. promotion and. what the agent does. in return for a royalty payment by the manufacturer. The Use of a Celebrity Name The name of a well-known person can be used to enhance the sales appeal of a product and guarantee. The most common example is the endorsement. An agent acts on behalf of a principal. as if they were employer and employee. A License to Manufacture This applies to a certain product within a certain territory and over a given period of time. by a sports personality. however. The arrangement is often found in industry and a well-known example is Modi Xerox's license to produce the photocopying devices pioneered by the Xerox Corporation. The Use Of A Trade Mark
. to validate a product. its quality. will be expected to hold adequate stock and maintain the premises in a way that reflects well on the vendor's product or service.for both franchisers and franchisees is much lower than for the small business sector as a whole. Licenser and licensee are independent of each other. at least by implication. for instance. training of staff. The licensee may have access to any secret process this involves and can use the product's brand name in exchange for a royalty on sales. particularly if there appears to be a direct connection between them: Arnold Palmer golf clubs. and perhaps better organised. is an arrangement where both parties are legally independent. It is also sometimes referred to as an agency. possibly. except that the licenser will no doubt insist that the licensee complies in order to preserve the good name of the product. but there is a fundamental difference between these two concepts. This arrangement resembles a dictatorship.
but there is a core of balancing factors. for a specified period of time. Franchise: Pros And Cons The advantages and disadvantages of taking up a franchise depend to some extent on the content of the agreement. The idea that franchisees are independent business people is something of a myth. which is borrowed from the French. The franchiser also provides the franchisee with training and other back-up support. always shown with the symbol TM beside it. An instance with which many readers will be familiar was Rubik's cube. which are largely common because they relate to the kind of activity which franchising involves. the franchisee's) money. Today. the effect on the liquidity of the franchiser. and the private who merely follows them. Because of the shortage of prime sites. The inventory and equipment are owned by the franchisee. Nevertheless. Business Format Franchising The term `franchising'. They are often hamstrung by the franchiser's policies. is enormous-though if the franchiser does his job properly there are
. the price and quality of these goods.Here a widely recognised product is exploited commercially for a fee-subject to certain licensing conditions-rather than the name of an individual. in contrast to expansion by opening branches. or at any rate to stand as guarantors. business format franchising is the name given to a relationship in which the owner of a product. the advantages are that the does not have any direct investment in an outlet bearing his name. franchising thrives because it merges the incentive of owning a business with the management skills of big business. Franchising may benefit not only the franchisee but also the franchiser. a process. size and layout of any premises to be used. One franchiser describes the ideal franchisee as the sergeant type. it may enable the franchiser to grow rapidly by using other people's (that is. And personal ownership is one of the best incentives yet created to spur hard work. and even the location. The franchiser Advantages From the franchiser's point of view. such as accounting systems. or a service allows a local operator to set up a business under that name. usually. continuing royalties for the privilege. there is a growing trend for franchisers to acquire leases on behalf of franchisees. They are subsequently frustrated by lack of autonomy. For example. originally meant being free from slavery. People who want their own business to escape taking orders from others frequently see franchising as the answer. standards and procedures. That is largely how giant franchisers like McDonald's and BaskinRobbins have mushroomed into billion-dollar businesses in so short a time.midway between the general who gives the orders. advertising programmes and personnel recruitment and selection advice. The franchiser lays down a blueprint on how the business should be operated: the content and nature of the goods and services being offered. In essence. The local operator (the franchisee) pays the parent organisation (the franchiser) an initial fee and. Franchisees generally are not free to run their business as they see fit.
the franchisee would be obliged to pay under the terms of agreement. promotion. In extreme cases the franchiser may terminate the agreement or at any rate not renew it. and to a large extent this is indeed the situation. and that.
. is more likely to be highly motivated than an employee and more responsive to local market needs and conditions. some degree of centralised administrative facilities. but a sour relationship is not good for either party. The franchisee is encouraged to think of him as an independent business entity. As a consequence. major problems can be avoided in the start-up period. Disadvantages The disadvantages are that. ● A recognised name of which the public is already aware and which has credibility with the suppliers. Clearly. as the owner of the business. Another disadvantage sometimes turns out to lie in the curious mixture of dependence and independence that franchising produces. although the failure of an individual franchise may reflect badly on the franchise operation as a whole. in as much as franchising provides economies of scale from centralised purchasing and. that the franchiser receives an income from the franchise. he is operating the franchiser's business concept under a license for which a fee is payable. ● Publicity. he may in this way derive some of the benefits of expansion. been found to work. administrative backup and feedback and communication within the network. not to the franchise concept or to the franchiser. so it is up to the franchiser to maintain his part of the bargain both in letter and in spirit. without direct financial involvement. Franchises are a matter of mutual interest and obligations. This is apt to be particularly so if the franchiser adopts a lower profile than he should. presumably.heavy start-up costs in piloting the franchise and in such aspects as training. but he cannot throw the franchisee out as if he were an employee. in that the franchiser advertises his product or services. where feasible. The success is felt to be due to the franchisee's own effort. of course. The franchisee From the point of view of the franchisee also there are certain plus and minus points. There are cases where franchisees identify so closely with the particular business they are running that they ultimately resent the payment of the fee. Thereafter there are further costs in providing a continuing service to franchisees in such matters as research and development. both direct. and indirect promotion through signage and other corporate image promotion in all the franchiser's outlets. The expectation is that these costs will be offset by the fact that the franchisee. all the franchiser can control is the format itself and he can only influence the running of individual operations by pulling the reins on this or that clause in the agreement-the broad terms of which we shall discuss shortly. The franchiser is therefore dependent on the willingness of the franchisee to observe the rules and play the game. Nevertheless. Advantages A business format or product which has already been market tested and. A failure to do so can be damaging to the franchiser and the franchisee as a whole. either in terms of direct help or in matters such as national advertising.
The backing of a known trading name when negotiating for good sites with letting agents or building owners. or if the franchisee is not pulling his weight. negotiating with planning officers and developers. appearance and packaging in whatever the franchise entails. A period of training on production and management aspects. the royalty can be subject to bitter dispute. service or design. though this may be partial where the franchiser is also the supplier. who is also entitled to vet the vendor and charge the cost of any
. The problem here is that if the franchiser is not pulling his weight. sales and stock control procedures incorporated in an operating manual. The protected or privileged rights to the franchise within a given area. Help with site selection. the franchiser will demand uniformly high standards of maintenance. The sale has to be approved by the franchiser. of necessity. This is usually based on gross turnover or on profit. it is considered that the percentage of expensive errors made by individuals starting on their own is substantially reduced by the adoption of a tested format. A set of standard management. Improved prospects of obtaining loan facilities from the bank. ● The royalty (sometimes called a management fee) paid to the franchiser. There is virtually no scope for individual initiative in matter of product. Furthermore.●
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Although taking up a franchise is not cheaper than starting on you own. Design of the premises to an established scheme saves on interior design fees and may eliminate these altogether where the franchiser has a set of specifications. Feedback throughout the network on operating procedures and the facility to compare notes with other franchisees. Direct and close assistance during the start-up period. accounting. the franchiser's resources to conduct a long-drawn-out proceeding will usually be greater than the franchisee's.
Disadvantages Business format franchising is. though not universally. If the franchiser's income is wholly or partially based on turnover. he or she may try to push for this at the expense of profitability. ● The franchisee is not absolutely at liberty to sell the franchise even though he is in many respects operating the business independently. but this is always a difficult matter to prove in the courts. ● A further problem is that a high turnover does not necessarily imply a highly profitable operation. or if the franchisee does not feel this to be the case. The benefit of the franchiser's research and development in improving the product. These are usually monitored by regular inspection. However. Possibly. though he may be looking for mark-ups in this area as a source of revenue from the franchise. Better terms for centralised bulk purchase negotiated through the franchiser. The franchisee may than feel justified in withholding all or part of the royalty on the grounds of non-performance by the franchiser. something of a cloning exercise. The benefit of the franchiser's advice on equipment selection and initial inventory levels. access to the franchiser's legal and financial advisers.
although the business would be valued as a going concern in trading terms. Knight of the University of Western Ontario concluded that franchisees and franchisers have a large measure of agreement on what makes for success. For instance.
A Mutual Dependence From this list of advantages and disadvantages to both parties. But before considering these. Furthermore. from the point of view of a particular outlet. equal advantage. be a waste of time. the franchisee may feel that. which. at best. They disagreed only in rating management ability and creativity-a point that may provide some clues as to what franchisers are really looking for in a franchise. but there is nothing to prevent the citizens of that suburb from buying their slimmer's meals in some other neighboring Calorie Countdown outlet. Equally. as well as paying a royalty to the franchiser. may be obliged to buy goods and services from his as well-possibly at disadvantageous rates. may. which can lead to expensive litigation. the scope for doing the reverse is more limited. The franchisee. A study of the personal franchisee characteristics required for success carried out by Professor Russell M. this is bound to affect the franchisee adversely. is able to concentrate his entrepreneurial skills at the sharp end of sales and customer service. If the franchiser's products or service gets bad publicity. Territory agreements may be difficult to enforce in practice. This relationship is expressed as agreements-the purchase agreement and the franchise agreement. Again.
. though perfectly harmless. on the other hand. he s saved. in other words. and there is very little he could do about it. the goodwill remains the property of the franchiser. the goodwill has been built up by his or her own efforts. while the administrative headaches of setting up the business are mitigated by the uniform nature of the format. from making the errors to which businesses are prone in their earlier and most vulnerable stages.●
investigations made to the existing franchise. which is not viable in isolation. he does receive an income from the franchisee as well as getting both an outlet for his product and more muscle in negotiating the purchase of materials and equipment. is a process rich in those gray areas. By the same token. it is necessary to evaluate the franchise as a whole. Through the franchiser please all sorts of control and obligations on the franchisee to maintain the quality of his image. The franchiser is able to expand without further investment and though the return is obviously lower than from expansion by ownership. at least to some extent. The failure of a franchiser may leave the franchisee with a business. the franchiser may engage in promotional activities (and involve the franchisee in them as well). Countdown may have the exclusive rights in the suburb in which it is located. The resale of a franchise. a more detailed picture emerges of the business format franchise as a relationship of mutual dependence. the hypothetical firm of Calorie. The franchisee. through feedback to the franchiser of the accumulated experience of the franchises. which allows each party to utilise its strengths to their mutual and.
there is a shortage of a particular commodity in the market. sometimes in short run.
Confederation of Indian Food Trade and Industry. New Delhi
. 4. Only when you are certain that the shortage will remain there for considerable period of time and you would be able to generate enough profits in the very first or second year of operation and that you can produce quality item within an acceptable pricing. Udyog Sahayk and so on). New Delhi Commissioner of Cottage Industries Entrepreneurship Development Institute of India. Project profiles Feasibility studies Industry studies Area development studies. New Delhi Khadi and Village Industries Commission. Ahmedabad National Institute of Entrepreneurship and Small Business Development. export promotion or such other work. New Delhi National Institute of Small Industry Extension and Training. then only you should venture into such a business. there are in organizations which undertake monitoring. 13. National Industrial Development Corporation.
This information could be in the form of:
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Industry-Specific Agencies For a given industry. 12. 5. First thing in such a condition is to analyse the situation. market . you may even come to know you will get almost two weeks in advance to supply fresh stock.
1. say for the next 3 to 5 years. But do not be easily influenced by these temporary shortages. Hyderabad Small Industries Development Bank of India. 6. There are many organizations which are in possession of information on business opportunities. you can contact these organisations to get an idea about product. 7.
District Industry Centres Technical Consultancy Organizations Centres for Entrepreneurship Development Small Industry Service Institutes Lead Bank Industrial Extensions Bureaus (These exist in several states) They are known by such names as iNDEXTb.Making a Product Choice
Make a careful analysis of the product or service you are choosing. Carefully analyse the future demand-supply position of the product.development. 3. Keep in mind that shortages may occur due to a number of reasons and a good entrepreneur always examine the pros and cons before setting up a business. 11. 2. Lucknow. It may tempt you to think that perhaps you have found a good businesses idea. Udyog Mitra. research. 8. Agencies For Fruit And Vegetable Processing Industry
1. 10. Does that mean you can jump into that business. 9.
. Mysore Indian Institute of Horticultural Research. 7. s(he) should consider the following additional questions : What should be the contents of export-product portfolio ? What are the special requirements for packaging if one has to export the products ? ● What product adaptations are needed to be made for exporting a product to a specific country? Does it meet the product's quality specification of the country concerned?
The development of export-product portfolio can be done by considering 4 parameters viz. IIT. 4. New Delhi Indian Institute of Packaging. Some such products in the recent past have been. In a project conceptualisation stage while making a product choice following factors related to the product needs to be considered:
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Easy availability of raw-material Process Technology Easy accessibility in the market Incentive and support from Government Product Line . audio cassettes. Bangalore Post-harvest Technology Centre. Kharagpur National Horticultural Board. which are likely to have a number of players in the market.Depth. EXIM (Export Import Bank of India) Bank has also developed an excellent model to conduct the export-product portfolio analysis based on three parameters viz. Bombay Central Food and Technological Research Institute. disposable gloves and bulk drugs. 6.
Agricultural and Processed Food Products Export Development Authority (APEDA). Width Market information Packaging Branding Warranties After Sales Service
Another point to keep in mind while deciding about products is to avoid the Products. New Delhi
You need to get in touch with such organizations. 5.
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External demand conditions Internal supply capability Complexity of Marketing Tasks Amount of investment required to penetrate the market
Analysis can be conducted using this four dimensional model. The choice should be a product which scores a high rating on first two parameters and low rating on last two parameters. 3. In case the entrepreneur is looking for a product which has export potential. You might get valuable information on your product and opportunities that exist.2.
Government has taken various steps for the promotion of the tiny enterprises. These steps include earmarking of 60% of credit flowing to SSI sector under priority sector lending programme of banks for tiny units (40% for tiny units having investment in plant and machinery up to Rs. The NSIC would earmark 40% of the assistance to the tiny units under various schemes viz. Excise exemption limit for SSI's including tiny units has been enhanced from Rs. Some high potential areas are:
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Leather Garments Yarns and Thread Apparel . This will give inducement to the tiny units for increasing their production. training facilities etc. This Policy got a legal backing when the I (D&R) Act was amended in March. Currently the investment limit for items to be manufactured in SSI is 1 crore. technology assistance. Tiny Business Tiny enterprises currently defined as those having investment in plant and machinery up to Rs. marketing support. 50 lakhs. the SIDBI will endeavor that up to 60% of its refinance flows to tiny sector. 5 lakhs to Rs. a consistent and higher flow of credit to tiny units. 25 lakhs). Criteria For Reservation
. Product adaptations for country's specific needs look into things like whether voltage supply is 220 V or 110 V for electric appliances and for automobiles whether left-hand drive or right-hand drive is appropriate.● ● ●
Supply Capability in product group Domestic environment Export market attractiveness
This analysis gives rise to product groups with high potential or low potential. 25 lakhs constitute about 95% of the small scale sector. Government has decided to adopt additional measures for the promotion of Tiny Enterprises by earmarking facilities for Tiny Units under the Integrated Infrastructural Development (IID) Scheme. In order to ensure flow of credit to tiny units. At present 812 items are reserved for manufacture in this sector.Woven and Knitted B & W TV Sets Costume Jewellery
With regard to special packaging requirements one has to be careful about laws of the country one is exporting to. Products for Small Scale Unit In India products have been Reserved for exclusive manufacture in the SSI Sector for promoting this sector. supply of machinery on hire purchase. 1984 empowering the Government to reserve items under this Act. This Act also provided for the Constitution of an Advisory Committee headed by Secretary (SSI & ARI). 30 lakhs to Rs..5 lakhs and 20% share to units having investment in plant and machinery between Rs. Tiny enterprises have been made eligible for same rate of excise exemption as available to registered units since 1994-95.
Electrical machines.The overwhelming consideration for reservation of an item is its suitability and feasibility for being made in the small scale sector without compromising quality aspects. former Additional Secretary in the Ministry of Commerce who has recommended to the Government for de-reservation of 91 items out of 821 items presently reserved in this sector. The reserved items fall under the following broad categories:● ● ● ● ● ● ● ● ● ● ● ● ● ●
Food and allied industries. 812 products reserved for exclusive production in the small scale sector.S Vijayaraghavan. a Committee was constituted under the Chairmanship of Shri T. Review Of Reservation List After the introduction of economic reforms with emphasis on liberalisation. Mechanical engineering. Any violation of the policy of reservation is punishable under Section 24 of I (D&R) Act. Wood and wood products.. bicycle parts and Miscellaneous (sports goods. Paper products. Appropriate action on the cases of violations of the Policy of Reservation is taken up suitably by the concerned Administrative Ministry/Department. auto-parts. stationery items etc. Violation And Punishment As per policy no medium/large including multi-national companies are allowed to manufacture reserved items except under 50% export obligation. Textile products including hosiery. Another committee known as Expert Committee under the Chairmanship of Shri Abid Hussain was also constituted to review the policies in the changed economic scenario for SSIs sector who had recommended for total abolition of the reservation for SSIs. Leather and leather products including footwear. Transport equipment. Electronic equipments and components. Plastic products. Rubber products. Those who had been manufacturing reserved items prior to the date of reservation can continue to do so after obtaining a Carry-On Business (COB) Licence from the Government.)
The small units manufacturing items served for manufacture in small scale sector do not require any prior licence. de-licensing and de-regulation. appliances etc. Glass and ceramics. Advisory Committee on Reservation constituted under the I (D & R) Act in its meeting held on 19th February 1997 recommended to the Government that the complete dereservation at this stage is not desirable and de-reservation should be done in a phased manner. This is a major relaxation where no licensing or restriction in
. Accordingly. Chemical and chemical products. a need was felt by the Government to review the reservation policy.
Constant liaison has been maintained with Administrative Ministries both at Central & State Levels. Earlier in the ESI Scheme establishments were liable for inspections once in a year. Steps are also being taken to have better self-discipline regarding enforcement of labour laws in the small scale sector. Seminars. namely "Labour Laws (Exemption from furnishing Returns and maintaining registers by certain Establishments). whereas establishments employing more than 20 persons are inspected annually. BuyerSellers Meet. However. public/private sector undertakings and other industrial developmental agencies through various programmed such as Vendor Development Programmes. Department of Public enterprises. etc. The location restrictions have also been minimised. parts. Similarly. Small Industry Development Organisation (SIDO) is a nodal agency of the Central Government and Ancillary Division at Headquarters continued its function for the promotion of ancillarisation programme in the country. and getting the items of the desired specifications. Plant Level Committee Meetings and PSU's and visit to public/private sector undertakings for the promotion of small ancillary & sub-contracting units. tools. to ancillary units. The Act. Now inspections in normal cases are being conducted on annual basis. Establishments employing less than 10 persons to maintain only 1 register and submit only one annual core return. Labour Act has been simplified in 1988 to assist the small establishments. while the small scale units have the advantage of getting assured market for their products. Earlier inspections under the EPF Scheme were conducted six monthly in normal cases and quarterly in default cases. 1988" covers labour related acts and thus provides:● ● ●
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Establishments employing 10-19 persons require to maintain only 3 registers and to submit an annual core return only. is under process. availability of technical assistance and improved technology from the parent units. Workshops. Now after liberalisation small scale establishments employing up to 20 persons are inspected once in 2 years.
Ancillary Units The programme of ancillarisation includes motivation of public and private sector units to offload production of components.
. Simplification of Labour legislation with a view to bringing them nearer to Labour Market and simplification of procedures with a view to minimising the adverse impact of excessive inspections and having joint inspection by the inspectors of the Ministry of Labour. employment of labour. sub-assemblies. inventories.production in small scale sector exists. Act. The programme of ancillary development has specific advantages both for large as well as small industries and also for the total economy of the country. Simplification and rationalisation of forms/returns to be submitted by the Establishments/Industries is under process. The large scale units have the advantages in the form of savings in investments.. in default cases establishments are liable for random inspections. intermediates. This programme also helps in overall economy of the country. State Level Ancillary Advisory Meetings. services etc. Ancillary Exhibition.
The spare capacity for different facilities as available with the competent small scale units are registered with these SCXs.Sub-contracting exchanges are functioning as a part of major SISIs in the country at important cities for the promotion of fruitful and lasting contracts between large & medium undertakings and small scale ancillary units. but due to political changes in that country these spares are not easily available and Ministry of Defence have come forward with an ambitious programme for the indigenisation of items required by them to be developed in the country. The pull of the market. existing SCXs have been equipped with latest equipments like Plain Paper Copiers and Electronic Typewriters. The setting up of large public sector / private sector undertakings in some places has encouraged growth of small scale industries in those areas (e. For providing advisory assistance. Bangalore.g. in this regard. Further efforts are being made to equip these SCXs with other facilities like FAX. Large Undertakings. Industrial Associations. manufacturing ancillary products and providing auxiliary services. These SCXs organise contacts between Buyers & Sellers by way of organising Vendor Development Programmes. availability of physical and social infrastructural facilities and skilled labour have been major considerations. In order to provide help. Rourkela. Ranchi. Banks. Computer Terminals. In new Industrial Policy. SLAACs have members from SISIs. Industrial Development Agencies.). Over the years small
. Financial Institutions etc. A great difficulty was being experienced by most of the ancillary units in getting timely payments from their parent units. During the year greater stress has been given on the indigenisation of the items required by Defence. etc. Other activities 1) Vendor development programme 2) Indigenisation of defence items 3) State level Ancillary Advisory Committee meeting 4) Plant level Committee meetings 5) Registration with SCXs 6) Supplies to public sector undertakings 7) Standing Committee/Ancillary development Small industries have tended to concentrate in the vicinity of large industries or in metropolises and big cities. As a follow-up of new industrial policy. stress has been given on the development of ancillary industry in the country by strengthening existing SCXs and setting up of new SCXs by industrial associations and other non-Governmental organisations. for effective and better utilisation of services. These SCXs also obtain such items from large units which are required by them and can be manufactured in the small scale sector. an Act has been passed under which interest is payable on the delayed payments by large undertakings. The requirement of the spares of Defence was being met mainly by imports from USSR. etc. State Industries Departments. etc. State Level Ancillary Advisory committees have been set up in almost all the States to provide infrastructural facilities and to recommend measures for the promotion of ancillary industry in the State and to monitor the outcome of these efforts. Buyers & Sellers Meet and Exhibition. CXs established by industrial organisations will be eligible for registration as SSSBE and will be entitled to get benefits as available to tiny sector units.
A major aspect of "spatial concentration" of SSI is that clusters of certain product lines have come up. Some of them are as follows:
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District/Region Tirupur. Franchises often succeed because product is a known brand and has been launched in the market.
. For such people. Bangalore. Farukkabad Aligarh Ambala. Major Industry Clusters Of India Product Group Woollen & Cotton Hosiery Sports Goods Handtools Glass and Ceramics Locks Scientific Instruments Safety Matches Bicycles & Parts Brass Parts Diesel Engines and Parts Electronics Domestic Electrical Appliances Wall Clocks Business Enterprises Some people may like to go into businesses as quickly as possible without actually entering into manufacturing and start earning at the earliest. Raw material availability. Delhi Meerut. Delhi Morvi
Become a franchisee Start a Turn-key or Packaged Business Join Multi-level Marketing Schemes Buy an Existing Business
Before selecting a particular method each of these methods needs to be examined carefully as each of them have their own advantages as well as limitations. The clusters of some selected industries in some areas are indicated below. Ghaziabad Bombay. Nagaur Khurja. a commercial concession granted by the franchiser to exclusively sell their products or provide services in a specific area. Delhi Bombay. Government Suport Programmes. Pune. improved infrastructure. Franchises can be found in in almost any type of business. Calcutta. Ludhiana. increasing demand and a lot of other factors have contributed to this phenomenon. Agra. Ajmer Sivakasi Ludhiana Jamnagar Kolhapur. Rajkot. Jullundhur Jullundhur. Coimbatore. there are several easy-to-start methods are available. Becoming a Franchisee Franchisee is a person or a firm or a company that acquires a franchise.units have exhibited significant growth in some new towns and cities. Entrepreneurship.
All utilities such as power. areas. Amway cleaning products. There are many methods to help examine the businesses up for sale and arrive at a reasonable purchase price. quickstart methods offer a simple route to entrepreneurship. Before buying a business a person should check out the actual position of the business and problems he might face once he buys it. if the unit is sick then turning around a sick business may be tall order. In India in products such as soaps. Some businesses are sold by the existing owners. But it does requires deep pockets and a good judgment. Multi-level Marketing Schemes or Network Marketing Method In multi level marketing scheme the company appoints agents. Turn-key or Packaged Businesses Some firms offer to teach their prospective customers how to set-up a business using their equipments and ingredients.
Location of Industry
After deciding the issues of product. Ironically. However. Thus. Moreover. most of the profit is made in recruiting sub-agents rather than by selling the products. too. But not all type of SSI can be set up in home either due to size or due to nature of the industry. water supply etc. where to set up the unit ? For many tiny units and service based units. too. There is no royalty payment involved. the home is perhaps the best starting point. GIDC. This facilitates a rather low-cost market entry for an individual. State level Government agencies like DSIDC. Usually a Franchisees have to make an upfront payment to the franchisers and may be an annual royalty. are available at site in case the units are located in any of the industrial
. A word of mouth is usually be the best source of information to pick a business for a good bargain. these agents in turn recruit other agents and they in turn recruit their own agents and chain continues. one should evaluate these types of business opportunities with thorough diligence and not get carried away by the hype. besides helping in the process of getting all the necessary clearances for the project. For example. Kodak not only sell its machines but also train the buyer how to operate the machine. TIDCO. parks.involvement of the owner-manager and backing of the franchiser. some businesses command even a premium. Oriflame cosmetics or Tupperware plastic products are good examples. HPSIDC. Then the entrepreneurs may like to locate their business in industrial estates. too. Buying an Existing Business Purchasing an existing business may save a considerable time and reduce risk. Modicare soaps. produce different jobs and set-up their business. complexes developed by concerned state government organisation or private bodies or in a privately leased land subject to approvals by various state and municipal bodies. the next important question is. cosmetics or jewellery are sold through multi level marketing schemes. UPSIDC assist entrepreneurs in identifying suitable locations/sites for the project.
hardness). private sector has also got into development of industrial parks. Checklist of points to be considered for evaluation of land /sites are as follows : Checklist for Location and Site Selection A. drainage and street lighting (single or multiple agencies) Postal. air-distance. canal. river).). Effluent treatment and disposal (if relevant): disposal point (land.estates developed by these agencies. quality of power etc. tube well). Of late. an example being the Mahindra Auto-ancillary park being developed jointly by the Mahindra group and TIDCO. sales tax. etc. sea. drainage arrangement for conveying the effluent (open. Industrial Infrastructure Position
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. industrial infrastructure
B. Municipality) Power supply : nearest substation. common). Ideally. Proximity of offices of industry assisting agencies (State Financial corporation. telex facility. common storage facility. quality (PH. arrangement for treatment (individual. Estate-Corporation. factory inspection. STD facility. operating authority (Public Works Department. Street lighting Responsibility for maintaining roads. distance. treatment and conveyance charges Approach road/internal roads. frequency) Distance from important geographical markets and to relevant ports (in case of export/import oriented enterprises) Distance from major raw material sources Availability of manpower with required skills and prevailing wage rates Law and order situation in the area Level of industrial development in the area and anticipated tempo Composition on industrial development (in terms of types of industry and size/health of existing enterprises) Whether built up factory shed is available at the location and whether its size confirms to your need Land: availability and price Existence of an organized industrial estate Water Supply : source (river. feeder type (industrial/rural) availability. manual or automatic exchange. Next. telegram and Telecommunication facility (availability of new telephone connections. compare these locations/sites in relation to your requirements. road. rate. General Considerations
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Location (city/town/village) Nearest large city (name and distance) Connections to nearest and major cities (rail. pollution control etc. labour laws.) Bank facility Transport-operator facility Typing/photocopying Warehousing facility (if required) Proximity of offices of law-enforcing agencies (excise. underground). identify two or three locations and then select a few possible sites at each of these locations.
ease of admission.g. number of seats. Similarly. state highway * Overhead telephones or power lines or underground water/drainage/gas line passing through the site* Access to national/state highway or other roads provided by the state Wind direction in relation to the site # Soil-type +
Omit the items in list. Financial Incentive Position Investment subsidy (Central Govt. frontage. # In India. price (ownership and rent). depending on circumstances. medium of instruction) ● Health: dispensary. quality. national highway.● ● ● ●
corporation. site-shape (regular/irregular) Proximity to railway line. local-tax exemption and such other incentives. raw material/marketing corporation. ravines. on the highway). normal wind-direction. electricity-duty exemption. gas-supply and such other industrial service Professional resource position (management/industrial consultants. pits. district Industries Centre which sanctions and disburses financial incentives) Building/electrical/fabrication contractor facility Shops for building material. except during winter. If there is a dense population concentration in south. hospitals. financial/legal advisers. specialties
E. is north-south. points or items that are not very relevant to your project. Top
. a factory involving gas/smell emission may cause a problem + Loose soil may increase construction cost.
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C. management/productivity associations). hilly. Social Infrastructure Position Housing: availability. painting. Note : * This may imply leaving out some portions of a plot for building purpose. secondary and university education facility (quality. in many cases just preliminary or qualitative information may be enough. brick-kilns). infrastructure corporation or such other agencies) ● Education: primary./State Govt.) Income-tax concession Sales tax exemption/interest-free sales-tax loan Promoter's contribution (margin) and interest-rate policy followed by State Financial Corporation ● Octori-exemption. approach etc. spare parts and such other things Motor-rewinding. public housing (actual and planned housing by State Housing Board. Direction of town-growth with reference to the site Non-agricultural status of the site Site-contours ( levelled. Site-specific Considerations
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Vantage or otherwise location (e.
A list of some of such industries follows : .Business Operating From Homes There are many businesses especially in the service sector which can be run efficiently from home.Health clubs .Travel agencies .Beauty parlours .Clearing and maintenance service . Setting up also requires negotiating a favourable plot or shed purchase. organising for proper construction or reconstruction of building.
.Courier and messenger service .Outdoor catering service .Childcare (creche) service .Data processing . Most of the items mentioned in the checklist applies for the home based business also.Medical clinics A point to be kept in mind while opening an service sector enterprise is that setting up an establishment in service sector is much more than putting a sign board up and waiting for customers to walk in. design of interiors and finding good deals for equipment and machinery.Mail order retailing .