ENTREPRENEURSHIP DEVELOPMENT (MODULE-II)

Edited by: MANAV SIR

(Faculty: PMEC & Research Scholar: Berhampur University)

Module II: Setting up of a small Business Enterprise.

Identifying the Business opportunity - Business opportunities in various sectors, formalities for
setting up small enterprises in manufacturing and services, Environmental pollution and allied
regulatory and non-regulatory clearances for new venture promotion in SME sector.
Writing a Business plan, components of a B-Plan, determining Bankability of the project.

Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro,
Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium
Enterprises (MSME) are classified in two Classes:
1. Manufacturing Enterprises-he enterprises engaged in the manufacture or production of
goods pertaining to any industry specified in the first schedule to the industries
(Development and regulation) Act, 1951) or employing plant and machinery in the process
of value addition to the final product having a distinct name or character or use. The
Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are
defined in terms of investment in equipment..
Enterprises have been classified under the Micro, Small and Medium Enterprises Development
Act, 2006 broadly into
(i) Enterprises engaged in the manufacture production of goods pertaining to any industry &
(ii) Enterprises engaged in providing/rendering of services.
The manufacturing and service enterprises have been further classified into micro, small and
medium based on investment in plant and machinery and in equipments respectively. Details are as
under:
Class/Category Manufacturing Service
Micro Enterprises Investment upto Rs.25 lakhs Investment upto Rs.10 lakhs
Small Enterprises Investment above Investment above
Rs.25 lakhand upto Rs.5 crore Rs.10 lakhand upto Rs.2 crore
Medium Enterprises Investment above Investment above
Rs.5 croreand upto Rs.10 crore Rs.2 croreand upto Rs. 5 crore
CHARACTERISTICS OF MSMEs
The important characteristics of MSMEs are summarized as follows:
They are generally organized and run by individual entrepreneurs.
They require less capital.
They are fundamentally labour-intensive units facilitating greater utilization of man power.
They involve the use of simple technology, intensive utilization of individual skill leading to
professional specialization.
They cater the individual tastes and fashions and render personalized service to consumers.
They are highly localized industries. Using local resources MSMEs are decentralized and
dispersed to rural areas.
They are eligible for govt. assistance and patronage and for concessional finance by banks,
financial institutions etc.
They are flexible to a large extent. They are more susceptible to change and highly reactive
and receptive to socio-economic conditions.
They are free from red-tapism and bureaucratic handicaps.
Compared to large units, a MSME has a lesser gestation period. ie, the period after which the
on investment starts.
OBJECTIVES OF MSMEs
The primary objectives of MSME are to play a complementary role in the socio-economic set
up of a country. The other objectives are as follows:
1) To provide increased employment opportunities.
2) To provide production of large variety of goods especially consumer goods through labour
intensive methods.
3) To bring backward areas too in the mainstream of national development.
4) To improve the level of living of people in the country.
5) To create a climate for the development of self-employed experts, professionals and small
entrepreneurs.
6) To ensure more equitable distribution of national income.
7) To ensure balanced regional development as regards industries.
8) To encourage the adoption of modern techniques in the un-organized traditional sector or the
industry.

ADVANTAGE OF MSMEs
1) They are relatively more environmental friendly.
2) They are generally based on local resources.
3) They provide ample opportunities for creativity and experimentation.
4) They facilitate equitable distribution of income and wealth.
5) MSME enjoys the government support and patronage.
6) These helps in the balanced regional development.
7) It is possible to make necessary changes as and when required.
8) These help in reducing prices.
9) There is a close and direct personal contact with the customer and employees.
10) They create more employment opportunities. They are labour intensive. They offer ample
scope for self employment.
11) They require only less capital. It is a boon to a country like India where capital is deficient.
12)MSME alone can satisfy individual tastes and offer personalized service to the customers.

DISADVANTAGES OF MSMEs
MSMEs suffer from lack of funds. They are financially weak.
They suffer from lack of managerial and other skills. They cannot employ highly paid officials.
MSMEs always face tough competition from large businesses.
They are not well equipped to make advantage of the latest technology and modern methods.
There is only a little scope for division of labour and specialization.
MSMEs cannot afford to spend large sums of money on research and experiments
They cannot survive in times of adversity.
They cannot secure cheap credit.

ROLE/ IMPORTANCE OF MSMEs IN DEVELOPING COUNTRIES

1) Large Employment Opportunities: MSMEs are generally labour-intensive. For every
Rs. 1 lakh of fixed investment, MSME sector provides employment for 26 persons as against 4
persons in the large scale sector. Thus in a country like India where capital is scarce and labour is
abundant, MSMEs are especially important.
2) Economical Use of Capital: MSMEs need relatively small amount of capital. Hence it is
suitable to a country like India where capital is deficient.
3) Balanced Regional Development: Generally small enterprises are located in village and
small towns. Therefore it is possible to have a balanced regional growth of industries. India is a
land of villages.
4) Equitable Distribution of Income And Wealth: It removes the drawbacks of
capitalism, abnormal profiteering, concentration of wealth and economic power in the hands of
few etc.
5) Higher Standard of Living: MSMEs bring higher national income, higher purchasing
power of people in rural and semi-urban areas.
6) Mobilization of Locals Resources: The spreading of industries even in small towns and
villages would encourage the habit of thrift and investment among the people of rural areas.
7) Simple Technology: New but simple techniques of production can be adopted more easily by
MSMEs without much investment.
8) Less Dependence on Foreign Capital: MSMEs use relatively low proportion of imported
equipment and materials. The machinery needed for these industries can be manufactured within
the country.
9) Promotion of Self Employment: MSMEs foster individual skill and initiative and
promote self-employment particularly among the educated and professional class.
10) Promotion of Exports: With the establishment of a large number of modern MSMEs in the
post independence period, the contribution of the small scale sector in the export earnings has
increased much.
11) Protection of Environment: MSMEs help to protect the environment by reducing the problem
of pollution.
12) Shorter Gestation Period: In these enterprises the time-lag between the execution of the
investment project and the start of flow of consumable goods is relatively short.
13) Facilitate Development of Large Scale Enterprises: MSMEs support the development of
large enterprises by meeting their requirements of inputs of raw materials, intermediate goods,
spare parts etc. and by utilizing their output for further production.

PROBLEMS OF MSMEs
Some of the more important problems faced by MSMEs are as follows:
1) LACK OF MANAGERING EXPERIENCE: They may not be having specialized knowledge
in the different fields of management. At the time of initiating the project, they are not in a position
to anticipate correctly their financial requirements and the size of market for their products.
2) INADEQUATE FINANCE: Generally MSMEs are not in a position to arrange full finance
from their own sources. They obtain finance from unorganized finance sector at higher rate of
interest.
3) LACK OF PROPER MACHINARY AND EQUIPMENT: Many MSMEs use inefficient and
outdated machinery and equipment. This affects the quality of production.
4) LACK OF TECHNICAL KNOW-HOW: Do not have the knowledge about different
alternative technologies and processes available for manufacturing their products to improve the
quality of products and reduce costs.
5) RUN ON TRADITIONAL LINES: They have not yet adopted modern methods and
techniques of production. They have not taken adequate interest in research and development
efforts. Hence they cannot be run efficiently.
6) IRREGULAR SUPPLY OF RAW MATERIALS: The majority of MSMEs depends on local
sources for their raw material requirements. Small entrepreneurs are forced to pay high prices for
materials because they purchase materials in small quantity.
7) PROBLEM OF MARKETING: The brand name of the products of MSMEs is acute due to
tough competition from large industries. It cannot afford to costly advertisement and network of
distribution system. There are delays in the payment of bills by large purchasers resulting in
inadequate working capital.
8) PERSONNEL PROBLEMS: It is difficult for them to get qualified persons to run the
business. They cannot provide much training facilities to employees.
9) LACK OF CLEAR-CUT POLICY OF THE GOVT: The Govt. may take decisions relating
to MSMEs on the basis of political consideration rather than on economic consideration.
10) BOGUS UNITS: The government should look into this aspect seriously, break the strong hold
of such vested-interested and promote only genuine entrepreneurship in the country.
11) OTHER PROBLEMS: Like inefficient management, non-availability of cheap power, burden
of local taxes etc.

Identification of Business Opportunity:

Idea Generation and Opportunity!

In general sense, the term opportunity implies a good chance or a favourable situation to do
something offered by circumstances. In the same vein, business opportunity means a good or
favourable change available to run a specific business in a given environment at a given point of
time.
The term ‘opportunity’ also covers a product or project. Hence, the identification of an opportunity
or a product or project is identical and, therefore, all these three terms are used as synonyms. The
Government of India’s “Look East Policy” through North East is an example of ‘opportunity’ to do
business in items like tea, handicrafts, herbals, turmeric, etc.
Opportunity identification and selection are like comer stones of business enterprise. Better the
former, better is the latter. In a sense, identification and selection of a suitable business opportunity
serves as the trite saying ‘well begun is half done.’ But, it is like better said than done. Why?
Because if we ask any intending entrepreneur what project or product he/she will select and start as
an enterprise, the obvious answer he/she would give is one that having a good market and is
profitable. But the question is how without knowing the product could one know its market?
Whose market will one find out without actually having the product? Whose profitability will one
find out without actually selling the product? There are other problems, besides. While trying to
identify the suitable product or project, the intending entrepreneur passes through certain
processes.
The processes at times create a situation, or say, dilemma resembling ‘Hen or Egg’ controversy.
That is, at one point, the intending entrepreneur may find one product or project as an opportunity
and may enchant and like it, but at the other moment may dislike and turn down it and may think
for and find other product or project as an opportunity for him/her. This process of dilemma goes
on for some intending entrepreneurs rendering them into the problem of what product or project to
start. Then, how to overcome this problem of product identification and selection?
One way to overcome this dilemmatic situation is to know how the existing entrepreneurs
identified the opportunity and set up their enterprises. An investigation into the historical
experiences of Indian small enterprises in this regard reveals some interesting factors.
To mention the important ones, the entrepreneurs selected their products or projects based
on:

a. Their own or partners’ past experience in that business line;

b. The Government’s promotional schemes and facilities offered to run some specific business
enterprises;
c. The high profitability of products;
d. Which indicate increasing demand for them in the market?
e. The availability of inputs like raw materials, labour, etc. at cheaper rates;
f. The expansion or diversification plans of their own or any other ongoing business known to
them;
g. The products reserved for small-scale units or certain locations.
Now, having gained some idea on how the existing entrepreneurs selected products/projects, the
intending entrepreneur can find a way out of the tangle of which opportunity/product/project to
select to finally pursue as one’s business enterprise.
One of the ways employed by most of the intending entrepreneurs to select a suitable
product/project is to firstly generate ideas about a few products/ projects. Accordingly, what
follows next is a discussion idea generation about products.
Idea Generation:
Sources of Ideas:
In a sense, opportunity identification and selection are akin to, what is termed in marketing
terminology, ‘new product development.’ Thus, product or opportunity identification and selection
process starts with the generation of ideas, or say, ideas about some opportunities or products are
generated in the first instance.
The ideas about opportunities or products that the entrepreneur can consider for selecting the most
promising one to be pursued by him/her as an enterprise, can be generated or discovered from
various sources- both internal and external.
These may include:
(i) Knowledge of potential customer needs,
(ii) Watching emerging trends in demands for certain products,
(iii) Scope for producing substitute product,
(iv) Going through certain professional magazines catering to specific interests like electronics,
computers, etc.,
(v) Success stories of known entrepreneurs or friends or relatives,
(vi) Making visits to trade fairs and exhibitions displaying new products and services,
(vii) Meeting with the Government agencies,
(viii) Ideas given by the knowledgeable persons,
(ix) Knowledge about the Government policy, concessions and incentives, list of items reserved
for exclusive manufacture in small-scale sector,
(x) A new product introduced by the competitor, and
(xi) One’s market insights through observation.
In nutshell, a prospective entrepreneur can get ideas for establishing his/ her enterprise from
various sources. These may include consumers, existing products and services presently on offer,
distribution channels, the government officials, and research and development.
Identifying the Business opportunity: Today's economy takes a lot more than hope to get people
to purchase your products or services: New business-building practices are required to expend the
business. Crafting a plan is necessary for quick and effective business. A road map that will infuse
new energy, enthusiasm and vision into your company's growth plans is possible through the
implementation of following 7 steps plan
Step 1: Specialiation focus. In small, businesses that the entrepreneur feels he or she must do
everything the "big guys" do to compete. The truth is small-business owners can really never
compete in the same way. So it's essential for small businesses to differentiate themselves by
focusing on the unique capabilities and core products they bring to prospects. Specialization is the
entrepreneur's greatest asset.
Step 2: Simple Communication: Every company needs is a simple "elevator pitch." That's a
short, concise message that can communicate message to a prospect in 30 seconds or less. It
explains the value your product or service provides so the prospect understands why it's applicable
to them. Try this little exercise to test your pitch clarity quotient. Ask someone who doesn't know
what you do to listen to your pitch. Explain what your company does, and watch for signs of
fatigue-eyes watering, lids getting heavy, and so on. Of course, you may have the perfect pitch.
But if you don't, you'll recognize it right away from verbal and physical responses.
Step 3: Priority on Business strength: Knowledge about Organization strength will help the
business to reach at goals. Stay true to business and what is the strength of business: Stretch and
grow business capabilities in alignment with your interests and expertise. Always it may make sure
that business focused on your priority "A" tasks and delegate your Bs and Cs.
Step 4: Share the strength. Sharing of business capabilities with the target clients' needs is an
excellent way to determine business service strategy. It will help to find to no requirement of
expertise service. Develop a list of decision-making criteria that the business expects from clients
to use when choosing a provider in your industry. Then rank the business and find out the position.
After this intense evaluation, make sure that your elevator pitch is still on target.
Step 5: Availability utilization. When deciding on a marketing strategy, implementation should
match the business strength and can meet the customer needs. Top previous marketing tools should
be identified and new ideas should be added. Marketing tools, also be evaluated from a financial
and cost basis. Decision should be taken on the best return by which each tool will be a revenue
producing result in one way or another.
Step 6: Action plan implementation. Review of the established goals in 3 or 6 months can help
to find out the achievement status. Missing the target should be questioned for appropriate tools for
customers, integrate specific strategy for goal achievement.
Step 7: Execute the plan. This final step is really straightforward: Just do it: Complete the daily
actions, and then do something extra to accelerate your success plan. Don't let unplanned tasks
waste precious time that should be applied toward reaching your goal. And most of all-enjoy the
process.

Business opportunities in various sectors

Business Opportunities available for Small Entrepreneurs in India
Twenty Business Opportunities available for Small Entrepreneurs in India!
While thinking about business opportunities, I am reminded of the statement of Douglas
MacArthur given as opening quotation: “There is no security on this earth – only opportunity.”
Regarding the availability of (business) opportunities, the views of Thomas J. Watson also seem
quite worth citing: “Opportunity never knocks on the door. You have to knock on opportunity’s
door and they are all around.”
The fact remains that there are opportunities available everywhere in and around us. What is
actually required is to have the lenses to see and recognize the same. There exist innumerable
business opportunities in the environment for unleashing by the entrepreneurs.
The various business opportunities, for example, available in the environment include but
are not confined to the following only:
1. Tourism:
By now, tourism has emerged as number one largest smokeless and fast growing industry in the
world due to its ample promises and prospects. Presently, it accounts for 8% of the world trade and
around 20 % of service sector in the world.
Evidences indicate that many countries have progressed from backward to developing to
developed, mainly due to tourism development. For example, tourism industry contributes to more
than 70% of the national income of some of the countries like Malaysia and Singapore. However,
its share to the national income of India is still dismally low at 2.5%.
Though India shelters around 15 % of the world population with its 2.5% of the world territory, it
accounts for only 0.40 % in the world tourism market. However, the prognostic picture of the
Indian tourism is not because of lack of tourism potential, but because of unleashing of the ample
tourism potential she is endowed with.
In fact, India too is a treasure trove for tourism development. She possesses long, unspoiled
beaches of golden sands and swaying coconut trees; from winding trails that take you gently up the
snowy slopes of a great mountain range like the Himalayas unfurling images of quaint, timeless
communities; from sprawling forts and breathtaking palaces that hide in their bosoms so many
tales of intrigue and ambitions, love and betrayal; from wildlife sanctuaries and sea worlds, Disney
lands and shopping festivals.
There hardly appears to be a thing that is not worthy of some showering of tourist’s attention and
attraction. Recognizing the India’s vast tourism potential, the World Travel and Tourism Council
(WTTC) has predicted: “India has potential to become number one tourist destination in the world
with the demand growing at 10.1% per annum.”
2. Automobile:
India has made much headway in automobile industry and by now has emerges as a hot spot for
automobiles and auto-components. A cost- effective hub for auto components sourcing for global
auto makers, the automobile sector is by all indications a potential sector for entrepreneurs in
India.
This is confirmed by a record increase registered by automobile industry in India. The automobile
industry recorded a 26 per cent growth in domestic sales in the year 2009-10. It is India’s strong
sales that have made her the second fastest growing automobile market after China in the world.
India being one of the world’s largest manufacturers of small cars with a strong engineering base
and expertise, there are still many segments untapped and un-served those entrepreneurs can focus
on in India’s automobile and auto components sector in future.
3. Textiles:
India is famous for its textiles since long time. What is worth mentioning that the style of apparel
is unique from region to state, thus, offering a diversified market for apparel / textile products in
the country? In view of this, India holds good potential to grow as a preferred location for
manufacturing textiles taking into account the huge demand for garments.
Places like Tripura and Ludhiana are, for example, now export hubs for textiles in the country. A
better understanding of the textiles markets and the varied customer needs can greatly help unleash
the potential this sector holds in our country.
4. Social Ventures:
Like many other developmental activities, entrepreneurship development is also context-specific.
The recent social issues providing a different entrepreneurial context has given emergence to yet
another breed of entrepreneurship called’ social entrepreneurship. With a view to ameliorate the
social fabric of the society, increasing number of entrepreneurs has started their social ventures.
SEWA and Lizzat Pappad, for example, are such two social ventures hardly get missed while
mentioning about social entrepreneurship. Muhammad Yunus’s ‘Gramin Bank’ in Bangladesh is
the worldwide known social venture of the recent times.
There is myriad of social issues or problems in the countryside in India, thus, offering opportunity
to young entrepreneurs to plunge into this sector. However, plunging into social ventures is as
much useful is so much challenging also.
5. IT & ITES:
India is known for its largest pool of world class software engineer’s world over. IT sector has
contributed substantially to the Indian economy. With one of the largest pool of software
engineers, Indian entrepreneurs can set higher targets in hardware and software development.
With more overseas companies outsourcing contracts to India, business to business solutions and
services emerge as potential activities for the knowledge-based entrepreneurs in future.
Entrepreneurs can cash in on the rise in demand for IT services with innovative and cost effective
solutions.
6. Engineering Goods:
India continues to be one of the fastest growing exporters of engineering goods, growing at a rate
of 30.1 per cent. The government has set a target of $110 billion by 2014 for total engineering
exports. Entrepreneurs must capitalise on the booming demand for products from the engineering
industry.
7. Franchising:
As a boon of New Economic Policy 1991 of the Government of India, India is now well connected
with the world economies. Hence, franchising with leading brands to spread across the country
could also offer ample opportunities for young entrepreneurs especially in services sector like
education and health. With many small towns developing at a fast pace in India, there is vast scope
for spreading franchising business in the countryside in future.
8. Education and Training:
Knowledge being power, on the one hand, and Government’s increasing emphasis on spreading
education, on the other, there is a good demand for education and online tutorial services in the
country. With good facilities at competitive rates, India can attract more students from abroad in
coming years signs of which have already started. Need-based educational programmes with
innovative teaching methods can help in a big way make education develop and flourish as an
industry in the country.
9. Food Processing:
Broadly, food processing industries include cannery, meat packing plant, slaughterhouse, sugar
industry, vegetable packing plants, industrial rendering, etc. India’s mainstay is agriculture.
Entrepreneurs can explore many options in the food-grain cultivation and marketing segments.
Inefficient management, lack of infrastructure, proper storage facilities leads to huge losses of food
grains and fresh produce in India.
Unfortunately, very small portion of our food production is processed for manufacturing
purposes as is evident from the following figures:

Likewise, the level of processing in perishable foods like fruits and vegetables (2.2%), milk and
milk products (35%), meat (21%), poultry (6%) and marine products (8%) is also at a quite low
level of total production. Thus, it is evident from above figures that there remains a lot of scope for
agri-business or agri- preneurship development in the country. As such, entrepreneurs can add
value to these produce with proper management and marketing initiatives. The processed food
market opens a great potential for entrepreneurs be it fast food, packaged food or organic food.
That there will be more and more demand for readymade or processed food in coming days is
already indicated by the meteoritic growth of Mumbai’s Dabbawala. Thus, food processing
industry offers yet more opportunities for entrepreneurship development to establish and run food-
based industries.
10. Corporate Demands:
There will be a good demand for formal attire with more companies opening their offices in India.
People who can meet this demand in a cost-effective way can make a good business. With
corporate gifting getting very popular, this is also a unique business to explore in growing urban
culture in India.
11. Ayurveda and Traditional Medicine:
India is well known for its herbal and Ayurvedic products. With increasing awareness about the ill-
effects of allopathic medicines, there will be a huge demand for cosmetics, natural medicines and
remedies in coming time.
12. Organic Farming:
Organic farming has been in practice in India for long time. That the importance of organic
farming will assume increasing importance in the country is evident by the fact that increasing
number of consumers especially foreigners have been preferring to only organic products.
Therefore, the prospective entrepreneurs can focus on business opportunities in this promising
sector of the country. Yes, many small-time farmers have already adopted organic farming but the
huge demand is still unmet which offers good opportunities for those agri-preneurs who can
promote organic farming on a large-scale in the country.
13. Media:
The media industry has also huge opportunities to offer to young entrepreneurs. With the huge
growth of this segment, any business in this field will help entrepreneurs reap huge benefits.
Television, advertising, print and digital media have seen a boom in business in the recent times
and is likely to grow more in coming times.
According to a report prepared by the Federation of Indian Chamber of Commerce and Industry
(FICCI), digitisation, regionalisation, competition, innovation, process, marketing and distribution
will drive the growth of India’s media and entertainment sector furthermore in coming times.
14. Packaging:
With China invading the markets with cheap plastic goods and packaging materials, there is a good
opportunity to develop good packaging materials to meet domestic and foreign demand. There is a
huge demand from various sectors like agriculture, automotive, consumer goods, healthcare
infrastructure and packaging sectors for plastics.
15. Floriculture:
India’s floriculture segment is small and unorganized. There is a lot to be done in this lucrative
sector. The global trade in floriculture products is worth $9.4 billion. With a 8 per cent growth, it is
expected to grow to $16 billion by 2010. India’s share in world trade is just 0.18 per cent. This is a
huge market to be tapped considering the rising demand for fresh flowers. More awareness and
better farming and infrastructure can boost exports of flowers in coming times.
16. Toys:
Another evergreen industry is toy manufacturing. India has potential to manufacture cost-effective
and safe toys for the world. With Chinese toys being pulled up for toxins, the market for safe and
good quality, toys beckons Indian entrepreneurs.
17. Healthcare Sector:
India’s healthcare sector dismal till the other day has now good prospects to develop in future. The
private sector, that is, individual entrepreneurs can play a vital role in developing this sector. With
medical tourism also gaining momentum, the sector can attract foreigners who are looking for
cost- effective treatment in countries like India.
18. Biotechnology:
After the software sector, biotechnology opens a huge potential for entrepreneurs in India. Global
evidences confirm that agricultural biotechnology has a major impact on agricultural productivity.
That is why increasing emphasis has been given to research and development in the agro-biotech
sector with an aim to produce crops with high level of tolerance against cold, heat and salinity.
A number of improved food products have also been developed. It is expected that with increase in
investment in research and development in India, agro-bio technology will further develop and, in
turn, Indian agriculture will develop. The future entrepreneurs can, therefore, look at a plethora of
options available with the application of biotechnology in agriculture, horticulture, sericulture,
poultry, dairy and production of fruits and vegetables.
19. Energy Solutions:
In a power starved nation like ours, the need to develop cost-effective and power-saving devices is
gaining ever increasing significance. There is a huge demand for low-cost sustainable energy
saving devices as well. The government has already unveiled the National Solar Mission which has
set a target of 20,000 MW of solar generating capacity by the end of the 13th Five Year Plan.
Prime Minister Manmohan Singh had urged the industry to see the huge business opportunity and
set up ‘Solar Valleys’ on the lines of the Silicon Valleys. These solar valleys can become hubs for
solar science, solar engineering and solar research, fabrication and manufacturing. So there is a big
opportunity for entrepreneurs in this sector as well in our country.
20. Recycling Business:
E-waste will rise to alarming proportions in the developing world within a decade, with computer
waste in India alone to grow by 500 per cent from 2007 levels by 2020, according to a UN study.
Therefore, this sector also opens new vistas of viable business opportunity for entrepreneurs in
terms of e-waste management and disposal activities in large size.
Recently, a national level conference on entrepreneurship called Entrepreneur India 2011 was held
on July 15th and 16th at Hotel Claridges, New Delhi. The conference was built across the seven I’s
of entrepreneurship:
(i) Inspire,
(ii) Ideate,
(iii) Individual,
(iv) Incubate,
(v) Innovate,
(vi) Invest, and
(vii) Internationalize to discuss and deliberate on Innovation and Entrepreneurship for unleashing
business opportunities available in the country.
21. Green business
22. Event management
23. Agro based (Food, fruit, vegetables processing, refrigeration, and transportation)
24. Mineral water
25. Courier services
26. Insurance sector
27. Telecom
28. Plastic
29. Tourism

Formalities for setting up small enterprises in manufacturing and services

STEPS FOR STARTING SSIs/MSMEs
As soon as a person decides to become an entrepreneur and to start a MSME, he is required
to take a number of steps and formalities one after the other. They are as follows:
1) Scanning of Business Environment: it is essential on the part of the entrepreneur to study and
understand the prevailing business environment. Entrepreneur should scan the business
opportunities and threats in the new environment. To study the administrative framework,
procedure, rules and regulations and other formalities implemented by the government. The
potential entrepreneur must assess his own deficiencies, which he can compensate through
raining.
2) Selection of the Product: The very success of one’s venture will depend on the rationality of
his decision in this regard. The economic viability of the product can be ascertained by considering
certain demand aspects such as volume of demand in the domestic market, volume of demand in
the export market, volume of potential demand, a degree of substitution of an existing product etc.
The prospective entrepreneur has to identify the product based on market research or market
survey.
3) Selection of Form of Ownership: He has to select sole proprietorship or family ownership or
partnership or private limited company as the form of the ownership.
4) Selection of Location and Site: Location is selected after considering certain factors such as
nearness to market, sources of material and labour, modern infrastructure facilities etc. The
entrepreneur has to choose a suitable plot for the factory. He may purchase land directly or choose
from an industrial area developed by State Development Corporations like SIDCO, or Directorate
of Industries. In order to stimulate industrial growth, the government of Kerala is providing
infrastructural assistance by way of
(1). Developing areas.
(2). Development Plots.
(3).Industrial estates, and
(4). Mini industrial units.
5) Designing Capital Structure: Apart from the own capital, he may secure finance from friends
and relatives, term loans from banks and financial institutions.
6) Acquiring Manufacturing Know-How or Technology: Many institutions of government,
research laboratories, research and development divisions of big industries and certain consultancy
agencies provide the manufacturing know-how.
7) Preparation of Project Report: The report usually covers important items like sources
of finance, availability of machinery and technical know-how, sources of raw material and labour,
market potential and overall profitability.
8) Registration as a Small Scale Industry: Registration with Department of industries and
Commerce is only optional. There is no statutory obligation, but small scale industries can avail
various facilities, incentives and concessions offered by the state as well as central government
only if they registered as SSI. The registration would be done in two stages.
Provisional Registration: It will be valid for one year with possible three extensions of six
months each. It helps entrepreneur to take necessary steps to bring the units into existence. The
provisional registration may enable the party to:
(1) Apply to NSIC/SIDO and other institutions for procuring machines on H.P basis.
(2) Apply for power connection.
(3) Apply to local Bodies for permission to construct the shed to establish a unit.
(4) Apply for financial assistance to SFC/Banks or other financial institutions on the basis of
project report.
(5) Obtain sales tax, excise registration etc whenever required.
(6) Apply for a shed in an industrial estate/ development site in an industrial area/ material for
construction of shed as the case may be.
9) Obtaining Statutory Licence: Any person should obtain the following licences and certificates
before starting the venture:
(A) Licence from Local Bodies For
(1) Construction of the building.
(2) Installation of plant and machinery.
(B) Licence from the Directorate of Factories and Boilers For:
(1) Approval of factory building.
(2) Registration under section 6, 7 and 85 of the Factory Act.
(C) No Objection Certificate from State Pollution Control Board.
10) Apply for Power Connection: There are 2 categories of power, the Low Tension (LT) and
High Tension (HT). A consumer can avail LT only if the connected load is 75 HP and below. If
connected load is between 75 HP and 130 HP, the consumer has the option to avail either LT
supply or HT supply.
11) Arrangement of Finance: Entrepreneur needs to acquire assists of 2 kinds namely Fixed
assets and current assets. Long term finance is needed to acquire fixed assets like land, building,
plant and machinery and for security deposits.
Short term funds are required for acquiring current assets. Current assets are essential for the day
to day working of the industry. Long term funds includes owner’s capital, subsidy from central/
state govt., personal borrowings from friends and relatives and long term loans from financial
institution like KFC and KSIDC.
12) Registration under the Sales Tax Act: Business enterprises are subject to three important
taxes- Income Tax, Excise Duty and Sale Tax. Income tax is levied on income as defined under the
IT Act of 1961. It is revenue of Central Government. Excise duty is a tax levied by the central
Government. It is the duty levied on the cost of goods manufactured within a country. Sales tax is
levied whenever goods are purchased from within the state. When goods are purchased from
outside the state, Central Sales Tax is levied. Application for registration should mention all places
of business dealer including the godown in which the goods are stored. The following papers are to
be submitted for registration.
1) Application for registration in Form 1 duly signed.
2) Counterfoil of challan for Rs. 100 towards registration fees.
3) Return of Estimated Annual Turnover in Form No. 10.
On the basis of declaration of the anticipated turn over and nature of turnover, registering authority
may demand security, which is normally ½ times of the anticipated tax due.
13) Installation of Machinery: Machinery should preferably be installed as per the plant layout.
14) Recruitment of Manpower: The number and type of workers is to be decided. After this, the
required workers should be recruited.
15) Procurement of Raw Material: The raw materials may be procured indigenously or may
have to be imported by the entrepreneur. The next step is to start production, which is taken up in
two stages- Trial production and Commercial production having successfully test marketed the
product, commercial marketing can be undertaken.
16) Application for Permanent Registration: For this, application form has to be made to the
GM of DIC through IEO/ Taluk Industries Officer. The GM should inform the entrepreneur of the
date and time of inspection of the unit. On being satisfied a registration certificate may be issued
by the Directorate of Industries within one month of the receipt of the application. The period of
the certificate whether provisional or permanent will be for a period of 2 years. Renewal certificate
would be affected by the GM (DIC) within a period of 3 months from the date of expiry of
certificate.

GOVT. REGULATORY FRAMEWORK FOR MSMEs

The govt. has two roles to play regulatory role and protective role. Govt. regulates as well as
protects small business. It plays the regulatory role by imposing certain restriction and formalities
on small business. It provides assistance and support to small business.
MEASURES TAKEN BY THE GOVERNMENT FOR THE PROMOTION OF MSMEs
Some of the measures taken by the government are as follows:
ADMINISTRATIVE FRAMEWORK: Administrative mechanism for SSI is being looked
after by the Department of Small Scale Industries, Agro and Rural Industries within the
Ministry of Industry. With the Department there is Small Industries Development Organization
(SIDO) headed by a department commissioner. SIDO has 27 small industries service institutes,
31 branch institutes, 37 extension centres, 18 field testing centres, four production centres and
two footwear training centres. To provide different services and support to village and small
entrepreneurs under a single roof, 422 Districts Industries Centres (DIC) have been set up to
cover 431 districts out of the total of 436 districts of the country. National Institute of Small
Industries Extension Training (NISIET) conduct research and training programmes and
provides consultancy services. National Small Industries Corporation (NSIC) deals with
marketing including Government purchases and supplying machinery on hire purchase.

POLICY INSTRUMENTS: Policy instruments adopted by the government to encourage the

growth of SSI comprise:
(1) Financial incentives.
(2) Fiscal incentives.
(3) General incentives.
(4) Special incentives in backward areas, and
(5) Reservation of items for SSI.
(1) Financial Incentives: SIDBI provides direct assistance, among others for specialized
marketing agencies, industrial estates, acquisition of machinery/ equipment, both indigenous and
imported, seed capital scheme and National Equity Fund Scheme, bills rediscounting and direct
discounting scheme. State and Local Government provides financial subsidies like interest rate and
capital subsidies, and water and electricity subsidies and subsidies for the acquisition of land.
(2) Fiscal Incentives: These comprise investments allowance, tax holidays, additional depreciation
for new plant and machinery and state and local Governments provide exemption from electricity
tariffs.
3) General Incentives: These include, among other things, reservation of items for exclusive
purchases from SSI, price preference over medium and large units in public sector purchases and
scheme for Self- Employment to Educated Unemployed Youths (SEEUY).
(4) Special Incentives in Backward Areas: Some of the schemes which are operational are
concessional finance scheme, transport subsidy scheme, intrest subsidy scheme and income
tax incentives, etc.
RESERVATION OF ITEMS: As per the policy certain items have been exclusively reserved for
manufacturing in the MSME sector. The objective is to protect MSMEs engaged in the
manufacturing of such items from the competition of medium and largescale units.
STATUTORY BOARDS: Govt. has setup six exclusive boards, namely, (1) Khadi and
Village Industries Board. (2) Handloom Board (3) Handicrafts Board (4) Coir Board (5)
Seri Culture Board, and (6) Small Scale Industries Board.
ESTABLISHMENT OF INDUSTRIAL ESTATES: Industrial estate is place where the
required facilities and factory accommodation are provided by the government to the
entrepreneurs to establish their industries there.

ROLE OF NATIONAL MANUFACTURING COMPETITIVENESS COUNCIL(NMCC):

The NMCC suggest a three-pole structure, “one of the effective measures for accelerating
manufacturing growth in this segment lies in promoting growth poles or industrial clusters,
referred to in the PURA(Provision of Urban Amenities in Rural Areas) context, in the 05-06 union
budget speech. The growth poles can cover all three elements of the cluster approach-industrial
clusters, artisan clusters and agro-based clusters,” The NMCC also suggests that the time is right
for exploring mechanisms of how Indian MSMEs could tie up with MSMEs in developing
countries for technology as well as trade.
PENALITIES FOR DELAYED PAYMENTS TO MSMEs: The Govt. has enacted the
interest on delayed Payments Act for the benefit of MSMEs. The Act prescribes that the
customers of MSMEs should make the payments within 120 days of accepting the goods.
Delays beyond this would attract interest at 11/2 times the prime lending rate of the SBI.
PRIME MINISTER’S ROZGAR YOJNA (PMRY): It was launched on 2nd October
1993, with the objective of creating one million jobs in 5 years by giving loans for the
creation of tiny and micro enterprise.
INDUSTRIAL CLUSTER DEVELOPMENT: An industrial cluster can be defined as a
sectorial and geographical concentration of enterprises, especially Micro, Small and
Medium Enterprises (MSMEs), which have common opportunities and face similar threats.
ASSISTANCE FOR MSME EXPORTS: Following are the assistance to MSME exports:
(a) MSMEs are helped in participating in trade exhibitions. The Govt. would meet the expenses
in this regard on space rent, handling and clearing charges, insurance and shipment charges
etc.
(b) MSMEs are given triple weightage for being recognized as Export Houses, Trading Houses,
Star Trading Houses and Super Star Trading Houses.
(c) Capital Goods Zero Duty Scheme is extended to MSMERs without any conditions.
(d) Marketing Development Assistance is given to MSMEs to facilitate market research,
publicity etc.
OTHER SCHEMES: Important schemes are briefly discussed as below.
(a) Integrated Infrastructural Development Scheme:
Under this scheme the Central Govt. would contribute Rs 5 crore in the ratio of 2:3 for the
development of industrial infrastructure in rural and backwards areas. The objective of the scheme
is to promote the location of MSMEs in rural and backward areas and facilitate linkage between
agriculture and industry.
(b) Marketing Development Assistance Scheme:
MDA is a new scheme launched in August
2001. This scheme provides following five types of assistance:
1) Assistance to individuals for participating in overseas trade fairs and exhibitions.
2) Assistance to individuals to go on overseas study tours or as a member of a trade delegation
going abroad.
3) Assistance for production of publicity material for overseas publicity.
4) Assistance to small industry association to conduct sector- specific market studies abroad, and
5) Assistance to SSI Associations to initiate/contest anti-dumping cases.
(c)Trade Related Entrepreneurship Assistance And Development For Women:
TREAD is a scheme for giving trade-related assistance to women entrepreneurs in the form of
Loans, grants, trade-related training and information, counseling and extension services.
(d) Preferential Govt. Purchases: It is made compulsory for various govt. departments and agencies
to buy their requirements of a number of items from the constituents of the MSME sector.

Flow Chart for setting up a SSI

1. Selection of a project
2. Deciding on the Constitution
3. Obtain SSI Registration
4. Obtain Clearance from Department as applicable
5. Arrange for land/shed
6. Arrange for Plant & Machinery
7. Arrange for Infrastructure
8. Prepare Project report
9. Apply & Obtain Finance
10. Proceed to implement & Obtain Final Clearances

STEP 1: PRODUCT/SERVICE SELECTION

a) Product or service selection
b)Location Selection
c) Project Feasibility Study
d) Business Plan Preparation
e) Preparation of a project profile

a. Product/Service selection
Project Identification is concerned with collection, compilation and analysis of economic data for
the eventual purpose of locating possible opportunities for investment & with the development of
such opportunities. Sources for generating novel project ideas are personal observations of the
surrounding environment, trade fairs/exhibitions, technical & professional literature published in
trade periodicals and magazines Development plans/schemes of Government may pinpoint toward
a unique investment opportunity, bulletins of research Institutes such as Ernst & Young,
McKinsey, KPMG, AC Nielsen can provide valuable insights on current state of various sectors,
demand-supply gap and investment opportunity, if any. Contacting organisations such as District
Industry Centres, Centres for Entrepreneurship Development, Small Industry Services Institute,
EDI, NIESBUD, KVIC, SIDBI, National Industrial Development Corporation etc. and gathering
information in the form of project profiles, feasibilities studies, industry studies, area development
studies etc. can be source of new idea.
Criteria for Selecting a Particular Product
Market Potential Degree of Competition Investment Size Location Availability of Raw Material,
Technology & Equipment Availability of Infrastructural facilities such as land/shed, power, water,
transport etc. Resource & Experience of the entrepreneur Government Policies & Procedures
Packaging, Branding, Warranties & After Sales Service
b. Location selection
1. General Considerations:
Location(city/town/village), proximity to nearest railway stations/sea port/air port/, availability of
essential raw material sources, skilled labour, law & order situation in the area, level of industrial
development in the area, etc.
2. Industrial Infrastructure Position:
Land (availability & price), water & power supply, effluent treatment & disposal/drainage
arrangement, postal, telegram & telecommunication facilities, banking facilities, warehousing
facility, professional resource person such as legal advisor. Chartered accountants,
management/industrial consultants etc.
3. Financial Incentives Available:
Investment subsidy (Central/State Government), income tax concession, sales tax
exemption/interest free sales tax loan, Octroi exemption, electricity duty exemption, local tax
exemption etc. 4. Social Infrastructure Position: Housing (availability, quality, price, public
housing facilities), education (primary, secondary and university education facility) and
health(dispensary, hospitals & specialities) 5. Site-Specific Consideration: access to national
highway or other roads provided by the state, soil type, direction of town growth with reference to
the site, overhead telephone or power lines or underground water/drainage/gas line passing through
the site, vantage or otherwise, frontage approach etc.
c. Project feasibility study
1.MARKET ANALYSIS
2. TECHNICAL ANALYSIS
3. FINANCIAL ANALYSIS
4. ECONOMIC ANALYSIS
5. ECOLOGICAL ANALYSIS
1MARKET ANALYSIS
Consumption trend in the past and present consumption level Past and present supply position
Production possibilities and constraints Imports and exports Structure of competition Cost
structure Elasticity of demand Consumer behaviour, intentions, motivations, attitudes, preferences
and requirements. Distribution channels & marketing policies
2. TECHNICAL ANALYSIS
Technical analysis has the availability of raw materials, power ad other inputs been established? Is
the selected scale of operation optimal? Is the production process chosen suitable? Are the
equipment & machine chosen appropriate? Has provision been made for treatment of effluents? Is
the proposed layout of the site, building and plant sound ? Have work schedules been drawn up
realistically? Is the technology proposed to be employed appropriate from the social point of view?
3. FINANCIAL ANALYSIS
Financial Analysis seeks to ascertain whether the proposed project will be financially viable in the
sense of being able to meet the burden of servicing the debt and whether the proposed project will
yield a satisfactory rate of return. Few aspects require to be looked into such as:
Investment outlay Means of financing Projected profitability
Break-even point
Cash flows of the project
Projected financial position
Level of risk Calculation of key ratios such as ROI, Liquidity & Solvency Ratios
4. ECONOMIC ANALYSIS
The questions sought to be answered in social cost-benefit analysis are as follows: What are the
direct economic benefits and costs of the project measure in terms of shadow prices and not market
prices? What would be the impact of the project on distribution of the income? What would be the
impact of the project on the level of savings and investment? What would be the contribution of
the project towards the fulfillment of certain criteria such as self- sufficiency, employment and
social order?
5. ECOLOGICAL ANALYSIS
Ecological analysis Ecological analysis should be done particularly for major projects which have
significant ecological implications such as power plants, irrigation schemes. Manufacturing of bulk
drugs, chemicals, leather processing etc. The key question raised in ecological analysis is as
follows: What is the likely damage caused by the project to the environment? What is the cost of
the restoration measure required to ensure that the damage to the environment is contained within
acceptable limits? Is the project causing water/air pollution or discharge of harmful chemicals?
d. Business plan preparation
WHAT IS INCLUDED IN A BUSINESS PLAN
e. Project profile A project profile gives a bird-view of the proposed project. This may be used to
obtain the Provisional Registration Certificate (PRC) from the District Industries Centre or
applying for land/shed to Industrial Area Development Board, State Small Industries Development
Corporation (SSIDC) etc. Important informational heads to be covered in a project profile are
promoter’s background, product description, market & marketing, plant & machinery, process
details, cost of the project & profitability, means of finance etc.

STEP 2. Decide on the constitution

Sole proprietorship Partnership Corporation/limited company Cooperative Franchising
Sole Proprietorship: A sole proprietorship is owned by only one person. This is the most
common form of business ownership.
Partnership: A business owned by two or more people. The partners share ownership and control
of the business.
Company: A company is a business which is considered a separate entity from owner; even
having the legal rights of a person.
Franchising: Franchising is a business arrangement in which the owner of a trade mark, trade
name, or copy right has licensed others to use it in selling goods or services. It can be sole
proprietorship, partnershipor company form.

STEP 3. Obtaining registration:

Registration Small-scale and ancillary units should seek registration with the Director of Industries
of the concerned State Government. Entrepreneur starting a small scale industry have to initially
obtain a Provisional Registration Certificate .Once the unit goes into production, the PRC has to be
converted into a Permanent Registration Certificate. The initial validity of the PRC is 2 years and it
can be renewed subsequently, if needed. PRC is normally valid for 5 years and permanent
registration is given in perpetuity.
Benefits of registration
The registration scheme has no statutory basis. Units would normally get registered to avail some
benefits, incentives or support given either by the Central or State Govt. The regime of incentives
offered by the Centre generally contains the following: - Credit prescription (Priority sector
lending), differential rates of interest etc. - Excise Exemption Scheme - Exemption under Direct
Tax Laws. - Statutory support such as reservation and the Interest on Delayed Payments Act.
States/UTs have their own package of facilities and incentives for small scale. They relate to
development of industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies
and other support
Provisional registration certificate (prc)
This is given for the pre-operative period and enables the units to obtain the term loans and
working capital from financial institutions/banks under priority sector lending. Obtain facilities for
accommodation, land, other approvals etc. Obtain various necessary NOCs and clearances from
regulatory bodies such as Pollution Control Board, Labour Regulations etc.
REGISTRATION Formalities for prc
Prescribed court fees stamp Copy of the project profile Partnership deed/MOA/AOA Affidavit as
per the format on appropriate stamp paper
The memorandum of association and articles of association are the two charter documents, for
setting up of the company and its operations thereon. ‘Memorandum of Association‘ abbreviated
as MOA, is the root document of the company, which contains all the basic details about the
company. On the other hand, ‘Articles of Association‘ shortly known as AOA, is a document
containing all the rules and regulations designed by the company.
PERMANENT REGISTRATION CERTIFICATE (PMT)
A PMT enables the unit to get the following benefits: income-tax and sales-tax exemption
Incentives and concessions in power tariffs To apply for scarce raw materials and for imported raw
materials. Price and purchase preference for goods produced To obtain central excise duty
concessions
Procedure for permanent registration certificate
Once the production commences, the organisation can proceed to apply for Permanent Registration
Certificate (PRC).It is a life time registration given after physical inspection of the enterprise and
scrutiny of certain documents. Some of the formalities required to be completed for seeking
permanent registration are :-Clearance from the municipal corporation State pollution control
board clearance Sanction from the electricity board Ownership/tenancy rights of the premises
where unit is located Copy of partnership deed/Memorandum orarticles of association in case of a
private limited company Sale bill of product manufacture Sale bill of each end product Purchase
bill of each raw material Purchase bill of machinery installed An affidavit giving status of the unit,
machinery installed, power requirement, etc

STEP 4. Clearance from specific departments

Specific Clearances usually depending on the type of units: Agricultural land conversion Urban
land ceiling clearance Building plan approval Factories Act/trade licence Pollution control board
clearances Sales tax/central excise registration Drugs & cosmetics licence Food adulteration act
licence

STEP 5. ARRANGEMENT OF LAND/SHED

For any industrial project, a suitable industrial site or a ready industrial shed is required. The
promoters of the unit could consider taking an industrial shed and constructing the shed as per the
requirement. Using a ready industrial shed could be considered on lease/rental basis. In order to
apply for industrial shed, few application formalities have to be complied including copy of
Provisional Registration Certificate, detailed project report, certified copies of educational
qualifications, applicable earnest money deposit.

STEP 6. ARRANGEMENT OF PLANT & MACHINERY

The entrepreneur can select and purchase the requisite plant & machinery from recognised and
approved manufacturers. Banks and SFCs maintain a list of approved machinery supplies Direct
purchase The plant & machinery can be taken on hire purchase from NSIC. As per the agreement,
once the leased instalment is paid, the assets will become the property of the industrial unit. An
application in the prescribed format has to be submitted to the Director of Industries of the State
under whose jurisdiction the applicant operates. Hire Purchase
ARRANGEMENT OF RAW MATERIAL
Raw Material procurement and planning are critical to success, of a start-up unit. The raw
materials required may be:- Domestically available (within the country). Imported from abroad:-
For importing the raw materials the Government rules and regulations have to be followed. The
imports are regulated by the Foreign Trade (Development and Regulation) Act, The Act provides
for the appointment by the Central Government, of a Director General of Foreign Trade for the
purpose of the Act. The DGFT shall advise Central Government in formulating export and import
policy and implementing the policy. Whatever be the source of raw materials it must be bought
from reputed dealers and agencies only. Before ordering, compare the prices and get quotation
from at least 3-4 places and also check whether price is inclusive or exclusive of transportation
costs. While receiving the delivery, check the quality and quantity of the materials
Process selection Before selecting any process technology, following considerations are to be
taken care of: The level of skilled workers or complex machines required by the process. The
quantity of water and / or power required. If any process or product patent is needed in order to
utilize the selected process technology. Any special Pollution or Environmental regulation is to be
followed. The appropriateness of the technology to the Indian environment and conditions.

STEP 7. ARRANGEMENT FOR INFRASTRUCTURE

The main infrastructural facilities required for a SSI unit are land/shed, power connection, water
supply and telephone facility. Single Window Agencies are set up at district level for the benefit of
small-scale industries. SWA provides various services including allotment of land/industrial
sheds/power connection, sanction of term loans and working capital, disbursement of various
incentives and concessions etc. The entrepreneur can avail of several concessions and incentives of
State Government available for SSI such as subsidised water/power tariff, transport subsidy,
incentive for pollution control etc.
Getting utility connections (water & power)
WATER SUPPLY: Find out the water requirement of the industry. Check out what is the best
possible source of the required water supply i.e. river, canal, tube well and how far is it from your
land. Check the quality of water (PH, hardness) and does it meet you specific requirements. Rate/
water charges applicable as well as the common storage facility. Find out who is the operating
authority (Public Works Department, Estate-Corporation, Municipality) of the area. Water
connection is obtained by applying in advance in formal forms
Getting utility connections (water & power)
POWER SUPPLY: Find out the power supply requirement of the industry. Locate the nearest
substation from where you will get power supply. Also find out the power tariff rate and the
duration for which required supply will be available. A formal application needs to be made in a
specific form to the concerned State Electricity Boards. An electrical inspector is deputed for
evaluation of application to factory site, after which the load is sanctioned. In areas of power
shortage, it is advisable to augment the power supply with a captive generating set. After obtaining
the power feasibility and sanction certificate, the power supply may be given to the industry.

STEP 8. PREPARE PROJECT REPORT

General Points to be kept in mind while preparing a Project Report: Expected use of the project
report Elaborate details but retaining the confidential data Proper validation of the data and
information based on reliable sources Effective presentation by use of charts, graphs and pictorial
forms Cost minimisation and timelines Proper estimation of the requirement of number of copies.
CONTENTS OF A PROJECT REPORT
1.EXECUTIVE SUMMARY: introduction, financial performance, balance sheet analysis, project
profitability & analysis, SWOT analysis
2. COMPANY DETAILS: history, manufacturing facilities, promoters, shareholding pattern,
board of directors, key executives, major products/consumers, details of divisions and group units
3. OPERATIONAL DETAILS: capacity & utilization, profit & loss account, term loans &
advances, marketing & distribution network, marketing strategy, export sales
4. PROJECT DETAILS: Proposed project, orders & enquiries, location, manufacturing process,
technical feasibility/know-how, manpower, power/water supply, auxiliary services
5. PROJECT COST: land, building, plant & machinery, preoperative expenses, margin money for
hire purchase & working capital.
6. MEANS OF FINANCE
7. PROJECT STATUS: implementation schedule, PERT & CPM analysis, current status of work
flow
8. PROFITABILITY & RISK ANALSYIS: Financial of the project, analysis of break-even point,
ROI, payback period and internal rate of return.
9. COMPANY vis-à-vis RELATED INDUSTRY: General analysis, competing industries,
knowledge about existing monopolies and existing cartels.
10. EMPLOYMENT GENERATION
11. CONCLUSION
12. ANNEXURE: Promoter’s bio-data Organisation chart Details of group units Statutory
sanctions/approvals Arrangement of land & building Details of orders & enquiries Process chart
Financial for project and company and its analysis Any other relevant details
STEP 9. APPLY & OBTAIN FINANCE
The entrepreneur has few key decisions to be made: Sources of finance: share capital, internal
accruals, deposits – own/public, debentures, short-term borrowings, long term loans, bridge loans
and working capital loans. Small scale units can obtain finance for their projects under two
categories: Term Loan Working Capital Loan 3. Financial assistance in India for SSI units is
available from a variety of institutions including Small Industries Development Bank of India,
SFC, NSIC, SIDC,DIC.Export Import Bank of India and Export Credit and Guarantee Corporation
are central agencies which provide credit for export/import and EXIM guarantees.

STEP 10.IMPLEMENT THE PROJECT & OBTAIN FINAL CLEARANCE

Construct shed Order for machinery Recruit personnel Arrange for raw materials Marketing
Erection & commissioning Obtain Final Clearance

Environmental pollution and Regulatory and non regulatory clearance s for new venture
promotion in SME sector:
Environmental clearances for SMEs
What is environmental pollution?
Environment may be consider as our surroundings which includes everything around us, i.e. the
non-living (abiotic) and living (biotic) environment.
The abiotic environment consists of air, water and soil, while the biotic environment includes all
the living organisms (plants, animals, microorganisms) that we regularly come in contact.
Environment – Basic Concepts:
The environment is composed of four basic components:
i. Atmosphere
ii. Hydrosphere
iii. Lithosphere
iv. Biosphere.
There is a continuous interaction among the various components of the environment (Fig. 54.1).
And ultimately, it is the biosphere that gets influenced by the other components.

The four components of the environment are briefly described.

Atmosphere:
The atmosphere consists of a blanket of gases, suspended liquids and solids that envelope the
earth. The atmosphere is basically derived from the earth itself by various chemical and
biochemical reactions. The major components of the atmosphere include the gases nitrogen,
oxygen, argon, carbon dioxide, water vapour and suspended particulates (dust, soot).
The composition of the atmosphere depends on time and space, and is highly variable. A liter of air
weights around 1.3 g. The atmosphere is vertically divided into four I ayes — troposphere,
stratosphere, mesosphere, and thermosphere. This division is mainly based on the increase in the
temperature.
Hydrosphere:
The hydrosphere primarily consists of the water on the earth’s surface. Thus, the hydrosphere
includes oceans, seas, rivers, streams, lakes, reservoirs and polar ice caps. Water is the most
abundant substance on the earth’s surface, which may be present as ice, liquid and vapour.
Approximately, 71% of the earth’s surface is covered with water, mainly in the form of oceans.
It is estimated that about 97% of the total earth’s water is in the oceans and inland seas with high
salt content. And this water is not useful for human consumption. Around 2% of the water is
present in the glaciers and ice caps.
The actual water available for human consumption is around 1% of the total earth’s water. This
includes the ground water, water from lakes and rivers and soil moisture. Humans uses water in the
homes, industries, agriculture and recreation. There is a continuous decrease in the consumable
global water. Therefore, there is a need for precious use of water, and its conservation.
Lithosphere:
The outer boundary layer of the solid earth on which the continents and the ocean basins rest
constitutes the lithosphere. In a broad sense, lithosphere includes the land mass and the ocean
floor. However, in a general usage, the term lithosphere refers to the land surface which is
approximately 3/10th of the total surface of the earth.
From the biological point of view, the soil is the most important part of the lithosphere because it
contains the organic matter and supports growth of plants and microorganisms. Lithosphere is
involved in the production of food for humans and animals, besides the decomposition of organic
wastes.
Biosphere:
The biosphere comprises of all the zones on earth in which life is present. Biosphere is spread over
the lower part of the atmosphere, the top of the lithosphere and the entire hydrosphere. In other
words, the broad spectrum of bio resources of the earth, supporting life constitutes the biosphere.
It is estimated that the biosphere contains more than 3.5 lakh species of plants (including algae,
fungi, mosses and higher plants) and more than 110 lakh species of animals (unicellular,
multicellular and higher animals). The biosphere provides the essential requisites (water, light,
heat, air, food, space etc.) for the existence of life.
The biosphere is very vast, and for the sake of understanding, it is divided into smaller units
namely ecosystems. An ecosystem may be considered as the smallest unit of biosphere that
possesses the requisite characteristics to sustain life e.g., ponds, seas, deserts, cities.
Environmental Pollution — Sources and Nature:
Man lives in two worlds—a natural world of the native environment and a built-world created by
himself. The built-world, an outcome of the advances made in the science and technology, is
associated with environmental pollution. Environmental pollution is a global phenomenon, and
therefore a matter of concern for everyone.
Pollution broadly refers to the presence of undesirable substances in the environment which are
harmful to man and other organisms. The presence of unwanted substances in the environment
may occur due to human activity discharging byproducts, a wide spectrum of waste products and
several harmful secondary products
Sources of Pollution:
As already stated, environmental pollution is mostly due to direct or indirect human activities,
arising out of the built-world created by him.
There are six major sources of environmental pollution:
1. Industrial sources
2. Agricultural sources
3. Biogenic sources
4. Anthropogenic sources
5. Unnatural sources
6. Extra-terrestrial sources.
The relative importance of each one of these sources depends on the site-specific situation. For
instance in cities, anthropogenic sources are the major contributors while in rural areas,
agricultural sources significantly add to pollution.
Types of Pollution:
The environmental pollution may be categorized into six major groups:
1. Air/atmosphere pollution
2. Water pollution
3. Land/soil pollution
4. Noise pollution
5. Thermal pollution
6. Radioactive pollution.

Kinds:
Air pollution: Strongest air pollutants are NO2, SO2, CO, O3, air borne particles, and volatile
organic compounds
Water pollution: the strongest are insecticides, pollutans from live stock operation, vocs, food
processing waste and chemical wastes.
Soli pollution: strongest are hydrocarbons, solvents and heavy metals.
Fossil fuels..are most critical…
Regulatory laws:
Acts: environmental protection act 1986
Water ( prevention & control of pollution ) act 1981as amended in 1978-88
The air (Prevention & control of pollution ) act 1981, as amended in 1987

Fiscal benefits to units for environmental protection:

Depreciation allowances @100% for installing pollution control devices
Custom duty at reduced rates of 35% + 5% auxiliary charges levied on imported equipment and
spares for pollution control.
Custom duty at reduced rates of 25% + full exemption from auxiliary charges for kit required for
conversion of petrol driven vehicles to compressed natural gas driven vehicles.
Excise duty at the reduced rate of 5 % on manufactured goods that are used for pollution control.
Excise duty exemption for bricks and blocks manufactured from fly ash and phosphorus –gypsum
Exemption under section 35 CCB of the income tax act is given to assess who incur expenditure by
way of payments on any sum towards association or institutions which carry out programmes for
conservation of natural resources.
Financial assistance towards capital investment up to 25% or rs 50 lakhs, which ever is less, is
given as subsidy to industrialists setting up common effluent treatment facilities.
Incentives in terms of rebate on cess payble under the water ( prevention and control of pollution)
cess amendment act 1991.
Provision of loan at reduced rate of interest by financial institutions for installing pollution control
devices.
Funded by USAID (United States agency of industrial development) the ICICI (industrial credit
and investment corporation of India) has a 25 million TEST (trade in environment services and
technologies) scheme which carries at 12.5 % with no exchange risk for dollar assistance.
Industrial pollution control projects funded by the world bank on concessional terms, received by
MOEF (ministry of external affairs)

Environmental restrictions for SSI sectors

Environment protection act 1986

Environmental clearance process

Screening
Scoping
evaluation

In the Constitution of India it is clearly stated that it is the duty of the state to ‘protect and improve
the environment and to safeguard the forests and wildlife of the country’. It imposes a duty on
every citizen ‘to protect and improve the natural environment including forests, lakes, rivers, and
wildlife’. Reference to the environment has also been made in the Directive Principles of State
Policy as well as the Fundamental Rights. The Department of Environment was established in
India in 1980 to ensure a healthy environment for the country. This later became the Ministry of
Environment and Forests in 1985.
The constitutional provisions are backed by a number of laws – acts, rules, and notifications. The
EPA (Environment Protection Act), 1986 came into force soon after the Bhopal Gas Tragedy and
is considered an umbrella legislation as it fills many gaps in the existing laws. Thereafter a large
number of laws came into existence as the problems began arising, for example, Handling and
Management of Hazardous Waste Rules in 1989.
Following is a list of the environmental legislations that have come into effect:
Environmental Regulations
Environmental Protection
The following is a brief description of the laws and regulations relating to environmental
protection in India.
a. Constitutional Status
Article 48A of the Directive Principles of State Policy provides for the State's commitment.
To protecting the environment and Article 51A(g) states that to protect and improve the
natural environment shall be the fundamental duty of the citizens of India.
b. Regulatory Environment Protection Laws
In observation of the Directive Principles, the Union of India has enacted the following major
legislations:
The Environment (Protection) Act, 1986, which is the umbrella Legislation
The Water (Prevention & Control of Pollution) Act, 1981, as amended in 1978 and 1988
The Air (Prevention & Control of Pollution) Act, 1981, as amended in 1987.
The above Acts have been substantially amended in the recent past and some of the most
significant aspects of amendments are:
A consent order is now valid for 15 years or till such time there is some significant change
in the process, whichever is earlier;
A consent order cannot be provided provisionally and will be obtainable only when all the
pollution prevention requirements are adopted in to;
Action under these two Acts are to be taken by the respective State Pollution Control
Boards.
The Forest Conservation Act, 1980
The Wildlife Preservation Act, 1982; extended to cover biosphere resources and the Hazardous
Wastes (Management & Handling) Rules, 1989.
Manufacture, Storage and Import of Hazardous Chemical Rules, 1989
Manufacture, Use, Import, Export and Storage or Hazardous Micro organisms and Genetically
Engineered Organism or Cell Rules, 1989, to regulate the storage, use, trade, transport and disposal
of hazardous wastes.
The Public Liability Insurance Act, 1991
The Motor Vehicles Act, 1939, amended in 1988, and
The Environment Tribunal Bill, 1992.
c. Promotional Policy Framework
The National Forest Policy, 1988
The National Conservation Strategy and Policy Statement on Environment & Development, 1992.
The policy statement for abatement of pollution, 1992
The above policy statements complement the National Water Policy and Factories Act, 1948,
besides other related legislation having a bearing on resources and economic activities
The national Housing Policy, 1988, the National Water Policy, 1987 and the National Land Use
Policy, 1988, recognise the importance of maintaining ecological balance.
D. Organisational Structures of the Regulating Bodies for Environment Management
The Ministry of Environment and Forests, created in 1986, is the nodal regulating agency. The
Ministry has four divisions:
a. Environment: The Central Pollution Control Board (CPCB) functions under it and this
department is responsible for exercise of promotional and regulatory functions under the
Water, Air and Environment Protection Acts.
b. Forests and Wildlife: Wildlife preservation offices responsible for implementing the
Wildlife Protection Act, 1972 and the Regional Offices of the MOEF for implementing the
provisions of the Forest Conservation Act, 1980.
c. Ganga Project Directorate
d. National Afforestation and Eco-Development Board.
In addition to the above, there are various bodies and institutes under the MOEF or working with it
on other areas such as research, awareness drives etc.
Other important Ministries and Departments of the Government of India looking after environment
protection include:
The Ministry of Rural Development - Regeneration of bio-mass outside recorded forest areas;
The Ministries of Power, Industry and Non Conventional Energy Sources - Energy conservation
and development of alternate sources of energy.
The Ministry of Water Resources - Monitoring of water quality and environment impact
assessment for water resource projects.
The Ministries of Water Resources and Agriculture - watershed management;
The Ministry of Agriculture - soil conservation;
The Department of Biotechnology - technical support for ex-site conservation and bio safety;
The Ministry of Urban Development - Solid waste collection and disposal in 500 urban areas.
State-level machinery:
All the state governments looking after environment and forests collectively.
Most of the states have State Pollution Control Boards (SPCBs) which have a significant role to
play in enforcing environmental management and pollution control as required under different
laws.
E. International Agreements to which India is a Signatory
India is a signatory to six important conventions that have a direct bearing on environment
protection and conservation. These are:
The Convention on International Trade in Endangered Species (CITIES)
The Convention on Wetlands of International Importance (the Ram Sar Convention)
The Convention on Climate Change
The Convention for Conservation of Biological Resources
The Vienna Convention / Montreal Protocol on substances that deplete the ozone layer
The Rio Declaration on Environment and Development and the Agenda 21, which is the
operational programme for sustainable development.
Two important procedures to be observed in the context of environment protection in industry are:
1. Environmental Impact Assessment (EIA) as per a notification issued on 27 January, 1994
The EIA is statutory for 29 different activities in industry, mining, irrigation, power plants, ports
and harbours, atomic power plants, railways and road highways, bridges, airport and
communications.
The Central government appraises the following types of projects :
Projects which require the approval of the Public Investment Board / Planning Commission
/ Central Water Commission / Central Electricity Authority etc.
Projects referred to the MOEF by other ministries.
Projects which are sensitive and fall in environmentally fragile areas.
Projects under dispute.
The process to be followed is:
Project authorities are required to provide relevant information as indicated in the guidelines along
with the EIA statement / environmental management plan.
After the preliminary scrutiny by the Ministry, the Appraisal Committee evaluates the impact and
makes recommendations for approval, rejection or modifications in the project.
The above recommendations form the basis of the Ministry's decision regarding approval /
rejection.
2. Environmental Audits:
All units seeking consent under the Water or Air Acts or Authorisation under the Hazardous
Wastes (Management & Handling) Rules, beginning 1993, are required to submit environmental
statements for the period ending 31 March on or before 30 September every year to the concerned
SPCB.
The Central and State Pollution Control Boards are responsible for enforcing legal action against
polluters.
Detailed below are the different fiscal benefits for environment protection:
Depreciation allowance at the rate of 100 per cent for installing pollution control devices.
Customs duty at reduced rates of 35 per cent plus 5 per cent auxiliary charges levied on imported
equipment and spares for pollution control.
Customs duty at the reduced rate of 25 per cent and full exemption from auxiliary charges for kits
required for conversion of petrol driven vehicles to compressed natural gas driven vehicles.
Excise duty at the reduced rate of 5 per cent on manufactured goods that are used for pollution
control.
Excise duty exemption for bricks and blocks manufactured from fly ash and phospho-gypsum.
Exemption under section 35 CCB of the Income Tax Act is given to assessees who incur
expenditure by way of payments on any sum towards association or institutions which carry out
programmes for conservation of natural resources.
Financial assistance towards capital investment up to 25 per cent or Rs. 50 lakh, whichever is less,
is given as subsidy to industrialists from the small scale sector for setting up common effluent
treatment facilities.
Incentives in terms of rebate on water cess payable under the Water (Prevention & Control of
Pollution ) Cess Amendment Act,1991.
Provision of loans at reduced rates of interest by financial institutions for installing pollution
control devices, for example:
Funded by the USAID (United States Agency for Industrial Development), the Industrial Credit
and Investment Corporation of India (ICICI) has a $ 25 million Trade in Environmental Services
and Technologies (TEST) scheme which carries loans at 12.5 per cent with no exchange risk for
the dollar assistance
Industrial pollution control projects funded by the World Bank; the Bank offers loans on
concessional terms which is received by the MOEF and disbursed through different financial
institutions.

ENVIRONMENTAL CLEARANCE PROCEDURES

Under the Environment (Protection) Act, 1986, 24 categories of projects and industries will require
environmental clearance from the Central Government
In addition, any project proposed to be located within 10 km of the boundary of a reserved forest
or a designated ecologically sensitive area or within 25 Kms of the boundary of a national park or
sanctuary will require environmental clearance from the Central Government.
For all other projects, environmental clearance need to be obtained only at the level of the State
Government. Clearance is required from the environmental (for site clearance) and pollution
control angle, which has to be obtained by all units other than certain specified non-polluting units
in the small scale sector.
No Objection Certificate (NOC) for the site clearance usually involves clearance from the
concerned State Pollution Control Board NOC is also required for adequacy of pollution control
measures.
In general, the State Pollution Control Board is the concerned authority which will be the State
Pollution Control Board is the concerned authority which will usually specify certain pollution
control measures to be taken by the unit.

AUTHORITIES OF STATES FOR ENVIRONMENTAL CLEARANCE

Andhra Pradesh Pollution Control Board, 6/6/115-124, Kavadiaguda, Secunderabad - 500 003.
Assam State Board for Prevention and Control of Water Pollution, Piyali Phokan Road, Rohaba
Guwahati - 781 001.
Bihar State Water Pollution Control Board, Rudra Bhawan, East Boring Canal Road
Patna - 800 001.
Gujarat Water and Air Pollution Control Board, Patnagar Old Assembly Building,
2nd Floor Sector No. 17 , Gandhinagar - 382 017.
Haryana State Board for Prevention, and Control of Water Pollution, Chandigarh - 160 008.
Himachal Pradesh State Board for Prevention,and Control of Water Pollution, Jaksal House
Kasumpti, Shimla - 171 002.
Jammu & Kashmir State Board for Environmental, Improvement & Ecology Department
Div. Planning and Development, New Secretariat , Jammu / Srinagar.
Karnataka State Pollution Control Board, 7th and 8th Floors Public Utility Building
Mahatma Gandhi Road, Bangalore - 560 001.
Kerala State Pollution Control Board, Keston Road, Kawdiar (P.O.), Tiruvanandhapuram - 694
003.
Madhya Pradesh State Pollution Control Board, Paryavacan Parisar, Sector E-5, Arera Colony
Bhopal.
Maharashtra State Pollution Control Board, Army and Navy Building, 148, M.G.Road Fort
Bombay - 400 001.
Orissa State Pollution Control Board, Gautam Nagar, Bhubaneshwar - 751 014.
Punjab State Board for Prevention and Control of Water Pollution, 11-A, The Mall
Patiala.
Rajasthan State Board for Prevention and Control of Water Pollution, J-2/35, Mahaveer Marg
Jaipur-1.
Department of Environment (Sikkim), Mahatma Gandhi Road , Gangtok ,Sikkim.
Tamil Nadu Pollution Control Board, 80, Kamarajar Salai, Ramakrishna Nagar R.A.Puram
Madras - 600 028.
Uttar Pradesh Pollution Control Board, B-159, Nirala Nagar, Lucknow - 226 007.
West Bengal Prevention and Control of Water Pollution Board, Industry House, 10,
Camac Street , Calcutta - 700 017.
Directorate of Smoke Nuisance , 60-B, Chowringhee Road , Calcutta - 700 020.
Department of Environment (Delhi), Government of India, Bikaner House, New Delhi.
Central Board for the Prevention and Control of Water Pollution (Delhi), A-1, Chandra House
Dr. Mukherjee Nagar , New Delhi - 110 009.
Central Board for the Prevention and Control of Water Pollution (Goa), Dhavali Mal Ponda
Goa - 403 408.
Central Board for the Prevention and Control of Water Pollution (Pondicherry)
"Ballamalyayam" 42, Sellam Nagar
Pondicherry - 605 011.
Environmental Restrictions for SSI Sector
Environmental clearances procedure for small scale industries have been rationalised and
simplified except in the case of 17 hazardous industries.
Now a mere acknowledgment of the application by the State Environment Board would be
sufficient.
Seventeen hazardous items are
Fertilizer (Nitrogen/Phosphate)
Sugar
Cement
Fermentation and Distillery
Aluminium
Petro-chemicals
Thermal power
Oil refinery
Sulphuric acid
Tanneries
Copper Smelter
Zinc Smelter
Iron and Steel
Pulp and Paper
Dye and Dye intermediaries
Pesticides manufacturing and formulation
Basic Drugs and Pharmaceuticals

General Forest and wildlife Water Air

General
1986 - The Environment (Protection) Act authorizes the central government to protect and
improve environmental quality, control and reduce pollution from all sources, and prohibit or
restrict the setting and /or operation of any industrial facility on environmental grounds.
1986 - The Environment (Protection) Rules lay down procedures for setting standards of
emission or discharge of environmental pollutants.
1989 - The objective of Hazardous Waste (Management and Handling) Rules is to control the
generation, collection, treatment, import, storage, and handling of hazardous waste.
1989 - The Manufacture, Storage, and Import of Hazardous Rules define the terms used in this
context, and sets up an authority to inspect, once a year, the industrial activity connected with
hazardous chemicals and isolated storage facilities.
1989 - The Manufacture, Use, Import, Export, and Storage of hazardous Micro-organisms/
Genetically Engineered Organisms or Cells Rules were introduced with a view to protect the
environment, nature, and health, in connection with the application of gene technology and
microorganisms.
1991 - The Public Liability Insurance Act and Rules and Amendment, 1992 was drawn up to
provide for public liability insurance for the purpose of providing immediate relief to the persons
affected by accident while handling any hazardous substance.
1995 - The National Environmental Tribunal Act has been created to award compensation for
damages to persons, property, and the environment arising from any activity involving hazardous
substances.
1997 - The National Environment Appellate Authority Act has been created to hear appeals
with respect to restrictions of areas in which classes of industries etc. are carried out or prescribed
subject to certain safeguards under the EPA.
1998 - The Biomedical waste (Management and Handling) Rules is a legal binding on the
health care institutions to streamline the process of proper handling of hospital waste such as
segregation, disposal, collection, and treatment.
1999 - The Environment (Siting for Industrial Projects) Rules, 1999 lay down detailed
provisions relating to areas to be avoided for siting of industries, precautionary measures to be
taken for site selecting as also the aspects of environmental protection which should have been
incorporated during the implementation of the industrial development projects.
2000 - The Municipal Solid Wastes (Management and Handling) Rules, 2000 apply to every
municipal authority responsible for the collection, segregation, storage, transportation, processing,
and disposal of municipal solid wastes.
2000 - The Ozone Depleting Substances (Regulation and Control) Rules have been laid down
for the regulation of production and consumption of ozone depleting substances. 2001 - The
Batteries (Management and Handling) Rules, 2001 rules shall apply to every manufacturer,
importer, re-conditioner, assembler, dealer, auctioneer, consumer, and bulk consumer involved in
the manufacture, processing, sale, purchase, and use of batteries or components so as to regulate
and ensure the environmentally safe disposal of used batteries.
2002 - The Noise Pollution (Regulation and Control) (Amendment) Rules lay down such terms
and conditions as are necessary to reduce noise pollution, permit use of loud speakers or public
address systems during night hours (between 10:00 p.m. to 12:00 midnight) on or during any
cultural or religious festive occasion
2002 - The Biological Diversity Act is an act to provide for the conservation of biological
diversity, sustainable use of its components, and fair and equitable sharing of the benefits arising
out of the use of biological resources and knowledge associated with it

Forest and wildlife

1927 - The Indian Forest Act and Amendment, 1984, is one of the many surviving colonial
statutes. It was enacted to ‘consolidate the law related to forest, the transit of forest produce, and
the duty leviable on timber and other forest produce’.
1972 - The Wildlife Protection Act, Rules 1973 and Amendment 1991 provides for the
protection of birds and animals and for all matters that are connected to it whether it be their
habitat or the waterhole or the forests that sustain them.
1980 - The Forest (Conservation) Act and Rules, 1981, provides for the protection of and the
conservation of the forests.
Water
1882 - The Easement Act allows private rights to use a resource that is, groundwater, by viewing
it as an attachment to the land. It also states that all surface water belongs to the state and is a state
property.
1897 - The Indian Fisheries Act establishes two sets of penal offences whereby the government
can sue any person who uses dynamite or other explosive substance in any way (whether coastal or
inland) with intent to catch or destroy any fish or poisonous fish in order to kill.
1956 - The River Boards Act enables the states to enroll the central government in setting up an
Advisory River Board to resolve issues in inter-state cooperation.
1970 - The Merchant Shipping Act aims to deal with waste arising from ships along the coastal
areas within a specified radius.
1974 - The Water (Prevention and Control of Pollution) Act establishes an institutional
structure for preventing and abating water pollution. It establishes standards for water quality and
effluent. Polluting industries must seek permission to discharge waste into effluent bodies. The
CPCB (Central Pollution Control Board) was constituted under this act.
1977 - The Water (Prevention and Control of Pollution) Cess Act provides for the levy and
collection of cess or fees on water consuming industries and local authorities.
1978 - The Water (Prevention and Control of Pollution) Cess Rules contains the standard
definitions and indicate the kind of and location of meters that every consumer of water is required
to affix.
1991 - The Coastal Regulation Zone Notification puts regulations on various activities,
including construction, are regulated. It gives some protection to the backwaters and estuaries.
Air
1948 – The Factories Act and Amendment in 1987 was the first to express concern for the
working environment of the workers. The amendment of 1987 has sharpened its environmental
focus and expanded its application to hazardous processes.
1981 - The Air (Prevention and Control of Pollution) Act provides for the control and
abatement of air pollution. It entrusts the power of enforcing this act to the CPCB .
1982 - The Air (Prevention and Control of Pollution) Rules defines the procedures of the
meetings of the Boards and the powers entrusted to them.
1982 - The Atomic Energy Act deals with the radioactive waste.
1987 - The Air (Prevention and Control of Pollution) Amendment Act empowers the central
and state pollution control boards to meet with grave emergencies of air pollution.
1988 - The Motor Vehicles Act states that all hazardous waste is to be properly packaged,
labelled, and transported.

Writing a Business plan, components of a B-Plan

Business Plan
Business plan is written statement of what an entrepreneur proposes to take up. It is aa kind of
guide or course of action what the entrepreneur hopes to achieve in his business and hpw is he
going to achieve it.
M J Dollinger: bp is the formal written expression of the entrepreneurial vision, describing the
strategy and operations of the proposed venture
J M KAPLAN: BP is the written document that spells out like a roadmap wher you are , where
you want to be, and how you want to get there.

A business plan is also a road map that provides directions so a business can plan its future and
helps it avoid bumps in the road. The time you spend making your business plan through and
accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term.
A business plan is a written document that describes a business, it is objectives, it is strategies, the
market it is in and its financial forecasts. It has many functions, from securing external funding to
measuring success within your business.
A written document describing the nature of the business, the sales and marketing strategy, and the
financial background, and containing a projected profit and loss statement
The purpose of a business plan
The business plan generally serves two main functions:
  It provides you with a detailed set of guidelines, setting out how to start your business,
what it will cost to set it up, what resources are required to ensure the success of the
business, what net income you can expect will flow from the business and how long it will
take to reach breakeven operating levels.
 The business plan may be used to convince banks and\or investors that your prospective
business is viable and can be used to find financial support for the business
COMPONENTS OF BUSINESS PLAN:
A business is actually a compilation of several sub-plans. A simplified business plan can be
prepared within the municipality to consist of:

 Title page and table of contents;

 Executive summary and business profile;
 Marketing plan;
 Operations plan
 Human resources plan; and
 Financial plan
Preparing a business plan means developing a comprehensive set of operational activities arising
from the strategic plans. It is an essential step in the preparation for PPPs that municipalities know:
What the objectives are;
 How the PPP option will be managed; and
 How the PPP goals will be attained.
A. Title page and table of contents
The title page should include the name of the partnership, the period of time that the plan covers,
the date that the plan was prepared as well as a contact person, phone number and address. The
title page should look professional: it is the first page a reader sees and first impressions are
important
The table of contents lists the topics covered by the plan. As a road map, it allows the reader to
jump immediately to those section that are of most interest
B. Executive summary and business profile
The purpose of the executive summary is to capture the highlights of the business plan and serve as
a quick reference. The summary is usually completed after the remainder of the plan has been
written and should preferably be about 1 or 2 pages long. It should include:
 A brief description of the service, potential customers and markets;
 Purpose and concept of the partnership( or why the marketplace needs the services of the
partnership);
 Business targets and how it can be attained
 Required financing and resources, how the funds will be used and how the funds will be
repaid; and
 Linkage to the partnership strategic plan.
Along with this, a brief description of the partnership organisation and ownership should be
provided. Other useful information includes management, previous financing, the proposed start-
up date of operations, important details of the partnership’s current market area, customers and
trends that the proposed business can build upon.
C. Marketing plan
The marketing plan describes, in general terms: the industry in which the partnership intends to
operate and the strategy to penetrate or develop the target market: how much is planned to be sold:
who the customers are: how the services will be priced: and how the services will be promoted. A
full marketing plan and strategy need not be included in the business plan but a number of
alternatives need to be considered and evaluated in the p-planning process before the marketing
plan is finalized.
There are various exercises that can be helpful in the planning process:
 SWOT analysis- strength, weaknesses, opportunities and threats:
 PEST analysis- political, economic, social and technological
 Balanced scorecard- analysis of the impact of achieving objectives from a financial
perspective, a customer perspective and an internal perspective, and of innovation and
 learning, together with identification of critical success factors and performance measures:
and
 Brainstorming- for alternative scenarios, opportunities and strategies.
The marketing plan must cover\include:
 Evidence that the partnership is aware of market conditions( size and structure), the general
economy and competition:
 The implications of change (or trends), new technologies, new products, different lifestyles,
ability of customers to afford the service:
 The implications of legal or political constraints on how the services are produced and
delivered:
 The competitive advantage of the particular service to be provided or if it fills a particular
niche in the marketplace:
 The basis for pricing the service based on costs, the competition or what the market will
bear:
 The geographic location in which the partnership will concentrate its promotion and
 The best way to distribute the services to customers.
D. Operation plan
The operation plan is a brief outline of the basis operation of the PPP option. This may be obvious
to some people, but not necessarily to every stakeholder.
The following need consideration:
 How the service is be provided;
 Where the supplies and materials will be purchased and how the service is to be delivered;
 What after-sales service is required
 What land, building, facilities and equipment are required, including costs and financing,
renovations, local taxes and utility costs;
 What employee and management plans are required, including how skilled labor can be
accessed if required;
 The business location that is chosen and an explanation of why it should serve the
partnership needs, proximity to customers, suppliers, transportation costs and location of
competitors; and
 the production capacity, turnover rates or services that can be achieved realistically with
the existing or proposed plan and staff.
E. Human resources plan
Management is critically important to the success of any PPP option. Investors or lenders are
looking for a balanced team of people to cover the important areas of management, marketing,
accounting, and the technical skills to deliver on the business plan. Human resources management
requires thinking about how the partnership will recruit, screen, motivate, train and discipline the
staff needed to work. The human resources plan should cover\include the points below:
*it should name the key people operating the PPP option, and outline the education or experience
each of them bring to it
It should explain how key areas of the operation are handle and by whom. An organisational chart
may be useful in this regard. Contingency plans should be indicated of a key person cannot work
for an extended period of time
It should indicate any weaknesses in the ,management team and the strategy to overcome team and
in what time frame. Training existing staff, recruiting new employees or hiring outside advisers are
some of the possibilities
 it should indicate whether salary and compensation of managers and employee are
competitive within the industry and whether incentives such as commissions, bonuses or
profit sharing are being offered.
 Is should name the board of directors or professional advisers and indicate how
management will use their experience and guidance. The timing and frequency of board
meeting should also be indicated.
F. Financial plan
The financial plan is key components of the business plan. This is because the process of creating
financial projections for PPP option revenue and expenses, cash flow and financial position will
force the team preparing the business plan to examine all of the other key components of the plan.
In doing this, they will be able to describe their plan in monetary terms and detect any
discrepancies, gaps or unrealistic assumptions made earlier. The financial plan is also a valuable
tools for creditors or government agencies when evaluating the partnership needs and use of
funds.
The financial plan consist of an income statement a cash flow summary the balance sheet capital
sales and purchases and a financing schedule.
Income statement: the purpose of the income statement is to disclose the annual revenues and
expenses of a business over the period of time that the plan covers. For an exiting business,
information for at least the last one or two years is necessary.
Cash flow summary: of all the supporting documents, the cash flow projection is one of the most
difficult to prepare. Basically, it is an educated guess about when and how much money will be
coming into and going out of partnership option. The cash flow forecast enables managers to
decide what can be afforded, when it can be afforded and how the partnership will be kept
operating on a month to month basis. This information is useful to indicate the projected increases
or decreases of a bank loan that may be required during the year. Quarterly summaries are often
adequate, but occasionally monthly summaries are required for the first year of operation
The balance sheet: the balance sheet describes the assets, the liabilities and the equity of the
partnership at a particular point in time. It is a widely used accounting statement that the economic
resources of the organisation and the claim on those resources by creditors. This information is
useful in that it allows manage management and creditors to compare the partnership estimates, as
well as it is past performance, against industry averages.
Capital sales and purchases: investors and lenders will required details information on the capital
purchases that are anticipated during the planning period, as well as information on how
these assets are to be financed and the expected useful life of the assets. Capital assets include
land, building and equipment
Financing schedule: the financing schedule or loan summary should provided the reader with a
snapshot view of existing and new loans that will be held by the partnership. Information should
outline the interest rate being paid, frequency of payments, security given, type of loan and the
expected term of the loan. For exiting loans, the name of the financial institution should be
indicated
No one expected a new partnership to make a profit in the first month, quarter or in some cases
year. However, there should be light at the end of the tunnel. Interest on loans is repayable from
the first day of operation, and the partnership must show a return on the investment, in terms of
both time and money, within a realistic time frame if is to be viable.

Contents:
1. General information
2. Promoters
3. Location
4. Land & building
5. Plant & machinery
6. Production process
7. Utilities
8. Transport and communication
9. Raw materials
10. Manpower
11. Products
12. Market
13. Requirement of working capital
14. Requirement of funds
15. Cost of production and productivity of first ten years
16. Breakeven analysis
17. Schedule of implimentation

General Guidelines for writing plan

As much as your plan represents your dream and is very important to you, it may not be as high on
the agendas of the people who read it. When you sit down to write your plan, think of who will be
reading it and put yourself into their shoes as much as possible. In most cases, the people who will
read your plan are going to be potential investors, bankers, and/or potential partners. Your readers
have likely seen dozens, and perhaps even hundreds, of plans. These people do not often have a
great deal of time, so prepare your plan accordingly. In general you should:

Write the plan yourself. Get help if you need it, but do not let your accountant, bookkeeper, or
other professional write your plan for you. You may let them help you with the financial plan, for
example, but you need to know your plan inside and out-and the best way to ensure that is to write
it yourself.

Back up every claim you make with supporting evidence. Include surveys and detailed
market research as an addendum or appendix to your plan.

Write clearly and to the point, keeping your prose to a minimum.

Avoid hyperbole: don't overstate your case. Similarly, avoid unnecessary adjectives such as
"fantastic," "amazing," "astounding," "irresistible," and so on. Let the reader form his or her own
opinion.

Ensure that your writing is error-free and edited for proper form and syntax.

Choose a simple, common font such as Times New Roman, and stick with it throughout the
document.

Use professionally produced drawings, photographs, and graphs. Unless you are a
professional, your own attempts at art will look amateurish. The same is true for videos, if you're
using them, or a computer-based demo.

Bind the pages simply. Cerlox or its equivalent is likely sufficient.

Make sure you include your contact information right on the cover. This is one of the most
common mistakes entrepreneurs make

Components of a B-Plan
Components:
 General information
 Preliminary analysis and alternatives
 Project description
 Marketing plan
 Capital requirements and costs
 Operating requirements and costs
 Financial analysis
 Economic analysis
 Miscellaneous aspects

 General informations:
Biodata of promoters
Industry profile
Constituent of organization
Product details

 Project descriptions:
Location
Project infra
 Raw materials
Skilled labor
Utilities
Pollution control
Communication
Transport
Oter common facilitie
Production process
Machinery n equipments
Capacity of the plant
Technology selected
R&D

 Marketing Plans:
Demnd n supply
Expected price
Mktg starategy
Aftersales service
Transporation

SECTION OF THE PLAN

The first two sections should appear at the beginning of your plan. It is not as critical that the
others follow in the order given, but this sequence will likely work well.
Executive Summary
This is by far the most important part of your plan. It should be no more than two pages in length,
or less. State the idea, the opportunity, how much money you need, where you hope to get it, how
it will be spent, and how you will pay it back. Readers who are interested may then go on to read
the rest of your plan. Be warned, if your executive summary is more than three pages long, it will
likely not be read.
Your Planned Venture
Describe your idea as clearly as possible, with diagrams, photographs or any other medium
necessary to communicate it to the reader. Back up the idea with a description of the target market,
tell why the opportunity exists, and why your idea will capture that market.
Market Research
Explain how you determined the product or service was appropriate to the market. Include
explanations of the "four P's" (price, product, promotion, placement).
Background and History
Tell who you are, what experience and skills you bring to this venture, and whether or not you've
run your own businesses in the past. Describe and explain their successes or failures. Include your
own, short, biography here. Management Team Provide the names, and short bios, of the people
you will use to fill the key positions in the business.
Start-up Plan
Tell when and where you plan to start the business and why you chose this time frame and
location. Operational Plan
Describe, in detail, how your business will operate. Include diagrams of production or service
areas if appropriate.
Marketing Plan
Describe, in detail, how you will attract customers or clients and how you will deliver your product
or service to them.
Financial Plan
Provide a detailed financial plan, including a cash-flow projection, that accounts for the money
you will need (borrow) and the repayment plan and return on investment to investors.
Appendix
Include your own and your team's detailed biographies here as well as additional market research
and any other information that is too detailed to be included in the body of the plan.
Most entrepreneurs have to come up with their own start-up money – either from their own savings
or from relatives who know and trust them. But there are other sources of capital out there that you
might tap into. Nothing is easy or straightforward about raising start-up capital for your venture.
Here are some typical potential sources of start-up money.

Writing up a Business plan

Now that you understand why you need a business plan and you've spent some time doing your
homework gathering the information you need to create one, it's time to roll up your sleeves and
get everything down on paper. The following pages will describe in detail the seven essential
sections of a business plan: what you should include, what you shouldn't include, how to work the
numbers and additional resources you can turn to for help. With that in mind, jump right in.
Within the overall outline of the business plan, the executive summary will follow the title page.
The summary should tell the reader what you want. This is very important. All too often, what the
business owner desires is buried on page eight. Clearly state what you're asking for in the
summary.
Business Description
The business description usually begins with a short description of the industry. When describing
the industry, discuss the present outlook as well as future possibilities. You should also provide
information on all the various markets within the industry, including any new products or
developments that will benefit or adversely affect your business.
Market Strategies
Market strategies are the result of a meticulous market analysis. A market analysis forces the
entrepreneur to become familiar with all aspects of the market so that the target market can be
defined and the company can be positioned in order to garner its share of sales.
Competitive Analysis
The purpose of the competitive analysis is to determine the strengths and weaknesses of the
competitors within your market, strategies that will provide you with a distinct advantage, the
barriers that can be developed in order to prevent competition from entering your market, and any
weaknesses that can be exploited within the product development cycle.
Design & Development Plan
The purpose of the design and development plan section is to provide investors with a description
of the product's design, chart its development within the context of production, marketing and the
company itself, and create a development budget that will enable the company to reach its goals.
Operations & Management Plan
The operations and management plan is designed to describe just how the business functions on a
continuing basis. The operations plan will highlight the logistics of the organization such as the
various responsibilities of the management team, the tasks assigned to each division within the
company, and capital and expense requirements related to the operations of the business.
Financial Factors
Financial data is always at the back of the business plan, but that doesn't mean it's any less
important than up-front material such as the business concept and the management team.

Common errors
Product selection
Capacity utilization estimates
Market study
Technology study
Location selection
Selection of ownership forms

Determining Bankability of the project

Loans available for starting Industrial venture in India
There are two main financial institutions available for loans for entrepreneurs on the (federal/ all
India level).
1. Industrial Development Bank of India (IDBI)
2. Industrial Finance Corporation of India (IFCI)
The Industrial Development Bank of India is the head institution in the area of long term industrial
finance. It was established under the IDBI Act 1964 as a wholly owned subsidiary of RBI and
started functioning on July 01, 1964.
Under Public Financial Institutions Laws (Amendment) Act 1976, it was delinked from RBI.
IDBI is engaged in direct financing of the industrial activities
The objectives of the Industrial development bank of India are to create a principal institution for
long term finance, to coordinate the institutions working in this field for planned development of
industrial sector, to provide technical and administrative support to the industries and to conduct
research and development activities for the benefit of industrial sector.
On the State level finance is available loans can be availed from
1. State Financial Corporation (SFC)
2. State Industrial Development Corporation (SIDC).

Criteria for Business loans:

√ Technical assessment of project
√ Experience of the entrepreneurs
√ Financial & commercial practicality of the project
√ Conformity to environmental laws
√ Economic viability of the project

How to apply for business loans in India – Loan application procedure

The first step is to submit a detailed project report (business plan)to the financial institution to
IDBI, IFCI or any other financial institution from where the loan sanction is sought. In case a
license is a requirement for the project, the license should be provided with the project report.

The financial institution after scrutinizing the project report. If the financial institution requires
additional information or clarifications, they usually ask for this in a few days of receipt of
project report.

Representative from the financial institution will arrange to inspect the site etc to make certain
the suitability of the project. At this stage discussions on various aspects of the project are
discussed and final project costs are calculated.

The financial institution gives its approval if they find the project feasible.

Loans provided for business ventures can be for equipment and fixed assets as well as working
capital. While there is no hard and fast rule that is revealed by financial institutions. I would say
that if a project is viable and the entrepreneur has approximately 25% of his own funds.
Then 75% can be financed.
In addition to this loans can be availed for working capital also. In case you can provide proof of
your expertise in the project there is always the possibility that your loans may be sanctioned with
a lesser amount of cash investment on your part.
Projects costing up to Rupees 5 crores can normally be financed on the state level.
Financial institutions follow guidelines such as debt-equity ratio, entrepreneur‟s contribution to
the project etc when deciding on loans. It is not uncommon for applicants to inflate their
contributions in an attempt to invest the least amount of their own funds.

Bankability of a Project
Peter Seeger once said, “Education is when you read the fine print, but experience is what you get
if you don’t. Africa is now receiving some attention from the rest of the world as a genuine
destination for impactful investment. While there are significant structure imbalances across the
continent, there are noticeable improvements in governance, delivery of social and basic services,
change in attitudes towards transformational education, and a token investment in infrastructure.
Gone are the days when inflated statistics on Africa were driving the narratives on economic
growth.
The African Outlook 2013 Report paints an optimistic picture of the continent’s growth potential –
the economy is projected to grow by 4.8% in 2013 and accelerate further to 5.3% in 2014. Net
capital inflows to Africa are projected to reach $77.5-billion in 2015 from $48.3-billion in 2012,
and household spending will be supported by rising income, increased remittance flows, and stable
macroeconomics environment. Amidst these positives is the African entrepreneurial renaissance
that has taken shape; the birth of a vibrant private sector that is changing the landscape of political
governance, and redefining the pathway to accelerating economic growth and impactful
development. In order to sustain such a unique and encouraging trend, African entrepreneurs must
understand what it takes to positively exploit these trends.
An emerging economy depends on many factors for impactful growth. Factors such as
entrepreneurship and innovation are central to the development process in an emerging economy.
Innovation and entrepreneurship are also cardinal to promoting growth, increasing productivity,
and creating jobs.
Bankable projects attract financiers and investors
For entrepreneurs to be taken seriously by investors, banks, financing agencies, and their own
governments, they will have to present convincing “Business Cases” by way of a “Bankable
Project”; inform by a feasibility study, and or a business plan.
Most times, project owners focus only on the technical aspects of the project in the early stages of
the business development, without proper packaging of the deal or business proposal. When one
scans the various platforms dedicated to the promotion of African businesses, you will observe an
encouraging, but worrisome trend; businesses that are trying to raise start-up or growth capital
without appropriate documentation to support the business case. Many of these pitches lack the
requisite documents that are required for an investor to make a determination on whether the
business is a viable and suitable investment option that deserves their attention and resources.
A bankable business case will consider scale, market, profitability, liquidity, quality of
management, customers, technology, and value added preposition. If a business idea is a
“Greenfield”, new, then in most instances, there is a need for a feasibility study.
A feasibility study is intended to provide an overview of the primary issues related to a business
case. The idea is to identify any “make or break” scenario that could prevent the prospective
business from being successful. In short, the feasibility study is meant to determine whether the
proposed business makes sense. With a completed feasibility study, the basis for the preparation of
an informed business plan is established.
A typical feasibility study will look at possible opportunities, and obstacles relating to the
following issues:
Market – what is the market, does the company sit on top of a big trend in its prospective market,
or is the market large enough to sustain the entry of a new player, how big is the industry or idea?
A thorough market research analysis should reveal baseline demand, demographic characteristics
of the customers, baseline supply, competitors’ strength and weaknesses, and an analysis on the
proposed location.
Organisation/technical – issues relating to the right organizational structure must be assessed and
articulated, who are those responsible for governance and oversight-the right mixed of a board of
directors, what qualifications are needed for operating the business, and an analysis of the
changing trend of staffing and retention. On technology, the need to determine the type of
technology that is core to the survival of the business, how mature is the information technology
landscape of the location and how will it impact the business IT strategy, is it cost effective to
integrate social media now, or later, and will it affect the start-up time to market.
Financial - understanding the financial needs of an existing business or start-up is of paramount
importance to successful fundraising. The need to determine and distinguish start-up cost from
operating cost must be made at the initial stage of the business. Revenue projection must be
realistic and in tune with the current state of the operating environment, sources of financing
should be identify and analyse for suitability, and availability, and lastly profitability forecast and
analysis should be informed with basic breakeven analysis.
What next after the feasibility study?
Based on a positive result of the feasibility study; if there are indications of the sound business
proposal, the next course of action is to develop a “Business Plan”. If the business is an existing
business, a feasibility study might not be needed. A business plan is the bridge of communication
between interested investors and the promoter or owner of a business. The business plan in
summary provides a roadmap on where the company is heading, how it intends to arrive, and how
it will appear upon arrival. Furthermore, a business plan is a tool utilise by business owners to set
goals and objectives for the business performance, provide a foundation for evaluation, and use to
communicate the proposed company message to staff, directors, lenders, and potential investors.
The following are the basic tenets of a sound business plan:
An executive summary – gives the reader or potential investors useful understanding of your
business model or idea in summary. It could enhance or limit your chances to getting funded
Purpose – the purpose of the plan if simple and to the point will attract investors, and summarize
the operational intent to managing the business.
Market analysis - this is usually gleaned from the feasibility study if one was prepared prior to the
preparation of the business plan. It tries to capture and analyse the characteristics of the target
market; demographic and geographic, and test the products and or services to be offered in
satisfying market needs.
Company - an overview of the proposed company; governance, management qualification and
experience, the needs management intends to satisfy, and the strategy to be deployed in offering
those services or products.
Marketing and sales strategy - what is the proposed company marketing & sales strategy, what
key indicators for success, who are your competitors, and how competitive is the environment.
Product or services – what are the ongoing efforts in terms of products or service offering ,
ongoing efforts regarding product development and time to market, are there key milestones to be
met?
Financial data – A look at funding requirements and the use of generated funds, historical
financial summary, and forecasted summary of the proposed company financial statement.
The tips provided above are also applicable to government-owned companies. In government,
feasibility studies are more applicable to infrastructure projects, and the provision of services. For
many government-oriented projects, project financing through “Public Private-Partnership”
arrangements (BOT, BOM, BOOT, Concession, etc.) are desirable. In many parts of Africa, there
are also challenges when it comes to financing infrastructure projects; such as roads, ports,
provision of utility (water, power, telecommunication, etc.). In most instances, project financing
might not require sovereign guarantees. This topic will be explored in another article (The
Intricacies of Project Financing in Africa). For now the point to be made is the idea of presenting
bankable projects.
The caveat
What it is true that some business owners or promoters have the technical expertise to prepare their
own business plan, it is not advisable to do so. Most investors and or lenders will prefer an
independent preparer; someone who is in the business of developing feasibility studies, and
business plans. The idea is to limit the infusion of bias in assumptions used to prepare the business
plan. There are misconceptions regarding the cost of feasibility studies, and the length of time to
completion. For others, the cost is not affordable, no matter how low it might be.

Components of a B-Plan
Components of Business plan
A business plan provides direction, keeping you on track and is usually a requirement when you
seek finance. Depending on your business type, your plan could include the following sections:

Title page - This describes what the plan is for and includes general information on your
business. Find out more on what to include in the title page of your business plan.

Business Summary - A one-page overview written after your business plan is finalised.
 About your business - This is typically called the management plan or operations plan. It
covers details about your business including structure, registrations, location and premises, staff,
and products/services.

About your market - This is the marketing plan. It should outline your marketing analysis of
the industry you are entering, your customers and your competitors. This section should also cover
your key marketing targets and your strategies for delivering on these targets.

About your future - This section covers your plans for the future and can include a vision
statement, business goals and key business milestones.

About your finances - The financial plan includes how you'll finance your business, costing
and financial projections. See the Finances section for detailed information on what to include on
finances.

Supporting documentation - List all of your attachments under this heading in your plan for
referral. For example: copies of emergency procedures, maps, resumes, or financial tables.