Edp Study Material

ENTREPRENEURSHIP DEVELOPMENT
VSEM B.COM/BBA
PREPARED BY
PROF TAMIL SELVAN .V MBA,M.COM

ASST PROFESSOR
DEPT OF COMMERCE AND MANAGEMENT
S N R DEGREE COLLEGE,JIGANI
SNR DEGREE COLLEGE, JIGANI Page 1


SYLLABUS
Objective: To enable students to understand the basic concepts of entrepreneurship and preparing Business
plan to start a small Industry.
UNIT I : ENTERPRENEURSHIP 10 HRS
INTRODUCTION-Meaning & Definition of entrepreneurship, Entrepreneur & Enterprise-Functions of

Entrepreneur-Factors influencing Entrepreneurship-Pros and cons of being an Entrepreuner-Qualities of an
entrepreneur-Types of Entrepreneur.
UNIT II SMALL SCALE INDUSTRIES 12 HRS
Definition-Meaning-Product Range-Capital Investment-Ownership patterns-Meaning and Importance of Tiny

industries, Ancillary Industries, Cottage Industries. Role played by SSI in the development of Indian Economy.
Problems faced by small scale industries and the steps taken to solve the problems-Policies governing SSI’s
UNIT III FORMATION OF SMALL SCALE INDUSTRY 14 HRS
Business opportunity, Scanning the environment for opportunities, Evaluation of alternatives and selection
based on personal competencies. Steps involved in the formation of small business. Venture: Location,
clearances and permits required. Formalities, Licensing and registration procedure, Assessment of the market
for the proposed project-Financial, Technical, Market and Social feasibility study.
UNIT IV Preparation of business plan (BP) 10 HRS
Meaning-Importance –preparation- BP format : Financial Aspects of BP. Marketing aspects of BP. Technical
Aspects of BP, Social aspects of BP. Common pitfalls to be avoided in the preparation of BP.
UNIT V PROJECT ASSISTANCE 10HRS
Financial Assistance through SFC’s, SIDBI, Commercial Banks, IFCI,-Non-Financial assistance from
DIC,SISI,AWAKE,KVIC-Financial incentives for SSI’s and Tax Concessions-Assistance for obtaining raw materials.
Machinery, land and Building and Technical assistance-Industrial Estates: Role of and Types.

UNIT I ENREPRENURSHIP
An individual who, rather than working as an employee, runs a small business and assumes all the risk
and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is
commonly seen as a business leader and innovator of new ideas and business processes.
The word entrepreneur is derived from the French word ‘enterprendre’ it means “to undertake”.
Entrepreneur is an individual who takes risk and starts something new.
Definitions:
Oxford Dictionary”: “ A person who sets up a business or businesses, taking on financial risks in the hope of
profit”.
According to Encyclopedia Britannica: “ An entrepreneur an individual who bears the risk of operating a
business in the face of uncertainty about the future conditions.”
Enterprise
A project or activity that involves many people and that is often difficult, a business, organization. The ability
or desire to do dangerous or difficult things or to solve problems in new ways
Differences between Manager and Entrepreneur
Bases of Difference Entrepreneur Manager
Status An entrepreneur is the owner of A manager is the servant in the

the enterprise. enterprise owned by the
entrepreneur.
Motive The main motive of an entrepre- But, the main motive of a manager
neur is to start a venture by setting is to render his services in an
up an enterprise. enterprise
Risk Bearing An entrepreneur being the owner A manager as a servant does not
of the enterprise assumes all risks bear any risk involved in the
and uncertainty involved in run- enterprise.
ning the enterprise.
Rewards The reward an entrepreneur gets A manager gets salary as reward

for bearing risks involved in the for the services rendered by him in
enterprise is profit which is highly the enterprise. Salary of a manager
uncertain. is certain and fixed.

Characteristics of a successful Entrepreneur:

1. Creativity and Innovation:
Creativity means generating new ideas or doing new things, it is a creative activity may be introduction of a
new product, new method of production. Opening a new market or creation of a new generation. Innovation
means creating something new in the business.
2.Accepting challenges:
Any enterprises fit for searching new investment, new production process, highest expectation from labour
and loss in the future will create competitive challenge for an enterprise.
3.Risk bearing and Uncertainty:
Risk means taking a chance or variability of income and outcomes. Uncertainty means taking a decision with
confidence in may or may not situation is called uncertainty.
4.Decision making:
A decision making is course of action which consciously chosen from multiple alternatives to achieve the
desired result or goals.
5.Building an economic organization :It means whose purpose is it to allocate resources. This two main 1.
Capitalist 2. Entrepreneur
6. Organization and Management:
Recognized organization and management of an enterprise is the main characteristics. It implies bringing
together the various factors or production, the purpose to allocate the productive resources in order to
minimize loss and reduced cost of production.
7. High Achievement:
People differ in ability to do and willing to do Doing things in a new and better way
Decision making under uncertainty.
Difference between Entrepreneur and entrepreneurship
Entrepreneur Entrepreneurship
Entrepreneur is a person Entrepreneurship is a process
Entrepreneur is an Organizer Entrepreneurship is the organized form of initiative
Entrepreneur is a risk taker Entrepreneurship is risk taking activity
Entrepreneur is a Motivator Entrepreneurship is the process of Motivation
Entrepreneur is an Innovator Entrepreneurship is the innovation process
Entrepreneur is a good planner Entrepreneurship is planned activity
Entrepreneur is a Leader Entrepreneurship is crux of leadership
Entrepreneur is decision maker Entrepreneurship is decision making activity
Entrepreneur is a visualize Entrepreneurship is the vision
Entrepreneur is a creator Entrepreneurship is the process of creation
Entrepreneur is a administrator Entrepreneurship is the administration

Qualities of successful Entrepreneur

An Entrepreneur should possess all such qualities with the help of which he can perform successfully
1. Calculated Risk taker:
An entrepreneur is calculated risk taker. He enjoys the excitement of a challenge but he does not
gamble. An entrepreneur avoids low risk situation because there is a lack of challenge and he avoids
high risk situation because he wants to succeed.
2. Innovator:
An entrepreneur exploits the invention commercially and produce newly and better goods which gives
him profit and satisfaction .
3. Organizer:
An entrepreneur has to bring together various factors of production, minimize losses and reduce the
cost of production. He produced the best result as organizer.
4. Creative:
Successful innovation is depend on creativity and one of the most important requirement of an
entrepreneur is to be creative as creativity may be taken as the cause and successful innovation as the
effect.
5. Achievement Motivated:
An entrepreneur is a achievement oriented person not money hungry. He works for his desire for
challenge, accomplishment and service to others.
6. Technically competent:
An entrepreneur must have reasonable level of technical knowledge it is the ability that people can
acquire with hard work.
7. Self confident:
It is necessary for an entrepreneur to be self confident . he should have faith in himself, only then he
can trust others.
8. Optimistic:
An entrepreneur should approach his task with hope of success and optimistic attitude. He attempts
any task with the hope that he will succeed rather than with a fear of failure.
9. Socially responsible:
The changing Environment calls for a socially responsible entrepreneur who is not threatened by
progress of others. The entrepreneur should have responsibility to create jobs for others.
10 . Mental Ability:
An entrepreneur must be intelligent ,adaptable, creative and he must be able to engage in analysis of various
problems and situations in order to deal with them.
11.Communication ability:
An entrepreneur must possess the good communication ability with others.

12.Decsion making :
An entrepreneur must be clear and creative when it is about decision making. Decisions which affect
organizations feature should be taken with the conscious mind.
13. A venture capitalist:
To start a new venture would be existing opportunity for economically strong person or he should in a
position to arrange capital for his new business.
14. Leadership:
This is an essential quality of an entrepreneur . Entrepreneurs as the leaders should provide the necessary
spark to motivation by guiding, inspiring, assisting and directing the members of the group for
achievement of unity of action, efforts and purpose.
15. Dynamism:
Entrepreneur faces the adversities boldly and bravely. They become tougher during adverse situation .
they have faith in themselves and attempt to solve problems given under pressure.
Advantages and disadvantages of being an Entrepreneur/

Pros and Cons of being an Entrepreneur
The advantages and disadvantages of being an entrepreneur are equally weighted. Being an entrepreneur one
can create wealth for society and be satisfied. But running a business show on one’s own capabilities is not
that easy.
Advantages(pros):
1. Bridge the gap between knowledge and application:
Entrepreneur is the only person who can bridge the gap between knowledge and its applications. If
the knowledge is new, that is not market. Entrepreneur can convert the knowledge into an economic
activity and gain out of it.
2. Converting an idea into money:
Being an entrepreneur, one may push up one’s innovative ideas into reality. A entrepreneur is
dynamic, creative, skilful and is ready to take calculate risk, he or she puts societal resources into
societal use.
3. Be your own boss:
Many people would like to enjoy their lives independently. They feel excited doing so entrepreneur
posses high capacity to take risk and have adventure life.
4. Originality respected: The creative and originality business ideas of an individual can be used for
societal benefit and with there the originator respected in the society.
5. Competition
By adapting innovative ideas of entrepreneur the product or services can be produced at low cost. These
facilities the organization to face competition in the market.

6. Better Utilization of Skills and knowledge:

The advantages of becoming an entrepreneur is that creative skills and knowledge of an individual can be
for the used for the benefit of the society otherwise it would go waste.
7. Alternative to current career:
Many people with entrepreneur skills will be working for others to reasons know as unknown of them they
are called Intrepreneurs at that time they get frustrated working with other would like to change the
position and employer.
8. Business Opportunity:
In any society is the business development process is the continuous activity. in such an atmosphere many
business opportunities will be cropping up in different sizes and magnitude. Many business opportunity
can be created by the people with entrepreneurial ability.
Disadvantages or Cons
1. Remuneration:
Entrepreneurs works on his own for economic gain but he or she is not assured of positive economic gain.
It will work both the ways. On the one hand becoming entrepreneur they may get regular income.
2. Benefits:
Being an entrepreneur a person may not gain much in initial stages. The startup programs being more, it
takes considerable time to reap the benefit of being an entrepreneur. Even in long run benefits will not be
extraordinary.
3. Time Management:
As entrepreneur will be taking more risk ,time is very precious for him. Time is money for him. One cannot
enjoy time in self employment as one enjoys in paid employment. managing time becomes critical factor.
4. Management:
Entrepreneur will be the boss of one’s own business and decision making will be again a critical factor. One
should have sound decision support system to take good decision. Decision should not be postponed.
5. Experience:
An unskilled person with an unskilled staff will have difficult time in running the business. working with the
employees who don’t know the ropes becomes a tough time to the entrepreneur
Role of entrepreneur in Economic Development :

1. It helps in bringing about change and development of civilization changing Trade Commerce and
Industrialization.
2. It arises needs for achievement in individual which bring about a change in the economic
scenario(growth) through economic development.
3. It results in exploitation Economic resources such as land labour, capital and organization ,technology
to the fullest extents.
4. It helps in higher rate of Economic growth of certain values.

5. It creates large scale employment opportunities. Thus it helps to reduce the unemployment problem in
the country.
6. It promotes balanced regional development
7. It offers business avenues to women to minorities and people of backward tribal issues.
8. It improves the standards of living of different weaker section in a society.
9. It improves culture of business and expand commercial activities.
10. It helps in reduce the concentration of economic power in few hands.
11. It facilitates the equitable distribution of wealth and income and power distribution among the people
in the country.
12. It acts as change agent to meet the requirements of the changing, Markets and Customer responses.
13. It promotes a country in export trend. Earning of foreign exchange, exploration new market.
Entrepreneurial competencies or Traits :

1. Initiative: It is entrepreneur who initiates a business activity.
2. Looking for opportunities: He looks for opportunity and takes appropriate actions.
3. Persistence: He makes repeated efforts to overcome obstacles that get in the way of reaching goals
4. Information seeker: Takes individual research and consults experts to get information to help to reach
the goal
5. Quality conscious: He always strong urge to excel to beat the existing standard
6. Committed to work: Does every sacrifice to get the task completed
7. Efficiency seeker: Makes always tenacious efforts to get the task completed within minimum cost and
time.
8. Proper planning: Formulates realistic and proper plans and then executes righteously to accomplish
the task
9. Problem solver: Always tries to find out ways and means to tide over the difficult times.
10. Self confidence: A strong believer in his strength and abilities
11. Assertive: Good in asserting his issues with others for the cause of his enterprise
12. Pervasive: Able to successfully persuade others to do what he actually wants from them
13. Efficient Monitor:
Personally supervises the work so that it is done as per the standards laid down
14. Employee’s well wisher:
Has great concern and also takes necessary measures to improve the welfare of the employees
working in his enterprise.
15. Effective strategies
Introduce most effective strategies to effect employees to achieve the enterprises goal what so ever it may.

Women Entrepreneurship
Women entrepreneurship is the process whereby women take the lead and organize the business or Industry
and provide employment to others.
According to Schumpeter” Women who innovate, imitate or adapt a business activity are called Women
Entrepreneurs”
According to Govt of India “ an enterprise owned and controlled by a women having minimum financial
interest of 51 percent of the capital and giving at least 51 percent of the Employment generated in the
enterprise to women”
Problems faced by women entrepreneurs: 11. Lack of self confidence

1. Patriarchal society 12. Lack of training
2. Absence of entrepreneurial attitude 13. Low risk bearing ability
3. Marketing problems 14. Lack of education
4. Financial Problems 15. Lack of Business experiences
5. Family conflicts 16. Negative attitude of banks and financial
6. Credit facilities institutions
7. Shortage of raw materials 17. Inadequate infrastructural facilities
8. Heavy competition 18. Male domination
9. High cost of production 19. Lack of encouragement from family
10. Social barriers 20. Lack of access to advanced technology
Institutional support for women entrepreneurs

There is tremendous institutional support for women entrepreneur. Following are some of the institutions
supporting them.
1. National women development corporation(NWDC)
2. Small Industries Development Bank of India(SIDBI)
3. National bank for agriculture and rural development(NABARD)
4. World Association of Women Entrepreneurs(WAWE)
5. Association of Women Entrepreneurs of Karnataka(AWAKE)
6. The Self Employed Women Association (SEWA )
7. Federation of Women Entrepreneurs (FIWE)
8. National Women Development Corporation(NWDC)
9. Women’s India Trust(WIT)
10. Self Help Group (SHG)

Types of entrepreneurs
1.ON THE BASIS OF THE TYPE OF BUSINESS 2.ON THE BASIS OF STAGES OF DEVELOPMENT
3.ON THE BASIS OF MOTIVATION 4.ON THE BASIS OF TECHNOLOGY
5.ON THE BASIS OF CAPITAL OWNERSHIP 6.OTHER CLASSIFICATIONS
7.ACCORDING TO GENDER AND AGE 8.ACCORDING TO AREA
9.ACCORDING TO SCALE 10.OTHERS
1.ON THE BASIS OF THE TYPE OF BUSINESS
i)Business entrepreneurs:-who start business units after developing ideas for new products/services.
ii)Trading entrepreneurs :-who undertake buying & selling of goods, but not engage in manufacturing.
iii)corporate entrepreneurs:-who establish and manage corporate form of organization which have separate
legal existence.
iv)Agricultural entrepreneurs:- who undertake activities like raising and marketing of crops, fertilizers and
other allied activities.
V) Industrial entrepreneur: as the very name indicates industrial entrepreneur is one who sets up an industrial
unit. He perceives the opportunity to set up his unit, complies with necessary formalities to getting license,
power connection, pollution control clearance, arrange initial capital, etc
2.ON THE BASIS OF STAGES OF DEVELOPMENT
i)First generation entrepreneurs:-who do not possess any entrepreneurial background. They start industry by
their own innovative skills.
ii)Second generation entrepreneurs:-who inherit the family business and pass to next generation.
iii)Classical entrepreneurs:-who aims to maximize his economic returns at a level consistent with the survival
of the unit with or without an element of growth.
3.ON THE BASIS OF MOTIVATION
i)Pure entrepreneurs:-who are basically motivated to become entrepreneurs for their personal satisfaction,
ego etc..
ii)Induced entrepreneurs:- who are induced to take up entrepreneurial role by the assistance and policy of
government including incentives, subsidies etc.

iii spontaneous Entrepreneurs: They are persons with initiative, boldness and confidence in their ability ,inner
urge and inborn talent and drive them to establish their own venture
4.ON THE BASIS OF TECHNOLOGY
i)Technical entrepreneurs:- who are task oriented and ‘craftsman type’. They prefer doing to thinking.
ii)Non-technical entrepreneurs:- who are not concerned with technical side, but rather with marketing and
promotion.
iii)Professional entrepreneurs:- who start a business unit, but later sell the running business and start a new
unit later.
5.ON THE BASIS OF CAPITAL OWNERSHIP
i)Private entrepreneurs:- individual or group set up enterprise, arrange finance, share risk etc..
ii)State entrepreneurs:- means the trading or industrial venture undertaken by the state or the government
itself.
iii)Joint entrepreneurs:- the combination of private and government entrepreneurs.
OTHER CLASSIFICATIONS
6.ACCORDING TO GENDER AND AGE i)Man entrepreneurs ii)Women entrepreneurs iii)Young entrepreneurs
iv)Old entrepreneurs v)Middle-aged entrepreneurs
7.ACCORDING TO AREA i)Urban entrepreneurs ii)Rural entrepreneurs
8.ACCORDING TO SCALE i)Large scale entrepreneurs ii)Medium scale entrepreneurs iii)Small scale
entrepreneurs iv)Tiny scale entrepreneurs
9.OTHERS i)Spiritual Entrepreneur ii) Social entrepreneurs iii)Edupreneurs
iv)Fabian Entrepreneurs
Fabian entrepreneurs are cautious and skeptical in experimenting changes in their enterprises. Such
entrepreneurs are shy, lazy and lethargic. They are imitative by nature but are not determined and also
lack power.
v)Drone entrepreneurs
Drone entrepreneurs are characterized by a refusal to adopt opportunities to make changes in
production formulae even at the cost of reduced returns. They can suffer loss but are not ready to
make changes in their existing production methods.

Intrapreneur:
Intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an
idea into a profitable venture by operating within the organizational environment.
Factors influencing Entrepreneurship
I. Psychological Factors: II. Cultural factors:

a) Culture
a) Need for achievement b) Religious belief
c) Minority group
b) Personal Motives d) Spirit of capitalism
c)Recognition
d) Need of Authority
IV. Economic factors:

III. Social factors:
a) Legitimacy of entrepreneurship a) Infrastructural facilities
b) Social Marginality b) Financial Resources
c) Family, role Models and association with c) Availability of materials and knowhow
similar type of Individuals d) Labour conditions
d) Caste systems e) Market
e) Occupation f) Support system
f) Education and technical qualifications g) Government Policy
g) Social status
h) Social Responsibility V personality factors:
a) Personality
b) Independence
c) Compulsion
FUNCTIONS OF ENTREPREUNERS
1. INNOVATION:-
The entrepreneur basically an innovator who introduces new combinations of production that is innovation.
Entrepreneurship is a creative activity and the entrepreneur introduces something new in any branch of
economic activity.
Introduction of new product, new technology ,new market for product, discovery of new sources of supply.
RISK BEARING:-
Risk taking is an uncertainty bearing implies assuming the responsibility for loss that may occur in the
unforeseen contingencies of the future. Business is a game of skill where risk and rewards both are great.

Ability of highest order is required for success in entrepreneurship. An entrepreneur is an especially

talented and motivated person who under takes the risk of Business.
2. Organizations and Management:

Recognize organization and management of the enterprise is the main function of the entrepreneur. Planning
of an enterprise, co-ordination , administration and control of employees routine type of supervision of
employees.
3. Other functions:
a) Understanding one’s own capacity
Examine dominant aspects of the business, Identify and compare own personal qualities and skills.
Know one ‘s Strength, Weakness and the overall capability.
b) Identifying new venture opportunity:
Study market needs and wants, Recognition innovation possibilities. Think about a new idea,
process, device product or services .Carrying out Market research, Be well aware of competitions
c) Planning new venture:
Planning the Human resource requirement . Planning the financial requirement, assts requirement,
Shareholders fund, investment and capital requirement.
d) Organizing new venture:
Choose the form of ownership, determine organizational structure
Ensure fearless from different authorities, obtain certificate of registration etc.
e)Managing Finance:
Arrange own and borrowed capital, prepare and review from time to time sectional and master budget
with fund flow estimate. Analyze financial requirement and statements. Maintain proper books of
accounts.
e) Managing Production operation:
Acquiring detail of basic technical knowledge and production operation .Formulating purchasing policy
and inventory control system. Formulate frame work for total quality control
f) Managing Work Force:
Arrange systematic manpower planning , prepare job descriptions for all positions at all level. Recruit
the right person for the right job, Evaluate each employees performance periodically.
g) Managing Market:
Collect and analyze regularly data on customer desires with special reference to product quality, price
and service sales after service. Select and review marketing channel and ensure smooth flow of goods
to market place. Motivate sales and servicing personnel.

UNIT II. SMALL SCALE INDUSTRIES
The small scale industries plays a vital role in self employment, general employment, institutional and
economic growth and support function to the large scale industries. Small scale industries supply spare parts
to large scale industries.
Meaning:
An industrial under taking in which the investment in Fixed assets in plant & machinery Rs.2500000 to
1crore will be treated as a small scale industrial unit.
Categories of Small Scale industries

1) Tiny industries :-
Tiny industry where the investment in plant and machinery does not exceed Rs. 250000 , and employees
10 to 15 in numbers.
2) Ancillary industries:-
This is a Sub class of small scale industries, an industrial undertaking which is engaged or is proposed to be
engaged in the manufacture of parts, components or tools.
3) Export orientated units:-[EOU]
An industrial undertaking in which the investment in fixed assets that is in plant and machinery does not
exceed Rs.1crore and as an obligation to Export 30% of its production .
4) Cottage industries:-
These are also called house hold industries or characterized by the following features. They are organized
by individuals private resources & with the help of members of the family.
1. Use of unsophisticated machine
2. Low capital investment
3. Manufacture of simpler goods at same location.
4. Employing local people
5. Established by group of people with their own resources.
Examples 1. Silk and cotton weaving. Leather, carpet making tiny food processing and metal
handicrafts industries.
Advantages of small scale industries:

1 Small scale industries do not require high level of technology.
2. Small scale industries are generally labour incentives and don’t require large amount of capital. The
energy of employment and under employed people may be used for productive purpose in economy
3. Small scale industries projects can be undertaken in a short period and hence can increase production
both in short run and long run.
4. Most developing countries are rich in certain agricultural, forest and mineral resources. Small scale
enterprises can be based on the processing of locally produced raw materials.

5. It is possible both to Save and Foreign Exchange goods from local resources.
6. S.S.I are the trying ground for local entrepreneur and decision making
7. By creating opportunities for the small business industrial enterprises can think about more equitable
distribution of income which is socially necessary and desirable
8. Small scale enterprises in developing countries help to create jobs in economic stability in society by
controlling the monopoly system
9. The development of small scale will create jobs in rural areas of the developing countries where the
unemployment is high
10. Small scale enterprises will make possible transfer of manufacturing activities from metropolitan to
small areas. This will also help in bringing about geographical requirement of skill and technology in a
country
11. Apart from the linkages between agriculture of rural development between small industrial
enterprises. There is an essential relationship between small scale industries and the farmers which
facilitates the growth
12. Small scale enterprises have there own place in a country’s economy Imperfect competition protects
the small firms, markets and enables them to exist even where they are not efficient in terms of cost
13. Small scale industries create immediate and permanent employment at a relatively small capital cost
14. They facilitate mobilization of resources both capital and human which remain unutilized .
Capital investment or sources of Funds of S.S.I

1) Long term Funds:-
Long term funds are the ordinary shares issued by organization for acquiring huge amount of funds.
2) Deferred ordinary shares:-
They are the form of ordinary shares. Which are entitled to a dividend only after a certain date or if
profits rise above a certain amount .
3) Rights issue:-
A right issue provides a way of rising new share capital by mean of an offer to existing share holders,
inviting them to subscribe cash for new shares in proportion to there Existing holdings.
4) Preference shares:-
Preference share have a fixed percentage dividend before any dividend is paid to the ordinary share
holders.
Loan stocks:-
Loan stocks is a long term debt capital risk by a company for while interest is pay usually half
yearly and at a fixed rate.

Debenture with a floating rate of interest:-

These are debenture for while the coupon rate of interest can be changed by the issuer, in
accordance with change’s market rate of interest. They may be attractive to both holders and
barrow when interest rate are flexible.
5) Security:-
Loan stock and debenture will be secured security may take the firm of either a fixed charge or a
floating charge.
6) Retained earnings:-
For any company the amount of earnings retained with in the business or a direct impact on the
amount of dividends profit reinvest an retained earnings in profit that could have been pay as a
dividend.
7) Bank lending:-
Barrowings from banks are an important sources of finance to company like short term loan and
overdraft facility.
8) Leasing :-
A lease is an agreement between two parties, the leaser and the lease. The leaser owns a
capital assets but allows the lease to use it.
9) Hire purchase:-
Hire purchase is a form of installment credit. Hire purchase is similar to leasing with the
Exception that ownership the goods passer to the hire purchase customer on payment of the
final credit installment.
10) Government assistance:-
The government provides the finance to company in case grounds and other forms of direct
assistance, as part of its policy of helping to develop the national Economy.
11) Venture Capital:-
Venture capital is the money put into an Enterprise while may be lost if the enterprise fails to
earn profits. Businessman starting of a business will invest venture capital, of his own but that
will probably need extra funding from a search than his own product.
12) Franchising:-
Franchising is the method of Expending business on less capital than good otherwise need for
suitable business it is an alternative to rise Extra capital for growth.
13) Short term funds:-
A) Bank over draft b. Commercial paper C. Treasury bill d. Letter of credit

Ownership Pattern
Sole proprietorship Partnership Firm Joint Stock Company Cooperative

I. Society
I. Sole proprietorship
This is the simplest business firm under while one person operates the business. This is not a
legal entity . It refers to a person who are the business and he is personally responsible for its debts.
Sole proprietorship may be defined as a firm of business organization which an individual interest his
own capital use his own skills, intelligence, experience and education to manage the business affairs
and he is sole responsible for a result of its operations and obligations.
Advantages of sole proprietorship Disadvantages:-
1.Ease of formation 1.Liability
2.Tax benefits 2.Lack of continuity
3.Employment 3.Difficulty in rising capital
4.Decision making 4.Risky
5.Control 5.Heavy burden.
6.Simplicity etc….
II. Partnership firm

It is the legal firm of business operations between two or more individuals who shares management and
profits.
Features
1.Agreement:-
Partnership cannot be firmed without the agreement it may be oral or written.
2.Regulation:-
It is not necessary that a partnership firm may be registered or may not be registered, incase of registration
many problems may be avoided.
3.Number of partner:-
In partnership there should be at least two partners.
4.Profit & Loss distribution:-
A basic aim of partnership is to earn profit. The profit is distributed among the partners according to their
agreement and similarly the loss incurred is also distributed among them.
5.Unlimited liability:-
The liability of the partner is not limited to his invested amount in case of loss.

The private property of the partner also used to pay the business obligations.
6. Other features:-
a) Transferability of shares B)Dissolution C)Co-operative.
Advantages of partnership:- Disadvantages of Partnership

1. Simplicity in formation 1. Unlimited liability
2. 2.Simplicity in dissolution 2. Limited life of the firm
3. Sufficient capital 3. Limited capital
4. Skilled workers 4. Limited liability
5. Secure of responsibility 5. Limited no of partners
6. Satisfaction of partners 6. Legal defects
7. Secrecy 7. lack of Interest
8. Social benefits 8. Lack of public confident
9. Expansion of business 9. Lack of prompt decision
10. Flexibility 10. Lack of secrecy
11. Tax facility 11. Chances of dispute among partners
12. Observe of fraud 12. Expansion problem
13. Frozen Investment
14. Risk of Loss
15. Transfer of rights
JOINT STOCK COMPANY

A joint stock company is a Business activity that is owned by share holders.
A joint stock company is a voluntary association of individuals for profit, having a capital divided into
transferable shares, the ownership of which is the condition of membership.
Advantages of Joint stock Dis advantages of Joint stock
Feature of joint stock company company company
1. Association of persons 1.Huge resources 1. Problems in formation
2. Artificial person 2.Limited liability 2. Oligarchic management
3. Separate legal entity 3.Transferability of shares 3. Problem with respect to decision
4. Limited liability 4.Efficient Management making
5. Transferability of shares 5.Scope for expansion 4. Separation of ownership and
6. Common seal 6.Economies of large scale management
7. Separation of ownership operation 5. No secrecy can be maintained
from management 7.Public confidence 6. Speculation in shares
8. Perpetual succession 8.Social benefits 7. Fraudulent in management
9. Investment facilities 9.Tax benefits 8.Concentration of economic power
10. Accountability 10Diffused risk 9. Excessive government regulations.
11. Restricted action 11.Stability of existence

Co-operative Society
A co-operative society is an autonomous association of person who voluntarily co-operate for their social,
economic and cultural benefits.
Features of co-operative society Advantages of co-operative Disadvantages of co-operative
1.Voluntary association society society
2.Open membership 1.Easy to form 1Limited resources
3.Variable nature of members 2.No observation for membership 2.Inefficient management
liability 3.Limited liability 3.Lack of secrecy
4.Democratic control 4.Service motive 4.Cash trading
5.Limited reward to capital 5.Democratic management 5.Excessive government
investment 6.Stability and continuity intervention
6.Service motive 7.Economic operations 6.Observe of motivation
7.Perfect unity 8.Surplus share by the members 7.Disputes and difference
8. A legal entity 9.State patronage
Problems in small scale industry

1) Inadequate credit assistance:-
Timely and adequate supply of facilitates is an important problem faced by small scale industry. This is
due to the scarcity of capital, improper functioning of financial institutions, due to the weak credit
worthiness of the small units in the country.
2) Problems of skilled man power:-
The success of a small enterprises revalues around the entrepreneur, his skilled and expertise have a
proper skill is responsible for a failure of small scale industries. Insufficient human factor and unskilled
man power create innumerable problems for the survival of small units.
3) Irregular supply of raw material:-
Small scale industries face several problems in respect of to the regular and adequate of the good
quality of raw material, non-availability of sufficient quantity and quality and increased the cost of raw
material creates a problem.
4) No organized marketing:-
Small scale industries lack organized marketing skills unlike the large units, their products do not hold
goods in the market and find very difficult complete with the products produced by large units.
5. Lack of good equipment & machinery:-
Small scale industries find it very difficult to employee a latest equipment and machinery which helps
them produce the good quality products. Most of them employee hold and outdated machineries.
6.)Observe of adequate inflow structure:-
Due of the major requirements for the success of any business is the right inflow structure which
includes goods, power, water, drainage facilities etc… . As small scale industries are located in rural
backward areas where there is no proper inflow structural facilities which affects a growth and life of
small scale industries.

7)Competition from large scale units and imported goods:-

Small scale industries finding very difficult to complete with the goods manufacture by large unit due
to their price, quality, service promotion etc… which are for better than small scale industries.
8)Other problems:-
Beside the above problem small scale industries also faced other numerous problem like poor project
planning, managerial inadequate old and outdated besides and huge member of bogus concerns,
labour problems and lack of training skills etc… .
Remedies to solve the problems of S.S.I
1) Inadequate credit assistance:-
The government should help S.S.I by giving credit facility from time to time at a lower rate of
interest. It should redirect the financial institutions to provide loans which is almost required by
small scale industries.
2) Industrial estates:-Government as setup industrial estate in different cities this areas have been
provided with various facilities like roads, banking, facilities to encourage SSI
3) Testing laboratories:-Government as established the testing laboratories the prescribed standard
of SSI products.
4) Supply of design:-Government also provide the new models and design of the products to improve
the quality id SSI products.
5) Publicity:-
The major problem faced by SSI is promoting their products, the government as setup display
centers and show rooms, inside and outside the country to increase the scale of SSI products.
6) Facility of raw material:-
The problem of raw material is also being solved by the government by supplying the require
quality and quantity of raw material at reasonable prices.
7) Purchase of SSI products:-The government also purchases the finished product from SSI and sells
them in showroom.
8) Protection against foreign competition:-The government is giving protection to small scale
industries by improving heavy duties on improves.
9) Establishment of training units:-To update the skill & enhance the knowledge of entrepreneur the
government as setup various institutions the industrial, vocational commercial institutions.
10) Advisory Services:-To encourage the new entrepreneur different kinds of advisory services given by
the government.
11) Effective planning:-SSI should conduct a detail survey of the existing situations in SSI sectors. A
detailed feasibility studying or good project report is highly essential for small entrepreneur, to
start their units.
12) Development of suitable machinery:- SSI should try to develop separate suitable machineries for
taking initiative with regard to problem faced by then the government should involve by availing
suitable machinery for small scale industries.

Differences between Small Scale industries and Large Scale Industries

SMALL INDUSTRIES LARGE SCALE INDUSTRIES
1.These industries employ less number of persons These industries employ a large number of
and capital. persons and capital.
2.The production is small and so the usage of raw There is large scale production and the
materials is also less. consumption of raw materials is also more.
3.The work is done manually and by using small The work is performed only by using larger
machines and tools. machines and laborers.
4.These industries are located in rural and urban They are located in urban centre and are in public
areas and are in the private sector. Example: sector run by big industrialists. Example: Jute and
Radio, Cycle and T.V. Cotton textiles.
5.These are the industries that has capital less These are the industries that have the capital
than 1 crore. more than 1 crore.
6.Small enterprises are required to be registered The large scale industries are subject to licensing
as SSI units with directorate of industries. and registration with government within a
prescribed time limit.
7.Government interference is less. Government interference is more
8.Ownership of small scale industries are sole Large scale industries are generally found in
proprietary or partnership. company forms.
9.SSI are less capital intensive and more labour They have higher input of technology and capital.
intensive.
10.They use age old techniques and equipments They have greater exposure to professional
there is no scope of professionalization. management.
11.They cater the needs of the local people. They are market-oriented and produce goods for
the masses.
12.The gestation period of a SSI is very short. There is comparatively a long gestation period in
large scale industries.
13.There is frequent turnover of employees as Due to the better working conditions and high
morale is very low. morale employee turnover is very less.
14.The educational level of employees is low or There is no limit for educational level and best
moderate. talents can be hired.
15.It is very difficult to convince and procure It is easy to convince and procure loans from
loans from banks and other financial institutions. institutions for various activities.

Role played by SSI in the development of Indian Economy

1. Employment Generation
SME sector in India creates large employment opportunities for Indian. Next only to agriculture has been
estimated that a lakh rupees of investment in fixed asset in ssi generate employment for 4 persons.
2. Production:
The SME sectors plays a vital role for the growth of the country. It contributes 40% of the gross
Manufacturing to the Indian economy.
3. Export Contribution:
SME sectors plays major role in India ‘s present export performance .45%- 50% of the Indian exports is
being contributed by SME sectors. The no of SSI that undertake direct exports would be more than 5000.
4. Innovation and Development:

SME are quick in assimilating new design trends ,developing contemporary products and bringing them to
the market place ahead of competition .
5. Utilizing Resources Optimally:
SME are notably skillful in the maximizing the use of the scarce capital resources and are able to partner
with large scale firms by supplying locally available raw materials in unprocessed or semi processed forms.
6. Developing Entrepreneurial capacity:
SME can act as the seed bed for the development of entrepreneurial skills and innovation. They provide
part in the provision of services in the community. they can make important contribution to the regional
development.
7. Increases GDP:
The SME sectors contributes about 9 percent of the country’s GDP, 45% of manufactured output and 40 %
of its exports. The SME provides employment to over million persons through more than 31 million
enterprises with lower labour to capital ratio and produces 6000 products.
8. Feeder to Large Scale Industries:

SME is complementary to the Large Scale Industries manufactured various types of component s, spare
parts, tools and accessories which required by the large scale sector.
9. Opportunities for Artisan:
In villages artisan/ specialist are having expertise in different fields are found. Because of lack of
opportunities their skills do not come to the light. SME industries are provide such a industry.

10.Increase Standard of Living:

With the establishment of small business in Rural areas or nearby regions villages get many type of facilities.
For example Employment, Electricity, water, Roads , Banks and mode of transport etc. in such a situation
promotion of standard of Living is inevitable.
11.Less pressure of population on Agriculture:

As more population depends upon land for survival the land is further divided into small pieces. It no longer
remains beneficial to do farming on such small fields .In every year there is a further increase of approximately
thirty lakhs people who depend on agriculture.
12.Equitable Distribution of Income :

With the establishment of the business the income of the country is not just concentrated with some handful
of city industrialists. This helps to reduce the gap between the rich and the poor in the country.
13.Social advantage
SME s offer opportunities for an independent way of life of people with a small means. They offer savings in
social overheads like Education, housing and medical facilities by taking industry near to the people. They help
to rise per capita income and standard of living in the country.

UNIT III FORMATION OF SMALL SCALE INDUSTRY
Definition
A business opportunity is a packaged business investment that allows the buyer to begin a business.
Meaning
A business opportunity, in the simplest terms, is a packaged business investment that allows the buyer to
begin a business.
A business opportunity is an arrangement where a third party (the seller) offers to sell you products,
equipment, supplies or services to enable you to start your own business.
Business opportunity involves sale or lease of any product, services ,equipment etc that will enable the
purchaser licensing to begin a business.
Identification of business opportunities
1.identifying Market inefficient:
When an individual looking at the market one must consider what inefficient are present in the market, one
should have an idea on who to correct this inefficiency? So therefore an individual must have a knowledge
about how to create an opportunity with the help of market inefficiencies.
2. Remove Key hastles :
One should take a look at some of the key hassles customers face when buying or using product or services.
An individual need not necessary to have a new product or services . one can be innovative and improve a
productive, a service or business process.
3.Consumer Behavoiur:
Consumer behavior will explain the tastes and preferences of the consumer and throw light on the demand
situation.
One may or may not have business idea or business process to serve a market. An individual can take
advantages of market inefficiencies to exploits opportunities.
4.Pick a growing sector or industry:
Which considering new business. It improve to look at whether an idea is in a growing sector or industry. For
example A lot of start ups in sector in India very well because there was huge demand in the industry.

5.Product differentiation:
Creating superior product or services alternative is improvement for using in the market place. The product
introduced by an individual should be from the existing product.
6.The study on financial support:
The study on financial support will examine the quantum of money required sources of obtaining finance
subsidies an incentives available , cost of finance and the break even period.
At the start up stage cash flow consideration are just improvement as any other business function. No
business man can run a business without cash flow consideration.
7.It is a seasonal Business:
When picking a new business consideration whether it it’s a seasonal or the year around. If decides on the
seasonal business he need to consider how to operate during off the season will help to get through the off
season.
9.Conduct a survey/ research:
Conduct a survey / research and collect information on the existing condition of the propsed product/ service
to be manufactured / rendered
10.Market behavior, Consumer behavior, financial support, legal aspects and economic viability have to
examined.
Market behavior gives information on the market feasibility . It gives information on whether the product has
to potential to get sold without any problems.
Legal aspects will determine the type of business opportunities available, the prevailing government policy
ecological constraints and the like .
Various stages of identifying Business opportunities
1.Environment Scanning
2. SWOT analysis
3.Evaluation of Opportunities:

Environmental scanning:
Environmental scanning involves studying and interpreting the sweep of social, political, economic ecological
and technological events in an effort to spot budding trends and conditions that could become driving forces.
Environmental scanning involves the scanning of internal and external environments.
Need for environmental scanning:
1. Identification Strength
2. Identification of Weakness
3. Identification of Opportunities
4. Identification of Threats
5. Optimum use of resources
6. Survival and Growth
7. To plan for long term business Strategy
8. Helps in decision making
Feasibility report
A feasibility report is a project report of a new enterprise or of an expansion which provides in general
primary economic, information, financial data and technical details.
Objectives of Feasibility Study
1. To assess project results

2. To improve project Management and process planning
3. To promote learning
4. To establish new knowledge
5. To understand different stakeholders perspectives
6. To ensure accountability
7. Best use of funds
8. To avoid weakness and future mistakes.
Types of feasibility studies:
1. Financial feasibility
2. Market feasibility
3. Technical feasibility
4. Social feasibility

1. Financial Feasibility:
The financial aspects of any business relate to the total amount of capital required the sources of
finance ,the cost of capital and its implication on the business. An analysis of these issues will indicate
whether the business is financially viable or not.
1.Statements of total projects cost , capital requirements and cash flows need to prepare
2. Collection period of sales , inventory levels, credit period that can be aviled, etc need to be
estimated.
3. Projections for future time periods need to be worked out.
4.Returns on Investment, returns on equity, Break even volume and price analysis needs to be studied.
5.A sensitive analysis needs to be conducted to know the impact of certain items on profitability.
2. Market feasibility:
Market feasibility study helps to understand the condition of the market and customer preferences
and expectations. It includes
1. Market survey will helps to understand the demand or opportunities of the customers.
2. Consumer behavior helps to understand the need and preference of the product and their buying
behavior etc.
3. Products and services which we have to offer to the market to satisfy the customers.
4. Price fixation also an important aspect in market feasibility
5. Distribution covers channels of distribution mode of transport, mode of packaging and cost of
distribution, Government policies etc.
6. Promotion will helps to reach the customer for their choices
7. Sales after services
8. Competitors ,also can be identified to prepare strategy to overcome competition.
9. stakeholders and customers must be satisfied.
3.Technical feasibility:
1. Material inputs, raw materials

2. Production/product mix
3. Location and site
4. Structures and civil works
5. Technical know-How
6. Project charts and layouts
7. Manufacturing process and technology
8. Plant capacity
9. Selection and procurement of machinery and equipment
10. Scale of operations
11.Collaboration agreements 12. Work scheduling

4.Social feasibility:
1. The estimation of costs and benefits which will accrue to individual members of society as consumers
or as suppliers of factory input.
2. Costs and benefits accrue to the community.
3. Costs and benefits accrue to the national Exchequer.
4. Costs and benefits accrue to the entrepreneur .
The various steps involved in starting business:

1. Identification and evaluation of the opportunity:
Consumers and business associates are the best source of ideas for a new venture. Many entrepreneurs
identify business opportunities through discussions with the retailers, wholesalers or manufacturer’s
representative. Lastly, technically oriented people often conceptualize business opportunities when working
on other projects.
2. Developing a business plan:
A business plan is the description of the future direction of business. A good business plan is not only
important in developing the opportunity but also essential in determining the resources required, obtaining
these resources, and successfully managing the resulting venture. A business plan is often an integration of
functional plans such as marketing, finance, manufacturing, and human resources.
3. Determining the resources required:
The resources need for starting the venture must also be determined. The process starts with an appraisal of
existing resources, if any, with the entrepreneur. Resources that are critical must then be distinguished from
those that are just helpful. Alternative suppliers of these resources, along with their needs and desires, must
be identified, the entrepreneur should try to structure a deal that enables the resources to be acquired at the
lowest possible cost and the least cost control.
4.Project appraisal and feasibility plan:
The exercise of project appraisal is the assessment of a project in terms of its economic, social, and financial
viability. This exercise calls for a complete scanning of the project. The appraisal of a project is undertaken by
the financial institutions with the twin objective of determining the market potential of a project and selecting
an optional strategy.
5. Managing the venture:

If it has been decided to go ahead with the venture , the entrepreneur must employ the acquired resources
through the implementation of the business plan. Operational problems of a growing enterprise must also be
examined. This involves implementing a management style and structure, as well as determining the key
variables for success. A control system must be identified so that any problem area can be carefully
monitored.

Factors taken while selecting the suitable site for a plant:

1. Law and order situation:
Plant location must be at that place where law and order situation is in control. If a state has bad law
and order situation, then the business must not be located within that state.
2. Availability of infrastructure facilities:
Plant location which is selected must have proper infrastructure facilities. Without good infrastructures
facilities, it will be difficult to do business efficiently.
3. Good industrial relations:
Plant location must be at those places where good industrial- relations are maintained. Entrepreneurs
do not want to locate their business at places where anti-social elements are rampant.
4. Availability of skilled workforce:
Plant location must be convenient and easily accessible to skilled workforce. The entrepreneur must be
consider the availability of competent skilled workforce at a particular place to locate their business.
5. Social Infrastructure:
There is a need for social infrastructure not only for employees but also for the development of their
families. The availability of social infrastructure will increase employees welfare .
6. Investor friendly attitude :
Plant location must be in those states whose governments have an investor friendly attitude.
Government must give attractive incentive and concessions to those who start business units in their states.
7.Nearness to Market:
Plant location must be near a market. Every business unit depends on a market for selling its goods and
services. The goods and services must reach the market on time, and be available to the consumers at a low
price
8. Nearness to raw materials sources:

Plant location must be usually near to the source of raw materials. It is important in the business to get the
raw materials in time and at a reasonable price.
9.Nearness to supporting industries:

Plant location must be near its supporting industries and services . if it purchases spare parts from an
outside agency then these agency must be located very close to the business.
10.Safety requirements:
Plant location must meet all essential safety requirements. Due to air ,water and noise pollution, some
factories have a bad effect on the health of the people.

Procedure to be followed and documents to be furnished while starting a SSI

I. Location: Selection of a location for establishing a business unit depends on various factors availability of
raw materials, nearness to Market, availability of finance, mobilization of required skilled labour, analysis of
feasibility studies. The nature of the business and its adaptability to proposed environment.
II Clearance and permits:

Different types of clearance and permits have to be obtained from different authorities. Following types of
industries have to obtain provisional registration from the respective District Industrial Centre.(DIC)
1.S S I s (Investment plant below Rs 1cr)
2.Ancillary industry whose investment in plant and equipment is below Rs 1cr
3.Tiny industries whose investment in plant and equipment is below 25 lakhs
4.Women entrepreneurs where one or more women entreprenures have not less than 51% financial holding
Other clearances:
1.Environmental clearances from Govt of India
2. N O C from pollution control board
3. change of land use from District collector/ Govt in Municipal administration and urban development
through Director / town and country planning urban development authority.
4. Exemption from urban land ceiling
II. BUILDING:
Permission for building layout needs to be taken from the gram Panchayat / Municipality/ Town and country
planning department/ Urban development Authority.
1.Plant and Machinery:

Approval of layout needs to be taken from department of factories/ boilers.
2.Raw materials : permission for space raw material like petrol, coal, molasses alcohaol, paraffin ,wax etc
if required from industries department.
3. Power: power feasibility from state Electricity Board, 2. Agreement with private power producer to
purchase power from private generating stations.
4.Water: (i) Own captive source (2)Public Supply(3) Supply from the state Government Authority in case of
Industrial Parks (4)Supply from state irrigation department for bulk Consumption .

III Licensing :
This is the part of clearance activity. It is open to any entrepreneur to set up an industrial unit in the small
scale sector. No formal permission from the state or central Government is necessary for this purpose also
industries employing less than 100 workers and having fixed assets of less than Rs 10 lakhs need not obtain
any license under the Industries act.
IV. Registration:
Registration with appropriate statutory agencies have to be made to clear the deck for the operations. In their
own interest all existing small scale units employing more than 10 workers should get themselves registered
with Director of Industries in their state. A copy of this application should be sent to the director of SSI
Institute in the concerned state.
V. Feasibility analysis:
A feasibility report is a project report of a new enterprise or of an expansion which provides, in general
primary economic , information, financial data and technical details.

UNIT IV . PREPARING BUSINESS PLAN

Meaning:
The business plan is written document prepared by the entrepreneur that describes all the relevant
external and internal elements involved in starting a new venture.
Business plan is a written document prepared by entrepreneur that describes all the relevant external and
internal elements involved in starting new venture. It is an integration of functional plans such as marketing,
finance , manufacturing and human resource plan.
A business plan is a blue print of step by step process that would be followed to convert business idea into
successful business venture.
Need or Importance for Business Plan

The importance of the business plan is as follows:
1. It helps to define the business plan.
2. It helps in establishing goals
3. It helps to manage risk and uncertainty
4. It ensures effective planning
5. It helps in developing organization structure
6. It helps in establish strategy
7. It helps in allocating resources
8. It helps in decision Making
9. To establish the right steps to starting a new business.
10. It helps in developing new business alliance.
11. To determine the potential to make a profit
12. It creates competitive advantage.
OBJECTIVE OR IMPORTANCE OF BUSINESS PLAN
1. To give direction to the vision formulated by the entrepreneur

2. To objectively evaluate the prospectus of business
3. To monitor the progress after implementing business plan
4. To persuade others to join business
5. To seek loans from financial institutions
6. To visualize concept in terms of market availability, organizational, operational, and financial
feasibility
7. To guide entrepreneur in actual implementation of plan
8. To identify actual strength and weakness of plan
9. To identify challenges in terms of opportunities and threats from the external markets.
10.To clarify ideas and identify gaps in management information about their business, competitors and
market.
11.To identify the resources that would be required to implement the plan

12.To document ownership arrangements, future prospectus and projected growth of the business
venture.
Steps in the business plan / outline of a business plan

The outline of a business plan is as follows:
I. Introductory page:
This is the title or cover page that provides a brief summary of the business plans contents. It should
contain the following:
1. Name and address of the company
2. Name of the entrepreneur, telephone no, fax, email address, website address
3. Paragraph describing the company and nature of business.
4. Amount of Finance required
5. A statement of the confidentiality of the report for security purposes.
II. Executive Summary:
The section of the plan is written after the total plan is prepared. The executive summary should
stimulate the interest of the potential investors. It would highlight in a concise and convincing
manner the key points in the business plan.
III. Environmental and industry analysis :

Environmental analysis is the assessment of external uncontrollable variables that may impact the
business plan. Examples of these factors are
i)Economy: Trends in GNP, Unemployment, disposable income and on
ii)Culture: shifts in the population by demographics, shifts in attitudes concern for environment trends in
Safety, health and Nutrition.
iii) Technology: Potential technology developments
iv) Legal Concerns:

Legal issues in starting the ventures, future legislation, deregulation of prices, restriction on media advertising
and safety regulations. Once an assessment of the environment is complete the entrepreneur should conduct
an Industry analysis that will focus on specific industry trends and competitive strategies. Some examples of
these factors are.
i)Industry demand: whether market is growing or decline, the number of new competitors and possible
changes in consumer needs.
ii)Competition: potential threats from the larger corporations, their strengths and Weakness.
IV. Description of the Venture:

This provide complete overview of the products, services and operations of the new venture. This statement
describes the nature of the business and what entrepreneur hopes to accomplish with that business.
V Production Plan:
This plan will describes the complete manufacture process, the sub contractors , including location, reasons
for selecting, costs and contracts that have been completed.
VI Marketing plan;
It describes the Market condition and the strategy related to how products and services will be distributed,
priced and promoted.
VII) Organizational Plan:

It describes the form of ownership and lines of authority of Members of a new venture.
VIII) Assessment of Risk:

This section will identify the potential hazards and alternative strategies to meet business plan goals and
objectives.
IX. Financial Plan:

This gives the projections of key financial data that determine economic feasibility and necessary
financial investment commitment.
X Appendix :
This section generally contains any backup material that is not necessary in the text of the document.
Pitfalls of Business Planning

The pitfalls of Business planning are:
1. Incredible Financial projections
2. Lack of a viable opportunity
3. No clear route to Market
4. Overestimation of revenues
5. Lack of Good cash flow management
6. No clear objectives
7. No evidence of real demand/ Over estimation of demand

8. Business plan inconsistencies.

9. Playing down the competition
10. Rushing the Output
11. Capacity utilization
12. Over estimating of demand
13. Un realistic pricing strategies
14. Underestimation of project demand
15. Wrong selection of Location
16. Lack of Understanding of appropriate technology
17. Selecting appropriate machinery
The pitfalls are avoided in Business planning by the following ways:

1. Using Business systems to define and control Workflow
2. Effective organization Structure
3. Break down tasks into a step by step process with checkpoints to ensure quality.
4 .Understand payment terms
6. Cover legal bases
7. Define banking boundaries
8. Identify the target markets
9. Proper cash flow management
10. Understand the competition
Major components of a Business Plan:

1. Financial aspects
2. Marketing Aspects
3. HRM Aspects
4. Technical aspects
5. Social aspects
1. Financial Aspect:
A financial can be a Budget, a plan for spending and saving for future income. This plan allocate future
income to various types of various types of expenses. A financial plan is also called as investment plan.
i)Cash Budget:
it is an estimate of cash receipts s from all sources and cash payments for all purposes and net cash balances
during the Budget period. It ensures that the business has adequate cash to meet its requirements.
ii) Working capital:

Working capital refers to the cash a business requires for day to day operations, or more specifically for
specifically purchasing of Raw materials, paying rent, wages , transport expenses, inventory maintenance .

iii) Income Statement:

The Performa of income statement or projected income statement is a projection of Income for a period of
time in future. The analyst may wish to evaluate each component of the cost of goods sold. A detailed study
analysis of purchases, production wages and overhead costs is likely to produce the most accurate forecast.
iv) Cash flow statement:

A statement of changes in the financial position of a firm on cash basis is called cash flow statement. Such a
statement enumerates net effects of the various business transactions on cash. A cash flow statement
summarizes the causes of changes in cash position of a business enterprise between dates of two balance
sheets.
v) Balance sheet:
Performa balance sheet is forecasting of flow of funds and according to this the estimation of every item
should be made and checked. The preparation of Performa balance sheet is made on the basis of Performa
income statement and supporting schedules and budgets.
Vi. Break even analysis:

Break Even Point(BEP) refers to the level of operation at which the project neither earns profits nor incurs loss.
Calculation of BEP for the given cost and price levels indicates the minimum capacity utilization that the that
the project should be aimed at in order to be in a no profit , no loss situation.
VII. Equity and debt funds:

Equity financing is required to start up a Business Part of debt fund is also taken as it helps purchase of
machinery and other fixed assets, whereas short term debt can be utilized for working capital purpose. Major
source of financing will be assistance from bank and other financial institutions.
2. Marketing Aspect:
All the efforts of the entrepreneur can go in vain if he does not have proper markets to sell his goods or
services. A well conceived idea, a strongly supported financial backup can become a failure if the
entrepreneurs does not have demand in the market so we shall focus on the marketing aspects of business
plan.
1. Target market , Market segmentation and positioning
2. Marketing decisions
3. Product / service strategy
4. Pricing strategies
5. Promotion Strategies:
Advertising, Indoor or outdoor advertising
Personal selling, sales promotion
6. Distribution strategy – Channels of distribution

7. Sales forecast
8. Marketing Strategy
Human Resources Aspects:

1. Organization chart with the names and titles of the key executives
2. Brief details of these executives with their previous experience, Education and qualification
3. Detailed resume of the each executives.
4. Contribution of the each individual to the company their duties and responsibilities.
5. Specify their initial salary , incentives fringe benefits and other benefits provided.
6. Attempt should be made to keep the initial salary low and to keep the deferred compensation high.
7. What key position remains unfilled?
8. Bring out the plans to retain and attract the efficient existing employees.
9. List of top level executives
10. Provide the names of the legal, accounting, banking and other important organizations that will
guide the organization.
11. If a firm service oriented firm it requires specific skills with required expertise to render services to
consumer.
12. If the firm is production unit it requires the people with technical as well as conceptual capabilities.
As the form has different departments categories of people like skilled, unskilled, technical,
managerial and professional personnel.
13. The Business plan should project on HRD and give details training and departmental
Programmes which will be deployed to enhance skills and capabilities of Employees.
14.The business plan should also furnish about the promotion, transfer, Performance appraisal, the
audit etc.
15. The Business plan should mention about the number of employees employed presently and future
expansion .
16. The details about the management practices, leadership styles, Management development
programmes, retrenchment policies ,rules ,organization culture should be clearly depicted in business.
3. SOCIAL ASPECTS:
To maintain good reputation and long survival . The business should not only concentrate on profit
maximization but also should focus and share certain profit on general interest of the society.
The various social responsibilities of an entrepreneur:
1. To produce quality goods or services
2. To provide true data
3. To maintain the safety of the product user.
4. To restrict adulteration of products.
5. Improved and safety packing and packaging should be provided.

6. Mention the steps to control pollution.

7. Optimum utilization of natural resources.
8. To give equal opportunity for women employees.
9. To provide safety and healthy work environment to the employees
10. TO provide educational facility
11. To provide proper insurance facility to employees
12. Firm’s involvement in donation, sponsorship of public health projects.
4. Technical Aspect of Business Plan:
The technical aspect of business plan is an important elemet and it is necessary whether it is a
manufacturing concern, retail or service industry.
The few important technical aspects are :
1 . Describe the technical feasibility of the project.
2.The business plan should specify the quantity to be provided. Specification of the project etc.
3. Describe the physical plant layout and design required and the method of acquiring the raw
materials
4. Measures should be adopted to dispose of waste, various methods of disposal of waste
5.Details of pollution control measures..
6.it should also choose an appropriate technology based on his affordability, ease, suitability,
maintainability and functionality.
7.Areas where the latest technologies are implemented like HR, Finance, Marketing, Inventory
management, Order tracking, production ,internal communication etc.
Following factors should be consider while choosing technology;

1.Functions
2. Ease of Use
3. Security
4. Flexibility
5. Maintainability
6.Financial consideration

V.IMPLEMENTATION OF THE PROJECT AND SICKNESS IN SSI
Financial assistance also known as financial aid, refers to loans, loans guarantees, subsidies, tax
allowances, cost sharing arrangements or outright grants provided by third parties
Name of the institutions offering financial assistance.

1. State financial Corporation (SFC)
2. Industrial Development Bank of India (IDBI)
3. Industrial Financial Corporation of India(IFCI)
4. Industrial credit Investment Corporation of India(ICICI)
5. Industrial Reconstruction Bank of India( IRBI)
6. Commercial Banks
7. Life Insurance Corporation(LIC)
8. General Insurance Corporation
9. Unit Trust of India(UTI)
10. Small Industries Development Bank of India(SIDBI)
11. Mutual Funds
12. Leasing companies
13. Risk Capital Foundation
14. National Bank for Agriculture and Rural Development (NABARD)
15. Khadi and Village Industries commission (KVIC)
16. Stock Exchange
17. Venture capital finance
18. Housing Development Finance Corporation Ltd
19. The shipping credit and investment company of India
20. The World Bank
21. Asian Development Bank
22. Infrastructure and leasing finance corporation
State Financial corporations : (SFC)

The state finance corporation was setup under a separate State finance corporation act 1951 on lines
of industrial financial corporation set up in 1948. State finance corporation is set up at every state to develop
Small and Medium scale industries.
The objectives of state financial corporation(SFC) are
1. To fulfill the financial needs of the small and Medium scale Industries
2. To extends loans to industrial units
3. Development of infrastructure facilities
4. Extending financial assistance

5. It provides term loan to small and Medium scale industries for creation of assets.
6. It provide working capital term loan to the industrial unit.
7. It provides non fund based services like merchant banking
8. To establish uniformity in regional industries.
9. To provide incentive to new industries.
10. To bring efficiency in regional industrial units.
11. To provide finance to small scale ,Medium sized and cottage industries in the state.
12. To develop regional financial resources.
KARNATAKA STATE FINANCE CORPORATION (KSFC):

It was established by the government of Karnataka , in march 1959 under the SFC act of1951. The aim of KSFC
was to extend financial assistance to tiny small and medium scale industries in the state.
Rs5 crs for corporate bodies and registered co-operative societies.
Rs2 crs are sanctioned proprietary, partnership and Hindu undivided family concerns.
Objectives of KSFC:
1. To promote the overall development of Indian Economy
2. To provide financial assistance to tiny ,Small and Medium Scale Industries.
3. To have a balanced Economic growth.
4. To guide new entrepreneur in their venture.
5. To assist the enterprises in acquisition of Machinery, land ,Building, Equipment etc
6. Generate Employment Opportunities.
Functions of KSFC:
1. To provide loans for a period not exceeding 20 years to industrial units.
2. To underwrite the issue of shares, debentures and binds for a period not exceeding 20 years of
Industrial Units.
3. To give guarantees to loans taken by industrial units for a period not exceeding 20 years.
4. To subscribe the share capital of the industrial unit.
5. To do all such acts as may be incidental of its duties under this act.
KSFC has involved loan schemes for extending financial assistance:

1. Industrial concern promotes by rural artisans.
2. Weaker sections of the society
3. Disabled entrepreneurs’ and others
4. EX-Servicemen
5. Women entrepreneurs and Hire purchase scheme.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA(SIDBI)

Small Industries Development Bank of India (SIDBI) was set up by an act of parliament, it commenced
operations in April 2 ,1990
The objectives of SIDBI are:
1. Promotion , financing and developing of industry in the small scale sector.
2. Co-coordinating the functions of other institutions engaged in similar activities.
3. Setting up to new projects
4. Expansion, diversification, modernization, technology up gradation, quality improvement
rehabilitation of existing units.
5. Strengthening Marketing capabilities of SSI units.
6. Development of infrastructure fir SSI units.
7. Export promotion.
Functions of SIDBI:
1. Refinances the credits and loans granted by Financial institutions to small scale industries.
2. SIDBI also serves the functions of discounting and rediscounting of bills of SSI units.
3.SIDBI also extend direct assistance to the SSI for exporting goods.
4.SIDBI also assists the SSI units such as Factoring and Leasing.
5.SIDBI helps in National small scale industries making Hirepurchase, leasing and marketing activities.
6.SIDBI provides various soft loans like Mahila vikas nidhi, National enquiry fund, Mahila udayam Nidhi. And
also provides seed capital to the start ups.
7.SIDBI took a step ahead in order to renovate the SSI units by instituting advanced technology in their
operations.
INDUSTRIAL FINANCE CORPORATION OF INDIA(IFCI):

The industrial finance corporation of India (IFCI) was established in 1 July 1948 under an act of parliament with
the object of providing medium and long term credit to industrial concerns in India.
Objectives of IFCI:
1. To extend financial assistance to industries in Rupees as well as foreign currency as per the necessary.
2. Direct subscription on shares and debentures of Industries.
3. Underwriting shares, debentures and issues of industries.
4. Financial assistance for purchase of equipments.
5. Financing to leasing to leasing and hire purchase companies.
6. The project value more than Rs 300 lakhs are financed by IFCI. The lesser value project taken care by
the IDBI or SFC
7. Stand guarantee for loans taken by industries from commercial Banks or state cooperative banks.
8. Guaranteeing for deferred payments due from the industries in connection with purchase of capital
goods which may be local or imported.

9. Guarantying loans from outside of the country in foreign currency with approval from the central
government.
Functions of IFCI
1.sactioning loan to the companies or by buying their debentures. Maximum duration of both is 25 years.
2.Raising capital by issuing shares, debentures, bonds etc on behalf of company. Maximum duration of the
securities is 7 years.
3.Raising the capital of public limited companies by purchasing their securities ie debentures, shares etc
4.Taking guarantee payments on behalf of those companies which make purchase of capital goods within or
outside the India.
5.Sanctioniing loan to the companies on the directive of the central Government or World Bank.
6. to set up a new company.
7.To expand or diversify the existing companies.
8.To renovate and modernize the existing company.
9. to fulfill the requirements of Working capital and to settle the liabilities of existing companies but only in
exceptional situations.
COMMERCIAL BANKS :
Commercial banks or scheduled commercial banks are those banks which are listed in the second schedule of
RBI act 1943. There are various categories in which scheduled bank are divided ie Nationalised banks, regional
rural banks,
Cooperative banks, private sector banks and foreign banks.
Functions of Commercial Banks:
1. Accepting deposits like fixed deposit and recurring deposits.
2. To open the current account for business people.
3. To open savings bank account for Savings.
4. To advancing loans
5. To granting loans and credits .banks also invest their surplus fund in Govt securities.
6. All the commercial banks provide cheque leaf to its customers for free or against nominal cost.
7. Banks transfer the fund from the one account to another.
8. Collecting the customer funds
9. Purchase and sale of shares and securities for its customers ex Demat Accounts.
10.Payment of premiums in proper intervals of time.
11. Banks acts as a trustee and the executor
12. Income tax consultant
13.Purchase and sale of foresin exchange
14. financing internal and foreign trade.
15. To provide locker facility to the customers for their valuables.
16. Issuing the travelers cheque.

17. giving information about its customer

18.Underwriting companies shares and debentures.
19.Accepting bills of exchange on behalf of the customers.
20.Giving advice to the financial matters.
II.Non financial assistance:

Apart from the providing various financial assistance the various financial institutions are also
providing non financial assistance. The various no financial assistances are.
1. National Small Industries development Corporation(NSIDC)
2. District Industries Centre(DIC)
3. Small Industries Service Institution (SISI)
4. Small Scale Industries Board(SSIB)
5. Small scale industries development corporation(SSIDC)
6. Entrepreneurship development institutes of India (EDI)
7. Khadi Village industries commission(KVIC)
8. Association of Women entrepreneurs of Karnataka(AWAKE)
9. Technical consultancy organization(TCO)
10. Technical consultancy services of organizations of Karnataka(TESCOK)
11. Small Industries Development Organisation(SIDO)
12. Consultancy Services.
1.National Small Industries development Corporation(NSIDC)

It was established in 1995 to promote and develop micro and small scale industries and enterprises in the
country. It was originally founded as an Government of India agency later made into fully owned by Govt
corporation.
Objectives of NSIDC:
1. To get registration under this scheme for participating in govt and public sector undertakings tenders.
2. NSIDC continuously gets updated with the latest specific information on business leads, technology and
policy issues.
3. NSIDC helps in acquiring raw materials for SSI at convenient and flexiable terms.
4. NSIDC facilitates sanctions of term loan and working capital credit limit of Small enterprise from Banks.
5. NSIDC provides marketing assistance and participates in government tenders on behalf of SSI to
produce order from them.

2.District industrial centre(DIC)

The district industrial center(DIC) was established on 8th may 1978. With a view to provide integrated
administrative frame work at the district level for promotion of Small Scale Industries.
Objectives of DIC:
1. To accelerate the overall efforts for sindustrialization of the district
2. To develop the rural industries and handicrafts and promotes rural industrialization.
3. To have balance economic development all over the district
4. Providing the benefits of the government to the new entrepreneurs.
5. Centralization of procedures required to start a new industrial unit and minimization of the efforts and
time required to obtain various permissions, Licenses, registrations, subsidies etc.
Functions of District Industrial Centers:
1. It monitors the registration of MSMEs
2. It provides infrastructural assistance to entrepreneurs in form of grievance redressel through the district
level clearances’ committees of industries.
3. The DIC organizes entrepreneurship development training programmees.
4. It provides required information about local sources of raw materials and their availability.
5. It sanctions SSI registration
6. It prepare techno-economic feasibility report.
7. It provides opportunity guidance to entrepreneurs.
8. It guides entrepreneur with regard to manpower assessment with respect to skilled and semi skilled
workers.
9. It provides information about various Govt schemes, subsidies ,grants and assistance available from the
other corporations set up for promotion of industries.
10. Helps entrepreneurs in obtaining sponsored schemes licences from the Electricity Board, Water Supply
Board, no objection certificates etc.
11. Implements government sponsored schemes for educated unemployed people like PMRY scheme.
Jawahar Rojgar yogana etc.
12. it acts as link between entrepreneurs and Bank and also organizing marketing outlets in liaison with
other government agencies.
3.Karnataka state Industrial development corporation: (KSIDC)

KSIDC is another financial institution which extends financial support to SSi s in Karnataka. This
organization of Karnataka has no specific financial programmes for adaptation of pollution control etc. but
provides medium and long term loans,equipment financing and direct equity participation.
Role or Objectives of KSIDC:
The role of KSIDC in the up lifting of SSI
1. KSIDC estates are provided with required amenities like training institute, P&T office, dispensary,
community garden banks canteen.

2. KSIDC provides ready to occupy sheds for immediate starting of industries and also provide gowdown
for storage of its materials.
3. KSIDC being a Government organization is transparent and of the prices of land/ building. The prices
so fixed are accepted by financial institutions for quick approval of loans.
4. KSIDC estates , once declared as notified area are free from local taxes and Octroi.
5. KSIDC provides a unique opportunities to entrepreneur cluster benefits related to raw material .
6. KSIDC provides special services in a acquiring and allotting land to SSI entrepreneurs.
7. KSIDC allots land on top priority basis to start industry by SC/ST SEDC applicants, further needy SC&ST
units of backward areas will be paid subsidy amount and also reduced payment of
EMD/application/Scrutiny fee.
8. KSIDC estate provides ISI testing units to help SSI units to process quality products.
4.Small Industries Services Institutions (SISI):

The small industries service institutes have been set up in state capitals and other places all over the
country to provide consultancy and training to small entrepreneurs.
The main objectives of SISI :
1. To serve as interface between central and state government.
2. To render technical support services.
3. To conduct entrepreneurship development programmes.
4. To initiate promotional programmes.
5. To assist potential entrepreneurs.
6. To prepare industrial profile of the state
7. To conduct update survey on the potential survey of the industries in the district.
8. To organize management skill development programmmes
9. To work in the direction of skill development of entrepreneurs.
10. To prepare the project profiles.
Functions of SISI:
1. It Assists existing and prospective entrepreneurs.
2. To conduct EDP s all over the country
3. It acts as advising agency
4. It conducts market survey
5. It provides assistance in quality Control.
6. It helps to get financial support
7. It initiates technical assistance
8. Ancillary development

5.SMALL INDUSTRIES DEVELOPMENT ORGANIZATION(SIDO):

SIDO is an apex body at Central level for formulating policy for the development of SSI in the country.
Functions of SIDO:
1. Framing of policies pertaining ot SSI sectors.
2. Coordinate with different agencies in the SSI sectors.
3. Monitoring policy implementation
4. Industrial Development
5. Extension services
6. To encourage exporters
7. SIDO provides exhibition space and shipment of exhibits EX Mumbai free of cost for this purpose.
8. Encourages participation in international fairs /Exhibition
9. Conducts training programmes on packaging for exports, with a view to render assistance to SSIs.
10. Technical and managerial consultancy services are provided to SSIs through a net work of field offices
so as to ensure higher level of production and generation of higher exports.
11. National award for quality products are given to outstanding units, who have made a significant
contribution .
12. SIDO has regional testing centers which are equipped with basic testing facilities for raw materials
,semi finished goods , finished goods.
6.Association of Women entrepreneurs of Karnataka(AWAKE):

Association of Women entrepreneurs of Karnataka(AWAKE) is a non profit . non Governmental
organization, established in 1983. It aims to promote entrepreneurship among women and thereby
empower them to join the economic mainstream.
Services of AWAKE:
1. It conducts Entrepreneurship Development Program(EDP) for women and youth intending to start a
business in urban and rural areas.
2.AWAKE conducts need based skill development programmes for women in various sectors like food
processing, handicrafts, tailoring, embroidery, garments, artificial jewellary, candle making , herbal
products, housekeeping ,beautician training etc
3.AWKE will conducts the progamme for both in rural and urban areas considering the business
opportunities and market trend of the environment.
4. AWAKE to encourage the women interested in food processing established a business incubator for
food processing at Bangalore.
5. AWAKE owes the success of its EDPs because to its holistic approach in including all developmental
agencies. Both the Govt and NGO.
6. AWAKE provides special assistance to women entrepreneurs.
7. Business counseling is conducted for potential entrepreneur aspiring to start her own business
enterprises.

8.Under this programme AWAKE informs and creates awareness amongst women entrepreneurs.
9. AWAKE in association with various government and non governmental agencies provides a platform for
its members and trainees for marketing their products and build their business network.
10.It conducts various programs and workshops on various topics such as Finance, Tax planning, Computer
skills, Information technology, packing in marketing, Export/import, communication skills and HRM.
7.Technical Consultancy Organisation: (TCO)

Technical consultancy organizations (TCO) were created for facilitating technical consultancy for industrial
projects. TCO were established by financial institutions like ICICI,IFCI,IDBI,SFC etc in collaboration with
state level financial institutions and commercial bank to cater to the consultancy needs for small and
medium enterprises.
It functions includes:
1. Giving advice on technical aspects of business
2. Preparing project profiles and feasibility reports.
3. Technical collaborations and technology transfer.
4. Technical consultancy to new entrepreneurs.
5.Financial Potential survey
6.Advice on industrial Management
7.Market research and survey for specific product.
8.offering merchant banking facilities.
9. conduct EDP programmes
10. Conducting survey on behalf of central and state governments on issues like power needs,
modernization of plant, rehabilitation of sick industry.
8.Technical consultancy services organization of Karnataka( TESCOK)
Technical consultancy services organization of Karnataka( TESCOK) is a Government of Karnataka

organization and it provides the following range of services to the entrepreneurs.
1. Identification of project ideas and selection of investment opportunities.
2. Selection of suitable locations for setting up industrial units.
3. Conduct market surveys.
4. Preparation of detailed techno-economic feasibility report.
5. Trunkey assistance.
6. Assistances in obtaining necessary licenses and clearances.
7. Energy audit and conservation.
8. Modernization studies
9. Dissemination of information on industrial policies.
10. Coordinating and conducting management development programme.

11. Identification and development of ancillary industries.

12. Assistance to government in providing information about new policies , programmes and schemes.
9.Khadi and village Industries Corporation(KVIC):

Khadi and village Industries Corporation(KVIC) established under the khadi and village industries
corporation in the year 1957
Objectives of KVIC:
1. Generating employment avenues for rural unemployed people through its different schemes.
2. Developing entrepreneurship ability among the rural unemployed youths.
3. Achieving the goal of rural industrialization.
4. Preserving the traditional arts and crafts in India.
5. Equipping artisans and craftsmen to take up the challenges of the modern market.
6. Promoting handicrafts, Khadi ,village and cottage industries facilitating them with the necessary inputs
like Raw materials, equipments, capital etc.
7. Developing market for KVIC products.
8. Bringing about regional balance in assisting cottage industries.
9. Introducing the products even in the international markets.
10. To promote and encourage cooperative efforts among the manufacturer of khadi or persons engaged
in village and cottage industries.
Functions of KVIC:
1. To plan and organize training of persons employed in KVIC.
2. To build up the reserves of raw materials and implement the supply them to kvic
3. To promote the sale and marketing of khadi or products , handicrafts .
4. To undertake through other agencies studies of the problems of KVIC.
5. To provide financial assistance directly or through specified agencie to institutions.
Industrial sickness:
A sick industrial unit may be defined as one when it fails to generate surplus on a continuous basis and
depend on frequent infusion of external funds.
Industrial sickness can be defined a condition wherein an industrial unit fails to generate surplus on a
continues basis and depends on frequent infusion of external funds.
Causes for industrial sickness:
I . Internal causes:
1. Poor handling of labour
2. Poor management of strategies
3. Choosing wrong idea or industry
4. Department structure of industry
5. Poor management of prevailing industry

6. Unsatisfactory organization.
7. Bad quality maintenance
8. Poor utilization of capacity
9. Lack of project implementation
10. Unsatisfactory training facilities
III. External causes:
1. Infrastructural bottle necks
2. Inadequate availability of raw materials
3. Continuous power shortage
4. Financial Bottle neck
5. Non availability of adequate finance
6. Govt control and policies
7. Market constraints
8. Market saturation
9. Technological changes
10. Changes in Govt policy
11. Natural calamities
12. Political situation
13. War and strikes
14. Fiscal duties are more
15. Taste and preference of customer may change.
Remedies to prevent the industrial sickness

1. A program of monitoring and nursing them during infancy is essential.
2. Financial institutions and banks should initiate necessary corrective action for sick.
3. Wherever the possible ,attempts should be made to restore sick unit with to financial health.
4. Excessive concern over employment resulting from the closure of a sick unit is unwarranted.
5. The BIFR should play the role of a single window clearing agency.
External causes :
1. Changes in the industrial policies of the Govt from time to time
2. Inadequate and untimely available of necessary raw materials, power, transport and skilled labour.
3. High cost of manufacture couple with a low realization of sales revenue.
4. Lack of the shrinkage and demand of the product
5. Cheaper variety of the products available in the market.
6. Frequent industrial strikes and labour unrest.
7. Shortage of financial resources especially working capital.
8. Political instability both at domestic and as well as international.

9. A stiff competition from large scale industries.

10. SSI are unable to adopt changes in the economic, social and political scenario of the country and the
world.
11. Changes in preference of consumers.
12. Natural calamities like drought, floods etc
13. Foreign exchange fluctuations leading adverse effects on the machinery and raw materials which are
imported.
Internal causes:
1. Wrong selection of product ,process layout
2. Under estimation of the project cost.
3. The existing manufacturing process may be outdated.
4. Selection of wrong project site resulting increasing of transport cost etc.
5. Undue investments of fixed assets.
6. Defective working of plant and machinery affecting quality of the production.
7. An improper choice of technology.
8. Inadequate attention towards maintenance management.
9. Lack of inventory and material management leading to hi inventories and wastages.
10. Absence of scientific and efficient quality control system.
11. Unsuitability of product mix
12. An improper demand estimation
13. Insufficient sale promotion activities
14. Improper pricing policies
15. Defective capital structure
16. Inefficient management of working capital
17. Unskilled and semi skilled labour
18. Improper wage ,increment and promotion policies.
19. Absence of Management Information System
20. Problems in partnership leads to sick
21. Labour problems strikes, lockout,
Industrial Estates
 An industrial estate is a place where the required facilities and factory accommodation are provided
by the government to the entrepreneurs to establish their industries there.
 industrial region, industrial park, industrial area, industrial zone, etc.
ROLE
1. Provide infrastructure and accommodation facilities to the entrepreneurs

2. Encourage the development of small-scale industries in the country
3. Decentralize industries to the rural and backward areas
4. Encourage ancillarisation in surroundings of major industrial units and
5. Develop entrepreneurship by creating a congenial climate to run the industries in these estates/area
/township, etc.
6. Types of Industrial Estates:
7. Industrial Estates are classified on various bases.
8. The prominent ones are:
9. I. On The Basis of Functions:
10. On the basis of functions, industrial estates are broadly classified into two types:
11. (i) General type industrial estates, and
12. (ii) Special type industrial estates.
13. General Type Industrial Estate:
14. These are also called as conventional or composite industrial estates. These provide accommodation to
a wide variety and range of industrial concerns.
The Indian Industrial estates are mainly of this type:
 III. On the Basis of the Other Variants:
 On the basis of other variants, industrial estates are classified into following three types:
 (a) Ancillary Industrial Estates:
 In such industrial estates, only those small- scale units are housed which are ancillary to a particular
large industry. Examples of such units are like one attached to the HMT, Bangalore.
 (b) Functional Industrial Estates:
 Industrial units manufacturing the same product are usually housed in these industrial estates. These
Industrial estates also serve as a base for expansion of small units into large units.
 (c) The Workshop -bay:
 Such types of industrial estates are constructed mainly for very small firms engaged in repair work.
 II. Special Type Industrial Estate:
 This type of industrial estates is constructed for specific industrial units, which are vertically or
horizontally independent.
 On the basis of Organizational set-up:
 On this basis, industrial estates are classified into following four types:
 1. Government Industrial Estates,
 2. Private Industrial Estates,
 3. Co-operative Industrial Estates.
 4. Municipal Industrial Estates
***********************

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ENTREPRENEURSHIP DEVELOPMENT

PROF TAMIL SELVAN .V MBA,M.COM

SNR DEGREE COLLEGE, JIGANI Page 1

SNR DEGREE COLLEGE, JIGANI Page 2

UNIT I : ENTERPRENEURSHIP 10 HRS

INTRODUCTION-Meaning & Definition of entrepreneurship, Entrepreneur & Enterprise-Functions of

UNIT II SMALL SCALE INDUSTRIES 12 HRS

Definition-Meaning-Product Range-Capital Investment-Ownership patterns-Meaning and Importance of Tiny

UNIT III FORMATION OF SMALL SCALE INDUSTRY 14 HRS

UNIT IV Preparation of business plan (BP) 10 HRS

UNIT V PROJECT ASSISTANCE 10HRS

SNR DEGREE COLLEGE, JIGANI Page 3

Differences between Manager and Entrepreneur

Bases of Difference Entrepreneur Manager

Status An entrepreneur is the owner of A manager is the servant in the

Rewards The reward an entrepreneur gets A manager gets salary as reward

SNR DEGREE COLLEGE, JIGANI Page 4

Characteristics of a successful Entrepreneur:

SNR DEGREE COLLEGE, JIGANI Page 5

Qualities of successful Entrepreneur

SNR DEGREE COLLEGE, JIGANI Page 6

Advantages and disadvantages of being an Entrepreneur/

SNR DEGREE COLLEGE, JIGANI Page 7

6. Better Utilization of Skills and knowledge:

Role of entrepreneur in Economic Development :

SNR DEGREE COLLEGE, JIGANI Page 8

Entrepreneurial competencies or Traits :

SNR DEGREE COLLEGE, JIGANI Page 9

Problems faced by women entrepreneurs: 11. Lack of self confidence

Institutional support for women entrepreneurs

SNR DEGREE COLLEGE, JIGANI Page 10

3.ON THE BASIS OF MOTIVATION 4.ON THE BASIS OF TECHNOLOGY

5.ON THE BASIS OF CAPITAL OWNERSHIP 6.OTHER CLASSIFICATIONS

7.ACCORDING TO GENDER AND AGE 8.ACCORDING TO AREA

9.ACCORDING TO SCALE 10.OTHERS

1.ON THE BASIS OF THE TYPE OF BUSINESS

2.ON THE BASIS OF STAGES OF DEVELOPMENT

3.ON THE BASIS OF MOTIVATION

SNR DEGREE COLLEGE, JIGANI Page 11

4.ON THE BASIS OF TECHNOLOGY

5.ON THE BASIS OF CAPITAL OWNERSHIP

iii)Joint entrepreneurs:- the combination of private and government entrepreneurs.

7.ACCORDING TO AREA i)Urban entrepreneurs ii)Rural entrepreneurs

9.OTHERS i)Spiritual Entrepreneur ii) Social entrepreneurs iii)Edupreneurs

SNR DEGREE COLLEGE, JIGANI Page 12

Factors influencing Entrepreneurship

I. Psychological Factors: II. Cultural factors:

IV. Economic factors:

SNR DEGREE COLLEGE, JIGANI Page 13

Ability of highest order is required for success in entrepreneurship. An entrepreneur is an especially

2. Organizations and Management:

SNR DEGREE COLLEGE, JIGANI Page 14

UNIT II. SMALL SCALE INDUSTRIES

Categories of Small Scale industries

Advantages of small scale industries:

SNR DEGREE COLLEGE, JIGANI Page 15

Capital investment or sources of Funds of S.S.I

SNR DEGREE COLLEGE, JIGANI Page 16

Debenture with a floating rate of interest:-

SNR DEGREE COLLEGE, JIGANI Page 17

Sole proprietorship Partnership Firm Joint Stock Company Cooperative

II. Partnership firm