Business Entrepreneurship II T. Y. B. Com Sem 6

BUSINESS
ENTREPRENEURSHIP - II
for
Third Year B.Com. (Semester - VI)
[SC : 365 - G]
New Syllabus as per CBCS Pattern
[No. of Credits - 04] June 2021
Dr. Vinit V. Rokade

M.Com. (Banking & Finance), MBA (Marketing),
M.A. (Economics), G.D.C. & A, D.L.L. and L.W.
SET (Commerce), NET (Commerce & Management
Ph.D. (Business Administration
Savitribai Phule Pune University)
Asst. Professor
SNBP College, Pune
Dr. Ganesh R. Patare

M.Com. (Account & Financial Mgmt.),
M.Phil. (Business Admin.), G.D.C. & A,
NET, SET (Commerce)
Ph.D. (Business Administration)
Savitribai Phule Pune University
Asst. Professor
Garware College of Commerce, Pune
Price ` 110.00
N5973
BUSINESS ENTREPRENEURSHIP - II ISBN 978-93-5451-492-0
First Edition : February 2022
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ACKNOWLEDGEMENTS
ACKNOWLEDGEMENTS
I the author of this book titled "Business Entrepreneurship - II" take the opportunity to
thank my parents Mr. Vishnu S. Rokade, Mrs. Kaushalya V. Rokade, my wife Dr. Mrs. Preeti V.
Rokade, my children Viraaj, Riya, my nephew's Vehant, Ansh and my in law's Mrs. Kamal
Dhadse for this continuous support and encouragement. I am also thankful to eminient
academicians and experts from industry like Dr. Kiran Thipase, Dr. M. B. Sonawane, Prof. T. N.
Ware, Mrs. Varsha Gaikwad, Mrs. Jayashree Bhosale, Mr. Pralhad Shastri, Prof. Ganesh
Bhosale, Mr. Nilesh Rokade, Mr. Aniket Rokade, Prof. Chandrabhan Gaur, Mrs. Arti Aher, Mrs.
Bharati Mandirwar, Prof. Jayanandan, Prof. Ashutosh Deshmukh, Mrs. Geeta Malode and my
fellow staff of SNBP College for their guidance, support and encouragement.
Also I am grateful to the staff and editors of Nirali Prakashan with special thanks to
Mr. Dineshbhai Furia and Mr. Jignesh Furia and Nitin Thorat for their confidence in me and
kind support in publishing this book. This effort wouldn't have been possible with the perfect
co-ordination from Mr. Prasad Chintakindi, Mr. Ilyas Shaikh, Mrs. Anjali Muley, Mr. Ravindra
Walodare hence my sincere thanks to them as well.
Special thanks to Dr. D. K. Bhosale Chairman SNBP Group, Dr. Vrishali D. Bhosale,
President SNBP Group, Adv. B. E. Avhad, Senior Lawyer, Supreme Court of India, Dr. Meghna
H. Buddhdev, Associate Professor Florida University U.S.A., ACP Mahendra Rokade, Mr. Vishal
A. Chugera, Chairman Vishal Chugera Properties India Pvt. Ltd., Dr D.D. Pathare sir, Major
General Satyaprasad Singh for their continuous encouragement and guidance.
Lastly but unfailing, this efforts is just a part of the blessings of the almighty. We are just
a small part of the medium to reach the thought towards social empowerment.
Thanks,
Dr. VINIT VISHNU ROKADE
I Dr Ganesh Patare, the author of this book titled "Business Entrepreneurship - II" take the
opportunity to thank my father Shri. Raosaheb P. Patare and Mother Smt. Shakuntala R.
Patare for their constant support and encouragement. I also thankful to Dr. N. S. Umarani,
Pro. Vice Chancellor, SPPU, Dr. Mukund Tapkir, Chair Professor, Padmashree Vikhe Patil Chair,
SPPU, Dr M.K. Dr. Geeta Acharya, Principal, MES Garware College of Commerce, Prof. Dr. B. S.
Vhankate, Secretary MES and Vice-Principal, GCC, Dr. Anand Y. Lele, Dr. Ketaki Modak, CA Dr.
S. D. Ghongate Patil, Vice Principal, MES GCC. I am also grateful to Prof. Dr M. K. Sanap sir
from Ness Wadia College for their Constant support & Motivation. I am also gretaful to all
my colleagues of MES GCC, I am very thankful to my friends Shri Vijay Darekar, Shri Amol ji
Tilekar, Dr Deepak Surwase, Dr Nagnath Mane, Shri. Amol Nikale, Shri. Pravin Jagtap from
Tata Motors. Thanks to all my friends & everyone for their constant support.
Thanks,
Dr. GANESH RAOSAHEB PATARE
Preface …
Entrepreneurship is important for a number of reasons, from promoting social change to
driving innovation. Entrepreneurs are frequently thought of as national assets to be
cultivated, motivated, and remunerated to the greatest possible extent. In fact, some of the
most developed nations such as the United States are world leaders due to their forward-
thinking innovation, research, and entrepreneurial individuals.
Great entrepreneurs have the ability to change the way we live and work, on local and
national bases. If successful, their innovations may improve standards of living, and in
addition to creating wealth with entrepreneurial ventures, they also create jobs and
contribute to a growing economy. The importance of entrepreneurship is not to be
understated. This book is an attempt to share the knowledge of Entrepreneurship with the
students.
We have structured the book Business Entrepreneurship - II in a flow most suitable for
the ease of understanding of the subject. In order to build a strong foundation and a firm
base, it is advisable to read the book in the flow it is structured. Many concepts and chapters
have great importance and deep relevance; however, excessive depth has been avoided as
this book has been structured considering the boundaries of the syllabus of Savitribai Phule
Pune University. The first chapter deals with Business Plan (BP) Implementation. The second
chapter deals with MSME Management, while the third chapter deals with Business Crises
and Sickness. The fourth deals with Introduction Start Up India Scheme. We have made out
best effort to rectify and nullify the mistakes. In any case if and where any mistakes are
detected in the book, kindly feel free to inform us about such mistakes so that they can be
corrected. We would love you to be a part of our team towards social empowerment by
sharing and spreading knowledge. For any other content related mistakes and
misinterpretations, kindly excuse us for the same. The error is human while to forgive is
divine. Our best wishes with the reader.
We sincerely thank Shri. Dineshbhai Furia and Shri. Jignesh Furia, the publishers, for the
confidence reposed in us and giving us this opportunity to reach out to the students of
commerce and management studies.
We have given our best inputs for this book. For any suggestions towards the
improvement of this book and sincere comments are most welcome on
niralipune@pragationline.com.
Dr. VINIT V. ROKADE

Dr. GANESH R. PATARE
✍✍✍
Syllabus …
1. Business Plan (BP) Implementation
Meaning - Importance - Preparation of business plan, Financial aspects, Marketing aspects,
Human resource aspects, Technical aspects, Social aspects of business plan. Common pitfalls
to be avoided in preparation.
2. MSME Management
Functional v/s Integrated Approach
Structured v/s Flexible Approach
Logical v/s Creative Approach
Start up Phase Management: Difference of opinion with in promoting team.
Avoiding failure - Problem-Solving, Creativity and Innovation, Stability Phase Management,
Growth Phase Management, MSME Registration, Consultants, Udyog Adhar Registration
Consultancy, Enterprise Risk Management (ERM), Challenges in implementation of Enterprise
Risk Management (ERM).
3. Business Crises and Sickness

Types of Business Crises, Starting crises, Cash crises, Delegation crisis, Leadership crises,
Financial crises, Prosperity crises, Succession crises, Crises management business community:
Meaning, Crises under Covid-19.
Sickness : Meaning and Definition, Symptoms, Causes, Turnaround Strategies, Revival
schemes of sickness.
4. Introduction to Start up India Scheme

Aim of Startup - Significance of Startup - Advantages of Startup - Significance of Startup -
Advantages of Startup - Eligibility for Startup India - Do’s and Don’ts for Startup - Examples of
Startup - Wow! Mome−Cabs - Zomato-Paytm - Digit Insurance - Vedantu - Dailyhunt -
Sharechat - Topper-Urban Ladder
✍✍✍
Contents …
1. Business Plan (BP) Implementation 1.1 – 1.20
2. MSME Management 2.1 – 2.32
3. Business Crises and Sickness 3.1 – 3.22
4. Introduction to Startup India Scheme 4.1 – 4.22
✍✍✍
Unit 1…
Business Plan (BP) Implementation
Contents …
1.1 Business Plan
1.1.1 Meaning
1.1.2 Definitions
1.1.3 Importance of Business Plan
1.1.4 Essential Functions of Business Plan
1.1.5 Preparation of Business Plan
1.2 Financial Aspects
1.3 Marketing Aspects
1.4 Human Resource Aspects
1.5 Technical Aspects
1.6 Social Aspects of Business Plan
1.7 Common Pitfalls to be Avoided in Preparation of a Business Plan
1.8 Steps in Business Plan
1.9 Implementation of Business Plan
1.10 Objectives of Business Plan
1.11 Guidelines to Prepare Good Business Plan
• Points to Remember
• Questions for Discussion
1.1 Business Plan

1.1.1 Meaning
A business plan is a formal written document containing the goals of a business, the
methods for attaining those goals, and the time-frame for the achievement of the goals. It
also describes the nature of the business, background information on the organization, the
organization's financial projections, and the strategies it intends to implement to achieve the
stated targets. In its entirety, this document serves as a road-map (a plan) that provides
direction to the business
1.1
Business Entrepreneurship - II 1.2 Business Plan (BP) Implementation
1.1.2 Definitions
• Webster New 20th Century Dictionary defines “a project as a scheme, design, a proposal
of something intended or devised.” Some important definitions of business plan are given
as follows.
• Mar J. Dollinger has defined the business plan as “the formal written expression of the
entrepreneurial vision, describing the strategy and operations of the proposed venture.”
• According to Jack M. Kaplan, “The term business plan means the development of a
written document that spells out like a roadmap where you are, where you want to be, and
how you want to get there.”
Thus, a business plan or project report can best be defined as a well evolved course of
action devised to achieve the specified objective, i.e. setting up a small business enterprise
within a specified period of time. So, to say, business plan is initially an operating document.
• According to the Entrepreneur’s encyclopedia, “A written document describing the
nature of the business, the sales and marketing strategy, and the financial background, and
containing a projected profit and loss statement”.
The business plan is termed by different names by its different intended interest
audience. For example, when presented to a bank, it may be called ‘loan proposal.’ a venture
capital group might call it the ‘venture plan’ or ‘investment prospects’ and a common man
may term it ‘project report.’ Let it be called by any name, its basic purpose is the same, i.e. to
serve as a road-map in setting up a business enterprise.
1.1.3 Importance of Business Plan
A well-written business plan is an important tool because it gives entrepreneurs and
small business owners, as well as their employees, the ability to lay out their goals and track
their progress as their business begins to grow. Business planning should be the first thing
done when starting a new business. Business plans are also important for attracting investors
so they can determine if your business is on the right path and worth putting money into.
Business plans typically include detailed information that can help improve your
business’s chances of success, like:
• A Market Analysis: Gathering information about factors and conditions that affect
your industry.
• Competitive Analysis: Evaluating the strengths and weaknesses of your competitors.
• Customer Segmentation: Divide your customers into different groups based on
specific characteristics to improve your marketing.
• Marketing: Using your research to advertise your business.
• Logistics and Operations Plans: Planning and executing the most efficient
production process.
• Cash Flow Projection: Being prepared for how much money is going into and out of
your business.
An overall path to long-term growth.

Arguments are made for and against writing a business plan. The argument advanced
against writing business plan is that it involves costs especially when some outside consultant
or accountant or lawyer is hired to write the business plan. One of the reasons for not writing
business plan is the fear of prematurely closing off the new venture.
The major argument made in favour of writing business plan is reducing anxieties and
tensions in running business enterprise. Writing business plan is especially useful for the
entrepreneurs who require financial help from the outside sources like banks and financial
institutions.
The reason is that the outside sources advance funds to entrepreneurs based on the
soundness of their enterprises as reflected in business plans. In nutshell, writing a business
plan is not without its costs and sacrifices, nonetheless the benefits of it outweigh its costs.
An objective without a plan is just a dream. Until committed to papers intentions are
seeds without soil, sails without winds or mere wishes which do not lead to execution and
without execution there is no payoff. The preparation of a business plan or project report is
of great significance for an entrepreneur.
1.1.4 Essential Functions of Business Plan
1. Business plan is like a road map: It describes the direction the enterprise is going
in, what its goals are, where it wants to be, and how it is going to get there. It also
enables an entrepreneur to know that he is proceeding in the right direction. Some
hold the view that without well spelled out goals and operational methods/tactics,
most businesses flounder on the rocks of hard times.
2. Business plan is to attract lenders and investors: Although, it is not mandatory for
the small enterprises to prepare business plans, yet it is useful and beneficial for them
to prepare the project reports for various reasons. The preparation of business plan is
beneficial for those small enterprises which apply for financial assistance from the
financial institutions and the commercial banks. It is on the basis of business plan or
project report that the financial institutions make appraisal if the enterprise requires
financial assistance or not.
1.1.5 Preparation of Business Plan
A good business plan must identify strengths and weaknesses internal to the business
and the challenges in terms of opportunities and threats to assess the viability of the
business. It must lay down all the necessary steps that are involved in initiating and operating
a proposed business. Preparation of a business plan involves the following steps:
Preliminary
Investigation
Idea
Generation
Environment
Scanning
Feasibility
Analysis
Drawing
Functional
Plans
Project
Report
Preparation
Evaluation,
Review &
Control
Fig. 1.1
(I) Preliminary Investigation:
In order to create an effective plan an entrepreneur must :
• Review available business plans.
• Draw key business assumptions on which plan is based.
• Scan the environment for Strengths, Weaknesses, Opportunities and Threats.
• Seek professional advice.
• Conduct a functional audit.
(II) Idea Generation:
It involves generation of a new concept/product/service or value addition to an existing
Product or Service. The idea must be such that satisfies the existing demands and future
demands of market.
Sources of ideas :
• Consumers
• Existing companies
• Research and Development

• Employees
• Dealers/Retailers
Methods of Generating Ideas:
• Brain Storming
• Group Discussion
• Data Collection through Questionnaires
• Invitation of Ideas from Professionals
• Value Addition to Existing Product and Service
• Market Research
• Import of Ideas from Products Launched Abroad
• Commercializing inventions
Screening of ideas is done to identify practical ones and eliminate impractical one. The
most feasible and the most promising idea is selected for further investigation.
(III) Environment Scanning:
The internal and external environment must be analysed to study the prospective
strengths, weaknesses, opportunities and threats of the business. An entrepreneur must
collect information from all formal and informal sources in order to understand the
supportive and obstructive factors related to the business enterprise.
External Environment:
• Socio cultural appraisal: It involves assessment of the values, beliefs and norms of a
particular society in order to understand their perception towards a particular idea or
product.
• Technological appraisal: It involves assessment of existing technical know-how and
availability of technology necessary to convert an idea into a product.
• Economic appraisal: It assess the economic environment in terms consumer price
index, inflation, balance of payments, consumption pattern, per capita income etc.
• Demographic: It involves an assessment of the overall population pattern of a
particular region. Variables like age, education, income pattern, sex, occupation,
distribution etc. help in identifying the size of target market.
• Government appraisal: It assess various grants, legislations, policies, incentives,
subsidies etc. formed by government.
Internal Environment :
• Availability of raw materials.
• Availability of various machines, tools and equipment required for production.
• Means of finance and assessment of opening, maintaining and operating expenses.
• Assessment of present, potential and future market.
• Assessment of cost, quantity and quality of human resources required.
(IV) Feasibility Analysis :

Feasibility analysis is done to find out whether the proposed project will be feasible or
not. The various variables that are studied include :
(a) Market Analysis :
• To estimate the demand of the proposed product in the future.
• To estimate the market share of the proposed product in the future.
(b) Technical or operational analysis : It is conducted to access the operational ability
of the proposed business. It is very important to find out the cost and availability of
technology. Under technical analysis data is collected on following parameters -
• Material availability
• Material requirement planning
• Plant location
• Plant capacity
• Machinery and equipment
• Plant layout
(c) Financial analysis : A Financial Feasibility test is carried out to access the financial
issues related with the proposed business. The following estimates have to be carried out :
• Cost of land and building
• Cost of plant and machinery
• Preliminary cost estimation
• Provision for contingencies
• Working capital estimates
• Cost of production
• Sales and production estimates
Based on the above analysis the following projections are made -
• Break-even point
• Cash flow statement
• Balance sheet
(V) Drawing Functional Plans :
If the feasibility plans give a positive indication a draft business plan is formulated. It
involves preparation of the following functional plans
(a) Marketing Plan : A marketing plan lays down strategies for marketing a
product/service which can lead to success of business. To determine this strategy, marketing
mix need to study i.e. 4 P’s of marketing, Product, Price, Place and Promotion.
(b) Production/Operation Plan : A production plan is made for a business involved in
manufacturing industry while an operation plan is made for business involved in service
industry. It includes strategies for following -
• Location and reasons for selecting a location.
• Physical layout.
• Cost and availability of equipment, machine and raw material.
• List of suppliers and distributors.
• Cost of manufacturing and running operations.
• Quality management.
• Production scheduling capacity and Inventory management.
(c) Organizational Plan : It defines the type of ownership i.e. it could be a single
proprietary, partnership firm, company, private limited or public limited. It also consists of
details about the organization structure and norms guiding the organization culture.
(d) Financial Plan : It indicates the financial requirement of the proposed business and
furnishes the following details :
• Cost incurred in smooth running of all the financial plans
• Projected cash flows
• Projected income statement
• Projected Break-even point
• Projected ratios
• Projected balance sheet
(e) Human Resource Plan : It consists of the details on the following :
• Manpower requirements
• Recruitment and selection
• Compensation
• Organization structure
• Wages and salaries
• Budget
• Remuneration etc.
(VI) Project Report Preparation :
It is a written document that describes step by step, the strategies involved in starting
and operating a business. It is prepared when environmental scanning has been done and
feasibility studies have been carried out.
(VII) Evaluation, Review and Control :
In order to keep up with the dynamic environment and successfully face global
competition, a business must be continuously evaluated and reviewed. It is necessary to
periodically evaluate, control and review a business to keep up with the technological
changes and introduce changes in the business strategy.
1.2 Financial Aspects

The last piece of the business plan that one definitely need to have covers the business’s
finances. Specifically, three financial statements will form the backbone of your business plan:
the income statement, the cash-flow statement and balance sheet. Let’s go through them
one by one.
1. The income statement explains how the business can make money in a simple way. It
draws on financial models already developed and discussed throughout the business plan
(revenue, expenses, capital and cost of goods) and combines those numbers with when sales
are made and when expenses are incurred. When the reader finishes going through your
income statement, they should understand how much money your company makes or loses
by subtracting your costs from your revenue, showing either a loss or a profit. If you like, you
or a CPA can add a very short analysis at the end to emphasize some important aspects of
the statement.
2. Second is the cash-flow statement, which explains how much cash your business
needs to meet its obligations, as well as when you’re going to need it and how you’re going
to get it. This section shows a profit or loss at the end of each month or year that rolls over
to the next time period, which can create a cycle. If your business plan shows that you’re
consistently operating at a loss that gets bigger as time goes on, this can be a major red flag
for both you and potential investors. This part of the business plan should be prepared
monthly during the first year of business, quarterly in the second year and annually after that.
Followings are the important elements of the financial aspects that need to cover
and analyse;
1. Cash: Cash on hand in the business.
2. Cash sales: Income from sales paid for by cash.
3. Receivables: Income from collecting money owed to the business due to sales.
4. Other income: The liquidation of assets, interest on extended loans or income from
investments are examples.
5. Total income: The sum of the four items above (total cash, cash sales, receivables,
other income).
6. Material/merchandise: This will depend on the structure of your business. If you’re
manufacturing, this will include your raw materials. If you’re in retail, count your
inventory of merchandise. If you offer a service, consider which supplies are
necessary.
7. Direct labour: What sort of labour do you need to make your product or complete
your service?
8. Overhead: This includes both the variable expenses and fixed expenses for business
operations.
9. Marketing/sales: All salaries, commissions and other direct costs associated with the
marketing and sales departments.
10. Research and development: Specifically, the labour expenses required for research
and development.
11. General and administrative expenses: Like the research and development costs,
this centres on the labour for G&A functions of the business.
12. Taxes: This excludes payroll taxes but includes everything else.
13. Capital: Required capital for necessary equipment.
14. Loan payments: The total of all payments made to reduce any long-term debts.
15. Total expenses: The sum of items six through 14 (material/merchandise, direct
labour, overhead, marketing/sales, research and development, general and
administrative expenses, taxes, capital and loan payments).
16. Cash flow: Subtract total expenses from total income. This is how much cash will roll
over to the next period.
17. Cumulative cash flow: Subtract the previous period’s cash flow from your current
cash flow.
Other Total
Cash Cash Sales Receivables Income Income
Marketing/ Direct Material/

R&D Overheads Labour
Sales Merchandise
General & Total

Loan
Admin. Taxes Capital
Payments Expenses
Expenses
Cumulative Cash Flow

Cash Flow
Fig. 1.2
1.3 Marketing Aspects
A business plan is a blueprint for taking an idea for a product or service and turning it
into a commercially viable reality. The marketing portion of the business plan addresses four
main topics:
1. Product: What is the good or service that your business will offer? How is that
product better than the competition? Why will people buy it?
2. Price: How much can you charge? How do you balance sales volume and price to
maximize income?
3. Promotion: How will your product or service be positioned in the marketplace? Will
your product carry a premium image with a price to match? Will it be an inexpensive,
no-frills alternative to similar offerings from other businesses? What type of
advertising will you use? When will ads be run? How will the product be packaged?
4. Place: Which sales channels will you use? Will you sell by telephone or will your
product be carried in retail outlets? Which channel will let you economically reach
your target audience?
The marketing portion of a business plan addresses how you will get people to buy your
product or service in sufficient quantities to make your business profitable. It consists of:
1. Market analysis: It assesses the market environment in which you compete,
identifies your competitors and analyzes their strengths and weaknesses, and
identifies and quantifies your target market.
2. Marketing strategy: It explains how you will differentiate your business from your
competitors' businesses and what approach you will take to get customers to buy
from you.
3. Marketing and sales plans: It specify the nature and timing of promotional and
other advertising activities that will support specific sales targets.
1. Market Analysis:
How do you determine if there are enough people in your market willing to purchase
what you have to offer at the price you need to charge to make a profit? The best way is to
conduct a methodical analysis of the market you plan to reach. The market analysis presents
your conclusions regarding external market factors that will affect your business. It examines
the totality of the business environment in which you will compete.
Topics addressed in the market analysis include the existence and type of competitors,
the characteristics of your target customers, market size, distribution costs, trends in your
industry, and in the market in general. Much of the information that will be included in the
market analysis will be derived directly from the SWOT analysis that you performed early on
in the planning process. The purpose of the market analysis is to set the stage for presenting
your marketing strategy. That strategy sets forth your plan for successfully competing in your
selected market.
2. Marketing Strategy:
The marketing strategy portion of your business plan presents the approach you plan to
take to provide products or services to your customers. It explains, at a high level, what you
are going to do to get your customers to buy in the desired quantities. Someone who reads
your market strategy should come away with a "big picture" view of how your business will
present itself to the market segment in which you will compete. You should assess both the
merits and the risks of your enterprise in the marketing strategy.
In the marketing strategy section of your plan, one can address issues such as:
• Identification of your target buyers.
• The market segment in which you'll compete.
• The reasons why the product or service you offer is unique.
• Your pricing philosophy.
• Your plans for market research.
• Your ongoing product or service development plans.
3. Marketing and Sales Plans:

Marketing and sales plan explains how you will reach your targeted customers and how
you will effectively market your product or service to those customers. For example, the
marketing plan specifies the types of advertising you will use and the timing of those
advertisements. In essence, the marketing plan takes the marketing strategy that you
developed to a tactical level. It sets forth the specific steps you will take to sell your product
or service and provides a timetable for those actions to occur.
For example, how will you advertise your business? If you decide on radio ads, which
stations will you choose, and at what times of day will you run ads? Can you afford enough
repetition of the ad to make it memorable? How will you assess whether you're getting your
money's worth from the radio spots?
The marketing and sales plan usually includes a calendar that ties marketing and sales
activities to specific operational events. For example, an advertising campaign may begin
some months before a new product is ready to be sold. As the date of the new product
introduction approaches, the ad campaign would be stepped up. Once the new product hits
the market, additional advertising is used to support specific sales objectives.
Sales plans: An integral component of any business plan is a strategy for getting your
product or service to your targeted customers. There are many ways to reach your
customers. One challenge in developing your business plan is selecting the sales channel that
is most effective. For instance, if you're in a business where you provide services personally,
your participation in the sales process can be extensive.
1.4 Human Resource Aspects
Following are some important aspects of Human Resource Aspects of Business Plan;
• Organizational chart with the names and titles of the key executives.
• Brief details of this executive with their previous experiences, educational
qualification.
• Detailed resume of each executive.
• Contribution of each individual to the company, the duties and responsibilities
• Specify their initial salary, incentives, fringe benefits, and other benefits provided.
• What key position remains unfilled?
• Bring out plans to retain and attract the efficient existing employees.
• List of top-level executives.
While working Human Resource Aspect of business plan, HR Management strategies
need to decide and define in a proper way so that they can implemented easily by the
concern authorities. Following strategies/points need to study before writing HR aspects of
the firm;
Human Resource Management Strategy:
• If a firm is service oriented it requires specific skills.
• If the firm is production unit it requires people with technical as well as capabilities.
• The business plan should cover the profit sharing and employee’s share profits if any.
• The business plan should project on HRD and give details training and development
programs.
• The business plan should also furnish about the promotion, transfer, performance
appraisal, the audit etc.
• The business plan should also mention about the number of employees presently
and the future requirements
1.5 Technical Aspects
Technical Aspects is the discussion of basic and operation flow of the project. Technical
aspect is one of the essentials of this study because this factor responds to the technicalities
and basic structure of the proposed study. This includes the equipment, materials, structure
plan and also the source of the supplies use in the proposed project. Business plans,
promotion strategies, utilities, facilities, layout design and location include in this chapter. It is
also discussing how the products are to be produced, when these products are to be
produced, how much will it cost to produce the products, where to produce products and
what technology to be used. Technical aspects help the owner to determine the technical
requirements of business.
Technical Requirements:
• The mission and vision of the business.
• Logo and tag lines that will serve as the trademark of the business.
• The equipment needed for the operation.
• Supplies needed in the business.
• Ingredients for making the product.
• The place where the business will be located.
1.6 Social Aspects of Business Plan
A business is a part of society, so it is very important that businesses consider certain
social aspects to run successfully.
The social aspects of a business plan will include:
1. Demographics of customers.
2. The lifestyle of customers.
3. Purchasing habit.
4. Corporate social responsibility.
5. Vision and mission that promotes harmony.
All these social aspects need to be considered and a plan needs to be prepared
accordingly, keeping the consumers and their growth in mind. It is the social responsibility of
every business which is part of society.
Various social responsibility of an entrepreneur are:
• To produce quality goods or services.
• To provide truthful data.
• To maintain the safety of the product user.

• To restrict adulteration of products.
• To provide educational facility.
1.7 Common Pitfalls to be Avoided in Preparation of a Business
Plan
There are many elements that make a good business plan, avoid these business plan
mistakes and give your business idea the pitch it deserves. It often takes time, patience and
many revisions before you get it right. Unfortunately, when rushing to get your funding in
place and launch your business, your plan can get neglected. Below we have highlighted a
few of the very common business plan mistakes:
1. Unrealistic Financial Projections:
Lenders and investors expect to be shown a realistic picture of where your business is
now and where it hopes to be, therefore if the plan is overly optimistic with no explanation of
the projections, it will ring warning bells and cause the plan to be rejected.
2. Not Defining the Target Audience:
No business will appeal to everyone. we must define your specific target market, present
how you have made these assumptions and outline how you will specifically target this
market.
3. Over-Hype:
You may believe your business idea is the next big thing but you need to be able to
back-up your claim. Over-hyping your business idea and littering your plan with superlatives
like hottest and greatest does not substantiate your product or service. Wow them with your
business idea, research and financial plan, not with the words you think they want to hear.
4. Bad Research:
All research must be double checked and substantiated. By using incorrect or out of date
information you will discredit your business idea and the remainder of the plan.
5. No Focus on your Competition:
Even if you think you have a ‘unique’ business idea and are sure that no other business
like yours exists, check and double check. There is no such thing as no competition. Even if
your business is one of kind. Equally if you highlight your competition too much the investor
will worry that the business will not survive. Focus on your niche, what differentiates you
from the competition, how you plan to compete in the marketplace and paint accurate
picture of what the industry is like now and where you see it going in the future.
6. Hiding Your Weaknesses:
Do not hide your weaknesses but do not highlight them too much. Every business has its
weaknesses but by hiding them or highlighting them too much you will put off the investor.
The only way to address these weaknesses is to include a detailed strategy of how you plan
to address these problems.
7. Not Knowing your Distribution Channels:

Have a secure plan how to provide your service or distribute your product. Including all
possible channels in your plan without substantiating why these are the correct channels and
how they will reach your target market will make the investor assume that you have just
thought of the list off the top of your head. The ability to articulate your strategy about how
your product or service will reach your client is vital.
8. Including Too Much Information:
If you were an investor, would you want to read a 200-page business plan? Most
investors have a mental checklist of 10 to 12 points that they are looking for in the plan,
everything else just gets in the way. The purpose of your plan is not to demonstrate the
depth of your knowledge but to focus on the key elements of your business. Clear and
concise writing is always appreciated and if you have additional information which you would
like to include in the document, create an appendix.
9. Being Inconsistent:
Highlighting different target markets, quoting conflicting statistics or having competing
strategies within a plan will make an investor challenge whether you know your business and
its market well enough. Sections of plans are often written on different days or by different
people and then pasted together into one document resulting in inconsistency. Take time to
review each section of your business plan.
10. One Writer, One Reader:
Make sure you ask several people to review your plan before submitting it. It is easy for
you to glaze over spelling mistakes and grammatical errors because you know the
information inside and out. Another set of eyes will help your plan to look more professional
and ensure that it reads correctly.
1.8 Steps in Business Plan
Followings are the different steps in Business Plan Preparation;
Step 1: Executive summary
This opening section kick starts your business plan and briefly outlines the key points of
your plan. The goal here is to explain what your company does and why it will be successful.
Include a company mission statement (i.e., what your ultimate goal is as a business, in just a
sentence or two.)
Step 2: Business description
This section leads off the main portion of your business plan. In it, you'll go into more
detail on what your company does and what solutions to brings to the marketplace. In this
section, it's time to get specific and detail what product or services you're developing and
what customers you're targeting. Include a brief history of your company and mention any
top-level talent you have aboard to get your company off the ground.
Step 3: Market analysis

In this section, you'll detail the marketplace you'll be competing in. Where are the best
opportunities in your market? What is the marketplace? Who are your competitors? What are
their strengths and weaknesses? What is the leading marketplace product or service and
what are you doing to improve on the leading products or services? Financing companies
want to work with differentiators, and they'll want to know what separates your business
from the pack. Here's the place to tell them exactly that.
Step 4: Company organization
How will your company operate (i.e., as a partnership or as a corporation, primarily) and
who will be the key decision makers? How will the company be structured legally? What is
the management hierarchy? Who has ownership of the company and at what percentage?
These are the primary questions you'll need to answer in the company organization section
of your business plan.
Step 5: Products or services provided
What will your company produce and how will it benefit customers? What kind of
research and development have you already put into your company and what results are you
getting - and expecting? Also, how will you market your product or service to customers?
These are the questions you'll need to answer in this section.
Step 6: Financial outlook
In this section, you'll need to lay out your financial projections for your company. If your
company is already up and running, list any income statements and cash flow numbers for
the past several years, if possible. Do you have any loans outstanding? What does your
balance sheet look like? What are your quarterly projections going forward? Company
funders consider this the most important section of your business plan, so be thorough and
as accurate as possible in presenting financial data to your readers - they'll be pouring over
every word and every digit to judge whether there's a good business opportunity here or
not.
Step 7: Summary
Close your business plan with a pitch for funding, and list any supporting data, graphs
and charts that bolster your pitch. Make it clear what you're looking for financially from
financiers - equity, a partnership or a loan. Provide a ballpark estimate of the funding you
need and make it clear whether you're open to a negotiation. A company that knows how
much money it needs will be taken as a serious one, and will be treated as such by funders
and financiers.
1.9 Implementation of Business Plan
Even the most well-thought-out business plan is just a stack of paper if it is not coupled
with clear guidelines on your path toward implementing the business plan. Implementation
plan is the section of greater business plan, where we need to;
• Clarify objectives.
• Assign tasks with deadlines.
• Chart your progress toward reaching goals and milestones.

• All of these efforts are the tools you will use to grow your business.
Defining Clear Objectives:
Objectives should be crystal clear and specifically spelled out since we will use them as a
building block for the rest of the implementation plan. For example, let’s assume your start-
up is a small consulting firm. Objective should be tough but reachable, and could read
something like this:
• Secure office space and be open for business in three months.
• Sign three clients within the first three months of operations.
• Sign 10 clients within the first year.
Setting the right goals and objectives for the implementation of business plan will push
you to show up and perform every day. If you don't set goals that challenge you on a daily
basis, it's easy to stagnate in your business and simply drift along doing ok. Objectives are
where hopes and ideas are translated into action.
Breaking them down into tasks:
This part of business implementation plan details what must be accomplished, to achieve
your greater objectives. Include a task manager for each step, so that roles are clearly
defined, and there is accountability.
As you create well-defined tasks and assignments for yourself, these descriptions should
be plainly and generally stated; don’t get into a step-by-step, micromanaged explanation of
how the tasks will be carried out. Instead, emphasize the expected results associated with
these tasks. Continuing with the above example, the tasks section of your implementation
plan might look like this:
• Secure Office Space – Real Estate Agent
• Obtain Licenses and Permits – Entrepreneur himself
• Set Up Office Phones and Computers – Office Manager
• Begin Recruiting Clients – Sales Manager
• Create Marketing Collateral – Marketing Manager
• Solicit Referrals from Clients – Relationship Manager
This list is very specific to this particular firm and is a brief illustration. we may wish to go
into more details, assigning tasks to yourself such as obtaining financing, networking with
prospective clients, and so on.
Allocating Time:
To determine how realistic your implementation plan is, each task must be paired with an
appropriate time frame for completion. Some tasks will naturally take more time than others,
so do your best to set realistic estimates. If you are treading into unknown territory with any
part of your plan, it's your responsibility to do the research, track down instructional
resources that will help you through implementation, or find a partner, mentor or contractor
with more direct experience to help execute.
One should be aggressive but reasonable with your time allocation to ensure not just
completion, but also competent work. For assistance in framing this timescale, use a program
such as Microsoft Project, or create your own Gantt chart – a helpful tool that shows how
long it will take to complete different tasks and in which order the tasks should be finished.
Making Progress:
A member of management team needs to be in charge of monitoring each task’s
progress and the completion percentage of each objective if you hope to implement your
business plan without delay successfully.
While the above steps may seem like overkill, the early days of implementation in a start-
up are critically important; it’s a time when good management patterns are set and also
probably a lean era when revenue has yet to start rolling in. The more efficiently you start
implementing your business plan, the more likely it is that you will survive this early period.
1.10 Objectives of Business Plan
After understanding the importance of business plan let us understand the objectives of
business plan;
• To give direction to the vision of Entrepreneur.
• To objectively evaluate the future prospects of the business.
• To monitor the progress after implementation of the plan.
• To seek loans from Financial Institutions.
• To facilitate the decision-making process.
• To persuade others to join the business.
• To identify strengths and weaknesses present in the internal environment.
• To identify opportunities and threats in the external environment.
• To assess the feasibility of the business.
1.11 Guidelines to Prepare Good Business Plan
1. Executive Summary:
The executive summary functions as a reading guide, as it highlights the key aspects of
the plan and gives structure to the document. It must describe ownership and history of
formation. It is an abstract of the entire plan, describes the mission statement of the
organization, and presents an optimistic view about the product/service/concept.
2. Business Description:
Business descriptions provide the concept of one’s place in the market and its benefits to
future customers. It must include key milestones, tasks, and assumptions, popularly known as
MAT. Big ideas are redundant without specifics that can be tracked. Fundamental questions
to be answered included:
• Who are you?
• What is the product or service, and what are its differentiating characteristics?
• Where is the opportunity located?

• When will you start implementing your plan and expects cash flows or profits?
• Why should customers choose your company?
• How do you plan to run the business in terms of structure and regulatory
compliance?
3. Market Strategies:
The market strategies section presents the target consumer group and the strategies
needed to tap into it. It requires meticulous analysis of all aspects of the market, such as
demography, cultural norms, environmental standards, resource availability, prices,
distribution channels, etc.
4. Competitive Analysis:
The competitive analysis section aims to understand the entry barriers one could face
due to other companies in the same or complementary sectors. The strengths of existing
companies could be co-opted into one’s strategy, and the weaknesses of existing product
development cycles could be exploited to gain a distinct advantage.
5. Design and Development Plan:
It outlines the technical details of the product and its development cycle within the realm
of production. In the sphere of circulation, it focuses on marketing and the overall budget
required to reach organizational objectives. It should be drafted properly.
6. Operations and Management Plan:
The operations and management plan describes the cycle of business functions needed
for survival and growth. It includes management functions such as task division, hierarchy,
employee recruitment, and operational functions such as the logistics of the value chain,
distribution, and other capital and expense requirements. The managers’ backgrounds must
also be briefly included.
7. Financial Factors:
The financials section should include the company’s balance sheet and cash flow
projections. Financial data is imperative to provide credibility to any assertions or claims
made about the future profitability of the business. The aim is to provide an accurate idea of
the company’s value and ability to bear operational costs and earn profits. All the financial
details should be disclosed in the business plan.
Points to Remember
• A business plan is a formal written document containing the goals of a business, the
methods for attaining those goals, and the time-frame for the achievement of the
goals.
• A well-written business plan is an important tool because it gives entrepreneurs
and small business owners, as well as their employees, the ability to lay out their
goals and track their progress as their business begins to grow.
• Business plans typically include detailed information that can help improve your
business’s chances of success, like:
o A market analysis: gathering information about factors and conditions that
affect your industry
o Competitive analysis: evaluating the strengths and weaknesses of your
competitors
o Customer segmentation: divide your customers into different groups based on
specific characteristics to improve your marketing
o Marketing: using your research to advertise your business
o Logistics and operations plans: planning and executing the most efficient
production process
o Cash flow projection: being prepared for how much money is going into and
out of your business
• A Good Business plan must identify strengths and weaknesses internal to the
business and the challenges in terms of opportunities and threats to assess the
viability of the business.
• Marketing Plan lays down strategies for marketing a product/service which can lead
to success of business. To determine this strategy, marketing mix need to study i.e.
4 P’s of marketing, Product, Price, Place and Promotion.
• Important Human Resource Aspects of Business Plan:
o Organizational chart with the names and titles of the key executives.
o Brief details of this executive with their previous experiences, educational
qualification.
o Detailed resume of each executive.
o Contribution of each individual to the company, the duties and responsibilities.
o Specify their initial salary, incentives, fringe benefits, and other benefits provided.
o What key position remains unfilled?
o Bring out plans to retain and attract the efficient existing employees.
o List of top-level executives.
• Technical aspect is one of the essentials of this study because this factor responds to
the technicalities and basic structure of the proposed study.
• Social aspects of a business plan will include:
o Demographics of customers.
o The lifestyle of customers.
o Purchasing habit.
o Corporate social responsibility.
o Vision and mission that promotes harmony.
Questions for Discussion

1. Explain the Concept Business Plan along with its importance.
2. Explain the significance of Financial Aspects in Business Plan.
3. Discuss the Common pitfalls to be avoided in Preparation of Business Plan.
4. Elaborate the steps in Business Plan.
5. Explain the significance implementation of Business Plan.
6. Explain the importance of Human Resource aspects in Business Plan.
7. What are the technical aspects of business plan?
8. What are the social aspects of business plan?
9. What are the sources of Business Idea generation?
10. What precaution one needs to take while working on Marketing aspects of the
business plan?
Write Short Notes on :
1. Steps in Preparation of Business Plan.
2. Importance of Marketing Aspects of Business Plan.
3. Social Aspects of Business Plan.
4. Precaution while implementation of Business Plan.
5. Do’s and don’ts of Business Plan.
University Previous Year Questions:
1. Define the term Business Plan. Explain the Objectives of Business Plan.
(SPPU Oct 2018, April 2018)
2. Explain Social View of Business Plan. (Oct 2017)
3. Write the Guidelines for Preparing Business Plan.
(SPPU April 2019, Oct 2018, April 2018)
4. Explain guiding principles of searching business opportunities.
(SPPU April 2018, Oct 2018)
5. Explain concept of business plan and explain objects of business plan.
(SPPU Oct 2018)
✍✍✍
Unit 2…
MSME Management
Contents …
2.1 Introduction to MSME

2.2 Functional v/s Integrated Approach
2.3 Structured v/s Flexible Approach
2.4 Logical v/s Creative Approach
2.5 Start-up Phase Management
2.5.1 Needs of Start-up Project Management
2.5.2 Difference of Opinion within Promoting Team
2.5.3 Avoiding Failure and Problem-Solving
2.6 Stability Phase Management
2.7 Growth Phase Management
2.8 MSME Registration
2.9 Consultants
2.10 Udyog Adhar Registration Consultancy
2.11 Enterprise Risk Management (ERM)
2.1 Introduction to MSME

In India, MSMEs contribute nearly 8% of the country’s GDP, around 45% of the
manufacturing output, and approximately 40% of the country’s exports. It will not be wrong
to refer MSME as the ‘Backbone of the country. ’The Government of India has introduced
MSME or Micro, Small, and Medium Enterprises in agreement with Micro, Small and Medium
Enterprises Development (MSMED) Act of 2006. These enterprises primarily engaged in the
production, manufacturing, processing, or preservation of goods and commodities.
2.1
Business Entrepreneurship - II 2.2 MSME Management
MSMEs are an important sector for the Indian economy and have contributed immensely
to the country’s socio-economic development. It not only generates employment
opportunities but also works hand-in-hand towards the development of the nation’s
backward and rural areas. According to the annual report by the Government (2018-19),
there are around 6,08,41,245 MSMEs in India.
MSMEs Redefined
A proposal was made to redefine MSMEs by the Micro, Small and Medium Enterprises
Development (Amendment) Bill, 2018, to classify them as manufacturing or service-providing
enterprises, based on their annual turnover.
Classification of Enterprises into Micro, Small and Medium Enterprises (in `)
Kind of
Act of 2006 Bill of 2018
Enterprise
Manufacturing Services All Enterprises
Investment towards Investment towards Annual Turnover
plant and equipment
machinery
Micro 25 lacs 10 lacs 5 Cr
Small 25 lacs to 5 Cr 10 lacs to 2 Cr 5 Cr to 75 Cr
Medium 5 Cr to 10 Cr 2 Cr to 5 Cr 75 Cr to 250 Cr
Benefits of the above-proposed reclassification:
According to the proposed reclassification or the new classification, there would be no
need for frequent inspections to check the investment in plant and machinery. Also, the
operations of MSMEs would be transparent, non-discriminatory, and objective in nature.
Importance of MSMEs for the Indian Economy:
Across the globe, MSMEs are accepted as a means of economic growth and for
promoting equitable development. They are known to generate the highest rate of growth in
the economy. MSMEs have driven India to new heights through requirements of low
investment, flexible operations, and the capacity to develop appropriate native technology.
• MSMEs employ around 120 million persons, becoming the second-largest
employment generating sector after agriculture.
• With approximately 45 lakh units throughout the country, it contributes about 6.11%
of GDP from manufacturing and 24.63% of the GDP from service activities.
• MSME ministry targets to increase its contribution towards GDP by up to 50% by
2025 as India moves ahead to become a $5 trillion economy.
• Contributing around 45% of overall Indian exports.
• MSMEs promote all-inclusive growth by providing employment opportunities,
especially to people belonging to weaker sections of the society in rural areas.
• MSMEs in tier-2 and tier-3 cities help in creating opportunities for people to use
banking services and products, which can amount to the final inclusion of the
contribution of MSMEs for the economy.
• MSMEs promote innovation by providing an opportunity to budding entrepreneurs
to help them build creative products hey and thereby boost competition in business
and fuel the growth.
• The Indian MSME sector provides salient support to the national economy and acts
as a defense against global economic shock and adversities. Hence, we can say that
India is propelling towards a robust global economy through a silent revolution
powered by MSMEs.
Approaches to Small and Medium Enterprise Management:
Running a business takes copious amounts of time and effort. Small business owners are
responsible for managing all aspects of their company. Management is commonly defined as
the alignment and coordination of multiple activities in an organization. Business owners use
management skills to accomplish the goals and objectives of their company. Small business
management requires business owners to use a mix of education, knowledge and expertise
to run their company.
2.2 Functional v/s Integrated Approach
• Functional Approach:
This is the most common and basic approach to organising. Small enterprises which have
limited product lines adopt the functional organisation. Similar or related activities are
grouped under one department. The common departments are finance, production,
marketing and personnel.
Advantages of Functional Approach:
The advantages of a functional organisation are:
• It makes supervision easier.
• It is easier to mobilise specialised skills.
• It is helpful in the efficient use of specialised resources.
Disadvantages of Functional Approach:
The disadvantages of a functional organisation are:
• As the organisation grows in terms of locations and product lines, quick decisions
become more difficult to get.
• It is harder to pinpoint accountability and judge performance.
• Top managers encounter difficulties in co-ordinating the functions of the members of
the entire organisation.
• Integrated Approach:
Small businesses have immense potential to contribute to the export trade and economic
development of a country in a surprising variety of products, provided the product lines are
carefully chosen on the basis of techno-economic feasibility in relation to foreign market
potential. It is essential therefore that entrepreneurs and managers in small businesses know,
at least in broad terms, what types of products small enterprises have been selling
successfully in the world market.
Integrated approach means grouping of various small enterprises in same product lines.
It is a means of achieving for them advantages such as:
• Internal economies through common infrastructure facilities.
• Complementary economies through promotion of inter firm relations and optimal
utilisation of common service facilities.
• Aggregation of a sufficiently large number of small enterprises to meet big export
orders, thus, ensuring quality standards and delivery dates.
• Economies in collecting and analysing market information and providing market
advice
• Facilitation of export documentation and procedures
• Facilitation of the provision and supervision of special credit arrangements for the
benefit of small export enterprises.
2.3 Structured v/s Flexible Approach
Structured Approach:
There exists a common belief, supported by developing country case histories, that small
enterprises could be a prime mode of economic growth if it overcomes some structural
problems and assumes a proper industrial policy role.
Need of Structured Approach: Small enterprise in a large number of observed
developing countries demonstrate a multiple of specific and in many ways non-conventional
managerial traits that one seldom encounters in medium or larger firms:
1. Is the very small management team that brings along with it a lack of specialisation, a
predominance of multifunctional roles, a shortage of promotable manpower, a
pronounced domination by a leader and a large measure of informal control;
2. There is the limited control of the environment and the limited resources available to
scan it, anticipate potential changes and adapt capacity accordingly;
3. There is the informal pattern of operation, with conflicts resolved more easily and
loyalties assuming a high magnitude and
4. There is the general unawareness or indifference to the structured approach to the
managerial function and the need for a longer-term vision of the enterprise and its
environment.
These and other related problems lead to the emergence of performance
bottlenecks. Owners concentrate on tasks that they value rather than adopt a rational
approach to task identification and pursual. Planning develops as response to events
instead of a rational choice of a course of action that promises most returns.
Manpower practices deviate from the structured and managerially acceptable and
demonstrate a bias toward the social and paternalistic. This is reinforced by
considerable use of family labour.
More structured approach in small enterprises will make more efficient, profitable
and reliable. The adoption of structure approach will lead to encourage small
entrepreneurs to start new ventures. This structed approach can be adopted in
introducing technology into the system.
Advantages of Structured Approach to manage small Enterprises:
• Encouraging village level associations of small-time manufacturers. These could
cooperate in machinery and equipment acquisition and utilisation, exchange
technical advice and complement each other’s' processes.
• Provision of mobile technical support units i.e., technically-oriented and equipped
extension officers who visit the villages with the purpose of assisting in specific
technical problems i.e., machine maintenance, efficient raw material utilization,
substitution of scarce inputs etc.
• The village industry "common facilities", where specific production equipment for
industrial processes is accessible to the small entrepreneur.
• Fourth is the stimulation of specific village level extension with emphasis on
low-cost automation and basic power assisted production processes.
Flexible Approach:
Flexibility is described through a scope of possible states (options, goals, actions) as well
as the time and costs necessary to achieve them. Flexibility plays an important role in many
contemporary concepts of management, such as: Knowledge Management and
Organisational Learning, Process Management, Lean Management, Time Based Management,
TQM, virtual or web organisation. An organisation operating in a flexible way is characterised
by its ability to be up-to-date with changes in the environment and to develop faster than
the competition, by an efficient system of getting feedback from customers and by quick
reactions to their expectations, as well as by short decision-making processes, taking place in
a flat organisation structure in conditions of high empowerment of accustomed to changes
personnel.
Flexibility performs very important functions in the organisational systems of small
enterprise. Flexibility is also treated as an important factor supporting the market orientation
of small enterprise. Flexibility can have a positive impact on the competitiveness of small
enterprise also through such effects as: an ability to promptly react to changing external
conditions, a capability of satisfying various expectations of clients, an ability to introduce
more modern methods of operation or immunity to external threats. The role of flexibility in
building the competitiveness of small and medium enterprises Flexibility is perceived as the
key factor determining the competitiveness and a competitive edge of contemporary
organisations, as it is one of the most basic qualitative features of this category of entities.
2.4 Logical v/s Creative Approach

Logical Approach:
A logical approach in small enterprises is crucial for practically every aspect of business
operation. While some enterprise relationships and decisions should definitely not be
decided by the emotions, logical thinking is overall one of the most important traits for a
successful businessperson. In many cases, businessmen do not want to be distracted by the
own personal thoughts and feelings about an issue, as individuals often hold a bias. Owner
need to make decisions that will benefit many people and lend to the success of products
and future endeavours of small enterprise. Critical thinking is a must, and owner need to be
able to follow a logical progression of events if he expects to manage a successful project.
Three-Part Strategy for Logical Approaches:
1. Identify the Purpose of Enterprise: What are owners trying to achieve here? If
owner do not have a clear outline of this, can he expect to be successful? This
purpose should inform the entire small enterprise and provide a guideline for the
planning process. Be as specific as the need to be to answer any concerns about the
plan.
2. Examine the Biases: This step is often the most difficult, in a small enterprise
situation. To think logically, owner must think from as many different perspectives as
possible. A product built from only one point of view can seem flat and somewhat
useless. When it comes to enterprise, owner must think from the perspectives of
customers, clients, co-workers, supervisors, business relations, and anyone else you
find to be involved.
3. Consider the Implications of the Choices: Owner of small industry should find
himself several different paths to choose from. Each has its own challenges and
consequences, so map out each individual path thoroughly so he may know what he
is up against. Taking as many different perspectives he can, as mentioned above, will
help to make more logical decisions. Only by understanding the options and the
effects of each choice can make well-informed business decisions.
Creative Approach:
Creative approaches in business enterprise give to entrepreneur an unfair advantage in
enterprise. If entrepreneur can create new ideas on demand, he will be better equipped to
overcome challenges. create new product ideas and sail past the competition. Creative
approached is all about coming up with new ideas.
Important Creative Approaches Skills: Following are the important creative approaches
skills:
• Suspending advocacy of the own idea to push for another person's concept.
• Putting the own idea to the same test to apply to an idea from someone else.
• Combining two different ideas and making them better (not muddled) as one idea.
• Letting someone else take "ownership" of the idea in order to build support for it.
• Displaying the patience to wait for someone else to say what needs to be said so all
entrepreneur has to do is agree.
• Sticking to the guns amid challenges to a creative idea which makes solid strategic
sense.
• Always looking for new creative skills to develop in yourself and those around
entrepreneur.
2.5 Start-up Phase Management
Start-ups are seeds of imagination and passion that germinate as side hustles or a bang
on investment of time and money. Besides, like a sapling needs sunlight, water, and nutrients
from the soil, a start-up also requires a certain set of resources to grow. The key lies in
providing the optimal resources and then using them with brilliance and an essential way to
succeed is to have an impeccable start-up project management is place.
Before dwelling into the concept of start-up phase management, let us discuss about one
dream goal that every entrepreneur has. To become a unicorn start-up.
No, it’s not the one-horned horse from your childhood fairy-tale. Unicorns are private
start-ups that break the ceiling of the billion-dollar revenue mark.
Management, the laxer the word sounds, the more is its potential to give anxiety to any
manager or CEO. Especially when it comes to start-ups, the quintessential management
process becomes vital.
Yet, the internet is full of tons of claims of the best project management software for
start-ups. All you need is one solid framework for directing your team, and resources, to raise
your brand’s success.
So, do you need to look for project management software for start-ups, or get one built
for yourself? Here’s a complete beginner guide to give the right wind to your sail, and
achieve the dream of becoming a unicorn.
Prioritization Unicorn
startup
Team
Pro!t
Idea
CAC LTA
Early stage
startup Deadline Iteration
Fig. 2.1
2.5.1 Needs of Start-up Project Management

Project management tools help you organize, plan, track and analyse the data, process,
team and other aspects at various stages of a project. Also, project management makes a
good fit for idea validation. These come in handy to deal with deadlines, foster collaborations
and even cut on costs.
Communication and organization are two concepts that play an active role in any firm.
So, keeping track of the two, or keeping the two on track is essential. Besides, a start-up
project management tool will also allow for further investment opportunities.
As per a recent study by KPMG, only 19 percent of organizations are able to deliver (at
least most of the time). As per the Harvard Business Review, most projects go over budget by
27 percent of their planned cost. PMI states that only 28 percent of companies adopt project
performance techniques. 87 percent of high-performing companies use project management
software, as per Wrike Statistics.
If the above facts are not eye-openers, what must be? These and many other studies
show that only a third of businesses in the world opt for project management plans. Also, a
majority of this very chunk goes over budget and deadlines.
Essential Features of Project Management for Start-ups:
If we do not add the right amount of salt, sugar and other spices to a recipe, it won’t
taste good. Though not all have the same taste buds, certain foods melt well in any mouth.
Likewise, a few basic features apply to all the start-up project management plans.
Effective Teamwork:
Nothing can beat good teamwork! From sports teams to movies like Oceans 11, a team
knows how to make the most of every opportunity and skill set. So, a plan that is devoid of
enough room for the team to collaborate and communicate is a half-cooked dish.
For instance, what one member of the team might be struggling with could be a piece of
cake for another. At times it is all about perspectives. And teammates can give effective ideas
without even having adequate knowledge in a particular field. Each member must have
access to the knowledge about the tasks other team members are engaged in.
• Planning/Scheduling:
Planning is synonymous with management. Teamwork involves division of tasks. The crux
lies in assigning them in a way that it is easy to follow and keep track of. An effective start-up
company, project management software, must be able to draw all the plans in one place.
That too, without making them look like a countryside vegetable market.
• Documentation:
Documentation is also essential for keeping track of the many files and data sets of a
project. There needs to be a common location where you could keep all the files. Access to
these must be granted or rather say limited to those who need it. Also, if a file has many
revisions, the edits need to have proper versioning in place.
• Analytics and Evaluation:

Critical self-assessment is crucial. This could mean by individuals themselves or the team
as a whole. For evaluation, it must have inbuilt analytics for reports on the team’s
performance, or to figure out possible loops that may pull back the project’s speed.
Fig. 2.2
• Project Start-up or Initiation Phase:
A project life cycle is a sequence of these five phases starting from initiation to closure.
Every project has a definite start and end, project goals or objectives, activities, and
deliverables. The project life cycle provides the basic foundation of the actions that have to
be performed in the project, irrespective of the specific work involved.
• Project Start-up / Initiation Phase:
As we see that project initiation is the first and undoubtedly be the most important phase
of the project life cycle. If it is executed in the right way then it paves the way for successful
completion of the project within the allocated time and budget.
The project initiation phase involves the necessary steps that need to be taken before a
project is approved followed by its planning and execution. The ultimate objective is to
define the project at a high level and tie it into the business case you wish to solve.
During the initiation phase, a project is created and defined. Key parameters of the
project like project charter, scope, objectives, stakeholders, and expectations from the project
are also defined during this phase. Let us briefly look into these parameters one by one:
• Creating a Project Charter
During the initiation phase, you need to create your project charter, or in other words, a
Project Initiation Document (PID) that outlines the purpose and requirements of the project.
Moreover, it also includes details such as the needs of the business, stakeholders involved,
scope, objectives, and overall goals. It provides a foundation to project managers to define
project decisions and ensuring they are in line with organizational strategic goals.
• Defining Project Scope

The project scope includes the project’s objectives, budget, schedule, and deliverables.
While scope can change over time, you must define scope early on to set expectations with
all stakeholders.
• Setting Project Objectives
Set project objectives and goals can help you to avoid potential risks and put the project
on track to success. With a clear set of objectives, the project team will also stay on track
because each team member will know precisely what he/she is working towards. Project
objectives must be SMART like these should be Specific, Measurable, Attainable, Relevant,
and Time-oriented.
• Involving the Stakeholders
You being the project manager must ensure that all important stakeholders are involved
early on and while taking key decisions for the project. Most of the project managers often
overlook this aspect considering it less important, so it’s important to consider everyone that
may be impacted by or have an interest in the project plan, deliverables, and outcome.
Project stakeholders can be internal and external. To maintain transparency throughout the
project, you need to be equipped with the necessary tools and techniques to communicate
with the stakeholders effectively.
• Setting Clear Expectations
Setting clear expectations of project objectives, timelines, resources, and deliverables is
key to project success. By putting the required effort upfront, communicating the potential
risks and issues to the stakeholders, and then executing the project activities with full
dedication will impart a great impact on project success.
2.5.2 Difference of Opinion within Promoting Team
Every individual has a different kind of upbringing, different values and morals, different
likes and dislikes, and different talents. It’s what makes each and every one of us unique. A
start-up is essentially a compilation of wildly different views, values, and expectations of how
business should be conducted. The ideal team should possess talent, experiences, and
opinions that are, on the whole, impossible for any one person to acquire in a lifetime.
The world is changing, and so are the people in it. There are myriad opportunities for a
company, but being horse-eyed and oblivious to diversity and differing opinions will do
more harm than good. Arguments are not necessarily a bad thing, and as Robert Ferguson,
co-author of Making Conflict Work: Harnessing the Power of Disagreement puts it, clash of
ideas can be used as a positive force.
Reasons of differences in opinion for start-ups.
1. They Offer Alternatives:
Constructive conflict is a great way to achieve the desired goals. In a start-up, an
entrepreneur will require an all-hands-on-deck situation, and differences of opinion are
bound to arise. But it is through argument and rebuttals that one can arrive at right
conclusions. Through positive arguments, those involved can find the loopholes in the
solutions provided, thus presenting themselves with better ideas.
2. They Teach Flexibility:

When faced with a situation of conflict, the process of adjusting and accommodating
works both ways. The two admirable qualities that come out of conflict are humility and
openness. Negotiation is the key to any successful conduct of business. Thus, the more open
and flexible the team members get, the more apt will they become in handling complicated
situations intelligently.
3. They Provide Solutions:
Conflict is a one-way ticket to innovation and reinvention. When existing structures and
processes are no longer in place, there is need for newer solutions. Of course, no one likes
the status quo to get disrupted, but it is only through change and constant development that
a start-up can achieve desired results. For any business to grow, its entire foundation must be
continuously analysed and fine-tuned.
4. They Increase Group Solidarity:
A recent study shows that motivated employees are likely to be more productive than
those who are not. Difference of opinions is all about negotiations and solutions, and while
the team members are working towards these solutions, they are unconsciously spending
considerable time together trying to find the apt resolution. Constructive conflict
management motivates team members to work with efficiency and become more productive,
thus helping restore values of group solidarity and mutual respect.
2.5.3 Avoiding Failure and Problem-Solving
Starting up is hard, and the fact that 90% of them fail within initial three years makes it
look even more dreadful. Intelligent entrepreneurs always learn from others mistakes and try
to avoid them in their own start-ups. Start-up failure is very common in fact, nine out of 10
start-ups in India fail in the first five years. But one can use following techniques to avoid the
failure.
Every entrepreneur, every human for that matter, knows about failure. We make mistakes,
yet we succeed a few times, too. As you dream of building the next big thing on the planet,
understand that two out of 10 new businesses fail in the first year of operations. By the same
token, 10 % succeed.
Let us discuss some of the key reasons start-ups fail, along with practical start-up
solutions that can help to avoid this.
1. Lack of Market Demand:
More than 40% of companies fail because they created their product or service without
considering the market context. In some cases, the market was not yet mature, or it was
over-crowded with companies solving the same problem in the same way.
Experts believe this happens when start-ups launch without a market analysis and/or
deep testing.
How can start-ups avoid this?
• Do a thorough market research to gain insight into the market size, statistical
segments, and so forth.
• Find what type of current problems your audience has in order to determine market
demand.
• Fill a gap in the market by offering a new solution, whether through new technology,
service, or disruptive pricing.
2. Lack of Innovation:
According to a 2017 study conducted by IBM, 77% of venture capitalists think that Indian
start-ups lack innovation. Globally too, the business landscape is littered with cautionary tales
of huge companies that failed due to lack of innovation, such as Kodak, Nokia, Black Berry
and Sony Walkman, to name a few. Unwillingness to innovate puts any company at risk of
failure, but this is even truer for start-ups that are struggling to make a mark in a crowded
marketplace.
• Constantly research in order to understand the (local) marketplace better.
• Hire expert technical workers and create a culture of innovation.
• Think about the long-term sustenance of the idea; remember, you are selling a
realistic plan and not just an idea.
• Consider introducing new software and technologies into your business to make
processes more efficient and productive.
3. Too little money:
There are hundreds of start-up ideas floating around. But to turn ideas into reality
requires money. Lack of funding is one of the biggest reasons why start-ups fail.
Studies have shown that insufficient cash is a roadblock that leads many start-ups to shut
shops. This is especially true for start-ups that receive seed funding but cannot raise follow-
on funds leading to start-up failure.
• Start-ups must have sustainable business and revenue models.
• Focus on revenue and profit as much as products/services from an early stage.
• Do your research and check local government agencies for start-up funding or
emergency grants.
• Look at streamlining expenses, lowering valuations, and asking for less.
• Funds must be spent judiciously.
4. Leadership Gaps:
Most start-ups are driven by the vision of its founders and core team members. Often
start-up founders have a good idea but don’t have the knowledge or the expertise to lead a
team to success.
This is another common reason why start-ups fail. Leadership gaps can include a number
of things from internal conflict and poor strategy, to general lack of vision. If leaders cannot
provide a strong foundation, start-up failure is all but inevitable.

• Become a learning organization through continuous improvement.
• Make decisions slowly by consensus.
• Develop exceptional people and teams that follow your company’s philosophy.
• Standardize tasks and processes to create consistency.
• Respect your extended network of partners and suppliers by helping them improve.
• Create a culture of transparency and openness.
• Find a mentor to help you build leadership skills.
5. Trying to Grow too Quickly:
Why many start-ups fail is because they want to expand too early and too fast. The term
often called ‘premature scaling’ in business can be defined as spending money on growing
the business before nailing the product-market fit. In their enthusiasm to grow, start-up
founders often put the cart before the proverbial horse. They hire more sales personnel and
other staff than required, expand faster in their market than is wise, and spend too much on
marketing campaigns. A study by Start-up Genome Project reports that 70% of start-ups
scale up too early, and as a result, fail.
• Don’t hurry — there are no shortcuts to success.
• Focus on who your primary customers are and what problem they want you to solve.
• Create an in-demand product that serves a large enough market for your start-up to
grow.
• Bottom line: If you want to build a successful start-up, don’t scale up before you’re
ready to.
6. Not Investing in the Right Team:
“Talent wins games, but teamwork and intelligence win championships.” This famous
saying by basketball legend Michael Jordan rightly highlights the importance of hiring
people who can work together as an effective team. Few businesses survive and grow as a
one-person army. With a good team, you can meet any challenge or pitfall and thrive in each
situation. A primary reason for start-up failure is that start-ups often have little money and
cannot afford to hire experts or experienced employees who come at a high price.
• Plan the hiring process with utmost care.
• Invest in a team of experts with diverse backgrounds — such as business, technology,
marketing, and finance. Each will bring different perspectives to your business.
• Be open to alternative working methods such as work on freelance-basis or a project
basis model with expert professionals.
7. Business Model Failure:

A good product, an impressive website, and a huge advertising budget may not be
enough to attract customers and business. All of this should be complemented with the right
business model, be it:
• Direct sales
• Franchise
• Subscription
• Platform business model
• The right business model minimizes start-up failure rates.
• Spend time on your value proposition, in other words, how your business can be
valuable to your customers.
• Do not ignore external threats such as competition. Evaluate their business models
and learn from them.
• Always seek expert opinions/advice, even if you have to pay for it.
Creativity and Innovation:
The companies that have done the best so far are those who are the most creative and
innovative. These companies don’t copy what others do, they use innovative ideas from
others to come up with a unique application, product, or service for themselves or they come
up with disruptive ideas, that are completely new to the world. These companies tend to
distance themselves from the competition rather than compete with them, they focus on
bringing value to the market and be different, be unique.
All companies can be more creative and innovative no matter what their expertise,
product, or service is about. When you apply creativity and innovation to every aspect of
your business, you are able to stay ahead of a changing marketplace and the competition.
Change and innovation are closely related, even though they are not the same. Change often
involves new and better ideas. The new idea may be the creation of a new product or process
or it can be an idea about how to change completely the way business is carried out.
Over the last decades, innovation and creativity have become critical skills for achieving
success. The need for creative problem solving has arisen as more and more management
problems require creative insights in order to find suitable solutions. And let’s not forget that
creativity goes hand in hand with innovation. And there is no innovation without creativity.
While creativity is the ability to produce new and unique ideas, innovation is the
implementation of that creativity.
Parameters to Drive Creativity and Innovation:
• Innovation is based on knowledge. Therefore, one needs to continually expand
their knowledge base. Read things he/she does not normally read!
• One’s perceptions may limit his/her reasoning. Be careful about basing your
decisions on your preferences and perceptions, ask people or your potential target
about what they think about your idea or a problem that you are trying to solve.
• Let your imagination run wild. You really should not be bound by any limits when
searching for new ideas. Keep an open mind.
• Let your ideas incubate by taking a break from them. It will help to you to come
up with other ideas or improve existing ones or look at them from different angle.
Sometimes it helps to disconnect just for several minutes or hours and find a cool
and inspiring place or go to nature. Sometimes you need weeks and months. The
most important here is not to rush.
• Test your idea. Once you are ready to start marketing your product, ask your
customers if they like it and if they are really interested in it.
• Experience as much as you can. Actively seek out new experiences to broaden your
experience portfolio.
• Have a vision for change and fight the fear of change. Replace the comfort with
the hunger of ambition. You cannot expect your team to be innovative if they do not
know the direction in which they are headed. Innovation has to have a purpose.
• Create an environment of innovation. Beautiful outdoor areas and interesting,
attractive indoor spaces can help spark ideas and creativity to help drive the
company’s innovation initiatives. Loot at highly successful innovative companies like
Twitter, Facebook, and Google or promising and fast-growing start-ups to see what
they do in terms of office design and employee entertainment. You’ll find open,
interesting spaces, places to play games, spots to relax, areas to get some exercise,
etc.
• Enable organizational agility. At most innovative organizations, job definitions are
flexible and fluid. These companies know that the roles their employees play must
adapt to the changing needs of the market. For example, at FedEx assists executives
in moving between functions in order to accumulate a diverse range of experiences
that improve their overall adaptability.
• Dare to risk, dare to make mistakes. Yes, you can learn from your mistakes, and yes,
sometimes clichés are clichés for a reason: because they are true. ‘If you never try
anything new, you’ll miss out on many of life’s great opportunities.
• Be sustainable. It is now an absolute necessity.
• Give your employees the freedom they need. Give them the time and freedom
they need to develop new ideas. For example, Google runs its famous “20 percent
time” programme, in which employees are free to work on their own projects one day
a week. Many of Google’s flagship products, such as Gmail and Google News, were
developed initially as “20 percent time” projects.
2.6 Stability Phase Management
A start-up is a company launched to evolve an idea with the potential for significant
business opportunity and impact. Sometimes the idea is a flash of insight, but more often it
begins with the development of an idea or solution to a meaningful problem that has an
identifiable market.
The evolution of a start-up — from an idea to exit — is a continuous process. It is often

difficult to precisely identify exactly where you are in the start-up lifecycle because many
factors are involved. The length of each start-up stage will vary greatly depending on
business execution, your industry or sector and your fund raising abilities.
Early-stage start-up:
This phase covers the time before securing your first Series A funding round. There are
several imprecise terms used to describe your position in this phase, including seed, pre-
seed, post-seed, pre-A, seed extension, and others, but they are only referring to points
within this often long and difficult phase to gain traction and growth.
The early start-up stage begins with a potentially scalable idea for a product or service
targeting a market that is poised to generate value. Your team may be just one or two
people, in addition to yourself, and you have a vague organization. Although there is no
formal structure or solid commitment to the concept or business, you and your team are
trending in that direction and are eagerly building the foundations for a launch.
When you are part of very early-stage start-ups, recognize that your investment of time,
money, ideas, rent for physical facilities and store of business relationships, supplies and
equipment may all be at risk. In most cases, companies that can afford to pay market-rate
compensation and rent are not really early-stage.
2.7 Growth Phase Management
During the growth, or establishment, phase your company should have a fairly stable
customer base. One should be consistently generating income and attracting more new
customers. Consistent revenue generation stabilizes cash flow, which one can use to cover
recurring expenses. In addition, one should also find your time divided between managing
your business, the employees whom you now have working for you, addressing customers'
needs and contending with any marketplace competitors.
Minimum Viable Product
Vision & Mission Scale
Growth
Product Market Fit

(MVP)
–2 –1 0 1 2 3
Time
PRE-STARTUP STARTUP GROWTH
Ideation Concepting Commitment Validation Scaling Establishing

Fig. 2.3
Business expansion occurs shortly after a company first finds stability in the growth
phase. The business must then venture into new markets by expanding products or service
offerings, moving beyond the region or opening new locations. This rapidly increases the rate
at which a company grows. This stage and its rapid expansion present several new challenges
to business owners who might suddenly find themselves facing fresh cash flow challenges
with their resources and time stretched thinner than ever before.
Many successful businesses fail because they expand too quickly. You need a
management reporting system to measure the return on investment on everything you do to
make sure the multitude of decisions you have to make help increase profits.
In today’s world, every entrepreneur aims at expanding his or her start-up at an
exponential pace. Before we can figure out what are the factors that influence acceleration
from early stage to growth stage, we need to understand the different stages of growth. We
would be focusing mainly on three stages, that is, Existence, Survival and Success –
Development and Growth:
Stage 1: Existence
In this stage the main problems of the business are obtaining customers and delivering
the product or service contracted for. The organization is a simple one the owner does
everything and directly supervises subordinates, who should be of at least average
competence. Systems and formal planning are minimal to non-existent. The company’s
strategy is simply to remain alive.
Stage 2: Survival
In reaching this stage, the business has demonstrated that it is a workable business
entity. It has enough customers and satisfies them sufficiently with its products or services to
keep them. The key problem thus shifts from mere existence to the relationship between
revenues and expenses. The organization is still simple. The company may have a limited
number of employees supervised by a sales manager or a general foreman. Neither of them
makes major decisions independently, but instead carries out the rather well-defined orders
of the owner.
Stage 3: Success
The success stage can be further sub-classified into development and growth stage:
• Development:
In the Success-Disengagement substage, the company has attained true economic
health, has sufficient size and product-market penetration to ensure economic success, and
earns average or above-average profits. The company can stay at this stage indefinitely,
provided environmental change does not destroy its market niche or ineffective
management reduce its competitive abilities
• Growth:
In the Success-Growth substage, the owner consolidates the company and marshals’
resources for growth. The owner takes the cash and the established borrowing power of the
company and risks it all in financing growth. Systems should also be installed with attention
to forthcoming needs. Operational planning is, as in substage III-D, in the form of budgets,
but strategic planning is extensive and deeply involves the owner. The owner is thus far more
active in all phases of the company’s affairs than in the disengagement aspect of this phase
Now let’s understand the various factors that impact the movement along these stages.
These factors can be divided into two main categories:
1. Organization Related Factors:

Financial Resources: This includes resources including cash and borrowing power, which
are crucial enough for any business to grow.
Personnel Resources: The quality of personnel that an organization has a great impact
on its performance. In today’s world one needs to have people who are innovative, creative
and have the ability to get the things done.
System Resources: Resources are needed for better performance and growth. System
resources includes resources related to both information & planning and control systems.
Business Resources: These include business relations with customers and suppliers,
market share, reputation and distribution process and technology. These factors are key
components in deciding how seamlessly a business can operate in the given environment
and fast can it grow.
2. Management Related Factors:
Vision: For accomplishing any great task, we need to have leaders who can imagine big.
Start-up ventures having owners who have long term vision for their venture prove to be far
more successful than other ventures lacing such leaders.
Operational Abilities: In the initial stages, a start-up runs mainly on the individual efforts
of its founder. So it is of utmost importance that the founders are capable of handling the
operational, financial and marketing aspects of the business
Managerial Ability: As the business expands, management comes into picture. Having a
good management can be a key to success as it would ensure proper delegation of tasks and
would help each and every employee deliver their best
Strategic Abilities: The founder(s) of the start-up needs to look beyond the present
situation and speculate about the future movements. He or she needs to sync their individual
goals with that of the organization so that both can survive as a single entity.
The mix in which these factors are required keeps on varying as we move from one to
another. However, all these factors are doing required for accelerating a start-up from early
stage to growth stage.
2.8 MSME Registration
MSME stands for Micro, Small and Medium Enterprises. In a developing country like
India, MSME industries are the backbone of the economy. When these industries grow, the
economy of the country grows as a whole and flourishes. These industries are also known as
small-scale industries or SSI’s.
Even if the Company is in the manufacturing line or the service line, registrations for both
these areas can be obtained through the MSME act. This registration is not yet made
mandatory by the Government but it is beneficial to get one’s business registered under this
because it provides a lot of benefits in terms of taxation, setting up the business, credit
facilities, loans etc.
The MSME became operational on October 02, 2006. It was established to promote,
facilitate and develop the competitiveness of the micro, small and medium enterprises.
MSME Registration Process:

Now that you know how to categorise different businesses according to their nature of
business and investments, the next step is to know how to register a business as an MSME.
This registration requires a few documents, personal details, details about the individual and
so on. Read on further to know more about the registration process in the MSME Sector.
Before starting the process, ensure that you have an Aadhar Card. Aadhar Card is
compulsory in the registration of MSME. In case you do not have one, an application is to be
filled online.
Documents required for the MSME Registration Process
• Aadhar number of the applicant.
• Name, gender, PAN number, email id, and mobile number of the applicant.
• PAN, location, and address of the organization.
• The number of employees and the date, you are planning to start your business.
• Bank account number and IFSC code.
• The basic business activity of the enterprise.
• NIC 2-digit code.
• Investment in plant and machinery/equipment.
• MoA and AoA.
• Copies of Sales Bill and Purchase Bill.
• Step by step registration process for MSME.
1. Start Registration Process
Click here to start the MSME Registration Process.
2. Fill Application Form
At the first step, you have to fill in basic details in the MSME Registration form that will
include all the necessary details of your business such as company name, registration
number, GST number, and so on.
3. Enter Personal Details
At this stage, you are required to fill in all your personal details such as name, address,
PAN Card, bank account details, and some common information that is mandatory during
the MSME registration process. Also, a photo needs to be uploaded. Ensure that the size of
the photo is within the permissible limits for it to be uploaded on the site.
4. Executive Will Process Application
At this process, an MSME executive will review your application. In case of any
discrepancy, you will be notified about the process and make the relevant changes.
5. Receive Certificate of Mail
After filling the complete form, you will get the certificate for MSME Registration. To
know how it would be, you can download a copy of the Sample MSME Certificate. The
Ministry will not issue you any hard copy for it. You will get a virtual certificate for MSME
Registration.
This is the process for the MSME registration for companies. Note that the entire
registration process is free of cost. However, there are many online portals that do the
registration process on behalf of the companies at a certain fee.
Benefits of MSME Registration:
The registration of MSME is not mandatory, but the registration process has been
provided so that all entrepreneurs can maximize their benefits under this scheme and reap
the offers provided by the government. The benefits are many; from priority, lending to
cluster financing, and an opportunity to adopt the latest quality management standards.
Let’s dive into the benefits of MSME registration point by point:
1. 50% Subsidy on Patent Registration:
If you have created something new, a new innovative product or business model, and
want to patent it, there is a hefty fee applied for patent registration. But with the help of
MSME registration, one can avail of the patent registration at 50% subsidy. This move aims to
encourage more entrepreneurs to invent and innovate. They can avail of the 50% subsidy by
registering with their respective industry.
2. Collateral Free Loans:
One of the biggest benefits of MSME registration is the collateral free business loans one
can avail through banks and NBFCs. This essentially means that SMEs and MSMEs can now
take various loans such as working capital loans and credit line loans, without providing any
collateral.
3. Exemption of Interest on Overdraft:
MSMEs who have good credit history and have good relations with their banks can avail
of the overdraft facility. MSMEs get the advantage of 1% exemption on interest on an
overdraft facility. This could be extremely beneficial for MSMEs. However, MSMEs should
check with their lender as not all banks give this facility.
4. Reservation Policy:
As mentioned above one of the greatest things about the MSME market is that it has
hardly been affected by outsiders. Due to this, the success of the MSME sector has been
magnificent. A major part of this success is due to the reservation policy of the government.
There are some MSME sectors that have been given exclusive rights to manufacture certain
products. Under the Government Stores Purchase Programme, the central government has
reserved the purchase of more than 300 products exclusively from this sector. This gives a
boost to the MSME market and it is not affected by stiff competition.
5. Technological Upgradation for MSME’s:
Some MSMEs may not be able to use their resources to full potential due to lack of
sophisticated technology. The government, under the Capital Aid for Technological
Upgradation Scheme, helps these enterprises to upgrade their equipment through latest
technology by helping them get low-interest loans from banks. With the rise of technology,
the government is encouraging more MSMEs to get into the space of technology through
aid and financial support.
6. Protection Against Delayed Payments:

One of the major advantages of registering under the MSME scheme is the protection
received by the government against delayed payments. This protection in delayed payments
is against the buyers in the transaction of business. If any micro or small enterprise that has
MSME registration, supplies any goods or services, then the buyer is required to make
payment on or before the date agreed upon between the buyer and the micro or small
enterprise. In case there is no payment date on the agreement, then the buyer is required to
make payment within fifteen days of acceptance of goods or services. In case of delayed
payment, the buyer is required to pay a fine to the MSME registered company. This helps
most MSMEs to ensure they have no outstanding debtors or bad debts.
From the benefits mentioned above, one can understand how important and helpful it is
for an MSME to get registered under the MSME Act. So, all in all, registering yourself as an
MSME has various benefits that could uplift your business.
2.9 Consultants
Nowaday’s consultancy is a strategic tool for business development. Large enterprises
have enough resources at their command to hire manpower to take care of various services.
MSME sector does not have these resources at their command and thus needs institutional
support for providing these inputs. The Scheme envisages financial assistance for availing the
consultancy support by micro, small and medium enterprises in their various activities
including the assistance in selection of consultants. As entrepreneurship, and resultant
creation of employment and wealth, is a major means for inclusive development, this scheme
also promotes consultancy among the young entrepreneur. The need of the hour presently is
to provide sustenance and support to the whole MSME sector (including service sector), with
special emphasis on rural and micro enterprises, through suitable measures to strengthen
them for converting the challenges into opportunities and scaling new heights. Thus,
although the medium enterprises are also proposed to be included as the target beneficiaries
in the scheme, special attention would be given to micro and small enterprises, in rural as
well as urban areas.
2.10 Udyog Adhar Registration Consultancy
Mostly all the domains come under the Udyog adhar registration, in simply terms Now
MSME Registration has been converted into the Udyog Aadhar Registration. It’s a simply
one-page self-certificate registration. So, anyone business can register but the problem you
can’t run the legal entity with this certification because banks are not open a current bank
account on this certification basis.
They required other registration certificate which is required documents verification by
the govt department.
It's needed just only the Adhar Card Number and any type of the business get the Self
Certification. so, if you have already another registration like service tax or VAT/CST or shop
act license then you can apply for the Udyog adhar as a MSME Benefits.
Small and medium small industries want to start any business; they need to do the
registration with MSME. This registration with MSME can be done in two ways i.e., one is
online and other one is offline. This facility is called Udyog Aadhar. This Aadhaar is a 12-digit
number. The reason to launch this Aadhar is to provide maximum benefits to the small and
medium scale industries, who are registered with MSME through this Aadhar number.
Those industries who are registered with Udyog Aadhar will be getting the benefits of all
Government schemes like easy loan, subsidies etc.
Registration Process:
1. To do the registration the small and medium scale industry owner has to fill a single
form which he can do online as well as offline.
2. If a person wants to do registration for more than one industry then also, he/she can
do individual registration.
3. To do the registration he/she has to fill a single form which is available at website.
Which is listed below.
www.msme.gov.in
• The document required for the registration is Personal Aadhar number, Industry
name, Address, bank account details and some common information.
• In this the person can provide self-certified certificates.
• There are no registration fees required for this process.
• Once the detail filled and upload you would be getting the registration number.
Mostly all the domains come under the Udyog adhar registration, in simply terms Now
MSME Registration has been converted into the Udyog Aadhar Registration. It’s a simply
one-pageself-certificate registration.
So, anyone business can register but the problem you can't run the legal entity with this
certification because banks are not open a current bank account on this certification basis.
They required other registration certificate which is required documents verification by
the govt department.
It's needed just only the Adhar Card Number and any type of the business get the Self
Certification. so, if you have already another registration like service tax or VAT/CST or shop
act license then you can apply for the Udyog adhar as a MSME Benefits.
The process of getting MSME or SSI Registration has been simplified by the introduction
of Udyog Aadhaar MSME in India. Prior to applying for MSME registration entrepreneurs
need to apply with two different forms with two separate fillings. Those are (Entrepreneurs
Memorandum) EM Part-1 and EM Part-2. The manual procedure is ridden with several
challenges and is not considered investor or entrepreneurs friendly. On account of the
cumbersome procedure and since the filling of EM is not mandatory, many MSMEs have not
registered themselves and are outside the scope of services time to time offered by the
Government.
The online Udyog Aadhaar registration process has been created with an aim to
encourage online filing of Entrepreneurs Memorandum (also known as MSME registration)
for Micro, Small and Medium Enterprises. The online Udyog Aadhaar registration process will
simplify the registration process with an online and simple one page registration form. In the
form, the MSME will self-certify its existence, bank account, business activity details,
employment and ownership details and other information.
Documents Required for Udyog Aadhaar MSME Registration:
• Aadhaar Number: 12 digits Aadhaar number issued to the applicant.
• Name of Owner: The applicant’s name as mentioned on the Aadhaar Card issued by
UIDAI.
• Social Category: General / Scheduled Caste / Scheduled Tribe / Other Backward
Castes (with proof).
• Name of Enterprise: Name of the legal entity to conduct business. One applicant
can have more than one enterprise doing business and each one can be registered
for a separate Udyog Aadhaar and with the same Aadhaar Number.
• Type of Organization: Type of Business entity or Legal Entity. (Proprietorship,
Partnership Firm, Hindu Undivided Family, Private Limited Company, Co-Operative,
Public Limited Company, Self Help Group, LLP, Others)
• Postal Address: Address of the business including mobile and email address.
• Date of Commencement: The date on which businesses was started.
• Previous Registration Details: Details of previous MSME registration, if applicable
should be entered here.
• Bank Details: Details of the bank account of the company including IFSC Code and
Bank Account number.
• Major Activity: Major area of activity of the business - manufacturing or service.
• NIC Code: The appropriate NIC Code should be entered from the National Industrial
Classification (NIC) handbook.
• The person employed: The total number of people employed in the business.
• Investment in Plant & Machinery / Equipment: Amount of money invested in
terms of machinery and equipment by the business.
• DIC: Details of the District Industry Centre nearest to the business, if required.
Option for Registration Without Aadhaar:
"In cases where Individuals do not have Aadhaar Number and till the time Aadhaar is
assigned to the individual, UAM registration on offline mode should be done through District
Industries Centre (DIC) or to the Office of the Micro, Small & Medium Enterprise -
Development Institute (MSME-DI) under the Development Commissioner, MSME or regional
offices of NSIC (for NER States), subject to the production of the following documents as
alternative and viable means of identification.
(a) (i) if he has enrolled, his Aadhaar Enrolment ID slip; or
(ii) a copy of his request made for Aadhaar enrolment, and
(b) any of the following documents, namely: -
Bank photo passbook; or voter ID Card; ration card; or Kishan Photo Passbook; or
passport; or driving license; or PAN card ; or MGNREGS job card; or employee photo identity
card issued by the Government or the Public sector undertakings; or any other photo identity
card issued by State Government or Union Territory Administration; or certificate of identity
with photograph issued by any gazetted officer in his official letterhead; or any other
document specified by the State Government or Union Territory Administration."
2.11 Enterprise Risk Management (ERM)
Enterprise Risk Management (ERM) is a term used in business to describe risk
management methods that firms use to identify and mitigate risks that can pose problems
for the enterprise. The simple question that ERM practitioners attempt to answer is: “What
are the major risks that could stop us from achieving the mission?”
Type of Risks:
In 2004, the JLA research team analysed 76 S&P 500 companies on their risk types, where
there was a 30% or higher decline in market value. They found that 61% of occurrences were
due to strategic risks, 30% were operational risks, and 9% were financial risks.
• Hazard risks include risks that present a high level of threat to life, health, or
property.
• Financial risks refer to risks that are directly related to money. They include financial
consequences like an increase in costs or a decline in revenues.
• Strategic risks are risks that affect or are created by strategic business decisions.
• Operational risks are risks that materially affect an organization.
Risk Response Strategies for Enterprise Risk Management
Management selects one of the five appropriate risk response strategies below to deal
with their identified risks:
• Risk avoidance: The elimination of risks or activities that can negatively impact the
organization’s assets. For example, the cancellation or halt of a proposed production
or product line.
• Risk reduction: The mitigation or limitation of the severity of losses. For example,
management can plan frequent visits to their major suppliers to identify potential
problems early.
• Alternative actions: The consideration of other possible ways to reduce risks.
• Share or insure: The actions of transferring risks to third parties, like insurance
agencies. For example, buying an insurance policy that could cover any unexpected
loss for the business.
• Risk acceptance: The acknowledgment of the identified risks and the willingness to
accept their consequences. Typically, any loss from a risk not covered or avoided is an
example of risk acceptance.
Core Elements of an Enterprise Risk Management Process

ERM follows a very distinct and ongoing process, where it actively identifies and
reassesses the various strategic and major risks to ensure financial security for businesses.
The process includes five specific elements.
• Strategy/Objective setting: Understand the strategies and associated risks of the
business.
• Risk identification: Provide a clear profile of major risks that can negatively impact
the company’s overall financials.
• Risk assessment: Identified risks are strictly analysed to determine both their
likelihood and potential.
• Risk response: Consider various risk response strategies and select appropriate
actionable paths to align identified risks with management’s risk tolerances.
• Communication and monitoring: Relevant information and data need to be
constantly monitored and communicated across all departmental levels.
Example of an Enterprise Risk Management Process:
• Strategy/Objective setting: Consider Tesla, a publicly-traded company operating in
two primary segments – automotive and energy generation. In this example, ERM will
begin by considering what drives the company’s value during the strategy/objective
setting. For Tesla, this could include the company’s competitive advantage, new
strategic initiatives, key product lines, or an acquisition.
• Risk identification: Once the key drivers are identified, the ERM process will begin
the risk identification process by evaluating relevant risks that can potentially hinder
the success of each key driver.
• Risk assessment: The risks must then be carefully analysed from cross-departmental
views during the risk assessment step.
• Risk response: Once the discussion and acknowledgment of the potential risks are
finalized by upper management, executives will consider an optimal risk response
strategy.
• Communication and monitoring: Finally, upper management will measure, monitor,
and communicate the effectiveness of the risk response strategies by utilizing any key
risk indicators deemed effective by that organization.
Challenges in Implementation of Enterprise Risk Management (ERM)
Very few organizations find enterprise risk management implementation easy--it requires
a rare combination of organizational consensus, strong executive management and an
appreciation for various program sensitivities. Despite the effort required, however, ERM is
worth it because it forces most organizations to step back and identify their risks, which is
one of the first steps to protecting capital and driving shareholder value. As boards and
executive management evaluate ERM, however, they usually come away with more questions
than answers. While each company faces specific concerns, the more challenging ERM issues
are generally consistent across companies and are largely unrelated to industry, geography,
regulation or competitive landscapes. By examining some of these common ERM challenges,
as well as the creative solutions that have been applied by other organizations, management
will be better equipped to develop and revamp their own enterprise risk management
programs.
1. Assessing ERM's Value:
The issue: In an economy driven by positive return on investment, organizations often
struggle to demonstrate sufficient ERM value to justify implementation costs. While
traditional investment decisions are evaluated using common risk and reward metrics such as
return on equity (ROE), return on assets (ROA) and risk adjusted return on capital (RAROC),
ERM value drivers are less prescriptive. Despite growing guidance, ERM remains largely
voluntary, resulting in a value proposition void of compliance language and regulatory
encouragement.
Potential solution: Many organizations establish ERM value, risks and costs using a
traditional business case. The typical business case looks at ERM value in four categories.
The first is shareholder value added, such as equity premium driven by positive public
perception, an improved credit rating or risk score, and the integration of risk results with
operations. Next is avoided risk, such as reduced volatility through hedging or insurance
products and reduced risk through incremental controls. Another category is hard dollar
savings such as risk infrastructure and process consolidation, reduced insurance and costs,
and reduced regulatory capital requirements. Finally, other qualitative benefits can include
improved risk transparency and awareness, improved risk management coordination and
accountability, improved risk and financial statement metrics, and the elimination of siloed
risk management activities.
After evaluating a programme's potential value, many companies then look at ERM
implementation costs and risks. While most companies manage risk as a matter of standard
business practice, ERM programmes typically involve enhanced risk assessment processes,
risk and business integration, and governance concerns. These activities may require new
resources, technologies, policies and process enhancements--all of which assume varying
degrees of capital expenditures.
As an alternative to the business case, management may implement ERM on a pilot basis
or as an ERM "lite" programme. This programme typically involves a prominent business unit
with large financial risk and a business unit with higher nonfinancial exposures such as
strategic, reputation or operational risk.
2. Privilege:
The issue: An ERM programme allows management to quantify the company's risks. As
risk information becomes increasingly event-driven and dollar-based, company lawyers may
raise issues regarding risk distribution to external regulators, auditors and constituents.
Organizations must balance risk visibility and legal exposure.
Potential solution: The easiest way to provide risk insight while protecting sensitive
information is to gather and report risk data according to broad categories without providing
specifics regarding contracts, legal cases, projects, events, counterparties and products.
Alternatively, risk information (e.g., severity) may be documented in qualitative terms with no
link to specific dollars or dollar ranges. While the more conservative approach is more
commonly applied by companies, the industry appears to be moving towards greater risk
transparency.
Companies with a more liberal approach typically manage data sensitivity issues using
several techniques. For example, companies can conduct all risk assessment activities under
legal supervision, with the objective of making the output privileged.
Alternative ERM risk assessment approaches where privilege is not available or where the
company does not wish to involve counsel include producing multiple risk reports and
distributing them according to business need (e.g., provide a detailed version to the board
and small executive team and a broader report to a larger distribution) and relying on
"confidential" and "for internal use only" protections.
3. Defining Risk:
The issue: One of the biggest challenges is establishing a consistent and commonly
applied risk nomenclature. Any inconsistencies between risk definitions or methodologies are
likely to jeopardize the program? success.
Potential solution: Establishing a formal risk management framework and common risk
nomenclature can be accomplished through working groups comprised of at least one
representative from each significant business unit and shared service function. The most
critical goal of the group is to establish the definition of risk itself. While each risk category
may be distinct, the definition of risk must be consistent and supported by clear guidance.
The group must also create a risk inventory and supporting risk taxonomy to further define
and rank all the risks faced by the organization.
4. Risk Assessment Method:
The issue: Enterprise risk assessments are performed using a variety of approaches and
tools, including surveys, interviews and historical analysis. Each approach offers its own value
and drawbacks that must be closely reviewed to determine organization suitability.
Potential solution: The risk assessment method employed is largely based on the
number of respondents surveyed, corporate culture and--perhaps most relevant--
organizational familiarity with risk management. Face-to-face assessments are helpful as they
facilitate risk management education and guidance, encourage discussion and allow for data
collection. Conversely, automated tools can be applied by organizations with broad risk
management knowledge or a predisposition for technology-based tools.
In addition, the risk assessment method is generally tailored to the audience. For
example, many organizations administer executive risk assessments using a group interview
session and apply individual techniques to management or technical personnel.
5. Qualitative Versus Quantitative:

The issue: A key decision for many organizations is whether risks are assessed using
qualitative or quantitative metrics. The decision is generally driven by the organization?
industry, commitment to ERM, its view regarding privilege and overall cost.
The qualitative method provides management with general indicators rather than specific
risk scores. Qualitative results are commonly presented as red, yellow and green light, or
high, medium and low risks. Qualitative assessments may be open to interpretation, guided
by descriptors (e.g., assess red light or high risk where the exposure represents a catastrophic
exposure) or framed using broad dollar ranges (e.g., a green light indicates an exposure less
than $10 million).
Qualitative risk assessments are frequently favoured because they require less
sophisticated risk aggregation methods, mathematical support and user training, which
means lower implementation costs. Conversely, qualitative results are commonly criticized for
their limited alignment with key financial statement and budgetary indicators. Additionally,
some critics suggest qualitative results are generally more difficult to interpret, which limits
management? ability to assign accountability and remediate.
Potential solution: While companies predominately apply the qualitative risk
assessment approach, the industry appears to be shifting towards quantitative risk
measurement. Companies that transition to the quantitative method typically do so using a
phased approach and will apply narrow risk ranges that expand the risk severity scale from
three categories (e.g., high, medium and low) to five or more (e.g., very high, high, moderate,
low and very low) and adjust narrative or dollar ranges accordingly. Frequently, they will also
use a separate risk severity scale for financial risks and non-financial risks such as strategic or
reputational exposures.
6. Time Horizon:
The issue: The time horizon of ERM risk assessment is largely based on the
organization's intent to use ERM risk results and its willingness to invest in risk management.
Many companies use ERM results for quarterly or year-end planning, while more
sophisticated companies integrate ERM results into annual budgeting and longer-term
strategic planning processes.
The shorter-term time horizon (less than 12 months) is generally preferred as it requires
less user training, provides increased risk estimation accuracy and is generally less expensive
than the longer-term alternative. The longer-term solution is applied where management
values risk visibility beyond the annual financial reporting period and additional time to
remediate. Regardless of the approach, the risk assessment time horizon must be consistent
with intended ERM program objectives.
Potential solution: Despite its ease, companies appear to be shifting from the short-
term risk assessment to a longer-term or hybrid solution. Additionally, companies are
increasingly utilizing a rolling time horizon (e.g., 12-18 months) to mitigate annual
assessment limitations--namely reduced risk visibility and time to mitigate as the year
progresses (e.g., the fourth quarter risk assessment covers three months of remaining risk).
7. Multiple Potential Scenarios:

The issue: Consider the following scenario: The ERM team asks a respondent to assess
the likelihood of counterparty default and its subsequent loss impact during the current fiscal
year. The respondent determines that there is a 100% probability of at least one counterparty
default with a low financial impact over the defined time horizon (high probability/low
impact event). There is also a 5% probability of at least one counterparty default with a
significant financial impact (low probability/high impact event) and several default scenarios
with varying loss severity estimates (moderate probability/moderate impact).
This situation highlights an issue associated with basic risk assessment methods? Most
risks have multiple event likelihoods and risk severities.
Potential solution: There are two common approaches to the problem. Under the most
basic approach, respondents provide a loss severity based on their best estimates. For
example, the organization recognizes a significant investment loss four times per year. The
respondent then estimates severity considering all four potential loss events, portfolio sizes,
historical loss records and the company's investment stress test results. If the respondent
estimates $100,000 in loss severity, it roughly equates to $25,000 per loss event.
The more advanced method requires the respondent to identify a distinct loss severity
for all potential events and calculate a mathematical average. To minimize computational
requirements, companies often limit the number of likelihood scenarios and potential
outcomes (e.g., unlikely, moderately likely, likely, very likely, probable).
The decision to pursue a basic or more complex method is largely based on an
organization's familiarly with probability and loss concepts, the risk assessment method
employed (e.g., in person or technology-based) and the level of sophistication supporting
risk tolerance definition.
8. ERM Ownership:
The issue: The question regarding who should "own" ERM is often unclear and
commonly disputed at the board, audit committee and management levels.
Potential solution: In most programmes, risk is primarily owned by line management
with oversight from independent risk, compliance and management oversight functions. The
broader question regarding ERM programme ownership is less decisive and largely based on
board and audit committee accountability, established risk management function and
infrastructure, and corporate risk philosophy.
While there is no one single industry practice with respect to organization structure, ERM
administration should generally be held by risk management followed by internal audit,
finance/treasury, legal and various supporting departments (e.g., compliance, strategic
planning).
9. Risk Reporting:
The issue: Organizations often struggle with two risk reporting issues: 1) what
information should be shared with various internal and external constituents, and 2) how
should risk be communicated.
Potential solution: Most organizations have multiple risk owners with varying
accountabilities and needs. As such, leading companies establish risk packages
commensurate with recipient responsibilities and specified delegation of authorities.
Common risk packages are created for the board/audit committee, management risk
oversight committee, business unit leaders and line management. Reports are typically
generated from a common risk database and taxonomy where information varies based on
recipient accountability, risk type and organizational impact.
Board reports, for example, typically present risks that exceed a defined threshold,
describe high value strategic, emerging and unquantified exposures, and exclude superfluous
information. Business unit and line reports, on the other hand, may illustrate mid-level
exposures, tactical risks and transactional compliance data.
The external reporting issue is often less challenging. Public organizations are often
required to share certain risk information through financial statements, annual meetings,
quarterly earnings announcements, public presentations and various regulatory responses.
While external reporting requirements are fairly prescriptive, organizations attempt to use
ERM results to formulate or support risk assertions.
Barring prescriptive external reporting requirements, organizations vary with respect to
internal risk reporting format. To the extent an organization applies dollar-based results,
management generally selects between one and three format options: specifically, expected
loss, loss severity or a combination. Loss severity is typically applied by companies that prefer
to view maximum potential loss unadjusted for probability of occurrence. Opponents suggest
loss severity overstates required risk remediation activities and related capital. As a
compromise, many organizations report a combination of risk results and designate one
primary metric to allocate capital (usually expected loss).
10. Simulations and Stress Tests:
The issue: Stress tests allow management to assess the degree that business operations
may be negatively affected by prescribed events and gauge the organization's ability to
respond. While the concept is intuitive, organizations often struggle to balance the need for
meaningful simulation and stress tests against a nearly infinite number of potential scenarios.
Similarly, organizations frequently struggle to identify and predict unknown or unlikely risks
(also known as black swans or game changers).
Potential solution: While there is no industry consensus regarding the number and type
of simulations to perform, bank regulatory guidance requires financial institutions to stress
test? base case? forecasts under "worst case" and other macroeconomic scenarios. While
worst case is not specifically defined, examples suggest stress tests represent "extreme"
scenarios rather than catastrophic events. In fact, most banks calculate value-at-risk and
economic capital thresholds using a two (95% confidence) or three (99%) standard deviation
test rather than a doomsday scenario.
Organizations typically address black swan events through periodic and highly targeted
brainstorming sessions where these events are inventoried and reviewed to determine what
management action will be required. The brainstorming session is typically limited to
executives and performed during an off-site retreat or during a regularly scheduled
leadership/risk oversight committee meeting.
Points to Remember
• In India, MSMEs contribute nearly 8% of the country’s GDP, around 45% of the
manufacturing output, and approximately 40% of the country’s exports.
• Across the globe, MSMEs are accepted as a means of economic growth and for
promoting equitable development. They are known to generate the highest rate of
growth in the economy.
• Running a business takes copious amounts of time and effort. Small business
owners are responsible for managing all aspects of their company. Management is
commonly defined as the alignment and coordination of multiple activities in an
organization.
• Flexibility is described through a scope of possible states (options, goals, actions)
as well as the time and costs necessary to achieve them. Flexibility plays an important
role in many contemporary concepts of management.
• A logical approach in small enterprises is crucial for practically every aspect of
business operation.
• Creative approaches in business enterprise give to entrepreneur an unfair
advantage in enterprise.
• Start-ups are seeds of imagination and passion that germinate as side hustles or a
bang on investment of time and money. Besides, like a sapling needs sunlight, water,
and nutrients from the soil, a start-up also requires a certain set of resources to grow.
• Project management tools help you organize, plan, track and analyse the data,
process, team and other aspects at various stages of a project.
• A project life cycle is a sequence of these five phases starting from initiation to
closure.
• Every individual has a different kind of upbringing, different values and morals,
different likes and dislikes, and different talents. It’s what makes each and every one
of us unique. A start-up is essentially a compilation of wildly different views, values,
and expectations of how business should be conducted. The ideal team should
possess talent, experiences, and opinions that are, on the whole, impossible for any
one person to acquire in a lifetime.
• All companies can be more creative and innovative no matter what their expertise,
product, or service is about. When you apply creativity and innovation to every
aspect of your business, you are able to stay ahead of a changing marketplace and
the competition.
• A start-up is a company launched to evolve an idea with the potential for significant
business opportunity and impact.
• The early start-up stage begins with a potentially scalable idea for a product or
service targeting a market that is poised to generate value.
• During the growth, or establishment, phase your company should have a fairly
stable customer base. one should be consistently generating income and attracting
more new customers.
• The registration of MSME is not mandatory, but the registration process has been
provided so that all entrepreneurs can maximize their benefits under this scheme and
reap the offers provided by the government. The benefits are many; from priority,
lending to cluster financing, and an opportunity to adopt the latest quality
management standards.
• Enterprise Risk Management (ERM) is a term used in business to describe risk
management methods that firms use to identify and mitigate risks that can pose
problems for the enterprise.

0. Explain Functional and Integrated Approach in detail.
0. Explain the Structured v/s Flexible Approach.
0. Discuss Logical and Creative Approach
1. Medium and small enterprises play a pivotal role in any economy- Discuss
1. Explain the Start-up phase Management in detail.
1. Explain the importance of Differences of opinion with in promoting team.
1. Discuss the role of Innovation & Creativity in start-up development.
1. Explain the Growth phase Management of start-up.
2. Explain the approaches of Medium & Small Business Management.
2. Explain MSME Registration process along with its importance.
2. Explain Udyog Adhar Registration Consultancy in detail.
2. What is Enterprise Risk Management (ERM)? Explain its Challenges in
implementation.
Short Notes:
1. Avoiding Failure and Problem solving.
1. Structured v/s Flexible Approach.
2. Logical Approach.
2. Role of Creativity and Innovation.
3. Enterprise Risk Management (ERM).
University Previous Year Questions
1. Explain the start-up stability and Growth phases of small and medium enterprise
management. (SPPU - April 2019, Oct 2018, April 2018, Sept 2017)
2. Creativity and Innovation. (SPPU - April 2017, Oct 2017)
3. Creative Approach. (SPPU - April 2017)
✍✍✍
Unit 3…
Business Crises and Sickness
Contents …
3.1 Business Crises
3.1.1 Types of Business Crises
3.2 Crisis Management and Business Continuity : Difference : Proactive vs Reactive
3.3 Crisis under Covid-19 (Global Context)
3.4 Crisis under Covid-19 (Indian Context)
3.4.1 Sickness
3.1 Business Crises

1. Business Crises :
Fig. 3.1
A business crisis occurs when an unexpected problem puts the stability of a company or
organisation at risk. These dilemmas can either originate internally or they can be brought on
by external influences. The problem affecting the business escalates to the point where it's
out of the company's control and they can't resolve it. If left unaddressed, this issue may
permanently damage the business or cause it to fail. The easiest way to identify a business
crisis is to assess the problem for three key elements.
First, the problem must pose an imminent threat to the organisation. Next, the situation
must involve an element of surprise or shock. Finally, due to the severity of the problem as
well as its unexpected nature, the situation will place pressure on the business to make timely
3.1
Business Entrepreneurship - II 3.2 Business Crises and Sickness
and effective decisions. Knowing the elements that make up a business crisis can be
instrumental in identifying these problems before it's too late. However, sometimes crises are
unavoidable, making it imperative that your business has a response ready to handle
conflicts. Adopting a crisis management team is a great way for a company to proactively
prepare for crises.
“A business crisis is an event, or a series of events, that causes major disturbance for a
business. A crisis typically occurs suddenly and poses intense difficulty or danger for the
business, usually in a situation where time is short and decisions have to be taken quickly.”
3.1.1 Types of Business Crises
Fig. 3.2
Many different types of business crisis exist, including:
• Natural disasters:
These are typically unpreventable environmental crises. For example, flooding due to
heavy rains or wind damage following storms.
• Technological disasters:
These can include IT system failures, corrupt software, faulty hardware, or malevolent
cyber attacks. They typically affect access to critical resources such as data, or
employees' ability to work effectively.
• Accidental disasters:
These usually happen unintentionally. Common examples include fires, gas leaks,
power cuts, etc
Other examples of potential business disasters are:
• Theft or vandalism:
Theft of computer equipment could prove devastating as it may prevent you from
carrying out business-critical operations. Similarly, vandalism of machinery or vehicles
could be costly and pose health and safety risks.
• Power cut:
Loss of power could have serious consequences. Would you be able to operate
without IT or telecoms systems, key machinery or equipment?
• Fuel shortages:
Temporary shortages in fuel supply could prevent staff from getting to work and
affect your ability to make and receive deliveries.
• Restricted access to premises:
How would your business function if you couldn't access your workplace (for
example, due to a gas leak)?
• Loss or illness of key staff:
How would your business cope if a key member of staff were to leave or was
incapacitated by illness?
• Outbreak of disease or infection:
An outbreak of an infectious disease among your staff, in your premises or among
livestock could present serious health and safety risks. Significant outbreaks, for
example like the coronavirus pandemic, could mean public health measures impose
business closures and restrictions to trade.
• Terrorist attack:
Consider the risks to your employees and business operations from a terrorist strike,
either where you are located or where you and your employees travel.
• Crises affecting suppliers:
How would you source alternative supplies?
• Crises affecting customers:
Will insurance or customer guarantees offset a client's inability to take your goods or
services?
• Crises affecting your business' reputation:
How would you cope, for example, in the event of a product recall or a social media
post gone wrong?
3.1.1.1 Starting Crises
This is the warning stage. The event hasn’t happened yet and you may have not even
recognized that it could happen. This is the time when you want to assess the impact an
actual crisis could have on your company, employees, customers, suppliers, operations and
bottom line.
3.1.1.2 Cash Crises
A cash flow shortage happens when more money is flowing out of a business than is
flowing into the business. That means, during a cash flow shortage, you might not have
enough money to cover payroll or other operating expenses.
3.1.1.3 Delegation Crises
Inability to delegate responsibilities and share decision-making burden is called a
delegation crisis.
3.1.1.4 Leadership Crises

A crisis is a fast-developing event that puts the organisation at risk and forces it to act. ...
Crisis leadership is more than simply leading an organisation through the response to a crisis.
Leaders should lean on their faith to make it through a crisis.
Leadership Skills to Best Manage a Crisis
• Communication. This is perhaps the most important skill needed when dealing with
crisis management.
• Adaptability.
• Self -Control.
• Relationship Management.
• Creativity.
3.1.1.5 Financial Crises
A financial crisis is any of a broad variety of situations in which some financial assets
suddenly lose a large part of their nominal value. Other situations that are often called
financial crises include stock market crashes and the bursting of other financial bubbles,
currency crises, and sovereign defaults. Factors that are often cited as being important causes
are the following:
• Explicit and implicit government and International Monetary Fund guarantees of
banks.
• Ineffective regulation of the banking system.
• Corruption and nepotism in the banking industry.
• A monopolistic market structure such as the chaebols (Chaebol means plutocracy,
rich business family, or monopoly, and the chaebol structure can encompass a single
large company or several groups of companies) as in Korea.
3.1.1.6 Prosperity Crises
Right
Smart Thoughts
Actions
Clear
Vision
Prosperity on Purpose
Fig. 3.3
True prosperity means everyone, regardless of the darkness of the day, has the
opportunity and responsibility to fulfil their unique potential and play their part in
strengthening their communities and nations. Prosperous nations are built on trust and
respect.
3.1.1.7 Succession Crises
A succession crisis is a crisis that arises when an order of succession fails, for example
when a king dies without an indisputable heir. It may result in a war of succession. Succession
planning is an important part of the talent management process. It provides a way to identify
key roles, people with the right skills and positions that may need filling in a short space of
time.
The most successful plans

are !exible to meet the
individual needs of those it
is developed to serve, while
comprehensive in nature to
respond to current and
future requirements.
Fig. 3.4
3.2 Crisis Management and Business Continuity : Difference :
Proactive vs Reactive
• Business Continuity Management is proactive while Crisis Management is reactive.
Business Continuity prepares the organisation to continue during an incident whereas
Crisis Management is when all efforts fail and we try to put things in place.
• Business Continuity is an enabling discipline. Crisis Management is a controlling
discipline. The former enables an organisation to continue a level of effective
operation, whilst at the same time the latter takes the impact event under control.
Teach that difference and your organisation will apply both people and budgets
effectively. It completely sets the separation between Crisis Management and
Business Continuity. And what’s more the clients like and understand it.
Good Practice Guidelines:
• The Good Practice Guidelines talk of a response structure which is team based.
Possibly, if the organisation is complex and so structured, split into Strategic, Tactical
and Operational response teams. Some simply have Strategic (Crisis/Media) and
operational. Not all incidents are crises, not all incidents are in need of business
continuity. The key is that there is a structure with known and understood trigger
points that move command and control up or down the pyramid of command. A
response structure that allows escalation or de-escalation triggers to move the
response appropriately, based on a situation report that reviews the triggers. The
structure should match the organisational structure. The process of response
structure creation, depends on the size, complexity and maturity of the organisation.
Crisis levels are reached when planning assumptions are breached and a strategic
response is required. No standard response structure exists, only your chosen
response structure.
• It is important to practice this hand over in a exercise to make sure both Crisis
Management and Business Continuity teams practice working together.
COSO – Operations Led Crisis Management
• Crises must be managed by Executives (and their teams). The Business Continuity
business unit is a second line of defence (COSO model), we don’t manage incidents
or crises. We are just here to make sure they test the plans, they execute them
correctly and for internal consulting. Operational teams (IT, operations, business,
finances, etc.) are those who execute the plans, they are not a business continuity
team. If we select people from the operational teams to be members of a business
continuity team, it will limit the scope and the capability of recovery of the
organisation. If we need to execute a plan and if it’s not a crisis, same answer:
Operational teams should execute the plan, not a Business Continuity Team.
• There has to be two separate teams for Business Continuity and Crisis Management.
While the former guides in the various strategies to be followed, the actual
management of the Crisis is done by the ‘Support’ functions such as Facilities, IT, HR
etc. However, there has to be a single framework that includes both these and
probably one single team that owns both.
The 5 Components of COSO: C.R.I.M.E.
The five components of COSO – control environment, risk assessment, information
and communication, monitoring activities, and existing control activities – are often referred
to by the acronym C.R.I.M.E. To get the most out of your SOC 1 compliance, you need to
understand what each of these components includes.
1. Control Environment:
How has management put into place policies and procedures that guide the
organisation? What kind of tone has management set in the organisation so that
everyone knows that they are supposed to make sure that your controls are
operating effectively and are achieving the results that they expect?
2. Risk Assessment:
How does your organisation assess risk in order to identify the things that threaten
the achievement of their objectives?
3. Information and Communication:
How does management communicate to their internal and external users what is
expected of them? How do you make sure that you receive acknowledgement from
those people that they understand what you’re asking them to do?
4. Monitoring Activities:
How does management oversee the functioning of the entire organisation? How do
you identify when things aren’t working correctly and correct those deficiencies as
quickly as you possibly can?
5. Existing Control Activities:
What are the controls that you currently have in place? Were they in place and
operating effectively over a period of time?
Visual Model:
• If the question is just Crisis Management and Business Continuity, draw a long
rectangle. On the left upper is Crisis Management with some large parts. Lower left is
Business Continuity. Right side the opposite. Now draw a lie between the 2 sides. It
should be that easy. It’s not. There will be bumps and loops. Notice I didn’t mention
length of time. The Emergency Operations Center is part of Crisis Management but is
bigger and different. In some cases the Emergency Operations Center may ‘stand up’
as an observer until a decision is made with the Businesses, Crisis Management and
Business Continuity teams.
• Business Continuity often overlaps crisis response. Each process will have a different
recovery timeline. Some processes require little intervention to recover.
Management:
• It has a lot to do with mindset and how business continuity and crisis management is
viewed by Management. That helps set the tone for processes.
• In some organisations it can be one person taking on a coordination role. Public
Relations would take the lead in crisis communications with input from Risk
Management while Risk Management would lead the business continuity effort.
Mock drills and table top exercises are part and parcel of the program to ensure
cooperation and collaboration between parties, including external entities.
Emergency Management:
• The four phases of emergency management could apply. Preparedness, response,
recover and mitigation are discussed as sequential activities, but they should all take
place concurrently even though there may be more emphasis on one phase at any
given time.
3.3 Crisis under Covid-19: (Global Context)
Fig. 3.5
The COVID-19 pandemic has led to a dramatic loss of human life worldwide and presents
an unprecedented challenge to public health, food systems and the world of work. The
economic and social disruption caused by the pandemic is devastating: tens of millions of
people are at risk of falling into extreme poverty, while the number of undernourished
people, currently estimated at nearly 690 million, could increase by up to 132 million by the
end of the year.
Millions of enterprises face an existential threat. Nearly half of the world’s 3.3 billion
global workforce are at risk of losing their livelihoods. Informal economy workers are
particularly vulnerable because the majority lack social protection and access to quality
health care and have lost access to productive assets. Without the means to earn an income
during lockdowns, many are unable to feed themselves and their families. For most, no
income means no food, or, at best, less food and less nutritious food.
The pandemic has been affecting the entire food system and has laid bare its fragility.
Border closures, trade restrictions and confinement measures have been preventing farmers
from accessing markets, including for buying inputs and selling their produce, and
agricultural workers from harvesting crops, thus disrupting domestic and international food
supply chains and reducing access to healthy, safe and diverse diets. The pandemic has
decimated jobs and placed millions of livelihoods at risk. As breadwinners lose jobs, fall ill
and die, the food security and nutrition of millions of women and men are under threat, with
those in low-income countries, particularly the most marginalised populations, which include
small-scale farmers and indigenous peoples, being hardest hit.
Millions of agricultural workers – waged and self-employed – while feeding the world,
regularly face high levels of working poverty, malnutrition and poor health, and suffer from a
lack of safety and labour protection as well as other types of abuse. With low and irregular
incomes and a lack of social support, many of them are spurred to continue working, often in
unsafe conditions, thus exposing themselves and their families to additional risks. Further,
when experiencing income losses, they may resort to negative coping strategies, such as
distress sale of assets, predatory loans or child labour. Migrant agricultural workers are
particularly vulnerable, because they face risks in their transport, working and living
conditions and struggle to access support measures put in place by governments.
Guaranteeing the safety and health of all agri-food workers – from primary producers to
those involved in food processing, transport and retail, including street food vendors – as
well as better incomes and protection, will be critical to saving lives and protecting public
health, people’s livelihoods and food security.
In the COVID-19 crisis food security, public health, and employment and labour issues, in
particular workers’ health and safety, converge. Adhering to workplace safety and health
practises and ensuring access to decent work and the protection of labour rights in all
industries will be crucial in addressing the human dimension of the crisis. Immediate and
purposeful action to save lives and livelihoods should include extending social protection
towards universal health coverage and income support for those most affected. These
include workers in the informal economy and in poorly protected and low-paid jobs,
including youth, older workers, and migrants. Particular attention must be paid to the
situation of women, who are over-represented in low-paid jobs and care roles. Different
forms of support are key, including cash transfers, child allowances and healthy school meals,
shelter and food relief initiatives, support for employment retention and recovery, and
financial relief for businesses, including micro, small and medium-sized enterprises. In
designing and implementing such measures it is essential that governments work closely
with employers and workers.
Countries dealing with existing humanitarian crises or emergencies are particularly
exposed to the effects of COVID-19. Responding swiftly to the pandemic, while ensuring that
humanitarian and recovery assistance reaches those most in need, is critical.
Now is the time for global solidarity and support, especially with the most vulnerable in
our societies, particularly in the emerging and developing world. Only together can we
overcome the intertwined health and social and economic impacts of the pandemic and
prevent its escalation into a protracted humanitarian and food security catastrophe, with the
potential loss of already achieved development gains.
We must recognize this opportunity to build back better, as noted in the Policy Brief
issued by the United Nations Secretary-General. We are committed to pooling our expertise
and experience to support countries in their crisis response measures and efforts to achieve
the Sustainable Development Goals. We need to develop long-term sustainable strategies to
address the challenges facing the health and agri-food sectors. Priority should be given to
addressing underlying food security and malnutrition challenges, tackling rural poverty, in
particular through more and better jobs in the rural economy, extending social protection to
all, facilitating safe migration pathways and promoting the formalisation of the informal
economy.
We must rethink the future of our environment and tackle climate change and
environmental degradation with ambition and urgency. Only then can we protect the health,
livelihoods, food security and nutrition of all people, and ensure that our ‘new normal’ is a
better one.
3.4 Crisis under Covid-19 (Indian Context)
Fig. 3.6
As per the official data released by the ministry of statistics and programme
implementation, the Indian economy contracted by 7.3% in the April-June quarter of this
(2021) fiscal year. This is the worst decline ever observed since the ministry had started
compiling GDP stats quarterly in 1996. In 2020, an estimated 10 million migrant workers
returned to their native places after the imposition of the lockdown. But what was surprising
was the fact that neither the state government nor the central government had any data
regarding the migrant workers who lost their jobs and their lives during the lockdown.
The government extended their help to migrant workers who returned to their native
places during the second wave of the corona, apart from just setting up a digital-centralised
database system. The second wave of Covid-19 has brutally exposed and worsened existing
vulnerabilities in the Indian economy. India’s $2.9 trillion economy remains shuttered during
the lockdown period, except for some essential services and activities. As shops, eateries,
factories, transport services, business establishments were shuttered, the lockdown had a
devastating impact on slowing down the economy. The informal sectors of the economy
have been worst hit by the global epidemic. India’s GDP contraction during April-June could
well be above 8% if the informal sectors are considered. Private consumption and
investments are the two biggest engines of India’s economic growth. All the major sectors of
the economy were badly hit except agriculture. The Indian economy was facing headwinds
much before the arrival of the second wave. Coupled with the humanitarian crisis and silent
treatment of the government, the covid-19 has exposed and worsened existing inequalities
in the Indian economy. The contraction of the economy would continue in the next 4
quarters and a recession is inevitable. Everyone agrees that the Indian economy is heading
for its full-year contraction. The surveys conducted by the Centre For Monitoring Indian
Economy shows a steep rise in unemployment rates, in the range of 7.9% to 12% during the
April-June quarter of 2021. The economy is having a knock-on effect with MSMEs shutting
their businesses. Millions of jobs have been lost permanently and have dampened
consumption. The government should be ready to spend billions of dollars to fight the health
crisis and fast-track the economic recovery from the covid-19 instigated recession. The most
effective way out of this emergency is that the government should inject billions of dollars
into the economy.
The GDP growth had crashed 23.9% in response to the centre’s no notice lockdown.
India’s GDP shrank 7.3% in 2020-21. This was the worst performance of the Indian economy
in any year since independence. As of now, India’s GDP growth rate is likely to be below 10
per cent.
The Controller General of Accounts Data for the centre’s fiscal collection indicates a
gross-tax revenue (GTR) of rupees 20 lakh crore and the net tax revenue of rupees 14 lakh
crore for 2020-21. The tax revenue growth will be 12 per cent, which would mean the
projected gross and the net tax revenues for 2020-21 would be rupees 22.7 lakh crore and
15.8 lakh crore respectively.
This suggests some additional net tax revenues to the centre amounting to rupees 0.35
lakh crores as compared to the budget magnitudes. The main expected shortfall may still be
in the non-tax revenues and the non-debt capital receipts. If we look down in the past, the
growth rate for the non-tax revenues and non-debt capital receipts have been volatile, but if
we add them together, they average to a little lower than 15% during the five years
preceding 2020-21.
3.4.1 Sickness
3.4.1.1 Meaning and Definition
Fig. 3.7
Rapid industrial growth has brought in its wake incidence of sickness in the industrial
sector. Sickness is a gradual process and does not develop suddenly. In the initial stages, it
gets reflected in the form of defects and mistakes in the unit's functional areas like
production, finance and management. Later on various symptoms like irregular or
unsatisfactory turnover in the account, slow and unsatisfactory movement of stocks, decline
in production, sales and profitability, frequent violation of terms and conditions and asking
for additional grants. A sick industrial unit may be defined as one when it fails to generate
surplus on a continuous basis and depends on frequent infusion of external funds for its
survival. The sick industrial companies ( special provision ) act 1985 identifies sickness in
terms of cash losses for two consecutive financial years and accumulated losses exceeding
the net worth of the company at the end of the second financial year.
3.4.1.2 Definition of Sickness
In general a sick unit can be defined as a unit that fails to generate surplus on a
continuous basis and frequently depends on external funds for its survival.
1. According to the Reserve Bank of India (RBI) a small scale unit is considered as a
sick unit if it has “incurred cash loss in the previous accounting year and is likely to
continue to incur cash loss in the current accounting year and has on erosion on
account of cumulative cash losses to the extent of 50 percent of those of its net
worth”.
2. According to ICICI, a sick industry is one whose financial viability is threatened by
adverse factors present and continuing. The adverse factor might relate to
management, market fiscal burden, labour relations or any other. When the impact of
factors reaches a point where a company begins to, incurred cash losses leading to
erosion of its funds, there is threat to its financial stability.
3. The definition of sick small scale industry has been modified as, “A small scale,
industrial unit should be considered as sick if it has, at the end of any accounting
year, accumulated losses equal to or exceeding 50 percent of its peak – net worth in
the immediately preceding five accounting years”.
3.4.1.3 Nature of Sickness
The policy of over-regulation of the entire industrial sector, coupled with restrictions on
closing a financially sick unit or reducing staff strength, led to a growing menace of industrial
sickness, that is, the phenomenon of industry and business units running into a persistent
loss and erosion of net worth. Instances also came to light where the entrepreneurs
deliberately made a unit financially sick by exploiting it for personal gain. Over years, the
growing menace of industrial sickness not only assumed a cancerous form but also
endangered the financial institutions, which had extended loans to them. The phenomenon
of industrial sickness has been fed by both fraudulent approach by the owners and the faulty
policies pursued by the authorities. The government has been guilty of over-regulating the
industrial units to an extent that left little scope for a reasonable return on investment by fair
means. At the same time, the government policies also provided an ample scope and
temptation for frauds and mismanagement. Frequently, the permitted sales price was
insufficient to cover the cost of inputs. The authorities also failed to formulate and implement
a labour and wage policy in conformity with the needs of growing industrialization of the
economy. Normally, when a business unit turns financially sick, avenues should be explored
for restructuring and reviving it. In the process, it may even be given a fresh injection of
capital. In case this remedy is not expected to work, it should be allowed to close down. In
India, however, the policy of the Government has been to keep these units alive through
financial support from itself and from the financial institutions with the objective of
protecting the jobs of the employees.
3.4.1.4 Symptoms of Sickness
Fig. 3.8
Some of the common symptoms of industrial sickness are listed hereunder:
• Little to no movement of inventory.
• Decrease in the company’s sales.
• Decline in capacity utilisation.
• Shortage of cash to meet the day to day obligations.
• Frequent proposals to extend the credit limit.
• Deteriorating financial ratio.
• Continuous fall in the prices of shares.
• Non-payment or delay in the payment of dues like taxes, interest, dividends, salaries,
etc.
• Delay in the audit of accounts.
• Disparities among various levels of management.
• Decline in technological innovations.
• Irregularity in the maintenance of books of accounts.
• Overdependence on external funds.
• Continuous losses.
3.4.1.5 Causes of Sickness
According to the Reserve Bank of India (RBI) a small scale unit is considered as a sick
unit if it has “incurred cash loss in the previous accounting year and is likely to continue to
incur cash loss in the current accounting year and has on erosion on account of cumulative
cash losses to the extent of 50 percent of those of its net worth”.
The factors causing industrial sickness are classified into two groups – Internal Causes
and External Causes.
Causes of
Industrial
Sickness
Internal External
Causes Causes
Fig. 3.9
Internal Causes
The causes which are under the control of the enterprise, are regarded as internal causes.
It may be a result of some internal insufficiency or shortcoming, in different areas of business.
Some of these causes are listed below:
1. Technical Feasibility:
• Inadequate Technical Knowhow
• Inappropriate choice of technology
• Obsolete production process
• Poor information system
• Wrong or defective idea of industry
2. Economic Viability:
• High cost of inputs
• High break-even point
• Excessive investment in fixed assets
• Non-flexibility of fixed assets
• Underestimation of financial requirements.
3. Production Management:
• Underutilization of production capacity
• Huge wastage of raw materials and supplies
• Poor maintenance and replacement of plant and machinery
• Wrong location or layout
• Poor quality maintenance
4. Labour Management:
• Poor performance and productivity of labour
• Huge workforce, than required.
• Lack of skilled labour
• Unreasonably high wage structure.
• Poor handling of labour

• Inadequate training
5. Marketing Management:
• Lack of market research and feedback
• Unsound pricing policy
• Inappropriate product mix
• Improper demand forecast
• Small customer base
• Poor marketing strategies
• Absence of horizontal and vertical integration
6. Financial Management:
• Shortage of working capital
• Lack of funds
• Defective Capital structure
7. Administrative Management:
• Huge expenditure on Research and Development
• Incompetent Management
• Lack of timely diversification.
External Causes : The causes which are beyond the control of the enterprise comes
under external causes, which affects the industry as a whole.
1. General Issues
• Improper supply or non-availability of important raw material, or availability at higher
prices.
• Improper supply of critical inputs like power, water and transportation.
• Chronic Power storage.
• High production cost.
• Ignorance of potential market.
2. Government Controls and Policies:
• Sudden unfavourable change in the policies of the government.
• Taxes and duties.
• Price control.
3. Market Constraints:
• Innovative technological changes, due to which products turn out as obsolete.
• Recessionary trend in the entire economy, affecting the performance of the firms.
4. Extraneous Factors:
• Natural Calamities, like an earthquake, floods, etc.
• Political Situation.
• Industrial Strikes.
• War between countries.
3.4.1.6 Turnaround Strategies of Sickness
Turnaround strategies derive their name from the action involved that is reversing a
negative trend. There are certain conditions or indicators which point out that a turnaround
is needed for an organisation to survive. Turn around strategy also means to convert, change
or transform a loss making company to a profit making company. It helps a sick company to
stand once again in the market. It tries to reverse the position from declining sales to
increasing sales, from weakness to strength, and from an instability to stability.
De!nition of
Turnaround Strategy
In General Sense... In an Academic Sense...

In Business Sense... “to solve the root
“to transform a loss “to deal with the issues of
making company into cause failure of a
a loss making company.” loss-making
a pro"t making one.”
company.”
Fig. 3.10
Features of Turnaround Strategy:
1. Turnaround involves restructuring the sick company.
2. It is applicable to a loss-making unit.
3. It needs consultation of internal and external experts.
4. It is a long and time-consuming process.
5. It involves in-depth planning with evidential testing.
6. It is a capital intensive strategy.
7. It helps to utilize all available resources optimally.
8. It leaves a permanent effect on the structure of the sick company.
9. It needs full co-operation of people associated with the sick company for its success.
So, from the above diagram we could know that turnaround strategy is the process of
restructuring the sick or loss making unit and converting it into a profit making unit in the
near future. Though it is a time consuming process, it also needs help from the internal and
external experts, who are experts in their respective subject matters. To once again bring the
company to profits, it’s a long process and involves in-depth planning with evidential testing.
All the resources which are available with the company should be utilised in the most
efficient manner which will leave a permanent effect on the structure of the sick company.
It is also to be noted that it is a capital intensive strategy and needs full cooperation of
the people associated with the sick company for its success.
3.4.1.7 Revival Schemes of Sickness
In this context, it is noteworthy that the Government of India has set up a statutory body,
namely, the Board for Industrial & Financial Reconstruction (BIFR) under the Sick Industrial
Companies (Special Provisions) Act, 1985 to facilitate revival of viable sick industrial units and
also for the winding up of non-viable sick units. The SSI sector, however, does not come
under the purview of the BIFR.
BIFR :
Fig. 3.11
(i) Industrial companies whose net worth has been eroded completely and those which
have net worth eroded by 50 percent or more are required to make a reference to
the BIFR under section 15 and 23 of the Act respectively.
(ii) Public sector undertakings were also brought under the purview of BIFR through an
amendment of the SICA, 1985 in December 1991.
(iii) If sickness of a company is confirmed the BIFR will determine the course of action to
be followed with regard to the company in the following ways:
(a) allowing the company on its own time, to make its net worth positive within a
reasonable period;
(b) having a scheme prepared such as for reconstruction, revival or rehabilitation of
the sick company for changing or takeover of management of sick unit for
amalgamation with other unit for sale of lease of the company etc. through the
operating agency in respect of the company, and
(c) deciding on the winding up to the company.
(iv) The decision of BIFR is binding on all concerned and the Act has an overriding effect
over all other laws except FERA (Foreign Exchange Regulation Act) and the Urban
Land (Ceiling and Regulation) Act.
(v) The jurisdiction of civil courts is barred in respect of matters coming under the
purview of BIFR. The Act provides for an Appellate Authority.
(vi) The BIFR has powers to appoint a special director on sick company in case of
mismanagement. It has also the power to debar the company management from the
organised sector for a period of 10 years.
Since its inception up to the end of March 1998, the BIFR has received 4001 references.
These references include 240 central and state public sector undertakings under the Sick
Industrial Companies (Special Provisions) Act, 1985 at the end of November 1999. However,
out of the reference reviewed 2841 were registered under section 15 SICA, while 516
reference were dismissed as non-maintainable under the Act.
Among the 240 references for the public undertaking 170 were registered in the month
of November 1999. The disposal of cases by the BIFR declined from 1881 in 1997 to 141 in
1998 and to further 159 in 1999.
On 1 December 2016, the Narendra Modi government dissolved BIFR and referred all
proceedings to the National Company Law Tribunal (NCLT) and National Company Law
Appellate Tribunal (NCLAT) as per provisions of Insolvency and Bankruptcy Code.
# In order to also help the sick units to regain their health and revive them, many
concessions and incentives have been given to these units, which are discussed below.
1. Banks Initiatives:
In order to rehabilitate sick industrial units the commercial banks have granted various
concessions, such as,
(i) Grant of additional working capital facilities to overcome the shortage of working
capital faced by such units,
(ii) Recovery of interest at reduced rates,
(iii) Suitable moratorium on payment of interest; and
(iv) Freezing a portion of the out-standings in the accounts, etc.
Besides these concessions, commercial banks have also initiated a number of steps on
the organisational front to understand the problem of sick industrial units and their
rehabilitation.
2. Government Policy:
(i) A policy framework regarding measures to deal with the problem of industrial
sickness was laid down in the guidelines announced in October 1981 (modified in
February 1982) for guidance of administrative ministries of the Central Government,
State Government and financial institutions.
(ii) Government taking over the management of a number of industrial units under the
provisions of the industries (Development and Regulation) Act, 1951, with the aim of
reviving them by providing management of support and financial support through
banks and financial institutions has not so far proved an effective measure for revival
of sick units. The present policy does not favour management take over, except as a
stop-gap arrangement for units to be nationalised.
(iii) Government has announced the following concessions:
(a) amended the Income-Tax Act in 1977 by addition of section 72A by which tax
benefit can be given to healthy units when they take over sick units by
amalgamation with a view to reviving them, and
(b) introduced a scheme on January 1, 1982 for provision of margin money to sick
units in the small scale sector a soft terms to enable them to obtain necessary
fund from banks and financial institutions to implement their revival scheme.
(iv) For reducing sickness in the small scale sector a liberalised margin money scheme
(LMMS) was introduced in June 1987. Under the scheme the State Governments are
to make a matching contribution on a 50-50 basis in providing assistance to sick
small scale units in their rehabilitation. The maximum amount to be sanctioned has
been enhanced from ` 20,000 to ` 50,000 per sick unit.
(v) The Industrial Reconstruction Corporation of India (IRCI), established by the
Government to revive and rehabilitate sick units, was in 1985 converted into a
statutory corporation now known as the Industrial Reconstruction Bank of India
(IRBI) with the aim of overcoming the inherent difficulties which had been faced by
the (IRCI).
(vi) In 1983 the RBI advised financing banks to evolve methods to diagnose sickness in
industrial units at the incipient stage itself.
(vii) In 1985 the Sick Industrial Companies [Special Provisions] Act (SICA) was passed.
(viii) A scheme for the grant of excise loan to sick/weak Industrial units, introduced in
1989 has been further liberalised in 1990. Under the scheme, selected sick units will
be eligible for excise loan not exceeding 50 percent of the excise duty actually paid
for 5 years.
(ix) Board for Industrial and Financial Reconstruction (BIFR) set up under SICA 1985 for
determining the preventive, ameliorative, remedial and other measures in respect of
sick industrial units and for expenditure enforcement of the measures determined.
Points to Remember
1. A business crisis occurs when an unexpected problem puts the stability of a company
or organisation at risk. These dilemmas can either originate internally or they can be
brought on by external influences.
2. Starting Crises : This is the warning stage. The event hasn’t happened yet and you
may have not even recognized that it could happen. This is the time when you want
to assess the impact an actual crisis could have on your company, employees,
customers, suppliers, operations and bottom line.
3. Cash Crises : A cash flow shortage happens when more money is flowing out of a
business than is flowing into the business. That means, during a cash flow shortage,
you might not have enough money to cover payroll or other operating expenses.
4. Delegation Crises : Inability to delegate responsibilities and share decision-making
burden is called a delegation crisis.
5. Leadership Crisis : A crisis is a fast-developing event that puts the organisation at
risk and forces it to act. ... Crisis leadership is more than simply leading an
organisation through the response to a crisis. Leaders should lean on their faith to
make it through a crisis.
5. Financial Crises : A financial crisis is any of a broad variety of situations in which
some financial assets suddenly lose a large part of their nominal value. Other
situations that are often called financial crises include stock market crashes and the
bursting of other financial bubbles, currency crises, and sovereign defaults.
6. True prosperity means everyone, regardless of the darkness of the day, has the
opportunity and responsibility to fulfil their unique potential and play their part in
strengthening their communities and nations. Prosperous nations are built on trust
and respect.
7. Succession Crises : A succession crisis is a crisis that arises when an order of
succession fails, for example when a king dies without an indisputable heir. It may
result in a war of succession. Succession planning is an important part of the talent
management process. It provides a way to identify key roles, people with the right
skills and positions that may need filling in a short space of time.
8. Business Continuity Management is proactive while Crisis Management is reactive.
Business Continuity prepares the organisation to continue during an incident whereas
Crisis Management is when all efforts fail and we try to put things in place.
9. Crises must be managed by Executives (and their teams). The Business Continuity
business unit is a second line of defence (COSO model), we don’t manage incidents
or crises. We are just here to make sure they test the plans, they execute them
correctly and for internal consulting. Operational teams (IT, operations, business,
finances, etc.) are those who execute the plans, they are not a business continuity
team. If we select people from the operational teams to be members of a business
continuity team, it will limit the scope and the capability of recovery of the
organisation. If we need to execute a plan and if it’s not a crisis, same answer:
Operational teams should execute the plan, not a Business Continuity Team.
10. The COVID-19 pandemic has led to a dramatic loss of human life worldwide and
presents an unprecedented challenge to public health, food systems and the world of
work. The economic and social disruption caused by the pandemic is devastating:
tens of millions of people are at risk of falling into extreme poverty, while the number
of undernourished people, currently estimated at nearly 690 million, could increase
by up to 132 million by the end of the year.
11. According to the Reserve Bank of India (RBI) a small scale unit is considered as a
sick unit if it has “incurred cash loss in the previous accounting year and is likely to
continue to incur cash loss in the current accounting year and has on erosion on
account of cumulative cash losses to the extent of 50 percent of those of its net
worth”.
12. Turnaround strategy also means to convert, change or transform a loss making
company to a profit making company. It helps a sick company to stand once again in
the market. It tries to reverse the position from declining sales to increasing sales,
from weakness to strength, and from an instability to stability.
13. That turnaround strategy is the process of restructuring the sick or loss making unit
and converting it into a profit making unit in the near future. Though it is a time
consuming process ,it also needs help from the internal and external experts, who
are experts in their respective subject matters. To once again bring the company to
profits, it’s a long process and involves in-depth planning with evidential testing. All
the resources which are available with the company should be utilised in the most
efficient manner which will leave a permanent effect on the structure of the sick
company.
14. Government of India has set up a statutory body, namely, the Board for Industrial &
Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special
Provisions) Act, 1985 to facilitate revival of viable sick industrial units and also for the
winding up of non-viable sick units. The SSI sector, however, does not come under
the purview of the BIFR.

1. What are business crises. Explain the various types of business crises ?
2. Explain the COSO model in detail ?
3. Write a brief note on Visual model ?
4. Write a detailed note about crises under covid 19 under Indian and world context ?
5. Define sickness ? Explain the nature of sickness ?
6. Explain the various symptoms of sickness and also explain the causes of sickness ?
7. Define Turnaround strategy ? Also explain the features of turnaround strategies.
8. Explain the revival scheme of sickness ?
9. Write short notes on :
(a) BIFR.
(b) Leadership crises.
(c) Succession crises.
(d) Financial crises.
(e) Turnaround strategy.
(f) COSO.
(g) Types of business crises.
✍✍✍
Unit 4…
Introduction to Startup India Scheme
Contents …
4.1 Aim of Startup
4.2 Significance of Startup’s
4.3 Advantages of Startup’s
4.4 Eligibility for Startup India
4.5 Do’s and Don'ts for Startup’s
4.6 Examples of Startups
4.1 Aim of Startup

Startup India is a flagship initiative of the Government of India, intended to build a strong
ecosystem that is conducive for the growth of startup businesses, to drive sustainable
economic growth and generate large scale employment opportunities. The Government
through this initiative aims to empower startups to grow through innovation and design.
Fig. 4.1
Several programmes have been undertaken since the launch of the initiative on 16th of
January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into
a country of job creators instead of job seekers. These programs have catalysed the startup
culture, with startups getting recognized through the Startup India initiative and many
entrepreneurs availing the benefits of starting their own business in India.
4.1
Business Entrepreneurship - II 4.2 Introduction to Startup India Scheme
Startup India Initiative :

Launched on 16th January, 2016, the Startup India Initiative has rolled out several
programs with the objective of supporting entrepreneurs, building a robust startup
ecosystem and transforming India into a country of job creators instead of job seekers. These
programmes are managed by a dedicated Startup India Team, which reports to the
Department for Industrial Policy and Promotion (DPIIT).
4.2 Significance of Startup’s
Startup India is about creating prosperity in India. Many enterprising people who dream
of starting their own business lack the resources to do so. As a result, their ideas, talent and
capabilities remain untapped – and the country loses out on wealth creation, economic
growth and employment. Startup India will help boost entrepreneurship and economic
development – by ensuring that people who have the potential to innovate and start their
own business are encouraged – with proactive support and incentives at multiple levels.
Fig. 4.2
Startup’s are significant because of the following reasons :
(a) Simple Process :
The government of India has launched a mobile app and a website for easy
registration for startups. Anyone interested in setting up a startup can fill up a simple
form on the website and upload certain documents. The entire process is completely
online.
(b) Reduction in Costs :
The government also provides lists of facilitators of patents and trademarks. They will
provide high-quality Intellectual Property Right Services including fast examination of
patents at lower fees. The government will bear all facilitator fees and the startup will
bear only the statutory fees. They will enjoy an 80% reduction in the cost of filing
patents.
(c) Easy Access to Funds :
A 10,000 crore rupees fund is set-up by the government to provide funds to the
startups as venture capital. The government is also giving guarantees to the lenders
to encourage banks and other financial institutions to provide venture capital.
(d) Tax Holiday for 3 Years :

Startups will be exempted from income tax for 3 years provided they get a
certification from Inter-Ministerial Board (IMB).
(e) Apply for Tenders :
Startups can apply for government tenders. They are exempted from the “prior
experience/turnover” criteria applicable for normal companies answering to
government tenders.
(f) No Time Consuming Compliances :
Various compliances have been simplified for startups to save time and money.
Startups shall be allowed to self-certify compliance (through the Startup mobile app)
with 9 labour and 3 environment laws.
(g) Tax Savings for Investors :
People investing their capital gains in the venture funds setup by the government will
get exemption from capital gains. This will help startups to attract more investors.
(h) Choose Your Investor :
After this plan, the startups will have an option to choose between the Venture
Capitalists, giving them the liberty to choose their investors.
(i) Easy Exit :
In case of exit – A startup can close its business within 90 days from the date of
application of winding up.
(j) Meet Other Entrepreneurs :
The government has proposed to hold 2 startup fests annually both nationally and
internationally to enable the various stakeholders of a startup to meet. This will
provide huge networking opportunities. Startups are being highly encouraged by the
government. The benefits enjoyed by them are immense, which is why more people
are setting up startups.
4.3 Advantages of Startup’s
The benefits provided to recognized startups under the Startup India initiative are:
Bene!ts of
Startup
India
Registration
Fig. 4.3
1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws.

2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and
exemption on capital and investments above Fair Market Value
3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016.
4. Startup Patent Application & IPR Protection: Fast track patent application with up
to 80% rebate in filing patents.
5. Easier Public Procurement Norms: Exemption from requirement of earnest money
deposit, prior turnover and experience requirements in government tenders.
6. SIDBI Fund of Funds: Funds for investment into startups through Alternate
Investment Funds.
Further, the Startup India portal – www.startupindia.gov.in – is a one-stop platform for all
stakeholders in the startup ecosystem to interact amongst each other, exchange knowledge
and form successful partnerships in a highly dynamic environment.
4.4 Eligibility for Startup India
Under the Startup India Action Plan, startups that meet the definition as prescribed under
GSR. notification 127(e) are eligible to apply for recognition under the programme. The
Startups have to provide support documents, at the time of application.
Fig. 4.4
Eligibility Criteria for Startup Recognition:
1. The Startup should be incorporated as a private limited company or registered as a
partnership firm or a limited liability partnership.
2. Turnover should be less than INR 100 Crores in any of the previous financial years.
3. An entity shall be considered as a startup up to 10 years from the date of its
incorporation.
4. The Startup should be working towards innovation/ improvement of existing

products, services and processes and should have the potential to generate
employment/ create wealth. An entity formed by splitting up or reconstruction of an
existing business shall not be considered a "Startup".
Startup India: 80 IAC Tax Exemption:
Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of
the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax
holiday for 3 consecutive financial years out of its first ten years since incorporation.
Eligibility Criteria for applying to Income Tax exemption (80IAC):
1. The entity should be a recognized Startup.
2. Only Private limited or a Limited Liability Partnership is eligible for Tax exemption
under Section 80IAC.
3. The Startup should have been incorporated after 1st April, 2016.
Startup India: Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)
Post getting recognition a Startup may apply for Angel Tax Exemption.
Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:
1. The entity should be a DPIIT recognized Startup.
2. Aggregate amount of paid up share capital and share premium of the Startup after
the proposed issue of share, if any, does not exceed INR 25 Crore.
4.5 Do’s and Don'ts for Startup’s
Fig. 4.5
(a) Stop selling and start sharing:
People are much more interested in what you have to say when you're sharing your
knowledge, your passion and your experience to help them solve their problems.
Focus on being interested in them, and don't worry so much about being interesting.
It's amazing how interesting you are when you're paying attention to your customers'
needs. People buy from those they like, trust and identify with. Building rapport
creates that trust and credibility. Just remember, it's about the relationship, not the
sale. Nobody likes to be sold, but everyone likes to buy.
Do: Listen to what your prospects and customers say with their words and body
language.
Don't: Pull out a brochure or sales sheet unless they ask for it.
(b) Differentiate or die:
What makes you unique vs. the others in the market? Make sure there's something
special about your product or service other than the price. Own something important
in your customers' hearts and minds. Being good is no longer good enough--you
have to find something where you're great. Use your imagination and creativity to set
yourself apart from the crowd.
Do: Talk to real customers and ask them for a report card
Don't: Chase last week's/quarter's/year's trend
(c) Solve problems people will pay for. Revenue is validation:
Are customers voting with their wallets? Are your products or services the "nice to
have" thing or the "have to have" thing? Be very important to your most important
customers--they should think of you first for any needs in your category. Also, make
sure you have more than just a "one off" good idea. Although great businesses start
with great ideas, not all ideas are company-worthy. Many of the dotcoms forgot that
the business model must actually work, that cash flow matters and that it's not just
about building awareness but about making the sale. Janet Jackson got plenty of
attention for her wardrobe malfunction in last year's Super Bowl, but did that sell
more of her products?
Do: Test, tweak and try again.
Don't: Ask your friends or family and call it "research."
(d) Leverage the evangelists:
There are people out there using your product or service who would be glad to tell
others about your business. If you can make them happy, they'll help you spread the
word to other like-minded customers. And here's something to keep in mind: They
may be using your product or service for purposes other than the ones you initially
intended, so make sure you really understand what they like and dislike about your
business and, more importantly, why. And remember, it's not about pedigree or job
title--your champions can come from anywhere. At one of the startups I worked for, a
hair stylist made a key introduction for our company. Friend-raising can, in fact, leads
to fundraising, so make friends before you need them.
Do: Make it easy for your evangelists to try your product or service.
Don't: Discount the negatives. There may be an important insight buried within.
(e) Create extraordinary experiences:

The relationships you have with your customers are based on the cumulative
experiences they have with your employees, product, service and business. If your
brochure or website makes one claim but the reality is very different, it's the firsthand
knowledge that will be remembered by your customers, so make sure you deliver on
the promises you make every time you connect with your customers. Is it such a
surprise that most of the airlines are going bankrupt while JetBlue and Southwest are
profitable?
Do: Consistently reinforce your key messages in everything you do.
Don't: Forget that every employee, partner and affiliate is an ambassador, too.
(f) Put passion above all else:
Customers are savvy--they know when something is genuine or if you're just going
through the motions. So do your employees, partners and affiliates. If you don't
enjoy what you are doing, find something else to do! It's hard to compete with
someone who gets up feeling excited every day and who's full of ideas about their
business. To them, what they do doesn't feel like work. Enthusiasm is contagious, so
determine what it is you enjoy doing and then share your gift with others whose
talents may lie somewhere else. When everyone plays to their strengths, the results
are superior.
Do: Work you love and believe is important.
Don't: Waste time. It's your most precious commodity.
Important Reasons for failure of startups in India :
Fig. 4.6
1. Not Serving The Need of The Market :
Often founders are too mesmerised with the idea of their start up. But this idea may
not serve the market need at all.42 percent of the failed startups quizzed by CB
Insights gave that as a reason for failing. Customers are seldom interested in the
model they prepare. They build solutions first and find the matching problem later.
2. Running out of Funds :

The most common problem faced by startups is shortage of funds. They somehow
manage to get a first round of funding but later when the venture requires more
investment, they run out of cash.
3. Wrong Team :
A start up has more chances of failure if the founders are alike. There should be
enough diversity for a variety of skills to be synergized.
4. Underestimating the Competition :
19% startups were overconfident of their idea and underscored the challenge posed
by their competitors. The competitor may outbeat by even a simple flanking strategy
if underestimated.
5. Improper Marketing :
A well marketed product can sustain a whole business as seen in the case of many
successful ventures. Knowing the target audience and pulling their attention and
converting them into leads and ultimately customers is one of the most important
skills of a successful business. The inability to market was a function of founders who
liked to code or build products but who didn‘t accept the idea of promoting the
product and came up in 14% of the startup post-mortems.
6. Flawed Business Model :
A business model may work upto a certain size but may simply flounder when the
time to scale up comes. Failed founders agreed that a business model is important –
staying wedded to a single channel or failing to find ways to make money at scale left
investors hesitant and founders unable to capitalise on any traction gained.
7. Inadequate Customer Feedback :
Ignoring customers and not seeking their feedback can prove to be fatal flaws for
most start ups.
4.6 Examples of Startups
(A) Wow-Cabs
Book your cab Now
WOW
Cabs
Fig. 4.7
Wowcabs India's First taxi company where you can book a taxi through whatsapp and call
from the company's website. Our Whatsapp taxi booking is smart and easy to use taxi
booking for all types of customers. We are also first cab company in odisha which offer
sanitised taxi and cabs for a journey with #wow feelings.
Wowcabs is an emerging next generation taxi travel company delivering the most
reputable taxi services inside the Odisha, West Bengal, Uttar Pradesh and Delhi, We specialise
in airport transfers, outstation cabs with educated and well behaved drivers. At wowcabs we
follow the best taxi service standards we ensure in providing the most affordable taxi service
to the customers. Our drivers are professionally trained to cater to the business, well trained
and educated. We are offering the best service to Pick and Drop services to Bhubaneswar
Airport, Delhi Airport, Kolkata Airport, Lucknow Airport, Jharsuguda Airport and almost all
Railway Stations in all major cities as mentioned, Our purpose to provide you best and cheap
cab service when you need a it in our operating cities to anywhere in India, We have a variety
of new cars starting from sedan Class to SUV and Luxury class cars as well. Enjoy your
destination with a Wowcar's range of taxi and cab services, comforts, drivers and customer
care, where you want to travel to airports, railway stations, Hotels, Popular Landmarks, so call
or whatsapp us for your instant sanitised taxi booking. We provide 24x7 taxi service in
Bhubaneswar, Kolkata, Moradabad, Delhi via whatsapp and calls to our customer care. When
you book a cab or taxi with us we will be there waiting for you on time every time.
(B) Zomato
All of it started when the founders, Deepinder Goyal and Pankaj Chaddah were in their
office in New Delhi and they came across so many people who were waiting for a long time
just to acquire a flash of the menu card. And in that exact moment, the idea for obtaining a
solution was planted in this duo’s minds and that led them to launch Zomato, formerly
known as ‘Foodiebay’. With the tremendous user base and growth rates that Foodiebay
brought in to the founders, they decided to modify it and take it international. And that’s
when this venture started being called Zomato, as we know of it today. It was in 2010 when
Foodiebay was officially rechristened as Zomato. Zomato's tagline is "Never have a bad
meal".
Fig. 4.8
The main source of revenue for Zomato now is the advertisements channel that the
portal offers to display. This accounts for most of its revenue followed by the commissions
that it charges to the restaurants. It works on a commission business model.
Zomato - Hyperpure
Hyperpure by Zomato is changing the way restaurants work. It is Zomato’s B2B foodtech
vertical. Hyperpure allows restaurants to buy everything online from vegetables, fruits,
poultry, groceries, meats, seafood to dairy and beverages. It claims to be working directly
with farmers, mills, producers, and processors to source these products thus ensuring quality
and consistency. It is an initiative by Zomato to provide fresh, hygienic, high-quality
ingredients and supplies.
• Zomato - Zomato Payments
Zomato announced the incorporation of a new subsidiary, Zomato Payments Private
Limited, which will be wholly owned by the company. While filing, Zomato has disclosed that
it has incorporated the subsidiary with a subscription of 10,000 equity shares of ` 10 each
aggregating to ` 1,00,000.
The Indian food delivery giant is looking to work as a payment aggregator and offer
payment gateway services, as per the RBI guidelines with its freshly incorporated subsidiary.
The all-new Zomato payments will serve as a payment and settlement system, along with
offering payment gateway services, and will also act as a payment solution for paying goods,
services, and utility bills with the help of mobile phones.
• Zomato - Zomaland
Zomaland is India's Grandest Food and Entertainment Carnival that brings together some
of the top eateries, musicians, DJs, comedians, and interactive installations and carnival
games, under one roof. It is like the offline version of its Zomato Collections, where it curates
and brings the best restaurants in the city together.
It is a flagship event of Zomato. In 2018, The debut edition of this carnival across Delhi,
Bengaluru, and Mumbai saw over 100,000 visitors. Since then it has grown to be held in over
10 cities and has also partnered with major brands including the Singapore Tourism Board.
• Zomato - Startup Challenges
The most significant hurdle in the Zomato journey was to find a way to cover all the
restaurants in all the areas in all the pivotal cities so that the consumers who hinge on
them do not miss the finest restaurants in the locality. This milestone has been omnipresent
since the inception and continues to drive considerable efforts on the venture’s part.
• Zomato - Competitors
Though Zomato is very predominantly present in the industry, it does face a lot of direct
and indirect competition. Zomato faces direct competition from Swiggy, and indirect
competition from regional food delivery applications like SendMe, etc.
• Zomato - Funding & Investors

To date, Zomato has raised close to $2.1 billion in funding. Recently (Feb 2021) Zomato
closed a $250 million funding round, led by existing investors Tiger Global, Kora, and Fidelity.
Zomato's valuation touches $5.4 Billion. In this round, Kora pumped in $115 million, while
Fidelity invested $55 million and Tiger Global has invested $50 million.
Zomato raised funds worth ` 4,196 crores from its marquee anchor investors, which is
supposed to be a part of the anchor book allocation. Zomato's ` 9,375 crore initial public
offering (IPO), which opened for subscription during July 14-16,2021 received a strong
reception from investors. The public issue was subscribed over 38 times, which is the highest
in the last 13 years among IPOs valued at more than ` 5,000 crore.
Info Edge India is Zomato's largest shareholder with over 18.4% stake.
Zomato - Acquisitions
In 12 years of its existence, Zomato has acquired close to 14 companies. Their most
recent acquisition was Uber Eats - India on Jan 21, 2020. They acquired Uber Eats - India for
$206 M. Zomato has declared that it would be acquiring around 9.3% stakes in Grofers as per
the latest filing with the Competition Commission of India. Though this stake is a minor one,
the company is looking to acquire Grofers in the long run, added some sources on request of
anonymity. Through its tweet dated August 13, 2021, the Competition Commission of India
(CCI) has sanctioned the Zomato-Grofers deal where the former company will be acquiring
9.3% stakes in Grofers.
(C) Paytm-Digit Insurance
Paytm is considered to be the Avant-garde of the cashback business model in India, has
become an undisputed leader in the domain of Mobile payments, E-wallets and E-commerce
just to name a few. The inception of the company was done in the year 2010 by a visionary
alumnus of Delhi College of Engineering (now DTU) Mr. Vijay Shekhar Sharma.
Fig. 4.9
• The maximum purchase cap has been raised to ` 1 crore in a single transaction;
• The number of new customers has increased by 50%, and the total order size has
increased by 60%.
• Paytm Money now offers digital gold as well. The company gained abrupt
prominence after the startling decision of demonetization by the honourable Prime
Minister Mr. Narendra Modi. Paytm became one of the prime sources to run the
economy. Taking into consideration the lack of flow of cash, people were lured to use
Paytm.
Fig. 4.10
Paytm-Digit Insurance :
Pay Insurance Premium On-The-Go | Paytm.com
With this fast-paced life, people often forget to pay their insurance premium on time. We
have a solution for this, pay premiums on time through Paytm!
Paytm presents an easy and seamless life insurance premium payment experience. Now
pay insurance premium online at Paytm and get rid of delays. You can pay an insurance
premium simply by logging into Paytm.com and receive confirmation as well. Moreover you
can get benefit of several deals and offers while paying insurance premium online at Paytm.
Through online payment, you can pay your premium anytime and anywhere on a timely
basis. This is an easy way to pay your insurance premiums conveniently without any hassle.
We provide a wide range of payment options that are safe & secure. No need to visit the
bank again & again, life insurance premium payment online at Paytm and save your time.
Experience the Ease of Insurance Premium Payment Online
All those busy buzzies, who do not have time to visit branches for premium payment, we
have an amazing online payment service that will give you an incredible experience. Enjoy
handiness when it comes to insurance premium payment, now you can pay your premium
online through Paytm, anytime & anywhere from the comfort of your home or office through
Desktop, PC or Mobile. We are providing various methods to pay insurance premium online
using Net Banking, Debit/Credit Card & Paytm Wallet. All those who forget their due dates,
Paytm is here for your rescue, all you need to do is login to Paytm.com, fill in the requisite
form and there you go!
Awards :
1. Paytm is named the Most Trusted Brand of the Year by ET Brand Equity in 2016.
2. Vijay Shekhar Sharma is the 2016 IMPACT Person of the Year.
3. Paytm is the winner of the FT Future of Fintech Award.
4. At the Forbes Leadership Awards 2016, Paytm was named Outstanding Startup of the
Year.
# Today the company is valued at $8 billion. In the year 2017.Sharma was honoured as
the youngest Indian billionaire having an asset of $1.3 billion. Sharma has developed a new
vigour and optimism in the budding entrepreneurs which teach us to chase dreams with
dedication and devotion.
Long before the inception of Paytm, he laid the foundation stone of its Parent company
One97 communications in the very first year of this millennium. Before that, being an
alumnus of one of the brightest institutes of India,
He developed his website Indiasite.net in the year 1997 and later on sold it at a valuation
of $1 million. Mr. Sharma used this money to yield mobile content like news, cricket scores,
jokes, and ringtones, etc using One97 Communications. He sees Mr. Jack Ma and Masayoshi
as his inspiration who are currently his business partners too.
D. Vedantu
Vedantu is India’s leading Edtech startup in the domain of online tutoring. It offers
personalised coaching for students of grades 6 to 12 with highly skilled teachers guiding
them. Vedantu's efficient, customised teaching methodologies include two-way audio, video,
and white-boarding technologies to enhance the learning outcomes with live student-
teacher interactions. The Bengaluru-based edtech company caters to students for
competitive examinations and co-curricular modules as well. The cooperative sessions keep
the students engaged according to the pace of the lecture, an aspect that is absent in
recorded video lectures and classroom education. Vedantu offers video sessions that support
even low internet bandwidth. With its powerful learning management tools and holistic
training approach, Vedantu appears to be the finest online educational service provider in
the K-12 segment. Vedantu was founded by Vamsi Krishna (co-founder, CEO), Pulkit Jain (co-
founder, head of product), Anand Prakash (co-founder, head of academics) and Saurabh
Saxena.
Fig. 4.11
• Vedantu - Startup Story
The story of Vedantu has the story of the four IITians and the story of Lakshya at its core.
It was Vamsi Krishna who took the initial initiative along with the other IITians and founded
the primary venture and named it "Lakshya" in 2006. IIT Roorkee Btech graduates - Saurabh
Saxena, Anand Prakash, Pulkit Jain, and Vamsi Krishna, started Lakshya Institute with an aim
to train for a wide variety of tests and exams. However, they eventually realised that to up the
game they needed something beyond the brick and mortar institute and this would be done
only by leveraging technology and the internet. Such an institute would be online and
scalable.
They found that to establish an online education platform they would be needing
dedicated and skilled teachers. Therefore, they soon started working on it through Lakshya.
Finally, they sold Lakshya to MT Educare Ltd, which purchased 51% stakes in the educational
platform in 2012. Vedantu was formed in 2011.
• Vedantu - Funding and Investors
Vedantu has raised around $290.9 million in funding to date. Vedantu had witnessed a
total of 10 rounds of funding. This surge can be attributed to the growing importance of the
Edtech segment, courtesy of the Covid-19 pandemic.
Furthermore, the company is aiming to raise $150 million from a fresh round of funding
in 2021, according to the sources close to Vedantu on request of anonymity. The round
would be led by the existing investors that include Coatue, Tiger Global, and Accel among
others. The talks are at an initial and with no term sheet disclosed as of now.
Vedantu is finally successful in raising their new round, which helped the company infuse
around $100 mn on September 29, 2021. The earlier talks, which predicted Tiger Global,
Accel, and Coatue as investors, came out to be true. However, the round was actually led by
Temasek-backed private equity firm ABC World Asia, along with the contributions from other
existing investors like Coatue Management, Tiger Global, GGV Capital, and WestBridge. With
this funding round, Vedantu steered to emerge as a unicorn, becoming the 27th unicorn of
India in 2021 after Apna. Furthermore, Vedantu has seized the 69th spot among the Indian
startups that crossed the $1 bn mark.
• Vedantu - Business and Revenue Model
Vedantu operates on a B2C business model whereby the company provides services like
online live tutoring — using a virtual learning environment called WAVE (Whiteboard Audio
Video Environment) — to students in the K-12 segment. Vedantu also offers online tutoring
to students for various competitive exams.
A major portion of Vedantu's revenue comes from providing education to the students
and the fees that come from the same. The company also sells subscriptions ranging from
` 100 to ` 5,000 for live and interactive sessions.
• Vedantu - Achievements
Vedantu was recognized as the 'Best Organization to Develop Technology for Education'
by DNA Innovative Education Awards in February 2016. It was also one of the winners of
'KINSES 2016 EduAwards'. Elets World Education Summit awarded Vedantu the title of
'Online Education Startup of the Year', and Praxis Media presented the 'Most Promising and
Live Online Tutoring Platform in India' award to Vedantu in 2015.
The founders of Vedantu - Vamsi Krishna, Pulkit Jain and Anand Prakash, were chosen to
be the winners of the Comeback Kid title in the ET Startup Awards in August 2020.
• Vedantu's top competitors are -
• UrbanPro
• WizIQ
• Tutorvista
• Flipclass
• Byju’s
• Toppr
• Unacademy
• Vedantu - Growth and Revenue
Vedantu generates revenue by providing paid educational services. It recorded
$10 million in revenue recently. The revenue increased by 97% from ` 5.3 crores in FY18 to
` 12.4 crores in FY19. For the fiscal year that ended in March 2020, Vedantu has recorded its
total revenues at ` 35.8 crore. Vedantu has also seen its losses pump up to ` 158.5 crore in
FY20, which was around ` 27 crore in FY19. Vedantu usually sees a 2X growth yearly, as per
the Co-founder and CEO of the company Vamsi Krishna. Furthermore, the Edtech platform
claims to have grown by 4X amidst the pandemic. COVID-19 actually helped to accelerate
the growth here when people started to look forward to alternative learning options than the
regular classroom sessions. The Bengaluru-based Edtech startup that initially had a skeleton
crew of four friends now has around 1328 employees; a 133% increase from 2019.
Vedantu offers subscriptions ranging from INR 100 to INR 5000 for different grades and
also provides courses for competitive examinations such as JEE, NEET, NTSE, IMO, PSA, KVPY,
and others. The company utilises its revenue for various operations like acquiring talented
teachers, advertisements and promotions, and employee benefits expenses to support its
growth.
• Vedantu - Acquisitions
On July 15, 2021, Vedantu acquired Pedagogy, an Edtech startup from Ahmedabad in a
cash and stock deal. This is the second acquisition by Vedantu after it acquired Instasolv, a
doubt-solving platform, in February this year. According to the filings by Vedantu, both the
companies have agreed to share the purchase agreement where Vedantu will be acquiring a
100% stake in Pedagogy across five tranches.
(E) Daily Hunt
Fig. 4.12
Dailyhunt (formerly Newshunt) is an Indian content and news aggregator application
based in Bangalore, India that provides local language content in 14 Indian languages from
multiple content providers. Virendra Gupta serves as Founder of Dailyhunt with Co-founder
Umang Bedi. The company's mission is "the Indic platform empowering a billion Indians
to discover, consume and socialise with content that informs, enriches and entertains".
Dailyhunt, earlier called Newshunt, was created as a Symbian app in 2009 by two ex-
Nokia employees Umesh Kulkarni and Chandrashekhar Sohoni. Later in 2011, Newshunt
became available on the Android platform. It was by that time that Virendra Gupta, founder
of Verse acquired the application.
Virendra Gupta, better known as Viru, had started Verse in 2007 as a value-added service
(VAS) company. In 2011, he acquired Newshunt from its owners Umesh and Chandrashekhar.
Umesh became the CTO and stayed on to oversee its transition towards the smartphone era.
In 2015, Viru renamed Newshunt as Dailyhunt. In early 2018, Viru roped in Umang Bedi,
to be the President of Dailyhunt and lead the business with him while focusing on making
the benefits of the platform available to a larger audience. Later, the duo pivoted their aim to
becoming India's largest digital media business. Umang was elevated to Co-Founder in 2020.
An end of 2015 story reported Dailyhunt to be the largest Indian language distributor of
e-books having 70,000 titles in ten languages.
• Funding : In September 2014, Dailyhunt (then known as Newshunt) closed its Series B
funding of INR 100 million from Sequoia Capital India. The Series C funding round was
led by Falcon Capital and was closed with $ 40 million in February 2015. In October 2016,
the company received its Series D funding of $ 25 million from and a Series E funding of
$ 6.39 million from Falcon Edge Capital in September 2018. Additionally, Dailyhunt raised
$ 3 Mn (INR 21.75 Cr) in a Series F funding round from Stonebridge Capital in August
2019. Other investors of Dailyhunt include Matrix Partners India, Omidyar Network,
Goldman Sachs and Sofina. The revenue as on Financial year 2020 is about $35.14m
(Approx. 276 crs).
• Partnerships : In January 2021, Dailyhunt partnered with Twitter to bring ‘Twitter
Moments’ to the Indian social app. Dailyhunt app now has a dedicated tab called “Twitter
Moments India” to showcase curated tweets pertaining to news and other events.
Again in January 2021, Dailyhunt announced the premiere of Season 2 of the popular
show Quote Unquote with KK (Kapil Khandelwal) on the app. It was the first podcast to
have been launched on the Dailyhunt app. In September 2020, Dailyhunt signed up as an
Associate Sponsor with Star Sports for Dream 11 IPL 2020.In May 2020, Snapdeal
partnered with Dailyhunt to add news content on marketplace. In March 2019, Discovery
Communications India, the factual entertainment network entered into a multi-year
partnership with Dailyhunt to showcase short-form content.
• Revenue : Though the app is free of cost for all, DailyHunt earns profit from two sources.
1. Most of the profit comes from showcasing advertising which brings in a wide user
base.
2. Also, for reading and downloading books and magazines from the app, the users are
charged a particular amount.
• Awards : In November 2018, Virendra Gupta, Founder & CEO, Dailyhunt and Umang
Bedi, President, Dailyhunt were honoured with the exchange4media Influencer of the
Year Award.
(F) Sharechat
Fig. 4.13
• ShareChat is an Indian social media and social networking service,developed by
Bangalore based Mohalla Tech Pvt Ltd. It was founded by Ankush Sachdeva, Bhanu
Pratap Singh and Farid Ahsan, and incorporated on 8 January 2015. ShareChat has over
250 million monthly active users across 15 Indian languages. The company's application
offers features that include private messaging, tagging and a personal messaging feature,
enabling users to share videos, jokes, songs and other language based social content
with other unknown users.
• History : ShareChat's holding company, Mohalla Tech Pvt Ltd, was incorporated in
January 2015 by three IIT Kanpur graduates — Ankush Sachdeva, Bhanu Pratap Singh
and Farid Ahsan. The company is headquartered in Bengaluru, Karnataka, and presently
employs over 400 people.
Initially, ShareChat primarily worked as a content sharing platform, without any scope of
users generating their own content. In April 2016, ShareChat enabled user - generated
content creation on its platform, allowing its users to share their own posters and creative
content. At around the same time, it also introduced open tagging for users, which would
allow anyone to create their own hashtags depending on the content.
The key people at the hierarchy of ShareChat include Ankush Sachdeva (co-founder and
Chief Executive Officer), Farid Ahsan (co-founder and Chief Operating Officer), Bhanu Pratap
Singh (co-founder and Chief Technical Officer), and Debdoot Mukherjee (Vice President -
Data Science). All of the co-founders featured in Forbes’ 30 under 30 Asia 2018, having been
recognized for their work with language-first approach in the social media landscape.In the
wake of the ban on Tik Tok by the Indian government in June 2020, ShareChat launched the
similar Moj app and grew substantially. In September 2020, ShareChat raised $40 million
from investors Dr. Pawan Munjal of Hero MotoCorp, Ajay Shridhar Shriram of DCM Shriram,
Twitter, SAIF Partners, Lightspeed Ventures and India Quotient. By April 2021 ShareChat had
raised $500 million from investors and was valued at over $2 billion.
Fig. 4.14
• Acquisitions : In March 2019, Mohalla Tech acquired Transversal Tech-owned short
video sharing platform, Clip. In February 2020, it acquired Bengaluru-based online
fashion marketplace Elanic. In March 2020, it acquired a meme discovery and sharing
platform, Memer. In August 2020, it acquired a hyperlocal information platform, Circle
Internet.
• Business and Revenue Model : There are two prominent kinds of business models
followed by the content marketing community on the internet. The first one helps in
building a network where the content material is created and owned by the platform
creators. On the other hand, lies the second kind of model, which helps create a major
part of the content material by the customers. This is what ShareChat does.
ShareChat believes in existing as a popular social networking platform, where users can
upload photos, videos, create content, chat with others, make friends, and more. However,
unlike the other social media platforms, Sharechat helps in conveying all the messages in the
regional languages of India. ShareChat does not charge its users to earn revenue. Instead, it
generates revenue through advertisements, payment transactions, and sponsored
campaigns. ShareChat's revenue figures had not much impressive in the last financial year
(FY20), where the company had spent Rs 715 crores and managed to register Rs 9.4 crores in
revenue.
(G) Toppr
Fig. 4.15
Toppr is a company that develops a test preparation platform for students. It offers
learning programmes and focuses on school curriculum and test preparation for engineering
and medical entrance exams. The company provides practice and test packages that help
students to prepare for the joint entrance examination (JEE), physical management training
(PMT), school boards, and other competitive exams.
• History:
Toppr was founded in 2013. In April 2015, Toppr acquired Jodhpur-based EasyPrep – an
online platform to help students prepare for entrance exams. In February 2016, Toppr went
on to acquire Manch - a knowledge delivery platform. The content on the app is available in
English and Hindi.
• Funding:
On May 9, 2013, Toppr raised angel funding worth $200,000. In May, 2014, the startup
received funding of ` 12 crore ($2 million) from SAIF Partners and Helion Ventures. In May,
2015 Toppr raised INR 65 Cr. from their existing investors: SAIF Partners and Helion Ventures,
along with, FIL Capital Management. During the latest round of funding on 23 October 2017
Toppr raised ` 45 crore.
• Awards and Recognitions:
Toppr has won the following awards:
2017 - Awarded the Best Educational Website by India Digital Awards [IAMAI].
2016 - 2017 - Awarded the Best Educational Website (emerging) by AWS Mobility.
2015 - Recognized as one of the Top 10 Hottest Startups by CB Insights.
• Toppr CEO and key executive team
• Zishaan Hayath. Co-Founder, CEO.
• Hemanth Goteti. Co-Founder.
• Rajshekhar Ratrey. Senior Vice President Product Management.
• Joe Kochitty. Senior Vice President.
• Profits :
Edtech startup Toppr, which was recently acquired by edtech behemoth Byju’s, saw its
operating revenues grow by 49.5% to ` 84.3 crore during FY20 — at the cusp of edtech
breakout — from ` 56.4 crore earned in FY19. Its income from financial assets also grew by
46% to nearly ` 6 crore during FY20.
(H) Urban Ladder
Urban Ladder Home Decor Solutions was co-founded by Ashish Goel (CEO) and Rajiv
Srivatsa in July 2012. Ashish Goel previously worked with McKinsey & Company and served
as the CEO of Amar Chitra Katha. Rajiv Srivatsav previously worked with Cognizant and
Yahoo before co-founding Urban Ladder.
Fig. 4.16
Urban Ladder is a design-led, omnichannel brand which offers furniture and home decor.
With over 5000 designs across 35 categories such as living, dining, bedroom, study, and
decor, Urban Ladder was established as an online-first brand in 2012. In 2017, Urban Ladder
made a shift to offline retail, in an effort to become an omnichannel brand. It opened its first
flagship store in Bangalore on 8 July 2017 and currently has 4 offline stores in Bangalore.
Rajiv Srivatsa, one of the founders of Urban Ladder, quit the company in October, 2019
after seven years with the company. In November 2020, Reliance acquired the company by
purchasing 96% stake in a ` 182 crore deal.
• Funding :
Urban Ladder secured seed capital of $US1 million from Kalaari Capital in August 2012.
The company later raised another $US5 million in a Series A round led by SAIF Partners;
Kalaari Capital too participated in the Series A funding. The company subsequently raised
$US21 million in Series B round of funding led by Steadview Capital, SAIF Partners and
Kalaari Capital Four months after the company raised Series B funding from Steadview
Capital and existing investors SAIF Partners and Kalaari Capital, Urban Ladder received a
personal investment from Ratan Tata, Tata Sons.
On 9 April 2015, Urban Ladder announced that they had raised $US50 million in funding
led by Sequoia and TR Capital. Existing investors Steadview Capital, SAIF Partners and Kalaari
Capital were also participants. Urban Ladder, raised an internal round of $12 million from
investors Kalaari Capital, Saif Partners, Sequoia Capital, and Steadview Capital in February
2018. In combination with the $15 million raised in January 2017, these funds were used to
further Urban Ladder’s omnichannel expansion, online and offline – a decisive step towards
profitability in FY 18–19. With a $27 million infusion over 12 months, Urban Ladder's
omnichannel approach and profitability push will help it build a powerful retail brand.
• Business Model :
Urban Ladder has both online and offline business model for distribution. The company
delivers and instals all the products it offers. The brand has also put its products on
marketplaces Amazon & Flipkart. Urban Ladder is continually creating and launching new
collections like the Malabar, the Eleanor & Louise, and the Fujiwara range,
• Urban Interiors:
Urban Ladder launched design consultation as a service in 2016.
• The Urban Ladder Design Network:
Apart from its in-house collections and consultations, Urban Ladder works with external
designers. The Urban Ladder Design Network provides external designers with 3D rendered
models of its products. The partnered designers also get priority inventory blocking on Urban
Ladder’s products and a commission when their clients select Urban Ladder’s designs for
their homes. Currently, Urban Ladder has over 600 design firms working with them as part of
The Urban Ladder Design Network, with the tribe increasing every month.
• Awards and Recognition:

Urban Ladder collected the 'Best Digital Start-Up' Award at the 4th India Digital Awards
conducted by Internet and Mobile Association of India. Ashish Goel was voted by the
Network 7 Media Group Jury as "Game Changer Entrepreneur of the year" 2016 at Satya
Brahma founded 8th edition of India Leadership Conclave 2016.
Points to Remember
• Launched on 16th January, 2016, the Startup India Initiative has rolled out several
programmes with the objective of supporting entrepreneurs, building a robust
startup ecosystem and transforming India into a country of job creators instead of
job seekers. These programs are managed by a dedicated Startup India Team, which
reports to the Department for Industrial Policy and Promotion (DPIIT).
• Startup India is about creating prosperity in India. Many enterprising people who
dream of starting their own business lack the resources to do so. As a result, their
ideas, talent and capabilities remain untapped – and the country loses out on wealth
creation, economic growth and employment. Startup India will help boost
entrepreneurship and economic development – by ensuring that people who have
the potential to innovate and start their own business are encouraged – with
proactive support and incentives at multiple levels.
• Post getting recognition a Startup may apply for Tax exemption under section 80 IAC
of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail
tax holiday for 3 consecutive financial years out of its first ten years since
incorporation.
• Important reasons for failure of startups :
1. Not Serving the Need of the Market. 2. Running out of Funds.
3. Wrong team. 4. Underestimating the Competition.
5. Improper Marketing. 6. Flawed Business Model.
7. Inadequate Customer Feedback.

1. What do you understand by a startup. Also explain the significance of a startup.
2. What are the advantages of startups in India?
3. Explain in detail the eligibility for startup India.
4. Explain in brief the Do’s & Don'ts for startup’s.
5. Write short notes on :
(a) Wow-cabs. (b) Zomato.
(c) Paytm-digit insurance. (d) Vedantu.
(e) Dailyhunt. (f) Sharechat.
(g) Toppr. (h) Urban Ladder.
✍✍✍

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BUSINESS

Dr. Vinit V. Rokade

Dr. Ganesh R. Patare

Published By : Polyplate Printed By :

KOLHAPUR JALGAON SOLAPUR

Dr. VINIT V. ROKADE

3. Business Crises and Sickness

4. Introduction to Start up India Scheme

1. Business Plan (BP) Implementation 1.1 – 1.20

2. MSME Management 2.1 – 2.32

3. Business Crises and Sickness 3.1 – 3.22

4. Introduction to Startup India Scheme 4.1 – 4.22

1.1 Business Plan

An overall path to long-term growth.

• Research and Development

(IV) Feasibility Analysis :

1.2 Financial Aspects

Marketing/ Direct Material/

General & Total

Cumulative Cash Flow

3. Marketing and Sales Plans:

• To maintain the safety of the product user.

7. Not Knowing your Distribution Channels:

Step 3: Market analysis

• Chart your progress toward reaching goals and milestones.

• Where is the opportunity located?

Questions for Discussion

2.1 Introduction to MSME

2.1 Introduction to MSME

2.4 Logical v/s Creative Approach

2.5.1 Needs of Start-up Project Management

• Analytics and Evaluation:

• Defining Project Scope

2. They Teach Flexibility:

How can start-ups avoid this?

7. Business Model Failure:

The evolution of a start-up — from an idea to exit — is a continuous process. It is often

Product Market Fit

PRE-STARTUP STARTUP GROWTH

Ideation Concepting Commitment Validation Scaling Establishing

1. Organization Related Factors:

MSME Registration Process:

6. Protection Against Delayed Payments:

Core Elements of an Enterprise Risk Management Process

5. Qualitative Versus Quantitative:

7. Multiple Potential Scenarios:

Questions for Discussion

3.1 Business Crises

3.1.1.4 Leadership Crises

The most successful plans

3.3 Crisis under Covid-19: (Global Context)

• Poor handling of labour

In General Sense... In an Academic Sense...

Questions for Discussion

4.1 Aim of Startup

Startup India Initiative :

(d) Tax Holiday for 3 Years :

1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws.

4. The Startup should be working towards innovation/ improvement of existing

(e) Create extraordinary experiences:

2. Running out of Funds :

Book your cab Now

• Zomato - Funding & Investors

• Awards and Recognition: