Entrepreneurship & Project Management

Entrepreneurship & Project Management
INDEX
Sr. no. Name of Chapter Page no.
1 Entrepreneur and Entrepreneurship 2
2 Entrepreneurship Development 20
3 Emerging areas in Entrepreneurship 43
4 Market Survey and Opportunity Identification 89
5 Project 106
6 Project Management 131
7 References 155
By Dr. Deepak S. Sharma, Page 1

Unit 1
Entrepreneur and Entrepreneurship
1.1. Entrepreneur
An entrepreneur is an individual who creates a new business, bearing most of the risks
and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator,
a source of new ideas, goods, services, and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to
anticipate needs and bring good new ideas to market. Entrepreneurs who prove to be
successful in taking on the risks of a startup are rewarded with profits, fame, and
continued growth opportunities. Those who fail, suffer losses and become less prevalent
in the markets.
Functions of an Entrepreneur
The following points highlight the top five functions of an entrepreneur. The functions
are: 1. Decision Making 2. Management Control 3. Division of Income 4. Risk-Taking and
Uncertainty-Bearing 5. Innovation.
1. Decision Making:
The primary task of an entrepreneur is to decide the policy of production. An

entrepreneur is to determine what to produce, how much to produce, how to produce,
where to produce, how to sell and’ so forth. Moreover, he is to decide the scale of
production and the proportion in which he combines the different factors he employs. In
brief, he is to make vital business decisions relating to the purchase of productive factors
and to the sale of the finished goods or services.
2. Management Control:
Earlier writers used to consider the management control one of the chief functions of the
entrepreneur. Management and control of the business are conducted by the
entrepreneur himself. So, the latter must possess a high degree of management ability to
select the right type of persons to work with him. But, the importance of this function has
declined, as business nowadays is managed more and more by paid managers.
3. Division of Income:
The next major function of the entrepreneur is to make necessary arrangement for the
division of total income among the different factors of production employed by him. Even

if there is a loss in the business, he is to pay rent, interest, wages and other contractual
incomes out of the realised sale proceeds.
4. Risk-Taking and Uncertainty-Bearing:
Risk-taking is perhaps the most important function of an entrepreneur. Modern

production is very risky as an entrepreneur is required to produce goods or services in
anticipation of their future demand.
Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks,
such as risks of fire, loss of goods in transit, theft, etc., which can be insured against. These
are known as measurable and insurable risks. Secondly, some risks, however, cannot be
insured against because their probability cannot be calculated accurately. These
constitute what is called uncertainty (e.g., competitive risk, technical risk, etc.). The
entrepreneur undertakes both these risks in production.
5. Innovation:
Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to

make frequent inventions — invention of new products, new techniques and discovering
new markets — to improve his competitive position, and to increase earnings
Types of Entrepreneur
1. Trading Entrepreneur:
As the name itself suggests, the trading entrepreneur undertake the trading activities.
They procure the finished products from the manufacturers and sell these to the
customers directly or through a retailer. These serve as the middlemen as wholesalers,
dealers, and retailers between the manufacturers and customers.
2. Manufacturing Entrepreneur:
The manufacturing entrepreneurs manufacture products. They identify the needs of the
customers and, then, explore the resources and technology to be used to manufacture the
products to satisfy the customers’ needs. In other words, the manufacturing
entrepreneurs convert raw materials into finished products.
3. Agricultural Entrepreneur:
The entrepreneurs who undertake agricultural pursuits are called agricultural

entrepreneurs. They cover a wide spectrum of agricultural activities like cultivation,
marketing of agricultural produce, irrigation, mechanization, and technology.

Based on the Use of Technology:
1. Technical Entrepreneur:
The entrepreneurs who establish and run science and technology-based industries are
called ‘technical entrepreneurs.’ Speaking alternatively, these are the entrepreneurs who
make use of science and technology in their enterprises. Expectedly, they use new and
innovative methods of production in their enterprises.
2. Non-Technical Entrepreneur:
Based on the use of technology, the entrepreneurs who are not technical entrepreneurs
are non-technical entrepreneurs. The forte of their enterprises is not science and
technology. They are concerned with the use of alternative and imitative methods of
marketing and distribution strategies to make their business survive and thrive in the
competitive market.
Based on Ownership:
1. Private Entrepreneur:
A private entrepreneur is one who as an individual sets up a business enterprise. He / she

it’s the sole owner of the enterprise and bears the entire risk involved in it.
2. State Entrepreneur:
When the trading or industrial venture is undertaken by the State or the Government, it
is called ‘state entrepreneur.’
3. Joint Entrepreneurs:
When a private entrepreneur and the Government jointly run a business enterprise, it is
called ‘joint entrepreneurs.’
Based on Gender:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are called
‘men entrepreneurs.’
2. Women Entrepreneurs:

Women entrepreneurs are defined as the enterprises owned and controlled by a woman
or women having a minimum financial interest of 51 per cent of the capital and giving at
least 51 per cent of employment generated in the enterprises to women.
Based on the Size of Enterprise:
1. Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is
called ‘small-scale entrepreneur.’
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery above Rs 1.00 crore
but below Rs 5.00 crore is called ‘medium-scale entrepreneur.’
3. Large-Scale entrepreneur:
The entrepreneur who has made investment in plant and machinery more than Rs 5.00
crore is called ‘large-scale entrepreneur.’
Based on Clarence Danhof Classification:
Clarence Danhof (1949), on the basis of his study of the American Agriculture, classified
entrepreneurs in the manner that at the initial stage of economic development,
entrepreneurs have less initiative and drive and as economic development proceeds, they
become more innovating and enthusiastic.
Based on this, he classified entrepreneurs into four types:
These are discussed in seriatim:
1. Innovating Entrepreneurs:
Innovating entrepreneurs are one who introduce new goods, inaugurate new method of
production, discover new market and reorganise the enterprise. It is important to note
that such entrepreneurs can work only when a certain level of development is already
achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs:
These are characterised by readiness to adopt successful innovations inaugurated by

innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such types
of entrepreneurs are particularly suitable for the underdeveloped regions for bringing a

mushroom drive of imitation of new combinations of factors of production already

available in developed regions.
3. Fabian Entrepreneurs:
Fabian entrepreneurs are characterised by very great caution and skepticism in

experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.
4. Drone Entrepreneurs:
These are characterised by a refusal to adopt opportunities to make changes in

production formulae even at the cost of severely reduced returns relative to other like
producers. Such entrepreneurs may even suffer from losses but they are not ready to
make changes in their existing production methods.
Following are some more types of entrepreneurs listed by some other behavioural
scientists:
1. Solo Operators:
These are the entrepreneurs who essentially work alone and, if needed at all, employ a
few employees. In the beginning, most of the entrepreneurs start their enterprises like
them.
2. Active Partners:
Active partners are those entrepreneurs who start/ carry on an enterprise as a joint
venture. It is important that all of them actively participate in the operations of the
business. Entrepreneurs who only contribute funds to the enterprise but do not actively
participate in business activity are called simply ‘partners’.
3. Inventors:
Such entrepreneurs with their competence and inventiveness invent new products. Their
basic interest lies in research and innovative activities.
4. Challengers:
These are the entrepreneurs who plunge into industry because of the challenges it
presents. When one challenge seems to be met, they begin to look for new challenges.
5. Buyers:

These are those entrepreneurs who do not like to bear much risk. Hence, in order to
reduce risk involved in setting up a new enterprise, they like to buy the ongoing one.
6. Life-Timers:
These entrepreneurs take business as an integral part to their life. Usually, the family
enterprise and businesses which mainly depend on exercise of personal skill fall in this
type/category of entrepreneurs.
Essential characteristics to be successful as an entrepreneur:
1. Creative
Entrepreneurship starts with an idea. To be successful, you need to always be thinking of

new ideas and better ways of doing things.
In an interview in Martyn Lewis's book "Reflections on Success," Virgin Airlines founder

Richard Branson said, "I've gone into business, not to make money, but because I think I
can do it better than it's been done elsewhere. And, quite often, just out of personal
frustration about the way it's been done by other people."
Entrepreneurs are not satisfied with the status quo. They think outside the box and look
for opportunities to come up with new solutions.
2. Passionate
Perhaps the most important characteristic for entrepreneurs, passion is essential to any
business owner or working professional's success. Without passion, there is no reason
for your work and no drive to do it.
Entrepreneurs love what they do and are extremely dedicated to the businesses they
create. To be successful, you must be confident in yourself and your business, and you
must be proactive with what you do and how you do it.
3. Motivated
In an interview with The Computerworld Smithsonian Awards Program, the late Apple
founder Steve Jobs said, "I'm convinced that about half of what separates the successful
entrepreneurs from the non-successful ones is pure perseverance."
Because of their passion for their ideas, entrepreneurs are willing to put in the long hours
and hard work required to launch and run a successful new business. Are you self-

motivated? Entrepreneurs are their own boss, which means there's no one telling them
to do things. You must be in charge of your own time and how you spend it.
4. Optimistic
Do you see the glass half empty or half full? For entrepreneurs, it's always half full.
Entrepreneurs always look on the bright side and are constant dreamers. They look at
how they can do things better and make the world a better place. They never dwell on the
past or the negative. Instead, they focus on moving forward and moving up.
When they're confronted with challenges, entrepreneurs don't see them as problems;
they see them as opportunities. Challenges fuel entrepreneurs and make them reach
higher and do more.
5. Future-oriented
Because entrepreneurs are focused on moving forward, they are always looking toward
the future. Entrepreneurs are very goal-oriented and know exactly what they want. They
set their goals and everything they do is aimed at achieving those goals.
Having a strong vision helps propel you toward accomplishment. Consider setting a goal
for yourself - a north star that can guide you on your path to success.
6. Persuasive
To be successful in business, you have to know business. If you're a people person and
know how to get people to listen to you, you could be a successful entrepreneur.
Especially when first starting out, entrepreneurs need to gain buy-in from those around
them on their big idea. If it's an out-of-the-box idea, which it usually is, many people will
be skeptical before giving their support or investing any money. That's why
entrepreneurs need to use their persuasiveness to sell themselves and their ideas.
7. Flexible
According to professional development coach Ruchira Agrawal in an article for Monster,

"As an entrepreneur, you'll typically start out as a 'solopreneur,' meaning you will be on
your own for a while. You may not have the luxury of hiring a support staff initially.
Therefore, you will end up wearing several different hats, including secretary,
bookkeeper and so on."
Entrepreneurs know how to adapt to unfamiliar situations. If their business requires that
they learn how to build a website or send an invoice, they'll do it. Whatever it takes,

entrepreneurs are ready and willing. They always approach things with an open mind
and are willing to change course if they need to.
8. Resourceful
In business, problems aren't a matter of if, but when. Entrepreneurs do not shy away from
challenges or conflicts. Instead, they face them head on and come up with a solution. They
know how to solve problems effectively.
Entrepreneurs also know how to make the most of what they have. Time, money and
effort are never used haphazardly. Everything has a plan and a purpose.
9. Adventurous
In an interview with Y Combinator president Sam Altman, Facebook founder Mark

Zuckerberg said, "In a world that's changing so quickly, the biggest risk you can take is
not taking any risk."
Entrepreneurs know that to be successful, they must be willing to take risks. While they
don't mind walking on the wild side, they don't take risks lightly. They know how to plan
for the unknown and make a calculated decision that is best for them and their business.
10. Decisive
There is no room for procrastination in business. Entrepreneurs know what needs to be

done and don't hesitate to make the decisions that will lead them to success. They don't
let opportunities pass them by; instead, they seize the day and get the job done.
Role of Entrepreneurs
A lot of hard work goes into starting and eventually expanding an enterprise. This hard
work starts with the entrepreneur and trickles down the entire organization. But this is
a very broad definition and does not really appreciate and highlight the actual role of
entrepreneurs with respect to their enterprises.
So to explain it in a better way, let us break it down into points about how an entrepreneur
is vital to the enterprise.
1. Initiator
The entrepreneur is the one who initiates the process of creating an enterprise by coming
up with the idea for the business and planning out how to turn that idea into a reality.

2. Risk Taker
In an enterprise, the entrepreneur, being the owner, is the biggest risk taker. He is the
one who finds the capital to back up his idea and also the person who is accountable in
the face of the failure of that particular idea.
3. Reduces Risk
It is also one of the most important roles of entrepreneurs to reduce the risk of an
enterprise failure by bringing in people that can help the organization grow. These people
can be shareholders or investors that have a stake in the company and therefore are
motivated to help the company succeed.
4. Allocator
An entrepreneur procures and allocates various resources in the organization. The most
important of these resources is manpower. The entrepreneur is responsible for hiring an
efficient staff to help him carry out his business. This is important because a good
manager can take a business to new heights, while a bad manager can destroy the
business.
He is also responsible for creating an organizational structure and departments for a

more efficient functioning of the enterprise.
5. Adhering to Legal Norms
To ensure that the enterprise adheres to legal norms and policies, such as obtaining a
license is also the duty of the entrepreneur. Not pertaining to these can mean serious legal
consequences for the enterprise. These could be in terms of financial losses for the
organization or something even more serious such as shutting down of an enterprise.
6. Forecasting
Last but far from least, the role of entrepreneurs involve acting as a forecaster. The
enterprise works in a business environment and is affected by changes occurring in
various aspects of this environment. It could be internal, such as strikes, machinery
breakdowns, budget cuts etc. or these could be external, such as legal policy changes,
political or social unrest, technological advancements, etc.
An entrepreneur must be able to correctly forecast these changes and prepare the
organization to deal with these changes.

1.3. Entrepreneur vis-à-vis Professional Manager, Intrapreneur,

Copreneur
Intrapreneur
An intrapreneur is an employee who is tasked with developing an innovative idea or
project within a company. The intrapreneur may not face the outsized risks or reap the
outsized rewards of an entrepreneur. However, the intrapreneur has access to the
resources and capabilities of an established company.
What Is an Intrapreneur?
An intrapreneur is an employee who is tasked with developing an innovative idea or

project within a company. The intrapreneur may not face the outsized risks or reap the
outsized rewards of an entrepreneur. However, the intrapreneur has access to the
resources and capabilities of an established company.
Key Takeaways
• An intrapreneur works inside a company to develop an innovative idea or project

that will enhance the company's future.
• The intrapreneur is generally given autonomy to work on a project that may have
a considerable impact on the company.
• Over time, an intrapreneur may turn into an entrepreneur.
How Intrapreneurship Works
Intrapreneurs are employees of a company who are assigned to work on a special idea or
project. They are given the time and freedom to develop the project as an entrepreneur
would.
However, they are not working solo. Intrapreneurs have the resources and capabilities of
the firm at their disposal.
Intrapreneurs and entrepreneurs have different objectives. An entrepreneur envisions

creating a company from the ground up. An intrapreneur has a broader vision for an
established company. This vision may involve radical changes to company traditions,
processes, or products. The intrapreneur typically has directly applicable skills and
experience to bring to the job.
Copreneur
When your personal and professional lives are so intertwined, the stakes are high.
Business couples must learn to juggle their roles, share power and decisions, and balance
life and work, all while owning and running a business. CopreneurCPR is dedicated to

helping entrepreneurial couples manage these challenges and the many others they face
in starting or growing a business together.
Career opportunities as Entrepreneur
1. Mid-level management
At big companies, the C-level folks develop ideas, the ground force does the work, and
mid-level management converts the idea into execution. Graduates with entrepreneurial
degrees are well suited for this opportunity.
2. Business consultant
The Fortune 500 is ripe with business consultants. They need people who can go to a
client site, identify problems and fix them. That is what an entrepreneur does, and that is
why this job is perfect for you. You have the training to help identify things that others
may not pick up on and the training to know how to fix them.
3. Sales
Someone who works in sales or runs the department needs to know how businesses run.
They need to know how to represent a company, manage accounts, and follow up on
leads.
4. Research and development
To work in R&D, you need to understand business concepts, procedures, and practices.
With all of the training and education someone has received learning about
entrepreneurship, they are well prepared for this type of position.
5. Not-for-profit fundraiser
Being able to raise funds requires understanding the importance of business and
networking relationships. It is a great place for someone with this type of degree because
you will have experience in studying advanced concepts that can be used to your
advantage on the job.
6. Teacher
Now here me out on this one. I am not suggesting that you go teach entrepreneurship. I
suggest you teach a core competency (e.g., math, history, literature, etc.), but teach
students the entrepreneurial side. Teach them the benefits of math to business, history
to innovation, and literature to persuasive advertising.

7. Recruiter
Having had courses that cover operations management, leadership, and a variety of
others, you most likely have a keen sense of what type of person is needed to fulfill a
position. Companies who use recruiters rely upon someone being not just people savvy,
but having an in-depth business sense as well.
8. Business reporter
If you can write articles, or pick up a quick class to learn it, you are in a prime position to
take the lead on covering a local business beat. You will understand the field and concepts
and can use your knowledge to make the business section that much more interesting
and telling.
Entrepreneurship Opportunities
India is emerging country; it has large opportunities for entrepreneurs to start up new
business and expand the old one. The opportunities are available in almost all sectors at
initiation level as well as expansion level. Also it is big market in the world as per diversity
and population point of view in the world. This research has identified the opportunities
in the fields explained below.
1. Tourism Sector
Tourism has a wide opportunities in India because domestic and foreign tourist rising
every year. India has heritage sites, hills stations, beaches, diverse culture, wild life, rural
life etc. Attract tourist. The number of tourist is increasing year by year in India because
of this sector must be well organised and require well trained professionalism persons
and good hospitality. Therefore, lot of opportunities for entrepreneurs in the field
tourism like; provide good transport facility, hotels, available guides to tourist etc.
2. Energy Sector
There are broad opportunities in this sector because day by day the requirement of
energy is rising due to many reasons like; betterment in living standards, industrial
development, agriculture development, population rise etc. To fulfil the energy demand,
there is need of production of energy, supply electrical device and supporting accessories,
agriculture irrigation machinery and equipments etc. The green energy is new field into
this energy sector have a lot of opportunities to develop solar power plants, manufacture
and sale domestic solar equipment etc.
3. Automobile Sector
India is second largest automobile growing market after China. At large level automobile
and components is manufactured in India. Foreign countries are shown their interest to
setup there plant in India and some has already started. A lot of opportunities for

entrepreneurs are available in; manufacturing of automobile components, supply spare

parts and lubricants, supply of fuels, service centers etc.
4. Textile Sector
Textile is one of the oldest and fastest growing sector. India export 11% of world’s total
requirement. There are two broad segments of textile. One is the organised sector,
consists modern machinery and techniques for production and second is unorganised
sector consists of handloom, handicraft etc. The future of Indian textile is opportunistic
in both domestic as well as export. Therefore, a lot of opportunities are available in this
sector for entrepreneurs.
5. Waste Management and Recycling

India is second largest populated country in the world. In India there are so many type of
waste generating from industries, cities and agriculture but there is no strong and a
standard waste management policy. A strong waste management is requiring proper
category wise collection, handling, disposal, reuse or recycling etc. This sector has broad
opportunities for entrepreneurs to start recycling plant, energy production from waste,
waste treatment plant, waste collection services etc. There are few companies started
business in this fields and running successfully. Examples; Timarpur-okhla waste
management private limited, Synergy waste management, Antony waste handling cell
private limited etc.
6. Health Sector
There is a large opportunities in this sector due to more population and also a huge
demand of ayurvedic and herbal medicine because it provide permanent treatment of
disease as well as there is no side effect. Opportunities are available to provide health
services like; good hospitals, medicine manufacturing, biomedical engineering, online
marketing of equipments and medicines etc.
7. Organic Farming
Organic farming is growing sector. The demand of organic fruits and grains is increasing
worldwide because it free from chemicals and fertilisers. This forming is environment
friendly and has large opportunities.
8. Media
In India there are huge opportunities in media. India government initiative “digital-India”
is also providing a motivation and several schemes to entrepreneurs. The entrepreneurs
can work in printing media, advertisement, news agencies, television channels, online
service etc.
9. Toys
Indian toy market is not well organised, it require organised approach for distribution
and marketing. India is importing toys from China, but still Indian design and taste is in

demand due to Indian tradition and culture. Toys market of India is growing 15% to 20%
per annum. The business opportunities in toy sector are: toys for education, electronic
remote control toys, sponge toys, wooden toys, balloons making, toy store etc.
10. Packaging
The packaging is requiring almost every product to provide safety against damage. It has
commercially impact on all firms either directly or indirectly. This is fastest growing
industry in India. Opportunities are available for entrepreneurs to provide packaging
materials for machinery, chemicals, fertilisers, electrical and electronic devices, drinks,
food products, fruits packaging etc.
11. Transportation
India has wide opportunities in transportation because here lack of transport facilities.
e.g. public transport, good transports, air transport etc. The entrepreneur can start
transport service for public like online taxi service, travelling agency, goods transport
service, air taxi, transport service for agricultures, special transport service like;
medicines, livestock, fruits, chemicals, refrigerated vans or trucks, industrial large
equipment transportation etc.
12. Food Products

India is famous for their delicious foods. Also it is 2nd largest food producer of the world.
There are large possibilities of growth and expansion of in area like; producing,
consuming, export, store, transport, packing, refrigeration, canning etc. The quality
product demands and food service demands of consumers have opened up more
opportunities in country as well as outside of country in food processing and equipment
industry.
13. Training and Education

There is huge demand of skilled and trained employees in all over India. Government of
India is also making effort in this direction through “skill India” program. There is lack of
quality education and training facilities in India. Due to this, there are lot of opportunities
in the field of training and education. To strengthen the basic education good schools are
required. To provide knowledge and training; sports club, music schools, training centers,
computer centers, printing press etc. For a particular skill development, there must be
some training centers provide training in particular trade.
14. Supply and Marketing

There are huge opportunities in India for supply and marketing of goods. In India there
are lot of suppliers and marketing persons are required, for the supply and marketing of
products like automobile parts, home appliances, energy devices, food products,
electronics products, etc. Almost all sectors require supplier to supply the products to
their customers. It has many opportunities for entrepreneurs. The marketing is
important and essential activity for any product now a days withought which it is difficult

to achieve target. Marketing businesses is somewhat difficult but have great

opportunities for entrepreneurs.
1.6 Entrepreneur and Entrepreneurship – Factors, Barriers &

Problems
Factors of an Entrepreneur in Business
Starting your own business can be a rewarding experience, as you have the chance to be
your own boss and the ability to earn an unlimited income. But the path to success is not
an easy one, and you're likely to face numerous obstacles and challenges along the way.
Your chances of success will be determined in large part on a number of important
personal factors.
1. Planning
According to CareerChoiceGuide.com, ineffective planning is a primary reason many

entrepreneurs fail. Preparing a thoughtful and comprehensive business plan can help you
foresee possible obstacles and develop ways to overcome them when they occur.
Contingency planning, such as having access to a backup financing source, can protect
against unexpected events such as the sudden loss of an important customer.
2. Perseverance
It can take time for a new business to gain traction, especially if the business concept is
new and unproven. An important entrepreneurial success factor is perseverance in the
face of adversity. A marketer of a new product, for instance, may need to make repeated
cold calls to potential buyers to find a few who are willing to take a chance on an
idea.CareerChoiceGuide.com indicates it often takes three to five years for a new business
to become profitable.
3. Risk Management
Starting a business introduces an element of risk, especially if you are leaving a stable job
with a regular salary. However, successful entrepreneurs know how to minimize risk by
making careful choices and decisions. You can minimize your risk by performing
extensive research and weighing the pros and cons of multiple options.
4. Enthusiasm and Belief
It can take a great deal of courage to launch your own business, so you need a great deal
of confidence in your ability to succeed. You also need to have a strong belief in your
business idea. Strong belief will help keep you going during the early stages when times

can be difficult. It can also provide a source of enthusiasm that can provide motivation.
According to the Entrepreneur website, doing something you truly enjoy can also help
supply the necessary enthusiasm.
5. Level-headed Approach
Your ability to take a level-headed, analytical approach to your business is an important

success factor because it prevents you from making knee-jerk decisions based on
emotion. You'll also have a greater chance of weathering the inevitable down periods.
You'll be able to make a realistic evaluation of the status of your business at all times.
6. Relishing Challenges
Successful entrepreneurs are motivated by challenges. You'll face challenges throughout

your entrepreneurial career. At the beginning, you'll face the challenge of getting the
business off the ground. Once you're successful, you'll have to deal with challenges from
competitors who want to steal your customers and mimic your methods. Rather than
backing down from these challenges, successful business owners meet them head-on.
Barriers & Problems for New Entrepreneurs
Entrepreneurship comes with a host of challenges. Rewarding challenges, but harsh

challenges nonetheless. Experienced entrepreneurs have to deal with this no matter how
long they’ve been in business -- trying to establish a brand, adjust to match or exceed the
competition and keep your business profitable is a challenge no matter how many years
you’ve been in business.
But for new and young entrepreneurs, there are some unique challenges that are
especially difficult to overcome. If you’re just getting into the game, or you’re thinking
about becoming an entrepreneur, be prepared for these eight significant hurdles.
1. Abandoning another career
If you’re going to dedicate yourself to starting and nurturing a business to success, it’s
going to be nearly impossible to simultaneously manage another career. You might be
able to manage the infancy of your business on the side, during weeknights and
weekends, but if you want a chance of growing significantly, invariably you’ll have to quit
your day job.
Walking away from a promising, steady long-term opportunity for something

unpredictable is scary -- especially if you’ve never run a business before. Unfortunately,

there’s no easy way to address this. Just think through your decision logically, and don’t
ignore your instincts.
2. Financing
Experienced entrepreneurs don’t have it easy when it comes to funding a new business,
but they do have a few advantages over newcomers. They might have a pool of capital
from a business they previously sold or a steady stream of revenue they can use to fund
a new business’s cash flow.
Even if their first business went under, they’ve likely made investment contacts and client
connections necessary to give them a leg up in a new enterprise. As a new entrepreneur,
you’ll be starting from scratch, which means you’ll need to start networking like crazy
and thinking through all your possible funding options before landing on one.
3. Teambuilding
This is especially hard if you’ve never run or managed a team before, but even if you have
management experience, picking the right team for a startup is stressful and difficult. It’s
not enough to find candidates who fill certain roles -- you also need to consider their cost
to the business, their culture fit and how they’ll work as part of your overall team. Such
considerations are exceptionally hard when you’re under the pressure of filling those
positions as soon as possible.
4. Being the visionary
As the founder of your startup, you’ll be expected to come up with the ideas. When a
competitor emerges, it will be your responsibility to come up with a response plan. When
your team hits an impenetrable obstacle, your job will be to come up with an alternative
plan to move forward.
This demands on-the-spot creative thinking -- which should be an oxymoron, but

entrepreneurs rarely have the luxury of time. The less experience you have, the more
pressure you’ll feel from this, and the harder time you’ll have coming up with acceptable
plans.
5. Dealing with the unknown
How long will your business exist? How profitable will your business be? Will customers
like your product? Will you be able to give yourself a steady paycheck? None of these
questions has a solid, reliable answer, even in startups based on great ideas with all the
resources they’d theoretically need.

That unknown factor means your job stability is going to plummet, and many of your
long-term plans will remain in flux as new developments emerge. Dealing with this
volatility is one of the hardest parts of emerging as a new entrepreneur.
6. Loneliness
It’s a rarely mentioned problem of entrepreneurship, and many new business owners
aren’t prepared for it until it happens. Being an entrepreneur is lonely. It’s a singular
position, so you won’t have teammates to rely on (completely). You’ll be working lots of
hours, so you won’t see your family as often. And your employees will be forced to remain
at a bit of a distance.
7. Rule-making
It’s fun to be the boss until you have to enforce something. Sooner or later, you’ll have to
come up with the rules your business follows, from how many vacation days your
workers get to what the proper protocol is when filing a complaint about a coworker.
These details aren’t fun to create, and they aren’t fun to think about, but they are
necessary for every business.
8. Decision-making
Believe it or not, this is probably the most stressful challenge on this list. New
entrepreneurs are forced to make hundreds of decisions a day, from big, company-
impacting decisions, to tiny, hour-affecting ones. Decision fatigue is a real phenomenon,
and most new entrepreneurs will experience it if they aren’t prepared for the new level
of stress.
If you can work your way past these major obstacles, you’ll be well on your way to
establishing yourself as an entrepreneur. That isn’t to say they won’t continue to nag at
you as the years go on, or that new and varied challenges won’t arise to take their place,
but you’ll be prepared to handle yourself in those most volatile and impactful first few
months -- and that puts you far ahead of the competition.

Unit 2
Entrepreneurship Development
2.1 Meaning
Entrepreneurship development is a program, method or process that aims to identify,
nurture, support and grow the talents in bigger level so that it brings new business
leaders in the market to reduce employment, health, educational, business,
environmental problems. The goal is to improve the living, the economic, social standard
thinking, and actions of people.
Definition of Entrepreneurship Development
Basically, entrepreneurship development is basically the process of improving the skill

set as well as the knowledge of the entrepreneurs. This can be done through various
methods such as classroom sessions or training programmes specially designed to
increase the entrepreneurial acumen.
Another definition of this term could be the process of enhancing the capacity to develop,
manage and organize a business venture while keeping in mind the risks associated with
it.
But instead of complicating things with big words and sophisticated terminologies, let us
understand it simply. The process of entrepreneurship development is nothing but
helping the entrepreneurs develop their skills through training and application of that
training. It instils in them the quality of making better decisions in the day to day business
activities.
Now that we understand the meaning of entrepreneurship development, let’s discuss the
process of entrepreneurship development.
Factors affecting for Entrepreneurship Development
Entrepreneurship is influenced by four distinct factors: economic development, culture,

technological development and education. In areas where these factors are present, you
can expect to see strong and consistent entrepreneurial growth.
These conditions may have both positive and negative influences on the emergence of
entrepreneurship. Positive influences constitute facilitative and conducive conditions for
the emergence of entrepreneurship, whereas negative influences create inhibiting milieu
to the emergence of entrepreneurship.

Let us look at each one of them in details.
Economic Factors
Economic environment exercises the most direct and immediate influence on

entrepreneurship. This is likely because people become entrepreneurs due to necessity
when there are no other jobs or because of opportunity.
The economic factors that affect the growth of entrepreneurship are the following:
1. Capital
Capital is one of the most important factors of production for the establishment of an
enterprise. Increase in capital investment in viable projects results in increase in profits
which help in accelerating the process of capital formation. Entrepreneurship activity too
gets a boost with the easy availability of funds for investment.
Availability of capital facilitates for the entrepreneur to bring together the land of one,
machine of another and raw material of yet another to combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of production.
France and Russia exemplify how the lack of capital for industrial pursuits impeded the
process of entrepreneurship and an adequate supply of capital promoted it.
2. Labor
Easy availability of right type of workers also effect entrepreneurship. The quality rather
than quantity of labor influences the emergence and growth of entrepreneurship. The
problem of labor immobility can be solved by providing infrastructural facilities including
efficient transportation.
The quality rather quantity of labor is another factor which influences the emergence of
entrepreneurship. Most less developed countries are labor rich nations owing to a dense
and even increasing population. But entrepreneurship is encouraged if there is a mobile
and flexible labor force. And, the potential advantages of low-cost labor are regulated by
the deleterious effects of labor immobility. The considerations of economic and emotional
security inhibit labor mobility. Entrepreneurs, therefore, often find difficulty to secure
sufficient labor.
3. Raw Materials
The necessity of raw materials hardly needs any emphasis for establishing any industrial
activity and its influence in the emergence of entrepreneurship. In the absence of raw
materials, neither any enterprise can be established nor can an entrepreneur be emerged

It is one of the basic ingredients required for production. Shortage of raw material can
adversely affect entrepreneurial environment. Without adequate supply of raw materials
no industry can function properly and emergence of entrepreneurship to is adversely
affected.
In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favorable these
conditions are, the more likely is the raw material to have its influence of entrepreneurial
emergence.
4. Market
The role and importance of market and marketing is very important for the growth of
entrepreneurship. In modern competitive world no entrepreneur can think of surviving
in the absence of latest knowledge about market and various marketing techniques.
The fact remains that the potential of the market constitutes the major determinant of
probable rewards from entrepreneurial function. Frankly speaking, if the proof of
pudding lies in eating, the proof of all production lies in consumption, i.e., marketing.
The size and composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the disadvantage of a competitive
market can be cancelled to some extent by improvement in transportation system
facilitating the movement of raw material and finished goods, and increasing the demand
for producer goods.
5. Infrastructure
Expansion of entrepreneurship presupposes properly developed communication and

transportation facilities. It not only helps to enlarge the market, but expand the horizons
of business too. Take for instance, the establishment of post and telegraph system and
construction of roads and highways in India. It helped considerable entrepreneurial
activities which took place in the 1850s.
Apart from the above factors, institutions like trade/ business associations, business
schools, libraries, etc. also make valuable contribution towards promoting and sustaining
entrepreneurship’ in the economy. You can gather all the information you want from
these bodies. They also act as a forum for communication and joint action.
Social Factors
Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. Strongly

affect the entrepreneurial behavior, which contribute to entrepreneurial growth. The

social setting in which the people grow, shapes their basic beliefs, values and norms.
The main components of social environment are as follows:
1. Caste Factor
There are certain cultural practices and values in every society which influence the’
actions of individuals. These practices and value have evolved over hundred of years. For
instance, consider the caste system (the varna system) among the Hindus in India. It has
divided the population on the basis of caste into four division. The Brahmana (priest), the
Kshatriya (warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined
limits to the social mobility of individuals.
By social mobility’ we mean the freedom to move from one caste to another. The caste
system does not permit an individual who is born a Shridra to move to a higher caste.
Thus, commercial activities were the monopoly of the Vaishyas. Members of the three
other Hindu Varnas did not become interested in trade and commence, even when India
had extensive commercial inter-relations with many foreign countries. Dominance of
certain ethnical groups in entrepreneurship is a global phenomenon
2. Family Background
This factor includes size of family, type of family and economic status of family. In a study
by Hadimani, it has been revealed that Zamindar family helped to gain access to political
power and exhibit higher level of entrepreneurship.
Background of a family in manufacturing provided a source of industrial

entrepreneurship. Occupational and social status of the family influenced mobility. There
are certain circumstances where very few people would have to be venturesome. For
example in a society where the joint family system is in vogue, those members of joint
family who gain wealth by their hard work denied the opportunity to enjoy the fruits of
their labor because they have to share their wealth with the other members of the family.
3. Education
Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of
education has a significant role to play in inculcating entrepreneurial values.
In India, the system of education prior to the 20th century was based on religion. In this
rigid system, critical and questioning attitudes towards society were discouraged. The
caste system and the resultant occupational structure were reinforced by such education.
It promoted the idea that business is not a respectable occupation. Later, when the British

came to our country, they introduced an education system, just to produce clerks and
accountants for the East India Company, The base of such a system, as you can well see,
is very anti-entrepreneurial.
Our educational methods have not changed much even today. The emphasis is till on
preparing students for standard jobs, rather than marking them capable enough to stand
on their feet.
4. Attitude of the Society
A related aspect to these is the attitude of the society towards entrepreneurship. Certain
societies encourage innovations and novelties, and thus approve entrepreneurs’ actions
and rewards like profits. Certain others do not tolerate changes and in such
circumstances, entrepreneurship cannot take root and grow. Similarly, some societies
have an inherent dislike for any money-making activity. It is said, that in Russia, in the
nineteenth century, the upper classes did not like entrepreneurs. For them, cultivating
the land meant a good life. They believed that rand belongs to God and the produce of the
land was nothing but god’s blessing. Russian folk-tales, proverbs and songs during this
period carried the message that making wealth through business was not right.
5. Cultural Value
Motives impel men to action. Entrepreneurial growth requires proper motives like profit-
making, acquisition of prestige and attainment of social status. Ambitious and talented
men would take risks and innovate if these motives are strong. The strength of these
motives depends upon the culture of the society. If the culture is economically or
monetarily oriented, entrepreneurship would be applauded and praised; wealth
accumulation as a way of life would be appreciated. In the less developed countries,
people are not economically motivated. Monetary incentives have relatively less
attraction. People have ample opportunities of attaining social distinction by non-
economic pursuits. Men with organizational abilities are, therefore, not dragged into
business. They use their talents for non-economic end.
Psychological Factors
Many entrepreneurial theorists have propounded theories of entrepreneurship that

concentrate especially upon psychological factors. These are as follows :
1. Need Achievement
The most important psychological theories of entrepreneurship was put forward in the
early) 960s by David McClelland. According to McClelland ‘need achievement’ is social
motive to excel that tends to characterise successful entrepreneurs, especially when
reinforced by cultural factors. He found that certain kinds of people, especially those who

became entrepreneurs, had this characteristic. Moreover, some societies tend to

reproduce a larger percentage of people with high ‘need achievement’ than other
societies. McClelland attributed this to sociological factors. Differences among societies
and individuals accounted for ‘need achievement’ being greater in some societies and less
in certain others.
The theory states that people with high need-achievement are distinctive in several ways.
They like to take risks and these risks stimulate them to greater effort. The theory
identifies the factors that produce such people. Initially McClelland attributed the role of
parents, specially the mother, in mustering her son or daughter to be masterful and self-
reliant. Later he put less emphasis on the parent-child relationship and gave more
importance to social and cultural factors. He concluded that the ‘need achievement’ is
conditioned more by social and cultural reinforcement rather than by parental influence
and such related factors.
2. Withdrawal of Status Respect
There are several other researchers who have tried to understand the psychological roots
of entrepreneurship. One such individual is Everett Hagen who stresses the-
psychological consequences of social change. Hagen says, at some point many social
groups experience a radical loss of status. Hagen attributed the withdrawal of status
respect of a group to the genesis of entrepreneurship.
Hage believes that the initial condition leading to eventual entrepreneurial behavior is
the loss of status by a group. He postulates that four types of events can produce status
withdrawal:
1. The group may be displaced by force;

2. It may have its valued symbols denigrated;
3. It may drift into a situation of status inconsistency; and
4. It may not be accepted the expected status on migration in a new society.
3. Motives
Other psychological theories of entrepreneurship stress the motives or goals of the

entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek power,
prestige, security and service to society. Stepanek points particularly to non-monetary
aspects such as independence, persons’ self-esteem, power and regard of the society.
On the same subject, Evans distinguishes motive by three kinds of entrepreneurs
1. Managing entrepreneurs whose chief motive is security.

2. Innovating entrepreneurs, who are interested only in excitement.

3. Controlling entrepreneurs, who above all otter motives, want power and
authority.
Finally, Rostow has examined inter gradational changes in the families of entrepreneurs.
He believes that the first generation seeks wealth, the second prestige and the third art
and beauty.
4. Others
Thomas Begley and David P. Boyd studied in detail the psychological roots of
entrepreneurship in the mid-1980s. They came to the conclusion that entrepreneurial
attitudes based on psychological considerations have five dimensions:
1. First came ‘need-achievement’ as described by McClelland. In all studies of

successful entrepreneurs a high achievement orientation is invariably present.
2. The second dimension that Begley and Boyd call ‘locus of control’ This means that
the entrepreneur follows the idea that he can control his own life and is not
influenced by factors like luck, fate and so on. Need-achievement logically implies
that people can control their own lives and are not influenced by external forces.
3. The third dimension is the willingness to take risks. These two researchers have
come to the conclusion that entrepreneurs who take moderate risks earn higher
returns on their assets than those who take no risks at all or who take extravagant
risks.
4. Tolerance is the next dimension of this study. Very few decisions are made with
complete information. So all business executives must, have a certain amount of
tolerance for ambiguity.
5. Finally, here is what psychologists call ‘Type A’ behavior. This is nothing but “a
chronic, incessant struggle to achieve more and more in less and less of time”
Entrepreneurs are characterize by the presence of ‘Type A’ behavior in all their
endeavors

2.2. Entrepreneurship Development Program (EDP):
Entrepreneurship Development Programme (EDP) is a programme which helps in

developing the entrepreneurial abilities. The skills that are required to run a business
successfully, is developed among the people through this programme. Sometimes, people
may have skills but it requires polishing and incubation.
Objectives of EDP
a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for
achievement.
b. Analyse environmental set up relating to small industry and small business.
c. Select the product.
d. Formulate proposal for the product.
e. Understand the process and procedure involved in setting up a small enterprise.
f. Know the sources of help and support available for starting a small scale industry.
g. Acquire the necessary managerial skills required to run a small-scale industry.
h. Know the pros and cons in becoming an entrepreneur.
i. Appreciate the needed entrepreneurial discipline.
j. Besides, some of the other important objectives of the EDPs are to:
k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise
and strive for their realization.
l. Prepare him / her to accept the uncertainty in running a business.
m. Enable him / her to take decisions.
n. Enable to communicate clearly and effectively.
o. Develop a broad vision about the business.
p. Make him subscribe to the industrial democracy.
q. Develop passion for integrity and honesty.
r. Make him learn compliance with law.

Contents:
1. General Introduction to Entrepreneurship:
First of all, the participants are exposed to a general knowledge of entrepreneurship such
as factors affecting small-scale industries, the role of entrepreneurs in economic
development, entrepreneurial behaviour, and the facilities available for establishing
small-scale enterprises.
2. Motivation Training:
The training inputs under this aim at inducing and developing the need for achievement
among the participants. This is, in fact, a crucial input of entrepreneurship training.
Efforts are made to inject confidence and positive attitude and behaviour among the
participants towards business.
It ultimately tries to make the participants start their own business enterprise after the
completion of the training programme. In order to further motivate the participants,
sometimes successful entrepreneurs are also invited to speak about their experiences in
setting up and running a business.
3. Management Skills:
Running a business, whether large or small requires the managerial skills. Since a small
entrepreneur cannot employ a management professionals /experts to manage his/her
business, he/she needs to be imparted basic and essential managerial skills in the
different functional areas of management like finance, marketing, human resource, and
production.
Knowledge of managerial skills enables an entrepreneur to run his/her enterprise

smoothly and successfully. That is why the saying goes that “One man control is the best
in the world (of business) if the man is big enough to control (manage) everything.”
4. Support System and Procedure:
The participants also need to be exposed to the support available from different
institutions and agencies for setting up and running small-scale enterprises. This is
followed by acquainting them with procedure for approaching them, applying and
obtaining support from them.
5. Fundamentals of Project Feasibility Study:
Under this input, the participants are provided guidelines on the effective analysis of
feasibility or viability of the particular project relating to marketing, organization,

technical, financial, and social aspects of the project. Knowledge is also given how to
prepare the ‘Project’ or ‘Feasibility Report’ for certain products.
6. Plant Visits:
In order to familiarize the participants with real life situations in small business, plant
visits are also arranged. Such trips help the participants know more about an
entrepreneur’s behaviour, personality, thoughts, and aspirations. These influence him /
her to behave accordingly to run his / her enterprise smoothly and successfully.
Issues/Problems
EDPs in India are affected with a number of problems which are responsible for low level
of success of the programmes. The problems come from the trainers, trainees, the various
organisations imparting training programmes, the supporting organisation and even
sometimes the government. Some of the important problems faced by EDPs are narrated
as follows:
i. No clear-cut policy at the national level:
India do not have a clear-cut national policy on entrepreneurship. Therefore, the growth
and development of entrepreneurship put to a halt due to the antithetic attitude of the
supporting agencies like banks, financial institutions and other supporting agencies in
the absence of a policy at the national level.
ii. No clear-cut objectives:
Majority of institutions engaged in EDP are themselves not convinced and certain about
the task they are supposed to perform and objectives to achieve. They are conducting EDP
because they have to conduct the same.
iii. No clear cut course of action:
The course contents are not standardized and the agencies engaged in EDPs are
themselves not very clear about the course of action they are supposed to follow. There
is no accountability and feed back system for further improvement.
iv. Poor follow-up:
Institutions providing EDPs do not show much concern for objective identification and
selection of entrepreneurs. No follow-up actions follow EDPs after training.
v. Non-availability of Infrastructural facilities : EDPs are not successful due to non-

availability of adequate infrastructural facilities required for the conduct of EDPs. Rural

and backward areas are lacking in proper class rooms, guest speakers, boarding and
lodging etc. for successful conduct of EDPs.
vi. Lack of commitment and involvement by the Corporate Sector:
Corporate sector shows less concern for the successful conduct of EDPs. They lack of
commitment and involvement in EDPs. There seems to be low institutional support
entrepreneurs.
vii. Non-availability of competent faculty:
The faculties selected for giving training are not sometimes competent enough to give
proper training to prospective entrepreneur. Even if competent and qualified teachers
available, they are reluctant to serve in rural and backward areas. This creates problem
smooth conduct of EDPs.
viii. Non conducive environment:
Non-conducive environment and constraints in the backward regions has become a

major problem for the conduct of EDPs. It makes the trainer-motivator’s role ineffective.
ix. Selection of wrong trainees:
There is no uniform procedure adopted by various agencies and institutions conducting

EDPs for the selection of trainees. This results in the selection of wrong trainees which
leads to low success rate of EDPs.
Phase of Entrepreneurship Development Programme:
Training Phase:
The main objective of this phase is to bring desirable change in the behaviour of the
trainees. In other words, the purpose of training is to develop ‘need for achievement’, i.e.
motivation among the trainees.
Accordingly, a trainer should see the following changes in the behaviour of the
trainees:
a. Is he/she attitudinally tuned very much towards his/her proposed project idea?
b. Is the trainee motivated to plunge into entrepreneurial career and bear risks involved
in it?
c. Is there any perceptible change in his entrepreneurial attitude, outlook, skill, role, etc.?

d. How should he/she behave like an entrepreneur?
e. What kinds of entrepreneurial traits the trainee lacks the most?
f. Whether the trainee possesses the knowledge of technology, resources and other
knowledge related to entrepreneurship?
g. Does the trainee possess the required skill in selecting the viable project, mobilizing
the required resources at the right time?
Some of the questions listed above also answer the basic underlying assumption in
designing a suitable training programme for the potential entrepreneurs. Having trained
the trainees, the trainers need to ask themselves as to how much, and how far the trainees
have moved in their entrepreneurial pursuits.
Post-Training Phase (Follow-up):
The ultimate objective of Entrepreneurship Development Programme is to prepare the

participants to start their enterprises. This phase, therefore, involves assessment to judge
how far the objectives of the programme have been achieved. This is also called ‘follow-
up’. Follow-up indicates our past performance, drawbacks, if any, in our past work and
suggests guidelines for framing future policies to improve our performance.
Evaluation:
Earlier, Government and other agencies were responsible for supporting potential
entrepreneurs to set up their units specially in backward and tribal areas. In this context,
Small Industries Service Institute and SIET Institute in the sixties tried to fill the
information gap which existed and were relevant for small entrepreneurs.
“The entrepreneurs required a lot of information for setting up a business and in that
context the contribution of these programmes was essentially in the area of
disseminating knowledge on financial, technical and managerial aspects. To that extent,
these programmes were not basically programmes towards entrepreneurship
development, but were in the nature of supportive programmes for the existing and the
new entrepreneurs.”
However, it was visualised that creation of industrial development corporations and

other external facilities has failed to develop, an effective and sufficient condition for
entrepreneurship development.
There must be an effective framework to develop the qualities of the individual who
respond to the external opportunities i.e. availability of funds, financial incentives etc.

Similarly, efforts should also be made so that social and organisational factors help
potential entrepreneurs to perceive the opportunities and learn to respond to them.
At present, existing entrepreneurs basically emerged out of the natural growth of

entrepreneurial talent of certain communities like Marwaris, Gujaratis, Parsi’s and South
Indian Brahmins. This type of entrepreneurs is a highly motivated group but problem is
that they be often interested in quick profits or high profits, opportunities which are
normally concentrated in the already well-developed areas.
So, it would be more important to have a broad-based entrepreneurial source to

command the tempo of economic growth. In this context, entrepreneurial training can
make a lot of difference in performance of the entrepreneurs. By motivating non-
entrepreneurial participants to start a viable enterprise, we can easily develop a valid
substitute for natural institutions like business families or existing entrepreneurs.
Entrepreneurship Development Programmes (EDPs) in India:
It will not be less than correct to say that India got the political freedom on 15 th August
1947, but not the economic freedom. And attainment of economic freedom i.e.,
emancipation from poverty and unemployment was the biggest challenge before the
country. The war for economic freedom started in 1950 in the form of planned
development. Then, it was realized that the way to get rid of poverty and unemployment
lies in the effective exploitation of hidden potential in the country. For this the policy
makers started advocating the promotion and development of small- scale industries in
the country. As a result, small – sector was recognized as employment- oriented sector
during the early sixties.
The employment-oriented thinking for small sector underwent changes by the end of
sixties and now small sector was recognized as an effective instrument to utilize the
entrepreneurial potential remained hitherto dormant in the country.
Realizing the various problems faced by the entrepreneurs in establishing enterprises,

the Government decided to offer promotional package to the entrepreneurs. Promotional
package included financial help and incentives, infrastructural facilities, and technical
and managerial guidance provided through various supporting organizations of the
Central, State and local levels.
This experience made the planners and policy makers realize that facilities and incentives
are, of course, necessary for establishing enterprises, but are not sufficient to solicit
adequate response from the entrepreneurs. Hence, now it was realized that emphasis on
human development is a necessary condition for entrepreneurship development. As
such, the serious thinking on entrepreneurship development began from here.

Concerted efforts on entrepreneurship development in India started with the

establishment of Small Industry Extension and Training Institute (SIET), now NISIET, in
1962 in Hyderabad. SIET got an opportunity with support from Harvard University to do
pioneering work in entrepreneurship development in India.
SIET in collaboration with Prof. David C. McClelland of Harvard University conducted 5-

years’ training and research programmes in Rajamundi, Kakinada and Vellur towns of
Andhra Pradesh and Tamil Nadu. McClelland proved that, through proper education and
training, the vital quality of an entrepreneur, which McClelland called ‘need for
achievement’ (n’ ach) can be developed.
The fact remains that McClelland’s this successful experiment proved to be a seed for
entrepreneurship development in India which has by now become a movement as EDP
(Entrepreneurship Development Programmes) in the country.
It is against this background now the Government and financial institutions started
thinking to develop entrepreneurship in the country through training programmes. It
was the Gujarat Industrial Investment Corporation (GIIC) which for the first time started
a three-month training programme on entrepreneurship development in 1970.
This programme was designed to unleash the talent of potential entrepreneurs and some
selected entrepreneurs. Special emphasis was given on three aspects:
(i) Establishment of small-scale enterprises,
(ii) Its management, and
(iii) To earn profits out of it. By the latter half of 1970s’, the news of GIIC’s EDP spread to
the other parts of the country also.
A major initiative to foster economic development in the North East India took place with
the establishment of the North Eastern Council (NEC) in 1972. The main objective of the
NEC was to promote economic development of the NER through inter-state plans and
bring the NER to the mainstream of the country. This is a matter of great satisfaction that
the NEC has since been seriously involved in its task of regional development. Two more
significant efforts were initiated in 1973 with an objective to remove the economic
backwardness of the region.
One, the establishment of the North Eastern Industrial and Technical Consultancy
Organization, (NEITCO) to impart training on entrepreneurship development, and
second, the establishment of the Entrepreneurial Motivation Training Centers (EMTCs)
in its six district headquarters of Assam.

Since EMTC was one of the oldest and noblest initiatives taken in the field of
entrepreneurship development in the country, some mention about the same seems
pertinent. The State Planning Board of the Government of Assam, under the dynamic
leadership of the then Chief Minister, took the initiative in requesting SIET Institute,
Hyderabad to be associated with training and research in the field of entrepreneurship
development in Assam with specific focus on self – employment for the educated
unemployed youth of the State (Mali 2000).
In response to it, the SIET Institute organized two training programmes for three weeks
duration each in 1973, for the officers of Government of Assam One training programme
was focused on entrepreneurship development for a selected band of officers from the
departments of industry, agriculture, animal husbandry, public works and other
departments and financial institutions of the Government of Assam.
The training programme included inputs like various methods and techniques of
identification and development of prospective entrepreneurs, development of
entrepreneurial personality, and identification of economic opportunities for setting up
small-scale enterprises in the State.
Functional areas of management for establishing and operating small enterprises on

sound lines were also included in the training programmes. Second the another
simultaneous training was imparted to the another group of officers of the industries
department to encourage people to establish small-scale industries, undertake industrial
potential surveys, select growth centers, plan infrastructure facilities, and develop
business profiles.
Integrated entrepreneurship development model and plan were evolved as a result of

SIET’s experience and realisation that entrepreneurship development is a multi-
disciplinary task, and the long-range plan should be executed through well coordinated
and orchestrated institutional support.
The integrated model of entrepreneurship development proposed by SIET included five

main components, namely:
(i) Local organization to initiate and support potential entrepreneurs till the break-even
stage,
(ii) Inter-disciplinary approach,
(iii) Strong information support,
(iv) Training as an important intervention for entrepreneurial development, monitoring

and evaluation, and

(v) Institutional financing.
Initially EMTCs were established in six centers in Assam under the State Planning Board,
which were monitored by 26 officers trained by SIET in May 1973. The team in each
centre consisted of multi – disciplinary talents. It is learnt that in 1979, after a
comprehensive evaluation of the performance of EMTCs by SIET Institute, the
programme was transferred from the State Planning Board to the Industries Department.
Three more centers were added to the earlier six locations.
The nine EMTCs where the programme was being implemented were as follows:
Mangaldoi (Darrang District), Silchar (Cachar District), Diphu (Karbi Analong District),
Jorhat (Jorhat District), Dhemaji (Dhemaji District), Kokrajhar (Kokrajhar District), in
1973, Dibrugarh (Dibrugarh District), Nalbari (Nalbari District) and Nagaon (Nagaon
District), in 1979.
SIET and Small Industry Development Organisation (SIDO) through Small Industry
Services Institute (SISl) and Industrial Development Bank of India (IDBI) and Technical
Consultancy Organisations (TCOs) started organising EDPs.
The encouraging results of these efforts culminated to the establishment of Centre for
Entrepreneurship Development (CED), Ahmedabad in 1979. Here, it is noteworthy that
CED, Ahmedabad was the first centre of its kind wholly committed to the cause of
entrepreneurship development.
Inspired and influenced by the success of CED, Ahmedabad; the national-level financial
institutions such as IDBI, IFCI, ICICI and SBI with active support from the Gujarat
Government sponsored a ‘Nation Resource Organisation’, called ‘Entrepreneurship
Development Institute of India (EDI)’, Ahmedabad, in 1983.
This institute was entrusted with the responsibility of extension and institutionalization
of entrepreneurship development activities in the country which the Institute has been
discharging successfully.
Almost at the same time of establishment of EDI in 1983, the Government of India
established ‘National Institute for Entrepreneurship and Small Business Development’
(NIESBUD) to coordinate entrepreneurship development activities in the country.
In course of time, some State Governments with the support from national level financial
institutions established state-level Center for Entrepreneurship Development (CED) or
Institute of Entrepreneurship Development (lED).
By now, the twelve States, viz., Bihar, Goa Gujrat, Himachal Pradesh, Jammu & Kashmir,
Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, and Uttar Pradesh
have established either CED or lED. EDPs in these states were conducted by the TCOs

before the establishment of CEDs or lEDs. According to the study of NIESBUD, some 686
organisations are involved in conducting EDPs in the country which have imparted
training to thousands of people by conducting hundreds of EDPs.
2.3. Entrepreneurship Development Training: Importance, Objective,

Methods
Entrepreneurship Development Training:

Many researchers agree that many training programmes do not address the real needs of
entrepreneurs. Garavan and O’Cinneide (1994a: 6) summarise the most significant
weaknesses of many entrepreneurial education and training programmes:
• Entrepreneurship education and training programmes are frequently of very
short duration compared with other educational programmes concerned with
helping people embark on a major career.
• While there is evidence that many of the entrepreneurship education and training
programmes are already highly committed to the owner-manager role and that
trainers are successful in raising commitment even higher, as well as reducing
doubts, there is parallel evidence to suggest that this mental preparation does not
go nearly far enough and that, indeed, it represents one of the major weaknesses
of many programmes.
• Many entrepreneurs are specialists within a particular field and tend to have a
poor grasp of the intricacies of managing across the range of functions. It is in
these situations that entrepreneurial skills are demanded: to work across
boundaries on complex, interrelated problems requiring the ability to take a
holistic view and exercise skills of analysis and synthesis.
• Trainers often try to accommodate too wide a range of start-up businesses within
a single programme. It is usual to group together people who are starting a diverse
range of small businesses and to offer them a more or less common skills
programme.
Objectives of entrepreneurial training
• To let the entrepreneur set or reset the objectives of his business and work
individually and along with his group for their realisation.

• To prepare him for accepting totally unforeseen risks of business after such
training.
• To enable him to take strategic decisions
• To enable him to build an integrated team to fulfill the demands of tomorrow.
• To communicate fast, clearly and effectively
• To develop a broad vision to see the business as a whole and to integrate his
function with it.
• To enable him to relate his product and industry to the total environment, to find
what is significant in it and to take it into account in his decisions and actions.
• To enable him to cope with and coordinate all relevant paper work, most of which
is statutorily obligatory.
• To make him accept industrial democracy, that is, accepting workers as partners
in enterprise; and
• To strengthen his integrity, honesty, and compliance with law, the key to success
in the long run.
2.4. Role of Institutions in Entrepreneurship Development
Institutions provide guidance, allow for routines to develop and ultimately reduce the
uncertainty of social interaction. These functions are all faces of the same coin but can be
analytically distinguished to better flesh out the role institutions play.
1. Institutions provide guidance

If institutions frame the behavior of individuals, they also, as a consequence, structure the
incentives that individuals face in their activities. In other words, if one cannot win at
tennis by playing outside the lines or letting the ball bounce twice, then the players will
be motivated to develop the capabilities to play within the boundaries and to always run
to return the ball before it bounces a second time. If I know that I can only win by playing
within the lines, it will force me to become good at hitting the ball within the limits of the
court. This will also guide my actions and my expectations regarding what my opponent
in the game can or cannot do.
2. Institutions allow for routines

By guiding actions, institutions facilitate social interaction in our daily lives. For instance,
driving on the right-hand side of the street is a rule which guides motorists in ways that
permit the coordination of cars. Such a coordination of vehicles happens because
everyone follows the same rule, which facilitates the choices drivers must make on the
road. As North explains, it is the existence of an imbedded set of institutions in our daily
lives which removes many difficult choices that, in the absence of institutions, would have
to be made in order to obtain social interaction.4 On the road, we don’t have to choose
which side to drive on every time we encounter another vehicle because we all accept
and follow the same rule.
3. Institutions reduce uncertainty

It follows that institutions reduce the uncertainty of social interaction by providing a
structure within which everyone can act. This function is very important because it allows
for the coordination of plans. Indeed, one could not interact socially in the total absence
of knowledge about what guides the actions of others in the social context. If I don’t know
the rules which my opponent will follow, I cannot engage myself in a tennis tennis game
because it would be too uncertain. The same is true in the “economic game”. Because
institutions guide human action in the social context, they reduce the uncertainty of social
interaction. To go back to the “rules of the road” example, the uncertainty every driver
faces with regard to the actions of every other driver is reduced by the existence of rules.
Because of rules, driving on the road is more certain. With this analysis in mind, it is easy
to understand that in order for institutions to reduce uncertainty, they must be as stable
and predictable as possible over time so that they can be used as guiding tools in social
interaction.
2.6 Role of DIC for the Promotion of Small Scale and Cottage Industries
• DIC provides the information on sources of machinery and equipment.

• Promotes new industrial growth centers, electronic industries etc.,
• Conducts multiple training programs to encourage the entrepreneurs.
• Gives assistance to entrepreneurs under State Incentives scheme and funding
assistance through self-employment schemes.
• It allots raw materials to the concerned industries at district level.
• DIC gives the information about marketing and its assistance on participating
trade fairs/buyers-sellers meet and so on.
• Guidance regarding Import and Exports of specific goods and services.
• Improves the managerial capacity by organizing various seminars, workshops
etc.
• It clears the problems related to SSI Registration/Bank loan/Marketing of
production etc.
• Single window assistance through SIDA and District Industries Centers.
• Products standardization

• Promotion of products under Non-conventional Energy Sources.

• Design and product development for handicrafts.
2.7. SISI – Small Industries Services Institute
1. To assist existing and prospective entrepreneurs through technical and

managerial counseling such as help in selecting the appropriate machinery and
equipment, adoption of recognized standards of testing, quality performance etc;
2. Conducting EDPs all over the country;
3. To advise the Central and State governments on policy matters relating to small
industry development;
4. To assist in testing of raw materials and products of SSIs, their inspection and
quality control;
5. To provide market information to the SISI’s;
6. To recommend SSI’s for financial assistance from financial institutions;
7. To enlist entrepreneurs for partition in Government stores purchase

programme;
8. Conduct economic and technical surveys and prepare techno-economic feasible

reports for selected areas and industries.
2.8. Role of EDII – Entrepreneurship Development Institute of

India
• Creating a multiplier effect on opportunities for self-employment,
• Augmenting the supply of competent entrepreneurs through training,
• Augmenting the supply of entrepreneur trainer-motivators, • Participating in
institution building efforts,
• Inculcating the spirit of 'Entrepreneurship' in youth,
• Promoting micro enterprises at rural level,
• Developing new knowledge and insights in entrepreneurial theory and
practice through research,
• Facilitating corporate excellence through creating entrepreneurs,
• Improving managerial capabilities of small scale industries,

• Sensitizing the support system to facilitate entrepreneurs establish and

manage their enterprises,
• Collaborating with organizations to accomplish the above objectives.
2.9. NIESBUD – National Institute of Entrepreneurship and Small

Business Development
The National Institute for Entrepreneurship and Small Business Development is a

premier organization of the Ministry of Skill Development and Entrepreneurship,
engaged in training, consultancy, research, etc. in order to promote entrepreneurship and
Skill Development. The major activities of the Institute include Training of Trainers,
Management Development Programmes, Entrepreneurship-cum-Skill Development
Programmes, Entrepreneurship Development Programmes and Cluster Intervention.
NIESBUD has provided training to 11,46,209 persons as of March 31, 2018 through
44,035 different training programmes since inception. This includes 4,384 international
participants hailing from more than 141 countries throughout the globe.
Training:
• Assessing the training programmes and identifying the gaps to systematically
conduct training programmes, orienting them as well as motivating youth
towards entrepreneurship.
• Developing and Designing various communication media tools for promoting
the culture of entrepreneurship among different strata of society in the
country.
• Supporting and playing a catalytic role towards organizations engaged directly
or indirectly in developing and promoting entrepreneurship and self-
employment in the Country.
• Providing consultancy services in the area of entrepreneurship and Skill
Development especially for MSDEs.
• In addition to above, Also Providing consultancy services to other Institutions
engaged in entrepreneurial training either in the Government or in the Private
Sector.
• Designing, Conceptualizing and standardizing course curriculum for
entrepreneurship and skill development programmes.
Research & Development:

• Promoting research and development activities in the area of
entrepreneurship, particularly in MSDE sector. Undertaking documentation
and disseminating information related to entrepreneurship/ enterprise
development.

• Developing and publishing literatures, articles, journals and information

material related to entrepreneurship/enterprise development/ Skill
Development/MSDEs
• Providing an interactive platform for exchange of ideas and experiences for
various targets groups mainly through seminars, workshops, conferences as
well as through training programs.
• Identifying the Problem and developing feasible solutions by conducting
research studies for generating knowledge and accelerating the development
of entrepreneurship.
Major Focus Areas :

• Creating a holistic environment to support entrepreneurship and skill
development within the Institute.
• Evaluating and revising the training programmes sponsored by NIESBUD so as
to fit in with the internal and external environmental changes with respect to
entrepreneurship and small business Development
• The institute is actively engaged in creating a positive image among the general
public on entrepreneurship and eliminating the misconception related to it.
This helps in disseminating the information on entrepreneurship and skill
Development fruitfully.
2.10. NEDB – National Entrepreneurship Development Board
Objectives:
The main objective of the National Entrepreneurship Development Board (NEDB)

is promotion of entrepreneurship for encouraging self-employment in small scale
industries and small business.
Salient Features:
The scheme covers the following activities:-

• To identify and remove entry barriers for potential entrepreneurs (first
generation and new entrepreneurs) including study on entrepreneurship
development.
• To focus on existing entrepreneurs in micro, tiny and small sector and identify
and remove constraints to survivals, growth and continuously improve
performance.
• To facilitate the consolidation, growth and diversification of existing
entrepreneurial venture in all possible ways.

• To support skill up gradation and renewal of learning processes among

practicing entrepreneurs and managers of micro, tiny, small and medium
enterprises.
• To support agencies in the area of entrepreneurship about the current
requirement of growth.
• To act as catalyst to institutionalize entrepreneurship development by
supporting and strengthening state level institutions for entrepreneurship
development as most entrepreneurship related activities take place at the
grass root level and removing various constraints to their effective
functioning.(
• Setting up of incubators by entrepreneurship development institutions and
other organizations devoted to the promotion of entrepreneurship
development

Unit 3
Emerging areas in Entrepreneurship
3.1. Women Entrepreneurship
Women entrepreneur may be defined as a woman or group of women who initiate,

organize, and run a business enterprise. In terms of Schumpeterian concept of innovative
entrepreneurs, women who innovate, imitate or adopt a business activity are called
“women entrepreneurs”.
Kamal Singh who is a woman entrepreneur from Rajasthan, has defined woman
entrepreneur as “a confident, innovative and creative woman capable of achieving self-
economic independence individually or in collaboration, generates employment
opportunities for others through initiating, establishing and running the enterprise by
keeping pace with her personal, family and social life.”
The Government of India has defined women entrepreneurs based on women

participation in equity and employment of a business enterprise. Accordingly, the
Government of India (GOI2006) has defined women entrepreneur as “an enterprise
owned and controlled by a women having a minimum financial interest of 51 per cent of
the capital and giving at least 51 per cent of the employment generated in the enterprise
to women.” However, this definition is subject to criticism mainly on the condition of
employing more than 50 per cent women workers in the enterprises owned and run by
the women.
In nutshell, women entrepreneurs are those women who think of a business enterprise,
initiate it, organize and combine the factors of production, operate the enterprise and
undertake risks and handle economic uncertainty involved in running a business
enterprise.
Types of Women Entrepreneurship
Women entrepreneurs in India are broadly divided into the following categories:
1. Affluent entrepreneurs
2. Pull factors
3. Push
4. Self-employed entrepreneurs
5. Rural entrepreneurs
1. Affluent Entrepreneurs:

Affluent women entrepreneurs are those women entrepreneurs who hails from rich
business families. They are the daughters, daughter-in laws, sisters, sister-in-laws and
wives of affluent people in the society. Many of them are engaged in beauty parlour,
interior decoration, book publishing, film distribution and the like. The family supports
the above type of entrepreneur in carrying out their responsibilities
2. Pull Factors:
Women in towns and cities take up entrepreneurship as a challenge to do something new

and to be economically independent. These are coming under the category of pull factors.
They belong to educated women who generally lake up small and medium industries
where risk is low. Under this category, women usually start service centres schools, food
catering centres, restaurants, grocery shops etc.
3. Push Factors:
There are some women entrepreneurs who accepts entrepreneurial activities to

overcome financial difficulties. The family situation forces them either to develop the
existing family business or to start new ventures to improve the economic conditions of
the family. Such categories of entrepreneurs are termed as push factors.
4. Self-employed Entrepreneur:
Poor and very poor women in villages and town rely heavily on their own efforts for
sustenance. They start tiny and Small enterprises like brooms making, wax candle
making, providing tea and coffee to offices, ironing of clothes knitting work, tailoring firm
etc. Such women are called self-employed entrepreneurs.
5. Rural Entrepreneurs:
Women in rural areas/villages start enterprises which needs least organising skill and
less risk. Dairy products, pickles, fruit juices, pappads and jagger making are coming
under this category of Rural entrepreneur.
Challenges of Women Entrepreneurship

1. Family restriction
Women are expected to spend more time with their family members. They do not
encourage women to travel extensively for exploiting business opportunities.
2. Lack of Finance
Family members do not encourage women entrepreneurs. They hesitate to invest money
in the business venture initiated by women entrepreneurs. Bank and other Financial

Institutions do not consider Middle Class Women Entrepreneurs as proper applicants for
setting up their projects and they are hesitant to provide financial assistance to
unmarried women or girls as they are unsure as to who will repay the loan — either their
parents or in-laws after their marriage. This humiliates unmarried women and they
generally leave the idea of setting up their ventures.
For example, Kiran Mazumdar Shaw initially faced many problems regarding funds for
her business. Banks were hesitant to give loan to her as biotechnology was a totally new
field at that point of time and she was a woman entrepreneur, which was a rare
phenomenon.
3. Lack of Education
Women are generally denied of higher education, especially in rural areas and under
developed countries. Women are not allowed to enrich their knowledge in technical and
research areas to introduce new products.
4. Role Conflict
Marriage and family life are given more importance than career and social life in Indian
society.
5. Unfavourable Environment
The society is dominated by males. Many business men are not interested to have
business relationship with women entrepreneurs. Male generally do not encourage
women entrepreneurs.
6. Lack of persistent Nature
Women generally have sympathy for others. They are very emotional. This nature should
not allow them to get easily cheated in business.
7. Lack of Mental strength
Business involves risk. Women entrepreneurs get upset very easily when loss arises in
business.
8. Lack of Information
Women entrepreneurs are not generally aware of the subsidies and incentives available
for them. Lack of knowledge may prevent them from availing the special schemes.

9. Stiff Competition
Women face lot of competition from men. Due to limited mobility they find difficult to
compete with men.
10. Mobility
Moving in and around the market, is again a tough job for Middle Class Women
Entrepreneurs in Indian Social system.
Problems faced by women entrepreneurs are as follows:
1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women
entrepreneurs suffer from shortage of finance on two counts.
Firstly, women do not generally have property on their names to use them as collateral
for obtaining funds from external sources. Thus, their access to the external sources of
funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage women
borrowers on the belief that they can at any time leave their business. Given such
situation, women entrepreneurs are bound to rely on their own savings, if any and loans
from friends and relatives who are expectedly meager and negligible. Thus, women
enterprises fail due to the shortage of finance.
2. Scarcity of Raw Material:
Most of the women enterprises are plagued by the scarcity of raw material and necessary
inputs. Added to this are the high prices of raw material, on the one hand, and getting raw
material at the minimum of discount, on the other. The failure of many women co-
operatives in 1971 engaged in basket-making is an example how the scarcity of raw
material sounds the death-knell of enterprises run by women (Gupta and Srinivasan
2009).
3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for
canvassing and advertisement. Thus, they have to face a stiff competition for marketing
their products with both organized sector and their male counterparts. Such a
competition ultimately results in the liquidation of women enterprises.

4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A single
woman asking for room is still looked upon suspicion. Cumbersome exercise involved in
starting an enterprise coupled with the officials humiliating attitude towards women
compels them to give up idea of starting an enterprise.
5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other members of the
family. Man plays a secondary role only. In case of married women, she has to strike a fine
balance between her business and family. Her total involvement in family leaves little or
no energy and time to devote for business.
Support and approval of husbands seem necessary condition for women’s entry into
business. Accordingly, the educational level and family background of husbands
positively influence women’s entry into business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause
of socio-economic problems. Due to the lack of education and that too qualitative
education, women are not aware of business, technology and market knowledge. Also,
lack of education causes low achievement motivation among women. Thus, lack of
education creates one type or other problems for women in the setting up and running of
business enterprises.
7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India speaks of
equality between sexes. But, in practice, women are looked upon as abla, i.e. weak in all
respects. Women suffer from male reservations about a women’s role, ability and
capacity and are treated accordingly. In nutshell, in the male-dominated Indian society,
women are not treated equal to men. This, in turn, serves as a barrier to women entry
into business.
8. Low Risk-Bearing Ability:
Women in India lead a protected life. They are less educated and economically not self-
dependent. All these reduce their ability to bear risk involved in running an enterprise.
Risk-bearing is an essential requisite of a successful entrepreneur.

In addition to above problems, inadequate infrastructural facilities, shortage of power,

high cost of production, social attitude, low need for achievement and socioeconomic
constraints also hold the women back from entering into business.
Achievements of Women Entrepreneurship
1. Growth
Women are more likely than men to start their own business.
• Between 1997 and 2017, the number of women-owned businesses in the US

increased by 114%, while the growth rate for all companies was 44%.
• Back in 1972, there were 402,000 women-owned businesses, which represented
4.6% of all firms. Fast forward to 2018, and there are now 12.3 million businesses
owned by women, accounting for 40% of all companies. That means women own
four out of every 10 businesses in the US.
• The combination of women-owned businesses and companies equally owned by
men and women account for 48% of all US businesses.
• Women in the US are starting businesses at an impressive rate of more than 1,800
(net) per day.
• States with the fastest growth rate for the number of businesses owned by women
are Florida, Georgia, Michigan, Tennessee, and South Carolina.
2. Economic Impact
• As of 2018, women-owned businesses employ 9.2 million Americans. What’s

more, total employment by women-owned firms rose by 21% between 2007 and
2018, while it declined for all firms by 0.8%.
• Women-owned businesses now employ 8% of the total US workforce.
• In 1972, businesses owned by women brought in $8.1 billion in revenue. By 2018,
the total had soared to $1.8 trillion– 217 times greater from 1972.
3. Financing and Revenue
• Businesses founded by women deliver higher revenue — more than twice as much
per dollar invested — than those established by only men.
• Companies founded or co-founded by women often receive substantially less in
investment funds compared to firms started by men. Despite this gap, one study
found that startups with female leadership performed better over time,
generating 10% more in cumulative revenue over five years.
• Between 2007 and 2018, total revenue of women-owned businesses jumped 46%,
compared to a 36% increase for all businesses.

• Five years ago, the femtech industry (a term used to describe technologies
designed for women’s health) had barely received $100 million in global funding.
It’s estimated that by 2025, femtech will reach a market size of up to $50 billion.
Between 2007 and 2018, total revenue of women-owned businesses jumped 46%,
compared to a 36% increase for all businesses.
4. Where They Work
• 62% of women entrepreneurs depend on their business as their primary source

of income. What’s interesting about that is, as one report says, this finding
“challenges the old assumption that women entrepreneurs are more likely to run
‘lifestyle businesses’ that provide additional income as opposed to serving as a
primary source of revenue.”
• Women are significantly more likely to launch businesses within the healthcare or
education sectors than men.
• Women-owned businesses have the highest total revenue in wholesale trade
(17%), retail trade (15%), and professional, scientific and technical services
(10%).
• Industries with the highest growth rates for the number of women-owned
businesses are: utilities (151%); other services, which includes salons and pet
care (126%); construction (94%); accommodations and food services (85%); and
administrative, support, and waste management services (70%).
5. Diversity
Firms owned by minority women grew at a staggering rate of 163% between 2007 and
2018.
• Over the past 11 years, minority women have been the driving force behind the
growth of women-owned businesses.
• Firms owned by minority women grew at a staggering rate of 163% between 2007
and 2018.
• As of 2018, women of color account for 47% of all women business owners.
• Nearly half of all women business owners are between the ages of 45 and 65
(48%) and two-thirds (67%) are 45 or older. The next largest age group, 25 to 44
years old, accounts for 31% of women business owners.
The numbers don’t lie: there is a lot to celebrate when it comes to the achievements of
women business owners and entrepreneurs.
Is there still more that needs to be done to promote and support women-owned
businesses? Yes, absolutely.

But these figures are an indication that change is moving in the right direction. And that’s
a trend we need to ensure continues.
Opportunities for Women Entrepreneurs
Education is a boon to mankind, while lack of education to a person is a bane now-adays.

Throughout the world, we can observe that the ratio of women entrepreneurs is growing
tremendously. The emergence as well as development of women entrepreneurs is quite
visible in India and their over-all contribution to Indian economy is also very significant.
Today the role of Women entrepreneur in economic development is inevitable because

women are entering not only in selected professions but also in professions like trade,
industry and engineering.
· The industrial structure and the enterprises are undergoing a radical change.
Information Technology has transformed the very technique of doing business.
Individually, business ownership provides women with the independence they crave and
with economic and social success they need. Nationally, business ownership has great
importance for future economic prosperity. Globally, women are enhancing, directing,
and changing the face of how business is done today. Ultimately, female business owners
must be recognized for who they are, what they do, and how significantly they impact the
world’s global economy.
· Women should be considered as specific target group for all development
programmes.
Govt. should extend better educational facilities and schemes to women folk. Adequate
training programs on management skills should be provided to women community.
Encourage women’s participation in decision making. Vocational training should be
extended to women community to enable them to understand the production process
and management.
· Training on professional competence and leadership skills should be extended to
women entrepreneurs.
Activities in which women are trained should focus on theirmarketability and
profitability. State Finance Corporations and financing institutions should permit by
statute to extend purely trade related finance to women entrepreneurs. And lastly
women’s development corporation has to gain access to open-ended financing.
Remedial Measures of Women Entrepreneurship:
Some of the remedial measures that can be undertaken to promote women

entrepreneurship in India, are as follows.

1. Promotional Help
Government and NGOs must provide assistance to entrepreneurs, both in financial and
non-financial areas.
2. Training
Women entrepreneurs must be given training to operate and run a business successfully.
Training has to be given to women who are still reluctant to take up the entrepreneurial
task.
3. Selection of Machinery and Technology
Women require assistance in selection of machinery and technology. Assistance must be

provided to them in technical areas so that the business unit become successful.
4. Finance
Finance is one of the major problems faced by women entrepreneurs. Both family and
government organizations should be liberal in providing financial assistance to them.
5. Marketing Assistance
Due to limited mobility, women are unable to market their goods. Assistance must be
provided to help them to market their goods successfully in the economic environment.
6. Family support
Family should support women entrepreneurs and encourage them to establish and run
business successfully.
Role Models of Woman Entrepreneurs in India
Woman achiever is one who can build a castle with the bricks other has thrown at her.
India too has its own pool of bold and fearless Women who have achieved a benchmark
not only in India but also overseas. Here I am going to list about such great and Successful
Women’s, who with their Hard work and Dedication have achieved such a great heights
in their life.
1. Kiran Mazumdar Shaw :
She is the founder, Chairman and Managing Director of Biocon Limited. Biocon was
started in 1978 and started its evolution from an industrial enzymes manufacturing

company to a fully integrated bio-pharmaceutical company. Under the leadership of

Kiran Mazumdar Shaw Biocon is a leader player in Biomedicine Research.
2. Chanda Kochhar :
Chanda Kochhar is the MD and CEO of India’s largest private bank ICICI Bank. She is
widely known for her role in shaping Retail Banking in India. She was awarded with the
Padma Bhushan one of the India’s largest Civilian honor for her pioneering work in the
financial sector and effective leadership during financial crisis and supportive business
practices.
3. Naina Lal Kidwai :
Naina Lal Kidwai was the first Indian Woman to graduate from Harvard Business School.
She is an Indian Banker, Chartered Accountant and Business Executive. She was also the
first Woman to guide functioning of Foreign Bank in India. She was listed among the
world’s top 50 Corporate Women from 2000 to 2003 by Fortune Magazine. She is one of
the most successful and famous Indian Business Woman of today.
4. Ekta Kapoor :
Ekta Kapoor is a daughter of famous actor Jeetendra and is sister of bollywood actor
Tusshar Kapoor. She is JMD and creative director of Balaji Telefilms. She has created a
name and fame for herself in TV serials and film production. She bagged the Hall of Fame
award for her contribution in the entertainment world at 6th Indian Telly Awards
2006. At present she is researching her hands in the sector of web series and is achieving
success in that too. She has been termed as the most successful Women of the
entertainment world.
5. Indra Nooyi :
Indra Nooyi is the current Chairman and CFO of the second largest food and beverage
business PepsiCo. In the beginning of her career she held manger positions at Johnson
and Johnson and the textile firm Mettur Beardsell. She joined PepsiCo in 1994 and was
named as president and CFO in 2001.
6. Neelam Dhawan :
Neelam Dhawan is an iconic figure in Indian IT Industry. She is an inspiration for

Women’s working in IT industry. She stepped her leg in IT world in early 1980’s when
there was handful of Women in his industry. She is said to be a Woman with ‘never-say-
die’ spirit.

7. Priya Paul :
Priya Paul has a bachelor’s degree in Economics from Wellesley College, USA and is an
Indian Business Woman. She entered her family Business and is currently the
Chairperson of Park Hotels. She has been conferred with Padma Shri award by the
Government of India on 26th January 2012. Priya has also opened a new branch of hotels
called Zone by the park and is a 4 star branch of Hotels.
8. Ritu Kumar :
Ritu Kumar is one of the renowned women in the field of Indian Fashion Industry. She
has carved a niche or herself in designing a variety of wardrobe’s including Indian wear,
Formal Evening Wear, Traditional Wear, Swimwear etc. She has also designed the
costumes of three Miss India winning pageants. She was awarded with Padma Shri by the
Government of India in the year 2013.
9. Shahnaz Hussian :
Shahnaz Hussain is a well known name in the Herbal Cosmetic Industry in India. She has
introduced number of herbal products and is CEO of Shahnaz Herbals Inc. Currently; her
group has over 400 franchise clinics over the world covering over approximately 138
countries. In 2006, she was awarded with the Padma Shri by the Government of India.
10. Indu Jain:
Indu Jain is known by many different titles such as humanist, spiritualist, entrepreneur
and an educationalist but she is most prominent and best chairman of Times Group. In
January 2016 she was awarded Padma Bhushan by the Government of India. She is the
perfect picture of the successful Indian Woman Enterpreneur.
Self-Help Groups (SHGs)
▪ Self-Help Groups (SHGs) are informal associations of people who choose to come
together to find ways to improve their living conditions.
▪ It can be defined as self governed, peer controlled information group of people
with similar socio-economic background and having a desire to collectively
perform common purpose.
▪ Villages face numerous problems related to poverty, illiteracy, lack of skills, lack
of formal credit etc. These problems cannot be tackled at an individual level and
need collective efforts.
▪ Thus SHG can become a vehicle of change for the poor and marginalized. SHG rely
on the notion of “Self Help” to encourage self-employment and poverty alleviation.

Functions
▪ It looks to build the functional capacity of the poor and the marginalized in the
field of employment and income generating activities.
▪ It resolves conflicts through collective leadership and mutual discussion.
▪ It provides collateral free loan with terms decided by the group at the market
driven rates.
▪ Such groups work as a collective guarantee system for members who propose
to borrow from organised sources. The poor collect their savings and save it in
banks. In return they receive easy access to loans with a small rate of interest to
start their micro unit enterprise.
▪ Consequently, Self-Help Groups have emerged as the most effective mechanism
for delivery of microfinance services to the poor.
Need for SHGs
▪ One of the reasons for rural poverty in our country is low access to credit and
financial services.
▪ A Committee constituted under the chairmanship of Dr. C. Rangarajan to prepare
a comprehensive report on 'Financial Inclusion in the Country' identified four
major reasons for lack of financial inclusion:
o Inability to provide collateral security,
o Poor credit absorption capacity,
o Inadequate reach of the institutions, and
o Weak community network.
▪ The existence of sound community networks in villages is increasingly being
recognised as one of the most important elements of credit linkage in the rural
areas.
▪ They help in accessing credit to the poor and thus, play a critical role in poverty
alleviation.
▪ They also help to build social capital among the poor, especially women. This
empowers women and gives them greater voice in the society.
▪ Financial independence through self-employment has many externalities such as
improved literacy levels, better health care and even better family planning.
Benefits of SHGs
▪ Social integrity – SHGs encourages collective efforts for combating practices like
dowry, alcoholism etc.
▪ Gender Equity – SHGs empowers women and inculcates leadership skill among
them. Empowered women participate more actively in gram sabha and elections.
▪ There is evidence in this country as well as elsewhere that formation of Self-Help
Groups has a multiplier effect in improving women’s status in society as well as in

the family leading to improvement in their socio-economic condition and also

enhances their self-esteem.
▪ Pressure Groups – their participation in governance process enables them to
highlight issues such as dowry, alcoholism, the menace of open defecation,
primary health care etc and impact policy decision.
▪ Voice to marginalized section – Most of the beneficiaries of government
schemes have been from weaker and marginalized communities and hence their
participation through SHGs ensures social justice.
▪ Financial Inclusion – Priority Sector Lending norms and assurance of returns
incentivize banks to lend to SHGs. The SHG-Bank linkage programme pioneered
by NABARD has made access to credit easier and reduced the dependence on
traditional money lenders and other non-institutional sources.
▪ Improving efficiency of government schemes and reducing corruption through
social audits.
▪ Alternate source of employment – it eases dependency on agriculture by providing
support in setting up micro-enterprises e.g. personalised business ventures like
tailoring, grocery, and tool repair shops.
▪ Changes In Consumption Pattern – It has enabled the participating households
to spend more on education, food and health than non-client households.
▪ Impact on Housing & Health – The financial inclusion attained through SHGs has
led to reduced child mortality, improved maternal health and the ability of the
poor to combat disease through better nutrition, housing and health – especially
among women and children.
▪ Banking literacy – It encourages and motivates its members to save and act as a
conduit for formal banking services to reach them.
Opportunities
▪ SHGs often appear to be instrumental in rural poverty alleviation.

▪ Economic empowerment through SHGs, provides women the confidence for
participation in decision making affairs at the household-level as well as at the
community-level.
▪ Un-utilised and underutilised resources of the community can be mobilised
effectively under different SHG-initiatives.
▪ Leaders and members of successful SHGs bear the potentiality to act as resource
persons for different community developmental initiatives.
▪ Active involvement in different SHG-initiatives helps members to grow
leadership-skills. Evidences also show that often women SHG leaders are chosen
as potential candidates for Panchayat Pradhans or representatives to Panchayati
Raj Institution (PRI).

3.2. Rural Entrepreneurship

Rural entrepreneurship is defined as entrepreneurship whose roots lie in the rural areas
but has a lot of potential to drive various endeavours in business, industry, agriculture,
etc. and contribute to the economic development of the country. India is a country of
villages. Nearly 70% of its major population reside in villages and their livelihood is
supported by agriculture and allied activities. Thus the nations’ economic development
depends largely on the standard of living of the people who live in the rural areas and the
level of development which has actually taken place there.
Indian agriculture is exposed to low productivity, natural calamities, agriculture & cash
crop mismatch, disparities in various public private partnerships. Since the land area for
agriculture is limited, not everyone is employed. This leads to migration of people from
rural to urban areas.
Mahatma Gandhi had quoted, “The real solution to the problems of this country is
production by its masses and not mass level production.”
Need for rural entrepreneurship: -
a) Reduce the levels of unemployment. The occupation provided by rural entrepreneurs

would serve as an antidote to this.
b) Reduce income disparities.
c) Reduce the number of migrants from rural to urban areas.
d) Balanced regional development.
e) To build up village republics.
f) Preserve the heritage of the country through art and creativity.
g) This leads to economic development of the rural areas and country as a whole.
Problems for rural entrepreneurship: -
Entrepreneurs certainly play very important role in the development of economy thus
contributing to overall Gross Domestic Product of the nation. They face various problems
in day to day life and work. As thorns are part of roses, in the same way flourishing
business has its own kind of problems. Some of the major problems
faced by rural entrepreneurs are as under:

1. Financial Problems: Some of the major financial problems faced by rural

entrepreneurs as follows:
a. Paucity of funds: Due to absence of tangible security and credit in the market most of
the rural entrepreneurs fail to get external funds. Also the procedure to avail the loan
facility from the banks is too time consuming that its delay often disappoints the rural
entrepreneurs. Lack of finance available to rural entrepreneurs is by far one of the biggest
problems faced by rural entrepreneurs nowadays especially due to global recession.
Some of the major difficulties faced by rural entrepreneurs include low level of
purchasing power of rural consumer so sales volume is insufficient, reduced profits due
to competition, lack of finance to start business, pricing of goods and services. Today
financial statements are also difficult to be maintained by rural entrepreneur due to
stringent tax laws, lack of guarantees for rising up of loans, major difficulty in raising
capital through equity, dependence on small money lenders for loans for each they charge
discriminating interest rates, huge rent and property cost. These all problems create a
difficulty in raising money through loans. Some banks have not ventured out to serve
rural customers because banks are expensive to be reached by rural customers and once
reached are quite often too poor to afford bank products. Poor people are often excluded
from traditional financial market as they often have insufficient established forms of
collateral or physical assets to offer. The government is providing subsidies to rural areas
but due to high cost of finance, these subsidies are not giving fruitful results. Some of the
major sources of finance in rural areas are loans from regional rural banks or from
zamindars but their rate of interest is usually very high. The government has various
institutions for this purpose but certainly the results are not up to the level expected.
Industrial credit and Investment Corporation of India (ICICI), Industrial Finance
Corporation of India (IFCI), and Small Scale Industry Development Bank of India (SIDBI)
are some of the major national level (SFC) institutions that are helping out rural
entrepreneurs. Some State level institutions are also working like State Financial
Corporation and State Industrial Development Corporation (SIDC). These institutions
also provide assisting for setting up of new ventures and side by side for expansion and
modernization of existing ones but their terms and conditions are very strict to be
handled. Various schemes like tiny unit scheme, composite loan scheme, scheme for
technical entrepreneurs etc, had started but they are unable to meet the expectations of
rural entrepreneur. Raising funds through equity is much more difficult for rural
entrepreneurs because of lack of financial knowledge and also because of financial corpus
which is low, so loans are the primary source of finance for them which proved to be a
great obstacle in developing rural entrepreneurship. Various policies of RBI regarding
priority sector lending have failed to achieve its objectives. Micro financing movements
started in India well. Self help groups form the basic constituent unit of micro finance
movement in India. Self help groups constitute a group of few individuals who pool their
savings into a fund from which they can borrow as and when necessary.
b. Lack of Infrastructural facilities: In spite of efforts made by government the growth
of rural entrepreneurs is not very healthy due to lack of proper and adequate
infrastructural facilities.

c. Rise Element: Rural Entrepreneurs have very less risk bearing capacity due to lack of
financial resources and external support.
2. Marketing Problems: Some of the major marketing problems faced by rural
entrepreneurs are as follows:
a. Competition: Rural entrepreneurs face stiff and severe competition from large sized
organizations and urban entrepreneurs. They incur high cost of production due to high
input cost. Problem of standardization and competition from large scale units are some
of the major problems faced by marketers. They face the problem in fixing the standards
and then sticking to them. For the survival of new ventures competition from large scale
units also creates difficulty. New ventures have limited financial resources and hence
cannot afford to spend more on sales promotion and advertising. These units are not
having any standard brand name under which they can sell their products. New ventures
surely have to come up with new advertisement strategies which the rural people can
easily understand. Literacy rate is one among many major problems faced by rural
entrepreneurs and they should device strategies and remedies to solve it.
Also printed media has limited scope and coverage in the rural context. Traditionally
bounded nature, cultural barriers and cultural backwardness all add to the difficulty of
communication. English and Hindi are not understood by many people as people in rural
areas mostly communicate in their local dialects. It has been seen in the recent past that
in spite of enough food stocks with government warehouses, people have died of
starvation. This indicates a major problem with the public distribution system. The
producers too are not collective in their approach for marketing their products because
they are too widely scattered and uneducated.
b. Middlemen: Middlemen exploit rural entrepreneurs. Rural entrepreneurs are heavily

dependent on middlemen for marketing of their products who necessarily pocket large
amount of profit. Poor means of transportation facilities and storage facilities are also
other marketing problems in rural areas. In most of the villages, farmers store the
produce in open space, in earthen vessels, in bags etc. So these indigenous and traditional
methods of storage are not capable of protecting the produce from weevils, dampness
etc. The agricultural goods are not standardized and graded.
3. Management Problems: Some of the major management problems are as follows:

a. Lack of Knowledge of I.T: Information technology as such is not very common in rural
areas. Entrepreneurs rely on internal linkages that which encourage the flow of services,
goods, ideas and information. The intensity of family and personal relationships in rural
communities can sometimes be very much helpful but they may also present obstacles to
effective and efficient business relationships. Business deals may receive less than
rigorous objectivity as well as intercommunity rivalries may reduce the scope for
regional cooperation. Lines of authority and decision making process are mostly blurred
by local politics in rural areas.
b. Legal formalities: In complying with various legal formalities and in obtaining licenses
rural entrepreneurs find it extremely difficult due to ignorance and illiteracy. Also

procurement of raw materials is really a tough task for many rural entrepreneurs. They
may also end up with poor quality raw materials, which may also face the problem of
storage and warehousing.
c. Lack of technical knowledge: Rural entrepreneurs to a major extent suffer a severe
problem of lack of technical knowledge. Lack of training facilities and other extensive
services create a hurdle for the development of rural entrepreneurship.
d. Poor quality products: Another important problem is growth of rural
entrepreneurship is the inferior quality of products produced due to lack of availability
of standard tools and other equipment’s as well as poor quality of raw materials.
4. Human resource Problems: Some of the major human resource problems found in
organization are as follows:
a. Low skill level of workers: Most of the entrepreneurs working in rural areas are
unable to find workers with high skills. In this case turnover rates are also high. They
have to be provided with on the job training and their training too generally is a serious
problem for entrepreneur as they are mostly uneducated and the training should be
imparted in local language which they can understand easily. The Industries in rural
areas are not only established just to take advantage of the cheap labour but also to bring
about an integrated rural development. Rural entrepreneurs should not look at rural area
as their market; instead they should see the challenges existing in urban areas and also
be prepared for them. Rural entrepreneurs are generally believed to be less innovative in
their thinking. Youths in rural areas have very little options and they are made to believe
this. This is the reason as to why many of the youths either prefer to work at farm or else
migrate to urban areas.
b. Negative attitude: Sometimes environment in the family, society and support system
is not much conducive enough to encourage rural people to take up entrepreneurship as
a career. It may be certainly due to lack of awareness and knowledge of entrepreneurial
opportunities. Young and mostly well educated youths mostly tend to leave. As per
circumstances, rural people by force may be more self-sufficient and capable when
compared with their urban counterparts, but the culture of entrepreneurship tends to be
weak. Continous motivation is needed in case of rural employee whom is sometimes very
much difficult for an entrepreneur to impart with.

Development of Rural Entrepreneurship
1. Raw material is a must for any industry. However, the non-availability of raw materials
accompanied by their prohibitive cost has weakened the viability of these industries. Past
experience bears evidence that rural industries with employment potential cannot be
sustained for long unless a strong raw material-base is created in rural areas itself.
Therefore, an urgent policy is called for to strengthen the raw material base in rural areas.
2. Finance is considered as lubricant for setting up and running an industry. Funds,

therefore, need to be made available on time at soft terms and conditions to those who
really need it.
3. In order to solve the problem of marketing for rural industries, common production-
cum-marketing centres need to be set up and developed with modern infrastructural
facilities, particularly, in the areas having good production and growth potential.
This would help in promoting export business, on the one hand, and bringing the buyers
and sellers in close interaction avoiding the middlemen in between them, on the other.
Legislative measures have to be taken to make the government purchases compulsory
from rural industries.
4. One peculiarity of rural entrepreneurs is that most of them join their entrepreneurial
career not by choice but by chance. Lack of aptitude and competency on the part of such
entrepreneurs makes the units sick.
Hence, there is a need to develop entrepreneurial attitude and competencies among the
prospective entrepreneurs through the training interventions like Entrepreneurship
Development Programmes (EDP), Women Entrepreneurship Development Programmes
and TRYSEM.
5. One effective way to inculcate the entrepreneurial acumen and attitude may be
imparting entrepreneurial education in the schools, colleges, and universities. That
younger minds are more susceptive to be molded is well evidenced by the popularly
known ‘Kakinada Experiments’ in Andhra Pradesh.
6. Sometimes the real problem in setting up industries is not the non-availability of

facilities, but non-awareness of facilities whatever is available. The need is, therefore, to
disseminate information about all what is available to provide to the entrepreneurs to
facilitate them in setting up industries.
7. Proper provisions need to be made to impart the institutional training to orient the
entrepreneurs in specific products and trades so that the local resources can be
harnessed properly.

8. Our accumulated experience bears ample evidences to the fact that the non-
governmental organizations, popularly known as NGOs, can prove instrumental in
developing rural entrepreneurship in the country. The role of NGOs in developing
entrepreneurship is, therefore, discussed separately.
Role of NGO’s
Among the wide variety of roles that NGOs play, the following six can be identified as
important, at the risk of generalization:
Development and Operation of Infrastructure:

Community-based organizations and cooperatives can acquire, subdivide and
develop land, construct housing, provide infrastructure and operate and maintain
infrastructure such as wells or public toilets and solid waste collection services.
They can also develop building material supply centres and other community-
based economic enterprises. In many cases, they will need technical assistance or
advice from governmental agencies or higher-level NGOs.
Supporting Innovation, Demonstration and Pilot Projects:

NGO have the advantage of selecting particular places for innovative projects and
specify in advance the length of time which they will be supporting the project -
overcoming some of the shortcomings that governments face in this respect. NGOs
can also be pilots for larger government projects by virtue of their ability to act
more quickly than the government bureaucracy.
Facilitating Communication:
NGOs use interpersonal methods of communication, and study the right entry
points whereby they gain the trust of the community they seek to benefit. They
would also have a good idea of the feasibility of the projects they take up. The
significance of this role to the government is that NGOs can communicate to the
policy-making levels of government, information bout the lives, capabilities,
attitudes and cultural characteristics of people at the local level.
NGOs can facilitate communication upward from people tot he government and
downward from the government tot he people. Communication upward involves
informing government about what local people are thinking, doing and feeling
while communication downward involves informing local people about what the
government is planning and doing. NGOs are also in a unique position to share
information horizontally, networking between other organizations doing similar
work.
Technical Assistance and Training:

Training institutions and NGOs can develop a technical assistance and training
capacity and use this to assist both CBOs and governments.
Research, Monitoring and Evaluation:

Innovative activities need to be carefully documented and shared - effective
participatory monitoring would permit the sharing of results with the people
themselves as well as with the project staff.
Advocacy for and with the Poor:

In some cases, NGOs become spokespersons or ombudsmen for the poor and
attempt to influence government policies and programmes on their behalf. This
may be done through a variety of means ranging from demonstration and pilot
projects to participation in public forums and the formulation of government
policy and plans, to publicizing research results and case studies of the poor. Thus
NGOs play roles from advocates for the poor to implementers of government
programmes; from agitators and critics to partners and advisors; from sponsors
of pilot projects to mediators
3.3 Entrepreneurship in agriculture
1. Food processing
Agriculture-based industrial products account for half of all exports from developing
countries. However, most of them involve exports of raw material as against developed
countries whose exports mostly comprise processed goods. By continuing to operate at a
low level of value chain, we are losing income and production. An entire food processing
industry can be developed in rural areas, augmenting income and employment.
2. Floriculture
In a number of cases flower farming can be done on small tracts of land. In fact, bulks of
flowers are cultivated on ‘micro farms’. Farmers can utilize a part of their land to cultivate
seasonal flowers alongside regular conventional crops.
But, this needs markets in the vicinity or processing and preservation units.
Entrepreneurs having knowledge of flower cultivation and marketing can set up parallel
industries in fertile rural lands.
3. Pisciculture
Fish farming is practiced by a lot of farmers to augment their incomes. However they do
so on amateurish and small scale basis. A conscious business effort to develop small pond
fish farms in rural areas can enable pisciculture to become a valuable sector in the rural

economy. Fish cultivation on market scale needs some knowledge and boosting
entrepreneurship in the sector can make a difference, as done in the western countries.
4. Farm technology
Dependence on outdated and inefficient technologies lead to poor productivity and low
income. While large scale farmers have adopted modern technology on a major scale in
India, most small farmers still rely on age-old farming techniques with mostly manual
methods.
Boosting entrepreneurial minds in agriculture can boost productivity by incorporating

modern technologies in the farming sector. With increasing awareness and technology
the risk of monsoon and the price trends in the markets can be taken care of.
TRYSEM
• Trysem was launched in 1979 as a separate national scheme for training rural
youth for self employment. The compelling reasons for launching the programme
being the huge backlog of unemployment and under employment among the rural
youth. Forty youth, both men and women were to be selected in each block and
trained in both skill development and entrepreneurship to enable them to become
self-employed.
• It was generating activities in the rural areas, the influx of rural youth to urban
areas could curbed. Moreover, local needs could also met with local resources,
thereby giving a fillip to rural development.
Objectives of TRYSEM
• To provide rural youth (18-35 years) from families below the poverty line with
training and technical skills to enable them to take up self-employment in
agriculture, industry, services and business activities.
• Training is perceived not only in terms of provision of physical skills. But also
change in attitude, enhancement of motivation and skills in human relations etc.,
are also ought to be imparted.
• Self-employment is defined as gainful employment on a full time basis which
results in income which is sufficient for the family of the youth cross the poverty

line. Situation of employment in which the means of production are owned, hired
or taken on lease are taken to be self-employment situations.
Features of TRYSEM
• TRYSEM became the “self employment for youth” component of IRDP and was
introduced in all the 5000 blocks in the country.
• An identified youth will be put through a period of training either in a training
institution or under a master crafts men.
• Duration of training is flexible depending upon types of courses.
• Trainers are given stipend and a tool kit.
• Successful trainee is eligible to receive a subsidiary/credit/income generating
asset under IRDP.
• At least 50 percent of the youth to be trained for self-employment either for
secondary or tertiary sector activity.
• Wage employment training was to be in the secondary and tertiary sectors.
• BDO selects the eligible youth belonging to the target group with the help of
VLW’s.
• The identification of locations is done by the DRDA in consultation with district
level officers of different departments.
• DRDA prepares a resource inventory for training facilities like ITI’s
polytechniques, KVI’s, KVK’s, NYK’s etc.,
• DRDA is responsible for the implementation of TRYSEM.
3.4 Social entrepreneurship
Social entrepreneurship is an approach by individuals, groups, start-up companies or

entrepreneurs, in which they develop, fund and implement solutions to social, cultural,
or environmental issues.[1] This concept may be applied to a wide range of organizations,
which vary in size, aims, and beliefs.[2] For-profit entrepreneurs typically measure
performance using business metrics like profit, revenues and increases in stock prices.
Social entrepreneurs, however, are either non-profits, or they blend for-profit goals with
generating a positive "return to society". Therefore, they use different metrics. Social
entrepreneurship typically attempts to further broad social, cultural, and environmental
goals often associated with the voluntary sector[3] in areas such as poverty alleviation,
health care and community development.

At times, profit-making social enterprises may be established to support the social or

cultural goals of the organization but not as an end in themselves. For example, an
organization that aims to provide housing and employment to the homeless may operate
a restaurant, both to raise money and to provide employment for the homeless.
In the 2010s social entrepreneurship was facilitated by the use of the Internet,
particularly social networking and social media websites. These websites enable social
entrepreneurs to reach numerous people who are not geographically close yet who share
the same goals and encourage them to collaborate online, learn about the issues,
disseminate information about the group's events and activities, and raise funds through
crowd funding.
Genesis & Characteristic
1. Healthy Impatience
A social entrepreneur shows a healthy impatience with the way things are, according to
Duke University’s Fuqua School of Business, in a report by its Center for Advancement of
Social Entrepreneurship.
CASE notes that socially minded entrepreneurs want to change things right away, know
it can be done, and are sometimes frustrated that bureaucracy and the lack of political
will, among others, impede on social changes that could benefit the masses.
2. Zeal
Socially oriented entrepreneurs interlock zeal and passion, especially at the initial stages
of a short-term project or long-term initiative. They tend to believe wholeheartedly in
their projects, and therefore it is not unusual for them to log 80-hour weeks.
This characteristic is also seen in business entrepreneurs, who initially work tirelessly on
their initiatives.
3. The desire to Change Others
At the core of every social entrepreneur is an unwavering willingness to change others,

especially people with whom he or she works.
That desire to alter mindsets also extends to people in power, as seen, for example, in the
case of Mohammed Yunus, the founder of the Grameen Bank, which did so much to
revolutionize the world of microfinance and enable lending to previously disenfranchised
populations.

4. Commitment to Improve Social Welfare
Social entrepreneurs are socially committed first and foremost – that is a no-brainer.
But what differentiates them from, say, a company engaging in CSR, is their ability to fully
devote their time, energy and meager resources to make sure things actually change for
the better.
A business can use corporate social responsibility (CSR) – which entails everything from
charitable donations to community work – to improve social welfare, but critics also point
out that some for-profit entities use CSR as a public-relations tool.
5. Innovation
Innovation is present in the minds of successful social entrepreneurs. They embrace

technology fully, finding new ways to make things, deliver products and services, heal
people, improve their lives…you name it.
The idea is to use expertise and competence acquired in the business world to change
mindsets and improve or save the lives of millions around the world.
6. Practicality When Solving Problems
Social entrepreneurship has no profit motive, but that does not mean social
entrepreneurs don’t pay attention to budgetary constraints.
In fact, they do – and most of them always seek effective and efficient ways to operate
their organizations. They have to, otherwise, they will vanish as fast as they appear on
their social and economic landscape.
The bottom line is that competent social entrepreneurs find smart ways to solve
problems without breaking their bank – which, again, is not really the case because they
don’t have that much money to start with, and therefore there is no real bank.
7. Risk Taking
Risk taking is essential in social entrepreneurship – and in any kind of entrepreneurship,

for that matter.
It takes a special mindset to wake up one day and say you want to change things in this
world. The risk becomes even greater if you have no money, don’t have a posh social
background, leave your day job, or embark on a project that could cost you your
livelihood…or even your life.
8. Philanthropic Bent

A social entrepreneur generally has a philanthropic bent, meaning he or she is not

necessarily driven by money or fame.
Also, he or she tends to distribute whatever profits are made to the socially
disadvantaged, or reinvest the excess cash in the organization.
The idea is to grow the entity by enlisting more people, so more people can be positively
affected, more lives can be saved, and much more social value can be created in the long
term.
9. Lack of Megalomania
This characteristic is similar to the previous one.
Social entrepreneurs don’t always a megalomaniac personality, imbued with themselves

or their work. They care deeply about their cause, otherwise, they would not risk
everything to pursue it in the first place.
But there is no “me, me, always me” drive here, a desire to shine always and everywhere.
The charitable cause being the most important thing, these entrepreneurs don’t have a
problem letting others shine, especially their team members or others involved in local
projects.
10. Faith in Team Work
Teamwork is essential for social entrepreneurs. In a sector in which there often is not
enough money, resources or expertise, the only resources available are people – and time,
if you can call it a resource.
Therefore, social entrepreneurship revolves around the concept of crowdsourcing,

tapping into a team of faithful workers along with volunteers scattered around the world
to identify worthy projects, fund them and undertake them.
3.5. E- Entrepreneurship
According to Longeneeker, Moore et al (1994), a common stereotype of the entrepreneur
emphasizes such characteristics as high need for achievement, a willingness to take
moderate risks, and a strong self-confidence.
1) Need for achievement – a desire to succeed, where success is measured against a

personal standard of excellence;

2) Willingness to take risk – the risk that entrepreneurs take in starting and/or
operating their own business are varied. By investing their own money, they assume a
financial risk. If they leave secure jobs, they risk their careers. The stress and time
required in starting and running a business may also place their families at risk. And
entrepreneurs who identify closely with particular business ventures assume psychic
risk as they face the possibility of business failure.
3) Self-confidence – Individuals who possess self-confidence feel they can meet the
challenges that confront them. They have a sense of mastery over the types of problems
they might encounter. Studies show that successful entrepreneurs tend to be self-reliant
individuals who see the problems in launching a new venture but believe in their own
ability to overcome these problems. Wheelen and Hunger (2000) identifie four
entrepreneurial characteristics such as:
1) The ability to identify potential venture opportunities better than most people;
2) A sense of urgency that makes them action oriented;
3) A detailed knowledge of the keys to success in the industry and the physical stamina
to make their work their lives;
4) Access to outside help to supplement their skills, knowledge and abilities
Essence of E-entrepreneurship:
1. Innovation
The act or process of introducing new ideas, devices, or methods. Being able to notice and
then desire to make changes is an equally important need. Because of that innate or
developed ability, you may be able to discover how to produce better quality, bigger
profits or more dominance in the marketplace. As a small and nibble business owner
these often simple yet profound insights can be the difference between failure and
success.
2. Opportunity Seeker
Being able to spot a future market interests or customer trend demands before others
ever take notice. In essence you need to have the ability to get a sense of where business
is likely to be heading in the coming years.
3. Courage
In order to take the plunge one must overcome and conquer some measure of fear

about giving up total stability or security. Therefore an essential necessary element is

that of having the courage to get started.
3.6. Family Business Management
FAMILY firms have been crucial features of the business landscape for centuries
and remain important today. They can be smalI, medium, or large and have appeared in
all sectors and in all three industrial revolutions. Throughout they have _ an important
role in employment, income generation, and wealth accumulation. This makes them
remarkably hard to describe as they are multidimensional, and no single definition fully
captures their intrinsic diversity. However, a broad general definition of the family firm
is one where a family owns enough of the equity to be able to exert control over strategy
and is involved in top management positions. This definition does transfer through time
and space, is one of the most used today, and so can be considered a useful benchmark.
However, the international range of institutional, cultural, and governance arrangements
means that it must remain a starting point against which to explore variety, rather than
an end point on which a rigid taxonomy can be built.
A general deflnition of the family firm has been offered in the introduction and we
use it as a starting point. However, historians and management specialists have found
definitions remarkably hard to pin down and this is weil retlected in the literature. The
legal, governance, and financial frameworks of family firms are not universal as indicated
by the preface of Family Business Magazine's 2004 list of the World's Largest Companies:
Compiling such a list is a stiff challenge by any measure. Between shifting disclosure
regulations and varying currency exchange rates, pinning down precise numbers and
owners is ... chalJenging. Many Asian and European companies operate behind intricate
holdingcompany structures that make ownership and even management difficult to
define.
It is no surprise, therefore, that there is no general consensus among scholars as to what
constitutes a family business in quantitative, qualitative terms or historical terms
(Handler 1989; Westhead and Cowling 2001; Colli 2003; ColJi et al. 2003.

Sharma 2004). However, by taking the benchmark definition provided in the

introduction, it becomes possible, using history, to explore the subtleties and differences
in family business behavior and performance. lt can be shown, for example, that although
family firms may be effident, they are not efficient per se as much depends on the specific
national context and surrounding conditions (Whitley 2000; Church 1993; Poutziouris
and Chittenden 1996; Colli and Rose 1999; James and Kobrak 2004)·
3.6.1. Importance of Family Business
First, many family businesses are run by owners who have a long-term and generational
perspective. In many cases, they see themselves as stewards for the future.
Second, family businesses tend to operate more informally than other businesses.
Handshake deals are not uncommon, and things can get done more quickly.
Third, trust-based relationships are an important part of how and with whom they do
business. Family businesses form more long-term relationships with suppliers and
advisors.
Fourth, meritocracy is not always at work within family businesses. It’s not always the
best person who gets hired and promoted. Family nepotism can lead to underperforming
companies.
With family businesses making up such an important part of the economy, it’s important
that we understand how family businesses view the current economic and regulatory
environment.

Family businesses are increasingly concerned about the role government policy is playing
in their business planning and future growth. Last year’s Family Enterprise USA Annual
Survey of family firms indicated that 91 percent, up from 82 percent the year before, said
that external factors were a greater threat to the future of their family business.
According to the survey, this indicates “an even more heightened sensitivity to the role
government policy and uncertainty is playing in business planning and development.”
As to government policies affecting family businesses, and all business for that matter, it
keeps coming back to the same public policy issues in no particular order. This list is also
not all-inclusive: the size of government deficits, reforming the tax code, immigration
reform, health care and the minimum wage.
With the current political divide and 2014 being an election year, there is little doubt that
much of what worries family business leaders will remain uncertain and will not be
resolved.
3.6.2 Types of Family business
Family firms enjoy many advantages and, especially in Asia, serve as important drivers of
economic growth.
Yet because of their structure, over time they also run into a maze of complexities which
bring with them potential risk.
For example, some businesses grow rapidly without managerial talent available inside
the family, meaning the business misses valuable opportunities. In other cases, the
number of family members outgrows the ability of the business to accommodate their
diverse interests and they descend into conflict.
How do owners know what challenges to address and when? Koay Peng Yen, a consultant
at Spencer Stuart and I studied four different types of family firms and provide
governance advice for each.
1. Simple business, simple family
Founded in 718, Japan’s Hoshi Ryokan hotel in central Japan, is one of the oldest family
firms in the world. Run by the same family for 46 generations, it has remained fairly
simple by focusing on a single hotel, and by passing leadership and ownership to the
eldest son.
In this model the successor’s role is clear and unchallenged, siblings do not get involved,
and the family’s commitment and heritage contribute to the firm’s success.

This model has worked well, keeping the business in the family for 1,300 years, but it is
vulnerable as it places all bets on one candidate.
Businesses like this are fairly focused, with a concentrated family structure. With only a
few family members involved, they do not need complex governance systems for either
the business or the family. The business is not very diversified or complex and could
benefit from centralised management and flexibility.
2. Simple business, complex family
Family-run Singapore property group Hiap Hoe is an example of how things can become
overly messy without proper rules.
The firm’s patriarch, Teo Guan Seng, kept three families at the same time and tried to
achieve cohesion by letting everyone share in his business wealth. However, family
squabbles, a divorce, and feuding children forced him to resign and dismantle the publicly
listed holding company.
Businesses of this type are relatively simple, but many family members are involved in
management or ownership, or both. Some family members may feel entitled to benefits
without contributing proportionately.
A family constitution that clearly sets out the values and expectations for how the family
owns, manages, and relates to the business, will be helpful for these firms, along with a
family board.
3. Complex business, simple family
Many firms from China, where the owners typically have small families and big markets
to play in, fall into this category.
For example, the Wahaha Group, which started in 1987 as a beverage company, has
diversified into a successful multinational and now operates in packaged foods, health
supplements, and children’s clothing. Its 73-year-old Chairman, Zong Qinghou, has
appointed his only daughter, Kelly Zong as the group’s chief executive. Going forward, her
attention will be focused on instilling proper controls in the business, and attracting
outstanding non-family talent.
Kelly Zong, head of international business at Hangzhou Wahaha Group Co. and daughter
of billionaire.
In cases like Wahaha, whilst the family is relatively simple, the business has already
matured and requires sophisticated managerial talent to run it. With few family members

involved, it is important to professionalize the business to limit its dependence on scarce

family talent.
Merit-based leadership and mature corporate governance systems are a minimum

requirement.
4. Complex business, complex family
South Korea’s Hyundai Group is a good example of a sprawling business group and a
multifaceted family. Founded as a construction business in 1947 by Juyoung Jeong, the
group informally split up among his sons and brothers after his sudden demise in 2001.
However, the Hyundai firms were interconnected in a convoluted cross-shareholding
pattern.
With three generations in the family business, including some deceased descendants
replaced by their widows, the family found little common ground and resorted to court
cases.
Managing firms where both the business and family are complex requires a significant
investment in governance systems. A continuous focus on involving new generations of
the family, grooming entrepreneurship and managerial talent, as well as family bonding
is required.
The business will also need mature governance systems that set clear expectations for
the business leadership, and development programs to stimulate leadership talent.
Family Business in India: A Historical Perspective (with example)
Family business in India had been in practice since long, of course, with its changing
nature and structure over the period. India enjoys a rich and glorious history of family-
owned business. The origin of family business in India is traced back to the bazaar system
in the ancient times.
Initially, family business in India started in the form of trading and money lending
involving the hustle and bustle of the bazaar. It was also confined to certain communities,
notably the Jains and Marwari’s especially in the northern India.
Its industry form is relatively of recent origin, going back largely to the British rule and
the First World War. Here is one such instance to it. Cawasji Davar set up the first cotton
mill, or say, the first manufacturing enterprise in Bombay (now Mumbai) in 1854.
Consequent upon this, some trading communities started textile mills in Mumbai and
Ahmedabad during the last half of the 19th Century. The trading communities emerged
as Aggarwals and Guptas in the North, the Chettiars in the South, the Parsees, Gujarati
Jains and Banias, Muslim Khojas and Memons in the West, and Marwari’s all over India.
Nowadays, Aggarwals are mostly referred to as Marwari’s. Here is an interesting legend

of how Aggarwal families emerged as most dominating and successful in business in

India.
The Agrawals:
The Agrawals claim descent from the legendary king Agrasena of Agroha. According to
the legend, Agroha was a prosperous city and hundred thousand traders lived in the city
during its heydays. An insolvent community person as well as an immigrant wishing to
settle in the city would be given a rupee and a brick by each inhabitant of the city.
Thus, the person would have hundred thousand bricks to build a house and hundred
thousand rupees to start a new business. Gradually, the city of Agroha declined and finally
gutted in a huge fire. The residents of Agroha, i.e. the Agrawals, moved out of Agroha and
spread to other parts of India. In his book, ‘Agarwalon ki utpatti,’ Bhartendu
Harishchandra categorized Agrawals into four branches: Marwari’s, Deswal, Purabiya,
and Pachihiye. Nowadays, Agrawal families are mostly referred to as ‘Marwaris.’
Jamshedji Tata started his varied business enterprises like cotton mill in Nagpur, the Taj
Hotel in Mumbai, his famous steel plant in Jamshedpur, and several real-estate
developments. These enterprises, in turn, prompted other people to join the business
foray. A number of families, such as Birla’s, Bangurs, Khaitans and Goenkas started their
business in Kolkata and developed the city as a centre for commerce.
Initially family businessmen were engaged in small-size businesses requiring small

investments managed by themselves only. But, once they entered into manufacturing
sector, they felt the need for more and heavy investments not manageable by themselves.
At the same time, they also knew that once they allow someone to join business, their
control over management of the business will weaken which they, however, did not want.
In such a case, family businesses inducted their family members or relatives or friends in
the business by allotting them blocks of shares while making sure that the majority
control and, in turn, the management of the business remained with the promoting family
itself.
This is how corporate management was born embedded by a combination of joint stock
principle and family control over business. Because stock markets were yet to gain
sufficient momentum, on the one hand, and the joint family system was also intact, on the
other, business families were holding control over their business empires built up
through the ingenious device, popularly known as the ‘managing agency system.’
The managing agency system continued till 1970 as an instrument of maintaining family
control over business enterprise. As such, all critical decisions about the business were
taken by the promoting families, euphemistically termed managing agents.
This system of corporate management got so rooted in due course of time that hardly any
industrial firm remained out of its orbit. In other words, this indicates that all businesses
were controlled and managed by a few families in the country.

R. K. Hazari, a well-known industrial economist, had concluded after an exclusive analysis

that most of the prominent industrial firms on the contours of Indian business during the
1950s, were in the hands of just 18 Indian families and two British houses. However, the
period of 1950s experienced certain changes with some developments shaking and
disturbing the business environment, in general, and family business, in particular.
The consequence was the earlier tranquil situation that the family business was
enjoying in the country got greatly disturbed especially by four major
developments as mentioned below:
1. With a resolution to accelerate the pace of economic development during the post-
Independence period to solve the problem of unemployment and poverty stalking the
land, the Government invited private sector to partake of new opportunities available for
business and industrial development, of course, amidst a myriad of restrictions imposed
on the freedom of enterprise.
2. The Governments, both at Central and State levels, set up various financial institutions
to provide finance to private sector enterprises in the country.
3. The joint family system, once the bedrock of the Indian social structure in India, started
experiencing severe strains and threats and, in turn, increasingly loosing, its place in the
social structure. For such a sorry state of situation, thanks to inter alia growing
urbanization and ever increasing westernization in the country.
4. The right of possession of private property and its inheritance has been one of the
major factors in encouraging family business in India.
In lump sum, these changes, in turn, caused changes in family business in the country.
With increase in the magnanimous size of infrastructural projects in the country, business
families were no longer capable enough to mobilize the required resources including
finance from their own resources.
As a result, financial control of business started gradually shifting from promoting

families to financial institutions. Also the business families started splitting and cracking.
To quote, the Dalmias were the first prominent business house in the country to break up
after freedom.
The pace of splitting family businesses started accelerating in the country beginning with
1970 and since then, it has been increasingly growing. Business history is replete with
increasing number of families splitting in the country over the period.
Birla’s, Modis, Sarabhais, Bangurs, Singhanias, Mafatlals, Shrirams, Thapars, Walchands,

Goenkas and the most recently, the Ambanis are the illustrious family businesses in our
country who have experienced split in their businesses.
Nonetheless, it is worth mentioning that inspite of various changes like loosing financial
control over business and growing splits in businesses, the family control over
management of business still remains impaired in the hands of promoting families.

This is indicated by the fact that the management of as many as 461 out of 500 most
valuable companies is still under family control in our country. One of the significant
changes in family business in India is induction of professionals to manage the affairs of
business. Tata’s, Birla’s, Reliance, Wipro, and Murugappa Group are some of the
illustrative family businesses employing professional managers to look after the
management issues of their businesses.
With increase in size of business has also led to increase in split in family businesses in
the country over the period. Goenka family and Ambani family are such examples of split
in family business in our times.
That the environment of family business in India has significantly changed over the
period is indicated as follows:
Earlier Presently
(a) Business as family (a) Family as business
(b) Family wealth and prosperity (b) Shareholders’ value and prosperity
(c) Growth strategies (c) Economic Value Added (EVA)
(d) Expansion and diversification (d) Core and competitive competencies
(e) Family succession planning for next (e) Planning for attraction and retention of
generation professionals
3.6.3. Responsibilities and Rights of Family Shareholders of a Family

Business
There has been a broad discussion around the roles and responsibilities of boards in
family enterprises. However, for boards to serve well, they must also have an
understanding of the proper roles and responsibilities of the family ownership group.
Then they can counsel the owners to fulfill their contribution and understand the
interactions between ownership and management. In a family business where the
owners also share the values and emotions of an intimate history, governance might best
be seen as a set of relationships among management, owners, and the board of directors.
Each group has distinct roles and responsibilities. The following is a framework that
outlines the roles and responsibilities of family ownership.
Ownership’s Contribution
Owners can provide substantial value to the performance and continuity of an enterprise
if it is united, committed and responsible. An ownership group that speaks with one voice
liberates management to focus on the business instead of fearing shareholder disputes.
Sharing a long-term view provides strategic stability and enhances risk-taking.
Responsible ownership reassures the board, the management and other shareholders.

Responsibility includes respecting the limits of ownership’s roles, understanding the

business and providing leadership for the governance process.
Providing this unity, commitment and responsibility suggests that owners have
consensus on the purpose of their ownership, on the policies affecting ownership, and on
the processes needed to strengthen their resolve.
Purpose Of Ownership
It’s the role and opportunity of owners to promote their collective values, their vision for
the enterprise and their goals as owners.
Values
Governance is effective if both family ownership and the board share a consensus on
values, vision and goals. Owners’ values, such as stewardship, transparency, paternalism,
innovation, trust and democracy, shape the culture of the business. If the owning family
isn’t clear about its values, the business culture will be shallow and the family’s
commitment to ownership weakened. Pride of ownership is largely a function of a distinct
and powerful business culture that reflects values that are important to the owners.
Vision
The owners’ values shape the vision they have for the business. There are two dimensions
to the owners’ vision: their vision for the nature of the business and their vision for the
structure of their ownership. Do the owners want a diversified, multi-business company
or do they want to be concentrated in one industry? Do they want a business focused on
the needs of the local community or a global company that expands the horizons of family
members? Do they want a business that welcomes family employment or depends on
non-family management?
Regarding the structure of ownership, the owning family needs to provide clarity on who
can own shares and who can vote the shares. Some families want public ownership,
others private partners, others neither. Some families concentrate voting rights in trusts
or general partners. Others are eager to distribute the shares quickly throughout the
family and democratize voting privileges.
For example, ownership must clarify whether spouses that join the family may hold
shares in the business, and to whom shareholders may sell if they no longer want to
participate as owners. Among larger family companies, the family may need to determine
if it wants the business to be a publicly traded, multi-business holding company that
grows from joint ventures with global partners under the majority control of a family
voting trust to assure family leadership for generations to come. Small business or large,
the board needs to exhort and advise the family to clarify its vision for ownership.

Goals
Owners also must attempt to present a set of goals for the business that satisfies their
interests and secures their commitment, yet are reasonable for management to meet. The
four goal areas that seem to be within the province of ownership are:
Growth Risk Profitability Liquidity
These four goals are, of course, interdependent. More of one means less of the others. The
fundamental trade-offs that are made among these goals reflect the owning family’s
values and vision for the business. One family may believe that the best way to assure
ownership’s long-term commitment is through generous dividends and redemption
opportunities. Another family may feel that reinvesting in an increasingly diversified
portfolio of businesses that provides exciting career paths for family members is a better
idea. The board can help educate the family on the inherent goal trade-offs of ownership.
The board also must provide candid feedback on whether the family’s goals are feasible
or appropriate for the business and its future.
Policies
In addition to values, vision and goals, the owning family needs to address the issues that
define its relationship with the business. Following is a list of policy areas that ownership
is responsible for determining:
• Interactions with management and directors

• Information
• Confidentiality
• Conflicts of interest (suppliers, customers, investments, new ventures,
competition)
• Shareholder relations expenses
• Estate planning
• Redemptions
• Dividends
• Charitable giving amounts and focus
• Succession to governance roles (trustees, general partners, directors, chairs, CEO)
Board effectiveness
The board can play several valuable roles as the family develops these policies. The board
can offer objective feedback on whether the policies being forged are consistent with the
family’s stated values, vision and goals. The board also can aid the family as it works to
define processes for decision making.
Processes

Developing family consensus on the purposes and policies of ownership is not a simple
effort, nor is it done once and for all time. Therefore, at the heart of providing a united,
committed and responsible ownership group are processes to learn and processes for
making decisions.
The owners need to have informed and knowledgeable next-generation owners,

otherwise commitment and unity are frail. So, providing education for current and future
owners is part of ownership’s role.
Certainly, management and the board can and should help a lot, but it’s the owners
themselves who are ultimately responsible for what they know and how hard they are
willing to work at it.
Three subject areas are fundamental to the owners’ education: understanding the culture
of the business and how they can contribute to it; understanding the business strategy
and how to track it; and understanding governance. For example, the owners must take
intellectual leadership for the effectiveness of the board, as they have the ultimate
authority over it. Good boards depend on knowledgeable owners.
Owners also need a good decision-making process. If the process is seen as just or fair,
then differences of positions can be accepted. If the process is corrupted by a lack of
information, knowledge or involvement, then unity and commitment are very much at
risk.
Finally, the decision-making process needs to evolve over time as the next generation of
family owners grows in age and conviction. If succession processes and expectations for
authority and control aren’t clear or satisfactory, ownership disputes or dissatisfactions
are inevitable. Succession needs to be addressed for ownership, for voting rights, for
directorship and for leadership.
While this article is aimed at clarifying the roles and responsibilities of a family
ownership group, it also is aimed at directors who need to understand the owners’ rights
and requirements so they can both encourage and support the owners’ efforts, and so
they can clarify the board’s and management’s roles in governance. Each group—the
board, the owners and management—plays an essential and interdependent part in an
effective governance system. Because the concept of ownership is, perhaps, less well-
developed or understood than the concepts of boards and management, directors can
provide invaluable guidance to owning families as they work to understand their role.
3.6.4. Succession in Family Business

1. Family is the primary emphasis of succession planning for many businesses.
Whether you're thinking about the future management of your business, how
ownership is going to be passed along, or taxes, you won't be able to help thinking

about how your decisions will affect your family. Consider six key tips to have the
best chance at a successful transition.
2. Start planning early: Five years in advance is good, but 10 years in advance is
better. Many business advisers tell budding entrepreneurs to build an exit strategy
right into their business plan. The longer you get to spend on succession planning,
the smoother the transition process is likely to be.
3. Involve family members in discussions: Making your own succession plan and
then announcing it is the surest way to sow family discord. Discussing the plan
helps to identify who in the family wants to be involved directly and who is
focused elsewhere. It also might help some family members find interest in the
business they didn't know they had.
4. Be realistic: You may want your first-born son to run the business, but does he
have the business skills or even the interest to do it? Perhaps there's another
family member who is more capable. It may even be that there are no family
members capable of or interested in continuing the business and that it would be
best to sell it. Examine the strengths of all possible successors as objectively as
possible.
5. Do what's best for the business: Making sure everyone has equal shares seems
nice, but it may not be in the best interests of your business. It may be fairer for
the successor(s) you have chosen to run the business to have a larger share of
business ownership than family members not active in the business. Another
alternative is to use voting and nonvoting shares so that only some of the family
shareholders can make decisions on company policy. It may be best to transfer
both management and ownership to your chosen successor and make other
financial arrangements to benefit your other children.
6. Train your successor(s): How can you expect your successor to take over and
run your business successfully if you haven't spent any time training him? Your
succession planning will have a much better chance of success if you work with
your successor(s) for a year or two before you hand over the reins. For solo
entrepreneurs, sharing decision making and teaching business skills to someone
else can be difficult, but it's definitely an effort that will pay big dividends for the
business.
7. Get outside help: Lawyers, accountants, financial advisers, and others can help
you put together a successful succession plan. There even are companies that

specialize in family business succession planning that will facilitate the process of
working through issues.
3.6.5. Pitfalls of the Family Business
1. Not respecting family hierarchy. Every family has a pecking order and not respecting
this order within the business will cause friction. If someone feels they are being
disrespected or not being heard, it’s a recipe for resentment and conflict. A certain level
of mutual respect and a feeling of collaboration is essential. Leveraging each person’s
individual strengths, including management capabilities, for the business’ greater good
needs to continually be top-of-mind. Each family member should take the lead in the area
they have the most experience and/or knowledge regarding. There are times when a
younger family member may be in charge of a particular project or aspect of the business,
however, respect for family hierarchies within the organization must be maintained.
2. Neglecting to define or agree upon roles. It’s important for family members to take
an active part in choosing and defining their roles within the business. Make those roles
official by including titles, creating business cards and including the position on your
website’s “About” page. This will be a motivating factor to get the family member to
acknowledge his or her position. Defining objectives is also important and, again, should
play to each family member’s strengths. Each quarter, family members should define one
to five key objectives and goals to accomplish. This will help keep everyone in the familial
circle moving forward and will help maintain momentum within the company at large.
3. Not allowing enough leeway. Family members, especially the younger ones, need the
freedom to try their own projects, even if other family members aren’t necessarily on
board. If the project fails, it is a learning experience-and one that individual will
remember for a very long time. If the project is a success, it’s a huge win-win both for the
individual and the business as a whole. In that vein, it’s important to remember that
family members are not the same as regular employees and treating them as such can be
a recipe for disaster. No one is more invested in a family business than a family member
and, because of this, family members should have much more leeway and authority than
a typical employee.
4. Not including the entire family on important decisions. It used to be that parents
and grandparents were the go-to family members for advice and input on important
decisions. In business, it’s also important to include the entire family when making
important decisions for several reasons. First of all, with 90 years and three generations
of experience to draw upon in my own family business, not utilizing that collective
wisdom and experience would be a tremendous opportunity loss. A woefully wasted
resource. In your own family business, even if you don’t currently have the advantage of
multiple generations’ worth of wisdom to draw upon, it’s important to create the

expectation that everyone’s input is valuable, which it is. Second, including the spouses
can also prove invaluable. They have a stake in the business the same as any other family
member, and can often bring forth an “outsider’s” perspective since they aren’t as close
to the issues at hand. When the entire family participates and a quorum is reached, the
entire family takes ownership of that decision and the results, for better or worse. In this
way, important business matters become family matters.
5. Having “zero tolerance” regarding personal vs. business finances. On the one
hand, keeping business credit cards under control is a must. Misuse can put the whole
business at risk of an IRS audit. On the other hand, revenue generated by the business
should not be off limits, either. After all, that money doesn’t belong to one person, it
belongs to the entire family. No one family member should have their fist so tightly
around the purse strings that no one has access to the fruits of their labor. This only
serves to create power struggles and resentment. Having tolerance and compassion
regarding family members’ financial needs is a must. The business exists to provide for
the family. If it can’t do that, what’s the point? Allowing family members to draw from
business revenue when necessary makes it possible for family members to take care of
their own needs, which, in turn, helps enable that family member to maintain focus on
their part in the business. Any concerns about overuse of company funds can be dealt
with by drawing up and agreeing in advance to a policy regarding the personal use of
revenue. No matter what your particular family dynamic is, remember that, ultimately,
family is far more important than money.
6. Forgetting to celebrate the wins and to have fun. Being in business with your family
is a blessing. If you’re not having fun running your family business, you’re taking yourself
way too seriously. Make sure you take the time to celebrate the wins in addition to
learning from the losses. This is vital to maintaining morale and a general positive feeling
toward the business. Any time an objective or goal is reached, time should be taken to
acknowledge and celebrate that accomplishment before moving on to the next. If this isn’t
done, family members may begin to feel taken for granted or unappreciated, which is a
certain morale and motivation killer, as well as another open door for resentment. A
family business that celebrates and supports one another creates a culture that fosters
dedication and success.
7. Not having a conflict resolution plan. Business disputes happen and, when those
disagreements are between family members, things inevitably get personal. To avoid
conflicts spiraling out of control, make sure everyone signs an agreement that states any
dispute is to be handled by mediation or arbitration. Litigation should never, ever be a
consideration. It will only cause irreparable damage both to the business and the family.
Proper communication is key in any relationship, but even more so within the highly
specialized context of family business dynamics. It’s critical to create a system and safe
place in which to deal with anger between family members when it arises—away from
the eyes and ears of non-family employees, as a family run businesses should also present

itself as a united front. For family firms that are co-owned, have an agreement in place on
awkward areas such as “veto power” and set processes and rules for how to move
forward if the two parties don’t agree on an issue. This is imperative to avoid arguing and
internalized anger.
At the heart of avoiding each of these pitfalls is proactive communication, systemization

and conflict resolution. Ultimately, how you interact with your family in general will
propagate to how you interact within your business. Taking the time to consider those
scenarios that can cause dissention among family members who work together and plan
out some precautionary measures, you will be well on your way to building stronger
relationships with loved ones and perhaps a lasting family business legacy for
generations to come.
3.6.6. Improving Family Business Performance
1. Training
Every severely troubled family business I have worked with has done a poor job of
training the successor generation(s).For some reason, the need for sound training is often
overlooked on a regular basis in FOBs. In part, this is because of a surprisingly common
belief that a college education and a little bit of exposure to the business should be enough
to prepare an in-coming family member adequately.
Most particularly, there are two areas that are consistently overlooked in my experience.
First, the benefit of working for a meaningful period of time outside of the FOB is typically
under appreciated.
For example, I recently talked at length with the CEO of a $20 million company. He talked
at length about his own feelings of inadequacy and pointed to the fact that he had never
worked for another company before joining the family business. He was well educated
and could understand that he lacked a broader perspective. At the same time, he also
seemed frustrated in his attempts to improve both his performance and his company’s.
The second area that is typically overlooked is the training that should take place once a
family member joins the business. In particular, the benefit of substantial exposure to
every critical aspect of the business is not recognized. Additionally, there is generally no
formal effort to continue with outside training, be it through additional course work,
workshops, industry based programs, etc. Particularly in today’s fast moving and
competitive environment, the need for consistent training experiences is vital.
2. Future Outlook

When visiting a troubled company for the first time, one of the most common phenomena
is the feeling of having gone back 10 to 20 years in time. For any number of reasons, these
businesses have tended to have little real concern about the future and the necessity of
preparing for the business changes that are inevitable.
There needs to be a core value adopted that fundamentally says that the family believes
that the future will be different and that the family must consistently make efforts to plan
for and manage change pro-actively. In my experience, the failure to do so has led to the
demise of many FOBs that had been very successful at one time.
3. Accountability
Over the past several years, I have worked closely with an FOB with both father and son
present. The son began his career at the company handicapped by weak work habits.
Further, he had never been given clear goals or had his performance evaluated. Rather,
he has largely been able to do whatever he has wished.
As a result, while he has exhibited some professional growth, he has not contributed at a
level consistent with his inherent potential. More importantly, the company has not
gotten the contribution from the son that it truly has needed. Overall, the company’s
progress has been materially impacted.
The simple act of establishing performance criteria and periodically evaluating

performance relative to those criteria is a relatively simple task. At the same, it is one of
the most difficult tasks the FOB faces. Even more difficult is the issue of dealing with poor
performers. In my experience, almost every under-performing FOB has little or no true
accountability.In today’s highly challenging environment, however, it is virtually
impossible to compete effectively over an extended period of time without it.
4. Finances
Many FOBs adopt core values around finances that are the polar opposite of the “If we
don’t make it, we don’t take it” philosophy. As a result, these FOBs tend to be chronically
cash poor. Sometimes, this core value is the result of greed. Often, however, it’s the result
of an insufficient understanding of the need for and benefit of retaining cash within the
business.
Regardless of the reason, these companies generally don’t have the funds needed to
operate effectively or invest in the future. Clearly, this tends to result in chronic under-
performance. Further, these companies are highly vulnerable to business downturns and
other types of setbacks. Many, if not most, eventually fail.
5. Other Critical Core Values

Many other core values can also often have a critical impact on a FOB’s performance. In
particular, these values tend to involve decision making processes, internal
communications, methods of conflict resolution, methods of compensation and the
formality of the FOB’s operating procedures. Depending on the circumstances, if any of
these core values is sufficiently dysfunctional, they can have a substantial impact on
performance and long term viability.
6. Addressing the Issue
Every FOB wishing to improve its performance can take a structured approach to
addressing the issue through a careful examination of its core values. As a first step, each
family member should independently evaluate the FOB’s core values and determine for
themselves if they believe each core value is functional or not. This evaluation should
consider all of the values addressed here as well as any others that appear to be
meaningful.
More specifically, at a minimum, each family member should evaluate the FOB’s core
values concerning training, the future, accountability, finances, decision making
processes, internal communications, methods of conflict resolution, methods of
compensation and the formality of the FOB’s operating procedures.
For example, each family member should develop their own evaluation about the
sufficiency of accountability within the business. Further, to the extent that any family
member believes that the business would benefit from greater accountability, they
should develop recommendations as to how accountability could be improved.
Once each family member has completed their own evaluation of the FOB’s core values, a
series of meetings should be held to discuss each of the family members thoughts and
recommendations. Eventually, action plans can be developed to improve each area which
the family has identified as requiring attention. These action plans should be quite
specific and include time lines for completion. Lastly, the family needs to commit itself to
aggressively following through on these action plans.
For some FOBs, their core values can be significantly dysfunctional, making it impossible
for the family to systematically consider these issues. In those cases, the families will
require outside assistance by competent professionals in order to develop and implement
a truly effective action plan. In those cases, the work required can be rigorous and even
painful. At the same time, the benefits in those instances can be most significant,
sometimes the difference between viability and ultimate failure.
3.6.7. How to Overcome Nepotism in Family Businesses

Nepotism is the practice of showing favoritism toward one’s family members or friends
in economic or employment terms, for example, granting jobs to friends and relatives,
without regard to merit. Such practices can and do have damaging effects on businesses.
They can erode the support of other employees, reduce the quality and creativity of
management and diminish the importance of competence and high-level performance.
In many smaller family-owned businesses, nepotism is viewed in positive terms, often

because it is a cheap source of labor, and is considered a synonym for “succession.” This
rationale is a mistake. Competence must be the criteria for employment, followed by years
of consistent, high level performance that can lead to succession.
Nepotism is neither good nor bad, in and of itself. It only takes on a positive or negative
charge in the context of how one has raised one’s children. I believe that the task of being
a parent is simply this, “To raise responsible adults who have high self esteem and can
function independently in this world.”
This process involves instilling those values that will lead to competent employees –
honesty, integrity, dependability, respect for others, being industrious and doing one’s
best in every endeavor.
Failure to teach these principles opens the door to children feeling entitled – believing
that they are the privileged and should be given everything. This deficiency becomes a
ripe incubator for problems to emerge when the child works in the family business.
Children who come to the business with an attitude of entitlement will think they are
exempt from the rules that apply to “ordinary people.” They often don’t understand that
they must earn their place in the company through hard work and consistently-
demonstrated competence. A seemingly small thing like coming to work on time is an
example.
Experience has shown that nepotism works IF and ONLY IF the values of the family
members are congruent and the successor is fully qualified.
3.6.8. How to save the Family Business
Most family-owned businesses—approximately 70%—last just one generation. Because

an estimated 80% of businesses across the globe are family-owned, the low survival rate
has alarming consequences. Consider this: In the United States alone, family-owned
businesses (FOBs) are responsible for 60% of total US employment and generate 78% of
all new jobs. Further, some of the world’s biggest companies are family-owned—News
Corp, Samsung, Tata Group, and Walmart to name but a few—and more than a third of
Fortune 500 companies are family-owned.

Our research on boards of directors and corporate governance has shed new light on
many board practices and reveals the need for improvement in several areas including
skills and selection, succession planning, and diversity. Given the vast impact of FOBs on
every economy in the world, we were keen to learn if there were differences between the
boards and governance practices of family and non-family owned companies.
In 2012, we (in partnership with Women Corporate Directors and Heidrick & Struggles)
surveyed more than 1,000 corporate directors across the globe and broke out the FOB
boards from the non-FOB boards. The results were striking: There was not one
meaningful measure—from missing skill sets to the effectiveness of succession practices
to creating more diverse boards and workplaces—on which FOB boards outperformed
non-FOB boards.
Director Profiles. To begin, we compared the profiles of directors on the boards of

family-owned vs. non-family-owned businesses and found few differences. A similar
percentage held advanced degrees: 75% of FOB directors and 77% of non-FOB directors.
When we looked at board service, we found that FOB and non-FOB directors had served
on an almost identical number of boards in their careers (5.8 and 6.0, respectively) and
were currently serving on the same number of boards (3.1).
Skills and Assessment. Boards cannot govern effectively if they’re missing key skill sets.
A greater percentage of FOB than non-FOB directors said skills were missing on their
boards and the missing skill they named most was HR-Talent Management—to a degree
almost 3 times that of non-FOB directors. There were other noteworthy differences: FOB
directors said their boards lacked Succession Planning, Strategy, Financial-Audit, and
Compensation skills to a greater extent than did non-FOB directors. Furthermore, less
than a quarter of FOB directors (vs. half of non-FOB directors) said their boards had a
process in place to determine skills required for the board and, therefore, new directors.
We also found that FOB boards measured their own performance through regular, annual
assessments less frequently than did non-FOB boards (45% vs. 67%, respectively).
Succession. Just 41% of FOB directors said their boards had an effective CEO succession planning
process (vs. 56% of non-FOB directors). Perhaps the most telling finding, however, was that 63%
of FOB directors said CEO succession was not discussed regularly at the board level. In addition,
only 29% of FOB directors said their boards had an effective board succession planning process
in place for directors.
Strategic Challenges and Talent Management. We asked board members to tell us the
biggest challenges their companies face achieving their strategic objectives and found
directors from family-owned and non-family-owned businesses aligned on many
challenges. For example, attracting and retaining top talent and global competitive
threats were leading concerns for both.

But we also identified notable differences: namely a greater percentage of FOB than non-
FOB directors viewed innovation as their top challenge, and FOB directors were also
more concerned than their non-FOB counterparts about the rising cost of materials and
commodities, levels of debt and supply chain risk. Conversely, a far greater percentage of
non-FOB directors than FOB directors were concerned about the regulatory
environment.
Diversity. We contend that in order to see greater progress in seating diverse boards,
change must occur within three spheres: at the country, organizational and individual
levels. Furthermore, although we have seen movement at the country and individual
levels, much greater effort must be made at the organizational level, which we think may
be the most determinative lever of change. Given that the majority of businesses in the
world are family-owned, greater action on their part to create diverse boards and
workplaces could have a substantial impact.

Chapter 4
Market Survey and Opportunity Identification
4.1. How to start a small scale industry
The small scale industry sector has flourished in the Indian economy over the past five
decades. In India, the small scale industries accounts for about 95 percent of industrial
units adds 40 percent of value addition to the manufacturing sector, nearly 80 percent of
manufacturing employment and about 35 percent of exports.
Starting a small scale industry is a profitable business idea for it has certain merits for the
entrepreneur as well as the economy of the nation. Despite being a labor-intensive
industry, it requires less capital to start a small scale industry. Therefore, a lot of small
entrepreneurs wish to start a small scale industry of their own.
For all those entrepreneurs who are thinking about starting a small scale industry, here
are a few simple steps that could help them to begin with the business.
#1 Selection of Products
By conducting a market research, one could decide the product that they want to
manufacture. A product that has good market potential and profitability should be the
one. Consider these factors while conducting market research:
• Should have a little or no competition

• Should be innovative
• Easy availability of raw materials
• Government Policies regarding the product type should be clear/all right
• Should be easily accessible to the market
• Should be within your budget
#2 Location of Enterprise
While deciding on the location of the industry, availability of raw material, transportation
costs and availability of land at cheaper rates are the most crucial points to be
remembered (along with some more factors). In India, government also offers a relevant
industrial estate with pre-built factory sheds/developed plots in order to make a room
for integrated development of small scale industries.
#3 Deciding the Organization Pattern
There are three main forms of ownership that small scale industry owners operate on:
Proprietary, Partnership, and Company.

Proprietary describes all the rights that are the owner of property can exercise and all
items manufactured and marketed under exclusive rights.
Partnership is an association of two or more businesspeople. Both partners invest their

money in a partnership and carry on the business as joint ventures where they share all
their profits, losses, risks and combine their capital and managerial skills for mutual
benefit.
Company is a legal entity created by the state whose assets and liabilities are separate
from its owners.
You could decide on which ownership form your business is going to operate.
#4 Project Appraisal
Project appraisal means the analysis of a scheme or project that has to be prepared
keeping in mind the economic, financial, technical, market and managerial aspects to
arrive at the most socially-feasible enterprise. It enables an entrepreneur to assess inputs
required to assimilate in the future activities of the firm.
#5 Registration with the Authorities
After finalizing the above steps, it’s time to get the small scale industry registered with
authorities like State Directorate of India, DGS&D, RBI, RLA, etc to get your industry
recognized by the government.
4.2. Procedures for registration of small scale industry
Small Scale Business provides more independence than the large scale business and
through this type of business one can fulfill their dream to become an entrepreneur. It
eliminates much of the overhead expense and extensive planning required in larger
business ventures. One can set up small-scale industries by following the simple
procedures, which are as follows:
• Decision Making: First of all, you need to prepare the description for the small
scale industry you want to set up. It is necessary to decide whether you wish to set
up a corporation, proprietorship or partnership. The potential entrepreneur has
to analyze his strength, weakness while deciding for entrepreneur career. This
analysis helps in knowing what type and size of business would be the most
suitable.
• Scanning Of Business Environment: Before setting up your industry, it is always
essential to study and understand the prevailing business environment in which
they operate particularly the industrial policy, economic policy, licensing policy,

legal environment, and technological environment. The environment impacts a lot

in setting up a proper industry.
• Product Selection: You need to decide the product you wish to manufacture or
the service you wish to offer. While choosing the product or service you want to
offer, you must conduct a good market research and learn about the prevailing
competition in the market.
• Location: You need to choose a location to set up your small scale industry. While
choosing the location such factors such as nearness to market, sources of material
availability of raw materials, labor, transportation services, modern
infrastructural facilities and other things are considered. Location determines the
success or failure of the enterprise.
• Technology: To manufacture any item, technology is used. The entrepreneur
should collect information on all available technologies, and the most suitable one
should be identified. This will also be useful to determine the type of machinery
and equipment to be installed.
• Project: Project appraisal means the assessment of a project. It is a technique for
ex-ante analysis of a scheme or project while preparing to set up an enterprise;
the entrepreneur has to appraise the project carefully from the standpoint of
economic, financial, technical, market, social and managerial aspects to arrive at
the most socially-feasible enterprise.
• Finance: Finance is the lifeblood of the enterprise. So, the next big step is to
arrange for finance. No business can be created, with zero capital. If you don’t have
enough finance and then the best way is to borrow or take a loan.
• Provisional Registration: It is always worthwhile to get the unit registered with
the government. The entrepreneur has to obtain the prescribed application from
DIC or Directorate of Industries. After having duly filled in the application form, he
has to submit the application with all relevant documents in the local DIC or
Directorate of Industries.
• Production Management: Production management is the next step, once you can
start your small scale industry. This includes allocating space for different
operations and choosing your production methods. You are required to purchase
machinery and hire employees and workers for different departments.
• Power And Water Connection: The sites where the enterprise will be located
should either have adequate power connections, or it should be arranged. The
entrepreneur can calculate the total power requirement and determine the
nearest pole from which power will be given to the enterprise, as it can materially
affect the installation cost.
• Installation Of Machinery: Once the above formalities have been completed; the
next step is to procure machinery and begin its installation as per the plant layout.
• Insurance: It is necessary to have adequate insurance for fixed assets at this stage
and later on for the current assets as well.

• Recruitment Of Manpower: Once machines are installed, the need for manpower
arises to run them. So, the quantum and type of manpower are to be decided. The
sources of getting desired labor are also important. This follows the recruitment,
training, and placement.
• If you want to learn more about Industrial and Labour laws, you can take up this
course that is created by iPleaders in association with National University of
Juridical Sciences (NUJS), Kolkata which is regularly ranked as one of India’s top
three law schools.
• Production: The unit established should have an organizational set-up. To
operate optimally, the organization should employ its manpower, machinery, and
methods effectively. There should not be any wastage of manpower, machinery,
and materials. If items are exported, then the product and its packaging must be
attractive.
• Marketing: Marketing is the most important activity as far as the entrepreneurial
development is concerned. Marketing and business advertising form the next big
step of setting up a small scale industry. Online business directories and various
traditional forms of advertising can gain exposure for your business. Prices for
your products or services are decided to keep in mind the profit margin.
• Quality Assurance: Before marketing, the product quality certification from BIS
(Bureau of Indian Standard)/ AGMARK/HALLMARK, etc., should be obtained
depending upon the product. If there are no quality standards specified for the
products, the entrepreneur should evolve his quality control parameters.
• Permanent Registration: After the small scale unit goes into production and
marketing, it becomes eligible to get permanent registration based on its
provisional registration from the DIC or Directorate of Industries.
• Market Research: Once the product or service is introduced in the market, there
is strong need for continuous market research to assess needs and areas for
modification, up gradation and growth.
• Monitoring: Periodical monitoring and evaluation not only of markets but also
production, quality, and profitability help in knowing where the firm stands in
comparison to performance envisaged in the business plan. It also identifies the
direction of future growth. Therefore, planning is a useful aspect of setting up a
small scale. According to business, at every stage, you are required to improve
your plan.
4.3. List of items reserved for exclusive manufacture in small scale

industry
Sl No. Item Description
1. AAC/& ACSR Conductor upto 19 strands
2. Agricultural Implements
a. Hand Operated tools & implements
b. Animal driven implements
3. Air/Room Coolers

4. Aluminium builder's hardware

5. Ambulance stretcher
6. Ammeters/ohm meter/Volt meter (Electro magnetic upto Class I accuracy)
7. Anklets Web Khaki
8. Augur (Carpenters)
9. Automobile Head lights Assembly
10. Badges cloth embroidered and metals
11. Bags of all types i.e. made of leather, cotton, canvas & jute etc. including kit bags,
mail bags, sleeping bags & water-proof bag
12. Bandage cloth
13. Barbed Wire
14. Basket cane (Procurement can also be made from State Forest Corpn. and State
Handicrafts Corporation)
15. Bath tubs
16. Battery Charger
17. Battery Eliminator
18. Beam Scales (upto 1.5 tons)
19. Belt leather & straps
20. Bench Vices
21. Bituminous Paints
22. Blotting Paper
23. Bolts & Nuts
24. Bolts Sliding
25. Bone Meal
26. Boot Polish
27. Boots & Shoes of all types including canvas shoes
28. Bowls
29. Boxes Leather
30. Boxes made of metal
31. Braces
32. Brackets other than those used in Railways
33. Brass Wire
34. Brief Cases (other than moulded luggage)
35. Brooms
36. Brushes of all types
37. Buckets of all types
38. Button of all types
39. Candle Wax Carriage
40. Cane Valves/stock valves (for water fittings only)
41. Cans metallic (for milk & measuring)
42. Canvas Products :
a. Water Proof Deliver, Bags to spec. No. IS - 1422/70
b. Bonnet Covers & Radiators Muff. to spec. Drg. Lv 7/NSN/IA/130295

43. Capes Cotton & Woollen

44. Capes Waterproof
45. Castor Oil
46. Ceiling roses upto 15 amps
47. Centrifugal steel plate blowers
48. Centrifugal Pumps suction & delivery 150 mm. x 150 mm
49. Chaff Cutter Blade
50. Chains lashing
51. Chappals and sandals
52. Chamois Leather
53. Chokes for light fitting
54. Chrome Tanned leather (Semi-finished Buffalo & Cow)
55. Circlips
56. Claw Bars and Wires
57. Cleaning Powder
58. Clinical Thermometers
59. Cloth Covers
60. Cloth Jaconet
61. Cloth Sponge
62. Coir fibre and Coir yarn
63. Coir mattress cushions and matting
64. Coir Rope hawserlaid
65. Community Radio Receivers
66. Conduit pipes
67. Copper nail
68. Copper Napthenate
69. Copper sulphate
70. Cord Twine Maker
71. Cordage Others
72. Corrugated Paper Board & Boxes
73. Cotton Absorbent
74. Cotton Belts
75. Cotton Carriers
76. Cotton Cases
77. Cotton Cord Twine
78. Cotton Hosiery
79. Cotton Packs
80. Cotton Pouches
81. Cotton Ropes
82. Cotton Singlets
83. Cotton Sling
84. Cotton Straps
85. Cotton tapes and laces

86. Cotton Wool (Non absorbent)

87. Crates Wooden & plastic
88. (a) Crucibles upto No. 200
(b) Crucibles Graphite upto No. 500
(c) Other Crucibles upto 30 kgs.
89. Cumblies & blankets
90. Curtains mosquito
91. Cutters
92. Dibutyl phthalate
93. Diesel engines upto 15 H.P
94. Dimethyl Phthalate
95. Disinfectant Fluids
96. Distribution Board upto 15 amps
97. Domestic Electric appliances as per BIS Specifications :-
- Toaster Electric, Elect. Iron, Hot Plates, Elect. Mixer, Grinders Room heaters &
convectors and ovens
98. Domestic (House Wiring) P.V.C. Cables and Wires (Aluminium) Conforming to
the prescribed BIS Specifications and upto 10.00 mm sq. nominal cross section
99. Drawing & Mathematical Instruments
100. Drums & Barrels
101. Dust Bins
102. Dust Shield leather
103. Dusters Cotton all types except the items required in Khadi
104. Dyes :
a. Azo Dyes (Direct & Acid)
b. Basic Dyes
105. Electric Call bells/buzzers/door bells
106. Electric Soldering Iron
107. Electric Transmission Line Hardware items like steel cross bars, cross arms
clamps arching horn, brackets, etc
108. Electronic door bell
109. Emergency Light (Rechargeable type)
110. Enamel Wares & Enamel Utensils
111. Equipment camouflage Bamboo support
112. Exhaust Muffler
113. Expanded Metal
114. Eyelets
115. Film Polythene - including wide width film
116. Film spools & cans
117. Fire Extinguishers (wall type)
118. Foot Powder
119. French polish
120. Funnels

121. Fuse Cut outs

122. Fuse Unit
123. Garments (excluding supply from Indian Ordnance Factories)
124. Gas mantels
125. Gauze cloth
126. Gauze surgical all types
127. Ghamellas (Tasllas)
128. Glass Ampules
129. Glass & Pressed Wares
130. Glue
131. Grease Nipples & Grease guns
132. Gun cases
133. Gun Metal Bushes
134. Gumtape
135. Hand drawn carts of all types
136. Hand gloves of all types
137. Hand Lamps Railways
138. Hand numbering machine
139. Hand pounded Rice (polished and unpolished)
140. Hand presses
141. Hand Pump
142. Hand Tools of all types
143. Handles wooden and bamboo (Procurement can also be made from State Forest
Corpn. and State Handicrafts Corporation)
144. Harness Leather
145. Hasps & Staples
146. Haver Sacks
147. Helmet Non-Metallic
148. Hide and country leather of all types
149. Hinges
150. Hob nails
151. Holdall
152. Honey
153. Horse and Mule Shoes
154. Hydraulic Jacks below 30 ton capacity
155. Insecticides Dust and Sprayers (Manual only)
156. Invalid wheeled chairs.
157. Invertor domestic type upto 5 kvA
158. Iron (dhobi)
159. Key board wooden
160. Kit Boxes
161. Kodali
162. Lace leather

163. Lamp holders

164. Lamp signal
165. Lanterns Posts & bodies
166. Lanyard
167. Latex foam sponge
168. Lathies
169. Letter Boxes
170. Lighting Arresters - upto 22 kv
171. Link Clip
172. Linseed Oil
173. Lint Plain
174. Lockers
175. Lubricators
176. L.T. Porcelain KITKAT & Fuse Grips
177. Machine Screws
178. Magnesium Sulphate
179. Mallet Wooden
180. Manhole covers
181. Measuring Tapes and Sticks
182. Metal clad switches (upto 30 Amps)
183. Metal Polish
184. Metallic containers and drums other than N.E.C. (Not elsewhere classified)
185. Metric weights
186. Microscope for normal medical use
187. Miniature bulbs (for torches only)
188. M.S. Tie Bars
189. Nail Cutters
190. Naphthalene Balls
191. Newar
192. Nickel Sulphate
193. Nylon Stocking
194. Nylon Tapes and Laces
195. Oil Bound Distemper
196. Oil Stoves (Wick stoves only)
197. Pad locks of all types
198. Paint remover
199. Palma Rosa Oil
200. Palmgur
201. Pans Lavatory Flush
202. Paper conversion products, paper bags, envelops, Ice-cream cup, paper cup and
saucers & paper Plates
203. Paper Tapes (Gummed)
204. Pappads

205. Pickles & Chutney

206. Piles fabric
207. Pillows
208. Plaster of Paris
209. Plastic Blow Moulded Containers upto 20 litre excluding Poly Ethylene
Terphthalate (PET) Containers
210. Plastic cane
211. Playing Cards
212. Plugs & Sockets electric upto 15 Amp
213. Polythene bags
214. Polythene Pipes
215. Post Picket (Wooden)
216. Postal Lead seals
217. Potassium Nitrate
218. Pouches
219. Pressure Die Casting upto 0.75 kg
220. Privy Pans
221. Pulley Wire
222. PVC footwears
223. PVC pipes upto 110 mm
224. PVC Insulated Aluminium Cables (upto 120 sq. mm) (ISS:694)
225. Quilts, Razais
226. Rags
227. Railway Carriage light fittings
228. Rakes Ballast
229. Razors
230. RCC Pipes upto 1200 mm. dia
231. RCC Poles Prestressed
232. Rivets of all types
233. Rolling Shutters
234. Roof light Fittings
235. Rubber Balloons
236. Rubber Cord
237. Rubber Hoses (Unbranded)
238. Rubber Tubing (Excluding braided tubing)
239. Rubberised Garments Cap and Caps etc
240. Rust/Scale Removing composition
241. Safe meat & milk
242. Safety matches
243. Safety Pins (and other similar products like paper pins, staples pins etc.)
244. Sanitary Plumbing fittings
245. Sanitary Towels
246. Scientific Laboratory glasswares (Barring sophisticated items)

247. Scissors cutting (ordinary)

248. Screws of all types including High Tensile
249. Sheep skin all types
250. Shellac
251. Shoe laces
252. Shovels
253. Sign Boards painted
254. Silk ribbon
255. Silk Webbing
256. Skiboots & shoes
257. Sluice Valves
258. Snapfastner (Excluding 4 pcs. ones)
259. Soap Carbolic
260. Soap Curd
261. Soap Liquid
262. Soap Soft
263. Soap washing or laundary soap
264. Soap Yellow
265. Socket/pipes
266. Sodium Nitrate
267. Sodium Silicate
268. Sole leather
269. Spectacle frames
270. Spiked boot
271. Sports shoes made out of leather (for all Sports games)
272. Squirrel Cage Induction Motors upto and including 100 KW440 volts 3 phase
273. Stapling machine
274. Steel Almirah
275. Steel beds stead
276. Steel Chair
277. Steel desks
278. Steel racks/shelf
279. Steel stools
280. Steel trunks
281. Steel wool
282. Steel & aluminium windows and ventilators
283. Stockinet
284. Stone and stone quarry rollers
285. Stoneware jars
286. Stranded Wire
287. Street light fittings
288. Student Microscope
289. Studs (excluding high tensile)

290. Surgical Gloves (Except Plastic)

291. Table knives (Excluding Cutlery)
292. Tack Metallic
293. Taps
294. Tarpaulins
295. Teak fabricated round blocks
296. Tent Poles
297. Tentage Civil/Military & Salitah Jute for Tentage
298. Textiles manufacturers other than N.E.C. (not elsewhere classified)
299. Tiles
300. Tin Boxes for postage stamp
301. Tin can unprinted upto 4 gallons capacity (other than can O.T.S.)
302. Tin Mess
303. Tip Boots
304. Toggle Switches
305. Toilet Rolls
306. Transformer type welding sets conforming to IS:1291/75 (upto 600 amps)
307. Transistor Radio upto 3 band
308. Transistorised Insulation - Testers
309. Trays
310. Trays for postal use
311. Trolley
312. Trollies - drinking water
313. Tubular Poles
314. Tyres & Tubes (Cycles)
315. Umbrellas
316. Utensils all types
317. Valves Metallic
318. Varnish Black Japan
319. Voltage Stablisers including C.V.T's
320. Washers all types
321. Water Proof Covers
322. Water Proof paper
323. Water tanks upto 15,000 litres capacity
324. Wax sealing
325. Waxed paper
326. Weighing Scale
327. Welded Wiremash
328. Wheel barrows
329. Whistle
330. Wicks cotton
331. Wing Shield Wipers (Arms & Blades only)
332. Wire brushes and Fibre Brushes

333. Wire Fencing & Fittings

334. Wire nails and Horse shoe nails
335. Wire nettings of gauze thicker than 100 mesh size
336. Wood Wool
337. Wooden ammunition boxes
338. Wooden Boards
339. Wooden Box for Stamps
340. Wooden Boxes and Cases N.E.C. (Not elsewhere classified)
341. Wooden Chairs
342. Wooden Flush Door Shutters
343. Wooden packing cases all sizes
344. Wooden pins
345. Wooden plugs
346. Wooden shelves
347. Wooden veneers
348. Woollen hosiery
349. Zinc Sulphate
350. Zip Fasteners
4.4. Assessment of demand and supply in potential areas of growth
• Demographic Analysis
Market Economics (M.E) helps private and public sector clients understand the
fundamental structures of the population. These structures are important because
they influence many current and future trends in growth, consumption of goods
and services and the demands placed on local and national infrastructure.
• Segment Analysis
Behaviour in any market (from retail goods to recreational and tourism

opportunities) is governed by demographic factors such as age, sex, life stage and
household type. At M.E we specialise in conducting market (supply and demand)
analysis at a detailed sectoral level to help explain underlying patterns and trends.
• Spatial Analysis
Location is a key driver of market behaviour. M.E are industry leaders in

integrating social, demographic and economic data with spatial information to
assess demand and the structures established to meet this demand. Spatial-
interactive models and GIS are applied to make the link between demand (people,
households, businesses) and supply (facilities, infrastructure) on the ground. We
have applied these methods widely for the commercial sector (e.g. in retail and

service network planning and development) and the public sector (e.g. to locate
recreational and sporting facilities such as libraries and swimming pools).
• Specialist Market Sector Analysis
M.E has undertaken a range of studies examining the supply and demand arising
in specific markets or industry sectors. We identify total supply and demand in
any market and assess how specific businesses fit within the total market at a local,
regional or national level. Further, our forecasting abilities (growth projections
and econometrics) allow us to consider likely future outcomes under a range of
scenarios.
4.5. Understanding business opportunity
A business opportunity consists of four elements all of which are to be present within the
same timeframe (window of opportunity) and most often within the same domain or
geographical location, before it can be claimed as a business opportunity. These four
elements are:
• A need
• The means to fulfill the need
• A method to apply the means to fulfill the need and;
• A method to benefit
With any one of the elements missing, a business opportunity may be developed, by
finding the missing element. A desirable characteristic is for the combination of elements
to be unique. The more control an institution (or individual) has over the elements, the
better they are positioned to exploit the opportunity and become a niche market leader.
4.6. Considerations in product selection
In selecting a product for your business venture, the following factors must be taken into
consideration:
• Supply-gap: The size of the unsatisfied market demand which constitutes a

source of business opportunity will dictate, to a great extent the need to select a
particular product. The product with the highest chances of success as reflected in
its demand will be selected. In essence, there must be an existing obvious demand
for the selected product.
• Fund: The size of the funds that can be mobilized is another important factor. The
adequate fund is needed to develop, produce, promote, sell and distribute the
product selected.

• Availability of and Access to Raw Materials: Different products require

different raw materials. The source quality and quantity of the raw materials
needed are factors to be seriously considered, Are the raw materials available in
sufficient quantities?
• Where are the sources of raw materials located? Are they accessible? Could they
be sources locally or imported? Satisfactory answers should be provided to these
and many other relevant questions.
• Technical Implications: The production process for the product needs to be
considered. There is a need to know the technical implications of the selected
product on the existing production line, available technology, and even the labor
force.
• The choice of a particular product may require either acquisition of the machinery
or refurbishing of the old ones. The product itself must be technically satisfactory
and acceptable to the user.
• Profitability/Marketability: Most often, the product that has the highest profit
potential is often selected. However, a product may be selected on the basis of its
ability to utilize idle capacity or complement the sale of the existing products. The
product must be marketable.
• Availability of Qualified Personnel: Qualified personnel to handle the
production and marketing of the product must be available. The cost of producing
the product must be kept to the minimum by reducing wastages. This is achievable
through competent hands.
• Government Policies: This is quite often an uncontrollable factor. The focuses of
government policies can significantly influence the selection of the product.
• For instance, a package of incentives from the government for a product with
100% local input contents can change the direction of the business’s R & D and
hence the product selected.
• Government objectives: The contributions of the product to the realization of the
company’s short and long-range objectives must be considered before selection.
For instance, the company goal maybe the achievement of sale growth, sales
stability or enhancement of the company’s social value.
4.7. Data collection for setting up small ventures
No matter what industry or niche you’re in, one of the things that make or break you is
how you handle data collection. If you’re accepting money from a customer, then you’re
probably invoicing and keeping a record of it. That’s data collection. If you’re paying an
employee or spending money on business equipment or service, then you want to keep
track of what you’re paying for. That’s data collection too.
Those are just two simple examples of data collection within a small business.

Not following best practices for data collection can have serious consequences. Small
businesses should focus on data collection as much, if not more, than bigger businesses.
A big business might be ok with losing a few invoices a month and can get by losing
$10,000 in potential revenue. But Can you afford to?
Here are a few best practices for small businesses and data collection.
• Create a Process
Whether you’re just getting started with your data collection efforts or refocusing
them, it’s important to have a process in place. This process should be repeatable and
scale-able so that as you grow, you’re not having to reinvent the wheel each month.
• Be Consistent
When you are figuring things out, make sure you’re doing things consistently. If you
have the equipment you’re purchasing, make sure you keep a record of each purchase
and do it the same way each time. If you’re asking employees to fill out timesheets,
make sure you educate them on how it should be done. Being consistent with your
data collection methods is crucial so you can track efforts over time and have the
ability to make decisions based on insights you’re discovering.
• Store Your Data Securely
You are probably collecting various types of information from your customers,
partners and employees, in addition to the data you track about your own business.
Make sure you’re storing this securely. At GoCanvas, we help our clients store their
data securely in the cloud, so there’s no need to worry about file cabinets or physical
storage space.
• Make Data Collection Simple
Another best practice for small business data collection is to make it as simple as
possible for your workforce and/or your customers to get you the information you’re
looking for. Maybe you’d love to have everyone fill out 10 pages of information with
their pets’ names, favorite car and favorite vacation spot so you can use this in
marketing efforts….but this probably isn’t going to happen.
Instead of asking people to fill out any paper forms at all, why not use mobile devices
to collect this information? You’ll get your data back quickly and securely, and you
won’t have to deal with terrible handwriting, torn pages or completely lost forms.
Watch this video about how GoCanvas can help you go paperless and mobile with your
data collection.

• Evaluate and Improve Data
As business owners, it’s important to set time aside to take a step back and evaluate
your data collection efforts, as well as the data itself. Ask yourself what’s working and
what’s not working in your data collection process. Analytics is one way to gain insight
into what is working in your data and what is not.
Are you using the latest features and technologies (signature capture, integrations,
GPS recording, barcode scanning, calculations, etc.)? Taking advantage of these
offerings can help you improve the quality of your data.
You might also find that one element of your data collection process is holding you
back. For example, maybe you figure out it’s taking an average of 25 days from when
you invoice a customer to when you are paid. Maybe you can test collecting payment
via a mobile device or sending a reminder email in order to get paid earlier. Tightening
the sales cycle in a small business is incredibly important for growth and
sustainability.

Chapter 5
Project
5.1. Project
Right understanding of the definition and key characteristics of project is of significant

importance. Any project is not just a way to make or do something but it’s an opportunity
to achieve some desired result by implementing a systematic management approach (for
example, producing a product or sharing knowledge).
An individual or organization involved in projects needs to understand how to solve

complexity of problems through project management. In this article we’ll define the term
“project”, describe the key characteristics of a project, and explain how to distinguish a
project from an activity.
Definition
Project is a great opportunity for organizations and individuals to achieve their business
and non-business objectives more efficiently through implementing change. Projects help
us make desired changes in an organized manner and with reduced probability of failure.
Projects differ from other types of work (e.g. process, task, procedure). Meanwhile, in the
broadest sense a project is defined as a specific, finite activity that produces an
observable and measurable result under certain preset requirements.
It is an attempt to implement desired change to an environment in a controlled way. By

using projects we can plan and do our activities, for example: build a garage, run a
marketing campaign, develop a website, organize a party, go on vacation, graduate a
university with honors, or whatever else we may wish to do.
A Project is a temporary, unique and progressive attempt or endeavor made to produce

some kind of a tangible or intangible result (a unique product, service, benefit,
competitive advantage, etc.). It usually includes a series of interrelated tasks that are
planned for execution over a fixed period of time and within certain requirements and
limitations such as cost, quality, performance, others.
Classification
1. Quantifiable and non- quantifiable projects
• Quantifiable projects- quantitative assessment of Benefits can be made. Concerned with
industrial Development, power generation, and mineral Development.

• Non- quantifiable projects- where quantitative Assessment is not possible. Concerned

with health, Education, defence etc.
2. sectorial projects
In India planning commission has accepted the Sectorial basis as the criterion for
classification:
• Agriculture & allied sector
• Irrigation and power sector
• Industry and mining sector
• Transport and communication
• Social service sector
• Miscellaneous
3. Techno- economic projects
Based on their techno- economic characteristics
4. Factor intensity- oriented classification
• Capital intensive
• Labour- intensive
5. Causation-oriented classification
• Demand based or,
• Raw materials based
6. Financial Institution Classification
All India and state financial institutions classify project according to their age, experience
and the purpose:
• New projects
• Expansion projects
• Modernization projects
• Diversification projects
These projects are invariably are profit- oriented.
7. Services projects:
• Welfare projects
• Research and development projects
• Educational projects
Project identification
In practice, project ideas often result from the identification of
• A discrete set of activities identified as important within programme-based
activities, a country’s poverty reduction strategy and/or sector-wide
approach
• Problems or constraints in the development process caused by shortages
of essential facilities, services, and material or human resources and by
institutional or other obstacles

• Unused or underused material or human resources and opportunities for

their conversion to more productive purposes; or, conversely, overused
natural resources that need to be conserved or restored
• Unsatisfied demands or needs and possible means to meet them including
opportunities arising from new technology or technological development,
for example, the internet and mobile telephony
• The need to complement other investments (such as providing railway and
port links for a mining project, transport, packing and marketing facilities
for an agricultural development project, or access roads for a sugar factory
and bio-ethanol plant)
Project ideas may also emanate from

• Initiatives by local private or public entrepreneurs who wish to take
advantage of opportunities they perceive or who are responding to
government incentives
• Community initiatives (often supported by national or international ngos)
• A government response to local political or social pressures originating, for
example, from economic, social, or regional inequalities
• A need for advocacy aimed at government in a weak policy environment
• The pursuit of national objectives such as food security
• The occurrence of natural events (drought, floods, earthquakes) and the
short-term responses to crisis
• As a response to long-term trends such as migration, environmental
degradation, and climate change
• A desire to create a permanent local capability to carry out development
activities by building up local institutions
Finally, project ideas originate not only from within a country but also from abroad as a
result of
• Investment proposals of multinational firms
• Programming activities of bilateral and multilateral aid agencies and their
on-going projects in the country
• Influence of investment strategies adopted by other developing countries
as well as opportunities created by international agreements (for example,
on the use of offshore resources)
• Prevailing professional opinion or public consensus within the
international community in such fields as population, environment, and the
alleviation of poverty

Project Design
The essential elements of a project are:
• Objectives (goal and purpose)
• Outputs
• Activities
• Inputs
Defining objectives
An objective is the aim or goal of a project, and describes the desired state which the
project is expected to achieve/contribute to. It provides the reason for undertaking the
project. A project will have at least two levels of objectives: a development goal or higher-
level objective; and an immediate purpose or objective.
The goal will usually be at the sectoral or sub-sectoral level and should provide a clear
development objective towards which the project is striving. For example, it may be a
country’s sectoral or sub-sectoral targets from its poverty reduction strategy paper, or
emerge from a funder’s country strategy paper. The project will be expected to make
a significant contribution to this objective, although not normally to achieve it
entirely. The project purpose provides the specific objective that the management
of the project will be expected to achieve Be wary of the temptation to overstate the
development objective in terms of sectoral or national goals (eg increase national
agricultural productivity; eradicate rural poverty) or to be vague (eg protect the
environment).
In defining a goal, make sure that:
• It provides adequate justification for the project
• Its progress can be verified either quantitatively or qualitatively
• It is single-purpose, or has multiple purposes which are compatible
The project purpose should specify the changes or improvements that could be expected
in the target group, organisation or region if the project is completed successfully and on
time. The purpose should also state the magnitude of such changes and the time span in
which they will be brought about. It is the formulation of the purpose that is of most
importance to the project designers and subsequently to the managers.
In defining project purpose, make sure that:
• It states clearly the desired change and where this will take place
• It specifies the magnitude of the change to be achieved
• It indicates the timescale for the change
• Its progress can be verified quantitatively
• If it conflicts with another purpose, priorities are indicated

The way in which the purpose contributes to the goal objective must be obvious. It may
be helpful to introduce an intermediate purpose or objective in order to clarify the
logical progress and connection.
The following example illustrates the use of such an intermediate objective in a three year
research project.
Goal: Rice production increased by 10% in Alpha province by year 10 from a base line of
X 000 tons in year 0.
Intermediate objective: Research results applied by 400 contact farmers in Alpha
province by year 4.
Purpose: Research results incorporated by the Alphan extension service into an
extension package by the end of year 3 (to be achieved at project completion or soon
after).
It is conceivable that two levels of intermediate objective might be useful for some
projects. Note that the number of levels is not critical, but it is the logical sequence that
must be correct. Objectives at each level must be clearly capable of contributing to the
achievement of the objectives at the next highest level.
A project purpose should thus be a very specific statement, the achievement of

which can be verified. Note that specification of the magnitude of change and the
timescale establishes a target for achievement.
A target is a quantitative statement of results and a planned performance standard by
which actual performance may be subsequently compared and measured. The
specification of targets in project formulation is useful because it forces the project
designers to think in terms of physical quantities, time spans and costs. It enables an
assessment to be made of how possible the project is and how realistic the proposals of
project achievements are in terms of the resources requested. It also assists in the
identification of indicators used to measure progress towards targets in the monitoring
and evaluation of a project. A good project design should even stipulate the rate of
achievement or progress over time, for example, by specifying annual targets.
When there is a trade-off between two competing objectives, it should be clearly
identified and an order of priority established.
Identification of the target group

The target group or primary stakeholders will have been agreed upon within the initial
stakeholder analysis. This needs to be carefully articulated within the Logframe. The
nature of the target beneficiary group will influence the physical requirements for the
project, the choice of technology and the organisational and institutional arrangements
that will be most appropriate. Failure to take sufficient account of this is a reason why
many projects under-achieve.
Precise articulation of the primary stakeholders requires more than a broad descriptive
term such as the ‘rural poor’, the ‘disadvantaged’ or ‘small farmers’. The target group
should be identified by reference to the following characteristics, specified for a
particular geographical area, for example, a region or district:

• Status, for example, in terms of income, wellbeing, level of nutrition, level of education,
or land tenure. (Indicators of status should be selected which are easy to use and
appropriate. For example, while income or nutrition levels are very appropriate they are
not readily usable, and land and livestock holdings may be easier).
• Occupation, for example, landowners with less than X hectares, landless labourers,
farmers engaged in special crop or livestock activities, fishermen with boats of less than
x capacity.
• Access to services, for example, farmers with no access to institutional credit, input
supply or extension advice.
• Gender
• Class or caste
• Ethnic status
For example:
Male- and female-headed, landless households, who supply labour to irrigated farms in
the rice growing zones of Sindh province; not, the landless poor in Pakistan.
Project outputs
Outputs are the result of activities completed by the project with the use of inputs. They
are a pre-condition for the subsequent achievement of purposes and goals. Production of
outputs should be managed by the project and less influenced by external factors that the
project management cannot directly control. As most projects have more than one output,
their sequential ordering is essential, because the output of one activity is likely to be
required for the production of another output.
The outputs of a project need to be stated in such a way that:
• Their realisation can be identified, in terms of quantity, quality, time and place
• As for objectives, a target is specified for the magnitude of output to be produced and
the timescale for this
• It is clear if a certain output is a prerequisite for other outputs
• All outputs necessary for achieving the project purpose are listed and all outputs clearly
relate to the purpose
• They are feasible within the resources available
By definition outputs are separate from objectives. Unfortunately confusion between

them is a common design error. Outputs are also commonly confused with activities.
Remember that an output is the result of an action or activity.
For example,
• The output of a training activity is trained people

• The output of a research activity is the research results

• Research conducted on inter-cropping is an activity
• Research findings on inter-cropping are an output
Activities
An activity is the action necessary to transform given inputs into planned outputs over a
specified period of time. Each activity should have at least one output, which may
contribute to a larger output.
Activities need to be stated in such a way that:
• Their implementation can be verified in terms of quantity, time and place
• They are stated in terms of actions being undertaken rather than as completed outputs
• All key activities necessary for achieving the outputs are listed
• There are no activities listed whose outcome cannot be traced upwards to the output
level
• It is clear who is responsible for carrying out the activity
A row for activities is not always included in the logical framework matrix, some
organisations and planners preferring to use a matrix of just four rows and four columns.
However, consideration of activities is inherent in assessing the logical progression from
inputs to outputs, and making these explicit in the matrix will usually be helpful.
Project Appraisal
When an organization wants to find a solution to a particular business problem and

identify the best way for implementing that solution, it needs to plan and develop a
project that might provide an effective action plan for addressing the problem through
implementing the solution. This organization will need to give an appraisal of the
potential project to make sure the project is really effective because it supports the right
solution and solves the required problem. In this context, project appraisal management
serves as the major process of analysing and approving the project. In this article, I am
going to write about the project appraisal process and its key steps. I hope my article will
help you learn how to evaluate and appraise projects. At the end of the article I give a link
to the project appraisal template, which is a more structured way of explaining the
appraising process.
Definition
Project Appraisal is a consistent process of reviewing a given project and evaluating its
content to approve or reject this project, through analyzing the problem or need to be
addressed by the project, generating solution options (alternatives) for solving the
problem, selecting the most feasible option, conducting a feasibility analysis of that
option, creating the solution statement, and identifying all people and organizations

concerned with or affected by the project and its expected outcomes. It is an attempt to
justify the project through analysis, which is a way to determine project feasibility and
cost-effectiveness.
Project Planning
Definition - What does Project Planning mean?
Project planning is a procedural step in project management, where required

documentation is created to ensure successful project completion. Documentation
includes all actions required to define, prepare, integrate and coordinate additional plans.
The project plan clearly defines how the project is executed, monitored, controlled and
closed.
Project planning requires an in-depth analysis and structuring of the following activities:
• Setting project goals

• Identifying project deliverables
• Creating project schedules
• Creating supporting plans
Techopedia explains Project Planning
The project planning stage requires several inputs, including conceptual proposals,
project schedules, resource requirements/limitations and success metrics. Project
planning begins by setting the scope of a project and eventually working through each
level of dependent actions, tasks, checkpoints and deadlines.
All of this information is integrated into Gantt charts, or other types of scheduling charts,
to provide a project overview for all involved parties.
The culmination of the project planning stage identifies:
• Road blocks in the project

• Work required for project completion
• People involved in the project and their key responsibilities
• Minimum project completion time
• Major project deliverables
• Required project milestones
Project planning is never truly finished until a project is completed. The project plan may
return to the planning stage multiple times prior to project completion, or even
abandoned. Generally, project complexity determines the length of the project planning
stage.

5.2. Marketing plan, financial plan and the organizational plan:
Marketing Planning: Meaning and Definition
Planning is the primary function of the management. It is the process of thinking about
and organizing the activities required to achieve the desired objectives or goals. The
definition of planning as given by some respective scholars has been given below:
• Dr. Philip Kotler

“Planning is deciding in the present what to do in future. It is the process whereby
companies reconcile their resources with their objectives and opportunities.”
• James L. Lundy
“It means the determination of what is to be done, how and where it is to be done, who
will do it and how results are to be evaluated.”
• M.E. Herley
“Planning is deciding in advance what is to be done. It involves the selection of objectives,
policies, procedures and programmes from among alternatives.”
• George R. Teny
Planning is a method or technique of looking ahead, a ‘constructive reviewing of future
so that the present action can be adjusted in view of the established goals.”
• Koontz and O’Donnel
“Planning is deciding in advance what to do, how to do it, when to do it, and who is to do
it. Planning bridges the gap between where we are and where we want to go. It makes it
possible for things to occur which would not otherwise happen.”
Definition of Marketing Planning
The marketing planning is a comprehensive blueprint which outlines an organization’s

overall marketing efforts. It typically results in a marketing strategy that can be used to
increase sales for the business producing it. The definition of marketing planning as given
by some prominent scholars has been given below:
• Stephen Morse: “Marketing planning is concerned with the identification of
resources that are available and their allocation to meet specified objectives.”
• American Marketing Association: “Marketing planning is the work of setting up
objectives for marketing activities and of determining and scheduling the steps
necessary to achieve such objectives.”
• Policies for Increasing Sales Revenue

Try adding more salespeople (resellers or distributors), assign them a sales quota, and
let them loose in a territory and see if your sales grow.

If you start getting more sales, you know your company is driven by sales. If your sales
fail to grow, try adding marketing activities. For example:
• Expand your website;

• Increase your public relations efforts;
• Add a company blog or a periodic newsletter;
• Expand your advertising or pay-per-click (PPC) program on the internet;
• Add more keyword focused pages to your internet marketing;
• Experiment with direct mail or email marketing;
• Attend (more) trade shows or events;
• Host your own conference for your customers and leads; and/or
• Add new products or enter new markets.
• Sales and Marketing Policies for Control

You can also try increasing your overall sales and marketing effectiveness by introducing
policies for more control over your sales and marketing cycle. If you’re unable to grow
your sales by either adding sales people or expanding your marketing activities, it’s time
for a strategic review. There are only two ways to grow your revenue — sales activities
or marketing programs.
When neither of these works, it’s time to change your strategy. Your business strategy is
what drives marketing, and marketing is what drives your sales.
• Align Sales Strategies with Marketing Tactics

Are your sales processes effective? How well do your marketing tactics really work? Do
your marketing and sales teams coordinate their efforts to achieve maximum results?
Policies and procedures based on proven best practices can help align your sales and
marketing processes to mange prospects and customers through the sales pipeline and
achieve improved performance.
• The Process Approach to Lead Generation and Sales Closing

Using a process approach to manage sales strategies and marketing tactics, you can plan
sales and marketing activities and measure results. Through our sales and marketing
strategy template, learn which marketing tactics generate the best leads and which
strategies are effective for closing sales and achieving continual and tangible
improvement. Track and manage important metrics like cost per lead and cost per sale
performance.
Financial plan
A financial plan is a comprehensive document that includes details about your cash flow,
savings, debts, investments, insurance and other elements of your financial life. A good
financial plan takes the stress out of setting and prioritizing goals, and maps out clear
strategies for achieving them.
How to make a financial plan
You can make a financial plan yourself, or you can get help from a financial planning
professional. No matter which route you go, financial planning starts with these seven
steps:
1. Set goals
2. See where your money goes
3. Get that employer match
4. Prepare for emergencies
5. Attack toxic debt
6. Invest to really grow your savings
7. Create a “moat” to protect and grow financial well-being
Organizational plan
The end result of the process of setting medium and long term objectives for an
organization and then developing a strategy to accomplish those goals. Producing a
coherent organizational plan is one of the most important tasks of senior business
management since it provides consistent guidance and an action plan for the rest of the
company to follow.
Objective
1. A specific result that a person or system aims to achieve within a time frame and with
available resources.
In general, objectives are more specific and easier to measure than goals. Objectives are
basic tools that underlie all planning and strategic activities. They serve as the basis for
creating policy and evaluating performance. Some examples of business objectives
include minimizing expenses, expanding internationally, or making a profit.
2. Neutral (bias free), relating to, or based on verifiable evidence or facts instead of on
attitude, belief, or opinion. Opposite of subjective.
An Organizational Plan Helps To:

• Set priorities for work
• Make sure tasks get done on time

• Focus on one thing at a time

• Share work among staff, board members & volunteers
• Make goals clear to investors
• Get a handle on big projects by breaking them down
• See the big picture of what organization is doing
5.3. Financing of the Project – Sources of Finance
Project finance is the long-term financing of infrastructure and industrial projects

based upon the projected cash flows of the project rather than the balance sheets of its
sponsors. Usually, a project financing structure involves a number of equity investors,
known as 'sponsors', a 'syndicate' of banks or other lending institutions that
provide loans to the operation. They are most commonly non-recourse loans, which
are secured by the project assets and paid entirely from project cash flow, rather than
from the general assets or creditworthiness of the project sponsors, a decision in part
supported by financial modeling.[1] The financing is typically secured by all of the project
assets, including the revenue-producing contracts. Project lenders are given a lien on all
of these assets and are able to assume control of a project if the project company has
difficulties complying with the loan terms.
Project Financing is a long-term, zero or limited recourse financing solution that

is available to a borrower against the rights, assets, and interests related to the concerned
project.
If you are planning to start an industrial, infrastructure, or public services project and
need funds for the same, Project Financing might be the answer that you are looking for.
The repayment of this loan can be done using the cash flow generated once the project is
complete instead of the balance sheets of the sponsors. In case the borrower fails to
comply with the terms of the loan, the lender is entitled to take control of the project.
Additionally, financial companies can earn better margins if a company avails this scheme
while partially shifting the associated project risks. Therefore, this type loan scheme is
highly favoured by sponsors, companies, and lenders alike.
In order to bridge the gap between sponsors and lenders, an intermediary is formed
namely Special Purpose Vehicle (SPV). The main role of the SPV is to supervise the fund
procurement and management to ensure that the project assets do not succumb to the
aftereffects of project failure. Before a lender decides to finance a project, it is also
important that all the risks that might affect the project are identified and allocated to
avoid any future complication.
Sources of Finance

Putting all your eggs in one basket is never a good business strategy. This is especially
true when it comes to financing your new business. Not only will diversifying your
sources of financing allow your start-up to better weather potential downturns, but it will
also improve your chances of getting the appropriate financing to meet your specific
needs.
Keep in mind that bankers don't see themselves as your sole source of funds. And showing
that you've sought or used various financing alternatives demonstrates to lenders that
you're a proactive entrepreneur.
Whether you opt for a bank loan, an angel investor, a government grant or a business
incubator, each of these sources of financing has specific advantages and disadvantages
as well as criteria they will use to evaluate your business.
Here's an overview of seven typical sources of financing for start-ups:
1. Personal investment
When starting a business, your first investor should be yourself—either with your own
cash or with collateral on your assets. This proves to investors and bankers that you have
a long-term commitment to your project and that you are ready to take risks.
2. Love money
This is money loaned by a spouse, parents, family or friends. Investors and bankers
considers this as "patient capital", which is money that will be repaid later as your
business profits increase.
When borrowing love money, you should be aware that:
• Family and friends rarely have much capital

• They may want to have equity in your business
• A business relationship with family or friends should never be taken lightly
3. Venture capital
The first thing to keep in mind is that venture capital is not necessarily for all
entrepreneurs. Right from the start, you should be aware that venture capitalists are
looking for technology-driven businesses and companies with high-growth potential in
sectors such as information technology, communications and biotechnology.
Venture capitalists take an equity position in the company to help it carry out a promising
but higher risk project. This involves giving up some ownership or equity in your business
to an external party. Venture capitalists also expect a healthy return on their investment,
often generated when the business starts selling shares to the public. Be sure to look for
investors who bring relevant experience and knowledge to your business.
BDC has a venture capital team that supports leading-edge companies strategically
positioned in a promising market. Like most other venture capital companies, it gets

involved in start-ups with high-growth potential, preferring to focus on major

interventions when a company needs a large amount of financing to get established in its
market.
4. Angels
Angels are generally wealthy individuals or retired company executives who invest
directly in small firms owned by others. They are often leaders in their own field who not
only contribute their experience and network of contacts but also their technical and/or
management knowledge. Angels tend to finance the early stages of the business with
investments in the order of $25,000 to $100,000. Institutional venture capitalists prefer
larger investments, in the order of $1,000,000.
In exchange for risking their money, they reserve the right to supervise the company's
management practices. In concrete terms, this often involves a seat on the board of
directors and an assurance of transparency.
Angels tend to keep a low profile. To meet them, you have to contact specialized
associations or search websites on angels. The National Angel Capital
Organization (NACO) is an umbrella organization that helps build capacity for Canadian
angel investors. You can check out their member’s directory for ideas about who to
contact in your region.
5. Business incubators
Business incubators (or "accelerators") generally focus on the high-tech sector by

providing support for new businesses in various stages of development. However, there
are also local economic development incubators, which are focused on areas such as job
creation, revitalization and hosting and sharing services.
Commonly, incubators will invite future businesses and other fledgling companies to
share their premises, as well as their administrative, logistical and technical resources.
For example, an incubator might share the use of its laboratories so that a new business
can develop and test its products more cheaply before beginning production.
Generally, the incubation phase can last up to two years. Once the product is ready, the
business usually leaves the incubator's premises to enter its industrial production phase
and is on its own.
Businesses that receive this kind of support often operate within state-of-the-art sectors
such as biotechnology, information technology, multimedia, or industrial technology.
MaRS – an innovation hub in Toronto – has a selective list of business incubators in

Canada, plus links to other resources on its website.
6. Government grants and subsidies
Government agencies provide financing such as grants and subsidies that may be
available to your business. The Canada Business Network website provides a

comprehensive listing of various government programs at the federal and provincial

level.
Criteria
Getting grants can be tough. There may be strong competition and the criteria for awards
are often stringent. Generally, most grants require you to match the funds you are being
given and this amount varies greatly, depending on the granter. For example, a research
grant may require you to find only 40% of the total cost.
Generally, you will need to provide:
• A detailed project description

• An explanation of the benefits of your project
• A detailed work plan with full costs
• Details of relevant experience and background on key managers
• Completed application forms when appropriate
Most reviewers will assess your proposal based on the following criteria:
• Significance
• Approach
• Innovation
• Assessment of expertise
• Need for the grant
Some of the problem areas where candidates fail to get grants include:
• The research/work is not relevant

• Ineligible geographic location
• Applicants fail to communicate the relevance of their ideas
• The proposal does not provide a strong rationale
• The research plan is unfocused
• There is an unrealistic amount of work
• Funds are not matched
7. Bank loans
Bank loans are the most commonly used source of funding for small and medium-sized
businesses. Consider the fact that all banks offer different advantages, whether it's
personalized service or customized repayment. It's a good idea to shop around and find
the bank that meets your specific needs.
In general, you should know bankers are looking for companies with a sound track record
and that have excellent credit. A good idea is not enough; it has to be backed up with a
solid business plan. Start-up loans will also typically require a personal guarantee from
the entrepreneurs.

BDC offers start-up financing to entrepreneurs in the start-up phase or first 12 months of
sales. You may also be able to postpone the principal payments for up to 12 months.
5.4. Role of Financial Institutions – Commercial Banks, IDBI, ICICI,

SIDBI, SFC’s, IFCI, NABARD, Venture Capital, Angle Capitalist
Financial institutions help the small as well as the medium size industries financially by
providing them loans. Thus, these industries can survive in the long run and have the
basic infrastructure to develop their industry.
Like for agriculture, industries approach these financial institutions for any monetary
help. Besides this, these institutions also help keep the policies and rules in check for the
industries. One such institution that works in India is Small industries development bank
ok India. This is also known as SIDBI.
SIDBI
The headquarters of SIDBI is in Lucknow, Uttar Pradesh and its chairman is Mohammad
Mustafa. The institution was established in April 1990.
It was set-up under the Act of Indian parliament. Also, this parliament currently acts as a
principal financial institution for financing, promoting, and developing the small, micro,
and medium-sized enterprises.
These enterprises are MSMEs. The institution provides support for refinancing through a
network. So, this network is made up of eligible members that are lending institutions for
onward lending for MSMEs. Thus, the direct assistance for any size industry is through
the bank’s branch offices.
Further, SIDBI also extends its financial help in the form of grants, loans, and equity to
nongovernment organizations (NGOs) and microfinance institutions. Thus, it helps these
organizations to support the micro-enterprises and financially weak sections of the
society.
So, it helps these institutions take up the activities that are income generating and that
too on a regular basis. Also, there are many schemes that are initiated by SIDBI for the
upliftment of the MSME section. It is one of the primary lending institutions for the MSME
sector.
Some of the associates of SIDBI includes
• Rating agency in India for SME

• Credit guarantee fund trust for the small and micro enterprises

• Financial Corporation of Delhi

• SME technology services Pvt. Ltd. India
• India small medium enterprise reconstruction company for assets limited
SIDBI is a financially independent institution which helps in the growth of small, micro,
and medium-sized enterprises. Also, it helps them in the policy makings along with the
fundings. It provides them with the fundings at a nominal rate as compared to the banks.
Thus, it refinances the loans and advances that are the existing institution provides to
smaller size units. Likewise, another fund is a debt fund which is called as a SIDBI make
in India loan for the enterprises. It is also popular as a SMILE.
In 2015 Union budget in February announced this firm. Also, this fund provides short-
term loans of quasi-equity nature to MSMEs. Thus, it ensures that the MSMEs meet the
debt to equity criteria and thereby pursue the growth pattern.
Subsidiaries of SIDBI
1. Mudra/SIDBI bank
2. SIDBI venture capital limited
3. SIDBI trustee co. limited
Role of Commercial Banks
Statute Laws
It’s is one of the main reason why banks were created in the first place. The roles such as
accepting of deposit, safekeeping assets but more importantly giving of loans and
advances make them a key element in the growth. Commercial banks will be providing
security for the customer’s money and at the same time giving entrepreneurs the
opportunity to use their deposits to borrow more fund in order to run their enterprises
without any hassle. A good payment system is essential for the efficient functioning of an
economy. And with the advancement of technology, the speed of service has greatly
improved.
The growth of digital banking has reduced the cost of starting/doing business
tremendously. This has greatly helped entrepreneurs in modern days. It is also very
helpful for those involved with businesses on foreign soil.
For instance, most international businesses are conducted on credit, with payment later.
Commercial Banks offer a quick foreign exchange – a service where money is transferred
to any part of the world on behalf of the banks’ clients. With banks playing this crucial

role, they have now become a very important part of promoting entrepreneurial
development.
Financing Roles
Not all entrepreneurs are from a sound financial background. Most will need initial loans
on reasonable interest rate in order to generate capital to start their venture or
enterprise. It is self-explanatory but without funds, entrepreneurs cannot grow, and this
is where banks, particularly commercial banks play a significant role in the lives of
entrepreneurs. Once an enterprise or business is set-up, then comes the important part,
funding the cash cycle.
There will be a delay in cash after selling products due to credit period provided to
customers. But entrepreneurs will have to make payments upfront to service providers.
Banks will help in providing working capital assistance that becomes the lifeline of
companies. Apart from that, banks will also provide financial help on regular basis like
during expansion or play the role of middleman to connect entrepreneurs. Banks can
connect people with huge pockets to people with great ideas. Banks are great advisers as
well, they can suggest young entrepreneurs invest their money on shares or commodities
to earn more and without any interest rate.
Counselling
Since banks have professional and specialized status, they are in a strong position to
advise entrepreneurs on sustainable lines of investment by analyzing the pro and cons of
each investment as well as management of investment of customers. This is one of the
key roles of banks in the development of entrepreneurs as many enterprises/businesses
fail to succeed because of faulty investment decisions, mismanagement of funds,
inefficient capital and poor planning.
Banks will always remain crucial to the growth and advancement, plus their operations
offer a rock-hard backing which is capable of entrepreneurs in profitable and viable
ventures. Commercial and specialized banks contribute significantly and positively in
advising and providing loans for the development of entrepreneur in India. They are
essential for the survival and growth of entrepreneurship in the country.
Role of IDBI:
(i) Direct Assistance:
The IDBI grants loans and advances to industrial concerns. There is no restriction on the
upper or lower limits for assistance to any concern itself. The bank guarantees loans
raised by industrial concerns in the open market from the State Co-operative Banks, the

Scheduled Banks, the Industrial Finance Corporation of India (IFCI) and other ‘notified’
financial institutions.
(ii) Indirect Assistance:
The IDBI can refinance term loans to industrial concerns repayable within 3 to 25 years
given by the IFCI, the State Financial Corporation and some other financial institutions
and to SIDCs (State Industrial Development Corporations), Commercial banks and Co-
operative banks which extend term loans not exceeding 10 years to industrial concerns.
IDBI subscribes to the shares and bonds of the financial institutions and thereby provide
supplementary resources.
iii. Special Assistance: IDBI Act 1964, provide Development Assistance fund. This find
to be used by the IDBI to assist those Industrial concerns which are not able to secure
funds in the normal course either because of heavy investment or low rate of return both.
iv. Direct Assistance to Industries: The IDBI has been empowered to finance industrial
concerns directly under the following structural arrangements: (i) To grant financial
accommodation up to a 16 year period for export of capital goods and other commodities,
(ii) To grant loans or to subscribe to the shares and debentures of industrial concerns.
Such loans, advances, and debentures can be convened into equity shares at the option of
the Bank, (iii) To underwrite new issues of Industrial concerns and accept, discount or
rediscount bonafide commercial bills or promissory notes of industrial concerns, (iv) To
guarantee deferred payment due from industrial concerns for loan raised by them in the
market or from scheduled banks etc.
v. Assistance to other financial institutions: IDBI has carried out the following
refinancing functions: IDBI can refinance term advances of 3 to 25 years maturity made
to industrial concerns by IFCI, SFCs and other financial institutions which may be notified
by the Government. It can similarly refinance term loans of 3 to 10 years maturity made
by scheduled banks and State Co-operative Banks. It can also refinance export credit of
15 years' maturity where primary lending institutions grant loans to person in India and
to parsons outside India repayable within a period of 12 years.
vi. Creation of Development of Assistance funds: The Bank created a development
assistance fund in 1965 with an initial contribution from Central Government. This fund
is intended to provide assistance for industries which for various reasons like, heavy
investment involved or low anticipated return on capital, may not be able to obtain funds
in the normal course. The prior approval of the Central Government is necessary for any
assistance from the Fund.
vii. Soft loan scheme: The soft loan scheme came into existence in November 1976 for
financing the modernisation programme of five selected industries, namely, cotton,
textiles, jute, cement, sugar and specified engineering industries. The scheme aims at

modernisation, replacement and renovation of industry which has become necessary to

achieve a more economic level of production in order to enhance their competitiveness
in domestic and international markets.
viii. Technical Development Fund Scheme: Technical Development Fund Scheme was
introduced in March 1979 with the object of promoting fuller capacity utilization,
technologies up gradation, and export development. The fund can provide foreign
exchange for small value imports with the object of procuring technical know- how,
foreign consultancy service, drawings and designs.
ix. Automatic Refinancing Scheme: The main features of Automatic refinancing scheme
are as follows: (a) Sanction and disbursement of refinance in respect of loans upto Rs. 5
lakhs from the eligible institutions to small scale industries including those in the tiny
sector which are normally covered under the IDBI Credit Guarantee Scheme, (b) The IDBI
will not levy commitment charges on credit institutions in respect of refinances under the
ARS (c) Only one general agreement will be taken from the eligible institution covering
drawals of refinance under different schemes of the IDBT
x. Rediscounting: IDBI has introduced a scheme for rediscounting of bills against the
sale of machinery to enable the indigenous machine manufacturing industry to purchase
equipment on deferred payment basis.
Industrial Financial Corporation of India (IFCI):

To meet the longterm finance needs of entrepreneurs several commission and
committees such as "Industrial Commission (1916-18), the External Capital Committee
(925) and the Indian Central Banking Enquiry Committee (1929-31) had stressed the
need for setting up of such institutions, but no action was taken by the Government. But
the greater need to finance the over-worked units during the Second World War period
forced the Government to set up Industrial Finance Corporation of India, which came into
existence on the 1st July 1948. The Corporation came into existence with an aim to
provide medium and long term credit to large scale industries, organized as public limited
companies or cooperative societies in India, engaged or proposing to engage in
manufacturing, preservation or pricing of goods, mining, generation and distribution of
electric power or any other source of power, shipping and hotel industries in India
particularly in circumstance when normal banking accommodation is inappropriate or
resource to capital issue method is impracticable.
IFCI is the first term-financial Institution which was set up in July 1948 by the
Government of India under the IFCI Act 1948 with objective of providing medium and
long-term loans to largest small Industrial concerns in the private sector.' However, joint
and public sector also have been made eligible for its assistance. It provide direct rupee
and foreign currency loans for new industrial projects and for expansion, diversification,
renovation and modernization of existing units, It also underwriter and directly

subscribe to industrial security, provided financial guarantees merchant banking services

and leave finance.
Main resources of the IFCI are;
(a) Loan from RBI,
(b) Share capital,
(c) Repayment of loans,
(d) Retained earning,
(e) Loan from Government,
(f) Lines of credit from foreign lending agencies; and
(g) Commercial borrowings in international capital market.
It has introduced a number of financial promotional schemes on its own. The letter
includes eight consultancy fee subsidy schemes, and two entrepreneurship development
schemes. It has formed IFCI Financial Limited. The constitution of IFCI was changed in
1993 from a statutory corporation to a company under the Companies Act to encash
greater flexibility. In future the IFCI Ltd. would lay emphasis to cater the needs of small
& medium enterprises and serve as a mid-corporate specialist. As an end-March 2003,
the principal holders of the total paid-up capital of IFCI Ltd. along with share were IDBl
(18.96%) Nationalized Banks (19.89%) SBI (9.69%) LIC (5.02%) GIG site subsidiaries
(5.97%) and so on.
Functions of Industrial Finance Corporation of India (IFCI):

The Corporation performs the following functions:
(1) Underwriting the shares, bonds or debentures of industrial enterprises; provided
such stocks, shares or debentures are disposed of by the Corporation within a period of
seven years from the date of acquisition,
(2) Granting loans or subscribing to the debentures of industrial undertakings repayable
within a period not exceeding 25 years,
(3) Guaranteeing loans traded in the public market by the industrial concerns, repayable
within 25 years or raided from scheduled banks or State co-operative banks,
(4) Subscribing directly to the stock or shares of any industrial concerns,
(5) Guaranteeing deferred payments in respect of import of capital goods' by industrial
concerns who are able to make such arrangements with foreign manufacturers or in
connection with the purchase of capital goods manufacturing in India,
(6) Guaranteeing loans raised from any banks or financial institutions in and country
outside India,
(7) Acting as the agent of the Central Government and IDBI in respect of loans sanctioned
by them to industrial concerns,
(8) Undertaking Merchant Banking Operations,
(9) providing technical and administrative assistance to any industrial concern for the
promotion, management by expansion of any industry, and

(10) undertaking research and surveys for evaluating or dealing with marketing or
investments and undertaking and carrying out techno-economic studies in connection
with the development of industry.
State Financial Corporations (SFCs):

The State Financial Corporation (SFCs) are state level financial institutions playing an
important role in the development of small & medium enterprises in their respective
state in tandem with national priorities. There are 18 SFCs at present. Seventeen (17) of
them have been set up under State Financial Corporation Act 1951, by the respective state
govt, as region of institution. The Tamil Nadu Industries Investment Corporation
Ltd. set up in 1949 under companies Act as Madras Industrial Investment Corporation
also function as SFC. They play an effective role in the development of small and medium
enterprises and bringing about regionally balanced economic growth.
Assistance Provide by SFCs:

SFCs aim at wider dispersion of small scale industries within each state they meet term
credit needs of such units. SFCs provide assistance to small scale industries by way of soft
loans, direct subscription to equity share /debenture guarantees, discounting of bills of
exchange and seed capital /special capital. Their main objectives are to finance and
promote these industries in the state for achieving the balanced growth. The activities of
SFCs were under the overall control and supervision of the IDBI and RBI till about 1990
after which the SIDBI and RBI have been performing the overseeing function. SFCs
operate a number of schemes of refinance and equity type assistance on behalf of
IDBI/SIDBI. Beside, they also have special scheme for artisans and special target groups
such as SC/ ST women, ex-servicemen, physically handicapped etc. Over the year, they
have diversified their activities and increased the scope and coverage of their assistance.
The annual growth rates of their sanctions and disbursements have been quite high (13
to 45 percent) most of the year. Under the single window scheme of SIDBI, SFCs have also
extending the working capital along with term loan to mitigate the difficulties faced by
SSIs in obtaining the working capital limits on time.
Industrial Credit Investment Corporation of India (ICICI):

ICICI was established on the recommendation of World Bank team in 1954 and it started
functioning from 5th June 1955 with an authorised capital of Rs. 25 crores and paid up
capital of Rs 22 5 crores.
Objectives of ICICI:
The objectives of the Corporation are as follows:
1. To encourage and promote the participation of foreign capital, both internal and
external, in industrial concerns.

2. To ensure rapid expansion of the investment markets and to promote private

ownership of industrial investments
3. To assist in the expansion, modernization and creation of private enterprises.
Role of NABARD:
1. It is an apex institution which has power to deal with all matters concerning policy,
planning as well as operations in giving credit for agriculture and other economic
activities in the rural areas.
2. It is a refinancing agency for those institutions that provide investment and production
credit for promoting the several developmental programs for rural development.
3. It is improving the absorptive capacity of the credit delivery system in India, including
monitoring, formulation of rehabilitation schemes, restructuring of credit institutions,
and training of personnel.
4. It co-ordinates the rural credit financing activities of all sorts of institutions engaged in
developmental work at the field level while maintaining liaison with Government of India,
and State Governments, and also RBI and other national level institutions that are
concerned with policy formulation.
5. It prepares rural credit plans, annually, for all districts in the country.
6. It also promotes research in rural banking, and the field of agriculture and rural
development.
Venture Capital
Venture capital provides finance as well as skills to new enterprises and new ventures of
existing ones based on high technology innovations. It provides seed capital to finance
innovations even in the pre-start stage.
In the development stage that follows the conceptual stage, venture capitalist develops a
business plan (in partnership with the entrepreneur) which will detail the market
opportunity, the product, the development and financial needs.
In this crucial stage, the venture capitalist has to assess the intrinsic merits of the
technological innovation, ensure that the innovation is directed at a clearly defined
market opportunity and satisfies himself that the management team at the helm of affairs
is competent enough to achieve the targets of the business plan.

Therefore, venture capitalist helps the firm to move to the exploitation stage, i.e.,
launching of the innovation. While launching the innovation the venture capitalist will
seek to establish a time frame for achieving the predetermined development marketing,
sales and profit targets.
In each investment, as the venture capitalist assumes absolute risk, his role is not
restricted to that of a mere supplier of funds but that of an active partner with total
investment in the assisted project. Thus, the venture capitalist is expected to perform not
only the role of a financier but also a skilled faceted intermediary supplying a broad
spectrum of specialist services- technical, commercial, managerial, financial and
entrepreneurial.
Venture capitalist fills the gap in the owner’s funds in relation to the quantum of equity
required to support the successful launching of a new business or the optimum scale of
operations of an existing business. It acts as a trigger in launching new business and as a
catalyst in stimulating existing firms to achieve optimum performance.
Venture capitalists role extends even as far as to see that the firm has proper and
adequate commercial banking and receivable financing. Venture capitalist assists the
entrepreneurs in locating, interviewing and employing outstanding corporate achievers
to professionalize the firm.
Angle Capitalist/ Investor
Definition:
There is no standard definition of an angel investor. The most widely accepted one is
that angels are financially sophisticated, wealthy individuals, with net worth exceeding
$1 million, who invest their funds on a part-time basis in startup or early-stage ventures.
Surveys of angels have shown that they are middle-aged (average age of 47), experienced
entrepreneurs with advanced education, whose wealth is partly derived from one or
more successful entrepreneurial ventures.
Where do angels invest?
The primary screening criterion for angel investments is whether the angel or an
associate of the angel knows and trusts the entrepreneur. Angels typically invest in
companies in an industry with which the angel is familiar and are located near the angel’s
home (one hour’s driving time is the standard radius). The businesses appear to have
high growth potential, proven management, and sufficient available information for the
angel to assess the company’s value. Because angel investment is private and not
publicly reported, the total size of the angel market is not easy to find out. The Small

Business Administration recently estimated that 250,000 individual private investors

annually put $20 billion in early-stage companies.
Role of angel investors:
Besides money, angel investors often provide active assistance to the companies in
which they invest. This can include technical and marketing help, advice on strategy,
financing, and recruiting, and assistance with equity offerings and acquisitions. An angel
also brings an extensive external contact network, including potential customers,
vendors, and financing institutions. Because venture capitalists usually fund businesses
a bit later in their development than angels, generally after one or more angels have
invested in the business, angels play a critical role in screening the one million annual
startups in the economy. Their participation is critical in determining which businesses
will evolve to the more exclusive realm of formal venture capital.

Unit 6
Project Management
6.1. Business Planning Process
1. Research
“Research and analyze your product, your market and your objective expertise,” William
Pirraglia, a now-retired senior financial and management executive, has written.
“Consider spending twice as much time researching, evaluating and thinking as you
spend actually writing the business plan.
“To write the perfect plan, you must know your company, your product, your competition
and the market intimately.”
In other words, it’s your responsibility to know everything you can about your business
and the industry that you’re entering. Read everything you can about your industry and
talk to your audience.
2. Determine the purpose of your plan.
A business plan, as defined by Entrepreneur, is 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.” However, your business plan can serve
several different purposes.
As Entrepreneur notes, it’s “also a road map that provides directions so a business can
plan its future and helps it avoid bumps in the road.” That’s important to keep in mind if
you’re self-funding or bootstrapping your business. But, if you want to attract investors,
your plan will have a different purpose and you’ll have to write a plan that targets them
so it will have to be as clear and concise as possible. When you define your plan, make
sure you have defined these goals personally as well.
3. Create a company profile.
Your company profile includes the history of your organization, what products or
services you offer, your target market and audience, your resources, how you’re going to
solve a problem and what makes your business unique. When I crafted my company
profile, I put this on our About page.
Company profiles are often found on the company’s official website and are used to
attract possible customers and talent. However, your profile can be used to describe your

company in your business plan. It’s not only an essential component of your business
plan; it’s also one of the first written parts of the plan.
Having your profile in place makes this step a whole lot easier to compose.
4. Document all aspects of your business.
Investors want to make sure that your business is going to make them money. Because of
this expectation, investors want to know everything about your business. To help with
this process, document everything from your expenses, cash flow and industry
projections. Also, don’t forget seemingly minor details like your location strategy and
licensing agreements.
5. Have a strategic marketing plan in place.
A great business plan will always include a strategic and aggressive marketing plan. This
typically includes achieving marketing objectives such as:
• Introducing new products

• Extending or regaining market for existing products
• Entering new territories for the company
• Boosting sales in a particular product, market or price range. Where will this business
come from? Be specific.
• Cross-selling (or bundling) one product with another
• Entering into long-term contracts with desirable clients
• Raising prices without cutting into sales figures
• Refining a product
• Having a content marketing strategy
• Enhancing manufacturing/product delivery
“Each marketing objective should have several goals (subsets of objectives) and tactics
for achieving those goals,” states Entrepreneur.
“In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of
the marketing tasks for the year ahead. In the implementation section, you focus on the
practical, sweat-and-calluses areas of who, where, when and how. This is life in the
marketing trenches.”
Of course, achieving marketing objectives will have costs. “Your marketing plan needs to
have a section in which you allocate budgets for each activity planned," Entrepreneur
says. It would be beneficial for you to create separate budgets for for internal hours (staff
time) and external costs (out-of-pocket expenses).

6. Make it adaptable based on your audience.
“The potential readers of a business plan are a varied bunch, ranging from bankers and
venture capitalists to employees,” states Entrepreneur. “Although this is a diverse group,
it is a finite one. And each type of reader does have certain typical interests. If you know
these interests up-front, you can be sure to take them into account when preparing a plan
for that particular audience.”
For example, bankers will be more interested in balance sheets and cash-flow statements,
while venture capitalists will be looking at the basic business concept and your
management team. The manager on your team, however, will be using the plan to “remind
themselves of objectives.”
Because of this, make sure that your plan can be modified depending on the audience
reading your plan. However, keep these alterations limited from one plan to another. This
means that when sharing financial projections, you should keep that data the same across
the board.
7. Explain why you care.
Whether you’re sharing your plan with an investor, customer or team member, your plan
needs to show that you’re passionate and dedicated, and you actually care about your
business and the plan. You could discuss the mistakes that you've learned, list the
problems that you’re hoping to solve, describe your values, and establish what makes you
stand out from the competition.
When I started my payments company, I set out to conquer the world. I wanted to change
the way payments were made and make it easier for anyone, anywhere in the world to
pay anyone with few to no fees. I explained why I wanted to build this. My passion shows
through everything I do.
By explaining why you care about your business you create an emotional connection with
others so that they’ll support your organization going forward.
Elements of Business Plan

1. Executive Summary:
A snapshot of your plan. This will be the last thing you write, but possibly the most
important, since many readers will stop here if they’re unimpressed. If your company is
a startup, focus on your background and experience as well as that of any partners to
show the underpinnings of the company, the agency says. If you’re better established,
make sure to include details such as when the business was started, the names of the

founders and their roles, how many employees you have, and where your operations are
situated.
2. Company Description:
Explain what your company does and how it stands out from competitors. List major
customers as well as markets you plan to target in the future. You’ll want to include
competitive advantages, such as expert personnel like the whiz-kid coder you just hired,
or location: Perhaps your floral shop is next door to an all-night wedding chapel.
3. Market Analysis:
It’s crucial to understand the market you plan to enter. Find out who your competitors
are, analyze their cash flow and profit margins, and research technological developments
in the industry that might be game-changers. Part of describing your customers is a
general awareness of how much they spend and when. For instance, Black Friday got its
name because it kicks off the lucrative Christmas shopping season that moves many
retailers into full-year profitability. If your business is grappling with a similar challenge,
you’ll want to be sure you have the resources and cash flow to withstand operating at a
loss for 11 months out of the year.
4. Organization and Management:
Spell out the details of ownership, including investors and show your organizational
chart. Specify whether your business is a sole proprietorship, partnership or corporation,
and if it’s the latter, what type.
5. Service or Product Line:
What do you sell, how will it help your customers, and how often will they need to replace
it? The answers to those questions can be crucial factors in business sustainability.
Include any patents or copyrights you own.
6. Marketing and Sales:
The best idea in the world won’t take off if you don’t let your potential customers know
what you have. Are you going to rely on word of mouth, promotional discounts or
advertising? Remember, your method will have to be tailored to your market. New York
businesses are famous for paying people to stand on the sidewalk promoting everything
from discounted pizza slices to bargain jewelry prices, but that doesn’t work nearly as
well in cities without a high volume of foot traffic.

7. Funding Request:
You’ll want to include how much you need right now as well as how much more you might
need over the next five years. A critical point is how you plan to repay borrowed money
to creditors (if you opt for debt financing) or, alternatively, generate returns for investors.
Both will want to know how you’re spending their money and when they’ll see a payoff.
8. Financial Projections:
If you need funding, provide realistic forecasts that show how you plan to generate future
cash flow. Unless you’re borrowing from your parents, your funding sources will want to
know. It’s easier if you can show recent financial statements and base your projections
on those, since that will give lenders an idea of how realistic your numbers are.
Objectives
1) Dedicating enough time for planning
A workable business plan cannot be created overnight. It is bound to take its own time to
develop. So, a perfect business plan will attempt to spend enough time and hard work to
achieve successful implementation. This should be one of the crucial stages in a business
plan.
A complete analysis of the current situation is the key to evolving plans. Review the
situation through brainstorming and other techniques to define the goals.
2) Create goals and objectives
An organization depends heavily on the business plan to arrive at the description of

business it performs. There are several areas that a company will focus on if it wants to
realize its objectives, understand the market that it is planned to operate in and the
strategy to achieve the goals.
Lack of a business plan will leave the management without any means to check out the
theories on how to operate the business. In essence, a business plan will help a company
to test different methods in reaching the best standards and policies.
3) Evaluating performance

A business needs proper planning and control over the activities for enhanced
performance. It will be an essential step towards achieving the long term survival of the
organization as a whole. The business plan also comes with a financial part to it and used
for comparing the actual performance with the estimated one.
The ability and provision for such a control and evaluation procedure are what offers you
a great advantage in checking the success of the operations. This way, you will be able to
detect issues like production or delivery delays, or even increasing production costs.
4) Gauging business strategy and applying due correction
A Business plan is what would assist you in assessing the efficiency of your strategies for
achieving business goals. In an ideal condition, a business needs to have the planned
results with which the actual results can be compared, and the way forward is decided.
If any of the strategies are found to be unsuccessful in achieving the relevant results, it
may be a perfect idea to ditch the strategy or take corrective actions. It is wise to have a
good business plan so that the management does have a reference with which it can have
a healthy comparison of the actual result achieved.
5) Arranging financial resources
A business plan can be much helpful and instrumental in acquiring adequate business
financing. Like we stated already, banks and lenders look for a proper business plan
before lending you any sort of finance.
A business plan should be prepared in such a manner that the banks will have a clear
understanding of the business perspective that the owner has. The lenders will be able to
get to the root of the actual vision shared by the promoters and the methods of operation
that will be employed.
Being financially viable is one of the prime objectives of a good business plan.
6) Stay consistent
This should be yet another objective that a business plan needs to be focussed with is
being consistent. A good business plan should place proper value on the exact process
and its adherence to the planned goals.
Sticking to a consistent schedule will work wonders in achieving the planned goals
effectively. This will also help the employees and other staff to fall into a proper routine.
This will help the concept of planning to be a part of your business culture.

7) Keep your goals ’SMART’
No, we are not referring to SMART as in the word intelligent. We mean your goals in the
business plan should be S-M-A-R-R-T ( Specific, Measurable, Actionable, Realistic, and
Time-Bound) to achieve success.
This will help you achieve the business goals as laid out in the business plan effectively
and efficiently. It would be practical to have your team member analyze the goals set so
that you will get back to a realistic approach.
8) Performing SWOT Analysis
SWOT Analysis is one of the best options you would want to go with when it comes to
focus on an effective business plan. Having perfect knowledge of the strengths and
weaknesses of your organization helps you come up with a better insight into the realistic
goals.
The SWOT analysis also takes into account the opportunities and threats that the
organization can come to face to face. This will assist you to focus on the positive factor
and take corrective actions against the negatives.
9) Marketing Analysis
Marketing forms an integral part of a business and so does with the business plan. This
part of the business plan should be focussed on determining the potential of your product
or service while letting the business owners know more about future customers.
The marketing analysis part of the business plan should ideally provide you with a means
of understanding your industry as a whole.
Market analysis
It’s smart to write a business plan, especially if you are beginning a new business venture.
Even if you’re a sole proprietor or don’t intend to borrow any money to get your business
off the ground, it’s important to have a clear plan in place. The market analysis isn’t just
one part of a successful business plan—it’s one of the best reasons to write one.
If you do need banks to lend you money or investors to jump on board, a market analysis
section is required, as savvy lenders or investors will need to know that the business
you’re pitching has viable market appeal.
Either way, a solid formal business plan or Lean Plan complete with market analysis will
be invaluable. You’ll need to identify your potential customers and attract investors, and

it will help you to be clear about what you want to do with your business, both now and
in the future.
The time you spend doing the research and putting it all together will come back to you
many times over in dollars earned and heartbreaks avoided. You’ll look like a
professional, and you’ll outshine the competitors that didn’t write one.
Because you’ll know the size of the mountain you’re about to climb, you’ll be able to pace
yourself and prevent problems in the future. But most importantly, thoroughly
understanding your market means that you’ll be able to build the best solution possible
for your customers’ problem.
What to include in your market analysis
Your market analysis should include an overview of your industry, a look at your target
market, an analysis of your competition, your own projections for your business, and any
regulations you’ll need to comply with.
1. Industry description and outlook
This is where you’ll outline the current state of your industry overall and where it’s
headed. Relevant industry metrics like size, trends, life cycle, and projected growth
should all be included here. This will let banks or investors see that you know what you’re
doing, and have done your homework and come prepared with the data to back up your
business idea.
2. Target market
In the industry section of your market analysis, you focused on the general scope. In this
section, you’ve got to be specific. It’s important to establish a clear understanding of your
target market early on. A lot of new entrepreneurs make the rookie mistake of thinking
that everyone is their potential market. To put it simply, they’re not.
For example, if you’re a shoe company, you aren’t targeting “everyone” just because
everyone has feet. You’re most likely targeting a specific market segment such as “style-
conscious men” or “runners.” This will make it much easier for you to target your
marketing and sales efforts and attract the kinds of customers that are most likely to buy
from you.
This is a good thing; by narrowing in, you’ll be able to direct your marketing dollars
efficiently while attracting loyal customers who will spread the word about your
business.
The target market section of your business plan should include the following:
• User persona and characteristics: You’ll want to include demographics such as

age, income, and location here. You’ll also need to dial into your customers’
psychographics as well. You should know what their interests and buying habits

are, as well as be able to explain why you’re in the best position to meet their
needs.
• Market size: This is where you want to get real, both with the potential readers
of your business plan and with yourself. How much do your potential customers
spend annually on the types of products or services you plan to offer? How big is
the potential market for your business?
3. Competitive analysis
This is the section in which you get to dissect your competitors, which is important for a
couple of reasons. Obviously, it’s a good idea to know what you’re up against, but it also
lets you spot the competition’s weaknesses. Are there customers that are underserved?
What can you offer that similar businesses aren’t offering?
The competitive analysis should contain the following components:
• Direct competitors: What other companies are offering similar products and
services? What companies are your potential customers currently buying from
instead of you?
• Indirect competitors: If your company is creating a new product category,
perhaps you aren’t competing with similar companies, but instead competing with
alternate solutions. For example, Henry Ford wasn’t competing so much with
other car companies, but was instead competing with other forms of
transportation such as horses and walking. A more modern example might be a
to-do list application, where the indirect competition would include notebooks
and hand-written lists.
• Competitor strengths and weaknesses: What is your competition good at?
Where do they fall behind? Get imaginative to spot opportunities to excel where
others are falling short.
• Barriers to entry: What are the potential pitfalls of entering your particular
market? What’s the cost of entry—is it prohibitively high, or can anyone enter?
This is where you examine your weaknesses. Be honest, with investors and
yourself. Being unrealistic is not going to make you look good.
• The window of opportunity: Does your entry into the market rely on time-
sensitive technology? Do you need to get in early to take advantage of an emerging
market?
4. Projections
At this point, your projections are educated guesses, so don’t worry about absolute
accuracy. However, it pays to be thoughtful and avoid hockey-stick forecasting.
• Market share: When you know how much money your future customers spend,
you’ll know how much of the market you have a chance to grab. Be practical, but
don’t sell yourself short. Make sure you are able to explain how you came up with
your numbers. Don’t make the mistake of saying that you’ll easily get 1 percent of
a huge market, and that this is enough to grow a successful business. Instead, do a
bottom-up projection where you explain how your marketing and sales efforts will
enable you to get a certain percentage of the market.

• Pricing and gross margin: This is where you’ll lay out your pricing structure and
discuss any discounts you plan to offer. Your gross margin is the difference
between your costs and the sales price. Again, be realistic yet optimistic.
Optimistic projections not only serve as a guide—they can also be a motivator.
5. Regulations
Are there any specific governmental regulations or restrictions on your market? If so,
you’ll need to bring them up here and discuss how you’re going to comply with them.
You will also need to address the cost of compliance. Addressing these issues is essential
if you are seeking investment or money from a lender, and everything has to be legally
squared away and above board.
Development of product / idea
The idea generation is an iterative process that all business organizations require to
figure out solutions to a number of arduous challenges. It involves the criteria of selecting
the best idea, creating a strategic plan and implementing the idea into practice. Here are
some steps for idea generation in new product development that will assist you to
stay on the curve and rule the market.
The first and foremost stage of a new product is ideation. Ideas come from everywhere,
can be in any form and can be numerous. This stage of ideation involves creating a large
pool of ideas from various resources including:
• Internal Sources:
The unbeatable source of idea generation starts from internal sources. Many companies
are paying incentives to their employees to come up with workable ideas.
• Market Research:
Companies are constantly keeping an eye on the volatile market to review the changing
needs, requirements and trends that are loved by all.
• Rivals:
Company’s SWOT analysis can help you with ideation. Take a look at the offering at your
rivals and find vulnerabilities and cons before strategizing your idea.
• SWOT analysis:

Business organizations may require their weakness, strengths, opportunities and threats
to come up with a feasible idea.
• Consumers:
Interviewing your consumers will definitely help you to generate best ideas. You can
conduct various review sessions and polls in order to come up with the best.
The idea is sound, the product has been tested and you are confident with your focus
group research that customers are ready. You might be wondering about the crucial
factors responsible for the success of a new product.
Marketing
A marketing plan establishes the goals and tactics of every marketing campaign. It keeps
everyone in your organization on the same page about the direction and purpose of your
marketing efforts. A marketing plan also provides a way for you to measure your success.
Without a plan, you won’t really know whether you’re succeeding.
While every individual campaign should have a plan, your company also needs a strategic
marketing plan to guide your overall efforts. A strategic plan identifies your business
goals, the marketplace in which you compete, your target audience, the ways you want to
reach them, and how you will evaluate your success. It integrates everything you say and
do to grow your company. A strategic marketing plan is not a static document that gets
tossed in a drawer once it’s written. Instead, a plan is a living document that guides your
work and is regularly updated to reflect changes in your business, your customers, and
your competition.
The process of developing a strategic marketing plan is crucial to your business. You
cannot create strategic marketing without strategic thinking. This planning helps you
clarify your goals and identify where you see your business in the future, which ultimately
strengthens your strategy. A strategic marketing planning process also helps with:
• Providing a clear map of your company’s goals and how to achieve them.
• Getting all stakeholders to share a common goal and a have a common
understanding of your company’s opportunities and challenges.
• Identifying and meeting customer needs with the right products in the right
places.
• Growing your market share and product lines, leading to more revenue.
• Enabling smaller companies to compete with bigger firms.

Finance:
The process of financial planning in business is designed to forecast future financial

results and determine how best to use the company’s financial resources in pursuit of the
organization’s short- and long-range objectives. Because planning involves looking well
into the future, it is a highly creative thinking process as well as an analytical one.
1. Benefits
Companies that make a concerted effort at financial planning can grow their revenues at
a more accelerated pace than organizations that have an inefficient planning process.
Financial planning provides the numerical logic for decision making. It shows where the
business should concentrate its resources for maximum effectiveness in building
revenues and managing costs. Efficient financial management allows more funds to be
available for marketing, expanding operations and product development, which in turn
brings about more growth.
2. Considerations
Strategic planning determines the course of action the company will take: the tasks
scheduled to be accomplished, as well as who is responsible for their timely completion.
Financial planning takes the actions described in the strategic plan and converts them
into dollars. The financial plan shows the revenues projected to result from the
implementation of the strategies and the expenses required to implement the action
steps. Senior management and marketing and operations personnel are heavily involved
in the strategic planning process. Their efforts must be coordinated with those of the
financial staff in charge of preparing the financial plan.
3. Significance
Financial planning in business requires proficiency in using spreadsheet software. Even

in smaller companies, the financial models created to predict future revenues can be
complex. Research and data gathering skills are also important. The accuracy of the
financial plan depends on the quality of information used in the assumptions for the
financial models. Creating realistic assumptions for key variables such as projected unit
sales and pricing is critical.
4. Time Frame
A business should prepare a financial plan once a year. This will include developing a
forecast profit-and-loss statement for each of the next 12 months. Some businesses also
prepare a long-range financial plan for as long as five years in the future. The long-range

plan is useful for companies whose product development plans require a long time to
complete.
5. Potential
Each month, actual financial results are compared to the numbers in the forecast, and
efforts are made to identify and analyze significant variances. These variances may
require an adjustment in strategy to get the enterprise back on track toward its revenue
and profit goals. Variance analysis shows when the competitive environment has changed
significantly from what the company expected.
6. Warning
Financial planning in business is difficult because so many variables affect the company’s
financial results, and each of them is hard to predict. Consumer behavior is especially
hard to predict -- how well customers will respond to both the company’s products and
the price being charged. Changes in cost factors can also cause significant variances. For
example, the negative effects of increases in the costs of fuel can be severe for some
businesses. Many start-up companies face the additional problem of having a business
model that has not been tried before, so there is little data available on which to base the
financial plan.
Organization & Management
The organization section sets up the hierarchy of the people involved in your business.
It's often set up in a chart form. If you have a partnership or multi-member LLC, this is
where you indicate who is president or CEO, the CFO, director of marketing, and any other
roles you have in your business..
If you're a single-person home business, this becomes easy as you're the only one on the
chart. While technically, this part of the plan is about owner members, if you plan to
outsource work or hire a virtual assistant, you can include them as well. For example,
you might have a freelance webmaster, marketing assistant, and copywriter. You might
even have a virtual assistant whose job it is to work with your other freelancers. These
people aren't owners but have significant duties in your business.
The Management Team
This section highlights what you and the others involved in the running of your business
brings to the table. This not only includes owners and managers but also your board of
directors (if you have one) and support professionals. Start by indicating your business
structure (i.e. partnership or LLC), and then list the team members.

Owner/Manager/Members
Provide the following information on each owner/manager/member:
• Name
• Percentage of ownership (LLC, corporation, etc.)
• Extent of involvement (active or silent partner)
• Type of ownership (stock options, general partner, etc.)
• Position in the business (CEO, CFO, etc.)
• Duties and responsibilities
• Educational background
• Experience or skills that are relevant to the business and the duties
• Past employment
• Skills will benefit the business
• Awards and recognition
• Compensation (how paid)
• How each persons' skills and experience will complement you and each other
Board of Directors
A board of directors is another part of your management team. If you don't have a board
of directors, you don't need this information. But even a one-person business could
benefit from a small group of other business owners who might be willing to provide
you with the feedback, support, and accountability that comes from an advisory board.
This section provides much of the same information as in the ownership and
management team sub-section.
• Name
• Expertise
• Position (if there are positions)
• Involvement with the company
Support Professionals
Especially if you're seeking funding, let potential investors know you're on the ball with
a lawyer, accountant, and other professionals that are involved in your business. This is
the place to list any freelancers or contractors you're using. Like the other sections,
you'll want to include:
• Name
• Title
• Background information such as education or certificates
• Services provided to your business
• Relationship information (i.e. retainer, as-needed, regular)
• Skills and experience making them ideal for the work you need
• Anything else that makes them stand out as quality professionals to have helping
you in your business such as awards
•

Ownership
This section outlines the legal structure of your business. It may only be a single sentence
if your business is a sole proprietorship. If your business is a partnership or a corporation,
it can be longer. You want to be sure you explain who holds what percentage of ownership
in the company.
Critical risk contingencies of the proposal
Where business opportunities have been identified, risks are usually associated with
capitalizing those identified business opportunities. It is important to identify any risks
associated with setting up a business. This also applies in the case of an existing business
that intends to expand, diversify or grow. The identification of risks helps you come up
with contingencies to mitigate the risks. Risks include financial risks, market risks,
operational risks, human resource risks, economic risks, technological risks and other
risks. Given below is a list of factors to look at when identifying and assessing risks.
Types of risk
1. Financial Risks
▪ Poor or high gearing ratio

▪ Poor profitability
▪ Loan non repayment
▪ Low gross profit
▪ Interest Cover
▪ Debt/ Equity ratio
▪ Debtors
▪ Financial sensitivity
▪ Solvency problems
▪ Liquidity problems
▪ Contingent liabilities
2. Market Risks
▪ Threat from substitute commodities

▪ Threat from suppliers
▪ Threat from customers
▪ Threat from new entrants
▪ The direct competition
▪ The indirect competition
▪ Seasonal fluctuations

3. Operational Risks
▪ Occupational heath and safety risk

▪ Time
▪ Quality
▪ Reliability
▪ Environmental risks
4. Human Resource (People) Risks
▪ Recruiting and retaining quality employees

▪ Incidence of fraud
▪ Incidence of mistrust
▪ Incidence of strike actions
▪ Loss of key personnel
▪ Diversity Management
▪ Management vulnerability
▪ Labor relations problems
5. Economic Risks
▪ Global economic conditions

▪ Regional economic scenario
▪ Interest rates
▪ Exchange rates
▪ Inflation rate
▪ Petrol prices
▪ Food prices
6. Technological Risks
▪ How dynamic the technology is

▪ The cost of the technology
▪ The availability of technical support
▪ Security risk
▪ Loss of information
▪ Compatibility risk
7. Other Risks
▪ Barriers to entry
▪ Business planning
▪ Business Instability

Scheduling and milestones
• Plan Review. The plan review milestone is designed to schedule the time to go
over your budget, business strategy, tactics, and forecast. This will give you the
opportunity to understand what is working well and what isn't so you can make
changes.
• Assumptions Validation. When you have a new business, you make a lot of
assumptions about what it is your customers want. Your milestones should
attempt to validate these assumptions. Your goal is to find the right product or
market fit. Your assumptions have led you to believe a certain target market is
interested in your product. However, you might not have the correct market fit
right away. At this stage, you may easily readjust your assumptions and develop
new ones to apply to your customer base.
• Implementation. After your assumptions have been affirmed, you'll create
implementation milestones, which build your business. These strategies come
after the early stages of starting a business so that you can implement strategies
you know will succeed.
6.2. Project Monitoring and Control
The project management monitoring and controlling starts as soon as a project begins.
Monitoring and controlling project work is the process of tracking, reviewing, and
regulating the progress in order to meet the performance objectives. It is the fourth
process group in Project Management. From the perspective of Knowledge Management
Area, this involves the management tasks, such as tracking, reviewing, and reporting the
progress of a project. Moreover, this process is majorly concerned with:
• Measuring the actual performance against the planned performance

• Assessing performance to determine whether or not any corrective or preventive
actions are indicated, the status is reported and/or appropriate risk response
plans are being executed.
• Maintaining an accurate, timely information base concerned with the project
output and its associated documentation till project completion
• Providing information to support status reporting, progress measurement and
forecasting
• Providing forecasts to update current cost and current schedule information
• Monitoring implementation of approved changes as they occur
Inputs
The inputs to the process of project monitoring and controlling are:
1. Project Management Plan (2nd process of this knowledge area)

2. Schedule Forecasts (Project Time Management)

3. Cost Forecasts (Project Cost Management)

4. Validated Changes
5. Work Performance Information
6. Enterprise Environmental Factors (EEF)
7. Organizational Process Assets (OPA)
Tools and Techniques
The tools and techniques for this process include:
1. Expert Judgement
2. Analytical Techniques
3. Project Management Information Systems
4. Meetings
Output
Following are the outputs of monitoring and controlling project work:
1. Change Requests
2. Work Performance Reports
3. Project Management Plan Update
4. Project Document Update
Analytical Techniques
There are different types of analytical techniques that are applied in project management
to forecast potential outcomes based on possible variations of project or environmental
variables and their relationships with other variables. Some of the analytical techniques,
which are most commonly used, are:
• Regression Analysis
• Grouping Methods
• Casual Analysis
• Root Cause Analysis
• Forecasting Methods (e.g., time series, scenario building, simulation, etc.)
• Failure Mode and Effect Analysis
• Reserve Analysis
• Trend Analysis
• Earned Value Analysis
• Variance Analysis
6.3. Technical, Financial, Marketing Personnel and Management

Feasibility Reports
Technical Reports:

The major focus of this technical writing course is the technical report. Just about
everything you study, everything you write, is geared toward preparing you to write this
final report. The early, short assignment involving instructions or descriptions and the
like give you practice using headings, lists, notices, and graphics; in handling numbers
and abbreviations; and of course in producing good, clear, well-organized writing.
For many students, the technical report is the longest document they've ever written. It
normally involves some research; often the information comes not only from published
sources in the library, but also sources outside the library, including nonpublished things
such as interviews, correspondence, and video tapes. It may also be the fanciest
document: it uses binding and covers and has special elements such as a table contents,
title page, and graphics.
As you think about what you want to write about for this project, don't shy away from
topics you are curious about or interested in, but don't know much about. You don't need
to do exhaustive research; normally, you can pull together information for an excellent
report from several books and a half-dozen articles. Our real focus is the writing: how
well adapted to a specific audience it is, how clear and readable it is, how it flows, how
it's organized, how much detail it provides. We are also focused on format: how well you
use headings, lists, notices; how well you incorporate graphics; how well you handle the
front- and back-matter elements; and how nice a job you do of turning out the final copy
of the report.
You don't need a fancy laser printer and you don't need to be a trained graphic artist to
produce a fine-looking report. A simple typewriter or dot-matrix printer, scissors, tape,
whiteout, a good-quality photocopier, and access to nice (but inexpensive) binding are all
you need. Plan on doing a first-rate job on the report; remember that past students have
shown prospective employers their reports and have benefited by doing so.
Job in this unit then is define the following:
• Report topic: Decide what subject you are going to write on; narrow it as much as
possible.
• Report audience: Define a specific person or group of people for whom you are
going to write the report. Define the circumstances in which this report is needed.

• Report purpose: Define what the report will accomplish--what needs of the
audience it is going to fufill.
• Report type: Decide on the type of report--for example, technical background
report, feasibility report, instructions, or some other.
Financial Report:
You may need several different types of statements, depending on the requirements of
your lender and your own technical expertise.
The statements you will certainly need are:
• A startup budget
• A startup costs worksheet
• A pro forma (projected) profit and loss statement
• A pro forma (projected) balance sheet
Your lender may also want these financial statements:
• Sources and uses of funds statement

• Break-even analysis
Putting these Statements in Order
First, work on your startup budget and your startup costs worksheet. It's tough because
you must do a lot of estimating. The trick is to underestimate income and overestimate
expenses.
Then work on a profit and loss statement for the first year. A lender will definitely want
to see this one. And, even though it's meaningless, lenders like to see a startup balance
sheet.
The other statements - the break-even analysis and the cash flow statement - are good to
have, but if you run out of time, you can provide these later. Depending on what you are
selling, your lender may require these statements, so it might be good to have them
ready.
Create a Business Startup Budget
A startup budget is like a projected cash flow statement, but with a little more guesswork.
It's a good idea to do a budget for startup even if you don't need a startup loan.
Your lender wants to know your budget - that is, what you expect to bring in and how
much to expect to spend each month. Lenders want to know that you can follow a budget
and that you will not over-spend.

They also want to see how much you will need to pay your bills while your business is
starting out (working capital), and how long it will take you to have a positive cash flow
(bring in more money than you are spending). Sometimes this budget is called a "cash
flow" statement. A typical budget worksheet should be carried through three years, so
the lender can see how you expect to generate the cash to make your monthly loan
payments.
Startup Costs Worksheet
This worksheet answers the question "What do you need the money for?" In other words,
it shows all the purchases you will need to make in order to open your doors for
business. I call this a "Day One" statement because you'll need all of this stuff the first day
of business.
Make sure you have included every cost; it is better to over-estimate what you will need
so you don't come up short with the money you receive from your loan.
Profit and Loss Statement/Income Statement
After you have completed the monthly budget and you have gathered some other
information, you should be able to complete a Profit and Loss or Income Statement
projecting your income for the first year.
This statement shows your profit for the year and how much tax you estimate having to
pay. This is an important statement because it shows how soon your business will have
enough income to pay its bills.
Break-Even Analysis
A break-even analysis shows your lender that you know the point at which you will start
making a profit. While the break-even analysis is primarily for businesses making or
selling products, it can also be useful for service-type businesses. Be sure to include a
break-even graph, and be able to explain i
Beginning Balance Sheet
Although this statement is usually complicated, at startup there isn't much to

include. You might want to get help from a CPA for this one. The balance sheet shows the
value of the assets you have purchased for startup, how much you owe to lenders and
other creditors, and any initial investments you have made to get started. The date for
this spreadsheet is the day you open the business.
Sources and Uses of Funds Statement
Large businesses use Sources and Uses of Funds statements in their annual reports, but
you can create a slightly different simple statement to show your lender Lenders exactly
how much you need for startup and working capital (on-going cash needs), how much

collateral you will be bringing to the business, and how much you need to borrow. In
other words, how much you need and what do you need it for.
Optional: A Business Requirements Document
A business requirements document is similar to a proposal document, but for a larger,

more complex project or startup. It gives a complete picture of the project or the business
plan. It goes into more detail on the project that will be using the financial statements.
Include Financial Statements in Your Business Plan
You will need a complete startup business plan to take to a bank or other business lender.
The financial statements are a key part of this plan. Give the main point in the executive
summary and include all the statements in the financial section.
Finally, Check for Mistakes!
Before you submit your startup business plan and financial statements, check this list.
Don't make these common business plan mistakes!
Check all numbers for accuracy and consistency. Especially make sure the amounts you
are requesting are specific and that they are the same throughout all the parts of your
business plan.
Marketing report
A marketing report is a set of data created to analyze the performance of a specific
marketing campaign or effort. It is utilized to effectively communicate a company’s
marketing strategy, including research, promotional tactics, goals and expected
outcomes.
We’ve all heard of that famous end of the month when it’s time to deliver reports, be it in
an agency or in-house. While your keyboard is burning and your fingers try to keep up
with your brain and comprehend all the data you’re writing about, using an interactive
online data visualization tool to set specific time parameters or goals you’ve been tracking
can bring a lot of saved time and, consequently, a lot of saved money.
1. First things first – organizing and prioritizing your marketing data
And just like you schedule daily, weekly and monthly marketing activities, so will you
build daily, weekly and monthly marketing reports. If you get your practice right and
utilize some effective data driven marketing strategy tips and tricks, a report can be
generated with just a few clicks. Below, in the article, we’ve gathered some of the
marketing reports templates that can easily be used to perfect the efficiency of generating
data and reduce the time needed to create it.

2. Use professional software
There are countless reports digging into your marketing data; the question usually is,
where do I start? Are there any basic reports that could help me get more comfortable
with these mountains of aggregated data? To get started, you might want to equip
yourself with a marketing BI software to analyze all your data and easily build
professional reports.
3. Structure your metrics
As with any report you might need to create, structuring and implementing metrics that
will tell an interesting and educational data-story is crucial in our digital age. We will go
into detail with each report below in the article, but it is important to keep in mind that
low-level metrics such as CPC or CTR will not take part in the strategic report that focuses
on customers’ costs. You need to decide which story you want to tell and to whom: your
colleagues, supervisor or VP? That way you can choose the best possible metrics for your
case.
4. Regularly monitor your data
Secondly, launching a campaign with achievable goals is only worth it if you check on
them on a regular basis and see if you’re on track – waiting for the end of the campaign
to see how it performed is, unfortunately, a common mistake people do, and the worst
practice. As a Forbes article states, “there’s no such thing as ‘set it and forget it’ [in digital
marketing]”. Noticing that something does not work as planned on the 7th day instead of
the 47th is a lot of time saved, and less money wasted.
Management Feasibility Reports
A feasibility study in project management usually assesses the following areas:
1. Technical capability: Does the organization have the technical capabilities and
resources to undertake the project?
2. Budget: Does the organization have the financial resources to undertake the
project, and is the cost/benefit analysis of the project sufficient to warrant moving
forward with the project?
3. Legality: What are the legal requirements of the project, and can the business meet
them?
4. Risk: What is the risk associated with undertaking this project? Is the risk
worthwhile to the company based on perceived benefits?

5. Operational feasibility: Does the project, in its proposed scope, meet the
organization’s needs by solving problems and/or taking advantage of identified
opportunities?
6. Time: Can the project be completed in a reasonable timeline that is advantageous
to the company?

References:
• S.K. Mohanty, Fundamentals of Entrepreneurship, 2005. [2] David A. Harper, Foundations

of Entrepreneurship and Economic Development, 2003.
• Dr Anand Kulkarni: Entrepreneurship in India: A global perspective
(https://qrius.com/entrepreneurship-indiaglobal-perspective)
• Global Entrepreneurship Index: (https://thegedi.org/global-entrepreneurshipand-
development-index).
• Global Entrepreneurship Index 2018: India Ranks 68
(https://www.gkdigest.com/2017/12/indiaranks-68.html).
• http://www.businessdictionary.com/definition/ entrepreneurship.html
• http://www.thefreedictionary.com/entrepreneur ship
• https://irejournals.com/formatedpaper/1701234.pdf
• https://businessjargons.com/types-of-entrepreneurs.html
• https://www.ediindia.org/
• https://byjus.com/commerce/entrepreneurship-development-process/
• https://relivingmbadays.wordpress.com/2012/12/26/factors-affecting-
entrepreneurship-development/
• https://www.dcmsme.gov.in/edpDetail.htm
• https://www.eurofound.europa.eu/observatories/emcc/comparative-
information/emerging-forms-of-
entrepreneurship#:~:text=The%20current%20policy%20and%20public,and%20busin
ess%20transfer%20and%20successions.
• https://www.yourarticlelibrary.com/entrepreneurship/8-problems-faced-by-women-
entrepreneurs-in-india-explained/41097
• https://ssir.org/articles/entry/social_entrepreneurship_the_case_for_definition
• https://www.dcmsme.gov.in/publications/reserveditems/Itemssi.htm
• https://www.smartdatacollective.com/5-innovative-ways-small-companies-can-collect-
big-data/
• https://www.merriam-webster.com/dictionary/project
• https://www.projectmanager.com/blog/project-design-in-project-management
• https://www.entrepreneur.com/encyclopedia/business-plan
• http://www.fao.org/3/w4343e/w4343e08.htm
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Entrepreneurship & Project Management

1 Entrepreneur and Entrepreneurship 2

3 Emerging areas in Entrepreneurship 43

4 Market Survey and Opportunity Identification 89

6 Project Management 131

By Dr. Deepak S. Sharma, Page 1

Entrepreneur and Entrepreneurship

The primary task of an entrepreneur is to decide the policy of production. An

By Dr. Deepak S. Sharma, Page 2

4. Risk-Taking and Uncertainty-Bearing:

Risk-taking is perhaps the most important function of an entrepreneur. Modern

Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to

The entrepreneurs who undertake agricultural pursuits are called agricultural

By Dr. Deepak S. Sharma, Page 3

Based on the Use of Technology:

A private entrepreneur is one who as an individual sets up a business enterprise. He / she

By Dr. Deepak S. Sharma, Page 4

Based on the Size of Enterprise:

Based on Clarence Danhof Classification:

Based on this, he classified entrepreneurs into four types:

These are discussed in seriatim:

These are characterised by readiness to adopt successful innovations inaugurated by

By Dr. Deepak S. Sharma, Page 5

mushroom drive of imitation of new combinations of factors of production already

Fabian entrepreneurs are characterised by very great caution and skepticism in

These are characterised by a refusal to adopt opportunities to make changes in

By Dr. Deepak S. Sharma, Page 6

Essential characteristics to be successful as an entrepreneur:

Entrepreneurship starts with an idea. To be successful, you need to always be thinking of

In an interview in Martyn Lewis's book "Reflections on Success," Virgin Airlines founder

By Dr. Deepak S. Sharma, Page 7

According to professional development coach Ruchira Agrawal in an article for Monster,

By Dr. Deepak S. Sharma, Page 8

In an interview with Y Combinator president Sam Altman, Facebook founder Mark

There is no room for procrastination in business. Entrepreneurs know what needs to be

By Dr. Deepak S. Sharma, Page 9

He is also responsible for creating an organizational structure and departments for a

5. Adhering to Legal Norms

By Dr. Deepak S. Sharma, Page 10

1.3. Entrepreneur vis-à-vis Professional Manager, Intrapreneur,

An intrapreneur is an employee who is tasked with developing an innovative idea or

• An intrapreneur works inside a company to develop an innovative idea or project

How Intrapreneurship Works

Intrapreneurs and entrepreneurs have different objectives. An entrepreneur envisions

By Dr. Deepak S. Sharma, Page 11

Career opportunities as Entrepreneur

4. Research and development

By Dr. Deepak S. Sharma, Page 12

By Dr. Deepak S. Sharma, Page 13

entrepreneurs are available in; manufacturing of automobile components, supply spare

5. Waste Management and Recycling

By Dr. Deepak S. Sharma, Page 14

12. Food Products

13. Training and Education

14. Supply and Marketing

By Dr. Deepak S. Sharma, Page 15

to achieve target. Marketing businesses is somewhat difficult but have great

1.6 Entrepreneur and Entrepreneurship – Factors, Barriers &

Factors of an Entrepreneur in Business

According to CareerChoiceGuide.com, ineffective planning is a primary reason many

4. Enthusiasm and Belief

By Dr. Deepak S. Sharma, Page 16

Your ability to take a level-headed, analytical approach to your business is an important

Successful entrepreneurs are motivated by challenges. You'll face challenges throughout

Entrepreneurship & Project Management

Entrepreneurship & Project Management