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What is meant by entrepreneurship? The concept of entrepreneurship was first established in the 1700s, and the meaning has evolved ever since. Many simply equate it with starting ones own business. Most economists believe it is more than that. Business expert Peter Drucker (1909-2005) took this idea further, describing the entrepreneur as someone who actually searches for change, responds to it, and exploits change as an opportunity. A quick look at changes in communicationsfrom typewriters to personal computers to the Internetillustrates these ideas. Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societies. In the developing world, successful small businesses are the primary engines of job creation, income growth, and poverty reduction. Therefore, government support for entrepreneurship is a crucial strategy for economic development. As the Business and Industry Advisory Committee to the Organization for Economic Cooperation and Development (OECD) said in 2003, Policies to foster entrepreneurship are essential to job creation and economic growth. Government officials can provide incentives that encourage entrepreneurs to risk attempting new ventures. Among these are laws to enforce property rights and to encourage a competitive market system.

Who can become an entrepreneur? There is no one definitive profile. Successful entrepreneurs come in various ages, income levels, gender, and race. They differ in education and experience. But research indicates that most successful entrepreneurs share certain personal attributes, including: creativity, dedication, determination, flexibility, leadership, passion, self-confidence, and smarts. How do you define an entrepreneur in the 21s t Century? An entrepreneur of 21st century is a customer focused innovator. He uses e knowledge. Advantage is speed. He is a global thinker even though he may not necessarily be a global player. Standard (New) Definition Entrepreneurship is the process of creating something different with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. Word Entrepreneur stems from French Verb Entreprendre means between; taker or go between New Definition involves four aspects (a) The creation process (b) Devotion of time and efforts (c) Assumption of risks (d) Rewards of independence, satisfaction, money.

Advantages of Entrepreneurship To an Individual (a) Provides Self Employment for the entrepreneur (b) Entrepreneur can provide employment for near & dear one as well (c) Entrepreneurship often provides an employment and livelihood for next generations as well. (d) Freedom to use own ideas Innovation and creativity (e) Unlimited income / higher retained income Bill Gates has risen to become richest in the world in a single life time through entrepreneurship (f) Independence (g) Satisfaction To the nation (a) Provides larger employment Entrepreneurs provide employment for self aswell as other people and is source of employment creation. (b) Results in wider distribution of wealth This is a logical sequel of above issue. Higher the employment, greater the distribution of wealth (c) Mobilizes local resources, skills and savings (d) Accelerates the pace of economic development Entrepreneurship is the govts one of the most trusted vehicles for economic development (e) Stimulates innovation & efficiency Factors Favouring Entrepreneurship 1. Developed Infrastructure Facilities Availability of infrastructure reduces the cost & efforts and improves viability of projects through higher profit margins. 2. Financial Assistance Easy availability of cheap funds is vital for promoting entrepreneurship. 3. Protective and Promotional Policies Most of the entrepreneurship projects start very small and have no resilience. They are extremely vulnerable to competitors, market, money markets, etc, for considerable time. Favourable Govt policies shelter them from such vagaries. 4. Growth of Education Science, Technology & Management Growth of education is believed to be promoting entrepreneurship. However, there are enough examples to suggest otherwise. A very large proportion of first generation entrepreneurs are low educated. Take the case of Microsoft Chairman Mr Bill Gates or Reliance Founder Mr Dhirubhai Ambani. (We also have Mr Narayan Murthy and Mr Ajim Premji to balance this scale). On a wider spectrum, Kerala, the most literate state and West Bengal, another state high on literacy front, are least entrepreneurial states where as Punjab, with 5 rank from bottom was top on entrepreneurial charts.

5. Risk Taking Abilities Risk taking ability is one of the pillars of entrepreneurial spirits. 6. Hunger for Success (Capitalistic View) Fire in the belly and dreams of riches is what drives most entrepreneurs on this risky path. Any person content with what he has would take the easier route of salaries job. 7. Environment/Culture Impact Entrepreneurship is contagious. Communities like Punjabies and Marwaries are historically entrepreneurial. They are known for seeking and exploiting business opportunities in most remote areas. It is a culture that propels them. (Go to Pull_Factors ) 8. Social Security Social security acts as a safety net against failure of enterprise. Social security guarantees basic roti, kapada aur makan in case of failure. Entrepreneurial spirit of United States is born partly out of this security. 9. Technical/Industrial Training Facilities Industrial Training facilities on one hand generate skilled manpower so vitally required for setting up enterprises while on the other hand they are also nursery for future entrepreneurs. Among the educated entrepreneurs, a majority is product of technical institutes from IIT to ITI (Tier I to Tier III institutes). 10. Globalization Globalization has provided another avenue for business. Many dare devils have taken a head along plunge into this uncharted water and have written new success stories. What makes a Successful Entrepreneur? 1. The urge for achievement (most often monetary ambitions) Most Important 2. Willingness to take moderate risks (High risk takers are not entrepreneurs but gamblers). 3. Determination to win 4. Win Win Personality 5. Ability to identify & explore opportunities 6. Analytical ability to take strategic decisions 7. Perseverance 8. Flexibility 9. Capacity to plan and organize 10. Preparedness to undergo physical and emotional stress 11. Positive self concept/Self Belief 12. Future orientation Vision 13. Ethics and Values Mission

Who can be an Entrepreneur? 1. Who feels the need for achievement 2. Who can take moderate risks 3. Who possess skills in organizing 4. Who can capitalize on opportunities 5. Who has some financial strength On his own or borrowed 6. Who has ability to work hard 7. Who has desire for responsibility 8. Who has a clear perception of probability of success 9. Who gets stimulation by feedback 10. Anyone He can be male, female or even a Eunuch 11. Who does not have previous experience Characteristics of an Entrepreneur 1. Mental ability 2. Clear objectives 3. Business secrecy 4. H.R. ability 5. Communication ability 6. Technical knowledge 7. Achievement oriented 8. Perseverance 9. Ethical 10. Motivator 11. Self confident 12. Long term involvement 13. High energy level 14. Problem solver 15. Initiator 16. Goal setter 17. Risk taker (Please note that all the three headings are necessarily the same) Key Elements of Entrepreneur 1. Need for Achievement 2. Risk taking 3. Organizing Skills 4. Ethics & Values 5. Vision 6. Innovation

Above is the list of key elements as per the professor, Mr JC Saboo. Individual opinions may vary. In my own assessment, the last three do not form the part of key elements of entrepreneur. Justification is as follows Ethics and Values Almost every entrepreneur is raw and weak at the time of start. He has little knowledge and even meagre resources. He is pitted against heavy odds like established players in the market who usually have little respect for ethics. There is no denying that Ethics will win in long term; provided you survive that long to benefit from that win. For short and medium term, it is hook or crook attitude which brings business success. Remember Sania Mirzas Tee Shirt! Nice girls dont win matches. The wisdom in the market place is Pyar aur VYAPAR mein sab kuchh jaayaj hai. There is no denying the fact that there are Tata, Infosys and Wipro business empires where almost every brick is a hallmark of ethics, but the list probably is not very long. The list of unethical, and yet successful, companies is rather long. We dont have any system of rating companies on ethical scale, else, the issue would have never arisen. Vision Rarely does an entrepreneur start with a 10 year vision. Almost everyentrepreneur, including Sir JRD Tata, starts small with basic survival or little riches as the aim. The vision, mission and all such management jargons erupt only after a reasonable level of success is attained. Innovation I personally consider Innovation fairly low in the entrepreneurial element basket. Innovation helps in achieving success in business whether it is 10 generations old business or an entrepreneurs new enterprise. An entrepreneur is one who starts a business enterprise of which he had no previous experience. Most entrepreneurs start with a routine business activity without any innovative idea. It may be as common a business as a pan shop. So, if a farmers son opens a pan shop, there is no innovation but it is entrepreneurship. Whereas, if a panwallas son opens a new pan shop away from his fathers shop, it is not even an entrepreneurship. But yes, if he later finds a way to export his pan to some foreign country, there is innovation of finding a new market for his product and it is entrepreneurship. He has gone into a territory which was new to him and probably even to his trade. As per my assessment, three qualities that replace above qualities are 4. Perseverance The start is tough and initial failures are common phenomenon. If the person does not have a steely resolve and perseverance to keep going against all odds, his failure is almost certain. In US, only one out of 10 new businesses survive beyond 2nd year. 5. Hard Working The initial years are sweat and sweat and even more sweat. Resources are scarce, finances are scanty, knowledge is sketchy and goodwill is zero. Untiring work bordering on the madness is common element in every successful entrepreneurs story. Almost every entrepreneur packs a 48 hrs work schedule in his 24 hour day. 6. Self Confidence They all have the confidence to overcome every odd.

Entrepreneurs Background & Characteristics 1. Family Environment In most cases, people follow the footstep of father. A businessmans son takes up business and a salaried persons son tries to find a job. So, if a family has had a tradition of entrepreneurship, later generations also follow the step of their ancestors, like the Gujaraties and Marwaries. Conversely, if a family has had a bad experience with entrepreneurship, it is unlikely that next generation will be very entrepreneurial. 2. Education Education has no correlation with entrepreneurial spirit. If at all there is one, it seems to be inverse. Most of the entrepreneurs come from low education background. Educated people who get decent job rarely prefer comfort of salaried job. It is only those who are unable to find a living for themselves eventually try their hands at new business. For long long years, due to problems of licence, quota and inspector raj, most educated people preferred govt job, for it symbolized power, comfort, social status and for the people with low scruples, money too. However, trend is slowly changing. With business environment becoming easier and govt officials powers being on the wane, many educated people are also beginning to venture into entrepreneurship 3. Age There are people who start as early as probably 10 and some others after their retirement. Harland David Sanders, better known as Colonel Sanders (not a Army Colonel but an honorary one) started his famous Kentucky Fried Chicken business quite late in his varied career. But commonly, men are often in the age group of 25 35 and women in the age group of 30 45. 4. Physical Attributes Have absolutely no correlation with entrepreneurial spirit. 5. Marital Status No direct correlation but going by the age group, most entrepreneurs are married. 6. Working History Entrepreneurs quite often have some working experience as a salaried employee in the field of their venture. It always helps to learn a little about business before putting your money in. Sindhi community follows this practice assiduously. 7. Family Contacts Family contacts in business world reduce the risks and help the entrepreneur. 8. Professional Contacts Professional contacts again help. IIT and IIM graduates venturing into entrepreneurship often get help from their peer and seniors. 9. Personal values 10. Lifestyle Most entrepreneurs are fond of good things in life but are willing to wait till they strike rich. In the interim they are willing to rough it out.

Entrepreneurship and Management Students 1. A Management Graduate is a person trained in necessary skills and knowledge to manage an enterprise. 2. A Management Graduate is best placed to be an entrepreneur. With his knowledge of business domain, his chances of launching a successful entrepreneurial venture are much higher than any one else. It will benefit the Management Graduate as well as the country. 3. Experience even from Harvard Business School confirms that more Management Graduates take Entrepreneurial Role (after gaining some experience) and the average income of entrepreneurs is higher by almost 2.5 times compared to their friends who are in job. 4. A Management Graduate should therefore not be just a Job Seeker. He can and should take the role of Job Provider. 5. Enterprises in protected economy can sustain mismanagement because the markets are assured under quota and license raj. In the ensuing monopoly or monopolistic market, there is a demand supply mismatch and therefore profit margins are high. Therefore, there is enough resilience to sustain errors and consequential losses in an entrepreneurial venture once the license was obtained. 6. Enterprises in competitive environment are essentially to be well managed. In the resulting perfect or near perfect market, profits are thin and any losses due to errors can not be passed on to the consumer. Therefore, entrepreneurial ventures have to be well managed. 7. Even in his employment in a company, he needs to become an INTRAPRENEUR in order to deliver maximum to his employer and increase his own stock in return. 8. Therefore, either way, Entrepreneurship Management becomes an essential part of curriculum of management studies. Entrepreneurship and Economic Development Entrepreneurial spirit of people is greatly responsible for economic development of any country. There is no resource including diamond mines as valuable as human resource. South Africa and a few other African countries despite their fertile gold and diamond mines have remained poor/relatively poor, where as Japan with literally no natural resources and having suffered devastation during WWII became a developed country in just three decades. Therefore, if a country allows its human resources to be unutilized/underutilized (unemployment/disguised unemployment), its economic development would be severely hampered. Failure of communism worldwide and our own harrowing experience with socialism has shown that Govt has no business to be in Business. Govt should only govern. Business activity should be left to people. And this is where entrepreneurs enter the picture. (a) Entrepreneurs set up enterprises which provide employment not only to themselves but to many others directly and indirectly and thereby put intoutilization Human Resource of the country. (b) Entrepreneurs combine resources, put their time and efforts and produce goods or services. The Value Addition that they do to the resources brings prosperity to the country. (c) What they contribute productivity, output, value addition, income and employment (d) Entrepreneurship is a Low Cost Strategy. An entrepreneur works with maximum financial efficiency in order to maximize his profits. Entrepreneurs rarely indulge themselves in luxury of Business Class travel and 5 Star Hotel comforts which the managers avail without fail. Thus, many such costs are either avoided or kept in check. Entrepreneurs perform the crucial role themselves.

(e) The spirit of Entrepreneurship Drive, achieving higher goals, creativity, innovative attitude. (f) A dynamic society emerges and the spirit spreads like a chain reaction Many entrepreneurs have proved to be catalyst for growth of a bevy of smaller entrepreneurs. Jamshedpur was a small town before Tata Steel Plant was set up. Once the plant came up in the place, many people set up their small enterprises to cater to the needs of the growing population. Business Environment & Entrepreneurship Environment (a) Political System, Stability, Leadership (b) Socio cultural Culture, Community, Values, Ethics, Attitude (c) Technological Education, Absorption, Competition, Innovation (d) Legal Regulatory framework, Consumer protection, Concern for environment, Labour laws (e) Economic GDP, GNP, Resources, Fiscal, Non fiscal policies, Incentives and Subsidies Dimensions of Environment (a) SPECTACLES Social, Political, Economic, Cultural, Technological,Aesthetic, Customer, Legal, Environmental and Sectoral (b) PEETS Political, Economic, Ecological, Technological and Sociodemographical (c) SLEPT Social, Legal, Economical, Political and Technological


intrapreneurship is defined as entrepreneurship within an existing business set up. That is to say Intrapreneurship is corporate entrepreneurship. When a corporation indulges in entrepreneurial activities, like diversification into new businesses, it is called intrapreneurship. Intrapreneur is a manager who focuses on innovation and creativity; who brainstorms, dreams and puts ideas into profitable venture by operating within the organizational environment. It is a tool for capitalizing the entrepreneurial spirit of employees in the organization. It gives managers the freedom to try new ideas by employing firms resources in a unique way. Characteristics of an Intrapreneur. An intrapreneur is not far removed from an entrepreneur. The major difference being that an entrepreneur risks his own money where as an intrapreneur works with his employers money. Thus, the risk level of an intrapreneur is considerably reduced. Secondly, the desire for independence and material success is not as strong in case of intrapreneurs. For most other characteristics, the two match perfectly. 1. Vision It is the basis for successful venture. An Intrapreneur has ability to visualise from idea to implementation. 2. Motivation Intrapreneur is generally self motivated, but expect corporation reward and recognition. 3. Orientation Intrapreneur is achievement oriented. 4. Risk Appetite Intrapreneurs are moderate risk takers since risk acceptance depends on their skills. Wild risk takers are not affordable to corporates. 5. Locus of status Intrapreneurs want to do the work on their own rather than delegate like managers 6. Failure and Mistakes Intrapreneur hide risky projects and ideas to ensure learning without political cost and public failure. They develop multi disciplinary team in the organisation and may go beyond organisation boundaries for results. 7. Goal set up Intrapreneur are determined to do things not even asked for. They set goals and quality standards.

Steps for setting Intrapreneurship in organisation Following are the steps required to be taken to establish Intrapreneurship in an organisation 1. Secure Commitment to Intrapreneurship from Top, Upper and Middle Management (a) Cultural Changes The cultural changes needed to development the spirit of intrapreneurship in an organisation is not possible without whole hearted commitment of its full line of higher management. It requires prolonged commitment and investment in arranging to expose the spirit of intrapreneurship among the employees. Talk shows are organised and bulletins published to expose people to this concept. Seminars and strategy sessions are held to transform the organisation into an intrapreneurial organisation. (b) Resource Requirement Intrapreneurship demands commitment of lot of resources; material as well as human. Without commitment of higher management, such resources will not be available for any intrapreneurial venture. (c) Confidence Building While intrapreneurship leads to rich rewards for the company, there is very little direct benefit to the employees. Most tend to work as intrapreneur to give expression to their creative zeal. On top of that, there is always a fair amount of risk of failure in such ventures. Therefore, unless the employees have full support of the higher management, they will not stick their neck out in such a venture. 2. Create Framework for Intrapreneurship Once cultural changes have been launched, which is a long slow process lasting approximately 23 years, parallely, a framework needs to be developed as to how the ideas will be processed and executed, how they will be funded, how they will be monitored and how will the losses, whenever they occur will be accounted. 3. Identification of Intrapreneurial Leaders Not every one has entrepreneurial spirit. Therefore, people with entrepreneurial characteristic need to be identified, selected and trained. Along with training, a mentor/sponsor system is also needed to be developed. These mentors from the top management will give the needed guidance and support to the intrapreneurial leaders 4. Identify the general areas of Intrapreneurial Thrust Every company has a priority area where it would like to move forward. Such areas need to be identified and notified to employees. An IT company would rarely want to foray into hardcore manufacturing sector even if the prospects are quite promising. 5. Improve Responsiveness and Flexibility Intrapreneurial spirit can not sustain the usual snail paced and ultra cautious bureaucratic decision making process in case of capital investments that is typical of ordinary organisations. Use of technology to speed up decision making process and induce flexibility in the process is required. 6. Modifying Organisational Structure A fat hierarchical organisational structure is inherently sluggish in decision making (Many cooks spoil the broth). A flat organisational structure is more suited to the

Intrapreneurship. Therefore, certain modifications to the organisational structure may be needed. However, It is easier said than done. 7. Publicity of Ideas New ideas should be well publicised. While such publicity is a morale booster for the author of the idea and therefore encourages more people to come forward with ideas, published ideas get scrutinised and value added by other people. 8. Tapping Customers Base for New Ideas Customers are the richest source of new ideas. 3M Corporation, holding over 6 lakh patents, claims that almost 70% of newideas have been contributed by the customers themselves. 9. Create Strong Support Structure for Intrapreneurship This is particularly important since most people have short term focus on quarterly, half yearly and yearly numbers. Intrapreneurial ventures are long term projects and therefore may get overlooked for funding and other support. Similarly, appraisal of the intrapreneurs may get adversely affected since there is nothing concrete to show quarter by quarter. Such a mishap is to be strongly guarded against because if such a thing does happen, it would kill the initiative among the employees. 10. Create a Strong Reward System Linked to Performance of the Intrapreneurial Venture Notwithstanding all the OB theories to the contrary, nothing works as fast and as effectively as tangible/material rewards system to motivate most people to put their best feet forward. 11. Create an Evaluation System Some Intrapreneurial venture are bound to fail for various reasons including change in external environment. Also, some ventures arelikely to astonish with their success even the most optimistic supporters. Therefore, regular evaluation of the ventures in hand is necessary. Promising ventures might need further thrust or scaling up in size while unsuccessful need to be wound up.


The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favourable opportunity conditions than in economies with relatively less favourable opportunity conditions. Entrpreneurship and Economic Development Entrepreneurship helps in the process of economic development in the following ways :

1) Employment Generation : Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment. 2) National Income : National Income consits of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurers are required to meet this increasing demand for goods and services. Thus entrepreneurship increases the national income. 3) Balanced Regional Development : The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development . When the new entrepreneurers grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions. 4) Dispersal of economic power : Industrial development normally may lesd to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

5) Better standards of living : Entrepreneurers play a vital role in achieving a higher rate of economic growth. Entrepreneurers are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements.When the price of of the commodies decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people. 6) Creating innovation : An entrepreneur is a person who always look for changes. apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation. Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words : " Economic development is the effect for which entrepreneurship is a cause "

The Role Of Entrepreneurship In Reducing Poverty In Ldcs

Entrepreneurship is the active process of recognizing an economic demand in an economy, and supplying the factors of production (land, labor and capital) to satisfy that demand, usually to generate a profit. High levels of poverty combined with slow economic growth in the formal sector have forced a large part of the developing worlds population into self-employment and informal activities. But this is not necessarily negative; microenterprises contribute significantly to economic growth, social stability and equity. The sector is one of the most important vehicles through which low-income people can escape poverty. With limited skills and education to compete for formal sector jobs, these men and women find economic opportunities in microenterprises as business owners and employees. If successful, entrepreneurship is likely to result in a small- to medium-enterprise (SME). They include a variety of firms village handicrafts makers, small machine shops, restaurants, and computer software firms that possess a wide range of sophistication and skills, and operate in very different markets and social environments. In most developing countries, microenterprises and small-scale enterprises account for the majority of firms and a large share of employment (refer to Fig. 1). In Ecuador, for example, firms with fewer than 50 employees accounted for 99 percent of firms and 55 percent of firms in 1980; in Bangladesh, enterprises with fewer than 100 workers accounted for 99 percent of enterprises and 58 percent of employment in 1986. Finally, it has been noted that, SMEs constitute the most dynamic segment of many transition and developing economies. They are more innovative, faster growing, and possibly more profitable as compared to larger-sized enterprises. Hence, the role of entrepreneurship in reducing poverty in LDCs is promising.
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A final optimistic suggestion, according to economic theory, implies that the income expenditure multiplier effect may also help to create chain reactions through developing economies, thus helping to break the cycle of poverty. So you see, that despite public opinion on this matter, business is not all that selfish. In fact, it is much more unselfish than a lot of public institutions. It does not exist to satisfy its own needs that is a way to business failure. On the contrary, its function is to satisfy in the long run the consumer demands our demands, and to make our life comfortable. So, when you make this crucial decision to embark on a business enterprise, bear it in mind that it is a way to serve society


One of the significant characteristics of a flourishing and growing economy is a booming and blooming small and medium enterprises (SMEs) sector. Small and medium enterprises play an important role in the development of a country. SMEs contribute to economic development in various ways: by creating employment for rural and urban growing labor force, providing desirable sustainability and innovation in the economy as a whole .In addition to that, a large number of people rely on the small and medium enterprises directly or indirectly.

Most of the current larger enterprises have their origin in small and medium enterprises. SMEs are different from large scale enterprises in three main aspects; uncertainty, innovation and evolution. The SME sector itself can be classified into micro enterprises, small enterprises and medium enterprises. SMEs are the starting point of development in the economies towards industrialization. However, SMEs have their significant effect on the income distribution, tax revenue, and employment, efficient utilization of resources and stability of family income.

According to the United Nations Industrial Development Organization UNIDO, for developing countries, integration into the global economy through economic liberalization, deregulation, and democratization is seen as the paramount way to triumph over poverty and inequality. Important to this process, is the development of an animated private sector, in which small and medium enterprises can play a central role.

SMEs have a propensity to employ more labor-intensive production processes than large enterprises. Consequently, they contribute significantly to the provision of productive employment opportunities, the generation of income and, eventually, the reduction of poverty.

According to the statistics, in industrialized countries, SMEs are major contributors to private sector employment. Empirical studies have shown that SMEs contribute to over 55% of GDP and over 65% of total employment in high income countries .SMEs and informal enterprises, account for over 60% of GDP and over 70% of total employment in low income countries, while they contribute about 70% of GDP and 95% of total employment in middle income countries.

SMEs play significant contribution in the transition of agriculture-led economies to industrial ones furnishing plain opportunities for processing activities which can generate sustainable source of revenue and enhance the development process. SMEs shore up the expansion of systemic productive capability. They help to absorb productive resources at all levels of the economy and add to the formation of flexible economic systems in which small and large firms are interlinked. Such linkages are very crucial for the attraction of foreign investment. Investing transnational corporations look for sound domestic suppliers for their supply

Small and medium enterprises (SMEs), particularly in developing countries, are the backbone of the nation's economy. They constitute the bulk of the industrial base and also contribute significantly to their exports as well as to their Gross Domestic Product (GDP) or Gross National Product (GNP).

India's Sme Scenario: India has nearly three million SMEs, which account for almost 50 percent of industrial output and 42 percent of Indias total exports. A special role for SMEs were earmarked in the Indian economy with the advent of planned economy from 1951 and the subsequent industrial policy followed by government. By and large, SMEs developed in a manner, which made it possible for them to achieve the objectives of: 1. High contribution to domestic production 2. Significant export earnings 3. Low investment requirements 4. Operational flexibility 5. Low intensive imports 6. Capacity to develop appropriate indigenous technology 7. Import substitution 8. Technology-oriented industries 9. Competitiveness in domestic and export markets However, as a result of globalization and liberalization, coupled with WTO regime, SMEs have been passing through a transitional period. With enhanced competition from China and a few low cost centers of production from abroad many units have of late been facing a tough time. However, those SMEs who had a strong technological base, international business outlook, competitive spirit and willingness to restructure themselves withstood the current challenges and came out successful to make their own contribution to the Indian economy. It is the most important employment-generating sector and is an effective tool for promotion of balanced regional development. These account for 50 percent of private sector employment and 30 to 40 percent of value-addition in manufacturing. It produces a diverse range of products (about 8000 odd items), including consumer items, capital and intermediate goods. However, the SMEs in India, which constitute more than 80 percent of the total number of industrial enterprises and form the backbone of industrial development, are as yet, in technological backwaters vis-vis advances in science and technology. These suffer from problems of suboptimal scales of operations and technological obsolescence.

While most of the large companies, even in developing countries, have financial as well as technical capacity to identify technological sources and evaluate alternate technologies that would suit their requirements, unfortunately, this capacity is conspicuously missing in most SMEs. It is these features of SMEs that make them an ideal target for technological upgradation through technological cooperation with foreign and local enterprises, with R&D institutions and centres of technology development. So, what these SMEs need today is primarily access to new technology. Poor financial situations and low levels of R&D, poor adaptability to changing trade trends, non-availability of technically trained human resources, lack of management skills, lack of access to technological information and consultancy services and isolation from technology hubs, etc. are some of the reasons why these SMEs are not being able to surge ahead. Small and Medium enterprises are the backbone of India's economy. They have to now work hard to get out of this impending scenario. There has to be a major change in policy on how they are operating. SMEs have to put in more effort on research and development (R&D) and on ways to use technology at par with the international standards.

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 A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term. Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. When the existing business is to assume a major change or when planning a new venture - a 3 to 5 year business plan is essential

Your business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask. Generally, a business plan has the following components:

OUTLINE OF A BUSINESS PLAN 1. Introductory page (a) Name and address of the venture (b) Names and addresses of the principals (c) Nature of business (d) Statement of financing needed (e) Statement of confidentiality of the report 2. Executive Summary 3. Industry Analysis (a) Future outlook and trends (b) Analysis of competitors (c) Market segmentation (d) Industry forecasts 4. Description of Venture (a) Product(s)/Service(s) (b) Size of business (c) Office equipment and personnel (d) Background of entrepreneurs

5. Production Plan or Operations Plan (a) Manufacturing process (amount subcontracted) (b) Physical plant (c) Machinery and equipment (d) Names of suppliers of raw materials 6. Marketing Plan (a) Pricing (b) Distribution (c) Promotion (d) Product forecast (e) Controls (f) e initiatives 7. Organizational Plan (a) Form of ownership (b) Identification of partners or principal shareholders (c) Authority of principals (d) Management team background (e) Roles and responsibilities of members of organization 8. Assessment of Risk (a) Evaluation of weaknesses of business (b) New technologies (c) Contingencies plans 9. Financial Plan (a) Pro forma income plan (b) Cash flow projections (c) Pro forma balance sheet (d) Break even analysis (e) Sources and applications of funds 10. Appendices (contains backup material) (a) Resumes of principals (b) Letters (c) Market research data and survey results (d) Leases or contracts

(e) Price lists from suppliers (f) Facility layout (g) Draft marketing brochure with or without pricing (h) Structure of e marketing thrusts, if any Business plans rank no higher than 2/10 as a predictor of a new ventures success. With all the uncertainties involved, it is not easy to forecast or make future projections. An entrepreneurial venture faces even greater uncertainties. It is hard to predict even revenues let alone the profits. Thus, every investor knows that any financial projections for a new company that stretch beyond a year are an act of imagination. It does not mean to say that business plans should not include numbers. Business plans should include numbers but those numbers should appear in the form of a business model that shows that the entrepreneurial team has considered the key drivers of the ventures success or failure. Estimation of time and capital is another hurdle faced during preparation of project plan. Break even analysis is very important. Also the time when cash flow will turn positive needs to be estimated. But this information should come towards the end of the project report. There are four independent factors critical to every new venture and should be highlighted in the business plan 1. The People The most important determinant of success. The men and women starting and running the venture, as well as, the outside parties providing key services or important resources for it, such as its lawyers, accountants and suppliers. An ordinary plan can succeed if the execution is immaculate, but an outstanding plan will surely flop without effective execution. Thus, the people involved in the new venture are most important. Arthur Rock, a Venture Capitalist legend associated with companies like Apple, Intel and Teledyne states, I invest in people, not ideas Three important questions need to be answered in every business plan (a) What do they know (about business)? (b) Whom do they know (the customers, the people in the govt, etc)? and, (c) How well are they known (their reputation that can be leveraged with various stakeholders of business like suppliers, employees and govt officials)? Thus, a business plan should describe each members knowledge of the new ventures type of products and markets from competitors to customers.

2. The Opportunity A profile of business itself what it will sell and to whom, whether the business can grow and how fast, what its economics are and who and what stands in the way of success. A good business plan begins by focussing on two aspects of opportunity (a) Is the total market for the ventures product large, rapidly growing or both? (b) Is the industry now, or can it become, structurally attractive? Investors look for a large and rapidly growing market because it is much easier to obtain a share of a growing market than to fight with entrenched competitors for a share of a mature or stagnant market. The business plan should establish the attractiveness of the industry in terms of growth potential. Building and launching of the product in the market place is the next emphasis point in the project report. If it were easy to spot the opportunities, they would have become extinct. They will be killed before they are born. Pricing is another issue. Difficult to guess but inevitable for any project report. Cash flow is equally important. The project report should include (a) When does the business have to buy resources, such as supplies, raw materials and people services? (b) When does the business have to pay for them? (c) How long it takes to acquire a customer? (d) How long before customer sends the business cheque? (e) How much is the investment for each rupee of sale? Growth opportunities in terms of place, product, customer base, etc needs to be elaborated. Project plan also needs to discuss the mouse traps that the business can get caught into and plan to avoid them. Competition is the next issue that should be addressed in great detail. Following questions should be answered (a) Who are the new ventures current competitors? (b) What resources do they control? What are their strengths and weaknesses? (c) How will they respond to the new ventures decision to enter business? (d) How can the new venture respond to its competitors response? (e) Who else might be able to observe and exploit the opportunity? (f) Are there ways to co-opt potential or actual competitors by forming alliances? 3. The Context The big picture The regulatory environment, interest rates, demographic trends, inflation and the like basically factors that change inevitably but can not be controlled by the entrepreneur.

4. The Risk and Rewards An assessment of everything that can go wrong and right and a discussion of how the entrepreneurial team can respond. The business plan remains same irrespective of the fact whether it is an entrepreneurial venture or being launched by the established company. After all the market does not differentiate on the basis of whose money it is; whether of the investor or the shareholders

Role of SIDBI in development of Small Scale Industries? Ans. SIDBI (Small Industries Development Bank of India) was set up on April 2, 1990 as a wholly owned subsidiary of IDBI (Industrial Development Bank of India) with a authorized capital of Rs 250 crore. IT was set up as an apex institution for promotion, financing and development of industries in small scale sector and for coordinating the functions of other institutions engaged in similar activities. SIDBI extends direct/indirect financial assistance to SSIs, assisting the entire spectrum of small and tiny sector industries on All India basis. Its objectives are 1. To initiate steps for technological upgradation and modernisation of existing units 2. To expand channels of marketing of SSI sector products in India and abroad 3. To promote employment oriented industries in semi urban areas and to check migration of population to big cities. The range of assistance comprising financing, extension support and promotional, are made available through appropriate schemes of direct and indirect assistance for the followingpurposes:(a) Setting up of small scale projects (b) Expansion, diversification, modernisation, technology upgradation, quality improvement and rehabilitation of existing SSIs (c) Strengthening of marketing capabilities of SSI units. (d) Development of infrastructure for SSIs and (e) Export promotion. Direct Assistance Schemes SIDBI directly assists SSIs under (a) Project Finance Scheme, (b) Equipment Finance Scheme, (c) Marketing Scheme, (d) Vendor Development Scheme, (e) Infrastructural Development Scheme, ISO-9000, (f) Technology Development & Modernisation Fund, (g) Venture Capital Scheme, (h) Assistance for leasing to NBFCs, SFCs, SIDCs and (i) resource support to institutions involved in the development and financing of small scale sector. These Schemes are mainly targeted at addressing some of the major problems of SSIs in areas such as high tech project, marketing, infrastructural development, delayed realisation of bills, obsolescence of technology, quality improvement, export financing and venture capital assistance.

Indirect Assistance Schemes Under its indirect schemes, SIDBI extends refinance of loans to Small Scale sector by Primary Lending Institutions (PLIs) viz. SFCs, SIDCs and Banks. At present, such refinance assistance is extended to 892 PLIs and these PLIs extend credit through a net work of more than 65,000 branches all over the country. All the Schemes of SIDBI, both direct and indirect assistance, are in operation in all the States of the country through 39 regional/branch offices of SIDBI. Promotional and Development Activities SIDBI is actively involved in promoting Tiny and Small Scale Industries by means of its promotional and developmental activities through suitable professional agencies for organising Entrepreneurship Development Programmes, Technology Upgradation & Modernisation Programmes, Micro Credit Schemes and assistance under Mahila Vikas Nidhi to bring about economic empowerment of women, specially the rural poor, by providing them avenues for training and employment opportunities. Main Schemes of SIDBI 1. National Equity Fund Scheme Provides equity support to small entrepreneurs setting up projects in Tiny Sector. National Equity Fund (NEF) under SIDBI provides equity type assistance to SSI units and tiny units at one per cent service charges. The scope of this scheme was widened in 1995-96 to cover all areas except Metropolitan areas, raising the limit of loan from Rs. 1.5 lakhs to Rs. 2.5 lakhs and covering both existing as well as new units. (a) The following are eligible for assistance under the scheme:(i) New projects in tiny and small scale sectors for manufacture, preservation or processing of goods irrespective of the location (except for the units in Metropolitan areas). (ii) Existing tiny and small scale industrial units and service enterprises as mentioned above (including those which have availed of NEF assistance earlier), undertaking expansion, modernisation, technology upgradation and diversification irrespective of location (except in Metropolitan areas). (iii) Sick units in the tiny and small scale sectors including service enterprises as mentioned above, which are considered potentially viable, irrespective of the location of the units (except for the units in Metropolitan areas). (iv) All industrial activities and service activities (except Road Transport Operators). (b) Project cost (including margin money for working capital) should not exceed Rs. 10 lakhs in the case of new projects. In the case of existing units and service enterprises, the outlay on expansion/modernisation/technology upgradation or diversification or rehabilitation should not exceed Rs. 10 lakh per project.

(c) There is no change in the existing level of promoters' contribution at 10% of the project cost. However, the ceiling on soft loan assistance under the Scheme has been enhanced from the present level of 15% per project to 25% of the project cost subject to a maximum of Rs. 2.5 lakh per project.

2. Technology Development & Modernisation Fund (TDMF) Scheme for providing finance to existing SSI units for technology upgradation/modernisation. SIDBI has set up Technology Development & Modernisation Fund (TDMF) scheme for direct assistance of small sale industries to encourage existing industrial units in the sector, to modernise their production facilities and adopt improved and updated technology so as to strengthen their export capabilities. Assistance under the scheme is available for meeting the expenditure on purchase of capital equipment, acquisition of technical know-how, upgradation of process technology and products with thrust on quality improvement, improvement in packaging and cost of TQM and acquisition of ISO-9000 series certification. SIDBI in July 1996 had permitted SFCs and promotional banks to grant loans for modernisation projects costing upto Rs. 50 lakhs. The coverage of the TDMF scheme has been enlarged w.e.f. 1.9.1997 to include (a) Non exporting SSI/Ancillary units (b) SSI/Ancillary units which are graduating out of SSI sectors on implementation of modernisation programs as eligible units of assistance under this scheme. Under TDMF scheme direct assistance is provided at the prime lending rate of SIDBI with no up front fee. 3. Single Window Scheme to provide both term loan for fixed assets and loan for working capital through the same agency. 4. Composite Loan Scheme for equipment and/or working capital and also for worksheds to artisans, village and cottage industries in Tiny Sector. 5. Mahila Udyam Nidhi (MUN) Scheme provides equity support to women entrepreneurs for setting up projects in Tiny Sector. 6. Scheme for Financing Activities relating to marketing of SSI products which provides assistance for undertaking various marketing related activities such as marketing research, R&D, product upgradation, participation in trade fairs and exhibitions, advertising branding, establishing distribution networks including show room, retail outlet, wears-housing facility, etc. 7. Equipment Finance Scheme for acquisition of machinery/equipment including Diesel Generator Sets which are not related to any specific project.

8. Venture Capital Scheme to encourage SSI ventures/sub-contracting units to acquire capital equipment, as also requisite technology for building up of export capabilities/import substitution including cost of total quality management and acquisition of ISO-9000 certification and for expansion of capacity. 9. ISO 9000 Scheme to meet the expenses on consultancy, documentation, audit, certification fee, equipment and calibrating instruments required for obtaining ISO 9000 certification. 10. Micro Credit Scheme to meet the requirement of well managed Voluntary Agencies that are in existence for at least 5 years; have a good track record and have established network and experience in small savings-cum-credit programmes with Self Help Groups (SHGs) individuals.

History After the formation of Maharashtra State on May 1, 1960, the Government of Maharashtra constituted a "Board of Industrial Development" (BID) on October 1, 1960, under the Chairmanship of Shri. S. G. Barve, I.C.S. The various committees recommendations received in the industries department were taken up for implementation and as per the Borkar Committees recommendations, development of Ulhas Valley Water Supply was entrusted to the Board of Industrial Development (BID). The BID framed the legislation and it was introduced before the state legislation and passed in the form of "Maharashtra Industrial Act" which gave birth to MIDC, as a separate corporation on August 1, 1962. The BID were the first personnel strength of MIDC. A small ceremony at Wagle Estate Thane, under the Chairmanship of the Chief Minister Shri Y.B. Chavan, marked the birthday of MIDC on August 1, 1962. Objectives To achieve balanced industrial development of Maharashtra with an emphasis on developing and underdeveloped parts of the State Infrastructural development of each and every district of Maharashtra and Facilitate entrepreneurs in setting up industries at various locations Activities The MIDC has been declared as an agent of the State Government for carrying out the activities within the framework of the MID Act and the MID Rules. These activities can be divided under following 3 broad categories. Acquisition and disposal of land. Provision of infrastructure facilities. Providing of services. Acquisition & Disposal Of Land The land for industrial areas is acquired by the Government of Maharashtra under Chapter VI of the MID Act. 1961 and handed over to the Corporation for further disposal. Likewise, wherever available, the Government land is also handed over to the Corporation as an industrial area. The Government pays for the compensation for the private land from its own fund. The Corporation in turn plans the area and disposes the land in suitable plots by leasing out for 95 years. For this purpose the Corporation recovers the premium lease money at different rates for different industrial areas. Also the Corporation constructs built-up accommodations like Sheds and Flatted units and sale them out to the prospective industrialists together with the land there under on lease basis. As on 31.3.2002 the Corporation has planned 87633.76 (Hectares) of land against which 52222.57 Hectors of land has already come in possession of the Corporation. parts

Provision of Infrastructure Facilities In terms of the provision of the MID Act, 1961 and the relationship prescribed by the Government in that regard, the Corporation is required to provide infrastructure facilities like Roads, Streetlight, Drainage, Water Supply schemes and Buildings for Common facilities like Post & Telegraphs, Canteen, Bank, Telephone etc. The Corporation meets the expenditure on such works (facilities) generally from the premium lease money received by it from the allottees. The relationship further prescribes that the industrial area, after it is fully developed, should be returned back to the Government / handed over to such agency or authority as the State Government may directs, after striking out the account of the industrial area concerned. The surplus / deficit generated out of such operations is to be made good to or recovered from the State Government as the case may be. As the development of an industrial area is a long process and instant objective, the Government has prescribed certain scale of interim annual payments which are termed as .On account Advance Payment to Government .. As on 31st March 2002 the Government has spent Rs. 303.44 crores on land compensation against which the Corporation has paid 339.09 crores as .On account Advance payment to Government. In this connection it may stated that the powers to fix the rates of premium for land for different industrial areas rest with the Corporation. Since it is the aim of the Government and the Corporation to achieve a balanced development of the entire State with special emphasis on the development of backward regions of the state, the Corporation follows a policy of cross subsidisation rate structure on A B C D zones pattern, in that the rates of land premium in developed and semi developed parts of the State are higher compared to the rates in developing and backward regions.

Providing of Services The Corporation provides the following services to the units in its industrial areas :Assured Water Supply From among the various services provided by the Corporation, an assured pure water supply can be regarded as a unique speciality of the MIDC. The investment on the water supply scheme (Head works) made by MIDC as on 31st March, 2002 is over Rs. 731.30 crores with installed capacity of water supply of 1941 MLD. The annual revenue from water is over Rs 375.96 crores. For the purpose of regulating the water supply operations of the Corporation the Government of Maharashtra has prescribed a legal and financial relationship between the Government and the Corporation. The salient features of this relationship are as under A water supply scheme providing water to more than one industrial area in grid system is termed as Centralised water supply scheme the ownership of which remains with the MIDC. On the other hand a water supply scheme catering the need of only one industrial area is termed as Localised water supply scheme with ownership remaining with Government, as in the case of Industrial area itself. The water supply made either from Centralised or Localised water supply scheme is treated as supply made on behalf of Government and the revenue thus collected is shown as revenue

accrueing to Government. While the operating expenditure of Centralised Water supply scheme is debited to the Corporations account (Income & Expenditure) the operating expenditure of Localised water supply scheme is debited to the account of Government in agency function. The Corporation takes credit of so much portion of the water revenue as is sufficient to meet its net operating and other expenses. This is done annually at a bulk rate arrived at by dividing the net expenses debited to the Income and Expenditure Account of the Corporation by quantity of water supplied through the Centralised water supply scheme. The surplus/deficit generated out of total water supply operations is to the account of Government. In this connection, it is to be noted that though the relationship provides for the crediting of the entire water revenue to the account of Government in agency function, the G.R. prescribing the relationship does not categorically stipulate to pay the amount of surplus generated out of water supply operations to Government. In other words the Corporation is impliedly authorised to plough-back the surplus in its operations.

Maintenance of Industrial Areas This is a municipal function requiring the Corporation to maintain the Roads, Street lights, Fire stations ( in few areas ) during the transitory period up to handing over of the industrial area either to Government or other agency as the Government may decide. The MID Act, vide Section 56, provides for the exist policy after the purpose of industrial development as contemplated in the Act is fulfilled. However, this has seldom become possible in the absence of a substitute agency to take over the responsibility, except in few cases like that of Marol, Wagale Estate, Pimpri Chinchwad etc. where the Corporation could hand over only the roads and street lights to local Municipal Corporations. In other areas, the Corporation carries on this function as a committed obligation. For this purpose the Corporation recovers service charges to defray the expenditure on such services. Drainage (effluent disposal) and CETP Schemes The Corporation has Effluent Disposal (Drainage) schemes only in selected Industrial areas having chemical industries. Such schemes are designed to collect and discharge the treated effluent only. In such areas the Corporation recovers drainage cess to defray the expenditure on maintenance and to partially recover the capital cost. Also with a view to arrest pollution, the Corporation has started the operations like Hazardious waste Management and Common Effluent Plants on Joint venture basis with the help of local industries associations. Other Services Theses includes providing and maintaining Common Facility Centers like P&T, Banks etc. Though the Corporation does not levy any specific cess for the purpose, the C. F. C. building are subject to rentals. Such rental together with other miscellaneous income from the area covers the maintenance cost of such CFCs.


What are prominent organisations promoting entrepreneurship in India? Give a Brief account of activities of each organisation. Ans. There are several organisations engaged in conducting entrepreneurship development program in India. The lead in the matter was taken by the Small Industrial Development Organisation (SIDO) through its service centres. Other organisations that have been actively conducting Entrepreneurship Development Programmes are (a) State Bank of India; (b) Financial institutes such as IDBI Entrepreneurial Motivation Training centre in northern eastern region, (c) Xavier Institute of Social Services, Ranchi (d) Industrial Consultancy Organizations in various states, (e) Centre for Entrepreneurship Development, Ahmedabad (f) State Financial Corporations, (g) Centre of Entrepreneurship development, Hubli (h) Small Industries Extension Training Institute, Hyderabad, (i) National Science & Technology Entrepreneurship Development Board etc. A need was felt to evolve an integrated national approach towards training program for various centres and states entrepreneurship development programme. In order to train the entrepreneurs, proper syllabi needed to drawn. Moreover, it was felt that there are not enough trainers and motivators to run the Entrepreneurship Development Programmes. The training program is designed to serve the following objectives 1. To impart basic knowledge about the industry, product & production methods 2. To build the necessary skill for new entrepreneurs. 3. To assist the entrepreneur to function more effectively in his present position by exposing him to various relevant concepts, techniques & information. 4. To expose the entrepreneur to latest developments which directly or indirectly affect him. 5. To broaden the vision of entrepreneurs by providing them suitable opportunity for an interchange of experiences within and outside an industry. 6. To impart customer education 7. To impart knowledge of the marketing of goods

Methods of Training 1. Individual Instructions Under this method, a single individual is selected for training. This mode of training is undertaken where a complicated skill is to be imparted to an individual 2. Group Instructions This mode of training is suitable for a group of individuals for tasks which are not very complicated and entire group needs same set of skills. 3. Lecture Method Here the instructor teaches the theoretical aspects. Any practicals are followed by the learners subsequently. Under this method, whenever there are any doubts they may be clarified on the spot. 4. Demonstration Method Where the performance of work to be shown practically by the instructor for better understanding, this method can be followed. This is more concerned with the practical then theoretical aspects. 5. Written Instruction Method The medium of training is followed where a feature reference is to be made by the learners. This method is mostly followed where a standardisation production is followed. 6. Conference Conferences are organised wherein experts in the field share their ideas & bring to the notice of learners new ideas & techniques to increase the production 7. Meeting Meetings are a mode of training involving a group of people who discuss the various problems confronting them; they exchange ideas & views and learn from each other.

9)MICRO MEDIUM AND SMALL ENTREPRENEURSHIP CRITERIA DEFINITION AND ROLE Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes: (a) Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951). The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery. (b) Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment. The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under:

Manufacturing Sector Enterprises Micro Enterprises Small Enterprises Medium Enterprises Service Sector Enterprises Micro Enterprises Small Enterprises Medium Enterprises

Investment in plant & machinery Does not exceed twenty five lakh rupees More than twenty five lakh rupees but does not exceed five crore rupees More than five crore rupees but does not exceed ten crore rupees

Investment in equipments Does not exceed ten lakh rupees: More than ten lakh rupees but does not exceed two crore rupees More than two crore rupees but does not exceed five core rupees

Definition of Micro, Small and Medium Enterprises in India There exists several definitions of the term small and medium enterprises (SMEs), varying from country to country and varying between the sources reporting SME statistics. The commonly used criteria at the international level to define SMEs are the number of employees, total net assets, sales and investment level. If employment is the criterion to define, then there exists variation in defining the upper and lower size limit of a SME.

The European Union makes a general distinction between self-employment, micro, small and medium sized businesses based on the following criteria: Number of employees 0 Self-employed 2-9 Micro business 10-49 Small business 50-249 Medium-size business In the Indian context, micro, small and medium enterprises as per the MSME Development Act, 2006 are defined based on their investment in plant and machinery (for manufacturing enterprise) and on equipments for enterprises providing or rendering services. According to the Micro, Small and Medium Enterprises (MSME) Development Act of 2006, (India) a micro enterprise is where the investment in plant and achinery does not exceed twenty five lakh rupees. A medium enterprise is where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees. A small enterprise is where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed five crore rupees. In the case of the enterprises engaged in providing or rendering of services, as (a) a micro enterprise is where the investment in equipment does not exceed ten lakh rupees. (b) a small enterprise is where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees. (c) a medium enterprise is where the investment in equipment is more than two crore rupees but does not exceed five crore rupees. According to the Ministry of Micro, Small and Medium Enterprises, recent ceilings on investment for enterprises to be classified as micro, small and medium enterprises are as follows: Classification Manufacturing Enterprises* Service Enterprises** Micro Rs. 2.5 million/ Rs. 25 lakh (US$ 50,000) Rs. 1 million/ Rs. 10 lakh (US$ 20,000) Small Rs. 50 million/ Rs. 5 crore (US$ 1 million) Rs. 20 million/ Rs. 2 crore (US$ 40,00,000) Medium Rs. 100 million/ Rs. 10 crore (US$ 2 million) Rs. 50 million/ Rs. 5 crore (US$ 1 million) * Investment limit in Plant & Machinery ** Investment limit in equipments

*** Rs 50 = 1 USD Before going further, it is important to mention some of the organisations that are associated with small-scale industry/ MSMEs: Small Industries Development Organisation (SIDO), Small Scale Industries Board (SSIB), National Small Industries Corporation Ltd. (NSIC), Confederation of Indian Industry (CII), Federation of Indian Chamber of Commerce and Industry (FICCI), PHD Chamber of Commerce and Industry (PHDCCI), Associated Chamber of Commerce and Industry of India (ASSOCHAM), Federation of Indian Exporters Organisation (FIEO), World Association for Small and Medium Enterprises (WASME), Federation of Associations of Small Industries of India (FASII), Consortium of Women Entrepreneurs of India (CWEI), LaghuUdyogBharti (LUB), Indian Council of Small Industries (ICSI), Indian Institute of Entrepreneurship (IIE), National Institute of Small-Industry Extension Training (NISIET), National Backward Caste Finance Development Corporation, National Institute for Entrepreneurship and Small Business Development (NIESBUD), Small Entrepreneurs Promotion and Training Institute (SEPTI), Small Industries Development Bank of India (SIDBI) etc

10)HOW TO MANAGE GROWTH WRT BUSINESS How to . . . manage your companys growth Dont watch from the sidelines 1 Growth has to be managed, ShaaWasmund, the founder of, an advice service for entrepreneurs, explains. When youre starting up, to a degree youre happy to let the business run away with itself and see where it goes. Its a seat-of-your pants adventure, but it cant and shouldnt last forever. Carry on like that and you risk overstretching yourself or overtrading. Plenty of great businesses and entrepreneurs have fallen into that trap and failed as a result. Make a plan 2 Start by knowing what you want to achieve, Emma Wimhurst, an entrepreneur and the author of Boom: Seven disciplines to control, grow and add impact to your business, says. You should be able to outline your aim in 50 words. Your formal business plan should include market research, details of the resources needed for growth, how you intend to grow and clear goals, so that you can assess progress. You also need to know when to cut your losses and move on, MsWasmund says. Dont try to do it all yourself 3 Force yourself to delegate, invest in quality people you can trust and put stringent reporting in place so youve always got a finger on the pulse, MsWasmund says. Alex Cheatle, the founder of Ten Lifestyle, a concierge service that grew from 33 to 240 staff in six years, suggests visiting Business Links website for some helpful advice: Its free and unbiased and, unlike a consultant, it wont spend the first hour telling you to buy another hour, he says. And I am a big fan of finding mentors for your top team.

Hire cautiously, hang on tight 4 Most growing businesses think too much about recruitment and not enough about retention, MrCheatle says: The more people you can hang on to, the fewer people you have to recruit. Established employees also know the business better. Margaret Heffernan, entrepreneur-in-residence at the University of Bath, says: Hire for attitude more than skills and make sure that the values of the people who work for you are consistent across the company. Fire your worst customers 5 Early-stage businesses tend to take on every customer they can, even if they are very demanding and not terribly rewarding. But, as you grow, you need to focus on the high-value customers, which means that some of your early customers may need to go, Ms Heffernan says. Think: structure and processes 6 You need to be certain that all aspects of the company are working together. If you find yourself in a position where sales are soaring, you will have a huge stress on your business if you dont have the systems in place to deal with it, MsWimhurst says. For example, an increase in orders sounds good, but if your supply chain cannot cope, your business will suffer. Communicate 7 In a 20-person start-up, this is relatively easy, but as things grow, communication needs to become more formal, more broadly based use meetings, e-mail, video and websites and more frequently repeated, MrCheatle says. This is needed to make sure that everybodys efforts are directed towards the same end.

Know your finances 8 Make sure your cashflow can handle the growth youve got planned and, if it cant, look at raising finance ahead of take-off rather than waiting until the situation gets out of control, when lenders will be less responsive, MsWasmund says. Also, do not leave everything up to your accountant or finance director. MsWimhurst adds: The information your accountant sends you will be a historical record, but if you are planning for, or managing, growth, you need to know what is happening right now. Analyse the growth 9 Take a hard-headed look to see what is true growth and what is simply a business riding a rising market, Ms Heffernan says. For example, are you just growing because you dont have many competitors yet? Profits and cashflow arent the only things to measure when doing this, MrCheatle says. Other factors to consider include employee engagement and service or product quality; be aware that growth can disguise a number of underlying problems. You need to know if the results are coming because you have a great sales team, not a great product, or if you are only in profit because of one big contract, he says.

Keep your focus 10 Just because you can grow everywhere does not mean you should, Ms Heffernan says. One of the big risks is people saying now we have lots of money we can do a whole bunch of new products and new brands and they lose their way. Instead, say no to opportunities that take you off track. Generally, entrepreneurs dont like to say no to anything we are opportunists but you need to take a step back and assess whether a particular idea will help you to achieve your aim, MsWimhurst says. Growth is only good if it is in the right direction.

How To Manage Rapid Growth As An Entrepreneur 1. Get Advice! How To Survive Rapid Growth: A few years ago we experienced a crazy amount of growth and promptly did all the wrong things (over-hired, over-expanded, etc.). We got into a CEO group and started talking to other more experienced business owners. Only then did we understand how to control the growth. If we hadnt had that advice, wed have exploded (in a bad way!). 2. Control Your Fixed Costs How To Survive Rapid Growth: Looks for ways to accommodate the increase in sales without opening another office/warehouse or entering into huge fixed expenditures. This might include (1) opening a virtual office instead of a bricks and mortar one, (2) using off peak workers or double teaming your equipment at your original facility instead of opening a new one, (3) servicing out of state sales by using Skype and teleconfercing instead of hiring an inter-state sales team, or (4) directing more customers online for sales and service assistance (standardize the information provided and cut down on the number of customer service staff needed). 3. Hire Slow; Fire Fast How To Survive Rapid Growth: When you are growing, you have to hire slowly (which seems counterintuitive), and then fire quickly if the person is a bad fit. This is true regardless of whether you are hiring employees or independent contractors. Get the right people in to help you grow and get rid of anyone who is wrong for you. 4. Expect It How To Survive Rapid Growth: Always be expecting rapid growth. If youre not expecting it, youre not thinking big enough. Even though you may not need additional employees, technology, and space, always be preparing so you wont be taken by surprise when the growth and success come. Keep an eye out for good team members (check out who works for your competition). Always be researching the available technologies so you are up-to-speed. You never know when additional office space will be needed. Keep an ear to the ground for good opportunities. 5. Transparency Is The Key How To Survive Rapid Growth: Over-communicate in times of crisis or stress, even when its positive stress around what to do about so much growth. Everyone wants to see a success story, and theyll do what they can

to pitch when asked and given a view into whats happening. Your customers and stakeholders will wait, they will help, and theyll cheer from the sidelines. 6. The Sum Is Greater Than Its Parts How To Survive Rapid Growth: Seek outside experts to help develop systems, refine strategies, and guide decisions. A team of individuals collaborating and brainstorming is far greater than any one individual is capable of doing single handedly. To identify talents, read Tom Raths Strengths Finder 2.0 and take the accompanying online assessment. 7. All Money Is Not Good Money! How To Survive Rapid Growth: You need to be highly selective int he clients you decide to work with when building your business. You could be greedy and take everyones money that comes your way but all money is not good money. When you grow too fast you lose your business, the goal you have in mind for it. It takes time to hire quality people even quality interns if you will to manage workload. This all plays a major part. You must simply step back during growth spurts and saydo I need all of this right now and where are the dead weights in the business or what clients could I really do without. 8. Where Are You Going? With Who? How To Survive Rapid Growth: Define your vision, make it exciting, and never lose sight of it. Be willing to modify it as conditions change. Communicate it to everyone. Repeat frequently. Know who you want to hire. Look for people with a history of getting results, not a collection of skills.Educate new employees. Show them how things are done and make them feel comfortable.Make sure everyone feels the companys goals are personally important to them. Celebrate progress. 9. Build A Team How To Survive Rapid Growth: Who says you have to do it alone. By building a solid team you can begin to delegate & outsource especially when feeling overwhelmed. As you grow you will need to manage your time even more. Sometimes its about letting go & saying no to those things that can tend to slow you down. 10. In The Cloud, The Sky Is The Limit! How To Survive Rapid Growth: Build with scalability in mind. We utilized the Amazon Cloud Computing Platform for hosting & data storage, which has allowed us to keep up with tremendous growth in traffic, users & data storage needs. Any Internet start-up that thinks they might need lots of servers and/or lots of storage would be wise to look into Cloud Computing for its immense scalability not to mention cost effectiveness. 11. Dont Wait To Delegate How To Survive Rapid Growth: When you identify an area that seems like it might start creating a bottleneck in your processes in the future, begin working on a plan to delegate or hire someone immediately. If you try to wait to delegate until the work becomes more than you can handle, its often too late, and quality or customer service has been compromised. By the time you train or hire someone to handle the area youve identified early on, there will be enough work to keep them more than busy.

12. Embrace It How To Survive Rapid Growth: You must embrace proven tools, strategies and best practices for growth, innovation and leadership the three main components required to develop a solid growth strategy. Senior executives must have the ability to benchmark such strategies with other best-in-class organizations. 13. Effective Customer Service How To Survive Rapid Growth: When a company is growing, its easy for customer service to suffer. In order to handle the influx of business, the typical response is to throw bodies at the problem. Because of time constraints the impulse is to get newly recruited customer service team on the phones and in front of customers as fast as possible instead of training them thoroughly. Hiring people to answer the phones rather than hiring people to help customers is not a good strategy. So what is the solution? Training. Its not sexy, and it may not sound very fun, but its critical, and it should be put in place starting with the first customer service rep. 14. From Distress To Eustress How To Survive Rapid Growth: There was a time years back when my firm experienced exponential growtha cluster of aerospace firms was seeking my training services. I found myself working six days a week with these Fortune 100 firms. My health didnt suffer but my mental equilibrium did. As a one-woman firm, I thought I could do it all. And, I did, but at considerable cost when it came to stress. My advice: hire people as needed. Less money in your pocket, but more peace in your mind (and soul!). 15. Get Out Of Your Own Way How To Survive Rapid Growth: I am a Goal driven, big picture visionary. I tend to feel drained and less effective when dealing with too many of the smaller details of any project.The greatest tip I can recommend to others who want to explode their business is to get out of your own way. Bring in people who are strong in areas you are weak. When you are first starting out, this may mean part time, but that is the key to massive strategic growth.Because the small details are just as important as the big picture, I bring in expert VAs to handle them. Then I am free to invest my energy on the things that I do best. 16. A High Bar For Talent With Low Walls Around It. How To Survive Rapid Growth: A small business doubling or tripling output year-over-year requires, above all, an obsessive attention to talent and process. Most likely, its the talent in your company that has enabled the exponential growth. Adding to it is a delicate alchemy; be selective. Secondly, the process through which initial success is achieved may buckle under the weight of that success; look to tear down the information silos and share. 17. Fast Is The Same A Slow How To Survive Rapid Growth: The way to manage rapid growth is the same as when you manage slow growth. You hire the right people at the right time all the time, not just to fill a position. You monitor hard dollar sales, dont borrow or payout on future sales. There is no such thing as future sales. When you need to make a change, think it through thoroughly first, not after you make the change. 18. The Good, The Bad, And The Art Of Outsourcing

How To Survive Rapid Growth: Become an expert on outsourcing. From hiring a reputable virtual assistant, to a product fulfillment center, web designers to SEO experts, you can build aa staff of people quickly and easily. Websites such as,, and all have people who are ready, willing and able to assist you at the drop of a dime.The trick to doing this without losing your shirt, is to allow yourself the time now, before the great expansion, to learn the ins and outs of outsourcing, how to locate the best people, what qualifications will you look for, and will they supply you with references and examples of their work. 19. Over Communicate How To Survive Rapid Growth: As business grows, departments grow, headcount grows and too frequently communication slows. You simply can not over communicate.Product, sales, marketing, operations, service all need to be in sync as the business booms. 20. Build AScaleable Infrastructure How To Survive Rapid Growth: One of the keys to managing rapid growth is to have an infrastructure in place that supports where you want to be in three years and not where you are now or expect to be next year. Work processes and systems that fall behind growth is one of the main reasons many businesses are not able to sustain growth or take advantage of opportunities as they arise. Having work processes that are scalable enables you to more easily expand the business capacity and capability to deliver. 21. Hire Temporary Workers! How To Survive Rapid Growth: Depending on my litigation caseload I can have extreme amounts of work at any given time and then a lull in activity for a few weeks.I hire temporary employees to get me through the work. There are so many highly skilled people out there looking for a job. They are grateful to be in the workforce again even for a short time, and I have excellent help with my projects. 22. Intelligent Growth How To Survive Rapid Growth: One of the biggest reasons most potentially successful businesses fail is because of..growth!..thats right. The road side is littered by great brands you can recognize that are no longer around. They may have begun with a great idea, but as they expanded they forgot my major rule about business success: It doesnt matter how much money you makeits how much you keep! Does that mean you shouldnt expand when the business is taking off?..not at all. But make the business revenues force your next move. In other words, make sure the revenues coming in cover the proposed addition of overhead, the biggest killer of businesses big and small. Better to move slower and not be able to initially quickly fulfill every order than to ramp up for increased demand that may or may not sustain itself over time. One of the safest ways to move into the first phase of any expansion is to outsource your growth. Then if things do slow, you have the means to immediately reduce your overhead. And if you can establish a long and proven track record, then you do have the funds to expand and bring in more of those functions in house if necessary. Bottom line, dont rush into running up expenses for an initial growth spurt. Let it organically develop. 9 out of 10 times your customers will still be there when you responsibly increase your overhead and your production or service capabilities at the same time. 23. Get In The Mixin Bowl & Hang On! How To Survive Rapid Growth: Growth can be a tricky thing to embrace. The key to successful growth (rapid growth) is to be prepared. If you plan and set a roadmap for direction when the growth explosion happens you will embrace it and move with it!

*Stay focused *Pay attention *Dont forget where you came from *Celebrate your success and look for the next opportunity


Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it's about selecting and executing the right ideas and bringing them to market in record time. In the 1990s, innovation was about technology and control of quality and cost. Today, it's about taking corporate organizations built for efficiency and rewiring them for creativity and growth. "There are a lot of different things that fall under the rubric of innovation," says Vijay Govindarajan, a professor at Dartmouth College's Tuck School of Business and author of Ten Rules for Strategic Innovators: From Idea to Execution. "Innovation does not have to have anything to do with technology." At the top of the list are the masters of many genres of innovation. Take Apple Computer Inc. (AAPL ), once again the creative king. To launch the iPod, says innovation consultant Larry Keeley of Doblin Inc., Apple used no fewer than seven types of innovation. They included networking (a novel agreement among music companies to sell their songs online), business model (songs sold for a buck each online), and branding (how cool are those white ear buds and wires?). Consumers love the ease and feel of the iPod, but it is the simplicity of the iTunes software platform that turned a great MP3 player into a revenue-gushing phenomenon. Toyota Motor Corp., which leapt 10 spots this year to No. 4, is becoming a master of many as well. The Japanese auto giant is best known for an obsessive focus on innovating its manufacturing processes. But thanks to the hot-selling Prius, Toyota is earning even more respect as a product innovator. It is also collaborating more closely with suppliers to generate innovation. Last year, Toyota launched its Value Innovation strategy. Rather than work with suppliers just to cut costs of individual parts, it is delving further back in the design process to find savings spanning entire vehicle systems.

Procter & Gamble Co. (PG ) (No. 7) has done just that in transforming its traditional in-house research and development process into an open-source innovation strategy it calls "connect and develop." The new method? Embrace the collective brains of the world. Make it a goal that 50% of the company's new products come from outside P&G's labs. Tap networks of inventors, scientists, and suppliers for new products that can be developed in-house. Coordinating innovation from the center is taken literally at BMW Group (BMW ), No. 16 on the list. Each time BMW begins developing a car, the project team's members -- some 200 to 300 staffers from

engineering, design, production, marketing, purchasing, and finance -- are relocated from their scattered locations to the auto maker's Research and Innovation Center, called FIZ, for up to three years. Such proximity helps speed up communications (and therefore car development) and encourages face-to-face meetings that prevent late-stage conflicts between, say, marketing and engineering. In 2004 these teams began meeting in the center's new Project House, a unique structure that lets them work a short walk from the company's 8,000 researchers and developers and alongside life-size clay prototypes of the car in development.