Entrepreneurship Mgmt | Entrepreneurship | Venture Capital

Entrepreneurship Management

1.

Who is an Entrepreneur? Explain briefly the charms of being an entrepreneur.

An Entrepreneur is one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessar7 resources to capitalize on them. The charms of being an entrepreneur are: a. Desire for responsibility: This is a fundamental characteristic of an entrepreneur who feels a deep sense of personal responsibility for the result of the projects that he starts. He prefers to have control over the resources, which he uses for achieving self-determined goals. b. Preference for moderate risk: This means that entrepreneurs do not take wild risks; instead, they take calculated risks. In other words, successful entrepreneurs are not as much risk takers as they are risk eliminators, removing obstacles that come in the way of the successful launch of their ventures. c. High level of energy: Entrepreneurs are more energetic than the average person, which sometimes proves to be vital in lunching a start-up company. That energy may be a critical factor given the incredible effort required to launch a start-up company. d. Desire for immediate feedback: Most entrepreneurs feel a sense of pride in being entrepreneurs. They take pleasure in facing the challenges that go with the running of businesses and constantly invite feedback as they are eager to find out how they are performing. They use this feedback to overcome their negative points by working on them. e. Skill at organizing: An entrepreneur knows how to bring together the right people for accomplishing a task. He effectively combines jobs and people and transforms his vision into reality. f. Flexibility: Entrepreneurs are capable of adapting themselves to varying demands of businesses and customers. E.g. IBM’s strategy of adopting e-mail advertising in early 1990 evinced a good response and increased its microprocessors business. g. High degree of commitment: Entrepreneurship is hard work, and launching an organization successfully requires total commitment from an entrepreneur. Business founders often immerse themselves completely in their companies.

2.

Trace the evolution of the concept of entrepreneurship in global perspective.

The concept of entrepreneurship is understood as a combination of creativity and innovation. It is a stance taken within the business applying inherent creativity as the act of 'thinking of' new things. It involves coming up with innovative ideas and trying out new methods within the operations. The concept of entrepreneurship is also concerned with new ways of looking at opportunities and identifying a new approach towards solving problems. Entrepreneurship requires the entrepreneur to shift paradigms and do away with old assumptions and perspectives. The entrepreneur basically adopts techniques to stimulate creativity amongst employees. The concept of entrepreneurship involves the consideration of a number of opportunities to enhance employee performance and business profits. The entrepreneur is expected to imply strategic planning to assess if the opportunities provided for growth are worthwhile and how they could be successfully exploited. Strategic planning is an essential part of the concept of entrepreneurship and effective application helps to ensure successful operation. It is a useful tool within the sphere of influence of entrepreneurship and serves a niche market for improving on the business performance. The concept of entrepreneurship involves the owner taking absolute responsibility of empowering the employees and in turn, affecting sales and profitability of the business. Entrepreneurs play a significant role in the development of the economy. An entrepreneur affects the lives of many people as it creates new job, provides the product, develops the technology, and provides feasible solutions to the existing social and environmental problems. Entrepreneurship creates wealth for the person and for the country. It is the most powerful force of the economy. Today, the business environment and technological advancements present complex challenges to an individual’s entrepreneurial drive and determination. Most entrepreneurs prefer to outsource projects to save on operating cost. They even outsource the most critical process of their manufacturing or business operations. Entrepreneurs need the right interest to initiate the right motivation for starting a small business or project. Interest comes from the dream to improve an individual’s lifestyle, social status, control of future, and raise standard of living. Entrepreneurship is a natural medium to fulfill economic aspirations, channel drive and energy, and build something for themselves.

organizing sales. Assumption of Risk: The entrepreneur assumes all possible risks of business which emerge with changes in the tastes of consumers. Managerial Functions: There are different types of managerial functions that an entrepreneur has to perform and these are based on the size and activities of an enterprise. Why Entrepreneurs are regarded as ‘Catalysts’ in the context of Entrepreneurship Entrepreneurs are regarded as ‘Catalysts’ because of the three factors which are: Assumption of Risk. if any. risk-assumption and risk-bearing remain the most important functions of an entrepreneur. providing production facilities. Manufacturing activities require a relatively high capital investment and more entrepreneurial abilities than distribution activities. Such risks are not insurable and the entrepreneur has to bear the loss. Generally an entrepreneur performs many useful functions for the development of society and to satisfy the needs of fellow citizens. rising of finance. selection. An entrepreneur has strong motivation and desire to achieve success by undertaking a venture and bearing risk for earning profit. which he tries to reduce with this initiative. techniques of production and new inventions. Business Decisions: The entrepreneur has to decide the nature and type of business to undertake the nature and type of goods that must be produced or services that must be provided to customers. recruitment etc.3. conducting and so on. . Administrative functions such as manpower planning. The managerial functions include formulation of production plans. knowledge and skill and good decisions. Considering all the above factors make entrepreneurs catalysts in the context of entrepreneurship. He enters the particular industry which offers him the best prospects and produces whatever commodities he thinks will pay him the most and employs those methods of production which seem to him to be the most profitable. Business Decision and Managerial Function. Thus. dealing with suppliers for procurement of raw materials and other materials. The entrepreneur can identify opportunities to start a business either as a manufacturer or as a distributor.

the management of risk-taking appropriate to the opportunity. and through the communicative and management skills to mobilize human. f. d. Concern for high quality of work: Acts to do things that meet or beat existing standards of excellence. Acts to extend the business into new areas. Takes action in the face of a significant obstacle. Commitment to work contract: Places the highest priority or getting a job completed. h. Uses contacts or information networks to obtain useful information. Sees and acts on opportunities. c. Makes a personal sacrifice or expands extraordinary effort to complete a job. Pitches in with workers or works in their place to get the job done. The important competencies/traits of entrepreneurs are: a. Plans by breaking large task into sub-tasks. Does things before being asked or forced to by the events. Initiative: Takes action that go beyond job requirements or demand of the situation. Information Seeking: Takes action on own to get information to help reach objectives or clarify problems. g. Express confidence in own ability to complete a task or meet a challenge. Entrepreneurship is the attempt to create value through recognition of business opportunity. b. equipment’s. Self-Confidence: Has a strong belief in self and own abilities. Takes a logical and systematic approach to activities. Seeks information as asks questions to clarify what is wanted or needed. Generates and evaluates alternatives. Seizes unusual opportunities to obtain finance. States a desire to produce work high quality. e. Systematic Planning: Develops and uses the logical. Accepts full responsibility for problems in completing a job for others. Sticks with own judgment in the face or opposition or early lack of success. Develops plans that anticipate obstacles. Sees and Acts on Opportunities: Looks for and takes action on opportunities. products or services. . Personally undertakes research.4. Define Entrepreneurship and discuss the important competencies/traits of entrepreneurs. space or other desired assistance. Does something that he says is risky. financial and material resources necessary to bring a project to fruition. Does personal research on how to provide a product or service. Persistence: Takes repeated or different actions to overcome obstacles. compares own work or own company’s work favorably to that of others. step-by-step plans to reach goals. analysis or investigation.

He is also one who always searches for change. For example. An Innovative Entrepreneur is highly motivated and talented and innovation in his key function. An entrepreneur creates new values or increases the value of what already exists. He continues to carry out his business in the traditional way even when he suffers losses. c. electronics and infrastructure. Indian entrepreneurs are adopting the new technologies developed in Japan. and exploits it as an opportunity. That means an imitative entrepreneur is one who is ready to adopt the successful innovations already inaugurated by innovative entrepreneurs. France and Germany in various lines of products such as automobiles. d. An entrepreneur can exhibit his innovativeness in any of the following ways: (i) By introducing a new product. the coir industry in Kerala is dominated by drone entrepreneurs. new quality. religion. Normally. lack of understanding of new development in his field of operations. (ii) By opening a new market. which is already in place. Innovative entrepreneur: An entrepreneur who is able to foresee potentially viable and profitable opportunities through innovation is considered as “Innovative Entrepreneur”. This type of an entrepreneur plays a vital role in developing countries. for example e-business. He simply follows the innovators after carefully observing how they fare and to what extent their innovation has caught the imagination of the society. b. What is the different types/classification of entrepreneurs? Explain giving examples. Adoptive or Imitative Entrepreneur: An Adoptive or Imitative Entrepreneur does not innovate anything. He is not prepared to introduce any change in his method of production. traditions and past practices and he is not ready to take any risk at all. He is ready to imitate only when it becomes perfectly clear that failure to do so would result in heavy loss for him. . he has neither the will to introduce new changes nor the desire to adopt new methods. responds to it. (iii) By discovering a new source for the supply of raw material or semi-finished goods. a new process or a new method for an existing product. Fabian Entrepreneur: This type of entrepreneur is one who is cautious in introducing any change in the business. He is dominated more by customs. Drone Entrepreneur: This type of entrepreneur is one who blindly follows the traditional methods of production even when it results in loss to him. but imitates techniques and technologies innovated by others. For example.5. The different types of entrepreneurs are: a. such as lack of funds. Reasons of this attitude could be several.

with their innovative and dedicated efforts. take their own decisions and put their ideas into practice. Such executives turned entrepreneurs were encouraged to survive in an organization. A system was devised whereby such executives would operate as entrepreneurs with full independence and autonomy but within the organization. They serve as champions to others in the organization. are perceived as valuable assets by the organizations. This brain drain had to be stopped as industries were losing their highly competent and capable executives. They preferred to start their own enterprise as they wanted fascinating and lucrative jobs. They were allowed to introduce new products. Such people were called intrapreneurs. . Gifford devised a way to be satisfied by their bosses. Their turnover was also reduced. Many bright executives in major corporations started leaving their jobs because of their entrepreneurial urge and drive. Intrapreneurs.6. Gifford Pinchot defined the term intrapreneur with reference to the persons who resigned from their well-paid executive positions to launch their own ventures. They were adequately sponsored and their entrepreneurial spark was kept alive. Their success as entrepreneurs posed a threat to the corporation that they had left a few years ago. Who are Intrapraneurs? Explain how these breeds of entrepreneurs evolve? The term intrapraneur was coined in the US in the late 70’s.

Conversely it’s mandatory for a manager to be educated in the fields of management theories and practices. Differentiate between Managers and Entrepreneurs: (i) An entrepreneur and a manager differ in their standing.7. Entrepreneur’s objective is to innovate and create and he acts as a change agent where as a manager’s objective is to supervise and create routines. (b) Aggressiveness and Assertiveness: Aggressiveness Assertiveness Problem Solving Content Self-enhancing Expresses feelings about self Achieves desired goals and also will negotiate Confrontation Angry Self-enhancing at other’s expense Expresses depreciation of others Achieves desired goals by hurting others . an entrepreneur is the owner of the organization and he bears all the risk and uncertainties involved in running an organization where as a manager is an employee and does not accept any risk. He implements the entrepreneur’s plans and ideas. (v) Entrepreneur is required to have certain qualifications and qualities like high accomplishment motive. (vi) “An entrepreneur could be a manager but a manager cannot be an entrepreneur”. (iv) An entrepreneur is not induced to involve in fraudulent behavior where as a manger does. innovative thinking. A manager may cheat by not working hard because his income is not tied up to the performance of the organization. He may employ a manager in order to perform some of his functions such as setting objectives. a. (iii) An entrepreneur is faced with more income uncertainties as his income is contingent on the performance of the firm where as a manager’s compensation is less dependent on the performance of the organization. risk-bearing ability etc. A manager cannot replace an entrepreneur in spite of performing the allotted duties because a manager has to work as per the guidelines laid down by the entrepreneur. forethought. An entrepreneur is intensely dedicated to develop business through constant innovation. rules etc. (ii) An entrepreneur and a manager differ in their objectives. policies.

13. These factors are based on the availability of resources. The following are examples of external factors:     Government support and assistance towards industrialization Availability of factors of production and the present economic condition of the country Interest and support from established business houses Hopeful demand for production. his level of education and his desire to achieve. Internal Factors: These are unique factors and differ from person to person. This can be done by means of training programs or other courses of action such as knowledge sharing among equivalent groups. government’s policies towards industrialization and policy maker’s vision. The term ‘motivation’ is derived from the word ‘motive’. Motive is a state of our mind that moves. The roles of motivation in Entrepreneurship development are based on the below two factors which are: Internal and External. In order to generate a willingness in a person to work hard so as to achieve organizational objectives. activates. energizes or directs our behavior toward our goals. . They arouse and energize a person’s activities. and satisfying the needs and desires of entrepreneurs. What is achievement motivation? Describe its role in Entrepreneurship development Motivation is a continuous process to ignite the inherent talent and aspirations of entrepreneurs to drive them to achieve their organizational objectives and goals. Motivation may be defined as a process of inspiring someone to adopt a desired course of action. Internal factors refer to a person’s family background. They give direction to human behavior to achieve goals or fulfill needs. Motives are expressions of a person’s goals or needs. The following are examples of internal factors:     Desire to do something new Level of education Technical Education Number of years of experience External Factors: These are common to every individual and are outside the scope of any one individual. Incentives exist to satisfy human needs. his motives must be satisfied by offering incentives. An incentive is something an individual perceives as helpful towards achieving his goals.

business laws and regulations. customer relationship and customer service. Essentials of management: This module is aimed at providing participants with basic management and technical know-how to enable them to operate their business enterprise effectively and efficiently. product and production methods. organization. industrial opportunities. Provide education regarding customer buying behavior. This covers such aspects as government incentives. Help know the pros and cons of being an entrepreneur. Explain the objectives and structure of typical Entrepreneurship Development Programme. It consists of the following subjects: (i) General Management (ii) Marketing Management (iii) Production Management (iv) Financial Management Fundamentals of project feasibility study: This ratio provides guidelines on the effective analysis of feasibility of the project in view of marketing. policies. Successful entrepreneurs are invited to speak about their experience in setting up and running a business. entrepreneurial behavior and the facilities available. Guide entrepreneurial behavior in day-to-day activities. The structure of typical Entrepreneurship Development Programme consists of the below six modules:  Introduction to entrepreneurship: This module covers general knowledge on factors affecting small-scale industries. financial and social aspects. the role of entrepreneurs in economic development. Develop and strengthen entrepreneurial qualities to achieve the objectives and goals of an enterprise. Acquire necessary managerial skills that are needed to run the enterprise. Motivation training: Motivation training is a three-day live in-module aimed at increasing the participant’s level of achievement and confidence and developing the right attitude and behavior towards business.     . Organizing the business: The purpose of this module is to enable participants to know about the environment in which they will operate their business. The objectives of Entrepreneurship Development Programmes are as below:       Provide knowledge about the industry. technical.14.

Why do you value an EDP? Describe the activities of the post-training phase of a typical EDP. market conditions.15. . An EDP can be judged on the basis of the extent of success achieved in the realization of objectives established under EDP. wealth. (c) Knowledge and ability of the entrepreneur (KA): experience of the entrepreneur. The Entrepreneurial performance is a function based on the following factors: (a) Socio cultural background of the entrepreneur (SB): This implies the environment in which the entrepreneur was born and brought up. It refers to the education.g. (d) Financial Strength (FS): internal and external sources. status. availability of technology and the labour situation. It conditions the values and attitudes of the entrepreneur. training and It means the funds which an entrepreneur can mobilize from (e) Environmental Variables (EV): These consist of government policies. (b) Motivational Force (MF): It implies the motives which prompt a person to undertake entrepreneurship e. self-employment etc.

when demand for such a service or a product introduced by the idea is expected to surge. can lead to a very profitable business. if you’ve travelled. For example. because in his job as an airline pilot he was constantly carrying his bags from one place to another. you’ve undoubtedly seen those suitcases with wheels. knowledge and skills: By tapping into the knowledge of a particular industry or market gained by working in it. What is a business idea? Explain the various sources of business ideas. scuba diving etc. Robert Plath created the first wheeled suitcase. however. A business idea is a concept which can be used for commercial purposes. Business ideas if introduced at the right time. External environment: Positive trends or changes that provide unique and distinct possibilities for innovating and creating value – in the entrepreneurial context. Work experience. These opportunities can be found in the technological. The various sources of business ideas are:  Personal interests or hobbies: Many entrepreneurial ventures are formed because of an entrepreneur’s love of doing something such as restoring antique automobiles. comfortable way to do so. an entrepreneur can pinpoint areas of potential opportunity. he created not only a new product but also a new industry. In the process of using his workrelated experiences and knowledge. Products and services currently available (both familiar and unfamiliar): The products and services we use every day and something which we are familiar of and something which we feel is required to make our lives more comfortable and easy. economic and legal-political sectors. the Travelpro Rollerboard. Business ideas are available through different sources.16. it is the application applied on these ideas and the timing makes all the difference in failure or success. societal culture. demographics.    . and he was looking for a more convenient. A successful entrepreneurial business might be built around one’s personal interests in a particular product or activity.

it shoots out leaves and puts down roots as it becomes an adult (maturity). a seed is planted (introduction). Brainstorming is a relatively simple technique that is typically done with a group of people. The members contribute as many ideas as they can in a given time by describing them verbally. after a long period as an adult the plant begins to shrink and die out (decline). Introduction The need for immediate profit is not a pressure. Participants are encouraged to come up with as many ideas as possible and build on each other’s ideas. joint ventures and take each other over. a skimming price strategy is employed.17. Limited numbers of product are available in few channels of distribution. In a brainstorming session. Each participant gets a stack of index cards. Pool Method: Each participant gets a form. It is an idea-generating process for developing creative solutions that encourages as many alternatives as possible while withholding criticism. b) Product Life Cycle: The Product Life Cycle (PLC) is based upon the biological life cycle. it is designed to generate lots and lots of ideas in a short amount of time. Brain writing is an alternative method to brainstorming that tries to encourage a more uniform participation within the group. For example. Like brainstorming. The product is promoted to create awareness. where everyone is free to stretch their minds and think out of the box. In theory it's the same for a product. A group leader states the issue or problem to be addressed and ensures that all participants understand it. If the product has no or few competitors. Problem is written * Idea card (Pin Card) method: on visible boards. 3 ideas per round and 5 minutes per round. * Electronic method: Ideas are adapted by emailing sheets around or posting onto a website. eventually the market stabilizes and the product becomes mature. Products become more profitable and companies form alliances. There are different methods for conducting a brainwriting session: * * 6-3-5 method: 6-3-5 means 6 in a group. Growth Competitors are attracted into the market with very similar offerings. it begins to sprout (growth). Explain the following: a) Brainstorming and Brain writing: It is one of the most familiar and widely used techniques to generate ideas. . then after a period of time the product is overtaken by development and the introduction of superior competitors. it goes into decline and is eventually withdrawn. Advertising spend is high and focuses upon building brand. Problem is written in the form. After a period of development it is introduced or launched into the market. Market share tends to stabilize. it gains more and more customers as it grows. preferably one with a relaxed environment. a group of people get together in a room.

There is intense price-cutting and many more products are withdrawn from the market. However. whether it is a new product. is the commercialization of the invention itself The words invention and innovation are sometimes used interchangeably. For example more innovative products are introduced or consumer tastes have changed. is the basis of developing an invention or an innovation. while an innovation is the practical application or commercialization of a new idea or concept into something of value in the marketplace. process or organizational system. Producers begin to leave the market due to poor margins. . Profits can be improved by reducing marketing spend and cost cutting. Innovation. device or process. The invention must create value for it to become a successful innovation. that identifies an opportunity or makes a discovery.Maturity Those products that survive the earlier stages tend to spend longest in this phase. The creation or development of the invention alone does not translate to an innovation. although not mutually exclusive. Producers attempt to differentiate products and brands are key to this. Sales grow at a decreasing rate and then stabilize. derived from an individual’s ideas or from scientific research. Price wars and intense competition occur. they are quite distinct. on the other hand. A curious and open mind. Decline At this point there is a downturn in the market. Both invention and innovation begin with a creative process. An invention is a new creation. c) Invention and Innovation: Invention refers to new concepts or products derived from an individual’s ideas or from scientific research. Promotions become more widespread and use a greater variety of media. At this point the market reaches saturation.

18. sales efforts required. The willingness to assume risk is a major characteristic of an entrepreneur. Risks: Risks are unavoidable. It is difficult to predict the future. So the availability of raw materials. How business ideas are generated? Describe its various evaluation parameters. consumption trends. Raw Material: Assurance of continuous and required qualities of qualitative raw material provides the half the success of any project. cost of obtaining it and its supply by the government at concessional rate are factors to be considered by the entrepreneur. the existing and potential demand in the market. the project can run successfully. Successful businesses find a need and fill it by providing a service or product.    . A great business idea combines your skills with imagination and market demand. availability of substitutes and technological development. Entrepreneurs who look at ways to make an existing product or service better can be as successful as those who create or invent products The various evaluation parameters are as below:   Well-matched with the promoter: The entrepreneur should ensure that the proposed project is well-matched vis-à-vis the available financial and human resources. But the possible effect of unfavorable future events on each of the project ideas can be examined. A business opportunity or idea often comes from everyday problems that someone solves. nature of competition. Government Regulations: The project to be undertaken should not violate government rules and regulations. So. Entrepreneurs are not only facing pure risk but also strategic financial risk. Favorable and growing market: With an assured market for the products or services. and export possibilities are the factors to be evaluated by the entrepreneur.

some academics still refer to them as two different techniques since they do have some minor technical differences. [However. CPM (Critical Path Method) is a very similar technique that was developed by the RAND Corporation in 1957 (and likely 'borrowed' by the Navy). There is not really any major logical difference between PERT and CPM and most people today consider them to be the same technique.] PERT is also logically similar to certain other planning techniques. and analyzing information with enough objectivity and detail to support a program decision that makes optimum use of resources to achieve desired results. What do you mean by Project Design? Briefly explain the network analysis techniques PERT & Project design first requires gathering. the similarity that is easiest to observe is that. PERT / CPM analysis is used for: 1) 2) Drawing a diagram that shows the order in which the different tasks will be done. synthesizing. CPM. Gantt Charts and Material Requirements Planning (MRP) as well. Basically. all three techniques count backwards from the desired finish time to plan task start times. . and 3) Determining the critical path. Determining the minimum project finish time. on budget" completion of projects that was originally developed by the Navy in 1958 to manage the Polaris missile project. ie. PERT (Program Evaluation and Review Technique) is a logical method for organizing the "on-time.28. the sequence of tasks that will make the entire project late if one of the tasks longer than planned. in a sense.

As your business and sales grow. but if you're entering a competitive industry. It is based on categorizing production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production). All start-up costs. Unit price refers to the amount you plan to charge customers to buy a single unit of your product. Psychology of Pricing: Pricing can involve a complicated decision-making process on the part of the consumer. then that dollar represents a variable cost. you'll have to keep the price in line with the going rate or perhaps even offer a discount to get customers to switch to your company. and there is plenty of research on the marketing and psychology of how consumers perceive price. you can't calculate likely revenues if you don't know what the unit price will be. Variable costs: These are recurring costs that you absorb with each unit you sell. If you've created a brand new. you can begin appropriating labor and other items as variable costs if it makes sense for your industry. such as rent. It is a mix of quantitative and qualitative factors. For example. if you were operating a greeting card store where you had to buy greeting cards from a stationary company for $1 each. Write explanatory notes on any three of the following: a. Take the time to review articles on pricing strategy and the psychology of pricing before choosing how to price your product or service.30. unique product. Fixed costs: These are costs that are the same regardless of how many items you sell. insurance and computers. are considered fixed costs since you have to make these outlays before you sell your first item. Setting a Price: This is critical to your breakeven analysis. Pricing Methods: There are several different schools of thought on how to treat price when conducting a breakeven analysis. you should be able to charge a premium price. Break-even analysis: Break-even analysis is a technique widely used by production management and management accountants. .

b. As it is considered as one of the fictitious asset of the company and is treated as deferred revenue expenditure because it derives benefits in the long run. . This in turn enables a project manager to determine the minimum time requirements for the entire project management life cycle to be completed. Pre-Operative expenses of Capital Nature are to be capitalized with the cost of fixed assets in relation to which they have been incurred which would be the case with salary of engineers and technicians engaged in installation of plant. Pre-operative expenses are those which are connected with actions that are required for start up of operations. Pre-operative expenditure can therefore be capitalized by apportionment/allocation to assets which are the subject matter of operation. In the Balance Sheet the total amount of preliminary expenses is reduced by the amount of expenses written off. and proves to be a valuable tool to reduce the redundancy in projects which involve multi-tasking. c. pre-operative expenses if Revenue Nature are to be charged against the profits of the company in the year in which business has commenced. PERT looks into analyzing the different tasks which are included in a project in order to estimate the time frames needed to complete each one. it is a project management model which basically works towards analysis and representation of the tasks that are a part of any given project. For those who wish to know what is PERT. More specifically. Whereas. These expenses are huge in amount are nonrecurring and are not related with the day-today operations. The balance left of preliminary expenses is to be shown in the asset side of the balance sheet of the company under the heading of “Miscellaneous Expenditure”. Preliminary expenses are the expenses relating to the formation of an enterprise. on the other hand. As a result PERT tends to be heavily used in large-scale. the expenses incurred after company formation but prior to commercial production. one-time infrastructure and Research and Development projects where the time factor holds greater relevance than the inherent costs. is a wider term. including the normal expenses such as salary and rent incurred. PERT: PERT is also known as the Program (or Project) Evaluation and Review Technique. Preoperative expense. Every year a portion of them are written off out Securities Premium Account or it may be written off out of the Profit& Loss A/c gradually over some period. Preliminary and Preoperative Expenses: Preliminary Expenses are the expenses incurred before the commencement of the company that are beared by the promoters of the company for its incorporation.

.d. Lenders have a legal right to interest on a loan and repayment of the capital. Venture capital in the UK originated in the late 18th century. Venture Capital: Venture capital provides long-term. buy-out a business in which he works. turnaround or revitalize a company. committed share capital. to help unquoted companies grow and succeed. Obtaining venture capital is substantially different from raising debt or a loan from a lender. the venture capitalist's return is dependent on the growth and profitability of the business. This return is generally earned when the venture capitalist "exits" by selling its shareholding when the business is sold to another owner. expand. This informal method of financing became an industry in the late 1970s and early 1980s when a number of venture capital firms were founded. venture capital could help do this. when entrepreneurs found wealthy individuals to back their projects on an ad hoc basis. irrespective of the success or failure of a business. As a shareholder. If an entrepreneur is looking to start-up. Venture capital is invested in exchange for an equity stake in the business. buy-into a business. There are now over 100 active venture capital firms in the UK. which provide several billion pounds each year to unquoted companies mostly located in the UK.

The information thus obtained from primary and secondary sources assist in deeply analyzing the data so that a report that presents the major findings can be offered to lenders and investors or utilized by the management of the firm for making GO/NO GO decisions with respect to project feasibility. b. such as partnerships. for assessing the demand for the service or product and gaining objective feedback. A study of all these is essential for an entrepreneur to have an understanding about the safety of his investment. Components of a business plan: The components of a business plan are: Estimation. Following the identification of the potential customers to be targeted. It is usually inclusive of growth trends and the size of the industry. and cost of product and profitability. land title deed. The business plan has a component about the cash inflow. competition and prices must be available so as to adopt the suitable technology based on the competitive products technology. Market feasibility study: Market feasibility studies usually include primary and secondary research. raw material consumption. possible future changes in the volume and pattern of supply and demand should also be estimated to assess the long term prospects of the unit. investment ability of company and pricing of technology. lease and rent deed and it should also stress on the legal aspects related to business. Adequate information regarding technology. The latter involves information that already exists and offers a general outline of the industry in which the entrepreneur intends to compete. An organization works with the motive of making profits. The former is used for compiling information that does not exist yet by means of market surveys and offers details about the level of interest and market strength of the proposal products or services. The question asked in the survey must be unbiased and must ensure that the research quality is not compromised. Projections. . mails or online means. A business plan should estimate the production demand.22. The usual size of a sample is between 100 and 350 responses. Information. The plan has to project the cost of production and sales revenue to determine the feasibility of the plan. usually through telephone. In addition. a market survey is carried out. Calculations and Documentation. depending on the budget and the accuracy of the data. The components of a business plan guide the preparation of a comprehensive plan. Apart from this. manpower requirements and capital requirements in terms of value of money. It should also estimate the prices of product and sales. cash outflow. Write short notes on any two of the following: a. a business plan should concentrate on flow of work in the organization by making proper documentation on price quotations for materials and machinery.

we believe that apart from designing a comprehensive entrepreneurship and SMEs strategy. employment bureaus. iii) To create incubator units providing the space and infrastructure for business beginners and innovative companies. Owing to their private ownership. the development of national SME support institutions and networks is one of key condition for success. A comprehensive government approach to entrepreneurship and SMEs would provide for a full coordination of activities of numerous governmental institutions (chambers of commerce. standards.9. designing a comprehensive. etc. SMEs have strategic importance for each national economy due a wide range of reasons. There is no simpler way to create new job positions. and helping them to solve technological problems. Logically.) and NGOs dealing with entrepreneurship and SMEs. the government shows such an interest in supporting entrepreneurship and SMEs. Therefore. taxation. their flexibility and adaptability as well as their potential to react to challenges and changing environments. coherent and consistent approach of Council of Ministers and entity governments to entrepreneurship and SMEs in the form of government support strategy to entrepreneurship and SMEs is an absolute priority. and to search for know-how and promote innovation . marketing To advise on business planning. marketing and accountancy. There are no doubts that governments should create different types of support institutions: i) issues. ii) To provide information on regulations. quality control and assurance. SMEs contribute to sustainable growth and employment generation in a significant manner. increasing GDP and rising standard of population than supporting entrepreneurship and encouraging and supporting people who dare to start their own business. Every surviving and successful business means new jobs and growth of GDP. Explain briefly the role of Government of India in promoting the growth of Indian Entrepreneurs? Small and Medium-sized Enterprises (SMEs) in market economies are the engine of economic development. entrepreneurial spirit. customs duties. With no pretension of defining the role of government in supporting entrepreneurship and SMEs.

They employ their own as well as borrowed resources for setting up their enterprises. Entrepreneurial activities also generate more activities and give a multiplier effect in the economy.10. Increase in gross national product and per capita income of the people in a country. As time passes. . which is very essential for the industrial and economic development of the country. they help increasing gross national product as well as per capita income of the people in a country. providing direct and indirect employment opportunities to many more. Such type of entrepreneurial activities leads to value addition and creation of wealth.  Wealth Creation and Distribution: It stimulates equitable redistribution of wealth and income in the interest of the country to more people and geographic areas.  Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the lookout for opportunities. The major roles played by an entrepreneur in the economic development of an economy are discussed in a systematic and orderly manner as follows:  Promotes Capital Formation: Entrepreneurs promote capital formation by mobilizing the idle savings of public. Explain how? The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. both on small and large-scale numerous job opportunities are created for others. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. thus giving benefit to larger sections of the society.  Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem of underdeveloped nations. bring in new products and services and develops markets for growth of the economy. In this way. is a sign of economic growth. encourage effective resource mobilization of capital and skill.. They explore and exploit opportunities. In this way. With the setting up of more and more units by entrepreneurs. Entrepreneurship is one of the most important inputs in the economic development of a country. ‘Entrepreneurship’ plays a critical role in the economic development of a country. these enterprises grow. entrepreneurs play an effective role in reducing the problem of unemployment in the country which in turn clears the path towards economic development of the nation. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector.

The amount of information to be furnished in the report depends upon the size of the unit. The Planning commission of India has issued certain guidelines for formulating a business plan for industrial concerns. the nature of production and the amount of finance required. These guidelines are more or less similar to the one that is discussed below:         General Information Preliminary analysis of alternatives Project description Marketing plan Capital requirements and costs Operating requirements and costs Financial analysis Economic analysis. . A business plan may be prepared in different ways by different entrepreneurs. Improvement in the Standard of Living: Increase in the standard of living of the people is a characteristic feature of economic development of the country. 21. This enables the people to avail better quality goods at lower prices which results in the improvement of their standard of living. Define a business plan and discuss the typical structure of an ideal business plan. Entrepreneurs play a key role in increasing the standard of living of the people by adopting latest innovations in the production of wide variety of goods and services in large scale that too at a lower cost. There is no standard pattern for it. However. it must contain all information necessary to appraise it and for lending institutions to take a financial decision.

Market Feasibility: Includes a description of the industry.e. The areas of assessment of Market feasibility study are as below: Description of the Business: The product or services to be offered and how they will be delivered. returns on investment. Serve as a solid foundation for developing your business plan.). sales projections. current market. and serve as a valuable tool for developing a winning business plan.25. Explain the importance and areas of assessment of Market feasibility study. etc. Financial Feasibility: Projects how much start-up capital is needed. anticipated future market potential. labor. address things like where and how the business will operate. to make the business work. A feasibility study looks at the viability of an idea with an emphasis on identifying potential problems.. The Market feasibility study is important due to the below factors:     List in detail all the things that you need. potential buyers. transportation. They provide in-depth details about the business to determine if and how it can succeed. technology needed. etc. materials. Technical Feasibility: Details how you will deliver a product or service (i. etc. Develop marketing strategies to convince a bank or investor that your business is worth considering as an investment. sources of capital. Organizational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business). where your business will be located. . Identify logistical and other business related problems and solutions. competition.

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