What is Entrepreneurship ?

• First concept developed in the year 1700’s • The term comes from French verb
―entrprendre‖ and German word ―unternehmen‖ , both means to ― undertake‖

• Bygrave and Hofer in 1891 defined the

entrepreneurial process as –involving all the functions, activities, and actions associated with the perceiving of opportunities and the creation of organisations to pursue them‖

• According to Joseph Schumpter – the carrying

out of new combinations we call enterprise, and the individuals whose function it is to carry them out we call entrepreneurs.

opening of a new market.• Schumpter tied entrepreneurship to the creation of five basic new combinations namely – introduction of a new product. . the conquest of a new source of supply and carrying out of a new organization of industry. introduction of a new method of production.

. When individuals create a new organisation. the creation of a new organisation.• Peter Drucker (1985) proposed that entrepreneurship is a practice. Entrepreneurship begins with action. they have entered the entrepreneurship paradigm .

• Entrepreneurship ---mindset covers motivation and capacity identify an opportunity produce new value or economic success creativity or innovation to compete .

fairness. leadership qualities. energy. attitude. intelligence. good judgment. selfconfidence. tactfulness and emotional stability . initiative.creativeness.honesty.• Entrepreneurial traits and Motivation A successful entrepreneur must be a person with technical competence.

• Mental ability • Clear objective • Business secrecy • Human relations ability • Communication ability • Technical knowledge .

• Motivator • Self confidence • Long-term involvement • High energy .

Characteristics of small scale entrepreneurs • They are young men • They are energetic/zealous/enthusiastic • They have minimum basic education • They are pleasant mannered • They are hard working • They are determined • They are systematic .

• They are self made men • They are self-confident • They are disciplined men • They follow a planned approach • They are trained/experienced • They have entrepreneurial zeal • They have meager capital .

• Their area of operation is small • Generally they deal in one product • They employ a few people • Their turnover is small • They are flexible .

when they must be obtained and how to gain access to them . business must generate sales Generate sales---must have inventory. facilities What assets to obtain.Financial Resources for New Venture • Asset Management— cash is the most important asset to manage To generate cash .

• Inventory decisions • Accounts receivable decisions • Equipment decisions • Facilities decisions .

installment credit and customer advances) Required to meet variable expenses. seasonal / temporary WC .• Types of industrial finance • Short term finance ( one year / two- banks. trade credit.

banks. debentures. financial institutions.• Medium term finance – ( one to five years) -. sloughing back of profits ( for existing ) .for permanent WC small expansions replacement Modernizations etc (issue of shares.

ploughing back of profits . debentures. loans.• Long term finance (Exceeding five years) to procure fixed assets establishment of new business expansion modernization Sources—issue of shares.

• Govt. schemes Technicians scheme: technically qualified or experienced professions up to Rs 7.50 lakhs Special capital schemes:-soft loan assistance up to Rs 4 lakhs is available on soft terms along with term loan for technically qualified or experienced persons .

• Seed capital scheme: assistance towards equity on soft terms up to Rs 15 lakhs along with term loan for technically qualified or experienced persons • Composite Loan Scheme: Both equipment finance and working capital up to Rs 50000 for artisans and rural industries .

• Disabled entrepreneurs: 100% finance up to 50000 to disabled entrepreneurs • Modernization: for replacement / renovation of equipment for successful units which are in existence since 5 years assistance up to Rs 90 lakhs • Electro Medical equipment : for doctors/private nursing homes up to rs 90 lakhs .

50 lakhs .7. for procurement of new machinery / equipment by existing industrial units up to Rs 90 lakhs • Quality control equipment : 100% assistance for setting up quality facility by existing and new SSI units-up to rs.• Equipment finance.

.80 lakhs for gaining self employment • Single window scheme: Both term loan and working capital together to new tiny and small scale industrial units up to rs 7.50 lakhs towards term loan and up to Rs 3.• Assistance to ex servicemen.75 lakhs onwards working capital .Term loan up to rs 9 lakhs and seed capital up to rs 1.

50 lakhs for setting up new sales out lets .• Mahila Udyam Nidhi scheme-. not exceeding six vehicles per borrower. assistance up to Rs 7.to s et up new industrial projects in SSI sector by women entrepreneurs • National Equity fund Scheme: Assistance • towards equity for new projects tiny and small scale sector up to Rs 75000 Assistance for marketing : Maximum assistance up to Rs 3 lakh per sales van.

• Portion of total capital which is employed in short term operations .Working Capital management • Integral part of overall corporate management • WC is the amount of funds which a small scale industry must have to finance its day to day operations.

• Effective utilisation of working capital results in the maximization of productivity and profits • A proper WCM helps to maintain minimum cash reserve • Profitability and solvency are the two objectives of the WCM .

Raw materials.prepayments. Loan and advances and other debtor balances. Etc. s.• Constituent parts of working capital--Current Assets: Inventories.. Finished goods. cash and bank balances . components Work in progress.debtors.

S.creditors.• Current liabilities: Loans. trade dues. advance received **Gross WC—total of all the current assets of the enterprise **Net WC—difference between the current assets and current liabilities .

• Commercial banks provide credit facilities to meet working capital requirements to facilitate production • WC facilities could be--Lock and key pledge of stocks Hypothecation advances advances against stock in process advances against bills packing credit to exporters .

The cost of fixed asses proposed to be acquired 2.Total working capital requirements 3. Preliminary and preoperative expenses .• Banks provide both term-loan and working capital together n composite loans • The total cost of the SSI project os computed as under – 1.

• Factors Determining the Amount of Working Capital— • Size of the small scale unit • Process of production • Proportion of raw materials to total cost • Terms of purchase and sales • Turnover of inventories • Importance of labour .

• Cash requirements • Seasonal variations • Banking facilities .

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