Entrepreneurship Development Programme

Concept of entrepreneurship
• An entrepreneur is the agent who buys factors of production at certain price in order to combine them into a product with a view to selling it at uncertain price in future. - Cantillon • An entrepreneur is the economic agent who units all means of production- land of one, the labour of another and capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. – J.B. Say • An entrepreneur is an innovator who brings economic development through new combinations of factors of production. - Joseph Schumpeter

Traits of entrepreneur • • • • • • • • • • • • • Initiation Watching for opportunities Persistence Information seeker & resourceful Quality conscious Commitment to work Efficiency lover Proper planning Self confidence Assertiveness Persuation Efficient monitoring Concern for employees .

Difference between Entrepreneur & Manager • • • • • • • Venture Risk bearing Reward Continuity Innovation Status –role Prerequisites .

Function of Entrepreneur • Innovation • Risktaking • Organization building .

Type of Entrepreneur • Innovating Entrepreneur • Imitative Entrepreneur • Fabian / Drone Entrepreneur .

understanding the logistics of setting up a small business enterprise and identifying strengths & weakness of project. .1 • Understanding of concept of establishing a business.Assignment .

Product/ Project identification and type of ownership .

Types of ownership • Sole Proprietorship • Partnership • Joint stock company .

Unlimited liability 5.Sole Proprietorship Salient features 1. No government regulation . One man control 3. Single ownership 2. Undivided risk 4.

6. 3. 5. Limited Funds Limited Skills Unlimited Liability Uncertain Life . 4. 4. Simplicity Quick Decisions High secrecy Direct Motivation Personal Touch Flexibility Disadvantages 1. 3.Sole Proprietorship Advantages 1. 2. 2.

By Admission of a Partner .Sole Proprietorship Expansion of business 1. By Employment of Paid Assistant 2.

By Employment of Paid Assistant Advantage • Reduction in administrative burden • Division of work • Appointment of specialist • Complete control / no interference in policies • Independent decisions and freedom of action • No sharing of profits • Easy to dismiss Disadvantage • May be careless & inefficient • Increases risk and liability of the sole proprietor • No financial stake/ business at the mercy of the assistant • Danger of disclosure of business secrets • No addition to goodwill • Problem of capital unsolved • Increased expanse • May leave the business and set up competition .

• Division of authority/ lack of independent decisions. Disadvantages • Sharing of control/ loss in freedom of action. • Direct relation between effort and reward. • Pooling of knowledge. . personal incentive and interest. • Difficulty in removing the partner. • Possibility of dispute and differences. • Sharing of managerial responsibility. • Sharing of losses & liability. experience and judgment. • Danger of dishonesty and negligence. • Sharing of profits. • Increase in liability and risk. • Secrecy ensured.By Admission of a Partner Advantages • Investment of capital. • Increase in goodwill & connections. • Economy of costs.

• Existence of a lawful business • Sharing of profit and loss • Mutual agency among partners • Unlimited liability • Restriction on transfer of interest • Utmost good faith. Maximim 10 in banking business and 20 in non banking business.Partnership Firm Salient features • Association of 2 or more persons. . • Contractual relationship – written or oral agreement among the partners.

retirement or death of a partner. power & obligation of all the partners. • Maintenance of accounts and audit. • Mode of valuation of goodwill on admission.Partnership Firm Formation / Deed of partnership • Name of the firm. • The proportion in which the profits and losses are to be shared. • Amount of capital contributed by each partner. • Loans & advances by partners and interest payable on them. • Amount of withdrawal allowed to each partner and the rate of interest. • Procedure for dissolution of the firm and settlement of accounts. Duration of partnership. Nature of the firm’s business. . • Settlement of disputes among the partners. Principal place of the firm’s business. • Etc. • Duties. • Amount of salary or commission payable to any partner. Date of agreement.

Date of agreement. Nature of the firm’s business. Principal place of the firm’s business.Partnership Firm Registration of firms Name of the firm. Dissolution of firm • By agreement • By notice • Contingent • Compulsory • Through court Settlement of accounts on dissolution . Duration of partnership.

Partnership Firm Merits • Ease of formation • Larger financial resources • Specialisation and balanced approach • Flexibility of operations • Personal incentive and direct supervision • Capacity for survival • Better human and public relation • Business secrecy Demerits • Unlimited liability • Limited resources • Risk of incompetent/ dishonest partner • Lack of harmony • Lack of continuity • Non transferability of interest. • Public distrust .

Joint stock company Salient features • Separate legal entity • Prepetual succession • Limited liability • Common seal • Transferability of shares • Separation of ownership and management • Incorporated association of persons.Private company ( minimum 2 person) & Public company ( minimum 7 persons) .

Joint stock company merits • • • • • • Limited liability Large financial resource Continuity Transferability of shares Professional management Scope for growth and expansion • Public confidence • Diffused risk • Social benefits demerits • Difficulty of formation • Excessive government control • Lack of motivation and personal touch • Delay in decisions • Conflict of interest • Frauds in promotion and management • Lack of secrecy • Social evils .

Choice of form of ownership. Power connection and water supply.• • • • • • • • • • • • • • Steps for establishing small business venture Selection of the product. Statutory licenses and clearances. Procuring raw material. Starting production. Registration with the authorities. Arranging term finance. Arranging work capital. Location of the enterprise. Recruitment of staff. Installation of machinery. Acquiring land and building. . Marketing the product.

Who will I compete with? .P. What’s the PLAN B against CONTIGENCIES? f. Can I manage such a business? g.Evaluate the plan a. Who is my customer? •Plan ways to avoid obstacles. Does it satisfy customer needs? e. Does the idea make sense? b. d. •If obstacles can’t be avoided…… •TERMINATE THE B. Will it work? c.

Executive summary – 3-4 pages summarising the complete business plan . Name and address of business b. Name(s) and address(es) of principal(s) c. Introductory page a. Nature of business d. Statement of confidentiality of report 2. Statement of financing needed e.Writing the business plan 1.

Product(s) b. Market segmentation d. Office equipment and personnel e. Analysis of competitors c. Background of entrepreneur . Size of business d.Writing the business plan 3. Industry and market forecasts 4. Industry analysis a. Service(s) c. Future outlook and trends b. Description of venture a.

Flow of orders for goods and/or services c. Description of company’s operation b. Technology utilisation . Production plan a. Machinery and equipment d. Manufacturing process (amount subcontracted) b.Writing the business plan 5. Operational plan a. Names of suppliers of raw materials 6. Physical plant c.

d. Marketing plan a.Writing the business plan 7. Form of ownership Identification of partners or principal shareholders Authority of principals Management-team background Roles and responsibilities of members of organisation . b. Organisational plan a. Pricing Distribution c. e. b. c. Promotion Product forecasts Controls 8. d. e.

b. c. d. Income statement Cash flow projections Balance sheet Break-even analysis Sources and applications of funds .Writing the business plan 9. c. e. Financial plan a. Assessment of risk a. Evaluate weakness of business New technologies Contingency plans 10. b.

d. Letters Market Research data Leases or contracts Price lists from suppliers . c.Writing the business plan 11. b. Appendix (contains backup material) a.

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