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In early 19th century the term entrepreneur

entreprendre which means to undertake.

Cantillondefined it first in hisessay on The
Nature of Trade in General.

Credit for coining the termentrepreneur

generally goes to the French economistJean


Who is an

An individual who, rather than working as an

employee, runs a business and assumes all

the risk and reward of a given business
venture, idea, or goods or service offered for







businesses, taking on financial risks in the

What is the definition of MSME?

The Government of India has enacted the Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006 in terms
of which the definition of micro, small and medium
enterprises is as under:

(i) A micro enterprise is an enterprise where investment

in plant and machinery does not exceed Rs. 25 lakh.
(ii) A small enterprise is an enterprise where the
investment in plant and machinery is more than Rs. 25
lakh but does not exceed Rs. 5 crore.
(iii) A medium enterprise is an enterprise where the
investment in plant and machinery is more than Rs.5
crore but does not exceed Rs.10 crore.

(i) A micro enterprise is an enterprise where the

investment in equipment does not exceed Rs. 10 lakh.
(ii) A small enterprise is an enterprise where the
investment in equipment is more than Rs.10 lakh but
does not exceed Rs. 2 crore.
(iii) A medium enterprise is an enterprise where the
investment in equipment is more than Rs. 2 crore but
does not exceed Rs. 5 crore.

MSME is having two Divisions called Small & Medium

Enterprises (SME) Division and Agro & Rural Industry

(ARI) Division.
The SME Division is allocated the work, of

administration, vigilance and administrative

supervision of the National Small Industries
Corporation (NSIC) Ltd.
The ARI Division looks after the administration of two

statutory bodies viz. the Khadi and Village Industries

Commission (KVIC), Coir Board and a newly created
organization called Mahatma Gandhi Institute for
Rural Industrialization (MGIRI).

The Implementation of policies and various programmes







services to MSME's is undertaken through its attached

office, namely the
Office of the Development Commissioner (OODC

National Small Industries Corporation (NSIC),
Khadi and Village Industries Commission (KVIC)
Coir Board and three training institutes viz.,
National Institute for Entrepreneurship Small Business

Development (NIESBUD) Noida.








Enterprises (NI-MSME), Hyderabad.

Indian Institute of Entrepreneurship (lIE), Guwahati.
Mahatma Gandhi Institute for Rural Industrialization

(MGIRI), Wardha a society registered under Societies

Registration Act, 1860.
The National Board for Micro, Small and Medium







Government under the Micro, Small and Medium

Enterprises Development Act, 2006 and Rules made
there under.

Small Scale Business

A small-scale industry is a project or firm

created on a small budget or for a small group
of people or an individual.
A small-scale
industry produces its goods using small
machines, less power and hired labour. It is
located within a single place and produces
goods meant for few people.
A small enterprise is the one where, investment in

plant and machinery is more than Rs. 25 lakh but

does not exceed Rs. 5 crore.
A small enterprise is the one where, investment in
equipment is more than Rs.10 lakh but does not
exceed Rs. 2 crore.

Role of Small Enterprise

1. Employment generation
2. Mobilisation of resources and entrepreneurial

3. Equitable distribution of income
4. Regional dispersal of industries
5. Provides opportunities for development of
6. Indigenisation
7. Promotes exports
8. Supports the growth of large industries
9. Better industrial relations
10. Rural development

Small Enterprise - Weaknesses

1. Financial Limitation
2. Staffing Problems
3. High Direct Cost
4. Lack of Credibility
5. Outdated Technology
6. Marketing Budget
7. Online Presence
8. Too dependent on owner or one key person
9. Lack of differentiation
10. Business is too dependent on one or two big customers

Small Enterprise - Strengths

1. Personal Touch
2. Greater Motivation
3. Greater Flexibility
4. Less bureaucracy
5. Unobtrusive
6. Better time Management is possible
7. Generally distribution system is more effective

Traits of a successful entrepreneur

1. Strong leadership qualities

2. Highly self-motivated
3. Strong sense of basic ethics and integrity
4. Willingness to fail
5. Serial innovators
6. Know what you don't know
7. Competitive spirit
8. Understand the value of a strong peer network

9. Limit the number of hats you wear

10.Follow-up constantly
11.Get and stay organized
12.Master the art of negotiation
13.Create a competitive advantage
14.Become known as an expert
15.Project a positive business image
16.Remember it's all about the customer

How to develop an Entrepreneur

Critical and creative thinking skills.
1. Creative Thinking
2. Problem Solving
3. Recognizing Opportunities
.Practical skills.

Goal Setting
Planning and Organizing
Decision Making
Business knowledge
Entrepreneurial knowledge
Opportunity-specific knowledge
Venture-specific knowledge

Interpersonal skills.
1. Leadership and Motivation
2. Communication Skills
3. Listening
4. Personal Relations
5. Negotiation
6. Ethics
.Personal characteristics.
1. Optimism
2. Vision
3. Initiative
4. Desire for Control
5. Drive and Persistence
6. Risk Tolerance
7. Resilience

Business Plan
A business plan is a document that describes

what you plan to do and how you plan to do it.

The plan includes the overall budget, current and

projected financing, a market analysis and its

marketing strategy approach, a business owner
projects revenues and expenses for a certain
period of time and describes operational activity
and costs related to the business.

Why do we need a Business Plan?

- Is the new venture technically feasible & financially

- Sources of fund for the venture?
- Is the new venture's product or service feasible?
- Does the market want the product or service?
- Can the product or service be profitably sold?
- Is the return on the venture adequate for prospective


How to prepare a business plan?

1. Cover Page
- Your contact information so potential investors can easily reach

2. Executive Summary
- Concisely describe what your business does
- What market need it solves
- Describe your unique success factors
- List out the reasons why your business will be successful
- Highlight your financial projections and amount of money you are
seeking to raise through various sources.

3. Company Overview
- Give a profile of your company
- Answer questions such as:
Where you are located?
When you were formed?
What is your legal entity form?
- Describe the stage of your company:
What your company has achieved so far

4. Industry Analysis
- Describe the market in which you are competing?
- How large it is, and what trends are affecting it?

5. Customer Analysis
- Identify who your target customers are and their needs.
- Specify the demographic and psychographic make-up of your

6. Competitive Analysis
- Identify your competitors and their key strengths and weaknesses
- Identify your competitive advantages
7. Marketing Plan
. Describe your products and/or services
. Desired brand positioning
. Detail your promotions plan
. Discuss your distribution plan
8. Operations Plan
. Describe the key daily operational processes your organization
. Identify the milestones you need to accomplish over the next 1-3
- The Management Team section must prove why the key company

10. Financial Plan

. Identify the ways in which your company generates revenues.
. Key assumptions which govern your financial projections.
. If you are seeking funding, identify the sources.
. Specify how much money you need to start and/or run your
business, and the primary uses of these funds.
11. Appendix
. Include your full financial projections, including your projected
income statements, balance sheets and cash flow statements.
. Include any additional details, such as patent information,
customer lists, etc., that help prove to investors that your
company is a great investment opportunity.

Why do companies need to do Marketing

1. Marketing research (MR) provides valuable data.
2. It studies and provides data about consumer

3. It helps to select suitable sales promotional

4. It suppliesmarket-related information.
5. It helps a company to evaluate its marketing


Operating Plans
Operating plan is the section of your business

plan where you dig into more of the nuts and

bolts of your business areas like: production,
manufacturing, inventory, and distribution.
An operational plan will always vary based upon
the type of business you run. If you are planning
to start a retail shop then you need to take care of
things like inventory, distribution etc.
But if you are planning to start an IT firm, you will
focus more on how to keep the data confidential,
securing the office space and the equipments etc.

Financial Plans
A financial plan explains what your business can

afford, how it can afford to do it, and what the

expected profits will be.
A well written business plan can be the difference

between you carrying the business or the

business carrying you.

What is Cluster financing?

A cluster based approach may be more beneficial

(a) in dealing with well-defined and recognized

groups (b) availability of appropriate information
for risk assessment (c) monitoring by the lending
institutions and (d) reduction in costs.
Cluster based approach to lending is intended to

provide a full-service approach to cater to the

diverse needs of the MSE sector which may be
achieved through extending banking services to
recognized MSE clusters.

United Nations Industrial Development

Organisation (UNIDO) has identified 388 clusters

spread over 21 states in various parts of the
The Ministry of Micro, Small and Medium

Enterprises has also approved a list of clusters

under the Scheme of Fund for Regeneration of
Traditional Industries (SFURTI) and Micro and
Small Enterprises Cluster Development
Programme (MSECDP) located in 121 Minority
Concentration Districts.

Types of Entrepreneurs

Innovating entrepreneurs.
Adoptive entrepreneurs.
Fabian Entrepreneurs.
Drone Entrepreneurs.
Entrepreneurs by inheritance.
Forced entrepreneurs.

Advantages of acquiring an established

The difficult start-up work has already been done.
Buying an established business means immediate

cash flow.
The financial history of the company will help it
easier to secure loans, and attract investors.
You will existing customers, goodwill, suppliers,
contacts, staff, plant, equipment and stock.
Your product is established in the market, so
publicity effort is reduced.
The staff there will be having their experiences to

Disadvantages of acquiring an established

Business might need major improvements to old
plant & machinery.
Initially you need to invest large amount
especially for the professionals and accountants.
The business might be poorly located, badly
managed, and with low staff morale.
Increasing competition or declining industry can
affect the future growth.
Underperforming business needs a lot of
investment to make it profitable.
The relation with the dealers & suppliers might
get affected.

Business Opportunity
A business opportunity can be defined as a sound
business idea which forms the basis upon which
an entrepreneur makes an investment decision.

Considerations for evaluation business

1. Potential for growth.
2. Infrastructure.
3. Market for goods & services.
4. Rewarding the Investor.
5. Price Structure.
6. Competition.
7. Competitive advantage.
8. Incentives.
9. Legal Considerations.
10. Financial Viability.
11. Personnel training & management.

Valuation of a business
Business valuation is process and a set of
procedures used to
estimate the economic value of an owners interest.
Elements of business valuation
1. Economic conditions.
2. Financial analysis.

Business Valuation Methods

1. Income approach.
This approach relies upon the economic principle of
Expectation ie, the value of business is based
on the
expected economic benefit and the level of risk
with the Investment. The mainly used income
. Capital Asset Pricing Model.
. Modified Capital asset Pricing Model.
. Weighted Average Cost of Capital.

2. Asset Based Approach

This approach is based on the principle of


as no rational investor will pay more for the

business assets than the cost of procuring the
asset of similar economic utility. The two main
methods followed by this approach are:
Net book value
Fair market value

3. Market Approach

The market approach is based upon the

economic principle of Competition ie, in a
free market, the supply and demand forces will
drive the price of business assets to a certain

Franchising is the practice of the right to use a
business model and brand for a prescribed period
of time.
What are the Franchisees perspective?
1. A documented tested and profitable business

2. Support, counselling & education.
3. Economy of scale.
4. Network of other practitioners.

What are the Franchisors perspective?

1. Lesser capital needs.
2. Shared risk.
3. Quicker expansion.
4. Local motivation, opportunity & risk.
5. Effective division of work generates less

overhead and less risk.