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Business incubation is a business support

process that accelerates the successful


development of start-up and fledgling
companies by providing entrepreneurs with
an array of targeted resources and services.
These services are usually developed or
orchestrated by incubator management and
offered both in the business incubator and
through its network of contacts.
A business incubators main goal is to
produce successful firms that will leave the
program financially viable and freestanding.
A Business Incubator is a facility designed to
assist businesses to become established and
sustainable during their start up phase.
Typically, they do this by providing- shared
premises, business advice, business services,
access to investor, market and international
networks, mentoring and a full-time, hands-
on management team.
Business incubators are projects designed to help
new businesses develop and successfully launch.
The main goal of a business incubator is to
encourage the development of new business. By
assisting a local entrepreneur to start a company
in the area, the community is likely to benefit
from an increase in the number of available jobs
in the area, and the additional revenue that is
brought to the city or town as a result of the new
business activities. Both elements can help to
revitalize a local economy that is somewhat
sluggish and thus enhance the quality of life for
everyone who lives and works in the area.
Business incubation provides workspace and
an instructive, supportive environment to
entrepreneurs at start-up and during the
early stages of businesses.
A by-product of a business incubator is the
internal dynamics that come from working
together in a shared physical space. The joint
and cross-discipline learning that takes place
and the opportunity to form business
networks and contacts are also critical to the
launch of successful ventures.
The business incubator helps to fill a void that
is found in many areas. Not everyone has
access to resources that can fund a new
business effort until it becomes profitable.
Incubator programs help to fill the gap by
providing training to entrepreneurs
a space to launch the business, and
connect the new business owner with others
who are in a position to invest in the future of
the company.
Business incubators are designed specifically to
help start-up firms. They usually provide:
1. flexible space and leases, many times at very
low rates
2. fee-based business support services, suchs as
telephone answering, bookkeeping, secretarial,
fax and copy machine access, libraries and
meeting rooms
3. group rates for health, life and other insurance
plans
4. business and technical assistance either on site
or through a community referral system
5. assistance in obtaining funding
6. networking with other entrepreneurs
Business incubation has been identified as a
means of meeting a variety of economic and
socioeconomic needs, which may include
Creating jobs.
Fostering a community's entrepreneurial
climate
Technology commercialization
Diversifying local economies
Building or accelerating growth of local
industry clusters
Encouraging women or minority
entrepreneurship
Identifying potential business opportunities
Community revitalization
Knight classified three types of uncertainty.
1. Risk, which is measurable statistically.
2. Ambiguity, which is hard to measure
statistically
3. True Uncertainty which is impossible to
estimate or predict statistically.
Uncertainty is present in all decisions we make.
Four forms of uncertainty:
1) Temporal uncertainty of future or past states,
2) Structural uncertainty due to complexity of
situation
3) Metrical uncertainty in measurement, and
4) Translational uncertainty in explaining results
All four types may occur in any situation, but
one or more usually dominates. Although these
types are not necessarily independent, the nature
of each is quite different.
Level of uncertainty Level of management

Low (near uncertainty) Operations management

Risk situation (precise probabilistic Middle management


measurement)

Very risky (not able to determine in Top and middle


probabilistic terms precisely) management

High (total uncertainty) Top management


Uncertainty often cannot be reduced by acquiring
new data, nor can one afford to obtain that data
even if available. Alternatives to seeking better
information are to manage the uncertainty with
the information on hand or to use a very selective
data acquisition program.
Uncertainty is addressed by 4 different broad
approaches:
1. Ignoring it.
2. Use margins of safety to provide contingencies.
3. Buy insurance to spread the risks.
4. Directly understand and manage the
uncertainties.
Central
State
Others
SSI Board
KVIC(Khadi & Village Commission )
SIDO(Small Industries Development Organisation)
NSIC( Nat. Small Industries Corporation Ltd)
NSTEBD (The Nat. Sc & Tech Dev. Board)
NPC(National Productivity Council)
NISIET(Nat. Institute for Small industries
Extension and training)
IIE (Indian Institute Of entrepreneurship)
EDI (Entrepreneurship Development Institute)
Constituted in 1954 to facilitate the coordination
& inter-institutional linkage for the development
of the SSI sector.
The Union Industry Ministry is the chairman of
the Board, it has State industry Ministers; select
members of the parliament; secretaries of
various departments of
the Central Govt,
financial institutions,
public sector undertakings,
industry associations and
eminent experts in the field.
The board operates in the following areas:
Policies and programmes
Industry development in a specific region.
Credit facilities, modernisation.
Industrial sickness.
A body created by the act of the parliament.
It is charged with planning, promotion,
organisation and implementation of the
programme for the development of khadi and
other village industries in the rural areas in
co-ordiantion with other agencies.
Its functions also involve building up a stock
of raw material for supply to producers,
creation of common service facilities for
processing of rawmaterial; provision of
services for marketing the goods produced.
Established in1995.
Provides vital services for promotion to SSI
1) machinery and equipment(purchase system)
Supply of machinery, value of which would not
exceed Rs 30 million.
2) Machinery and equipment- lease
100% finance facility; tax rebates.
3) Financial Assistance
Five financial assistance schemes operating at
Delhi, Mimbai, Ahmedabad, Bangalore, Goa.
Facility of marketing, raw material purchase,
and exports.
4) Assistance and procurement of rawmaterial
Import of raw material
Providing Scarce material on priority basis.
Supplies through NSIC godowns.
Established in 1982 by the Govt of India
Under the Deptt. of Science and Technology .
Its an institutional mechanism aimed at
promoting knowledge driven and technology
intensive enterprise.
Aims at converting job seekers to job creators
through Science and Technology Intervention.
Major objectives:
1. To promote and develop high end
entrepreneurship for S&T.
2. To facilitate and conduct various
informational services relating to promotion
of entrepreneurship.
3. To act as policy advisory board with regard
to entrepreneurship.
Major Activities:
1. Training programmes
2. Institutional mechanism
3. Information dissemination.
Established as an autonomous body
functioning under the supervision of the
Ministry of Industry.
Primary role is to act as a catalyst in
enhancing the productivity of all sectors of
the economy.
NPC is administered by a tripartite Governing
Council (GC) which gas equal representation
from the industry, govt. and trade unions.
Minister for industry is the ex-officio
president and is chaired by the Secretary for
Industrial Development.
NPC is active in the field of consultancy and
training.
It also has specialised division to provide
tailor-made solutions to agriculture and
industry.
NPC has a role to play in undertaking various
entrepreneurship development programmes.
Member of the APO(Asian Productivity
Organisation), Tokyo, an umbrella body of all
productivity councils on the Asian Region.
Has a role to play in manpower assessment,
wage fixation, etc.
District Industries Centre (DIC)
State Financial Corporation(SFC)
State Industrial Development Corporation
State Small Ind. Dev Corp (SSIDCs)
Regional Rural Banks.
State Cooperative Banks.
Initiated in 1978 as a centre sponsored
scheme, later in the year 1993-94 the central
sponsorship was withdrawn.
Developed with the aim of providing
employment opportunities especially in the
rural and backward areas.
Services
Economic investigation of local resources.
Raw material provision.
Credit facility arrangement.
Consultancy services.
Set up under the Companies Act 1956 as
wholly owned undertakings of the State govt.
Facilities provided
1. Land development.
2. Infrastructural facilities.
3. Term loans.
4. Promotional facilities.
Set up under the Companies Act, 1956 as
state govt undertaking.
SSIDCs are operationally flexible
Services:
Procurement and distribution of raw-
material.
Supply of machinery on hire purchase basis .
Construction of industrial estates.
Seed capital facility.
Established under the SFC Act, 1951
Aim is to finance and promote small and
medium enterprise in their respective states.
Financial assistance can be provided in the
form of term loan, guarantees, seed capital
assistance, etc.
Tailor made schemes for artisans, SC/ST,
Women, ex-servicemen, etc
Set up on October 2, 1975. The banks
provide credit to the weaker sections of the
rural areas, particularly the small and
marginal farmers, agricultural labourers,
artisans and small entrepreneurs.
Initially, five RRBs were set up on October 2,
1975 which were sponsored by Syndicate
Bank, State Bank of India, Punjab National
Bank, United Commercial Bank and United
Bank of India.
The major objective is to develop rural economy
by providing credit and facilities for the
development of agriculture, trade, commerce,
industry and other productive activities in the
rural areas.
RRBs are expected to make credit available to
rural households.
To take the banking services to the doorstep of
rural masses.
To make available institutional credit to the
weaker sections of the society who had by far
little or no access to cheaper loans.
To mobilize rural savings and channelise them
for supporting productive activities in rural areas.
To generate employment opportunities in rural
areas and bring down the cost of providing credit
to rural areas.
The co-operative banks arrived in India in the
beginning of 20th Century as an official effort
to create a new type of institution based on
the principles of co-operative organisation
and management, suitable for problems
peculiar to Indian conditions. These banks
were conceived as substitutes for money
lenders, to provide timely and adequate
short-term and long-term institutional credit
at reasonable rates of interest.
NABARD (National Board of Agriculture and
Rural Dev)
Non Governmental organisations.
SIDBI
Housing & Urban dev Corporation (HUDCO)
Set up in 1928.
Initiates measures toward institution-building for
monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel,
etc.
Coordinates the rural financing activities of all the
institutions engaged in developmental work at the field
level and maintains liaison with the government of India ,
State governments, the Reserve Bank of India and other
national level institutions concerned with policy
formulation
Prepares, on annual basis, rural credit plans for all the
districts in the country. These plans form the base for
annual credit plans of all rural financial institutions
Promotes research in the fields of rural banking,
agriculture and rural development
Functions as a regulatory authority, supervising,
monitoring and guiding cooperative banks and regional
rural banks
Formed in 1970.
Primary objectives:
1. to provide assistance for urban, social sector
infrastructure,
2. creation of housing facility,
3. infrastructure for SSI sector.
4. Consultancy services.
5. Technical assistance.
Policy initiatives at state and central level.
Administratively, the SSI has been divided
into various groups (traditional & Modern):
1. Handicrafts
2. Handloom
3. Khadi, village & cotton industries.
4. Coir
5. Sericulture
6. Powerlooms
7. Other small scale industries.
The promotional measures cover
- industrial extension services
- institutional support in respect of credit
facilities,
- provision of developed sites for construction
of sheds,
- provision of training facilities,
- supply of machinery on hire-purchase terms,
- assistance for domestic marketing as well as
exports,
- special incentive for setting up enterprises in
backward areas etc.
- technical consultancy & financial assistance for
technological upgradation.
Industrial Policy Measures 1991
Integrated infrastructure development
Participation of state & Central Govt.
Support associations to establish counselling and
common testing facilities
Modernisation/ upgradation programmes.
Post 1999 Policy Measures
De-reservation
Change in investment limit
Facilities for foreign participation
Market assistance
Incentives for quality improvement
Rural industrialisation
Managerial
Financial
Structural
Setting goals
Measuring performance
Finding and retaining employees
Motivating employees
Getting useful business information
Low employee productivity
Health, safety isuues.
Finding apt source of finance
Working capital management.
Debt pay-off.
Not being able to make use of Govt.
incentives
Unable to control costs
Unforseen financial issues
Level of competition
Govt. policies
Absence of diverse buyer market
Changing trends
Supplier market problems
Infrastructural issues
Technology upgradation issues
Geopolitical issues
Internal
Inadequate communication
Lack of Inter-functional integration.
Chaotic delegation of authority and
responsibility
IFCI Industrial Finance Corporation of India.
IDBI Industrial Development Bank of India.
SFC State Financial Corporation.
SIDCO State Industrial Development Corporation
ICICI Institutional Credit and Investment
Corporation of India.
In July 1, 1948 IFCI was established by the
Govt of India.
Gives preference for advancing loans to:
1. New entrepreneurs.
2. Projects aimed at exploring new areas of
technology.
3. Products aimed at raising the agricultural
products.
Established in January 1955.
Major functions:
To assist industrial concerns with loans and
guarantees.
To assist the formation, expansion and
modernisation of the industrial units lying
with the private sector.
Development of industries in the private
sector.
Incorporated in 1964
Functions:
Co-ordinating agency:
Financial assistance.
Refinancing.
Special assistance through Development
Association Funds.
Promotional Agency
Investment limit: raised form 1 cr to 5 cr.
Development of SEZ:
EDI: increase training capacities. Micro and
small entrepreneurs provided training under
management development programme.
Sanctioning loans on priority basis.
Launching of Technology Development Fund
in the states by central govt.
Credit Guarantee Fund Scheme for SSI: has
been launched to provide guarantee for loans
upto Rs. 25lakhs.
Setting up of National Commission on
Enterprise to recommend measures for
improvement in the productivity of
enterprises, providing marketing facilities,
skill development, etc.
SME fund launch by SIDBI. Interest rate is
charge at 2% lower than the prevailing rate.
Provision of facilities for participation in
overseas fairs/exhibitions.
Micro and small Enterprise Development
Programme: Started in the Eleventh plan.
Clusters (which are industrial estates for
specific industry as per regional
specialisation) are developed.