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ENTREPRENEURSHIP &

FAMILY BUSINESS
MANAGEMENT
SESSION 2
GROUP 6
Overview
• New venture startups & Challenges
• Why new ventures Fail?
• Environment of new ventures
• Macro View
• Schemes introduced by Government
• Industry Environment
• Micro View
• Business incubators
New-venture start-ups
• During past few years the number of new venture start-ups has been
consistently high.
• There are 150 million startups in the world today with 50 million new
start ups launching every year. On average, there 137,000 startups
emerging every day. These are huge numbers by any standards.
• According to economic survey 2015-2016 India has more than 19000
technology enabled startups.
• The entrepreneurial motivations of individuals are personal
characteristics of entrepreneur, the environment and venture itself.
Challenge of new-venture start-ups
• Fierce competition
• Unrealistic expectations
• Hiring suitable candidates
• Financial management
• Winning trust of customers
The real challenge of new firms is to survive and grow.
In order to do this they need to have clear understanding
of the critical factors for selecting ventures, the known
reasons for failure and effective evaluation process
Pitfalls in selecting new ventures
• Lack of objective evaluation
• No real insight into the market
• Inadequate understanding of technical requirements
• Poor financial understanding
• Lack of venture uniqueness
• Ignorance of legal issues
Critical factors for new venture development
• Uniqueness
• Investment
• Growth of sales
• Product availability
• Customer availability
A new venture Idea Checklist
• Basic Feasibility of the venture
• Competitive advantage of the venture
• Buyer decisions in the venture
• Marketing of goods and services
• Production of goods and services
• Staffing decisions in the venture
• Control of the venture
• Financing the venture
ENVIRONMENT OF NEW
VENTURES
Environmental Scanning
Refers to the efforts by which an
owner-entrepreneur examines
the external and internal
environments before making a
decision.
A Macro View: The Economic and Industry
Environments
• What is the current state of economy?
• What is the condition of the labour market?
• How many firms are there in this industry?
• What is the geographic concentration of firms in the
industry?
• What is the competitive nature of this business?
Regulatory Environment
Governmental Regulations Affect Smaller Ventures in a Variety of Ways:
• Prices
• Cost inequities
• Competitive restriction
• Mental burden
Modi’s Schemes That Have Been Favorable for
Starting an MSME in India
1. Startup India, Standup India scheme:
Startup means an entity, incorporated or registered in India :
• Not prior to seven years, (for Biotechnology Startups not prior to ten
years),
• With annual turnover not exceeding INR 25 crore in any preceding financial
year, and
• Working towards innovation, development or improvement of products or
processes or services, or if it is a scalable business model with a high
potential of employment generation or wealth creation
*Provided that such entity is not formed by splitting up, or reconstruction, of
a business already in existence
Startup India (contd)
• Startup India Hub : to resolve queries and provide handholding
support to Startups through telephone,email and twitter
• Tax Incentives: Income tax exemption for 3 years in a block of 5 years,
if they are incorporated between 1st April 2016 and 31st March 2019
• Enables faster exit for startups
• IPR Benefits: A panel of facilitators has been constituted for
assistance in filing Intellectual Property (IP) applications.
• Startup India Portal and Mobile App: These have been launched as
online platform for providing updates, information, recognition and
eligibility certificates to Startups and other stakeholders
2. Zero Defect, Zero Effect Scheme
This is for MSME sector to improve the quality of their products to
match global standards. As the MSME sector contributes largely to the
country’s GDP, the scheme is expected to contribute to the
environment as well.
3. National SC/ST Hub
The government launched the National SC/ST hub for facilitating
entrepreneurs (from SC/ST categories) in MSME sector and even
distributed 500 spinning wheels (traditional wooden charkhas) among
women to start their own MSME unit.
4. Stand Up India Loan Scheme
It is basically a loan scheme launched by the Indian government to
provide financial assistance to country’s lower sections (SC/ST,
backward tribes, and women) to promote employment and
entrepreneurship among them. The financial aid between INR 10 lakh
to 1 crore at the lowest applicable rate for that category
5. Credit Guarantee Fund Trust (CGFT)
The CGFT ensures availability and delivery of bank credit to the first-
generation MSME entrepreneurs without worrying about collaterals or
third-party guarantees to help and support them in realising their
dreams of owning a business.
ELEMENTS OF INDUSTRY
The five forces model
• Threat of new entrants
Number of firms in the industry
Industry growth rate
Excess capacity

• Bargaining power of suppliers


Number of important suppliers
Number of materials or components being supplied
• Threat of substitutes
Availability of close substitutes
Value-price ratio of substitute products

• Bargaining power of buyers


Number of important buyers
Importance of product or service to buyers
Common industry characteristics
• Technological uncertainty:
Which product configuration will prove to be the best
Which will be more efficient
Difficulty in developing the technology
Creating a technological breakthrough
• Strategic uncertainty:
Industry participants will formulate different approaches to product positioning,
advertising, pricing, different product configurations and production technologies
• First time buyers:
Marketing task is thus one of substitution or getting the buyer to make the initial
purchase of the new product or service
• Barriers to entry:
Expensive technology
Access to distribution channels
Access to raw materials and skilled labour
Cost disadvantages due to lack of expertise
• Competitive analysis:
Quality and quantity of competition
Number of competition and their strength
Make assumptions about competitors strength and weaknesses

• Taking the right steps


1) Clearly define the industry for the new venture
2) Analyze the competition
3) Determine the strength and characteristics of supplier
4) Establish the value-added measure of the new venture
5)Project the market size for the particular industry
ELEMENTS OF INDUSTRY
The five forces model
• Threat of new entrants
Number of firms in the industry
Industry growth rate
Excess capacity

• Bargaining power of suppliers


Number of important suppliers
Number of materials or components being supplied
• Threat of substitutes
Availability of close substitutes
Value-price ratio of substitute products

• Bargaining power of buyers


Number of important buyers
Importance of product or service to buyers
Common industry characteristics
• Technological uncertainty:
Which product configuration will prove to be the best
Which will be more efficient
Difficulty in developing the technology
Creating a technological breakthrough
• Strategic uncertainty:
Industry participants will formulate different approaches to product positioning,
advertising, pricing, different product configurations and production technologies
• First time buyers:
Marketing task is thus one of substitution or getting the buyer to make the initial
purchase of the new product or service
• Barriers to entry:
Expensive technology
Access to distribution channels
Access to raw materials and skilled labour
Cost disadvantages due to lack of expertise
• Competitive analysis:
Quality and quantity of competition
Number of competition and their strength
Make assumptions about competitors strength and weaknesses

• Taking the right steps


1) Clearly define the industry for the new venture
2) Analyze the competition
3) Determine the strength and characteristics of supplier
4) Establish the value-added measure of the new venture
5)Project the market size for the particular industry
Micro View: The Community perspective
Researching the location
• Community demographics – community size, purchasing power,
educational background, types of occupations. Amount of
entrepreneurial activity in a location also is an important factor.
• Economic base - purchasing power, educational background, types of
occupations
• Population trends
• Overall business climate
Sources of environmental data

• Census of population – Carried out every 10 years


• Census of manufacturers – 4 years
• Census of businesses – 4 years
• Department of commerce publications
• Sales management magazine’s “Buying Power Index”
Determining reliance and deservedness
• For evaluating these aspects we have to find an answer to following
questions
How familiar is the entrepreneur with the community where the
venture located?
The impacts on the community of the venture?
Any relationship built up with local contacts?
What active step can be taken to strengthen local support?
What active step can be taken to reduce local opposition?
• 2 major ways
1. Based on community’s need for the venture and entrepreneur’s
willingness to make a commitment to community
2. People identifies with people who deserve their support
Business Incubators
• A business incubator is a company that helps new and startup
companies to develop by providing services such as management
training or office space.
• Types of Incubators
1. Publicly sponsored
2. Non-profit sponsored
3. University related
4. Privately sponsored
Services provided by incubators
• Below market rental rates
• Elimination of building maintenance responsibilities
• Sharing of equipment and services that would otherwise be
unavailable or unaffordable
• Additional information, contacts, training , moral support etc.
Benefits to community
• Transformation of underused property into a center of productivity
• Creation of opportunities for public/private partnerships
• Enhancement of image as a center of innovation and
entrepreneurship
• Increased employment opprtunities