ENTREPRENEURSHIP FOR ENGINEERS

CHAPTER -2

2.1 Developing the Entrepreneurial Plan

2.2 Ideas versus Opportunities
2.3 Commercialization of technology-
based innovation
2.4 Formation, Development and
growth of technology-based new
enterprises.
2.1 Developing the entrepreneurial plan

 Planning as Part of the Business /

Entrepreneurship Operation
1. Planning is a process that never
ends for an entrepreneurship
2. As the venture grow up to mature
entrepreneurship , planning will
continue
Entrepreneurial Plan or Business Plan
1. A business plan is a written document
that describes all the relevant internal
and external elements and strategies
for starting a new venture.
2. It is a integration of functional plans
such as marketing, finance,
manufacturing, sales and human
resources.
3. The business plan should be prepared
by the entrepreneur
4. The entrepreneur may consult with
lawyers, accountants, marketing
consultants, and engineers in its
preparation
5. The business plan may be read by
employees, investors, bankers, venture
capitalists, suppliers, customers, advisors, and
consultants.
6. There are three perspectives should be
considered in preparing the plan :
o Perspective of the entrepreneur
o Marketing perspective
o Investor’s perspective
7. The business plan is valuable to the
entrepreneur, potential investors, or even
new personnel, who are trying to familiarize
themselves with the venture, it goals, and
objectives.
8. It provides guidance to the entrepreneur in
organizing his or her planning activities
9. It serves as an important tool in helping to
obtain financing.
10. It is often necessary for an entrepreneur to
orally present the business plan before an
audience of potential investors.
11. Before committing time and energy to preparing
a business plan, the entrepreneur should do a
quick feasibility study of the business concept to
see whether there a any possible barriers to
success.
Outline of the Entrepreneurial Plan
1. Introductory Page
• Name and address of business
• Name(s) and address(es) of principal(s)
• Nature of business
• Statement of financing needed
• Statement of confidentially of report
2. Executive Summary – Three to four pages
• What is the business concept or model?
• How is this business concept or model unique?
• Who are the individuals starting this business?
• How will they make money and how much?
3. Environmental and Industry Analysis
• Future outlook and trends
• Analysis of competitors
• Market segmentation
• Industry and market forecasts
4. Description of Venture
• Product(s)
• Service(s)
• Size of business
• Office equipment and personnel
• Background of entrepreneurs
5. Production Plan
• Manufacturing process (amount subcontracted)
• Physical plant
• Machinery and equipment
• Names of suppliers of raw materials
6. Operational Plan
• Description of company’s operations
• Flow of orders for goods and/or services
• Technology utilization
7. Marketing Plan
• Pricing
• Distribution
• Promotion
• Product forecasts
• Controls
8. Organizational Plan
• Form of ownership
• Identification of partners or principal
shareholders
• Authority of principals
• Management-team background
• Roles and responsibilities of members of
organization
9.Assessment of Risk

oEvaluate weakness of business

oNew technologies
oContingency plans

10. Financial Plan

oPro forma income statement
oCash flow projections
oPro forma balance sheet
oBreak-even analysis
oSources and applications of funds
11. Appendix (contains backup material)

oLetters
oMarket research data
oLeases or contracts
oPrice lists from suppliers.
Using and Implementing Entrepreneurial
Plan
• The business plan is designed to guide the
entrepreneur through the first year of
operations.
• Implementation of the strategy contain
control point to ascertain progress and to
initiate contingency plan if necessary.
• Business plan not end up in a drawer
somewhere once the financing has been
attained and the business launched.
 Measuring Plan Progress
• Entrepreneur should check the profit and
loss statement, cash flow projections, and
information on inventory, production,
quality, sales, collection of accounts
receivable, and disbursements for the
previous month.
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements – paying out money
Updating the Plan
• The most effective business plan can
become out-of-date if condition change.
• If the changes are likely to affect the
business plan, the entrepreneur should
determine what revisions are needed.
• In this manner, the entrepreneur can
maintain reasonable targets and goals
and keep the new venture on a course
that will increase probability of success.
Entrepreneurial Plan Failure
• Goals set by the entrepreneur are unreasonable.
• Goals are not measurable
• The entrepreneur has not made a total
commitment to the business or to the family.
• The entrepreneur has no experience in the
planned business.
• The entrepreneur has no sense of potential
threats or weaknesses to the business.
• No customer need was established for the
proposed product or service.
 2. 2 Ideas versus opportunities

Idea –is a thought about or mental picture

of something such as future or a possible
event. It could be a concept that exists in
the mind only. It is also a mental image
that reflects reality.
Opportunity is a chance, especially one
that offers some kind of advantage.
A favourable conditions,
circumstances or situations.
Ideas Start With Solving Problems
o Remember… Ideas Start With Solving Problems
o Any Problems are Big Opportunities.
o No Problems, No Solutions, & No Reasons for
Firms to Exist.
o No One Pays You to Solve a Non-exist Problem
(Vinod Khosla, Sun Microsystems)
o Take care with this use of the word “problem”…
o The normal use of this word might
suggest that there is something wrong
o In a business context, we might use the
word simply to represent something which
makes the customer’s activities less
efficient/enjoyable/simple
o So, a “problem” might be something
quite trivial, everyday or simple – however,
by providing a cost effective solution, we
please our customer and make money
“An opportunity has the qualities of being
attractive, desirable and timely and is anchored in
a product or service which creates value for buyer
or end user”
• A new or improved product
• A new service
• A new means of production
• A new way of distributing the product or
service
• An improved service
• New combinations
• Or a hybrid of the above
Recognizing an Opportunity
• Opportunities are not like raindrops – they
do not fall at our feet.
• Well, not usually! From time to time
something might just happen which allows
an entrepreneur to move forward.
• However, if we wait for an opportunity to
turn up, we will probably never succeed.
• As creative business people we seek or
develop opportunities.
Do Ideas = Opportunities? & Do Problems =
Opportunities?
• Reality - An Idea is Only an Opportunity
when It:
• Adds Value to Consumer
• It Solves a Problem
• It Can Make Some Money
(Communicate Some Value to Other
Stakeholders)
• It is a Good “Fit” with the Entrepreneurial
Team
Factors Influencing the Discovery of
Opportunities
• Prior knowledge
• Education
• Work experience
• Enculturation
• Family and friends
• Other personal events or other
means
 2. 3 Commercialization of Technology-
Based Innovation
Commercialization
Commercialization is the process of
introducing a new product or production
method into commerce—making it
available on the market. The term often
connotes especially entry into the mass
market but it also includes a move from the
laboratory into (even limited) commerce.
The "development" segment of the "research
and development" spectrum requires time
and money as systems are engineered with a
view to making the product or method a
paying commercial proposition.
The product launch of a new product is the
final stage of new product development - at
this point advertising, sales promotion, and
other marketing efforts encourage commercial
adoption of the product or method.
Beyond commercialization (in which
technologies enter the business world)
can lie consumerization (in which they
become consumer goods, as for example
when computers went from the
laboratory to the enterprise and then to
the home, pocket, or body.
 2. 4 Formation, Development and Growth
of Technology-Based New Enterprises
• Formation is the process of creating
something or coming into existence.
• Development is the process of changing
and becoming larger, stronger, or more
impressive, successful or advance, or
causing enterprise to change.
• Growth is an increase in numbers, size,
power, or intensity of enterprise.
Formation and development of Technology based
ventures
Entrepreneurship studies have identified three critical
factors linked to successful creation of technology
ventures:
• technology
• talent
• capital.
• The strategic focus of new ventures is to facilitate the
effective fusion of innovative technology, strong
scientific, entrepreneurial and management talent,
and investment capital to create a successful venture.
National policies and strategies are at the heart of
development programs
• Government policies:
1. Credit programme with State-subsidized rates
2. Share programme by Government venture-capital
companies
3. Grants by the government, especially for creating jobs
and for research
4. Security programme by the Government for taking
over part of the risk of the credit institutions for
enterprises
5. Advisory services.
 6. Other support activities for enterprises with
both public and private sector involvement,
include:
(a). Business consulting services: Assistance with
business development, developing business plans, tax
advice, and so forth.
(B). Technical consulting services: More
specialized services are provided such as networking
assistance between enterprises and science and
technology organizations, technology transfer, the
exchange of similar experiences and the
identification of potential for cooperation.
• Financing Support Activities
(a) Offer optimal conditions to enterprises in
terms of rent and costs of spaces, infrastructure
and services. Offer also assistance with accessing
and using financial sources such as corporate
financing, business angels, venture
capital, and so forth
Growth of Technology-based New Enterprises
1. The innovative capacity of an entrepreneur and
more accurately, of companies operating in that field,
is a key determinant of its capability to enhance the
economic development and to upgrade the standard
of living of a country. It is widely accepted that one of
the indicators of this innovative capacity is the rate of
creation of New Technology-Based firms (NTBF).
2. The nurturing of small firm formation and growth
has become increasingly important to the health of
developed economies in general, and to the creation
of new innovative industrial sectors in particular.
 3. Strengthening and promoting technology
based ventures through incubation programme
for new technology based enterprises is necessary
for them to survive in a competitive society.
4. Technology incubators, which play a role in
accelerating the commercialization of R&D
outputs and the transfer of technology, have
contributed to startups of high technology-based
enterprises in the newly industrializing economies
of developing and developed economies of the
world
2 nd Chapter Completed

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