Entrepreneurship Development

Concept of Entrepreneur

•Basically an entrepreneur is a person responsible for setting up a business or an

enterprise.

•He has the initiative ,

skill for innovation and
who looks for high achievements.
He is a catalytic agent of change and works for the good of people .

•He puts up new green field projects that create wealth,

open up many employment opportunities and
leads to growth of other sectors
THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneur  Person  

Entrepreneurship    Process of action 

Enterprise  Object
Qualities of an Entrepreneur

•He is a person who develops and owns his own enterprise

•He is a moderate risk taker and works under uncertainty for achieving the goal.

•He is innovative.

•Reflects strong urge to be independent.

•Persistently tries to do something better.

•Dissatisfied with routine activities.

•Prepared to withstand the hard life.

Qualities of an Entrepreneur

•Determined but patient

•Exhibits sense of leadership

•Also exhibits sense of competitiveness

•Takes personal responsibility

•Oriented towards the future.

•Tends to tackle in the face to adversity

•Convert a situation into opportunity.

The Four Types of Entrepreneurship

1. Small Business Entrepreneurship

Today, the overwhelming number of entrepreneurs and startups in India are still small
businesses.

There are 51 million small businesses in India. They employ 120 million people.

Small businesses are grocery stores, hairdressers, consultants, travel agents, internet
commerce storefronts, plumbers, electricians, etc.

They are anyone who runs his/her own business. They hire local employees or family.
Most are barely profitable.

Their definition of success is to feed the family and make a profit, not to take over an
industry or build a $100 million business. As they can’t provide the scale to attract
venture capital, they fund their businesses via friends/family or small business loans.
2. Scalable Startup Entrepreneurship

These entrepreneurs start a company knowing from day one that their vision could change
the world. They attract investment from equally crazy financial investors – venture
capitalists.

They hire the best and the brightest.

Their job is to search for a repeatable and scalable business model.  When they find it, their
focus on scale requires even more venture capital to fuel rapid expansion.

Scalable startups in innovation clusters (Silicon Valley, Shanghai, New York, Bangalore,

Israel, etc.) make up a small percentage of entrepreneurs and startups but because of the
outsize returns, attract almost all the risk capital.
3.  Large Company Entrepreneurship

Most grow through sustaining innovation, offering new products that are variants
around their core products.

Changes in customer tastes, new technologies, legislation, new competitors, etc. can
create pressure for more disruptive innovation – requiring large companies to create
entirely new products sold into new customers in new markets.

Existing companies do this by either acquiring innovative companies or attempting to

build a disruptive product inside.

Ironically, large company size and culture make disruptive innovation extremely
difficult to execute.
 Social Entrepreneurship

Social entrepreneurs are innovators who focus on creating products and services
that solve social needs and problems.

But unlike scalable startups their goal is to make the world a better place, not to
take market share or to create to wealth for the founders. They may be nonprofit,
for-profit, or hybrid.
Factors affecting Entrepreneurship
Economic Factors

People become entrepreneurs due to necessity when there are no other jobs
or because of opportunity.

1. Capital

Capital is one of the most important factors of production for the establishment of
an enterprise.

Increase in capital investment in viable projects results in increase

in profits which help in accelerating the process of capital formation.

Entrepreneurship activity too gets a boost with the easy availability of funds
for investment.
2. Labor

Easy availability of right type of workers also effect entrepreneurship.

The quality rather than quantity of labor influences the emergence and growth of
entrepreneurship.

The problem of labor immobility can be solved by providing infrastructural facilities

including efficient transportation.

The quality rather quantity of labor is another factor which influences the emergence of
entrepreneurship. Most less developed countries are labor rich nations owing to a
dense and even increasing population.

But entrepreneurship is encouraged if there is a mobile and flexible labor force. And, the
potential advantages of low-cost labor are regulated by the deleterious effects of labor
immobility.

The considerations of economic and emotional security inhibit labor mobility.

Entrepreneurs, therefore, often find difficulty to secure sufficient labor.
3. Raw Materials

The necessity of raw materials hardly needs any emphasis for establishing any
industrial activity and its influence in the emergence of entrepreneurship.

In the absence of raw materials, neither any enterprise can be established nor can
an entrepreneur be emerged
It is one of the basic ingredients required for production. Shortage of raw material
can adversely affect entrepreneurial environment.

Without adequate supply of raw materials no industry can function properly and
emergence of entrepreneurship too is adversely affected.

In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions.

The more favorable these conditions are, the more likely is the raw material to have
its influence of entrepreneurial emergence.
4. Market

The role and importance of market and marketing is very important for the growth of
entrepreneurship.

In modern competitive world no entrepreneur can think of surviving in the absence of

latest knowledge about market and various marketing techniques.

The fact remains that the potential of the market constitutes the major determinant of
probable rewards from entrepreneurial function.

The size and composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in a market becomes more influential for
entrepreneurship than a competitive market.

However, the disadvantage of a competitive market can be cancelled to some extent by

improvement in transportation system facilitating the movement of raw material and
finished goods, and increasing the demand for producer goods.
5. Infrastructure

Expansion of entrepreneurship presupposes properly developed communication and

transportation facilities.

It not only helps to enlarge the market, but expand the horizons of business too. Take
for instance, the establishment of post and telegraph system and construction of roads
and highways in India.

It helped considerable entrepreneurial activities which took place in the 1850s.

Apart from the above factors, institutions like trade/ business associations, business
schools, libraries, etc. also make valuable contribution towards promoting and
sustaining entrepreneurship’ in the economy.

You can gather all the information you want from these bodies. They also act as a
forum for communication and joint action.
Social Factors

Social factors can go a long way in encouraging entrepreneurship.

Strongly affect the entrepreneurial behavior, which contribute to entrepreneurial

growth.

The social setting in which the people grow, shapes their basic beliefs, values and
norms.

Social factors include :

Age,
gender,
education,
caste,
family background ,etc
1. Caste Factor
 
There are certain cultural practices and values in every society which influence the’
actions of individuals.

These practices and value have evolved over hundred of years. For instance, consider
the caste system (the varna system) among the Hindus in India. It has divided the
population on the basis of caste into four division.

The Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and the Shudra
(artisan): It has also defined limits to the social mobility of individuals.

By social mobility’ we mean the freedom to move from one caste to another. The caste
system does not permit an individual who is born a Shridra to move to a higher caste.

Thus, commercial activities were the monopoly of the Vaishyas. Members of the three
other Hindu Varnas did not become interested in trade and commence, even when
India had extensive commercial inter-relations with many foreign countries.

Dominance of certain ethnical groups in entrepreneurship is a global phenomenon

2. Family Background

This factor includes size of family, type of family and economic status of family.

In a study by Hadimani, it has been revealed that Zamindar family helped to gain access
to political power and exhibit higher level of entrepreneurship.

Background of a family in manufacturing provided a source of industrial

entrepreneurship. Occupational and social status of the family influenced mobility.

There are certain circumstances where very few people would have to be venturesome.

For example in a society where the joint family system is in vogue, those members of
joint family who gain wealth by their hard work denied the opportunity to enjoy the
fruits of their labor because they have to share their wealth with the other members of
the family.
3. Education
Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems.

In any society, the system of education has a significant role to play in inculcating
entrepreneurial values.

In India, the system of education prior to the 20th century was based on religion. In this
rigid system, critical and questioning attitudes towards society were discouraged.

The caste system and the resultant occupational structure were reinforced by such
education. It promoted the idea that business is not a respectable occupation. Later,

when the British came to our country, they introduced an education system, just to
produce clerks and accountants for the East India Company, The base of such a system,
as you can well see, is very anti-entrepreneurial.

Our educational methods have not changed much even today. The emphasis is till on
preparing students for standard jobs, rather than marking them capable enough to
stand on their feet.
4. Attitude of the Society

A related aspect to these is the attitude of the society towards entrepreneurship.

Certain societies encourage innovations and novelties, and thus approve entrepreneurs’
actions and rewards like profits.

Certain others do not tolerate changes and in such circumstances, entrepreneurship

cannot take root and grow.

Similarly, some societies have an inherent dislike for any money-making activity. It is said,
that in Russia, in the nineteenth century, the upper classes did not like entrepreneurs.

For them, cultivating the land meant a good life. They believed that rand belongs to God
and the produce of the land was nothing but god’s blessing.

Russian folk-tales, proverbs and songs during this period carried the message that
making wealth through business was not right.
5. Cultural Value (job oriented vs business oriented)
Motives impel men to action. Entrepreneurial growth requires proper motives like
profit-making, acquisition of prestige and attainment of social status.

Ambitious and talented men would take risks and innovate if these motives are
strong. The strength of these motives depends upon the culture of the society.

If the culture is economically or monetarily oriented, entrepreneurship would be

applauded and praised; wealth accumulation as a way of life would be appreciated.

In the less developed countries, people are not economically motivated. Monetary
incentives have relatively less attraction.

People have ample opportunities of attaining social distinction by non-economic

pursuits. Men with organizational abilities are, therefore, not dragged into business.
They use their talents for non-economic end.
Psychological Factors

1. Need Achievement
The most important psychological theories of entrepreneurship was put forward in
the early) 1960s by David McClelland.

According to McClelland ‘need achievement’ is social motive to excel that tends to

characterize successful entrepreneurs, especially when reinforced by cultural
factors.

He found that certain kinds of people, especially those who became entrepreneurs,
had this characteristic.

Moreover, some societies tend to reproduce a larger percentage of people with high
‘need achievement’ than other societies. McClelland attributed this to sociological
factors.

Differences among societies and individuals accounted for ‘need achievement’

being greater in some societies and less in certain others.
The theory states that people with high need-achievement are distinctive in several
ways.

They like to take risks and these risks stimulate them to greater effort. The theory
identifies the factors that produce such people.

Initially McClelland attributed the role of parents, specially the mother, in mustering
her son or daughter to be masterful and self-reliant.

Later he put less emphasis on the parent-child relationship and gave more
importance to social and cultural factors.

He concluded that the ‘need achievement’ is conditioned more by social and

cultural reinforcement rather than by parental influence and such related factors.
2. Withdrawal of Status, Respect
There are several other researchers who have tried to understand the
psychological roots of entrepreneurship.

One such individual is Everett Hagen who stresses the-psychological

consequences of social change.

Hagen says, at some point many social groups experience a radical loss of status.
Hagen attributed the withdrawal of status respect of a group to the genesis of
entrepreneurship.

Hage believes that the initial condition leading to eventual entrepreneurial

behavior is the loss of status by a group. He postulates that four types of events
can produce status withdrawal:
      i.        The group may be displaced by force;
     ii.        It may have its valued symbols denigrated;
    iii.        It may drift into a situation of status inconsistency; and
   iv.        It may not be accepted the expected status on migration in a new society.
3. Motives
Other psychological theories of entrepreneurship stress the motives or goals of the
entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek power,
prestige, security and service to society. Stepanek points particularly to non-
monetary aspects such as independence, persons’ self-esteem, power and regard of
the society.
On the same subject, Evans distinguishes motive by three kinds of entrepreneurs
Managing entrepreneurs whose chief motive is security.
Innovating entrepreneurs, who are interested only in excitement.
Controlling entrepreneurs, who above all otter motives, want power and authority.
Finally, Rostow has examined inter gradational changes in the families of
entrepreneurs. He believes that the first generation seeks wealth, the second
prestige and the third art and beauty.
4. Others : tolerance
Thomas Begley and David P. Boyd studied in detail the
psychological roots of entrepreneurship in the mid-1980s. They
came to the conclusion that entrepreneurial attitudes based on
psychological considerations have five dimensions:
First came ‘need-achievement’ as described by McClelland. In all
studies of successful entrepreneurs a high achievement
orientation is invariably present.
The second dimension that Begley and Boyd call ‘locus of
control’ This means that the entrepreneur follows the idea that
he can control his own life and is not influenced by factors like
luck, fate and so on. Need-achievement logically implies that
people can control their own lives and are not influenced by
external forces.
The third dimension is the willingness to take risks. These two
researchers have come to the conclusion that entrepreneurs who take
moderate risks earn higher returns on their assets than those who take
no risks at all or who take extravagant risks.

Tolerance is the next dimension of this study. Very few decisions are
made with complete information. So all business executives must, have a
certain amount of tolerance for ambiguity.

Finally, here is what psychologists call ‘Type A’ behavior. This is nothing

but “a chronic, incessant struggle to achieve more and more in less and
less of time” Entrepreneurs are characterize by the presence of ‘Type A’
behavior in all their endeavors.
Business Idea and Plan
Sources of Business Ideas

1.Interests and Hobbies

2.Customer surveys
3.Brainstorming and dreams
4.Fanchises
5.Mass Media
6.Personal Experience and Talents
1.Interests and Hobbies

Eg.
Travelling : blogs, tourism, youtube
channel.
Entertainment : serials, blogs, stand up
comedy, drammas, etc
Cooking ;
Hospitality .

2. Customer surveys : the wants and

needs of customers
Unsatisfied customers.
3.Brainstorming : come up with
many ideas and options
possible.

The rules of Brainstorming :

1.Never judge or criticize the
ideas and suggestions of others
2.Encourage idea and invite
crazy or wild ideas
3.Quantity is paramount where
more the number of ideas, the
better
4. Combine and develop the
ideas that friends and
colleagues give you.
5.Never procrastinate.
5. Mass Media

Including Television , newspaper, Internet,

Radio and magazines are a great
Source of Information and Opportunities.

For eg : if there is a high demand for

physical fitness and healthy eating practices,
you can start a fitness and healthy eating
centre.

Internet has emerged as the latest

information technology with instant
millions of Ideas.
6. Personal Experience and
Talents

•What am I passionate about?

•What talents or skills do I

possess?

•Are people willing to pay me

for my skills ?

•What do I do to build my
skills?
How to evaluate Business Idea

1. Identify target market. Eg. JIO ,

2. Know what makes your product/service different.
3. Research the competition.
4. Conduct a Financial Feasibility Analysis.
1,50,000 CR INVESTMENT AND 8 GLOBAL PARTNERS
Starting a business ? Do this first
 
Step 1: Do Your Market Research.

Step 2: Make a Business Plan .

Step 3: Plan Your Finances.

Step 4: Choose a Business Structure. : sole proprietorship ,partnership firm,etc

Step 5: Pick and Register Your Business Name.

Step 6: Get Licenses and Permits.

Step 7: Choose Your Accounting System.

Step 8: Set Up Your Business Location.

Step 9: Get Your Team Ready.

Step 10: Promote Your Small Business.

 
Business Plan

A Traditional Business Plan consists of following points :

1.Executive Summary
2.Company Description
3.Products or services
4.Market Analysis
5.Market Strategy
6.Financial Analysis
Mission statement : describes what a company wants to do now.

Vision Statement : describes what a company wants to be in the future.

Amazon :
Mission : we strive to offer our customers the lowest possible prices, the best
Available selection, and the utmost convenience.
Vision : to be earth’s most customer –centric company, where customers can find and
Discover anything they might want to buy online.
2.Company Description

•Business name
•Location
•Management team
•Incorporation /establishment year details,
•Company background
•Overview of company’s profile
•Services offered by the company , etc
3.Products or services
· 1 Retail goods
· 2 Amazon Prime
· 3 Consumer electronics
· 4 Digital content
5. Amazon Games
· 5 Amazon Art
· 6 Amazon Video
· 7 Amazon Bussines
8 etc
Market Analysis
Market Strategy

Market strategy of Amazon

Segmentation,
Targeting,
Positioning in the Marketing strategy of Amazon
Financial Analysis
Corporate Social Responsibility
Corporate social responsibility (CSR) is a self-regulating business model that helps a
company be socially accountable — to itself, its stakeholders, and the public. 

 To engage in CSR means that, in the normal course of business, a company is
operating in ways that enhance society and the environment.

Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit
society while boosting their own brands. 

Often, companies that adopt CSR programs have grown their business to the point
where they can give back to society. Thus, CSR is primarily a strategy of large
corporations.
CSR done by Tata group
Tata companies are involved in a wide variety of
community development and environment
preservation projects.

Infosys to contribute more than Rs 240 crore

towards corporate social responsibility activities. ...
Established in 1996, Infosys Foundation works in the
areas of healthcare, education, culture, vidow care
and rural development.

Reliance Industries spends Rs. 771 Cr on CSR during

FY 2017-18.
Corporate Governance

Corporate governance is the system of rules, practices and processes by which

a firm is directed and controlled. 

Corporate governance essentially involves balancing the interests of a company's

many stakeholders, such as shareholders, management, customers, suppliers,
financiers, government and the community. 

Good and Bad Governance

Bad corporate governance can cast doubt on a company's reliability, integrity or
obligation to shareholders — which can have implications on the firm's financial health. 

Tolerance or support of illegal activities can create scandals like the one that rocked pnb,
Vakrangee,ICICI BANK,JAYPEE INFRA.
Q.1. 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:

•Enterprises engaged in the manufacture or production, processing or

preservation of goods as specified below:
• A micro enterprise is an enterprise where investment in plant and
machinery does not exceed Rs. 25 lakh;
• 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;
• 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.
Enterprises engaged in providing or rendering of services and whose investment in
equipment

• A micro enterprise is an enterprise where the investment in equipment does

not exceed Rs. 10 lakh;

• A small enterprise is an enterprise where the investment in equipment is

more than Rs.10 lakh but does not exceed Rs. 2 crore;

• A medium enterprise is an enterprise where the investment in equipment is

more than Rs. 2 crore but does not exceed Rs. 5 crore.
District Industries Centre
The 'District Industries Centre' (DICs) programme was started by the central
government in 1978 with the objective of providing a focal point for promoting
small, tiny, cottage and village industries in a particular area and to make available
to them all necessary services and facilities at one place.
 
The District Industries Centre is the institution at the District level, which provides all
the services and support facilities to the entrepreneur for setting up Micro, Small
and Medium Enterprises.

This included

1. identification of suitable schemes,

2. preparation of feasibility reports,
3. arrangements for credit facilities,
4. machinery and equipments,
5. provision of raw materials and
6. development of industrial clusters etc. 
Benefits of DIC
It was a landmark measure in development of cottage and small industries in smaller
towns in India.

1.It is aimed at providing all assistance and support to entrepreneurs in various

states.

2.These centres are responsible for effective promotion of cottage and small scale
industries at district level.

3.These centres also act to provide support facilities, concessions and services to
develop tiny, cottage and district industries centres small scale units.

4.Granting financial and other facilities to small units.

5.Developing close links with development blocks and specialized institutions

providing help to set up industries in rural areas.

6.Identifying and helping new entrepreneurs

 Hierarchy in District Industries Centre

1 General Manager is the head 

2 Manager (Credit),
3 Manager (Economic Investigation)
4 Manager (Development),
5 Assistant Manager
6 An Administrative Assistant.  

The functioning of DICs and their achievement is monitored by the

Additional Chief Secretary (Industries) and Director Of Industries &
Commerce. 
Activities of District Industries Centres.
1. Registration of SSI units (Permanent/ Provisional).

2. Registration of Handicrafts/Cottage industries.

3. Implementation of Prime Minister’s Rozgar Yojana.

4. Granting of Subsidies to SSI units.

5. Training for Entrepreneur Development Programme.

National Small Industries Corporation (NSIC)
•National Small Industries Corporation (NSIC), is an ISO 9001-2015 certified
Government of India Enterprise under Ministry of Micro, Small and Medium
Enterprises (MSME).

•NSIC has been working to promote, aid and foster the growth of micro, small and
medium enterprises in the country.

•NSIC operates through countrywide network of offices and Technical Centres in

the Country.

•In addition, NSIC has set up Training cum Incubation Centre managed by
professional manpower. 
NSIC Technical Services Centres are located at the following places:

Name of the Centre Focus area

Chennai Leather & Footware
Howrah General Engineering
Hyderabad Electronics & Computer Application
New Delhi Machine Tools & related activities
Rajkot Energy Audit & Energy Conservation
activities
Rajpura (Pb) Domestic Electrical Appliances
Aligarh (UP) Lock Cluster & Die and Tool making
Neemka (Haryana) Machine Tools & related activities
NSIC offers small enterprises the following support services through its
Technical Services Centres and Extension Centres:

1. Advise on application of new techniques

2. Material testing facilities through accredited laboratories

3. Product design including CAD

4. Common facility support in machining.

5. Energy and environment services at selected centres.

6. Classroom and practical training for skill upgradation.

7. NSIC facilitates import of raw materials.
8. NSIC takes care of all the procedures, documentation & issue
of letter of credit in case of imports.
Small Industries Development Organization
Small Industries Development Organization (SIDO) is a subordinate office of the
Department of SSI & Auxiliary and Rural Industry (ARI).

It is an apex body and nodal agency for formulating, coordinating and monitoring
the policies and programmes for promotion and development of small-scale
industries.

Development Commissioner is the head of the SIDO.

He is assisted by various directors and advisors in evolving and implementing

various programmes of training and management, consultancy, industrial
investigation, possibilities for development of different types of small-scale
industries, industrial estates, etc.

Development Commissioner
Directors
Advisors
The main functions of the SIDO are classified into:
(i) Co-ordination,

a. To evolve a national policy for the development of small-scale industries,

b. To co-ordinate the policies and programmes of various State
Governments,
c. To maintain a proper relations with the related Central Ministries,
Planning Commission, State Governments, Financial Institutions etc., and
d. To co-ordinate the programmes for the development of industrial
estates.

(ii) Industrial development, and

To reserve items for production by small-scale industries,
b. To collect data on consumer items imported and then, encourage the
setting of industrial units to produce these items by giving coordinated
assistance,

c. To render required support for the development of ancillary units, and

d. To encourage small-scale industries to actively participate in
Government Stores Purchase Program by giving them necessary guidance,
market advice, and assistance.
(iii) Extension.

a. To make provision to technical services for improving technical process,

production planning, selecting appropriate machinery, and preparing factory
lay-out and design,

b. To provide consultancy and training services to strengthen the competitive

ability of small-scale industries.

c. To render marketing assistance to small-scale industries to effectively sell

their products, and

d. To provide assistance in economic investigation and information to small-

scale industries.
Business Incubation and Business Clusters
Business Incubation centres :

A business incubator is a company that helps new and startup companies to develop

by providing services such as management training or office space. The National
Business Incubation Association (NBIA) defines business incubators as a catalyst tool
for either regional or national economic development.

An organization designed to accelerate the growth and success of entrepreneurial

companies through an array of business support resources and services that could
include physical space, capital, coaching, common services, and networking
connections.

Business incubation programs are often sponsored by private companies or municipal

entities and public institutions, such as colleges and universities.

Their goal is to help create and grow young businesses by providing them with
necessary support and financial and technical services.

There are approximately 900 business incubators nationwide, according to the

National Business Incubation Association.
Incubators provide numerous benefits to owners of startup businesses.

Their office and manufacturing space is offered at below-market rates, and their staff
supplies advice and much-needed expertise in developing business and marketing
plans as well as helping to fund fledgling businesses.

Companies typically spend an average of two years in a business incubator, during

which time they often share telephone, secretarial office, and production equipment
expenses with other startup companies, in an effort to reduce everyone's overhead and
operational costs.

Not all business incubators are alike, however, so if you have a specialized idea for a
business, try to find the incubator that best suits your requirements.

In India, the business incubators are promoted in a varied fashion: as Technology

Business Incubators (TBI) and as Startup Incubators -- the first deals with technology
business (mostly, consultancy and promoting technology related businesses) and the
later deals with promoting startups (with more emphasis on establishing new
companies, scaling the businesses, prototyping, patenting, and so forth). 
Business Clusters
A business cluster is a geographic concentration of interconnected businesses, suppliers,
and associated institutions in a particular field. Clusters are considered to increase the
productivity with which companies can compete, nationally and globally.

Business clusters are a concentration of interconnected businesses, suppliers and

institutions in a particular field. Think Silicon Valley in the US – like-minded companies
gravitate together thanks to shared needs, and as a result, greater revenue gets poured
into the local area with skilled workers coming together to drive expertise and innovate
culture.
Networking:
The value of networking can never be underestimated – having peers on
hand to review suppliers, give insight into industry trends and see where
a partnership might be mutually beneficial is something that even the
world of digital communication can’t fully replicate. These are all benefits
that can save time and effort for your business in the long run.
Growth:
Growth is important for many small businesses, but no more so than
start-ups, for whom winning new business is imperative. Many
businesses have succeeded by bring their proximity closer together –
take the Toyota model, where suppliers cluster around the company’s
factories, or cities where science hubs spring up near major universities.
Talent:
Finally, hubs of innovation draw in skilled workers like magnets. Start-ups
need to recruit wisely in early days, as poor hiring can be incredibly costly
– both in terms of finances and time resources. Bringing your company
to the bright and skilled workers instead of trying to entice them to come
to you might be all you need to get a competitive edge in the crowded
race to the top.
 
 Unit IV
Mobilizing Resources
 Capital structure
Two broad sources of finance available to a
firm

1.Shareholder’s fund.
2.Loan fund.
 DEBT
Meaning Funds owed/Borrowed by the
company from another party is
known as Debt.
What is it It is a loan fund
Reflects It gives obligation
Term Term of debt is shorter
period/longer period.
Risk Low risk.
Types Term loan, Debentures, Bonds etc.
Return Interest
Nature of Fixed and regular.
return
Collateral Essential to secure loans, but
funds can be raised otherwise
also.
Debentures (or Bonds )

Acknowledgement of debt by a company from the members of public by

Issue of an instrument.

It is a written promise given by the company to the lenders for repayment

For repayment of a certain amount with interest on a certain date.
Secured Loans

Loan taken by the company against the security of the assets is called as secured
Loan.

If the loan taken against the security of fixed assets then it is called mortgage
loan.
Eg. Car Loan, Home loan.

Features

1. It carries fixed rate of interest.

2. Interest payable irrespective of profit.
3. Secured by the asset.
Unsecured Loan.

Loan taken by the company without any security of the assets is called
Unsecured Loan.

If you default on the loan, the lender can't automatically take your property. The
most common types of unsecured loan are credit cards, student loans.

Features

They are unsecured.

They are accepted for a maximum period of 3 years.

Refundable after certain time.

In case the deposits are not refunded by the companies after a specified time
The responsible officer is penalized.
Venture Capital Funds

• Startups seek finance often through venture capital (VC) firms.

• These firms can provide

capital;
strategic assistance;
introductions to potential customers,
partners, and
employees; and much more.

• Venture capital financings are not easy to obtain or close.

• Entrepreneurs will be better prepared to obtain venture capital financing if they

understand the process, the anticipated deal terms, and the potential issues that will
arise.
Venture Capital

•Venture capital is a relatively small financial institution.

•It encompasses the extremes of many corporate finance challenges like

Uncertainty.

•Venture capitalist unlike mutual fund houses typically do not disclose

Much information to regulators.

•This has led to a shortage of reliable industry data.

•A young company which is not ready to tap public financial market may
Seek venture capital.
•Such capital is provided by venture capital funds which are prepared to
Finance an untried company that appears to have promising prospects.

•It represents financial investment in a risky proposition made in the hope

Of earning a high rate of return.

• Venture capitalists concentrate mainly in few metropolitan area.

1. Obtaining Venture Capital Financing

To understand the process of obtaining venture financing, it is important to know that

venture capitalists typically focus their investment efforts using one or more of the
following criteria:

Specific industry sectors (software, digital media, semiconductor, mobile, biotech,

mobile devices, etc.)

Stage of company (early-stage seed or mid stage Series , or later stage rounds with
companies that have achieved meaningful revenues )

Geography (e.g., Mumbai , Banglore /Silicon Valley, New York, etc.)

How to approach VC s

•Interest match with VC s : Before approaching a venture capitalist, try to learn

whether his or her focus aligns with your company and its stage of development.

• Don’t Irritate VC s : The second key point to understand is that VCs get
overburdened/irritated with investment opportunities, many through unsolicited
emails.

•Almost all of those unsolicited emails are ignored. The best way to get the
attention of a VC is to have a warm introduction through a trusted colleague,
entrepreneur, or lawyer friendly to the VC.

•A startup must have a good “elevator pitch” and a strong investor pitch deck to
attract the interest of a VC.
Steps to be followed at VCs

•Time Consuming Process : Startups should also understand that the venture
process can be very time consuming.

•Just getting a meeting with a principal of a VC firm can take weeks;

•Followed up with more meetings and conversations;

•Followed by a presentation to all of the partners of the venture capital fund;

•Followed by the issuance and negotiation of a term sheet, with continued due
diligence;

•And finally the drafting and negotiation by lawyers on both sides of numerous
legal documents to evidence the investment.
2. The Venture Capital Term Sheet

•Most venture capital financings are initially documented by a “term sheet”

prepared by the VC firm and presented to the entrepreneur.

•The term sheet is an important document, as it signals that the VC firm is serious
about an investment and wants to proceed to finalize due diligence and prepare
definitive legal investment documents.

•Before term sheets are issued, most VC firms will have gotten the approval of their
investment committee.

•Term sheets are not a guarantee that a deal will be consummated, but in our
experience a high percentage of term sheets that are finalized and signed result in
completed financings.
•The term sheet will cover all of the important facets of the financing:

•Economic issues such as the valuation given to the company;

•Control issues such as the makeup of the Board of Directors and what sorts of
approval or rights the investors will enjoy;

•And post-closing rights of the investors, such as the right to participate in future
financings and rights to get periodic financial information.

•The term sheet will typically state that it is non-binding, except for certain
provisions, such as confidentiality .

•Although it is not binding, the term sheet is by far the most important document to
negotiate with investors—almost all of the issues that matter will be covered in the
term sheet, leaving smaller issues to be resolved in the financing documents that
follow.

•An entrepreneur should think of the term sheet as the blueprint for the
relationship with his or her investor, and be sure to give it plenty of attention.
3. Valuation of the Company

The valuation put on the business is a critical issue for both the entrepreneur and
the venture capital investor.

Valuation is negotiable and there is not one right formula or methodology to rely
upon.

Assumed selling price after 5 years = 100 cr rs.

- Value after 4 years = 50 crs rs.
- Value after 3 years = 25 crs rs.
- Value after 2 years = 12.5 crs rs.
- Value after 1 years = 6.25 crs rs.
- Current valuation = 3.125 cr rs.
The key factors that will go into a determination of valuation include:

The experience and past success of the founders (so-called “serial”

entrepreneurs present less risk, and often command higher valuations)

The size of the market opportunity

The skills, technology already developed by the company.

Any initial traction by the company (revenue, partnerships, satisfied customers,

favorable publicity, etc.)
Assume that your college has one Incubation centre. Design a
startup Business Idea of your group which you can start off
before leaving this college.

You are required to talk about how and what expertise of college
are you going to utilize or procure for your start up.

Give suitable name to your business idea.

What sponsorship are you planning to get from the college. Give
justification (why should college sponsor you).

How are you/from where are you going to manage your financial
resources.
Unit 5 : Family Business
How large is the family business sector in India?
•In India the majority of businesses are in the dominant control of the
families.

•It is estimated that 90% of the business in India is controlled by families.

From 'Mom and Pop' Kirana stores to large conglomerates and SME's one
finds family run businesses.  

•Most of the big corporate business houses like Tatas, Ambanis, Birlas,
Godrej, Wadias,  Munjals, Mahindra, Thapars, Mittals, ShaparjiPaollonji,
Jindals, Adanis, Anil Aggarwal – Vedanta, Bajaj, Ruias, Ranbaxy, Times of
India and many more are all controlled by families.

•The role of family and the family patriarch is quite important in India. 
 
•There are many families who have separated and partitioned.
What helps family firms in India survive for generations?

•Importance to personal family reputation.

•Good self governance.

•Self discipline.

•Brand of their family names.

•Good will.
What are the key challenges facing family firms in India?
•Inter family disputes,
•Lack of professional management and professional
participation,
•Absence of family constitution on running of business and
handling family wealth,
•Lack of written understanding to address any conflict,
•Lack of communication amongst the family members,
•Unsound and unfair policies for the employees,
•Lack of quality controls and to keep pace with the modern
techniques and
•Advancements are the key challenges to any family firms in
India.
 
Are family firms changing the way they should?
•Decision making ability is high in Family members due to sense of
belongingness.
•They are capable of appointing the right talent for their business.
• They are well educated.
•Right governance structure.
•Adapting New way of doing business.
• The families are increasingly retaining professionals to run the
businesses
•They are also interested in settling down the succession related
issues relating to their personal assets as well as running of
business in a professional manner.
 
Is succession planning a big issue?  

•Preservation of Increase in wealth.

•Past generation involved in lot of borrowings and
present generation has to hold the pressure of that
borrowings.
•Joint families divided into nuclear families.
•Distribution of estate : who will handle which
business.
How do families in India plan and manage
succession?
•The practice and philosophy

•Training to new generation.

• Developing trust among themselves.

•Taking professional help.

 
UNIT 6 : E- Business
Introduction to e-Business
E-business or Online business means business transactions that take place online with
the help of the internet.

The term e-business came into existence in the year 1996. E-business is an abbreviation
for electronic business. So the buyer and the seller don’t meet personally.

Features of Online Business

Some of the features of Online Business are as follows :
It is easy to set up
There are no geographical boundaries
Much cheaper than traditional business
There are flexible business hours
Marketing strategies cost less
Online business receive subsidies from the government
There are a few security and integrity issues
There is no personal touch
Buyer and seller don’t meet
Delivery of products takes time
There is a transaction risk
Anyone can buy anything from anywhere at anytime
The transaction risk is higher than traditional business
Types of e-Commerce
Now there are actually many types of e-Businesses. It all depends on who the final
consumer is. Some of the types of e-commerce are as follows :
Business-to-Business (B2B)
Transactions that take place between two organizations come under Business to business.
Producers and traditional commerce wholesalers typically operate with this type of
electronic commerce. Also. it greatly improves the efficiency of companies.
Business-to-Consumer (B2C)
When a consumer buys products from a seller then it is business to consumer transaction.
People shopping from Flipkart, Amazon, etc is an example of business to consumer
transaction. In such a transaction the final consumer himself is directly buying from the
seller.
Consumer-to-Consumer (C2C)
A consumer selling product or service to another consumer is a consumer to consumer
transaction. For example, people put up ads on OLX of the products that they want to sell.
C2C type of transactions generally occurs for second-hand products. The website is only
the facilitator not the provider of the goods or the service.
Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of exchanging goods. This
type of e-commerce is very common in crowd sourcing based projects. A large number
of individuals make their services or products available for purchase for companies
seeking precisely these types of services or products.
Consumer-to-Administration (C2A)
The Consumer-to-Administration model encompasses all electronic transactions
conducted between individuals and public administration. Some examples of
applications include
Education – distance learning, etc.
Social Security – through the distribution of information, making payments, etc.
Taxes – filing tax returns, payments, etc.
Health – appointments, information about illnesses, payment of health services, etc.
Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions conducted online by companies
and public administration or the government and its varies agencies. Also, these types
of services have increased considerably in recent years with investments made in e-
government.
The importance of domain name in ecommerce business

What is the importance of domain name?

Even if the success of your ecommerce site is not totally based on this, it also should be
accepted that right domain name has a positive effect. But when we analyze the brand
names which we often use in daily life, they are not very attractive. The positive effects of
these brands are formed in time. Domain name is essential at the beginning for the
ecommerce business.
Short and catchy

If you want to easily make your customers remember your domain name, just be careful
that your domain name is as short as possible and make sure that is easy to remember.
And in the longer domain names are not meaningful words to keep in mind is more
difficult. It’s much more difficult to remember long and meaningless words.

Avoid similar names.

It will be more useful not to prefer a similar domain name as your competitors in the
industry and well-known ecommerce sites. This may cause legal issues related to
trademark registration of that company and can cause your customers to create a negative
image about you.
Think as the customers do

Do not forget that the customers give particular importance to their own needs and
try to see on their point of view on the step of decision. For example, it may be
sensible to use the word of “mother” in an ecommerce site’s domain name for an
ecommerce site on which you sell suitable for mothers interest, but it will be more
sensible to take into account that mothers would buy for their “children” and
“babies” and they will search using these words. E-commerce may be sale for you but
for your customers it is purchasing transaction . If you have to prefer one of these
words in your domain name, it would be more accurate to think like customers and to
use the word of “get”.

Choice of domain name extensions

The world’s most popular domain name extension, .com, is not a chance. Because
.com extension for users is more familiar for users we recommend you to use that as
much as possible. If you’ve found a perfect domain name with a different extension
and if you have difficulty in .com extension with a suitable domain name, it may be a
good idea to use .net exention. 
GROWTH Strategies of Ecommerce and e business

1. Interactive product visualization

2. Artificial Intelligence : use of adwords,adsense,conversion rate,etc
3. Advance product filtering : eg mobiles,shoes,t shirts.
4. Chatbots
5. More delivery options