Chapter-8 Small business and Enterprises

Entrepreneurship

Entrepreneurship is the process of setting up one's own

business as distinct from pursuing any other economic
activity, be it employment or practicing some
profession. The person who set-up his business is called
an entrepreneur. The output of the process, that is, the
business unit is called an enterprise.
Top Indian Entrepreneurs

  Dhirubhai Ambani (Reliance)

 Narayana Murthy (Infosys)
 Azim Premji (Wipro)
 Gautam Adani (Adani group)
 Radhakishan Damani (Dmart)
Need/ Importance of Entrepreneurship

INCREASED
LIFE LINE OF
PROFIT
NATION

PROVIDE EMPLOYMENT
IMPORTANCE OPPORTUNITIES
INNOVATION

SOCIAL
GROWTH OF
BENEFITS
ECONOMY
PROCESS OF ENTREPRENEURSHIP

SELF DISCOVERY

IDENTIFYING OPPORTUNITIES

GENERATING AND EVALUATING IDEAS

PLANNING

RAISING STARTUP CAPITAL

START-UP

GROWTH

HARVEST
Start up India Scheme

 Start up India is an initiative of govt of India. The

campaign was first announced by Prime Minister,
Mr Narendra Modi in his speech on 15th August 2015

 The objective of this scheme is:

 To build a strong ecosystem for promoting and
nurture innovative entrepreneurs across the
country.
 To reduce the regulatory burden on startups and
allowing them to focus on their core business.
 Start up India program was launched on 16th Jan 2016. An
entity shall be considered as start up if it satisfies all the
following conditions:

 If it is registered as any one from Private Ltd company,

Partnership firm, Limited liability partnership firm, One
person company provided that such entity is not formed by
splitting up or reconstruction of existing business.
 It has not completed 10 years since registration
 Its turnover for any of the financial year has not exceeded Rs
100 Crores.
Schemes/Benefits offered by Govt of
India to startup
 No inspection
 Registration
 Income tax exemption
 Capital gain tax exemption
 Benefits in patent and intellectual property
 Funding schemes for startup
Funding options for Startups
 Self funding/bootstrapping: To start business self
funding is first option on later stage investors may get
attracted.(Invest by own)
 Crowd funding: It is the process of funding a venture by
small amount of money from large number of people.
 It is the platform where entrepreneur give details like-
description of business, goal of business, plans for
making profit, investment required, reason etc.
 Investors evaluate idea if they like they contribute fund.
It can be reward based, equity based or giving donation
 Eg: Kickstarter, Indiegogo
 Angel investment: Angel investors are wealthy
individuals with surplus cash and interest to invest in
startups and expecting upto 30% equity in company.
They also provide guidance to business.

 Eg: Ratan Tata who was Ex-chairman of Tata

industries did investment in urban
company,Snapdeal etc
 Kunal Bahl CEO and founder of Snapdeal invested in
olacabs and ecommerce sector
 Venture capital: These are professionally managed
organisations who provide funds to companies that
have huge potential to earn profits and expect
equity stake in return.

 Eg: IDG Ventures India, Ascent Capital, Forum

Synergies etc.
 Business Incubators and Accelerators:

 These are programs conducted by specific organisations in every city, differ

in terms of stage of business. It also invest and have equity stake in business.
It provide workspace, seed funding, mentoring and training to them.

 Incubator program are for business in idea stage. They don’t have even
prototype of business.

 Accelerator program are for companies in early stage i.e. they already
started business and wants to grow or expand.

 Eg: These programs initiated by central state govt, venture capitalist,

Corporate accelerators, Education sector
 Winning Contests: Contests/competition are arranged
for new entrepreneurs, who have sound business idea
and plan wins and get funds to invest.

 Loans from banks: It is the first option that

entrepreneurs use for funding in their business. There are
various schemes started by govt through which startups
can get collateral free business loans at low interest
rates. These are registered under banking regulation act.

 Eg: SBI, PNB, ICICI etc

 Loans from Non Banking Financial institutions:
Business loans can also be provided by NBFC’s at
little higher rate of interest to those who don’t have
good credit ratings. These are registered under
Companies act but govern by RBI

 Eg: Bajaj Finserve, Mahindra Finance, Tata Capital,

Muthoot finance etc
 Government Programs: The govt of India has
allocated huge fund to improve startup ecosystem
and also launched various schemes by Central and
state govt.

 Eg: Small Industries development bank of India

(SIDBI)
 Maharashtra centre for entrepreneurship
development
 Rajasthan startup fest etc
INTELLECTUAL PROPERTY
RIGHTS (IPR)
INTELLECTUAL PROPERTY RIGHTS
(IPR)
 Intellectual property (IP) refers to the
creations of the human mind, like inventions,
literary and artistic works, symbols, names,
images and designs used in business.
 IPR allow innovative entrepreneurs to protect
their inventions. It also give an edge over
competitors.
Why Is IPR Important for
Entrepreneurs?

 It encourages creation of new, pathbreaking

inventions, such as cancer cure medicines. It
incentives inventors, authors, creators, etc., for
their work.
 It allows the work created by a person to be
distributed and communicated to the public only
with his/her permission. Therefore, it helps in the
prevention of loss of income.
 It helps authors, creators, developers and owners
to get recognition for their works.
Types of Intellectual Property

Industrial property
 It includes inventions (patents), trademarks,
industrial designs and geographical indications.

Copyrights
 It includes literary and artistic works, such as
novels, poems, plays, films, musical works, artistic
works, such as drawings, paintings, photographs
and sculptures and architectural designs.
Types of Intellectual Property Rights

 Copyright
 Copyright is the right to "not copy". The copyright is
an exclusive right of the creator to prohibit the
unauthorized use of the content which includes
reproducing and distributing copies of the subject
matter. The unique feature of copyright is that, the
protection of work arises automatically as soon as
the work comes into existence and remains till life
of author.
 Trademark
 A trademark is any word, name, or symbol (or their
combination) that lets us identify the goods made by an
individual, company, organization, etc.
 A trademark helps in distinguishing similar products in the
market from its competitors.
 A competitor cannot use the same, or similar trademark to
sell their product in the market
 Geographical Indication (GI)
 A Geographical Indication (GI) is primarily an indication which identifies
agricultural, natural or manufactured products (handicrafts, industrial
goods and food stuffs) originating from a definite geographical territory,
where a given quality, reputation or other characteristic are essentially
attributable to its geographical origin. It suggests to consumers, that the
product will have a particular quality or characteristic, that they may
value.
 Eg: Darjeeling Tea, Kangra Painting, Nagpur Orange, Banaras Sarees,
and Kashmir Pashmina
 Patent
 A patent is a type of IPR which protects the scientific
inventions (products and or process) which shows technical
advancement over the already known products.
 A 'patent' is an exclusive right granted by the Government
which provides the exclusive 'right to exclude' all others and
prevent them from making, using, offering for sale, selling or
importing the invention.
 A patent grants exclusive rights to the inventor for a period
of 20 years.
 Trade Secret:
 It is any valuable information that is not
publicly known and of which the owner has
taken reasonable steps to maintain secrecy.
 Eg: Business plan, customer list, recipe etc
SMALL BUSINESS
Small Business

 The small business is defined as per the

Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006 which
came into force w.e.f., October, 2006.
Accordingly, enterprises are classified into
two major categories viz., manufacturing and
services.
 Manufacturing Enterprises
 There are three types of enterprises:
 1. Micro Enterprises— where the investment in
plant and machinery does not exceed Rs 25 lakh.
2.Small Enterprises —where the investment in
plant and machinery is more than Rs 25 lakh but
does not exceed Rs 5 crore.
 3. Medium Enterprises — where the investment in
plant and machinery is more than Rs 5 crore but
does not exceed Rs 10 crore.
 Service Enterprises
 Micro Enterprises — where the investment in
equipment does not exceed Rs 10 lakh.
 Small Enterprises — where the investment in
equipment is more than Rs 10 lakh but does
not exceed Rs 2 crore.
 Medium Enterprises —where the investment
in equipment is more than Rs 2 crore but
does not exceed Rs 5 crore.
Role of Small business in Rural India

Improves
Employme Economic
nt Condition

Promotion of
Rural
Artistic and
Creative Sense Development
Government Schemes and
Agencies for Small-Scale
Industries
Institutions setup by the government of
India to promote small-scale industries in rural India

1. National Small Industries Corporation (NSIC)

National Small Industries Corporation was set up in 1955 with a view to promote,
aid and foster the growth of small business units in the country.

This focuses on the commercial aspects of these functions.

 Supply indigenous and imported machines on easy hire-purchase terms.

 Procure, supply and distribute indigenous and imported raw materials.
 Export the products of small business units and
 Develop export-worthiness.
 Mentoring and advisory services:
 Serve as technology business Incubators.
 Creating awareness on technological upgradation.
 Developing software technology parks and technology transfer centres.
2. The District Industries Centers (DICs)

 The District Industries Center was launched on 1 May 1978, with

a view to providing an integrated administrative framework at
the district level, which would look at the problems of
industrialisation in the district, in a composite manner.
 The main activities undertaken by the District Industries
Centers (DICs) are as follows:
 Identification of suitable schemes,
 Preparation of feasibility reports,
 Arranging for credit,
 Machinery and equipment,
 Provision of raw materials and
 Other extension services
Incentives offered by the
government of India for small scale
industries, especially in rural,
backward, tribal and hilly areas
 Land
 Every state offers developed plots for setting up of
industries. The terms and conditions may vary. Some states
don't charge rent in the initial years, while some allow
payment in installments.
 Power
 Power is supplied at a concessional rate of 50 per cent, while
some states exempt such units from payment in the initial
years.
 Water
 Water is supplied on a no-profit, no-loss basis or with 50
Percent concession or exemption from water charges for a
period of 5 years.
 Raw materials
 Units located in backward areas get preferential treatment in
the matter of allotment of scarce raw materials like cement,
iron and steel etc.
 Finance
 Subsidy of 10-15 per cent is given for building capital assets.
Loans are also offered at concessional rates.
 Goods and Services Taxes (GST)
 Small industries with less than`20 lakh turnover are
completely exempted, whether they register or not.