ENTREPRENEURSHIP

Dr. Akshita Jain

SYLLABUS
 UNIT I: 
 Entrepreneurship

Entrepreneurship: Meaning, Nature, Benefits,

Classification of Entrepreneurship, Evolution of
the Concept of Entrepreneurship,
Entrepreneurial Process
Entrepreneur: Competencies of an
Entrepreneur, Types of Entrepreneur, Role and
Functions of Entrepreneur
UNIT II

 Promotion of a New Venture:

 Promotion of a New Venture: Search for a Business
Idea – Sources of Ideas, Idea Processing and
Selection; Pre-start-up Implementation – Assembling
Necessary Inputs; Establishing the Enterprise and
Start-up Stage – Start-up Operating objectives,
Positioning the Enterprise

 Business Plan: Concept, Characteristics, Steps in

developing a Business Plan, Need and Importance of
Business Plan, Feasibility Study for New business,
Valuation of a New Company
UNIT III 

 Forms of Business Ownership:

Forms of Business Ownership: Sole
Proprietorship, Partnership, Limited Liability
partnership and Corporation form, Joint Stock,
Co-operative Venture, Franchising
Entrepreneurship, Creativity and Innovation:
Meaning, Creativity Vs Innovation, Creativity
and Innovation Process, Stimulating Creativity;
Organizational actions that enhance/hinder
creativity, Sources of Innovation in Business
UNIT IV
 Role of Government in Entrepreneurial
Development:
 Role of Government in Entrepreneurial
Development: Need; Government Assistance,
Incentives and Schemes for Infrastructural
facilities
Family Business and Entrepreneurship: Concept of
Family business, Structure and Kinds of family
firms, Management of family enterprises, Conflict
and conflict resolution in family firms, Encouraging
Change in the family business system
UNIT V 

 Financing the Entrepreneurial Business

Financing the Entrepreneurial Business: Sources
of finance – Short-term and Long-term; Loan
syndication, Consortium finance, Venture
capital, Angel Investors
Institutional Support to Entrepreneurs: SIDBI,
IDBI, IFCI, FIWE
ESSENTIAL READINGS:
 Burns, P. (2001). Entrepreneurship and small business. New
Jersey :Palgrave.
 Drucker, P. F. (2006). Innovation and entrepreneurship: Practice and
principles. USA: Elsevier.

 Hisrich, R., & Peters, M. (2002). Entrepreneurship. New Delhi: Tata

McGraw Hill.

 Holt, D. H. (2004). Entrepreneurship new venture creation. New Delhi:

Prentice Hall of India.

 Kaplan, J. (2004). Patterns of entrepreneurship. Wiley.

 G.S Sudha (2013) Fundamentals of Entrepreneurship. Jaipur. New Delhi .

R.B.D Publication

 Vasant Desai (2011) Entrepreneurial Development. Himalaya Publishing

House.

 Roy Rajeev, Entrepreneurship, Oxford Higher Education

LIST OF TOP STARTUPS IN INDIA
 Ola Cabs (founded in 2010)
 Zomato (2008)
 Paytm (2010)
 Myra (online parmacy, 2015)
 Dailyhunt (daily news and local language content, 2009)
 Policybazaar (insurance, 2008)
 Nykaa (online beauty and wellness products, 2012)
 Toppr (after school learning app for various competitive
exams, 2013)
 Urban ladder (online furniture company, 2012)
 Xpressbees (e-commerce logistics, 2015)
EVOLUTION OF
ENTREPRENEURSHIP

Entrepreneurship is one of the four
mainstream economic factors– land, labour ,
capital and entrepreneurship. During 14th
century, references speak about tax
contractors- individuals who paid a fixed sum
of money to a government for the license to
collect taxes in their region.
 Known as tax contractors they used to take
the risk of collecting taxes. If they collected
more than the sum paid for their license ,
they made profits and kept the excess.
 EVOLUTION OF THE CONCEPT OF
ENTREPRENEURSHIP
The term ‘Entrepreneur’ was first appeared in the French
language. Initially, the concept was applied to the leaders of
military expeditions / sphere in the beginning of the 16 th
century. Later on it began to be applied to construction,
engineering, and other related activities. It was only in the 18 th
century that the term entrepreneurship was applied almost
exclusively to economic activities in general.
The evolution or emergence of the entrepreneurship can be
classified into the following historical periods:
i. Earliest Period (during 16 th century): An early example of
entrepreneurship was of Marco Polo, a Venetian (Venice,
Italy) merchant traveller. He attempted to establish trade
routes to the Far East (China). He was a passive risk bearer,
and took the active role in trading, bearing all the physical
and emotional risks.
ii. Middle Ages: In the Middle Ages, the term
Entrepreneur was used to describe both an actor and
a person who managed large production projects. In
such projects, the entrepreneur did not take any risks,
but merely managed the project using the resources
provided, usually by the government of the country.
iii. 17th Century: The connection of risk with
entrepreneurship was developed in the 17th century.
Richard Cantillion , an Irish-French economist,
developed one of the early theories of the
entrepreneur and is regarded as the ‘Founder of
Entrepreneurship’. He viewed entrepreneur as a risk
taker. He gave the concept of entrepreneurship a
central role in economics.
iv. 18th Century: In the 18th century, the person with
capital was differentiated from the one who needed
capital. One reason for the differentiation was the
industrialisation occurring throughout the world. Many of
the inventions developed during this time were reactions
to the changing world, as was the case with the inventions
of Eli Whitney and Thomas Edison. They both were
developing new technologies and were unable to finance
their inventions themselves.
Adam Smith wrote in his book ‘Wealth of Nations’ in
1776 , that the entrepreneur as a person with unusual
foresight who could recognize potential demand for goods
and services. He viewed that entrepreneurs reacted to
economic change, thereby becoming the economic agents
who transformed demand into supply.
vi. In the 21st Century: In the new millennium i.e.
the 21st century, the ideas, talents, skills, and
knowledge that promote entrepreneurship are
evident in young people all around the world. This
is a change from previous times when the forces for
economic creativity tended to favour the older and
more established businesspersons. The face of the
world economy has shifted, however, and the youth
of today seem especially well suited for
entrepreneurial activity. The spirit of
entrepreneurship - the notion of human progress,
development, achievement, and change – motivates
and energizes people.
 CONCEPT OF
ENTREPRENEURSHIP

 Entrepreneurship refers to a process of actions

an entrepreneur undertake to establish his
business. It is a creation and innovative
response to the environment and an ability to
recognize, initiate and exploit an economic
opportunity .
 In today’ s world of modernization and
development the term entrepreneurship is a
well known term.
CONCEPT OF
ENTREPRENEURSHIP
 Entrepreneurship is the ability to foresee or
ascertain the various opportunities related
with investment and then to evaluate these
various opportunities and forming enterprise,
the purpose of which is to give the maximum
contribution in the national’s growth.

 When we combine these activities performed

by entrepreneurs the resultant is known as
entrepreneurship.
FEATURES
 Innovation is an important feature as well as
function of entrepreneurship . Innovation
means doing something new or doing old things
in new or different way . It is the introduction
of new methods and ways of doing the work.
an entrepreneur should be innovative.
 According to DRUCKER, INNOVATION IS THE
MEANS BY WHICH ENTREPRENEUR EITHER
CREATES NEW WEALTH PRODUCING RESOURCES
OR ENDOWS EXISTING RESOURCES WITH NEW
PRODUCTS, SERVICES, IDEAS, AND
INFORMATION”
FEATURES
 Risk bearing: Risk bearing is also an important
function of entrepreneurship.
Prof knight in his theory ‘ RISK UNCERTAINTY AND
PROFITS’ DEFINES there are two types of risk:
 Foreseeable risk – is the risk which can be insured and
capable of being calculated.

 for eg: Business Risk, Government policy, Competative

risk

 Unforeseeable risk.- is the risk which can’t be insured

and it is tough to calculate it.
 For eg : Theft, Floods
FEATURES AND FUNCTIONS
 Organizing function : Entrepreneurship can also
be defined as an organizing function.
Organization means organizing all the factors of
production and directing them towards the
attainment of the goal of organization.
 Management skills: Entrepreneur must posses
managerial skills like motivation and leadership.
Motivation is inner urge that emerges the
behaviour towards achievement of goals. It can
be positive and negative, financial and non-
financial and leadership is to direct the people to
do what you want your men to do.
FEATURES AND FUNCTIONS
 Economic activity: Entrepreneurship is an
economic activity as it is concerned with
earning more and more profits.

 Goal oriented: Entrepreneurship is an goal

oriented activity. It is undertaken to achieve
the predetermined goals of the
entrepreneur.
FEATURES AND FUNCTIONS
 Decision Making: Entrepreneur takes decisions regarding
activities of enterprise. He decides about the type of
business to be done and the ways of doing it. An
entrepreneur has to make decisions to take actions with
unknown and unpredictable results.

 Function of High Achievement: People for high need for

achievement are more likely to succeed as entrepreneur.

 Gap filling function: Gap filling is the most significant

feature of entrepreneurship. The job of entrepreneur is to
fill the gap or make up the deficiencies which always exist
in the production function. He has to perform the
functions of input completing and gap filling.
COMPETENCIES OF
ENTREPRENEURS
 Competency is composed of knowledge, skills,
abilities, traits and other characteristics for
successful job performance.

 Entrepreneurial competencies can be defined

as underlying characteristics of a person
which led to his or her effective or superior
performance in a Job, such as generic and
specific knowledge, motives, traits, self
images, social roles and skills that result in
venture birth, survival and growth.
NEED FOR ENTREPRENEUR
COMPETENCIES

Entrepreneurial competencies are the skills
necessary for an entrepreneur to venture
into an enterprise Organize and manage an
enterprise competently to realize the goal
for which the enterprise is established.
TYPES OF COMPETENCIES
PERSONAL ENTREPRENEURIAL
COMPETENCIES
 Concern for high quality
 Commitment to work contract: An entrepreneur places the
highest priority on getting a job completed.
 Example

Makes personal sacrifice or expends extraordinary effort to

complete a job
 Efficiency orientation: A successful entrepreneur always finds
ways to do things faster or with fewer resources or at a lower
cost.
 Examples:

Looks for or finds ways to do things faster or at less cost.

Uses information or business tools to improve efficiency,
Expresses concern about costs vs. benefits of some
improvement, change, or course of action
PERSONAL ENTREPRENEURIAL
COMPETENCIES
 Personal entrepreneurial competencies is the personal characteristics of
an individual who possess to perform the task effectively and efficiently.

Personal entrepreneurial competencies includes:

Initiative:
 By keen observer of changes
 Awareness regarding consumer requirements

 Sees and acts on opportunities:  An entrepreneur always looks for and
takes action on opportunities.
 Examples

 Sees and acts on new business opportunities

 Seizes unusual opportunities to obtain financing, equipment, land, work
space or assistance

 Persistence
 Information Seeking
PERSONAL ENTREPRENEURIAL
COMPETENCIES
 Systematic planning: An entrepreneur develops and
uses logical, step-by-step plans to reach goals.
 Example: Plans by breaking a large task down into
sub-tasks
 Develops plans that anticipate obstacles
 Evaluate alternatives
 Takes a logical and systematic approach to
activities

 Persuasion
 problem Solving
 Self Confidence
 In addition to personal competencies, an
entrepreneur must possess the competencies
required to launch enterprise and for its growth
and survival. Which includes:
Venture Initiation and Success Competencies:
 It is further divided into two categories:

 Enterprise launching competencies

 Enterprise Management competencies
ENTERPRISE LAUNCHING
COMPETENCIES
 Competency to:

 Understand the nature of business:

 Regarding benefits to launch a business
 To analyze how to maximize the opportunities and minimize
the risks of owning a business.
 Personal risk involved

 To determine the potential as an entrepreneur

 To develop a business plan

 To obtain technical Assistance

ENTERPRISE LAUNCHING
COMPETENCIES……..
 Competency to:

 Plan market strategy

 Locate the business

 Finance the business

 To comply with government regulations

ENTERPRISE MANAGEMENT
COMPETENCIES
 Competency to:
o Manage the business
o Manage Human resource
o Promote the business
o Manage sales efforts
o Keep business records
o Manage the finance
o Manage customer credit and collection
o Protect the Business
CLASSIFICATION OF ENTREPRENEURSHIP
 Based on the type of Business
 Business Entrepreneurship:
 Includes individual who conceive an Idea for a new product
 Known as business founders
 Promote Economic Endeavour

 Trading Entrepreneurship:
 Related to trading activities.

 These types of entrepreneurs usually buy finished products in

bulk from manufacturers at some discount.
 They then sell these products directly or with the help of
retailers or vendors with profits.
 Usually acts as a middleman between manufacturers and
customers. This may include wholesalers, retailers, dealers, etc.
 Industrial Entrepreneurship:
 Identify the potential needs of industrial units
 Explore and produce various raw materials, equipments,
new sources of energy and technology to be used to
manufacture the products used in factories. Like,
cement, tools, chemicals, semi -finished products,
packaging materials etc.

 Agricultural Entrepreneurship:

 The entrepreneurs who undertake agricultural pursuits

are called agricultural entrepreneurs.
 They cover a wide spectrum of agricultural activities like
cultivation, marketing of agricultural produce, irrigation,
mechanization, and technology.
 Corporate Entrepreneurship: Is also known as
intrapreneurship,intra-corporate venturing,
or innopreneurship.

 it is the practice of beginning and

developing new business ventures within the
structure of an existing organisation.
TYPES OF ENTREPRENEURS
On the basis of the Scale of Entrepreneurs

 Small-Scale Entrepreneur: An entrepreneur who

has made investment in plant and machinery up
to Rs 1.00 crore.

  Women Entrepreneurs: Women entrepreneurs

are the enterprises owned and controlled by a
woman or women having a minimum financial
interest of 51 per cent of the capital and giving
at least 51 per cent of employment generated in
the enterprises to women.
BASED ON STAGES OF ECONOMIC
DEVELOPMENT
 Clarence Danhof Classifies:

 Innovating Entrepreneur: Who introduces new goods, inaugurates new

method of production, discovers new market & reorganizes the enterprise
 Imitative Entrepreneur : Characterized by readiness to adopt successful
innovations inaugurated by successful innovating entrepreneur. He only
imitates technology innovated by others that is in (more advanced countries)
 Fabian Entrepreneur : Are lazy and shy. characterized by very great caution
and skepticism in experimenting any change in their enterprise. They are timid
in nature.

 Drone Entrepreneur: He is one who follows the traditional methods of

production. Such entrepreneurs may even suffer losses, but then they
refuse to adopt and use new methods. They struggle to survive, not to
grow. They resist changes.
v. Social Entrepreneur: They drive social innovation and
transformation in various fields including education, health,
human rights, worker’s rights, environment and enterprise
development.
On the basis of Attitude and Knowledge:
vi. Empirical Entrepreneur: He hardly introduces anything
revolutionary. He follow the policies exactly.
vii. Rational Entrepreneur: This entrepreneur is well
informed about the general economic conditions. He
introduces changes which look more revolutionary.
viii. Cognitive Entrepreneur: These entrepreneurs have
complete knowledge about market conditions. They also
draws upon the advice and services of experts. He
introduces changes that reflect complete break from the
present situations.
On the basis of Type of Business Occupations:
ix. Business Entrepreneur: They conceive an idea for a new product or
services and then create a business to materialize their idea into reality.
They exploit new business opportunity. They tap various resources to set
up a business.
x. Trading Entrepreneur: They undertake buying and selling activities.
They are not concerned with the manufacturing work. Such an
entrepreneur identifies potential markets, stimulates demand for his
products and motivates buyers to purchase his product. He may be
engaged in both domestic and overseas trade.
xi. Industrial Entrepreneur: He is essentially a manufacturer who
identifies the potential needs and wants of consumers and then figures
out how to make and distribute the products to satisfy those wants. He
converts resources into economic utilities and values.
ix. Corporate Entrepreneur: Such an
entrepreneur has vision and imaginative
skill to organize and manage a corporate
undertaking. He plans, develops and
create a corporate legal entity.
x. Agricultural and Allied Entrepreneur:
Such entrepreneurs undertake
agricultural activities. They raise and
market crops, fertilizers and other input
of agriculture.
On the basis of Ownership:
xiv. Private Entrepreneur: Private entrepreneur is motivated
by profit. The entrepreneur makes the business-related
decisions. Private entrepreneurship is popular in
(capitalist countries) England, America, Germany, Japan,
France, etc. Example, Anand Mahindra (Mahindra and
Mahindra), Azim Premji (Wipro), Binny Bansal (Flipkart),
Deep Kalra (Make my Trip), Gautam Adani (Adani Group),
Karsanbhai Patel (Nirma), Kumar Managlam Birla (Aditya
Birla Group), Lakshmi Mittal (Arcelor Mittal), Mukesh
Ambani (Reliance Industries), Ratan Tata (Tata Group),
Sunil Mittal (Bharti Enterprises), Venugopal Dhoot
(Videocon), etc.
xiv. Joint Sector Entrepreneur: Joint entrepreneurship is a
partnership formed to utilize the financial resources of the
government sector and the managerial skill and experience of
the private entrepreneurs. This is the mixed form of private and
government ownership. In India, joint entrepreneurship has been
adopted. Example, Maruti Udyog Ltd. (formerly, now Maruti
Suzuki India Ltd. founded by Govt of India in 1981 and then
Joint Venture with Suzuki, a Japanese automobile company in
1982), Air India International (Tata Sons Ltd. and Govt of
India), Cochin Refineries Ltd., Goa Carbon Ltd., Karnataka
Blades Ltd., Madras Fertilizers Ltd., Lubrizol India Ltd., etc.
 Co-operative: When several people collectively
establish Enterprises, bear risks and carry out
innovations on the cooperative basis, it is known as
Cooperative Entrepreneurship. This is an association
of persons who have voluntarily joined together to
achieve common economic needs. The main object of
such entrepreneurs is to encourage the spirit of self
independence and mutual welfare among the citizens.
Example, Cooperative Banks of India, such as
Abhyudaya Cooperative Bank Ltd.; Adarsh Cooperative
Bank, Indian Coffee House, Anand Milk Union Ltd.
(Amul), Shri Mahila Griha Udyog Lijjat Pappad, Orissa
State Cooperative Milk Producers’ Federation, Mother
Dairy,
On the basis of Use of Technology:
xiv. Technical Entrepreneur: they possess technical
expertise and know how.
xv. Non Technical: they simply deal with developing
alternative marketing and distribution strategies to
promote the business.
xvi. Professional: Such entrepreneur is interested in
establishing a business. He takes no interest in
managing or operating it once it is established . He
sells out the running business and starts another
venture with the sales proceeds.
CORPORATION FORM OF
OWNERSHIP
 A corporation is a business that is a legal entity
separate from its owners.
 It has legal rights of an individual.
 It can:

 Own property
 Owe money (take out loans)
 Hire and terminate employees
 Sue or be sued by other persons and/or other
corporations
 A corporation is owned by
shareholders/stockholders.
PRIVATE COMPANY
Characteristics of private company
 1 or more persons may incorporate a private
company.
 one director (1 or more directors) or any
other
 prohibited by MOI from offering its shares to
the public and the transferability of its
shares is restricted.
 The name of a private company must end
with the expression “Proprietary Limited” or
its abbreviation “(Pvt) Ltd.”.
PUBLIC COMPANY
 Characteristics of public company

 No limit on number of shareholders

 Unlimited number of shareholders.
 Must have at least three directors. 3 or more for a
public (Ltd) company
 Shares of the public company are freely transferable.
 Financial statement of a public company requires to
be audited
 A separate legal personality
 Compelled to attend a annual general meeting
(AGM).
DIFFERENCE BETWEEN PUBLIC
AND PRIVATE COMPANY
Private Corporation Publicly Held Corporation

 Restricted to a small  shares can be

group of investors (original easily purchased or sold
owner, friends, relatives,
by investors
employees, etc.)

 Issue stock to public

 Shares cannot be sold on
the open market
– Control often remains in
hands of the original
owner(s)
(go public)
 Simplicity and flexibility
in buying/selling stock
WHAT IS LIMITED LIABILITY
PARTNERSHIP?
 LLP - alternative corporate business entity.
 To prevent personal liability – LLP concept
devised

 LLP Act, 2008 passed by Lok Sabha on 12th of

December 2008 and the President gave assent to
the Bill on 7th January 2009.

 Hybrid of Corporate & Partnership business Form.

 Limits liability of partners to the extent of their
contribution.
SALIENT FEATURES/
CHARACTERISTICS
 LLP – Separate Legal Entity from the partners
 Minimum of two partners requires
 There must be at least two designated partners in every
LLP of whom one shall be resident in India.
 No requirement as to minimum capital contribution
 Perpetual succession
 Suitable for any type of Enterprise
 Mergers and acquisitions of LLPs may take place
 Winding up - either voluntary or by the Company law
Tribunal to be established under The Companies Act, 1956.
 The LLP Act 2008 enables the Central Government - apply
the provisions of the Companies Act whenever appropriate -
must issue notification to that effect provided
ADVANTAGES
 Liability of each partner limited to share as
per the LLP Agreement
 Low Cost of Formation
 Easy to form
 Partners – not held liable for the acts of
each other
 Less restrictions and compliance enforced
on LLPs by the Government
 Can sue and be sued in its name – partners
are not liable to be sued for dues against the
LLP
DISADVANTAGES
 Cannot raise money from the public as a
company does – cannot be formed for
charitable purposes.
 Any act of the partner without the consent of
other partners can bind the LLP.
 Because of the hybrid form of the business, it is
required to comply with various rules &
regulations and legal formalities.
 Difficult to wind up - Limited Liability
Partnership (Winding Up and Dissolution) Rules
provide for a very lengthy and expensive
procedure.
FRANCHISING MEANING
 Itis a form of licensing…
 A franchise is the agreement between two legally independent
parties which gives:
 A person or group of people (franchisee) the right to market a
product or service using the trademark or trade name of another
business (franchisor)

 The franchisee the right to market a product or service using the

operating methods of the franchisor

 The franchisee the obligation to pay the franchisor fees for these
rights

 The franchisor the obligation to provide rights and support to

franchisees
 
FRANCHISING MEANING
 A marketing system revolving around a two-party
agreement, whereby the franchisee conducts business
according to the terms specified by the franchisor
 Franchise :

A franchise is a contractual agreement between the

franchisor and the franchisee, allowing franchisee to
conduct a business under an established name as per a
particular business format in return for a fee or
compensation.

 Franchisee : An entrepreneur whose power is limited by a

contractual agreement with a franchisor
 Franchisor : The party in the franchise contract that
specifies the methods to be followed and the terms to be
met by the other party
 FRANCHISOR VS FRANCHISEE
BOOK – ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT,
NORMAN M. SCARBOROUGH, JEFFREY R. CORNWALL, PEARSON EDUCATION

Parameters Franchisor Franchisee

Selection of appropriate Can decide the Awaits for the
site geographical location of Franchisor to approve
the site, will inspect the the site selected
site selected by the
Franchisee and may not
approve it
Layout / design Provides prototype of Implements the design
the layout / design and pay for it
Staff / employees Provides overall training Recruits manager and
suggestion and fire employees / staff
recommendations
Products and its Identifies and provides On approval from the
corresponding services the way in which the Franchisor, the
product line has to be positioning of the
positioned product line can be
modified
 Parameters Franchisor Franchisee

Product pricing Only recommendation Franchisee decides on

can be made about the the final price
aspects of pricing

Purchasing and standards Helps by providing list of It is mandatory to

approved suppliers, purchase only from the
sometimes may require approved suppliers, if
the Franchisee to required has to purchase
purchase directly from from the supplier and
the Franchisor and also also should maintain the
establishes the quality quality standards
standards
Protocols on advertising Creates and co-ordinates Has to pay for National
the campaign across the add campaign, complies
nation, may require with local advertising
minimum level of requirements, has to
spending on local take approval from the
advertising Franchisor for the local
ads
 Parameters Franchisor Franchisee

Quality control Periodical inspection are Maintains the quality

methodologies done to set quality standard as mentioned
standards and actions by the franchisor and
are taken to enforce the trains employees / staff
quality standards by to implement quality
training the franchisee systems
appropriately
All types of support Through an established Operates business on a
business system constant daily basis with the
support is provided support of the franchisor
FRANCHISING ARRANGEMENTS
/TYPES OF FRANCHISE  
 MAIN THREE KINDS OF FRANCHISES ARE:
 Product Distribution / Trade mark Franchise: (like a supplier-
Deale relationship) Allows franchise to sell a specific, brand-
name product in a specified territory.
 This type of franchise focuses on the sales of products. In such
franchise the manufacturer controls the methods used by
retail stores to shop and sell their products. Product franchises
are often governed by multiple rules and regulations. 
Eg: maruti suzuki

 Business Format Franchise: Provides an entire business plan,

marketing, and operating system
 Guidance from the franchisor is ongoing; supervision &
monitoring are continuous
Eg: Subway, McDonalds
 A product or trade
mark franchise eg:
Archies, maruti,
hundai
 A business format franchises: eg Pizza hut,
Mc Donalds, Shades, Burger king etc.
FRANCHISING ARRANGEMENTS
/TYPES OF FRANCHISE …….
 Production/Manufacturing Franchise: This type of
franchise businesses receive “permissions, or grants”
from the manufacturer or parent company. Thus, they
will be allowed to sell goods and even produce items
using the parent company’s trademark or name.
 This franchising method is extremely famous amongst
beverage and food companies. For instance, the
bottlers(mixes drink ingredients and fills up cans and
bottles with the drink) tend to obtain the rights from
“parent” soft drink companies. Consequently, they
will be allowed to produce the drink, manufacture the
bottle, and eventually distribute the soft drink.
 Eg: coca cola
FRANCHISE AGREEMENT
 A good basic franchise agreement will stipulate the
conditions for both parties, and will contain information
on:
 Fees and initial cost
 Product service method stipulations
 Restriction upon purchase of materials
 Record keeping requirements
 Life of franchise
 Termination
 Royalties
 Location and territorial rights
 Training provisions
 Controls of operations and performance standard
FRANCHISE AGREEMENT
(CONT’D)
 Obligations of the Franchiser and the Franchisee:
 Franchisor Guarantees:

 Use of company name

 Management training

 Financial help
 Continuing management help
 Wholesale prices on purchases
 Franchisee Obligations:

 Paying franchise fees

 Making minimum investment
 Meeting quality standards

 Following procedures
 Maintaining business relationship
 UNIT II
Promotion of a New Venture
MEANING
 In general sense, promotion means ‘start or
formation’. But From the viewpoint of
industry/enterprise, it means all those activities
and modalities which are performed right from
the emergence of the idea of setting up the
industry to bring it to the stage of its
establishment.
 In other words, the promotion starts from the
emergence of the idea to the stage at which an
enterprise/business/industry completely
establishes well, to start its activities as an
organization or institution.
FOLLOWING DEFINITIONS ARE USEFUL TO UNDERSTAND THE MEANING OF PROMOTION.

• Promotion involves four elements, discovery, investigation,

assembling, and financing.
• Promotion is the process of creating a specific business
enterprise. The aggregate of activities contributed by all
those who participate in building up of the business
constitutes promotion.
• Promotion may be defined as the discovery of business
opportunities and the subsequent organization of funds,
properly and managerial ability into a business concern for
the purpose of making profits therefrom.
 Thus, promotion means all those activities (legal, financial
and initial contracts) which are carried out right from the
emergence of the industrial or business ideas in the brain of
any individual or group of individuals to bring it to the stage
of starting it.
STEPS TO START A VENTURE
 Step 1: Discovery of a Business Idea
• Process of business promotion begins with
conception of an idea of business opportunity.
• Idea may come from non-availability of any
product to satisfy the existing need of people.
 For example:
 During early 1940՚s there was no “Walkman” .
• This idea gave birth to the new product
“Walkman” .
STEPS……
 Step 2: Investigation and Verification(Idea processing
and Selection)
• Once the idea has been conceived, then investigation is
made to establish the soundness of the proposition.
 For example:
 If technology is available but the cost involved in making a
“Walkman” would be so high that no customer could be able
to purchase it.
• Investigation on technical feasibility, commercial viability
and profitability are presented in a report called “project
report” or “feasibility report” .
• Report helps in procuring licenses and arrange the
necessary finance from financial institutions and other
investors
STEPS…..
 Step 3 : Pre startup implementation:Assembling necessary
Inputs
• The next step is assembling or making arrangements for all the
necessary requirements.
• It includes land, building, machinery, tools, capital, etc.
• Decision is also to be made regarding size, location and layout etc.
• Also make agreement with bankers to finance and take initial steps
for the setting up of a Company.
 Financing the Proposition
• Proportion of capital to be raised from owner՚s fund, that borrowing
from banks and others.
• How and when to raise the share capital from the general public.
• Agreements are made with merchant bankers, underwriters and
stockbrokers.
• These are to assist the capital issue and so on.
 Here, entrepreneur will also seek necessary permission, approval, licenses, leases,
facilities and equipments. An entrepreneur requires relevant data on the following
aspects:

 Size and nature of demand for the product

 Volume and sources of supply

 Sources and cost of raw materials and other components

 Type and suppliers of technology and machinery (

 Nature and degree of competition

 (f) Marketing and distribution system

 (g) Advertising and publicity programme (h) Consumer

behaviour-motives, buying capacity, habits, tastes and
preferences of customers.

 An entrepreneur should conduct a market survey to get the

relevant information with regard to above requirements.
 BUSINESS PLAN
 Business plan is a written document prepared by the entrepreneur
that describes all the relevant external and internal elements
involved in starting a new venture.
 It is a document which expresses the entrepreneurial vision,
describes the strategy and operations of the proposed venture.
 It is often an integration of functional plans such as marketing,
finance, manufacturing and human resources.
 The idea behind putting together a business plan is to enable
owners to have a more defined picture of potential costs and
drawbacks to certain business decisions and to help them modify
accordingly before implementing these ideas.
 A business plan should be prepared with proper insight, vision and
thoughtfulness. Planning is a continual process.
 It is important for the entrepreneur to continue to plan for both the
short term and the long term perspective.
 Entrepreneurs are judged by the way they organize,
write and present the business plan.
 It is extremely important in the early stages of any new
venture when the entrepreneur will need to prepare a
preliminary business plan.
 The plan will become finalized as the entrepreneur has
a better sense of the market, the product or services to
be marketed, the management team and the financial
needs of the venture.
 CHARACTERISTICS OF BUSINESS PLAN
 Business plan describes objectives and strategies.
 Business plan is a document with the purpose.
 It addresses both short-term and long-term decision making.
 It is a formal written document, describing the vision, strategy and
operations of the proposed venture.
 It is like a road map.
 External factors such as new regulations, competition, social changes,
changes in consumer needs, or new technology are considered in business
plan.
 Business plan is required by investors, suppliers, bankers, venture
capitalists, advisors, employees, customers, consultants, etc.
 It is prepared by the entrepreneur; however he may consult lawyers,
accountants, marketing people or engineers.
 It may function as financing proposal or investment prospectus.
 It is required for strategic planning.
 It is based on analytical thinking.
 It is required for resource allocation and implementations of the plan.
 SCOPE OF BUSINESS PLAN
A Business Plan is prepared considering the three perspectives:
 Entrepreneur Perspective: This is the perspective of the
entrepreneur, who understands better than anyone else the
creativity and technology involved in the new venture. The
entrepreneur must be able to clearly articulate what the venture
is all about.
 Marketing Perspective: An entrepreneur will consider only the
product or technology and not whether someone would buy it.
Entrepreneurs must try to view their business through the eyes of
their customer.
 Investor Perspective: The entrepreneur should try to view his
business through the eyes of the investor. Sound financial
projections are required. If the entrepreneur does not have the
skills to prepare this information than outside sources can be of
no assistance.
 NEED / SIGNIFICANCE OF BUSINESS PLAN
 To master changes
 To achieve growth
 To determine the resources required
 To manage the enterprise
 To serve throughout a venture’s life
 To survive in a complex economy
 To manage outside pressures
 To harness energies
 To guide the entrepreneur in organizing his planning
activities
 To serve as an important tool to obtain finance
 PLANNING CONSIDERATIONS FOR VENTURES
Prior to Start-up
 Establish the purpose of the venture and define major objectives
 Plan the market with attention to a well defined market niche
 Forecast sales and translate sales data into resource requirements

 Document financial requirements and resources

 Plan with attention to maintain positive cash flow

 Consciously approach planning as a feasibility study

During initial business operations

 Create a clear marketing strategy

 Position products or services in appropriate growth markets

 Establish an inventory management plan
 Plan growth consistent with resources and limitations, rapid growth can create
problems in cash flow and financing
 Adapt plans made prior to start-up; initial assumptions are often found to be
flawed
 Do not allow events to just happen – plan consciously to control events and to
prevent mistakes
 CONTENTS OF BUSINESS PLAN
 General information: Product profile and product details
 Promoter: His/her name, educational qualification, work experience, project
related experience
 Location: Exact location of the project, lease or freehold, locational
advantages
 Land and Building: Land area, construction area, type of construction, cost of
construction, detailed plan and estimate along with plant layout
 Plant and Machinery: Details of machinery required, capacity, suppliers, cost,
various alternatives available, cost of miscellaneous assets
 Production process: Description of production process, process chart,
technical know how, technology alternatives available, production programme
 Utilities: Water, power, steam, compressed air requirements, cost estimates,
sources of utilities
 Transport and Communication: Mode, possibility of getting, costs
 Raw Material: Quality and quantity of raw materials required, sources of
procurement, cost, tie-up arrangements, alternative raw material
 Manpower: Skilled and semi-skilled manpower required, sources of
manpower supply, cost of procurement, training requirement and its
cost
 Products: Product mix, estimated sales, distribution channels,
competitions and their capacities, product standard, input-output ratio,
product substitute
 Market: End-users of product, distribution of market as local, national
and international, trade practices, sales promotion devices, and
proposed market research
 Requirement of Working Capital: Requirement of working capital,
sources of working capital, need for collateral security, nature and
extent of credit facilities offered and available
 Requirement of Funds: Break up of project cost in terms of costs of
land, building, machinery, miscellaneous assets; preliminary expenses,
contingencies and margin money for working capital, arrangements for
meeting the cost of setting up of the project
 Cost of Production and Profitability of first ten years
 Break-even analysis
 Schedule of Implementation
BREAK EVEN ANALYSIS
 Assume an investor buys
Microsoft stock at $110.
That is now their
breakeven point on the
trade. If the price moves
above $110, the investor is
making money. If the stock
drops below $110, they are
losing money.
 If the price stays right at
$110, they are at the BEP,
because they are not
making or losing anything.
PROCESS OF BUSINESS PLANNING
Idea Generation

Environmental Scanning

Feasibility Analysis

Project Report Preparation

Evaluation, Control and Review

PROCESS OF BUSINESS PLANNING
 Idea generation
 Observing markets
 Advice of Professional Experts
 Prospective consumers’ habits and tastes
 Trade Journals
 Trade Fairs
 Revival of Sick units
 Advice and assistance of government organizations
 Social and economic trends

 Environmental scanning: once the entrepreneur is

through the idea generation stage, next entrepreneur is
required to conduct environmental scanning which
includes analyzing external and internal environment
that affects business idea.
 External environment comprises of :
 Socio cultural appraisal : it gives brief overview
about the culture and tradition existing in society. It
is comprised of values and beliefs of people which
determines the acceptance of product by customer in
the market.
 Technological appraisal : it assess various
technological options available to convert an idea to
product. It also provides an brief overview about
technological updation.
 Economic appraisal : it assess the status of the
society in terms of economic development, per
capita income, national income, consumption pattern
in the business.
EXTERNAL ENVIRONMENT COMPRISES OF :

 Demographic appraisal : it assess the

population pattern of given geographic area.
Which includes sex, age profile, distribution
etc.
 Government appraisal : it assess the various
legislation, policies, incentives formulated
for particular industry. Flexibility of these
rues determine ease for entrepreneur in
terms of opening venture in particular area.
  Internal environment includes :

 Raw material : it refers to in terms of availability of raw

material required for the process of production. If the
material availability is at distance place and is very
expensive then entrepreneur should give second thought to
the same.
 Production/ operation : it assess the availability of various
machineries, equipments, tools and techniques that would
be required for production.
 Finance : it studies total requirement of finance in terms
of start up expenses, fixed expenses, running expenses etc.
 Market : refers to study on potential customer and target
customers in market.
 Human resource : refers to demand and supply of required
human resource in market and estimation of expenses to
be incurred on human
  Feasibility analysis : refers to conducting detailed analysis in
relation to every aspect relevant to business and determining
credibility of business.
 Market analysis : is conducted to estimate the demand and
market share for proposed product and service in future. Demand
and market analysis is based on factors like consumption pattern,
availability of substitute goods and services etc.
 Technical and operational analysis : is to assess operational
ability of proposed business enterprise. Technical or operational
analysis collects data on following parameters :
 Material availability
 Material requirement planning
 Plant location
 Plant capacity
 Machinery and equipment
 Marketing plan : lays down the strategies of marketing which can
lead to success of business plan. Strategies are in terms of
marketing mix which includes ( product, price, place, promotion )
which determines the potential demand of customers for product in
the market.
 Production plan / operational plan : production plan is drafted for
manufacturing sector where as operation plan is designed for
business into service sector. It comprises of strategies on
parameters such as location layout, cost, availability of material,
human resource etc.
 Organizational plan : defines type of ownership pattern in
company, sole trading concern, family business, private or public
limited company etc.
 Financial plan : financial plan indicates the requirement of
proposed business enterprise. Which includes fund flow, cash flow
statement, break even point, projected ratio, projected balance
sheet.
  Project report preparation : project report
is a written document that describes step by
step strategies involved in starting and
running business.
 Evaluation , control and review : as
company operates in dynamic environment
company has to monitor and review
strategies and policies to stay in line with
competition existing in market.
BUSINESS VALUATION
 A business valuation is a general process of
determining the economic value of a whole
business or company unit. Business valuation
can be used to determine the fair value of a
business for a variety of reasons, including sale
value, establishing partner ownership,
taxation, and even divorce proceedings
 VALUATION OF A NEW COMPANY
 Business Valuation or Valuation of a startup business is a
process and a set of procedures used to determine what a
business is worth. It takes full preparation and thought.
 There is no one way to establish what a business is worth.
That’s because business value means different things to
different groups of people.
 For example, a business owner may believe that the
business connection to the community it serves is worth a
lot. Similarly, an investor may think that the business value
is entirely defined by its historic income. In addition,
economic conditions also affect what people believe a
business is worth.
 APPROACHES FOR VALUATION OF BUSINESS
 Asset approach: The asset approach views the business as a set of
assets and liabilities that are used as building blocks to construct the
picture of business value. Valuation is done of the physical assets
including machinery, office furniture, computers, inventory,
prototypes (the cost to develop them). Then move on to intellectual
property. This includes patents, trademarks, and even incorporation
papers (because the company’s name is protected)
 Capitalized Excess Earnings Method
 Asset Accumulation Method
 Market approach: The market approach, relies on signs from the real
market place to determine what a business is worth. This starts by
estimating the size and growth of the target market. Bigger the
market, and higher the growth projections. Next is assess the
competition and determine the barriers to entry. Stiffer the market,
lower the valuation. This also includes the intangible side i.e. the
Goodwill of the company – the amount a buyer might pay for the
company above the value of assets on the balance sheet.
 Income approach: The income approach looks at the
core purpose for running a business i.e. making money.
This method is used extensively by the financial
analysts. This involves projecting a company’s future
cash flows and discounting them, at some rate, to arrive
at their present value (in terms of the dollars). The
discount rate applied to start-ups is typically steep from
30% to 60%. The younger the company, and the greater
the uncertainty of its future earning power, the larger
the discount rate should be. Generally, in the case of
very young, pre-revenue companies, this technique may
not prove very useful.
 Capitalization Method
 Discounting Method
SOCIAL ENTREPRENEURSHIP

 Social entrepreneurship is the activity of

establishing new business ventures to achieve
social change. The business utilises creativity and
innovation to bring social, financial, service,
educational or other community benefits.
 Social enterprises are not charities or welfare
agencies. They are private businesses established
by entrepreneurs with an emphasis on human
values rather than just profit.
 These businesses focus on working with and
enhancing the social capital within the
community by encouraging participation,
inclusion and utilising a bottom-up approach to
achieve social change
SOCIAL ENTREPRENEUR

 Social entrepreneur focus to deliver the

best entrepreneurship technique to make the
social change and they involve community
members to achieve the goal. They find a
problem in the society, look for a solution on
the society and invite social members.
UNIT III
Entrepreneurship,
Creativity and
Innovation
WHAT IS CREATIVITY?
 The act of doing what has never been done
 Children are inherently creative
 Creativity is beaten out of us
 Education, failure, enjoyment
 There is no can’t, only can.

Example:
 Steve Jobs of Apple. Steve Jobs gave many
creative ideas to world (like touch screen device).
 
 Another creative entrepreneur is Jan Koum who
has given great app to world called as whatsapp.
THREE COMPONENTS OF
CREATIVITY
 EXPERTISE = Knowledge (Technical, Procedural and
Intellectual)
 MOTIVATION: Intrinsic is more effective than extrinsic
 CREATIVE THINKING SKILLS: How flexibly and imaginatively
people approach problems

EXPERTISE CREATIVE
THINKING SKILLS
CREATIVITY

MOTIVATION
THREE REASONS WHY PEOPLE ARE
MOTIVATED TO BE CREATIVE
 Need for novel, varied, and complex stimulation.
 Need to communicate ideas and values.
 Need to solve problems.

 In order to be creative, we need to be able to view things in new ways

or from a different perspective. Among other things,
 We need to be able to generate new possibilities or new alternatives.
Tests of creativity measure not only the number of alternatives that
people can generate but the uniqueness of those alternatives
 The ability to generate alternatives or to see things uniquely does not
occur by change; it is linked to other, more fundamental qualities of
thinking, such as flexibility, tolerance of ambiguity or
unpredictability, and the enjoyment of things which are unknown

Thus, creativity is the development of ideas about products, practices,

services, or procedures that are novel and potentially useful to the
organization.
BARRIERS TO CREATIVITY
 Excessive focus on extrinsic motivation
 Limits set by superiors
 Critical evaluation
 Close, controlling supervision
 Competition in a win-lose situation
 Control of decision making
 Control of information
 Blindly following the rules
 Constantly being practical
 Becoming overly specialized
 Fearing looking foolish
 Fearing mistakes and failure
TECHNIQUES OF CREATIVE
THINKING
 Techniques which are
used in developing
creativity or resolving
problems by creative
thinking come under
theTechniques of
creative thinking.
DIFFERENT TECHNIQUES OF
CREATIVE THINKING ARE:
 Focus Groups
 Brainstorming
 Attribute Analysis
 Synectics
 Checklist of questions
FOCUS GROUPS
 Questions are
asked in an
interactive group
setting where
participants are
free to talk with
other group
members
 Group discussion  The researcher has less
produces data and control over a group than a
one-on-one interview, and
insights that would be thus time can be lost on
less accessible without issues irrelevant to the topic.
interaction  The number of members of a
 Focus groups also focus group is not large
provide an opportunity enough to be a representative
sample of a population; thus,
for disclosure among the data obtained from the
similar others in a groups is not necessarily
setting where representative of the whole
participants are population, unlike the data of
validated opinion polls.

Benefits of focus groups Problems related to focus groups

BRAINSTORMING
 Brainstorming is the way of making of a
group of people all think about same thing at
same time, often in order to solve a problem
or to create a good idea (oxford dictionary).
 Brainstorming is a group creativity technique
designed to generate a large number of ideas
for the solution of a problem
RULES OF BRAINSTORMING
 Focus on quantity: This rule is a means of enhancing
divergent production, aiming to facilitate problem
solving through the maxim- quantity breeds quality.
 Withhold criticism: In brainstorming, criticism of
ideas generated should be put 'on hold'.
By suspending judgment, participants will feel free
to generate unusual ideas.
 Welcome unusual ideas: To get a good and long list
of ideas, unusual ideas are welcomed.
 Combine and improve ideas: Good ideas may be
combined to form a single better good idea, It is
believed to stimulate the building of ideas by a
process of association.
ATTRIBUTE ANALYSIS
 Attribute analysis is the process of breaking
down a problem, idea, or thing into
attributes or component parts and then
thinking about the attributes rather than the
thing itself.
 Steps in attribute analysis

 Identification of major attributes

 Generation of alternatives
 Evaluation of alternatives
SYNECTICS
 Synectics is a problem solving method that
stimulates thought processes of which the
subject may be unaware.
 This method was developed by George M.
Prince and William J. J. Gordon, originating
in the Arthur D. Little Invention Design Unit
in the 1950s.
 Synectics is a technique of problem solving
by using a variety of analogies.
CHECKLIST OF QUESTIONS
 Questions are the creative acts of
intelligence, for that they could be so
designed as to force a dramatic shift of
perspective.
WAYS TO STIMULATE CREATIVITY
 Daily program
 You’re a creative person.
 Play like a baby.
 Take a walk.
 Look what’s around you.
 Take a break and enjoy your
time.
 Congratulate yourself
whenever you do something
positive.
 Amount of time, distance,
and money.
 Take a path you’ve never
had.
 Look at pictures, paintings, designs,
and decorations.
 He tried to do something I never
promised.
 Perform creative capacity development
exercises
 Watch sci-fi movies
 Practiced a hobby to collect certain
things
 Other than your way of doing things,
there are no routine tasks, but routine
ways to accomplish tasks.
 Use colors you don’t like.
 Think about how to invent some simple
tools.
WAYS TO STIMULATE CREATIVITY
 Select 10 things you think are
impossible to accomplish and
try to think about how to
accomplish at least one
 Think constantly about the
positive things that happen to
you.
 Read a new book of a
Different Kind
 Try making friends with
people from different
countries
 Write down the ideas in your
head and try to develop
them.
 Practice Sports
 Eating food you’ve never
tried.
 Talk to older people and
benefit from their
experience in life
 Ask questions about what
things are you think about
the relationship between
people, ideas and events.
 See how kids deal with
new things and how they
can do their job
 Invention refers to the creation of a brand
new product or device. Conversely,
innovation is an act of making changes to
the existing product or the process by
introducing new ways or ideas. ... While
invention is all about creating or designing
something, innovation is the process of
turning a creative idea into reality.
INNOVATION
 Innovation is the implementation of new ideas at the individual,
group or organizational level.
 A process of intentional change made to create value by meeting
opportunity and seeking advantage.
 Process: Innovation is a process (implying, among other things,
that it can be learned and managed).
 Intentional: That process is carried out on purpose.
 Change: It results in some kind of change.
 Value: The whole point of the change is to create value in our
economy, society and/or individual lives.
 Opportunity: Entrepreneurial individuals enable tomorrow's value
creation by exploring for it today: having ideas, turning ideas into
marketable insights and seeking ways to meet opportunities.
 Advantage: At the same time, they also create value by exploiting
the opportunities they have at hand.
WHAT IS INNOVATION?

“Innovation distinguishes between a leader and a

follower.” – Steve Jobs
 Bringing creative processes together
 Gas engine and the carriage
 The Wright brothers
 Henry Ford (Multiple Failures)
SOURCE OF INNOVATION
 The first source of innovation is “The Unexpected.” When something
unexpected happens to us we are hardwired to rule out it out. It's a learned
behavior. However, if we were to analyze The Unexpected, we may find an
opportunity to innovate. Think of the story of how the use of gasoline came
about. Oil Refiners was dumping this by product of kerosene into the Ohio
River. This by product would unexpectedly catch fire and blow up. This by
product was gasoline and thousands of barrels was being tossed into the river.
John D. Rockefeller saw this, and instead of seeing as unexpected event, he
saw it as an opportunity to leverage its combustion capabilities in the engines
of his factories. Hence gasoline was born and Rockefeller capitalized off of it
handsomely.
 The second source of innovation is “Incongruities.” This one is a fun one,
because when you ask someone why do they operate in a particular way, and
they respond "because we've always have done it this way."This is an indicator
their may be a case of incongruity there, because they are operating in a way
that is the status quo instead of asking is there a better way to do a particular
function. Bottom line if something conflicts with the status quo, most of us are
not inclined to change it.
SOURCE OF INNOVATION…..
 The third source of innovation is “Process Change.” This is one
of my favorites, because you could always analyze a process and
find concrete ways to improve it. Amazon is a master of this. If
you take a tour of one of their fulfillment centers, you'll see tons
of ways they innovated through technology, engineering, and
supply chain from the status quo to quickly fill millions of orders.
Take time to study a process you you'll be amazed on possibilities
you may have to innovate, especially as technology improves.
 The fourth source of innovation is “Industry and Market
Structures.” A change in and industry or market opens up ample
opportunity to innovate. Cloud technology is probably the most
apparent at this time. 10 years ago, it was difficult to use cloud
technology, because of the need to have fast and reliable
internet connection. Since internet services and speeds have
significantly improved, it opened the door for the cloud
computing market
SOURCE OF INNOVATION…..
 The fifth source of innovation is "Demographics." In 2008 I received a data set
from large tire manufacture to conduct a market analysis. When I opened the
zipped file, I saw information on one of their studies to design a new tire
focused on the Tuner Group. This group was street racers in their late teens
and twenties, that had an appetite for a particular type of high performance
tire. While conducting my analysis, I noticed they focused on a certain
demographic to determine the design, compound, and cost of the tires. I found
it insightful on the impact demographics played on how they engineered their
tires.
 The sixth source of innovation is "Changes in Perception." In mathematics
there is no difference between "The glass is half full" and "The glass is half
empty." However, the meaning of these two statements is completely
different, and so are their consequences. We can go back to the cloud
computing example. Amazon had built these elaborate data-centers to run
their own business; however, they saw an opportunity in cloud computing.
They didn't stop and say owe, we are a online retailer. No they changed the
perception of what business they were in and started the Amazon Web Services
part of their business to capitalize off the rapidly expanding cloud business.
SOURCE OF INNOVATION……
 The seventh source of innovation is "New
Knowledge."This source of innovation is what
most of us think of, when we think of
innovation. This is where the Bill Gates, Mark
Zuckerbergs, and Steve Jobs of the world
play in. It's the most difficult form of
innovation; however, the most lucrative. It's
conceptualizing a new idea and that new
idea changes an entire market.
BUSINESS PLAN
 A written document that outlines the future
activity for an existing or proposed business
venture.
 Is the formal written expression of the
entrepreneurial vision, describing the strategy
and operations of the proposed venture.
 A business plan is a document that brings
together the key elements of a business that
include details about the products and services,
the cost, sales and expected profits.

 Blue Print
BUSINESS PLAN MEANING…..
 Business plan is a written document
prepared by entrepreneur that describes all
the relevant external and internal elements
involved in starting new venture. It is an
integration of functional plans such as
marketing, finance , manufacturing and
human resource plan.
 A business plan is a blue print of step by
step process that would be followed to
convert business idea into successful business
venture.
OBJECTIVE OR IMPORTANCE OF
BUSINESS PLAN
 To give direction to the vision formulated by the
entrepreneur
 To objectively evaluate the prospectus of business
 To monitor the progress after implementing business
plan
 To persuade others to join business
 To seek loans from financial institutions
 To visualize concept in terms of market availability,
organizational, operational, and financial feasibility
 To guide entrepreneur in actual implementation of
plan
 To identify actual strength and weakness of plan
OBJECTIVE OR IMPORTANCE OF
BUSINESS PLAN……….
 To identify challenges in terms of
opportunities and threats from the external
markets.
 To clarify ideas and identify gaps in
management information about their
business, competitors and market.
 To identify the resources that would be
required to implement the plan
 To document ownership arrangements,
future prospectus and projected growth of
the business venture.
PURPOSE OF A BUSINESS PLAN
 Saves time & money
 Key to raising capital
 Serves as an operations guide
 Keeps us focused
 Explains the idea behind our business
 How our product or service will be produced
and sold
 sets specific objectives and how we will
achieve them
 Describes the experience of the people who
will run the business
BUSINESS PLANNING PROCESS
 Idea generation : is the first step in the business
planning process. This step differentiates
entrepreneur from usual business. An
entrepreneur may come up with new business
idea or may bring in value addition to existing
product in the market.
Sources of new idea for entrepreneurs are :
 Consumers/ customers
 Existing companies
 Research and development
 Employees
 Dealers, retailers
 Environmental scanning : once the entrepreneur is through the idea
generation stage, next entrepreneur is required to conduct environmental
scanning which includes analyzing external and internal environment that
affects business idea.
 External environment comprises of :
 Socio cultural appraisal : it gives brief overview about the culture and
tradition existing in society. It is comprised of values and beliefs of people
which determines the acceptance of product by customer in the market.
 Technological appraisal : it assess various technological options available to
convert an idea to product. It also provides an brief overview about
technological updation.
 Economic appraisal : it assess the status of the society in terms of economic
development, per capita income, national income, consumption pattern in the
business.
 Demographic appraisal : it assess the population pattern of given geographic
area. Which includes sex, age profile, distribution etc.
 Government appraisal : it assess the various legislation, policies, incentives
formulated for particular industry. Flexibility of these rues determine ease for
entrepreneur in terms of opening venture in particular area.
  Internal environment includes :

 Raw material : it refers to in terms of availability of raw

material required for the process of production. If the
material availability is at distance place and is very
expensive then entrepreneur should give second thought to
the same.
 Production/ operation : it assess the availability of various
machineries, equipments, tools and techniques that would
be required for production.
 Finance : it studies total requirement of finance in terms
of start up expenses, fixed expenses, running expenses etc.
 Market : refers to study on potential customer and target
customers in market.
 Human resource : refers to demand and supply of required
human resource in market and estimation of expenses to
be incurred on human
  Feasibility analysis : refers to conducting detailed analysis in
relation to every aspect relevant to business and determining
credibility of business.
 Market analysis : is conducted to estimate the demand and
market share for proposed product and service in future. Demand
and market analysis is based on factors like consumption pattern,
availability of substitute goods and services etc.
 Technical and operational analysis : is to assess operational
ability of proposed business enterprise. Technical or operational
analysis collects data on following parameters :
 Material availability
 Material requirement planning
 Plant location
 Plant capacity
 Machinery and equipment
 Marketing plan : lays down the strategies of marketing which can
lead to success of business plan. Strategies are in terms of
marketing mix which includes ( product, price, place, promotion )
which determines the potential demand of customers for product in
the market.
 Production plan / operational plan : production plan is drafted for
manufacturing sector where as operation plan is designed for
business into service sector. It comprises of strategies on
parameters such as location layout, cost, availability of material,
human resource etc.
 Organizational plan : defines type of ownership pattern in
company, sole trading concern, family business, private or public
limited company etc.
 Financial plan : financial plan indicates the requirement of
proposed business enterprise. Which includes fund flow, cash flow
statement, break even point, projected ratio, projected balance
sheet.
  Project report preparation : project report
is a written document that describes step by
step strategies involved in starting and
running business.
 Evaluation , control and review : as
company operates in dynamic environment
company has to monitor and review
strategies and policies to stay in line with
competition existing in market.
SOCIAL ENTREPRENEURSHIP

 Social entrepreneurship is the activity of

establishing new business ventures to achieve
social change. The business utilises creativity and
innovation to bring social, financial, service,
educational or other community benefits.
 Social enterprises are not charities or welfare
agencies. They are private businesses established
by entrepreneurs with an emphasis on human
values rather than just profit.
 These businesses focus on working with and
enhancing the social capital within the
community by encouraging participation,
inclusion and utilising a bottom-up approach to
achieve social change
SOCIAL ENTREPRENEUR

 Social entrepreneur focus to deliver the

best entrepreneurship technique to make the
social change and they involve community
members to achieve the goal. They find a
problem in the society, look for a solution on
the society and invite social members.
CHARACTERISTICS OF A SOCIAL
ENTREPRENEUR
 Not bound by norms or traditions
 Not confined by barriers that stand in the
way of their goals
 Develop new models and pioneer new
approaches to enable them to overcome
obstacles
 Take innovative approaches to solve social
issues
 Transform communities through strategic
partnerships
NON PROFIT ORGANISATIONS MEANING
 A nonprofit organization (NPO) or is an organization that
uses surplus revenues to achieve its goals rather than distributing
them as profit or dividends.While NPOs are permitted to generate
surplus revenues, they must be retained by the organization for its
self-preservation, expansion, or plans. NPOs have controlling
members or boards.Designation as a nonprofit does not mean that
the organization does not intend to make a profit, but rather that
the organization has no owners and that the funds realized in the
operation of the organization will not be used to benefit any
owners. 
CHALLENGES FACING NONPROFIT ORGANIZATIONS
• Charitable organizations and foundations find it difficult to solicit
donations and volunteer support because of rapidly changing
communication methods.

• NPOS need to better understand what motivates existing donors

and volunteers to provide financial support and give their time.

• Non-profits need to engage the emergent generation to support

it’s work. While orgs may understand the principles of
relationship, they fail to implement systems, strategies and tactics
to enhance them; they see the type of contact that they initiate for
constituents as transactional commodities instead of opportunities
to strengthen relationships.