BUSINESS PLANNING

DEFINE AN ENTREPRENEUR

MEANING

• Derived from French word Entreprendre means “to undertake”

• Richard Carleton: “a person who buys factors of production at certain prices in order to combine them into a product with a view to sell them at uncertain prices

Considered as a risk bearer

Eg: Farmer pays definite price for seeds, fertilizers ,pesticides , labours etc..but not certain at which price he could sell his produce

TYPES OF ENTREPRENEURS

NECESSITY•Entrepreneurs who work for invention only when there is a need

OPPORTUNISTIC•Entrepreneurs who are always looking for the opportunity whether there is a need of invention or not

INVENTOR & INNOVOTOR

• INVENTOR- A person who

creates new thing

• INNOVATOR-is a person who brings something new in business

DEFINITIONS BY

AUTHORS

PETER F DRUCKER

• PETER F DRUCKER, define an entrepreneur,

“as the one who always searches for change, respond to it and exploit it as an opportunity

JOSEPH A SCHUMPETER

• defines an entrepreneur as, “one who innovate, raises money, assembles inputs and sets the organizations going with his ability to identify them and opportunities, which others are not able to fulfils such economic opportunities”.

J.B.SAY

- defines an entrepreneur as, “one

who brings together the factors of production and combine them into a product.”

F.H.KNIGHT

• “ A Person who bears uncertainty ( risk which cannot be insured & is incalculable) can be reduced by taking Insurance.

FEATURES OF AN ENTREPRENEUR

He is the hero of the market

place.He is a catalyst of change

He is creative and result-

orientedHe improves the

technology, product and the

society

He is action – oriented,

highly motivated individual

who take risk to achieve

goals.

He is both thinker and doer,

planner and worker

Characteristics of a successful entrepreneur

Entrepreneur

Determination& Persistence

Motivation to succeed

No daunted by failure

Passion

Spot and take advantage of opportunities

Relevant skills and expertise

Vision, creativity

and innovation

Risk taker

PATH FOLLOWED BY ENTREPRENEUR

FAMOUS

ENTREPRENEURS…….

Bill Gates 1955

• By linking his Microsoft software to IBM's first PCs, he dominated the industry.

• He developed a two-prong strategy of expanding the market while maintaining a strong hold on competitors.

Michael Dell 1965

• Created a new model for PC sales

• Cutting out the retail middleman and custom-building computers to suit buyer‘s needs put Dell at the front of the class of PC makers.

Muhammad Yunus 1940

• Founded a banking system 30 years ago

• To lend small amounts of money to the rural poor in Bangladeshi villages.

• 2006 Nobel Peace Prize winner,

Chad Hurley, 29, Steve Chen, 28 & Jawed Karim, 27

• Founders of YouTube

• Broadcasts 100 million short videos daily on myriad subjects

• Sold to Google

Entrepreneurial Traits (Qualities of an entrepreneur)

A Trait can be explained as an underlying characteristic of a person which leads to the effective or superior performance of a job.

The successful completion of any job , the organizer should posses certain special qualities. These qualities are known as traits or features. The major qualities are Knowledge,Skill,and Motive

Knowledge : It means the collection and retention of information in one’s mind. A person with knowledge can describe things to others ,but mere description will not enable the listener to perform a job.

Skill : Skill means the ability to practice knowledge

Motive : motive is an urge to achieve the goals . This achievement motivation directs a person to perform his duties in a better manner.

Other Entrepreneurial Traits

• Mental ability: It consists of intelligence and creative thinking.• Clear objectives :An entrepreneur should have clear objectives regarding the nature of his product, demand for the products etc………• Effective communication : An entrepreneur should be able to communicate his ideas , messages and information effectively and clearly to others.

• Guarding of business secret : The leakage of business secrets to his rivals will effect his business adversely. So he must be very careful in the selection of his subordinates.•Technical knowledge : An entrepreneur must have a clear idea about the technological advancements taking place in the field of business.•Ability to mobilize resources : Resources are scarce while demands are unlimited

• Risk-bearing capacity: The risk and reward are positively correlated i.e., high risk leads to high profit, low risk to less profit.• Employees well wisher : entrepreneur must take welfare measures for the employees who are working under him.• Hard working mentality : An entrepreneur should work hard to achieve his goals.

• Imagination and Initiative• Capacity to interact with people •Ability of organization and administration•Efficient supervision• Motivation• Self confidence etc……………….

• Joseph.A.Shumpeter-”An individual who introduces something in the economy –a method of production not yet tested by experience in the branch of manufacture concerned a product with which consumers are not yet familiar , a new source of raw material or of new markets and the like . . .”

ENTREPRENEUR

• Entrepreneurs can be potentially developed through training . It will help them to identify their aptitudes , motivation, developing personalities ,encouraging innovative thinking etc. . .

HOW TO DEVELOP . . .

• A person becomes entrepreneur when he . . ;• Perceives opportunities for profitable investments• Explores the prospects of starting such a manufacturing

enterprise• Obtain necessary industrial licences• Arranges initial capital• Provides personal guarantees to the financial

institutions• Promises to meet short falls in the capital • Supplies technical know how

• An emerging entrepreneur should develop• Willingness to work hard• Desire for high achievement• Clear foresight• Organising capacity• Innovative skill• Self confidence

WHO IS AN ENTREPRENEUR?

He is ordinarily called a business man. He is the person who combine capital and labour for the

purpose of production.

He organises and manages a business unit assuming the risk for profit.

He is an individual who think,reason and acts to convert ideas into commercial opportunities

and to create value.

He is the artist of the business World.

The mission of an entrepreneur is to find economic opportunities,convert them into valuable product and services and create value within the organisation and in the market place.

DEFINITION• PETER DRUCKER, define an entrepreneur, “as the one who always searches for change,respond

to it and exploit it as an opportunity”.

• JOSEPH A SCHUMPETER defines an entrepreneur as, “one who innovate, raises money,assembles inputs and sets the organisations going with his ability to identify them and opportunities, which others are not able to fulfil such economic opportunities”.

• In the words of J.B.SAY, “an entrepreneur is one who brings together the factors of production and combine them into a product.”

FEATURES OF AN ENTREPRENEUR

He is the hero of the market place.He is a catalyst of change.He improves the technology, product and the

society.He is action – oriented, highly motivated

individual who take risk to achieve goals.He is creative and result-oriented.He is both thinker and doer,planner and worker.

He undertake venture not for his personal gain alone but for the benefit of consumers,governments and societies as well.

He build new enterprisesHe can foresee the future,seize market with a

salesmans persuasiveness,manipulate funds with financial talent and smell errors,fraud and deficiencies with an auditors position.

Who needs

• You need a business plan if you – Are running a business– Are applying for a business loan– Are looking for business investment– Are working with partners– Want to communicate with a

management team– Wish to sell a business/ set a value on

business

Description• A plan that works for a business to look

ahead, allocate resources, focus on key points and prepare for problems and opportunities

• Comprehensive document describing– Business– Objective– Strategies– Market it is in– Financial forecasts

• Not just a blue print, but a vital component of starting and growing a successful enterprise.

Why do anyone need to write• Defining a new business• Support a loan application• Raise equity funding• Define objectives & strategy to achieve• Evaluate a new product line, promotion or

expansion• Creating a regular business review and course

correction process• Define agreement between partners• Set a value on a business for sale or legal purposes

Frame work

• Executive Summary

• Industry• Company

Description• Product/ Service• Market Analysis• Competitive

Analysis

Strategy & Implementation

Web plan Summary

Management Team

Operational Strategy

Financial Analysis

Build Your Plan

Components for each segment

• Start-up: Proof that your business will generate enough revenue to cover your expenses

• Existing business: Ultimate agenda is to be more of operational than financial

• Venture Capitalist: Factors involved in decision to invest in a company – quality of people

Elements to create a successful

• Presents a well thought out idea• Contains a clear and concise writing• Has a logical structure• Illustrates management’s ability to

make the business a success• Shows profitability• Bringing all together• Focused and realistic

Home work before planning• What is the purpose behind your

company?• Who are your potential customers?• Who are your competitors?• How will you run your business?• Factors to consider

– Stat-up expenses– Operating expenses– Cash flow– Future profitability

Do’s & Don’ts• Understand planning process is

critical• Utilize to determine what to

include• Answer key questions such as

who, when, where, what, how• Include market research• Explain relation to financial

projections• Use plan to monitor actual

performance and compare to your expectations

• Consider all your competition• Address strengths and weakness

• Just guess what your costs may be

• Biased when composing plan

• Leave out relevant facts and details

• Handwrite your plan

• Expect to complete in couple of days

• Assume you are required to use software

• Struggle to fit plan to generic mold

• Assume reader is industry expert

• Overestimate revenues

• Underestimate expenses & costs

Relevance• Avoid big mistakes• Counterbalance your emotions• Make sure everyone’s on the same page• Develop a game plan• Raise capital• Establish business milestones• Understand your competition• Enunciate previously unstated assumptions• Uncover new opportunities

Advantages• Helps you make decisions

• Helps you knock off the gray area

• Can be a reality check• Identifying gaps early on the process gives a

chance to shore up the researches

• Can give you new ideas• Helps to think creatively and come up with

solutions for the toughest business challenges

• Creates an action plan• Helps to outline action items, next steps and

future activities

INTRODUCTION

• A business enterprise is an economic institution engaged in the production or distribution of goods and services in order to earn profits and acquire wealth.

• The whole process of starting a business begins with writing a business plan.

• A good business plan is the key to setting up a successful business.

There are 8 simple steps to creating your own business plan

1.Name of your business - create a name or reevaluate the nameof your business. Does it integrate well with what you areselling? Is it easy to spell and remember? Is it a name that canbe well branded over time?

2. Vision - what will your business look like 5 years from now?Think of how you may want to expand it to include other branchesor extra employees.

3. Mission statement - this defines what your business reallydoes, what activities it performs and what is unique about itthat stands out from your competitors.

4. Goals and objectives - clearly define what you want toachieve with your business. Make sure they are quantifiable andset to specific time lines. Set specific goals for each of yourproducts or services.

5. Strengths, weaknesses, opportunities, threats (SWOT) - byanalysing these characteristics in your business, you will get aclearer idea of what it will take for you to not only to survivebut also prosper.

6. Strategic action plan - this is the most critical step ofyour business plan, because without it, your business will notget off the ground. This should include your sales and marketingstrategies.

7. Financial plan - a business can operate without budgets, butit is clearly good business practice to include it. With budgets, you will bemore likely to achieve your business objectives, you will makemore-reasoned decisions and you will have better control of yourcash flow.

8. Measuring and evaluation - you wrote your business plan andset the goals with the intent of achieving them. So now breakthem down into measurable pieces and monitor the resultsregularly. A plan that cannot be measured is almost alwaysdestined for failure. Celebrate your wins and recharge yourselfto accomplish your next goal.

Conclusion:Now that you have a business plan, make it a part ofyou by knowing and understanding it clearly. Build upon itcontinuously and refer to it often, so you remain on track tobuilding a profitable business.

Need for Market Research

Market ResearchThe process of gathering, analyzing and interpreting information about a market, about a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service; research into the characteristics, spending habits, location and needs of your business's target market, the industry as a whole, and the particular competitors you face

Need for Market Research

• Realize Opportunities to Reach New Customers.• Is your company actively reaching out to new

customers? Having a strong consumer base is important. Expanding a company’s consumer base can prove to be complicated, but if successful allows for greater profit potential and growth sustainability. Validate and seek to understand the needs of potential customers, by discovering “What do they want?” and “What do they need?”

Determine growth in the Marketplace –Who Needs Your Products?

• Examining market segments, within your marketplace, can help your company take action to correct unmet needs of your customers. Certain market segments will expand and contract with time, events, and other social variables. Researching about demographic or societal trends will be valuable when determining who to interview from each group.

Discover the Best Approach to Satisfy the Needs of Your Existing and Potential Customers

• What is the best approach to satisfy unmet needs of your customers? How can your company develop a product with benefits that will meet the needs of more people? What can your company ensure to have the capacity to continuously meet demand? These situations are where focus groups provide great solutions. Conduct some focus groups, including discovering their familiarity, preference, satisfaction, and dissatisfaction.

See What Your Competition Is Doing

• Take a closer look at what your competition is doing. Inspect their products, services, advertising, marketing techniques, pricing, location, etc. If they provide a service, try it out. Put yourself in the shoes a “secret shopper”, whose job it is to try out the products or services and rate the company on multiple aspects. If they have a brick and mortar location, make a trip or few to examine their culture. If they have posted advertisements take pictures. With the rise of smart phones and I Pads, there is virtually no excuse to not observe every aspect of your competition.

Rethink and Rework Your Unique Value Proposition and Brand Identity.

Starbucks has dedicated over 40 years in building trust and creating genuine connections at their coffee houses. If you have ever been to a Starbucks coffee house in the past few years, you may have noticed that they recently changed their branding of the Starbucks “Siren” logo. The company spent a lot of thought into the reasons why the wanted to change their logo. With the help of numerous opinions polled and research conducted, the new Starbucks logo was launched with great success. Customers favoured the new logo, as many felt it was in line with their own identity.

Fine-Tune Your Advertising

• The advertising business generates typically over $100 billion in revenue and keeps increasing every year. In 2010, at&t spent over $1.5 billion, Verizon about $1.4 billion, GM at $1.4 billion and P&G weighing in at the largest contender of $2.24 billion in advertising. Companies spend lots of money to gain the attention of customers.

Verify if Your Customers Are Satisfied – And If Not, What They Really Want

• There is only one way to know if your customers are satisfied with your company’s offerings, which is by asking them if they are satisfied. If you have a storefront, you could just outright ask your customers. If your company is seeking to take a more scientific approach, customer satisfaction is delineated as a certain percentage of customers’ expectations that are met or exceed satisfaction goals versus a total.

OPERATIONS PLAN

• All businesses- manufacturing or non manufacturing should include an operations plan as part of the business plan.

• Describes the flow of goods and services from production to the customer.

• A service provider would also need this in the business plan in order to explain the chronological steps in completing a business transaction.

• This would be a convenient place for the entrepreneur to discuss the role of technology in the business transaction process.

• The process of delivering the service quality is what distinguishes one new service venture from another and thus needs to be the focus of an operation plan.

• It is an important part of the business plan.

• It determines the potential investment commitment needed for the new venture and indicates whether the business plan is economically feasible.

• The entrepreneur should summarize the forecasted sales and the appropriate expenses for at least the first three years, with the first year’s projections provided monthly.

FINANCIAL PLAN

• The second major area of financial information needed is cash flow figures for three years, with the first year’s projections provided monthly.

• It is important to determine the demands on cash on a monthly basis, especially in the first year.

• The last financial item needed in this section of the business plan is the projected balance sheet.

• This shows the financial condition of the business at a specific time.

• It summarizes the assets of a business, its liabilities, the investment of the entrepreneur and any partners, and retained earnings.

• Any assumptions considered for the balance sheet or any other item in the financial plan should be listed for the benefit of the potential investors.

Small business

o A small business, also called mom and pop store by some in the United states, is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales.

o Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. Small businesses can also be classified according to other methods such as sales, assets, or net profits.

o Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery, hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses,photographers, small-scale manufacturing, and online business such as web design and programming) etc.

Advantages of small business

A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can easily serve specialized niches, something that would have been more difficult prior to the internet revolution which began in the late 1990s.

Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and maturity.

Independence is another advantage of owning a small business. One survey of small business owners showed that 38% of those who left their jobs at other companies said their main reason for leaving was that they wanted to be their own bosses.

Freedom to operate independently is a reward for small business owners. In addition, many people desire to make their own decisions, take their own risks, and reap

the rewards of their efforts. Small business owners have the satisfaction of making their own decisions within the

constraints imposed by economic and other environmental factors. However, entrepreneurs have to work very long hours and understand that ultimately their customers are their bosses.

MARKETING THE SMALL BUSINESS

• Finding new customers is the major challenge for Small business owners. • Small businesses typically find themselves strapped for time but in order to create

a continual stream of new business, they must work on marketing their business every day.

• Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print, email marketing, and internet.

• Electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service.

• Another means by which small businesses can advertise is through the use of “deal of the day” websites such as Groupon and Living Social. These Internet deals encourage new visitors to small businesses.

S0URCE OF FUNDING..

• Small businesses use several sources available for start-up capital• Self-financing by the owner through cash, equity loan on his or her home, and or

other assets.• Loans from friends or relatives• Grants from private foundations• Personal savings• Private stock issue• Forming partnerships• Angel investors• Banks• SME finance, including Collateral based lending and Venture capital, given

sufficiently sound business venture plans

SUCCESS FACTORS FOR SMALL BUSINESS

• Success is "where preparation and opportunity meet." • But how do we define and measure success in our business? • How do we know if our business is a success?• Can you tell if we are on or off course? If we are off course, what corrective

action(s) can be taken?• An important part of planning our business entails knowing the key things that can

tell you when you have reached our goals. Called key success factors, these are indicators or milestones that measure your business achievements and help determine how well you are progressing towards your goals and objectives.

• Without determining your key success factors, you run the risk of needing to make expensive changes of direction later on as you have not aligned your objectives to the success of your business. You must sit down and think what you really need to do to make your dream business a success

1. Sell each unit at a profit. Evaluate each and every product that you sell and determine if you are selling them profitably. If not, you may need to identify how to make its

current sales profitable, whether by reducing your costs for that product or increasing its price

2. Continue to reduce overhead costs. A lower overhead should be a continuing objective for your business. You can cut costs by evaluating your insurance needs, reducing your reliance on outside consultants and service providers, or cutting down unnecessary supplies and equipment.

3. Develop new products while maintaining the high quality of existing products. Ensure that your products are created or chosen in response to the needs of your customers. Ask for customer feedback through surveys or direct interaction with them to find out what are the items that they need and expect from your business.

4. Find and retain high-value customers. The 80-20 rule of business states that 80 percent of your business will come from 20 percent of your customers. It is therefore critical that you exert the extra effort to ensure that you retain the business of your top customers.

5. Create and maintain the highest level of customer satisfaction. A very important success factor needed to sustain your business is to provide the best service to your customers. Satisfied customers are more likely to come back to you. Better yet, give your customers more than they expect.

The above are but a few of the key success factors that you can use for your business. Your key success factors must encompass all the important areas of your business, from finance, marketing and product development, sales and customer service, and human resources

Success factors

CONCLUSION

Small business success is made up of experience, education, hard assets, and human assets, all deployed in our wonderfully pure and extremely demanding marketplace.

Identify how you measure up with each of the success factors.

Lead with your strengths, overcome deficiencies, and keep one eye on the road ahead and one on the horizon.

SMALL BUSINESS

The basic objectives underlying the development of small scale industries are:

Increase in the supply of manufactured goodsPromotion of capital formationThe development of indigenous

entrepreneurial talents and skills Creation of employment opportunities

DYNAMICS

Payment mechanism

This is necessary to ensure that small industries do not get into the grip of the large buyer enterprises which may also control them through equity and technology.

Resources

• The most important change for modern small scale is the provision of additional finance by permitting limited liability for new non-active partners and permitting up to24 percent equity investment by other industrial undertakings.

• This could encourage indirect ownership of small units by large corporate entities

Nodal agency

• The Small Industry Development Organization(SIDO) has been recognized as the nodal agency to support the SSI in export promotion.

• A technology development cell would also be set up in SIDO to provide technology inputs for improving productivity and competitiveness of SSI products.

Marketing

• Marketing promotion would be undertaken through co-operative ,public sector institutions, other professional and marketing agencies.

• The National Small Industrial Corporation (NSIC) would concentrate on marketing of mass consumption items under a common brand name.

Raw material

• Based on the capacity needs, SS units would be given priority in the allocation of indigenous raw materials.

• Besides this, adequate and equitable distribution of imported raw materials would also be ensured for this sector.

Quality

• Industry Associations would be encouraged and supported to establish quality counseling and other testing facilities.

• Technology information centres, to provide up-to-date knowledge on technology and market would also be established.

• Compulsory quality control would be enforced.

In a developing economy, it is the

small scale industry that

constitutes the backbone of its

economic structure.

SMALL BUSINESS

A business that is privately owned and operated, with a small number of employees and relatively low volume of sales.

Small businesses are normally privately owned corporations, partnerships or sole proprietorships.

Generally has under 50 employees.

Common in many countries depending upon the economic system in operation.

ADVANTAGES

Started at a very low cost and on a part

time basis

Well suited to internet marketing

Independence

Satisfaction of small business

owners

CAUSES

Poor planning

Inadequate capital

No prior business experience

Ineffective marketingCompetition

Poor customer service

Poor record keeping and financial

controls

TIPS TO AVOID SMALL BUSINESS FAILURES

Make sure there is enough demand for the product or service you are offering.

Be knowledgeable about the market. Be flexible about the plan. Be smart about the financial position. Be proactive ,when it comes to sale.

“success does not come to those who wait and it does not wait for anyone

to come to it”

FEASIBILITY PLANNING

• FEASIBILTY PLANNING IS A VERY SIMPLE START UP PLAN THAT INCLUDES A SUMMARY, MISSION STATEMENT,KEYS TO SUCCESS,BASIC MARKET ANALYSIS OF COSTS ,PRICING PROBABLE EXPENSES.

• THIS KIND OF PLAN IS GOOD FOR DECIDING WHETHER OR NOT TO PROCEED WITH THE PLAN ,TO TELL IF THERE IS A BUSINESS WORTH PURSUING.

• THIS IS UNDERTAKEN TO FIND OUT WHETHERTHE PROPOSED PROJECT WOULD BE FEASIBILE OR NOT.

FEASIBILTY PLANNING INCLUDES THE FOLLOWING

• MARKET FEASIBILITY• TECHNICAL/OPERATIONAL FEASIBLTY• FINANCIAL FEASIBILITY

MARKET FEASIBILITY IS CONDUCT FOR THE FOLLOWING REASONS

• TO ESTIMATE THE AGGREGATE DEMAND OF THE PROPOSED PRODUCT OR SERVICE IN FUTURE.

• TO ESTIMATE THE MARKET SHARE OF THE PROPOSED PRODUCT OR SERVICE IN FUTURE.

MARKET ANALYSIS IS CONCERNED WITH BROADLY TWO VARIABLES

• PRESENT OR FUTURE AGGREGATE DEMAND OF THE PROPOSED PRODUCT OR SERVICE.

• EXPECTED MARKET SHARE OF THE PROPOSED BUSINESS ENTERPRISE.

TECHNICAL/OPERATIONAL FEASIBILITY

• TECHNICAL OR FEASIBILITY ANALYSIS IS DONE TO ASSESS THE OPERATIONAL ABILITY OF THE PROPOSED BUSINESS ENTERPRISE.

• THE COST AND AVAILABILITY OF TECHNOLOGY MAY BE OF CRITICAL IMPORTANCE TO THE FEASIBILITY OF A PROJECT OR IT MAY NOT BE AN ISSUE AT ALL.

EG : A HOSPITAL MIGHT NEED THE LATEST TECHNIQUES TO STAVE OFF COMPETITION.

TECHNICAL OR OPERATIONAL ANALYSIS COLLECTS DATA ON THE FOLLOWING PARAMETERS

• MATERIAL AVAILABILITY• MATERIAL REQUIREMENT PLANNING• PLANT LOCATION• PLANT CAPACITY• MACHINERY AND EQUIPMENT• PLANT LAYOUT

FINANCIAL FEASIBILITY

• ONCE MARKETING ,OPERATIONAL AND ORGANIZATIONAL ANALYSIS HAS BEEN DONE SUCCESSFULLY,FINALLY,FINANCIAL FEASIBILITY IS DONE TO ASSESS FINANCIAL ISSUES OF THE PROPOSED BUSINESS VENTURE.

IT INCLUDES THE FOLLOWING

• COST OF LAND AND BUILDING.• COST OF PLANT AND MACHINERY.• PRELIMINARY COST ESTIMATION.• PROVISION FOR CONTINGENCY NEEDS.• WORKING CAPITAL ESTIMATES.• COST OF PRODUCTION.• SALES AND PRODUCTION ESTIMATES.• PROFITABILITY PROJECTIONS.

BUSINESS VENTURE ???

ECONOMIC ACTIVITY

BUYING AND SELLING OF GOODS AND SERVICES

UNDERTAKING RISK

MAXIMISATION OF PROFIT

WHY PLANNING???

DECIDING IN ADVANCE

ASSUMPTIONS ABOUT THE FUTURE

SYSTEMATIC APPROACH FOR REDUCING RISK.

BUSINESS PLANNING TO WHOM ??

BUSINESS PLANNING ARE MADE BY THE PERSONS WHO ARE GOING OR WILLING TO UNDERTAKE A BUSINESS VENTURE.THE CONCEPT OF ENTREPRENEURSHIP INVOLVES MOBILISATION OF RESOURCES AND UTILISATION OF THEM WITH A VIEW TO INITIATE CHANGES IN PRODUCTION.IT IS THE INTENTIONAL ACTIVITY OF A PERSON OR A GROUP OF PERSONS,UNDERTAKEN TO INITIATE,MAINTAIN OR ENHANCE PROFIT BY THE PRODUCTION OF SUPPLY OF GOODS AND SERVICES.

ESSENTIAL QUALITIES NEED FOR AN ENTREPRENEUR BEFORE

PLANNINGADVENTURISM

RISK BEARING

INNOVATION OF NEW PRODUCTION IDEAS

IDENTIFICATION OF NEW USAGES FOR MEN AND MATERIALS

STEPS FOR PLANNING A BUSINESS VENTURE

EVALUATES A NEW SITUATION BY THE ENTREPRENEUR IN HIS ENVIRONMENT

PERCEIVES OPPORTUNITIES FOR PROFITABLE INVESTMENTS

EXPLORES THE PROSPECTS OF STARTING SUCH A MANUFACTURING ENTERPRISE

OBTAIN NECESSARY LICENSES

ARRANGES INITIAL CAPITAL

PROVIDES PERSONAL GURANTEES TO THE FINANCIAL INSTITUTIONS

PROMISES TO MEET SHORT FALLS IN THE CAPITAL

SUPPLIES TECHNICAL KNOW-HOW.

ESSENTIALS OF A GOOD BUSINESS PLAN

CLEAR-CUT OBJECTIVES

FLEXIBILITY

ADOPT SYSTEMATIC APPROACH

SIMPLE AND EASY TO UNDERSTAND

CONCLUSION

BEHIND EVERY SUCCESSFUL BUSINESS THERE IS

A GOOD PLAN.

Feasibility plan

• A feasibility plan is a very simple start-up plan that includes a summary, mission statement, keys to success, basic market analysis, and preliminary analysis of costs, pricing, and probable expenses. This kind of plan is good for deciding whether or not to proceed with a plan, to tell if there is a business worth pursuing.

A feasibility plan is valuable for:

• Starting a new business• Expansion of an existing

business• Adding an enterprise to an

existing business• Purchasing an existing business

Feasibility Plan includes:

• Market Analysis• Competitive Analysis• Venture Analysis

Market Analysis• 1. Determine the size of the industry you

are considering.• 2. Identify trends that are driving the

market How is the market changing?• 3. Segment the market? What are the

size, expected growth and trends of each segment?

• 4. What threats exist, e.g. economic, political, technological, international, etc.?

• 5. Are there new distribution channels that can be used to exploit existing markets?

Competitive Analysis

• 1. How is the industry structured?• 2. What barriers to entry do new

companies face?• 3. What is the degree of rivalry among

competitors? • 4. Describe the major competitors in

the market.• 5. How do your competitors perceive

themselves?

• On what basis do the major companies in the marketplace compete: service, quality, price, new product/service introductions, customer support, etc.?

• How much control do you have over: * Setting prices. * Costs. *Channels of distribution.

Venture Analysis

• Opportunity or Need• Product or Service• Target Market• Unique Benefits• Competitive Advantage• Risks

What is Marketing?

• Business function

• Business philosophy

Marketing as a business philosophy

• The Marketing Concept• Organizing all the firm’s activities around the

goal of being profitable by satisfying the wants and needs of its customers.

Marketing as a business function

• Managing exchange relationships• • Sellers----------------- Buyers•

4 Ps

DEFINITION

• Marketing may be narrowly defined as a process by which goods and services are exchanged and the values determined in terms of money prices.

Marketing is a process or a system of a business designed to plan, price, promote and distribute want satisfying product and services to the present and potential cutomers.

MARKETING CONCEPT

• It emphasizes customer oriented marketing process. All business operations revolve around customer satisfactions and services. Marketing plans and policies and programmes are formulated to serve efficiently customer demand.

NEW MARKETING SYSTEM

PRODUCT ORIENTED

Something that had to be sold (Distributive in nature)

to the customer

Something thatIs bought by the customer ( To serve demand)

Overall change in the perception of marketing

PRODUCT CONSUMER

CONSUMER PRODUCT

CUSTOMER ORIENTED

.A large scale business can have its own formal marketing network, media campaigns, and sales force, but a small unit may have to depend totally on personal efforts and resources, making it informal and flexible.

Marketing makes or breaks a small enterprise. An enterprise grows, stagnates, or perishes with the success or failure, as the case may be, of marketing. “Nirma” is an appropriate example of the success of small scale enterprise.

Common Elements in the Marketing Skills of Great Entrepreneurs

They possess unique environmental insight, which they use to spot opportunities that others overlook or view as problems.

They develop new marketing strategies that draw on their unique insights. They view the status quo and conventional wisdom as something to be challenged.

They take risks that others, lacking their vision, consider foolish.

They live in fear of being preempted in the market.

They are fiercely competitive.

They think through the implications of any proposed strategy, screening it against their knowledge of how the marketplace functions. They identify and solve problems that others do not even recognize.

They are meticulous about details and are always in search of new competitive advantages in quality and cost reduction, however small.

They lead from the front, executing their management strategies enthusiastically and autocratically. They maintain close information control when they delegate.

They drive themselves and their subordinates.

They are prepared to adapt their strategies quickly and to keep adapting them until they work. They persevere long after others have given up.

They have clear visions of what they want to achieve next. They can see further down the road than the average manager can see.

A feasibility plan is a brief formal analysis of a prospective business idea.

The goal of a feasibility plan is to give the entrepreneur a clear evaluation of the potential for sales and profit for a particular idea.

Feasibility plan

A feasibility plan is valuable for:• Starting a new business• Expansion of an existing business• Adding an enterprise to an existing business• Purchasing an existing business

Elements of a Feasibility Analysis

Elements

• Estimate the total capital requirements.• Estimate equity and credit needs.• Budget expected costs and returns.

Financial/Economic Feasibility

• Are customers wiling to purchase our goods and services?

• Can we provide the product or service to our customers at a profit?

Product or Service Feasibility Analysis

• Industry description. • Industry competitiveness.• Market potential• Access to market outlets. • Sales projection

Industry and Market Feasibility Analysis

• Determine facility needs.• Suitability of production technology.• Availability and suitable of site.• Raw materials.• Other inputs.

Technical Feasibility

What is Marketing Research?

According to the American Marketing Association, marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.

An Entrepreneur’s Doubts…

Who are my customers and potential customers? What kind of people are they? Can and will they buy? Am I offering the right kinds of goods or services

they want - at the best place, at the best time and in the right amounts?

Are my prices consistent with what buyers view as the product's value?

Are my promotional activities working? What do customers think of my business? How do I compare my business with my

competitors?

four key steps for successful venture:

• Understanding the customer • Making value for the money paid by

your customer • Communicating your value to your target

market • Making it easy for the customer to buy.

PURPOSE

• Marketing research focuses and organizes marketing information. It ensures that such information is timely and permits entrepreneurs to:

Reduce business risks Spot current and upcoming problems in the

current market Identify sales opportunities Develop plans of action

Basic Types of Marketing Research

• Methodologically, marketing research uses four types of research designs, namely:

► Qualitative marketing research

►Quantitative marketing research

►Observational techniques

►Experimental techniques

QUALITATIVE MARKETING RESEARCH

• Generally used for exploratory purposes

• Small number of respondents

• Not generalizable to the whole population • Statistical significance and confidence not

calculated

eg: focus groups, depth interviews, and projective techniques

QUANTITATIVE MARKETING RESEARCH

• Generally used to draw conclusions

• Tests a specific hypothesis

• Uses random sampling techniques so as to infer from the sample to the population

• Involves a large number of respondents

• eg : surveys and questionnaires

Observational techniques

• The researcher observes social phenomena in their natural setting

• observations can occur cross sectionally

(observations made at one time) or longitudinally (observations occur over several time-periods).

Experimental techniques

• The researcher creates a quasi-artificial environment to try to control spurious factors, then manipulates at least one of the variables

• examples include purchase laboratories and test markets

Is Marketing Research worth the Expenses?

• A recent survey of small business managers revealed that 84 percent of those having conducted formal marketing research projects in the past three years felt that the information obtained was worth the money spent.

• Overall, 65 percent said that they were able to incorporate the research findings into their decision making process. Only 7 percent reported that they were not able to implement the results

• What topics do small business managers and entrepreneurs address through marketing research studies?

• What is your target market?• How big is it? • Who buys your product? • Why do they need it? • Who pays for it? • Who uses it? • How do the users fix the business problem you're

addressing today?• How much are they willing to pay? • Why would they buy from you? • What business problems are more important to them

than this one?

some common misconceptions about marketing research

• Many entrepreneurs think that marketing research should only be done by a small business when they are making a profit.

• Sometimes managers believe that unless research provides a complete description of a situation it is of no value

• The misconception that marketing research requires big dollars keeps many entrepreneurs from doing research..

• Another misconception is that you can not do research unless you are a sophisticated researcher.

Marketing Research

• “marketing research is the application of scientific methods in the solution of marketing problems”

David Luck, Donald Taylor

What is marketing research

o Marketing : Buying and selling activities• Research: Systematic and complete study of a

problem. it is done by experts. It uses scientific methods.

Cont……

• So marketing research is a scientific method of collecting , recording and analyzing of data which is used to solve marketing problems

Accurate and thorough information is the foundation of all successful business ventures. Market research , provides relevant data to help some marketing challenges that a business will most likely face-an internal part of the business planning process

MR involves two type data primary data and secondary data

Primary data

• This is research you compile yourself or hire someone to gather for you

• Two type- Exploratory research and Specific research

• Exploratory-open ended, help you define specific problem and usually involves detailed unstructured interviews in which lengthy answers are solicited from a small group of respondents

• Specific – is precise in scope and is used to solve a problem that exploratory research has identified

• Interviews are structured and formal in approach

• Of the two specific is more expensive

primary sources

• Telephone interview. Speed is another advantage of telephone interviews. A rate of five or six interviews per hour is typical, but experienced interviewers may be able to conduct more. Phone interviews also can cover a wide geographic range relatively inexpensively.

• One of the most effective forms of marketing research is the personal interview.

• A group survey. Used mostly by big business, group interviews or focus groups are useful brainstorming tools for getting information on product ideas, buying preferences, and purchasing decisions among certain populations.

• The in-depth interview. These one-on-one interviews are either focused or nondirective. Focused interviews are based on questions selected ahead of time, while nondirective interviews encourage respondents to address certain topics with minimal questioning.

Secondary data

• Secondary research uses outside information assembled by government agencies, industry and trade associations, labor unions, media sources, chambers of commerce, and so on. It's usually published in pamphlets, newsletters, trade publications, magazines, and newspapers. Secondary sources include the following:

Secondary sources

• Public sources. These are usually free, often offer a lot of good information, and include government departments, business departments of public libraries, and so on.

• Commercial sources. These are valuable, but usually involve cost factors such as subscription and association fees. Commercial sources include research and trade associations, such as banks and other financial institutions, and publicly traded corporations.

• Educational institutions. These are frequently overlooked as valuable information sources even though more research is conducted in colleges, universities, and technical institutes than virtually any sector of the business community.

MarketingThere are two critical marketing functions in

entrepreneurial firms:• Marketing research - establishing the

market characteristics of your firm• Marketing strategy - developing plans to

price, promote, and distribute your product

Entrepreneurial Market Research

• Usually you have little information to go on

• Data collection must be as thorough as your financial means allow

• Any mistake, oversight or miscalculation can be fatal

• Learn by doing

Step 1: Establish Purpose & Objectives of Research

• Typical research questions…• What is the size of the market?• Will the market grow or decline?• Who are our customers? • Where are they?• Who are our main competitors?• What price should I charge?

Step 2: Gather Secondary Data

• Publications (newspapers, magazines, journals, books, product brochures, government publications, studies & reports)

• Internet• Statistics (demographic & consumer

profiles, spending patterns,etc.)

Step 3: Gather Primary Data

• Interviews• Surveys (telephone, mail)• Focus groups• Observation• Who?

– Customers, industry reps, potential competitors, similar businesses, trade shows/conferences

Common Pitfalls of Marketers and Entrepreneurs

Unrealistic growth expectations Preoccupation with product issues Excessive faith in the benefits of growth Minimization of competing products and services

Resource-based Marketing

Key Questions

• What is our competitive advantage?

• Who values our competitive advantage?

• What marketing activities will help us reach our markets?

Ways to get started

Major and Minor Entry points

Major Entry New products or services

Parallel competition- fill small

market gaps

Franchising

Minor Entry Exploiting partial momentum

Customer sponsorship

Parent company sponsorship

Government sponsorship

Major Entry points

• New products and services– Start from the scratch

• Parallel competition– Existing market and product– New setup

• Franchise– Start an outlet of an existing company

Minor Entry points• Customer Sponsorship

– special contract– second sourcing

• Exploiting – geographic short comes– supply shortage– underutilized resources

Minor Entry points

Parent company sponsorship– joint ventures– Licensing– spin-off

Government sponsorship– favored purchasing– rule change– direct assistance

sALES PROMOTIONSales promotion is a method used by market or expand and retain and existing market for given goods or services

• Entrepreneurs undertake a number of activities to make customers aware of their products

The main objectives of these activitiesTo remind or inform the public about the existence or availability of the product

To target a particular segment of the market

To stabilize sales

To increase sales through attracting new customers by making them aware of your product

Methods of attracting customers

• Advertising

• Sales promotion

Advertising

• Advertising refers to any form of communication about a product or idea.

• It is the spreading of information about an entrepreneur’s products/services to customers

.

The methods of advertising

• Use of the media, for example, newspapers, magazines, radio, television, billboards, posters, leaflets, etc.

• Use of music, jingle bells or banners• Door-to-door advertising• Display of products outside the shop or

through the window

Sales promotion

• This refers to anything that can be done by an entrepreneur to make customers buy more of his/her goods or maintain them

Sales promotion can be carried out

•Arrange the products inside the business premises properly

•Give free samples and gift

•Be polite to the customers

•Talk to customers and understand what they require

•Exhibit knowledge about the product/service, i.e., its uses and benefits

•Improve product quality

•Brand your product, i.e., give it a distinctive name

Importance of sales promotion

• To inform the public about the availability of a particular product/service

• To stabilise sales through encouraging and attracting customers to continue buying the product/service

• To increase the sales volume, as more and more customers buy the product

• To target a particular market segment• To reward royal customers• To out compete rivals/competitors

Sales promotion 3 goals

• To increase immediate customer sales

• To increase support among the marketers sales force

• To gain the support of the trade in marketing the products

Why the companies are spending more and more money to on sales promotion

• Sales managers are under great pressure to produce result quickly

• Assessment of sales promotion is relatively easy

• Sales promotion strategies targets consumer, trade and the sales force

• Cost for result in this industry are relatively low

Consumer promotion

• Point of purchase• Sampling• Refunds• Incentives• Rebates• Lucky dip

Trade promotion

• Trade incentives• Trade deals

• Point-of purchase displays CartoonsBannersSignsPrice cards ,etc........

Buying an Existing Business

In most cases, buying an existing business is less risky than starting from scratch

When you buy a business, you take over an operation that's already generating cash flow and profits.

You have an established customer base, reputation and employees who are familiar with all aspects of the business.

And you don't have to reinvent the wheel--setting up new procedures, systems and policies--since a successful formula for running the business has already been put in place.

WHEN YOU START A NEW BUISINESS YOU WILL FACE…

difficulty of building a customer basemarketing the new business, hiring employees and establishing cash flow...all without a track record or reputation to go

on.

THE RIGHT CHOICE

looking at an industry with which you're both familiar and which you understand.

Think long and hard about the types of businesses you're interested in and which best match your skills and experience

the size of businessemployees, number of locations and salespinpoint the geographical area where you

want to own a business

Contacting a business brokerlooking in the local newspaper's classified

section under "Business Opportunities“make sure there are no complaints against the

business

ASK YOURSELF BEFORE THE ACQISITION…?????

Why is this business for sale? What is the general perception of the industry and

the particular business, and what is the outlook for the future?

Does--or can--the business control enough market share to stay profitable?

Are raw materials needed in abundant supply? How have the company's product or service lines

changed over time?

FINANCIAL ANALYSIS

o Ask the business owner to show you projected financial statements.

o Balance sheets, income statements, cash flow statements, footnotes and tax returns for the past three years are all key indicators of a business's health.

VERIFY THE VALUE OF A BUSINESS BEFORE MAKING A DECISION TO BUY

Inventory Furniture, fixtures, equipment and building. Copies of all contracts and legal documents Incorporation Tax returns for the past five years. Financial statements for the past five years Sales records ETC…….

ADVANTAGES…!!!

This strategy eliminates many of the headaches involved in getting a start-up off the ground, such as developing products, hiring the right people and building a sound customer base

gives entrepreneurs a jump on the start-up phase - a time when many new businesses fail.

less risky

SOME ADDITIONAL TIPS...;)

Stay in the area you knowLook for the right fitEvaluate the risksLook at the firm's identityEvaluate the costs

SHORTCOMINGS

buying a business is often more costly than starting from scratch

If you're not careful, you could get stuck with obsolete inventory, uncooperative employees or outdated distribution methods

ADVANTAGES &DISADVANTAGESOF ESTABLISHED BUSINESS

ADVANTAGES&DISADVANTAGES OFESTABLISHED BUSINESS

• GOODWILL• EMPLOYEES• SUPPLIER RELATIONSHIPS• BANKING & OTHER FINANCING

ARRANGEMENTS• LIABILITIES: TRADE CREDITORS

ADVANTAGES&DISADVANTAGES ESTABLISHED BUSINESS

PREMISES STOCK

advantages disadvantages

Equipment/vehicles

An existing business will likely have the equipment &/or vehicles & other capital items requird for the operation of the business-although it will be important to agree on the value of such of items for purposes of the depreciation that will be available to you,

The equipment ,vehicles,etc owned by the existing business may be worn out or poorly maintained.also,it may be difficult to establish a value for each such item.

OPPORTUNITY IDENTIFICATION

• It is the process by which an entrepreneur comes up with the opportunity for new venture.

• Most good business do not suddenly appear but rather result from an entrepreneur’ s alertness to possibilities.

Sources of business opportunities

• Consumers and business associates , members of the distribution system , technical people .

• Consumers are the best source of ideas for a new venture .

• Opportunity is identified by using input from consumers , business associates, channel members, or technical people, each opportunity must be carefully screened and evaluated.

• The opportunity must fit the personal skills and goals of the entrepreneur.

• Opportunity analysis or Opportunity assessment plan is a method for evaluating an opportunity which provide a basis for making the decision of whether or not to act on the opportunity.

Contents of opportunity assessment plan

• A description of the product or service• An assessment of the opportunity• An assessment of the entrepreneur and the team• Specifications of all the activities and resources

needed to translate the opportunity into a viable business venture

• The source of capital to finance the initial venture as well as its growth. . .

• Business valuation is a process and a set of procedures used to estimate the economic value of an owner’s interest in a business.

Business valuation

• Economic conditions

• Financial analysis

• Normalization of financial statements

• Income approaches

Elements of business valuation

• A business valuation report generally begins with a description of national, regional and local economic conditions existing as of the valuation date, as well as the conditions of the industry in which the subject business operates.

Economic conditions

• The financial statement analysis generally involves common size analysis, ratio analysis (liquidity, turnover, profitability, etc.), trend analysis and industry comparative analysis.

This permits the valuation analyst to compare the subject company to other businesses in the same or similar industry, and to discover trends affecting the company and/or the industry over time.

• By comparing a company’s financial statementsindifferent time periods, the valuation expert can view growth or decline in revenues or expenses, changes in capital structure, or other financial trends. of market multiples.

Financial analysis

• Comparability Adjustments. The valuer may adjust the subject company’s financial statements to facilitate a comparison between the subject company and other businesses in the same industry or geographic location.

• Non-operating Adjustments. It is reasonable to assume that if a business were sold in a hypothetical sales transaction (which is the underlying premise of the fair market value standard), the seller would retain any assets which were not related to the production of earnings or price those non-operating assets separately.

Normalization of financial statements

• Discretionary Adjustments. The owners of private companies may be paid at variance from the market level of compensation that similar executives in the industry might command. In order to determine fair market value, the owner’s compensation, benefits, perquisites and distributions must be adjusted to industry standards.

• Three different approaches are commonly used in business valuation.

• The income approach,

• The asset-based approach,

• And the market approach.

Income, asset and market approaches

• The income approach determine value by calculating the net present value of the benefit stream generated by the business (discounted cash flow).

• The asset based approach determine value by adding the sum of the parts of the business (net asset value).

• The market approach determine value by comparing the subject company to other companies in the same industry, of the same size, and/or with in the same region.

• The evidence on the market value of specific businesses varies widely, largely depending on reported market transactions in the equity of the firm. A

fraction of businesses are publicly traded, meaning that their equity can be purchased and sold by investors in stock markets available to the general public

Estimates of business value

• Franchise & Franchisee’s perspective

Examples of Franchised business

ALL DEALERS ARE FRANCHISEES BUT ALL FRANCHISEES ARE NOT DEALERS

A dealer invests more than just space

The party in a franchising agreement that is purchasing the right to use a business's

trademarks, associated brands and other proprietary knowledge in order to open a branch. In addition to paying an annual

franchising fee to the underlying company, the franchisee must also pay a portion of its

profits to the franchisor

A business established or operated under an authorisation to sell or distribute goods and services in a particular area

e

Franchise agreements are

covered under two std

commercial laws: the Contract

Act 1872 and the

Specific Relief Act 1963

Business plan.

• Most franchisors help franchisees develop a business plan. Many elements of the plan are standard operating procedures established by the franchisor….. Other parts of the plan are customized to the needs of the franchisee.

Experience of franchisor.

The experience of the franchisor’s management team increases the potential for success. This experience is often conveyed through formal instruction and on-the-job training.  Management Assistance. Franchisor provides

management assistance to a franchisee. This includes accounting procedures, personnel management, facility management, etc. An individual with experience in these areas may not be familiar with how to apply them in a new business. The franchisor helps a franchisee overcome this lack of experience.

Start-up assistance. The most difficult aspect of a new business is its start-up. Few experienced managers know about how to set up a new business because they only do it a few times. However, a franchisor has a great deal of experience accumulated from helping its franchisees with start-up. This experience will help reduce mistakes that are costly in both money and time.

The Name

• Established franchisors can offer national or regional name recognition. This may not be true with a new franchisor. However, a benefit of starting with a new franchisor is the potential to grow as its business and name recognition grow.

Efficiency in operation.

Franchisors discover operating and management efficiencies that benefit new franchisees. Operational standards set in place by the franchisor also control quality and uniformity among franchisees.

Three factors will help you predict the potential success of a franchise.

The first is the number of franchises that are in operation.

The second predictor is how long the franchisor and its franchisees have been in operation.

The third is the number of franchises that have failed, including those bought back by the franchisor.

Franchisee Checklist

Assessing the business type

Assessing the business proposition

The franchisee agreement

Assessing the franchisor

ASSESSING THE BUSINESS TYPE. IS THIS A GENUINE BUSINESS FORMAT FRANCHISE?

It could be a product distributorship or agency which

is not really a franchise but is promoted as a business format franchise and should therefore

be treated with caution.

Franchise territory is another

important concern

ASSESSING THE BUSINESS PROPOSITION FINANCING THE BUSINESS

1. What is the total cost of establishing a franchise operation? 2. What is included in this cost?3. Is it Exclusive or Non Exclusive?

If the franchisor's company is soundly financed? Ask to see audited financial records for three years.

THE FRANCHISE AGREEMENT.

It should last for a sufficient period of time to allow the franchisee to recoup his/her investment.

Or not….

ENTREPRENEURS NEED NOT ALWAYS BURN THEIR HANDS, DOING BUSINESS HE OR SHE DO NOT KNOW… YOU MAY TRY A FRANCHISE INSTEAD…. FOR A START

Which is the world’s biggest Franchise

Subway with over 33,749 Stores only…!!!

Financing Options for New Businesses

Coming up with new the money to start a new business is a challenge, but it is not impossible. There are different sources of financing for new ventures.

• Friends and Family

• Borrowing from yourself

•SBA

• Venture capital

•Traditional lenders

Forms of Financing

Raising financial capital from friends and family is a common approach for entrepreneurs launching a new venture . Friends and family are more likely to invest in your venture because of the personal relationship.

Friends and Family

Borrowing from yourself

The entrepreneur have a 401(k) plan,he can able to boorow against the money.If your plan allows you to borrow against it, you can get a maximum of $50,000 but not more than 50 percent of the total amount in your account.

Small Business Administration

• Small Business Administration (SBA) is a great place to turn for financial assistance. While the SBA does not grant loans, they do guarantee them. The SBA guarantee substantially lowers a lender's risk, making them more apt to grant a loan.

Venture Capital

• venture capitalists (VCs) raise money from outside investors for investment in new, high-growth ventures. With this investment, a VC typically takes an equity position in the new venture, expecting an annual return.

Traditional lenders

• Many lenders will still take a chance on you if you can show them a strong business plan, good personal financial statements, and a solid credit rating.

• Proving the financial health of your company — or of your business plan.

VENTURE CAPITAL• Venture capital (VC) is a significant financial

innovation of the twentieth century.• Venture capital is the investment of long-

term equity finance where the venture capitalist earns his return primarily in the form of capital gains.

• The underlying assumption is that the entrepreneur and the venture capitalist would act together in the interest of the enterprise as ‘partners’.

• Money for investment in innovative enterprises or research in which both the risk of loss and the potential for profit may be considerable.

• Venture capital investing is all about a willingness to accept a high degree of risk in order to obtain the potential for an extremely high rate of return.

• Venture capital is not the answer for all businesses in need of capital. But for those businesses that offer the potential of rapid growth and the potential for considerable profit, informed investors are ready to open their check books.

Cont……….

NEED OF VENTURE CAPITAL

There are entrepreneurs and many other people who come up with bright ideas but lack the capital for the investment. What these venture capitals do are to facilitate and enable the start up phase.

When there is an owner relation between the venture capital providers and receivers, their mutual interest for returns will increase the firms motivation to increase profits.

Through venture capital involvement, a portfolio firm can initiate growth, identify problems, and find recipes to overcome them.

VENTURE CAPITALISTS

A venture capitalist is a person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

Venture capital firms typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience.

Features of Venture Capital

• Equity Participation.• Long-term Investments.• Participation in Management.

Venture capitalist combines the qualities of bankers, stock market investors and entrepreneur in one.

Stages in Venture Financing

START UP

Additional finance

Acquisition STAGE

ESTABLISHMENT FINANCE

SEED FINANCE

CAPITAL FOR TRANSTATING AN IDEA INTO BUSINESS PROPOSITION

START UP

CAPITAL SUPPORT IN THE

IMPLEMENTATION STAGE.

Both the seed capital and start up capital is utilized for

the full scale manufacturing and

growth.

Additional finance

TO DEVELOP MARKETING INFRASTRUC

TURE

ESTABLISHMENT FINANCE

FINANCE FOR DIVERSIFICAT

ION AND EXPANSION

ACQUISITION STAGE

Acquiring financing

or another firm for further

growth

TO ACHIEVE AN EXIT VEHICLE FOR THE INVESTORS AND

FOR THE VENTURE TO GO PUBLIC

THE BUSINESS PLAN• The first step for a company (or an entrepreneur)

proposing a new venture in obtaining venture capital is to prepare a business plan for the consideration of a venture capitalist.

• The business plan should explain the nature of the proposed venture’s business, what it wants to achieve and how it is going to do it.

• The length of the business plan depends on the particular circumstances.

• It should use simple language and all technical details should be explained without jargons.

Essential Elements of a Business plan

1. Executive summary2. Background on the venture3. The product or service4. Market analysis5. Marketing6. Business operations7. The management team8. Financial projections9. Amount and use of finance required

and exit opportunities

What does a Venture Capitalist Look for

in a Venture?

• Superior businesses• Quality and depth of management• Corporate governance and structure• Appropriate investment structure• Exit plan

249

THE PROCESS OF VENTURE CAPITAL FINANCING

DEAL ORIGINATION SCREENING

EVALUATION (DUE

DILIGENCE)

DEAL STRUCTURING

POST-INVESTMENT

ACTIVITY

EXIT PLAN

Venture Capital Investment Process

Disinvestment Mechanisms

• Buyback by Promoters• Initial Public Offerings• Secondary Stock Market• Acquisition by another company

DEVELOPMENT OF VENTURE CAPITAL IN INDIA

The concept of venture capital was formally introduced in India in 1987, when the government announced the creation of a venture fund, to be operated by the Industrial Development Bank of India (IDBI).

VCFs in India can be categorized into the following four groups:1. VCFs promoted by the central (federal)

government-controlled development finance institutions

2. VCFs promoted by the state government -controlled development finance institutions

3. VCFs promoted by the public sector banks4. VCFs promoted by the foreign banks and private

sector companies and financial institutions

Future Prospects of Venture Financing

Rehabilitation of sick units. Assist small ancillary units to upgrade their technologies.

Provide financial assistance to people coming out of universities etc.

VCFs can play a significant role in the service sector including tourism, publishing, health care, etc.

Success of Venture Capital

• Entrepreneurial Tradition• Unregulated Economic Environment• Disinvestment Avenues• Fiscal Incentives• Broad Based Education• Venture Capital Managers• Promotion Efforts• Institute Industry Linkage• R&D Activities

ALTERNATE SOURCES OF FINANCING

Broadly, entrepreneur requires finance for 6 types of activities at different phases:

For consultancy,R&D,feasibility study etcFor purchase of land,developing the area, construction,developing infrastructurePurchase of rawmaterials,machinery,sparepartsHold the stock in process and pending finished goodsTo pay wages, salary, fuel, power, water, selling expenses, interest on funds borrowed etcBonus to employees, taxes andduties

Different types of Industrial Finance

Short term finance(For a period less than one year):To meet variable, seasonal or temporary working capital requirements

Medium term finance(For a period from one year to five years):For permanent working capital, small expansions, replacements, modifications etc

Long term finance(For a period exceeding five years):For procuring fixed assets, for the establishment of a new business, for substantial expansion of existing business, modernization etc Short Term Medium Term Long Term

SOURCES OF

FUNDS

a) Bank creditb) Trade creditc) Installment

creditd) Customer

advances

a) Issue of sharesb) Issue of

debenturesc) Loans from

banks and other financial institutions

d) Public Depositse) Ploughing back

of profits

a) Issue of sharesb) Issue of

debenturesc) Loans from

financial institutions

d) Ploughing back of profits

Venture Capital

Provides finance as well as skills to new enterprises and new ventures of existing ones based on high technology innovationsMade significant contributions to technological innovations and promotion of entrepreneurship(Apple, Intel Microsoftetc)Assists entrepreneurs in locating, interviewing, and employing outstanding corporate achievers to professionalize the firm Available in three forms: Equity, Conditional loans and Income notesProvision for conditional loans:-no interest,but carries royalty and profitability of investment

VENTURE CAPITAL: Stages of Financing

SEED MONEY STAGESmall amount of financing needed

to develop a product

START UPFinancing for a firm for marketing

and product development

SECOND ROUND FINANCINGFunds for working capital of a firm

that is in loss

FIRST ROUND FINANCINGAdditional money to sales and manufacturing after a firm has

spent its start up capital

THIRD ROUND FINANCINGFunds for a firm that is breaking

even and is contemplating an expansion project

FOURTH ROUND FINANCINGFunds for firms that are likely to go

public

Institutional Finance

With the launching of Five Year Plans, in the absence of a sufficiently broad domestic capital market, there was need for adopting and enlarging the institutional structure to meet the medium and long term credit requirements of the industrial sector.It was in this context that the RBI took the initiative in setting up statutory corporations at the all India and regional levels to function as the specialised financial agencies purveying team credit..

Industrial Finance Corporation of IndiaEstablished in 1948 to provide medium and long term term credit to industrial concerns in IndiaForms of assistance:

Granting loans on subscribing to debentures repayable within a period not exceeding 25 yearsUnderwriting the issue of stock, shares, bonds or debentures by industrial concernsGuaranteeing loans i. Raised by industrial concerns which are repayable within a period not exceeding 25 yearsii. Raised by industrial concerns from scheduled banks or state co-operative banks

Guaranteeing deferred payments due from any industrial concerni. In connection with import of capital goods from outside Indiaii. In connection with the purchase of capital goods within India Subscribing to the stock or shares of any industrial concern Schemes for encouraging entrepreneurship development in tourism and self employment Subsidies for women entrepreneurs, encouraging quality control measures in small scale sector, adoption of indigeneous technology

The National Bank For Agricultural And Rural Development

Came in to existence in 1982 to promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.Following schemes are under operation Attracting Youth to Rural Non-Farm sector Direct Rural Industries Project (DRIP) Rural Entrepreneurship Development Programme (REDP) Marketing of rural non farm products Rural Innovation Fund (RIF) to support innovative projects in Farm, Non-Farm and Micro Finance sectors

Small Industries Development Bank of IndiaAn apex level institution for promotion, financing, and development of industries in the small scale sectorSIDBI offers

Financial assistance to SSI units under Technology Development and Modernisation Fund (TDMF) Scheme Assistance to small scale entrepreneurs using innovative indigenous technology and expertise Financial assistance to SSI units in textile and cotton sectors for technology upgradation and modernisation under Technology Upgradation Funds Scheme(TUFS) Short term credit to State Electricity Boards to facilitate their purchase from SSI’s and effect payment in time

Some other institutional investors

Khadi & Village Industries CommisionNational Small Industries Corporation LTDState Industrial Development CorporationsState Small Industries Development CorporationsState Financial CorporationsScheduled Commercial BanksExport Import banks of India

Package schemes of assistance

Financial institutions offer a package of assistance to entrepreneurs to enable them to translate their project idea in to a raising operationA few institutional finances to entrepreneurs are:Technicians Scheme:Technically qualified proffesionals-up to Rs 7.5 lakhsComposite Loan Scheme: Both equipment finance and working capital up to Rs 50000 for artisans and rural industriesDisabled Entrepreneurs:100% finance up to Rs 50000Modernisation:For replacement/renovation of equipment for successful units which are in existence since 5 years-assistance up to Rs 90 lakh

Quality control equipment:100% assistance for setting up quality control facility by existing and new SSI units-up to Rs7.5lakhTourism related facilities: Up to Rs 9lakh availableMahila Udayam Nidhi Scheme: To set up new projects in SSI sector by women entrepreneursSingle window scheme: Provision of term loan and working capital together to upcoming small industrial units, up to Rs 7.5 lakh towards term loan and upto Rs 3.75 lakh towards working capitalEquipment Finance: For procurement of new machinery/equipment by existing industrial units-up to Rs 90 lakh

Working Capital represents operating liquidity available to a business

Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital

Net Working Capital Net working capital is calculated as current assets minus current

liabilities If current assets are less than current liabilities, an entity has

a working capital deficiency, also called a working capital deficit.

Positive working capital is required to ensure that a firm is able to continue its operations

WORKING CAPITAL

WORKING CAPITAL

Concepts of Working Capital1. Balance sheet concept2. Operating cycle concept

Balance Sheet Concept There are two interpretations under this:

1. Excess of current assets over current liabilities (Net Current Assets which is normally used)

2. Gross or total current assets

Operating Cycle Concept Consists of 3 primary activities

1. Purchasing resources,

2. Producing the product and

3. Distributing (selling) the product

WORKING CAPITAL

WORKING CAPITAL

WORKING CAPITAL REQUIREMENT

WORKING CAPITALWORKING CAPITAL

WORKING CAPITAL

REQUIREMENT

Minimum amount of resources that a company requires to effectively cover the usual costs and expenses necessary to operate the business

The basic formula for determining working capital involves only two factors:

1. Current Assets; mainly,

• Accounts Receivables

• Inventory

2. Current Liabilities; mainly,

• Accounts Payable

Basic formula

Current AssetsCurrent

Liabilities

Working Capital

Requirement

Net Working Capital Requirement will vary from company to company and within the company it may vary from month to month

It depends on: How much earnings a company has and what is the frequency of receiving

those earnings What are the expenses that a company has and how frequently these

payments have to be settled

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

REQUIREMENT

SHARED SERVICES

WORKING CAPITAL REQUIREMENT

Working Capital Requirement can be divided in to two components for simplifying the companies calculation and to meet the requirement as much as possible: Permanent Working Capital – a constant which will be there in the operation

every month and can be taken safely in to the companies working capital requirement for every month

Variable Working Capital – Varies from month to month and usually shows a seasonal pattern

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

WORKING CAPITAL REQUIREMENT

Variable Working Capital

Permanent Working Capital

Amou

nt o

f Wor

king

Cap

ital

Time

Working Capital Requirement Calculation:

Working Capital Requirement =

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

WORKING CAPITAL REQUIREMENT

[Increase in accounts receivable+

Increase in inventory +

Cash inflows i.e. cash in bank, bank loan, other current assets]

- [Increase in accounts payable

+ Cash outflows i.e. prepaid

expenses, payment to suppliers, other current liabilities]

FACTORS AFFECTING WCR

WORKING CAPITAL

REQUIREMENT

WORKING CAPITAL

REQUIREMENT

FACTORS

WORKING CAPITAL

Factors affecting Working Capital Requirements of a Company are:

1. Nature of business

2. Size of the enterprise

3. Seasonality of operations

4. Production policy

5. Market conditions

6. Technology and manufacturing policy

7. Price level changes

The 5 stages of entrepreneurship Life Cycle

Introduction Stage/ Start up Stage Growth Stage Maturity stage Decline Stage Abandonment / Exit Stage

INTRODUCTION STAGE

High setup cost for fixtures, fittings and stock. Obtaining funding or loans from financial institutions

due to risk. Slow sales growth due to lack of exposure to market. Trouble in attracting right staff.Focus: Start-ups requires establishing acustomer base and market presence along withtracking and conserving cash flow.

CHALLENGS

Choosing competitive product finding right legal structure Size and location of premises marketing strategies or promo cost sourcing finance to grow business

GROWTH STAGE

Rapid growth Increased customer awareness Diversified product range Better Management of production More employeesFocus: Growth life cycle businesses are focused

on running the business in a more formal fashion to deal with the increased sales and customers.

CHALLENGES

Maintain quality as output grows Develop systems to evaluate performance Managing cash flow in expanding business Improving efficiency Recruiting and delegating

MATURITY STAGE Rapid growth levels off New competition may enter Business reach maximum size Management may become stuck or satisfied

with current state. May work on reducing production cost to maintain

profit.Focus: Add new products or services to existing markets

or expand existing business into new markets and customer types.

CHALLENGES

Staying responsive to consumer demands. also staying competitive.

identifying opportunity for innovation in products and services.

sustaining motivation of manager and staffs.Rationalizing business operation and reducing

cost.

DECLINE STAGE

Dropping sales and profit. Negative cash flow.Focus: Search for new opportunities and

business ventures. Cutting costs and finding ways to sustain cash flow are vital for the declining stage.

CHALLENGES

Understanding the changing taste and needs of consumers. Developing new products

Shifting in to new or related markets where growth opportunities exist.

Orienting management and staffs towards change. New methods, new structure and new procedures can adopt.

ABANDONMENT STAGE

Continuous loss and low sales Shutting down/selling of business venture

Focus: Get a proper valuation on your company. Look at your business operations, management and competitive barriers to make the company worth more to the buyer. Set-up legal buy-sell agreements along with a business transition plan.

CHALLENGES

Realistic valuation Find a party to sell the entrepreneur ship.

Each stage of the business life cycle

may not occur in chronological order.

Some businesses will be "built to flip";

quickly going from start up to exit.Others will choose to avoid

expansionand stay in the established stage. Whether your business is a

glowing success ora dismal failure depends on your

ability toadapt to it's changing life cycles.

There are six stages of an entrepreneurial venture that founders of companies will

encounter.  The six steps are:  

Stage 1:  CONVICTION No matter the stage of the business when an individual begins his/her entrepreneurial journey, every entrepreneur must address his/her conviction to be an entrepreneur.  This sounds trivial, but it is the most important step in the process.  It SHOULD be the first step; however, many entrepreneurs wait until the VENTURE stage to address it.  This can lead to grave problems.  

In the CONVICTION stage, an entrepreneur needs to figure out if he/she has the conviction to withstand the fundamental issues of entrepreneurship.  

Different stages of entrepreneurial venture1) CONVICTION2) IDEA3) CONCEPT4) VENTURE5) BUSINESS6) SUSTAINABLE BUSINESS

Stage 2:  IDEA 

The IDEA stage is the easiest stage.  Everyone has an idea for a business.  This is also the most fun stage because the cost is zero and the excitement level high.  Of course, the IDEA stage is the basis for every other stage so it cannot be dismissed; however, as an entrepreneur, you should never confuse an "idea" for a "concept".  As you will see in the next step, a concept has much more structure than an idea and subsequently warrants a different concerns and decision making.

 

As mentioned above, a concept is characterized by structure.  In the CONCEPT stage, you take your idea and employ a certain intellectual rigor which includes: - Extensive market research- Development of the business model- Conceptualization of the type of the team required to execute - Engagement of  informal and formal advisors

Stage 3:  CONCEPT

Stage 4:  VENTUREThis is the most challenging stage of the business and for many entrepreneurs the most fun...well at least in the beginning.  The VENTURE stage is characterized by significant investment.  This investment typically comes in two forms:  money and time.  In most cases, as the entrepreneur, it is "your" money and "your" time; and those can often be significant. 

Stage 5:  BUSINESS  The BUSINESS stage is where all entrepreneurs strive to be.  This is the stage where you have revenues that are commensurate with your expenses.  Of course, there may be unprofitable months or years, but in general, the business can support itself with little outside capital.  This is the stage where you are most likely to find investors.  

Stage 6:  SUSTAINABLE BUSINESS Although most entrepreneurs are satisfied to build a Business, they should strive to become a Sustainable Business.  There are unique challenges to creating a sustainable business and it can be defined in different ways.  It is typically characterized by time.  Ventures that last 10+ years may be thought of as sustainable; however, the real challenge is for a business to outlast the involvement of its founders.  That is a more relevant definition of a sustainable business

REQUIREMENTS FOR

A SUCCESSFUL PATENT RIGHT

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvements thereof, may obtain a patent, subject to the conditions and requirements of this title.

Requirements…

Be Statutory

Be New

Be Useful Be Nonobvious

I. Statutory Requirement

• The Patent Act states that processes, machines,

articles of manufacture, and compositions of matter are patentable.

• Under this statute, it is clear the broadest standards for what is patentable in the entire world.

• However, there are certain "inventions" which are not patentable under the Patent Act.

Clearly Non-statutory Items which can’t be patented…

• Data structures or programs per sec -these items may be patentable when claimed in a different form to include computer-readable medium.

• Nonfunctional descriptive material, such as music, literary works, and compilations or mere arrangement of data.

• Electromagnetic signals, which are considered forms of energy and as such are nonstatutory natural phenomena

ii. Novelty Requirement

• In order for an invention to be patentable, it must be new as defined in the patent law. This novelty requirement states that an invention cannot be patented if certain public disclosures of the invention have been made. The statute which explains when a public disclosure has been made is complicated and often requires a detailed analysis of the facts and the law.

An invention will not normally be patentable if:

The invention was known to the public before it was "invented" by the individual seeking patent protection.

The invention was described in a publication more than one year prior to the filing date.

The invention was used publicly, or offered for sale to the public more than one year prior to the filing date.

iii. Useful Requirement

• The patent law specifies that the subject matter must be "useful." The term "useful" in this connection refers to the condition that the subject matter has a useful purpose and also includes operativeness; that is, a machine which will not operate to perform the intended purpose would not be called useful, and therefore would not be granted a patent. In most cases, the usefulness requirement is easily met in computer and electronic technologies.

iv. Nonobviousness Requirement

• In order for an invention to be patentable, it must not only be novel, but it must also be a non obvious improvement over the prior art. This determination is made by deciding whether the invention sought to be patented would have been obvious "to one of ordinary skill in the art.

AT A GLANCE… FOR OBTAINING A SUCCESSFUL PATENT RIGHT THE

INVENTION FOR WHICH THE PATENT IS CLAIMED…• 1. must be new and novel.• 2.must be useful.• 3.must relate to manufacture of things and substances

which are corporeal and substantial.• 4.must be capable of industrial application.• 5. must relate to processes and products which are

marketable.

Contd…

• 6.Must relate to the applied arts,technology,processes,methods employed in manufacture and theirmanner to which they are applied in the manufacture,to the machines,apparatus and articles used in the

manufacture and to the substances produced by manufacture.

PROCEDURE FOR OBTAINING A PATENT

NOT A FORMAL MATTERThrough application with all requirements as per the rules .Should be in the appropriate prescribed form.Fees should be paid along with the application.It should accompanied by provisional specification .Application should contain the name of the true and first inventor .The application shall be confined to one invention only .The application shall be either in Hindi , or in English .

STAGES OF PROCEDURE

First Stage : office objections

• The office of the controller examine the application in accordance with the procedures prescribed .

• After office objections are satisfactorily complied with the controller will issue a direction that the application be kept pending for 12 months.

• This time is intended to enable the applicant to re-examine his invention , check and re-check improve upon the invention and explore the possibilities , its usefulness and marketability .

Second stage : examination by examiner

After the complete specification is filed the controller will refer to examiner of the patent who examines the application thoroughly .If there are any objection the examiner of patents communicate the same to the applicant .The examiner of patents shall submit his report to the controller within 18 months from the date of reference .

Third stage : acceptance and proceedings in opposition

On receipt of the report from the examiner of the patents the controller will decide the issues acceptance of the application , if accepted the controller will direct the publication of the patent in the official gazette.If no objections is received , controller buy an order grant the patentIn case any objections are received within 4 months from the date of publication , controller will decide on the objection after giving full opportunity of making representation , adducing of evidence and hearing to all those who filed objections and applicant.

Fourth stage : sealing of patentWithin 6 months from the date of order disposing off the objections in the proceedings of opposition and grant to the applicant to the patent , the applicant may apply to the controller to register the patent and grant him the patent certificate and seal the patent .the applicant will there after will be called a patent holder or patentee.

TRADEMARK

A trademark is any sign, mark, symbol, word or words,

which indicate the origin or ownership of a product as

distinguished from its quality and which others have not

the equal right to employ for the same purpose.

LEGAL FORMALITIES FOR REGISTRATION OF TRADEMARK

1. It must not be identical with or confusingly similar to marks already in the

same field.

2. It should be one by which the public can recognize the goods.

3. It must not possess a flag or coat-of-arms of a foreign nation.

4. The brand of mark must be associated by the public with a definite

source of supply.

5. The public gives its own meaning to the words and terms it

uses in trade, even as it does to any other word, and this use of a word or

term cannot be controlled or restricted by the proprietors of a brand or

trademark.

6. The word, term or slogan selected as a brand or trade mark must be one

which can be monopolised and used and used exclusively for the

identification of the owner’s goods without interference with the rights of

others.

COPYRIGHT AND ITS FAIR USE

"copyright is a legal device that provides the creator of a work of art or literature, or a work that conveys information or ideas, the right to control how the work is used"

The intent of copyright is to advance the progress of knowledge by giving an author of a work an economic incentive to create new works

INTRODUCTION

Tangible, original expressions can be copyrighted. This means, for example, that a verbal presentation that is not recorded or written down cannot be copyrighted.

There are three fundamental requirements for something to be copyrighted, according to the United States Copyright Office

WHAT CAN BE COPYRIGHTED?

FIXATION

ORIGINALITY

MINIMAL CREATIVITY

Works in the public domain:Ideas are in the public domain.Facts are in the public domain.Words, names, slogans, or other short phrases also cannot be copyrighted. However, slogans, for example, can be protected by trademark law.Blank forms.Government works, which include: Judicial opinions,

Public ordinances, Administrative rulings.

WHAT CANNOT BE COPYRIGHTED?

WHAT DOES COPYRIGHT PROTECT?

Copyright provides authors fairly substantial control over their work. The four basic protections are:The right to make copies of the work.The right to sell or otherwise distribute copies of the work.The right to prepare new works based on the protected work.The right to perform the protected work (such as a stage play or painting) in public.

WHAT IS FAIR USE?

Fair use is the most significant limitation on the copyright holder's exclusive rights (United States Copyright Office, 2010, para. 1). Deciding whether the use of a work is fair IS NOT a science. There are no set guidelines that are universally accepted. Instead, the individual who wants to use a copyrighted work must weigh four factors:

The purpose and character of the use:

Is the new work merely a copy of the original? If it is simply a copy, it is not as likely to be considered fair use.Does the new work offer something above and beyond the original? Does it transform the original work in some way? If the work is altered significantly, used for another purpose, appeals to a different audience, it more likely to be considered fair use.

Recent case law has increasingly focused on transformative use to make fair use determinations – for a discussion of this topic see Lultschik, 2010.

Is the use of the copyrighted work for nonprofit or educational purposes? The use of copyrighted works for nonprofit or educational purposes is more likely to be considered fair use (NOLO, 2010, para. 6).

The nature of the copyrighted work:

Is the copyrighted work a published or unpublished work? Unpublished works are less likely to be considered fair use.Is the copyrighted work out of print? If it is, it is more likely to be considered fair use.Is the work factual or artistic? The more a work tends toward artistic expression, the less likely it will be considered fair use (NOLO, 2010, para. 9).

The amount and substantiality of the portion used:

The more you use, the less likely it will be considered fair use.Does the amount you use exceed a reasonable expectation? If it approaches 50 percent of the entire work, it is not likely to be considered a fair use of the copyrighted work.Is the particular portion used likely to adversely affect the author's economic gain? If you use the "heart" or "essence" of a work, it is less likely your use will be considered fair (NOLO, 2010, para. 13).

The effect of use on the potential market for the copyrighted work:

The more the new work differs from the original, the less likely it will be considered an infringement.Does the work appeal to the same audience as the original? If the answer is yes, it will likely be considered an infringement.Does the new work contain anything original? If it does, it is more likely the use of the copyrighted material will be seen as fair use (NOLO, 2010, para. 11).

WHAT ARE THE RULES FOR FAIR USE FOR INSTRUCTORS?

Copying by instructors must meet tests for brevity and spontaneity:Brevity refers to how much of the work you can copy.Spontaneity refers to how many times you can copy and how much planning it would take to otherwise seek and obtain permission from a copyright holder

"Certain works in poetry, prose, or in ‘poetic prose’ which often combine language with illustrations and which are intended sometimes for children and at other times for a more general audience fall short of 2,500 words in their entirety

Special works should never be copied in their entirety.An excerpt of no more than two pages or 10 percent, whichever is less, is the rule for special works (U.S. Copyright Office, 2009, p. 6).

The use of the copies should be for one course at one school. The copies should include a notice of copyright acknowledging the author of the work (U.S. Copyright Office, 2009, p. 7).

UMUC recommends that its faculty and instructors consider both the special guidelines for instructors and take into account the four factors that are used to evaluate fair use when they are deciding what and how much of a copyrighted work to use.

IN GENERAL, WHAT COUNTS AS FAIR USE?

Keeping in mind the rules for instructors listed above, and that the source(s) of all materials must be cited in order to avoid plagiarism, general examples of limited portions of published materials that might be used in the classroom under fair use for a limited period of time, as discussed by the U.S. Copyright Office (2009, p. 6), include

A chapter from a book (never the entire book).An article from a periodical or newspaper.A short story, essay, or poem. One work is the norm whether it comes from an individual work or an anthology.

A chart, graph, diagram, drawing, cartoon or picture from a book, periodical, or newspaper.Poetry

Copies of a poem of 250 words or less that exists on two pages or less or 250 words from a longer poem.

ProseCopies of an article, story or essay that are 2,500 words or less or excerpts up to 1,000 words or 10 percent of the total work, whichever is less.

IllustrationsCopies of a chart, graph, diagram, drawing, cartoon, or picture contained in a book or periodical issue (U.S. Copyright Office, 2009, p. 6).

WHAT SHOULD BE AVOIDED?

Making multiple copies of different works that could substitute for the purchase of books, publisher's reprints, or periodicals.Copying and using the same work from semester to semester.Copying and using the same material for several different courses at the same or different institutions.Copying more than nine separate times in a single semester (U.S. Copyright Office, 2009, p. 7).

WHEN IS PERMISSION REQUIRED?

When you intend to use the materials for commercial purposes.When you want to use the materials repeatedly.When you want to use a work in its entirety, especially when it is longer than 2,500 words (U.S. Copyright Office, 2009, p. 7).

HOW DO I GET PERMISSION? HOW CAN THE LIBRARY HELP?

The UMUC Library will assist UMUC faculty obtain permission for copyright-protected materials for use in UMUC classes in the Reserved Readings area of WebTycho.

COPYRIGHT AND ELECTRONIC PUBLISHING

The same copyright protections exist for the author of a work regardless of whether the work is in print, in a library research database, a blog, an online discussion board or comment space, or any social media formats.If you make a copy from an online source for your personal use, it is more likely to be seen as fair use. However, if you make a copy and put it online, it is less likely to be considered fair use.Note that the Internet IS NOT the public domain. There are both copyrighted and uncopyrighted materials online. Always assume a work online is copyrighted.

A CHAT WITH AN ENTREPRENEUR.

A WOMAN ENTREPRENUER WHO HAS GIVEN A DIFFERENT DIMENSION TO ENTREPRENEURSHIP WITH HER MIDAS

TOUCH AND HAS PROVED HERSELF AND BE SUCCESSFUL IN WHATEVER SHE PUTS HER MIND TO.

A PRESENTATION ON BUSINESS PLANNING AND ENTREPRENEURSHIP

SWADHISTA MUSHROOMS

Mushrooms – An Overview

A mushroom is the fleshy, spore-bearing fruiting body of a fungus, typically produced above ground on soil or on its food source. The standard for the name "mushroom" is the cultivated white button mushroom. Many species of mushrooms seemingly appear overnight, growing or expanding rapidly. This phenomenon is the source of several common expressions in the English language including "to mushroom" or "mushrooming" (expanding rapidly in size or scope) and "to pop up like a mushroom" (to appear unexpectedly and quickly). In reality all species of mushrooms take several days to form primordial mushroom fruit bodies, though they do expand rapidly by the absorption of fluids

Myths And Facts..

There are hundreds of species of edible mushroom. Many are delicious, or even medicinal, but eating the wrong kind of mushroom can have deadly results. It's not safe to collect wild mushrooms to eat unless you're sure about what you are doing! There are many myths about poisonous mushrooms arising from folklore, said to explain how to distinguish poisonous mushrooms. Unfortunately, most have been proven unreliable. In other stories about mushrooms, Roman Emperor Claudius may have been murdered by mushrooms in a meal. Was he, and if so, by whom?

JANAKI SREEKUMAR – THE ENTREPRENEURSWADHISHTA MUSHROOMS

JANAKI SREEKUMAR Her Noble Vision : Bring mushroom dishes into daily menu of Malayalees.

Mission Accomplished : Grows mushrooms, provides mushroom cutlets, spawns, soups etc, a typical example of diversification..

WEAKNESSHighly perishable and If the plants gets infested by weeds there is a chance of sudden spreading and plants get easily destructed.

OPPORTUNITIESThe main strength of the business is lack of competition for years in Trivandrum. She is a monopoly when it comes to mushrooms in Trivandrum.

SWOT

MARKETING, A HERCULEAN TASKSlow and steady wins the race…

Janaki Sreekumar entered into the mushroom business at a time when myths about the inedibility of mushrooms were prevalent among the fastidious Keralites. They have been trying really hard to get a break through in the market. It was successful only after making several persevering attempts which include cooking demonstrations with mushroom recipes in clubs, hotels and residential colonies. Even stalls were held up in fares and exhibitions and free samples of cutlets were provided. They have now replaced the tinned mushrooms which was the only available form. The growth was slow but steady and has won the race. She has become the only synonym for mushrooms in kerala.

A lot depends on HR…!!!A good leader..The staff strength is around 20 and one could see all happy faces. She despite her hectic and hasty schedule finds herself time to look after the needs of her employees. They feel immense happiness in sharing their happiness and sorrows, which showcase the entrepreneur’s human resource management. Technical staff are given more remuneration and allowances including stipends, travel expenses and accommodation.

Believe it or not..!! 1+1 = 11Money is like manure. You have to spread it around or it

smells.

The more profit you get the more you have to invest in the business to make it an empire. The venture would not have flourished if she hadn't done that. For her, initial investment was not a big deal as there was only a miniscule amount involved. Apart from fresh mushroom farming, Janaky operates a spawn industry, which is the major source of her income and supplies value added products from mushroom and runs a vermi-compost unit. When it all started as a hobby in a bedroom, no one might have dreamt about launching a crore worth farming project spread over six acres. But believe me its on its threshold.

BEHIND EVERY SUCCESSFUL WOMAN, THERE IS A MENTOR, A MAN…!!!

Her dream has become a reality only because of the back end support of her husband Mr. Sreekumar, who is working in the Agriculture department of state government.

Even at times of difficulties and hardships her husband stood by her.

Once when she suffered burns while sterilizing paddy straw, her family members objected her tooth and nail to withdraw her business. But it was her husband who gave her immense confidence and support with which she has setup this super structure.

A real entrepreneur

• Recognizing a new opportunity in every challenge.

• Finding an opportunity in every threat.

• Buy-back arrangement.• Business diversification at its

very best.• CSR

CSR

• Free training program being taken at her home in which Proper awareness about the pros and cons of the business.

• Interested in charity - helps the children of her staff in their education.

• Used to visit schools and colleges for free.

FUTURE PLANS

A take away counter : Start a counter for mushroom products like cutlets, mushroom masala dosas, pickles etc..

A Mobile van : which moves to nook and corner of city providing the same products.

Advice to Budding Entrepreneurs

Employees are in a comfort zone unlike employers. The basic problem with nowadays youngsters is that they ask why and not why not. Why not need to be asked by all youngsters.

For mba students, theory and practical are different. Acquire managerial capabilities and when you start an enterprise be one among your employees and work together and get wonderful results. Be prepared to do hard work. “No pains, no gains.”

Being an employer is always an element of risk involved in it. We should be willing to take calculated risks. Success will come your way.

• She earns a monthly income of 1.5 lakhs.

• She’s on the threshold of an agricultural project worth 1.25 crore.

• She has received awards from krishi vijyana kendra(KVK), Directorate of mushroom research, etc.

FOR YOUR INFORMATION