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Course Content :
(A) Entrepreneurial Perspective:
Concept of Entrepreneur, Entrepreneurship and Enterprise ;advantages Entrepreneur
1) Nature and Development of Entrepreneurship; Gender Issues inEntrepreneurship. -
2) The dynamic role o Small Business? Industry in EconomicDevelopment
3) Personality of an Entrepreneur! Entrepreneur
4) Innovation and Entrepreneurship
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ENTREPRENEURSHIP
A French word entrepreneur meaningbetween- taker or go-between.
Marco Polo who attempted to establish
trade routes to the far East. As a gobetween he would sign contracts with amoney person to sell his goods. As amerchant-adventurer he took the active
role in trading, bearing physical andemotional risk. While the capitalist was thepassive risk taker.
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Doing new things or doing things that arealready being done in a new way is
therefore a simple definition ofentrepreneurship.
Entrepreneurship can be described as acreative and innovative response to theenvironment. Such responses can takeplace in any field of social endeavour business agriculture, education, socialwork and the like.
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QUALITIES OF ENTERPRENEUR High level of motivation
Moderate risk taker
Self confident with positive self image
Excellent leadership qualities
Good business acumen Managerial competence.
Problem solving attitude
Flexibility and adaptability Realistic approach to planning
Independence of thought and action
Ability to perceive opportunities and threats
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QUALITIES OF ENTERPRENEUR
Entrepreneurs are quick to see possibilitiesfor achievements, unlike managers in largesedate organizations where they are
generally blinded by the in-grown culture. As we are aware that ideas for new
products and services often originate inunexpected places, entrepreneurs are the
first one to embark on these innovativeideas or opportunities.
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ENTREPRENEUR
Grabs such novel ideas, develops themand pursues their success doggedly withunflagging spirit thus these people are
entrepreneurs in true sense of the word. They are self starters and doers who
organize and build successful enterprises.
They are not opportunist because it is notonly selfish interest that drives him but healso meets the needs of the people.
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Global Views onEntrepreneurship Dr. Joseph A. Schumpeter well-known
expert on entrepreneurship,emphasizes-
Innovation as the key factor thatdistinguishes enterprises from otherform of endeavors.
No body is an entrepreneur all the time
one behaves as entrepreneur only whencarrying out innovative activities.
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Dr. Joseph A. Schumpeter well-known experton entrepreneurship, emphasizes.
Early English Entrepreneurs demonstratedthe key factor of enterprising person-theinnovative personality.
They were involved in developinginventions for commercial use and inapplying new scientific discoveries toproductive purposes.
They set a standard basic value forentrepreneurs who were to follow.
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Dr. David C McClelland-key researcherin the area of entrepreneurship-findings
Achievement motivation is one of the keyfactor contributing to success of anentrepreneur.
Prime psychological drives that motivatesan entrepreneur is high need forAchievement identified as N-Ach.
A drive towards accomplishing a goalembodying a reasonable challenge to theindividuals competence.
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Dr. David C McClelland-key researcher inthe area of entrepreneurship-findings
Desire for responsibility
prefer to use their own resources inthere own fashion in working towards the
goal. Would like to be accountablepersonally for the result.
Preference of moderate risk
Sets goals requiring high level of
performance, which demands exertion &are confident of meeting
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Dr. David C McClelland-key researcher in the
area of entrepreneurship-findings Perception of probability of success- Confidence in
their ability to succeed. Stimulation by feedback-Stimulated to higher level of
performance from feedback regarding their efforts asthe task progress
Energetic Activity -Exhibit high level of energy -active&mobile,engaged for long time in getting tasksdone in novel ways.
Future orientation-Plans and thinks ahead
Skill in organizing-both work and people for achievingthe goals. Attitude towards money-financial gains is secondary
in importance to achievement.
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Entrepreneur&
Interpreneur
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Entrepreneur/Interpreneur
An Entrepreneur operates in an openworld.
An Intrapreneur operates within anorganization fighting with bureaucratichurdles and inertia in the organization to
keep the Entrepreneurial spirit alive. He isan internal entrepreneur in anorganization.
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Entrepreneur/Interpreneur
Intrepreneurship is the development, withina large corporation, of internal markets andrelatively small autonomous orsemiautonomous business units, producingproducts, services or technologies thatemploy the firms resources in a uniqueway.
Intrepreneurship gives the manager of acorporation the freedom to take initiativeand try new Ideas. It is entrepreneurshipwithin an existing business.
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Entrepreneur/Interpreneur
Companies recognize that an individualcould make major contributions withoutbecoming a manager-by inventing or
making technical breakthroughs. Many innovative companies-IBM,
Tektronic, EM and Texas Instrumentcreated a second career path through
which inventor could win prestige andsalary increase without assumingManagerial roles.
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Entrepreneur/Interpreneur
Intrepreneruship offered a third careerpath to bridge the gap between amanager and an inventor.
Like entrepreneurs they are notnecessarily in a new product or servicetheir contribution is in taking new ideas
and even working prototype and turningthem into profitable products andbusiness.
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Entrepreneur/Interpreneur
When the ideas have become solid and functioningbusiness, intrapreneurs tend to grow bored, provenmanagers are need to take over to maintain anddevelop the business while they go back to buildnew ventures for others to manage.
Intrapreneurship is corporate entrepreneurshipwhereby an organization seeks to expand byexploring new opportunities through newcombinations of it existing resources. A tool for
stimulating and capitalizing on individuals whobelieve that something can be done differently andin a better way.
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Advantages of Intrapreneurship. Intrapreneurial ideas offer a way to build onto or
improve the corporate business. Capital for ideas is easy to come from internal
sources within a corporate identity. The established corporate image helps to boost
the chances of success of an intpreneurial idea. Corporates offer continuing access to the
organizational proprietary technology to staycompetitive.
Corporates offer economies of scale in marketingdistribution and services. Unique advantage of multidisciplinary team work. Interpreneur retains job security as well as enjoys
freedom of prosperity.
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Creating Intrapreneurial Environment
Research & Development-R&D efforts are keysources for successful new product ideas. It isan investment for sustainability & growth.
Funding-corporate venture funds.If a co caninvest in other companies, why cant theyinvest in ideas of their own employees.
Creating a climate-define what a
intrapreneurial culture means in different partsof their organization & appropriate for theirindustry.
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Creating Intrapreneurial Environment
Training-for employees at different levels on how tobehave in accordance with intrapreneurial valuesand motivational factors. Developing creativitythrough brain storming session and other means.
Most organization encourage idea that has astrategic fit with the company.
Reward System-well defined transparent rewardsystem. Stock Option appears to be the best and
most widely accepted approach. While rewardingsuccess, the failure should not be harshlypenalized.
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Creating Intrapreneurial Environment Multi-disciplinary Team: An Idea can be converted
into an enterprise only by critically viewing allaspects. Organizations have to allocate peoplefrom different function for an intrapreneurial projectand reabsorb them after the project.
Commitment-by top,upper & middle managementlevels for intrapreneurship in order to undergo thecultural climate change necessary forimplementation. A long term horizon should be set
to evaluate the success of the programme. HP, Dupont AT&T Xerox G.E, Ranbaxy Levers,
Telco, M&M, Godrej, Infosys, Satyam computersare companies were transformation is brought
about by intrapreneurship 22
E t i l/I t i l
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Entrepreneurial/Intrapreneurialcomparison
Parameter Intrapreneurial
Characteristics
Entrepreneurial
Characteristics
Primary
motives
Freedom and access
to corporate resource
Wants freedom, self
reliant &Self motivated
Timeorientation
5-10 years. Looks forincremental
achievement
5-10 years. Looks forincremental
achievement
Skill &
experience
Much like
entrepreneur,
Doesnt get
discouraged by
hierarchy
Knows business very
well & can put together
resources
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Entrepreneurial/Intrapreneurialcomparison
Environment Same as entrepreneurmust deal with
corporate environment
Macro-environ. &Micro environ.
relevance
Resources Derived primarily fromslack within the
organization
Assembled &acquired from the
factor markets
Failure &Mistakes
Sensitive to corporateattitudes. Attempt to
hide errors. Will learn
from mistakes
Own errors. Allerrors public &
visible.
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Entrepreneurial/Intrapreneurial
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Entrepreneurial/Intrapreneurialcomparison
Decisions Needs to get others to
share vision, willing toaccept compromise
Follows own vision, makes
own decision May notcompromise
Attitude to
bureaucracy
Dislike system but learned
to live and manipulate it
May have done well with
the system,grew impatient
& left to start own venture.
Risk
preference
Accepts moderate risk
Puts career & job on line
Accepts moderate risk. Has
money & reputation at
stake
Attitude to
status
Corporate symbols
demeaning & worthless
Willing to accept long
period of low status.
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ENTREPRENEUR/PROFESSIONAL
INNOVATOR RECOGNIZED BY
THE TRAITS
IN PURSUIT OF
NEW IDEAS &ENVIRONMENTS.
SEEKS ADVICE &SUPPORT
OWNSENTERPRISE
EXPERT
RECOGNIZED BYQUALIFICATIONAND EXPERIENCE
IN PURSUIT OFENHANCMENT OFEXPERTISE
PROVIDES ADVICE& SUPPORT
MAY OWN ORWORK FORORGANISATION
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Nature & Development ofEntrepreneurship Entrepreneurship collectively has the
power to change the destiny of family, city,state or country.
Punjab & Haryana has high economic
growth as compared to other states likeBihar,Orissa because of strongentrepreneurial base.
Individuals in economically backward
states search for jobs. South Indian states are catching up onentrepreneurial activity which can speed upeconomic growth in current decade.28
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Nature & Development ofEntrepreneurship
Earlier entrepreneur were Marwaris,Baniyas
SIDC & SISI has made some efforts to train
entrepreneur. Short term courses have been conducted by
them to develop capabilities in entrepreneurs.
There have shortcomings in these projects.
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Nature & Development ofEntrepreneurship
Reasons for limited success in NurturingEntrepreneurship.
General Lack of Entrepreneurs in the country. Rural India people prefer jobs to self employment
Need for research and re-strategizing developmentalschemes.
Candidates selected for these courses are the oneswho have failed to get a job.
Qualified men seek government jobs Unemployed people lack experience and ability to
perceive the project and build the enterprise. They aremore likely to fail strengthening belief to take up jobs.
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Nature & Development ofEntrepreneurship Source for ample supply of entrepreneurs
could be management institutes. Business schools need to re-orient
management education in India.
Presently producing administrativemanagers whereas developing countrieslike ours need entrepreneurs.
Entrepreneurship should be made a
compulsory subject & cases on successfulentrepreneurs should be presented inthese courses.
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Nature & Development ofEntrepreneurship
Project work on entrepreneurial venture should beintroduced-could be a feasibility report. In AIMs Manilastudents do not pass unless they submit a xerox copyof cheque issued by Bank approving the feasibilityreport prepared by him.
Talks by successful entrepreneurs should be organized Emerging entrepreneurs from sunrise industry should
be call for such talks. Encourage students to generate new ideas for
launching new ventures specially in new technologyareas. Talks by successful entrepreneur- alumni will be more
impactful in nurturing entrepreneurship.
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Nature & Development ofEntrepreneurship Institute should start Entrepreneurship
centres to do research on the subject andrecommend policy measures to strengthenentrepreneurship in management student.
IIT has established such a centre toconvert engineers into entrepreneurs. Entrepreneurs should preferably start with
trading/marketing/service providing, with
less capital need and less risk and avoidtemptation of building. Once he has thefeel of the market then he could backwardintegrate.
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BUSINESS
PLAN
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Business Plan
A Business plan provides all necessaryinformation about the unit to be set up. It isuseful for the entrepreneur and also forvarious development agencies who will help
the entrepreneur in setting up the unit. Wealth of information is available which will
help the entrepreneur to prepare the businessplan various branches of SISI (small
Industries service Institute, publishesguideline on industries which containstatistical information on a large no of items
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Business Plan
Present installed capacity
Production & capacity utilization
Government approach towards the item
The information helps to ease the task of the
entrepreneur. All he has to do now is. Decide on the production & Activity level
Match financial resources with amount required
Prepare the business plan.
The Technical Consultancy organization set up by
IDBI also helps the entrepreneur to prepare aBusiness plan.
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Business Plan
The size of the business plan depends on thefollowing.
The size of the unit to be set up
The nature of production and the product
The amount of financial assistance required
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Business Plan
Business Plan format typically consists ofseven selections.
General Information Project Description
Market Potential
Capital Cost and Sources of finances Assessment of Working capital requirement
Other financial aspects
Economic and social variables
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Preparing a Business Plan General Information-This section must contain the
following information: Name & Address of the entrepreneur.
Qualification, experience & capabilities
If there are any partners then the above details of the
partners must be included. Reference to the industry to which the product to be
manufactured must also be included. Trends in theindustry, Past production trends, future demands must
be presented. Organization structure and constitution of firm.
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Preparing a Business Plan
Information whether the firm is registered withDirector of Industries. The certificate no andother details pertaining to the registrationshould be mentioned.Though the registration
is not compulsory it helps In obtaining power connection from the SEBs
In getting raw material quotas when in shortsupply.
While dealing with other governmentagencies.
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Project Description
Mention of the site, indicate town andindustrial estate.
Whether the land is owned or leased.
In case the project is being set up in anapproved industrial area indicate whetherpermission has been taken. If the project isnot to be set up in approved industrial area,
then indicate whether a NOC has beenobtained from the local Municipal corporation.
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Project Description
Some suggestion on the choice of location-depending on the type of industry.
Demand based industry-the location must benear the market.
Resource based industry- must be closed to theresource (sugar industry)
Skill based industry- must be closed to the skillcenter (carpet weaving, diamond )
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Project Description
Physical infrastructure facilities available.
Raw material-whether imported or locally available,licensed or control.
The price, availability & method of procurement of
the Raw Material. Availability of skilled labor communication &
transport facilities, power & fuel.
Availability of water.
Method of waste disposal. How environmental hazards are handled-water & air
pollution.
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Project Description
Technology selected whether indigenous orimported. If imported, mention the name of theforeign collaborator and method of technologytransfer.
Details of the manufacturing process-draw theproduction flow chart. If the manufacturing processis known, then mention the following.
Machine required for each sub process.
Their specification ,cost and capacity Balancing equipment required and their cost.
Quality control method to obtain ISI orAgmark(food industry) certification.
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Market Potential This section must contain following information.
The total demand & supply position at present.
Future demand & supply position.
The demand supply gap. In case demand is greater
than supply mention how this will affect profitability. The expected price-with justification.
If price is more than the competitors-justify how the
high price has been arrived at and why the productwill sell at that price.This information may berequired by the banks- to know how the high pricecould be realized.
M k t P t ti l
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Market Potential
How the product is proposed to be sold? What is
the distribution network?Are there anyarrangements with the distributors or suppliers.
Will you be ancillary for another unit or will yourproduct be sold by a reputed marketing organization
under its own name. Proposed after-sales service? Particularly relevant
in the consumer durable industry.
In case of seasonal items, what would be done
during off-season? What will be the warehousingarrangement for such items during off-season.
Goods transportation details if the product is bulkyor requiring controlled temperature .
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Capital cost & Sources of Finance.
There are two types of Capital Costs.
One time cost ( Fixed cost) Land building-Plant & Machinery Installation cost-
furniture/fixtures,vehicles, tools, dies, jigs,etc.
Contingency cushion against price rise/ unforeseen
expenses Margin of working capital
Report should also include present& probablesources of finance. The sources of fund should
equal the cost of a project. The resources of funds would include the owners
fund together with loans and deposits raised as wellas the limits expected by the financial
institutions/banks.
C i l S f Fi
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Capital cost & Sources of Finance
Working capital costs. This includes cost incurred in
Raw Material, Work in Progress & Finished goodsinventory & accounts receivable.
Assessment of working Capital.
Planning working capital is crucial. Most units fall sickbecause of inadequate assessment of working capitalrequirements.
The Account receivable a component of working capital-average credit period need to be calculated on the basis of
industry average.
The entrepreneurs assess the working capital requirementsin their own way this has a problem as the banks have theirown assessment. Hence it is a good idea to calculate the
working capital requirements according to the bank formats.
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Other financial Aspects The other aspects to be included in the Business Plan.
Prepare the projected Balance Sheet. Prepare the projected Profit & Loss Account
Prepare the cash flow statement.
Calculate the Break Even point.
BE=FX100 F=Fixed cost,
(S-V) S= Sales at Full capacityV=Variable cost
O
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Other financial Aspects
Calculate & Indicate the following ratios in the plan.
1)Profitability ratio = Net Profits X 100
Sales
2)Return on Investment= Net profits X 100
Capital employed
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Other financial Aspects
Debt : Equity ratio = DebtEQUITY
Debt Service Coverage Ratio (DSCR)= Net Profit after tax+ Depreciation+Interest for one year
Installments + Interest (for one year)
The DSCR indicates to the banker or the financial institution
about the capacity of the unit to repay it loan installment andinterest. TSCR must work out to 2:1
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Economic and Social Variables
Here, the entrepreneur must perform a cost-benefit analysis with respect to its impact onthe economy and on the society.
The entrepreneur must include Abatementcosts or costs incurred to controlenvironmental damage.This the value ofadditional engineering & technology required
for effluents, reducing noise pollution etc.
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Economic and Social Variables
The following social & Economic benefitscould be mentioned.
Promoting employment:The number ofpersons the unit proposes to employ vis--vis
the current employment situation in the area Import substitution:How much foreign
exchange will be saved by the unit. What isthe proposed indigenisation programme?
Ancillary: If any work would be sub-contracted, what will be the level of ancillaryand additional employment thus generated
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Economic and Social Variables
It would be wise to include details of the plantlayout. Because ultimately, the business planmust serve as blueprint for the entrepreneurand a plant layout would be very useful to
him.
The plan implementation schedule must bementioned. For SSIs however it would suffice
to include a simple plan implementationschedule.
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Economic and Social Variables The various activities could include the following.
Acquiring Land Registration
Obtaining bank loans
Construction of building Ordering plant and machinery
Supply & installation of plant machinery
Recruitment of personnels
Training of personnels Trial Production
Commercial Production.
B i Fi i
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Business Financing
Financial Management is an integral part of business
administration and ranks equally in importance with
other key areas such as Production & Marketing.
Fundamental objective of any venture are
Survival,Growth & maximization of profits along withother social objective.
Financial management plays a major role in fulfilling
the above objectives & it includes function like
analyzing & forecasting financial needs, managingworking capital, planning the capital structure etc.
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Business Financing
Short term & Long term Finance.
Short term finance is used for short termrequirements & Long term finance is deployed to
meet both long term and short-term uses. Short term finance include
Sundry creditors
Bank borrowings for working capitalDeposits/borrowing from friends relatives & others
Advance received from customers
Credit available from suppliers.
Business Financing
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Long term Finance Include.
Equity/owners Capital & Deposits.
Term Loans from financial Institutions & Banks
Seed Capital, Margin Money & subsidy fromgovernment and financial Institution.
Besides the above external sources, there is an internalsource of funds through retention of Profits orconversion of assets into funds.
For sound financial health of any industry, it is essential
that short term finance be utilized for acquisition ofcurrent assets only which are converted into cash withinone year.Long term finance is utilized for acquiringfixed assets as also financing current assets, that is for
meeting margin on working capital
Business Financing
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Business Financing
The application for loan or say short-termfinance always needs the back-up of a
project Report, which is essential when thesmall-scale unit wants to apply for the loanfor monetary support.
Estimation of Fixed Assets
Land, Building, Plant & machinery-these are byand large, met out of market borrowing orterms loans from financial institution includingbanks
Fixed Assets
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Fixed Assets
A Land
Location, Area, Whether freehold or leaseholdPurchase price of land, if owned
Rent in case of Leased Land
Term of Lease
Ground rent Payable per Year
B Building
Location, Whether owned or leased
Purchase price of Building if ownedRent in case of leased/rented premises
Terms of lease
Fixed Asset- Building &
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ed sset u d g &
MachineryStructure Type of Structure Dimension Area
Sq. Mtrs
Actual
Cost/Rs
Date of
Erection
1
2
3
4
Workshop
Godown
Administrative
Other
Buildings
C Cost of
Machinery
E l ti f P ti
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Evaluation of Pre-operative expenseSr
NoPre-operative Expense Cost
alreadyIncurred
Proposed to
be Incurred
Total
A
B
C
D
E
Establishment
Rent, rates &
Taxes
Traveling Expense
Miscellaneous Exp.
Interest &commitment
charges on borrowings
E l ti f P ti
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Sr.
No
Pre-operative Expense Cost
alreadyIncurred
Proposed to
be Incurred
Total
F
G
H
Insurance during
construction including
erection insurance
Mortgage expenses
(Stamp duty,
registration charges &other loan expenses
Interest on deferred
payment if any
Evaluation of Pre-operative expense
Evaluation of Working Capital Requirement
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A. Current Assets
Sr.
No
Item 1st Year of
Operation
2nd Year
Operation
3rd Year
Operation
1
2
3
Raw Materials
-Imported (month
consumption)
-Indigenous(month
consumption)
Other consumablespares
Stock in process(Months cost of production)
Evaluation of Working Capital Requirement
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Sr.
No
Item 1st Year
Operation
2nd Year
Operation
3rd Year
Operation4
5
6
Finished Goods(months cost of sales)
Receivables other
than exports &deferred
receivables (includingbills purchased & discounted
by bankers) Months domesticsales excluding deferred
payment sales.
Export Receivables(including bills purchased by
bankers) Months export sales
A. Current Assets
Evaluation of Working Capital Requirement
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A. Current Assets
Sr.
No
Item 1st Year
Operation
2nd Year
Operation
3rd Year
Operation
7
8
Advance to
suppliers of raw
materials & stores/spares consumables
Other current assets
including cash &
bank balance &deferred receivable
due within one year
Total current Assets (A)
Evaluation of Working Capital Requirement
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Sr.
NoItem 1st Year
Operation
2nd Yr.
Operat.
3rd Year
Operat.
1
2
3
4
5
Other than bank
borrowing for Working
Capital.
Creditors for purchase of
raw material & Stores &
Consumables spares
(Months purchases)Advances from customers
Accrued expenses
Statutory Liabilities
Total Current Liabilities (B)
B. Current Liabilities
Evaluation of Working Capital Requirement
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OTHER ITEMS
Sr.
NoItem 1st Year
Operation
2nd Yr.
Operat.
3rd Year
Operat.C
D
E
Working capital gap
(A-B)
Margin on working
capital (25% of C/25%of
A)
Bank borrowing (C-D)
Management of Working Capital
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Management of Working Capital
Working capital is that part of the capital which is
invested in the working or current assets like stock orraw material semi finished goods, Sundry debtors, billreceivable etc.
This capital is also known as circulating capital or
revolving capital. Working capital is used for financing current assets ie.
the day to day business needs.
Also used for purchasing raw materials.
A major portion of the capital lies in the business in theform of semi-finished, finished goods & cash.
Management of Working Capital
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Management of Working Capital Working capital is also required for payment of wages &
salaries,overhead expenses like power, rent taxes repairing &
maintenances of machinery. The amount in respect of goods sold on credit (sundry Debtors)
represent a vital portion of working capital.
Classification of working capital.
Regular working capital-meeting continuous day-to-daybusiness needs of the firm, it is re-invested in business. It iscalled as fixed or regular working capital.
Variable working capital-not regular, not static but required
to meet periodic or seasonal rise in quantity of goodsproduced. This is called seasonal working capital.
Special working capital-need on special occasion vizincreasing price of raw materials, business recession, strike
or failure of machinery, fire etc.
Management of Working Capital
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a ag g Cap a
Working Capital is classified as
Gross Working Capital: Total of all current Assets.
Net Working Capital:Difference between Total
Current Assets & Total Current Liabilities.
On going review of Gross Working capital isessential for efficient management of current
Assets.
Long-Term View we have to concentrate on networking capital.
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Management of Working Capital
Net working capital of a healthy unit should be
positive.
Periodic study on changes in net working capital isnecessary.
Changes in net working capital can be measured in
terms of value as also in percentage by comparing
current assets, current liabilities & working capitalover a given period.This involves basic approach
to working capital analysis.
Deployment of Working Capital is called Operatingcycle
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cycle
Stage V
Sundry Debtors
Receivables
Stage I
Cash
Stage II
Raw Material
OPERATINGCYCLE
Stage IVFinished Goods
Stage IIIStock in process
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Management of Working Capital
Operating cycle is also called the cash to cashcycle.
Working Capital is the total cash that is circulating
in this cycle.
It also becomes clear that working capital cash beturned over, or reused after completing the cycle.
Therefore Management of Working Capitalmeans, apart from finding out the source ofmeeting capital requirements, ways of reducingthe cycle time for optimum results.
Management of Working Capital
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Management of Working Capital
The following factors forms a force affecting the working
capital needs:Nature of business
Production policies
Manufacturing processGrowth & expansion of business
Business cycle fluctuations
Terms of Purchase and sales
Withdrawal by promoters etc.
For an industry there are likely to be periodic changes in
any or all of the above. Therefore management of working
capital becomes a dynamic activity.
Management of Working Capital
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Management of Working Capital
Working Capital requirements are met through
internal as well as external source.
Major external source is the Banking system.
Bank offers various types of credit facilities for
meeting the financial requirements like
Credit against inventory holdings.
Book debts & bills receivable.
export finance (Pre-shipment & Post-shipment
credits)Certain contingent facilities like issuing letter of
credit & guarantees are also offered by them.
Management of Working Capital
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g g p
Working capital requirements above 10 Lakhs are
required to comply with norms laid by Tandoncommittee & chore committee which is accepted by
Reserve Bank of India.
Tandon committee : Important featuresClassification of Industry and fixation of
inventory/receivables norms
Application of Margin & eligibility of borrowing: In order to avoid double financing, the committee
recommended that only a part of the working capital
gap(current assets-current liabilities excluding bank
borrowings) could be financed by the banks
Management of Working Capital
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Management of Working Capital
Tandon committee suggested 3 methods for computing the
maximum permissible level of bank borrowings.Method 1. Bank would finance 75% of the WC gap the
remaining 25% to come from long term sources such asowned funds or term borrowing.
Method 2. Borrower should provide 25% of the gross currentassets through long term source & the rest to be provided bytrade credit, other current liabilities & the bank
Method 3.Similar to 2 further stipulates that the core currentassets should be taken out from the current assets separately
funded from long term sources.
Also recommended submission of periodic statementsregarding operation of the units for the purpose ofeffective monitoring & supervision by banks.
Management of Working Capital
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g g p
Chore committee norms-important recommendations.
The borrower enjoying aggregate working capital limits ofRs. 50 lakhs and over require to conform to secondmethod of lending prescribed by Tandon committee whichwould give a minimum current ratio of 1.33.
Borrower would be required to submit to the bank
quarterly requirement of funds on the basis of his budget& provide periodical information of the actualperformance vis--vis the estimates.
Liberalized Norm: A new norm to compute Working capital
introduced in 1992 with ceiling enhanced from time to time.SSI units having aggregate WC requirement upto 1 Crore.The bank calculates the limit on the basis of simplecalculation of 20% of their annual turnover. This is for unitshaving turnover less the 5 crores per annum.
Financial Forecasting
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Financial Forecasting
A systematic projection of the expected actions of
the management in the form of financialstatements, budgets etc.
Process involves use of past records, funds flow
behavior, financial ratios and expected economicconditions in the industry as a whole as well as
the unit.
A working plan formulated for a specific periodby arranging future activities.
Advantages of financial forecasting
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Advantages of financial forecasting
Enables optimum utilization of funds
Helps in planning the units growth & in settingperformance goals.
Anticipate financial needs & reduce adhoc &
emergency decision.
Good basis not only for negotiating confidently with
banks/financial institution.
These projected statement provide and important
base for financial reasonable estimate of revenue,
costs, profits, taxes,other uses & sources of funds.
P j d P fi & L
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Projected Profit & Loss statement
Statement begins with the estimate of the
expected sales for the forecast period .
The purposes of this statement is to have a fair &
reasonable estimate of expected revenue, costs,
profits, taxes etc..
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Projected Balance Sheet
Forecast of expected funds flow of eachitem therein. Various items of assets &liabilities of the projects balance sheet areexplained below.
Assets:
Cash: There is an assumption for a minimum
level of cash or liquid funds desired at the endof the period of forecasting. It can also be abalancing of assets & liabilities
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Projected Balance Sheet
Trade Debtors: Magnitude of debtors is closely
linked to sales.Based on past
trend/performance, expected credit policy & the
pattern of future clientele, a certain number of
days debtors or receivables is expected to be
outstanding. Thus to forecast debtors one has to
study historical data about the industry,marketconditions and nature of customers.
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Projected Balance Sheet
Inventories:estimate of inventories is
prepared on the basis of past operating data
together with an examination of futurepolicies. It involves analysis of the additions
to opening stocks, purchases & productions
of goods during the period and reduction
therein through use & sale.
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Projected Balance Sheet
Fixed Assets: Outlays for factory building,
plant & machinery are generally planned in
advance. Adjustments have to be made foradditions and sales of the old assets.
Adequate provision for depreciation should
be made year by year to generate funds for
replacement of the relative assets.
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Projected Balance Sheet
Liabilities
Trade creditors-creditors can be estimated by
analyzing schedules of purchase paymentmaturing during the period or by calculating the
ratio of accounts payable to purchases.
Loans & advances-This is usually the balancing
figure to equalize assets and liabilities
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Projected Balance Sheet
Accrued Liabilities- These are arrived at by
analyzing the pattern of wage payments, the tax
dues, interest obligation & repayment of loans.
Provision for taxes- will be found by starting with
the opening balance of the provision for taxes,
adding the new provision for taxes & deducting
the actual payment of taxes.
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Cash Management
Cash flow statements will forecast the probable
time of receiving cash from sales and estimate the
time after which the bills are paid.
Projected cash flow statement show all cash
receipts from every source as they are expected to
be received and of cash payments by the business
as there are to be made.
Cash Management
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Cash Management
Importance of cash flow Statement
Cash flow gives the following
A list of bills giving details on how much is due and
when it is due
A schedule of anticipated cash receipt.A schedule of priorities for the payment of accounts
Estimate of the amount of money needed to borrow in
order to finance day to day operations. This is perhapsthe most important aspect of a complete cash flow
projections
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Cash Management
Format for planning the most effective use of
your cash.
A measure of the effects of unexpected changes
in circumstance ie loss of many bids,
bankruptcy of general contractor or a developer
strikes, poor estimate etc.
An outline to show the financer the sufficientcash to make loan payments, if there any plans
to borrow money on a long term basis.
Cash ManagementP ti f C h Fl t t t i l i b i
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Preparation of Cash Flow statement involves six basicsteps.
Estimate cash receipts for the budget period.Estimate cash disbursement for the budget period.
Calculate the net cash inflow (or outflow)
Add in cash on hand at the beginning of the month
Compute cash balance (or shortages)Project amount of loans necessary.
A cash flow statement is normally prepared for twelvemonths.
It is computed on an on-going basis and is revised as thesituation changes. It assist in financial planning, inventorypurchases & formulating credit & collection policies. Itserves as an early indicator when expenses are getting out of
line.
Estimating your operating cash requirements
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g y p g q
Cash flow statements estimate the amount of money
required to be borrowed to finance the day to day operation.When the cash flow statement is ready we realize how muchoperating capital must be injected into business by doing thefollowing calculation.
Identify your initial bank loans balance or overdraft beforethe start of the year.
Proceeding month by month add the increase or deductdecrease in your operating bank loan to determine the
monthly operating loan balance. Identify the highest operating balance, this represent the
minimum operating loan or line of credit that should beobtained
Break-even AnalysisB k l i l ll d t l fit l i
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Break even analysis also called cost-volume profit analysishelps in finding out the relationship of cost & revenue to the
output. The analysis can be done only after calculating theBreak even Point BEP.
BEP is defined as that level of sales at which the total costequals total revenue ie the sales level at which there is no
profit or no loss. BEP is calculated using the following formula:
BEP= fixed expense/contribution per unit where thecontribution is sales minus variable cost per unit.This will
be in units. BEP=fixed expense* sales/Total contribution where
contribution is the total sales minus the total variableexpense.This will be in Rupees.
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Break-even Analysis
For calculating BEP, it is essential toclassify the expense into fixed expenses andvariable expenses. The break-even pointshows the level of sales at which there is noprofit or loss.This information is ofimmense use to the units because it gives
the minimum level at which the unit shouldoperate, at given cost and price to startgenerating profits.
Sales Revenue LineCost & Sales
R
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Break even
Point
Total cost Line
Fixed cost
Variable Cost Line
Volume of output in units
Revenue
Rs
Break-even Analysis
Break-even Analysis Break even analysis is useful in the following areas:
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Break even analysis is useful in the following areas:
Determining product mix. This is done by knowing the
contributions of different products and choosing theproducts in such a way the the total contribution ismaximized.
Make or buy decisions. If the variable cost is less than the
price that has to be paid to an outside supplier, it may bebetter to manufacture than buy.
Knowing profits at given sales volume and finding theeffects of changes in fixed and variable costs to profits.
In case of SSI units it is essential that the break-even pointis as low as possible. This can be ensured by minimizing thefixed expenses or increasing the contribution. However thecontribution is dependent on market condition, it is
necessary to keep the fixed expenses at the minimum level.
Venture Capital Financing
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Venture Capital Plays an important role in financing
small-scale enterprises, particularly Innovative oneswhere the growth prospects are high but the risk
factor is equally high.
Investment is needed at any stage of implementationof the project between start-up and commencement
of commercial production.
It is recognized as an industry by itself in the
developed countries in the early 1960 and is
established in India also now.
Venture Capital Financing
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Venture capital providers offer services like
Development of the business
Approval of project ideas
Financial assistance
Overall management expertise
The main features of venture capital financing can belisted as:
Long term source of investment. Usual period is 5 to 10years.
Venture capital firms in most situation insist on qualityparticipation through direct purchase of shares orconvertible securities.
Ensures continuous participation of venture capitalist inthe management of the entrepreneurs business.
Features of venture capital financingP id i f k i f h l
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Provides services of marketing management of technology
and developing appropriate organization structure.
Venture capitalist comes into the game when it is not easyto access funds from the conventional sources.
Business must have a high potential of growth. Venture
Capitalist is not averse to the risk. The flow of fund from the venture capitalist is in a phased
manner and can be in the form of debt also in the initial
stage.
Venture capitalist is not a permanent equity holder.
Ensure the exit route in the appropriate manner ensuring the
interest of the entrepreneur
Venture Capital -Process The Preliminary screening:
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y g
Begins with receipt of the Business Plan from theentrepreneur to the venture capital provider.
A good plan should have a clear-cut mission,
clearly stated objectives
in depth industry & market analysis
& key financial statements While evaluating the business the venture capitalist first
determines that the proposal fits in his long-term policy &short-term needs in developing a portfolio balance.
He investigates the economy of the industry & ensures thathe has appropriate knowledge & ability to invest in theproject.
Return on Investment is the key issue but the credentials &
capability of the entrepreneur is also an important factor.
Venture Capital -Process
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Due diligence:
This stage cover the agreement on principal termsbetween the entrepreneur & the venture capitalist before
making the major commitment of money, time & efforts
involved.
Detailed review of the companys history, the businessplan, the resumes of the promoters & their key managers,
financial background of the promoters and target market
are scrutinized.Risk Analysis of the business is jointly
undertaken.
Venture Capital -Process
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NEGOTIATIONS:
Once the viability of the project is clearly understood thenegotiation process starts.
This stage will cover the amount of investment to be
made by both promoters & venture capitalist, total funds
to be made available by the venture capitalist, debtcomponent & the interest rate for the loans, securities,
equity and other convertible securities, protective
clauses,right to control the management of the business,
buy-back arrangements and finally the exist routes.
Venture Capital -ProcessC M d f U d ki (MOU)
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Contract or Memorandum of Undertaking (MOU)
Taking into consideration the negotiations the final agreement
or MOU is signed between both the parties. This should takeinto consideration the regulatory laws as well.
Flow of funds
This now progress as per the terms of the agreement or MOU.
A change in the external environment does happen andflexibility is very much desired on the part of both the parties.Periodical reviews at each stage of project launch are done.
Exit
A venture capitalist is not a permanent associate. He likes toquit at the appropriate stage. Buy-Back of the equity, initialpublic offering, mergers & acquisition & smooth transitionare the components of the exit strategy.
A few Tips for the Entrepreneur
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Select the venture Capitalist carefully
Do not hesitate to get all the facts and the previousbackground of the venture capitalist.
It is better to have an intermediary, who is respected and hasa pre-existing relationship with the venture capitalist
Avoid lawyers, accountants or other advisors in the initialstages
Be very careful about what is projected or promised.
Disclose your strengths and weakness to build a good
relationships.
Be flexible & patient.
Always remember that it it the performance, which will buildthe trust.
Venture Capital Provider- Indian Scenario.
Th i l id i I di i h
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There are many venture capital provider in India in theform of individuals and firms. A large number of
entrepreneurs have set up their enterprises throughventure capital financing particularly in the field ofinformation technology.
Most banks & financial institutions have promoted
Venture funds. To name a few1) SIDBIS Venture capital fund.
2) Technology Development and Information Company ofIndia Limited (TDICI)
3) Risk Capital& Technology Finance Corporation Limited.(RCTC)
4) SBI Capital Venture fund.
5) Canbank Venture Capital Fund
Venture Capital Provider- Indian Scenario.
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6) 20
th
Century Venture Capital Fund7) Indus Venture Capital Fund
8) Andhra Pradesh Industrial Development
Corporation -Venture Capital Ltd.9) India Investment Fund
In order to promote this concept, tax concession are
being offer by the Government of India to VentureCapital providing firms. However the regulatory
mechanism also operates through SEBI
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PREREQUISITE FOR
ENTREPRENEURSHIP
Prerequisites for Entrepreneurship
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Prerequisites for Entrepreneurship
INDIVIDUAL ENVIRONMENT
SOCIO-CULTURAL FACTOR
NORMATIVE BEHAVIOUR RISK TAKING
INDEPENDENCE
WORK CULTURE SOCIALIZATION
SUPPORT SYSTEM
Prerequisites for Entrepreneurship
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Prerequisites for Entrepreneurship
INDIVIDUALThree Major AttributesENTREPRENEURIAL MOTIVATION
Achievement-Power-Extension Motivation
PERSONAL EFFICICACY
Project DevelopmentEnterprise Management
COPING CAPABILITY SustainGrowStrategies to meet competitive demand
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Prerequisites for Entrepreneurship
Environment
Knowledge of economic-political environment
Polices of Govt., Financial & Commercial Inst.Availability of raw material,infrastructure-
transportation, power& market in proposed location.
Agencies providing financial, material, consultancy.
Schemes from Industries, State Government,
Associations
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Prerequisites for Entrepreneurship
Environment
choice of enterprise will be more rewarding if one
has wide knowledge of alternative industries &bearing of them on the one chosen.
Manufacturing process-product & commercial
feasibility
Various technologies & their cost benefit.
Prerequisites for Entrepreneurship
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Prerequisites for Entrepreneurship
Socio-Cultural FactorsFamily background & immediate social circle
Values, attitudes & pressure of values inherited
Initiative, risk taking, self reliance, workingwith ones own hand for required tasks areresults of socialization process in family,school& society
Appreciation, encouragement & other external& internal devices get reinforced in developingrelated values & norms.
Prerequisites for Entrepreneurship
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Prerequisites for Entrepreneurship
Normative BehaviourFamily expectation & pressure to do independent
work and earn to maintain standard of living.
Familys role in small business-Philippines model
Husbandwife teams up as entrepreneurs.
Classmates plan enterprise during college days
Husband takes up job & supports family with income
Wife starts small stores & the income ploughed back to
expand business & later Husband quits job to take overthe expanded business.
Prerequisites for Entrepreneurship
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Prerequisites for Entrepreneurship
Risk-taking important for success.
-Takes moderate risk, does not gamble nor
opts to play safe
Independence.
self reliant, works out own plans, searches and exploresresources & uses experience & inner urge to make theenterprise a success.
Work
Willing to work with own handsindefinite work
schedule.
Socialization
Family & other social institution plays crucial role intraining an indiviual.
Prerequisites for Entrepreneurship
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q p p
Support System.
Several agencies & organization help to support anentrepreneur.
Corporation set up to develop small industries in aregion.
Financing institution including banks. Department of Industries, NGOs of small industries,
consultants & private agencies & educationalinstitutions like Institute of Technology, Institute ofManagement etc.
Development administration in the district.
Large industrial establishment interested in developingancillary industries provide guidance for growth.
R l i f
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Relation of
Environmental
Factors ToEntrepreneurship
Relation of Environmental
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Relation of Environmental
Factors To Entrepreneurship Findings of a Research conducted at
Mumbai to isolate environmental factors
related to entrepreneurship in order to havea better understanding of the developmental
process of an entrepreneur.
Relation of Environmental
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Relation of Environmental
Factors To Entrepreneurship Entrepreneurial Behavior (EB) is a function ofindividuals personality characteristic and
environmental factors.
Represented as EB=f(P,E)
P=Personality characteristics
E=Environmental factors.
Environmental factors could be either nurturant orimpediments to entrepreneurial development
Relation of Environmental
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Relation of Environmental
Factors To Entrepreneurship
Greater Emphasis was laid on determining
environmental facts at micro level that correlated
with development and success.
The factor that were concentrated on.
Social/psychological factors including family, peer
group, formal and informal association, etc.
Financial Material availability
Technology availability/applicability.
Relation of Environmental
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Relation of Environmental
Factors To Entrepreneurship
At the macro level, the study tried to establish the
relationship between the state of national economy
and the development of entrepreneur. The success
was measured based on.
Increase in profits
Increase in turnover
Increase in assets Extent of diversification.
Relation of Environmental
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Relation of Environmental
Factors To Entrepreneurship
The sample was 51 respondents from the list of
700 members of Small Scale Industries
Federation.
Structured questionnaire with certain open ended
question were administered. 12 of the member
were also interviewed after three months, cases
were constructed based on these interviews . Conclusions where drawn to further revalidate
these finding of the study.
Relation of EnvironmentalFactors To Entrepreneurship
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Factors To Entrepreneurship For the purpose of study, entrepreneurs life was
divided into two stage, initiation and subsequentsuccess of an entrepreneur
Following were the variables studied and the findings.
Educational background: Against the earlier notionthat those lacking educational qualification went infor business 41.18 % had professional qualification27.45% were graduates and rest non-graduates or SSCand below.
No significant relationship could be establishedbetween the educational background andentrepreneurship of a person.
Relation of Environmental
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e at o o v o e ta
Factors To Entrepreneurship Age: Mean age at which entrepreneurs started an
enterprise was found to be 24.6 yrs.
82.35% thought of starting business befor the age
of 30. Maximum concentration was determined between
the age of 25-30 years indicating that ideal time toimpart entrepreneurial training would be between
18 to 25 years.So after highlighting all thealternatives the entrepreneur is ready to start a newventure at the age of 30 yrs,
Relation of Environmental
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Factors To Entrepreneurship From the sample studied not a single entrepreneur
started business between 40 to 50 years.
Indicating a tendency not to take risk at middle
age or postpone the idea of entrepreneurship tillretirement.
Comparing the average the entrepreneurs actuallystarted business at 28 and the average age at which
they thought of the starting business at 24.6 ittakes 3.5 years from conceiving the idea tocommencing the business.Therefore sowing theidea of entrepreneurship in the form of training
should be undertaken before the age of 25
Relation of Environmental
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Factors To Entrepreneurship
Also 37 of the 51 entrepreneurs started
business at 30 years
There were no fresh business venturesbetween 41 to 50 years.
Only 20 % of the entrepreneurs started their
business between the age of 31 and 40years.
Relation of Environmental
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Factors To Entrepreneurship Friends: influence was found to play a significant
role to the extent of 29.4%.
While selecting a prospective entrepreneur for
intensive training it is advisable to gatherinformation of his friends.As an entrepreneurfriend is likely to induce people towardsentrepreneurship.
It is recommended to establish an EntrepreneurClub by agencies associated with development ofentrepreneurship for speedy development, vitalfor economic growth.
Relation of Environmental
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Factors To Entrepreneurship
Community: 13 of the 51 entrepreneurs
surveyed quoted this as a determining factor
as the community, family members andrelatives made significant contribution in
inculcating entrepreneurship.
Relation of EnvironmentalFactors To Entrepreneurship
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Factors To Entrepreneurship
Prior Occupation status: As regards the status ofentrepreneurs before their entry into business 70.59percent were previously employed,21.57 percentstudying 7.84 percent unemployed.
Looking out for opportunities while studying andstarting a business immediately after completion ormany join family business gain some experience andstart their own venture
Being unemployed and taking to entrepreneurship as alast resort. Failure in the category will be the highest.Government programmes also concentrate on thiscategory.
Relation of EnvironmentalFactors To Entrepreneurship
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Factors To Entrepreneurship
After serving for some years, accumulating some capital,leaving the jobs to take up entrepreneurial roles.
Of the 36 falling in this category, 13 worked for largecompanies, 11 in medium size and 11 in small
companies and 1 in state government. 17 of these peopleleft their job due to dissatisfaction.
It is possible to locate prospective entrepreneur amongstthose working in commercial undertaking who are either
dissatisfied or having high achievement motivation. Alsodue to attractive policies and money makingopportunities one would like to take up entrepreneurship
Relation of EnvironmentalFactors To Entrepreneurship
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Factors To Entrepreneurship
Family size: Only 13.72% came from small familyhaving one or two children.23.53% came from families
having 5 children and as high as 54.9% came from
families having 5 or more children.
Financial difficulties spurring children to take upeconomic activities with higher determination /N.Ach
or the feeling of support from brothers & sisters in
times of need should explain this phenomenon.
Family size no way related to entrepreneurial success
Relation of Environmental
Factors To Entrepreneurship
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Factors To Entrepreneurship
Except one respondent, all fathers of entrepreneurs hadcrossed the age of 40.
Possible that these parents gave mature advice becauseof their age and experience.
Parents education had no correlation to development ofentrepreneurship.
A large 58.2% of entrepreneurs came from familieswhere their parental profession had influence.However
there was no correlation with the later success. Alsothere was no correlation with the individualsentrepreneurship and his brothers profession
Relation of Environmental
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Factors To Entrepreneurship Wife: Seeks support at the beginning of the
entrepreneurial venture & wife is in vantageposition to provide the emotional and financial
support. With exception of 6 (11.77%) cases of early
marriage rest had married at normal ages for urbanpopulation. There were 8 bachelors.
There was one solitary non matric wife rest werereasonably well educated which was in contrastwith respect to mothers of entrepreneurs.
Relation of Environmental
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Factors To Entrepreneurship An educated wife is an asset to an entrepreneur as
she can assist or take up a job, should need arise.
Risk taking abilities of the entrepreneur was
reinforced in such above cases. (58.6%) of the wives were unemployed.
Though they were safety devices during leanperiods.
Education background of wives had no correlationwith the success of the entrepreneurs.
Relation of Environmental
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Factors To Entrepreneurship
Joint family: Often thought to be
impediment to nurturance of
entrepreneurship in Hindu families. Finding disprove this notion as 45.10%
were from joint families.
Though family status was not found to haveany bearing on the entrepreneurs success.
Relation of Environmental
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Factors To Entrepreneurship
Migration: Though no relationship could be
determined between these two factors in the
initiation stage it was found to correlatewith success of entrepreneurship.
Such movement serves to inculcate coping
capabilities which is desirable quality for
success.
Relation of Environmental
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Factors To Entrepreneurship Peer Group: The finding of 56.8% having at least
one entrepreneur friend substantiated the initialnotion that peer group had significant effect on the
thinking and behavior of entrepreneurs. This finding could be used while selecting
prospective entrepreneurs developmentprogrammes or other support from governmental
agencies. No relationship was found between having an
entrepreneur friend and the later success.
Relation of Environmental
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Factors To Entrepreneurship Association Membership: 7 member had
membership 44 replied in the affirmative.
Two members subsequently became members.
It is suggested that entrepreneur club be startedwith support from government or SIDC having amix of existing and would be entrepreneurs togenerate more prospective entrepreneurs.
This may be only for initiation of entrepreneur, nocorrelation has been found between this factor tothe success of an entrepreneur.
Relation of Environmental
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Factors To Entrepreneurship Financial Status of family:
23.53% came from rich families the rest frommiddle and low income group.
32.59% concentration was from low income groupbelow Rs. 10000 per annum.
66% were from middle class.
Willingness to take risk is not very high in lowincome group but very high in middle incomegroup
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Factors To Entrepreneurship People coming from lower middle and lower income
group has relatively high risk in taking upentrepreneurship.
High income families with income over Rs. 1 Lakh weremostly engaged in business.
Indian tradition of taking up hereditary profession musthave contributed to children from such families to take
up entrepreneurship. More successful entrepreneur came from such business
environment with ability to take higher risks.
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Factors To Entrepreneurship This finding is somewhat contrary to socio-
economic objective of the government which feelconcerned about the rich getting richer and poor
getting poorer. 16.29% had married into rich families 79.07%
married into middle class and 4.65% into lowerincome groups.
Of the 51, 16 had received financial aid fromrelatives ranging Rs. 5000 to Rs. 50000. & 12 hadreceived aid from friends varying from Rs. 1000to Rs. 50000
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Factors To Entrepreneurship
Most of the entrepreneurs had accumulated
capital before starting their venture 68.3%
had accumulated capital above Rs, 10000,
few depended on help from wife relatives or
friends. No relationship was established
between these aids and their success.
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Factors To Entrepreneurship
Availability of Material
Only 7.84% claimed that availability of material in their
areas of stay was an aid to their becoming entrepreneurs.
Though easy availability of raw material is a good reason
for starting an industry it may be worthwhile to isolate
such materials and give support to certain selected
entrepreneurs to develop industries related to thesematerials
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Factors To Entrepreneurship
Availability of Technology
Only 4 entrepreneurs stated this reason for
starting venture. Thus some members may become
entrepreneurs due to easy availability of
technology in nearby areas but it is not anecessary condition.
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Entrepreneurship Entrepreneurship collectively has the power to
change the destiny of family, city, state or country.
Punjab & Haryana has high economic growth as
compared to other states like Bihar,Orissa becauseof strong entrepreneurial base.
Individuals in economically backward statessearch for jobs.
South Indian states are catching up onentrepreneurial activity which can speed upeconomic growth in current decade.145
Nature & Development of
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Entrepreneurship
Earlier entrepreneur were Marwaris,Baniyas
SIDC & SISI has made some efforts to train
entrepreneur. Short term courses have been conducted by them
to develop capabilities in entrepreneurs.
There have shortcomings in these projects.
Nature & Development of
Entrepreneurship
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Entrepreneurship
Reasons for limited success in NurturingEntrepreneurship.
General Lack of Entrepreneurs in the country.
Rural India people prefer jobs to self employment
Need for research and re-strategizing developmentalschemes.
Candidates selected for these courses are the ones whohave failed to get a job.
Qualified men seek government jobs
Unemployed people lack experience and ability toperceive the project and build the enterprise. They are
more likely to fail strengthening belief to take up jobs
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Entrepreneurship Source for ample supply of entrepreneurs could be
management institutes.
Business schools need to re-orient management
education in India. Presently producing administrative managers
whereas developing countries like ours needentrepreneurs.
Entrepreneurship should be made a compulsorysubject & cases on successful entrepreneursshould be presented in these courses.
Nature & Development of
Entrepreneurship
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Entrepreneurship
Project work on entrepreneurial venture should beintroduced-could be a feasibility report. In AIMs Manilastudents do not pass unless they submit a xerox copy ofcheque issued by Bank approving the feasibility reportprepared by him.
Talks by successful entrepreneurs should be organized
Emerging entrepreneurs from sunrise industry should becall for such talks.
Encourage students to generate new ideas for launchingnew ventures specially in new technology areas.
Talks by successful entrepreneur- alumni will be moreimpactful in nurturing entrepreneurship.
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Entrepreneurship Institute should start Entrepreneurship centres to
do research on the subject and recommend policymeasures to strengthen entrepreneurship in
management student. IIT has established such a centre to convert
engineers into entrepreneurs.
Entrepreneurs should preferably start with
trading/marketing/service providing, with lesscapital need and less risk and avoid temptation of
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