UNIT -3

INSTITUTIONAL SUPPORT TO ENTREPRENEURS INTRODUCTION Starting a

business or industrial unit-say, enterprise in short-requires various resources
and facilities. Small scale enterprises, given their small resources, find it
difficult to have their own. Finance has been an important resource to start
and run enterprise. Hence finance is considered as “life-blood’ for an
enterprise. Admittedly, finance is an important resource but not the only
condition to run an enterprise. In order to start any economic activity, a
minimum level of prior built-up of infrastructural facilities is needed. Financial
assistance and concessions cannot, in any case, adequately compensate for
the deficiencies of infrastructure such as transport and communication. This
is one of the reasons why industries have not been developing in backward
areas in spite of financial assistance and concessions given by the
governments to the entrepreneurs to establish industries in backward areas.
The following are the various kinds of support and facilities provided by
various institutions to the entrepreneurs to help them establish industries.

Small Industries Service Institutes (SISI):

The Small Industries Service Institutes (SISIs) are set-up in capital of all the
28 states. These Institutes through their wide network provide consultancy
and training service to small and prospective entrepreneurs. SISIs function
under the Ministry of SSI, Government of India and provide services such as
preparation of project reports, conducting training programs in different
areas, extending technical assistance, and offering guidance on industrial
policy of the government. These are pioneer organization to develop small
scale industries through counselling, consultancy, and training. SISIs assist
the industries in marketing the products and acquiring quality standards.
They also provide various types of extension and assistance services in
setting up of units, promoting and developing product and services by the
smallscale industries. Functions of SISI: The wide spectrum of tasks
performed by SISIs includes technological, managerial, and administrative
functions. The detailed functions of SISIs are:

• To assist new entrepreneurs in preparing project proposals, obtaining

financial assistance, and exploring possibilities of expansion and
diversification.
 • To assist existing/ prospective entrepreneurs through technical and
managerial counseling in selecting appropriate machinery and equipment,
adoption of recognized standards of testing, quality performance etc.

• To conduct economic and technical surveys; and prepare techno-economic

feasible reports for selected areas and industries.

• To give exposure to Small Scale Industries (SSIs) on market survey,

product identification and selection, technologies involved, management of
small enterprises on matters relating to financial, marketing, packaging, and
exports.

• To conduct EDPs for several target groups, e.g., educated unemployed

youth, ex-service personnel, new entrepreneurs etc. on issues related with
establishment of new enterprise, material handling, new technologies,
management technique, facilities/ assistance available from State/ Central
govt. agencies, banks, financial institutions and NSIC, energy conservation,
pollution control, quality improvement, etc.

• To advise the Central and State governments on policy matters relating to

small industry development,

• To assist in testing of raw materials and products of Small-Scale Industries

(SSIs), their inspection and quality control,

NABARD: NABARD is an apex institution having power to deal with all

matters concerning policy, planning as well as operations in giving credit to
agriculture and other economic activities in the rural areas. It is a refinancing
agency for those institutions that provide investment and production credit
for promoting several developmental programs for rural development.
NABARD is improving the absorptive capacity of the credit delivery system in
India, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, and training of personnel. It coordinates
the rural credit financing activities of all sorts of institutions engaged in
developmental work at the field level while maintaining liaison with
Government of India, and State Governments, and RBI and other national
level institutions that are concerned with policy formulation. NABARD
prepares rural credit plans annually for all districts in the country, and
promotes research in rural banking, and in the field of agriculture and rural
development. The services offered by NABARD include: (i) attracting youth to
rural non-farm sector,
(ii) preparing district industries rural project (DRIP), and rural
entrepreneurship development program (REDP).

District Industries Centres (DICS)

This programme was started by 1978 with a view to provide integrated

administrative framework at the district level for promotion of small-scale
industries in rural areas. Its main functions are

Functions:

DICs undertake various promotional measures with a view to bring about

development of SMEs in the district. They start from exploration of potential
entrepreneurs to marketing of the products produced by SMEs. DICs provide
and arrange a package of assistance and facilities for credit guidance, raw
materials, training, marketing etc. including necessary help to unemployed
educated young entrepreneurs in general. Brief description of promotional,
technical, physical, financial, marketing, and other services offered by DICs is
as follows.

• Identification of Entrepreneurs: DIC’s develop new entrepreneurs by

conducting entrepreneurial motivation programs throughout the district
particularly under SEEUY scheme. DICs also take association of SISs and
TCOs for conducting EDPs.

• Provisional Registration: Entrepreneurs can get provisional registration with

DICs which enables them to take necessary steps to bring the unit into
existence. The entrepreneur can get assistance from term lending
institutions only after getting provisional registration.

• Permanent Registration: When the entrepreneur completes all formalities

required to commence the production like selection of site, power
connection, installing machinery etc., they can apply to DIC for permanent
registration. It is only after getting the permanent registration that the
entrepreneur can apply for supply of raw materials on concessional rates.
Permanent registration is essential to avail all types of benefits extended by
the government from time to time

. • Purchases of Fixed Assets: DICs recommend loan applications of the

prospective entrepreneur to concerned financial and developmental
institutions for the purchase of fixed assets. They also recommend
entrepreneur’s applications to the commercial banks for meeting the working
capital requirements.

• Clearances from Various Departments: DIC takes the initiative to get

clearances from various departments which is essential to start a unit. It
even takes follow up measures to get speedy power connection.

• Assistance to Village Artisans and Handicrafts: Despite inherent talent and

ability, village artisans are not better off because they lack financial strength
to strive in the competitive market. DICs with support of lead banks and
nationalized banks extend financial support to artisans.

• Incentives and Subsidies: DICs help SMEs and rural artisans to subsidies
granted by government under various schemes. These subsidies are related
with power, interest and other subsidies under IRDP.

• Interest Free Sales Tax Loan: SIDCO provides interest free sales tax loan up
to a maximum limit of 8 per cent of the total fixed assets to SSI units set up
in rural areas.

Small Industries Development Organisation (SIDO)

Small Industries Development Organisation (SIDO) is a subordinate office of

the Department of SSI & ARI. Development Commissioner is the head of the
SIDO. He is assisted by various directors and advisers in evolving and
implementing various programmes of training and management consultancy,
industrial investigation, possibilities for development of different types of
small-scale industries, development of industrial estates, etc.

The main functions of SIDO are

• Functions relating to Co-ordination

• Functions relating to Industrial Development

• Functions relating to extension

National Small Industries Corporation Ltd (NSIC)

The national Small Industries Corporation Ltd (NSIC) an enterprise under the
union ministry of Industries, was set up in 1955 to promote, aid and foster
the growth of small-scale industries in the country. It main functions are

• To provide machinery on hire-purchase scheme to small scale industries •

To provide equipment leasing facility

• To help in export marketing of the products of small-scale industries

• To help in development and upgradation of technology and implementation

of modernization programmes of small-scale industries

Small Scale Industries Board (SSIB)

The government if India constituted a Board, namely, Small Scale Industries

Board (SSIB) in 1954 to advise on development of small-scale industries in
the country. The SSIB is also known as Central Small Industries Board. Hence
to facilitate Co-ordination and inter-institutional linkages, the Small Scale
Industries Board has been constituted. It is an apex advisory body
constituted to render advice to the Government on all issues pertaining to
the development of small scale industries Small Industries Service Institutes
(SISIs) Small Industries Service Institutes (SISIs) are set up to provide
consultancy and training to small entrepreneurs-both existing and
prospective. It main functions are

• To serve as interface between Central and State Governments

• To render technical support services

• To conduct Entrepreneurship Development Programmes.

• To initiate promotional programmes

Laghu Udyog Bharti (LUB) was established in 1995 to promote and

safeguard the interest of tiny and small-scale industries. It has been given
representation on the national and the state level government bodies
responsible for the development of SSIs. It is also responsible for undertaking
entrepreneurial training, providing support for technology upgradation and
marketing services. The main functions of Laghu Udyog Bharti are:
(i) entrepreneurial training, (ii) technology up gradation, and (iii) marketing
services. 4.3 India SME Technology Services Ltd. (ISTSL) The objective of
ISTSL is to render professional services for technology transfer and support
services to enhance market competitiveness of micro, small and medium
enterprises, and promote sustainable development. It provides a platform
where micro, small and medium enterprises can tap opportunities at the
global level for acquisition of new and emerging technology or establish
business collaboration.

Role of industries/ entrepreneur’s association

Indian Investment Centre (IIC) The IIC is an autonomous, non-profit service

organization financed and supported by the Government of India. It is
concerned with the important task of promoting mutually rewarding joint
ventures between Indian and foreign entrepreneurs.

Entrepreneurial Guidance Bureau (EGB) The lIC has set up EGB in order to
guide entrepreneurs in identifying investment opportunities, assisting them
in selecting locations for the projects, preparing project profiles, assisting
them to get financial assistance. EGB has been supplying information
pertaining to the products that offer scope for manufacture, statistical details
relating to demand, capacity productions, sources of raw-materials, types of
equipment’s required, investment involved, sources of finance, etc
Information on, procedures pertaining to obtaining letters of intent, import of
capital equipment, export of finished products is also furnished. EGB also
renders assistance from banks/ financial institutions or for submitting
proposals for the letter of intent, etc., EGB also establishes direct contracts
with engineering graduates, technically qualified personnel and small
entrepreneurs to promote entrepreneurship development.

National Productivity Council (NPC)

Recently National Productivity council has started a package of Consultancy

Service to Small Industries. This service isin three stages. Train young and
prospective entrepreneurs; Undertake market surveys in the state/areas for
identifying investment opportunities and consumption patterns for the
prospective entrepreneurs; develop data bank for providing information in
respect of investment opportunities and financial resources required,
facilities available for obtaining loans; selection Modernization of processes
and equipment; product development; availability of raw materials and
market opportunities, sales promotion and marketing; and to undertake
techno-economic feasibility studies either on behalf of prospective or existing
entrepreneurs or on behalf of financial institutions.

SELF-HELP GROUP

A self-help group, abbreviated as (SHG) is a village-based financial

intermediary committee normally consist of 10–20 local women or men. Self-
help group is basically group of individual members who by free alliance
come together for a common communal purpose. Practically, self-help group
include individual members recognized to each other and belong to the same
village, community and even marketing area. They are homogeneous and
have certain pre group social binding factors. In the context of micro-finance,
self-help group are made around the theme of investments and credit. Most
self-help groups are situated in India but these groups are also found in other
countries, particularly in South Asia and Southeast Asia. Self-help group are
unique and pioneering organizational establishment in India for the
enhancement of women and welfare. All women in India are encouraged to
join any one of SHGs for training and development, so as to become
potential entrepreneur and skilled worker. Self-help group are promoted by
the Government as if women in India may not be ingenious enough to be
entrepreneurs.

SELF-HELP GROUP MECHANISM

When the Self-help group arrange training facilities to perform certain task
which are suitable for women in India, bank must provide financial support to
carry out manufacturing and business operations, arranging marketing
facilities while the Governments will procure the product of SHGs, arrange for
enhancing the capacity of women in terms of leadership quality and
arranging for the management of SHGs by themselves so as to have
administrative capacity.

Self-help groups are small informal association of the poor formed at the
grassroot level for the purpose of enabling members to reap economic
benefits out of mutual help solidarity and joint accountability. Self-help
groups are developed willingly by the rural and urban poor to contribute to a
common fund to be lent to its members as per group decision and for
working together for social and economic uplift of their families and
community.
Economic -objectives:

To promote saving and teach financial management skills.

To improve access to saving and credit services.

To improve living standards.

To reduce vulnerability to poverty in times of crisis (sickness, death etc)

To further economic self-reliance.

Self help groups have also amalgamated into big organizations. Typically,
about 15 to 50 SHGs make up a Cluster / voluntary organization with either
one or two representatives from each SHG. Depending on geography, several
clusters come together to establish an Apex body

BUSINESS INCUBATORS

The number of incubators has grown considerably in recent years. This rise is
due to several factors, such as corporate downsizing, increased
entrepreneurship, new technologies, economic globalization and the transfer
of technology the number of incubators has grown considerably in recent
years. This rise is due to several factors, such as corporate downsizing,
increased entrepreneurship, new technologies, economic globalization and
the transfer of technology.

Meaning An organization designed to accelerate the growth and success of

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

Importance of Business Incubation

There is no dearth of start-ups that work on a brilliant idea with a huge scope
of scaling. However, these companies have little knowledge about
management, and therefore, burn cash rapidly. Business incubators help the
start-ups to manage finances and ensure proper utilization of the money.
Managing a business at a very local level play a significant role in making the
foundation strong and scale it. Business Incubators essentially perform the
same function. There are various business incubators that target businesses
that want to establish themselves formally in the market. Such businesses
with great growth potential might require various types of support such as
planning, training and development, research support and so on.

Stages of Business Incubation The whole process of business incubation is

broadly divided into three categories:

Physical Facility Support This refers to the incubation service provided within
the physical facility.

Networking Facilities After the physical facility, business incubators help the
start-up with networking facilities so as to grow the business.

Support Services Once the business is up and running, the incubators offer
various support services to the businesses in order to run the business
smoothly.

Incubators – Who are They? Incubators are usually a partnership or

collaboration between one more pro-business organization. These
organizations can be: Economic development organizations Government
entities Local colleges and universities For-profit ventures Trade associations

Types of Business Incubator Majorly there are four types of incubators

prevailing in the market today. These are:

Corporate Incubators

Objective – to enhance the entrepreneurial spirit and help the start-up to

keep up with others in the industry Targets – usually target internal and
external projects related to the activity of the company. Challenges –
conflicts between the management regarding the objectives and
management-related decisions.

Private Investors’ Incubators

Objective – assist the potential business model and then reap benefits by
selling the shares. Targets – technology-intensive start-ups. Challenges –
quality and durability of the project.
Academic Incubators Objective – offering new sources of finance, supporting
the entrepreneurial spirit and civic responsibility. Targets – external projects
and the projects internal to the institution before the creation of a company.

Local Economic Development

Incubators Objective – economic development, supporting SMEs and specific

groups for the overall Upliftment of the society. Targets – small, handicraft,
locally sourced business companies.

Challenges – conflicts, governance risk, management quality, red-tapism,

long hours of negotiation. There are other types of incubators as well,
including Seed Accelerator (focusing on early startups), Public/Social
Incubator (focusing on the public good), Kitchen Incubator (focusing on the
food industry), Medical Incubator (focusing on medical devices &
biomaterials) and Virtual Business Incubators (online business incubators

ANGEL INVESTOR:

Meaning An investor who provides financial backing for small startups or

entrepreneurs. Angel investors are usually found among an entrepreneur's
family and friends. The capital they provide can be a one-time injection of
seed money or ongoing support to carry the company through difficult times.
Advantages of business angel financing the advantages of BA funding for
your business can include:

• BAs are free to make investment decisions quickly

• no need for collateral - i.e. personal assets

• access to your investor's sector knowledge and contacts • better discipline

due to outside scrutiny

• access to BA mentoring or management skills

• no repayments or interest

Disadvantages of business angel financing The disadvantages of BA funding

for your business can include:

• not suitable for investments below £10,000 or more than £250,000

• takes longer to find a suitable BA investor

• giving up a share of your business

 • less structural support available from a BA than from an investing
company

VENTURE CAPITAL

Meaning: Venture Capital is defined as providing seed, start-up and first

stage finance to companies and also funding expansion of companies that
have demonstrated business potential but do not have access to public
securities market or other credit oriented funding institutions. Venture
Capital is generally provided to firms with the following characteristics:

• Newly floated companies that do not have access to sources such as

equity capital and/or other related instruments.

• Firms, manufacturing products or services that have vast growth potential.

• Firms with above average profitability.

• Novel products that are in the early stages of their life cycle. • Projects
involving above-average risk.

• Turnaround of companies Venture Capital derives its value from the brand
equity, professional image, constructive criticism, domain knowledge,
industry contacts; they bring to table at a significantly lower management
agency cost.

A Venture Capital Fund (VCF) strives to provide entrepreneurs with the

support they need to create upscalable business with sustainable growth,
while providing their contributors with outstanding returns on investment, for
the higher risks they assume. The three primary characteristics of venture
capital funds which make them eminently suitable as a source of risk finance
are: That it is equity or quasi equity investment It is long term investment
and It is an active form of investment. Characteristics of venture capital:
Ideas and innovations, which have potential for high growth but has inherent
uncertainties, are Financed by Venture capitalists. Further, venture capitalists
provide networking, management and marketing support as well. Therefore,
venture capital refers to risk finance as well as managerial support. This
blend of risk financing and handholding of entrepreneurs by venture
capitalists creates an environment particularly suitable for knowledge and
technology based enterprises. Startups, where fund is needed most, are
seldom funded by Venture capitalist. However, a rare combination of product
opportunity, market opportunity, and proven management may attract
venture fund even in Startups.
 (a) Expect a very high growth rate in the assisted enterprise,

(b) Bring management and business skills

(c) Expect medium term gains (5-10 years), and

(d) Do not insist for any collateral to cover the capital provided. Venture
capital firms:

Venture capital firms are companies that invest money in small businesses
operating in particular industries, in which they are familiar with and have
high growth and profit potentials. Venture capital firms also look for business
with competent management and competitive edge. In return, they expect a
significant ownership interest in the business, which is typically 20 to 40
percent of a company. Since they risk a considerable amount of money, most
business proposals are subjected to rigorous reviews and selection process.
Public Stock Sales: A company can also raise capital by selling shares of its
stock to the public. Stock sales can be public (stocks sold to everyone
through the stock market) or private (stocks sold to specific individuals).
Going public paves the path for large amount of capital. However, the
founder must be prepared to accept dilution of ownership and loss of control.
Venture capitalists When someone refers to venture capitalist, the image
that comes in mind is Mr. Money bags. We all think of venture capitalists as
someone who is sitting on millions of dollars and who with the wave of his
magic wand turns your dreams into reality. Well, if that’s what you think is all
about why run after him – “play Santa yourself” Venture Capitalists is like
any other professional who is paid for doing his job, yes, venture capitalist is
nothing but a fund manager whose job is to manage funds that are raised. A
venture capitalist gets a fee to invest in companies that interest his
investors.

Difference between a Venture Capitalist and Bankers/Money Managers.

• Banker is a manager of other people’s money while the venture capitalist is

basically an investor.
• Venture capitalist generally invests in new ventures started by technocrats
who generally are in need of entrepreneurial aid and funds.

• Venture capitalists generally invest in companies that are not listed on any
stock exchanges. They make profits only after the company obtains listing.

• The most important difference between a venture capitalist and

conventional investors and mutual funds is that he is a specialist and lends
management support.

UNIT 4

INTRODUCTION BUSINESS IDEAS

 Every business needs a good business idea. It is the idea which can help
them to move in the right direction. The success and failure of a business
depends on its business ideas. If the idea of a business is good, the business
will survive otherwise it will fail in the market of competition. Good business
ideas, if introduced at the right time, can make a business very successful.
The ability to come up with a good business idea can be transformed into a
viable business.

SOURCES OF BUSINESS IDEAS There are many sources of business ideas.

The most important sources of business idea have been discussed below:-

(A) PRIMARY SOURCES OF BUSINESS IDEAS

1. Hobbies: While having fun at what they enjoy doing, many people have
started businesses. Converting hobbies into money making opportunities has
worked for many entrepreneurs. For instance, if you love to travel, perform
arts or into hospitality you can look at starting a business venture in the
tourism sector. Examples of hobbies that make money include sports,
cooking, piano playing, photography etc.

2. Self Experience: Many investors find it convenient to choose business

ideas in line with their background. This because of them understands the
terrain better. More than half of business ideas come from experiences at
work place only. A survey of entrepreneurs found that most of the new start-
up companies are involved in industries where they had significant work
experience. The personal contacts and domain expertise developed on the
job have proven to be valuable to many individuals who contemplated
launching a business of their own. Anybody who intends to start a business
in a new industry are therefore, encouraged to firstly becoming an
"apprentice" for a suitable period of time. By doing this he could avoid costly
mistakes and the same time be able to assess whether he enjoy the work
before making a serious financial commitment.

3. Mass Media: The Mass Media is also a platform for the generation and
sources of business ideas in the following ways: (a) Study commercial
advertisements on business needs and sales of entire business. (b) Extract
information from reports on changes in fashions or consumer needs e.g
healthy eating, weight loss, etc. (c) Sieve through advertisements for popular
skills demanded e.g security, catering, web design.

4. Exhibitions: If we take time to study most exhibitions, we would be able to

discover the nature of new products and re-branding ideas of existing
products. Through talking with sales representatives, manufacturers and end
users, we will be able to find a gap to fill to start our own business.

5. Surveys: Surveys can either be done online or offline. Talking to

neighbours, co-workers and family members about a particular product or
service is a form of informal survey. The essence of carrying out surveys is to
gather complaints from dissatisfied customers of new and existing products.
We will be able to generate new ideas to fine-tune our own investment so as
to include improvements and changes most people would like to see.

6. Complaints: Anytime we hear a customer complaint about a product such

as; I wish there was……, if they had….etc., there lies an idea for investment.
We can either set up competitor business with such firms offering a better
product or sell that idea/product for improvement to the company directly.
Talk to people, read comment and reviews on blogs and browse popular
forums to gather complaints about that product. Complaint is one of the
most practical primary sources of business ideas.

7. Brainstorming: Brainstorming involves using creative thinking to generate

business ideas to solve problems. The first step is to identify a problem or
question and then Brainstorming is a technique of creative problem-solving
as well as for generating ideas. The overall idea is to come up with solutions
as many as possible. When looking for sources of ideas for new business
start ups, through brainstorming you should avoid criticizing the ideas of
others on our team, allow even the wildest of ideas, allow large number of
contributions and don’t hesitate to merge and improve upon other people’s
suggestions.

(B) SECONDARY SOURCES OF BUSINESS IDEAS

1. Consumers: Potential entrepreneurs should continually pay close attention

to potential customers. This attention can take the form of informally
monitoring potential ideas and needs or formally arranging for consumers to
have an opportunity to express their opinions. Care needs to be taken to
ensure that the idea or need represents a large enough market to support a
new venture.

2. Existing Products and Services: Potential entrepreneurs and intrapreneurs

should also establish a formal method for monitoring and evaluating
competitive products and services on the market. Frequently, this analysis
uncovers ways to improve on these offerings that may result in a new
product or service that has more market appeal.

3. Existing Distribution Channels: Members of the distribution channels are

also excellent sources for new ideas because of their familiarity with the
needs of the market. Not only do channel members frequently have
suggestions for completely new products, but they can also help in
marketing the entrepreneur’s newly developed products. One entrepreneur
found out from a sales clerk in a large departmental store that the reason his
hosiery was not selling was its colour. By heeding the suggestion and making
the appropriate colour changes, his company became one of the leading
suppliers of nonbrand hosiery in that region of the United States.

4. Government and Industrial Policies: The Government and Industrial

policies can be a source of new product ideas. New product ideas can come
in response to Government regulations and new industrial policies. The files
of the patent office contain numerous new product possibilities. Although the
patents themselves may not be feasible, they can frequently suggest other
marketable product ideas. Several Government agencies and publications
are helpful in monitoring patent applications.

5. Research and Development: The largest source of new ideas is the

entrepreneur’s own "research and development", efforts, which may be a
formal endeavour connected with one's current employment or informal lab
in a basement or garage. The research and development wing of the
enterprise will continue the research to find the suitable products according
to the need and requirement of the customers.

IDEA AND INFORMATION SOURCES

(B) Periodicals and Technical Reports

1. Trade Magazines: There are a number of trade magazines that cover

general design issues or are targeted at a specialized technical field. These
magazines are often a source of solutions for current problems. Besides the
articles in these magazines, the advertisements can provide a fruitful source
of ideas. As it is difficult to pinpoint specific information in trade magazines,
it is a good practice to make a habit of regularly reading or at least scanning
these publications so that information can be located when required.

2. Research Journals: Research journals directly related to the specific area

of the problem which is to be solved may provide modelling and analysis of
specific problems as well as more general information that can lead to a
design solution. Examples of these journals are Journal of Engineering
Design, ASME Journal of Seat Transfer, and Artificial Intelligence in
Engineering, Design and Manufacturing etc.

3. Databases: Databases provide a mechanism by which articles from

hundreds of technical journals spanning numerous years can be searched for
a specific subject. The usability of these databases has been greatly
enhanced in recent years by computerization. Examples of these databases
include “The Engineering Index and The National Technical Information
Service” etc. These databases can be searched by general categories or
specific key words can be used for more targeted searches.

(C) Directories

1. Thomas Register: The Thomas Register of American Manufacturers is a set

of volumes that provide information about manufacturers of a multitude of
products and services. It can typically be found in the library but is now
conveniently available on the Internet at [Link].

2. Fraser's Canadian Trade Directory: Similar to the Thomas Register, Fraser’s

Canadian Trade Directory provides information about Canadian providers of
products and services. It is available in both hard copy and CD-ROM formats,
and can also be accessed through the Internet at [Link] where
searches can be conducted .within the categories of company,
product/service or brand name.

3. Yellow Pages: The yellow pages are another source for suppliers and
manufacturers. If availability from local suppliers is insufficient, yellow pages
for other cities can often be found at the library or on the Internet.

4. Catalogues: There are hundreds of catalogues of parts, assemblies and

materials available through vendors. These catalogues are often available
through workshops and resource centres, or can be ordered by mailing away
request cards often included in trade publications.

(D) Other Literature Sources

1. World Wide Web: Searching the Internet can lead to websites belonging to
vendors, manufacturers, consultants, design companies, professional
organizations and educational centres etc. Almost every organization of one
type or another has a website and the information that is often provided on
these websites is remarkable. Information found on the Internet is often more
current than what is published, and often provides an e-mail address to
which questions and requests for additional information can be sent. As
anyone can create a website, caution should be used when utilizing
information that it has been obtained from a reputable source.

2. Brochures: Marketing publications available from competitors or for related

products can sometimes provide valuable information.

PEOPLE AS IDEA AND INFORMATION SOURCES

An extremely valuable source of ideas that often gets overlooked is people.

It is truly amazing that the viable ideas can come from not only subject
experts, but also the most unlikely sources including the person sitting next
to you on the plane or a small child. Designers should never be afraid to ask
others for ideas. Even if someone does not have any solutions to offer, they
may know where to locate information or a person who can provide
information. This is called networking and can be one of the most powerful
tools in business today. We can find the new ideas from the people like
Colleagues, Consultants, Business Vendors, Existing Customers, Lead Users
of our products and Friends and our Family Members.

ORGANIZATIONS AS IDEA AND INFORMATION SOURCES

The Government and business organization including various departments,

laboratories, associations and other professional groups are also major
sources of ideas and information.

1. Government: There are numerous sources within all levels of government.

Many departments, including the Transportation and Safety Board, the
National Bureau of Standards and the Department of National Defence, have
standards and guidelines based on extensive research. Engineering
organizations throughout the world make extensive use of the Military
Standards produced by the Department of Defence, many of which can be
accessed through libraries or downloaded from the Internet. The National
Technical Information Service, a branch of the Department of Commerce, is
a source for worldwide scientific, technical, engineering and business related
information.

2. Non-Profit Laboratories and Associations: Organizations such as the

Canadian Standards Association, Underwriters Laboratories, American
Society for Testing and Materials, and American Standards Association can
provides standards and guidelines at a nominal fee. Often products must be
tested against and comply with these standards before they can be offered
commercially

3. Professional Organizations: Groups such as Association of Professional

Engineers, /Geologists and Geophysicists of Alberta (APEGGA) and Society of
Manufacturing Engineers (SME) often have publications and codes available.
These organizations typically can identify and provide contact information for
experts on a given subject.

4OTHER IDEA AND INFORMATION SOURCES Generally, the innovative

business ideas and its related information are available in the nature itself.
The patents, analogies are other sources of ideas and information to start the
enterprise. 1. Nature: Many innovative technical solutions are based on
principles found in nature. Birds have provided concepts for winged flight as
fish have for submarines. Honeycombs have provided examples of
lightweight but strong structures and the arch of the human foot
demonstrates the effect TECHNIQUES FOR GENERATING NEW IDEAS
Generally, the entrepreneurs identify more ideas than opportunities because
many ideas are typically generated to find the best way to capitalize on an
opportunity. The following are different types Of techniques which can be
used to stimulate and facilitate the generation of new ideas for products,
services and businesses.

1. Brainstorming 2. Focus Groups 3. Observations 4. Surveys 5. Emerging

Trends 6. Research and Developments 7. Trade Shows and Association
Meetings 8. Other Techniques

1. Brainstorming: This is a process in which a small group of people interact

with very little structure, with the goal of producing a large quantity of novel
and imaginative ideas. The goal is to create an open, uninhibited atmosphere
that allows members of the group to “freewheel” ideas. Normally, the leader
of the group asks the participants to share their Ideas. As group members
interact, each idea sparks the thinking of others, and the spawning of ideas
becomes contagious.

2. Focus Groups: These are group of individuals who provide information

using a structured format. Normally, a moderator will lead a group of people
through an open and in depth discussion. The group members will form
comments in open-end in-depth discussion for a new product area that can
result in market penetration. This technique is an excellent source for
screening ideas and concept.

3. Observation: A method that can be used to describe a person or group of

people’s behaviour by probing: (i) What do people/organizations buy? (ii)
What do they want and cannot buy? (iii) What do they buy and don’t like? (iv)
Where do they buy, when and how? (v) Why do they buy? (vi) What are they
buying more of? (vii) What else might they need but cannot get?

4. Surveys: This is a process which involves the gathering of data based on

communication with a representative sample of individuals. This research
technique requires asking people who are called respondents for information
either verbally or by using written questions. Questionnaires or interviews
are utilised to collect data on the telephone or face-to-face interview.

5. Emerging Trends: The example is based on the population within your area
may be getting older and creating demand for new products and services. 6.
Research and Development: Research is a planned activity aimed at
discovering new knowledge, with the hope of developing new or improved
products and services. Researching new methods, skills and techniques
enable entrepreneurs to enhance their performance and ability to deliver
better products and services. 7. Tradeshows and Association Meetings: This
can be an excellent way to examine the products of many potential
competitors, uncover product trends and identify potential products. 8. Other
Techniques: This can be achieved by reading relevant trade magazines and
browsing through trade directories. These may include local, national and
foreign publications.

MEANING OF PROJECT

An entrepreneur takes numerous decisions to convert his business idea into

a running concern. His/her decision making process starts with
project/product selection. The project selection is the first corner stone to be
laid down in setting up an enterprise. The success or failure of an enterprise
largely depends upon the project. The popular English proverb well began, is
half done” applies to project selection and also indicates the significance of a
good beginning. The dictionary meaning of project is that it is a scheme,
design a proposal of something intended or devised to be achieved. Newman
and his associates define that “a project has typically a distinct mission that
designed to achieve and a clear termination point, the achievement of the
mission.” Gillinger defines project “as a whole complex of activities involved
in using resources to gain benefits”. According to Encyclopedia of
management, “a project is an organized unit dedicated to the attainment of
goal—the successful completion of a development project on time, within
budget, in conformance with predetermined programme specifications.”
Now, a project can be defined as a scientifically evolved work plan devised to
achieve a specific objective within a specified period of time. Project can
differ in their size, nature of objectives, time duration and complexity.
However projects partake of the following three basic attributes:

1. A course of action

2. Specific objectives and

3. Definite time perspectives. Every project has starting point, an end point
with specific objectives.

PROJECT CLASSIFICATION

Project classification helps in expressing and highlighting the essential

features of project. Different authorities have classified projects differently.
The following are some of the important classification of projects.

Quantifiable and Non-Quantifiable Projects

Quantifiable projects are those in which possible quantitative assessment of

benefits can be made.

Non-quantifiable projects are those where such assessment is not possible.

Projects concerned with industrial development, power generation, mineral
development fall in the first category while projects involving health,
education and defense fall in the second category.

Sectional Projects

Here the classification is based on various sectors like • Agriculture and

allied sector

• Irrigation and power sector

• Industry and mining sector

• Transport and communication sector

• Information technology sector

• Miscellaneous.
This system of classification has been found useful in resource allocation at
macro level.

Techno-Economic Projects

Classification of projects based on techno-economic characteristic fall in this

category. This type of classification includes factor intensity-oriented
classification, causation oriented classification, magnitude oriented
classification as discussed below.

(a) Factor Intensity-Oriented Classification: Based on this projects may be

classified as capital intensive or labor intensive. If large investment is made
in plant and preparation of machinery, the project will be termed as capital
intensive. On the other hand project involving large number of human
resources will be termed as “labor intensive”.

(b) Causation-Oriented Classification: On the basis of causation, projects can

be classified as demand based and raw material based projects. The
availability of certain raw materials, skills or other inputs makes the project
raw-material based and the very existence of demand for certain goods or
services make the project demand-based.

PROJECT IDENTIFICATION

Often indenting entrepreneurs always are in search of a project having a

good market but how without knowing the product coat they determine
market whose market they find out without knowing the item i.e., product?
Idea generation about a few projects provides a way to come out of the
above tangle. Idea Generation The process of project selection starts with
idea generation. In order to select most promising and profitable project, the
entrepreneur has to generate large number of ideas about the possible
projects he can take. The project ideas can be discovered from various
internal and external sources. These may include:

1. Knowledge of potential customer needs.

2. Personal observation of emerging trends in demand for certain products.

3. Scope for producing substitute product.

4. Trade and professional magazines which provide a very fertile source of

project ideas.

5. Departmental publications of various departments of the government.

6. Success stories of known entrepreneurs or friends or relatives.

7. A new product introduced by the competitor.

8. Ideas given by knowledgeable persons.

All these sources putting together may give few ideas about the possible
projects to be examined among which the project must be selected. After
going through these sources if an entrepreneur has been able to get six
project ideas, one project idea will be finally selected going through the
following selection process. Project Selection Project selection starts once the
entrepreneur has generated few ideas of project. After having some ideas,
these project ideas are analyzed in the light of existing economic conditions,
market conditions and the government policy and so on. For this purpose a
tool is generally used what is called SWOT analysis. The intending
entrepreneur analyses his strengths and weaknesses as well as
opportunities/ competitive advantages and threats/challenges offered by
each of the project ideas. In addition, the entrepreneur needs to analyze
other related aspects also like raw material, potential market, labor, capital,
location and forms of ownerships etc. Each of these aspects has to be
evaluated independently and in relation to each of these aspects. This forms
a continuous and back and forth process. On the basis of this analysis, the
most suitable idea is finally selected to convert it into an enterprise. The
process involved in selecting a project out of few projects is also termed as
“Zeroing in Process”. There is a time interval involved in between project
identification and project selection. In some cases it may be few months and
in others it may be few minutes. 2.8 MEANING AND SIGNIFICANCE OF

PROJECT PROPOSAL/REPORT

A project report or a business plan is a written statement of what an

entrepreneur proposes to take up. It is a kind of guide frost or course of
action what the entrepreneur hopes to achieve in his business and how is he
going to achieve it. A project report serves like a kind of big road map to
reach the destination determined by entrepreneur. Hence a project report
can be defined as a well evolved course of action devised to achieve the
specified objectives within a specified period of time. It is like an operating
document. The preparation of project report is of great significance for an
entrepreneur. The project report serves two essential purposes. The first is
that the project report is like a road map as it describes the direction the
enterprise is going in, what its goals are, where it wants to be, and how it is
going to get there. In addition, it enables the entrepreneur to know that he is
proceeding in the right direction. Dan Steinhoff and John F. Burgess hold the
view that without well spelled out goals and operational methods, most
businesses flounder on the rocks of hard times. The second purpose of the
project report is to attract lenders and investors. The preparation of project
report is beneficial for those small scale enterprises which apply for financial
assistance from the financial institutions and commercial banks. On the basis
of this project report the financial institutes make appraisal and decide
whether financial assistance should be given or not. If yes how much. Other
organizations which provide various assistance like work shed/land, raw
material etc, also make decision on the basis of this project report. 2.9

CONTENTS OF A PROJECT REPORT/PROPOSAL

(1) General information

(2) Project description

(3) Market potential

(4) Capital costs and sources of finance

(5) Assessment of working capital requirements

(6) Other financial aspects

(7) Economical and social variables

(8) Project implementation

The nature of formation to be collected and furnished under each of these

stages has been given below.

• General Information The information of general nature given in the

project report includes the following:
Bio-Data of Promoter: Name and address, qualifications, experience and
other capabilities of the entrepreneur. Similar information of each partner
if any. Industry Profile: A reference analysis of industry to which the
project belongs, e.g., past performance; present status, its organization,
its problems etc.
Constitution and Organization: The constitution and organization
structure of the enterprise; in case of partnership firm its registration with
registrar of firms, certification from the Directorate of Industries /District
industry Centre
 Product Details: Product utility, product range, product design, advantage
to be offered by the product over its substitutes if any.

(2) Project Description A brief description of the project covering the

following aspects should be made in the project report. Site: Location of the
unit; owned, rented or leasehold land; industrial areas no objection
certificate from municipal authorities if the enterprise location falls in the
residential area. Physical Infrastructure: Availability of the following items of
infrastructure should be mentioned in the project report.

(a) Raw Material: Requirement of raw material, whether inland or imported,

sources of raw material supply.

(b) Skilled Labour: Availability of skilled labour in the area i.e., arrangements
for training labourers in various skills.

(c) Utilities: These include:

 Power: Requirement of power, load sanctioned, availability of power

 Fuel: Requirement of fuel items such as coal, coke, oil or gas, state of their
availability and supply position.

 Water: The sources of water, quality and quantity available.

 Pollution Control: The aspects like scope of dumps, sewage system,

sewage treatment plant, infiltration facility etc., should be mentioned.

 Communication and Transportation Facility: The availability of

communication facilities, e.g., telephone, fax, telex, internet etc., should be
indicated. Requirements for transport, mode of transport, potential means of
transport, approximate distance to be covered, bottlenecks etc., should be
stated in the business plan.

 Production Process: A mention should be made for process involved in

production and period of conversion from raw material into finished goods. 
Machinery and Equipment: A complete list of machines and equipments
required indicating their size, type, cost and sources of their supply should
be enclosed with the project report.  Capacity of the Plant: The installed
licensed capacity of the plant along with the shifts should also be mentioned
in the project report

 Technology Selected: The selection of technology, arrangements made for

acquiring it should be mentioned in the business plan.
  Other Common Facilities: Availability of common facilities like machine
shops, welding shops and electrical repair shops etc., should be stated in the
project report.  Research and Development: A mention should be made in
the project report regarding proposed research and development activities
to be undertaken in future.

3. Market Potential While preparing a project report, the following aspects

relating to market potential of the product of the product should be stated in
the report.

(a) Demand and Supply Position: State the total expected demand for the
product and present supply position, what is the gap between demand and
supply and how much gap will fill up by the proposed unit.

(b) Expected Price: Expected price of the product to be realized should also
be mentioned.

(c) Marketing Strategy: Arrangements made for selling the product should be
clearly stated in the project report.

(d) After Sales Service: Depending upon the nature of the product, provisions
made for aftersales should normally be stated in the project report.

(4) Capital Costs and Sources of Finance An estimate of the various

components of capital items like land and buildings, plant and machinery,
installation costs, preliminary expenses, margin of working capital should be
given in the project report. The sources should indicate the owners fund
together with funds raised from financial institutions and banks.

(5) Assessment of Working Capital The requirement for working capital and
its sources of supply should clearly be mentioned. It is preferred to prepare
working capital requirements in the prescribed formats designed by limits of
requirement. It will reduce the objections from banker's side.

(6) Other Financial Aspects To adjudge the profitability of the project to be

set up, a projected profit and loss account indicating likely sales revenue,
cost of production, allied cost and profit should be prepared. A projected
balance sheet and cash flow statement should also be prepared to indicate
the financial position and requirements at various stages of the project.
PROJECT FEASIBILITY STUDY

Project feasibility analysis is carried put to ensure viability of project. The

important project feasibility study is

1. Market feasibility

2. Technical feasibility

3. Financial feasibility

4. Economic feasibility

5. Ecological feasibility.

Market Feasibility

Market feasibility is concerned with two aspects the aggregate demand for
the proposed product/service, and the market share of the project under
consideration. Fox this market analysis requires variety of information and
appropriate forecasting methods. The kind of information required is

• Consumption trends in the past and the present consumption level

• Past and present supply position

• Production possibilities and constraints

• Imports and exports • Structure of competition

• Cost structure

• Elasticity of demand

• Consumer behavior, intentions, motivations, attitudes, preferences and

requirements

• Distribution channels

• Administrative, technical and legal constraints.

Technical Analysis

Technical analysis seeks to determine whether prerequisites for successful

commissioning of the project have been considered and reasonably good
choices have been made with respect to location, size, and so on. The
important questions raised in technical analysis are

 Has the availability of raw material, power, and other inputs been
established?  Is the selected scale of operation optimal?

 Is the production process chosen suitable?  Are the equipment and

machines chosen appropriate?

 Have the auxiliary equipment and supplementary engineering works been

provided for?  Has provision been made for treatment of effluents?  Is the
proposed layout of-the site, buildings and plant sound?

 Have work schedules been drawn up realistically?

 Is the technology proposed to be employed appropriate from the social

point of view?

Financial Analysis

Financial analysis is necessary as ascertain whether the propose project is

financially viable in the sense of being able to meet the burden of servicing
dept and whether the proposed project will satisfy the return expectations of
those who provide the capital. The aspects to be looked into while
conducting financial appraisal are as follows.

 Investment outlay and cost of project

 Means of financing.  Project profitability  Break-even point  Cash shows

of the project  Investment worthiness, judged in terms of various criteria of
merit  Project financial position  Level of risk Economic/Social Cost-Benefit
Analysis This is concerned with judging a project from the larger social point
of view, where in the focus if on social costs and benefits of a project, which
may often be different from its monetary costs and benefits. The questions
to be answered in social cost benefit analysis are are as follows:-  What are
the direct economic benefits and costs of the project measured in terms of
shadow prices and not in terms of market prices?  What should be the
impact of the project on the distribution of income in the society?

-What would be the impact of the project on the level of savings and
investment in the

society?
-What would be the contribution of the project towards the fulfillment of
certain like selfsufficiency, employment and social order?

Ecological Analysis

Today, environment concerns assured a great deal of significance and hence

ecological

analysis should be done, particularly for projects which have significant

ecological implications

like power plants and irrigation schemes and for environmental polluting
industries like

chemicals, leather processing etc. The key questions to be answered in

ecological analysis are as

follows:-

-What is the likely damage caused by the project to the environment?

-What is the cost of restoration measures required to ensure that the

damage to the

environment is contained within acceptable?

PROJECT APPRAISAL:

MEANING AND DEFINITION

Project appraisal is an exercise where by a lending financial institution

makes an independent and objective assessment of various aspects of an
investment proposition to arrive at the financial decision. Project appraisal
means the assessment of project in terms of its economic, social and
financial viability. It is a complete scanning of the project. Usually banks and
financial institutions conduct a critical appraisal of projects, which are
submitted to them by the entrepreneur for getting loans. They have been
traditionally accepting the data provided by the entrepreneur as valid while
assessing the project. In fact the emphasis has largely been on the cash flow
and financial viability of a project in assessing their suitability for extending
the loans. Project appraisal can be defined as the promoter taking a second
look critically and carefully at a project as presented by the promoter a
person who is no way involved in or connected with its preparation and who
is as such able to take an independent dispassionate and objective view of
the project in its totality as also in respect of its various components. The
person who carries out appraisal of project is usually a team of institutional
officials. The appraisal of proposed project includes the following analysis:

1. Economic Analysis: An economic analysis looks at the project from the

viewpoint of the whole economy, asking whether the latter will show
benefits sufficiently greater than project cost to justify investment in it.

2. Financial Analysis: The purpose of the appraisal of the financial aspects of

a project is generally to ensure its initiation of financial conditions for the
sound implementation and efficient operation.

3. Market Analysis: Financial institutions examine the project to ensure

economic justification of investment details. They study the marketing scope
of the project and also its worth to the national economy by analyzing the
consumption pattern and the potential demand for the project.

MARKET ANALYSIS COVERS THE FOLLOWING

Anticipated market for the product  Analysis of market opportunity and

specifying marketing objectives

Planning the process of marketing the product

Organization for the marketing process

Life cycle of the product

4. Technical Analysis: Technical appraisal of a project broadly involves a

critical study of the following:

Location and Site: There are a number of aspects that influence industrial
location because it may significantly influence the cost of production and
distribution efficiency, the operating environment etc. The important factors
that influence industrial location are raw material, proximity to market,
availability of water, power, transportation facilities, man power, labor laws,
taxes, incentives, subsidies etc. The factors to be considered for selection of
site are load bearing capacity, access to water, effluent discharge etc.

Size of the Plant/Scale of Operation: The size of the plant determines the
economic and financial liability of a project. An important aspect of size is
the available process technology. Equipment is often standardized at specific
capacities in production sectors. Operative capacities in such sectors are
therefore available only in certain multiples.

Technical Feasibility: The appraisal of the technical aspects involves scrutiny

of such aspects of the project as

Technology selected  Technical collaboration and arrangements made

Capacity/Size of the project  Selection of plant, machinery and equipment 

Plant layout and factory building  Technical and engineering services.

5. Organizational Analysis: As a lender and development institution, the

banks and other financial institutions place particular stress on the need and
efficient organization and responsible management for the execution of the
project. During project appraisal, these two aspects of a project are
examined. If both aspects are not carried out properly, short term remedial
steps are recommended to the entrepreneur. The objective of this aspect of
appraisal is to make sure that the project is adequately carried out. The
various organizational aspects are organization, structure, recruitment,
training and development and so on.

6. Managerial Aspects: If the management is incompetent, even a good

project may fail. It is rightly pointed out that if the project is weak, it can be
improved upon but if the promoters are weak and lack in business acumen,
it is difficult to reverse the situation. To safeguard from this problem, the
financial institutions can exercise control over the assisted units. There is a
provision for appointment by the financial institutions or nominate directors
on the boards of all MRTP companies assisted by them. The Companies Act,
the Industries Act (Development and Regulation), empower government to
exercise powers of control over the management, including the takeover of
management of industrial undertakings. All these indicate the importance
given to proper managerial strategies to prevent mismanagement. If the
proper appraisal of the managerial aspects is made in the beginning itself,
future problems in this area can be avoided to a very large extent.

PROJECT SUBMISSION/PRESENTATION
This is a very important step as it leads to successful delivery of information
to external agencies and financial and non-financial institutions. There is
always a limited amount of time available and there is a lot of information to
be processed, so the project submission and the presentation should be
crisp and to the point. For a suitable submission review, the entrepreneur
should ensure that the reason for bringing out the report, terms of
references, expectation of project report, target audience of the report etc.
are known and drafted very carefully. In order to maximize the effectiveness
of the project submission maximum reader insight and minimum reader
effort should be emphasized upon. In the presentation the speaker should
demonstrate familiarity with the project emphasizing on the project goals,
project submissions, and flow charts to maximize the impact on the
audience. Project presentation should also include the benefits (social and
economic) which could be derived from it for the region.

PROJECT APPRAISAL

Project appraisal is examined prima facie that whether the project is

acceptable under certain rules which could be the experience and
background of the applicant, the potential demand of the product, whether
the project is meeting the governmental requirements and status etc.

1. Appraisal from External Agencies: Financial Agencies The financial

external agencies appraising the project, their point in contention is to look
for credit appraisal. In this before a credit facility is provided to the
entrepreneur, the proposal is checked rigorously. It involves in-depth study
of all the feasibility aspects studied earlier viz., financial, technical,
commercial, managerial etc. Generally, in order to sanction an amount it is
prudent for the banks and other financial institutions to assess the data
provided by the entrepreneur in an unbiased manner. This assessment can
be further by financial institutions by outsourcing the data gathering
exercise to independent agencies because the borrowers could tamper or
favourably place the data to suit their needs. Loan appraisal by financial
institutions and banks require careful scrutiny of the highest level. Loan
appraisal signifies the capability of the borrower to repay the principal loan
amount and the interest thereof in the period specified.

2. Appraisal from External Agencies: Non-Financial Agencies

Project appraisal done by non-financial agencies could require a checks and

balances on all the aspects of feasibility testing which is carried out by the
entrepreneur in the first step. It may involve a detailed estimation and
research on the way of production of the product in offing, proposed way of
marketing the final product after the launch etc. Project appraisal by non-
financial institutions may also involve examining in a systematic manner
proper i.e effective and efficient utilization of resources which could result
into best results and ultimately ensuring product viability.

AREAS OF PROJECT APPRAISAL

1. Market/Marketing Appraisal: In marketing appraisal the emphasis is on

ascertaining the demand projections of the business under perusal. The
examination of whether the demand projections are in tune with the ground
reality is done. Further, the adequacy of the marketing infrastructure is
assessed by evaluate the distribution network, transport facilitates, stock
levels, promotional efforts etc. The key marketing managerial personnel are
also judged for their level of competency and skills required to get the job
done.

2. Technical Appraisal: In this the focus is on the technical aspects. It is

basically an appraisal of the technical feasibility ascertained by the
entrepreneur. In this the overall appraisal of the technology and the
manufacturing process, location decisions, decisions related to plant and
machinery, and also the raw materials and other inputs is done.

3. Managerial Appraisal:

• Promoter’s resourcefulness check

• Credibility of the plan project

 Assessment of the organizational structure
 Estimated cost of the project

• Commitment of the promoters towards the work

Managerial Competence

In managerial competence appraisal the focus is on evaluating the level of

competence of the people at the helm of affairs. The question is whether the
management has the insight and ability to pull off a project. The emphasis is
on the determination of the ability of the project to implement and carry on
the business in a manner desired.
Appraisal by external agencies /financial /non-financial institutions

A project at the outset must bear a logical appearance, which it can get only
after the feasibility test. Project report is a document, which clearly narrates
the various aspects of project in a prescribed form. Project report
preparation is a post investment decision exercise. It involves the
preparation of detailed specifications and designs for the project premises,
detailed design of the process or other equipment and time schedules for
the implementation of the project. Hence, the detailed project report is the
work plan for the implementation of a project once an investment decision is
arrived at. A project report is meant to provide the necessary information,
which may be required for the purpose of processing and assessing the
proposal for getting the financial assistance from the financial institutions.
This is essentially prepared in order to provide a complete information with
proximate values of the project and presented to the financial institution for
appraisal. A project report prepared with utmost care would not only give a
clear idea to the banker but also it relives the entrepreneur from the normal
objections and formal queries of the banker. In a developing economy like
India, where the development banking is vigorous, an entrepreneur gets a
lot of published materials with data relating to various feasibilities and
promotional institutions engaged in entrepreneurship development produce
good literature covering various aspects of producing a project or products in
the country.

The Director General of Technical Development (DGTD),

National Small Industries Corporations (NSIC) are some of the pioneer

institutions providing variety of information for small scale entrepreneurs to
manufacture. They give guidelines for industries indicating those items, in
which good scope exists for manufacturing. With these available
informations, an entrepreneur has to do the following for starting an
industrial unit: To decide the type and level of industrial production To
compare the requirements of funds with his personal availability of finance.
To prepare a nice project report containing all relevant information Many of
the institutions like SISI, State Financial Institutions also help in preparation
of project report and later on recommend them to the banks. Besides these
institutions, several commercial banks help the entrepreneurs to get a good
project report.