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TECHNOLOGICAL INNOVATION
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MODULE 5
Business plans: Introduction, purpose of a Business plan, contents of a Business
plan, presenting a Business plan, why do some Business plan fail? Procedure for
setting up an Enterprise.
Institutions supporting Business opportunities: Central level institutions-
National Board for micro, small & medium Enterprises(NBMSME), MSME-DO,
National Small Industries Corporation. State level institutions- State Directorate
Industries and Commerce, District Industries Centres, state financial Corporations,
State Industrial Development Corporation (SIDC), and State Industrial Area
Development Board (SIADB).
Other Institutions - NABARD, Technical consultancy organisation (TCO), Small
Industries Development Bank of India(SIDBI), Export Promotion Councils, Non-
governmental Organisations.
BUSINESS PLANS
Introduction
A business plan is a roadmap and blueprint of the project. A business plan is a
written document that describes in detail how a business is going to achieve its
goals. It is a document that explains a business opportunity, identifies the market
to be served, and provides details about how the entrepreneurial organization plans
to pursue it. Ideally, the business plan describes the unique qualifications that the
management team brings to the effort, explains the resources required for success,
and provides a forecast of results over a reasonable time horizon. A business plan
is based on estimates.
PURPOSE OF A BUSINESS PLAN
A business plan is the written representation of an entrepreneur's vision for his/her
business. A business plan is a written document between 20-40 pages in length that
describes where a business is heading and how it achieves its goals and objectives.
A workable business plan should determine the direction of the company; highlight
the challenges; and formulate strategies to keep the business on track in order to
reach predetermined goals and objectives.
The reasons for preparing a business plan are given below:
 A business plan is used to get finance from banks or to get equity funding from
angel investors or venture capitalists.

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 Entrepreneurs reap benefits from the planning activity itself.
 It can also be used to attract business partners and key employees or to make
business alliances.
 If the business plan is prepared within a large organization, then it enables the
board of directors to make capital investment decisions.
 The act of writing the plan will force the entrepreneur and his team to think
through all the key elements of the business.
 The plan provides a basis for measuring actual performance against expected
performance.
 The plan's financial projections can be used as a budget. Actual results that fall
short of planned results will prompt the entrepreneur to investigate and take
corrective action.
 The plan acts as a vehicle for communicating to others what the business is
trying to accomplish.
CONTENTS OF A BUSINESS PLAN
The key sections in a business plan along with the average number of pages to be
included in each section are given in below table.

Sl. No Contents Pages

1. Cover page and table of contents 2

2. Executive summary 2
3. Business concept 4
4. Management summary 4
5. Business Strategy 2
6. Operations plan 4
7. Marketing plan 4
8. Financial plan 4
9. Appendices 10
Most business plans contain the following components:
Cover Page and Table of Contents: Every business plan should have a cover page.
The cover page presents the first impression of your business plan to readers. The
cover page should have a clean and professional appearance and should contain the
following information:

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 Name of the business or project.
 The company's name, logo, address, telephone and fax numbers, Web site
address, e-mail address.
 The name and designation of the contact person.
Executive Summary: The executive summary is a standalone document two or
more pages long. It is a snapshot of the entire business plan and usually written
last. The executive summary is a concise presentation of the main points of the
business plan and gives a brief overview of the business venture.
Bankers and venture capitalists generally do not read through the entire
business plan when it is presented to them. They go through the executive
summary. The executive summary is a formal statement and should include the
following information:
 A brief description of the industry and market environment in which the business
opportunity will develop and flourish.
 The uniqueness of the business opportunity and the key strategies for success.
 Profiles of the company's management team.
 Financial requirements and budget allocation.
 The anticipated risk and reward of the business.
Business Concept: This gives the history of the business, the basic nature, and the
purpose of the business. It clearly states the business objectives. It analyses the
economics underlying the opportunity and the key factors that will drive success.
This section is used to describe the company and to explain how it is organized. It
gives the usage, description, & specifications of the products & services to be offered.
Business Strategy: This section provides the SWOT analysis of the firm and
analysis of the business environment. It provides information on the nature of the
industry, competition within the industry, anticipating barriers to entry, the market,
and the customers within the market. The goals of the company and the business
strategy are explained in this section. This section should give the mission, vision,
future plan, and exit strategy of the business.
Management Summary: The success of the business mainly depends on the quality
of the management team. Investors are also keen to know about the people behind
the business who they see as key assets. This section should be able to answer the
following questions:

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 What is the profile of the founders, the team's management philosophy, and their
reputation the business community?
 Who are the current owners, and what percentages do they control?
 How is ownership evidenced-for example, in terms of common and preferred
stock? Have any options, warrants, or convertible bonds that could expand
ownership been issued?
 Which owners are involved in the day-to-day working of the business?
Marketing Plan: The market is where the company's product of service will be sold.
The marketing plan is written after conducting a market analysis. This section
provides information on assessing the market's size and growth, defining the target
market, and articulating the value proposition.
The marketing plan should be clear about all aspects of marketing, including
price, position, promotion, place, and customer value proposition. The marketing
plan provides strategies sell the company's product or service. The marketing plan
should be a dynamic plan used to monitor the progress of the business.
Operations Plan: It gives an overview of the flow of the daily activities of the
business operation & strategies to support them. The operations plan should focus
on the critical operating factors that will make the proposed business a success.
The operations plan describes the physical necessities of the business's
operation, such as the physical location, raw materials, technology, human resource
facilities, and equipment. An operations plan provides a description of the break-
even analysis, quality control measures, and the manufacturing process.
Financial Plan: The financial plan section determines whether or not the business
idea is viable, and is a key component in determining whether or not the business
plan is going to be able to attract any investment in your business idea. This section
consists of an analysis of financial statements such as the income statement, the
cash flow projection, projected balance sheet, break-even charts, cost of the project,
sources, and uses of funds.
Appendix: This section contains document attachments and the milestones of the
project. This comes at the end of the business plan. It contains the market survey
report, financial projections, product and technological specifications, process flow
charts, photographs of the existing or proposed firm, lists of plants and machinery,
organizational charts, and résumés of each member of the management team.

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PRESENTING A BUSINESS PLAN
A business plan should be well-written in crisp and to the point language and
should not contain irrelevant information. It should be written in a professional
manner. The contents of the plan are critical, the document should be attractive,
impressive, and easy to read.
The business plan should be written by one or two key people from the
management team. However, individual sections should be written by those
responsible for implementing the plan. The business plan is a dynamic document
and each version of the document should be clearly labelled and old versions of the
document should be maintained as back-ups. It is appropriate to routinely monitor
it and update it to help track the progress of your business. The contact details of
the people responsible for the business plan should be easily accessible, it is
generally advisable to use generic dates such as months rather than actual dates in
the milestones portion of the business plan.
A good business plan should be brief, clear, and properly organized. Before
writing your business plan, it is necessary to know for whom it is written. Business
plans usually take from one week to three months to write. A business plan is not
only a tool for raising money, it also helps the entrepreneur to identify and define
business goals and to determine the best methods for achieving those goals. The
assumptions made in preparing the business plan should be realistic
The executive summary should be a concise presentation of the major points
of a business plan and is written once the rest of the business plan is complete. The
executive summary is the first section to be read and must engage readers and
excite them about the potential business idea. It should be the most carefully written
of all the sections. It should be able to explain the key ideas and features of the
business concept in two or three minutes.
Oral and Visual Presentation: It is necessary to prepare for an oral presentation of
a business plan. The oral presentation is required in cases such as when the
entrepreneur is participating in a B-plan competition; in front of potential partners
and investors; for potential customers and other stake holders in the business. A
good set of slides should be prepared to support the oral presentation. The visual
presentation enables the presentation of visual information such as product images,
charts, graphs, and numerical tables.

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WHY DO SOME BUSINESS PLANS FAIL?
Some of the business plan fail because of the following reasons:
 Failure to address the customer's problems and needs
 Unrealistic goals set by the promoters
 Lack of commitment to the business by the promoters
 Lack of experience of the promoters
 Lack of professionalism
Failure to address the customer's problems and needs: The business plan should
address the customer's problems/needs/wants. It should clearly state how big the
business opportunity is. The entrepreneur should document customer pain points
before preparing the plan. Customer needs can be identified from direct experience,
letters from customers, or from market research.
Unrealistic goals set by the promoters: Setting goals requires the entrepreneur to
be well informed about the type of business and the business environment. The
goals set by the entrepreneur are based on data and the business plan is no good if
it does not include a lot of data. The goals set by the entrepreneur should be Specific,
Measurable, Achievable, Realistic, and Time-bound (SMART).
Lack of commitment to the business by the promoters: The promoters must
make a total commitment to the business in order to be able to meet the demands
of a new venture. Investors will not be interested in a venture that does not have
committed promoters. Investors also expect the promoter to make a significant
commitment to the business.
Lack of experience of the promoters: A lack of experience will result in failure
unless the entrepreneur can either attain the necessary knowledge of team up with
others who already have experience in this area.
Lack of professionalism: The business plan should be brief, clear, and nicely
organized. It should highlight those points that can attract investors. The
assumptions made in preparing business plan should be realistic.
PROCEDURE FOR SETTING UP AN ENTERPRISE
The formalities for setting up of a business enterprise are shown in Figure 5.1.
Selection of a Project: In order to set up a business enterprise, a suitable project
has to be decided upon. This involves selecting a product or service, and a location
for the unit. Based on these selections, a project feasibility study has to be

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Figure 5.1: Formalities for setting up a Business Enterprise

conducted and then a brief profile has to be prepared for the proposed project. Then
an entrepreneur has to prepare a business plan.
Project selection is the initial decision that an entrepreneur has to make.
Project selection and preliminary activities involve the following:
i. Product or service selection.
ii. Location selection.
iii. Project feasibility study.

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iv. Business plan preparation.
v. Preparation of a project profile
i. Product or Service Selection: The product or service is selected by the
entrepreneur depending on the existing business opportunity. The entrepreneur has
to make a careful analysis in choosing the product/service by considering factors
such as experience of the promoters, marketability of the product or service,
availability of raw material, availability of technology, investment capacity, and
availability of infrastructural facilities.
ii. Location Selection: While selecting the location for the project, the entrepreneur
has to consider factors such as proximity to the market; government policy;
incentives and subsidies; the availability of suitable infrastructural facilities for the
project; the availability of raw material and labour, and the availability of
transportation and communication facilities.
iii. Project Feasibility Study: A project feasibility study is an analysis that involves
finding and documenting potential solutions to a particular business opportunity.
The project feasibility study involves market analysis, technical analysis, financial
analysis, economic analysis, and ecological analysis.
iv. Business Plan Preparation: A business plan is a blueprint of the project which
provides a roadmap to the project. It usually keeps the business on track to reach
its planned goals. It determines where the company needs to go and formulates
responses to contingencies.
v. Preparation of Project Profile: A project profile is a summary of a detailed
project report. It is a snapshot of the project. It is the first step towards the
development of a detailed project report. A project profile usually comprises five
parts: introduction to the project, business opportunity, details of promoters, cost
of the project and means of finance, and risk and return.
Decide on the Constitution: In order to set up an enterprise, the entrepreneur has
to decide on the constitution of the unit at the initial stages of the project. The
various types of constitution of the enterprise are sole proprietor ship, partnership,
limited company (private/public), cooperative, and franchising.
Obtain Registration: The sole proprietor has no legal formalities. Usually MSME
choose to register with the District Industries Centre for obtaining various facilities
and incentives. Partnership firms are governed by the Indian Partnership Act, 1932.

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The terms and conditions of partnership are contained in the partnership deed.
Companies register with the registrar of companies and cooperatives register with
the registrar of cooperatives.
Obtain Clearances from Departments as Applicable: For setting up a new
enterprise in India, a number of clearances and approvals are required from
concerned authorities depending on the type of enterprise. The approvals and
clearances that may be required from various departments are given in below table:

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Arrange for Land/Shed: For any industrial project, a suitable industrial site or a
ready industrial shed is required. The promoters of the unit could consider taking
an industrial site and constructing a shed as per their requirements.
Industrial Land: Once the location of the unit is decided, the land for the project
could be conveniently taken from the State Industrial Areas Development Board.
However, private land could also be purchased, but it has to be converted for
industrial purpose and other necessary legal formalities will have to be completed.
Industrial Shed: For setting up an enterprise, the promoters could consider using
a ready industrial shed. This could be on rent or on ownership basis.
Application Formalities: Application in the prescribed form is to be submitted
along with the following documents:
 A copy of the Provisional Registration Certificate (PRC).
 A detailed project report.
 Certified copies in support of educational qualification, experience, and other
categories as may be applicable.
 Applicable earnest money deposit.
Arrange for Plant and Machinery: The plant unit machinery required for the
project could be purchased from recognized dealers. The plant and machinery could
be taken on a direct or hire purchase scheme.
Direct Purchase: The entrepreneur has to select and buy the required plant and
machinery from recognized and approved manufacturers or dealers. Banks and the
State Financial Corporation maintain a list of approved machinery suppliers.
The entrepreneur should compare the quality, performance, and service
terms, price, and other de tails of the alternate plant and machinery that may be
available in the market. Then they should decide on an appropriate plant and
machinery for their proposed project.
NSIC Hire Purchase Scheme: In the hire purchase scheme offered by NSIC, the
required plant and machinery will be the asset of NSIC and they will lease it to the
promoters of the industrial unit. As per the NSIC scheme agreement, once the
required lease instalment is paid, the assets (plant and machinery) will become the
property of the industrial unit.
Arrange for Infrastructure: The main infrastructure facilities required for an
enterprise are land or shed for the project, power connection, water supply, and

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telephone facility. Single Window Agencies (SWA) are set up at the district level for
the benefit of MSME. The SWA provide clearances for various infrastructure and
other facilities for MSME. The assistance provided by the SWA is given below:
 Grant of land in industrial areas and allotment of sheds in the industrial estates
for all MSME.
 Grant of power up to the limit prescribed by the state government.
 Review and recommendation of sanction of term loans and working capital loans
by the State Financial Corporation and commercial banks within the district for
the new and existing MSME.
 Grant and disbursement of all incentives and concessions for MSME.
 General review of the position regarding problems faced by entrepreneurs and
existing MSME within the district and doing such other work as may help
promotion of the enterprises.
Land and Construction of Building: After deciding the location and site, three
important factors have to be kept in mind before purchasing/leasing the land.
 Availability of basic amenities like power and water.
 Connectivity to nearest rail, road, or port.
 Price of the land.
Prepare Project Report: The project report is an important document and should
be prepared carefully. Banks and other financial institutions decide whether a loan
should be granted, and if granted, the amount that should be sanctioned on the
basis of this report. The project report is generally prepared to cover the following
broad segments:
General information: The following information should be provided:
 Name of the unit and address
 Name of product/service
 Constitution of the unit
 Name of the promoter
 Educational qualification
 Experience
Details of the project: The following information should be provided:
 Product/service details

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 Details of machinery
 Details of raw material
 Utility
 Manpower requirement
 SWOT analysis
Market survey: The market survey report should be enclosed.
Cost of project: The following details should be provided:
 Fixed cost: Land/building, machinery, office equipment, miscellaneous items.
 Working capital: Stock in raw material, semi-finished goods, finished goods, bills
receivable, working expenses.
 Total investment. Fixed capital, working capital, preliminary and preoperative
expenses, interest during implementation, contingency.
 Means of finance: Term loan, working capital loan, own investment.
 Profitability: Revenue, production cost, depreciation, interest, maintenance,
sales and advertisement, profit, annual income before tax, taxes, net profit.
Annexure: Promoter's bio data, organizational chart, details of group units if any,
statutory sanctions/approvals, project feasibility study report, project schedule,
arrangement of land and building, statement of cost of plant, machinery and other
equipment, details of orders and enquiries, process chart, financials for project and
its analysis, financials of the company and its analysis, manpower planning, and
financial statements.
Apply for and Obtain Finance: A formal application needs to be made for loans
from financial institutions and commercial bank. The details of documentation that
need to be provided with the loan application are given below:
 Balance sheet and profit and loss statement for the previous three consecutive
years of firms held by promoters
 Income tax assessment certificates of partners/directors, proof of possession of
land/building
 Architect's estimate for construction cost.
 Partnership deed/memorandum and articles of association of the company
 Project report
 Budgetary quotations of plant and machinery

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A bank issues a sanction or rejection letter after it completes an assessment of
the application for funding. If the loan is approved, the bank sends a sanction letter
to the applicant. Applicants need to indicate in writing their acceptance of the terms
and conditions laid down by the financial banks after receiving the sanction letter.
Implement the Project and Obtain Final Clearances: Entrepreneurs will have to
take necessary steps to physically implement the project after obtaining the various
licenses, clearances, infrastructure facilities and so on. The following are the major
activities that entrepreneurs have to undertake for implementing the project:
 Construct shed.
 Order machinery
 Recruit personnel
 Arrange for raw materials
 Generate a marketing plan.
Erection and Commissioning: Once the building is ready and the necessary plant
and machinery have arrived, entrepreneurs have to take steps to erect the
machinery. The various items of plant and machinery should be erected as per the
prepared plan. Once the production unit is standardized, they can proceed with
commercial production.
Obtain Final Clearances: Entrepreneurs are required to take several final
clearances when the unit is ready for commissioning or as soon as it goes into
production. Accordingly, entrepreneurs are advised to refer to the various
preliminary clearances they have obtained from different departments and take
necessary steps to obtain final clearances/approvals as required.
INSTITUTIONS SUPPORTING BUSINESS OPPORTUNITIES
Most of the enterprises need support at the pre-start up, start-up, development, and
growth phase. An entrepreneur should be aware of governmental and non-
governmental support systems available for his enterprise.
A number of support institutions set up by the central and state governments
and various other agencies help entrepreneurial development in various ways. The
activities of support institutions cover a wide range of services such as financing,
equipment support, technical assistance, training, marketing, and providing
subsidy and grants. The various institutions supporting entrepreneurial activities
in India also shown in Figure 5.2 are given below:

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Figure 5.2: Institutional support for enterprises

1. Central-level institutions: Central level institutions for supporting
entrepreneurial activities are set up by the Central Government. These are National
Board for Micro, Small, and Medium Enterprises (NBMSME), Khadi and Village
Industries Commission (KVIC), Coir Board, Micro Small Medium Enterprises
Development Organisation (MSME-DO), National Small Industries Corporation
(NSIC), National Science and Technology Entrepreneurship Development Board
(NSTEDB), National Productivity Council (NPC), Entrepreneurship Development
Institutes (EDI), National Research Development Corporation of India (NRDCI), and
National Entrepreneurship Development Institutes.

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2. State-level institutions: The state-level institutions for supporting

entrepreneurial activities are set up by the various state governments in India.
These are: State Directorate of industries; District Industries Centres (DIC), State
Financial Corporations (SFC), State Industrial Development Corporation (SIDC);
and State Industrial Area Development Board (SIADB)
3. Other institutions: Apart from central and state level institutions, there are
various other institutions supporting entrepreneurial activities in India. These are
National Bank for Agriculture and Rural Development (NABARD), Housing and
Urban Development Corporation (HUDCO), Technical Consultancy Organizations
(TCOs); Small Industries Development Bank of India (SIDBI), Export Promotion
Council (EPC); Industry Associations; Non-Governmental Organizations (NGOs);
and Business Incubators.
CENTRAL-LEVEL INSTITUTIONS
National Board for Micro, Small, and Medium Enterprises (NBMSME)
The NBMSME was constituted in 2007 to facilitate the coordination and inter-
institutional linkages for the development of MSME. The Board has a statutory
backing and is an apex advisory body constituted to render advice to the government
on all issues pertaining to the MSME sector.
The Office of the Development Commissioner (MSME) serves as the secretariat
for the Board. The Union Minister of Commerce and Industry is the chairman of the
Board. The NBMSME comprises 50 members including state industry ministers;
select members of Parliament; secretaries of various departments of the Central
Government; financial institutions; public-sector undertakings industry
associations; and eminent experts in the field as members.
The Board examines the factors affecting the promotion and development of
MSME and advises the Central Government to facilitate their promotion and
development in order to enhance competition.
Micro, Small, and Medium Enterprises Development Organization (MSME-DO)
The Office of the Development Commissioner, Ministry of Micro, Small, and Medium
Enterprises Government of India (DC-MSME) is a nodal agency for formulating,
coordinating, and monitoring the policies and programmes for the promotion and
development of MSME in the country. Micro, Small, and Medium Enterprises

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Development Organization (MSME-DO) is the apex body for assisting the
government in formulating, coordinating, implementing, and monitoring policies
and programmes for the promotion and development of MSME in the country.
MSME-DO provides a range of common facilities, technology and support services,
marketing assistance, and entrepreneurial development support to MSME.
MSME-DO has over 60 offices and 21 autonomous bodies under its
management. The autonomous bodies include tool rooms, training institutions, and
project-cum-process development centres. The MSME-DO offers advice to the
Central Government in policy formulation and provides liaison services between
different institutions for the promotion and development of the MSME sector.
MSME-DO has a network of 30 MSME development institutes, 28 branch
MSME development institutes, four MSME testing centres, and seven MSME field-
testing stations. There are also two MSME departmental training institutes and one
departmental MSME hand tools development centre. These institutes conduct
consultancy, training, and provide common facility services to MSME.
MSME has initiated various schemes for the promotion of the MSME sector.
These are Small Enterprise Information and Resource Network, entrepreneurship
development programmes management training programmes, WTO cells; motivation
campaigns, skill development programmes, & initiatives for environmental control.
National Small Industries Corporation (NSIC)
This is a GOI enterprise under the MSME. The NSIC work towards the growth of
micro, small, and medium enterprises in the country. The NSIC operates through a
country side network of offices and technical centres. The NSIC provides a package
of services and various schemes to support MSME in the country. These schemes
comprise facilitating market support, credit support, technology support, and other
support services.
The NSIC has devised a number of schemes such as consortia and tender
marketing; single-point registration for government purchase; B2B web portal for
marketing, marketing intelligence; exhibition and technology fairs; export; and
buyer-seller meets to support MSME in their marketing efforts. The NSIC facilitates
the credit requirements of MSME by providing financial assistance for the
procurement of raw materials for up to 90 days; finance through syndication with
banks; and facilitating import of scarce raw materials.

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In order to evaluate the strengths and weaknesses of existing operations and
to take corrective and preventive actions, the NSIC has started operating a
performance and credit rating scheme through agencies such as ICRA, ONICRA,
CRISIL, Fitch, CARE, Brickwork Ratings, and SMERA.
STATE-LEVEL INSTITUTIONS
The state-level institutions for supporting entrepreneurial activities are set up by
the various state governments in India. They are State Directorate of industries and
Commerce, District industries Centres (DIC); State Financial Corporations (SFC),
State industrial Development Corporations (SIDC); and State Industrial Area
Development Boards (SIADB).
State Directorate of Industries and Commerce (SDIC)
The SDIC acts as a catalyst for the overall development of the industrial sector
through effective implementation of policies. The policies developed by the Central
Government serve as guidelines but each state evolves its own policy and package
schemes. The Directorate develops growth centres, industrial parks, export zones,
special economic zones, industrial clusters, and infrastructure required for
industrial development.
The main function of the Directorate is to carry out industrial development in
the state. It also implements policies and schemes of the GOI and the state
government. The Commissioner/Director of Industries and Commerce is the head
of the institution and is assisted by additional directors, joint directors, deputy
directors, assistant directors, and other support staff. In all the states and union
territories the Directorate oversees the industrial activities of the state and the
District Industries Centres (DIC) at the district level.
District Industries Centres (DIC)
DIC are the main focus agencies for promoting MSME at the district level. DIC were
established with the aim of generating greater employment opportunities especially
in the rural and backward areas of the country. The functions and activities of DIC
are monitored by the Directorate of industries and Commerce.
DIC are district-level institutions set up by the government, which provide all
services and facilities to entrepreneurs in one place to set up MSME. These services
and facilities include identification of a suitable scheme, preparation of a project
feasibility report, arrangements for the supply of plant, machinery, and equipment,

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provision of raw materials, credit facilities and input for marketing and extension
services, quality control, and research and entrepreneurial training.
DIC are headed by a joint director. The joint director is assisted by the deputy
director/assistant director, industrial promotion officer, and industrial extension
officer at the taluk level. The functions of DIC are registration of MSME; providing
infrastructure assistance to entrepreneurs, formulating employment generation
programmes; implementing incentive schemes; and conducting entrepreneurship
development and awareness programmes at village, taluk, and district levels. The
functions also include arranging buyer-seller meets, organizing industrial
exhibitions; creating cluster development and sensitizing programmes; recovering
departmental loans; and following up industrial approvals.
State Financial Corporation (SFC)
The SFC is established in each state under the State Financial Corporations Act,
1951. The SFC plays an important role in the development of MSME at the state
level. They aim to finance and promote MSME in their respective states for achieving
balanced industrial growth. They act as catalysts to generate employment and widen
the industrial base. The important services provided by SFC are infrastructure
development, financial services, and term loans.
SFCs are managed by a board of directors, an executive committee, an audit
committee, and principal officers. Branch managers manage operations at the
district level. SFCs have a decentralized system of working. SFCs operate through a
wide network with branch offices, circle office field offices, and internal audit cell.
Financial services to MSME are provided by term loans, discounting of bills of
exchange, and seed capital assistance. SFCs operate a number of schemes for
refinance of IDBI and SIDBI, SFCs have tailor made schemes for women, artisans,
ex-servicemen, disabled people, and special target groups such as the SC/ST.
State Industrial Development Corporation (SIDC)
SIDCs are wholly-owned undertakings of the state governments set up under The
Companies Act 1956. SIDCs act as catalysts for industrial development in their
respective states. They develop land for providing industrial infrastructural facilities
in the form of industrial estates by developing industrial land and readymade
industrial sheds. They also provide facilities such as roads, power, water supply,
drainage, and other amenities required for industrial development.

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State Industrial Area Development Board (SIADB)
The SIADB is a statutory board constituted under the industrial Areas Development
Act, of the respective state governments in India, for example, the Karnataka
Industrial Areas Development Act, 1966, in Karnataka. The SIADB's primary
objective is to promote and assist in the rapid growth and development of enterprises
in industrial areas. The SIADB acquires and provides developed land suited for
industries. It prepares industrial plots of various sizes to suit different industries
along with the requisite infrastructural facilities.
The basic facilities developed by the SIADB in industrial areas include roads,
drainage, water supply, and power supply. The SIADB also provides various
common amenities in industrial areas such as banks, post offices, telephone
exchanges, telecommunications, fire stations, police outposts, canteens, ESI
dispensaries, bus depots, and petrol bunks. It also makes provision for technical
training centres, research and development centres, and common effluent treatment
plants.
OTHER INSTITUTIONS
Apart from central and state-level institutions, there are various other institutions
supporting entrepreneurial activities in India. These are the National Bank for
Agriculture and Rural Development (NABARD); the Housing and Urban
Development Corporation (HUDCO); Technical Consultancy Organizations (TCOs);
the Small Industries Development Bank of India (SIDBI); the Export Promotion
Council (EPC), Industry Associations, Non-Governmental Organizations (NGOs),
and Business Incubators.
National Bank for Agriculture and Rural Development (NABARD)
NABARD was established to provide focused attention to the development of rural
India by facilitating credit flow for the promotion of agriculture and the rural non-
farming sector. It provides refinance assistance to State Cooperative Banks,
Regional Rural Banks, and other approved institutions for all kinds of production
and investment credit to industries, artisans, cottage and village industries,
handicrafts, and other allied activities. NABARD also helps entrepreneurs to procure
loans for setting up industries in any part of the country.
NABARD's primary goal is to promote sustainable and equitable agriculture
and rural prosperity through effective credit support, related services, institution

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development, and other innovative initiatives. NABARD's functions can be classified
into four major categories: credit planning, financial services, promotion and
development; and supervision. NABARD has effectively brought in a number of
innovations in the rural credit domain. Some of them are the formation and linkage
of self-help groups; farmers' clubs, rural infrastructure development funds,
watershed development, the Kisan Credit Card; the district rural industries project,
women and development, the Rural Entrepreneurship Development Programme
(REDP); rural marketing, NABARD Consultancy Services (NABCONS); co-financing;
cluster development programmes; and the Rural Innovation Fund.
NABARD is governed by a board of directors and assisted by approximately
25 departments working for the improvement of the rural economy. It has regional
offices, training establishments, and district development offices for implementing
policies and various initiatives. NABARD extends assistance to the government, the
Reserve Bank of India (RBI), and other organizations in matters relating to rural
development. It acts as a regulator for cooperative banks and Regional Rural Banks
(RRB). It is a refinancing agency for financial institutions, offering production credit
and investment credit for promoting agriculture and developmental activities in
rural areas.
Technical Consultancy Organization (TCO)
A TCO is a premier professional, industrial, technical, and management consultancy
organization. A network of TCOs was established by the all-India financial
institutions in collaboration with state-level financial/development institutions and
commercial banks to cater to the consultancy needs of MSME and new
entrepreneurs. At present, there are 18 TCOs operating in various states, some of
them covering more than one state. Few of them are listed below:
1. Andhra Pradesh Industrial & Technical Consultancy Organization Ltd (APITCOI).
2. Bihar Industrial and Technical Consultancy Organization Ltd (BITCOI.)
3. Gujarat Industrial and Technical Consultancy Organization Ltd (GITCOI).
4. Haryana-Delhi Industrial Consultants Ltd (HARDICON).
5. Himachal Consultancy Organization Ltd (HIMCO).
6. Industrial and Technical Consultancy Organization of Tamil Nadu Ltd (ITCOT).
7. Technical Consultancy Services Organization of Karnataka (TECSOK).
8. Maharashtra Industrial and Technical Consultancy Organization Ltd (MITCON).

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TCOs provide a total package of consultancy services to enterprises,
government departments, commercial banks, and other institutions for activities
relating to industrial development and financing. Initially, the functions of TCOs
were focused on pre-investment studies for enterprises. Over the years, they have
diversified their functions to include the following:
 To prepare project profiles and feasibility profiles.
 To undertake industrial potential surveys.
 To identify potential entrepreneurs and provide them with technical and
management assistance.
 To undertake market research and surveys for specific products.
 To supervise the project and where necessary, render technical and
administrative assistance.
 To undertake export consultancy for export-oriented projects based on modern
technology.
 To conduct entrepreneurship development programmes.
 To offer merchant banking services.
Small Industries Development Bank of India (SIDBI)
SIDBI was founded in 1990 under an Act of Parliament. It is the principal financial
institution for the promotion, financing, and development of the MSME sector and
other institutions engaged in similar activities. SIDBI facilitates the timely flow of
credit for term loans and working capital to MSME in collaboration with commercial
banks. In addition to refinancing and discounting of bills SIDBI participates in
equity loans, term loans, working capital, venture capital support, and various
forms of resource support to banks and other institutions.
SIDBI seeks to empower the MSME sector with a view to contribute to the
process of economic growth, employment generation, and balanced regional
development. The four main functions set by SIDBI for the development of MSME
sector are financing, promotion, development, and coordination. SIDBI finances
technology transfer and upgradation, quality improvement programmes, export
promotion, environmental care, and rural industrialization. It uses the services of
consultants and NGOs at national and international levels for various improvement
programmes on a need basis.

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SIDBI as an apex institution makes use of the existing network of banks and
state-level financial institutions to convey financial assistance to the MSME sector.
It has entered into a memorandum of understanding with many banks,
governmental agencies, international agencies, research and development
institutions, and industry agencies in India and abroad to reach out to and facilitate
the development of the MSME sector in the country
Export Promotion Councils (EPCs)
In order to overcome problems in the marketing of MSME products in the overseas
markets, it is considered desirable to adopt a consortium approach. The export
promotion councils for different industries make efforts to promote the exports of
their member units through direct marketing, developing vendor relations, opening
respective sales outlets abroad, and so on, as a collective expert marketing strategy.
The activities of different councils are targeted to increase the exports from the
sector.
MSME get access to export-related services from the councils. Some of the
councils obtain bulk purchase orders from foreign buyers and distribute these
among member units for supply to the council for onward export. This process
ensures export orders to every member unit and thereby facilitates the timely
delivery of goods abroad. For such a service, the councils charge a nominal fee from
member units. EPCs also offer a package of other services to existing as well as new
members by providing information about the developments taking place in the
international arena. They keep the members informed of the changes with regard to
export-import policies and procedures, customs and excise duty rules, and so on.
Non-Governmental Organizations (NGOs)
There has been an emergence NGOs in different states to provide financial
assistance, information, training, marketing supper, legal advice, and so on to
MSME. The 1991 SSI policy of the Government of India favoured assistance to
MSME through NGOs. A few training programmes for unemployed youth to help
setup industries under the PMRY have been assigned by state governments to some
NGOs. In the present scenario, the role of NGOs is assuming increasing importance
for assistance to entrepreneurs particularly under micro financing activities. Many
NGOs have set up Sub-Contracting Exchanges (SCXs) to promote entrepreneurship
by developing and strengthening linkages between buyers and sellers.

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Assignment Questions:
1. What is a business plan? Describe the reasons for preparing a business plan.
2. Briefly explain the contents/components of a business plan.
3. Why do business plan fail? Explain.
4. With diagram, briefly explain the procedure for setting up an enterprise.
5. List the various institutions supporting entrepreneurial activities in India.
6. Discuss following central level institutions:
a. NBMSME
b. MSME-DO
c. NSIC.
7. Discuss following state level institutions:
a. DIC
b. SDIC
c. SIADB
d. SFC.
8. What is NABARD? Explain its goal and functions.
9. What is the role of TCO? List the functions of TCO.
10. Write short notes on:
a. SIDBI
b. EPC.

Mr. Mohammed Saleem Department of EC PACE, Mangalore