DEPARTMENT OF COMMERCE

ENTREPRENEURAIL DEVELOPMENT NOTES:

AUTHOR: [Link]
SYLLABUS:
UNIT I: Entrepreneurship
Entrepreneur: Meaning of entrepreneurship – Types of Entrepreneurship – Traits of
entrepreneurship – Factors promoting entrepreneurship- Barriers to entrepreneurship- the
entrepreneurial culture- Stages in entrepreneurial process – Women entrepreneurship and
economic development- SHG.

UNIT II: Developing Successful Business Ideas

Recognizing opportunities – trend analysis – generating ideas – Brainstorming, Focus Groups,
Surveys, Customer advisory boards, Day in the life research – Encouraging focal point for ideas
and creativity at a firm level-Protecting ideas from being lost or stolen – Patents and IPR.

UNIT III: Opportunity Identification and Evaluation

Opportunity identification and product/service selection – Generation and screening the
project ideas – Market analysis, Technical analysis, Cost benefit analysis and network analysis-
Project formulation – Assessment of project feasibility- Dealing with basic and initial problems
of setting up of Enterprises.

UNIT IV: Business Planning Process

Meaning of business plan- Business plan process- Advantages of business planning- preparing
a model project report for starting a new venture (Team-based project work).

UNIT V: Funding
Sources of Finance- Venture capital- Venture capital process- Business angles- Commercial
banks- Government Grants and Schemes.

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INTRODUCTION:

The joy of being an entrepreneur:

1. An Entrepreneur is an independent person. Entrepreneurship provides an opportunity

for self-expression and the realization of one’s passion for doing something new and
different.
2. There are numerous opportunities for self-development
3. An entrepreneur makes his/her own decisions and acts on them.
4. Working on one’s own and thus getting rewards yields immense satisfaction and pleasure
for more than what one can get in a job.
5. Reward we be in both monetary and non-monetary terms.
6. An entrepreneur with a science and technology background can introduce new
technologies, develop substitutes for imported components.
7. An entrepreneur generates employment for others
8. An entrepreneur can greatly contribute to the development of the country.

DEFINITION OF ENTREPRENEUR:

According to Peter F. Drucker entrepreneur is an innovator. Entrepreneur is the person who

does his/her own business. They incorporate lot of innovation in doing the business for the
purpose of attracting their target audience and to earn profits.

ENTREPRENEURIAL CHARACTERISTICS:

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Functions of entrepreneur:

Difference between entrepreneur and manager:

On the basis of Entrepreneur Manager

Nature Independent and try to do things Will follow the commands of the
on his/her own entrepreneur
Primary motives Will look for opportunity to earn Will try to do all possible things to
money and capture market make his/her boss happy
Activity To create policies that helps To implement, delegate and
business to grow further supervise employees under
his/her supervision
Reward Profits and gaining of market share Salary and bonus
Level of risk High risk Low risk
Decision making Needs good decision making ability Just need to implement the
ability as it is primary for a person to be a decision of the top level
good entrepreneur. management and to ensure proper
implementation
Capital Here exist huge capital There is no need for capital as they
investment requirement to start or expand are part of the enterprise.
their business.

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Difference between self-employed person and entrepreneur:

On the basis of Entrepreneur / self employed Employee

Risk Involvement of high risk Involvement of very low risk
Level of freedom Enjoys high level of freedom Enjoys very low level of freedom
Nature of income Income by the way of profit share Income by the way of salary given
by the employer
Level of Existence of very high level of Existence of very low level of
innovation innovation innovation
Government Will directly affect entrepreneur Will indirectly affect employees
policies
Leadership He/she must have effective He/she must be a good follower of
quality leadership quality in order to run the their leader’s wish and he/she
business must be a good implementer
Challenges Mostly entrepreneur face challenges Main challenge of employee is to
at the time of heavy competition and keep them updated according to
at the time of raising of capital or the market trends.
additional funds

DEFINITION OF ENTREPRENEURSHIP:

It is the tendency of a person to organize the business of his own and to run it profitability, using
all the qualities of leadership, decision making and managerial calibre etc..

Robert [Link] – Entrepreneurship is that form of social decision making which is performed
by economic innovators.

Musseleman and Jackson – Entrepreneurship is the investing and risking of time, money and
efforts to start a business and make it successful.

MEANING OF INTRAPRENEURSHIP:

Intrapreneurship is simply entrepreneurship in an existing organization. In many ways,

intrapreneurship is easier for an individual than entrepreneurship because it has the support
of an existing organization. However, there are both facilitators and barriers to
intrapreneurship

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IMPORTANCE OF ENTREPRENEURSHIP:

FEATURES / CHARACTERISTICS OF ENTREPRENEURSHIP:

1. It should result in any economic activity

2. It must be an creative activity and must be unique in nature
3. It must crease some sort of purpose
4. Entrepreneurship is highly risk bearing in nature
5. It is a gap filling function.
6. It is a dynamic process
7. It is an innovative function
8. It relates to effective organising of day to day business activity.

FACTORS AFFECTING ENTREPRENEURSHIP IN INDIA:

1. Incompetence and poor management

2. Restrictions in the name of customs and traditions
3. Involvement of high risk
4. Low level of involvement and commitment
5. Lack of motivation
6. Socio-cultural rigidity
7. Lack of proper infrastructure facilities
8. Marketing imperfections
9. Low quality products
10. Lots of red tapes involved to set up a unit
11. Very low package of salaries to employees that leads to unavailability of skilled workers.
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Theories of entrepreneurship:

1. Economic theory
2. Sociological theory
3. Psychological theory
4. Anthropology theory: combination of both sociology and psychological theory.

DIFFERENCE BETWEEN INTRAPRENEURSHIP AND ENTREPRENEURSHIP:

A COMPARISON BETWEEN MEN AND WOMEN ENTREPRENEUR:

On the basis of Women entrepreneur Men entrepreneur

Occupational House wife service and related Experience in line of work
background occupational background competence in managing a business
Source of funds Family and personal funds Personal savings, bank finance and
seed investors
Reason for becoming Earning extra money for the Job frustration
an entrepreneur family and to escape boredom
Motivation Family support and drive to be To create self-image and to earn
an independent women their own identity.
Personality Flexible, tolerant, goal oriented, Goal oriented, self-confidence,
self-confidence and enthusiastic, energetic and
enthusiastic and innovative innovative
Support group Friends, family and husband Professionals, friends and experts.

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CLASSIFICATION OF ENTREPRENEURSHIP:

1. Administrative entrepreneurship: It is a combined effort of general management and

technical area to improve and develop better products and techniques than the existing
ones.
2. Opportunistic entrepreneurship: opportunistic entrepreneurs are people who are
prepared for any opportunity, don't aim to be flawless, find opportunities to exploit and
are ready to work hard.
3. Acquisitive entrepreneurship: The entrepreneurship that learns from other
competencies is called acquisitive entrepreneurship. It acquires something new of value
front, the competitive environment or achieves the competitors' technical capacities. It
keeps entrepreneurship sustainable in a competitive environment.
4. Imitative entrepreneurship: The imitating entrepreneurs are those who immediately
copy the new inventions made by the innovative entrepreneurs. These do not make any
innovations by themselves; they just imitate the technology, processes, methods
pioneered by others.
5. Incubative entrepreneurship: Incubative entrepreneurship is a type of
entrepreneurship that generates and nurtures new ideas and ventures in the
organization. Here, the ideas are constructively executed to ensure profitability and
revenue generation for the company or the organization.

CLASSIFICATION OF ENTREPRENEUR:

1. Innovative Entrepreneur 11. Women Entrepreneurs

2. Adoptive or imitative Entrepreneurs 12. Rural Entrepreneurs
3. Fabian Entrepreneur 13. Non- technical Entrepreneurs
4. Drone Entrepreneur 14. Technical Entrepreneurs
5. Service Entrepreneurs 15. Entrepreneur by inheritance
6. Agricultural Entrepreneurs
7. First generation Entrepreneurs
8. Induced Entrepreneurs
9. Inventor Entrepreneurs
10. Buyer Entrepreneurs – they involve in buying all profitable companies and merge them
in their business conglomerate.

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THEORIES OF MOTIVATION RELATED TO ENTREPRENEURSHIP:

1. MASLOW’S NEED HIERARCHY THEORY:

(a) Physiological needs
(b) Safety needs
(c) Social needs
(d) Esteem needs
(e) Self-Actualisation needs
2. McClellend’s – need theory:
(a) Need for achievement
(b) Need for power
(c) Need for affiliation / recognition

Motivation factors:

1. Internal Factors:
(a) Family background
(b) Desire to do something
(c) Educational background
(d) Occupational background
(e) Desire to head a manufacturing unit.
2. External factors:
(a) Government assistance and support
(b) Availability of inputs like finance, labour and raw material
(c) Encouragement from big business houses – promise to support small business that
provides raw materials.
(d) Availability of infrastructure
(e) Promising demand for the product
(f) Availability of technology

TYPES OF INNOVATIONS:

1. Product innovation 6. Personnel innovation

2. Process innovation 7. Finance innovation
3. Marketing innovation 8. Cultural innovation
4. Research and development innovation 9. Structural innovation
5. Supply source innovation 10. Government relations innovation

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ENTREPRENEURIAL ENVIRONMENT:

VARIOUS FACTORS THAT AFFECTS ENTREPRENEURSHIP:

Political Legal Economic Technological Social Cultural

environment environment environment environment environment environment
Political Government Availability of Availability of Social Family and
philosophy rules and resources required structure peer group
regulations technologies (income influence
level)
Political Procedures Economic Availability of Social values Cultural
atmosphere conditions skilled and beliefs factors
workers
Quality of Approval Economic Better Consumer’s Ethical
leadership durations policies utilization of opinion factors
productive
resources
- - Labour rules -
- - Trade policies -
- - Tariff policies -
- - Incentives -
- - Subsidies -
International environment
Other
International Other
countries
Globalisation WTO capital Global demand countries cost
taxation
market of production
policies

MEANING OF ENTREPRENEURIAL MOBILITY:

It means not only physical migration, but also comprises the entrepreneur’s willingness to
invest their capital at a distance.

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FACTORS AFFECTING LOCATIONAL MOBILITY:

1. Availability of required resources 6. Labour conditions

2. Availability of skilled workers 7. Political uncertainty
3. Language barrier 8. Availability of inputs
4. Need for experienced workers
5. Government policies

TYPES OF RISK IN ENTREPRENEURSHIP:

1. Personal risk
2. Financial risk
3. Know-how risk
4. Vested-interest risk

MEANING OF WOMEN ENTREPRENEUR:

Women or a group of women who initiate, organize and operate a business enterprise. A woman
entrepreneur is therefore a confident, creative and innovative woman. Desiring economic
independence individually and simultaneously creating employment.

CATEGORIES OF WOMEN ENTREPRENEURS: They can be categorised into three types

1. The first group consist of women who are educated and professionally qualified. They
take initiative and manage business like the men does.
2. The second group consist of women who may not be educated or had formal training but
they have practical knowledge and required skill set to run a small or tiny enterprise.
3. The third group of women entrepreneurs are those who work in cities and slums to help
women with lower means of livelihood. There is a service motivated organization to
assist economically backward section of society.

TYPES OF INDUSTRIES/BUSINESSES THAT CAN BE ESTABLISHED BY WOMEN’S:

1. Agarbathi manufacturing 8. Running restaurants, sweet stalls, and soft drink stall
2. Papad making 9. Running of retail shops
3. Special bedspreads making 10. Florist shops & running of small scale industries
4. Embroidery 11. Pickle manufacturing, plumbing works
5. Handicrafts for exports 12. Running tutorial classes, typewriting classes
6. Apparels manufacturing 13. Milk distribution, photographic studios
7. Catering services 14. Running working women’s hostel.
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PROBLEMS FACED BY WOMEN ENTREPRENEURS:

1. Lack of self-confidence 6. Role conflict

2. Male dominated society 7. Lack of education
3. Low risk bearing capability 8. Low mobility
4. Lack of encouragement from family 9. Problem of access to finance
5. Discrimination in upbringing 10. Stiff competition

STEPS TAKEN BY GOVERNMENT:

1. Swaranjayanti gram swarozgar yojana (SGSY): it is created for providing reservations for
women and also to assist women entrepreneurs.
2. SIDBI’s initiative for women entrepreneurs – Mahila Udyam Nidhi (MUN), Mahila Vikas
Nidhi (MVN), Micro Credit Scheme (MCS), women entrepreneurial development
programmes (EDP’s), Marketing development fund for women entrepreneurs.
3. Industrial estate for women entrepreneurs: Specifically created industrial estate that will
have enterprises that are owned and managed by women.
4. Consortium of women entrepreneurs of India: creation of (a) NGOs, (b) Self help group,
(C) institutions (d) establishment of individual enterprises in both urban and rural areas.
5. Micro credit scheme: it was launched in the year 1994 for providing micro finance to
women through SIDBI.
6. Under the scheme of prime ministers Rozar Yojana: launching of women oriented
schemes of SFCs, IDBI etc., for women entrepreneurs and to provide them with financial
assistance.
7. The Rashtriya Mahila Kosh: was set up in 1993 to provide micro credit to poor women
who have no access to financial institutions
8. The Government of India had started training programmes exclusively for self-
employment of women through various schemes such as
(a) STEP – support for training and employment programme of women
(b) NORAD – setting up of training cum employment cum production units
(c) DWCRA – development of women and children in rural areas.

MEANING OF RURAL ENTREPRENEURSHIP:

Rural entrepreneurship can be defined as entrepreneurship emerging at village level which can
take place in a variety of fields of endeavour such as business, industry, agriculture and acts a a
potent factors for economic development.

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FEATURES OF RURAL INDUSTRY:

Very low investment

Low gestation period
Use of traditional skills
Decentralised production system
RURAL INDUSTRY Products are either essential goods or handicrafts
Use of locally available raw materials
Cater to limited markets
Products are becoming popular in foreign markets
for their unique nature

NEED FOR RURAL ENTREPRENEURSHIP:

1. Over 65% of Indian population lives in villages and towns. In order to make villages to
contribute more to GDP rural business is the only feasible solution
2. Rural industries are labour intensive there by helps in controlling unemployment
problems and also indirectly helps in increasing average national income
3. There exist huge income disparities between rural and urban arear. Rural enterprises can
greatly help in reducing this income disparities by proving the employees with
reasonable pay.
4. Rural industries can help in reducing the concentration of industries in urban areas there
by helps in reducing pressure on urban areas which is already crowded in nature.
5. Rural Indians are rich in their traditional arts and handicrafts which is having big export
potential. In order to increase our exports to foreign countries rural enterprises can
greatly contribute to it.
6. Rural entrepreneurship can greatly help in reducing poverty, growth of slums, pollution
of cities and reduction of hunger.
7. Rural entrepreneurship can greatly help in awaken the youth and expose him to various
avenues that are open to them to adopt entrepreneurship and promote it as a career.
8. It also helps in increasing the literacy rate in rural areas. As everyone starts earn they will
make their children to study there by the whole community gets an opportunity to study
and develop in their life.

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TYPES OF RURAL ENTREPRENEURS:

ENTREPRENEURAIL DEVELOPMENT UNDER – TRAINING OF RURAL YOUTH FOR SELF

EMPLOYMENT (TRYSEM):

1. Identification of beneficiaries with entrepreneurial qualities

2. Identification of entrepreneurial opportunities
3. Training in motivation and skills
4. Provision of credit facilities
5. Sharing of risk element by providing investment subsidiary
6. Helping in provision of raw material and marketing
7. Constant monitoring and follow up.

MAJOR PROBLEMS & CHALLENGES IN DEVELOPMENT OF RURAL INDUSTRIES:

Lack of adequate infrastructure facilities

Financial constraints
Lack of technical knowledge
MAJOR PROBLEMS &
Marketing problems
CHALLENGES
Lack of availability of skilled workforce
Unavailability of required raw materials
Legal problems

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MEANING OF INTERNATIONAL ENTREPRENEURSHIP:

It is the process by which an entrepreneur conducting business activities across national

boundaries. It may consist of exporting, licensing, opening a sales office in another country.

VARIOUS WAYS IN WHICH AN ENTREPRENEUR CAN ENTER INTO INTERNATIONAL

BUSINESS:

EXPORTING NON-EQUITY ARRANGEMENTS DIRECT FOREIGN INVESTMENS

Indirect exporting Licensing Taking minority ownership of a
foreign company
Direct exporting Franchising Joint venture
Winning of government contracts Taking majority control or
-
ownership of a foreign company
Winning of private contracts 100% ownership of a foreign
-
company
- - Merger and Acquisition

ENTREPRENEURAIL DEVELOPMENT PROGRAMME:

INTRODUCTION: the governments in economically under developed countries have to make

consistent efforts to develop entrepreneurship for promoting economic growth.

MEASURES TO BE TAKEN BY THE GOVERNMENT FOR PROMOTING ENTREPRENEURSHIP:

1. Providing of quality education

2. Reducing of legal formalities
3. Development of adequate infrastructure facilities
4. Development of higher education and research institutions that actively involves in
development of new technologies
5. To take steps to ensure continuous availability of financial assistance to the need section
6. To reduce the corruption and improve transparency at bureaucratic level
7. To develop better communication system
8. To train and develop already existing enterprises to adopt to new technology that can
make things simpler.

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OBJECTIVES OF ENTREPRENEURIAL TRAINING:

INSTITUTIONS THAT ARE CONCERNED ABOUT ENTREPRENEURIAL DEVELOPMENT:

STATE LEVEL NATIONAL LEVEL

Small industries service institute (SISI) Small industries development corporation
(SIDC)
District industrial centre (DIC) Industrial finance corporation of India (IFCI)
State finance corporation (SFC) Industrial development bank of India (IDBI)
Technical consultancy organization (TCO), Industrial credit and investment corporation
(ITCOT – Industrial consultancy organization of India (ICICI), National institute of small
of Tamilnadu) industry extension training (NISIET)
State small industries corporation (SSIC), National small scale industries development
(SIDCO – State industrial development corporation, Unit trust of India (UTI), Life
corporation in Tamilnadu) insurance corporation of India (LIC)
State level industrial promotion corporation Khadi and village industries centre (KVIC)
Commercial banks SIDBI
State level industries promotion corporation, Minerals and metals trading corporation
(SIPCOT – State industrial promotion (MMTC), National bank for agriculture and
corporation of Tamilnadu) rural development (NABARD)

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PHASES OF ENTREPRENEURIAL DEVELOPMENT PROGRAMME:

PRE-TRAINING PHASE TRAINING PHASE (Methods) POST TRAINING PHASE

Designing of course Individual training Identifying deviations
curriculum
Selection of faculty or Group training Analysing deviation
resource person
Insertion of Lecture method Understanding deviations
advertisement
Selection of potential Written instruction method To find proper solutions
entrepreneurs
- Demonstration method To implement the solution
- Conference method To measure the result
- Meetings -

DEFINITION OF ANCILLARY INDUSTRIES:

Ancillary industries are small industries having investments in fixed assets, plant and
machinery not exceeding 75 lakhs and engaged in (a) manufacturing of components, sub-
assemblies and fixtures, (b) providing services as support function to various production and
services activities of the large industries.

Example: MRF Tyres supply tyres to Air India. Here MRF is called as ancillary industry to the
Airline industries.

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CHARACTERISTICS OF ANCILLARY INDUSTRIES:

ADVANTAGES AND DISADVANTAGES OF ANCILLARY INDUSTRIES:

ADVANTAGES DIS-ADVANTAGES
It is easy and better option for entrepreneurs Running business is a tedious job and needs
to start their own industries. lot of care and continuous monitoring
Big companies concentrate on big ticket Existence of lots of competition
contracts there by small contracts can be
attracted
Low capital requirement High interest rates for getting loans
Helps in creation of employment Difficulty in getting skilled workforce
Direct financial and non-financial support No scope for research and development due
from both government and non-government to financial constraints.
organizations
Comparatively low risk when compared to Still dependent on labour intensive technique
big industrial outlets. due to which it is facing shortage of workers.
Helps in minimizing wastages as orders are Delay in payment of money for the orders
taken from big companies in smaller made by big companies creation money
quantities. rotation problem
Low advertising cost No brand recognition.

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MEANING OF INDUSTRIAL ESTATES:

An industrial estate is a place where necessary infrastructural facilities are made available to
entrepreneurs. Industrial parks, industrial zone, industrial area, industrial township are some
of the other terms used to denote industrial estates.
FEATURES OF INDUSTRIAL ESTATES:

1. Separate plots and sheds

2. Creation of clusters: ( a small piece of area dedicated only for industrial usage)
3. Regional development 7. Different sizes
4. Common infrastructure 8. Industrial areas / estates can be made in all areas
5. Promote industrialization
6. Industrial estates can be promoted by all kind of bodies.

OBJECTIVES OF INDUSTRIAL ESTATES:

1. Ensuring well planned and structured industrial development.

2. To provide the necessary infrastructure.

3. To provide common facilities to a number of industries.

4. To promote development of clusters.

5. To enable small units to source products from one another.

6. To enable dispersal of industries.

7. To promote balanced regional development.

8. To ensure development of backward areas.

9. To provide a climate for smooth functioning of industrial enterprises.

TYPES OF INDUSTRIAL ESTATES:

FACILITY BASED CATEGORY OWNERSHIP BASED CATEGORY

Industrial area Government ownership
Industrial estates Public sector undertaking ownership
Industrial township Private ownership
Industrial buildings Co-operative ownership

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Meaning of creativity:

Creativity involves the application of person’s mental ability and curiosity to some areas, with
the creation, or discovery of something new as a result. – Hicks and Gullett.

The creative process is any thinking process which solves a problem in an original and useful
way. – H. Herbert Fox.

CHARACTERISTICS OF CREATIVE INDIVIDUALS:

TECHNIQUES AND METHODS OF GENERATING NEW IDEAS:

1. Brainstorming 6. Problem inventory analysis

2. Trigger session 7. Group activity
3. Wildest ideas session
4. Scenario writing or scenario day dreaming
5. Suggestions schemes

SOURCES OF NEW BUSINESS IDEAS:

1. Consumers 4. Government
2. Existing companies or your competitors 5. Research and development
3. Distribution channels

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PROCESS OF BUSINESS IDEAS:

1. Identification of various consumer needs and problems

2. Understanding of consumer taste and preference
3. Determination of target audience
4. Development of business idea
5. Giving share to your plan by collecting all related information
6. Looking for other alternatives
7. Finalize the plan
8. Implement the plan
9. Develop good advertising strategy
10. Apply effective CRM system
11. Run the business and look for deviations
12. Identify the problem and its root cause
13. Look for solutions and select appropriate solution
14. Implement the solution and follow up.

DEFINITION OF PROJECT:

A project can be defined as a scientifically evolved work plan devised to achieve a specific
objective within a specified period of time.

CLASSIFICATIONS OF PROJECT:

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QUANTIFIABLE: if the benefits of the projects can be assessed then it is called as quantifiable
project example: spending for industrial development, power generation and road
development.

NON-QUANTIFIABLE: if the benefits of the project cannot be assessed then it is called as non-
quantifiable project ex: spending for defence purchases.

SECTORIAL PROJECT: example: agricultural, transport, irrigation, power, social services and
industrial sector etc…

TECHNO-ECONOMIC PROJECTS: it is the combination of technological factor as well as project

that has huge economic potential. Example: Indian government spending millions of dollars for
space research one of the main reason is to find some rare minerals that has huge economic
potentials.

MEANING OF FEASIBILITY STUDY:

It is usually carried out by business enterprises before entering into a market. Feasibility study
will discuss in detail about the market condition, consumer buying behaviour, scope of the
business, future demand for the product, competition level and the amount of time required to
get back the amount that had been invested.

If the results of the feasibility study is satisfactory in nature then the company will decide to
invest in that particular market and if the results are not as expected then they might looking
for profitable markets for investments.

VARIOUS AREAS OF FEASIBILITY ANALYSIS – BEFORE IMPLEMENTATION OF A PROJECT:

Technical analysis
Economic analysis
Financial analysis
Project areas of appraisal
Commercial and market analysis
and feasibility analysis
Social or society analysis
Environmental analysis
Skill analysis

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ADVANTAGES OF FEASIBILITY STUDY:

Meaning of cost benefit analysis: Cost-benefit analysis is a way to compare the costs and
benefits of an intervention, where both are expressed in monetary units.

Meaning of social-cost benefit analysis: Social cost-benefit analysis is an extension of

economic cost-benefit analysis, adjusted to take into account the full spectrum of costs and
benefits (including social and environmental effects) borne by society as a whole as a result of
an intervention. It is usually done by the government before implementing any project.

Meaning of incentives: something that encourages a person to do something more and work
harder. Increment will be given to those who are performing above average is a kind of incentive

Meaning of subsidies: A subsidy or government incentive is a form of financial aid or support

extended to an economic sector (business, or individual) generally with the aim of promoting
economic and social policy.

Need for incentives:

1. To correct regional imbalances in development

2. To promote entrepreneurship by removing economic constraints
3. To provide competitive strength, survival and growth
4. To create a platform for new age entrepreneurs
5. To promote healthy completion and to remove monopoly or market dominance
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Government schemes/subsidies for businesses:

1. Credit Guarantee Fund Scheme for micro and small enterprises

2. Pradhan Mantri Mudra Yojana (PMMY)
3. This is a business loan type offered to MSMEs by the Government of India. PMMY
disburses the following three types of loans:
(a) Shishu loans up to Rs. 50,000
(b) Kishore loans above Rs. 50,000 but up to Rs. 5 lakh
(c) Tarun loans above Rs. 5 lakh but up to Rs. 10 lakh
4. Subsidy Offered Through National Small Industries Corporation (NSIC)
5. Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)
6. Stand-up India Scheme – specifically for women entrepreneurs
7. Government Subsidy for Small Business for Cold Chain
8. Integrated Development for Leather Sector Scheme
9. Technology and Quality Upgradation Support (TEQUP) Scheme

Various schemes of incentives are in operation:

1. Export and import incentives 8. Land & Building at concessional rates

2. Interest free loans 9. Sales tax exemptions
3. Incentives and subsidy for R&D works 10. Concessional water
4. Transport subsidy 11. Exemption from stamp duty
5. Subsidy/incentives for power generators 12. Provision for seed capital
6. Exemption from property tax
7. Special incentives to women entrepreneurs

PROBLEMS RELATING TO INCENTIVES AND SUBSIDIES:

1. Target group to whom the subsidy is to benefit should be clearly defined, otherwise those
who do not deserve the subsidy may get it.
2. The quantum of subsidy should be adequate to produce the desired results. The quantum
will differ according to the firm’s size.
3. The duration for which the subsidy will be given must be fairly long so it gives sufficient
time for industries to get benefited and repay the subsidy amount
4. Information regarding the subsidy scheme should reach the prospective beneficiaries.
The communication must be complete and clear.

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 5. In the long run subsidy will make beneficiaries inefficient so subsidy should be given until
the firms reach growth stage after that firms should survive on their own.
6. Success and failure of giving subsidy is dependent on economic conditions if the economy
is healthy it will help the subsidy scheme to work if not it will lead to failure
7. The effect of subsidy may be reduced if the administration is inefficient or becomes
corrupt.
8. The subsidy scheme will remain unutilized if the procedure to apply for subsidy is long
and time consuming

DIFFERENCE BETWEEN INCENTIVES & SUBSIDIES

INCENTIVES SUBSIDIES
It is given to encourage employees to perform It is given to support a firm to meet its
will financial needs and help it to grow well
It is given by employer to an employee It is usually given by government to any
particular industries or firm
It leads to increase in companies performance It leads to increase in manufacturing and
production activity
It supports and increases company profits It helps in improving the GDP of the country
It leads to development of staffs of that It leads to creating of employment
particular company opportunity
It leads to career development It leads to societal development
It creates healthy competition among the It creates healthy competition between the
employees of the organisation firms of one particular industry
It creates additional financial stress for the It creates additional financial stress on the
company government
It helps in retaining skilled workers of the It helps in attracting new industries to our
organisation country
It is a micro economic concept It is a macro economic concept

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Role of entrepreneurship in economic development:

Stages involved in successful business plan:

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Environmental pollution due to rapid growth of businesses:

Environment pollution is one of the biggest problem the world is facing now. Rapid
industrialization and mass consumption is one of the major reason for environmental pollution.
Governments across the world are taking various steps to reduce the environmental pollution.

Business play major role in environmental pollution, governments of various nations are
working out solutions to control the environmental pollution shares of businesses.

Measures to control pollution and pollution effects:

1. Voluntary contribution by business to become carbon neutral

2. More emphasis should be given to recycle and reuse
3. Proper waste treatment by government
4. Government intervention through legislation
5. Proper education of general public and should encourage shift to sustainable
consumption
6. More investments needed for research and development so that new and harmless way
of manufacturing products can be found out
7. Providence of financial concession for industries that are implementing pollution control
equipment.
8. High polluting industries must pay environmental cess
9. To give awards and recognition to industries that are giving more emphasis to
sustainable production.

Institutions to assist small scale industries

Central government institutions State government institutions
Department of small scale industry State directorate of industries
State small scale industries development
Small scale industries board
corporation
Small industries development organisation Industrial estates
Specialised institutions District industrial centres
- Technical consultancy organisations

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Small scale financial support institutions

Non-financial Financial
State Central State Central
SIDCO NSIC TIIC IDBI
SPICOT SISI SIDCOT SIDBI
TANSI MSME-DO COOP BANK IRBI
DIC - RURAL BANK NABARD
- - - DEVELOPMENT BANK
- - - MUDRA

VARIOUS SOURCES OF FINANCE TO ENTREPRENEURS IN INDIA:

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LIST OF DEVELOPMENT BANKS:

CHALLENGES FACED BY SMALL BUSINESS IN INDIA:

MEANING OF EXPANSION: expansion is one of the form of internal growth of business. It means
enlargement or increase in the same line of activity. Expansion is a natural growth of business
enterprise taking place in course of time.

Three forms of expansion:

1. Expansion through market penetration: it means expansion of market area coverage

2. Expansion through market development: entering into new market with same product
3. Expansion through product development or modification: making small changes as per
needs and wants of the target audience .
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ADVANTAGES AND DIS-ADVANTAGES OF EXPANSION:

ADVANTAGES DIS-ADVANTAGES
Growth through expansion is natural and Growth is time consuming
gradual
Business grows without making any change Expansion with same product line declines
in organisational hierarchy innovations
Expansion makes possible of effective Dynamic market environment
utilization of existing resources
Gradual growth helps in easy management of Expansion needs extra financing. Finding
enterprise person to finance the company expansion is a
difficult task to accomplish
Expansion results in economies of large scale Existence of heavy competition.
operations

MEANING OF DIVERSIFICATION:

Diversification is another form of internal growth of business. If a business under the same
brand launches multiple product then it is called as business diversification. Example: tata salt,
tata steel, tata tea, tata motors etc… this is what is called as diversification.

ADVANTAGES DIS-ADVANTAGES
Diversification helps an enterprise make Diversification requires huge capital
more effective use of its resources investments
Diversification also helps to minimize risk Diversification has greater impact in goodwill
involved in the business of the company if the products are not up to
the quality
Diversification adds to the competitive High possibility for waste of resources and
strength of the business improper handling of goods
Diversification also enables an enterprise to Diversification makes the management and
tide over business fluctuations and thus coordination job a lot difficult.
ensures smooth running of the business

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TYPES OF DIVERSIFICATION:

1. Horizontal diversification: same product but entering into different market.

2. Vertical diversification: example sugar manufacture will develop a sugarcane farm for
own cultivation of sugarcane instead of buying outside.
3. Concentric diversification: nestle is originally a baby food product producer. They slowly
entered into food industry and now they dominate the whole food market.
4. Conglomerate diversification: single brand with different unrelated products ex: tata
airlines, tata steel, tata motors, Teamspirit (tata garment unit), titan etc….

MEANING OF JOINT VENTURE:

If two company join hands to develop a new product or service then it is called as joint venture.
Example: maruthi & Suzuki, hero & honda are some example of joint ventures.

ADVANTAGES AND DIS-ADVANTAGES OF JOINT VENTURE:

MEANING OF MERGER:

It is a form of external growth strategy. Merger means combination of two or more existing
enterprises into one. In other words when two or more existing company are combined into one
then it is called as merger.

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TYPES OF MERGER:

1. Horizontal merger: entering into different market and buying that country company
2. Vertical merger: buying of companies inside that company for the purpose of expansion
3. Concentric merger: buying all the companies under one single segment for example tata
merging Air India with Vistara and Air Asia
4. Conglomerate merger: merger happens with different companies with different
specialization for the purpose of having product ranges at different segments

ADVANTAGES AND DIS-ADVANTAGES OF MERGER:

MEANING OF ENTREPRENEURIAL NETWORK:

Entrepreneurship is a dynamic process. As such it necessarily requires links to relationships not

only among and between individuals but also among and between a variety of institutions. The
stronger, more complex and more diverse the web of relationship, the more the entrepreneur
is likely to have access to opportunities, the greater are his chance of solving problems and
ultimately the greater the chance of success for the new venture.

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THE ENTREPRENEURIAL NETWORK:

ENTREPRENEURIAL NETWORK RELATIONSHIPS:

Formal and informal relations with suppliers and wholesalers

Contracts or informal relationship with subcontractors
Business relationships Existing contacts with potential customer or clients
Potential contacts with clients or customers through networks
established in prior employment
Formal or informal relationship with bankers, security analysts,
savings and loan managers and investment managers
Professional relationships
Maintaining contacts with public accountants, consulting
organisations import/ export brokers and realtors.
Relationship with previous employers and universities
Organizational
Formal and informal ties with government agencies, state
relationships
agencies, and local political organisations
Membership in local, state, or national professional associations
Attending trade and professional conference
Social relationships
Relationship established through local social clubs, community
organisations, athletic clubs and social events
Family relationships and friendship network
Other relationships Ethnic, cultural and religious affiliations
Relationship with trade groups and unions

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SELF HELP GROUP:

MEANING: Self-help Groups (SHGs) are informal associations of people who come together to
find ways to improve their living conditions. They are generally self-governed and peer-
controlled. People of similar economic and social backgrounds associate generally with the help
of any NGO or government agency and try to resolve their issues, and improve their living
conditions.

Characteristics of self-help group:

1. The ideal size of an SHG is 10 to 20 members

2. The group need not be registered
3. The should meet regularly
4. Members have the same social and financial background
5. The group consist of either only men or only women
6. Monthly meetings are conducted for solving their problems
7. They generally create a common fund by contributing their small savings on a regular
basis.

Functions of self-help groups:

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MEANING OF FRANCHISE:

A franchise is a written agreement that allows a business owner to expand his or her business
by granting franchisees the right to offer, sell or distribute goods or service under the
franchiser’s trademark and utilise a proven marketing plan or system

TYPES OF FRNACHISE:

1. Product and trade name franchises: product and trade name will be given to different
individuals for doing business, by which the original owner will gain market reach.
Marketing and other awareness have to be taken care by the respective individuals.
2. Business format franchise: this is the common and popular mode of franchising here the
original owner will give his/her brand name, product, procedure to make and even
marketing will be done in a common manner. Only franchising deposit and profit share
will be given by the franchisee to the franchiser.
3. Manufacturing format franchise: here the original manufacturer will allow other small
manufacturer to supply spares that is needed for new product development.

WHEN WILL THE FRANCHISE AGREEMENT WILL GET CANCELLED?

1. Fails to reach sales goals

2. If the franchisee indulge in activities that leads to damage in image of the company
3. If the franchisee fails to provide required weekly or monthly progress reports to the
franchisor.
4. Failure to work smoothly with the franchisor
5. Misuse of the franchisor name and equipment
6. Failure in sharing pre-discussed profit share

Advantages and disadvantages to the franchisee:

Advantages Disadvantages
Only few people will run and get into Initial investment can be very high
franchise business so there exist reduced risk
How much investemtn is requried will be very Cannot sell the business without the
clear and no chance for confusion permission of the franchisor
Since it is already an established business no Profit sharing and other rules might be very
need to put additonal effort for marketing difficult to follow
Continous support from franchisor side. Cannot sell other product and limits freedom

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ADVANTAGES AND DISADVANTAGES OF FRANCHISE AGREEMENT:

Advantages and disadvantages to the franchisor:

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MEANING OF LEASING:

A Lease can be defined as a contract where a party being the owner (lessor) of an asset (leased
asset) provides the asset for use by the lessee at a consideration (rental), either fixed or
dependent on any variables, for a certain period (lease period), either fixed or flexible, with an
understanding that at the end of such period, the asset, subject to the embedded options of the
lease, will either be returned to the lessor or disposed off as per the lessor’s instructions.

TYPES FO LEASING AGREEMENT:

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ADVANTAGES AND DISADVANTAGES OF LEASING:

MEANING OF START UPS:

A startup company is a newly formed business with particular momentum behind it based on
perceived demand for its product or service. The intention of a startup is to grow rapidly as a
result of offering something that addresses a particular market gap.

FOUR STAGE GROWTH MODEL OF START UPS:

1. Pre start up stage: the period during which entrepreneurs plan the venture and do the
preliminary work of obtaining resources and getting organised prior to start up
2. Start up stage: the initial period of the business when the entrepreneurs must position
the venture in a market and take necessary steps to assure survival
3. Early growth stage: a period of rapid development and growth when the venture may
undergo major changes in markets, finance and resource utilizations
4. Later growth stage: it is the stage of evolution of small start up into big company.

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HOW DOES A START UP BUSINESS EMERGE?

BUSINESS MODEL OF START UPS

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TYPES OF START UPS:

Various fund raising options for start-ups:

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MAIN REASONS FOR FAILURE OF ENTREPRENEURS:

1. Poor management: incompetence, unbalanced experience, inexperience.

2. Production problems: poor raw material, power cuts, labour problems, lack of technical
knowledge, wastage of material and insufficient quality control.
3. High fixed cost: heavy investment in land and building and market borrowing at high
interest rates etc…
4. Marketing problems: competition from larger and already established companies,
insufficient sales force, low quality of finished goods and recession.
5. Financial problems: allowing longer credit to the purchasers of finished goods, diversion
of short term funds into long term users.
6. Neglect of business
7. Fraud
8. Disaster

*** ALL THE BEST***

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