UNIT-1

BUSINESS CONCEPTS
 What you will know?

 Statement of concept of business

 Who is a potential customer
 Marketing approach
 Where is the money- trend identification
 Micro/ Macro level factors
– Social, political, environmental, Technological factors
 Tap customer’s hidden requirements
 New products- improvement over existing products
 Barriers to new ideas
 Competitor effect
 Effect of patent rights
 Brand name protection
 Is business right for you?
 Are you an entrepreneur?
 Entrepreneurial firm
 How and when to zero in on a project 2
 What is Business?

Definition: Business refers to those economic activities,

which are connected with the production or purchase and
sale of goods or supply of services with the main object of
earning profit. People engaged in business earn income in
the form of profit.

Meanings of Business

 Business has four dimensions of meaning

– A commerce
– An occupation
– An organization
– A System

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Meanings of Business

 Business as a commerce is the process that people

produce, exchange and trade goods and services

 Business as an occupation is the acquired set of

specialized skills and abilities that allows people to
create valuable goods and services

 Business as an organization is the system of task

and authority relationship that coordinates and
controls the interactions between people so that they
work toward a common goal

 Business as a system is a combination of business

commerce, occupations, and organizations that
produces and distributes the goods and services
that create value for people in a society 4
The Concept of Business

 The exchange of goods/services with money for

mutual benefit/profit

 An organization that provides goods and/or

services to earn profits

 All profit-seeking activities that are organized and

directed to convert factors of production into
goods and services or combination between
goods and services for customers in the markets
to achieve the business objectives

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Business Objectives

 Business Profit = Total Revenue –Total Cost

 Economic Profit – business profit that considered

opportunity cost as a part of expenses

 Survival

 Growth

 Social Responsibility

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Who is a potential customer ?

 Customer: A person, company, or other entity

which buys goods and services produced by
another person, company, or other entity.
 Potential customer : A person, company, or
other entity which may buy a particular thing or
avail a service.
 There is a high possibility of this person, company
or entity buying that thing or service.
(Or)
 ' A person, company, or other entity which might
be willing and be able to engage in exchange to
satisfy that need or want'

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Marketing Approach

 Marketing approach begins with getting to know markets

and target clients
– understand their true needs and desires.

 The company thus develops products as solutions adapted

to those clients.

 It then looks for pertinent ways in which to commercialize

– Communicates its existence and its solutions.

 Once this is accomplished, it is then in a better position

– to manage,
– sell and
– deliver value to clients
– persuades them to repeat their purchases.
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Contd…

 In other words, the more one understands the needs of

target markets and clients, the greater the odds of one’s
creating and developing products and services adapted to
those needs.
 One will then be in a better position to promote such
business solutions, using appropriate means of
communication, thus driving sales.
 The last stage of the process is the delivery of the product
or service with an eye toward creating a satisfying buying
experience for the client, building client loyalty as much as
possible.
 If the company delivers the goods properly and gets to
know the client better in doing so, it can in turn develop
more suitable products (the cycle begins anew; the wheel
comes around).

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Where is the money?- Trend identification

 Trend identification: The analysis of

past data and identification through past
changes in a variable's value to determine
if a trend exists and, if so, what the trend
indicates.
 A firm's marketing department is likely to
be interested in sales trends for each of
the firm's products.

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Importance of Trends

 Trends are one of the most valuable elements to

identify if we hope to comprehend, in general, the
type of future we will face.

 They are also extremely important for marketers

and those in business, as many of us catering to
niches, or even general markets, must
understand where real trends are guiding things,
as the survival or profitability of our businesses
will depend on it.

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Spotting and Profiting from Business
Trends

 No matter what business you’re in, watch for trends in the

– fashion,
– property and
– electronics industries
 Often how society reacts to these trends will shape how
and what they buy. 
 You should also look at your target audience and notice
their buying habits as well.  Ask yourself the following
questions:
– How much do they earn? 
– Are they willing to pay more for better service or quality
or are they hunting for the cheapest bargains? 
– How likely are they to tell their friends about their
experience with you?

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 – What gender are they and what is their education level?

– Are they single? Married? Do they have children? All of

these questions can impact how well a trend is received
and how far it expands.

– How do they view the Internet?

– Are they technologically savvy?

– Do they use shopping comparison and research tools or

are they likely to buy the first thing that comes up to their
mind or the first thing that pops up when they search on
the net?

 When checking out current business trends, it’s a good idea

to “look beneath the surface” of the trend and ask yourself –
what makes it popular? 
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Micro and Macro level factors

 In any economy all corporations are affected by micro and macro

economic, social, political, environmental, demographic and
international.

The Micro-environment:

 This environment influences the organization directly. It

includes suppliers that deal directly or indirectly,
consumers and customers, and other local stakeholders.
Micro tends to suggest small, but this can be misleading.
In this context, micro describes the relationship between
firms and the driving forces that control this relationship.
It is a more local relationship, and the firm may exercise
a degree of influence.

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The macro-environment

 This includes all factors that can influence an

organization, but that are out of their direct
control.
 A company does not generally influence any laws
(although it is accepted that they could lobby or
be part of a trade organization).
 It is continuously changing, and the company
needs to be flexible to adapt. There may be
aggressive competition and rivalry in a market.
Globalization means that there is always the
threat of substitute products and new entrants.
 The wider environment is also ever changing, and
the marketer needs to compensate for changes in
culture, politics, economics and technology 15
 The micro-environment, i.e. our external customers, agents
and distributors, suppliers, our competitors, etc.

 The macro-environment, i.e. Political (and legal) forces,

Economic forces, social factors, Technological forces
Socio-cultural forces, and. These are known as PEST
factors.

Economic Factors
Economic factors those affect the growth of entrepreneurship are:
 Infrastructural Facilities
 Availability of Capital
 Market Risks
 Availability of Skilled Labour
 Interest rates
 The level of inflation Employment level per capita
 Long-term prospects for the economy Gross Domestic Product
(GDP) per capita, and so on
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 Social factors

 Is Society the rational thinking type?

 What are the customs, traditions of the society?

 Are education, research, training etc. given adequate importance

& attention?

 Are appointments to responsible positions made on the basis of

competence but not by narrow religious/ caste considerations?

 Does process of hiring skilled & even non-skilled labour also

have skewed considerations of caste, region, affiliation to
political parties?

 Is the competence, aptitude, skill etc. taken into consideration?

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Socio-cultural Factors

 [Link] is the dominant religion?

 [Link] are attitudes to foreign products and
services?
 [Link] language impact upon the diffusion of
products onto markets?
 [Link] much time do consumers have for leisure?
 [Link] are the roles of men and women within
society?
 [Link] long are the population living? Are the
older generations wealthy?
 [Link] the population have a strong/weak opinion
on green issues?
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Technological Factors

 Does technology allow for products and services to be

made more cheaply and to a better standard of quality?

 Do the technologies offer consumers and businesses more

innovative products and services such as Internet banking,
new generation mobile telephones, etc?

 How is distribution changed by new technologies e.g. books

via the Internet, flight tickets, auctions, etc?

 Does technology offer companies a new way to

communicate with consumers e.g. banners, Customer
Relationship Management (CRM), etc?

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 Political factors

The political arena has a huge influence upon the regulation

of businesses, and the spending power of consumers and
other businesses.

You must consider issues such as:

 [Link] stable is the political environment?

 [Link] government policy influence laws that regulate or tax
your business?
 [Link] is the governments position on marketing ethics?
 4. What is the governments policy on the economy?
 5. Does the government have a view on culture and
religion?
 6. Is the government involved in trading agreements ?

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Tap Customer’s hidden requirements

 We have an increasing need to design a

competitive advantage into our services and
products. One of the greatest struggles is
identifying the features and positioning the
product which will provide an advantage and
communicate this value to potential customers.

 We can use modified six sigma techniques to

identify CTQs to translate the VOC into specific
features. These features when mapped against
customers’ unspoken and hidden needs can be
positioned to provide a distinctive competitive
advantage
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 Lets take a look at this specific
methodology to uncover the hidden needs
of customers. We will follow the following
steps to organize the process

 Define VOC requirements

 Obtain the VOC
 Conduct a customer needs assessment
 Design the product/service features
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Define the requirements:
 To start the process it is important to identify where your
fundamental customer needs can be identified. Customer needs
can be identified through customer interviews, sales team
feedback, customer surveys, market research etc.. If you are
targeting a new market segment, identify sources with your target
market characteristics.

 Come up with a list of contacts and sources that will contribute to

your overall assessment. From there decide on the types of
information you require from these contacts. Customer needs can
be technical requirements, financial parameters, turnaround times
etc..

 For example if you are offering technology installation services,

you will want to build a list of companies and people that will be
representative of your target market

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Obtaining VOC
 Begin to craft questions and contact methods to
accurately obtain feedback from these individuals.
 We are uncovering needs here and not validating
what we already think.
 The best way is to conduct one-to-one interviews
to be able to pick up potential hidden needs and
inquire about them in more depth.
 Once we gather the feedback its time to analyze,
group and prioritize responses. It is helpful to
survey customers and it can help you prioritize
the needs uncovered .

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Conducting a Customer Needs Assessment
 Once we gather the VOC, its time to create A
customer needs assessment
 This is where a CTQ flow down method is helpful
to organize VOC requirements.
 To use this method place the customer need on
the LHS and try to dig a bit deeper to describe the
needs in more specific terms.
 The idea is to break down needs into more
specific areas so that you can design features
that are sure to meet their needs
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Designing service features
 This is the final step
 Some features may meets multiple needs, which
is all the better for creating a efficient product/
service.
 Start by looking at very specific needs identified in
your customer needs assessment.
 Your features need to meet these needs in the
most efficient and cost effective means possible
 The main point here is to create innovative
features that meet your customer’s hidden
requirements
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CTQ Flow diagram

Specific Features
need

Need
Features
Specific
Product need
design Features
Specific
need

Need Features

Specific
need
Features

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Barriers to new ideas

 Need for change

If the existing product is satisfying the needs of the consumer there
is no need for a new product.
Ex: Windows 7 and Windows XP

 Receptiveness
The human mind resists change. A innovative product may not be
immediately accepted in the market if it is threatening the
existence of its well established competitor.
Ex: BING and Google

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 Compatibility with the previous versions
A new technology may not be compatible with the existing products which run
on the product or on which the product runs on.
Ex: Several software are not reverse compatible
 Limitations by patents
Not much of research may be done on patented technology. Only the company
holding the patents might be working to improve the technology
 Decision taking body
The board of director of a company should be able to identify the potential of a
new idea
Ex: The mouse was neither an Microsoft/ Apple invention. It was XEROX’s
invention.

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 Funding for research
Adequate funding and advanced facilities may not be available for
testing new ideas

 Lack of parallel technology

A good idea has to be backed with parallel contemporary
technologies. The absence of parallel technology to develop a
idea and bring it into production is a major hindrance.
Ex: Concept cars, Electric Cars, Microsoft’s Project Natal, Sixth
Sense

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 Competitor effect

Effect:  on the organization

 on the customer

On the organization:
– Loss of sales
– Loss of customers
– Loss of employees
– Loss of profits
– Difficulty in surviving
– Price race
– Unlawful practices
– Rivalry
– Trademark/copyright infringement
– Desire to make better quality products/services
– Creativity and innovation
– More efficient production
– Better employee remuneration
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 On the customer:
Better prices/ better service
Better quality
Better customer satisfaction
More product variation
Better and more efficient economy
Better value for money

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 Patents

What Are Patents, Trademarks, and

Copyrights?

 Some people confuse patents, copyrights,

and trademarks. Although there may be
some similarities among these kinds of
intellectual property protection, they are
different and serve different purposes

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 What Is a Patent?

 A patent for an invention is the grant of a property

right to the inventor, issued by the Patent and
Trademark Office of the country

 “the right to exclude others from making, using,

offering for sale, or selling” the invention

 or “importing” the invention into the country. What

is granted is not the right to make, use, offer for
sale, sell or import, but the right to exclude others
from making, using, offering for sale, selling or
importing the invention

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 There are three types of patents:

 1) Utility patents may be granted to anyone who invents or

discovers any new and useful process, machine, article of
manufacture, or composition of matter, or any new and
useful improvement thereof;

 2) Design patents may be granted to anyone who invents a

new, original, and ornamental design for an article of
manufacture; and

 3) Plant patents may be granted to anyone who invents or

discovers and asexually reproduces any distinct and new
variety of plant.

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What Is a Trademark or Servicemark?

 A trademark is a word, name, symbol, or device that is used

in trade with goods to indicate the source of the goods and
to distinguish them from the goods of others.

 A servicemark is the same as a trademark except that it

identifies and distinguishes the source of a service rather
than a product. The terms “trademark” and “mark” are
commonly used to refer to both trademarks and
servicemarks.

 Trademark rights may be used to prevent others from using

a confusingly similar mark, but not to prevent others from
making the same goods or from selling the same goods or
services under a clearly different mark.

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 What Is a Copyright?

 Copyright is a form of protection provided to the authors of

“original works of authorship” including literary, dramatic,
musical, artistic, and certain other intellectual works, both
published and unpublished.

 Copyright Act generally gives the owner of copyright the

exclusive right to reproduce the copyrighted work, to
prepare derivative works, to distribute copies or
phonorecords of the copyrighted work, to perform the
copyrighted work publicly, or to display the copyrighted work
publicly.

 The copyright protects the form of expression rather than

the subject matter of the writing. For example, a description
of a machine could be copyrighted, but this would only
prevent others from copying the description; it would not
prevent others from writing a description of their own or from
making and using the machine. Copyrights are registered by
the Copyright Office 37
 Patent Laws

 The patent law specifies the subject matter

for which a patent may be obtained and
the conditions for patentability. The law
establishes the Patent and Trademark
Office to administer the law relating to the
granting of patents and contains various
other provisions relating to patents.

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What Can Be Patented

 The patent law specifies the general field of

subject matter that can be patented and the
conditions under which a patent may be obtained.

 Any person who “invents or discovers any new

and useful process, machine, manufacture, or
composition of matter, or any new and useful
improvement thereof, may obtain a patent,”
subject to the conditions and requirements of the
law. These classes of subject matter taken
together include practically everything that is
made by man and the processes for making the
products
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 The patent law specifies that the subject matter
must be “useful.” The term “useful” in this
connection refers to the condition that the subject
matter has a useful purpose and also includes
operativeness, that is, a machine which will not
operate to perform the intended purpose would
not be called useful, and therefore would not be
granted a patent. A patent cannot be obtained
upon a mere idea or suggestion.

 The patent is granted upon the new machine,

manufacture, etc., as has been said, and not
upon the idea or suggestion of the new machine.
A complete description of the actual machine or
other subject matter for which a patent is sought
is required.
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Novelty And Non-Obviousness, Conditions
For Obtaining A Patent

 In order for an invention to be patentable it must

be new as defined in the patent law, which
provides that an invention cannot be patented if:
“(a) the invention was known or used by others in
this country, or patented or described in a printed
publication in this or a foreign country, before the
invention thereof by the applicant for patent,” or
“(b) the invention was patented or described in a
printed publication in this or a foreign country or in
public use or on sale in this country more than
one year prior to the application for patent

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 If the invention has been described in a printed publication
anywhere in the world, or if it was known or used by others
in this country before the date that the applicant made
his/her invention, a patent cannot be obtained. If the
invention has been described in a printed publication
anywhere, or has been in public use or on sale in this
country more than one year before the date on which an
application for patent is filed in this country, a patent cannot
be obtained. In this connection it is immaterial when the
invention was made, or whether the printed publication or
public use was by the inventor himself/herself or by
someone else. If the inventor describes the invention in a
printed publication or uses the invention publicly, or places
it on sale, he/she must apply for a patent before one year
has gone by, otherwise any right to a patent will be lost. The
inventor must file on the date of public use or disclosure,
however, in order to preserve patent rights in many foreign
countries.
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 Even if the subject matter sought to be patented
is not exactly shown by the prior art, and involves
one or more differences over the most nearly
similar thing already known, a patent may still be
refused if the differences would be obvious. The
subject matter sought to be patented must be
sufficiently different from what has been used or
described before that it may be said to be
nonobvious to a person having ordinary skill in the
area of technology related to the invention. For
example, the substitution of one color for another,
or changes in size, are ordinarily not patentable.

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Brand Name Protection

 Brand names are protected through “TRADE

MARK “

 All businesses should have a registered trade

mark. As a minimum, the business or main brand
name should be registered

 This is the only way to stop others from copying

names, logos, slogans or other things.

 Business name registration alone does not work.

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 Contd…

 Many people think that registering a business name means

that it is protected and it stops other people from using the
same business name.
It doesn't!

 Registering a business name is almost useless for

protection purposes.

 Registering "Ultrashine Carwash" in Chennai does not stop

someone else from setting up their own "Ultrashine
Carwash" in Mumbai.

 Secondly, it does not stop someone from registering a very

similar name - even in the same state. Examples are
"Ultrashine Car Cleaning" or "Ultrashiny Carwash".

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 Contd…

 The only real function business name registration

has is to notify the government of the owner of the
business.

 The same applies with company (ie. Pvt. Ltd.)

names.

What happens if clients do not register a trade

mark?

 If Ultrashine Carwash is not registered as a trade

mark, it is very expensive and difficult to stop
someone else from calling their business exactly
the same name.
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 What happens if you register a trade mark?

 When a business registers "Ultrashine Carwash"

as a trade mark, it will have the automatic legal
right to stop anyone from using the name. It will
have the right to sue the other company for
"Trade mark infringement" law.

 All it will need to show the judge is that it has

registered the name and that the other company
is using the same or a similar name. The court is
likely to order them to change their name and to
pay compensation money.

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 Contd…

 Most importantly, when businesses have a registered trade

mark, they can use the symbol ®. Just by using this symbol,
most copycats are scared off so they may not even have a
problem to begin with.

 It is very important for businesses to register everything that

they do not want others to copy.

This can include:

 • Name
• Packaging
• Logo
• Colours
• Slogan
• Sounds
• Shapes
• Smells
 Because trade marks are powerful tools, businesses need
to register their trade marks.
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 Are you an entrepreneur?
Is this business right for you?
Entrepreneurial firm

– Its taken from a French word “entrprendre”

which means to “undertake”
 Who is an Entrepreneur ?
– An urge to build
– Want to make the “future state” the “present
state”
– Take an idea off the ground and keeping it
afloat
– A true entrepreneur is a doer not a dreamer

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Qualities of an entrepreneur

 Passionate
 A strong urge to create
 Leader
 Often unconventional
 Has a GOAL and not a WISH
 Ability to take Risk – Leave the comfort zone
 Focus
 Commitment
 Perseverance
 Sees the Big Picture
 Roll up the sleeve / Get your hands dirty attitude
 Delegation
 Always thinking about the idea and validating it

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 Opportunity –
– Most of the things worth doing in the world had been
declared impossible before they were done – Louis D.
Brandeis
 Staying Power –
– Success seems to be a matter of hanging on after
others have let go
 Planning
– Fail to Plan and you Plan to Fail
– “For everything you must have a plan” – Napoleon
 Handling Adversity
– There is no education like adversity – Benjamin Disraeli

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 Hustler
– Everything comes to him who hustles
while he waits – Thomas Edison
 Aggressive
– Impatient, Restless, Need it now
 Not worried about details
 Compromise quality of life
 Handle social pressures
 Relationship – People person

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Attributes in an entrepreneur that you can learn in
College

 Leadership
 Resourceful
 Passion
 “Make it Happen” attitude
 Identify and build a team
 Unconventional
 Commitment
 Focus
 “Can be done” – Don’t worry about details
 Seizing an “Opportunity”
 Learn from your instructors, friends, environment
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Essential Ingredients

 Idea
 Vision
 Passion
 Money – friends and family before taking
professional money, Incubation
 Address a customer need
 Your partners
 Market
 Execution Plan (not all the details)
 How will you make money?

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 Idea
– Validate from advisors, seniors, market
– Barrier to entry
– Impact on the customer base
 New Idea – Product or Service
 Existing – Cheaper, Faster, Better

Passion
- All success stories have a common factor – PASSION
- High achievers – passionate people
- Self driven and motivated
- Goal oriented not technique oriented
- Passionate people innovate

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Zero in on a project

The moment you see an opportunity to make some money

 Analyse - the product and the market

 Talk to entrepreneurs in the same field
 Conduct market survey
 Find and compare suppliers of
 Raw materials
 Machinery
 Equipments
 Service providers etc.
 Calculate the economics
 Fixed costs
 Variable costs
 Maintenance costs
 Operational costs
 Contingencies etc.

 Prepare a business plan

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End of unit

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