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1 entrepreneurship-1

  1. 1. K’s Entrepreneurship &Practical Business Training Ks 1
  2. 2. EntrepreneurshipAn activity that aims at starting,establishing & increasing the sizeof an enterprise that marketsgoods or services Ks 2
  3. 3. EntrepreneursMen or Women who set up andmanage their own business Ks 3
  4. 4. Characteristics of aSuccessful Entrepreneur Self Motivated Taking InitiativesOrganizing Resources Taking Risks Innovating Ks 4
  5. 5. Entrepreneurship vs. Economic DevelopmentIncrease in overall productivity Increase in employment Transfer of technology Increase in exports Ks 5
  6. 6. Entrepreneurial Competencies
  7. 7. Entrepreneurial Competencies 12 Essential Competencies required in an entrepreneur1. Commitment 6. Opportunity Identification2. Persistence 7. Systematic Planning3. Information seeking 8. Problem Solver4. Self-Confidence 9. Persuasive5. Concern for efficiency 10. Purely professional -& high Quality nothing personal Ks 7
  8. 8. Entrepreneurial Competencies Initiative Case StudyCase Study of Gurdeep & his 3 friends who could not start their software business because of lack of INITIATIVE Ks 8
  9. 9. Entrepreneurial Competencies Persistence Case StudyCase Study of Mrs. Lal who survivedfrom construction problems,electricity problems, theft, outdatedtechnology, seizure of Land & buildingbut still managed to make project asuccess because of PERSISTANCE Ks 9
  10. 10. Entrepreneurial Competencies Commitment Case StudyCase study of Mrs. Bhatia, Anentrepreneur having a unit ofknitting cardigans who worked byher own self continuously formany nights to keep up to herCOMMITMENT Ks 10
  11. 11. Entrepreneurial Competencies Problem Solver Case Study• Case study of Mr. Ramalingam who played trick on electricity department to get his work done Ks 11
  12. 12. Entrepreneurial Competencies Purely professional – Nothing personal Case Study• Case study of Mr. Vishal Sharma who suffered huge loss in his Rubber Chappal (Boiler) manufacturing unit because of personal attitude• Case study of Mr. Narayanan who suffered losses in his finances due to an incompetent Finance Manager Ks 12
  13. 13. Entrepreneurial Competencies Persuasion Case Study• Case study of Mrs. Bharti who managed to get loan from bank because of PERSUASION Ks 13
  14. 14. Entrepreneurial Competencies Major Mental Blocks in starting a businessI don’t have money, I cant do businessI am too young, I cant start a businessI am a womenI am a housewife, I don’t have time to do businessI am in service, I cant even think of a businessI don’t have any family background of business Ks 14
  15. 15. Entrepreneurial Competencies Case Study of Macksalin Kharmudai• 19 yr old boy from shillong, came from a tribal family, the eldest of the 5 children, father a govt. employee• Learned some works in welding, fabrication, carpentry etc• Father expired, Macksalin left the school, being the eldest son came up with all the responsibility of the family.• Macksalin plans to set up a fabrication unit at Shillong• Applies for a loan of 1.5 Lacs to Meg.IDC, MIDC wanted him to invest at least 25%. He had no money, he requested for some money from relatives and also pledged a small piece of land in the village and started up.• Took a land at rent and constructed a shed, employed 2 workers & started visiting contractors & clients for orders• Started getting small orders, he always use to work on the low margins & give high quality works to customers• Today he is a well established fabricator for shutters, gates, grills 15 Ks etc.
  16. 16. Entrepreneurial Competencies Case Study of Geeta Khandelwal• Geeta M.A. (Socio) was a housewife & had one child, husband was in the job in addition he had also established a small unit for manufacturing ferrous & non-ferrous spare parts for melting arc furnaces• Met with an accident, husband died on-the-spot, Geeta and her child were saved• Geeta went financially weak, she took up the task for restarting the unit of her late husband• She sold the land, shifted the machinery in her house garage, Sold her jewellery to get the working capital, finally started production• She personally went to clients to do her sales calls along with her small child• Her persuasive competency helped her to get an order from BHEL• Finally established herself in the market Ks 16
  17. 17. A Few Indian Leaders of Entrepreneurship Ks 17
  18. 18. Entrepreneurial Competencies Case Study of Reliance• Name: Mr. Dhirubhai Hiralal Ambani• Education: High School• Previously: Gas Station Attendant• Presently: Founder Chairman Reliance Group Ks 18
  19. 19. Entrepreneurial Competencies Case Study of Reliance• Dhirubhai’s father was a school teacher and he started his career with selling Bhajia• At the age of 16 in 1948, he went to Aden, Yemen & took up as the Gas station attendant & later as a clerk in a oil company• In 1958, he returned back to India with Rs.50,000/- & started textile trading company• In 1960, he started his own textile unit• In 1977, his gross sales was 67 crores, he now needed to expand the capacity of his unit, instead of going to bank for money he went to public & by 1980 he doubled the capacity of the plant• By the year 2002 Reliance was making a turnover of 75,000 crore Ks 19
  20. 20. Entrepreneurial Competencies Case Study of Cadila• Name: Late Mr. Raman bhai Patel• Education: B. Pharma• Profession: Teacher in a pharmaceutical college• Presently: Ex. M.D., Cadila Ks 20
  21. 21. Entrepreneurial Competencies Case Study of Cadila• Name: Mr. Indravadan Modi• Education: B.Sc. (Tech.)• Previously: Chief Chemist in a Laboratory• Presently: M.D., Cadila Ks 21 K’s
  22. 22. Entrepreneurial Competencies Case Study of Cadila• Planned to start their enterprise, but were discouraged by parents• Both pooled Rs.26,000/- to start on their own• Ramanbhai would continue the job and will help after working hours whereas Modi would run around for establishing the business• Rented a bungalow @ Rs.50/- per month in March 1952, they started the production work• They produced 2 products Livirubra & Cadilagripe, No employees• From 5 – 10 AM they were doing production, then do sales calls, call the doctors and give them the samples, After 2 again do production till 5 PM, From 5- 8 PM, deliver the material on their cycle• After 2 years a sales rep. was hired• Today CADILA has 14 offices & turnover of over Rs.100 crores Ks 22
  23. 23. Photographs ofLate Mr. Raman Bhai Patel Ks 23
  24. 24. Entrepreneurial Competencies Case Study of Airtel• Name: Mr. Sunil Mittal• Education: Graduate from Punjab University• Previously: Hired Rs.20,000/- to start up a business of cycle spare parts in Ludhiana• Presently: M.D. Airtel Ks 24
  25. 25. Entrepreneurial Competencies Case Study of Airtel• Soon discovered that business can not grow beyond a limit, he left that business and came to Mumbai in the year 1979• In 1982 started the business of importing portable Gensets from Japan, the business was running well but suddenly the Government allowed the manufacturing of such Gensets in India itself, Mr. Mittal has to close down the business• In 1986 started the business of telecom equipments, Fax machines, Cordless Phones & apparatus, in the meanwhile the GSM services were introduced in India in 1992 and TRAI rolled out a tender inviting bids for various telecom circles• Mr. Mittal submitted his bid for Delhi circle. His bid happened to be the highest one & he was given license to operate Mobile services in Delhi• Today Mr. Mittal operates in over 18 circles through out India and is the largest Telecom operator of India• Biggest Telecom Company of the world VODAFONE has invested over 1.5 Arab Dollars in this company in various projects Ks 25
  26. 26. Entrepreneurial Competencies Case Study of Biocon• Name: Mrs. Kiran Mazumdar Shaw• Education: Master in Brewing Technology from Melbourne University• Presently: M.D., Biocon India Ltd. (Turn Over – 800 Crore) Ks 26
  27. 27. Entrepreneurial Competencies Case Study of Biocon• Mrs. Kiran had her education from Bangalore, was a topper in Science of Bangalore University• Went to Australia for a Masters degree in Brewing, topped there as well• In 1978, at the age of 25, she planned to start a unit of manufacturing enzymes, she went to a bank with her proposal but her proposal was turned down• She started on her own with a capital of Rs.10,000/- & a garage at home as her office• Today after 25 years, Mrs. Kiran is the richest women of India & her company is making revenues in the tune of 800 Crores Ks 27
  28. 28. Entrepreneurial Competencies Case Study of Career Launcher• Name: Mr. R. Satya Narayan• Education: MBA, IIM Bang.• Previously: Executive with Ranbaxy Labs• Presently: M.D., Career Launcher (Turn Over – 70 Crore) Ks 28
  29. 29. Choosing YourBusiness
  30. 30. Entrepreneurial Opportunities Agriculture Channel / Trading Dealer / Distributor / Wholesaler / Franchising SSSBE (Small Scale Service & Business Enterprise)(Dry cleaning/ Tailoring/ Photo Lab/ Beauty parlors/ Crèches/ etc.) Manufacturing Industries (SSI / Tiny / Cottage) Ks 30Spices/ Bread/ Biscuits/ Paints/ Soaps/ Detergents/ Hosiery etc
  31. 31. ManufacturingIndustry SectorsChemical – Inks / Paints / Detergents / etcElectrical – Tandoor / Toaster / Auto LampsRubber – Chappels / Erasers /Plastic – Mug / Bucket / Frames / etcFood – Pickles / Bread / Buns / Spices / etcHosiery – Undergarments / T-Shirts / DyeingGlass & Ceramics – Crockery / Mirror / Tiles Ks 31
  32. 32. ManufacturingIndustry Sectors• Mechanical - Pumps/Pistons/Stpl. Pins etc• Leather - Purses / Chappels / Shoes etc• I.T.& Electronics - Amplifiers / TV Tuners / UPS / Weighing Scales / Transformers etc Ks 32
  33. 33. Manufacturing Industries Cottage / Household IndustriesIndustry where the products are manufactured in-house, using locally available raw materials, notmass manufactured & usually traditional innature Handlooms, Paintings, Handicrafts, Pottery, Carpet weaving, Wood work,Recent Additions to this category: Atta chakkis (flour mills),clay and modelling with plaster of paris, dairy products, drycleaning,, milk cream separation, manufacture of jute products,manufacture of bindi, photo-copying of drawings, packaging ofshampoos, packaging of hair oil, rubber stamps, screen paintingand mixing and packaging of utensil washing powder. Ks 33
  34. 34. Manufacturing Industries Tiny Industries / Micro EnterprisesIndustry where the investment in plant& machinery are calculated up to Rs. 25LakhsItems like Land, Building, some quality control &pollution control equipment are not included in thecalculation – Only investment in plant & machineryis considered Ks 34
  35. 35. Manufacturing Industries Small Scale Industries (SSI)Industry where the investment in plant& machinery are calculated above 25Lakh but does not exceed Rs. 5 CroreItems like Land, Building, some quality control &pollution control equipment are not included in thecalculation – Only investment in plant & machineryis consideredIndustries like Hosiery, Stationery items, Drug & Pharmacy & Sports goodshave an investment limit of 5 Crore to be in SSI’s Ks 35
  36. 36. Manufacturing Industries Ancillary EnterpriseIndustry engaged in the manufacturingof parts, components, tools, etc, whichproposes to supply at least 50% of itsproduction or services to one or more ofthe industrial undertakings & where theinvestment in plant & machinery are upItems likeCrore are termed as Ancillaryto Rs. 1 Land, Building, some quality control &pollution control equipment are not included in theEnterprisecalculation Ks 36
  37. 37. Manufacturing Industries Medium Scale EnterpriseIndustry where the investment in plant& machinery are above Rs. 5 Crore andup to Rs. 10 Crore are termed as MediumScale EnterpriseItems like Land, Building, some quality control &pollution control equipment are not included in thecalculation – Only investment in plant & machineryis considered Ks 37
  38. 38. Service Industry Micro Scale Service EnterpriseService enterprise where an investmentin fixed assets is calculated up to Rs. 10LakhsItems like Land, Building are not included in thecalculation – Only investment in equipment isconsidered Ks 38
  39. 39. Service IndustrySmall Scale Service Business Enterprise (SSSBE)Service enterprise where an investmentin fixed assets is calculated to be morethan 10 Lakh but does not exceed Rs. 2CroreItems like Land, Building are not included in thecalculation – Only investment in equipment isconsidered Ks 39
  40. 40. Service Industry Medium Scale Service Business EnterpriseService enterprise where an investmentin fixed assets is calculated to be morethan 2 Crore but does not exceed Rs. 5CroreItems like Land, Building are not included in thecalculation – Only investment in equipment isconsidered Ks 40
  41. 41. SSSBESmall Scale Sector Business Enterprise Advertising Agencies Marketing / Industrial Consultants STD / PCO / FAX / XEROX Centers Auto / TV / Refrigerator / Watch / etc. Repairing Centers Beauty Parlors Crèche Photography Lab Dry Cleaning Tailoring Ks 41
  42. 42. Repair & Maintenance ServicesAutomobile Repairs2-Wheelers / 4-Wheelers / etc.Electronic RepairsAC / Fridge / TV / Stereo / Washing Machines etc.Electric RepairsIron / Fans / Mixers / Coolers etc.Mobile Phone Repairs Ks 42
  43. 43. Professional ServicesMedical Services DoctorLegal Services LawyerPlacement Services Placement ConsultantsConstruction Services ArchitectsCompany Affairs Chartered Accountants Ks 43
  44. 44. Service EnterprisesSchools EducationProfessional Colleges Higher EducationHotels Temporary AccommodationBanquet Halls Wedding facilitiesInternet Cafes Internet surfingRestaurant Food & Good timeGymnasiums Health servicesClubs Socializing & spending good times Ks 44
  45. 45. Channel / Trading• FMCG Sector / Non Durable Sector / Consumer Durable SectorSuper stockiest – stockiest – retailerSuper distributor – distributor – retailerCompany - retailer Ks 45
  46. 46. The Million Dollar QuestionWhat business should I start ? Ks 46
  47. 47. Choosing your business• Study your own selfWho am i ?What can i do ?What i can not do ?Where do i stand ?What do i want ? Ks 47
  48. 48. Top Ten Techniques.that help you find the right business opportunity for you Ks 48
  49. 49. Choosing your business•Technique No. 1Look at the nature around you Ks 49
  50. 50. Choosing your business•Technique No. 2Add a little value add to the existing product• Ganga Water• A car signed by Sachin tendulkar• Air, water & a smile is free with patrol Ks 50
  51. 51. Choosing your business•Technique No. 3Join the established markets• Ready Market & Customers• Ready availability of raw materials, skilled workers• Easy availability of finances from local banks Ks 51
  52. 52. Established MarketsFurnishing Fabrics PanipatPower loom Bhiwandi & SuratMachine Tools Batala, FaridabadBrassware Jamnagar, MoradabadKnitwear Ludhiana, TrichyGem & Jewellery JaipurDiamond Cutting & SuratPolishingLeather Chennai, Kanpur, AgraElectrical App. Faridabad Haryana Ks 52
  53. 53. Choosing your business•Technique No. 4 Look at the requirements of the industries around you & in the pipeline• Raw material requirements• Consumable items requirements• Packaging Ks 53
  54. 54. Choosing your business Look at the industries around you Case Study of Mr. Sapan Jhavar• Mr. Sapan Jhavar is B.E. and has got good experience in the Metallurgical Industry• 6 Pharma factories in his region and one tooth paste manufacturing unit who have regular requirement of tubes• All of them showed good interest if they could locally get these tubes• One tube manufacturing facility already operational in town.• Sapan started the unit and kept the price marginally lower then the other factory• For One year he could not get any orders from any54of Ks these companies
  55. 55. Choosing your business Look at the industries around you Case Study of Mr. Sapan Jhavar What actually happened ???• Out of 6 pharma factories one has invested in the tube factory• The purchase managers of 2 of the factories had understanding with the existing tube factory• One of the factory bargained by showing the availability of tubes locally and got better price and service from the existing supplier• One of the factory bargained in terms of the credit with the existing supplier• The nephew of the director of the tooth paste company was already in the business of tubes so they did not shifted to the other supplier Ks 55
  56. 56. Choosing your businessLook at the industries around you Case Study of Mr. Sapan JhavarWhy did they encouraged Mr.Sapan to start the project ?? Ks 56
  57. 57. Choosing your businessLook at the industries around you Case Study of Mr. Sapan JhavarWhy did they encouraged Mr.Sapan to start the project ??An extra supplier is always welcome so that incase of any problem with the existing supplierthey have a second option ready with them Ks 57
  58. 58. Choosing your business•Technique No. 5Look at the waste of the industries around you• Use the By-products as a resource Ks 58
  59. 59. By-products from some IndustriesIndustry By-product Commercial productSugar Mill Bagesse / Press Cattle Feed / Mud / Molasses Paper / Wax / Chalk / Chemical /Steel Plants Naphthalene Alcohol dyestuffTextile Pieces of small Tiny garments sizesFertilizer Gypsum Plaster boardPlant Ks 59
  60. 60. Choosing your business•Technique No. 6Think of an absolutely new & original idea Ks 60
  61. 61. Business based on new ideasTime-share resortsFire extinguisher for homes & offices (CF)Water ParksDating ServiceSynthetic soft drink concentratesPre-cooked vegetables & paranthasMulti Marketing Concept (Amway) Ks 61
  62. 62. Choosing your business•Technique No. 7Study the statistics available on different businesses Ks 62
  63. 63. Literature available on Business StatisticsLiterature Published byHandbook of Industrial Ministry of IndustriesStatisticsGuidelines of Industries A journal published by the Ministry of IndustriesHandbook of statistics Confederation of Indian Industries Ks 63
  64. 64. Industry-specific LiteraturesIndustry Literature / JournalsEngineering Current Engineering PracticeHosiery Hosiery & Textile JournalPaint ColourageRubber Rubber news / Rubber IndiaPlastic Popular plasticWool Woolens & worsteds of IndiaChemical Chemical weeklyFood Food Industry NewsLeather Indian Leather Ks 64
  65. 65. Choosing your business•Technique No. 8Take ideas from other markets• Developed countries – Undeveloped Countries• One State - Another• City – Towns - Villages Ks 65
  66. 66. Ideas that came to India from Developed Countries Fast Food Restaurants Amusement Parks Personal Computers Credit Cards Coffee Shops Departmental Stores Sanitary NapkinsKs 66
  67. 67. Choosing your business Take idea from other markets Case Study of Mr. Praveen Jha Returned to his hometown inAhmedabad from USA Wanted to invest in the real estatebusiness Ahmedabad either had Bungalows forhigh class or Flats for lower class In USA Row Houses are a commonthing He introduced the concept of RowHouses to Ahmedabad - A house forMiddle Class He was a Big Success Ks 67
  68. 68. Choosing your business•Technique No. 9Take the help of Government Machinery Ks 68
  69. 69. Some Major Govt. BodiesInstitution WorkDistrict Industry Center Support services in establishing the SSI,( One in each District ) Reg. formalities, project identificationNational Small Industry Corp. Provides M/C on hire purchase basis(In metros & some states) Supply of Raw material, export promotion Internal Marketing, trainingState Financial Corporation Selection of project, finances(In the major districts of all states)Technical Consultancy Org. Project Identification, identification of technology sources, diagnostic reports for(One in each state) sick units, marketing assistanceSingle window mechanism Offering complete industrial counseling, helping them comply with necessary(Gujarat / U.P. / MP / Mahrashtra / government formalities, finances, projectPunjab / Haryana /Karnataka / TN / Goa ) implementationIndustrial Infrastructure Ag. Infrastructure facilities like land / sheds on Ks 69 hire/pur. basis, power, water, drainage(In almost all states)
  70. 70. A few other Government BodiesInstitutionSmall Industries Service InstituteNational Industrial Development CorporationKhadi & Village Industries CommissionCommissioner of Cottage IndustriesState Small Industries Development Corporation Ks 70
  71. 71. Choosing your business•Technique No. 10Identify the gaps in the market Ks 71
  72. 72. Choosing your business Identify the gaps Case Study of Mr. Jyoti prakash• Mr. Jyoti works at Jamshedpur with TISCO he often has to visit Kolkata on official purpose• Mr. Dave his friend at Jamshedpur owned a club and often showed movies to the members• Mr. Dave requested Jyoti to get one famous movie from Kolkata which he was not able to get anywhere• Mr. Jyoti got the movie at 50,000/- and sold to club at 60,000/-• Mr. Jyoti spoke to other clubs & film theatres and found out that they too were facing the similar problem of availability• He identified the gap and filled it. He now is a successful film distributor and has offices in Kolkata & Jamshedpur Ks 72
  73. 73. Choosing your business Identify the gaps Case Study of Mr. Vishal Agrawal• Mr. Vishal was working in the production department of an engineering company• He noticed one major problem that whenever the equipments broke-down it use to take a long time to get them repaired, which harmed the production• He enquired and found out that the only workshop doing the repairing job was situated 1000 kms. away from their unit and besides it was very difficult to take these equipment out for repairs• He spoke to other Engg. Companies in the area and found that they too were facing the similar problems• Mr. Vishal identified the gap, he left the job & established his Ks 73 own workshop for repairing & reconditioning of such eqpmts.
  74. 74. Choosing your business♠ If you shortlist 10 business projects - chances are 8 of them are wrong for you Ks 74
  75. 75. Choosing your businessThe best way of selection isREJECTION Ks 75
  76. 76. Choosing your business Selecting the right proposal Case Study of Mr. Somesh Dutta• B.Tech. in Mechanical • On the basis of information collected from various Engineering sources shortlists enginn. /• Worked for 1 Year with electronic / plastic / chemical & pharma / wire textile processing machinery industries• Father can afford to invest • Project invstt. available in Rs. 2 Lacs in his business the range of 5 - 7 Lacs• Father is a government • Discards the idea of employee and earns well to chemical & pharma because support family but will retire of inability to handle the after 2 years complexities & high investments needed• Father has good contacts with the govt. deptts. & with • Discards wire because of banks Ks 76 unease of availability of raw material
  77. 77. Choosing your business Selecting the right proposal Case Study of Mr. Somesh Dutta• There were many plastic factories in the area and the ROI was not attractive the idea of plastic was discarded• Somesh has got contacts only within the frame of textile processing houses he however has friends who are working in the large engineering public sectors• He wants to achieve a break-even in less then 2 years time• He further discards electronic industries because of no additional strength in this area• He finally chose ENGINEERING INDUSTRY Ks 77
  78. 78. .Checking Project Viability Ks 78
  79. 79. Choosing your business Take 4 tests to check Viability of theInvestment & Infrastructure checkMarket check projectTechnical Know-how checkFinancial Viability check - I Ks 79
  80. 80. Choosing your business• Investment & Infrastructure check Fixed Assets Working Capital Land & Building Salaries Plant & Machinery Office expenses (Tel / Electricity / etc) Furniture Interest on Loan Vehicle Traveling expenses Office equipment Raw material expenses Ks 80
  81. 81. Choosing your business• Investment & Infrastructure check Other Expenses Involved Legal expenses Trial production Cost on money invested by you Contingency estimates • You go wrong on estimations • Raw material prices may hike • You have to give credit facilities to your customers Ks 81
  82. 82. .Market Check Ks 82
  83. 83. Market Check Benefits• Estimating the demand• Estimating the profitability• Determining Pricing• Determining quality.…accordingly procuring the right machinery, tools & raw materials• Knowing Competition• Knowing Customer behavior• Determining marketing strategy• Understanding Key determinants of success in the industry Ks 83
  84. 84. Choosing your businessWhat is Market Check ?Gathering information from similar businessowners, raw material suppliers, employeesworking in that enterprise, dealers, packingmaterial suppliers, customers, machinerysuppliers, research studies, Government data &research agencies regarding the businessUsing your own network to gather the relatedinformation Ks 84
  85. 85. Procedure of Market Check• Primary Data• Secondary Data Ks 85
  86. 86. Market Check• Primary Data Talk to similar business owners, employees working in that enterprise, dealers, packing material suppliers, customers, machinery suppliers, raw material suppliers • Telephonically • Mail Contacts • Personal Contacts Ks 86
  87. 87. Market Check• Collecting Primary DataWho is to be surveyedTarget Customers / Dealers / Employees especiallySales Force / Raw Material Suppliers / MachinerySuppliers / Similar Business OwnersChoose the right sample of peopleRandomly / Quota wise / Cluster wiseWhat information do you need from them,design a proper questionnaire ?Closed ended question / Yes or No type / Openended / 5-choice answers Ks 87Analyze the data collected
  88. 88. Market Check • Secondary Data• Credit Rating Agencies• Trade publications & records• Libraries• Govt. agencies such asTIC – Trade Information Centers.TCO – Trade Consultancy OrganizationDIC – District Industries Center• News papers & magazines Ks 88
  89. 89. Market Check• Secondary DataCredit Rating Agencies• Credit Rating Information Service of India Ltd• Credit Analysis & Research Ltd.• Investment Information Credit Rating Agency of India• Marketing & Development Research Associates Ks 89
  90. 90. Market Check• Can I start a Squash business in Bangalore ??? Determine on the basis of secondary data Ks 90
  91. 91. Market Check Study on the Soft drink Market 1991-92Year Consumption Population Per Capita (Millions) (Millions) (In Thousands )1978-79 778 646 1.211979-80 1057 660 1.601980-81 1842 675 2.731981-82 1998 690 2.891982-83 2123 706 3.011983-84 2410 722 3.341984-85 2600 738 3.521987-88 3283 788 4.17 Ks 911991-92 5200 850 6.12
  92. 92. Market CheckStudy on the Soft drink Market 1991-92Delhi 60.6%Mumbai 19.7%Chennai 8.8%Kolkata 7.4%Bangalore 3.5% Ks 92
  93. 93. Market Check Study on the Soft drink Market 1991-92Product Avg. of 5 MetrosCoca Cola 35%Pepsi 25%Packed 25%JuicesSynthetic Drinks 15%(Squash / Rasna etc.) Ks 93
  94. 94. Market Check Study on the Soft drink Market 1991-92Product Avg. of 5 Delhi Mum Bangalore MetrosCoca Cola 35% 20% 40% 25%Pepsi 25% 30% 20% 10%Packed 25% 38% 22% 25%JuicesSynthetic 15% 12% 18% 40%Drinks (Squash / Ks 94Rasna etc.)
  95. 95. Choosing your business• Technical Know-how check Are you fully aware of the technical intricacies involved in the project Do you have a stable resource which can handle the technical aspects Can you fully rely on the hired resource for the purpose Ks 95
  96. 96. Choosing your business Technical Know-how check Case Study of Mr. Sunil Bhatia• Mr. Bhatia worked for over 7 years as a chemist with a dyestuff factory at Ahmedabad• Holds thorough understanding of the dyestuff production• Starts up his own dyestuff factory• Factory gets well established and began to give good profits• Mr. Jignesh who had little knowledge about the technical aspects of the business was watching the growth of this factory,• He decides to starts up his own factory and picks up the production supervisor from bhatia’s factory Ks 96
  97. 97. Choosing your business Technical Know-how check Case Study of Mr. Sunil Bhatia• Production supervisor was not so good in the know-how of the process• Product coming out was substandard and the batches were not passed during inspection for quality control• Struggled for 8 months to improve the quality and soon the supervisor found a better job and he left• Mr. Jignesh was left in lurch and faced huge loss Ks 97
  98. 98. Choosing your business • Financial Viability checks - IROI Return on Investment (Profit / Investment x 100)Gross profit on turnover Profit calculated after deducting the production & selling costsGestation period Initial period when you continue to operate with losses or without losses at break evenBreak even point Point at which you neither make profits nor make any losses Ks 98
  99. 99. Choosing your business Case Study of Mr. Mohd. Faris• Mr. Faris has done ITI in mechanical works, makes up his mind to start up a business enterprise• Can invest a maximum of Rs. 3 Lacs• Can not afford a gestation period of more then 2 Years• Must reach break even by 2nd year• By 3rd year he needs a ROI of not less then 25%• He is looking for an industry where his technical skills are also used Ks 99
  100. 100. Choosing your business Case Study of Mr. Mohd. FarisProduct Gas Link Cutlery Paint Lighter Clips BrushesM/c. Cost 2.5 – 3.0 80,000/- 2.5 – 3.0 1.25 Lacs Lacs LacsAnnual 27 Lacs 1.20 10-11 15 LacsTurnover Lacs LacsGestation 2 Years 1 Year 2 Years 1 YearPeriodEstimated 80% 15% 35% 60%ROI Ks 100
  101. 101. Choosing your business8 Common errors done While choosing a1. Falling prey to the attractive numbers project2. A partial or incomplete view of the project3. Mismatch between personal & project profile4. Lack of interest in the project5. Lack of confidence in the project6. Blind faith on the information collected from the market7. Failure to grasp the key determinants of success in the given project8. Me-Too Syndrome Ks 101
  102. 102. Choosing your business Falling prey to attractive numbers Case Study of Mr. Navneet Gupta • Mr. Gupta came across the demand of cheese in many parts of Rajasthan & Gujarat • He enquired about the cheese projects from the plant manufacturers. This is the information he receivedOn 100% capacity utilization, the No plant in that industry worked forplant would produce 10000 cubes of over 90% capacity utilization, so50gms in one month max. production would be 9,000 cubesCost on production per 50gms cube Cost of milk was never stable so theof cheese would be Rs. 3 cost on production of cheese also increased at that time(Rs.3.5)Market price per 50gms cube is The margin of Rs. 1 given to theRs.6 dealers was never told (Rs.5)From above estimates his profit per KsFrom above estimates his profit per 102month would be Rs.30,000/- month would be Rs.13,500/-
  103. 103. Choosing your business Failure to grasp key determinants Case Study of Mr. Himanshu Chadha• Mr. Himanshu is a BE in Mechanical Engineering• His friend Mr. Ganesh made him aware of the high demand of power coil used in the two-wheeler• Himanshu developed the power coil and both friends started the business in partnershipThey produced high quality coil Quality was never a keyThereby charging high price for it determinant of that industry, but low price definitely wasThey would work on advance Industry had a culture of givingpayments with wholesalers & not long credits to the wholesalers andgive any credit no advance paymentsThey were ready to give a guarantee Wholesalers were satisfied with lifeof up to 10 years on it of 3-5 years of a coil Ks 103
  104. 104. Choosing your business Failure to grasp key determinants Case Study of Mr. Himanshu ChadhaThey would advertise to Industry worked largely onestablish the brand name interest of wholesalers rather then advertisementsThey would make timely Competitors were evading tax topayments regards to their curb costingliabilities & govt. taxesIt took them full one year to realize the key determinants of thebusiness and change themselves according to the industry, tillthat time they incurred losses Ks 104
  105. 105. Constitution of an Organisation Ks 105
  106. 106. Forms of OrganizationProprietorshipPartnershipPrivate Limited CompanyPublic Limited CompanyCo-operative Enterprises Ks 106
  107. 107. Forms of Organization Proprietorship100% Owner of the OrganizationOne man control – single ownershipUnlimited LiabilityNo difference between your personal &business assets Ks 107
  108. 108. ProprietorshipADVANTAGES DISADVANTAGESComplete Control Limited FundsNo difference of Limited SkillsopinionQuick decision Unlimited Liability Ks 108
  109. 109. Forms of Organization Partnership Minimum 2 partners – maximum 10 in banking &20 in non-banking business Contractual relationship – written / oralagreement among the partners Liability not limited to your share in thepartnership, it is still unlimited No difference between your personal &business assets Sharing of profit & lossKs amongst members on 109mutually agreeable percentages
  110. 110. PartnershipADVANTAGES DISADVANTAGESLarger Financial An incompetent or dishonestresources partner can cause disaster to the businessCombined abilities, Transferring of partnershipskills & judgment rights to an outside person isresults in better not possible without thedecisions & better permission of other membersmanagementSurvival capacity of a Disagreement & distrust amongbusiness is much the partners can lead tohigher breakage of partnership & 110 Ks business in question
  111. 111. Forms of Organization Private Limited Company Shareholders are the owners of the company Minimum 2 shareholders, Maximum 50shareholders Prohibits any invitation to the public to subscribefor any shares Family members can also be the shareholders Limited Liability Less paperwork because many of the companylaws do not apply to private limited companies 111 Ks
  112. 112. Private Limited CompanyADVANTAGES DISADVANTAGESLimited Liability transfer of shares restricted by the articles of associationLarger Financial Can not raise capitalresources from the publicFreedom from Not suitable for aexcessive legal control Large scale& regulations organisationStable permanent life KsDelayed decisions 112
  113. 113. Forms of Organization Public Limited Company Shareholders are the owners of the company Minimum 7 shareholders, Maximum unlimitedcan be millions of shareholders Can raise more money from the market then aprivate limited company Limited Liability More paperwork because many of the companylaws are applicable to public limited companies Ks 113
  114. 114. Public Limited CompanyADVANTAGES DISADVANTAGESLimited Liability No secrecy – full publicity of accountsLarge Financial Excessive legal control &resources regulationFree transferability of Delayed decisionssharesAny amount of capital Time-consuming,can be raised from the Expensive & Difficultpublic formationStable permanent life Ks 114
  115. 115. Forms of Organization Co-Operative Enterprises Basic aim is to render service to its members &society in general Management of a society is entrusted to a managingcommittee elected by its members State Government has full right to conduct periodicinspection on audited accounts, annual reports etc. Must get registered under the Co-operativeSocieties Act, 1912. Voluntary association of people, who are open tobecome a member or leave it at their own free will Ks 115 The capital to run it is provided by the members
  116. 116. Co-operative EnterprisesADVANTAGES DISADVANTAGESEase of formation Lack of motivationLimited Liability Rivalries often seen within the societyTax Advantage Under state(Advantage in Income tax, Surcharge, stamp regulationsduty & Reg. fees)Eligible for state patronage Lack of competent(in the form of loans, grants etc.) managementSuitable for small sized businessoperations(Usually business related to socio-economicdevelopment of weaker sections of the Ks 116society like educational institutes, etc.)
  117. 117. Ownership Patterns in some SSI’s in IndiaINDUSTRY Sole Family Non-Family Cooperatives Proprietor Partnership Partnership shipFlour Mills 36.4 49.1 14.5 -Hosiery 63 25 20 1Drugs 60 35 3Utensils 55 38 6 1Soap 27 53 20Oil Mills 15 70 12 2Printing Press 52 28 20Wooden Furniture 60 31 8 1Electrical Goods 25 69 6 Ks 117
  118. 118. Choice of Constitution Depends upon Size of Business Nature of Business Control over Business Amount of Capital Risk & Liability Government regulations & control Tax liability Ks 118