The PPT is for reference purpose.

1. ENTREPRENEURSHIP DEVELOPMENT – KMB 402
Topic: Launching a New Venture
ACHLA TYAGI, ABES EC (032), AKTU,
LUCKNOW

2. Unit V - Launching a New Venture
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3. Steps involved in launching a Business
(Process Charts)
1. Determine the main components of the
process.
2. Order the activities.
3. Choose the correct symbols for each activity.
4. Make the connection between the activities.
5. Indicate the beginning and end of the
process.
6. Review your business process diagram.
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4. Process Mapping
Process Mapping is the task of defining what
exactly a business does, who is responsible,
and what is the standard by which the success
of a business process can be judged
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5. Why process mapping important?
• Onboarding new employees: Having a set of
documented processes for new employees to
follow can shorten training time, put less strain
on other staff members, and help to ensure
consistency and continuity of output.
• Communicating processes to others: At times it
is necessary to be able to show a process to
others. The visual structure of a business process
map makes it easier to understand the process
without having to read (and try to comprehend) a
long, narrative description.
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6. • Process improvement and re-engineering:
Once a process is documented and
understood, it can be analyzed to improve
efficiency.
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7. Steps Involved in Business Process Mapping
• Identify the process you want to document
• Gather information from process participants
via interviews or observations
• Identify the start and end points of your
process
• Break the process into distinct tasks and
decision points
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8. Basic Components of Business Process
Mapping
• Process - The overall workflow from a starting point to its
successful completion.
• Tasks or Activities - Something performed by a person or a
system.
• Flows - This is indicated on the process map by connecting
lines and arrows.
• Events - These are triggers that cause a process to begin,
end, or may redirect a process to a different path.
• Gateways - Decisions that can change the path of the
process depending on conditions or events.
• Participants - Specifically naming the people or systems that
perform the tasks or activities.
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9. Process Mapping: Tools and Techniques
The Primary Objective of Process Mapping is
to display visually what happens in a process.
Graphic symbols represent the nature and
the flow of the steps in a process
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10. 3/26/2020 10

11. Process Mapping: Tools and Techniques
Top Down Mapping generally does not use
graphic symbols and is defined by starting and
stopping points, milestones and the how to of
the process.
Procedure:
• 1st: Define your starting and stopping points.
• 2nd: Define the milestones (the what’s)
• 3rd: Complete your drill down (the how’s)
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12. Process Mapping: Tools and Techniques
• A Swim Lane Process map sometimes called a
cross-functional diagram, is a process
flowchart that provides more information on
who does what than a top down. It can also
be expanded to show times— when tasks are
done and how long they take.
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13. 3/26/2020 13

14. Process Mapping: Tools and Techniques
• A simple process flowchart is probably the most
versatile of the commonly used flowchart types
and can be applied to virtually anything.
• A simple process flowchart shows inputs,
activities, decisions and outputs of a process,
partial process, or even a single process step.
These are shown in a successive manner without
denoting all the different functions within the
concerned process.
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15. 3/26/2020 15

16. Process Mapping: Tools and Techniques
• SIPOC: SIPOC shows the key elements of a
process such as Suppliers, Inputs, Process,
Outputs, and Customers.
• When to use:
to identify the key elements of a process
before doing a detailed map
to define the scope of complex processes
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17. SIPOC Diagram
• Macro level of end-to-end process
Transport
material
Ship
material
Receive
material
Put away
to stock
A
goods out process
B
transport
C
goods in process
T0 T1 T2 T3 T4
t1 t2 t3
TT = Transit Time
Pick from
stock
Finished
goods
stock
Production Transit
t4
DC
Stock
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18. Various forms of Business Ownership
• Sole Proprietorship
• Partnership
• Company
– Public Company
– Private Company
• Cooperative
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19. Sole Proprietorship
A business owned and operated by
one person.
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20. Advantages of sole proprietorships
•Easy and inexpensive to create.
• Unless you need certification or
local permits, government
intervention is minimal
•Owner makes all business decisions &
has control over all aspects of the
business.
•Flexibility in scheduling to meet
owner’s needs
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21. Advantages of sole proprietorships cont.
•Owner receives all profits.
•Privacy – owner is the only one who
knows details of the business
• Secret ideas, formulas, or
recipes
•Ability to act quickly in making
decisions – no checking with others
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22. Advantages of sole proprietorships cont.
•Tax advantages
• Business itself pays no taxes
• Taxes are paid as personal income of owner
which is usually lower than corporate taxes
• Many business expenses are deductible
•Easy to close/dissolve
• Pay employees and creditors
• Sell your equipment
• Notify customers if possible
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23. Disadvantages of sole proprietorships
•Owner has unlimited liability for all debts and
actions of the business.
•Unlimited liability: The debts of the business may be paid
from the personal assets of the owner.
•If you cannot pay business debt with business income, bill
collectors can take your personal assets (home, car)
•Difficult to raise capital.
•Banks/lenders consider sole proprietorships to be a high-
risk investment
•Needs include paying employees, purchasing equipment &
inventory, & running the business
•Expansions can be delayed or halted causing you to lose
business to your competition3/26/2020 23

24. Disadvantages of sole proprietorships
•Sole proprietorship is limited by
his/her skills and abilities.
•Uncertain life
•You are “it” – illness or injury that prevents you
from working may cause you to close
•Bankruptcy or incarceration will dissolve your
business
•The death of the owner automatically dissolves
the business.
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25. Partnership
A form of business ownership in which two or
more people share the assets, liabilities, and
profits.
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26. Advantages of partnerships
•Fairly easy & inexpensive to start
• May pay attorney if you develop a partnership agreement
•Combined resources
• Team with partners with different skills, experience, contacts, &
capital
• Sharing responsibilities makes business run more efficiently &
smoothly
• Increase the amount of capital to run the business. Lenders may
be more willing to lend or extend credit
•Decreased Competition
• Combining like businesses will decrease or eliminate
competition
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27. Advantages of partnerships cont.
•Reduced expenses
• When two or more businesses combine expenses are no longer
being duplicated
• Ex. promotion, office space, supplies, utilities
•Business losses are shared by all partners.
•The partnership does not pay income tax on profits.
• Each partner pays income tax on her/his individual share of the
profit
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28. Disadvantages of partnerships
•Unlimited liability
• Each owner in a general partnership has unlimited liability.
• Each partner can lose personal assets to pay business debt
• In a limited partnership, the liability is limited to the amount
invested in the business
•Limited Capital
• Although partners may bring more capital to the business than sole
proprietors, it is still limited to what each can contribute
• Some lenders may still be reluctant to lend large amounts
•Difficulty in ending
• Withdrawing can be complicated if there is no written partnership
agreement
• By law profits must be divided equally if no agreement3/26/2020 28

29. Disadvantages of partnerships cont.
•Partnerships may lead to disagreements.
• May disagree on business goals, finances, responsibilities, &
division of profits
• Can affect the efficiency of the business, morale of employees, &
success or failure of the venture
•Developing a detailed partnership agreement often
helps resolve the conflict because it addresses many
issues that cause potential disagreements
• In 1916, the U.S. government developed the Uniform Partnership
Act (updated in 1997) which serves as a guide for legally
formulating a general partnership agreement
• A limited partnership is more formal & specific in nature & is
governed by the Uniform Limited Partnership Act (ULPA)3/26/2020 29

30. Disadvantages of partnerships cont.
•Uncertain life/Transferability
• Unless specified in a detailed
partnership agreement,
bankruptcy, death & the
withdrawal or admittance of a new
partner dissolves the partnership
• Remaining partners may start a
new partnership if they have the
money to buy the former partner’s
share
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31. Corporation
 A business that is chartered by a state and
legally operates apart from its owners.
 Owned by stockholders who have
purchased units or shares of the company
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32. Types of corporations
•C-corporation: The most common form of
corporation. It protects the entrepreneur from
being personally sued for the actions and debts
of the corporation
•Subchapter S corporation: A corporation that is
taxed like a sole proprietorship or partnership.
•Nonprofit corporation: Legal entities that make
money for reasons other than the owner’s profit.
Limited Liability Company (LLC): A form of
business ownership that provides limited
liability and tax advantages.
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33. Advantages of corporations
•Financial Power
•Can raise money quickly by issuing shares of stock.
•Because it is closely regulated by the government, financial
institutions are more willing to lend larger amounts of capital
•Limited Liability
•Owners are liable only up to the amount of their investments.
Personal assets cannot be used to pay business debt
•Unlimited life
•May exist indefinitely
•The death or withdrawal of an owner/stockholder does not affect
the life span of the corporation
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34. Advantages of corporations cont.
•Easy-to-transfer ownership
•Ownership simply transferred by selling stock to someone else
•New stock certificate is issued in the name of new stockholder.
No permission is required by others
•The business can hire experts to
professionally manage each aspect of the
business.
•Can result in a more efficiently run organization
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35. Disadvantages of corporations
•Difficulty in forming & operating
• Legal assistance is needed to start a corporation
• Lawyer fees can be very expensive
• Must request approval from the State & register the Articles of
Incorporation
• Decisions about value & class of stock & shareholder voting rights
•Corporations are subject to more government
regulations than partnerships or sole proprietorships.
• Reporting & taxation requirements vary from state to state
• Required to keep detailed reports for stockholders & to keep them
informed of certain corporate transactions, meetings, & voting rights
• New charter must be approved if corporate activities change3/26/2020 35

36. Disadvantages of corporations
•Separate owners & managers
• Stockholders are not generally involved in the day-to-day operation
of the corporation
• Stockholders form a board of directors to make decisions about
the business & managers carry out these decisions
• Separation of ownership & management provides more opportunity
for irregularities or misunderstandings
•Dual taxation
•Corporation is taxed on profits from the
company
•Shareholders are taxed on the
dividends they earn on their investments
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37. Hybrid forms of Business Ownership
•Limited Liability Company (LLC)
•Limited Liability Partnership (LLP)
•Both combine various elements of sole
proprietorships, partnerships, &
corporations into one package
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38. Advantages of Hybrid Businesses
•Cost to start & operate
•Generally less expensive than corporations
•No dual taxation - requires less paperwork & regulation
•LLPs are designed for business professionals such as lawyers &
doctors
• Partners might need to carry a required amount of liability insurance
•Limited Liability
•Personal assets cannot be used to pay business debt
•Owners (members) lose only what they have invested in the
business if it fails
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39. Advantages of Hybrid Businesses cont.
•Taxation
•LLCs & LLPs pay taxes on personal income-tax returns
•Since they are not considered separate entities (like corporations)
they are not subject to dual taxation
•Combined resources
•Often have more owners & tend to have a wider pool of financial
resources, skills, talents, & contacts
•Life span
•Hybrids are required to dissolve after a specific time period
• Depending on the state registered in, usually between 30 & 40 years
•Owners can decide if they want to reorganize or let it dissolve
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40. Advantages of Hybrid Businesses cont.
•Flexibility
•Number of members permitted in LLCs are unlimited
• Sub S corporations must have 100 or fewer shareholders
•Most states require only one member to establish a business as a
hybrid
•Members are permitted to run the company or to allow others to
manage it
•Membership changes do not automatically dissolve the company
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41. Disadvantages of hybrids
•Verification of each state’s
statutes can be costly
•Requirements & laws to establish & operate
hybrids vary from state to state
•Problematic for businesses that operate in more than one state
•No universal guidelines from state to state
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42. Partnership Deed
• Written agreement between partnering
parties.
• Although it is left to the choice of partners to
the firm to decide themselves as to what
should be mentioned in their partnership
deed, yet a partnership deeds generally
contains the following:
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43. Registration of Business Units
• Procedures of Registering a Business
Enterprise - One of the primary aspects of
starting a business enterprise is registering the
business. Primarily, a business is registered
with the state in which the business operates.
Some types of businesses have to register with
the federal government, such as those
pertaining to firearms, tobacco and alcohol.
Registering business with state entities helps
you to start and run your business legally.
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44. • Choose a Business Structure
Before you can set out to register your business at any level
(county, state or federal), you first have to decide which
business structure you want to register. Your choices are
sole proprietorship, corporation, partnership or limited
liability company (LLC). The business structure you choose
correlates with the type of documentation you have to file
with the state secretary’s office where the business
operates in order to register the business.
• Pick a Business Name
In order to register any type of business, you also have to
choose a business name. Most states, Texas included, do
not allow two businesses to operate in the state with the
same name. Because of this, it is wise to choose a couple of
backup names in case your first choice is already in use. If
you are registering a corporation, it is a requirement for the
business name to carry one of the following designations:
Incorporated, Corporation, Company, Inc., Corp. or Co.
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45. • Register with the State
You can obtain the application that pertains to your business structure from the
office of the Secretary of the State for the state where you are registering your
business. Depending on the business structure, you may have to supply
supplemental documentation with the application. For example, a corporation
requires the Articles of Incorporation and a partnership requires a Partnership
Agreement.
• Register with the IRS
The Internal Revenue Service (IRS) requires business enterprises to obtain an
employer identification number, which is the business equivalent of a Social
Security number. This is the number you use to file all of your business tax return
forms, and can obtained by completing the IRS Form SS-4. If you elect to register
your business as an S corporation, this is an election you make with the IRS by
filing IRS Form 2553.
• Obtain Business License(s)
Obtain business license(s). The types of business licenses you need depend on
the type of business you’re opening and the city, county and state. While some
states do require you to obtain a business license, other states, such as Texas, do
not require a business to obtain a state license. You do need a city or county
license to operate a business, so contact the county clerk’s office where you’re
opening the business to obtain this license.
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46. Start Up to going IPO
• The U.S. Securities and Exchange Commission defines
IPO as initial public offering, the first time when a
company sells its shares to the public.
• It may be a young company trying to generate some
needed revenue or an established company that just
waited to go public. Whether a company is trying to
expand or just paying its debts, the bottom line is that
companies seek an IPO to raise money.
• Investing in an IPO can be risky to an investor. No one
can guess whether the stock will be profitable because
there's not enough historical data to say how the
company will perform.
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47. Revival, Exit & End to a Venture
This topic have following objectives:
• To understand the reasons for failure of businesses and the
precautions that need to be taken.
• To learn about the categories into which businesses can be broadly
classified.
• To learn about the major criteria to identify a sick unit and the
classification of sick/weak companies.
• To define micro, small and medium enterprises and large
companies and their relevance.
• To understand what is meant by bankruptcy and liquidation.
• To learn about the ways in which a company can be wound up.
• To learn about the process of reviving a sick company.
• To learn about exit strategies for an entrepreneur
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48. Venture Capital
• Meaning – VC is long term risk capital to finance
high technology projects which involve risks but
at the same time has strong potential for growth.
• Venture capitalist are professional investors , who
pool their resources including managerial abilities
to assist new entrepreneurs in early years of
project.
• Definition – “A financing institution which joins an
entrepreneur as a co-promoter in a project &
share the risks & rewards of enterprise.”
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49. 3/26/2020 49

50. Features of Venture Capital
• High tech areas.
• Long term start up.
• Return is possible only when share of company is
sold at market price.
• Also participate in management affairs of
business.
• Reduce uncertainties.
• Encourages, nurture and help the entrepreneur
grow.
• Act as co-partner.
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53. 3/26/2020 53

54. IPO
• Also called as Stock Market Launch.
• Involves a private company offering its shares
to the public for purchase for the first time.
• Referred to as taking a company public.
• The original investors in the private company
can make fortunes because the new stock is
worth much more than their original
investments
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55. Mergers & Acquisitions
• A merger is a combination of two companies
to form a new company.
• An acquisition is the purchase of one
company by another in which no new
company is formed.
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56. Shares Buyback
• The promoters buy back VC stake at
predetermined price and keep the ownership
control with him.
• VC consider it as an exit option only when
promoters are in position to mobilise funds for
buy back of equity held by the venture
investors.
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57. Sales to other Strategic Investors
• VC sells his stake to the strategic buyer who
already owns a business or has plans to enter
target industry.
• The benefit is typically liquidity because if VC sell
the company to a strategic acquirer he/she might
be able to sell most or all of their stock.
• The acquirer may or may not retain the
management team, and may or may not make
substantial changes in the company's operations,
staff, and business lines.
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58. Sales in OTC Market
• OTC (Over-The-Counter) can be used to refer to
stocks that trade via a dealer network as opposed
to on a centralized exchange.
• OTC markets are typically bifurcated into the
customer market – where dealers trade with their
clients such as corporations and institutions – and
the interdealer market, where dealers trade with
each other.
• The price a dealer quotes to a client may very
well differ from the price it quotes to another
dealer.
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59. Management Buyouts
• A transaction where a company’s management team
purchases the assets and operations of the business they
manage.
• A management buyout (MBO) is appealing to professional
managers because of the greater potential rewards from
being owners of the business rather than employees.
• The financing required for an MBO is usually a combination
of debt and equity that is derived from the buyers,
financiers and sometimes the seller.
• The advantage of MBO is that as the existing managers are
acquiring the business, they have a much better
understanding of it and there is no learning curve involved.
• Another advantage is that the company’s debt load may be
lower, giving it more financial flexibility.3/26/2020 59