Entrepreneurship Development notes of Diploma 3rd year

1. Entreprneurship Development
Forestry 3rd Year
Latinath Model Higher Secondary
School

2. UNIT – 1 INTRODUCTION TO ENTERPRISE
1.1 DEFINITION AND DIFFERENT TYPES OF ENTERPRISE:
DEFINITION:
• Entrepreneurship is the process of designing, launching and running
a new business, which is often initially a small business. It is also
described as "capacity and willingness to develop, organize and
manage a business venture along with any of its risks to make a
profit.
• The people who create new businesses are called entrepreneurs. An
entrepreneur is one who creates a new business in the face of risk
and uncertainty for the purpose of achieving profit and growth by
identifying significant opportunities and assembling the necessary
resources to capitalize on them..

3. Introduction…
TYPES OF ENTERPRISE:
• Many of informal forest-based enterprises are operated by individual
and family with small investment mainly for generation of petty
cash while the formal enterprises are run by community or
consortium of individual or communities or collaboration between
community, individuals or private institutions.
Based on Types of Forest Resources and Products:
1. MAP based enterprise:
Among thousands of Non-Timber Forest Products (NTFPs) 700
different species of plants are identified as high value medicinal and
aromatic plants (MAPs) in Nepal. MAPs include the plants used to
produce pharmaceuticals, dietary supplement products and natural
health products, beauty aids, cosmetics, and personal care products,
as well as some products marketed in the culinary/food sector.

4. TYPES OF ENTERPRISE…
2. NTFP based enterprise:
• Non-Timber Forest Products as all goods of biological
origin as well as services derived from forest or any land
under similar use, and exclude woods in all its forms (FAO,
1982). It embraces products such as leaves, shoots, bark,
flowers cottons, tannins, gum, resin, fruits, seed, juice, and
roots. NTFPs provide important community needs for
improved rural livelihoods; contribute to household food
security and nutrition; help generate additional employment
and income; offer opportunities for NTFP-based enterprises;
contribute to foreign exchange earnings; and support
biodiversity and other conservation objectives.

5. TYPES OF ENTERPRISE…
3. Wood based enterprise:
• The wood-based forest enterprise is one of the important major
forest enterprises in Nepal. It has great potential for generating
high revenues. It includes all those forest enterprises that use
timber, firewood and other wood products. Softwood is mostly
used in the manufacture of materials of decoration, furniture and
plywood while hardwoods are specially used in strong
construction purposes. This has remained a historically important
enterprise with use of hard timber to build shipping fleets,
railroads, bridges, buildings and other construction purposes. A
large number of saw mills and furniture industries have been
established in various parts of the country to use this forest
woods for providing the demand of wood-based products.

6. TYPES OF ENTERPRISE…
4. Agro-forestry enterprise:
• An Agro-forestry enterprise is equally important for the expansion of
agriculture in forest area and forest in agriculture areas. Cultivation of tea,
coffee, cardamom, essential oil and cereals can be done under the forest
canopy. Similarly, various fruit trees, fodder trees and other multi-purposes
trees can be planted in and around agricultural areas.
5. Service based enterprise:
• Besides the wood and non-wood forest products, forest provides various
other ecosystem and recreational services. Different forest-based recreation
enterprises; mainly the hotel industries have been established and practiced
in many places in Nepal. So, the service-based forest enterprise is also
equally potential sector in generating income of the people dependent on
forest resources in Nepal. Payment for ecosystem services is also one of the
emerging sectors where the community or private sector can generate
income for providing various ecosystem services like provision of clean
water, recreation area and healthy living conditions.

7. TYPES OF ENTERPRISE…
According to the industrial policy 2067, enterprises are
classified in following categories:
1) Cottage industries:
• Cottage industries using local materials, equipments and
technology are known as cottage industry. It also uses
electricity of 10 kilowatt.
2) Small industries:
• Industries having 5 crore fix capital
3) Medium industries:
• Industries having 5-15 crore fix capital
4) Large industries:
• Industries having more than 15 crore fix capital

8. TYPES OF ENTERPRISE…
5) Micro – enterprise:
• Industries having 2 lakhs fix capital except land and houses, 9
employees and sell upto 20 lakhs and use of electricity upto 10
kilowatt. A micro-enterprise is a type of small business, often
unregistered, having fewer employees and requiring small amount
as seed capital.
• Types of micro-enterprises: There are four types of micro-enterprise
that are forestry, agriculture, 1ivestock and off-farm enterprises.
a. Forestry based enterprises:
• Micro-enterprises that are operated from the forest products such as
timber and non-timber forest products are known as forestry-based
enterprises. These enterprises are furniture making, NTFP collection
and sell, allo processing, bamboo product making, herbal soap
making, sisno powder making etc.

9. TYPES OF ENTERPRISE…
b. Agriculture based enterprises:
• Micro-enterprises that are operated from the agriculture products
such as cereal crops, vegetables, fruits and flowers are known as
agriculture-based enterprises. These enterprises are vegetable and
fruits production and sell, lemon juice making, ginger candy
making, turmeric powder making and apple chips making etc.
c. Livestock based enterprises:
• Micro-enterprises that are operated from the livestock and their
products are known as livestockbased enterprises. These enterprises
are goat, sheep and pig keep in poultry farming, bee keeping and
dairy milk production and sell etc.
d. Off-farm enterprises:
• Micro-enterprises that are bakery item making, hotel or tea shop,
soap making, hair cutting, shoes making, metal work, etc. are known
as off-farm enterprises.

10. 1.2 CHARACTERISTIC OF ENTREPRENEURSHIP
A good entrepreneur should have following characteristic:
1) He/she should have ability to establish very good interpersonal relations
2) He/she should be risk taking
3) He/she should have high motivation
4) He/she should have emotion stability
5) He/she should have analytical ability
6) He/she should have realistic perception
7) He/she should be able in effectiveness of feedback
8) He/she should be enthusiastic
9) He/she should be creative
10) He/she should offer hard labour
11) He/she should have goal clarity
12) He/she should have ability in solving problem easily
13) He/she should he flexible
14) He/she should be tough-minded

11. 1.3 Phases of enterprise development
a) Pre-Phase Activities:
• Identification Selection of the appropriate community/enterprise was one of
the crucial but challenging tasks for carrying out the piloting forest-based
enterprise activities. To ease this task, three processes have been adopted.
• The first was the stakeholder consultation, which was primarily with the
staffs of the partner organizations. The officials of the District Forest
Offices (DFOs), District Small and Cottage Industries, District Federation
of Nepal Industries and Chambers of Commerce (DFNICC), district based
entrepreneurs, and some civil society organizations have also been
consulted for the general information on forest-based enterprises.
• The second was the preliminary field visit to the selected community or
enterprises. The aim of the preliminary field visit was to develop general
knowledge about present status and future prospects of the particular
enterprise and the aspirations of the entrepreneurs and local communities
for their enterprise.

12. 1.3 Phases of enterprise development…
• Based on the existing situation and aspiration of the entrepreneurs and the
particular community and the consultation meetings with the staffs to
prepare a plan for piloting activities
b) Intermediate Activities:
• Supporting It provides technical support to prepare business development
strategy (BDS) of their enterprise, provide matching funds for the
implementation of immediate activities, support in community facilitation,
and monitoring of their activities.
c) Post-phase Activities: Follow Up, Documentation and Analysis
• Follow up is done to document the whole processes of the interventions
and the changes/impacts of the piloting activities. The documentation of the
knowledge, experiences, and perceptions of the entrepreneurs, enterprises
and beneficiary communities have also became a part of documentation
work.

13. 1.4 Policy and legal issues of forest based enterprises
There are some issues and constraints to be remembered while
establishing forest enterprises in Nepal are:
1. Royalty rates and arbitrary royalty rates.
2. Lengthy and costly export formalities.
3. Ban on collection aid trade of commercially viable NTFPs that can be
harvested on a nondestructive basis
4. Contradictions between forest act, and local governance acts regarding
control over NTFP use and management.
5. CFCG rights for NTFP collection and marketing withheld in forests
where DOF has separate agreement with other companies.
6. Absence of NTFP management directives and guidelines for community
forests.
7. Lack of provision to ensure equitable sharing of benefits among the
NT FP collectors and traders.

14. 1.4 Policy and legal issues of forest based enterprises…
8. Impractical enterprise registration and establishment formalities.
9. Inadequate incentives to NTFP enterprise.
10. Sometimes, there is DoF harassment on green felling and
commercial use of community Forest products.
11. Distorted in implementation of regulatory provision e.g.
Royalty for NTFPs from private sector and cultivation and trade
of some of the important NTFPs, mis-identification of species
etc.
12. Absence of enabling environment for conservation and trade of
NTFPs and other forest products.
13. Illegal harvesting and sell of forest products have also created
problem in establishing forest based enterprises.
14. There is no special program tor cultivation of NTFPs in private
land.

15. 1.5 Community forest user group (CFUG) level issues and
constrains of an enterprise
CFUG level issues and constrains:
1. Lack of resources (raw materials and fund to operate enterprise) and
good governance practices (such as inclusiveness- gender and social
equity, accountability and transparency) within enterprise operating
body.
2. Mismanagement of fund.
3. Weak coordination between CFUG executive committee members and
enterprise operating members within CFUG and support line agencies.
4. Fluctuating markets.
5. Lack of skill labour in villages.
6. Availability of fuel (Diesel. electricity etc.) at the local level to operate
timber enterprise
7. Incapability of the responsible management team.
8. Lack of sense of ownership.
9. Lack of entrepreneurship skill in CFUG members.

16. 1.5 Community forest user group (CFUG) level issues and
constrains of an enterprise…
10. Frequent pressure from the political groups for fund donation.
11. Ineptitude (lack of skill) between demand and supply condition in forest product
markets.
12. In ability of the entrepreneur to adapt in changing scenario through modification
in products, price and quality.
13. Rise in transportation cost of raw materials and final products.
14. Absence or responsibility expectation of equal benefit.
15. Unclear knowledge of government policy, legislation and taxation among the
users.
16. Lack of cooperation of government staff.
17. Use of group fund by elites in those areas which are outside the interest of
common user group members.

17. 1.6 Case study of a forest based enterprises
• Forest based enterprise is one of the most potential sectors of Nepal's forest resources for
two reasons i.e. generating job opportunities and increasing trade markets. At present most
of the forestry sector program and interventions in Nepal have prioritized the
establishment and promotion of forest based enterprises.
• Multi -Stakeholder Forestry Program (MSFP) was also implemented with the aim of
supporting to the establishment and development of forest-based enterprises as one of its
prioritized activities in Nepal. The plain land of Terai is highly potential for timber-based
enterprises while mountain belt is highly potential for varieties of valuable Non-Timber
Forest Products (NTFP).
• Timber based Industries:
– Timber Harvesting
– Sawmilling
– Furniture industry
– Plywood
– Wooden handicrafts
– Papermills
– Non timber and Service Industries

18. 1.6 Case study of a forest based enterprises…
Timber Harvesting:
• Mostly, the harvesting techniques are labour intensive and only slightly
more mechanized than those used by the villages. Hand saws and axes are
used for felling, delimbing and cross- cutting. Bullock carts are used to
bring the logs to depots, from where they are loaded manually onto trucks
that take them to the mill.
Sawmilling:
• It is estimated that 86% of all timber consumption takes place outside
industrial units i.e. rural consumption. Industrial saw milling is done by
private saw mills. The saw mills are all technically similar, consisting of a
horizontal band saw with a very simple carriage and a vertical band saw for
re-sawing. Power is supplied by electricity or diesel engine.
Furniture industry:
• Nepal's furniture industry includes modern factories, hundreds of small
workshops and thousands of individual carpenters. Existing factories are
already unable to operate at full capacity because of the lack of raw
materials

19. 1.6 Case study of a forest based enterprises…
Plywood:
• There are many plywood mills in terai region as compare to hilly region. Because
of shortage of raw materials, these mills are operating below the capacity. There are
no reliable data on plywood consumption in Nepal because there is an unrecorded
flow across the border from India. But it is estimated that two-thirds of the local
demand is fulfilled by imports from India.
Wooden handicrafts:
• Wooden handicrafts are produced all over the country at a cottage industry level.
There are no estimates of the volume or value of craft production for the country as
a whole.
Papermills:
• At present Nepal's paper mills use non-wood raw materials such as sabai grass
(Eulaliopsis binata), straw and waste paper. There are still no plans a foot to shift to
wood-based paper and pulp factory in Nepal. In order to be self-sufficient in
printing and writing papers, Nepal will have to establish six new small mills (30
tons/day) or one or two large mills with a total annual capacity of 60,000 tons by
2010. The size of the mills should preferably be larger to derive the benefits of
economy of scale and to bear the cost of pollution control facilities.

20. 1.6 Case study of a forest based enterprises…
Non-wood forest products:
• The major non-wood forest products of Nepal are: medicinal and aromatic plants: lokta paper, pine resin
and katha. Lokta is linked to a traditional cottage industry while the others are linked to industries which
add considerable value.
Forests as service industry:
• The protected areas play an important role in the tourism industry of Nepal, both by attracting people to
visit the country and by providing activities for them, once they are here. Many of the mountains including
Everest, Makalu, and Langtang, the key species of wildlife and examples of cultural diversity are found in
and around the protected areas. Protected areas are therefore, important in promoting Nepal as a tourist
destination. The parks and reserves of the mountains are popular for trekking and mountaineering activities
while those in the Terai are renowned for wildlife watching.

21. Non-Wood Forest Based Industries:
• Agarbatti sticks
• Bel juice
• Bidi
• Broom sticks
• Coir (Coconut fibre)
• Doko Namlo
• Fiber
• Honey
• Laligurans juice
• Leaf plate
• Resin & Paints
• Rope
• Sabai grass rope mates
• Sand/stone/gravel
• Sisnu-Powder Making
• Sajiban Oil
• Allo Processing
• Allo Cloths Making
• Herbal Medicine
Collection and Processing

22. Herb Production and Processing Company Limited (HPPCL),
• a parastatal within MFSC, is responsible for the production,
processing and export of medicinal and aromatic plants, crude drugs
and extracts. It also conducts commercial scale experiments in agro-
technology in its herbal farms. It has a number of herbs purchasing
centers in different parts of the country.
Lokta (Daphne sp.)
• which is a shrub occurring in upper temperate forests, have been
used as raw material for hand-made paper for a long time. Hand-
made paper is used for a variety of purposes from legal
documentation to record keeping papers, religions scriptures, file
folders, envelopes and greeting cards. The handmade paper is also
exported in small quantities.

23. Resin tapping of Pinus roxburghii
• It has great economic significance, providing raw materials for domestic
use and for the rosin and turpentine industry. One large resin processing
plant is being operated by Nepal Rosin and Turpentine Industry, a
parastatal.
Katha is an extract obtained from the heartwood of Acacia catechu.
• It is a light brown coloured crystalline substance used in the preparation of
"paan" a chewing substance popular in South Asia. A by-product of katha
production is catch, which is used in tanning and dyeing. Nepal has six
katha factories with a total production of 650 tonnes of katha and 700
tonnes of catch.
Sabai grass:
• It is traditionally used in rope making and thatching. Along with straw, it is
used as raw material in Nepal's paper mills. Sabai improves the value of the
paper significantly. Replanting becomes necessary when the grass yield
starts diminishing as the root stock becomes exhausted.