4. Small and medium-sized enterprises
Small Business
Small and medium-sized enterprises (SMEs; sometimes also small and
medium enterprises) or small and medium-sized businesses (SMBs)
are businesses whose personnel numbers fall below certain limits.
Small enterprises outnumber large companies by a wide margin and also
employ many more people.
SMEs are also said to be responsible for driving innovation and
competition in many economic sectors.
6. Role of SMEs in Nation development
High contribution to Domestic Production, Significant Export Earnings
Low Investment Requirements
Operational Flexibility
Location Wise Mobility
Low Intensive Imports
Capacities to Develop Appropriate Indigenous Technology
Import Substitution
Contribution towards Defence Production
Technology – Oriented Industries
Competitiveness in Domestic and Export Markets thereby generating new entrepreneurs
by providing knowledge and training.
7. Advantages of MSMEs
Employment generation
Use of local raw materials
Balanced regional development
Decentralisation of industries
Mobilisation of capital
Developing entrepreneurship
Equitable distribution of wealth
Efficient use of production factors
Promotion of export
Better adaptability
Innovation
8. Threats for SMEs
Sub-optimal scale of operation
Technological obsolescence
Supply chain inefficiencies
Increasing domestic and global competition
Fund shortages
Change in manufacturing strategies and turbulent and uncertain market
scenario.
9. Problems faced by SMEs
Absence of adequate and timely banking finance
Non availability of raw materials
Limited capital and knowledge
Non-availability of suitable technology
Low production capacity/ under utilisation of capasity
Ineffective marketing strategy
Identification of new markets
Constraints on modernisation & expansions
Non availability of highly skilled labour at affordable cost
Follow-up with various government agencies to resolve problems etc
10. Creating competitive advantage
To survive with such issues and compete with large and global enterprises,
SMEs need to adopt innovative approaches in their operations.
Characteristics of an Ideal SME
Innovative
Inventive
International business outlook
Strong technological base
Competitive spirit
Willingness to restructure themselves can withstand the present challenges
11. Supporting agencies of SMEs
Small Industries Development Organization (SIDO)
National Small Industries Corporation Ltd. (NSIC)
Small Industries Development Bank of India (SIDBI)
Confederation of Indian Industry (CII)
Laghu Udyog Bharti (LUB)
Federation of Indian Chamber of Commerce and Industry (FICCI)
Associated Chamber of Commerce and Industry of India (ASSOCHAM)
National Institute of Small-Industry Extension Training (NISIET)
World Association for Small and Medium Enterprises (WASME)
Small Scale Industries Board (SSIB)
PHD Chamber of Commerce and Industry (PHDCCI)
Federation of Indian Exporters Organization (FIEO)
Federation of Associations of Small Industries of India (FASII)
12. Role of MSME in India
The Micro, Small and Medium Enterprise (MSME) sector is crucial to India’s
economy.
There are 29.8 million enterprises in various industries, employing 69 million
people.
In all, the MSME sector accounts for 45 percent of Indian industrial output
and 40 percent of the exports.
Although 94 percent of MSMEs are unregistered, the contribution of the
sector to India’s GDP has been growing consistently at 11.5 percent a
year, which is higher than the overall GDP growth of 8 percent
17. Entrepreneurship
Entrepreneurship is the process of starting a business or other organization.
The entrepreneur develops a business model, acquires the human and
other required resources, and is fully responsible for its success or failure.
Entrepreneurship operates within an entrepreneurship ecosystem.
18. In elementary economics, there are four factors of production namely
land, labour, capital and the entrepreneur.
The Entrepreneur according to economic theory is the person who
coordinates the other three factors of production.
19. Qualities / Skills of an Entrepreneur
To be a successful and ideal entrepreneur, one should have certain qualities or skills as given
below :-
Ability to organize
Risk bearer
Innovative
Decision Making
Negotiation skills
Foresight
Organizing capability
Effective Communication
Perseverance
20. Functions of Entrepreneur:-
(I) Primary Function
(II) Other Function
(I) Primary functions:-
(a) Planning:- Planning process covers steps:-
i. Scanning of the best suitable idea.
ii. Selection of product line.
iii. Determination of business organization.
iv. Estimation of the capital needed.
v. Selection of capital resources
vi. Selection of location.
vii. Studying the govt. rules relations & policies.
viii. Selecting the way to fulfill the govt. facilities.
ix. Study of availability of work force.
x. Study of market strategy to be adopted.
21. Functions of Entrepreneur:-
(b) Organizations:- co-coordinators- land, labour and capital.
(c) Decision – Making:-
- Determination of the business objectives of the enterprise.
- Decision regarding procurement of machine, material, men, money and market.
- Decision regarding requisition of efficient technology & new equipments.
- Decision regarding development of a market for the product.
- Maintenance of good relations with public authorities & with society at large.
(D) Management:- Men, Machine, Material, Money, Land, Labour & Capital for the enterprise.
22. Functions of Entrepreneur:-
(E) Innovation:- Implies “doing of new things or doing of things that are already being done in a
new ways”.
- Launching of new product in the market.
- Introduction of new technology in the production.
- Creation of new market
- Discovery of new & better resources of raw material.
- Creation of monopoly or breaking up monopoly.
(F) Risk Baring
(G) Uncertainty Bearing (Trade Credits, trends of market.)
23. Functions of Entrepreneur:-
(II) Other Functions:-
(a) Diversification of production)
(b) Expansion of the enterprise
(c) Maintaining cordial employer-employee relations
(d) Tackling of labour problems.
(e) Co-ordination with outside agencies.
24. Functions of an entrepreneur
The functions of an entrepreneur is classified into five broad categories:
Risk-bearing function,
Organisational function,
Innovative function,
Managerial function, and
Decision making function.
25. Importance of Entrepreneur in Economic
Development:
Employment Generation
Contribution to National Income
Balanced Regional Development
Harness Locally available resources and entrepreneurship
Improvement in living standards
Management of Scarce resources
26. Types of Entrepreneurs
1. Adviser
2. Administrator/Organizer
3. Builders/Creators
4. Caretaker
5. Communicator/Trainer
6. Entertainer/Host
7. Investor/Owner: If you have money to invest you can put your capital to work for you investing in
stocks, real estate or businesses.
8. Seller: This covers salespeople and brokers in our purchases, from real estate to insurance to art.
9. Technologist/Engineer
27. How can we say that an entrepreneur
contributes to social development?
Entrepreneurs contribute to social development through the following activities.
For Individual
They provide new employment opportunities
They improve the standard of living of the people.
For Investors
They provide investment opportunities for the investors and generate the wealth and
distribute it to the investors. Thus helping the investors to grow their wealth.
For the nation
They contribute to the GDP of the nation directly.
They contribute to the area development by re-investing in projects.
They will be responsible for industrial and technical developments.
28. Characteristics of successful entrepreneurs
Successful entrepreneurs tend to have one or more of the following characteristics:
Passionate about their product or service and about getting things right for the customer
Visionary – they have faith in what they are trying to do. They tend to not get too bogged
down in the fine detail of day-to-day business
Energetic and driven – prepared to work consistently long hours, especially in the early stages
Self-starting and decisive – they don’t wait for others to take decisions. Entrepreneurs tend to
take the initiative, spotting opportunities early and taking decisions quickly
Calculated risk-takers – not reckless; they are prepared to take a risk in order to maximise the
rewards
29. Characteristics of successful entrepreneurs
Multi-tasking – able to take on more than one role (product development, selling, recruitment)
Resilient and determined – able to handle problems and overcome hurdles. Setting up a
business is difficult and time-consuming
Focused – sets clear goals and self-imposed high standards
Results-orientated – take pleasure from achieving targets and setting the bar higher.
Entrepreneurs tend to set clear objectives for their business which then feed into relevant
business planning
Persuasive – entrepreneurs are good at bringing other people and businesses “along with the
idea”; persuading suppliers to supply a new business, or an employee to leave a current job
and join the start-up
Leadership – an entrepreneur leads his or her own business (often working alone in the early
stages). As the business develops, the skills of leading others become even more important
30. Entrepreneurs vs. Managers
Entrepreneurs are the change agents.
Managers are the maintainers.
In times of accelerated change organizations need innovators and
entrepreneurs. In more stable times, organizations need managers.
31. Entrepreneurs vs. Managers
Entrepreneurs Professional Managers
1. Perception of an/opportunity
2. Risk-taking
3. Tactical Planning
4. Interpersonal communication
5. Negotiating
6. Troubleshooting
7. Making it a growing concern
8. Innovator
9. Motivator
10. Determined
11. Idealist
12. Committed
13. Visionary
14. Planner
1. Setting of objectives
2. Policy formulation
3. Strategic Planning
4. Formal communication
5. Organising 6. Motivating
7 Controlling
8. Administrator
9. Skilled, knowledgeable
10. Confident
11. Specialist
12. Loyal
13. Planner
14. Implementer
33. Typical questions addressed by a business
plan for a start up venture
What problem does the company's product or service solve? What niche will it fill?
What is the company's solution to the problem?
Who are the company's customers, and how will the company market and sell its products to
them?
What is the size of the market for this solution?
What is the business model for the business (how will it make money)?
Who are the competitors and how will the company maintain a competitive advantage?
How does the company plan to manage its operations as it grows?
Who will run the company and what makes them qualified to do so?
What are the risks and threats confronting the business, and what can be done to mitigate
them?
What are the company's capital and resource requirements?
What are the company's historical and projected financial statements?
34. Business Plan Outline
1.0 Executive Summary
1.1 Objectives
1.2 Mission
1.3 Keys to Success
2.0 Company Summary
2.1 Company Ownership
2.2 Company History (for ongoing companies) or Start-up Plan (for new companies)
2.3 Company Locations and Facilities
3.0 Products and Services
3.1 Product and Service Description
3.2 Competitive Comparison
3.3 Sales Literature
3.4 Sourcing and Fulfilment
3.5 Technology
3.6 Future Products and Services
35. Business Plan Outline
4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Distribution Patterns
4.3.3 Competition and Buying Patterns
4.3.4 Main Competitors
36. Business Plan Outline
5.0 Strategy and Implementation Summary
5.1 Strategy Pyramids
5.2 Value Proposition
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Patterns
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
5.7 Milestones
37. Business Plan Outline
6.0 Management Summary
6.1 Organizational Structure
6.2 Management Team
6.3 Management Team Gaps
6.4 Personnel Plan
7.0 Financial Plan
7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Break-even Analysis
7.4 Projected Profit and Loss
7.5 Projected Cash Flow
7.6 Projected Balance Sheet
7.7 Business Ratios
7.8 Long-term Plan
8.0 Appendix
38. Entrepreneurship Development
Assignment Project – Business Plan
Select a business of interest
Study the industry, and already existing players in the market (competitor analysis)
Conduct a feasibility study
Develop a business plan with reference to the above
Details of the Project Report
Company Profile
Vision, Mission, Objectives
About products/ services
Study of the industry/ Market Analysis
SWOT Analysis
Study of competitors
Organisational Structure
Marketing Plan/ Promotional activities
Financial Management Plans
Conclusion
40. Feasibility planning
Feasibility planning is the process of determining whether a business idea
is viable.
It is the preliminary evaluation of a business idea, conducted for the
purpose of determining whether the idea is worth pursuing.
Feasibility analysis takes the guesswork (to a certain degree) out of a
business launch, and provides an entrepreneur with a more secure notion
that a business idea is feasible or viable
44. Product/ Service Feasibility
Is an assessment of the overall appeal of the product or service being
proposed.
The idea is that before a prospective firm rushes a product or service into
development, it should be confident that the product or service is what its
prospective customers want.
The two components of a product/service feasibility analysis are:
Concept testing
Usability testing
45. Industry/Market Feasibility
Is an assessment of the overall appeal of the market for the product or
service being proposed.
For industry/market feasibility analysis, there are three primary issues that a
proposed business should consider:
industry attractiveness
market timeliness
identification of a niche market
48. Organizational Feasibility Analysis
Is concerned with determining whether the business itself has sufficient
skills and resources to bring a particular product or service idea to market
successfully.
The factors to be considered are:
management expertise
organizational competence
resources
49. Financial Feasibility
For feasibility analysis, a quick financial assessment is usually sufficient.
The most important issues to consider at this stage are:
Total start‐up cash needed.
Financial performance of similar businesses.
Overall attractiveness of the proposed venture.
51. Marketing Research
Business owners and entrepreneurs acquire information through marketing
research that helps identify and define marketing opportunities and
problems; generate, refine and evaluate marketing actions; monitor
marketing performance; and improve the understanding of marketing as
a process.
52. Purpose of marketing research
One of the difficulties companies face with marketing occurs when the
owner/manager thinks he or she knows what the customer wants, how
they want it, where they want it and when they want it.
Not enough customers, insufficient revenues and excessive inventories
indicate that the customer's needs are not being met.
Marketing research can help find the problem and identify a solution. I
t helps managers to look outside of themselves for solutions.
53. Areas addressed through marketing
research studies
What should you market goods, services or both?
Should your marketing feature some sort of price advantage?
Should you emphasize your self, your quality offerings, your selection, your
service or merely the existence of your business?
Should you take on your competition or ignore all competitors?
Exactly who are your competitors?
What are your best prospects?
What income groups do they represent?
What motivates them to buy?
Where do they live?
What do they read or watch or listen to in the way of media?
57. Marketing Research
Business owners and entrepreneurs acquire information through marketing
research that helps identify and define marketing opportunities and
problems; generate, refine and evaluate marketing actions; monitor
marketing performance; and improve the understanding of marketing as
a process.
58. Purpose of marketing research
One of the difficulties companies face with marketing occurs when the
owner/manager thinks he or she knows what the customer wants, how
they want it, where they want it and when they want it.
Not enough customers, insufficient revenues and excessive inventories
indicate that the customer's needs are not being met.
Marketing research can help find the problem and identify a solution. I
t helps managers to look outside of themselves for solutions.
59. Areas addressed through marketing
research studies
What should you market goods, services or both?
Should your marketing feature some sort of price advantage?
Should you emphasize your self, your quality offerings, your selection, your
service or merely the existence of your business?
Should you take on your competition or ignore all competitors?
Exactly who are your competitors?
What are your best prospects?
What income groups do they represent?
What motivates them to buy?
Where do they live?
What do they read or watch or listen to in the way of media?