1. Handouts for further studies
ENTREPRENEURSHIP: THE CALL OF THE DAY
“We need technical education and all else which may develop industries so that men
instead of seeking service may earn enough to provide for themselves and to save
something against a rainy day.”
SWAMI VIVEKANANDA
SUCCESSFUL ENTREPRENEURIAL CULTURE REQUIRES:-
 Continuous Skill-up gradation
 Sharing of expertise
 Openness to new technologies
 Career flexibility
Technical Insights
Technical Strategy (Exploration of Technical Ideas)
Every product has three stages in which human expertise is needed:-
(a) Production
(b) Authorized servicing & sales
(c) Maintenance beyond warranty
Entrepreneurship possible in all the three fields, but the form suitable for a particular
individual depends on -
• Expertise: Availability of technical know-how
• Financial strength: Ability to mobilize funds
• Market influence: Relationship with established players (wholesalers)
A. Product-based Enterprise
(Good for technologically - oriented people)
• Design of a New Product
• Improvements to an existing Product in features or in efficiency
• Expertise required: Analysis of existing system:
- Theoretical (Mathematical modeling)
- Practical (Reverse Engineering)
• Activity to undertake:
Exploration of a number of New Ideas (Skills not emphasized in Colleges)
- Technological ideas
- Functional design – what are key inputs, outputs & components
- Material properties: Mechanical, Chemical & Electrical, Cost & availability
- Weak links in product/process where failure occur frequently
- Packaging: Appearance, Aesthetics, Simplicity, and Ruggedness
• Benefits: Good understanding of Principles of Design & Costing
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in

2. Handouts for further studies
B. Servicing & Sales-based Enterprise
(Good for Business - oriented people)
• Assembling & Trouble-shooting using Manufacturer-approved (specialized) tools and
instruments
• Expertise required: Experimental skills (Skills taught in college)
- Theoretical (General idea of How Things Work)
- Practical (Perform pre-defined experiments)
• Activity to undertake:
Develop eagerness for hands-on activity
- Ability to independently identify appropriate tools needed &use them
- Material uses: Engineering properties, cost & availability
- Hot spots in product: Weak links where failures occur most frequently
Develop verbal skills: Ability to explain concepts to non-technical people
Psychology: Understand subtle meaning of words and gestures
Cash flows
• Benefits: Mature ability to Handle Tools & Products, familiarity with actual market
C. Maintenance-based Enterprise
(Good for Trade - oriented people)
• Repair & Maintenance using general tools and instruments
• Expertise required: Technical skill (Skills taught in colleges)
- Theoretical (Familiarity with terms, principles of trade)
- Practical (Perform routine Trade-related tasks)
• Activity to undertake:
Language: Ability to understand technical language
Discipline: Ability to work under senior technicians (humility, open/eager to learn)
- Practical Ability to use tools needed
- Material handling: How to handle various engineering material
- Commonly occurring routine problems & their solutions
• Benefits: Good reputation & familiarity with Market Leaders
(necessary for sub-contracts etc.)
Financial Vision
Analysis of Financial Merits
There are three stages in which Financial Resources operate:
(a) Financial Planning
(b) Mobilization & Investment
(c) Profit generation & Depreciation
Initial Financial Planning
3 Stages of Planning
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in

3. Handouts for further studies
- Project Report: Total investment required
- Profitability Estimation: Expected returns over time
- Comparative Analysis: Selection of Best Project
Project Report (Assessment of Capital Required)
Given:
- Estimates of Cost/Rent of Land, Machinery, etc.(Predictable)
- Expected Income, operating Cycle, etc. (Unpredictable)
Objective: Study of following scenarios
- How much capital required
- How much to obtain on Loan
Profitability Estimation (Assessment of Turnover & Profits)
Given:
- Estimates of Running Costs: Cost of Inventory (Predictable)
- Expected quantity of sales (Unpredictable)
Objective: Study of following scenarios
- What is the total turnover, net profit, BEP, DSCR, etc.
- How to set sale price
- What inventory levels to maintain
- How much monthly installments to pay
Comparative Analysis
- Assessment of Goodness of different Implementations of a given project
- Given estimates of Capital & Running Costs, Income
- Objective: What is the best-case BEP, DSCR, etc.
Break Even Point (BEP): It is the quantity of goods and services that must be sold at a chosen
price so that the Revenue obtained will be exactly equal to the cost of Production. BEP is important
to the entrepreneur for running the production.
Debt Service Coverage Ratio (DSCR): It is the ratio of the Net Cash Accruals and the Periodic
Repayment Commitments. The DSCR is important to the investors, financiers and other loan
providers to judge the financial strength of the project.
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in

4. Handouts for further studies
Flowchart of Financial Planning
Stage 1: Consider Technological Strategy
Stage 2: Prepare a Project Report
Stage 3: Prepare Profitability
Estimate for 5 years & Calculate BEP, DSCR
No
Modify Stage 3
Parameters: Installment, Price, Study of Stage 3 done?
Inventory, etc.
Yes
No
Modify Stage 2
Parameters: Area, Study of Stage 2 done?
Machinery, etc.
Yes
No
Modify Stage 1
Parameters: Product, Study of Stage 1 done?
Process, etc.
Yes
Stage 4: Identify best Project Done
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in

5. Handouts for further studies
Project Report
Project Details (For quick reference and future usage)
1. Product/Service: A clear description of the Product/Service
2. Process: Description of the Technological Plan under consideration
3. Use & Market of Product: Appropriate description
Non-Recurring Expenditure
4. Land & Shed/Building
Item Area Unit Cost (Rs.) Total Cost (Rs.)
(a) Land, Boundary Wall, etc.
(b) Office Building (Administration, etc.)
(c) Production Shed (Factory)
(d) Store / Go down
Total:
5. Plant, Machinery & Equipment
Sl.No. Description No. of Units Unit Cost (Rs.) Total Cost (Rs.)
(a)
(b)
Total:
6. Other Expenses
(a) Installation Costs (Machinery, Electrical, etc.)
(b) Tools & Implements
(c) Furniture & Fixtures
(d) Other Preliminary Expenses
Total:
A. Total Fixed Capital: (4) + (5) + (6)
Recurring Expenditure (Expense per Month)
7. Raw Materials
Sl.No. Description No. of Units Unit Cost (Rs.) Total Cost (Rs.)
(a)
(b)
Total:
8. Other Recurring Expenses
(a) Rent, Electricity, Telephone, Water, etc.
(b) Postage & Stationary
(c) Conveyance & Marketing Expenses
(d) Petty Cash, etc.
Total
9. Salary & Wages
Category No. Rate per Month Total (Rs.)
(a)
(b)
Total
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in

6. Handouts for further studies
Total Recurring Expenses: (7) + (8) + (9) per Month
B. Total Working Capital: (Total Recurring Expenses) x (Operating Cycle in Months)
C. Total Capital Investment: (A + B)
Prof. Sudipto Bhattacharya, VITBS, sudiptobhattacharya@vit.ac.in