Classifications

1. 1
DBE 904: Advanced Entrepreneurship and
Innovation
Topic: Micro, Small and Medium Enterprises (MSMEs)
Meaning, Classification, Characteristics

2. Are Micro, Small and Medium
Enterprises(MSMEs) Necessary?
Micro, Small and Medium Scale Industries
provide numerous benefits to the
entrepreneurs, the society and to the
nation as a whole. These can generally be
clubbed into two heads – economic
benefits and social benefits,

3. Are Micro, Small and Medium
Enterprises(MSMEs) Necessary?
Economic Benefits:
a) MSMEs generally are less intensive on
technology and are therefore within reach of
individuals who may not be highly educated.
b) They need small capital and can be started by
people with little resources.
c) Due to small size, their gestation period is often
short.
d) Most MSMEs use local raw materials which
ensure good prices for producers of raw
materials.

4. Are Micro, Small and Medium
Enterprises(MSMEs) Necessary?
Social Benefits:
a) MSMEs generate employment at the local level,
which is much needed for a developing country like
ours with a heavy population load.
b) With MSMEs generating employment and wealth
creating avenues, equitable distribution of income is
possible to some extent with their help.
c) Also, MSMEs check monopoly of strong players to a
large extent by producing substitutes, which are
cheaper and affordable.
d) Infrastructure development in rural and semi– urban
areas has also been possible because of MSMEs.

5. Are Micro, Small and Medium
Enterprises(MSMEs) Necessary?
Social Benefits:
e) MSMEs have helped in rural development.
Agriculture provides employment for only few
months in a year. MSMEs provide employment
round the year.
f) MSMEs have improved employment
opportunities and many MSMEs are in
under/semi developed areas, even in villages.
This keeps a check on the exodus of workers to
metros and urban zones.
g) MSMEs help to establish the linkage between
agriculture and industry to harness the potential
of both the sectors.

6. What are the steps of starting an MSME?
1. SWOT Analysis
a) YOU – Strengths & Weaknesses
b) Your Business – Opportunities & Threats

7. What are the steps of starting an MSME?
SWOT?
Strengths Weakness
• What do you do well?
• What unique resources can you
draw on?
• What do others see as your
strengths?
• What could you improve?
• Where do you have fewer
resources than others?
• What are others likely to see as
weaknesses?
Opportunities Threats
• What opportunities are open to
you?
• What trends could you take
advantage of?
• How can you turn your strengths
into opportunities?
• What threats could harm you?
• What is your competition doing?
• What threats do your weaknesses
expose you to?

8. 8
Cross
SWOT
Opportunity Max-Max Mini-Max
Weakness
Strength
Threat Max-Mini Mini-Mini
Here’s How
Strengths–Opportunities(Max-
Max): Use your internal strengths
to take advantage of opportunities.
Strengths-Threats(Max-Mini): Use
your strengths to minimize
threats.
Weaknesses-Opportunities(Mini-
Max): Improve weaknesses by
taking advantage of opportunities.
Weaknesses-Threats(Mini-Mini):
Work to eliminate weaknesses to
avoid threats.
What are the steps of starting an MSME?
Cross SWOT.

9. What are the steps of starting an MSME?
2. Environmental Scanning

10. What are the steps of starting an MSME?
Possible changes in the business
environment
Impact assessment
PEST Factors(Descriptions)
Assessment
（O）
Opportunity
（T)Threat
Logical
reasoning
Political
（P）
Economic
（E）
Social
（S）
Technologica
l
（T）

11. What are the steps of starting an MSME?
3. Product Selection
4. Market Survey
5. Preparation of Project Report
6. Form of Ownership

12. What are the steps of starting an MSME?
7. Route to Start –
a) Franchising
b) Ancillarizing
c) Acquisitioning
d) Building from Scratch
8. Finance
9. Man Power
10. Site Location.

13. What are the steps of starting an MSME?
11. Provisional Registration
12. Licenses & Approvals
13. Power Connection
14. Machinery – Procurement&
Installation
15. Recruitment
16. Raw Materials Procurement

14. What are the steps of starting an MSME?
17. Trial Production
18. Marketing
19. Quality Assurance
20. Monitoring
21. Permanent Registration

15. Q Explain characteristics of the legal forms that a micro,
small or medium enterprise (MSME) can take.
What are some of the legal forms of SMEs?
• Sole Proprietorship
• General Partnership
• Limited Partnership
• Limited Liability Partnership (LLP)
• Corporation
• Limited Liability Company (LLC)
• Trust

16. Sole Proprietorship.
A Sole Proprietorship is one individual or
married couple in business alone. Sole
proprietorships are the most common form
of business structure. This type of ownership
is simple to form and operate, and may
enjoy greater flexibility of management, less
legal regulation, and fewer taxes. However,
the business owner is personally liable for all
debts incurred by the business.

17. General Partnership .
A General Partnership is composed of two or
more persons (usually not a married couple)
who agree to contribute money, labor, or skill
to a business. Each partner shares the
profits, losses, and management of the
business, and each partner is personally and
equally liable for debts of the partnership.
Formal terms of the partnership are usually
contained in a written partnership
agreement.

18. Limited Partnership .
A Limited Partnership is composed of one or
more general partners and one or more
limited partners. The general partners
manage the business and share fully in its
profits and losses. Limited partners share in
the profits of the business, but their losses
are limited to the extent of their
investment. Limited partners are usually not
involved in the day-to-day operations of the
business.

19. Limited Liability Partnership (LLP) .
A Limited Liability Partnership (LLP) is
similar to a General Partnership except
that normally a partner does not have
personal liability for the negligence of
another partner.

20. Corporation .
A Corporation is a more complex business
structure. As a chartered legal entity, a
corporation has certain rights, privileges,
and liabilities beyond those of an individual.
Doing business as a corporation may yield
tax or financial benefits, but these can be
offset by other considerations, such as
increased licensing fees or decreased
personal control. Corporations may be
formed for profit or nonprofit purposes.

21. Limited Liability Company.
A Limited Liability Company (LLC) is
composed of one or more individuals or
entities through a special written
agreement. The agreement includes:
provisions for management, ability to assign
interests, and distribution of profits and
losses. Limited liability companies are
permitted to engage in any lawful, for-profit
business or activity other than banking or
insurance.

22. Trust.
A Trust is an unincorporated business
with the property being held and
managed by the trustees for the
shareholders. The trustees are considered
employees since they work for the trust.

23. Thank You.
23