The document discusses the formation and identification of business opportunities within small-scale industries, emphasizing the importance of understanding both internal and external environments through methods like SWOT analysis. It outlines the steps necessary for starting a new venture, including project selection, feasibility studies, obtaining clearances, and arranging for funding and infrastructure. Additionally, it highlights the significance of market studies to validate business ideas and the associated financial, technical, and social feasibilities required for successful implementation.

1. CHAPTER 3
FORMATION OF
SMALL SCALE
INDUSTRY

2. Meaning of business
opportunity :
A business opportunity is a consumer
need or want that can potentially be
met by a new business.
A successful entrepreneur is one who
capture opportunities.

3. Identification of
Business opportunity:
Identify market inefficiencies
Customer desire to experience
something new
Pick a growing sector/industry
Product differentiation
Is it a seasonal business
Remove key hassles
1.
2.
3.
4.
5.
6.

4. Variousstagesto
identifyingbusiness
opportunities:
SCANNING OF
BUSINESS
ENVIRONMENT
EVALUATION OF
OPPORTUNITIES
SELECTION OF
OPPORTUNITIES
(SWOT)

5. Scanning of business environment:
Meaning: It is the process of carefully examining the internal and external
environment of an organization to detect threats and opportunities that may
affect its future direction.
Understanding
business
environment will
help the business
in following
ways:
Determining
opportunities and
threats
Giving direction for
growth
Continuous learning
Image building
Meeting competition
1.
2.
3.
4.
5.
Identification of strength
Identification of weakness
Identification of
opportunities
Identification of threats
Optimum use of resources
Survival and growth
Decision making
1.
2.
3.
4.
5.
6.
7.
Importance
or need of
environment
scanning:

6. Have you considered all the merits and
demerits of the idea?
Have you pinpointed the exact problem?
Is your idea an original?
Are there any problems your idea may
generate?
Can your company be competitive?
Does your idea fill a real need?
How soon could the idea be put into
operation?
Could you offer alternative ideas?
EVALUATION OF ALTERNATIVE:
An entrepreneur should ask the following
questions when evaluating an idea for
business:
New experience
Economic advantage
Opportunity for the
technology to add value
Size of the market
opportunity
Frequency
FACTORS TO BE
CONSIDERED WHILE
ANALYZING THE MARKET:

7. SELECTION OF OPPORTUNITIES
BASED ON PERSONAL
COMPETENCIES (SWOT)
Strengths: Characteristics of the business or
project that gives it an advantage over others.
Weaknesses: Characteristics that place the
business or project at a disadvantages relative to
others.
Opportunities: Elements that the project could
exploit to its advantage
Threats: Elements in the environment that could
cause trouble for the business project

8. Internaland
externalfactors:
Internal
factors= The
strength and
weaknesses
internal to the
organization
External
factors= The
opportunities
and threats by
the environment
external to the
organization
1.
2.

9. INTERNAL
ENVIRONMENT
ANALYSIS
internal
environment
(control)(near
environment)
Customers
Competitors
Suppliers
Some policies
Intermediaries
1.
2.
3.
4.
5.
Climate
Exchange rate
Foreign competition
Interest rates
Culture
Government
Technology
Some publics
1.
2.
3.
4.
5.
6.
7.
8.
Political
Environemnt
Social
Technology
Economic
Legal
1.
2.
3.
4.
5.
6.
Far
environemen
t
PESTEL Analysis:
EXTERNAL
ENVIRONM
ENT
ANALYSIS

10. 1
Discovering
entrepreneurial
potential
2
Identifying a
problem
3
Evaluating the
idea
4
Investigating and
gathering the
data resources
5
Forming the
entreprise
6
Implementation
7
Planning the
future
STEPS IN STARTING A NEW VENTURE:

11. Project will have a
start and end point
Project differ from
operation
Project need
resources to deliver
results
Major projects are
divided into sub
projects
Projects are carried
on for research
Features of a project:
STEP 1. SELECTION
OF A PROJECT:
Understanding
the problem
Planning
Designing
Implementing
Training
Testing,
evaluating and
maintaining
STAGES IN PROJECT
DEVELOPMENT:

12. A) PRODUCT OR SERVICE
SELECTION:
Supply gap
Availability of raw
material
Marketability
Government policies
Factors to be considered in
product selection:
D) BUSINESS PLAN
PREPARATION
B) LOCATION
SELECTION:
Determine one's need
Brand image
Competition
Safety
Plan for future growth
Tips to choose the right
business location:
E) PREPARE PROJECT
REPORT
C) PROJECT FEASIBILITY
STUDY:
Legal feasibility
Operational feasibility
Economic feasibility
Technical feasibility
Schedule feasibility
Resource feasibility
Cultural feasibility
Financial feasibility
The idea of the project
The need of the project
Basic raw material
Space and location
Machinery and
equipment
Employment
Working hours
Feasibility study contain
following key elements:

13. Types of Business
Entities
Ownership
STEP 2 DECIDE ON
THE CONSTITUTION

14. Registration of SSI
Clearance from municipal
department
State pollution control board
clearance
Sanction from electricity
board
Copy of partnership
deed/MOA in case of private
company
Purchase bill of raw material
STEP 3 OBTAIN
SSI
REGISTRATION
1.
Some formalities required to be
completed for seeking
permanent registration are:
2. REGISTERING
SSI UNIT:
4. OBJECTIVES OF
REGISTERING SCHEME:
To maintain a roll of small
industries to which the package of
incentives and support are
targeted
To provide certificate
To create nodal center at the
center, state and district levels to
promote SSI
3. BENEFITS OF
REGISTERING:
Credit availability
Excise exemption
scheme
Exemption under
direct tax laws
5. Provisional
registration certificate
6.Permanent registration
certificate
7. Procedure for
registration
8. De-registration

15. 2 0 2 0
09
State drug controller
Ministry of
agriculture
Chief inspector of
factories
State electricity
board
State pollution
control board
Local joint
commercial tax
officer
STEP 4 OBTAIN
CLEARANCE:
Statutory licenses:
STEP 6 ARRANGE FOR
PLANT AND MACHINERY
Purchase of plant and machinery
Building
Raw materials
Power and water
Hire purchase scheme for NSIC
Technology selection
STEP 5 ARRANGEMENT
FOR LAND

16. Development
of
infrastructure
facility
Land related
decisions
Getting the
required utility
connection
STEP7 ARRANGE FOR
INFRASTRUCTURE
Land and building
required
Manufacturing
capacity per annum
Manufacturing
process
Machinery and
equipment along
with their prices
Required of raw
materials
Man power needs
Marketing
Project report contains
detailed information
about:
STEP 8 PREPARE
PROJECT REPORT
Long and medium
term loans
Risk capital
Short term or
working capital
requirement
Seed capital
Finance can be
classified into
following types:
STEP 9 APPLY AND
OBTAIN FINANCE

17. Contruction of shed
Measures to procure machinery
Hiring Human resources
Raw material arrangenment
Marketing strategy
Pollution control
Industries requiring water and affecting effluent dispersal
For units functioning outside the industrial area
STEP 10
a) PROCEED TO IMPLEMENT:
b) OBTAIN FINAL CLEARANCES:
ENVIRONMENT POLLUTION RELATED CLEARANCES:

18. MARKET FEASIBILITY:
ASSESSMENT OF THE MARKET FOR THE PROPOSED
PROJECT:
1.
• Once you have validated your idea by assessing the legal validity
of your project; the next step is preparing the market feasibility
study.
• Market feasibility study is considered to be the most important
study of the detailed studies.
• This study is essential to the rest of the feasibility studies, without
having a market study it’s difficult to go for further studies of the
detailed feasibility study

19. Create a
business plan.
Goals for Market Study:
We can set up the goals of the market
feasibility study as follows:
• Determine the market structure and shape.
• Determine exact demand for product.
• Identify the factors affecting the market
demand and supply.
• Identify market targeted groups, and
market segments.
• Selecting the price policy and the best price
mechanism to sell the products.

20. Important questions for the market study:
• What you are going to sell?
• Who are your customers?
• How will you operate and how will you sell your
product?
• Why this way and not another?
• How much: What is the estimated level of sales?
• Whereabouts? (area & site) What are your reasons
for thinking this is the ideal location,
particularly if you are counting on a local customer
base?

21. FINANCIAL FEASIBILITY:
Purchase or installment of machinery
Procurement of raw material
Working funds
Statement of total project cost, initial cost, capital
requirement
Collection period of sales, inventory levels, payment
period of purchase, selling, administration and financial
expenses
Return on investment
The area where finance is needed, after the SSI has acquired
the land:
Financial analysis should include:

22. TECHNICAL FEASIBILITY:
Expected to be advantageous or not
Technology should be based on
indigenous raw material and
resources
Technology should be workable under
local condition(climate, humidity etc)
Continuous updating of technology
Whether the technology is patented or
not
Scale of development
Flexibility
Important aspects examined while
deciding upon a particular technology are
as under:
Factors to be considered:

23. SOCIAL FEASIBILITY:
Environment protection
Maintaining values in the
society
Creating employment
Improving salary structure
Social need concept
considered several societal
aspects they are: