The document outlines the concept of entrepreneurship, defining various types of entrepreneurs such as innovating, imitative, fabian, and drone entrepreneurs, as well as intrapreneurship. It explains different business forms, the contributions of entrepreneurs to the economy, essential traits for success, and distinctions between entrepreneurs and managers. Additionally, it discusses women entrepreneurship, startup initiatives in India, sources of capital, and financial institutions supporting entrepreneurs.

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VISHNURAJ C.R
T5 MBA
RBS

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UNIT-1
According to Peter F. Drucker, an entrepreneur is “one who always searches for changes, responds to
it exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which
they exploit changes as an opportunity for a different business or service.”
entrepreneurs types
1. Innovating Entrepreneurs: Innovating entrepreneurs are one who introduce new goods,
inaugurate new method of production, discover new market and reorganize the enterprise. It is
important to note that such entrepreneurs can work only when a certain level of development is already
achieved, and people look forward to change and improvement.
2. Imitative Entrepreneurs: These are characterized by readiness to adopt successful innovations
inaugurated by innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such types of
entrepreneurs are particularly suitable for the underdeveloped regions for bringing a mushroom drive
of imitation of new combinations of factors of production already available in developed regions.
3. Fabian Entrepreneurs: Fabian entrepreneurs are characterized by very great caution and
skepticism in experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the enterprise.
4. Drone Entrepreneurs: These are characterized by a refusal to adopt opportunities to make changes
in production formulae even at the cost of severely reduced returns relative to other like producers.
Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing
production methods.
5. Intrapreneurship
Intrapreneurship or Corporate Entrepreneurship is the process by which an established company
conceive, foster, launch, and manage new business that is distinct from the parent company but
leverages the parent’s assets, capabilities, market position and other resources. These are performing
by employees within the organization.
Forms of Business
• Sole Proprietorship
The sole proprietorship is the simplest business form under which one can operate a business. The sole
proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally
responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do

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business under a fictitious name, such as Nancy's Nail Salon. The fictitious name is simply a trade
name--it does not create a legal entity separate from the sole proprietor owner.
• Partnership
A partnership is an arrangement in which two or more individuals share the profits and liabilities of a
business venture. Various arrangements are possible: all partners might share liabilities and profits
equally, or some partners may have limited liability. Not every partner is necessarily involved in the
management and day-to-day operations of the venture. In some jurisdictions, partnerships enjoy
favorable tax treatment relative to corporations.
• Cooperative
A cooperative is a legal entity owned and democratically controlled by its members. Members often
have a close association with the enterprise as producers or consumers of its products or services, or
as its employees.
• Joint Stock Company
A joint stock company issues shares similar to a public company that trades on a registered exchange.
Joint stock holders may buy or sell these shares freely in the market. But unlike ordinary shares
or preferred shares, the shares of a joint stock company carry explicit obligations. Holders have a direct
vote in company management decisions as well as a joint and several liability for the company's
outstanding debts.
Entrepreneur's contribution
• Contribution to GDP and national income
• Employment generation
• Balanced regional development
• Promotion of exports and trade
• Improvement in standard of living
• Increased innovation
• Overall development of the economy
Entrepreneurial traits or Qualities
1. Capacity to assume risk
2. Technical knowledge and willingness to adopt changes
3. Ability to mobilize resources
4. Ability to organize and administer
5. Mental ability

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6. Clear-cut objectives
7. Capacity to guard business secrets
8. Capacity to interact with people
9. Effective communication
10. Self-confidence
11. Motivator
12. Decision maker
13. Watching for opportunities
Entrepreneur Vs Manager
An entrepreneur is a person with an idea, skills, and courage to take any risk to pursue that idea, to
turn it into reality. On the other hand, manager, as the name suggests, is the person who manages the
operations and functions of the organization.
The main difference between entrepreneur and manager lies in their standing, i.e. while an entrepreneur
is the owner of the organization and so he is the one who bears all the risks and uncertainties in the
business, the manager is an employee of the company.
Basis for comparison Entrepreneur Manager
Meaning Entrepreneur refers to a person
who creates an enterprise, by
taking financial risk in order to get
profit.
Manager is an individual who takes
the responsibility of controlling and
administering the organization.
Focus Business startup Ongoing operations
Primary motivation Achievement power
Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse

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Difference Between Entrepreneur and Intrapreneur
an intrapreneur is an employee of the organization who is paid remuneration according to the success
of the business unit, for which he/she is hired or responsible.
Basis for
Comparison
Entrepreneur Intrapreneur
Meaning Entrepreneur refers to a person
who set up his own business with
a new idea or concept.
Intrapreneur refers to an employee of
the organization who is in charge of
undertaking innovations in product,
service, process etc.
Approach Intuitive Restorative
Resources Uses own resources. Use resources provided by the
company.
Capital Raised by him. Financed by the company.
Enterprise Newly established An existing one
Dependency Independent Dependent
Risk Borne by the entrepreneur
himself.
Taken by the company.
Works for Creating a leading position in the
market.
Change and renew the existing
organizational system and culture.
Important role that entrepreneurship plays in the economic development
1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.
2. It provides immediate large-scale employment. Thus, it helps reduce the unemployment
problem in the country, i.e., the root of all socio-economic problems.
3. It promotes balanced regional development.
4. It helps reduce the concentration of economic power.
5. It stimulates the equitable redistribution of wealth, income and even political power in the
interest of the country.

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6. It encourages effective resource mobilization of capital and skill which might otherwise remain
unutilized and idle.
7. It also induces backward and forward linkages which stimulate the process of economic
development in the country.
Ethics and Social Responsibility of Entrepreneurs
• Economic Responsibility - Profit making - Market expansion - Business competition
• Non-Economic Responsibility - Ethical business - CSR - Employee satisfaction - Customer
satisfaction
Ethics and Social Responsibility
• Ethics deals with moral values and judgments.
• Ethics concerns the application of general ethical principles and standards to the actions and
decisions of organizations and the conduct of company personnel.
• Business ethics values principles.
• Meeting corporate goals, profitability.
• Ethically motivated job satisfaction.
• Fostering of durable partnership.
• CSR applies to business concerns as it duty to operate without any harm towards stakeholders
and the environment.
• Operating the business in an ethical way.
• Charitable activities such as community service and helping the needy.
• Actions to protect the environment like go green projects using products that are free from
materials harmful for the environment.
• Acting for employee wellbeing as in helping for a healthy life.
Start Up India, Stand Up India
• Startup India campaign is based on an action plan at promoting bank financing for start-up
ventures to boost entrepreneurship and encourage start-ups with job creation.
• Schemes are
o Extra Mural Research Funding
o High Risk
Here are the plans for start-ups
1. Self certification

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The start-ups will adopt self-certification to reduce the regulatory liabilities. The self-certification will
apply to laws including payment of gratuity, labour contract, provident fund management, water and
air pollution acts.
2. Start-up India hub
An all-India hub will be created as a single contact point for start-up foundations in India, which will
help the entrepreneurs to exchange knowledge and access financial aid.
3. Register through app
An online portal, in the shape of a mobile application, will be launched to help start-up founders to
easily register. The app is scheduled to be launched on April 1.
4. Patent protection
A fast-track system for patent examination at lower costs is being conceptualized by the central
government. The system will promote awareness and adoption of the Intellectual Property Rights
(IPRs) by the start-up foundations.
5. National Credit Guarantee Trust Company
A National Credit Guarantee Trust Company (NCGTC) is being conceptualized with a budget of Rs
500 crore per year for the next four years to support the flow of funds to start-ups.
6. No Capital Gains Tax
At present, investments by venture capital funds are exempt from the Capital Gains Tax. The same
policy is being implemented on primary-level investments in start-ups.
7. No Income Tax for three years
Start-ups would not pay Income Tax for three years. This policy would revolutionize the pace with
which start-ups would grow in the future.
8. Tax exemption for investments of higher value
In case of an investment of higher value than the market price, it will be exempt from paying tax
9. Building entrepreneurs
Innovation-related study plans for students in over 5 lakh schools. Besides, there will also be an annual
incubator grand challenge to develop world class incubators.
10. Setting up incubators
A private-public partnership model is being considered for 35 new incubators and 31 innovation
centers at national institutes.
11. Legal support
A panel of facilitators will provide legal support and assistance in submitting patent applications and
other official documents.
12. Rebate
A rebate amount of 80 percent of the total value will be provided to the entrepreneurs on filing patent
applications.

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13. Easy rules
Norms of public procurement and rules of trading have been simplified for the start-ups.
Woman Entrepreneurship: Opportunities and Challenges.
Women Enterprise: Owned and controlled by a woman having minim financial interest of 51% of
the capital and giving at least 51% of the employment generated by the enterprise to women.
• Shift from 3 Ps (Pickle, Pappad, Powder) to 3 Ts (Tailoring, Teaching, Tinting) to 3 Es (Electronics&
Electricals, Exports and E Commerce).
• Shift from traditional economy to knowledge economy.
Reason for women’s become entrepreneur
The following are the different reasons for women becoming entrepreneurs Innovative thinking
• New challenges and opportunities for self-fulfillment
• Employment generation
• Freedom to take own decision and be independent
• Government policies and procedures
• Family occupation
• Need for additional income
• Bright future of their wards
• Success stories of friends and relatives
• Role model to others
• Support of family members
• Education and qualification
• Self identify and social status.
Challenges
1) Lack focus on Career Obligations
Indian women do not focus on their career obligations in the same manner as they do on their family
and personal life. Despite having excellent entrepreneurial abilities, they do not focus on their career
obligations. Their lack of focus towards their career creates a problem in promoting women
entrepreneurship.
2) Economic Instability of women
The economic stability of Indian women is in a very poor state as they lack proper education that is
crucial for becoming self-dependent. Women in rural areas can’t take any entrepreneurial.
3) Lack of Risk taking ability

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Our educational system is very primitive and creating awareness about woman’s capacities and their
hidden powers to handle economic activities. Most of the women are not performing entrepreneurial
activities because they are not having the proper capacities and risk making ability.
4) Arrangement of Finance& Raw Material
Arrangement of finance is a major problem that is faced by women entrepreneurs. Their access to
external sources of finance is very limited because of their poor economic condition in the society. As
such; they find it difficult to be an entrepreneur as they lack the risk-taking ability because of poor
financial assistance. Another problem faced by them is shortage of raw-material and difficulty faced
by the women entrepreneur in arranging good quality raw material at competitive prices.
5) Cut-throat Competition
Women entrepreneurs have to face tough competition not only from industry but also from their male
counterparts . Surviving this cut-throat competition and achieving the aim of producing quality product
at competitive price is not an easy task for the women entrepreneurs.
6) Low levels of literacy amongst women
Illiteracy is the root cause of socioeconomic biasedness that prevails in the society and that doesn’t let
women achieve economic independency. Due to lack of Knowledge of latest technology and proper
education, it becomes difficult for women to set up their own enterprises.
7) Problems in getting financial assistance by banks & Financial Institutions
8) Marketing Problems
9) Less support towards family
10) Lack of self-confidence and self-esteem amongst women
UNIT -2 (a)
How to Become an Entrepreneur?
• Generate Business Idea
a. Observe Market Trends
b. Find Gap in Market
• Conduct feasibility Analysis
a. Technical Analysis
b. Financial Analysis
c. Economic Analysis
• Making a Business Plan
a. Written Document for potential Investors
• Arrange Fund
a. Equity Financing
b. Debt Financing

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• Setup Enterprise
a. Smooth Management
b. Nurture Growth
Entrepreneurial Decision Making
• Strategic orientation
The decision making is totally dependent on their perception of opportunity unlike managers
• Commitment to opportunity
Entrepreneur is pressured by the need for action, short decision windows, willingness to assume risk
and has a short time span
• Commitment to resources
isagainshorttermandensurethattheyareproductive
• Control of resources
Strives to hire resources for short period of time, of an as-needed basis
• Management structure
Is very flat, as he is trying to hasten the decision-making process
Sources of Capital
1. Debt or Equity Financing
• Debt financing - Obtaining borrowed funds for the company.
o Asset-based financing; requires some asset to be used as a collateral.
o Borrowed funds plus interest need to be paid back.
• Equity financing - Obtaining funds for the company in exchange for ownership.
o Does not require collateral.
o Offers investor some form of ownership position.
• Factors affecting type of financing:
o Availability of funds.
o Assets of the venture.
o Prevailing interest rates.
o All financing requires some level of equity; amount will vary by nature and size of
venture.
2. Internal or External Funds

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• Internally generated funds are most frequently employed; sources include:
o Profits.
o Sale of assets and little-used assets.
o Working capital reduction.
o Accounts receivable.
• Short-term internal source of funds:
o Reducing short-term assets - inventory, cash, and other working-capital items.
o Extended payment terms from suppliers.
o Criteria for evaluating external sources of funds:
o Length of time the funds are available.
o Costs involved.
o Amount of company control lost.
3. Personal Funds
• Least expensive funds in terms of cost and control.
• Essential in attracting outside funding.
• Typical sources of personal funds:
o Savings.
o Life insurance.
o Mortgage on a house or car.
• The entrepreneur’s level of commitment is reflected in the percentage of total assets that the
entrepreneur has committed.
4. Family and Friends
• Likely to invest due to relationship with entrepreneur.
o Advantages - Easy to obtain money; more patient than other investors.
o Disadvantage - Direct input into operations of venture.
• A formal agreement must include:
o Amount of money involved.
o Terms of the money.
o Rights and responsibilities of the investor.
o Steps to be taken incase business fails.

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Angel Investors & Venture Capital
Both Angel Investors and Venture Capitalists will hold private equity from having made investments
directly into private companies.
However Business Angel Investors will be individuals, often successful business people, who are
investing their own personal funds into a potentially rewarding business opportunity.
Whereas Venture Capital is invested by firms or companies that use other people's money. They
raise that money by offering investors a chance to take part in a fund that is then used to buy shares
in a private company.
The fact that business angels are using their own money and venture capitalists are using other
people's affects their capacity for risk and of course an individual angel investor doesn't have as
much to invest as a venture capital firm. The main characteristics of each are:
Angel Investor
• An individual investor
• May be willing to invest in early-stage or start-up businesses, as well as established companies
• Investment amounts: £10k - £100k, sometimes a bit more, groups could go up to £1m
• Have experience and contacts to contribute
• May be willing to be "hands-off" or "hands-on" adding important skills
Venture Capital
• A company or business rather than an individual
• Seldom interested in early-stage, unless compelling reasons (eg. high tech with already successful
founders)
• Investment amounts: £1M +
• Have contacts
• Require seat on board
Institutional financial assistance (role)
1) Industrial Financial Corporation of India(IFCI)
IFCI was setup in 1948, it is the 1 st development bank in India.it provides medium and long- term
credit. Any limited company or cooperative society incorporated and registered in India which is
engaged itself in the manufacture, preservation, or processing of goods, shipping, mining, hotel

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industry, generation and distribution of electricity or any other form of power is eligible for financial
assistance from the IFCI.The financial assistance takes the form of:
• Rupee loans
• Sub-loans in foreign currencies
• Underwriting of and/or direct subscription to the shares and debentures of public limited
companies.
To meet the long-term finance needs of entrepreneurs several commission and committees such as
"Industrial Commission (1916-18), the External Capital Committee (925) and the Indian Central
Banking Enquiry Committee (1929-31).
2) Industrial Development Bank of India(IDBI)
The IDBI was established on 1 st july,1964 under the Industrial Development Bank of India Act,1964
as a wholly owned subsidiary of the Reserve Bank of India.in terms of the Public Financial Institutions
Laws(Amendment)Act,1975, the ownership of IDBI has been transferred to the Central Government
with effect from February 16, 1976.IDBI is the apex institution in the area of development banking.
Capital: The entire share capital of Rs.50 crores of the IDBI was held by the RBI. The authorized
capital has been raised to Rs.1000 crores.
The main function of the Industrial Development Bank of India, as its name itself suggest is to finance
Industrial enterprises in both private and public sector. Financial assistance is provided either directly
or through special financial institutions.
3) Industrial Credit and Investment Corporation of India(ICICI)
It was founded on January5,1955 as a public limited company with government support and
under the sponsorship of the World Bank and representatives of the Indian industry. It has
played an important role in setting up institutions, such as Over-the- Counter Exchange,
CRISIL, Venture capital.
The organization structure of ICICI Bank is divided into 5 principal groups:
• Retail banking
• Wholesale banking
• Project finance &special assets management.
• International business
• Corporate Centre.
4) State Financial Corporations(SFCs)
The State Financial Corporations(SFCs) are established under the State Financial

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Corporations Act,1951 with a view to provide medium and long term finance to medium and
small industries. There are 18 SFCs operating in different states. The maximum amount of
loan for a single concern is Rs. 60lakhs.As per the Amendment Act,1962, the SFCs are
authorized to render financial assistance to hotels and transport industries. The financial
resources of SFCs consists of:
• Share capital
• Issue of bonds
• Refinance from IDBI
• Borrowing from RBI
• Loans from State Government
5) State Industrial Promotion Council of Tamil Nadu (SIPCOT)
SIPCOT was established in 1971 and has been acting as catalyst in the development of Medium and
Large-Scale Industries in Tamil Nadu. Working in line with the State Government’s Progressive
Industrial policies, SIPCOT helps faster industrial development in backward and underdeveloped
areas. SIPCOT as totally committed to assist the entrepreneurs provides institutional finance with
refinance assistance from Industrial Development Bank of India and Small Industries Development
Bank of India for meeting fixed capital investment in Industries. It also provides financial services
like, Lease Finance Scheme for Capital Goods, Term Loan assistance for Industrial projects. SIPCOT
is also involved in formation and managing of Industrial complexes/Parks and allotment of developed
plots for location of industries
UNIT-2 (b)
E-Commerce and the Entrepreneurship
E‐Commerce is the exchange of information or transactions using any form of electronic
communication.
• The most successful companies embrace the Internet as a mechanism for transforming their
companies and for changing everything about the way they do business.
• In the world of e-commerce, size matters less than speed and flexibility.
• High-volume, low-margin commodity products are best suited for selling on the Web.
Benefits
• Opportunity to increase revenues
• Ability to expand into global markets
• Ability to remain open 24 hours a day, seven days a week
• Capacity to use the Web’s interactive nature to enhance customer service

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• Power to educate and inform
• Ability to lower the cost of doing business
• Ability to spot new business opportunities and capitalize on them
• Power to track sales results
Approaches to E-Commerce
• Online shopping malls
• Storefront building services
• Internet service providers (ISPs)
• Hiring professionals to design a custom site
• Building a site in-house
Concept and Features of Joint Ventures
A temporary kind of business activity carried on by more than on individual with a view to earning
profit in a pre-agreed manner without giving a firm name to the business is known as joint venture. It
is a temporary partnership between two or more persons for completing a particular adventure. The
relationship between them is ceased as soon as that particular venture is completed.
The persons who enters into the joint venture agreement are called co-ventures. The joint venture
agreement will be automatically terminated after completing the venture. The profits or losses are
shared between the co-ventures according to their pre-agreed agreement. In the absence of agreement,
the profits or losses are shared equally among themselves.
Features of Joint Ventures
1. Joint venture is a special partnership without a firm name.
2. Joint venture does not follow the accounting concept 'going concern'.
3. The members of joint venture are known as co-ventures.
4. Joint venture is a temporary business activity.
5. In joint venture, profits and losses are shared in agreed proportion. If there is no agreement
regarding the distribution of profit, they will share profit equally.
6. Joint venture is an agreement for polling of capital and business abilities to be employed in
some profitable venture.
7. At the end of venture, all the assets are liquidated and liabilities are paid off: if necessary the
assets and liabilities could be shared by co-ventures.
8. Joint venture always follows cash basis of account

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Merger
• A transaction where two firms agree to integrate their operations on a relatively co-equal basis
because they have resources and capabilities that together may create a stronger competitive
advantage.
• The combining of two or more companies, generally by offering the stockholders of one
company securities in the acquiring company in exchange for the surrender of their stock
• Example: Company A+ Company B= Company C.
Acquisition
• A transaction where one firms buys another firm with the intent of more effectively using a
core competence by making the acquired firm a subsidiary within its portfolio of business
• It also known as a takeover or a buyout
• It is the buying of one company by another.
• In acquisition two companies are combine together to form a new company altogether.
• Example: Company A+ Company B= Company A.
Reasons for Mergers and Acquisitions:
• Financial synergy for lower cost of capital
• Improving company’s performance and accelerate growth
• Economies of scale
• Diversification for higher growth products or markets
• To increase market share and positioning giving broader market access
• Strategic realignment and technological change
• Tax considerations
• Undervalued target
• Diversification of risk
Problem with Merger
• Clash of corporate Cultures
• Increased business Complexity
• Employees may be resistant to change
Franchising
Franchising is a well-known business strategy. Franchising is a form of contractual agreement in which
a franchisee (a retailer) enters into an agreement with a franchisor (a producer) to sell the goods and
services for a specified fee or commission. The retailer through his outlet distributes the goods or
services.

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It brings together the title-holder of recognized merchandise with another business. This strategy can
be opted by small businesses by having a brand name of a well-known company associated with it.
For small business who cannot afford for much finance and capital investment for a business startup,
franchising will be beneficial. Buying a franchise can be a shortcut to success.
Initial Public Issue (IPO)
When a company makes public issue of shares for the first time, it is called Initial Public Offer. The
securities are sold through the issue of prospectus to successful applicants on the basis of their demand.
The company has to appoint underwriters in order to guarantee the minimum subscription.
An underwriter is generally an investment banking company. They agree to pay the company a certain
price and buy a minimum number of shares, if they are not subscribed by the public. The underwriter
charges some commission for this work. He can sell these shares in the market afterwards and make
profit. There may be two or more underwriters in case of large issue.
Right issue
When a listed company proposes to issue securities to its existing share holders, whose name appear
in the register of members on record date, in the proportion to their existing holding, through an offer
document, such issues are called Right Issue. This mode of raising capital is best suited when the
dilution of controlling interest is not intended.
Bonus issue
Bonus shares are usually issued when a company earns extra profit or have extra reserves and they
want to convert the same into share capital. These shares are issued in proportion to the number of
shares held by the shareholders. Rules regarding issue of bonus shares are given in the SEBI. Issue of
bonus shares reduces the market price of the company's shares and keeps it within the reach of ordinary
investors. Issue of bonus shares is generally indicates future growth.
Unit - 3
Small Scale Enterprises
• Micro, small and Medium Enterprises is one of the most vibrant sectors of Indian economy.
• The sector is credited with generating employment.
• Accounts for a major share of industrial production and exports.
• Provides ancillary support to large enterprises, promote balanced regional and industrial
growth, protects handicrafts and cultural products, promote backward area development.
Concepts and Definitions of MSME
• Micro Enterprise – an enterprise where the investment in plant and machinery does not exceed
25 lakh. ( Service Sector– does not exceed 10 lakh)

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• Small Enterprise – an enterprise where the investment in plant and machinery more than 25
lakh but does not exceed 5 crore. ( Service Sector – 10 Lakh – 2 crore)
• Medium Enterprise - an enterprise where the investment in plant and machinery more than 5
crore but does not exceed 10 crore. ( Service Sector – 2crore – 5 crore)
Role and Importance of MSME
• MSME play major role in socio economic transformation as well as sustainable growth.
• MSME create wealth, generate employment, need lower capital investment, promotes exports
in both rural and urban areas.
• MSME ensures equitable distribution of income and yielding balanced regional development.
• MSME contribute % to GDP , 45% to manufacturing output, 40% to exports.
• MSME produces 8000 products ranging from traditional to high tech.
• MSME employs 600 lakh people, created 13 lakh jobs.
Current Schemes for MSME
• The objective is to meet and create an ecosystem that support entrepreneurship and skill
development in MSME.
• The ministry offers schemes, incentives and subsidies for the development.
• Only registered MSMEs are eligible for these schemes.
• Credit Guarantee Trust for MSE (CGTMSE).
• Technology Up gradation Scheme
• Marketing Assistance Scheme
• Certification Scheme
• Credit Rating Schema
Problems Facing by MSMEs
• Lack of availability of timely and adequate credit.
• Inadequate infrastructural facilities
• Technological backwardness
• Lack of product innovation
• Lack of access to market
• Difficulty in finding and retaining talented human resources.
• Impact of WTO compliances and regulatory systems
Small Industry Extension Training Institute
• For guidance, support and mentoring
• Pre-start up stage, start up, development and growth phases
• Financing, equipment support, technical assistance, training, marketing, subsidies, grants etc.

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• Central Level Institutions
• State Level Institutions
• Others
• Central Level Institutions
• National Board for MSME (NBMSME)
• Khadi and Village Industries Commission (KVIC)
• Coir Board
• National Small Industries Corporation (NSIC)
• National Productivity Council (NPC)
• Entrepreneurship Development Institute (EDI)
• National Entrepreneurship Development Institutes ( NIESBUD & IIE)
• State Level Institutions
• State Directorate of Industries
• District Industries Centers (DIC)
• State Financial Corporation (SFC)
• State Industrial Development Corporation (SIDC)
• Others
• National Bank for Agriculture and Rural Development (NABARD)
• Housing and Urban Development Corporation (HUDCO)
• Technical Consultancy Organization (TCO)
• Export Promotion Council (EPC)
• Small Industries Development Bank of India ( SIDBI)
Procedure to start a small-scale industry
The process of starting a new business venture is embodied in the entrepreneurial development
process. The process can be classified into four phases.
identification and evaluation of the opportunity.
develop a business plan
determining the resources required
implementation and management of the
enterprise

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Step in setting up an enterprise
Ministry of Micro, Small and Medium Enterprises (MSME) has defined 8 distinct steps for setting up
micro, small and medium level enterprises.
a) Project Selection
• Product (shape, size and nature),
• Process (technology to produce the product),
• Place (Location of plant), and
• Partner (Technological or Financial Collaborator).
b) Technology and machinery
c) Arranging Finance
d) Unit Development
e) Filing of Entrepreneurs’ Memorandum
f) Approvals
g) Clearances
h) Quality Certification
Industrial sickness
It becomes clear from the definitions of industrial sickness that industrial sickness does not occur all
of a sudden in the life of an industrial unit. In fact, it is a gradual process with distinct stages taking
from 5 to 7 years to corrode the health of a unit beyond cure and making the unit sick. To put in simple
words, it starts with downturn in the industry whose continuation ultimately leads to setting in of
industrial sickness (Kortial 1997). The process of industrial sickness can be presented in different
ways.
The causes of industrial sickness may be divided into two broad categories:
i. Internal
ii. External
Internal Causes of Sickness
The major internal factors responsible for the widespread sickness in Indian industries are discussed
below:
a) Lack of Financial Planning/ Control and Budgeting
b) Improper Utilization of Assets
c) Inefficient Working Capital Management
d) high Rate of Capital Gearing

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e) Poor Collection of Bad and Doubtful Debts
f) Improper Selection of Site
g) Poor Maintenance of Plant and Machinery
h) Lack of Product Diversification
i) Inept Demand Forecasting
j) Selection of Inappropriate Product-Mix
k) Lack of Market Research / Survey
l) Absence of Proper Product Planning
m) High Absenteeism and Labour Turnover
n) Bad Industrial Relations
o) Inappropriate Wage and Salary Administration
p) Overstaffing
q) Poor Managerial Talent
r) Poor Reporting
s) Mismanagement
t) Improper Project Planning
External Causes of Sickness
The major external causes of sickness are
a) Lack of Adequate Industrial Credit
b) Delay in Disbursement of Loans
c) Unfavorable Investment Climate
d) Policy of Credit Restraints
e) Shortage of Inputs-
f) Demand recession leads to a decline in sales of the enterprise
g) Heavy Taxes
h) Wage Disparity in Identical Units
i) Inter-union Rivalry
UNIT – 4
Factors Can Affect the production Process
The manufacturing process is a complex one that can be impacted by many factors: supplies,
equipment, factory overhead, the need for special parts, and the people who work at all points in the

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process. The more variables there are, the greater the possibility of disruption to the smooth operations
of a factory. Management styles can also have a positive or negative impact on this process.
a) Supplies
Many manufacturers depend on raw materials supplied from outside sources. Some of the factors that
can delay or hamper a regular delivery schedule include a glitch at the site of a supply source, problems
with transportation or inclement weather. If supplies are not forthcoming as needed, the potential for
shutdown or a major slowdown in the manufacturing process can result. Alternatively, a smooth supply
operation and well-managed inventory promote production as scheduled.
b) Equipment
When a manufacturing process involves complex machines to complete production, a temporary
malfunction or a breakdown in an intricate piece of equipment can affect the manufacturing process.
Identifying means of improving efficiency of all working parts of production promotes a continual and
more efficient operation. Positioning of equipment and the personnel required to operate machines can
also affect production. In a paper on manufacturing cycle times, Mandar M. Chincholkar of Intel
Corporation and several of his academic and research colleagues explain the concept of "process drift,"
which they describe as a common occurrence in manufacturing processes where machines fail to
function properly due to lack of cleaning.
c) Factory Overhead
Manufacturers depend on utilities to power machines, cool equipment and light the workspace in their
factories. Even a temporary shutdown of the power supply or lack of a steady water source can impact
production, thus affecting the manufacturing process. In addition, management style can have a
significant impact on production in both negative and positive ways.
d) Special Parts
In the textbook "Operations Management," professors R. Dan Reid of the University of New
Hampshire and Nada R. Sanders of Lehigh University posit "conformance to specifications" as one
definition of quality in manufacturing. They cite as an example the situation of machine parts being
built to specs. Here, an unforeseen change in made-to-order parts can have a significant impact on the
manufacturing process, especially if the parts are shipped over long distances from offsite. Disparities
in quality may require multiple orders for the same inventory, resulting in delays and temporary
slowdowns or shutdowns of the manufacturing process.
e) People
The workforce, especially "touch labor," the workers directly involved in the manufacturing process,
can affect that process in many ways. For example, sick days and vacations taken by key personnel

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must be figured into production to prevent a negative impact on manufacturing. An intangible factor
that affects the manufacturing process and is dealt with after the fact is human error. Alternatively,
human insight into a manufacturing process leading to more labor-efficient and cost-effective methods
of production can affect the manufacturing process in a positive way.
Production Planning
means to fix the production goals and to estimate the resources which are required to achieve these
goals. It prepares a detailed plan for achieving the production goals economically, efficiently and in
time. It forecasts each step in the production process. It forecasts the problems, which may arise in the
production process. It tries to remove these problems. It also tries to remove the causes of wastage
• Effective utilization of resources.
• Steady flow of production.
• Estimate the resources.
• Ensures optimum inventory.
• Coordinates activities of departments.
• Minimize wastage of raw materials.
• Improves the labour productivity.
• Helps to capture the market.
• Provides a better work environment.
• Facilitates quality improvement.
• Results in consumer satisfaction.
• Reduces the production costs.
Rural Entrepreneurship
According to Khadi and Village Industries Commission (KVIC) rural industry is industry located in
rural area, population of which does not exceed 10,000 or such other figure which produces any goods
or renders any services with or without power and in which the fixed capital investment per head of
an artisan or a worker does not exceed a thousand rupees.
Types of Rural Entrepreneurship
• Individual entrepreneurship
• Group entrepreneurship
• Cluster formation
• Co-operatives
Need for Rural Entrepreneurship
• Labour Intensive

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• Employment Generation
• Income generation
• Encourages dispersal of economic activities-BRD
• Development leads to village republics
• Helps to protect and promote art and creativity-Kondapalli toys.
• Fosters economic development by reducing migration of people from village to urban, reduces
growth of slum areas, atmospheric pollution.
Problems Of Rural Entrepreneurship
• Financial Constraints
• Lack of technical know-how
• Lack of training services
• Management problems
• Lack of quality control
• Lack of communication and marketing information
• Poor quality of raw materials
• Lack of storage and warehousing facilities
• Lack of latest technology
• Lack of promotional strategy
Social entrepreneurship
Social Entrepreneurship create innovative solutions to immediate social problems and mobilizes the
ideas, Capacities, resources, and social arrangement required for sustainable social transformation.
Function of Social entrepreneurship
• To create and maintain a stable level of employment
• Create jobs and provide support to socially vulnerable groups
• Social Entrepreneurship promotes development of entrepreneurial skills
• Compensating countries narrow place.
• Social Entrepreneurs create social innovation and change in various areas, including education,
health, environment and business development
• reduces poverty risk.

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Unit – 5
Business Incubation
Business Incubation defined as a location in which entrepreneurs can receive pro-active, value-added
support, and access to critical tools, information, education, contacts, resources and capital that may
otherwise be unaffordable, inaccessible or unknown. Well-structured incubators provide links to
industry; business support services to enhance and develop business; upgrade skills and techniques;
technological advice and assistance with intellectual property protection; financial resources for R&D;
initial marketing expenses; and access to potential private investors and strategic partners.
Types of Business Incubators
Incubators come in many formats, mostly fitting the following four types:
• Public or not-for-profit incubators: government and non-profit organization, whose primary
objective is to promote economic development, sponsor these.
• Private incubators: these are run by venture and seed capital investment groups, or by
corporations and real estate development partnerships. These incubators generally seek a return
on their investment.
• Academic-related incubators: there are started where which have academic objectives also
focus on faculty development, and on creating business-spin-offs from faculty research
• Public/private incubators: these are joint efforts between government and non-profit agencies.
This type of incubation offers the advantage that government funding can often be secured to
support private sector expertise and financing.
Business Plan
• A business plan is a roadmap and blue print of the project.
• A business plan is a written document that describes in detail how a business is going to
achieves its goals.li
• It is a document that explains a business opportunity, identifies the market to be served and
provides details about how the entrepreneurial organization plans to pursue it.
• It inclues a step b step procedure for starting a business enterprise.
• It contains 20 – 30 pages.
• It specifies the direction of the company, highlights the challenges and determine the current
position.
Contents of a Business Plan
• Cover Page and Table of Contents

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• Executive Summary
• Business Concept
• Management Summary
• Business Strategy
• Organisation Plan
• Marketing Plan
• Operations Plan
• Financial Plan
• Annexure
• Appendices
Contents of Detailed Project Report (DPR)
1. General Information
• Name
• Constitution & Sector
• Location
• Nature of Industry and Product
• Promoters and their contribution
• Cost of Project and means of finance
2. Promoter’s Details
3. Marketing & Selling Arrangement
4. Particulars of the Project
• Product mix and capacity
• Location & Site
• Plant & Machinery
• Raw Materials
• Utilities
5. Technical Arrangements
6. Production Process

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7. Environmental Aspects
8. Schedule of Implementation
9. Cost of the Project
10. Means of Finance
11. Profitability Estimates
• Assumptions
• Projected Income Statement
• Projected Balance Sheet
• Projected Cash Flow Statement
• Appraisal based on Profitability statement
13. Economic Considerations
14. Appendices
• Estimates of cost of production
• Calculation of depreciation
• Calculation of working capital and margin money for working capital
• Repayment/Interest Schedule of term loan and bank finance
• Calculation of tax
• Coverage ratios
• NPV,IRR etc
• Sensitivity Analysis