small business & epreneurship development

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UNIT III STARTING A SMALL SCALE UNIT-
small scale industries are those industries which requires low need of capital and these are
labour intensive. the industries which are organized on a small scale and produce goods with
the help of small machines, hired labour and power are called as small scale industries
Stepstostartasmallscaleindustry
anindustry: is one in which something is converted into other form(s) with value-addition using
men, material, & equipment. when this involves at least 3-persons (and power is used) or at
least 5-persons (when power is not used), it is an industry, else, it is classified as an “artisan”
activity. service enterprises may also be in the small-scale ambit, and there are many schemes
that are now available for financing them. s.s.i: a small-scale industry is one in which the
investment in plant & machinery is less than rs. 1 crore. when investment is less than rs. 25
lakhs it qualifies to be treated as a “tiny” sector ssi.
productidentification:the overriding reason for anyone to think of establishing a SSI unit can be
summarised in one word - opportunity. if one can see an opportunity to provide a product or
service in a manner to generate sufficient surplus, then one way is to start up a SSI unit.
location: an industry can be started by the entrepreneur at either his own place / own shed, or
rented place / rented shed. it can also be located at an industrial estate.
form of ownership: sole proprietorship family ownership partnership this is the entrepreneur’s
personal decision.
location of unit: location of unit proximity to source of raw materials nearness to the market
general business climate of the region climate and environmental factors
approvals: every SSI unit has to comply with various regulations in force. these include
regulatory, taxation, environmental and certain product specific clearances. licensing in the
industries sector is governed by the licensing exemption notification issued by govt. of India
in july 25 1991 under the industries (development and regulation) act, 1951. in SSI, there are
virtually no licensing restrictions. no industrial license is required except in case of 6 product
groups included in compulsory licensing (these products groups mainly cover products that can
only be made in large sector) but if a small-scale unit employs less than 100 workers
with/without power then it would not require a license from the govt. of India even for the 6
product groups covered in licensing under schedule ii of the notification
registration:provisionalregistrationcertificate(PRC): in order to take steps to set up an industry for a
particular product at a particular place, one needs to register it with the state government’s
district or tehsil industries centre (DIC / tic etc.), which issues a provisional registration
certificate (PRC). to get the PRC, apply to the DIC etc. in prescribed format with a project
report / project profile. a 2 to 3-page project report / profile would suffice if it is a small SSI. it
would highlight the background of the entrepreneur, plant & machinery to be bought & its
value, details of where the product would sell & at what price, and the sources of funds
including term loan, working capital loan, own equity, etc. for large SSI project, details like
cash-flow chart will also be needed. the DIC etc will issue the PRC (normally, across the table)
if the investment in plant & machinery is within rs. 1 crore, the product is not banned, and such
an activity is declared as an industry (many services like it, hotels, hospitals are included). the
PRC is valid for 3-years, and can be extended if the entrepreneur cites unavoidable
circumstances. the PRC is a prerequisite for getting other permissions – permission of local
authority to set up the industry, trade licence, power, pollution clearance, clearance of inspector
of boilers, registration for commercial taxes (state & central sales tax) etc. the PRC is also
needed for obtaining term loan & working capital.
permanent registration certificate (PMT) having set up the unit and achieved trial production, the
entrepreneur is expected to take the permanent registration (PMT). this is also issued by the

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DIC etc. to get PMT, apply in prescribed format along with copies of PRC, power sanction,
municipal / panchayat licence, first sale invoice, lease or rental agreement, partnership deed or
memorandum of association (in case of limited co.), and a required affidavit. the PMT is
normally issued either after inspection or without inspection subject to later verification.
clearances:an entrepreneur has to obtain several clearances or permissions depending upon the
nature of his unit and products manufactured regulatory or taxation clearances
1.registration under sales tax act - commercial tax officer of area concerned
2.registration under central excise act - collector of central excise or his nominee for area
payment of income tax - into of the area concerned registration of partnership deed - inspector
general of area concerned
3.calibration of weights & measures - weights and measures inspector of state
4.power connection - designated officer of state electricity board
5.employee strength exceeding 10 with power connection or 20 without power - chief inspector
of factories
arrangementoffinance:arrangement of finance fixed capital: the finance required for setting up
infrastructure like land, buildings, machinery etc. this can be generated by partnership, bank
loans arrangement of finance working capital: it is necessary for buying raw materials and
recurring expenditure. it hugely depends on the financial position of the firm. startingproduction:
after the basic trial runs, commercial production has to begin with proper quality checks in
place.
marketing the product: this is the last but the most important step in realizing the business
ambition. no business is complete without selling the products and ensuring that the revenues
flow into the organisation. marketing is the prime way to enhance the business and the best
way to survive in this competitive world.
STRUCTURE AND OWNERSHIP,
Ownership: Such units are generally under single ownership. So it can either be a sole
proprietorship or sometimes a partnership firm. SSI’s generally are under single ownership.
Ownership Structure
When determining whether an organization is eligible for SSI registration, its ownership
structure is also considered. An enterprise may be owned in India by an individual, a
partnership firm, a company, or a cooperative. The business should be independent, not a
division of a sizable industrial organization.
Types of Ownership Structures
The most common ways to organize a business:
 Sole Proprietorship
 Partnership
 Limited partnership
 Limited Liability Company (LLC)
 Corporation (for-profit)
 Non-profit Corporation (not-for-profit)
 Cooperative.

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Sole Proprietorships and Partnerships: For many new businesses, the best initial ownership
structure is either a sole proprietorship or -- if more than one owner is involved -- a partnership
Sole Proprietorships: A sole proprietorship is a one-person business that is not registered with
the state like a limited liability company (LLC) or corporation. Legally, a sole proprietorship
is inseparable from its owner -- the business and the owner are one and the same. This means
the owner of the business reports business income and losses on his or her personal tax return
and is personally liable for any business-related obligations, such as debts or court judgments
Partnerships: Similarly, a partnership is simply a business owned by two or more people that
haven’t filed papers to become a corporation or a limited liability company (LLC). As in a sole
proprietorship, the partnership's owners pay taxes on their shares of the business income on
their personal tax returns and they are each personally liable for the entire amount of any
business debts and claims. Sole proprietorships and partnerships make sense in a business
where personal liability isn't a big worry -- for example, a small service business in which are
unlikely to be sued and for which won't be borrowing much money for inventory or other costs.
Limited Partnerships: Limited partnerships are costly and complicated to set up and run, and
are not recommended for the average small business owner. Limited partnerships are usually
created by one person or company (the "general partner"), who will solicit investments from
others (the "limited partners").
The general partner controls the limited partnership's day-to-day operations and is personally
liable for business debts (unless the general partner is a corporation or an LLC). Limited
partners have minimal control over daily business decisions or operations and, in return, they
are not personally liable for business debts or claims. Consult a limited partnership expert if
interested in creating this type of business.
Corporations and LLCs: Forming and operating an LLC or a corporation is a bit more
complicated and costly, but well worth the trouble for some small businesses. The main benefit
of an LLC or corporation is that these structures limit the owners' personal liability for business
debts and court judgments against the business.
What sets the corporation apart from all other types of businesses is that a corporation is an
independent legal and tax entity, separate from the people who own, control and manage it.
Because of this separate status, the owners of a corporation don't use their personal tax returns
to pay tax on corporate profits -- the corporation itself pays these
taxes. Owners pay personal income tax only on money they draw from the corporation in the
form of salaries, bonuses, and the like. Like corporations, LLCs provide limited personal
liability for business debts and claims. But when it comes to taxes, LLCs are more like
partnerships: the owners of an LLC pay taxes on their shares of the business income on their
personal tax returns. Corporations and LLCs make sense for business owners who either 1) run
a risk of being sued by customers or of piling up a lot of business debts, or 2) have substantial
personal assets they want to protect from business creditors
Non-profit Corporations: A non-profit corporation is a corporation formed to carry out a
charitable, educational, religious, literary, or scientific purpose. A non-profit can raise much-
needed funds by soliciting public and private grant money and donations from individuals and
companies. The federal and state governments do not generally tax non-profit corporations on

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money they take in that is related to their non-profit purpose, because of the benefits they
contribute to society
Cooperatives: Some people dream of forming a business of true equals -- an organization
owned and operated democratically by its members. These grassroots business organizers often
refer to their businesses as a "group," "collective," or "co-op" -- but these are often informal
rather than legal labels. For example, a consumer co-op could be formed to run a food store, a
bookstore, or any other retail business. Or a workers' co-op could be created to manufacture
and sell arts and crafts
SOME MORE POINTS IN DETAIL
Common types of business ownership
The most common forms of business ownership are sole proprietorship, partnership, limited
liability partnership, limited liability company (LLC), series LLC, and corporations, which can
be taxed as C corporations or S corporations.
In addition, social entrepreneurs can choose from non-profit corporations as well as benefit
corporations and low-profit limited liability companies (L3Cs). States provide different
business structures with unique requirements and privileges.
1. Sole Proprietorship
Sole proprietorship is the default structure of a business that hasn’t filed any paperwork to
create a legal entity. It is the simplest form of business ownership, and the structure of choice
for four out of five small business owners with no employees.
Advantages of a sole proprietorship
Sole proprietorship is a simple ownership type with several advantages, including the
following:
 Simplicity: In most cases, sole proprietors operating under their own names can simply
get to work without filing paperwork with the state. Sole proprietorships may be exempt
from certain licensing and registration requirements such as obtaining a business license
to sell online. This makes sole proprietorship the simplest and least expensive among
the different types of business ownership.
 Control over the business: A sole proprietorship is owned by a single person. There’s
no need to get consensus before making decisions about the business: It’s all yours.
 Pass-through taxation: Profits from a sole proprietorship pass through to the owner’s
personal income, simplifying taxes significantly. As a pass-through entity, a sole
proprietorship qualifies for the 20% qualified business income (QBI) deduction
established under the 2017 Tax Cuts and Jobs Act. Tax software can help you ensure
that you’re getting all of the tax credits and deductions your business qualifies for.
Disadvantages of a sole proprietorship
Sole proprietorships do have their disadvantages compared to other types of ownership.

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 Legal liability: A sole proprietorship passes more than income through to its owner.
Legally, the two are inseparable. That means any lawsuits or other claims against the
business are launched personally against the owner. As a sole proprietor, you’re putting
your personal assets on the line every day that you operate your business.
 Financial risk: In addition to legal risks, sole proprietors take on all financial risk of
the business personally. Your home, bank accounts, cars, and other assets can be seized
to satisfy claims by creditors if your business hits a rough patch financially.
 Access to funding: Because of their informal structures, sole proprietorships generally
have a harder time accessing loans and investment capital than other business
ownership types. This can make it difficult to provide competitive benefits such as
small business health insurance.
2. Partnerships
Partnerships, often called general partnerships, are businesses with more than one owner. If
you team up on a business venture without forming a legal business entity through the state,
your business is a partnership by default.
While they don’t require formation paperwork, there may be limitations on naming a
partnership in your state, which may necessitate filing a “doing business as” (DBA) name.
Partnerships are usually founded on formal partnership agreements outlining the ownership
share, rights, and obligations of each partner.
Partnerships are a popular type of company ownership for professional firms.
Advantages of a partnership
Partnerships provide some notable advantages, including:
 Simplicity: Partnership is a relatively simple structure since it doesn’t require
formation paperwork. Depending on the number of partners and the terms of your
agreement, they can also be relatively simple to run.
 Pass-through taxation: Partnerships are pass-through entities, with income passing
through to partners proportionally based on share of ownership. If your partnership is
split evenly down the middle, for example, 50% of the business’s profits would pass
through to each partner’s personal income. Partnerships qualify for the 20% QBI
deduction.
 Control over the business: Partnerships allow their owners to participate in the
business directly and allocate profits and control according to their own wishes. New
partners can be brought in relatively easily.
Disadvantages of a partnership
Following are some drawbacks of partnerships:
 Legal liability: Like sole proprietorships, partnerships open the partners up to legal
liability for the firm’s operations. Liability insurance can address these risks, but
insurance has limits.
 Financial risk: Partners also take on financial liability for the business, putting their
personal assets at risk in case of financial hardship or bankruptcy.

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3. Limited Liability Partnership (LLP)
An LLP is a legal entity available in some states to provide the simplicity and pass-through
taxation of a partnership while limiting liability for the partners. In addition to a formal
operating agreement among partners, LLPs generally require registration with the secretary of
state.
Where available, they are a popular type of business entity with professionals such as doctors,
lawyers, accountants, architects, and engineers.
Advantages of an LLP
LLPs provide their owners with many advantages, including:
 Limited liability: Like an LLC, an LLP is a separate legal entity with its own assets
and obligations. This protects partners from personal liability for legal and financial
claims against the firm, although the degree of protection varies by state. Generally, the
partners’ liability is limited to their investments in the firm. Partners may still be liable
for their own personal errors and misconduct, so liability insurance is generally still
required.
 Ownership and control: Like partnerships, LLPs allow owners to actively participate
in the business and control how it is run.
 Tax options: LLPs may be considered pass-through entities, which can be
advantageous for owners, particularly with the 20% QBI deduction. Their tax treatment
varies by state, however.
Disadvantages of an LLP
Some limitations of LLPs include:
 Limited availability: LLPs are not available in every state, and they may only be
available to certain types of businesses.
 Increased complexity: Because LLPs are treated differently in different states,
partners will need to research their state requirements and tax laws thoroughly before
choosing this structure.
4. Limited Liability Company (LLC)
An LLC is a legal entity formed by creating an LLC operating agreement and filing articles of
organization with the secretary of state. LLCs allow business owners to retain some of the
advantages of sole proprietorship while limiting legal and financial liability, making them a
popular business ownership structure for small businesses.
When evaluating the advantages of sole proprietorship vs LLC, be sure to weigh all the pluses
and minuses.
Advantages of an LLC

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Limited liability is one of several benefits provided by an LLC:
 Limited liability: When you form an LLC, you create a separate legal entity with its
own assets and obligations. Any legal claims against the business remain against the
business, not its owners. Members of an LLC may still be liable for their personal
conduct, however, so liability insurance is generally advised.
 Active ownership: LLCs allow ownership by two or more members who can exert as
much control and involvement in the business as they like.
 Tax options: LLCs are pass-through entities, which can be advantageous for owners,
particularly with the 20% QBI deduction. But LLCs also provide additional flexibility
by allowing members to choose to be taxed as a corporation instead (see “corporations,”
below). This is generally advantageous to larger firms, but it gives LLCs flexibility as
the business grows.
Disadvantages of an LLC
Following are some of the limitations of LLCs:
 Complexity: LLCs must be formed by filing articles of formation with the state. You
also have ongoing regulatory paperwork to attend to, including maintaining a registered
agent to receive legal documents and filing periodic reports where required with the
state. All of this adds up to extra administrative time and complexity.
 Administrative costs: An LLC costs more to create and maintain than a sole
proprietorship. State filings generally require fees, and you may need software or
support to complete them. You may need extra legal and financial guidance to ensure
that you’re getting the most out of your choices as well, which can further add to the
costs.
5. Series LLC
Currently available in 18 states and counting, series LLCs are an up-and-coming type of
business ownership structure. Basically, they allow one parent LLC to form multiple internal
LLCs in subsidiary fashion. These nested LLCs can be used to isolate liability for different
business units.
Series LLCs are complex, but worth discussing with your advisors if your business has distinct
units that might benefit from individual treatment.
Advantages of a series LLC
Series LLCs provide numerous benefits, including:
 Really limited liability: Each LLC within a series has separate members, assets, and
liabilities.
 Active ownership: Series LLCs allow owners to actively participate in the operation
of their individual LLCs.
 Tax options: Series LLCs retain the tax advantages and flexibility of traditional LLCs.
 Unified filing: Despite the multiple LLCs, a series LLC is required to register and file
taxes just once through the parent LLC. The registrations and returns must encompass
all LLCs, however, so they are still more complicated than a single LLC.

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Disadvantages of a series LLC
Series LLCs have the following limitations:
 Complexity: Despite the unified filing setup, it’s considerably more complex to
manage multiple LLCs with separate assets and owners than a single entity. Taxes in
particular are complicated by the series structure.
 Administrative costs: The added administrative burden means additional cost and
guidance from professional advisors. In addition, fees may be higher for forming a
series LLC.
6. C Corporation
A corporation is owned by shareholders who may have varying levels of control and
involvement in the everyday operations of the business. In the case of stock corporations,
ownership is issued in shares of stock.
A corporation is formed by filing articles of incorporation with the state. The process of
incorporation includes appointing a board of directors to oversee the business and establishing
bylaws for its governance.
With governance managed through a board of directors and ownership distributed among
shareholders, corporations represent a further degree of separation between the business entity
and its owners.
By default, corporations are C corporations, so called because they are taxed under Subchapter
C of the Internal Revenue Code (IRC). Unlike sole proprietorships, partnerships, and LLCs, C
corporations are not pass-through entities.
Profits belong to the corporation and are subject to corporate income tax. They may also be
distributed through dividends to shareholders.
Advantages of a C corporation
With their formal governance and ownership structures, corporations can sustain any level of
growth. Generally, the structure becomes advantageous as a business grows larger. Some of
the advantages include the following:
 Limited liability: Like an LLC, a corporation is a separate legal entity with assets and
liabilities of its own. The liability of its shareholders is generally limited to the amount
they have invested in the business.
 Self-employment taxes: Shareholders who work in the business are paid and taxed as
employees, sparing them from self-employment tax. Income can be kept in the business
as equity and distributed through shares and dividends, providing greater financial
flexibility.
 Access to capital: C Corporations can access capital by issuing stock. They can make
unlimited stock offers to individuals or businesses, including foreign or domestic
investors. They can also issue multiple types of stock.

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Disadvantages of a C corporation
Incorporation also has the following drawbacks:
 Regulatory oversight: Corporations are subject to greater scrutiny than LLCs, being
required to disclose earnings, governing documents, and other information annually to
shareholders and in some cases the public.
 Corporate tax: The profits of Corporations are subject to corporate tax. Shareholders
who work in the business and take a salary, as well as shareholders who earn dividends,
also pay personal income tax on their earnings. This results in two layers of taxation on
the business’s profits.
 Complexity and costs: Corporations are more complex and costly to form and
maintain than other business entities.
 Less control: Because ownership is spread among shareholders, and governance
among a board of directors, corporations make it harder to exert individual control over
the business.
7. S Corporation
Some corporations can enjoy the benefits of pass-through taxation by electing to be taxed as
an S corporation. To qualify, the corporation may not have more than 100 shareholders and
may issue only one class of stock.
Only individuals, certain estates and trusts, and certain tax-exempt organizations may own
shares in an S corporation.
An S corporation is formed through the same steps as a C corporation, with an additional
election made through a filing with the Internal Revenue Service.
Advantages of an S corporation
The advantages of an S corporation include:
 Limited liability: Like all corporations, S corporations limit the owners’ personal
liability for the business’s debts and legal obligations.
 Access to funding: S corporations can attract investment capital and other funding.
 Pass-through taxation: S corporations qualify for pass-through taxation, which can
reduce the tax burden for individual shareholders as well as for the business.
Disadvantages of an S corporation
Some of the drawbacks of S corporations include the following:
 Higher start-up costs: Like any corporation, S corporations cost more to start and
operate than LLCs and sole proprietorships.
 Increased complexity: S corporations must regularly report earnings and other
information to shareholders.
 Limits on ownership: S corporations may be owned only by individuals who are U.S.
citizens or residents, and they can issue only one type of stock.

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8. Non-profit Corporation
Most non-profits are formed as corporations that apply for tax-exempt status under Section
501(c) of the IRC. Their entity formation process is the same as that of other corporations, with
articles of incorporation filed with the secretary of state, a board of directors, and bylaws for
governance.
Non-profits may be formed solely for the tax-exempt purposes specified in Section 501(c),
however, and they are subject to specific regulatory requirements in each state.
Contrary to popular belief, non-profits can and should generate profits. The difference between
a non-profit entity and a for-profit entity is how those profits are invested. Rather than being
distributed to shareholders, profits are reinvested in the non-profit’s operations to serve its
charitable mission.
Advantages of a non-profit corporation
Non-profit corporations provide significant advantages, including:
 Liability protection: Non-profit corporations provide the same limits on liability as
other corporations, protecting you from personal liability for the non-profit’s
operations.
 Tax exemption: Non-profits may qualify for exemption from federal taxes as well as
many state and local taxes. This allows non-profits to stretch their budgets and apply
maximum resources toward their missions. Federal tax exemption is not a blanket
exemption from all taxes, however. Non-profits that achieve federal tax-exempt status
generally need to apply separately for exemption from state and local taxes such as sales
tax.
Disadvantages of a non-profit corporation
Some of the limitations of non-profit corporations include the following:
 Limited activities: Non-profits must limit their activities to the pursuit of charitable
purposes.
 Limited access to funding: Non-profit organizations rely on grants and charitable
contributions to fund their operations.
 Increased regulatory oversight: In addition to the usual duties of corporations, non-
profits have unique registration and reporting requirements to manage at the state and
federal levels.
9. Benefit corporation
Benefit corporations are corporations formed to serve a public benefit in addition to the usual
corporate mission of earning profits. They are structured like other corporations with a board
of directors and bylaws, yet the board is responsible for measuring and reporting on its social
impact as well its financial performance.
Benefit corporations are an increasingly popular structure for entrepreneurs who want to do
good while doing business.

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Advantages of a benefit corporation
Benefit corporations provide the following advantages:
 Limited liability: Like any other corporation, a benefit corporation limits its
shareholders’ liability for financial and legal claims.
 Access to funding: Benefit corporations can take advantage of investor capital and
revenue from commercial activities to accomplish their social missions.
 Profit distribution: Like other corporations, benefit corporations can distribute profits
to shareholders as dividends.
Disadvantages of a benefit corporation
Following are some of the drawbacks of a benefit corporation:
 Varying regulations: Benefit corporations are currently available in 35 states. This
map from B Lab shows where they are available. Each state has its own rules for what
types of social benefits qualify and how they must be measured and reported, which
means additional complexity in forming and running the business.
 Increased regulatory oversight: Benefit corporations must meet all of the usual
regulatory requirements of corporations plus report on their social and financial impact
annually to shareholders.
 Corporate tax: Benefit corporations are subject to federal corporate income tax.
10. Low-Profit Limited Liability Company (L3C)
L3C is a relatively rare business type that combines the legal structure of an LLC with the
charitable mission of a non-profit. An L3C can distribute modest profits to its members, yet
this must always be secondary to the primary purpose of furthering a charitable mission.
L3Cs may not be formed for political or legislative purposes.
L3Cs were conceived as an investment vehicle for foundations, which must give 5% of their
assets to a charitable program or program-related investment (PRI) each year. That plan ran
into some hurdles with the IRS, however, and the L3C structure has not been widely adopted
as a result.
Advantages of an L3C
An L3C offers some advantages:
 Liability protection: L3Cs provide the same limits on liability as LLCs, protecting you
from personal liability for the business’s operations.
 Flexible ownership: Members of an L3C can maintain ownership and control and
actively participate in the day-to-day operations of the business.
 Pass-through taxation: L3Cs qualify for pass-through taxation.
Disadvantages of an L3C
Following are limitations of an L3C:

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 Lack of tax exemption: L3Cs do not qualify for federal tax-exempt status, and are
therefore less attractive than incorporation for social enterprises.
 Regulatory uncertainty: Because the IRS has not officially sanctioned L3Cs as PRIs
for foundations, their usefulness and longevity are uncertain. They are currently
permitted in only nine states.
OWNERSHIP PATTERN IN MICRO AND SMALL-SCALE ENTERPRISES IN
INDIA:
The various legal forms of business ownership available to entrepreneurs to select for their
enterprises. It also seems pertinent to know the ongoing pattern of ownership actually used by
micro and small scale-enterprises in India.
Essentially, family partnership is akin to proprietorship. In fact, the two forms are so
intermingled with each other that they cannot be differentiated from each other as these two
categories are practically family concerns by virtue of the ownership and management
structure. Therefore, we have lumped them together under one category, i.e. sole
proprietorship. Similarly, cooperatives are lumped with company. After this, we find the
following pattern of business ownership used in micro and small-scale enterprises in India
ESTABLISHMENT OF UNIT,

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Units means the Class A Units and any other Class of Units authorized in accordance with this
Agreement, which shall constitute interests in the Partnership as provided in this Agreement
and under the Act, entitling the holders thereof to the relative rights, title and interests in the
profits, losses, deductions and credits of the Partnership at any particular time as set forth in
this Agreement, and any and all other benefits to which a holder thereof may be entitled as a
Partner as provided in this Agreement, together with the obligations of such Partner to comply
with all terms and provisions of this Agreement.
Establishment means a single physical location where business is conducted or where services
or industrial operations are performed.
Establishment refers to an economic unit which under one ownership or control produces
commodities of mainly one particular type usually at one location. An ancillary
establishment is located separately from the actual production activity of an enterprise and
produces services only for the enterprise itself.
PROJECT FEASIBILITY,
 Project simply means an investment opportunity exploited for profit.
 It is an idea or plan which is intended to be carried out or a finite task to be completed.
 In the words of Gillinger “project is a whole complex of activities involved in using
resources to gain benefits”.
IN THE CONTEXT OF ENTREPRENEURSHIP
A project is a business venture/known as business
FEASIBILITY:
Feasibility describes how easy or difficult it is to do something.
Feasibility refers to whether or not a project will be successful and how to overcome potential
obstacles for the project.
A feasibility study allows a business to address where and how it will operate, its competition,
possible hurdles, and the funding needed to begin. The business plan then provides a
framework that sets out a map for following through and executing on the entrepreneurial
vision
A feasibility analysis helps entrepreneurs to consider the costs and activities required to set up
and run a business, and how to make an informed decision about whether to start a business
and how to do it.
Project feasibility:
Project feasibility is the study of a project's various elements to determine if it has the potential
for success. Before a project begins, a company can evaluate the project's feasibility to identify
obstacles, form strategies to overcome them and ultimately attract investors.
A project feasibility study examines all of a project's pertinent aspects, including economic,
technical, legal, and scheduling issues to determine the possibility of the project's successful

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completion. Prior to commencing the project and investing funds, time, and efforts into it,
managers conduct a feasibility study of the project.
Key elements of a good project feasibility study
In project management, a project feasibility study evaluates the following areas:
 Technical Capability: Is the organization equipped with the necessary technical
resources to complete the project
 Budget: Does the organization have the financial resources to carry out the project, and
does the cost-benefit analysis justify moving forward?
 Legality: What is the project's legal requirements, and can the company meet them?
 Risk: What are the risks involved in completing this project? Is the risk worth the
company's money and time based on the expected benefits?
 Operational feasibility: Does the project, in its intended scope, address the
organization's needs through fixing problems and/or seizing opportunities?
 Time: How much time would it take for completion?
Top 5 Different Types of Project Feasibility Studies
Since a feasibility analysis assesses a project's chances of success, perceived neutrality is a
critical aspect of the study's credibility with possible investors and lenders. There are five
different types of project feasibility studies, each of which examines a different topic, as
stated below.
1. Technical Feasibility:The technological resources that are used by the company should
undergo an examination. It assists businesses in determining whether technical resources are
sufficient for the job and whether the technical team is capable of executing planned concepts.
To assess the technical viability factors like the system's hardware, software, and other possible
technical needs are taken into account.
2. Economic Feasibility:A cost-benefit analysis of the project is frequently included in this
review, which helps firms determine the project's viability, cost, and benefits before investing
financial resources. It also serves as an unbiased project evaluation, enhancing project
credibility by supporting decision-makers in identifying the proposed project's favorable
economic benefits to the company.
3. Legal feasibility:This assessment looks into if any component of the proposed project
violates any regulations, such as zoning laws, data protection legislation, or social media laws.
Let us take an example that a company that desires to build a new office building at a particular
location. A feasibility study may discover that the desired location for the company is not
designated for that sort of business.
4. Operational Feasibility:This assessment entails researching to evaluate whether — and to
what extent — the project can meet the organization's needs. Operational feasibility studies
also look at how a project plan meets the requirements specified during the requirement
analysis phase.

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5. Scheduling Feasibility: Scheduling feasibility evaluation is crucial for project success; after
all, the project will fail if it is not completed on time. A company forecasts the amount of time
it will take for project execution when scheduling feasibility.
After all of these factors have been considered, the feasibility study can help identify any
potential project constraints, such as:
 Internal project constraints include technological, financial, and resource constraints.
 Export, financial, marketing, and other internal corporate constraints.
 Logistics, the environment, laws and regulations, and so on are all external constraints.
Importance of Project Feasibility Study
The value of a feasibility study stems from the desire of an organization to “get it right” before
investing resources, time, or money. A feasibility study may discover fresh ideas that alter the
scope of a project. It's preferable to make these decisions ahead of time rather than rushing into
a project only to discover that it won't work. A feasibility study is usually advantageous to a
project since it provides you and other stakeholders with a clear picture of what is being
planned.
Following are the major benefits that project feasibility study offers:
 Improves the attention of project teams
 Discovers fresh possibilities
 Provides relevant information that helps in making the judgment regarding whether to
proceed or not.
 Reduces the number of business options
 Identifies a compelling reason for pursuing the project.
 By examining several parameters, it improves the success rate.
 Assists in project decision-making
 Determines why it's not a good idea to go ahead.
Conducting a Project Feasibility Study
Various companies that conduct a project feasibility study in Gurgaon and Mumbai follow
the following steps:
1. Preliminary Analysis: Many organizations may do a preliminary analysis, which is
similar to a pre-screening of the project, before moving forward with the time-
consuming process of a feasibility study. The purpose of the preliminary analysis is to
identify insurmountable barriers that would render a feasibility study ineffective. If no
major impediments are discovered during this pre-screening, a more thorough
feasibility study will be conducted.
2. Define the scope: It's critical to define the project's scope so that the feasibility study's
scope may be determined. The scope of the project will also take into consideration its
impact on internal stakeholders as well as external clients or consumers. It is important
to consider the project's potential impact on various sections of the company.

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3. Market research: There is no such thing as a project that is performed in a vacuum.
Those performing the feasibility assessment will look at the current competitive
landscape to see if the project has a place in it.
4. Financial analysis: The project’s feasibility study will look at the project's economic
costs, such as equipment or other resources, man-hours, the project's expected benefits,
the break-even date, financial risks, and, most crucially, the financial impact of the
project's failure.
5. Roadblocks and alternative solutions: If any potential obstacles arise during the
study, it will investigate options to ensure the project's success.
6. Results re-evaluation: It's critical to take a fresh look at the feasibility study,
especially if a large amount of time has passed after it was completed.
7. The last decision: Whether the project should proceed or not—is the final part of a
feasibility study.
Suggested Best Practices to Conduct Project Feasibility study
Feasibility studies are unique because they reflect the aims and demands of each project.
However, the following pointers can be used in any feasibility study. For instance, it might
wish to try the following:
 Obtain feedback from the right stakeholders on the new concept.
 Analyse and challenge business data to ensure that it is reliable.
 To assist in data collection, conduct a market survey or market research.
 Make business, organizational, or operational plans.
 Make forecasted income statement.
 Prepare forecast of balance sheet.
 Make a preliminary decision whether to proceed or not regarding carrying out the
strategy.
IMPLEMENTATION,
Implementation of 5S practices in a small scale industry:5S is the foundation of all
improvements and is the key component of establishing a Visual Workplace. implementing 5S
in small scale industry and to improve the efficiency by eliminating the different types of
wastes. Due to the implementation of the 5S, the safety is improved in the working
environment. The 5S originates from the Japenese philosophy, namely from the basic five
elements workplace organizations and standardization. It is evident that well organized
workplace motivates the people to produce effectively. The efficiency of the industrial
organization is highly improved and its impact on improvement in productivity is drastically
observed. Hiroyuki Hirano from Japan initially developed the concept of 5S approach to a
production system. 5S is considered as a Lean management tool and it is useful in eliminating
non-value added process available in the manufacturing industries. This is achieved by
standardization of the methods and processes in properly organizing them in a standard manner.
5S means
 ‘Seiri’ means Sort
 ‘Seiton’ means Set in Order
 ‘Seiso’ means Shine

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 ‘Seiketsu’ means Standardize
 ‘Shitsuke’means Sustain
Lean SSI systems is dependent on the principles of 5S . The 5S tool is useful in implementation
of sorting, organizing, cleaning and other basic requirement required at the ground level for the
improvement of the working environment. Lean manufacturing is initiated at SSI facilitating
5S. As a result of 5S implementation, several improvements such as material handling, tool
organization, operations, layout and housekeeping methodologies are improved to a high
extent. The efficiency and effectiveness of the manufacturing industry is improved and
productivity is reaching to new high targets. 5S focuses on removing the waste and improving
the efficiency of the plant. The scrap in terms of motion, time, resources are also reduced in
the implementation of 5S. This is achieved by well-organized work place environment and it
results in increase of organizational competitiveness and satisfaction of the customers. The
customer satisfaction is more important in the present industrial scenario and 5S improves the
same by providing variability in the process in the manufacturing industries. 5S is a effective
cleaning tool and provides necessary working environment for any SSI . The productivity is
increased and and 5S is widely adopted technique in the implementation of lean SSI toolbox.
Significant studies are done to analyse and deploy the performance of the management using
the 5S toolbox and there by understanding the problem prevailing in the industry and
supporting effective corrective actions for the productivity improvement. 5S brings in great
changes to the industry in several ways such as; waste reduction, increase in efficiency and
effectiveness, enhance safety and so on. The implementation of sustainable manufacturing in
industries and safety management principles to be adopted in the manufacturing industries are
investigated.
TAX BENEFITS INCENTIVES AND CONCESSIONS.
tax incentive is a government measure that is intended to encourage individuals and businesses
to spend money or to save money by reducing the amount of tax that they have to pay. Tax
incentive is an aspect of a government's taxation policy designed to incentivize or encourage a
particular economic activity by reducing tax payments.
tax concessions are a reduction made by the government in the amount of tax that a particular
group of people or type of organization has to pay or a change in the tax system that benefits
those people.

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