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Starting small business
- 2. Sources of Idea Generation for Small Business • Situation Survey • Internal Sources • External Sources
- 3. Situation Survey • Survey of current situation in the environment • Signs of environmental changes are identified • Forces of change can be: – Political-legal changes – Economic changes – Socio-cultural changes – Technological changes
- 4. Internal Sources • Prior work experience • Suggestions • Creativity • Hobby
- 5. External Sources • Needs and requirements of customers • Outside consultants and experts • Competitor’s activities • Foreign countries • Suggestions from friends, family and well- wishers • Media
- 6. External Sources • Visits to trade fairs and exhibitions • Attending education and training courses • Chance happenings • Legal provisions
- 7. Methods of generating new ideas • Brainstorming • Focus group • Checklist method • Attribute listing • Big dream approach • Value analysis
- 8. Methods of generating new ideas • Scientific method • Heuristics • Forced relationships
- 9. Factors affecting choice of forms of ownership • Needs of the owner • Nature and size of the business • Control • Tax considerations • Liability • Succession • Paperwork • Transparency • Costs
- 10. Options for Forms of Small Business Ownership • Sole Proprietorship • Partnership • Joint Stock Company • Co-operative
- 11. Advantages of Sole Proprietorship • Simplicity • Control • Tax advantage • Secrecy • Personal satisfaction
- 12. Disadvantages of Sole Proprietorship • Unlimited liability • Limited capital • Limited skills • Limited life
- 13. Advantages of Partnership • Easy to establish • Pooled resources • Decision making • Flexibility • Tax advantage
- 14. Disadvantages of Partnership • Unlimited liability • Managerial conflicts • Limited size • Limited life • Non-transferable ownership
- 15. Advantages of Company • Limited liability • Indefinite life • Professional management • Growth potential • Ownership transfer
- 16. Disadvantages of Company • High establishment cost • Lack of secrecy • Government restrictions • Heavy tax • Speculation
- 17. Advantages of Cooperatives • Easy to form • Democratic • Limited liability • Patronage • Social benefits
- 18. Disadvantages of Cooperatives • Poor management • Limited resources • Government control
- 19. Options for starting small business • Buy an existing business • Inherit family business • Start new business • Buy a franchise
- 20. Buy an existing business • Acquiring total ownership • Acquiring assets and name • Acquiring parts of business
- 21. Factors to be considered when buying an existing business • Motive for sale • Condition of assets • Human resources • Competition • Financial performance • Price of the business – Book value, replacement value, liquidation value, past earnings, cash flow and so on.
- 22. Methods for valuation of existing business • Asset based valuation • Market based valuation • Earnings based valuation • Cash flow based valuation
- 23. Advantages of buying an existing business • Low risk • No start-up headaches • Relationships • Desirable location • Fair price (Value of assets, goodwill, patents, trademark and profit potential)
- 24. Disadvantages of buying an existing business • Old facilities • Obsolete inventory • Overdue account receivables • Bad reputation • Incompetent employees • Undesirable • High price • Problematic
- 25. Advantages of inheriting a business • No risk • Reputation • No start-up headaches • Location • Taxation
- 26. Disadvantages of inheriting a business • Lack of interest • Lack of skills • Overlap • Relationships • Legal hassles
- 27. Steps in starting a new business • Selection of idea • Business plan – Product description – Market analysis – Production aspects – Financial aspects – Human resource aspects – Implementation action plan – Risk management
- 28. Steps in starting a new business • Location selection • Form of ownership • Formalities • Finance • Assets • Employees • Production • Clearances
- 29. Advantages of starting a new business • Freedom • Operations • Employee selection • Reputation
- 30. Disadvantages of starting a new business • High risk • Start-up headaches • Operational problems • Lack of relationships • Competitor reactions
- 31. Evaluating new idea for new business • Market • Competitive advantage • Profit • Fit
- 32. Role of government ministry and line agencies • Departments – Department of Cottage and Small Industries – Office of the Registrar of Companies – Department of Standards and Measurement – Department of Commerce
- 33. Role of government ministry and line agencies • Special Agencies – Cottage and Small Industries Development Board – Industrial District Management Ltd. – Industrial Enterprise Development Institute (IEDI) – National Productivity and Economic Development Center (NPEDC) – Trade Promotion Centre (TPC)
- 34. Role in promoting and strengthening small business • Legitimacy • Regulation – Promotion-oriented regulations – Control-oriented regulations • Exhibitions/trade fairs
- 35. Specialized government agencies • Provision of finance • Competency development • Consultancy services • Input supply and marketing • Research and development • Industrial districts
- 36. Assignment 1 (17th Sept, 2014) • Is an MBA degree required to become an entrepreneur? If not, what are the qualifications of an entrepreneur? • List and explain the positive and negative aspects of entrepreneurship. • On the basis of point of difference, draw a line of demarcation between large business and small business.
- 37. Assignment 1 (17th Sept, 2014) • Even under difficult circumstances, small businesses have managed to survive in Nepal. What are the reasons of their survival? • Present a small overview on a business plan that comes to your mind when thinking about entrepreneurship/small business. What is the form of business ownership suitable to your plan? Explain with suitable reasons.
- 38. Class Test 1 (19th Aug, 2014) Unit 1 and 2
- 39. General Business Legislation • Private Firms Registration Act, 1958 • Partnership Act, 1964 • Company Act, 1997 • Co-operative Act, 1960 • Industrial Enterprise Act, 1992 • Contract Act, 2000 • Arbitration Act, 1999
- 40. Labor Legislation • Bonus Act, 1974 • Industrial Training Act, 1982 • Labor Act, 1992 • Trade Union Act, 1993 • Labor Court Regulation Act, 1995 • Child Labor Act, 2000
- 41. Finance and Investment Legislation • Foreign Investment and Technology Transfer Act, 1992 • Foreign Exchange Regulation Act, 1961 • Taxation Acts – Income Tax Act, 2002 – VAT Act, 1996 – Customs Act, 1963 • Export-Import Control Act, 1956
- 42. Social and Consumer Protection Legislation • Patent, Design and Trademark Act, 1965 • Copyright Act, 2002 • Black Market and some other Social Crime and Punishment Act, 1997 • Food Act, 1966 • Nepal Standardization Act, 1980 • Consumer Protection Act, 1999 • Environment Protection Act, 1996
- 45. THANK YOU!!!