The First Step
The individual has to take the decision to get self-
employed rather than scout for job.
The personality traits of the to be entrepreneurs are:
Intuition: Instantaneous and instinctive perception of
Vision :Imaginative foresight
Optimism : Faith in oneself and confident endeavor in
search of opportunities
Dynamism : An ability to face the pace of change
Enterprise: Rational risk taking and capacity to manage
men & material
Determination: Indomitable will.
• Decision on the type of activity to be undertaken or the
identification of the dream project. Thousands of
manufacturing projects, service ventures, Business activities are
possible under the small industry sector
classified as mechanical, electrical, electronics, glass, ceramics,
hosiery, food leather, and other categories.
Entrepreneurs have to carefully think over on the project selection
taking into consideration several factors such as:
a) His inclination/aptitude towards the project,
b) His background such as education, technical skills, and training
c) Potential for making profits
d) Availability of technical know-how, machinery and raw materials
e) Substantial market/demand for the products/services planned
f) Capacity to invest : the project investment requirements should
be within the limits of the entrepreneur
• Deciding on the size of the project:
The level of Investment will decide the status
of the venture under any of the following
small manufacturing industry, ancillary
industry, export oriented unit, tiny sector,
service venture or Business enterprise. One
has to take this decision depending on one's
• Location of the Project:
The selection of the place to setup venture as
to be done taking into consideration the
a) Nearness to market b)Availability of basic
infrastructures like power, water, roads,
trained labor, communication facilities etc
c) Availability of industrial sheds and so on.
Preparation of the Project Report-Technical Feasibility
This is an important step which not only describes all the features of the project
but also justifies the feasibility of the
dream with all the details to convince not only the entrepreneur but also others
who are to commit resources for the project. Many financial institutions prescribe
specific formats in which the report has to be prepared. One has to
check and decide the format according to the needs. A study of technical feasibility
is to ensure that the activity
proposed can be accomplished and that the inputs are not only adequate but also
the project report should cover the entire spectrum of activity and include the
a) Land & Building b) Plant & Machinery c) description of the
product/service/business d) production process
and technology e) Inputs required such as raw materials, power, water, labor f)
Plant layout & flow chart
Decision should also be taken on ownership (proprietary/partnership).
• Financial Viability
The project should not only technically feasible but also
financially viable. Financial viability means that the
products/services can be produced at reasonable cost,
marketed at competitive price with decent profit. The
project report should contain proposed investments in
capital items, working capital needed, &Breakeven level of
operation. The Financial feasibility analysis is complete only
when the total financial requirements for implementing the
project are assessed and sources of financing the project
identified. While considering financial feasibility, the ability
of the promoter entrepreneur to bring in his share of
contribution must always be kept in view.
• To know more on "Feasibility Study"
Arrangement of Finance -
Long Term Finance Funding requirements of a
Project are of Long term needs for acquiring fixed
asses like land & Building,
Plant & Machinery and for security deposits and
working capital margin. Short term advances for
working Capital in the form of
pledge/hypothetication/cash credit/bills facility.
The term Loans for fixed assets land, building,
plant & machinery are preferably got from State
Arrangement of Finance - Working Capital
The Industrial Unit needs short term loans for
its working capital requirements. Working
Capital is required for:
Purchase of raw materials, Consumable
Stores/Spares ,Stock in Process Manufacturing
Expenses ,Credit Sales/Bills Receivable
Provisional registration as small industry
District Industries Centres issue the
registration based on Project report of the
Entrepreneurs. This registration is required to
obtain Industrial sheds from Government built
Estates, to obtain license from Municipal
corporations, to get power connection from
electricity board, to apply for loans from
Acquiring Industrial Shed
Factory Building can be rented or owned. Investment in Land &
Building is better to be avoided in the initial stages to prevent
locking up of funds and increase of borrowed capital. It is advisable
to go in for Industrial sheds in approved areas or estates.
If the factory building is to be constructed it should be ensured that
the land is free from encumbrances, it can be used for industrial
purposes and all needed infrastructure facilities are available.
Before starting construction activities, the entrepreneur has to
obtain necessary license from corporation or municipal authorities
and should also ensure the plan of the building conform to the
norms stipulated by the inspector of factories. The small industry
development corporation of the state offer constructed sheds in
the industrial estates.
Purchase of Machinery
The requirements of machinery, spares, tools etc are to
be carefully assessed and the proper size of plant &
machinery should be decided. Once fixed assets are
created it will be difficult to change them. The
machinery should be necessary and adequate.
It is some time cheaper and convenient to have some
components bought out or got done on job works basis
from outside making investments on machinery for
making them. The Names of different machines &
suppliers be obtained. Then get Quotations, evaluate
specifications, quality, delivery time, price and decision
to be taken to place orders for machines
Entrepreneur has to ensure timely availability
of raw materials for continuous production.
Modern Material Management & Inventory
methods have to be understood & followed.
Many product lines if taken up for manufacturing
need licenses and one cannot ignore them.
Manufacture of drugs & Cosmetics need license
from drug controllers, food processing industry
from ministry of agriculture, Inspector of
factories, Pollution Control Boards, Commercial
Tax departments, Collector of Central Excise and
so on depending on the products to be made.
• Man Power Needs
A realistic assessment of the man power
requirement in skilled, semiskilled and
unskilled category should be made after
deciding on the size of operations.
Recruitments have to be carefully made at the
• Synchronizing various aspects
The various aspects of preliminary operations to
establish an industry should be synchronized
within a time frame. The machinery orders
should be placed in such a way that it arrives
after the shed is constructed and ready. The man
power is to be in place just before the machine
arrive and the power connection will be available.
The orders for materials and other tools etc be
placed at appropriate time. The Statutory
clearances should be obtained while the entire
exercise is in progress
The power connection should be obtained
without delays. It is always better to contact
the Electricity Board once the location
is decided and quantum of power needed is
estimated to check availability of power lines.
Applications should have been submitted on
time and authorities convinced on all
Entrepreneur should draw blue print of layout
of factory, install machinery & plan
production. once planned then production to
be commenced taking care of quality & time
Marketing is the most important aspect the
entrepreneurs are to plan for. Making a study
of Government marketing assistance's
programs, appointing distributors, dealers,
retailers have all to be carefully done
appropriate to products marketing strategy.
Watching competitors & taking care of
customers are very important.
We congratulate you...If you have read all the
18 Steps - BEST OF LUCK