Entrepreneurship & Small

Business Management(ESBM)

Presented By-
Mr. Rasmi Ranjan Mishra
U.N (A) College of Sc.& Tech.
 Setting Up SSI
Small scale industries (SSI) are those industries in
which manufacturing, providing
services, productions are done on a small scale or
micro scale. For example, these are the ideas of Small
scale industries: Napkins, tissues, chocolates,
toothpick, water bottles, small toys, papers,
pens. Small scale industries play an important role
in social and economic development of India. These
industries do an one-time investment in machinery,
plants, and industries which could be on
an ownership basis, hire purchase or lease basis. But
it does not exceed Rs. 1 Crore. Let us discuss in detail
Essentially small scale industries comprise of small
enterprises who manufacture goods or
services with the help of relatively smaller machines
and a few workers and employees. Basically, the
enterprise must fall under the guidelines set by
the Government of India. At the time being such
limits are as follows,
• For Manufacturing Units for Goods: Investment in
plant and machinery must be between 25 lakhs and
five crores.
• For Service Providers: Investment in machinery
must be between 10 lakhs and two crores.
In developing countries like India, these small scale industries
are the lifeline of the economy. These are generally labour-
intensive industries, so they create much employment.
They also help with per capita income and resource
utilization in the economy. They are a very important
sector of the economy from a financial and social point of
view.
Examples and Ideas of Small Scale Industries
• Bakeries
• Small toys
• Paper Bags
• Photography
• School stationeries
• Water bottles
Ownership: SSI ’s generally are under single
ownership. So it can either be a sole proprietorship
or sometimes a partnership.
Procedures for Setting up SSI:-
A strong entrepreneur is the most vital aspect of
every successful project. In order to set up an
enterprise or set up a small-scale industry, a
suitable project has to be decided upon. This
involves selecting a product or service, and a
location for the unit. Based on these selections, a
project feasibility study has to be conducted and
then a brief profile has to be prepared for the
proposed project. Then an entrepreneur has to
prepare a business plan.
Feasibility Report:- Before starting SSI, one should
consult the Director of Industries and the small
industries service institute (SISI) located in one’s
state. The SISI guides entrepreneurs as to the type
of industries to start, where to start and how to
start it. The SISI helps them to select the various
items of manufacture which have scope for
development in different areas. Similarly technical
help in the selection of proper raw material and
type of machinery is also provided. Apart from this
the SISI gives valuable information of various
incentives available to SSI from various
organizations.
Project Feasibility Analysis:-
A feasibility analysis is used to determine the viability
of an idea, such as ensuring a project is legally
and technically feasible as well as economically
justifiable. It tells us whether a project is worth the
investment—in some cases, a project may not be
viable. There can be many reasons for this,
including requiring too many resources, which not
only prevents those resources from performing
other tasks but also may cost more than an
organization would earn back by taking on a project
that isn’t profitable.
A well-designed study should offer a historical
background of the business or project, such as a
description of the product or service, accounting
statements, details of operations and management,
marketing research and policies, financial data, legal
requirements, and tax obligations. Generally, such
studies precede technical development and project
implementation.
The analysis stage consists mainly of three factors –
market, technical and financial.
A market analysis is a method of screening project
ideas as well as a means of evaluating a project’s
feasibility in terms of the market. It should cover
the following areas-
• A brief description of the mkt- mkt area,methods of
transportation, channel of distribution and general
trade practices.
• Analysis of past and present demand and value of
consumption and identification of major consumers
of the product.
• Analysis of past and present supply as well as
information which will assist in determining
competitive position of the product.
• Technical Feasibility
This assessment focuses on the technical resources
available to the organization. It helps organizations
determine whether the technical resources meet
capacity and whether the technical team is capable
of converting the ideas into working systems.
Technical feasibility also involves evaluation of the
hardware, software, and other technical
requirements of the proposed system.
• Economic Feasibility
This assessment typically involves a cost/ benefits
analysis of the project, helping organizations
determine the viability, cost, and benefits
associated with a project before financial resources
are allocated. It also serves as an independent
project assessment and enhances project credibility
—helping decision-makers determine the positive
economic benefits to the organization that the
proposed project will provide.
• Licences:- An impression seems to have gained
ground among some people that there are some
restrictions on the getting up ssi units and that
licences from either the central or state govt. have
to be taken out before an entrepreneur set up ssi,
no formal permission is necessary for this purpose.
Industries employing less than 100 workers and
having fixed assets of less than Rs10 lakh need not
obtain any licence under IDRA.
SSI however to conform to the rules and regulations
prescribed by the state o local authorities .
Registration of SSI:- All existing SSI units employing
more than 10 workers should get themselves
registered with the Director of Industries in their
state. A copy of this application for registration
should be sent to the Director of small Industries
service Institute in the concerned state. Such
registration with the director of industries and small
industries service institute will be of considerable
help to small scale unit in obtaining financial
assistance from the Govt. and for obtaining
machinery from hire-purchase basis from the
National Small Industries Corporation.
• Obtaining Land and Building:
To overcome the problem of availability of land for the
construction of factory, the State Department of Industries
have set up Industrial Areas and Industrial Estates in the
urban, semi-urban and rural areas. Land is allotted in
Industrial areas on lease for a period of 99 years. Factory
accommodations with facilities of water, electricity,
transport, bank, post-office etc., are provided in the
Industrial Estates.
These factory accommodations are available at reasonable
rents, on the hire-purchase basis or on outright purchase.
Several state governments allow subsidy on rent for these
accommodations, water and electricity, exemption from
sales tax on certain categories for a given period of time,
and loans to small industries in non-confirming areas for
• Arranging Finance:
A firm is required to explore internal and external sources for
raising funds. A judicious mix of funds should be accorded
first preference.
• Internal Sources:
(i) Personnel and family savings.
(ii) Loans from LIC. Provident Fund Account.
(iii) Personal loans against assets like land and property.
(iv) Personal loans against shares and debentures.
(v) Personal loans from societies, chit funds etc.
(vi) Loans from relatives and friends.
• External Sources:
Banks and other financial institutions grant loans and advances
for the purchase of machinery, equipment and land and
• Procurement of Machinery and Raw Materials:
National Small Industries Corpo­ration Ltd (NSIC) supplies
indigenous and imported machinery to small scale units
on hire- purchase basis.
Small Industries Development Organisation (SIDO)
maintains close liaison with raw mate­rial suppliers such
as primary producers, chanalising agencies like STC
(State Trading Corpora­tion), MMTC (Minerals and
Metals Trading Corporation) etc. SIDO assists the state
Directors of Industries and Small Scale Industries (SSI)
Corporations in the estimation of raw materials
required by the respective Small Scale industries. State
Directorate of Industries fix up specific quotas for
industrial units while undertaking distribution of scarce
• Recruitment of Staff:
In these days of specialization and competition,
professionals and skilled workers are necessary to
be recruited. After making realistic assessment of
the actual manpower requirements of an
enterprise, suitable arrangements should be made
for recruitment of personnel. If the entrepreneur
himself is not specialized in the particular field, he
should appoint a works manager well-versed in that
particular field.
• Marketing Management:
Marketing is a two-way exchange process in which the
needs and wants of the buyer and seller are
satisfied.
The NSIC provides assistance in marketing the
products of SSI sector, both at home and abroad.
The corporation markets products of SSI sector
under the Government Stores Purchase Programme
to meet the requirements of departments,
Railways, Defence etc.
• Training, Research and Design Institutes:
For the success of any industry, proper training is
essential in production techniques, management,
marketing and other aspects. Small Industries
Service Institute and their extension centers
organize training programmes to improve technical
skills of workers and acquainting the entrepreneurs
with advanced production and management
techniques.
(i) Management Training by SIDO in industrial
management, marketing, financial man­agement,
costing, and production.
(ii) Technical training courses for workers by SISIs.
(iii) Training programmes for engineer entrepreneurs
by SISIs and others.
(iv) Entrepreneurial development for non-engineers
by SIDO for different category of entrepreneurs.
(v) Central Institute of Tool Design (CITD), Hyderabad
for fulfilling the needs of SSI in the fields of tool
design (including jigs, fixtures, dies and moulds),
manufacturing and training of technical personnel.
(vi) Central Tool Room and Training Centre, Kolkata for
assisting SSI by providing mod­ern tools, technical
consultancy, training of tool makers and tool
designers.
(vii) National Institute for Entrepreneurship and Small
Business Development (NIESBUD), New Delhi
conducts training programmes for
trainers/motivators and entre­preneurs, prepares
model syllabi for training various targets groups,
conducts seminars/ workshops/conferences etc.
(viii) National Institute of Design, Ahmedabad.
(ix) Central Machine Tool Institute, Bangalore.