Entrepreneurship developmen book in mku syllabus hariharan23900

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Author : N. HARIHARAN DDTP.,DOA.,IBM.
Bcom Corporate secretary ship,
Second year

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ENTREPRENEURSHIP DEVELOPMENT
UNIT -1
Entrepreneur- Meaning- Characteristics, Functions, and Types, Entrepreneur VS Manager,
Entrepreneur VS Intrapreneurship , Entrepreneurship- Meaning – Positive Aspects – Obstacles-
Factors simulating Entrepreneurship – Role of Entrepreneurship in Economic Development.
UNIT-2
Entrepreneurship Development Programmes – Meanings, Objectives, Courses contents and
Curriculum – Phases, Institutions for EDP: NIESBUD, NAYE & TCOs – Problems in EDP,
Women Entrepreneurs – Types – Their Problems and Remedies.
UNIT-3
SSIs – Meaning – Importance and problems of starting an SSI – steps. Forms of ownership:
Sole Proprietorship, Partnership. Joint stock company and Co-operatives – Features, Merit and
Demerits.
UNIT-4
Project Identification – Meaning and Steps, Project Classification - Project life cycle. Project
Report – Contents, Project Appraisal – Meaning – Feasibility Analysis: Market, Technical,
Financial, Economic, Managerial and social.
UNIT-5
Institutional support: SIDO, SISI, NSIC, SIDCO, DIC - Their Functions – SIDBI’S Schemes.
Incentives: Subsidy, Tax concessions, Marketing and Export Assistance. Sickness – Definitions,
Symptoms, Causes. Measures to Prevent Sickness in small scale units.

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UNIT- 1
ENTREPRENEUR
An entrepreneur is an individual who creates a new business, bearing most of the risks and
enjoying most of the rewards. The process of setting up a business is known as entrepreneurship.
The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and
business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate
needs and bringing good new ideas to market. Entrepreneurship that proves to be successful in
taking on the risks of creating a startup is rewarded with profits, fame, and continued growth
opportunities. Entrepreneurship that fails results in losses and less prevalence in the markets for
those involved
MEANING OF ENTREPRENEUR

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Everything you need to know about the various definitions of entrepreneur. ‘Entrepreneur’ is a
French word which means to undertake, to pursue opportunities, to fulfill needs and wants of the
people through innovation and starting business.
An entrepreneur undertakes a venture, organizes it, raises capital to finance it, and assumes the
whole or major part of the risk of business. In other words, entrepreneurship is the process of
giving birth to a new business.
CHARACTERISTICS OF ENTREPRENEUR
1) Creativity
2) Professionalism
3) Risk-taking
4) Passion
5) Planning
6) Knowledge
7) Social Skills
8) Open-mindedness towards learning, people, and even failure
9) Empathy
10) The customer is everything
An entrepreneur is a person who has a passion for creation and the ability to follow through on
their ideas, someone who has the ability to see a need that has previously not been addressed or in
some cases created a need that didn’t even exist. Entrepreneurs want to work for themselves and
are willing to take risks in order for their ideas or products to succeed.
1) Creativity:

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Creativity gives birth to something new. For without creativity, there is no innovation possible.
Entrepreneurs usually have the knack to pin down a lot of ideas and act on them. Not necessarily
every idea might be a hit. But the experience obtained is gold. Creativity helps in coming up with
new solutions for the problems at hand and allows one to think of solutions that are out of the box.
It also gives an entrepreneur the ability to devise new products for similar markets to the ones he’s
currently playing in.
2) Professionalism:
Professionalism is a quality which all good entrepreneurs must possess. An entrepreneurs
mannerisms and behavior with their employees and clientele goes a long way in developing the
culture of the organization. Along with professionalism comes reliability and discipline. Self-
discipline enables an entrepreneur to achieve their targets, be organized and set an example for
everyone. Reliability results in trust and for most ventures, trust in the entrepreneur is what keeps
the people in the organization motivated and willing to put in their best. Professionalism is one of
the most important characteristics of an entrepreneur.
3) Risk-taking:
Risk-taking A risk-taking ability is essential for an entrepreneur. Without the will to explore the
unknown, one cannot discover something unique. And this uniqueness might make all the
difference. Risk-taking involves a lot of things. Using unorthodox methods is also a risk. Investing
in ideas, nobody else believes in but you is a risk too.
Entrepreneurs have a differentiated approach towards risks. Good entrepreneurs are always ready
to invest their time and money. But, they always have a backup for every risk they take. For
exploring in the unknown, one must be bestowed with a trump card; a good entrepreneur has one,
always. Also, evaluation of the risk to be undertaken is also essential. Without knowing the
consequences, a good entrepreneur wouldn’t risk it all.
4) Passion:
Your work should be your passion. So when you work, you enjoy what you’re doing and stay
highly motivated. Passion acts as a driving force, with which, you are motivated to strive for better.
It also allows you the ability to put in those extra hours in the office which can or may make a

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difference. At the beginning of every entrepreneurial venture or any venture, there are hurdles but
your passion ensures that you are able to overcome these roadblocks and forge ahead towards your
goal.
5) Planning:
10 characteristics of an entrepreneur Perhaps, this is the most important of all steps required to run
a show. Without planning, everything would be a loose string as they say, “If you fail to plan, you
plan to fail.” Planning is strategizing the whole game ahead of time. It basically sums up all the
resources at hand and enables you to come up with a structure and a thought process for how to
reach your goal. The next step involves how to make optimum use of these resources, to weave
the cloth of success. Facing a situation or a crisis with a plan is always better. It provides guidelines
with minimum to no damage incurred to a business. Planning is one of the most important
characteristics of an entrepreneur.
6) Knowledge:
Knowledge is the key to success. An entrepreneur should possess complete knowledge of his niche
or industry. For only with knowledge can a difficulty be solved or a crisis is tackled. It enables
him to keep track of the developments and the constantly changing requirements of the market that
he is in. May it is a new trend in the market or an advancement in technology or even a new
advertiser’s entry, an entrepreneur should keep himself abreast of it. Knowledge is the guiding
force when it comes leaving the competition behind. New bits and pieces of information may just
prove as useful as a newly devised strategy.
He should know what his strengths & weaknesses are so that they can be worked on and can result
in a healthier organization. A good entrepreneur will always try to increase his knowledge, which
is why he is always a learner. The better an entrepreneur knows his playground, the easier he can
play in it.
7) Social Skills:

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characteristics of an entrepreneurA skillset is an arsenal with which an entrepreneur makes his
business work. Social Skills are also needed to be a good entrepreneur. Overall, these make up the
qualities required for an entrepreneur to function.
 Social Skills involve the following:
 Relationship Building
 Hiring and Talent Sourcing
 Team Strategy Formulation
 And many more.
8) Open-mindedness towards learning, people, and even failure:
An entrepreneur must be accepting. The true realization of which scenario or event can be a useful
opportunity is necessary. To recognize such openings, an open-minded attitude is required. An
entrepreneur should be determined. He should face his losses with a positive attitude and his wins,
humbly. Any good businessman will know not to frown on a defeat. Try till you succeed is the
right mentality. Failure is a step or a way which didn’t work according to the plan. A good
entrepreneur takes the experience of this setback and works even hard with the next goal in line.
This experience is inculcated through the process of accepted learning. Good entrepreneurs know
they can learn from every situation and person around them. Information obtained can be used for
the process of planning. Learning with an open mind lets you look at your faults humbly. New
information always makes an entrepreneur question his current resolve. It also provides a new
perspective towards a particular aspect. Open-mindedness also enables you to know and learn from
your competition.
9) Empathy:
characteristics of successful entrepreneursPerhaps the least discussed value in the world today is
empathy or having high emotional intelligence. Empathy is the understanding of what goes on in
someone’s mind. This a skill that is worth a mention. A good entrepreneur should know the
strengths and weaknesses of every employee who works under him.You must understand that it is
the people who make the business tick! You’ve got to deploy empathy towards your people.

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Unhappy employees are not determined and as an entrepreneur, it is up to you to create a working
environment where people are happy to come. To look after their well-being, an entrepreneur
should try to understand the situation of employees. What can be a motivational factor? How can
I make my employees want to give their best? All this is understood through empathy. Keeping a
workplace light and happy is essential. For without empathy, an entrepreneur cannot reach the
hearts of employees nor the success he desires. Empathy is one of the most important
characteristics of an entrepreneur.
10) And lastly, the customer is everything
A good entrepreneur will always know this; a business is all about the customer. How you grab a
customer’s attention is the first step. This can be done through various mediums such as marketing
and advertising. It is also important that you know the needs of your customers. The product or
service which is being created by your organization needs to cater to the needs of your consumers.
Personalising a business for consumers will also boost the sales.
The ability to sell yourself in front of a potential investment when it comes in the form of a
customer is also required. Being ready with the knowledge to please a customer, is a way to have
a successful business. It isn’t necessary that every entrepreneurial venture is a huge success. In
addition to a brilliant idea, viability is an equally important aspect of a business, which is where
having a business education can play an important role. All these characteristics of an entrepreneur
can be instilled in an individual.
FUNCTIONS OF THE ENTREPRENEUR
The following points highlight the top five functions of an entrepreneur. The functions are:
1. Decision Making
2. Management Control
3. Division of Income
4. Risk-Taking and Uncertainty-Bearing
5. Innovation.

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1. Decision Making:
The primary task of an entrepreneur is to decide the policy of production. An entrepreneur is to
determine what to produce, how much to produce, how to produce, where to produce, how to sell
and’ so forth. Moreover, he is to decide the scale of production and the proportion in which he
combines the different factors he employs. In brief, he is to make vital business decisions relating
to the purchase of productive factors and to the sale of the finished goods or services.
2. Management Control:
Earlier writers used to consider the manage-ment control one of the chief functions of the
entrepreneur. Management and control of the business are conducted by the entrepreneur himself.
So, the latter must possess a high degree of management ability to select the right type of persons
to work with him. But, the importance of this function has declined, as business nowadays is
managed more and more by paid man-agers.
3. Division of Income:
The next major function of the entrepreneur is to make necessary arrangement for the division of
total income among the different factors of production employed by him. Even if there is a loss in
the business, he is to pay rent, interest, wages and other contractual incomes out of the realised
sale proceeds.
4. Risk-Taking and Uncertainty-Bearing:
Risk-taking is perhaps the most important function of an entrepreneur. Modern production is very
risky as an entrepreneur is required to produce goods or services in antici-pation of their future
demand. Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks,
such as risks of fire, loss of goods in transit, theft, etc., which can be insured against. These are
known as measurable and insurable risks. Secondly, some risks, however, cannot be insured
against because their probability cannot be calculated accurately. These constitute what is called
uncertainty (e.g., competitive risk, technical risk, etc.). The entrepreneur undertakes both these
risks in production.
5. Innovation

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Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to make
frequent inventions invention of new products, new techniques and discovering new markets to
improve his competitive position, and to increase earnings.
TYPES OF ENTREPERNEUR
Innovators
Hustlers
Imitators
Researchers
Buyers
1. Innovators
Innovators are the types of entrepreneurs who come up with completely new ideas and turn them
into viable businesses. In most cases, these entrepreneurs change the way people think about and
do things. Such entrepreneurs tend to be extremely passionate and obsessive, deriving their
motivation from the unique nature of their business idea.
Innovative entrepreneurs also find new ways to market their products by choosing product
differentiation strategies that make their company stand out from the crowd. And sometimes it is
not just standing out from the crowd but actually creating a new crowd. To say that innovators like
Steve Jobs, Larry Page of Google and Microsoft founder Bill Gates were obsessed with their
business would be an understatement.
2. The Hustler Entrepreneur
Unlike innovators whose vision is the gas in their engine, hustlers just work harder and are willing
to get their hands dirty. Hustlers often start small and think about effort – as opposed to raising
capital to grow their businesses. These types of entrepreneurs focus on starting small with the goal
of becoming bigger in the future.

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Hustlers are motivated by their dreams and will work extremely hard to achieve them. They tend
to be very focused and will get rid of all forms of distractions, favoring risks over short-term
comfort. A perfect example of a hustler is Mark Cuban. He started in business very young selling
trash bags, newspapers and even postage stamps and this hustle later created a goldmine which
was acquired by internet giant Yahoo!
3. Imitators
Imitators are the types of entrepreneurs who copy certain business ideas and improve upon them.
They are always looking for ways to make a particular product better so as to gain an upper hand
in the market. Imitators are part innovators and part hustlers who don’t stick to the terms set by
other people and have a lot of self-confidence.
4. Researcher
Even after having an idea, researchers will take their time to gather all the relevant information
about it. To them, failure is not an option because they have analyzed the idea from all angles.
Researcher entrepreneurs usually believe in starting a business that has high chances of succeeding
because they have put in detailed work to understand all aspects.
As a result, these types of entrepreneurs usually take a lot of time to launch products to make
decisions because they need the foundation of deep understanding. These entrepreneurs rely much
more on data and facts than instincts and intuition.
5. Buyers
One thing that defines buyers is their wealth. These types of entrepreneurs have the money and
specialize in buying promising businesses. Buyer entrepreneurs will identify a business and assess
its viability, proceed to acquire it and find the most suitable person to run and grow it.
DIFFERENCE BETWEEN ENTREPRENEUR VS MANAGER

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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
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse
DIFFERENCE BETWEEN ENTREPRENEURSHIP VS INTRAPRENEURSHIP
POINTS OF
DIFFERENCE
INTRAPRENEURSHIP ENTREPRENEURSHIP
Definition Intrapreneurship is the entrepreneurship
within an existing organization.
Entrepreneurship is the dynamic process
of creating incremental wealth.
Core objective To increase the competitive strength and
market sustainability of the organization.
To innovate something new of socio-
economic value.
Primary motives Enhance the rewarding capacity of the
organization and autonomy.
Innovation, financial gain tad
independence.
Activity Direct participation, which is more than a
delegation of authority.
Direct and total participation in the
process of innovation.
Risk Hears moderate risk. Bears all types of risk.

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Status Organizational employees expecting
freedom at work.
The free and sovereign person doesn’t
bother with status.
Failure and
mistakes
Keep risky projects secret unless it is
prepared due to high concern for failure
and mistakes.
Recognizes mistakes and failures to take
new innovative efforts.
Decisions Collaborative decisions to execute
dreams.
Independent decisions to execute
dreams.
Whom serves Organization and intrapreneur himself. Customers and entrepreneur himself.
Family heritage May not have or a little professional post. Professional or small business family
heritage.
Relationship with
others
Authority structure delineates the
relation.
A basic relationship based on interaction
and negotiation.
Time orientation Self-imposed or organizationally
stipulated time limits.
There is no time-bound.
The focus of
attention
on Technology and market. Increasing sales and sustaining
competition.
Attitude towards
destiny
Follows self-style beyond the given
structure.
Adaptive self-style considering Structure
as inhabitants.
Attitude towards
destiny
Strong self-confidence and hope for
achieving goals.
Strong commitment to self-initiated
efforts and goals.
ENTREPRENEURSHIP
Entrepreneurship refers to the process of creating a new enterprise and bearing any of its risks,
with the view of making the profit. It is an act of seeking investment and production opportunity,
developing and managing a business venture, so as to undertake production function, arranging
inputs like land, labour, material and capital, introducing new techniques and products, identifying
new sources for the enterprise. The person who creates a new enterprise and embraces every
challenge for its development and operation is known as an entrepreneur. And the undertaking or
organisation, typically a startup company, set up by the entrepreneur is called enterprise.

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FUNCTIONS OF ENTREPERNEURSHIP
POSITIVE ASPECTS OF ENTREPRENEURSHIP
1. Be your own boss
One of the most common reasons people start a business is because of the independence it creates.
As the founder and CEO of a business, you answer to no higher authority, except maybe the
customers you serve.
2. Choose your own team

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Playing well with other team members can be difficult, especially if you have conflicting
personalities or philosophies. When you start your own business, you get the privilege of choosing
the team members that you get to work with, and that best represent the brand.
3. Creative expression
Brands are really just the personality, the creative expression of a business, and as an entrepreneur,
you get to call the shots. That doesn’t just refer to the colors and imagery, but the core values and
tone of the company’s messaging.
4. Excellent learning experience
Nothing prepares you for the business world better than real-life experience. Even if you studied
business in college, the lessons in a work setting are more memorable and better understood. For
example, while you may have learned about writing up business plans for startups, reality may be
slightly messier and less structured. Your startup will likely evolve several times and look totally
different to the original concept.
5. Flexible Schedule
As the manager of your business, you also have more control over your time. If you want to work
earlier in the morning and rest in the afternoon or work late at night, you have the power to do so.
6. Following a vision/cause
Entrepreneurs don’t just undertake the risk of starting a business for fun. Something usually
inspires them to action, whether it’s a perceived lack of options, or an unfulfilled customer need.
The drive to innovate and compete is one of the major differences between an entrepreneur and a
small business.
7. Greater potential profit
Since entrepreneurs have the ability to allocate resources, they have the opportunity to save money
in certain places, such as expensive marketing initiatives or costly office maintenance.
8. Set your own office

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Forget about stuffy cubicles and small offices. Depending on the size of your business, you can
choose to work from home, or in a coworking space. Some entrepreneurs even enjoy their privilege
of traveling the world as they work.
9. No professional ceiling
Don’t wait years hoping for a promotion. As an entrepreneur, traditional hierarchies are
meaningless. You automatically become the CEO of your company, so there’s no need to worry
about vertical mobility. You just need to make sure you’re running the business smoothly.
10. Developan inspiring work culture
Many entrepreneurs were once entry-level workers stuck in someone else’s concept of a work
environment. Dreams of more inclusive policies and team-centered values can finally be realized.
Entrepreneurs get to set the standard for how team members treat customers and one another.
Check out this TED Talk on finding and doing work that you love.
FACTORS OF SIMULATING ENTREPRENEURSHIP
Economic Factors
Economic factors can play an interesting and formative role in the development of future
entrepreneurs. For those who are raised in a more desperate situation, with less access to capital
and fewer opportunities to achieve financial success, their desperation could actually urge them to
pursue entrepreneurship to seek out a more comfortable life and create their own opportunities.
This has been the case with entrepreneurs like Daymond John, who’s talked about how his
financial struggles growing up pushed him to be the hustling and hard-working successful
entrepreneur that he is.
Capital
Access to capital is one factor that can facilitate and accelerate entrepreneurship, as capital is often
required for research and development, production or manufacturing, and marketing. This is the
reason venture capitalists, angel investors, entrepreneurial incubators, and accelerators are around

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– to help connect the aspiring entrepreneurs in need of capital with the supportive investors, who
have the necessary capital and believe in the ideas they’re funding.
That said, with crowdfunding, equity crowdfunding, and the new developments in technology over
the past decade, it’s become a lot easier to start and build a company, even without venture capital
funding. In fact, there are affordable and efficient options for getting many products created, which
can make the barriers to entry in entrepreneurship a lot lower and allow many more people to
pursue this route. These days, you can even start chasing your dreams while you’re still in high
school.
Labor
The availability and affordability of good labor is another factor that impacts entrepreneurship, as
it can be difficult to find qualified employees to work for a new startup. However, like access to
capital, this is another factor that is much less problematic these days, largely due to sites like Up
Work and Fiverr.
It has become much easier, faster, and cheaper to connect with highly skilled and qualified
potential employees from all over the world through these freelancer marketplaces, and no matter
where you are located, you can likely find the necessary labor to carry out your idea for a
reasonable price.
Market
The one factor that applies as much now as it did decades ago is the market: it’s necessary to find
the ideal target market for your idea, service, or product if you have hopes of selling it and making
any money. However, while a market for an idea must still exist to ensure its success and
profitability, finding and accessing that market has become much easier in recent years, as well.
With all of the social networks out there, digital publications, and online groups and forums,
finding and reaching a targeted market has never been easier or cheaper. So, while there must be
a large enough target market that is interested in your idea to ensure its profitability, if that market
is out there, reaching them should be much easier today than it would have ten years ago.
Social Factors

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Social factors can have a significant impact on a person’s likelihood to pursue entrepreneurship or
to do so successfully, but they aren’t guaranteed to steer a person in one direction or another. That
said, social factors in terms of the family background of entrepreneurship or encouragement from
family towards an entrepreneurial path can play a great role in guiding a teen towards an
entrepreneurial future.
Family background
A family background in entrepreneurship is one of the best and most direct ways to immerse a
child in the entrepreneurial mindset and to exemplify the benefits of starting and running one’s
own business. For those who have a positive experience with their own family business, they may
be more likely to pursue their own ventures in the future, and they may see the entrepreneurial
route as more customary and less unconventional or risky.
However, the family background in entrepreneurship isn’t the only way to influence a child
towards pursuing their own ventures; education and encouragement is another option. Families
who do not have firsthand entrepreneurial experience, but who do introduce their children to
entrepreneurship through educational entrepreneurship programs like Beta Bowl can similarly
influence their children towards an entrepreneurial path and equip them with the necessary skills
to succeed.
Education
Education can play a large role in leading a student down an entrepreneurial or more traditional
corporate path. Unfortunately, the formal education system in the U.S. has, for many decades,
trained students to prepare for specific occupations, and therefore, produced those with aspirations
of becoming corporate employees, rather than entrepreneurs. However, that, too, has changed
drastically in the past decade.
As entrepreneurship has become a more popular topic of discussion, it’s also become a greater
emphasis of study in business schools and colleges. More universities have included
entrepreneurship majors, minors, and entire departments. Nonetheless, if you’re hoping to equip
your child for an entrepreneurial future, you would be better served by seeking out an
entrepreneurial program that is specifically designed to give them those skills, experience, and
resources – this is exactly what Beta Bowl does, and that’s why aspiring teen entrepreneurs enroll.

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Cultural Value
Though it may seem to have a less direct impact on our kids, the cultural views and value of
entrepreneurship do impact the prevalence of an entrepreneurial focus among the youth. The good
news here is that our culture in the U.S. has come to highlight and reward entrepreneurship,
especially in the past two decades. From the “dot com boom” to shows like Shark Tank and the
rise of unicorn startups (those with over 1 billion dollar valuations) with apps like Uber, Airbnb,
and Snapchat to the social media influencer millionaires, we have seen a great rise in
entrepreneurship over the past two decades, and we’ve seen the financial reward for those
involved.
This increase in the popularity of entrepreneurship has also contributed to its increased focus at
universities, and it has become more accepted, applauded, and revered in our society. For this
reason, our culture has placed a great value on entrepreneurship, and this is a wonderful factor that
can encourage young kids and teens to become future entrepreneurs.
Psychological Factors
Perhaps the most direct factors impacting a person’s likelihood to become an entrepreneur or at
least a successful one, are in fact psychological and may be inherent or instinctual in certain people.
While a person’s upbringing can influence their psychological factors like creativity, risk
tolerance, drive, and leadership, these can also be personality traits that are deeply rooted in who
a person is, regardless of outside factors. Parents can try to instill those traits that would be
beneficial, but at the end of the day, people are independent people, and it’s impossible to control
which skills and traits they truly master and embrace.
Creativity and Ideas
Having creativity and new ideas obviously play a huge part in a person’s entrepreneurial journey,
as entrepreneurship often sparks out of creative innovation. In order to foster creativity in a child
or teen, it’s best to encourage them to brainstorm ways to make current products or services better,
faster, cheaper, or somehow different.
By encouraging your child to run with their imagination and use it to think up new products,
services, or improvements on current ones, you’re helping them exercise their entrepreneurial

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muscle. This is a great way to put them into an entrepreneurial mindset, and by the time they’re an
adolescent or teen, they may be coming up with ideas good enough to turn into real businesses.
Risk Tolerance
Entrepreneurship is often inherently risky, to some degree, and it takes a person with at least a
minimal level of risk tolerance to truly stick it out and weather the storm. In order to prepare your
child for an entrepreneurial future, you should help them develop their risk tolerance. You can do
this by encouraging and rewarding them for taking on new challenges, so they get used to facing
new and unfamiliar situations and get over their fear of failure. That said, you can also have
conversations with them about business opportunities and discuss the idea of calculated risks. The
goal here is to help them develop a mindset of risk tolerance, without adopting a careless attitude
of throwing caution to the wind.
ROLE OF ENTREPRENEURSHIP

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ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT.
1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities.
Investment of public savings in industry results in productive utilization of national resources. Rate
of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur
is the creator of wealth.
2. Improvement in Per Capita Income:
Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land,
labour and capital into national income and wealth in the form of goods and services. They help
to increase net national product and per capita income in the country, which are important
yardsticks for measuring economic growth.
3. Generation of Employment:
Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an
entrepreneur offers the best way for independent and honorable life. Indirectly, by setting up large
and small scale business units they offer jobs to millions. Thus, entrepreneurship helps to reduce
the unemployment problem in the country.
4. Balanced Regional Development:
Entrepreneurs in the public and private sectors help to remove regional disparities in economic
development. They set up industries in backward areas to avail various concessions and subsidies
offered by the central and state governments. Public sector steel plants and private sector industries
by Modis, Tatas, Birlas and others have put the hitherto unknown places on the international map.
5. Improvement in Living Standards:
Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new
products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small
scale sector help to improve the standards of life of a common man. These offer goods at lower
costs and increase variety in consumption.
6. Economic Independence:

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Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture
indigenous substitutes of hitherto imported products thereby reducing dependence on foreign
countries. Businessmen also export goods and services on a large scale and thereby earn the scarce
foreign exchange for the country. Such import substitution and export promotion help to ensure
the economic independence of the country without which political independence has little
meaning.
7. Backward and Forward Linkages:
An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several
backward and forward linkages. For example- the establishment of a steel plant generates several
ancillary units and expands the demand for iron ore, coal, etc. These are backward linkages. By
increasing the supply of steel, the plant facilitates the growth of machine building, tube making,
utensil manufacturing and such other units.
Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. They give an
organization its momentum. Entrepreneurial behavior is critical to the long term vitality of every
economy. The practice of entrepreneurship is as important to established firms as it is to new ones.
POLICIES FOR ECONOMIC DEVELOPMENT

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UNIT -2
ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES
Entrepreneurship Development Programme (EDP) is a programme which helps in developing
entrepreneurial abilities. The skills that are required to run a business successfully is developed
among the students through this programme. Sometimes, students may have skills but it requires
polishing and incubation. This programme is perfect for them. This programme consists of a
structured training process to develop an individual as an entrepreneur. It helps the person to
acquire skills and necessary capabilities to play the role of an entrepreneur effectively.

24
EDP is an effort of converting a person to an entrepreneur by passing him through thoroughly
structured training. An entrepreneur is required to respond appropriately to the market and he/she
is also required to understand the business needs. The skills needed are varied and they need to be
taken care in the best possible way. EDP is not just a training programme but it is a complete
process to make the possible transformation of an individual into an entrepreneur. This programme
also guides the individuals on how to start the business and effective ways to sustain it successfully.
MEANING OF EDP
As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among
the people. In other words, it refers to inculcation, development, and polishing of entrepreneurial
skills into a person needed to establish and successfully run his / her enterprise. Thus, the concept
of entrepreneurship development programme involves equipping a person with the required skills
and knowledge needed for starting and running the enterprise.
OBJECTIVES
The objective of this programme is to motivate an individual to choose the entrepreneurship as a
career and to prepare the person to exploit the market opportunities for own business successfully.
These objectives can be set both in the short-term and long-term basis.
Short-term objectives: These objectives can be achieved immediately. In the short-term, the
individuals are trained to be an entrepreneur and made competent enough to scan the existing
market situation and environment. The person, who would be the future entrepreneur, should first
set the goal as an entrepreneur. The information related to the existing rules and regulations is
essential at this stage.
Long-term objectives: The ultimate objective is that the trained individuals successfully establish
their own business and they should be equipped with all the required skills to run their business
smoothly. The overall objectives of EDP are mainly to help in the rapid growth of the economy
by supplying skilled entrepreneurs. This programme primarily aims at providing self-employment
to the young generation.

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COURSES CONTENTS AND CURRICULUM
1. General Introduction to Entrepreneurship:
First of all, the participants are exposed to a general knowledge of entrepreneurship such as factors
affecting small-scale industries, the role of entrepreneurs in economic development,
entrepreneurial behaviour, and the facilities available for establishing small-scale enterprises.
2. Motivation Training:
The training inputs under this aim at inducing and developing the need for achievement among the
participants. This is, in fact, a crucial input of entrepreneurship training. Efforts are made to inject
confidence and positive attitude and behaviour among the participants towards business.
It ultimately tries to make the participants start their own business enterprise after the completion
of the training programme. In order to further motivate the participants, sometimes successful
entrepreneurs are also invited to speak about their experiences in setting up and running a business.
3. Management Skills:
Running a business, whether large or small requires the managerial skills. Since a small
entrepreneur cannot employ a management professionals /experts to manage his/her business,
he/she needs to be imparted basic and essential managerial skills in the different functional areas
of management like finance, marketing, human resource, and production.
Knowledge of managerial skills enables an entrepreneur to run his/her enterprise smoothly and
successfully. That is why the saying goes that “One man control is the best in the world (of
business) if the man is big enough to control (manage) everything.”
4. Support System and Procedure:
The participants also need to be exposed to the support available from different institutions and
agencies for setting up and running small-scale enterprises. This is followed by acquainting them
with procedure for approaching them, applying and obtaining support from them.
5. Fundamentals of Project Feasibility Study:

26
Under this input, the participants are provided guidelines on the effective analysis of feasibility or
viability of the particular project relating to marketing, organization, technical, financial, and
social aspects of the project. Knowledge is also given how to prepare the ‘Project’ or ‘Feasibility
Report’ for certain products.
6. Plant Visits:
In order to familiarize the participants with real life situations in small business, plant visits are
also arranged. Such trips help the participants know more about an entrepreneur’s behaviour,
personality, thoughts, and aspirations. These influence him / her to behave accordingly to run his
/ her enterprise smoothly and successfully.
PHASE OF ENTREPRENEURSHIP DEVELOPMENT PROGRAMME
Training Phase:
The main objective of this phase is to bring desirable change in the behaviour of the trainees. In
other words, the purpose of training is to develop ‘need for achievement’, i.e. motivation among
the trainees.
Accordingly, a trainer should see the following changes in the behaviour of the trainees:
a. Is he/she attitudinally tuned very much towards his/her proposed project idea?
b. Is the trainee motivated to plunge into entrepreneurial career and bear risks involved in it?
c. Is there any perceptible change in his entrepreneurial attitude, outlook, skill, role, etc.?
d. How should he/she behave like an entrepreneur?
e. What kinds of entrepreneurial traits the trainee lacks the most?
f. Whether the trainee possesses the knowledge of technology, resources and other knowledge
related to entrepreneurship?
g. Does the trainee possess the required skill in selecting the viable project, mobilizing the required
resources at the right time?

27
Some of the questions listed above also answer the basic underlying assumption in designing a
suitable training programme for the potential entrepreneurs. Having trained the trainees, the
trainers need to ask themselves as to how much, and how far the trainees have moved in their
entrepreneurial pursuits.
Post-Training Phase (Follow-up):
The ultimate objective of Entrepreneurship Development Programme is to prepare the participants
to start their enterprises. This phase, therefore, involves assessment to judge how far the objectives
of the programme have been achieved. This is also called ‘follow-up’. Follow-up indicates our
past performance, drawbacks, if any, in our past work and suggests guidelines for framing future
policies to improve our performance.
In nutshell, the purpose behind EDP follow-up is to:
a. Review the pre-training work;
b. Review the process of training programme; and
c. Review past training approach.
PHASE OF ECONOMIC DEVELOPMENT PROGRAMME

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INSTITUTIONS FOR EDP
Institutions set up by Central Government
1. Small industries development organization (SIDO)
SIDO was established in October 1973 now under Ministry of Trade, Industry and Marketing.
SIDO is an apex body at Central level for formulating policy for the development of Small Scale
Industries in the country,headed by the Additional Secretary & Development Commissioner(Small
Scale Industries)under Ministry of Small Scale Industries Govt. of India. SIDO is playing a very
constructive role for strengthening this vital sector, which has proved to be one of the strong pillars
of the economy of the country. SIDO also provides extended support through Comprehensive plan
for promotion of rural entrepreneurship.
2. Management development Institute(MDI)
MDI is located at Gurgaon(Haryana).It was established in 1973 and is sponsored by Industrial
Finance Corporation Of India,with objectives of improving managerial effectiveness in the
industry.It conducts management development programs in various fields.In also includes the
programmes for the officers of IAS,IES,BHEL,ONGC and many other leading PSU’s.
3. Entrepreneurship development institute of India (EDI)

29
Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit institute,
set up in 1983, is sponsored by apex financial institutions – the IDBI Bank Ltd., IFCI Ltd., ICICI
Bank Ltd. and the State Bank of India (SBI). EDI has helped set up twelve state-level exclusive
entrepreneurship development centres and institutes. One of the satisfying achievements, however,
was taking entrepreneurship to a large number of schools, colleges, science and technology
institutions and management schools in several states by including entrepreneurship inputs in their
curricula. In the international arena, efforts to develop entrepreneurship by way of sharing
resources and organizing training programmes, have helped EDI earn accolades and support from
the World Bank, Commonwealth Secretariat, UNIDO, ILO, British Council, Ford Foundation,
European Union, ASEAN Secretariat and several other renowned agencies. EDI has also set up
Entrepreneurship Development Centre at Cambodia, Lao PDR, Myanmar and Vietnam and is in
the process of setting up such centres at Uzbekistan and five African countries.
4. All India Small Scale Industries Board (AISSIB)
The Small Scale Industries Board (SSI Board) is the apex advisory body constituted to render
advise to the Government on all issues pertaining to the small scale sector.It determines the policies
and programmes for the development of small industries with a Central Government Minister as
its president and the representatives of various organization i.e. Central Government,State
Government,National Small Industries Corporations,State Financial Corporation,Reserve Bank of
India,State Bank of India,Indian Small Industries Board,Non government members such as Public
Service Commission,Trade and Industries Members.
5. National Institution of Entrepreneurship and Small Business Development (NIESBUD),
New Delhi
It was established in 1983 by the Government of India.It is an apex body to supervise the activities
of various agencies in the entrepreneurial development programmes.It is a society under
Government of India Society Act of 1860.The major activities of institute are:
i) To make effective strategies and methods
ii) To standardize model syllabus for training
iii) To develop training aids, tools and manuals

30
iv) To conduct workshops, seminars and conferences.
v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial Development.
vi) To help support government and other agencies in executing entrepreneur development
programmes.
vii) To undertake research and development in the field of EDPs.
6. National Institute of Small Industries Extension Training
It was established in 1960 with its headquarters at Hyderabad. The main objectives of national
Institute of Small Industries Extension Training are:
i) Directing and Coordinating syllabi for training of small entrepreneurs.
ii) Advising managerial and technical aspects.
iii) Organizing seminars for small entrepreneurs and managers.
iv) Providing services regarding research and documentation.
7. National Small Industries Corporation Ltd. (NSIC)
The NSIC was established in 1995 by the Central Government with the objective of assisting the
small industries in the Government purchase programmes.The corporation provides a vast-market
for the products of small industries through its marketing network.It also assists the small units in
exporting their products in foreign countries.
NIESBUD
National Institute of Entrepreneurship and Small Business Development (NIESBUD) The
National Institute for Entrepreneurship and Small Business Development is a premier organization
of the Ministry of Skill Development and Entrepreneurship, engaged in training, consultancy,
research, etc.
OBJECTIVES

31
 To standardize and systemize the processes of selection, training, support and sustenance
of potential and existing entrepreneurs.
 To support and motivate institutions/organizations in carrying out training and other
entrepreneurship development related activities.
 To serve as an apex national level resource institute for acelarating as well as enhancing
the process of entrepreneurship development, to measure the impact of the same within
different strata of the society.
 To provide vital information and support to trainers, promoters and entrepreneurs by
organizing research and documentation activities relevant to entrepreneurship and skill
development.
 To create a holistic environment to train the trainers, promoters and consultants in diverse
areas of entrepreneurship and skill Development.
 To offer consultancy nationally/internationally for promotion of entrepreneurship and
small business development at national and international level.
 To provide national/international forums for interaction and exchange of ideas for policy
formulation and its refinement at various levels.
 To share experience and expertise in entrepreneurship development across national
frontiers to create awareness on it at national level.
 To interchange international experience and expertise in the field of entrepreneurship
development for mapping its development at international levels too.
NAYE
National Alliance of Young Entrepreneurs
 This is a national organization of young entrepreneurs of the country, which-

32
 Looks into the interests of young entrepreneurs
 Takes special care of the interests of women entrepreneurs.
Some of the major achievements of NAYE are:
 Establishing its credibility in both governmental and non-governmental circles as a highly
professional, competent, effective and efficient non-governmental organization
representing small and medium enterprises.
 Establishing its effective presence in the area of international cooperation in small and
medium enterprise sector.
 Creating a profound impact of various strategies, policies and procedures put on the anvil
by the central and state governments for performance of small and medium enterprise.
 Creating and nurturing a new class of women entrepreneurs and enabling them to acquire
their rightful place in the Indian economy.
All the above measures are applicable equally to women enterprises as majority of them fall in the
small enterprises category. There are many entrepreneurs not only in training them to be
entrepreneurs but also in specific areas for financial identification of units and for marketing.
TCOs
Tactical Combat Operations System
You might also like some similar terms related to TCOS to know more about it. This site contains
various terms related to bank, Insurance companies, Automobiles, Finance, Mobile phones,
software, computers, Travelling, School, Colleges, Studies, Health and other terms.
PROBLEMS OF ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES (EDPS)
ARE:
1. No Policy at the National Level.
Though Government of India is fully aware about the importance of entrepreneurial development,
yet we do not have a national policy on entrepreneurship. It is expected that the government will

33
formulate and enforce a policy aimed at promoting balanced regional development of various areas
through promotion of entrepreneurship.
2. Problems at the Pre training Phase.
Various problems faced in this phase are identification of business opportunities, finding &
locating target group, selection of trainee & trainers etc.
3. Over Estimation of Trainees.
Under EDPs it is assumed that the trainees have aptitude for self employment and training will
motivate and enable the trainees in the successful setting up and managing of their enterprises.
These agencies thus overestimate the aptitude and capabilities of the educated youth. Thus on one
hand the EDPs do not impart sufficient training and on the other financial institutions are not
prepared to finance these risky enterprises set up by the not so competent entrepreneurs.
4. Duration of EDPs.
An attempt is made during the conduct of EDPs to prepare prospective entrepreneurs thoroughly
for the various problems they will be encountering during the setting up and running of their
enterprises. Duration of most of these EDPs varies between 4 to 6 weeks, which is too short a
period to instill basic managerial skills in the entrepreneurs. Thus the very objective to develop
and strengthen entrepreneurial qualities and motivation is defeated.
5. Non Availability of Infrastructural Facilities.
No prior planning is done for the conduct of EDPs. EDPs conducted in rural and backward areas
lack infrastructural facilities like proper class room suitable guest speakers, boarding and lodging
etc.
6. Improper Methodology.
The course contents are not standardized and most of the agencies engaged in EDPs are themselves
not fully clear about what they are supposed to do for the attainment of pre-determined goals. This
puts a question mark on the utility of these programmes.
7. Mode of Selection.

34
There is no uniform procedure adopted by various agencies for the identification of prospective
entrepreneurs. Organisations conducting EDPs prefer those persons who have some project ideas
of their own and thus this opportunity is not provided to all the interested candidates.
8. Non Availability of Competent Faculty.
Firstly there is problem of non availability of competent teachers and even when they are
available, they are not prepared to take classes in small towns and backward areas. This naturally
creates problems for the agencies conducting EDP.
9. Poor Response of Financial Institutions.
Entrepreneurs are not able to offer collateral security for the grant of loans. Banks are not prepared
to play with the public money and hence they impose various conditions for the grant of loans.
Those entrepreneurs who fail to comply with the conditions are not able to get loan and hence their
dream of setting up their own enterprises is shattered. Helpful attitude of lending institutions will
go a long way in stimulating entrepreneurial climate.
WOMEN ENTREPRENEURS
The emergence of entrepreneurs in a society depends to a great extent, on the economic, social,
religious, cultural and psychological factors prevailing in the society. In the advanced countries of
the world, there is a phenomenal increase in the number of self-employed women after the World
War II. In the U.S., women own 25 per cent of all businesses, even though their sales on an average
are less, than two-fifths of those of other small businesses.In Canada, one-third of small businesses
are owned by women and in France it is one-fifth. In the U.K., since 1980, the number of self-
employed women has increased three times as fast as the number of self-employed men.
WOMEN ENTREPRENEURSHIP

35
DEFINITIONS
According to Schumpeter, “Women who innovate, imitate or adopt a business activity are called
women entrepreneurs.” According to the Government of India, a woman entrepreneur is defined
as “an enterprise owned and controlled by a woman and having a minimum financial interest of
51 percent of the capital and giving atleast 51 percent of the employment generated in the
enterprise to women.”
CHALLENGES FACED BY A WOMEN ENTREPRENEUR

36
TYPES OF WOMEN ENTREPRENEURS
Affluent entrepreneurs
Pull factors
Push
Self-employed entrepreneurs
Rural entrepreneurs
1. Affluent Entrepreneurs:
Affluent women entrepreneurs are those women entrepreneurs who hails from rich business
families. They are the daughters, daughter-in laws, sisters, sister-in-laws and wives of affluent
people in the society. Many of them are engaged in beauty parlour, interior decoration, book
publishing, film distribution and the like. The family supports the above type of entrepreneur in
carrying out their responsibilities

37
2. Pull Factors:
Women in towns and cities take up entrepreneurship as a challenge to do something new and to be
economically independent. These are coming under the category of pull factors. They belong to
educated women who generally lake up small and medium industries where risk is low. Under this
category, women usually start service centres schools, food catering centres, restaurants, grocery
shops etc.
3. Push Factors:
There are some women entrepreneurs who accepts entrepreneurial activities to overcome financial
difficulties. The family situation forces them either to develop the existing family business or to
start new ventures to improve the economic conditions of the family. Such categories of
entrepreneurs are termed as push factors.
4. Self-employed Entrepreneur:
Poor and very poor women in villages and town rely heavily on their own efforts for sustenance.
They start tiny and Small enterprises like brooms making, wax candle making, providing tea and
coffee to offices, ironing of clothes knitting work, tailoring firm etc. Such women are called self-
employed entrepreneurs.
5. Rural Entrepreneurs:
Women in rural areas/villages start enterprises which needs least organising skill and less risk.
Dairy products, pickles, fruit juices, pappads and jagger making are coming under this category of
Rural entrepreneur.
PROBLEMS OF WOMEN ENTREPRENEURS
1. Problem of Finance:

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Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women
entrepreneurs suffer from shortage of finance on two counts. Firstly, women do not generally have
property on their names to use them as collateral for obtaining funds from external sources. Thus,
their access to the external sources of funds is limited.
Secondly, the banks also consider women less credit-worthy and discourage women borrowers on
the belief that they can at any time leave their business. Given such situation, women entrepreneurs
are bound to rely on their own savings, if any and loans from friends and relatives who are
expectedly meager and negligible. Thus, women enterprises fail due to the shortage of finance.
2. Scarcity of Raw Material:
Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs.
Added to this are the high prices of raw material, on the one hand, and getting raw material at the
minimum of discount, on the other. The failure of many women co-operatives in 1971 engaged in
basket-making is an example how the scarcity of raw material sounds the death-knell of enterprises
run by women (Gupta and Srinivasan 2009).
3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for canvassing
and advertisement. Thus, they have to face a stiff competition for marketing their products with
both organized sector and their male counterparts. Such a competition ultimately results in the
liquidation of women enterprises.
4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A single woman
asking for room is still looked upon suspicion. Cumbersome exercise involved in starting an
enterprise coupled with the officials humiliating attitude towards women compels them to give up
idea of starting an enterprise.
5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other members of the family.
Man plays a secondary role only. In case of married women, she has to strike a fine balance
between her business and family. Her total involvement in family leaves little or no energy and

39
time to devote for business. Support and approval of husbands seem necessary condition for
women’s entry into business. Accordingly, the educational level and family background of
husbands positively influence women’s entry into business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-
economic problems. Due to the lack of education and that too qualitative education, women are
not aware of business, technology and market knowledge. Also, lack of education causes low
achievement motivation among women. Thus, lack of education creates one type or other problems
for women in the setting up and running of business enterprises.
7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality
between sexes. But, in practice, women are looked upon as abla, i.e. weak in all respects. Women
suffer from male reservations about a women’s role, ability and capacity and are treated
accordingly. In nutshell, in the male-dominated Indian society, women are not treated equal to
men. This, in turn, serves as a barrier to women entry into business.
8. Low Risk-Bearing Ability:
Women in India lead a protected life. They are less educated and economically not self-dependent.
All these reduce their ability to bear risk involved in running an enterprise. Risk-bearing is an
essential requisite of a successful entrepreneur. In addition to above problems, inadequate
infrastructural facilities, shortage of power, high cost of production, social attitude, low need for
achievement and socio-economic constraints also hold the women back from entering into
business.
WOMEN ENTREPRENEURS REMEDIES
1. Making authoritative first impressions

40
"One of the biggest challenges women entrepreneurs face is creating an authoritative first
impression. We are often stereotyped by our looks and not immediately recognized as a serious
entrepreneur."
The solution: "To overcome this challenge, I've started to introduce myself, first and last name,
and my business as I shake hands. 'Hi there. Sarah Pendley, Sarah Theresa Communications.' This
establishes authority and immediately clears up any confusion as to my role. I've found that
conversations go further and I'm taken more seriously as an entrepreneur."
2. Achieving work-life balance
"As a mom of two and owner of three businesses, my greatest challenge as a female entrepreneur
is finding balance. It can feel like your heart and your time are being tugged a million different
directions at once."
The solution: "However, one thing that has helped me achieve the balance I've been craving is by
creating schedules and systems."
3. Finding a support system
"As a mother, most of our personal friends have kids, and a large percentage stay at home – or, if
they do work, they don't have the same business risks and demands as an entrepreneur has. It is
easy to feel like nobody feels like you do or has your struggles."
The solution: "In this day and age, it is helpful to listen to podcasts, read books, connect outside
the geographic confines that may make you feel isolated. There are stories out there that can inspire
you, and we all have days we need inspiration."
4. Getting unsolicited advice
"Everyone and their cat wants to give you advice on what to do, especially men and people who
are not even remotely in the pit with you. I have been talked down to, not taken seriously, and even
ridiculed."
The solution: "The kindest way I have learnt to tackle this is to be graceful and repeat a silent
mantra in my head: 'I am not here to prove anything to anyone. I release this thought from sticking
to me or having the need to react to the comment. The people meant for you will understand and

41
find you.' And I smile and get on with my work, because my energy is limited and I need to show
up every day."
5. Being lonely
"The big thing I didn't realize was that going from an office of 30, and a position where it was my
job to build community, to being a solopreneur would result in feeling really lonely in my
professional world. Even though I was meeting with clients and hosting one-on-one meetings, I
couldn't unload my concerns, questions, fears and doubts on existing or potential clients."
The solution: "I started by reaching out to those I had met in the community through the local
Chamber of Commerce Women in Business group, then went online to start scouring for other
women in business-focused events, meetings, conferences, book clubs, etc."
6. Battling unrealistic expectations
"My crazy expectations were mostly from myself. I expected to be Super Mom, wife of the year,
and build a successful business all in the same year. Even though I was (and am) doing great in all
the key areas of life, I often felt inadequate, which is exhausting."
The solution: "I overcame this by starting a 'what got done' list and gauging my success by that,
rather than looking at the items still on my to-do list. This one little shift has made a huge
difference, and I let the guilt of not getting every single thing done go."
7. Overcoming self-doubt
"I believe the biggest challenge female entrepreneurs face is their own self-doubt stemming from
a past negative experience or relationship ... Insecurity can get the best of some and lead to a less-
than-supportive community of women. It is only when women support each other can we squash
our self-doubt, take a risk and breathe 100 percent confidence into our new endeavor."
The solution: "The first step to overcoming this challenge is to dig deep and identify the source of
any insecurities. Why do you doubt yourself? These are the barriers to our success and cannot be
overcome unless they are recognized, validated and released."

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UNIT-3
SMALL SCALE INDUSTRIES (SSI)
Small Scale Industries (SSI) are those industries in which the manufacturing, production and
rendering of services are done on a small or micro scale. These industries make a one-time
investment in machinery, plant, and equipment, but it does not exceed Rs.10 crore and annual
turnover does not exceed Rs.50 crore.
MEANING
Essentially the small scale industries are generally comprised of those industries which
manufacture, produce and render services with the help of small machines and less manpower.
These enterprises must fall under the guidelines, set by the Government of India.
The SSI’s are the lifeline of the economy, especially in developing countries like India. These
industries are generally labour-intensive, and hence they play an important role in the creation of
employment. SSI’s are a crucial sector of the economy both from a financial and social point of
view, as they help with the per capita income and resource utilisation in the economy.

43
IMPORTANCE OF SSI
1. Small Scale Industries Provides Employment
SSI uses labour intensive techniques. Hence, it provides employment opportunities to a
large number of people. Thus, it reduces the unemployment problem to a great extent.
SSI provides employment to artisans, technically qualified persons and professionals. It
also provides employment opportunities to people engaged in traditional arts in India.
SSI accounts for employment of people in rural sector and unorganized sector.
It provides employment to skilled and unskilled people in India.
The employment capital ratio is high for the SSI.
2. SSI Facilitates Women Growth
It provides employment opportunities to women in India.
It promotes entrepreneurial skills among women as special incentives are given to women
entrepreneurs.
3. SSI Brings Balanced Regional Development
SSI promotes decentralized development of industries as most of the small scale industries
are set up in backward and rural areas.
It removes regional disparities by industrializing rural and backward areas and brings
balanced regional development.
It promotes urban and rural growth in India.
It helps to reduce the problems of congestion, slums, sanitation and pollution in cities by
providing employment and income to people living in rural areas. It plays an important role
by initiating the government to build the infrastructural facilities in rural areas.
It helps in improving the standard of living of people residing in suburban and rural areas
in India.
The entrepreneurial talent is tapped in different regions and the income is also distributed
instead of being concentrated in the hands of a few individuals or business families.
4. SSI Helps in Mobilization of Local Resources

44
It helps to mobilize and utilize local resources like small savings, entrepreneurial talent,
etc., of the entrepreneurs, which might otherwise remain idle and unutilized. Thus it helps
in effective utilization of resources.
It paves way for promoting traditional family skills and handicrafts. There is a great
demand for handicraft goods in foreign countries.
It helps to improve the growth of local entrepreneurs and self-employed professionals in
small towns and villages in India.
5. SSI Paves for Optimisation of Capital
SSI requires less capital per unit of output. It provides quick return on investment due to
shorter gestation period. The pay back period is quite short in small scale industries.
SSI functions as a stabilizing force by providing high output capital ratio as well as high
employment capital ratio.
It encourages the people living in rural areas and small towns to mobilize savings and
channelize them into industrial activities.
6. SSI Promotes Exports
SSI does not require sophisticated machinery. Hence, it is not necessary to import the
machines from abroad. On the other hand, there is a great demand for goods produced by
small scale sector. Thus it reduces the pressure on the country’s balance of payments.
SSI earns valuable foreign exchange through exports from India.
7. SSI Complements Large Scale Industries
SSI plays a complementary role to large scale sector and supports the large scale industries.
SSI provides parts, components, accessories to large scale industries and meets the
requirements of large scale industries through setting up units near the large scale units.
It serves as ancillaries to large Scale units.
8. SSI Meets Consumer Demands
SSI produces wide range of products required by consumers in India.
SSI meets the demand of the consumers without creating a shortage for goods. Hence, it
serves as an anti-inflationary force by providing goods of daily use.

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9. SSI Ensures Social Advantage
SSI helps in the development of the society by reducing concentration of income and
wealth in few hands.
SSI provides employment to people and pave for independent living.
SSI helps the people living in rural and backward sector to participate in the process of
development.
It encourages democracy and self-governance.
10. Develops Entrepreneurship
It helps to develop a class of entrepreneurs in the society. It helps the job seekers to turn
out as job givers.
It promotes self-employment and spirit of self-reliance in the society.
Development of small scale industries helps to increase the per capita income of India in
various ways.
It facilitates development of backward areas and weaker sections of the society.
Small Scale Industries are adept in distributing national income in more efficient and
equitable manner among the various participants of the society.
PROBLEMS OF SMALL SCALE INDUSTRIES

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PROBLEMS OF SMALL SCALE INDUSTRIES
1. Shortage of Funds:
Small business entrepreneurs don’t have enough long- term or short-term funds. These are,
therefore, short of both fixed assets as well as working capital. Even the banks do not come to their
help in a big way. Financial institutions like ICICI, IDBI and IFCI help only large scale industries.
2. Lack of Latest Technology:
Small business lacks funds. Latest technology is not used because it is expensive. Only old
methods and techniques are being used. Due to this they earn less margin of profit.
3. Shortage of Raw Materials:
There is shortage of raw material because of less working capital. They can’t buy in bulk during
the season and cannot enjoy the economies of large scale.
4. Shortage of Power:
Because of shortage of power, the small business enterprises are not able to use full capacity of
the plant at their disposal. They cannot afford to have their own power generators.
5. Labour Problem:
The labour is mostly unskilled. Small business don’t have resources to provide good training.
Labour are also not paid well. There is no motivation for professional growth. Small business is
incapable to bargain with powerful trade unions.
6. Marketing Problem:
Small business cannot face the competition with large scale units in marketing and selling. They
cannot afford to spend much on advertising and proper distribution of goods. They have to depend
on middlemen, who pay low prices and even the recovery from the middlemen is very slow.
7. Managerial Skills:
Only individuals or a small group of people own and operate the small business units. They don’t
possess professional managerial skills required to run a business successfully.

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8. Quality:
Small business finds it difficult to come upto global standards of the quality. They also don’t have
funds for research in order to improve upon the quality. The product quality is their weakest point
as compared to the standards of the large scale units.
9. Sickness:
It is painful to see most of the small units going sick. There is a lack of planning. Skilled and
trained personnel is another hurdle. They have to sell on credit. Their customers do not pay them
in time. There are large scale bad debts. Thus, they fall short of working capital to keep the
production process going. This leads to sickness.
STEPS OD SMALL SCALE INDUSTRIES SSI
Hence the various steps to start small scale industries involved in establishment of an enterprise
through which the entrepreneur may pass are the following.
Step 1: Decision to be Self-Employe

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This is the most crucial decision a youth has to take, shunning wage employment and opting for
self-employment or entrepreneurship to steps to start small scale industries.
Step 2: Analyzing Strengths, Weakness, Opportunities and Threats
The Potential entrepreneur has to analyze his strengths, weakness, opportunities and Threats, while
deciding to go for entrepreneur career. It is also call SWOT analysis.
Step 3: Scanning of Business Environment
It is always essential on the part of the entrepreneur to study and understand the prevailing business
environment. In order to ensure success if his enterprise, entrepreneur should scan the business
opportunities and threats in the environment.
Step 4: Training
Before going to start the enterprise, the potential entrepreneur must assess his own deficiencies
which he can compensate through training. He can avail the facilities of various training institutes
like EDI, NIESBUS, IEDs existing in our country.
Step 5: Product Selection
The most important steps to start small scale industries is to decide what business to venture into,
the product or range of products that shell be selected for manufacture and in what quantity. The
level of activity will help in determining the size of business and thus form of ownership.
Step 6: Market Survey
It is important convenient to manufacture an item but difficult to sell. Market survey implies
systematic collection of data by the entrepreneur about the product for manufacture, demand-
supply lag, extent of competition, frequency of demand, pattern and design of demand, its potential
share in the marketing pricing, distribution policy etc.
Step 7: From of organization
A firm can be constituted as proprietorship, partnership, limited company, cooperative society, etc.
This will depend upon the type, purpose and size of entrepreneur’s business.
Step 8: Location

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The next step will be to decide the location where the unit is to be established. This size of plot,
covered and open area and the exact site will have to be decided.
Step 9: Technology
Information on all available technologies should be collected by the entrepreneur and the most
suitable one to be identified.
Step 10: Machinery and Equipment
Having chosen the technology, the machinery and equipment required for manufacturing the
chosen products have to be decided.
Step 11: Project Report Preparation
This the most important steps to start small scale industries. After deciding the form of the
ownership, location, technology, machinery, and equipment, the entrepreneurs should be ready to
prepare his project report the feasibility study. A project report that may now be prepared will be
helpful in formulating the production, marketing, financial and management plans.
Step 12: Project Appraisal
Project appraisal implies the assessment of a project. It is technique for ex-ante analysis of a
scheme or project. While preparing to set up an enterprise, the entrepreneur has to carefully
appraise the project form the standpoint of economic, financial, technical, market, managerial and
social aspects to arrive at the most socially-feasible enterprise.
 Economical appraisal
 Financial appraisal
 Technical appraisal
 Management appraisal
 Organizational appraisal
 Market appraisal
Step 13: Finance
Finance is the lifeblood of the enterprise. Entrepreneur has to take certain steps and follow
specified norms of the financial institutions and banks to obtain it.

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Step 14: Provisional Registration
It is always worthwhile to get the unit registered with the government. The entrepreneur has to
obtain the prescribed application from the provisional registration under DIC or Directorate of
industries. This will enable the entrepreneur to avail various government facilities, incentives, and
assistance schemes including financial assistance from NSIC/SFCs/KVIC.
Step 15: Technical Know-How
Technical know-how may be arranged for setting up enterprise. Facilities are also available to SSI
for making technical know-how arrangements including turn-key jobs.
Step 16: Power and water connection
The sites, where the enterprise will be located, should either have adequate power connections or
this should be arranged. Entrepreneur can calculate the total power requirement and water
connection will have to be obtained.
Step 17: Installation of Machinery
Having completed the above formalities, the next step is to procure the machinery for installation.
Machinery should preferably be installed as per the plan layout.
Step 18: Recruitment of Manpower
Once machines are installed, the need for manpower arises to run them. This presupposes the
skilled, unskilled and semiskilled labour, administrative staff etc.
Step 19: Procurement of Raw materials
Raw materials are the important ingredients for running an enterprise. The labour will require raw
materials to work upon the installed machinery.
Step 20: Production
The unit established should have an organizational setup. To operate optimally,the organization
should employ its manpower, machinery and methods effectively. There should not be any wastage
of manpower, machinery and materials. Production of the proposed item should be taken up in two
stages.

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Trail Production Commercial Production
Trail production will help tackling problems confronted in production and test marketing of the
product. Commercial production should be commenced after the test-marketing of the product.
Step 21: Marketing
Marketing is the most important activity as far as the entrepreneurial development is concerned.
Various aspects like how to reach the customer, distribution channels, commission structure,
pricing, advertising, publicity etc., have to be decided by the entrepreneur. Commercial marketing
can be undertaken. The entrepreneur can contact the small industries marketing cooperation.
Step 22: Quality assurance
Before marketing, the product quality certification from BIS (Bureau of Indian standards) or
AGMARK/HALLMARK etc.
If there is no quality standards specified for the products, the entrepreneur should evolve his own
quality control parameters.
Step 23: Permanent Registration
After the small scale unit goes into production and marketing, it becomes eligible to get permanent
registration based on its provisional registration from DIC.
Step 24: Market Research
There is strong need for continuous market research to assess needs and areas for modification,
up-gradation and growth. Market becomes Waterloos for most SSI entrepreneurs as they ignore
the vital day-to-day operation. These are 24 steps to start small scale industries in anywhere and
they are most important factor whose nobody ignores an successful entrepreneurs.
SOLE PROPRIETORSHIP
A sole proprietorship also referred to as a sole trader or a proprietorship, is an unincorporated
business that has just one owner who pays personal income tax on profits earned from the business.
A sole proprietorship is the easiest type of business to establish or take apart, due to a lack of
government regulation. As such, these types of businesses are very popular among sole owners of

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businesses, individual self-contractors, and consultants. Many sole proprietors do business under
their own names because creating a separate business or trade name isn't necessary.
GOVT. POLICIES OF SSI
DEFINITION OF SOLE PROPRIETORSHIP:
It is that type of business organization which is owned, managed and controlled by a single owner.
 The word “sole” means “only” and “proprietor” notes to “owner”.
 A sole proprietor is the beneficiary of all profits.
 All risks are to be borne by the sole proprietor.
 The sole proprietor has unconditional and full control over its business.
 Example: Beauty parlour, barbershop, general store and sweet shop run by a single owner.

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PARTNERSHIP
A partnership is a formal arrangement by two or more parties to manage and operate a business
and share its profits. There are several types of partnership arrangements. In particular, in a
partnership business, all partners share liabilities and profits equally, while in others, partners may
have limited liability. There also is the so-called "silent partner," in which one party is not involved
in the day-to-day operations of the business.
FEATURES OF PARTNERSHIP:
Following are the few features of a partnership:
1. Agreement between Partners:
It is an association of two or more individuals, and a partnership arises from an agreement or a
contract. The agreement (accord) becomes the basis of the association between the partners. Such
an agreement is in the written form. An oral agreement is evenhandedly legitimate. In order to
avoid controversies, it is always good, if the partners have a copy of the written agreement.

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2. Two or More Persons:
In order to manifest a partnership, there should be at least two (2) persons possessing a common
goal. To put it in other words, the minimal number of partners in an enterprise can be two (2).
However, there is a constraint on their maximum number of people.
3. Sharing of Profit:
Another significant component of the partnership is, the accord between partners has to share
gains and losses of a trading concern. However, the definition held in the Partnership Act
elucidates – partnership as an association between people who have consented to share the gains
of a business, the sharing of loss is implicit. Hence, sharing of gains and losses is vital.
4. Business Motive:
It is important for a firm to carry some kind of business and should have a profit gaining motive.
5. Mutual Business
The partners are the owners as well as the agent of their firm. Any act performed by one partner
can affect other partners and the firm. It can be concluded that this point acts as a test of partnership
for all the partners.

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STOCK COMPANY
A joint stock company is an organisation which is owned jointly by all its shareholders. Here, all
the stakeholders have a specific portion of stock owned, usually displayed as a share. Each joint
stock company share is transferable, and if the company is public, then its shares are marketed on
registered stock exchanges. Private joint stock company shares can be transferred from one party
to another party. However, the transfer is limited by agreement and family members.
FEATURES OF JOINT STOCK COMPANY
Separate Legal Entity – A joint stock company is an individual legal entity, apart from the
persons involved. It can own assets and can because it is an entity it can sue or can be sued.
Whereas a partnership or a sole proprietor, it has no such legal existence apart from the person
involved in it. So the members of the joint stock company are not liable to the company and are
not dependent on each other for business activities.
Perpetual – Once a firm is born, it can only be dissolved by the functioning of law. So, company
life is not affected even if its member keeps changing.
Number of Members – For a public limited company, there can be an unlimited number of
members but minimum being seven. For a private limited company, only two members. In general,
a partnership firm cannot have more than 10 members in one business.
Limited Liability – In this type of company, the liability of the company’s shareholders is limited.
However, no member can liquidate the personal assets to pay the debts of a firm.
Transferable share – A company’s shareholder without consulting can transfer his shares to
others. Whereas, in a partnership firm without any approval of other partners, a partner cannot
move his share.
Incorporation – For a firm to be accepted as an individual legal entity, it has to be incorporated.
So, it is compulsory to register a firm under a joint stock company.
CO-OPERATIVE

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Cooperatives are people-centred enterprises owned, controlled and run by and for their members
to realise their common economic, social, and cultural needs and aspirations. Cooperatives bring
people together in a democratic and equal way. Whether the members are the customers,
employees, users or residents, cooperatives are democratically managed by the 'one member, one
vote' rule. Members share equal voting rights regardless of the amount of capital they put into the
enterprise.
As businesses driven by values, not just profit, cooperatives share internationally agreed principles
and act together to build a better world through cooperation. Putting fairness, equality and social
justice at the heart of the enterprise, cooperatives around the world are allowing people to work
together to create sustainable enterprises that generate long-term jobs and prosperity. Cooperatives
allow people to take control of their economic future and, because they are not owned by
shareholders, the economic and social benefits of their activity stay in the communities where they
are established. Profits generated are either reinvested in the enterprise or returned to the members
.
ADVANTAGES AND DISADVANTAGES OF COOPERATIVE SOCIETY
Advantages:
The cooperative form of organization offers the following advantages:
1. Easy to Form- A cooperative society is a voluntary association and may be formed with a
minimum of ten adult members. Its registration is very simple and can be done without much legal
formalities.
2. Open Membership- Membership in a cooperative organisation is open to all people having a
common interest. A person can become a member at any time he likes and can leave the society at
any time by returning his shares, without affecting its continuity.
3. Democratic Management- A cooperative society is managed in a democratic manner. It is
based on the principle of ‘one man one vote’. All members have equal rights and can have a voice
in its management.

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4. Limited Liability- The liability of the members of a co-operative society is limited to the extent
of capital contributed by them. They do not have to bear personal liability for the debts of the
society.
5. Stability- A co-operative society has a separate legal existence. It is not affected by the death,
insolvency, lunacy or permanent incapacity of any of its members. It has a fairly stable life and
continues to exist for a long period.
6. Economical Operations- The operation of a cooperative society is quite economical due to
elimination of middlemen and the voluntary services provided by its members.
7. Government Patronage- Government gives all kinds of help to co-operatives, such as loans at
lower rates of interest and relief in taxation.
8. Low Management Cost- Some of the expenses of the management are saved by the voluntary
services rendered by the members. They take active interest in the working of the society. So, the
society is not required to spend large amount on managerial personnel.
9. Mutual Co-Operation- Cooperative societies promote the spirit of mutual understanding, self-
help and self-government. They save weaker sections of the society from exploitation by the rich.
The underlying principle of co-operation is “self-help through mutual help.”
10. No Speculation- The share is always open to new members. The shares of co-operative society
are not sold at the rates higher than their par values. Hence, it is free from evils of speculation in
share values.
11. Economic Advantages- Cooperative societies provide loans for productive purposes and
financial assistance to farmers and other lower income earning people.
12. Other Benefits- Cooperative societies are exempted from paying registration fees and stamp
duties in some states. These societies have priority over other creditors in realising its dues from
the debtors and their shares cannot be decreed for the realisation of debts.
DISADVANTAGES:

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As against the advantages of co-operatives, the following limitations and drawbacks of this form
of organization must also be noted:
1. Limited Capital- Cooperatives are usually at a disadvantage in raising capital because of the
low rate of return on capital invested by the members.
2. Inefficient Management- The management of a co-operative society is generally inefficient
because the managing committee consists of part-time and inexperienced people. Qualified
managers are not attracted towards a cooperative on account of its limited capacity to pay adequate
remuneration.
3. Absence of Motivation- A cooperative society is formed for mutual benefit and the interest of
individual members is not fully satisfied. There is no direct link between effort and reward. Hence,
members are not inclined to put their best efforts in a co-operative society.
4. Differences and Factionalism among Members- Once the initial enthusiasm about the co-
operative ideal is exhausted, differences and group conflicts arise among members. Then, it
becomes difficult to get full co-operation from the members. The selfish motives of members begin
to dominate and service motive is sometimes forgotten.
5. Rigid Rules and Regulations- Excessive Government regulation and control over co-
operatives affect their functioning. For example, a co-operative society is required to get its
accounts audited by the auditors of the co-operative department and to submit its accounts
regularly to the Registrar. These regulations and control may adversely affect the flexibility of
operations and the efficiency of management in a co-operative society.
6. Lack of Competition- Cooperatives, generally, do not face any stiff competition. Markets for
their goods and services are more or less ready and assured. Hence, there is possibility of
slackening of efforts.
7. Cash Trading- The members of the societies are generally from poor sections of the society.
These persons need credit facilities. On the other hand, private traders extend credit facilities to
the consumers. Though the societies sell goods at lower prices but absence of credit facilities
compel them to go to private traders for meeting their requirements.

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8. Lack of Secrecy- The affairs of a co-operative society are openly discussed in the meetings of
the members. Every member is free to inspect the books and records of the society. Therefore, it
becomes difficult to keep the secrets of business.
9. Weightage to Personal Gains- Mutual co-operation erodes away over a period of time and the
members start giving weightage to their personal gains.
10. Lack of Incentive and Initiative- In a cooperative society form of organisation everybody is
the owner of the society and over a period of time it becomes lifeless due to a lack of incentive
and initiative as everybody is the owner, but business does not belong to any one of them.
11. Corruption- It is the worst demerit from which co-operative societies suffer, it is the biggest
hindrance in the development and growth of business.
TYPES OF JOIN STOCK COMPANY

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UNIT -4
PROJECT IDENTIFICATION
Project Identification is a process of generating a few ideas about the possible projects. The
project ideas can be discovered from various internal and external sources. It is apprehensive
with the collection, compilation and analysis of economic data for the eventual purpose of
locating probable opportunities for investment. Actually, Project identification means identifying
some possible projects having a good market.
Steps in Project Identification
For identifying the feasible projects, the prospective entrepreneur has to go through the
following steps.
Conceiving project ideas
This is the first vital stage in project identification. Profit making is the chief drive behind every
business or enterprise.
Choosing the right line of business
To ensure the success of the business, the potential entrepreneur has to spend substantial time
and energy on choosing the right line of activities.
Opportunity seeking
A number of business opportunity may be obtainable; however, seeking the right business
opportunity depends upon the entrepreneur’s capabilities, his strengths and weaknesses and also
on his preferences.
Decision-making process
This final step in project identification involves making important decisions regarding the project
to be undertaken. Project identification cannot be complete without identifying the characteristics
of the project.

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PROJECT IDENTIFICATION
The purpose of project identification is to develop a preliminary proposal for the most appropriate
set of interventions and course of action, within specific time and budget frames, to address a
specific development goal in a particular region or setting. Investment ideas can arise from many
sources and contexts. They can originate from a country’s sector plan, programme or strategy, as
follow-up of an existing project or from priorities identified in a multi-stakeholder sector or local
development dialogue.
PROJECT IDENTIFICATION STAGE
The purpose of the Identification Stage is to ensure that a project or a program of work (POW)
submitted for project approval/expenditure authority (planning and design) has been adequately

62
developed and analyzed in the context of the Public Services and Procurement Canada (PSPC)
Program and Centralized Portfolio management and represents the best investment solution.
The project identification stage can also assist our custodian clients in identifying and developing
the most appropriate projects for their departmental objectives and in support of the government
agenda for real property, business projects and information technology.
Identification Stage diagram
Project identification stage diagram. Long description below.
CONCEPT OF PROJECT AND ITS CLASSIFICATION
CONCEPT OF PROJECT
The term “project” connotes programme of action. Project is always interwoven with all socio-
economic and cultural activities the project involves a scheme and a speculative imagination.
The kinds of projects

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1. Agricultural projects- relating to
Land development
Irrigation
Soil- conservation
Fertilizers, and
Seeds etc.
2. Researchprojects
Definition of “Project”- According to World Bank, project can be defined as “An approval for a
capital investment to develop facilities to provide goods and services”. Little and Mireless defines
project as “A scheme or a part of scheme for investing resources which can be reasonably analyzed
and evaluated as an independent unit”. “It is an appraisal for investment with the definite aim of
producing a flow of output over a specific period of time”.
Gittinger has defined it as the whole gamut of activities involved in using resources to gain
benefits. According to Dr. Albert O. Hirchman” The development project connotes
purposefulness, some minimum size, a specific location, the introduction of something qualitative
new, and the expectation that a sequence of further development will be set in motion”.
PHASES OF PROJECT MANAGEMENT LIFE CYCLE
1. Project Initiation
Project initiation is the first Project Management life cycle phase, where the project starts. It
provides an overview of the project, along with the strategies required to attain desired results. It
is the phase where the feasibility and business value of the project are determined. The project
manager kicks off a meeting to understand the client and stakeholders’ requirements, goals, and
objectives. It is essential to go into minute details to have a better understanding of the project.
Upon making a final decision to proceed, the project can move on to the next step: that is,
assembling a project team.

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The Project Charter is considered to be the most important document of any project as it
comprises:
Business vision and mission
Project goals and benefits
List of stakeholders
Scope of the Project
Project deliverables
Risks associated with the project
Project budget and resources
project initiation - project phases - invensis learning
Undertake a Feasibility Study
In the initial stage, it is essential to understand the feasibility of the project. See if the project is
viable from the economic, legal, operational, and technical aspects. Identifying problems will help
you analyze whether you can solve issues with appropriate solutions.
Identify the Project Scope
Identifying the project scope involves defining the length, breadth, and depth of the project. On
the other hand, it’s equally essential to outline functions, deadlines, tasks, features, and services.
Identify the Project Deliverable
Upon identifying the project scope, the very next step is to outline the project deliverables. The
project deliverables include defining the product or services needed.
Identification of Project Stakeholders
A thorough identification of project stakeholders is essential. It is better to have meetings with
team members and experts to identify project stakeholders. Documentation of relevant information
on stakeholders and impact on them on successful completion of the project is required.
Develop a Business Case

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Before developing a business case, check whether the essential pillars of the project such as
feasibility, scope, and identification of stakeholders are in place. The very next step is to come up
with a full-fledged business case.
2. Project Planning
A lot of planning related to the project takes place during this phase. On defining project objectives,
it is time to develop a project plan for everyone to follow. The planning phase frames a set of plans
which help to guide your team through the implementation phase and closing phase. The program
created at this point will surely help you to manage cost, quality, risk, changes, and time.
The project plan developed should include all the essential details related to the project goals and
objectives and should also detail how to achieve it. It is the most complex phase in which project
managers take care of operational requirements, design limitations, and functional requirements.
3. Project Execution
Project execution is the phase where project-related processes are implemented, tasks are assigned,
and resources allocated. The method also involves building deliverables and satisfying customer
requirements. Project managers or team leaders accomplish the task through resource allocation
and by keeping the team members focused. The team involved will start creating project
deliverables and seek to achieve project goals and objectives as outlined in the project plan. This
phase determines whether your project will succeed or not. The success of the project mainly
depends on the project execution phase. The final project, deliverable also takes shape during the
project execution phase.
Hold Regular Meetings
Before you kick-off a project meeting, be clear about the agenda and make team members aware
of what the meeting is all about well in advance. If communication is timely and straightforward,
the productivity of ongoing projects and those that are in the pipeline will not get affected.
Manage Problems
Problems within the project are bound to occur. Issues such as time management, quality
management, and a weakening in the team’s morale can hinder the success of a project. So make
sure all problems are solved in the beginning.

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4. Project Monitoring and Control
The project monitoring and control phase is all about measuring the performance of the project
and tracking progress. It is implemented during the execution phase. The main goal of this phase
is to check whether everything aligns with the Project Management plan, especially concerning
financial parameters and timelines.
It is the responsibility of the project manager to make necessary adjustments related to resource
allocation and ensure that everything is on track. To aid this, a project manager may conduct review
meetings and get regular performance reports. Monitoring project activity after the project
execution phase will allow the project manager to take corrective actions. Meanwhile, considering
the quality of work will also help to make the necessary improvements. Keeping an eye on the
budget will help to avoid unnecessary expenses resources.
5. Project Closure
With much time and effort invested in the project planning, it is often forgotten that the final phase
of the Project Management life cycle phases is equally important. The project closure phase
represents the final phase of the Project Management life cycle, which is also known as the
“follow-up” phase. Around this time, the final product is ready for delivery. Here the main focus
of the project manager and the team should be on product release and product delivery. In this
stage, all the activities related to the project are wrapped up. The closure phase is not necessarily
after a successful completion phase alone. Sometimes a project may have to be closed due to
project failure.
Upon project completion and timely delivery to clients, it is the role of the project manager to
highlight strengths, list the takeaways of the project, identify the ambiguities and suggest how they
could be rectified for future projects. Taking time to recognize the strengths and weaknesses will
help to handle projects with more dedication; this, in turn, builds the project manager’s credibility.
Once the product is handed to the customers, the documentation is finalized, the project team is
disbanded, and the project is closed.
MEANING OF PROJECT REPORT

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A Project Report is a document which provides details on the overall picture of the proposed
business. The project report gives an account of the project proposal to ascertain the prospects of
the proposed plan/activity. Project Report is a written document relating to any investment. It
contains data on the basis of which the project has been appraised and found feasible. It consists
of information on economic, technical, financial, managerial and production aspects. It enables the
entrepreneur to know the inputs and helps him to obtain loans from banks or financial Institutions.
The project report contains detailed information about Land and buildings required, Manufacturing
Capacity per annum, Manufacturing Process, Machinery & equipment along with their prices and
specifications, Requirements of raw materials, Requirements of Power & Water, Manpower needs,
Marketing Cost of the project, production, financial analyses and economic viability of the project.
PROJECT MANAGER

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CONTENTS OF A PROJECT REPORT
Following are the contents of a project report.
1. General Information
A project report must provide information about the details of the industry to which the project
belongs to. It must give information about the past experience, present status, problems and future
prospects of the industry. It must give information about the product to be manufactured and the
reasons for selecting the product if the proposed business is a manufacturing unit. It must spell out
the demand for the product in the local, national and the global market. It should clearly identify
the alternatives of business and should clarify the reasons for starting the business.
2. Executive Summary
A project report must state the objectives of the business and the methods through which the
business can attain success. The overall picture of the business with regard to capital, operations,
methods of functioning and execution of the business must be stated in the project report. It must
mention the assumptions and the risks generally involved in the business.
3. Organization Summary
The project report should indicate the organization structure and pattern proposed for the unit. It
must state whether the ownership is based on sole proprietorship, partnership or joint stock
company. It must provide information about the bio data of the promoters including financial
soundness. The name, address, age qualification and experience of the proprietors or promoters of
the proposed business must be stated in the project report.
4. Project Description
A brief description of the project must be stated and must give details about the following:
 Location of the site,
 Raw material requirements,
 Target of production,
 Area required for the workshed,
 Power requirements,

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 Fuel requirements,
 Water requirements,
 Employment requirements of skilled and unskilled labour,
 Technology selected for the project,
 Production process,
 Projected production volumes, unit prices,
 Pollution treatment plants required.
If the business is service oriented, then it must state the type of services rendered to customers. It
should state the method of providing service to customers in detail.
5. Marketing Plan
The project report must clearly state the total expected demand for the product. It must state the
price at which the product can be sold in the market. It must also mention the strategies to be
employed to capture the market. If any, after sale service is provided that must also be stated in
the project. It must describe the mode of distribution of the product from the production unit to the
market. Project report must state the following
PROJECT MANAGEMENT

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PROCESS OF PROJECT APPRAISAL
The process of project appraisal consists of five steps and they are – initial assessment, defining
problem and long-list, consulting and short-list, developing options, and comparing and selecting
project. The process of appraisal generally starts from the initial phase of the project. If the
appraisal process starts from an early stage, then the company will be in a better position to decide
how capital should be spend in the project and also it will help them to make the decision of not
spending too much or stopping a project that is not economically viable.
DEFINITION
Project appraisal is the structured process of assessing the viability of a project or proposal. It
involves calculating the feasibility of the project before committing resources to it. It is a tool that
company’s use for choosing the best project that would help them to attain their goal. Project
appraisal often involves making comparison between various options and this done by making use
of any decision technique or economic appraisal technique.
Project appraisal is a tool which is also used by companies to review the projects completed by it.
This is done to know the effect of each project on the company. This means that the project

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appraisal is done to know, how much the company has invested on the project and in return how
much it is gaining from it.
PROJECT INTRODUCTION
FEASIBILITY STUDY
As the name implies, 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 doable. 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.
CONTENTS OF A FEASIBILITY REPORT

72
The content of sample feasibility report is formatted and structured according to a range of
requirements which may vary from organization to organization but there are common
suggestions, which are listed below.
(i) Title Page or Front Matter:
To begin with writing a sample feasibility report, first you need to create a title page that provides
a descriptive yet concise title, con-taining the name of the writer, email, job position, and also the
or-ganization for which you are writing the report. Next, you must include an itemized list of
contents that provides headings and sub-headings sequenced the as they are structured in the report
body. Also add a list of all material such as tables, figures, illustrations, annexes etc. which have
been used within the document. Keep in mind that the title page should not be numbered and that
no more than 4-5 pages should be dedicated to the front matter.
(ii) Body of the Report:
There are many different styles and requirements for formatting the body of feasibility study
report, it may be difficult to select right format. However, there are several common suggestions
which are as follows:
 Each page of the report body needs to include a descriptive header with an abbreviated title
for the report, the author’s name and page number
 Structure the report by headings and sub-headings and indicate this structure within the
document content
 Make sure headings are properly formatted (i.e., flush left, indented, etc.) on each page
 Use the same style for headings throughout the entire report template
 Never use too larger or too small font (font should have a professional look, 10-12 point)
 Use the same citation style (e.g., CBE, APA, etc.) for formatting sources used in your
feasibility study.
(iii) Sections of the Report:
The following list provides an outline of the key sections to be included in report content:
 Executive Summary – A description of the problem/opportu-nity highlighted in the study,
the purpose of the report, and the importance of the research for your target audience

73
 Background – A more detailed description of the feasibility study, who it was carried out,
and whether it was implemented elsewhere
 Analysis – An examination and evaluation method employed in the conducting your
feasibility study
 Alternatives and Options – An overview of any alternative proposals or options and their
features in comparison to the main proposal of the study
 Cost-Benefit Evaluation – A rigorous analysis method that was implemented to examine
and evaluate the main proposal for cost-benefit effectiveness and to demonstrate the tech
feasibility, economic practicality, social desirability, and eco soundness of the proposal.
 Conclusion – A summary of the work done and your own conclusions regarding your
analysis
 Recommendations & Suggestions – A series of recommendations practices and follow-
up actions based on your conclusions
(iv) Back or End Matter/Last Page:
One last thing you need to consider when writing your feasibility study report is that the report
should include a Reference page that lists all reference material such as articles, books, web pages,
period-icals, reports, etc. cited in your document. This page should be styled appropriately.
Additionally, you can create an Appendix page that provides detailed discussions of all criteria
used in analyzing feasibility and examples of each criterion. This page should also be styled
appropriately.
TYPES OF FEASIBILITY ANALYSIS
 This feasibility can be ascertained on following parameters:
 Financial Feasibility
 Commercial Feasibility
 Technical Feasibility
 Economic Feasibility
 Social Feasibility
 Environmental feasibility

74
 Legal feasibility
 Operational feasibility
 Schedule feasibility
 Market and real estate feasibility
 Resource feasibility
MARKET RESEARCH FEASIBILITY STUDY
One of the most preferred types of projects that comes our way at Research & Marketing Strategies
(RMS) is a market research feasibility study. The request from our client usually pertains to
needing research around a new program they want to offer at their institution, a new type of
business they want to start in the area or an expansion to their current business. The main objective
of a market research feasibility study is to understand the market and determine whether enough
demand exists to make the venture successful. Arguably, there isn’t another type of market
research report that offers more in-depth and thorough analysis than a market research feasibility
study report.

75
FEASIBILITY STUDY
A feasibility study is an assessment of the practicality of a proposed project or system. A feasibility
study aims to objectively and rationally uncover the strengths and weaknesses of an existing
business or proposed venture, opportunities and threats present in the natural environment, the
resources required to carry through, and ultimately the prospects for success. In its simplest terms,
the two criteria to judge feasibility are cost required and value to be attained.
FINANCIAL FEASIBILITY STUDIES
Prospectus’ research and writing team is recognized as a world leader in financial feasibility study
preparation. Consisting of lifelong entrepreneurs, our team is dedicated to the success of our
clients’ goal. We have assisted hundreds of companies in writing their finance and economic
feasibility reports and prepared vital studies for a business’s initial launch. From real estate to high
tech to economic development to refineries of all kinds, there is not an aspect of the feasibility
study process that our staff is not intimately knowledgeable about. The financial aspect of such
studies is one of our strengths.
A financial feasibility study, or FFS, should assess the viability of a project based on major pivotal
component: will the project or business have enough cash to complete the project (and generate a
profit). One of the bottom lines of any business is whether a company can sustain itself, pay its
employees and of course make a profit.
ECONOMIC FEASIBILITY
Economic feasibility is a kind of cost-benefit analysis of the examined project, which assesses
whether it is possible to implement it. This term means the assessment and analysis of a project's
potential to support the decision-making process by objectively and rationally identifying its
strengths, weaknesses, opportunities and risks associated with it, the resources that will be needed
to implement the project, and an assessment of its chances of success. It consists of market
analysis, economic analysis, technical and strategic analysis.
MANAGIRIAL FEASIBILITY STUDY

76
Managerial feasibility studies are a form of project analysis that look at every aspect of a proposal
to determine its likelihood of success before commencing. These types of studies take an objective
look at the strengths and weaknesses of the proposed project to see how viable the idea is in terms
of generating profit and meeting objectives. For more information about assessing business ideas,
please visit the Ahmed Dahab Twitter page.
All activities that comprise a managerial feasibility study are geared towards answering the
question “should this project go ahead?” A feasibility study is usually completed before a business
plan – the PDF attachment explores the differences between the two.
SOCIAL FEASIBILITY STUDY
Social feasibility is a detailed study on how one interacts with others within a system or an
organization. Social impact analysis is an exercise aimed at identifying and analyzing such impacts
in order to understand the scale and reach of the project's social impacts.
TYPES

77
UNIT-5
INSTITUTIONAL SUPPORT
The term institutional support refers to the part of economic environment of industry and business.
It consisting of authorities and institutions whose decisions and active support in form of laws,
regulation, financial and non-financial help brings a lot of changes in the functioning of any
business.
SMALL INDUSTRY DEVELOPMENT ORGANISATION (SIDO)
The SIDO, through a network of field offices and autonomous bodies plays an important role in
the promotion and development of small scale industries in the country. For facilitating the supply
of Information to the citizen the SIDO and its field offices have already setup Information Right
To Information is an Act to provide for freedom to every citizen to secure access to Information
under the control of public authorities, consistent with Public interest, in order to promote
openness, transparency and accountability in administration and in relation to matters connected
therewith or incidental thereto.
The Right to Information Bill was passed by the Parliament on 13th May, 2005 . The Bill got the
Presidential assent on 15th June to become the Right to Information, Act,2005 . It is an Act to
provide for setting out the practical regime of right to information for citizens to secure access to

78
information under the control of public authorities, in order to promote transparency and
accountability in the working of every public authority. Facilitation Counters in their office.
SMALL INDUSTRIES SERVICE INSTITUTES (SISI’S)
The small industries service institutes (SISI’s) are set-up one in each state to provide consultancy
and training to small and prospective entrepreneurs. The activities of SISs are co-ordinate by the
industrial management training division of the DC, SSI office (New Delhi). In all there are 28
SISI’s and 30 Branch SISI’s set up in state capitals and other places all over the country.
SISI has wide spectrum of technological, management and administrative tasks to perform.
FUNCTIONS OF SISI
To assist existing and prospective entrepreneurs through technical and managerial
counseling such as help in selecting the appropriate machinery and equipment, adoption of
recognized standards of testing, quality performance etc;
Conducting EDPs all over the country;
To advise the Central and State governments on policy matters relating to small industry
development;
To assist in testing of raw materials and products of SSIs, their inspection and quality
control;
To provide market information to the SISI’s;
To recommend SSI’s for financial assistance from financial institutions;
To enlist entrepreneurs for partition in Government stores purchase programme;
Conduct economic and technical surveys and prepare techno-economic feasible reports for
selected areas and industries.
NATIONAL SMALL INDUSTRIES CORPORATION LIMITED (NSIC)

79
NISC is a Mini Ratna government agency established by the Ministry of Micro, Small and
Medium Enterprises , Government of India in 1955[4][5] It falls under Ministry of Micro, Small
& Medium Enterprises of India. NSIC is the nodal office for several schemes of Ministry of MSME
such as Performance & Credit Rating, Single Point Registration, MSME Databank, National SC
ST Hub, etc.
SMALL INDUSTRIES DEVELOPMENT CORPORATIONS ('SIDCO)
SIDCO are state-owned companies or agencies in the states of India which were established at
various times under the policy of Government of India for the promotion of small scale industries.
...
DISTRICT INDUSTRIES CENTERS (DICS)

80
DICS provide full assistance to the entrepreneurs who are going to start the business on their own
and in their regional places. These centers provide service and support to small entrepreneurs under
a single roof at both pre and post investments.
SIDBI
Established in the year 1990, Small Industries and Development Bank of India-SIDBI aims at
enhancing cash flow in the MSME Sector – to promote and develop this sector thus benefitting the
society and the economy of the nation. This Bank thrives on promoting, commercialising, and
marketing new ideas, innovative start-ups, and developing small scale industries by providing
funds and customising loan schemes to enhance the working of MSMEs to meet the demands of
people by encouraging their own working and supply.
OBJECTIVES OF SIDBI
The focus of SIDBI is to follow these four main objectives and goals:
 Development of the MSME Sector
 Promotion of customer service and workability of the sector
 Coordination and Control
 Financing and Providing various kinds of customised loans to give monetary assistance to
MSMEs to grow and deliver.
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
 Direct Assistance Schemes
 Indirect Assistance Schemes

81
 SIDBI's assistance
 Main Schemes of SIDBI
 Major scheme
SUBSIDY
A subsidy is an incentive given by the government to individuals or businesses in the form of
cash, grants, or tax breaks that improve the supply of certain goods and services. With subsidies,
consumers are able to access cheaper products and commodities. Markets that have positive
externalities, which are extra benefits to society, tend to be favored in policy to provide a greater
supply of that good and service.
TYPES OF SUBSIDIES
1. Production subsidy
This type of subsidy is provided in order to encourage the production of a product. In order for
manufacturers to increase their production output, the government compensates for some of its
parts in order to lessen their expenses while increasing their output. As a result, production and
consumption grow, but the price remains the same. The drawback of such an incentive is that it
may promote overproduction.
2. Consumption subsidy
This happens when the government offsets the costs of food, education, healthcare, and water.
3. Export subsidy

82
An obvious fact is that a country or state earns from its exports and exports help to balance its
economy. That is why, to encourage exports, the government subsidizes the cost. However, this
can be easily abused, especially by exporters who exaggerate the prices of their goods so that
they receive a larger incentive, eventually raising their profits at the expense of taxpayers.
4. Employment subsidy
This incentive is given by the government to companies and organizations in order to enable
them to provide more job opportunities.
HERE ARE SOME TAX BENEFITS FOR ENTREPRENEURS IN INDIA
1. Tax holiday for three years:
In order to give entrepreneurial ventures a much-needed boost, the government in the union
budget 2016-17 has announced to provide a deduction of 100% tax exemptions during the first
three years of operation. Only the companies that are registered as startups under the
Department of Industrial Policy and Promotion (DIPP) that involve in innovation, deployment,
development or commercialization of new products and services driven by technology would be
eligible for the three year tax benefits. Moreover, in the first three years the eligible startups
would not have to pay any tax for profits except MAT (Minimum Alternate Tax). MAT is
calculated on `book profit'.

83
2. 20% exemption on Capital Gains:
Capital gains are the taxes charged on profits gained from sale of capital assets such as stocks
and bonds. The government has recently made provision for an exemption of 20% capital gains
tax. This provision was a long-pending demand by the startups. Before this provision, most
investments in Indian startups were compelled to route their investment through Maurititius as
the capital gain tax on investment from there waived following provisions in the Double Tax
Avoidance Treaty.
3. Taxes on Turnover:
The government levy 25% tax plus cess and surcharge on new manufacturing firms. However,
companies with a turnover of less than 50 crore per annum have to pay 29 percent tax. Medium
and small companies with a turnover of less than Rs. 50 crore are taxed at a rate of 25 percent.
Moreover, the period of claiming profit linked tax exemption is now increased from 5 years to 7
years. This step by the government would benefit approximately 6.67 lakh companies in the
country.
4. Payment of EPF by the Government:
The government will now provide EPF (Employees' Provident Fund) contribution of 8.33% for
the period of three years. Earlier, the percentage of the contribution was 12% of employees basic
salary. This move will relieve many employers by cutting costs of startups by 12% for straight
three years and will provide opportunities to hire competent candidates for their company as
candidates will have job security. Many companies have started registering themselves with
EFPO to avail the benefits.
5. Presumptive tax:
It is mandatory for the entrepreneurs to maintain the books of account. However, under
Presumptive taxation scheme, it is not required to maintain the books of account and hence will
reduce the burden of the entrepreneur. Anyone whose income earned stands at 8% is eligible for
this scheme. However, a person whose income earned is more than 8 %, higher rate can be
declared. Moreover, all the small business man with a turnover of up to Rs 2 crore and professional
with gross income of up to Rs 50 lakh can avail benefit of this scheme.
All these policies comes under "Startup India” campaign of the government and were proposed in
the Union budget 2016-17. These policies were made with an objective to give a much-needed
boost to the budding entrepreneurial ventures. It is a subsidiary of the `Make in India' scheme and
aims to create more jobs within the country. This startup tax policy will definitely give the much-
needed boost to the startups.
EXPORT PRODUCTION ASSISTANCE AND EXPORT MARKETING ASSISTANCE
1) Export Production Assistance

84
Export production assistance is available right from the stage of acquiring land and building,
procuring plant machinery, equipments, components, spares, technical guidance/training, to giving
finance and credit in time at comparatively cheaper rate.
ii) Manufacture-in-Bond
Manufacture-in-bond facility is available both in the excise as well as customer regulations.
Whereas rule 13 of the Central Excise Rules relates to Excise Regulations, Section 65 of the
Customs Act provides facilities of manufacture in bond.
iii) Machinery and Equipments:
Besides making available machinery and equipments on lease, there is a special facility to import
CG (Capital Goods) at 5% duty under EPCG, i.e., Export Promotion Capital Goods Scheme.
Iv) Production Inputs:
Raw-materials, components, spares, consumables, etc., whether indigenous or imported, can be
obtained for export production under various schemes. Imported inputs for use in export products
are importable duty free under the Duty Exemption/Remission Scheme, popularly known as
Advance Licensing Scheme, Duty Free Replenishment Certificate (DFRC), and Duty Entitlement
Passbook (DEPB) Scheme, although there are several other schemes covered there under. Still
another scheme known as duty free import entitlement scheme has been introduced for status
holder exporters including service providers.
SICKNESS IN SMALL SCALE INDUSTRIES
1. Inadequacy Of Working Capital
Some units turn out sick due to inadequacy of working capital. There may exists delay in sanction
of working capital by financial institutions. Industrial units find it difficult to meet out day to day
operations due to the time gap between sanction of term loan and working capital needs. Shortage
of Working Capital is one of the main reasons for sickness.
2. Non-Availability Of Credit

85
Sickness in SSI sector may be attributed to non-availability of credit. Delay in getting loans may
result in stoppage of work or lead to production loss. Low production may lead to reduced sales
which in turn may lead to financial loss.
3. Poor And Obsolete Technology
Some industrial units use technology which is outdated. Out dated technology may affect the
quantity and quality of production. This results in production loss and reduces demand for the
goods.
4. Non Availability Of Raw Material
Some units may require raw material which are scarcely available. Sometimes, the raw material
required by the unit may not be available in abundance. Hence, this affects the production and the
sales of the goods. If the raw material is not abundantly available, then the industrial units have to
spend a large amount of money to buy them. This may result in financial loss.
5. Marketing Problems
Sometimes, the industrial units may not know as to how to create demand for the products. Lack
of marketing knowledge may result in less demand for the goods. Similarly, there may be less
demand for the goods produced by the SSI due to competition or change in the taste of the buyers.
For example, lot of units producing dyes and ceramics have been found sick in Gujarat and Tirupur.
6. Erratic Power Supply
Shortage in power supply affects the industries. This results in delay in production of goods and
leads to financial losses.
7. Labour Problems
The relationship between the employer and the employees may not be cordial. Some of the labour
problems such as strike, lay off, lock out may lead to industrial sickness.
8. Poor Management
The entrepreneur must be a good planner, organizer and a manager. If the Industrial Unit promoters
lack managerial skills, then it may lead to several problems.

86
9. Inadequate Attention To R&D
Industries have to allocate a part of money in research and development to survive and compete
with competitors. Failure to focus on the above may lead to industrial sickness.
10. Diversion Of Resources
If the employer utilizes the funds obtained for the business for any personal purposes, then
diversion of funds will lead to industrial sickness. The funds used for personal purposes cannot be
regenerated and hence it may result in delay in payment of loans or financial crisis for the borrower
of the loan.
11. Globalization
Small scale industrial units may find it very difficult to compete with large scale industries and
foreign competitors. Inability of the units to face growing competition due to liberalization and
globalization may lead to industrial sickness.
12. Dispute Among Partners
There may arise dispute between the partners or family members running the unit. This results in
stoppage of work and leads to industrial sickness.
13. Overambitious Projects
The project may not be technically feasible, such an overambitious project is one of the reasons
for industrial sickness.
INDUSTRIAL SICKNESS – DEFINITIONS
In general a sick unit can be defined as a unit that fails to generate surplus on a continuous basis
and frequently depend on external funds for its survival.
SYMPTOMS OF A SICK COMPANY
1. Being Cut Off by Your Vendors for Non-Payment

87
If you are being cut off by your vendors, either trade or consultants for non-payment you have a
problem. The problem is not that you are being cut off - the problem is that you are not managing
your business properly.
2. Having Little or No Cash Reserve Even in Good Times
Some firms are constantly working from a position of weakness. They scrape by living like a
financially over extended household living paycheck to paycheck. They eagerly await the mailman
hoping there is a large enough check to cover payroll. If they are fortunate enough to build up a
cash surplus, the owner pulls the money out of the company to buy his latest toy. The staff struggles
on with outdated computers and software because there is no money to invest in the company. The
owner is invariably offended when people leave the company to work for a firm that is committed
to reinvesting in the company.
3. Everyone is Working 60 Hours a Week
While we generally need to work more than 40 hours a week in this business, I have seen too many
firms take it to an extreme. A constant diet of 60-hour weeks will take its toll on everyone. Over
the long run it results in low productivity, poor quality, high turnover and personal problems with
your family. To solve the problem, hire more people. If you can't find the quality people you need,
raise your prices. The resulting price increase will either lower your volume of work or give you
more profit to attract high quality people.
4. No Strategic Planning for Where You Want to Be in 5 Years
If you don't know where you are going you will wind up somewhere else. If handled properly, a
3-day strategic planning retreat can produce tremendous results. Without it your chances of
professional and financial success are greatly diminished.
5. Too Many Meetings
Meetings are certainly necessary, but some firms over do it. These firms usually have a micro-
managing leader who insists upon countless meetings even if there is nothing to talk about. If you
don't have an agenda prepared and distributed in advance, a time limit and expected outcome -
cancel the meeting until you are prepared.

88
6. Too Few Meetings
Yes we do need to communicate face to face with each other on a regular basis. You need to meet
face to face with your partners or other key employees at least 1 to 2 hours a week. If you are in
different locations, this can be done via videoconference or telephone. Be sure to be well prepared
and have a standing agenda to speed things along.
7. Financing Your Company With the Consultant's Money
As tempting as it might be to use a sub-consultant's money to finance payroll, rent, office
improvements, bonuses etc. It is a path you don't want to go down. Consultant's money is a drug
that masks the real cash flow problems in your firm. By using their money, you avoid making the
tough decisions on a timely basis. Make it a policy to pay your consultants with 2 days of being
paid by your client. The result will be more cooperative consultants and a cash flow that is closer
to your actual profit and loss.
8. Meetings That Never Start on Time
Meetings that start late are one of the prime symptoms of a dysfunctional company. In my
experience companies that hold meetings and consistently have partners/employees showing up
15 minutes + late are invariably unprofitable. This is a particular hot button with me. If it is
important enough to have the meeting, it is important enough to show up on time.
9. Finalizing the Current Year's Budget in April
I have seen far too many companies start the calendar year budget in February and finalize it in
April. If this is the case you have a problem. The time to finalize next years budget, is no later than
November 30th.
10. Holding Your Christmas Party In February
Yes, the first A/E firm I ever worked for held their Christmas party in February. Not because they
thought it was a good idea, but because they couldn't get it together and make the decisions that
were necessary to have the party in December. Unfortunately this is how they ran their company.
Is it any surprise that they aren't in business anymore?

89
INDIAN TAX SYSTEM
CAUSES OF INDUSTRIAL SICKNESS
When we talk about industrial sickness, it is not caused by a single factor, rather the collective
impact of multiple factors results in industrial sickness. The factors causing industrial sickness are
classified into two groups – Internal Causes and External Causes, which are discussed below

90
INTERNAL CAUSES
The causes which are under the control of the enterprise, are regarded as internal causes. It may be
a result of some internal insufficiency or shortcoming, in different areas of business. Some of these
causes are listed below:
1. Technical feasibility
Inadequate Technical Knowhow
Inappropriate choice of technology
Obsolete production process
Poor information system
Wrong or defective idea of industry
2. Economic Viability
High cost of inputs
High break-even point
Excessive investment in fixed assets
Non-flexibility of fixed assets
Underestimation of financial requirements.
3. Production Management
Underutilization of production capacity
Huge wastage of raw materials and supplies
Poor maintenance and replacement of plant and machinery
Wrong location or layout
Poor quality maintenance
4. Labour Management
Poor performance and productivity of labour
Huge workforce, than required.
Lack of skilled labour

91
Unreasonably high wage structure.
Poor handling of labour
Inadequate training
5. Marketing Management
Lack of market research and feedback
Unsound pricing policy
Inappropriate product mix
Improper demand forecast
Small customer base
Poor marketing strategies
Absence of horizontal and vertical integration
6. Financial Management
Shortage of working capital
Lack of funds
Defective Capital structure
7. Administrative Management
Huge expenditure on Research and Development
Incompetent Management
Lack of timely diversification.
EXTERNAL CAUSES
The causes which are beyond the control of the enterprise comes under external causes, which
affects the industry as a whole.
1. General Issues
Improper supply or non-availability of important raw material, or availability at higher
prices
Improper supply of critical inputs like power, water and transportation

92
Chronic Power storage
High production cost
Ignorance of potential market
2. Government controls and policies
Sudden unfavourable change in the policies of the government
Taxes and duties
Price control
3. Market Constraints
Innovative technological changes, due to which products turn out as obsolete.
Recessionary trend in the entire economy, affecting the performance of the firms
4. Extraneous factors
Natural Calamities, like an earthquake, floods, etc
Political Situation
Industrial Strikes
War between countries
CAUSE CHANGES INTERNAL – EXTERNAL

93
MAJOR CAUSES OF SICKNESS IN SMALL SCALE INDUSTRIES
Small Scale Industries (SSIs) play vital role in the economic development of a country. Some SSIs
turn out to be sick due to various reasons. Some of the major causes for sickness in small scale
industries are dealt in brief.
Sickness In Ssi - Causes And Remediessickness In Ssi – Causes And Remedies
1. Inadequacy Of Working Capital
Some units turn out sick due to inadequacy of working capital. There may exists delay in sanction
of working capital by financial institutions. Industrial units find it difficult to meet out day to day
operations due to the time gap between sanction of term loan and working capital needs. Shortage
of Working Capital is one of the main reasons for sickness.
2. Non-Availability Of Credit
Sickness in SSI sector may be attributed to non-availability of credit. Delay in getting loans may
result in stoppage of work or lead to production loss. Low production may lead to reduced sales
which in turn may lead to financial loss.
3. Poor And Obsolete Technology
Some industrial units use technology which is outdated. Out dated technology may affect the
quantity and quality of production. This results in production loss and reduces demand for the
goods.
4. Non Availability Of Raw Material
Some units may require raw material which are scarcely available. Sometimes, the raw material
required by the unit may not be available in abundance. Hence, this affects the production and the
sales of the goods. If the raw material is not abundantly available, then the industrial units have to
spend a large amount of money to buy them. This may result in financial loss.
5. Marketing Problems
Sometimes, the industrial units may not know as to how to create demand for the products. Lack
of marketing knowledge may result in less demand for the goods. Similarly, there may be less

94
demand for the goods produced by the SSI due to competition or change in the taste of the buyers.
For example, lot of units producing dyes and ceramics have been found sick in Gujarat and Tirupur.
6. Erratic Power Supply
Shortage in power supply affects the industries. This results in delay in production of goods and
leads to financial losses.
7. Labour Problems
The relationship between the employer and the employees may not be cordial. Some of the labour
problems such as strike, lay off, lock out may lead to industrial sickness.
8. Poor Management
The entrepreneur must be a good planner, organizer and a manager. If the Industrial Unit promoters
lack managerial skills, then it may lead to several problems.
9. Inadequate Attention To R&D
Industries have to allocate a part of money in research and development to survive and compete
with competitors. Failure to focus on the above may lead to industrial sickness
10. Diversion of Resources
If the employer utilizes the funds obtained for the business for any personal purposes, then
diversion of funds will lead to industrial sickness. The funds used for personal purposes cannot be
regenerated and hence it may result in delay in payment of loans or financial crisis for the borrower
of the loan.
11. Globalization
Small scale industrial units may find it very difficult to compete with large scale industries and
foreign competitors. Inability of the units to face growing competition due to liberalization and
globalization may lead to industrial sickness.
12. Dispute Among Partners
There may arise dispute between the partners or family members running the unit. This results in
stoppage of work and leads to industrial sickness.

95
13. Overambitious Projects
The project may not be technically feasible, such an overambitious project is one of the reasons
for industrial sickness.

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