PRINCIPLES OF ENTREPRENEURSHIP

B. TECH- CSE IV –I
UNIT – 1
Prepared by: S. GOVARDHAN MBA (Ph.D)
Mobile Number: 9676943188

1. INTRODUCTION TO ENTREPRENEURSHIP:

DEFINITION OF ENTREPRENEURSHIP:
An entrepreneur is a person who starts a new business and usually risks his own money to
start the venture. Examples of well-known entrepreneurs include Bill Gates, Steve Jobs, Mark
Zuckerberg, Pierre Omidyar, Arianna Huffington and Caterina Fake
An Entrepreneur is a person who creates and manages any business by identifying a need and
benefiting from the opportunity. This usually comes with considerable risk, personal sacrifice,
and initiative.They are also at risk of losing their capital. They run that risk because like any
other business in the world, there is a chance of failure.An entrepreneur can be the owner,
a partner, or in some cases the majority shareholder in the venture. They usually assume all
roles that involve managing the business activities.

Characteristics of an Entrepreneur:

1. Entrepreneur is an agent.
2. Entrepreneur is a risk-taker.
3. Entrepreneur is a profit maker.
4. Entrepreneur is an achievement motivator.
5. Entrepreneur is a capital provider.
6. Entrepreneur is the determinant of the nature of the business.
7. Entrepreneur is an innovator.
8. Entrepreneur is a reward receiver.
9. Entrepreneur is a challenge taker.

1. Entrepreneur is an agent: An entrepreneur is perceived as an economic agent who

assembles materials for producing goods at a cost that ensures profits and re-
accumulation of capital.He is also understood as a change agent who brings about
changes in the structure and formation of the organization, market and the arena of goods
and services.

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2. Entrepreneur is a risk-taker: Many experts – old and new, have emphasized this
characteristic. Back I955, Redlich pointed out that an entrepreneur is a person who identifies the
nature of risk and takes a decision.Later on, Burch, Meredith and other experts have agreed that
an entrepreneur is a risk-taker while undertaking a venture.

3. Entrepreneur is a profit maker: An entrepreneur is an individual who establishes and

manages the business for the principal purpose of profit and growth.

4. Entrepreneur is an achievement motivator: David C. McClelland has initiated this concept

of the entrepreneur by calling him “as per sun with a strong desire for achievement.”

5. Entrepreneur is a capital provider: Entrepreneur a person who operates a business by

investing his or her capital. Abbett first pointed out this characteristic in 1967.It supported by
Nadkami (l97S) and Sharma (1981). They perceived entrepreneur as the founder of an enterprise
who assembles necessary resources for the operation of the enterprise.

6. Entrepreneur is the determinant of the nature of the business: This characteristic /concept
of the entrepreneur was promoted by Evans in 1957 It says that an entrepreneur is the person or
group of persons who perform the task of determining the kind of business to the operated.

7. Entrepreneur is an innovator: Joseph A. Schumpeter {1934) characterized entrepreneur as

an innovator of a new combination in the field of production Later on Robinson (1962)
andHagen (1962) have described entrepreneurs as a person who lakes a small venture to the edge
of success by his efforts, innovation and motivation.Innovation is perceived by Schumpeter as an
action that introduces a product, a new quality, a new method of production, a new market and a
new organization.

8. Entrepreneur is a reward receiver: An entrepreneur is a person who creates something new

of value by devoting time and efforts and in tum receives monetary and personal rewards.
MaxWeber, Hartman, Hisrich and Peters have recognized this distinctphenomenon of
entrepreneurs.

9. Entrepreneur is a challenge taker

i. Individual entrepreneur: Person is the pioneer of entrepreneurship in the history of

human civilization. When a single person undertakes an entrepreneurial venture then it is
termed as an individual entrepreneur.
ii. Institutional entrepreneur: Institutions are-groups of persons with a common goal.
When an institution undertakes entrepreneurial ventures then it is called an institutional
entrepreneur.

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PRINCIPLES OF ENTREPRENEURSHIP

1. Be a Solution Provider

You must note that entrepreneurship is not just about making money at first but it’s about
providing solutions and adding value. Over the years, successful entrepreneurs had noted that
passion is what brings success in business. This is because, in starting a business, there are bound
to be issues ranging from sourcing funding to getting good partners, building a good team,
location, marketing etc. If you are involved with inexperienced persons, you are bound to fail as
fast as you had started. Only passion can keep you if you find yourself in such situation. You just
need to impact a life no matter how small; that is the beginning of your success story.
“Look for a way to make life easy for others”
2. Have a Vision

You are not an entrepreneur merely to make a living. You are an entrepreneur because you want
to enable the world to live more amply, with greater vision, with a finer spirit of hope and
achievement. You are an entrepreneur to enrich the world, and you impoverish yourself if you
forget the errand. Jonathan Swift said that “Vision is the art of seeing what is invisible to others”.
Have a defined purpose and pursue it.
“Successful entrepreneurs are those that were able to transform their vision into reality”
3. Choose the Right Team

When assembling your team, it is imperative to gather a team of individuals with the same
mindset and attitude towards achieving a common goal. You must not involve family or close
friends especially those without any knowledge or expertise they can add to your startup. Your
team must have the same drive, tenacity, perseverance and an underlying belief in themselves
and the value they can add to the success of the business. Your team must be motivated and
dedicated.

“Good team work builds speed”

4. Viable Product/Service

Let your product/service fulfill a need, be innovative and the approach, a little different from
other regular businesses. Technology is an important tool in the hand of modern entrepreneurs.
Your business should easily be accessible to your target customers. Always give your customers
room for feedback or suggestions on how your product/service can be better.
“Good products most times sell itself”

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5. Capital

Good business plan always draw investors. Capital should be your least worry when you have a
solution. Entrepreneurship is all about solution. When your idea is great, you can easily get
investors or government loan. In my country, Nigeria for example, government has created loan
programs for SMEs and this can be easily accessed with a good business plan alone. One of such
programs is YouWin. Also, the Central Bank of Nigeria is supporting startups with funding with
a little interest rate. Other programs like the Tony Elumelu Foundation also support startups
financially. These funding channels should be exploited. These are measures most
nationalgovernments are applying to promote entrepreneurship knowing that the growth of the
world’s economy depends on it.
“Capital isn’t scarce, vision is”
6. Accountability

As an entrepreneur, you are accountable to the success or failure of your business, not your
employees, investors or advisors. You must have detailed account of whatever transaction made
by the company. Have a scorecard of all inventories. Always carry your investors along if there
are any. The success of any business is, in many ways, measured by the management of its
resources. Even if you hire a full-time accountant, as an entrepreneur, you are expected to have a
fundamental knowledge of accounting, how it works and how to apply its basic principles with
the aim of operating a flourishing business.
“Accountability breeds responsibility”
7. Growth and Marketing

Every successful business grew over the years. Most big companies started small. It was all a
process. Success in business is not a one-time event; it is an on-going process. You must give
room for growth. Do not be content with the success of yesterday; always strive to beat your own
record. That way, your business will keep on growing, your investors will be happy to remain
and inject more funds. Always remain focused and dedicated to your goal. Have a clear goal and
pursue it. Your business growth also depends on your marketing strategy. Marketing helps in
getting your product known and good sales come from good marketing.
“Without continual growth and progress, such words as improvement, achievement, and success
have no meaning”

8. Know Your Customer

Your customer base determines the life of your business. If you provide solution to better the
world, your customers will increase. In business, the higher your customers, the higher the profit.
Your business must be streamlined into a particular niche. This will help you to know who your
prospective customers should be and how to get and keep them. When you focus on a niche
market, it is more efficient, more productive and less competitive. Always map out strategies that
will allow for customer feedback even if it means giving out discounts/vouchers in exchange.
“Always treat your customers as special guests”

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9. Priorities

For success in business, you must categorize things in order of importance. Set your priorities
based on your goals and do not deviate. Your investors should not make you lose focus on your
dream. Daren Smith of theselfemployer.com wrote “Decide what to do and do it, then decide
what not to do and don’t do it“. Simple! Analyze what to create next based on what has proven
to have the biggest return. If Apple had pushed their Mac Pro, their powerhouse desktop
computer created specifically for demanding professionals who need lots of computing power,
harder than they pushed the iPod back in the day, they wouldn’t be the industry giant they are
today. I’m sure there were some people who were way more passionate about the Mac Pro, but
they had to realize that the numbers don’t lie, and the iPod was more important to market to the
world. Your target should always be defined.
“Things which matters most must never be at the mercy of things which matter least”
10. Never Give Up

The never give up attitude is one quality an entrepreneur must possess. Successful entrepreneurs
are goal-getters. They never give up on turning their vision into reality. Like I stated in this
article 10 Major Causes of Business Failure, quitting too soon is the biggest reason why many
businesses failed. If you do not persevere, enquire, research, fail and try again, you might not be
successful in business. If you persist, you will have no choice than to succeed. In
entrepreneurship, persistence and determination is supreme.

TYPES OF ENTREPRENEURS:

1. Technical Entrepreneur:The entrepreneur that utilities a modified form of existing

technology for producing a good or rendering service is known as a technology
entrepreneur.The person familiar to a particular technology may see some of the
prospective changes, which will make cost-effective output. This generates/ promotes
technical entrepreneurs.These entrepreneurs may enter the business to commercially
exploit their inventions and discoveries.

2. Innovative Entrepreneur : An innovative entrepreneur is a person who discovers new

use of the old product through adding new utilities; innovation denotes new techniques of
work, new market, a new source of materials, new management style or system, a new
strategy or a new opportunity in the present or future environment.

3. Drone Entrepreneur: Drone entrepreneurs are those persons who can immediately
transfer an opportunity into a viable project. The environment is an ever-changing
phenomenon.Any change in any variable of an environment may bring about a profitable
opportunity for initiating some activity of entrepreneurship.A wise and prudent
entrepreneur may grasp the visible change and its potentiality and initiates a venture of
enormous prosperity. Therefore, they are known as drones or opportunist entrepreneurs.

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 4. Imitative Entrepreneurs: Imitation is the art of creating a product similar to another
product already in (he market. A person who adopts this technique is an imitative or
adoptive entrepreneur.Franchising is a popular way to imitate a product. Imitative
entrepreneurs are most suitable for under-developed nations because in these nations
people prefer lo imitate the technology, knowledge, and skills already available in more
advanced countries.

5. Fabian Entrepreneurs: Fabian entrepreneurs are very cautious and skeptical while
practicing any change. They are shy and lazy. Their dealing is determined by custom,
religion and past practices.Fabian entrepreneurs do not have much interest in taking a risk
and try to follow the footsteps of the predecessors. When they are clear that the chance of
failure does not exist and there is no possibility of loss in a particular- venture from the
experience of others in the market, then they take the venture initiative

6. Forced Entrepreneurs: The entrepreneurs who are forced to be so by the competing

environment are known as forced entrepreneurs. The fall of a business may force a
person to initiate a new venture.

Sex Basis Entrepreneurs Classification

Entrepreneurs are classified based on the natural division of humans and therefore, there are two
sections of entrepreneurs on the criteria of sex. They are male and female entrepreneur

Place Basis Entrepreneurs Classification

The place of entrepreneurial activity is the basis of classifying entrepreneurs into two categories,
such as rural and urban entrepreneurs.Urbanentrepreneurs are the persons who initiate their
venture in the urban area of a country. They are large in number in all the countries of the
world.The balanced growth of the economy requires rural entrepreneurs too.Rural entrepreneurs
take their initiatives in rural areas of the country. They use indigenous resources, which enhance
the use of local natural resources and enhance the local standard of living.

Size Basis Entrepreneurs Classification

1. Small scale entrepreneur: Small-scale entrepreneurs are those who have small capital or
investment, as well as small production capacity, number of employment and a small area
of the market, it denotes the limited operation of a business.
2. Large scale entrepreneurs: Large-scale entrepreneurs are those persons or groups of
persons who initiate a venture with a large-scale production capacity. They address large
aggregate demand and involve with huge investment in production technology. They are
small in number in all the countries of the world.

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Basis Entrepreneurs Classification

Entrepreneurs are classified in the context of generation loo. The enormous types of new
ventures initiate this classification.

1. New generation entrepreneurs: New generation entrepreneurs arc those who utilize
technology or idea in their new version. Cybercafefast-food shop, virtual universities are
a few of the examples of new generation entrepreneurial projects.
2. Old generation entrepreneurs: Old generation entrepreneurs arc those who do not like
change. They normally take the initiation of old styled projects. They are hesitant lo hew
technology but fond of familiar or traditional and prevailing technology.

Types of Entrepreneurships
Small Business Entrepreneurship-: These businesses are a hairdresser, grocery store, travel
agent, consultant, carpenter, plumber, electrician, etc. These people run or own their own
business and hire family members or local employee. For them, the profit would be able to feed
their family and not making 100 million business or taking over an industry. They fund their
business by taking small business loans or loans from friends and family.

Scalable Startup Entrepreneurship-: This start-up entrepreneur starts a business knowing that
their vision can change the world. They attract investors who think and encourage people who
think out of the box. The research focuses on a scalable business and experimental models, so,
they hire the best and the brightest employees. They require more venture capital to fuel and
back their project or business.
Large Company Entrepreneurship:These huge companies have defined life-cycle. Most of
these companies grow and sustain by offering new and innovative products that revolve around
their main products. The change in technology, customer preferences, new competition, etc.,
build pressure for large companies to create an innovative product and sell it to the new set of
customers in the new market. To cope with the rapid technological changes, the existing
organizations either buy innovation enterprises or attempt to construct the product internally.

Social Entrepreneurship-: This type of entrepreneurship focuses on producing product and

services that resolve social needs and problems. Their only motto and goal is to work for society
and not make any profits.

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 II. ENTRPRENERIAL TRAITS: Entrepreneurial traits are the typical characteristics, abilities
and thought patterns associated with successful entrepreneurs. While some entrepreneurs are
born with these traits, others can develop them.
Entrepreneurship & Entrepreneurial Traits

Who Is Entrepreneur: Entrepreneur is the person who gives reality to his visionary aspects. He
can be any person who works on his own terms and assumes risk to perceive profit in near
future.
What is Entrepreneurship: Entrepreneurship is the process of executing the concepts and ideas
of an entrepreneur in the market through proper planning,

1. Entrepreneurs are innovative, because of which they think out of the box by continuous learning,
questioning, and brainstorming their ideas.
2. Hard work is the most common trait found in entrepreneurs. They work day in and day out to
give a platform to their concept. They do not get distracted from their target whatever is the
circumstance.
3. Positivity is that trait in entrepreneurs which doesn’t let them disheartened from the initial
setbacks of their venture. A true entrepreneur does not see money as the motivation, instead
takes success as a motivation and money as the reward.
4. Entrepreneurs are practical enough to judge market demands, that they can even modify their
product to customer satisfaction. Market requirement is their main focus to achieve success.
5. Entrepreneurs are always good at resource management be it personnel or monetary. They
know how to motivate their team to extract maximum productivity out of them by properly
communicating their vision and goals to them.
6. Entrepreneurs are always enthusiastic about their ideas or plans in a way that they can convince
others to listen or look at their plan.
7. Self-confidence is the most important aspect of entrepreneurs’ life, which comes through the
expertise and proper research in their work.
8. Entrepreneurs possess risk taking capacity without which they cannot step forward in the
market, and the risk taking capacity comes from the confidence and know-how of the
mechanism which they are going to execute.

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Image Title: Entrepreneurial Traits
All of these skills can be learned as well as honed by the prospective entrepreneurs in the
following ways-

1. Never say die spirit is truly the first and foremost skill to be learnt. This can be
achieved by being an optimist and by always looking forward, even after failures.
2. SWOT analysis of one’s own personality makes people aware about the
shortcomings in their behavioral pattern towards entrepreneurship, so that they can
improve on their weaknesses and threats.
3. Interpersonal skills set is a must have for an entrepreneur to be successful and
these can be learned and developed from external sources and can be improved with
self-consciousness also. Some interpersonal skills which are necessary for a
successful entrepreneurship are listening, communication, personal relations,
delegation, motivation, and ethics.
4. Tremendous research and brainstorming ideas makes one abrupt of nook and
corner of the concept and gives self-confidence to the entrepreneur.
5. To be a successful entrepreneur, one must have the capability to take initiatives and
possess problem solving attitude which comes through self-motivation and
requisite enthusiasm.

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III. ENTREPRENEUR VS MANAGER:

The key difference between an entrepreneur and a manager is their standing in the company. An
entrepreneur is a visionary that converts an idea into a business. He is the owner of the business,
so he bears all the financial and other risks. A manager, on the other hand, is an employee, he
works for a salary.

IV. CREATING AND STARTING THE VENTURE

What is New Venture Creation? Meaning of Venture Creation: The process of turning a new
idea or technology into a business that can succeed and will attract investors: Potential
entrepreneurs trying to identify a possible business idea, pay attention to everything in the media
that relates to venture creation.

Create An Entrepreneurial Roadmap For Your Venture : Step 1: Outline your main
goal:What is your objective? Are you focusing on a problem or a solution? If you're focusing on
only developing a solution, then you will fail. Why? Because a customer will only buy if they
think you will solve their problem. The business world is littered with great products that failed,
or needed someone else to make it a viable business (look up the origin stories of Starbucks or
McDonalds).That brings me to an important point that investors want to hear– can your business
model scale? Have you thought about the future- as any investor would want multiplying returns.
So keep it simple and scalable.

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Step 2: Outline your values

At what cost are you willing to do business, or better still, what values will govern how you will
do business? You might think this is not necessary to know for a young startup, but it is very
crucial. Think Valeant Pharmaceuticals. When you hit the ground running (and you will be!),

Step 3: Build a product concept that works: A lot of investor money does go into research and
development and concept ideas –see Elon Musk's SpaceX or Tesla- but in the end, the market
only accepts products that work. You need proof of concept, and it needs to be able to scale
quickly without too many bugs (like Sarah Blakely's Spanx), or you need a heavyweight investor
or celebrity endorser who has the connections and clout to help you get the help you need

Step 4: Find a market that appreciates your productWhile it's tempting to want your product
to be the next instant global brand, you need to remember to start small. Remember that
Facebook began in a dorm room in Boston. Start in markets you can win –which are often the
markets where the bigger players or competitors ignore (think Aramex, Airbnb, or Flipkart)–
catch them off guard. Jamalon is a great example– it is now the largest Arabic online book store.
Mumzworld has 30% of its range exclusive to itself- making it now the most visited online
children's products' retailer with 250+ brands in the MENA region. Uber now has local
competition like Careem, which began in the UAE and just got a US$10 million Series B round
of funding.

Step 5: Map your networks

If you haven't done this y- start now, seriously! Networks are assets that are nurtured and
developed. Build your networks methodologically. No, I am not saying you should attend all
those networking sessions. Figure out who you want to meet and why, and then arrange to meet
them. Classmates, employees and customers can bring in strong networks– not just investors.
Create an advisory board, and this is an opportunity to rope in some key mentors. Research
shows international diversified networks leads to more funding, more customers and more expert
knowledge that you can't pay for in your early years.

Step 6: Outline key indicators of performance

Sure, you measure customer acquisitions numbers, sales and profits- these are all common
fundamentals, but don't forget to look at customer retention, return on investments and referrals
as well. Take a look at the startup metrics Dave McClure and Andreessen Horowitz
recommend. Understand the beating pulse of your business so you can predict the slumps. More
importantly, when chasing capital or employees, remember at what cost you give away your
share of your company. Whether customer, supplier, distributor, employee or investor, read the
fine print

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Step 7: Provide value to your stakeholders
Ask yourself what value you provide to each of your key stakeholders. Start with employees,
customers, suppliers, distributors, shareholders and even mentors. Here's a simple logic to keep
in mind: if the cost of being with you is more than the benefit, then people will walk away.
Invest time to make sure you keep your valuable stakeholders close.

Step 8: Be careful about what you promise

You can't control the media, so be careful with what you promise. Look at the issues surrounding
Meredith Perry's U-Beam and Elizabeth Holmes's Theranos. This caution is especially required
with technology you haven't mastered. Tesla was founded in 2003, and it was only in 2008 that
they shipped their first car. Space X was founded in 2002, and it was only at the end of 2010 that
they were able to return a spacecraft from low-Earth orbit. Too much media exposure can open
you up to close scrutiny, and worse, highlight every inaccurate statement you made unwittingly,
even in good faith.

V. Sources of New Ideas:

1. Consumers– the potential consumer should be the final focal point of ideas for the
entrepreneurs. The attention to inputs from potential consumers can take the form of informally
monitoring potential ideas or needs or formally arranging for consumers to have an opportunity
to express their concerns. Care needs to be taken to ensure that the new idea or the needs
represents a large enough market to support a new venture.

2. Existing Companies– with the help of an established formal methods potential entrepreneurs
and intrapreneurs can evaluate competitive products & services on the market which may result
in new and more market appealing products and services.

3. Distribution channels– members of the distribution channels are familiar with the needs of
the market and hence can prove to be excellent sources of new ideas. Not only do the channel
members help in finding out unmet or partially met demands leading to new products and
services, they also help in marketing the offerings so developed.

4. Government– it can be a source of new product ideas in two ways firstly, the patent office
files contain numerous product possibilities that can assist entrepreneurs in obtaining specific
product information, and secondly, response to government regulations can come in the form of
new product ideas.

5. Research & development– Entrepreneur’s own R&D is the largest source of new idea. A
formal and well-equipped research and development department enables the entrepreneur to
conceive and develop successful new product ideas.

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VI.METHHODS OF GENERATING IDEAS:

1. Past Work Experience

2. Hobbies and Interests
3. Strengths and Abilities
4. Friends and Family
5. Distribution Channels
6. Travel
7. Books and Magazines
8. Current Trends.

VII. The Steps of the Creative Problem-Solving Process

Training oneself to think like an entrepreneur means learning the steps to evaluating a challenge:
clarify, ideate, develop, implement, and evaluate

The process of creativity is not random; it is a specific and logical process that includes
evaluation. The entrepreneur repeats the creative process until reaching a successful solution.
(Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Step 1: Clarify

To clarify is the critical step of recognizing the existence of a gap between the current state and a
desired state. This can also be thought of as having need awareness, which occurs when the
entrepreneur notes a gap between societal or customer needs and actual circumstances.
Clarifying the problem by speaking with clients and developing a detailed description of the
problem brings the specifics of a problem to light. Failure to identify the specifics of a problem
leaves the entrepreneur with the impossible task of solving a ghost problem, a problem that is
fully unknown or unseen. To establish and maintain credibility, an entrepreneur must clarify the
problem by focusing on solving the problem itself, rather than solving a symptom of the
problem.

For example, a farm could have polluted water, but it would not be enough to solve the problem
only on that farm. Clarifying would involve identifying the source of the pollution to adequately
tackle the problem. After gaining an understanding of a problem, the entrepreneur should begin
to formulate plans for eliminating the gap. A fishbone diagram, as shown in Figure 6.10, is a tool
that can be used to identify the causes of such a problem.

Step 2: Ideate

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To ideate is the step of the creative problem-solving process that involves generating and
detailing ideas by the entrepreneur. After collecting all information relevant to the problem, the
entrepreneur lists as many causes of the problem as possible. This is the step in which the largest
variety of ideas are put forth. Each idea must be evaluated for feasibility and cost as a solution to
the problem. If a farm does not have clean water, for example, the entrepreneur must list causes
of toxic water and eliminate as many of those causes as possible. The entrepreneur must then
move forward investigating solutions to bring the water back to a safe state. If, say, nearby
livestock are polluting the water, the livestock should be isolated from the water source.

Step 3: Develop

To develop is the step in which the entrepreneur takes the list of ideas generated and tests each
solution for feasibility. The entrepreneur must consider the cost of each idea and the obstacles to
implementation. In the preceding example, adding a chemical to the water may not be a feasible
solution to the farmer. Not every farmer wants additional chloride or fluoride added to the water
due to the effect on both humans and livestock. These tradeoffs should be addressed in the
feasibility assessment. The farmer might prefer a filtration system, but the cost of that solution
might not be practicable. The entrepreneur should identify and assess alternative solutions to find
one that is most cost-effective and feasible to the customer.

Step 4: Implement

To implement is the step in which the solution to the problem is tested and evaluated. The
entrepreneur walks through the planned implementation with the client and tests each part of the
solution, if a service, or thoroughly tests a developed good. The entrepreneur implements the
solution and goes through a structured system of follow-up to ensure the solution remains
effective and viable. In the water example, the solution would be reducing runoff from toxic
insecticides by adding prairie strips, buffers of grass, and vegetation along banks of streams.

Step 5: Evaluate

To evaluate is the step in which the final solution is assessed. This is a very important step that
entrepreneurs often overlook. Any fallacy in the implementation of the product or service is
reassessed, and new solutions are implemented. A continual testing process may be needed to
find the final solution. The prairie strips, buffers of grass, and vegetation along banks of streams
chosen in the farming water example should then be analyzed and tested to ensure the chosen
solution changed the content of the water.

VIII. Writing business plan in Entrepreneurship

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 1. Write an executive summary.
2. Describe your company.
3. State your business goals.
4. Describe your products and services.
5. Do your market research.
6. Outline your marketing and sales plan.
7. Perform a business financial analysis.
8. Make financial projections

1. Write an executive summary: This is the first page of your business plan. Think of it as your
elevator pitch. It should include a mission statement, a brief description of the products or
services offered, and a broad summary of your financial growth plans.Though the executive
summary is the first thing your investors will read, it can be easier to write it last. That way, you
can highlight information you’ve identified whiwriting business plan in entrepreneurship writing
other sections that go into more detail.

2. Describe your company

a. Your business’s registered name.
b. Address of your business location.
c. Names of key people in the business. Make sure to highlight unique skills or technical
expertise among members of your team.

3. State your business goals: The third part of a business plan is an objective statement. This
section spells out exactly what you’d like to accomplish, both in the near term and over the long
term.If you’re looking for a business loan or outside investment, you can use this section to
explain why you have a clear need for the funds, how the financing will help your business grow,
and how you plan to achieve your growth targets.
For example, if your business is launching a second product line, you might explain how the loan
will help your company launch the new product and how much you think sales will increase over
the next three years as a result.
4. Describe your products and services:
a. An explanation of how your product or service works.
b. The pricing model for your product or service.
c. The typical customers you serve.
d. Your supply chain and order fulfillment strategy.
e. Your sales strategy.
f. Your distribution strategy.

5. Do your market research: Lenders and investors will want to know what sets your product
apart from your competition. In your market analysis section, explain who your competitors are.
Discuss what they do well, and point out what you can do better. If you’re serving a different or
underserved market, explain.

6. Outline your marketing and sales plan: Here, you can address how you plan to persuade
customers to buy your products or services, or how you will develop customer loyalty that will
lead to repeat business.

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7. Perform a business financial analysis: If you’re a startup, you may not have much
information on your business financials yet. However, if you’re an existing business, you’ll want
to include income or profit-and-loss statements, a balance sheet that lists your assets and debts,
and a cash flow statement that shows how cash comes into and goes out of the company.
You may also include metrics such as:
a. Net profit margin: the percentage of revenue you keep as net income.
b. Current ratio: the measurement of your liquidity and ability to repay debts.
c. Accounts receivable turnover ratio: a measurement of how frequently you collect on
receivables per year.

8. Make financial projections: This is a critical part of your business plan if you’re seeking
financing or investors. It outlines how your business will generate enough profit to repay the loan
or how you will earn a decent return for investors.Here, you’ll provide your business’s monthly
or quarterly sales, expenses and profit estimates over at least a three-year period — with the
future numbers assuming you’ve obtained a new loan.

Business plan tips and resources

:
Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer
likely knows your market pretty well. Providing unreasonable sales estimates can hurt your
chances of loan approval.
Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off
lenders and prospective investors, taking their mind off your business and putting it on the
mistakes you made. If writing and editing aren't your strong suit, you may want to hire a
professional business plan writer, copy editor or proofreader.

What is a business plan?

A business plan is a document that describes your business, the products and services you sell,
and the customers that you sell to. It explains your business strategy. How you’re going to build
and grow your business, what your marketing strategy is, and who your competitors are. Most
business plans also include financial forecasts for the future. Setting sales goals, expense
budgets, and predictions for cash flow. Now, a business plan can be far more than just a static
document that you write once and forget about. It’s also a guide that helps you outline and
achieve your goals. A management tool to analyze results, make strategic decisions, and
showcase how your business will operate and grow. In short, if you’re thinking of starting a
business or plan to pitch to investors or venture capitalists, writing a business plan can improve
your chances of success.

Why you need a business plan?

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You likely already have a good idea of your business strategy in your head. So you may be
wondering, “Why should I spend my time making a business plan?” Here are the top reasons
why you should invest in planning:

X. EVALUATING OF BUSINESS PLANS:

When evaluating your Business Plan, it is important to look at industry trends and ensure that
you are making the best of current trends that impact your business. It is also essential that you
examine the ways in which competitors have changed their functioning to accommodate the
change in trends

What is the purpose of evaluating a business?

Business valuation determines the economic value of a business or business unit. Business
valuation can be used to determine the fair value of a business for a variety of reasons

What is launching in entrepreneurship?

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A product launch refers to a business's planned and coordinated effort to debut a new product to
the market and make that product generally available for purchase. A product launch serves
many purposes for an organization— giving customers the chance to buy the new product is only
one of them.
What are the three types of product launch?
The process includes various tasks: understanding customer requirements, product development,
testing, marketing, and promotion. These tasks are usually broken down into three stages: pre-
launch, launch, and post-launch. At the pre-launch stage, a company establishes goals and
creates a roadmap.

XI. What is Enterprise Launching Formalities

1. Product Selection
2. Decide the Constitution
3. Registration
4. Clearances from Specific Department
5. Location
6. Machinery and Equipment Selection
7. Project Report Preparation
8. Project Appraisal
9. Finance
10. Implementation the Project and Obtain final Clearance

1) Product Selection:Deciding the type of business, selecting the product or product range
for manufacturing along with its quantity is the most vital step. The size and the type of
business ownership will be decided on the basis of level of business activities.

a. Selecting the product/service,

b. Selecting the location,
c. Conducting Project feasibility study,
d. Preparing the business plan,
e. Preparing a project profile.

2) Decide the Constitution:

Most of the new entrepreneurs do not have a clear vision related to various legal issues and other
government-related factors associated with the selection of a certain business, which could result
in mistakes costing time and money. In India, most of the entrepreneurs tend to start a private
limited firm.

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The constitution of the business unit has to be decided by its promoters before starting any
industry, which are mainly of following types:
a. Sole proprietorship.
b. Partnership,
c. Corporation/Limited Company,
d. Cooperative,
e. Franchising.

3) Registration: Registration of a new venture is very important. Though not mandatory, but
registration is very advantageous for a business unit as it provides a legal identification and
status to the business so that it can execute all its legal rights. A registered business unit is,
provided with government assistance, incentives and licenses to import raw materials. Briefly, a
business can ensure all its legal rights by registering itself. Maintaining the statistics and role of
different business units for providing various promotional plans and incentives is the main
objective of registration. According to the guidelines of Central Government, there a uniform
registration process for the business units.

Objectives of the Registration Scheme:

a. Detailing and maintaining the role of small industries for providing support and various
incentives.
b. Providing certificates to business units so that can avail their statutory benefits, usually in
they can terms of protection.
c. Collecting statistics.
d. Developing nodal centres at the Central, State and District levels for promoting Small
Scale Industries (SSI).
Features of the Registration Scheme:
 Main registering center is District Industries Centre (DIC).
 It is not mandatory for the firm to get registered.
 There are two forms of registration done under all States. First, a Provisional Registration
Certificate is provided and then a Permanent Registration Certificate is given, once the
production starts.
 Validity of Provisional Registration Certificate is 5 years and permanent registration is
provided in perpetuity.
Benefits of Registering:
a. Credit prescription (priority sector lending). differential interest rates, etc.,
b. Scheme of excise exemption,
c. Exemption under direct tax laws,
d. Statutory support such as reservation and Interest on Delayed Payments Act,
e. Applying for a shed or plot in an industrial estate or a developed area,
f. Applying for Corporation/Municipality for other licenses,

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 g. Applying for power/water connection,
h. Applying for financial assistance from banks and other institutions,
i. Applying to the National Small Industries Corporation/State Small-Scale Industries basis,

4) Clearances from Specific Departments: On the basis of nature of the industry and the
location of units, various types of approvals are required from different authorities. Specific
Clearances are usually required depending on the Type of Unit:
a. Agricultural land conversion,
b. Urban land ceiling clearance,
c. Building plan approval,
d. Factories Act,
e. Trade license,
f. Pollution Control Board clearances,
g. Sales tax registration,
5) Location: Deciding the location for constructing the business unit is the next step. The
entrepreneur also has to decide whether to buy or rent the business location. It also important to
decide the size of plot, covered and open areas, etc. This is quite important to have an
appropriate industrial site or a ready industrial shed for any industrial project. According to the
business requirement, an industrial site can be taken and a shed can be constructed, or an already
constructed shed can be owned or leased.
6) Machinery and Equipment:Depending upon the selected product, different machines and
equipment's required for production are selected. Also, the different suppliers and their costs are
evaluated and selected. The scheme of National Small Industries Corporation (NSIC) can be
used, in which different machines and equipment's can be acquired on the basis of hire-purchase
system.

7) Project Report Preparation: Once the nature of ownership, machines, equipment's and
location are decided, the entrepreneur must prepare the feasibility study or project report. A
project report provides a detailed understanding about the project and reveals its techno-
economic feasibility. With the help of project reports, economic viability and the technical
feasibility of the selected. Product can be ensured. This report will help in deciding the
production, marketing, financial, and management plans. The project report also aids in
procuring finance, shed, power connection, water connection, raw material quotas, etc.

8) Project Appraisal:In simple terms, evaluation of a project is called project appraisal. This
mainly includes the method of conducting ex-ante analysis of any project or scheme, It is quite
important to evaluate the project from the viewpoint of economic, financial, technical, market,
managerial and social aspects, Economical appraisal.

a. Financial appraisal,
b. Technical appraisal,

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 c. Management appraisal,
d. Organizational appraisal,
e. Operational appraisal,
f. Market appraisal.

9) Finance:
Finance can be considered as the backbone of an organization. Every entrepreneur needs finance
to setup a new venture. One can seek capital assistance and venture capital for starting an
enterprise from various financial agencies. Some specific steps and norms have to be followed
by the entrepreneurs to receive financial support from financial institutions and banks. However,
these types of financial assistance's can also be obtained on concessional rates from various other
firms. Entrepreneurs who want to initiate their own business units can also seek financial help
under PMRY (Prime Minister's Rozgar Yojana) and REFP (Rural Employment Generation
Programme) schemes.

10) Implement the Project and Obtain Final Clearances:

After obtaining different clearances, licenses, infrastructure facilities, etc., from the concerned
departments, the entrepreneurs are required to implement the project.

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