1 Entrepreneurship & Practical Business Training
2 Characteristics of a Successful EntrepreneurSelf Motivated Taking Initiatives Organizing Resources Taking Risks Innovating
3 Entrepreneurship vs. Economic DevelopmentIncrease in overall productivity Increase in employment Transfer of technology Increase in exports
4 Entrepreneurial Competencies
5 Entrepreneurial Competencies12 Essential Competencies required in an entrepreneur Commitment 6. Opportunity Identification 2. Persistence 7. Systematic Planning 3. Information seeking 8. Problem Solver 4. Self-Confidence 9. Persuasive 5. Concern for efficiency & high Quality 10. Purely professional nothing personal
6 Entrepreneurial Competencies Initiative Case StudyCase Study of Gurdeep & his 3 friends who could not start their software business because of lack of INITIATIVE
7 Entrepreneurial Competencies Persistence Case StudyCase Study of Mrs. Lal who survived from construction problems, electricity problems, theft, outdated technology, seizure of Land & building but still managed to make project a success because of PERSISTANCE
8 Entrepreneurial Competencies Commitment Case StudyCase study of Mrs. Bhatia, An entrepreneur having a unit of knitting cardigans who worked by her own self continuously for many nights to keep up to her COMMITMENT
9 Entrepreneurial Competencies Problem Solver Case StudyCase study of Mr. Ramalingam who played trick on electricity department to get his work done
10 Entrepreneurial Competencies Purely professional – Nothing personal Case StudyCase study of Mr. Vishal Sharma who suffered huge loss in his Rubber Chappal (Boiler) manufacturing unit because of personal attitude Case study of Mr. Narayanan who suffered losses in his finances due to an incompetent Finance Manager
11 Entrepreneurial Competencies Persuasion Case StudyCase study of Mrs. Bharti who managed to get loan from bank because of PERSUASION
12 Entrepreneurial CompetenciesMajor Mental Blocks in starting a business I don’t have money, I cant do business I am too young, I cant start a business I am a women I am a housewife, I don’t have time to do business I am in service, I cant even think of a business I don’t have any family background of business
13 Entrepreneurial Competencies Case Study of Macksalin Kharmudai19 yr old boy from shillong, came from a tribal family, the eldest of the 5 children, father a govt. employee Learned some works in welding, fabrication, carpentry etc Father expired, Macksalin left the school, being the eldest son came up with all the responsibility of the family. Macksalin plans to set up a fabrication unit at Shillong Applies for a loan of 1.5 Lacs to Meg.IDC, MIDC wanted him to invest at least 25%. He had no money, he requested for some money from relatives and also pledged a small piece of land in the village and started up. Took a land at rent and constructed a shed, employed 2 workers & started visiting contractors & clients for orders Started getting small orders, he always use to work on the low margins & give high quality works to customers Today he is a well established fabricator for shutters, gates, grills etc.
14 Entrepreneurial Competencies Case Study of Geeta KhandelwalGeeta M.A. (Socio) was a housewife & had one child, husband was in the job in addition he had also established a small unit for manufacturing ferrous & non-ferrous spare parts for melting arc furnaces Met with an accident, husband died on-the-spot, Geeta and her child were saved Geeta went financially weak, she took up the task for restarting the unit of her late husband She sold the land, shifted the machinery in her house garage, Sold her jewellery to get the working capital, finally started production She personally went to clients to do her sales calls along with her small child Her persuasive competency helped her to get an order from BHEL Finally established herself in the market
15 Entrepreneurial Competencies Case Study of RelianceDhirubhai’s father was a school teacher and he started his career with selling Bhajia At the age of 16 in 1948, he went to Aden, Yemen & took up as the Gas station attendant & later as a clerk in a oil company In 1958, he returned back to India with Rs.50,000/- & started textile trading company In 1960, he started his own textile unit In 1977, his gross sales was 67 crores, he now needed to expand the capacity of his unit, instead of going to bank for money he went to public & by 1980 he doubled the capacity of the plant By the year 2002 Reliance was making a turnover of 75,000 crore
16 Entrepreneurial Competencies Case Study of CadilaName: Late Mr. Raman bhai Patel Education: B. Pharma Profession: Teacher in a pharmaceutical college Presently: Ex. M.D., Cadila
17 Entrepreneurial Competencies Case Study of CadilaName: Mr. Indravadan Modi Education: B.Sc. (Tech.) Previously: Chief Chemist in a Laboratory Presently: M.D., Cadila K’s
18 Entrepreneurial Competencies Case Study of CadilaPlanned to start their enterprise, but were discouraged by parents Both pooled Rs.26,000/- to start on their own Ramanbhai would continue the job and will help after working hours whereas Modi would run around for establishing the business Rented a Rs.50/- per month in March 1952, they started the production work They produced 2 products Livirubra & Cadilagripe, No employees From 5 – 10 AM they were doing production, then do sales calls, call the doctors and give them the samples, After 2 again do production till 5 PM, From 5- 8 PM, deliver the material on their cycle After 2 years a sales rep. was hired Today CADILA has 14 offices & turnover of over Rs.100 crores
19 Photographs of Late Mr. Raman Bhai Patel
20 Entrepreneurial Competencies Case Study of AirtelName: Mr. Sunil Mittal Education: Graduate from Punjab University Previously: Hired Rs.20,000/- to start up a business of cycle spare parts in Ludhiana Presently: M.D. Airtel
21 Entrepreneurial Competencies Case Study of AirtelSoon discovered that business can not grow beyond a limit, he left that business and came to Mumbai in the year 1979 In 1982 started the business of importing portable Gensets from Japan, the business was running well but suddenly the Government allowed the manufacturing of such Gensets in India itself, Mr. Mittal has to close down the business In 1986 started the business of telecom equipments, Fax machines, Cordless Phones & apparatus, in the meanwhile the GSM services were introduced in India in 1992 and TRAI rolled out a tender inviting bids for various telecom circles Mr. Mittal submitted his bid for Delhi circle. His bid happened to be the highest one & he was given license to operate Mobile services in Delhi Today Mr. Mittal operates in over 18 circles through out India and is the largest Telecom operator of India Biggest Telecom Company of the world VODAFONE has invested over 1.5 Arab Dollars in this company in various projects
22 Entrepreneurial Competencies Case Study of BioconName: Mrs. Kiran Mazumdar Shaw Education: Master in Brewing Technology from Melbourne University Presently: M.D., Biocon India Ltd. (Turn Over – 800 Crore)
23 Entrepreneurial Competencies Case Study of BioconMrs. Kiran had her education from Bangalore, was a topper in Science of Bangalore University Went to Australia for a Masters degree in Brewing, topped there as well In 1978, at the age of 25, she planned to start a unit of manufacturing enzymes, she went to a bank with her proposal but her proposal was turned down She started on her own with a capital of Rs.10,000/- & a garage at home as her office Today after 25 years, Mrs. Kiran is the richest women of India & her company is making revenues in the tune of 800 Crores
24 Entrepreneurial Competencies Case Study of Career LauncherName: Mr. R. Satya Narayan Education: MBA, IIM Bang. Previously: Executive with Ranbaxy Labs Presently: M.D., Career Launcher (Turn Over – 70 Crore)
25 Choosing Your Business
26 Entrepreneurial OpportunitiesAgriculture Channel / Trading Dealer / Distributor / Wholesaler / Franchising SSSBE (Small Scale Service & Business Enterprise) (Dry cleaning/ Tailoring/ Photo Lab/ Beauty parlors/ Crèches/ etc.) Manufacturing Industries (SSI / Tiny / Cottage) Spices/ Bread/ Biscuits/ Paints/ Soaps/ Detergents/ Hosiery etc
27 Manufacturing Industry SectorsChemical – Inks / Paints / Detergents / etc Electrical – Tandoor / Toaster / Auto Lamps Rubber – Chappels / Erasers / Plastic – Mug / Bucket / Frames / etc Food – Pickles / Bread / Buns / Spices / etc Hosiery – Undergarments / T-Shirts / Dyeing Glass & Ceramics – Crockery / Mirror / Tiles
28 Manufacturing Industry SectorsMechanical - Pumps/Pistons/Stpl. Pins etc Leather - Purses / Chappels / Shoes etc I.T.& Electronics - Amplifiers / TV Tuners / UPS / Weighing Scales / Transformers etc
29 Manufacturing Industries Cottage / Household IndustriesIndustry where the products are manufactured in-house, using locally available raw materials, not mass manufactured & usually traditional in nature Handlooms, Paintings, Handicrafts, Pottery, Carpet weaving, Wood work, Recent Additions to this category: Atta chakkis (flour mills), clay and modelling with plaster of paris, dairy products, dry cleaning,, milk cream separation, manufacture of jute products, manufacture of bindi, photo-copying of drawings, packaging of shampoos, packaging of hair oil, rubber stamps, screen painting and mixing and packaging of utensil washing powder.
30 Manufacturing Industries Tiny Industries / Micro EnterprisesIndustry where the investment in plant & machinery are calculated up to Rs. 25 Lakhs Items like Land, Building, some quality control & pollution control equipment are not included in the calculation – Only investment in plant & machinery is considered
31 Manufacturing Industries Small Scale Industries (SSI)Industry where the investment in plant & machinery are calculated above 25 Lakh but does not exceed Rs. 5 Crore Items like Land, Building, some quality control & pollution control equipment are not included in the calculation – Only investment in plant & machinery is considered Industries like Hosiery, Stationery items, Drug & Pharmacy & Sports goods have an investment limit of 5 Crore to be in SSI’s
32 Manufacturing Industries Ancillary EnterpriseIndustry engaged in the manufacturing of parts, components, tools, etc, which proposes to supply at least 50% of its production or services to one or more of the industrial undertakings & where the investment in plant & machinery are up to Rs. 1 Crore are termed as Ancillary Enterprise Items like Land, Building, some quality control & pollution control equipment are not included in the calculation
33 Manufacturing Industries Medium Scale EnterpriseIndustry where the investment in plant & machinery are above Rs. 5 Crore and up to Rs. 10 Crore are termed as Medium Scale Enterprise Items like Land, Building, some quality control & pollution control equipment are not included in the calculation – Only investment in plant & machinery is considered
34 Service Industry Micro Scale Service EnterpriseService enterprise where an investment in fixed assets is calculated up to Rs. 10 Lakhs Items like Land, Building are not included in the calculation – Only investment in equipment is considered
35 Service Industry Small Scale Service Business Enterprise (SSSBE)Service enterprise where an investment in fixed assets is calculated to be more than 10 Lakh but does not exceed Rs. 2 Crore Items like Land, Building are not included in the calculation – Only investment in equipment is considered
36 Service Industry Medium Scale Service Business EnterpriseService enterprise where an investment in fixed assets is calculated to be more than 2 Crore but does not exceed Rs. 5 Crore Items like Land, Building are not included in the calculation – Only investment in equipment is considered
37 SSSBE Small Scale Sector Business EnterpriseAdvertising Agencies Marketing / Industrial Consultants STD / PCO / FAX / XEROX Centers Auto / TV / Refrigerator / Watch / etc. Repairing Centers Beauty Parlors Crèche Photography Lab Dry Cleaning Tailoring
38 Repair & Maintenance ServicesAutomobile Repairs 2-Wheelers / 4-Wheelers / etc. Electronic Repairs AC / Fridge / TV / Stereo / Washing Machines etc. Electric Repairs Iron / Fans / Mixers / Coolers etc. Mobile Phone Repairs
39 Professional ServicesMedical Services Doctor Legal Services Lawyer Placement Services Placement Consultants Construction Services Architects Company Affairs Chartered Accountants
40 Service Enterprises Schools Education Professional CollegesHigher Education Hotels Temporary Accommodation Banquet Halls Wedding facilities Internet Cafes Internet surfing Restaurant Food & Good time Gymnasiums Health services Clubs Socializing & spending good times
41 Channel / Trading FMCG Sector / Non Durable Sector / Consumer Durable Sector Super stockiest – stockiest – retailer Super distributor – distributor – retailer Company - retailer
42 The Million Dollar QuestionWhat business should I start ?
43 Choosing your businessStudy your own self Who am i ? What can i do ? What i can not do ? Where do i stand ? What do i want ?
44 that help you find the right business opportunityTop Ten Techniques. that help you find the right business opportunity for you
45 Choosing your businessTechnique No. 1 Look at the nature around you
46 Choosing your businessTechnique No. 2 Add a little value add to the existing product Ganga Water A car signed by Sachin tendulkar Air, water & a smile is free with patrol
47 Choosing your businessTechnique No. 3 Join the established markets Ready Market & Customers Ready availability of raw materials, skilled workers Easy availability of finances from local banks
48 Established Markets Furnishing Fabrics Panipat Power loomBhiwandi & Surat Machine Tools Batala, Faridabad Brassware Jamnagar, Moradabad Knitwear Ludhiana, Trichy Gem & Jewellery Jaipur Diamond Cutting & Polishing Surat Leather Chennai, Kanpur, Agra Electrical App. Faridabad Haryana
49 Choosing your businessTechnique No. 4 Look at the requirements of the industries around you & in the pipeline Raw material requirements Consumable items requirements Packaging
50 Choosing your business Look at the industries around you Case Study of Mr. Sapan JhavarMr. Sapan Jhavar is B.E. and has got good experience in the Metallurgical Industry 6 Pharma factories in his region and one tooth paste manufacturing unit who have regular requirement of tubes All of them showed good interest if they could locally get these tubes One tube manufacturing facility already operational in town. Sapan started the unit and kept the price marginally lower then the other factory For One year he could not get any orders from any of these companies
51 What actually happened ???Choosing your business Look at the industries around you Case Study of Mr. Sapan Jhavar What actually happened ??? Out of 6 pharma factories one has invested in the tube factory The purchase managers of 2 of the factories had understanding with the existing tube factory One of the factory bargained by showing the availability of tubes locally and got better price and service from the existing supplier One of the factory bargained in terms of the credit with the existing supplier The nephew of the director of the tooth paste company was already in the business of tubes so they did not shifted to the other supplier
52 Choosing your business Look at the industries around you Case Study of Mr. Sapan JhavarWhy did they encouraged Mr. Sapan to start the project ??
53 Choosing your business Look at the industries around you Case Study of Mr. Sapan JhavarWhy did they encouraged Mr. Sapan to start the project ?? An extra supplier is always welcome so that in case of any problem with the existing supplier they have a second option ready with them
54 Choosing your businessTechnique No. 5 Look at the waste of the industries around you Use the By-products as a resource
55 By-products from some IndustriesIndustry By-product Commercial product Sugar Mill Bagesse / Press Mud / Molasses Cattle Feed / Paper / Wax / Chalk / Chemical / Alcohol Steel Plants Naphthalene dyestuff Textile Pieces of small sizes Tiny garments Fertilizer Plant Gypsum Plaster board
56 Choosing your businessTechnique No. 6 Think of an absolutely new & original idea
57 Business based on new ideasTime-share resorts Fire extinguisher for homes & offices (CF) Water Parks Dating Service Synthetic soft drink concentrates Pre-cooked vegetables & paranthas Multi Marketing Concept (Amway)
58 Choosing your businessTechnique No. 7 Study the statistics available on different businesses
59 Literature available on Business StatisticsPublished by Handbook of Industrial Statistics Ministry of Industries Guidelines of Industries A journal published by the Ministry of Industries Handbook of statistics Confederation of Indian Industries
60 Industry-specific LiteraturesLiterature / Journals Engineering Current Engineering Practice Hosiery Hosiery & Textile Journal Paint Colourage Rubber Rubber news / Rubber India Plastic Popular plastic Wool Woolens & worsteds of India Chemical Chemical weekly Food Food Industry News Leather Indian Leather
61 Choosing your businessTechnique No. 8 Take ideas from other markets Developed countries – Undeveloped Countries One State - Another City – Towns - Villages
62 Ideas that came to India from Developed CountriesFast Food Restaurants Amusement Parks Personal Computers Credit Cards Coffee Shops Departmental Stores Sanitary Napkins
63 Choosing your business Take idea from other markets Case Study of MrChoosing your business Take idea from other markets Case Study of Mr. Praveen Jha Returned to his hometown in Ahmedabad from USA Wanted to invest in the real estate business Ahmedabad either had Bungalows for high class or Flats for lower class In USA Row Houses are a common thing He introduced the concept of Row Houses to Ahmedabad - A house for Middle Class He was a Big Success
64 Choosing your businessTechnique No. 9 Take the help of Government Machinery
65 Some Major Govt. Bodies Institution Work District Industry Center( One in each District ) Support services in establishing the SSI, Reg. formalities, project identification National Small Industry Corp. (In metros & some states) Provides M/C on hire purchase basis Supply of Raw material, export promotion Internal Marketing, training State Financial Corporation (In the major districts of all states) Selection of project, finances Technical Consultancy Org. (One in each state) Project Identification, identification of technology sources, diagnostic reports for sick units, marketing assistance Single window mechanism (Gujarat / U.P. / MP / Mahrashtra / Punjab / Haryana /Karnataka / TN / Goa ) Offering complete industrial counseling, helping them comply with necessary government formalities, finances, project implementation Industrial Infrastructure Ag. (In almost all states) Infrastructure facilities like land / sheds on hire/pur. basis, power, water, drainage
66 A few other Government BodiesInstitution Small Industries Service Institute National Industrial Development Corporation Khadi & Village Industries Commission Commissioner of Cottage Industries State Small Industries Development Corporation
67 Choosing your businessTechnique No. 10 Identify the gaps in the market
68 Choosing your business Identify the gaps Case Study of MrChoosing your business Identify the gaps Case Study of Mr. Jyoti prakash Mr. Jyoti works at Jamshedpur with TISCO he often has to visit Kolkata on official purpose Mr. Dave his friend at Jamshedpur owned a club and often showed movies to the members Mr. Dave requested Jyoti to get one famous movie from Kolkata which he was not able to get anywhere Mr. Jyoti got the movie at 50,000/- and sold to club at 60,000/- Mr. Jyoti spoke to other clubs & film theatres and found out that they too were facing the similar problem of availability He identified the gap and filled it. He now is a successful film distributor and has offices in Kolkata & Jamshedpur
69 Choosing your business Identify the gaps Case Study of MrChoosing your business Identify the gaps Case Study of Mr. Vishal Agrawal Mr. Vishal was working in the production department of an engineering company He noticed one major problem that whenever the equipments broke-down it use to take a long time to get them repaired, which harmed the production He enquired and found out that the only workshop doing the repairing job was situated 1000 kms. away from their unit and besides it was very difficult to take these equipment out for repairs He spoke to other Engg. Companies in the area and found that they too were facing the similar problems Mr. Vishal identified the gap, he left the job & established his own workshop for repairing & reconditioning of such eqpmts.
70 Choosing your businessIf you shortlist 10 business projects - chances are 8 of them are wrong for you
71 Choosing your businessThe best way of selection is REJECTION
72 Choosing your business Selecting the right proposal Case Study of MrChoosing your business Selecting the right proposal Case Study of Mr. Somesh Dutta On the basis of information collected from various sources shortlists enginn. / electronic / plastic / chemical & pharma / wire industries Project invstt. available in the range of Lacs Discards the idea of chemical & pharma because of inability to handle the complexities & high investments needed Discards wire because of unease of availability of raw material B.Tech. in Mechanical Engineering Worked for 1 Year with textile processing machinery Father can afford to invest Rs. 2 Lacs in his business Father is a government employee and earns well to support family but will retire after 2 years Father has good contacts with the govt. deptts. & with banks
73 Choosing your business Selecting the right proposal Case Study of MrChoosing your business Selecting the right proposal Case Study of Mr. Somesh Dutta There were many plastic factories in the area and the ROI was not attractive the idea of plastic was discarded Somesh has got contacts only within the frame of textile processing houses he however has friends who are working in the large engineering public sectors He wants to achieve a break-even in less then 2 years time He further discards electronic industries because of no additional strength in this area He finally chose ENGINEERING INDUSTRY
74 Checking Project Viability.
75 Choosing your businessTake 4 tests to check Viability of the project Investment & Infrastructure check Market check Technical Know-how check Financial Viability check - I
76 Choosing your businessInvestment & Infrastructure check Fixed Assets Working Capital Land & Building Salaries Plant & Machinery Office expenses (Tel / Electricity / etc) Furniture Interest on Loan Vehicle Traveling expenses Office equipment Raw material expenses
77 Choosing your businessInvestment & Infrastructure check Other Expenses Involved Legal expenses Trial production Cost on money invested by you Contingency estimates You go wrong on estimations Raw material prices may hike You have to give credit facilities to your customers
78 . Market Check
79 Market Check Benefits Estimating the demandEstimating the profitability Determining Pricing Determining quality.…accordingly procuring the right machinery, tools & raw materials Knowing Competition Knowing Customer behavior Determining marketing strategy Understanding Key determinants of success in the industry
80 Choosing your businessWhat is Market Check ? Gathering information from similar business owners, raw material suppliers, employees working in that enterprise, dealers, packing material suppliers, customers, machinery suppliers, research studies, Government data & research agencies regarding the business Using your own network to gather the related information
81 Procedure of Market CheckPrimary Data Secondary Data
82 Market Check Primary Data Talk to similar business owners, employees working in that enterprise, dealers, packing material suppliers, customers, machinery suppliers, raw material suppliers Telephonically Mail Contacts Personal Contacts
83 Market Check Who is to be surveyedCollecting Primary Data Who is to be surveyed Target Customers / Dealers / Employees especially Sales Force / Raw Material Suppliers / Machinery Suppliers / Similar Business Owners Choose the right sample of people Randomly / Quota wise / Cluster wise What information do you need from them, design a proper questionnaire ? Closed ended question / Yes or No type / Open ended / 5-choice answers Analyze the data collected
84 Market Check Credit Rating Agencies Trade publications & recordsSecondary Data Credit Rating Agencies Trade publications & records Libraries Govt. agencies such as TIC – Trade Information Centers. TCO – Trade Consultancy Organization DIC – District Industries Center News papers & magazines
85 Market Check Secondary Data Credit Rating AgenciesCredit Rating Information Service of India Ltd Credit Analysis & Research Ltd. Investment Information Credit Rating Agency of India Marketing & Development Research Associates
86 Can I start a Squash business in Bangalore ???Market Check Can I start a Squash business in Bangalore ??? Determine on the basis of secondary data
87 Market Check Study on the Soft drink Market 1991-92Year Consumption (Millions) Population Per Capita (In Thousands ) 778 646 1.21 1057 660 1.60 1842 675 2.73 1998 690 2.89 2123 706 3.01 2410 722 3.34 2600 738 3.52 3283 788 4.17 5200 850 6.12
88 Market Check Study on the Soft drink Market 1991-92Delhi 60.6% Mumbai 19.7% Chennai 8.8% Kolkata 7.4% Bangalore 3.5%
89 Market Check Study on the Soft drink Market 1991-92Product Avg. of 5 Metros Coca Cola 35% Pepsi 25% Packed Juices Synthetic Drinks (Squash / Rasna etc.) 15%
90 Market Check Study on the Soft drink Market 1991-92Product Avg. of 5 Metros Delhi Mum Bangalore Coca Cola 35% 20% 40% 25% Pepsi 30% 10% Packed Juices 38% 22% Synthetic Drinks (Squash / Rasna etc.) 15% 12% 18%
91 Choosing your businessTechnical Know-how check Are you fully aware of the technical intricacies involved in the project Do you have a stable resource which can handle the technical aspects Can you fully rely on the hired resource for the purpose
92 Choosing your business Technical Know-how check Case Study of MrChoosing your business Technical Know-how check Case Study of Mr. Sunil Bhatia Mr. Bhatia worked for over 7 years as a chemist with a dyestuff factory at Ahmedabad Holds thorough understanding of the dyestuff production Starts up his own dyestuff factory Factory gets well established and began to give good profits Mr. Jignesh who had little knowledge about the technical aspects of the business was watching the growth of this factory, He decides to starts up his own factory and picks up the production supervisor from bhatia’s factory
93 Choosing your business Technical Know-how check Case Study of MrChoosing your business Technical Know-how check Case Study of Mr. Sunil Bhatia Production supervisor was not so good in the know-how of the process Product coming out was substandard and the batches were not passed during inspection for quality control Struggled for 8 months to improve the quality and soon the supervisor found a better job and he left Mr. Jignesh was left in lurch and faced huge loss
94 Choosing your businessFinancial Viability checks - I ROI Return on Investment (Profit / Investment x 100) Gross profit on turnover Profit calculated after deducting the production & selling costs Gestation period Initial period when you continue to operate with losses or without losses at break even Break even point Point at which you neither make profits nor make any losses
95 Choosing your business Case Study of Mr. Mohd. FarisMr. Faris has done ITI in mechanical works, makes up his mind to start up a business enterprise Can invest a maximum of Rs. 3 Lacs Can not afford a gestation period of more then 2 Years Must reach break even by 2nd year By 3rd year he needs a ROI of not less then 25% He is looking for an industry where his technical skills are also used
96 Choosing your business Case Study of Mr. Mohd. FarisProduct Gas Lighter Link Clips Cutlery Paint Brushes M/c. Cost 2.5 – 3.0 Lacs 80,000/- 1.25 Lacs Annual Turnover 27 Lacs 1.20 Lacs 10-11 Lacs 15 Lacs Gestation Period 2 Years 1 Year Estimated ROI 80% 15% 35% 60%
97 Choosing your business8 Common errors done While choosing a project Falling prey to the attractive numbers 2. A partial or incomplete view of the project 3. Mismatch between personal & project profile 4. Lack of interest in the project 5. Lack of confidence in the project 6. Blind faith on the information collected from the market 7. Failure to grasp the key determinants of success in the given project 8. Me-Too Syndrome
98 Choosing your business Falling prey to attractive numbers Case Study of Mr. Navneet GuptaMr. Gupta came across the demand of cheese in many parts of Rajasthan & Gujarat He enquired about the cheese projects from the plant manufacturers. This is the information he received On 100% capacity utilization, the plant would produce cubes of 50gms in one month No plant in that industry worked for over 90% capacity utilization, so max. production would be 9,000 cubes Cost on production per 50gms cube of cheese would be Rs. 3 Cost of milk was never stable so the cost on production of cheese also increased at that time(Rs.3.5) Market price per 50gms cube is Rs.6 The margin of Rs. 1 given to the dealers was never told (Rs.5) From above estimates his profit per month would be Rs.30,000/- From above estimates his profit per month would be Rs.13,500/-
99 Choosing your business Failure to grasp key determinants Case Study of Mr. Himanshu ChadhaMr. Himanshu is a BE in Mechanical Engineering His friend Mr. Ganesh made him aware of the high demand of power coil used in the two- wheeler Himanshu developed the power coil and both friends started the business in partnership They produced high quality coil Thereby charging high price for it Quality was never a key determinant of that industry, but low price definitely was They would work on advance payments with wholesalers & not give any credit Industry had a culture of giving long credits to the wholesalers and no advance payments They were ready to give a guarantee of up to 10 years on it Wholesalers were satisfied with life of 3-5 years of a coil
100 Choosing your business Failure to grasp key determinants Case Study of Mr. Himanshu ChadhaThey would advertise to establish the brand name Industry worked largely on interest of wholesalers rather then advertisements They would make timely payments regards to their liabilities & govt. taxes Competitors were evading tax to curb costing It took them full one year to realize the key determinants of the business and change themselves according to the industry, till that time they incurred losses
101 Constitution of an Organisation
102 Private Limited Company Public Limited Company Forms of Organization Proprietorship Partnership Private Limited Company Public Limited Company Co-operative Enterprises
103 Forms of Organization Proprietorship 100% Owner of the OrganizationOne man control – single ownership Unlimited Liability No difference between your personal & business assets
104 Proprietorship ADVANTAGES DISADVANTAGES Complete Control Limited FundsNo difference of opinion Limited Skills Quick decision Unlimited Liability
105 Forms of Organization PartnershipMinimum 2 partners – maximum 10 in banking & 20 in non-banking business Contractual relationship – written / oral agreement among the partners Liability not limited to your share in the partnership, it is still unlimited No difference between your personal & business assets Sharing of profit & loss amongst members on mutually agreeable percentages
106 Partnership ADVANTAGES DISADVANTAGES Larger Financial resourcesAn incompetent or dishonest partner can cause disaster to the business Combined abilities, skills & judgment results in better decisions & better management Transferring of partnership rights to an outside person is not possible without the permission of other members Survival capacity of a business is much higher Disagreement & distrust among the partners can lead to breakage of partnership & business in question
107 Private Limited CompanyForms of Organization Private Limited Company Shareholders are the owners of the company Minimum 2 shareholders, Maximum 50 shareholders Prohibits any invitation to the public to subscribe for any shares Family members can also be the shareholders Limited Liability Less paperwork because many of the company laws do not apply to private limited companies
108 Private Limited CompanyADVANTAGES DISADVANTAGES Limited Liability transfer of shares restricted by the articles of association Larger Financial resources Can not raise capital from the public Freedom from excessive legal control & regulations Not suitable for a Large scale organisation Stable permanent life Delayed decisions
109 Public Limited CompanyForms of Organization Public Limited Company Shareholders are the owners of the company Minimum 7 shareholders, Maximum unlimited can be millions of shareholders Can raise more money from the market then a private limited company Limited Liability More paperwork because many of the company laws are applicable to public limited companies
110 Public Limited CompanyADVANTAGES DISADVANTAGES Limited Liability No secrecy – full publicity of accounts Large Financial resources Excessive legal control & regulation Free transferability of shares Delayed decisions Any amount of capital can be raised from the public Time-consuming, Expensive & Difficult formation Stable permanent life
111 Co-Operative EnterprisesForms of Organization Co-Operative Enterprises Basic aim is to render service to its members & society in general Management of a society is entrusted to a managing committee elected by its members State Government has full right to conduct periodic inspection on audited accounts, annual reports etc. Must get registered under the Co-operative Societies Act, 1912. Voluntary association of people, who are open to become a member or leave it at their own free will The capital to run it is provided by the members
112 Co-operative EnterprisesADVANTAGES DISADVANTAGES Ease of formation Lack of motivation Limited Liability Rivalries often seen within the society Tax Advantage (Advantage in Income tax, Surcharge, stamp duty & Reg. fees) Under state regulations Eligible for state patronage (in the form of loans, grants etc.) Lack of competent management Suitable for small sized business operations (Usually business related to socio-economic development of weaker sections of the society like educational institutes, etc.)
113 Ownership Patterns in some SSI’s in IndiaINDUSTRY Sole Proprietorship Family Partnership Non-Family Partnership Cooperatives Flour Mills 36.4 49.1 14.5 - Hosiery 63 25 20 1 Drugs 60 35 3 Utensils 55 38 6 Soap 27 53 Oil Mills 15 70 12 2 Printing Press 52 28 Wooden Furniture 31 8 Electrical Goods 69
114 Choice of Constitution Depends uponSize of Business Nature of Business Control over Business Amount of Capital Risk & Liability Government regulations & control Tax liability
115 Thank U!!