Entrepreneurship Management -1

7/31/2019 Entrepreneurship Management -1

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Entrepreneurial Opportunity Recognition Process

EducationPrior knowledgeof market &Consumer Problems

Experience EntrepreneurialAlertnessOUTCOMESuccessfulOpportunityRecognition

PersonalExperience

WorkExperience

Networks


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SuccessfulOpportunityRecognition

Feasibility

AnalysisStudy

ProductPlanning &Development


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Generate your idea


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Product InnovationProcess InnovationInnovation Life Cycle

Detailed Discussion


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C1 Concept StageC2 Procurement StageC3 Pilot Product/ Service development StageC4 Test Marketing StageC5 Production StageC6 Introduction to Market Stage

A : Opportunity OccursB : Idea GenerationC : Commencement of Project

D : First group of customers issatisfiedE : Huge PublicityF : Entry of CompetitorsG : Break Even PointH : Market LeaderI : Starting of MaturityJ : Retrenchment or Reviving

Net Cash

flow

+ve

_ve

A B C

D E F G E F G


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Role of Business Incubator

1. What is Business Incubator?2. Why we need them?


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Role of Business Incubator

1. What is Business Incubator?2. Why we need them?


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Just born Baby IncubatorJust born Baby

Entrepreneur Business Incubator

Incubator Incubatee


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Objectives of these IncubatorsNature of these Incubators

Developing Profitable Enterprises.

Create Jobs

Raise the awareness of Potential Entrepreneurs.

Create ecosystem conducive for entrepreneurship.

Success measures number of companies incubatedand their being successful.

NGO Government financedPrivate Self financed


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ICT(Information and Communication Technology ) servicesOffice spaceShared workshopsFinancial management/accounting servicesLinkages to financiers, Loan and Loan guaranteeIncubation and Business Development: Business informationBusiness management and development advisory servicesIncubation program for non-resident clients (virtual incubation)Incubation program for resident clientsMentoring/coaching and mentoring

Pre-incubation servicesInternational Business Services: Help entering particular marketsNetworks and Synergy: Networking eventsReferrals to business professionalsTechnology Transfer: Help with commercializing technologyHelp with intellectual property/patent advice

Other: Facilities also includes shared resources.Strong support for access to business network, Angel/ VC/ Loan funding.


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Some Business Incubators in India

Name Place Web siteSociety for Innovation andEntrepreneurship (SINE)

IIT Bombay www.sineiitb.org

Technology Business Incubator (TBI) IIT Delhi www.fitt-iitd.org

Rural Technology and Business Incubator(RTBI)

Science and TechnologyEntrepreneurship Park (STEP)

JSSATENoida

www.jssstepnoida.org

IndiaCo Centre (for profit) Pune www.indiaco.com


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CFC (Common facility Centre)GOI- --- Sfurti Scheme --- To Develop ClusterThrough

NIESBUD, NoidaNIMSME, HydrabadIIE, GuwahatiEDI, AhemdabadVarious NGOs

Example Firozabad Bangles

Muradabad BrassPilakhwa TextileMeerut Sport goodsSaharanpur WoodenKhurja CeramicAgra PethaChamoli Bee Keeping


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Case Study and Discussion


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Feasibility AnalysisBusiness PlanFeasibility of your business plan


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Idea Generation

Feasibility Study

Business Plan

Final Project Report


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What is a Feasibility Study?

A feasibility study is an analysis of the viability of an IDEA

through a disciplined and documented process of thinkingthrough the idea from its logical beginning to its logical end.

A feasibility study provides an INVESTIGATING function thathelps answerShould we proceed with the proposed project idea? Is it a

viable business venture?A feasibility study should be conducted to determine theviability of an idea

BEFORE proceeding with the development of a business .


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What is a Business Plan?

A Business Plan summarizes the PLAN OF ACTION after acourse of action has been determined through theFeasibility Study A Business Plan provides a Planning function A Business Plan outlines the actions needed to take the

proposal from

idea to reality A Business Plan tells How your business will be created and Why it will be successful?

A Business Plan provides a road map for strategicplanning


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Why do a Feasibility Study?

Provide a thorough examination of all issues and assessment of probability of business success

Give focus to the project and outline alternatives Narrow business alternatives

Surface new opportunities through the investigative process

Identify reasons NOT to proceed

Enhance the probability of success by addressing and mitigating factors early on that couldaffect the projectProvide quality information for decision making

Help to increase investment in the company

Provide documentation that the business venture was thoroughly investigated

Help in securing funding from lending institutions and other monetary sources


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Why to make a Business Plan?

Put the Pieces Together Do the pieces fit together in a logical manner?

Create a Blueprint for Action

Focus Founders and/or Management Team

Obtain Financing

Attract Equity Investment

Attract Key Managers and Employees

Obtain Contracts

Create Joint Ventures, Mergers, Acquisitions


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What is included in a Feasibility Study Report?

A feasibility study report should be completed in all respectivemanners, containing detailed analysis of all best possible factors ondate.

Operational FeasibilityWill it work? how?

Technical FeasibilityCan it be built? how?

Marketing FeasibilityCan we market the product? how?

Economic Feasibility Will it make economic sense if it works and is built? how? Will it generate profits? how?

Financial FeasibilityHow to arrange required fund?


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What is included in a Business Plan?

A Business Plan should be brief, concise & straight to the point. MainRequirements May Include

Industry Description Market Size Customer Base

Competitive Advantage Business Location Three years of Financial Projections Monthly Tracking of First Year Financials Management Experience and Profile Personal Statement of Affairs Other Sources of Cash, if any


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Feasibility Study Vs. Business Plan

Feasibility study (after idea generation) answers the bottom line questionIs this venture going to make money?

Feasibility study outlines and analyzes several alternatives or methods of achieving business success.

Feasibility study is conducted before a business plan.

Business plan is prepared only after the venture has been deemed to befeasible.

Business plan deals with only one alternative or scenario that isdetermined to be the best alternative.

Business plan considers the management side goals and objectives of the planned business venture.


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Technical Feasibility

Crucial technical specifications Engineering requirements

Design Machines

Durability Tools

Reliability and standardization Instruments

Product safety Work flow

Product development Product testing

Blueprints Lab testing

Models Field testing

Plant locationDesirable characteristics of plant site (proximity to suppliers, customers),environmental regulations


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Marketing FeasibilityMarket potentialIdentification of potential customers and their dominant characteristics(e.g., age, income level, buying habits)

Potential market share (as affected by competitive situation)Potential sales volumeSales price projections

Market testingSelection of testActual market testAnalysis of market

Marketing planning issues

Preferred channels of distribution, impact of promotional efforts, requireddistribution points (warehouses), packaging considerations, price differentiation


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Financial Feasibility

Required financial resources

Fixed assetsCurrent assetsNecessary working capital

Available financial resources

Required borrowingPotential sources for fundsCosts of borrowingRepayment conditions

Operation cost analysisFixed costsVariable costsProjected profitability


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Operational Feasibility

Required skill levels and other personal characteristics of potentialemployees

Managerial requirements

Determination of individual responsibilities

Determination of required organizational relationshipsPotential organizational developmentCompetitive analysis


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Summary of feasibility study

Questions to be answered after study


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Summary of Feasibility StudyBasic Feasibility of the Venture

1. Can the product or service work?2. Is it legal?

Competitive Advantages of the Venture1. What specific competitive advantages will the product or service offer?2. What are the competitive advantages of the companies already in

business?3. How are the competitors likely to respond?4. How will the initial competitive advantage be maintained?

Buyer Decisions in the Venture1. Who are the customers likely to be?2. How much will each customer buy, and how many customers are there?3. Where are these customers located, and how will they be serviced?


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Summary of Feasibility Study (Contd.)

Marketing of the Goods and Services

1. How much will be spent on advertising and selling?

2. What share of market will the company capture? By when?

3. Who will perform the selling functions?

4. How will prices be set? How will they compare with the competitions prices?

5. How important is location, and how will it be determined?

6. What distribution channels will be used wholesale, retail, agents, direct mail?

7. What are the sales targets? By when should they be met?

8. Can any orders be obtained before starting the business? How many? For what totalamount?


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Production of the Goods and Services

1. Will the company make or buy what it sells? Or will it use a combination of thesetwo strategies?2. Are sources of supplies available at reasonable prices?3. How long will delivery take?4. Have adequate lease arrangements for premises been made?

5. Will the needed equipment be available on time?6. Do any special problems with plant setup, clearances, or insurance exist?

How will they be resolved?7. How will quality be controlled?8. How will returns and servicing be handled?

9. How will pilferage, waste, spoilage, and scrap be controlled?


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Staffing Decisions in the Venture

1. How will competence in each area of the business be ensured?2. Who will have to be hired? By when? How will they be found and recruited?3. Will a banker, lawyer, accountant, or other advisers be needed?4. How will replacements be obtained if key people leave?

5. Will special benefit plans have to be arranged?

Control of the Venture

1. What records will be needed? When?2. Will any special controls be required? What are they? Who will be

responsible for them?


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Financing the Venture

1. How much will be needed for development of the product or service?

2. How much will be needed for setting up operations?

3. How much will be needed for working capital?

4. Where will the money come from? What if more is needed?

5. Which assumptions in the financial forecasts are most uncertain?

6. What will be the return on equity, or sales, and how does it comparewith the rest of the industry?

7. When and how will investors get their money back?

8. What will be needed from the bank, and what is the banks response?


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Data required for a feasibility study can come from primary or secondary sources,

Primary data can include formal interviews and surveys. Collection of primary data can be expensive and time consuming,

Secondary data can include industry and trade publications, statistics of

industry associations, and government agency reports

Data Sources for a Feasibility Assessment


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Feasibility Study

Business Plan

Starting the Venture

Success Failure

Quality work of feasibility study andbusiness plan

good bad


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Quality work of feasibility study andbusiness plan

poor

good

success


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Feasibility of your business plan


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Legal Issues for a Entrepreneur

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Intellectual property rights

Patents , Trademark, Copy rights, Trade secrets.

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Lawyer

For legal advice. Check legal expertise for new venture. Fee to be paid.( one time or retainer ship) Option to be an employee

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Patents

Utility patents. Design patents. Plants patents. International patents. Documentations. (Application, description,

claims etc)

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Licensing.

An arrangement between 2 parties where-inone party has proprietary & the other overinformation , process, technology rights.

Product safety & liability. Insurance. Contracts (conditions)

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Patent documentation.

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Legal Environment & Entrepreneurship

Entrepreneurs are not supposed to be lawyers orhave legal expertise but be sufficientlyknowledgeable about legal concepts that impact

businesses Review laws that relate to

Inception of the venture Growth & continuity of the venture

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Patents Processes, machines, plants, products, plants, chemical compounds, &

improvements in already existing items Protection for 14 years Temporary monopoly to encourage creation of new ideas Can sell, license etc.

Copyright Protection of literary & artistic productions (60 years, proposed for 70

years, might have already been done) Books, periodicals, dramas, music, art, motion pictures,

lectures, sound recording , computer programs

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Trademarks A distinctive name, mark, symbol, motto identified with a

companys product (s)

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Entrepreneurial Organizations & LegalForms

Three primary legal forms

Sole Proprietorship Partnership Corporation (Pvt Ltd, Public Ltd)

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Sole Proprietorships Advantages ???

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l l


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Sole Proprietorships Advantages

Ease of formation Sole Ownership of profits Decision making & control Flexibility Relative Freedom from Govt. control Freedom from Corporate business taxes (taxed as individual tax payers)

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l & l


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Sole Proprietorships Disadvantages???

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E i l O i i & L l


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Sole Proprietorships Disadvantages

Unlimited Liability including personal assets

Lack of continuity Less Available capital Obtaining long term debt relatively difficult Relatively limited viewpoint & experience

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E i l O i i & L l


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Partnerships Articles of partnership are usually executed and contain

Name, purpose, Duration of agreement Character of partners (general or limited, active or silent)

Contributions of partner Division of profits and losses Draws or salaries Death of a partner clauses Release of debts

Business expenses handling Arbitration Etc.

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E i l O i i & L l


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Partnerships Advantages ???

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E i l O i i & L l


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Partnerships Advantages

Ease of Formation

Direct Rewards Growth & Performance facilitated (more capital & skills) Flexibility Relative freedom from Governmental control

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E i l O i i & L l


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Partnerships Disadvantages??

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E t i l O i ti & L l


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Partnerships Disadvantages

Unlimited liability at least of one partner

Lack of continuity Relative difficulty in getting large sums of capital Bound by the acts of just one partner (general, can sign any contracts and

obligations)

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E t i l O i ti & L l


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Partnership Success

Partnership Attributes Commitment

Coordination Trust & Interdependence

Communication Behavior Quality Information Sharing & Participation

Conflict Resolution Techniques Persuasion & Smoothing Arbitration & Joint Problem solving

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E t i l O g i ti & L g l


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Corporations A separate legal entity apart from the individuals

who own it Advantages ????

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Advantages Limited Liability Easy Transfer of ownership

Unlimited life Relative ease of securing capital Increased ability & Expertise

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Corporations Disadvantages ???

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Entrepreneurial Organizations & Legal


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Corporations Disadvantages

Activity Restrictions (Limited by Charter)

Lack of participation for minority stockholders Regulation Organizing expenses Double taxation (on corporate profits as well as individual income)

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Franchising (Franchisee & Franchisor, being shared for its uniqueness,will be one of the earlier discussed forms)

Advantages Training & Guidance Brand Name Appeal Proven Track Record Financial Assistance

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Franchising Disadvantages

Franchisee Fees

Control exercised by the franchisor Unfulfilled promises by some franchisors

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Entrepreneurs are not supposed to be lawyers orhave legal expertise but be sufficientlyknowledgeable about legal concepts that impactbusinesses

Review laws that relate to Inception of the venture Growth & continuity of the venture

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Patents Processes, machines, plants, products, plants, chemical compounds, &

improvements in already existing items Protection for 14 years Temporary monopoly to encourage creation of new ideas Can sell, license etc.

Copyright Protection of literary & artistic productions (60 years, proposed for 70

years, might have already been done) Books, periodicals, dramas, music, art, motion pictures,

lectures, sound recording , computer programs HANDOUT: Post Internet Copyright protection

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Trademarks A distinctive name, mark, symbol, motto identified with a

companys product (s) HANDOUT:

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Franchising Disadvantages

Franchisee Fees

Control exercised by the franchisor Unfulfilled promises by some franchisors

Case 12.2

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Entrepreneurial

Marketing Research

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Entrepreneurial - Marketing Research

Marketing Research questions that you need answersfor

Market Do you know about the buying habits of your target market Do you know about the repeat purchase behavior Can you plot your sales month by month

Product Have you tested the market acceptability of your offering Have you tested the price elasticity of your offering

Advertising Is your advertising reaching the right target Is it more effective in comparison to your competitors

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Inhibitors to marketing research

Cost

Complexity Irrelevancy (in the mind of entrepreneur)

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3 Marketing philosophies of entrepreneurs

Production driven Sales driven Consumer driven

Depends on

Competitive pressure Entrepreneurs background Short term focus

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Entrepreneurial -Marketing Research

Entrepreneurs need to know distinctly their offeringtype

Convenience Goods Staple goods (food etc.) & Impulse goods

Shopping goods (spend time on comparing prices & specs) Specialty Goods (customers make a special effort to find & purchase) Unsought Goods (encyclopedias etc.)

New Products

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Entrepreneurial Marketing Research

Marketing Stages for Growing Ventures Entrepreneurial Marketing Opportunistic Marketing

Responsive marketing Diversified marketing

Entrepreneurship Management -1

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