Small Business in India

Setting up a small business enterprise

The formalities for setting up of a small business

enterprise is given in the next slide.

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1. a. b. c. d. e.

Selection of a project Product or service selection Location selection Project feasibility study Business plan preparation Prepare project profile 2. Decide on the constitution

3. Obtain SSI registration

4. Obtain clearances from departments as applicable

5. Arrange for land/shed

6. Arrange for plant and machinery 8. Prepare project report 9. Apply and obtain finance

7. Arrange for infrastructure

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10. a. proceed to implement 4 b. Obtain final clearances

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a. Product or Service selection

5

Determinant factors for deciding on a suitable project: background and experience of the entrepreneurs Availability of technology and know-how for the project Marketability of the product/services Investment capacity Availability of plant and machinery Availability of raw materials and proper infrastructure.
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Organisations in possession of information on business opportunities

6

District industry centres Technical consultancy organisations Centres for entrepreneurship development Small industry service institutes Leading banks SIDBI

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Project feasibility study

7

Market analysis Technical analysis Financial analysis Economic analysis Ecological analysis

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Registering a New Company

8

MCA 21

(http://www.mca.gov.in/MCA21/RegisterNewComp. html)

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Management of Small Business In India

Organisation Life cycle

12

Start Up

Expansion
Consolidation

Growth

Product/mar ket definition

Revival Decline
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Organisatio n

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VARIABLES

The External Environment

13

General environment Sociocultural

Demographic

Industry Environment
Threat of new entrants Power of suppliers Power of buyers Product substitutes Intensity of rivalry

Global

Political/Legal

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Competitor Environment Technological

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Assessing the economic environment 14

What is the current state of the economy? What is the condition of the labour market? Are the interest rates rising or stable? How many companies are in this industry? Do the companies vary in size and general characteristics or are they all similar? What is the geographic concentration of companies in this industry? Do the companies serve only one domestic market? What local, central government regulations affect this type of business? What is the competitive nature of this business?
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Role of Regulatory Agencies in Start Ups

15

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How India Compares with Similar World Economies (World Bank Report, 2012)
20

Ease of Doing Business

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How India ranks on Doing Business Topic

21

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Ease of starting a Business

How India Compares with Similar World Economies (World Bank Report, 2012)
22

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Summary of Procedures for starting a business in India

23

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Note: Refer the accompanied report for all the procedures.

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Ease of dealing with construction permits

How India Compares with Similar World Economies (World Bank Report, 2012)
29

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How India Compares with Similar World Economies (World Bank Report, 2012)
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Ease of getting electricity

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What are your resource and investment requirements?

31

Where is your business? - On a racing track or on a

highway?

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32

As a venture progresses from one stage to the next,

conditions change requiring different decisions for managing growth, developing products/markets and organising the company.

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Activity
33 You are a senior software consultant in your firms

Knowledge enterprise which consists of six people with various specialities. As a result of your and your partners work the enterprise has been doing well for the last five years. Your boss has identified a business opportunity in the Middle east during a recent visit there and wants to diversify by opening one more enterprise in the Gulf. Your boss has already decided on the individuals for the new office. However he asks you to select a person from your group to head the new office in the Gulf.
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 The person best qualified is your immediate assistant,

Rajiv. He is experienced and he has successfully led 34 five software projects. If he were sent to the Gulf a big vacuum would be created in the office here and it would be difficult to replace him. At the same time your partner is interested to send his niece, Geeta, who is a graduate from the local university but has not worked with a knowledge enterprise. If you recommend rajiv, which creates a vacuum, you would still have a problem with Geeta. If you recommend Geeta to go to the Gulf the boss would be happy and you would be rid of her.
WHAT IS YOUR RECOMMENDATION?
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Reviewing Organisations Present Situation

35

What is the current state of the organisation? What is your track record? What is the organisational mission? What are its major products/services/programmes? What are the core competencies of this organisation? What is its financial standing?

What are the plans for the future?

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Assess your strengths and weaknesses?

36

Internal Resources Financial resources Overall performance

Strong weakness

Slight weakness

neutral

Slight strength

Strong strength

Ability to raise capital Cash position

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Assess your strengths and weaknesses?

37

Internal Resources Marketing Resources

Strong weaknes s

Slight neutral weaknes s

Slight strength

Strong strength

1. Market performance
Knowledge of markets location

product
Advertising and promotion price
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Assess your strengths and weaknesses?

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Internal Resources Operational Resources Production facilities

Strong weakness

Slight weakness

neutral

Slight strength

Strong strength

Access to suppliers
Inventory Control Quality Control Organisationa l Structure Sasmita k Maurya, Faculty

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Assess your strengths and weaknesses?

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Internal Resources Human Resources Number of Employees

Strong Slight weakness weakness

neutral

Slight strength

Strong strength

Relevance of skills Morale Compensation

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Financial Management
40

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Functions of Financial Management

41

Estimating financial requirement Identifying sources of finance Raising of finance Proper use of finance Control of finance

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Functions involved in Financial Management

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Managerial finance functions

- estimating financial requirement -Identifying sources of finance - raising of finance - proper use of finance - control of finance Routine finance functions - cash receipts and payments, safeguarding cash balances, securities, insurance policies etc, accounting, regular return of borrowed funds.
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Working Capital cycle

43 CASH

Receivables

Raw material

Finished Goods

Work in Progress

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Illustration
44

Assume that production is 100,000 units per annum.

Total production cost Rs 90,000 p.a. One manufacturing cycle 120 days (that is, three

cycles a year) Working capital needed- Total Cost/Manufacturing cycle = Rs 90,000/3 = Rs 30,000.

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Marketing Management
45 NEW VENTURES

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Marketing Philosophy
46

Production driven Sales driven Consumer driven

Competitive Pressure Entrepreneurs background

Short term focus

Factors Influencing the Choice of Marketing Philosophy

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Market Segmentation
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Demographic Variables

Benefit Variables

Age

Convenience

Marital status
Gender Occupation Income Location

Cost
Style trends

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Consumer Behaviour- Five major consumer classifications

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Convenience goods Shopping goods Specialty goods Unsought goods New products

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Marketing Stages for a growing venture

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Responsive marketing Opportunistic marketing

Diversified marketing

Entreprene urial marketing

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The evolution of Marketing Function

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Stage I Entreprene urial Mktg

Stage II Stage III Opportunisi Responsive tc Mktg Mktg

Stage IV Divesrified Mktg

Strategy Mktg Organization

Market niche Informal, flexible

Mkt penetration Sales mgt

Product-mkt development Product-mkt mgt

New business development Corporate and divisional levels

Mktg Goals
Critical success factor

Credibility in the mkt place

A lil help from friends

Sales volume
Prodtn economies

Customer satisfaction
Funcl coordination

PLC and portfolio mgt

Entrepreneurs hip and innovation

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Discussion
51

Identify and discuss three of the psychological

characteristics that help an entrepreneur identify and describe customers. Also explain how the product life cycle will affect the purchasing behaviour of these customers.
How would an entrepreneurs new-venture strategy

differ under each of the following marketing philosophies: product driven, sales-driven, consumer driven?
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How does the way consumers view a ventures

product or service affect strategy? For example, why would it make a difference to the entrepreneurs strategy if the consumers viewed the company as selling a convenience good as opposed to shopping good?

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Ethics and Entrepreneurship

53 ETHICAL BUSINESS IS GOOD BUSINESS

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Short term profit at the cost of losing a customer is long term death for your business.

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Developing a code of ethics

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1 Identify your general principles that would lead to fair business practices. 2. Check with your industry association for basic standards to review 3. Allow for the fact that ethical questions do not always have a unique, faultless answer. 4. Write out specific statements that will assist you and others in making day-to-day ethical decisions. 5. Apply your code of ethics to a written policy and procedure manual identifying the major rules for operating your business.
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Developing a code of ethics

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6. Train your employees (and family members) to make ethical decisions about the business.

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Your code of ethics will apply to all types of business operations including the following. What others can you add to this list?
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* Handling cash and checks from customers * "Negotiating" special prices for a friend without permission * Accepting gifts from suppliers and business associates Selling damaged merchandise Warranties on products * Merchandise return policies for customers * Returning merchandise to suppliers * Handling shoplifters
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* Supporting your advertising promises * Checking in merchandise when received from suppliers * Keeping the premises clean and free from harmful substances or germs. * Handling employee performance problems * Telling customers the truth

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Decision Making Skills for Ethical decisions

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Define the problem/identify the real problem Explore alternative solutions to problems Identify the consequences of alternative solutions Collect information

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Activity- Consider the given business

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1. Identify problems the entrepreneur might encounter in running this business in an ethical manner. 2. Develop a 10-point code of ethics for the business. 3. Discuss policies and procedures appropriate for this business that would support the code of ethics. 4. List as many ethical problems as possible that might be faced by employees during a normal work day. Discuss the possible solutions for the problems. Consider how a procedure guide might help employees to make the best decisions.
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