ENTREPRENEURSHIP DEVELOPMENT MATERIAL - MECHANICAL ENGINEERINF III EAR/1SEM

ENTREPRENEURSHIP
DEVELOPMENT

B. Tech (MECHANICAL ENGINEERING) III year-I semester

Study Material

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ENTREPRENEURSHIP DEVELOPMENT MATERIAL - MECHANICAL ENGINEERINF III EAR/1SEM

UNIT-1

ENTREPRENEURSHIP

CONCEPT OF ENTREPRENEURSHIP
Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along
with any of its uncertainties in order to make a profit. The most prominent example of
entrepreneurship is the starting of new businesses.

In economics, entrepreneurship connected with land, labour, natural resources and capital can
generate a profit. The entrepreneurial vision is defined by discovery and risk-taking and is an
indispensable part of a nation’s capacity to succeed in an ever-changing and more competitive global
marketplace.

Meaning of Entrepreneur
The entrepreneur is defined as someone who has the ability and desire to establish, administer and
succeed in a startup venture along with risk entitled to it, to make profits. The best example of
entrepreneurship is the starting of a new business venture. The entrepreneurs are often known as a
source of new ideas or innovators, and bring new ideas in the market by replacing old with a new
invention.
It can be classified into small or home business to multinational companies. In economics, the profits
that an entrepreneur makes are with a combination of land, natural resources, labour and capital.
In a nutshell, anyone who has the will and determination to start a new company and deals with all
the risks that go with it can become an Entrepreneur.
What is the introduction to entrepreneurship?

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Entrepreneurship is the art of starting a business, basically a startup company offering creative
product, process or service. We can say that it is an activity full of creativity. An entrepreneur
perceives everything as a chance and displays bias in taking decision to exploit the chance.

What is entrepreneurship development?

Entrepreneurship development is the means of enhancing the knowledge and skill of
entrepreneurs through several classroom coaching and programs, and training. The main point
of the development process is to strengthen and increase the number of entrepreneurs

What is Entrepreneurship Development?

Entrepreneurship Development is defined as a process of enhancing the skill set and knowledge of
entrepreneurs regarding the development, management and organization of a business venture while
keeping in mind the risks associated with it. This is carried out through training programs and
sessions which are aimed at accentuating entrepreneurial acumen. Pursuing this field as a career, you
will be working towards facilitating skill development amongst budding entrepreneurs and assisting
them to tackle their struggles with building their businesses.

What are the 4 Types of Entrepreneurship?

It is classified into the following types:
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., builds 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-

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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.

Characteristics of Entrepreneurship:
Not all entrepreneurs are successful; there are definite characteristics that make entrepreneurship
successful. A few of them are mentioned below:

1. Ability to take a risk- Starting any new venture involves a considerable amount of failure
risk. Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks,
which is an essential part of being an entrepreneur.
2. Innovation- It should be highly innovative to generate new ideas, start a company and earn
profits out of it. Change can be the launching of a new product that is new to the market or a
process that does the same thing but in a more efficient and economical way.
3. Visionary and Leadership quality- To be successful, the entrepreneur should have a clear
vision of his new venture. However, to turn the idea into reality, a lot of resources and
employees are required. Here, leadership quality is paramount because leaders impart and
guide their employees towards the right path of success.
4. Open-Minded- In a business, every circumstance can be an opportunity and used for the
benefit of a company. For example, Paytm recognised the gravity of demonetization and
acknowledged the need for online transactions would be more, so it utilized the situation and
expanded massively during this time.
5. Flexible- An entrepreneur should be flexible and open to change according to the situation.
To be on the top, a businessperson should be equipped to embrace change in a product and
service, as and when needed.
6. Know your Product-A company owner should know the product offerings and also be aware
of the latest trend in the market. It is essential to know if the available product or service
meets the demands of the current market, or whether it is time to tweak it a little. Being able
to be accountable and then alter as needed is a vital part of entrepreneurship.

Importance of Entrepreneurship:

1. Creation of Employment- Entrepreneurship generates employment. It provides an entry-

level job, required for gaining experience and training for unskilled workers.
2. Innovation- It is the hub of innovation that provides new product ventures, market,
technology and quality of goods, etc., and increases the standard of living of people.
3. Impact on Society and Community Development- A society becomes greater if the
employment base is large and diversified. It brings about changes in society and promotes
facilities like higher expenditure on education, better sanitation, fewer slums, a higher level of
homeownership. Therefore, entrepreneurship assists the organization towards a more stable
and high quality of community life.

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4. Increase Standard of Living- Entrepreneurship helps to improve the standard of living of a

person by increasing the income. The standard of living means, increase in the consumption
of various goods and services by a household for a particular period.
5. Supports research and development- New products and services need to be researched and
tested before launching in the market. Therefore, an entrepreneur also dispenses finance for
research and development with research institutions and universities. This promotes research,
general construction, and development in the economy.

Types of Entrepreneurship Development

The types of entrepreneurship development programs depend on the types of entrepreneurs. As per
research, different types of entrepreneurship have been identified. All types of entrepreneurship are
catalysts for economic development.

Business author Clarence Danhof classified entrepreneurs on the basis of economic development and
risk-taking. He put them into four categories:
1. Innovative Entrepreneur: Such an entrepreneur is one who aggressively gathers information,
generates new business ideas based on the information and puts these ideas into practice. They have
a shrewd business sense and create new products and new markets. Steve Jobs and Mark Zuckerberg
are examples.

2. Adoptive Entrepreneur: Such an entrepreneur is skilled in enhancing already existing ideas and
technology to create a competitive advantage. They can exogenously enhance or change technologies
and create more jobs. For example, development of smaller shopping malls and manufacturing of car
parts etc.
3. Fabian Entrepreneur:
Such an entrepreneur has a more orthodox and traditional approach to business. They do not believe
in taking risks or innovating. Usually, they are the second-generation business owners of an existing
business.
4. Drone Entrepreneur:
Such entrepreneurs are laggards in their fields. They are not motivated by new and exciting
opportunities to grow their business. Instead, they are happy to struggle to make ends meet. Their
approach to business can push them out of competition, especially when the market becomes too
competitive.
Entrepreneurs can also be classified on the basis of some other markers:
Based on the type of business:
Agricultural Entrepreneur: An individual involved in the business of agriculture and any of the
related activities such as cultivation, irrigation, agricultural technology, etc.
Manufacturing Entrepreneur: An entrepreneur, who identifies market gaps, researches the
resources and raw materials to fulfill the gap, finds the technology and produces the finished
product.
Trading Entrepreneur: All manufacturers do not engage in marketing their products themselves.
They look for trading partners who can increase the reach of their products to businesses and
consumers. These trading entrepreneurs are the links between the manufacturer, the wholesaler, the
retailer and the consumer.
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Based on technology use:

1. Technical Entrepreneurs: These entrepreneurs are intrigued by new technology and start
businesses in the field of science and technology. They offer products and services related to
technology.
2. Non-technical Entrepreneurs: These entrepreneurs do not concern themselves with the
technological aspects of products and services they produce. They develop marketing and
promotional strategies for their products and services.
Other Types Of Entrepreneurs:
1. Women Entrepreneurs:
While entrepreneurship has been on the rise, development of women entrepreneurship has gathered
steam only in recent years. This is especially true in India. With more women having access to
education and technology, they can explore their creative sides to actually create profitable
businesses. As per the Indian government, an enterprise that gives 51% stake to women, including
51% of the employment generated to women, is considered a women entrepreneurship enterprise.
The Government of India is giving a fillip to the development of women entrepreneurship by
providing vocational and skill-building courses at minimal or no cost and by providing loans and
help for women to set up their own businesses.
2. First-generation Entrepreneurs:
These are individuals who do not belong to business families and have started their businesses
without any family support or backing. Deregulation has helped many individuals set up their own
businesses. Innovative entrepreneurs are often first-generation entrepreneurs.
Since all the above categories display distinct characteristics, the types of entrepreneurship
development programs for each of these categories must be focused and different.
6Cs that motivate entrepreneurs to establish their own business are as follows −
1. Change − Entrepreneurs frequently want change, not only change, they also want to be the
bearers of change. They are solution givers and want to interrupt the status quo. They have a
vision like "I want to assemble the world's information" or "I want to put an AC at every
desk" and they take an attempt to make this change. In this attempt, some succeed and some
fail.
2. Challenge − some people love challenges and they opt for starting a new business as it is
very challenging to handle big problems. These people find typical job in a big corporate as
boring and not challenging enough.
3. Creativity − Running one’s own business is all about being more creative and having the
independence to make new discoveries. For example, testing a new website design, launching
a new marketing scheme, creating inventive items that solve a known issue in a different way,
creating new advertising campaigns, etc. One needs to have an infinite room to welcome and
introduce creativity in a small business.
4. Control − some people tend to start a business because they don't want to be pushed around
and work for a product/company in which they have no way to shape their destiny. They want
to be their own boss having their own time, own pace, location of their choice, employees of
their choice and have a progressive role in deciding the direction of the company.
5. Curiosity − Successful entrepreneurs are always anxious and ask − "what if we do X this
way?” They want to have more than one option to do a work and choose the best one from
them. They want to understand the customer's perceptions, point of views, markets and

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competitors. They are frequently anxious to see how their particular theory like "people want
to do A with B" works. In this aspect, they can’t be differentiated from a scientist who is
trying to prove his theorem.
6. Cash − the last but not the least part is the cash. Money says it all. Many no entrepreneurs
have a misconception that cash comes first for entrepreneurs but this is never really true. If
this would be the case, then there is no reason for an Ellison or Gates to keep expanding their
business aggressively after they have made more than billion dollars. However, money is not
the primary motivation.

Introduction to Entrepreneurship
Entrepreneurship - Concept, knowledge and skills requirement - Characteristics of successful
entrepreneurs - Entrepreneurship process - Factors impacting emergence of entrepreneurship -
Differences between Entrepreneur and Entrepreneur - Understanding individual entrepreneurial
mindset and personality - Recent trends in Entrepreneurship.

Introduction to Entrepreneurship
Entrepreneurship is the art of starting a business, basically a startup company offering creative
product, process or service. We can say that it is an activity full of creativity. An entrepreneur
perceives everything as a chance and displays bias in taking decision to exploit the chance.
An entrepreneur is a creator or a designer who designs new ideas and business processes
according to the market requirements and his/her own passion. To be a successful entrepreneur, it is
very important to have managerial skill and strong team building abilities. Leadership attributes are a
sign of successful entrepreneurs. Some political economists regard leadership, management ability,
and team building skills to be the essential qualities of an entrepreneur.
n entrepreneur is an innovator or a creator who introduces something new to the firm or
economy. It can be a new method of production, a new product, a new source of material, a new
market or any other similar innovation. Thus, an entrepreneur is an innovator, creator, borrower,
purchaser, etc. Some famous entrepreneurs are Azim Premji, Lakshmi Mittal, and Ekta Kapoor.

What entrepreneurship really means?

Entrepreneurship is the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit. The most prominent
example of entrepreneurship is the starting of new businesses.

CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR

1. Capacity to take risk

2. Capacity to work hand
3. Above average intelligence and wide knowledge
4. Self-Motivation
5. Vision and foresight
6. Willingness to defer consumption

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7. Imagination initiative and emulation

8. Incentive ability and sound judgment
9. Flexibility and sociability
10. Desire to take personal responsibility.
11. Desire to seek and use feedback
12. Persistence in the face of adversity
13. Innovativeness and future orientation
14. Mobility and drive
15. Creative Thinking.
16. Strong need for achievement
17. Ability to Marshall resources
18. High degree of ambition
19. Will to conquer & impulse to fight.
20. Will to prove superior to others.

2. Knowledge and Skills of Entrepreneur

1. 1 Idea generation & scanning of the best suitable idea

2. Determination of the business objective
3. Product analysis and market research
4. Determination of form of ownership
5. Completion of promotional formalities
6. Raising necessary funds
7. Procuring machine & material
8. Recruitment of men
9. Undertaking the business operations

QUALITIES OF ENTREPRENEUR

Being an entrepreneur is about more than just starting a business or two, it is about having
attitude and the drive to succeed in business. All successful Entrepreneurs have a similar way of
thinking and possess several key personal qualities that make them so successful in business.
Successful entrepreneurs like the ambitious Richard Branson have an inner drive to succeed and
grow their business, rather than having a Harvard Business degree or technical knowledge in a
particular field.

All successful entrepreneurs have the following qualities:

Inner Drive to Succeed

Entrepreneurs are driven to succeed and expand their business. They see the bigger picture and
are often very ambitious. Entrepreneurs set massive goals for themselves and stay committed to
achieving them regardless of the obstacles that get in the way.

Strong Belief in themselves

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Successful entrepreneurs have a healthy opinion of themselves and often have a strong and
assertive personality. They are focused and determined to achieve their goals and believe
completely in their ability to achieve them. Their self-optimism can often been seen by others as
flamboyance or arrogance but entrepreneurs are just too focused to spend too much time thinking
about un-constructive criticism.

Search for New Ideas and Innovation

All entrepreneurs have a passionate desire to do things better and to improve their products or
service. They are constantly looking for ways to improve. They're creative, innovative and
resourceful.

Openness to Change
If something is not working for them they simply change. Entrepreneurs know the importance of
keeping on top of their industry and the only way to being number one is to evolve and change with
the times. They're up to date with the latest technology or service techniques and are always ready to
change if they see a new opportunity arise.

Competitive by Nature

Successful entrepreneurs thrive on competition. The only way to reach their goals and live up to
their self imposed high standards is to compete with other successful businesses.

Highly Motivated and Energetic

Entrepreneurs are always on the move, full of energy and highly motivated. They are driven to
succeed and have an abundance of self motivation. The high standards and ambition of many
entrepreneurs demand that they have to be motivated!

Accepting of Constructive Criticism and Rejection

Innovative entrepreneurs are often at the forefront of their industry so they hear the words "it
can't be done" quite a bit. They readjust their path if the criticism is constructive and useful to their
overall plan, otherwise they will simply disregard the comments as pessimism. Also, the best
entrepreneurs know that rejection and obstacles are a part of any leading business and they deal with
them appropriately.

True entrepreneurs are resourceful, passionate and driven to succeed and improve. They're
pioneers and are comfortable fighting on the frontline The great ones are ready to be laughed at and
criticized in the beginning because they can see their path ahead and are too busy working towards
their dream.

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ENTREPRENEURIAL PROCESS
Definition: The Entrepreneur is a change agent that acts as an industrialist and undertakes the
risk associated with forming the business for commercial use. An entrepreneur has an unusual
foresight to identify the potential demand for the goods and services.
The entrepreneurship is a continuous process that needs to be followed by an entrepreneur to plan
and launch the new ventures more efficiently.
Entrepreneurial Process

1. Discovery: An entrepreneurial process begins with the idea generation, wherein the
entrepreneur identifies and evaluates the business opportunities. The identification and the evaluation
of opportunities is a difficult task; an entrepreneur seeks inputs from all the persons including
employees, consumers, channel partners, technical people, etc. to reach to an optimum business
opportunity. Once the opportunity has been decided upon, the next step is to evaluate it.
An entrepreneur can evaluate the efficiency of an opportunity by continuously asking certain
questions to himself, such as, whether the opportunity is worth investing in, is it sufficiently
attractive, are the proposed solutions feasible, is there any competitive advantage, what are the risk
associated with it. Above all, an entrepreneur must analyze his personal skills and hobbies, whether
these coincides with the entrepreneurial goals or not.

2. Developing a Business Plan: Once the opportunity is identified, an entrepreneur needs to

create a comprehensive business plan. A business plan is critical to the success of any new venture

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since it acts as a benchmark and the evaluation criteria to see if the organization is moving towards
its set goals.
An entrepreneur must dedicate his sufficient time towards its creation, the major components of a
business plan are mission and vision statement, goals and objectives, capital requirement, a
description of products and services, etc.

3. Resourcing: The third step in the entrepreneurial process is resourcing, wherein the
entrepreneur identifies the sources from where the finance and the human resource can be arranged.
Here, the entrepreneur finds the investors for its new venture and the personnel to carry out the
business activities.
4. Managing the company: Once the funds are raised and the employees are hired, the next
step is to initiate the business operations to achieve the set goals. First of all, an entrepreneur must
decide the management structure or the hierarchy that is required to solve the operational problems
when they arise.
5. Harvesting: The final step in the entrepreneurial process is harvesting wherein, an
entrepreneur decides on the future prospects of the business, i.e. its growth and development. Here,
the actual growth is compared against the planned growth and then the decision regarding the
stability or the expansion of business operations is undertaken accordingly, by an entrepreneur.
The entrepreneurial process is to be followed, again and again, whenever any new venture is
taken up by an entrepreneur, therefore, its an ever ending process.
Factors Influencing Entrepreneurship Development
Entrepreneurs are visionary, creative, confident, opportunity seeker, relation builder, and risktaker
individuals who decided to ditch the nine-to-five lifestyle to set up their own businesses, taking on financial
risks in the hope for profit. But what is the making of such individuals? What factors play behind the scenes to
produce them? Entrepreneurship, in fact, is a complex phenomenon influenced by the interplay of many
distinct factors.
Economic Factors
The economic environment exercises the most direct and immediate influence on entrepreneurship. This
is likely because people become entrepreneurs due to necessity when there are no jobs. “In countries where
the economy is poorer, or where unemployment rates are high, citizens turn to starting their own small
businesses where they see opportunity,” Trilby Rajna of Approved Index said. Economic factors impacting
entrepreneurship include:
1. Capital
Capital is one of the most important factors, yet one of the biggest barriers when launching a new
business. Entrepreneurs require capital to start risky ventures and also require instant capital to scale
up the business quickly if the idea is found to be successful. There are however numerous ways to
fund a new venture including bank loans, crowdfunding, and bootstrapping.
2. Labor
The availability of labor impacts entrepreneurship. Nevertheless, the quality rather than the quantity of
labor influences the emergence and growth of entrepreneurship.
3. Raw Materials
The necessity of raw materials consisting of natural resources hardly needs any emphasis for
establishing any industrial activity and the emergence of entrepreneurship. The absence of raw
materials adversely affects the entrepreneurial development.

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Psychological Factors
They say entrepreneurship is not for the faint of heart. But then for whom is it! What does it take for an
individual to become an entrepreneur? While there isn’t a single “ideal” entrepreneurial personality, one thing
remains constant: an entrepreneurial spirit. This type of spirit entails many traits and characters that make 400
million entrepreneurs out of 7 billion people worldwide.(1)
1. Passion
Starting up a new business is not an easy task to pull off and a consistent and constant commitment to
the idea and the long hours it will require to turn it to a success is essential. Passion is the fuel of this
commitment that motivates entrepreneurs to rise early in the morning and put their blood, sweat, and
tears into their business.
2. Need for Achievement
Entrepreneurs are self-starters with a need to achieve. This achievement motivation isn’t necessarily
driven by the incentives of financial gain only but also by the satisfaction gain. To add, entrepreneurs’
motivation extends to reach their employees and partners to keep them on the same page and drive
them to achieve as well.
3. Resilience
Resilience comes with the package of the entrepreneurial spirit to help entrepreneurs stay determined
in the face of any defeat they might encounter throughout the process. Failure is then a mere lesson to
learn from and continue instead of giving up.
Social Factors
Social factors can go a long way in boosting entrepreneurship. In fact, it was the highly helpful society that
made the industrial revolution a glorious success in Europe. Such factors strongly affect the entrepreneurial
behavior, which contributes to entrepreneurial growth. The main components of the social environment
include:
1. Family Background
Family background including the size, type, and economic status can influence entrepreneurs and;
therefore, entrepreneurship. Nonetheless, the entrepreneurial spirit does not necessarily run in the
family. According to some sources, 51.9% of all entrepreneurs were the first to launch a business in
their family.(2) Furthermore, less than 1% of all entrepreneurs come from extremely rich or extremely
poor families.
2. Education
Studies state that 95.1% of all entrepreneurs hold a bachelor degree, 47% of those have advanced in
their education and acquired masters, Ph.D. or the like.(2) This is a well enough indicator of the
importance of education to the development of entrepreneurship.
3. Social Networks
Interacting with the surrounding society and forming a reliable network is essential. Social networks
facilitate access to information and influence the quality, quantity, and speed of information reception
thus help identify opportunities.

Differences between Entrepreneur and Intrapreneur

1. Dependency
a. Entrepreneur: He is independent in his operations. He is fully independent. He
does not work for others and his own boss.
b. Intrapreneur: But, an intrapreneur is dependent on the entrepreneur, i.e., the
owner. He depends on corporate owner. He works for corporation under defined rules
and regulations.

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2. Core objective
a. Entrepreneur: To innovate something new of socio economic value
b. Intrapreneur: To increase competitive strength and market sustainability of the
organization
3. Capital/ Investment
a. Entrepreneur: He manages required capital himself. He raises fund for new
business.
b. Intrapreneur: He does not need to manage required fund because corporation
raises capital for the business.
4. Risk Bearing
a. Entrepreneur: he bears the risk involved in the business. He bears
100% business risk. He risks own money.
b. Intrapreneur: He does not fully bear the risk involved in the enterprise. He
does not bear full risk of the business, He risks others money.
5. Primary Motive
a. Entrepreneur: Primary motive of entrepreneur is to be independent, self-
satisfaction and earn monetary reward.
b. Intrapreneur: He has the motive of advancement and promotion with fixed
salary.
6. Time Bound
a. Entrepreneur: He does not follow strict timetable. It may take several years for
the growth of the business.
b. Intrapreneur: He is bounded by the corporate timetable.
7. Mind-set

a.Entrepreneur: He is guided by the principle of ‘Problems provide opportunities’.

b.Intrapreneur: He thinks that the problems are threats for him and his corporation.

What Is the Entrepreneurial Mindset?

1. Determination
The refusal to fear failure keeps entrepreneurs going. As setbacks happen, entrepreneurs seek
solutions instead of focusing on the negative.
2. Focus
Entrepreneurs rarely allow distractions to take their minds off matters at hand. It’s a quality that
many UAGC students develop in college. As busy students, most are required to balance school with
the responsibilities of work and family.
3. Drive
Entrepreneurs are driven to make their ideas work, so much so that they develop daily habits in
order to remain on track.
4. Decisiveness
When you’re the head of an entrepreneurial venture, everything falls on you. Time is money, so
the ability to make rational decisions quickly can help an entrepreneur avoid wasteful thoughts and
actions.

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5. Independence
Though networking plays a big part in sharing ideas and gaining perspective, entrepreneurs are
very comfortable taking matters into their own hands. The need for independence is one of the
reasons why a person who has already enjoyed a long career in business may break from their
company to strike out on their own.
6. Authenticity
There is a genuineness to entrepreneurs; they’re not phonies. Even if people don’t always believe
in their ideas, you cannot question their passion for what they are hoping to create.
7. Flexibility
9-to-5 is not really an option for entrepreneurs. They’re thinking about their ideas 24/7, and have
no qualms about getting down to work at any time of the day or night. It’s a trait they share with
UAGC students who are perfectly comfortable finishing a paper after the kids have gone to bed, or
reading the chapter of a book on their phones during their lunch breaks.
8. A Thirst for Knowledge
Entrepreneurs have a natural desire to learn, and this is what often drives them to earn their
degrees. They have ideas, but they recognize that much more information is needed to bring those
ideas to life.
9. Creativity
The ability to think outside the box and improvise when necessary is an essential element of the
entrepreneurial mindset. Entrepreneurs can see how something is done and imagine how it can be
done better.
.
Entrepreneurial personality, a matter of mindset?

Entrepreneurial personality:

The definition of an entrepreneurial attitude consists of three parts.

1. Seeing opportunities
The first part is seeing opportunities. Everyone sees opportunities. For example, you walk past
an empty building, and you fantasize about what you could start there. However, you can also
observe an opportunity within an entrepreneurial venture or public organization. For example, a CEO
or receptionist envisions another approach that saves the company a lot of money. However, if you
don’t take action, it’s nothing more than dreaming and fantasizing.
2. Seizing opportunities
The second part follows the first part, which is really starting to do something with the
opportunity. Or at least investigate whether it makes sense to implement the perceived probability.
Is it financially feasible? Are you the right person to take that opportunity? Do you have the
entrepreneurial personality and personal qualities to realize the opportunity?
3. Creating value
The third and last part is the creation of value. Even if you exploit the opportunity, meaning the
approach that you have devised for the organization where you work actually saves money, the
question remains if it is sufficient. Can you make enough money with the business you started in the
vacant building? And value is of course, much more than just money.
Value can also mean freedom, to be able to do what you really like and what makes your
customers happy. Or social entrepreneurship, where you help solve societies’ problems with a new

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business. You generate not only value for yourself (income, freedom, proactivity) but also value for
others (making customers happy and working towards a better world).
So, the definition of an entrepreneurial personality is:
An entrepreneurial personality sees opportunities and exploits them by creating value for
themselves and others, sustainably.(Dr. Martijn Driessen)
The personality aspects of a true entrepreneur are someone who:
• Uses His Manipulating Power.
• Gives His Opinion Without Being Asked.
• Creates A Vision And A Novel Idea For A Competitive Advantage
• Works Focused And Shows Conscientiousness.
• Likes To Organize And Manage Things; Call It Execution Power (Entrepreneur Vs
Manager).
• Keeps An Open Mind.
• Has A Different Perception And Sees Problems As An Opportunity.
• Takes Criticism Personally.
• Does Well Around Others.
• Wants To Be The Leader Of A Team.
• Knows How To Make Others Enthusiastic.
• Is At His Best When Things Run Smoothly And Orderly.
• Is A Pain In The Ass When Things Don’t Run (At All).
• Thinks Constantly About The Goals And Entrepreneurial Strategies.

ENTREPRENEURSHIP TRENDS TO WATCH IN 2022 AND 2023

1. Working from home and hybrid work

Remote work was once seen as an option for a select few industries. The pandemic revealed that
many people could work successfully from home, especially those in IT-related businesses.
These days, lots of entrepreneurs work exclusively or mostly from home, as do many
entrepreneurial ventures with small workforces. This is a benefit for many startups. After all, it
eliminates a major expense by not having to pay for office space.
That being said, many organizations are trying to shift their employees back to the office. Not
every employee or business owner wants remote work as a long-term option. Nor is remote work a
suitable option for every kind of organization either.
This is why we will likely see most businesses embrace a hybrid work model. Employees and
contractors will retain the flexibility of working in a remote location. It will also encourage in-person
collaboration for more exploratory or hands-on work. Potentially providing the benefits of both
remote and in-person, while removing the drawbacks.
2. Mobile optimization
According to a study by Google, 50% of shopping apps installed on a smartphone are used at
least weekly. It’s also anticipated that global consumer mobile spending will reach $728 billion by
2025.
Companies that want to succeed online need to begin or increase investment in mobile
optimization. The mobile version of their online stores must be easy to navigate. It should reflect the
capabilities of the desktop version, and ideally, work consistently between the two.

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Just remember that being present and optimized for mobile is only one part of the overall
equation. You need to be optimized and consider user experience anywhere.
3. Increased diversity in the workforce
Diversity is increasing in the workforce like never before. No longer is the professional and
entrepreneurial sphere relegated to men, for example. Women make up a large proportion of
working-class professionals and even entrepreneurial leaders. In large part thanks to major societal
shifts.
Furthermore, many entrepreneurial companies employ diverse workforces of people from many
races, creeds, and religious faiths. This is a great thing, and it ties into profits at the same time.
Millennials are more likely to shop at places they know are appropriately diverse and dedicated to
social justice.
There is undeniably a revitalized focus on diversity, especially from the consumer perspective.
However, there’s still a struggle to make businesses and their respective hiring practices more
diverse as well. Businesses that truly embrace it will:

• Develop more well-rounded teams.

• Have a better chance of hiring the best employees.
• Ideally, help make the business landscape truly diverse.
But those that fain diversity or ignore it entirely in favor of outdated biases will become left
behind.
4. Niche market service
At the same time, many companies are specializing in offering increasingly niche market
services. Why? Simply put, lots of people want to be unique.
Therefore, companies are changing their brand identities, taglines, and even offering products to
provide niche, specialized things for their target audiences. You can even see this at fast-food
companies that claim that customers can order food “their way.”
Bespoke options are now the name of the game. Especially for eCommerce businesses or online
markets such as Etsy. Simple things like adjusting your email marketing message with a
personalizing a greeting are just the baseline.
Having options to create a personalized product or even add a name or color can be incredibly
worthwhile. Consumers want something unique that most people will never get their hands on.
5. The rise of the gig economy
It’s no surprise that the gig economy has risen in tandem with all these other trends. The gig
economy relies on front-line or working-class employees. People constantly moving from gig to gig,
always chasing another payday and working for clients on a per-job basis.
Businesses like Uber and DoorDash have proven the profitability of this business model. One
where they technically don’t employ anyone but which connect independent contractors with
customers.
Whether this is a good thing is up for debate, of course. But there’s no denying the influence the
gig economy has had on the workforce. Freelance websites such as Upwork are just the start. They
now allow individuals with in-demand skills to advertise themselves, build brands, and essentially
run their own businesses.
As more and more workers feel empowered to pursue new endeavors, the need for gig economy
platforms will continue to grow. However, the expectations from those that leverage them for work
will also increase. There’s an increased willingness to step away from poor working conditions. This

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means current and emerging gig-economy services will need to step up in how they treat contract
workers.
6. Long-term cash planning
More entrepreneurs are looking into long-term cash planning for their budgets. Rising
inflation alone is pushing entrepreneurs to ensure their cash remains solvent and stable. This includes
investing in long-term growth initiatives or commodities associated with your business. While it may
be an upfront cost, it encourages long-term stability and insures against rising expenses.
It’s similar to taking out a life insurance policy. Which requires individuals to pay more initially
but save money as they get older. To that end, lots of entrepreneurial companies are investing in their
employees, retirement packages, and so on. As a bonus, this is also ideal for attracting top talent
across industries.
7. Subscription-based businesses
Subscription-based businesses have exploded due to the pandemic. As lockdowns began in 2020,
many people turned to these online purchases initially for safety. According to a recent study by
McKinsey, 49% of shoppers currently use a subscriptions service. However, the added convenience
is expected to continue stimulating continued growth.
With these businesses, clients rarely purchase or outright own the products or services they use.
However, they get constant management support, tech help, and other benefits by subscribing to the
ongoing oversight of a company. For items that they do own, they’re locked into a monthly
membership that may include exclusive items, discounts, etc.
These can be broken down into three types of subscriptions: replenishment, curation, and access.
It involves the likes of streaming services, SaaS companies, and more traditional physical retail items
like food, beauty, and apparel.
Adapting a subscription-based business model is a major focus for most established businesses
moving forward. Consistent revenue, better engagement and brand loyalty, and increased customer
value are all major benefits. However, it will take investing in excellent service and online
infrastructure to be truly effective.
8. Eco-friendly business practices and products
Millennials and younger shoppers are increasingly concerned with the health of the planet. They
tend to shop with brands that make a show of being eco-friendly or practice green product
manufacturing standards.
Entrepreneurs are paying attention to these business trends and are dedicated to reinventing their
companies to be more eco-friendly. That may require changes such as:

• Auditing and adjusting business partnerships.

• Investing in green initiatives for the office like solar panels or emission standards.
• Donating a portion of profits to green initiatives and non-profits.
• Providing incentives to employees for participating.
Keep in mind, that you don’t need to make all of these changes overnight. However, it’s worth
outlining how to integrate these practices into your business within the next five years. Consumers
are beginning to care more and eco-friendly practices are here to stay.
9. Social commerce
Social commerce is where a business sells products directly on social media, and it has risen into
an $89.4 billion market. Product or brand discovery, exploration, potentially engaging with micro-
influencers and finally purchasing. It’s all done on social media platforms.

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It’s designed to remove friction with your customers and be present where they are most
engaged. However, there are often specific requirements to participate meaning you’ll need to grow
your social following. This may require you to focus more on social media as part of your digital
marketing strategy.
Thankfully, it’s an investment that will likely pay off. This market is expected to grow past $735
billion in sales by 2025. More and more people are using social for product research. Plus, if you
want to attract a younger audience—social media is the place to be.
If you’re not or barely using social, now is the time to start. You’ll likely be surprised by how
cost-effective it is and how well it integrates with other business operations.
10. Crypto acceptance
Cryptocurrency has evolved far beyond a short-term fad. Bitcoin and other crypto coins are now
incredibly popular thanks to the ease of selling and buying them. Now, more companies than ever are
accepting cryptocurrencies at their online stores.
This has several important benefits, including:

• The ability to accept money from anywhere in the world

• The ability to hold currencies that aren’t overseen by a national government or bank system
• The ability to accept more customers at one’s online store
All of these benefits may make crypto tokens very attractive for eCommerce enterprises.
Businesses generally make more money as they offer more payment methods. So this trend will
likely continue, with more options emerging, for some years to come. The only major drawback to
consider is increased government scrutiny over this payment model, which may hamper adoption.
Take advantage of these trends for entrepreneurs
Some of these trends may feel familiar. Things like mobile optimization, working from home,
and environmental considerations have been brewing for years. Others, like subscription services and
crypto acceptance, have seen new life due to the pandemic. Regardless, it’s becoming natural for
consistent entrepreneurial trends to take hold and see consistent growth for years at a time.

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UNIT II
STARTING A NEW VENTURE
An enterprise also means an undertaking, a business firm or venture. Here is a step-by-step
approach for starting a new venture. These can be divided into three stages:

Step-by-step approach for starting a new venture

1. Pre-launch Stage
2. Launch Stage
3. Post launch Stage

1. Pre launch Stage

The following steps are involved in a Pre-launch stage in starting of a new venture.
1. Identify, Analyze and decide on the business idea.
2. Analysis of strengths, weaknesses, opportunities and threats.
3. Analyze competition and select the positioning strategy.
4. Estimate and forecast the market size, growth and marketing feasibility which
involvemeasurement of demand - supply gap.
5. Whether to be an ancillary unit.
6. Understand the technology, process and selection of the idea.
7. Decide on the size of the enterprise in terms of production capacity, employees.
8. Decide on the location of the venture.
9. Identify the incentives given by the Government to promote the small and
mediumindustries.
10. Understand the relevant laws which are applicable for the business.
11. Analyse the business idea as opportunity in terms of Profit, costs, expenditure,
income,sales, market share.
12. Estimation of manpower requirements.
Pre-Launch Stage of a new venture involves collection of information through primary and
secondary sources of data. It is a critical stage. The skills that are required are entrepreneurial
skillsof business opportunity identification and analytical skills.
The functional areas of marketing and finance dominate this stage. Forecasting skills are also
required in this stage.
2. Launch Stage
1. Selection of the Name of the enterprise.
2. Hiring or construction of building
3. Deciding on the ownership pattern — sole proprietor, partnership, private or public
limitedcompany and limited liability partnership.
4. Registration of the firm. If it is a partnership firm, then agreements has to be signed.
Theregistration processes of SMEs have been streamlined.
5. Now provisional registration certificate can be obtained online with District
IndustriesCentre.
6. Preparation of business plan and project report.
7. Deciding on the product mix and markets to serve.
8. Application for loan to banks. If private or public, issue of shares.
9. Raising of finance.

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10. Ordering and installation of machinery.

11. Recruitment of people.
12. Deciding on the channel of distribution.
13. Sources of raw materials to be finalized and purchases made.
14. Production started.
15. Products to be made available in the market.

In Launch stage of a new venture, operational actions and decisions are taken. It
requires managerial skills of coordination with the various agencies. Project management skills
are required.There is lead time from planning to implementation stage. Close monitoring has to
be made to see that the launch is as per the plan. Delay will increase the cost and have impact
on thefinances of the firm.
3. Post Launch
1. Teething problems to be solved.
2. Systems to be developed in all the areas of management
3. Feedback on the product
4. Changes if needed to be introduced.
5. Expansion decisions.
After launch of the business, the gestation period varies from one to three years. The
provisional certificate is valid for a year. After commencement of business, permanent
certificate is to be obtained from District Industries Centre.
An entrepreneur has to plan and prepare for this critical period. The profits will start flowing
once the business settles down. All the businesses may not succeed, so mental preparation for
failure and exit route should also be a part of the business plan

SOURCES OF NEW IDEAS FOR ENTREPRENEURS

The entrepreneurial idea is a feasible, financially sound, technically possible, and

sociallyacceptable idea of a project or product that may have utility lo perspective customers.
No one can come up with an idea and, in the very first instance, convert it into a
business opportunity and start a small business on that basis. The majority of good business
opportunities do not come suddenly. It comes from an established mechanism to generate many
ideas so that at least one idea has the potential for a business opportunity. It requires a series of
steps to finalize it into a profitable business. This is the first step in idea generation and
evaluation.

Entrepreneurs throughout the world use the following sources to tap to identify good ideas:

1. Customers :Prospective customers know best what they want and the habits/tastes that
will be popular shortly.

2. Existing organization:Competing products and services of existing organizations

andevaluation thereof is a successful source of new ideas.

3. Distribution channels:Member of the distribution channels; intermediaries,

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transientcustomer preference, and possible expectations may be a good business idea.

4. Government:The government can be a source of new product ideas in many ways.

1. First, the files of the Patent Office contain numerous new product possibilities. They
cansuggest other more marketable new product ideas.
2. Secondly, new product ideas can respond to government regulations, industrial
policy,investment guidelines, annual plan, Five-year plan, etc.
3. Thirdly, several government agencies nowadays assist entrepreneurs in discovering
evaluating business ideas.
4. Fourthly, government publications on trade and industry can also help set new
ventureideas.
5. Financial institutions and Development Agencies

These organizations also provide ready projects and offer suggestions to potential
entrepreneurs who help identify promising projects.

Community Development Financial Institutions Fund, Small Business Administration, Office

of Advocacy, United States Chamber of Commerce, Economic Development Administration,
Small Business and Entrepreneurship Council, House Committee on Small Business, and many
other bodies in the USA are working to improve entrepreneurship and small businesses.
6. Research and Development

The entrepreneur’s own “research and development” is the largest source of new ideas. It may
be a more formal endeavor connected with one’s current employment or an informal laboratory
in theprivate premises.

METHODS OF IDEA GENERATION

1. Focus Groups

Focus groups are good sources of product ideas.

A moderator leads a group of people through an open, in-depth discussion rather than simply
asking questions to solicit participant response; for a new product area, the moderator focuses
thegroup’s discussion in either a directive or a nondirective manner.
2. Brainstorming

The brainstorming method for generating new product ideas is based on the fact that people can
be stimulated to greater creativity by meeting with others and participating in organized group
experiences.

This method would be effective if the effort focuses on a specific product or market area. The
following four rules should be followed when using this method:

1. No criticism is allowed by anyone in the group – no negative comments.

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2. Freewheeling is encouraged- the wilder the idea, the better.

3. Quantity of ideas is desired- the greater the number of ideas, the greater the likelihood
ofuseful ideas emerging.
4. Combinations and improvements of ideas are encouraged – ideas of others can still
produceanother new idea.

The brainstorming session should be fun, with no one dominating or instituting the discussion.
3. Collective Notebook Method

In the collective notebook method, a small notebook that easily it’s in a pocket, containing a
statement of the problem, blank pages, and any pertinent background data, is distributed.
4. Heuristics Method

Heuristics relies on the entrepreneur’s ability to discover through a progression of thoughts,

5. Synectics Method

Synectics is a creative process that forced individuals to solve problems through four analogy
mechanisms: ‘ personal, direct, symbolic, and fantasy. A group works through a two-step process.

The first step is to make the strange familiar.

Through generalizations or models, this involves consciously reversing the order of things and
putting the problem into a readily acceptable or familiar perspective, thereby eliminating the
strangeness.

Once the strangeness is eliminated, participants engage in the second step, making the familiar
strange through personal, direct, or—symbolic analogy, which ideally results in a unique
solutionbeing developed.

6. Checklist Method

A new idea is developed through a lot of related issues or suggestions.

The entrepreneur can use the list of questions or statements to guide the direction of developing
entirely new ideas or concentrating on specific “idea” areas. The checklist may take any form
andbe of any length.

7. Dream Approach

The big dream approach to coming up with a new idea requires that the entrepreneur dreams
aboutthe problem and. Its solution- thinking big.
8. Market Gap Analysis

Market gap analysis is a powerful method used to uncover areas in the market in which the

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needsand wants far exceed the supply.

This method has a hopper or gathering effect of converting everyday information into bunches of
lucrative product and service gaps that few have thought of before.
9.Life-style analysis Method
ntrepreneurs can use lifestyle analysis effusively for product-service ideas. Lifestyle is a person’s
pattern of living expressed in his or her psychographics

10. Reverse brainstorming

While the process of brainstorming is the generation of ideas to identify problem-solving
methods, reverse brainstorming starts with thinking about the causes of that problem. Focusing on
the causes of the problem may sometimes be more efficient than focusing on the solution. By
finding potential causes, you can work proactively to resolve or prevent the cause of the
problem. Often, teams usereverse brainstorming to improve products and services.

11. Brain writing

A brainwriting activity is typically most effective in a group setting. Start by writing a topic on
a piece of paper. Then, pass the paper around the group so that everyone has a turn to write on it
and contribute their ideas to the central topic or question. The ideas of one group member can
inspire the ideas of another, or someone may choose to improve upon an existing one.
12. Brain netting
Brain netting involves the use of cloud-based documents or programs for groups to share and
collaborate. This form of brainstorming can be quite interactive with the addition of links,
videos and images to provide visual representations and context. Using an online program also
works when working with a team either live or remotely, which could be beneficial for those
collaboratingwithin different time zones.

13. Forced relationships

The forced relationships method introduces two random and seemingly unrelated items and
forces you to create a connection between them. This technique encourages innovative thinking
in order to build those relationships and possibly develop a new product. You can conduct
forced relationship activities in group settings or individually.

14. Role-storming
Role-storming is brainstorming with the added element of role-playing. To bring out new
perspectives and different ideas, participants could imagine that they're in a different role in
relation to the brainstorming goal. They could pretend they're a client or manager assessing the
same goal and ask themselves what improvements to implement.

15. Storyboarding
Develop a storyboard by finding pictures, quotes and other visual information associated with
the focus of your brainstorming. Then, you could arrange these items to create a narrative and
add notes to help explain the progression of the ideas. Storyboarding can be a more interactive
method when searching for physical items to add to the board. The physical aspect of seeking and
buildingcan allow your brain to process the visual information in front of you at a faster rate.

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16. Five whys

This method often begins with a real or hypothetical problem that you could address with your
team. You would ask them why a problem happens or is happening. After the initial round of
responses and forming an answer, a facilitator asks again and again until the fifth time. The
reason for asking the same question five times is to find deeper answers, as the first response is
typicallymore shallow.

17. Six thinking hats

You can use this technique with groups of at least six people. Each participant represents a
"thinking hat," or different thought focuses, such as benefits, emotions, facts, ideas, judgment
and planning. With these mindsets, each person addresses the topic or problem from that
standpoint.
18. S.C.A.M.P.E.R.
S.C.A.M.P.E.R. stands for substitute, combine, adapt, modify, put to another use, eliminate and
reverse. This acronym is essentially a question checklist to prompt your ideas. It asks you to
consider factors like substituting a variable for another, combining one with another or adapting
a variable to a different context. This method helps you think critically and consider creative
approaches from several angles.

19. S.W.O.T. analysis

S.W.O.T. is an acronym for strengths, weaknesses, opportunities and threats. You can usually
use this method individually or with a team to assess the worth of proposed projects. You could
ask what the strengths, weaknesses, opportunities and threats are for a particular project to help
decideif you should proceed with it.

20. Group sketching

In this method, each group member passes around a piece of paper to sketch something related
to a central concept or related to another sketch on the paper. Once the entire group has
completed sketching, discuss the images and form connections between them. Visually thinking
and creating can give a form to the group's ideas in a way that they can then interpret a plan or
design.

OPPORTUNITY RECOGNITION AND EVALUATION

Creativity and Idea Generation
Entrepreneurial creativity is regarded as the driving element behind the present-day vibrant
business environment and socio-economic growth
Preparation: This stage entails investigation and information gathering. Preparation involves
leveraging on (a) work experience and learning; (b) information seeking from social networks; and
(c) alertness and opportunity identification. The tacit knowledge acquired through work
experience and education broadens intellectual space of entrepreneurs. It helps entrepreneurs to
understand the need and a possible solution, and discover opportunities. The entrepreneurs use
social networks to enlarge their information pool and by remaining alert to the environment, use

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these pieces of disparate information to connect them to opportunities.

Incubation: This stage is characterised by processing the information gathered in the
preparation phase and is typically referred to as “connecting the dots”. In what is essentially a
mental process, entrepreneurs study the related and unrelated information and connect the dots
to identify the available opportunity.
Idea experience: This phase marks the discovery of an idea, which is sometimes perceived as
the only component in the creativity process. Here new ideas often emerge through a slow and
gradual process. Idea generation may not always result in the discovery of intended workable
solutions, but often results in discovering solutions for unintended outcomes.
Evaluation and implementation: This stage requires entrepreneurial action to evaluate and
implement the new idea and is characterised by uncertainties and difficulties necessitating self-
discipline, courage and steadfastness. Many entrepreneurs fail several times before successfully
implementing their new ideas, or transform their ideas and give them a new direction during the
implementation process. Sometimes they abandon them completely. Evaluation of ideas before
implementation constitutes another important activity in this phase.

Opportunities and Ideas

(a) perceiving a possibility to create new businesses, or
(b) significantly improving the position of an existing business, in both cases resulting in
newprofit potential”.
Opportunities are chances to do something different and better (Wickham, 2006).
Entrepreneurial opportunities refer to favourable business circumstances for the introduction of
new products, services or a combination of both, new processes, new production techniques,
new marketing techniques, entry to new markets and acquiring of new resources. Innovation is
at the core of entrepreneurial opportunities

FEASIBILITY STUDY
Project management is the process of planning, organizing, and managing resources to
bring about the successful completion of specific project goals and objectives. A feasibility
study is a preliminary exploration of a proposed project or undertaking to determine its merits
and viability. A feasibility study aims to provide an independent assessment that examines all
aspects of a proposed project, including technical, economic, financial, legal, and environmental
considerations. This information then helps decision-makers determine whether or not to
proceedwith the project.

The feasibility study results can also be used to create a realistic project plan and
budget. Without a feasibility study, it cannot be easy to know whether or not a proposed project
is worth pursuing.

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Types of feasibility:

A feasibility analysis evaluates the project’s potential for success; therefore, perceived
objectivity is an essential factor in the credibility of the study for potential investors and lending
institutions.There are five types of feasibility study:
1. Technical Feasibility
This assessment focuses on the technical resources available to the organization. It helps
organizations determine whether the technical resources meet capacity and whether the
technical team is capable of converting the ideas into working systems. Technical feasibility
also involves the evaluation of the hardware, software, and other technical requirements of the
proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star
Trek’s transporters in their building—currently, this project is not technically feasible.
2. Economic Feasibility :
This assessment typically involves a cost/ benefits analysis of the project, helping
organizations determine the viability, cost, and benefits associated with a project before
financial resources are allocated. It also serves as an independent project assessment and
enhances project credibility—helping decision-makers determine the positive economic benefits
to the organizationthat the proposed project will provide.
3. Legal Feasibility:
This assessment investigates whether any aspect of the proposed project conflicts with
legal requirements like zoning laws, data protection acts or social media laws. Let’s say an
organization wants to construct a new office building in a specific location. A feasibility study
might reveal the organization’s ideal location isn’t zoned for that type of business. That
organization has just saved considerable time and effort by learning that their project was not
feasible right from the beginning.
4. Operational Feasibility
This assessment involves undertaking a study to analyze and determine whether—and how
well— the organization’s needs can be met by completing the project. Operational feasibility
studies also examine how a project plan satisfies the requirements identified in the requirements
analysis phaseof system development.

5. Scheduling Feasibility

This assessment is the most important for project success; after all, a project will fail if
not completed on time. In scheduling feasibility, an organization estimates how much time the
projectwill take to complete.

Importance of Feasibility Study

The importance of a feasibility study is based on organizational desire to “get it right”
before committing resources, time, or budget. A feasibility study might uncover new ideas that
could completely change a project’s scope. It’s best to make these determinations in advance,
rather than to jump in and to learn that the project won’t work. Conducting a feasibility study is
always beneficial to the project as it gives you and other stakeholders a clear picture of the
proposed project.

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Benefits of conducting feasibility study:

▪ Improves project teams’ focus

▪ Identifies new opportunities
▪ Provides valuable information for a “go/no-go” decision
▪ Narrows the business alternatives
▪ Identifies a valid reason to undertake the project
▪ Enhances the success rate by evaluating multiple parameters
▪ Aids decision-making on the project
▪ Identifies reasons not to proceed

BUSINESS PLAN
A business plan is a document that outlines your business’s financial goals and explains how
you’ll achieve them. A strong, detailed plan will provide a road map for the business’s next
three to five years, and you can share it with potential investors, lenders or other important
partners.
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 ofyour 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 while writing other
sections thatgo into more detail.
2. Describe your company
Company description should contain information like:
Your business’s registered name.
Address of your business location.
Names of key people in the business. Make sure to highlight unique skills or technical
expertiseamong members of your team.
Your company description should also define your business structure — such as a sole
proprietorship, partnership or corporation — and include the percent ownership that each owner
has and the extent of each owner’s involvement in the company.
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. The key is to provide a clear explanation of the
opportunity presented and how the loan or investment will grow your company.
4. Describe your products and services
Go into detail about the products or services you offer or plan to offer. The following

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shouldbe included:
An explanation of how your product or service works.
The pricing model for your product or service.
The typical customers you serve.
Your supply chain and order fulfillment strategy.
Your sales strategy.
Your distribution strategy.
You can also discuss current or pending trademarks and patents associated with your product or
service.
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 that.
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.
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:
Net profit margin: the percentage of revenue you keep as net income.
Current ratio: the measurement of your liquidity and ability to repay debts.
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.
9. Add additional information to an appendix
List any supporting information or additional materials that you couldn’t fit in elsewhere, such
as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank
statements, contracts and personal and business credit history. If the appendix is long, you may
want to consider adding a table of contents at the beginning of this section.

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UNIT III

FINANCIAL ASPECTS OF PROMOTIONSOURCES OF FINANCE

Internal sources of finance

Owners capital refers to money invested by the owner of a business. This often comes from
their personal savings. Personal savings is money that has been saved up by an entrepreneur. This
sourceof finance does not cost the business, as there are no interest charges applied.
Retained profit is when a business makes a profit, it can leave some or all of this money in the
business and reinvest it in order to expand. This source of finance does not incur interest
charges or require the payment of dividends, which can make it a desirable source of finance.

Selling assets involves selling products owned by the business. This may be used when either a
business no longer has a use for the product or they need to raise money quickly. Business
assets that can be sold include for example, machinery, equipment, and excess stock.

External sources of finance

Family and friends - businesses can obtain a loan or be given money from family or friends
thatmay not need to be paid back or are paid back with little or no interest charges.
A bank loan is money borrowed from a bank by an individual or business. A bank loan is paid
offwith interest over an agreed period of time, often over several years.

Overdrafts - are where a business or person uses more money than they have in a bank
account. This means the balance is in minus figures, so the bank is owed money. Overdrafts
should be used carefully and only in emergencies as they can become expensive due to the high
interest rates charged by banks.

Venture capital and business angels - refers to an individual or group that is willing to invest
money into a new or growing business in exchange for an agreed share of the profits. The
venture capitalist will want a return on their investment as well as input into how the business is
run.

New partners - is when an additional person or people are brought into the business as a new
business partner. This means they would provide money to then own part of the business.

Share issue - a business may sell more of their ordinary shares to raise money. Buying shares
gives the buyer part ownership of the business and therefore certain rights, such as the right to
voteon changes to the business.
A trade credit must be agreed with a supplier and forms a credit agreement with them. This
source of finance allows a business to obtain raw materials and stock but pay for them at a later
date. The payment is usually made once the business has had an opportunity to convert the raw

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materials and stock into products, sell them to its own customers, and receive payment.

Leasing - is a way of renting an asset that the business requires, such as a coffee machine.
Monthly payments are made and the leasing company is responsible for the provision and
upkeep of the leased item.

Hire purchase - is used to purchase an asset, such as a delivery van or piece of equipment. A
deposit is paid and the remaining amount for the asset is paid in monthly installments over a set
period of time. The business does not own the item until all payments are made.

Government grants - are a fixed amount of money awarded by the government. Grants are
given to a business on the condition that they meet certain criteria such as providing jobs in areas
of highunemployment. These do not usually need to be paid back.

The advantages and disadvantages of the different sources of finance

Source of finance Advantages Disadvantages

Owners capital quick and convenient the owner might not have enough
savings or may need the cash for
doesn’t require borrowing personal use
money
once the money is gone, it’s gone
no interest payments to make

Source of finance Advantages Disadvantages

Retained profits quick and once the money is gone, it is not

convenienteasy available for any future unforeseen
access to the money problems the business might face

no interest payments to make

can create space for more
profitable uses
might not get the full market value of
Selling assets can be quick the assets or even be able to sell them at
all
raise money from unused
equipment might need the assets in the future

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low interest money may be lost if the business fails

Family and friends
money may not need to be arguments may occur between family
paid back members

easy and quick to access have to pay interest

Bank loan
can get a significant amount difficult for a new business to access
of money at one time

quick access high interest rates

Overdraft
allows emergency purchases is only a short term solution

gain money quickly

owner must give away part of the
Venture capitalists potential to raise huge business
and business angels amount of money
they may have a different vision for
they may offer advice and the business than the owner does
help
easy way to gain money
owner must give away part of the
New partners potential to raise huge business
amount of money
they may have a different vision for
they may offer advice and the business than the owner does
help
can gain lots of money give away part of the business
Share issue quickly
leaves a business open to takeovers
no interest payable
Source of finance Advantages Disadvantages

shareholders receive dividends

access to supplies without short term, must be paid off
Trade credit immediate payment quickly usually small amounts

no interest

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no large upfront payments over time it can be a more expensive

way to obtain assets
Leasing leasing company may be
responsible for repairs and assets aren’t owned by the business
maintenance

expensive assets can be interest is charged on hire purchase

Hire purchase purchased and paid back over items
time
equipment is not owned until the final
payment is made
does not need to be paid back business needs to meet certain criteria
Government grants available to small businesses
it is time-consuming to apply for
grants and to complete the paperwork

Long-Term Sources of Finance

• Share Capital or Equity Shares
• Preference Capital or Preference Shares
• Retained Earnings or Internal Accruals
• Debenture / Bonds
• Term Loans from Financial Institutes, Government, and Commercial Banks
• Venture Funding
• Asset Securitization
• International Financing by way of Euro Issue, Foreign Currency Loans, ADR, GDR, etc.

Short Term Sources of Finance

• Trade Credit
• Short Term Loans like Working Capital Loans from Commercial Banks
• Fixed Deposits for a period of 1 year or less
• Advances received from customers
• Creditors
• Payables
• Factoring Services
• Bill Discounting etc.

According to Ownership and Control:

• Sources of finances are classified based on ownership and control over the business.
These two parameters are an important consideration while selecting a source of funds

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for the business. Whenever we bring in capital, there are two types of costs – one is the
interest and another is sharing ownership and control. Some entrepreneurs may not like
to dilute their ownership rights in the business and others may believe in sharing the
risk.

Owned Capital
• Equity
• Preference
• Retained Earnings
• Convertible Debentures
• Venture Fund or Private Equity

Borrowed Capital
Borrowed or debt capital is the finance arranged from outside sources. These sources of debt
financing include the following:
• Financial institutions,
• Commercial banks or
• The general public in case of debentures
• There is no dilution in ownership and control of the business.
• The cost of borrowed funds is low since it is a deductible expense for taxation purpose
which ends up saving on taxes for the company.
• It gives the business the benefit of leverage.

According to source of generation:

Internal Sources
The internal source of capital is the one which is generated internally by the business. These
areas follows:
• Retained profits
• Reduction or controlling of working capital
• Sale of assets etc.

External Sources
An external source of finance is the capital generated from outside the business. Apart
fromthe internal sources of funds, all the sources are external sources.
Deciding the right source of funds is a crucial business decision taken by top-level
financemanagers.

Classification on various bases:

1. On the Basis of Period:
• Long-term: The long term sources fulfil the financial requirement of an enterprise for a
period exceeding 5 years. It includes sources such as shares and debentures, long term

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borrowing and loans from a financial institution.

• Medium-term: When funds are required for more than 1 year but less than 5 years then
the company opt for medium-term finance options. These sources include borrowings
from commercial banks, public deposits etc.
• Short-term: Short-term funds are those which are required for a period not exceeding
one year. Trade credits, loans from commercial banks and commercial papers are some
examples of short-term funds.
2. On the Basis of Ownership:
• Owner’s Fund: Those funds which are provided by the owner of the enterprise are
called Owner’s Fund. Shares and retained earnings are some examples of the Owner’s
Fund.
• Borrowed Fund: Those funds which are borrowed from the outsiders as loans or
borrowings are called Borrowed Funds.
3. On the Basis of Source of Generation:
• Internal Source: Those funds which are generated from inside the business are called
Internal Sources of Fund. Collection of receivables, disposing of surplus inventories are
some examples of internal sources.
• External Source: External Sources of funds include those sources that lie outside the
organization such as suppliers, lenders and investors.
There is not a single best source of funds for all organizations. Depending on the situation,
purpose, cost and associated risk, a choice may be made about the source to be used. We
willsee them one by one:

1. Retained Earnings: A portion of profit or earnings which wasn’t distributed to the

shareholders as dividends and retained in the business is called Retained Earnings. It is a source
of internal financing or self-financing or ‘ploughing back of profits. The company can use its
retained earnings as a source of finance.
2. Trade Credit: Trade Credit is a short-term finance option in which credit is extended by one
trader to another for the purchase of goods and services. It facilitates the purchase of goods or
services without immediate payment. The volume and period of credit are extended
depending on factors such as the reputation of the purchasing firm, the financial position of the

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seller, volume of the purchase, record of the payment and degree of risk and competition
prevailing in the market.
3. Factoring: Factoring is a financial service in which a business sells its account receivables
to a third party (Factor) at a certain discount before the maturity date to meet its immediate and
present cash needs. The factor provides the funds at that time and collects them from the firm’s
debtors on the date of maturity.
4. Lease Financing: A contractual agreement in which the right to use any asset is given by
one party i.e. the owner of the assets to the other party in return for a periodic payment. The
owner of the assets is called the “lessor” and the user of the assets is called the “lessee”. It can
also be called renting an asset for a specified period. Generally, fixed assets are leased.
5. Public Deposits: The money that is directly raised from the public is called Public Deposits.
The interest rates offered on public deposits are generally higher than bank deposits. It can be
used to raise the medium and short-term requirements of a business. Any person who is
interested in depositing money in an organization can do so by filling up a prescribed form. The
organization in return issues a deposit receipt as an acknowledgement of the receipt.
6. Commercial Paper: Commercial Paper is an unsecured promissory note issued by a firm to
raise funds for a short period, varying from 90 days to 364 days. It can be issued by any firm to
other business firms, insurance companies, pension funds and banks. The amount raised by
Commercial Paper is generally very large. As the debt is unsecured, the firm having a good
creditrating can only issue Commercial Paper.
7. Issue of Shares: The smallest unit of a firm’s capital is called a share. The firm’s capital is
divided into small units and issued as shares to the public. The capital obtained by Issue of
Shares is called ‘Share Capital’. It is a type of Owner’s Fund. Two types of shares can be
issued:
• Equity Shares: Equity Shares are those types of shares in which there is no fixed
dividend but have ownership and voting rights. The equity shareholders of the company
are called Owner of the company. They do not get a fixed dividend but are paid based
on the earnings of the company.
• Preference Shares: Preference shares are those types of shares that have a little
preference over equity shares. Preference Shareholders get a fixed rate of dividend and
have the right to get their capital before the equity shareholders at the time of
liquidation. Although, they don’t have any voting right in the management of the
company.
8. Debentures: Debenture is a type of financial instrument with a fixed rate of interest. It is a
type of long term debt capital issued by a company as an acknowledgement that the
company has borrowed a certain amount of money. Interest can be paid half-yearly or yearly on
debentures.
9. Commercial Banks: Commercial Banks are very vital in providing funds as they provide
funds for different purposes and different periods. Banks provide loans to firms in many ways,
like, cash credits, overdrafts, term loans, discounting of bills and issue of letters of credit. The
rate of interest charged on such credits varies from bank to bank as well as the nature, amount
and period of that loan.
10. Financial Institutions: There are several financial institutions established by
Government in the country to provide finance to business organisations. They provide both
owned capital and loan capital for the long and medium-term requirements. As these

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institutions aim at promoting the industrial development of a country, these are also called
‘Development Banks’. In addition to providing financial assistance, these institutions also
conduct surveys and provide technical assistance and managerial services to organisations.

International Financing:
With the opening up of the economy and the operations of the business organisation, apart from
the sources mentioned above, organisations can raise funds internationally. Various
international sources from which funds may be generated include;
1. Commercial Banks: Commercial Banks are all over the world, they extend foreign currency
loans for a different purposes to organisations worldwide.
2. International Agencies and Development Banks: Several international agencies and
development banks at national, regional and international levels have emerged over the years to
finance international trade and business. These institutions provide long and medium-term
loans and grants to promote the development of economically weaker countries as well as
economically weaker areas.
3. International Capital Market: Just like the domestic capital market, companies can get
funds from international capital markets as well. Prominent financial instruments used for
this
are Global Depository Receipts (GDRs) and American Depository Receipts (ADRs) and
Foreign Currency Convertible Bonds (FCCBs)

Factors Affecting the Choice of the Source of Funds:

Different types of businesses have different types of financial needs. Therefore, business firms
resort to different types of sources of funds. As no source of funds is free from risk and certain
limitations, companies opt to use a combination of sources rather than relying on a single
source.Several factors affect the choice of this combination, we will see them one by one:
1. Cost: The cost of procurement of funds as well as the cost of utilising the funds are taken
into consideration while deciding about the choice of funds that will be used by an
organisation.
2. Financial Strength and Stability of Operations: Company’s financial strength and position
is key element to take into account. Funds need to be repaid to the source it has been generated
from, so for this, a business should be financially stable. When the earning position of the
business is not stable, fixed charged funds like preference share and debentures shouldn’t be
taken.
3. Form of Organization and Legal Status: The legal entity (i.e. sole proprietorship,
partnership or company) of a business allows or prohibits
choosing from various options of funds. Like only a public company can issue equity shares to
raise money from the market, not the partnership business or even private company.
4. Purpose & Period: The purpose and period are important factors that affect the choice.
Short- term use of funds has different sources where a company can choose from whereas Long-
term use of funds has different sources.
5. Risk Profile: The risk factor associated with a different type of source of finance varies from
each other. For example, there is the least risk inequity as the share capital has to be repaid only
at the time of winding up and dividends need not be paid if there is no profit but in debentures

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are opposite in terms of payment of interest.

6. Control: If a company wants to generate fund from issuing equity shares then it has to
sacrifice a bit of ownership and control to the public whereas by issuing debt funds like
debentures or taking a loan, a company doesn’t have to compromise with the ownership and
control.
7. Effect on Credit Worthiness: Credit Worthiness is the company’s power or ability to repay
the debts. Some source of funds affects the creditworthiness of a company negatively; a
companymay choose not to consider those options while selecting the source of finance.
8. Flexibility and Ease: Generally, those options which are more flexible and easy are
preferable rather than those which have restrictive provisions, detailed investigation and
documentation.
9. Tax Benefits: Various sources offer different tax benefits to the organization, while the
dividend on preference shares is not deductible, interest paid on debentures and loan is tax-
deductible.

COMMERCIAL BANKS

A commercial bank is a kind of financial institution that carries all the operations related
to deposit and withdrawal of money for the general public, providing loans for investment, and
other such activities. These banks are profit-making institutions and do business only to make a
profit.
The two primary characteristics of a commercial bank are lending and borrowing. The
bank receives the deposits and gives money to various projects to earn interest (profit). The
rate of interest that a bank offers to the depositors is known as the borrowing rate, while the
rate at which a bank lends money is known as the lending rate.

Functions of Commercial Bank:

The functions of commercial banks are classified into two main divisions.
(a) Primary functions
Accepts deposit : The bank takes deposits in the form of saving, current, and fixed
deposits. The surplus balances collected from the firm and individuals are lent to the
temporary requirements of the commercial transactions.
Provides loan and advances : Another critical function of this bank is to offer loans and
advances to the entrepreneurs and business people, and collect interest. For every bank, it is
the primary source of making profits. In this process, a bank retains a small number of deposits
as a reserve and offers (lends) the remaining amount to the borrowers in demand loans,
overdraft, cash credit, short-run loans, and more such banks.
Credit cash: When a customer is provided with credit or loan, they are not provided with liquid
cash. First, a bank account is opened for the customer and then the money is transferred to the
account. This process allows the bank to create money.
(b) Secondary functions

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Discounting bills of exchange: It is a written agreement acknowledging the amount of money

to be paid against the goods purchased at a given point of time in the future. The amount can
alsobe cleared before the quoted time through a discounting method of a commercial bank.
Overdraft facility: It is an advance given to a customer by keeping the current account to
overdraw up to the given limit.
Purchasing and selling of the securities: The bank offers you with the facility of selling and
buying the securities.
Locker facilities: A bank provides locker facilities to the customers to keep their valuables or
documents safely. The banks charge a minimum of an annual fee for this service.
Paying and gathering the credit : It uses different instruments like a promissory note,
cheques,and bill of exchange.

Types of Commercial Banks:

There are three different types of commercial banks.
Private bank –: It is a type of commercial banks where private individuals and businesses
own a majority of the share capital. All private banks are recorded as companies with limited
liability. Such as Housing Development Finance Corporation (HDFC) Bank, Industrial Credit
and Investment Corporation of India (ICICI) Bank, Yes Bank, and more such banks.
Public bank –: It is a type of bank that is nationalised, and the government holds a
significant stake. For example, Bank of Baroda, State Bank of India (SBI), Dena Bank,
Corporation Bank,and Punjab National Bank.
Foreign bank –: These banks are established in foreign countries and have branches in other
countries. For instance, American Express Bank, Hong Kong and Shanghai Banking
Corporation(HSBC), Standard & Chartered Bank, Citibank, and more such banks.

Examples of Commercial Banks

Few examples of commercial banks in India are as follows:
1. State Bank of India (SBI)
2. Housing Development Finance Corporation (HDFC) Bank
3. Industrial Credit and Investment Corporation of India (ICICI) Bank
4. Dena Bank
5. Corporation Bank

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Role & Importance of Commercial banks in India:

Commercial banks in India are the backbone of all major economic activities in the country,
whether it is for the citizens to keep their hard-earned money safely or get loans whenever they
need funds for important things like a home, wedding, a car or for business. It won’t be an
analogy to say that banks and businesses run hand in hand, as without adequate credit support,
businessesfind it hard to flourish, and vice versa.

Scheduled and Non-scheduled Banks:

Scheduled banks are those banks which are listed in the second schedule of the RBI Act 1934.
These banks are licensed after they fulfil certain statutory conditions such as a paid-up capital
of minimum ₹ 50 Lakh and must satisfy the CRAR norms as prescribed by the RBI.
On the other side, non-scheduled banks are mainly the local area banks, and there are very
few of them. These banks are not under any obligation to fulfil CRAR norms or keep reserves.
They work on the lines of a cooperative society and help people in need with mutual
aspirations. A few local area banks are: Coastal Local Area Bank Ltd (Vijayawada), Capital
Local Area Bank Ltd (Phagwara), Subhadra Local Area Bank Ltd (Kolhapur) and a few
others.
Now, if we talk about the major categories that fall under the commercial bank, here are a few
details regarding the same;

Public Sector Banks

These banks are the nationalized banks undertaken by the Government of India in a way or the
other. Many people can relate to these as state-run banks. Nationalized banks account for over
75% of the overall business transactions that happen in the country. Out of all these public

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sector banks, we all know the State Bank of India, which is now amongst the top 50 banks in the
world. As per the recent reports, after the amalgamation of smaller banks with larger banks,
there are 12public sector banks in India as of now. The names of these banks are:
State Bank of India Punjab National Bank Bank of Baroda Bank of India
Bank of Maharashtra Union Bank of India Canara Bank Central Bank of
India
Indian Bank Indian Overseas Bank Punjab & Sindh Bank UCO Bank

Private Sector Banks

Private sector banks are the ones that work on similar lines as the nationalized banks do, the
only difference is that the majority stakes in these banks are privately owned, as in the major
stakes in the equity are owned by private stakeholders or business houses. These banks majorly
work on the lines of profit-making by keeping deposits providing loans and other products
related to financialactivities.
The major private sector banks in the country are:
HDFC Bank Kotak Mahindra Bank ICICI Bank
IndusInd Bank IDFC Bank YES Bank
South Indian Bank Bandhan Bank Laxmi Vilas Bank
The banks mentioned above might account for a lesser share in the overall banking operations
in the country but they excel in terms of customer engagements and overall standards of
service.

Foreign Banks
A foreign bank is a bank having its head-quarter outside the country but run its offices as a
private entity at any other location outside the country. The bank may have as many branches
and offices they find suitable, they are under an obligation to operate under the regulations
provided by the central bank of the country as well as the rule prescribed by the parent
organization located outsideIndia.
Some major foreign bank that operates in India are as given below:
HSBC Bank CitiBank Standard Chartered Bank
American Express Banking DBS Bank India Limited FirstRand Bank
Corporation
Credit Suisse JP Morgan Chase Bank SBer Bank

Regional Rural Banks

These banks also fall under the category of scheduled commercial banks of small scale, the
main objective behind the formation of such banks is to provide credit support to economically
weaker sections of the society like labourers, farmers, rural traders and small business owners.
Most of these banks are regional as the name suggests, means these banks operate in particular
regions andmight have branches in the metropolitans as well.

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Payments bank
Payment bank is a relatively Indian new model of banks. Conceptualised and regulated by the
Reserve Bank of India (RBI), payments banks can accept a restricted deposit up to Rs. 1 lakh
per customer. Payments Banks can offer services like debit/credit cards, net-banking and
mobile- banking services.

Primary functions of Commercial banks –

The primary function of a commercial bank is to serve the public with the right intentions. As a
list, the primary functions would be:
Accepting deposits
Advancing loans

Secondary functions of Commercial banks –

The secondary functions of commercial banks can be described as the following:
Overdraft Facility
Discounting bills of exchange
Agency functions
General utility functions

Bottom line
Commercial banks do play an important role in fulfilling the short-term and mid-term credit
requirements in an economy. However, they do not provide long-term credit for over 15 years
or more, so that liquidity of assets can easily be maintained. The funds parked at the
commercial banks belong to the general public and are withdrawn at a short notice; therefore,
commercial banks prefer to provide credit for a short period of time backed by tangible and
easily marketablesecurities.

INSTITUTIONAL FINANCE: MAJOR INSTITUTIONS PROVIDING FUNDS FOR

ENTREPRENEURS

1. Industrial Development Bank of India:

The IDBI was established on July 1, 1964 by the Government of India under an Act of
Parliament as the principal financial institution in the country.
Main Functions of IDBI

(a) The IDB1 provides assistance to the small scale sector through its scheme of refinance
and bills rediscounting scheme.
(b) The financial assistance has been indirect in the form of refinancing of loans and the
State Financial Corporations (SFCs).
(c) In order to assist the small scale sector, the IDBI has set up Small Industries Development
Fund (SIDF) in May 1986. This fund basically aims at providing a focal point to co-ordinate
financialand non-financial inputs required for growth of small industries sector.
(d) In association with Government of India, IDB1 has constituted National Equity Fund

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(NEF) to prevail equity type of support to tiny and small scale units which are engaged in
manufacturingactivities. The scheme is administered by IDB1 through nationalized banks.
(e) The IDBI has also introduced the single window assistance ‘scheme for grant of term loans
and working capital assistance to tiny, small and medium scale enterprises.

(f) The IDB1 has also set up a Voluntary Executive Corporation Cell (VECC) to use the
services of experts, professionals for counselling small units and for providing consultancy
support in specified areas.
2. Industrial Finance Corporation of India Ltd.:
The Industrial Finance Corporation of India was set up by the Government of India
under IFC1 Act in July 1948. It is an important financial institution which gives financial
assistance to the entrepreneurs through rupee and foreign currency loans, underwriting, direct
subscriptions to shares, debentures and guarantees. It also extends other financial facilities like
equipment procurement, equipment finance, buyer’s and supplier’s credit, equipment leasing
and finance toleasing and hire-purchase companies.
The IFCI has devised new promotional schemes such as

(a) Consultancy fees, subsidy schemes for assisting small scale entrepreneurs in
marketingsector.
(b) Interest subsidy schemes for women entrepreneurs.
(c) Pollution control in small and medium scale enterprises.
(d) Encouraging the modernisation of tiny, small and medium scale industries
3. Industrial Credit and Investment Corporation of India Ltd. (ICICI):
The ICICI was established by the Government of India under the Companies Act 1956,
with the objective of providing financial assistance to the small and medium scale sectors. The
main functions of ICIC1 are as follows

(a) Financial assistance is extended by way of rupee and foreign currency loans,
underwritingand direct subscriptions to shares, debentures and guarantees.
(b) Financial facilities such as deferred credit, leasing credit, instalment sale, asset credit
andventure capital are given by ICICI.
(c) It also guarantees loans from other private investment sources, small scale units are
themajor beneficiary of the ICICI assistance.
4. Life Insurance Corporation of India (LIC):
The LIC was established under the L1C Act in 1956. It offers many insurance policies
to give social security to various segments of society. As per its investment policy, LIC invests
75% and above in Central and State Government’s securities including government-guaranteed
marketable securities and in the socially-oriented sector. The LIC gives loans for activities like
housing, rural electrification, modernisation of industry, expansion, diversification of industrial
ventures, water supply and sanitation etc.

5. Unit Trust of India (UTI):

The UTI was set up by the Government of India in 1964 under an Act of Parliament.
The chief objectives of UTI are to mobilise savings of small investors through sale of units and
to channelise these savings towards corporate investment. The UTI has introduced many

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schemes which aimed at common investors. These schemes are mainly Primary Equity Fund,
Retirement Benefit Plan, Grihalaxmi Unit Plan, Unit Scheme 1995 and Columbus India Fund.
The UTI also provides financial assistance to corporate sector in the form of term loans and
underwriting directsubscriptions to shares and debentures.

6. Small Industries Development Bank of India (SIDBI):

SIDBI was established in 1989 as a subsidiary of IDBI under a Special Act. The main functions
of SIDBI are the promotion and development of small scale industries by way of financing. It
commenced its operations from 2 April, 1980 with its head office at Lucknow. The initial
authorisedcapital of SIDBI was 25 crore, which can be .extended upto 1,000 crores.
The functions of SIDBI are as follows :
▪ To promote small scale industries in semi-urban areas to create more employment
opportunities.
▪ To undertake technological up gradation and modernization of existing small
scaleindustries.
▪ To expand the channels for marketing the products of SSI sector on both domestic
and international markets.
▪ To extend seed capital or soft loan assistance under National Equity Fund Scheme
/ Mahila Udyam Nidhi Scheme.
▪ To great direct assistance and refinance for exports of small scale sector.
▪ To provide financial assistance to SFCs, SIDCs, Commercial Banks, RRBs
throughexisting credit delivery system.
▪ To provide factoring and leasing service.
▪ To provide financial assistance to the institutes, organisations for
undertakingEDPs.
▪ Special emphasis and the new schemes of assistance for marketing support to the
small scale sector.
7. Industrial Reconstruction Bank of India (IRBI):
The IRCI was set up in 1971 under the Companies Act to act as an agency to rehabilitate
the sick units. But, in the year 1984, the Government of India renamed the IRCI as Industrial
Reconstruction Bank of India (IRBI) by an Act of Parliament.
It acts as an agency of State Government, Union Government and other financial institutions as
per the authorisation of the Government.

(1) It provides consultancy and merchant banking services for reconstruction and
developmentof industrial units.
(2) It also helps in providing infrastructural facilities, raw materials, machineries and other
toolson the basis of hire-purchase and lease schemes.
8. State Financial Corporations (SFCs):
IFCI provides financial assistance only to large sized industrial undertakings. In order to
cater to the needs of the small scale units, the Government of India passed the State Financial
Corporations Act in 1951 under which the State Financial Corporations (SFCs) were set up.

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The first SFC was set up in Punjab in 1953. Today, there are 18 SFCs functioning in the
country. State Financial Corporations are managed by a Managing Director, Board of Directors
and the ExecutiveCommittee is headed by a chairman.
The functions of SFCs are as follows

(a) To advance term loans to small scale and medium scale industrial units.
(b) It underwrites the issue of stocks, shares, debentures and bonds of industrial units.
(c) It grants loans to the industrial concerns which is repayable within a period not more
than20 years.
(d) It subscribes to debentures floated by industrial concerns.
(e) It provides financial assistance to small road transport operators, tour operators, hoteliers,
hospitals, nursing homes, etc.
9. National Bank for Agriculture and Rural Development (NABARD) is an apex
development bank in India for all rural credit having headquarters based in Mumbai
(Maharashtra) and other branches are all over the country. The Committee to Review
Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD),
set up by the Reserve Bank of India (RBI) under the Chairmanship of Shri B. Sivaraman,
conceived and recommended the establishment of the National Bank for Agriculture and Rural
Development (NABARD). It was established on 12 July 1982 by a special act by the parliament
and its main focus was to uplift rural India by increasing the credit flow for elevation of
agriculture & rural non farm sector and completed its 25 years on 12 July 2007. It has been
accredited with “matters concerning policy, planning and operations in the field of credit for
agriculture and other economic activities in rural areas in India”. RBI sold its stake in NABARD
to the Government of India, which now holds 99% stake. It is active in developing financial
inclusion policy and is a member of the Alliance for Financial Inclusion.
Objectives of NABARD
NABARD was established in terms of the Preamble to the Act, “for providing credit for
the promotion of agriculture, small scale industries, cottage and village industries, handicrafts
and other rural crafts and other allied economic activities in rural areas with a view to promoting
IRDP and securing prosperity of rural areas and for matters connected therewith in incidental
thereto”.
The main objectives of the NABARD as stated in the statement of objectives while
placingthe bill before the Lok Sabha were categorized as under

(1) The National Bank will be an apex organization in respect of all matters relating to
policy, planning operational aspects in the field of credit for promotion of Agriculture, Small
Scale Industries, Cottage and Village Industries, Handicrafts and other rural crafts and other
allied economic activities in rural areas.
(2) The Bank will serve as a refinancing institution for institutional credit such as long-term,
short-term for the promotion of activities in the rural areas.
(3) The Bank will also provide direct lending to any institution as may be approved by the
CentralGovernment.
(4) The Bank will have organic links with the Reserve Bank and maintain a close link with in.

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Role and Functions of NABARD

NABARD is the apex institution in the country which looks after the development of the
cottage industry, small industry and village industry, and other rural industries. NABARD also
reaches out to allied economies and supports and promotes integrated development. And to help
NABARD discharge its duty, it has been given certain roles as follows:

(1) Serves as an apex financing agency for the institutions providing investment and
productioncredit for promoting the various developmental activities in rural areas
(2) Takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc.
(3) Co-ordinates the rural financing activities of all institutions engaged in developmental
work at the field level and maintains liaison with Government of India, State Governments,
Reserve Bank of India (RBI) and other national level institutions concerned with policy
formulation
(4) Undertakes monitoring and evaluation of projects refinanced by it.
(5) NABARD refinances the financial institutions which finances the rural sector.

OTHER INSTITUTIONS
1. Small industries development organization (SIDO)
SIDO was established in October 1973 now under Ministry of Trade, Industry and Marketing.
SIDO is an apex body at Central level for formulating policy for the development of Small
Scale Industries in the country,headed by the Additional Secretary & Development
Commissioner(Small Scale Industries)under Ministry of Small Scale Industries Govt. of India.
SIDO is playing a very constructive role for strengthening this vital sector, which has proved
to be one of the strong pillars of the economy of the
country. SIDO also provides extended support through Comprehensive plan for promotion of
rural entrepreneurship.
2. Management development Institute(MDI)
MDI is located at Gurgaon(Haryana).It was established in 1973 and is sponsored by Industrial
Finance Corporation Of India,with objectives of improving managerial effectiveness in the
industry.It conducts management development programs in various fields.In also includes the
programmes for the officers of IAS,IES,BHEL,ONGC and many other leading PSU’s.
3. Entrepreneurship development institute of India (EDI)
Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit
institute, set up in 1983, is sponsored by apex financial institutions – the IDBI Bank Ltd., IFCI
Ltd., ICICI Bank Ltd. and the State Bank of India (SBI). EDI has helped set up twelve state-
level exclusive entrepreneurship development centres and institutes. One of the satisfying
achievements, however, was taking entrepreneurship to a large number of schools, colleges,
science and technology institutions and management schools in several states by including
entrepreneurship inputs in their curricula. In the international arena, efforts to develop
entrepreneurship by way of sharing resources and organizing training programmes, have helped
EDI earn accolades and support from the World Bank, Commonwealth Secretariat, UNIDO,

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ILO, British Council, Ford Foundation, European Union, ASEAN Secretariat and several other
renowned agencies. EDI has also set up Entrepreneurship Development Centre at Cambodia,
Lao PDR, Myanmar and Vietnam and is in the process of setting up such centres at Uzbekistan
and five African countries.
4. All India Small Scale Industries Board(AISSIB)
The Small Scale Industries Board (SSI Board) is the apex advisory body constituted to render
advise to the Government on all issues pertaining to the small scale sector.It determines the
policies and programmes for the development of small industries with a Central Government
Minister as its president and the representatives of various organization i.e. Central
Government,StateGovernment,National Small Industries Corporations,State Financial
Corporation,Reserve Bank of India,State Bank of India,Indian Small Industries Board,Non
government members such as Public Service Commission,Trade and Industries Members.
5. National Institution of Entrepreneurship and Small Business
Development(NIESBUD),New Delhi
It was established in 1983 by the Government of India.It is an apex body to supervise the
activities of various agencies in the entrepreneurial development programmes.It is a society
under Government of India Society Act of 1860.The major activities of institute are:
i) To make effective strategies and methods
ii) To standardize model syllabus for training
iii) To develop training aids,tools and manuals
iv) To conduct workshops,seminars and conferences.
v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial
Development.
vi) To help support government and other agencies in executing entrepreneur development
programmes.
vii) To undertake research and development in the field of EDPs.
6. National Institute of Small Industries Extension Training
It was established in 1960 with its headquarters at Hyderabad.The main objectives of national
Institute of Small Industries Extension Training are:
i) Directing and Coordinating syllabi for training of small entrepreneurs.
ii) Advising managerial and technical aspects.
iii) Organizing seminars for small entrepreneurs and managers.
iv) Providing services regarding research and documentation.
7. National Small Industries Corporation Ltd. (NSIC)
The NSIC was established in 1995 by the Central Government with the objective of assisting
the small industries in the Government purchase Programmes.The Corporation provides a vast-
market for the products of small industries through its marketing network.It also assists the
small units in exporting their products in foreign countries.

NON-BANKING FINANCIAL COMPANIES

(NBFCS)
Non-banking financial companies (NBFCs) are financial institutions that offer banking

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services but do not have a banking license. NBFCs in India exist primarily to grant credit to small
businesses. NBFCs help MSMEs meet their fund requirements by offering them loans.

Features of NBFCs:
NBFCs can offer banking services such as loans and credit facilities, currency exchange,
money markets, underwriting and merger activities.
Unlike banks, NBFCs cannot carry out money transfers and they do not accept demand drafts
and cheques.
NBFCs are not subject to the banking regulations and oversight by federal and state authorities
that traditional banks are tied to.
Examples of NBFCs in India include Investment banks, mortgage lenders, money market
funds, insurance companies, hedge funds, private equity funds, and P2P lenders.

Benefits of NBFCs in India for small businesses

Earlier, small businesses looked to banks to get loans. However, NBFCs are stepping up their
presence in the lending department. MSMEs have turned away from taking loans from banks
because of:
• Tight and stringent regulatory norms
• Humongous paperwork
• Need for collateral to secure loans.
The benefits that come with applying for loans through NBFCs are:

• NBFCS can provide loans and credit facilities and can trade in money market
instruments.
• Recently, Finance Minister Nirmala Seetharaman stated that NBFCs can use Aadhar
based KYC to avoid repeating the KYC process for customers. This increases customer
convenience as they will not have to undergo the KYC process when applying for loans
with NBFCS (if they have already got their KYC done at a bank)
• NBFCs are faster than banks with regard to approving loan applications forborrowers.
• The Financial institutions customize their products according to the needs of the
business applying for a loan.
• NBFCs are less stringent to eligibility, requirement, and paperwork.

Top 3 NBFCs in India for small business loans:

1. Bajaj Finserv:
Bajaj Finserv is a financial services company that helps small businesses meet their financial
requirements in a timely, easy way with their MSME Business loan.
The NBFC provides collateral-free loans and loan amounts up to 30 lakhs for businesses that
are looking to expand.
Along with an attractive interest rate, the loan offers a unique Flexi loan facility and approval
in just 24 hours.
Tenor: Ranges between 12 months – 60 months, depending on the businesses budget.
2. Ziploan:

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ZipLoan is an RBI registered NBFC that offers unsecured business loans of up to Rs. 1-5 lakh.
The NBFC requires a minimal list of documents and disburse the business loan within a few
working days.
Your small business can apply for an unsecured business loan online on their website or
through their app. Ziploan will process your loan in a few hours.
Tenor: Collateral free loans can be repaid over a period of 12-24 months in easy monthly
instalments.
The Different Types of Business Loans Without Collateral Offered by ZipLoan: Machinery
Loan: For businesses to expand operations or to upgrade to a better version. Working Capital
Loan: Unsecured working capital loan for small businesses which have high seasonality and rely on
working capital loans to cover wages, accounts payable, andother related finances.
Term Loan: ZipLoan also offers a term loan of up to INR 1-5 Lacs at very easy terms and
conditions. The business can apply for a business loan online.
Flexi Business Loan: This loan is for unexpected cash requirements. The business owners can
use the cash to meet their unexpected cash requirements.
3. Lendingkart:
Lendingkart is a non-deposit taking NBFC that provides working capital loans for small
businesses in India.The company offers loans at a fair interest rate for new as well as existing
businesses.
Lendingkart’s loan application process can be completed online in just 15 minutes. Lendingkart
customizes your cost structure around the profit margins of your business and helps you get
funds quickly. The NBFC offers business loans from INR 50,000 up to INR 2 Crore to eligible
SMEs.

How NBFCs Help in Small Business Expansion:

Non-Banking Financial Companies are financial institutions that function with the
motto of helping small business enterprises grow and boost their business. NBFCs prove to be a
game-changer in the field of finance. They provide small business loans to entrepreneurs and
contribute to the economic progress of the nation. The unbiased eligibility criteria and lower
business loan interest rate maintained by the NBFCs, encourage more and more people to start
their dream business. Lakhs of Indians can availof the financial facilities offered by NBFCs.
NBFCs have made it possible for people to easily be their own boss, and live their life
on their terms. The all-inclusive nature of NBFCs support people with their dreams and help
them live sustainably. The minimal involvement of paperwork and better processes make
NBFCs a dependable and reliable source for a small business loan. The application procedure
for taking loans is much simpler with NBFCs as compared to traditional banks. The flexible
repayment nature of NBFCs along with a lower business loan interest rate are supportive ways
to take care of small-scale entrepreneurs' needs.

Positive features of NBFCs :

NBFCs follow a multidimensional and all-inclusive approach and reach out to the poor
masses
Traditional banks fail to provide financial assistance to these masses due to several

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eligibility requirements. NBFCs could reach out to the most impoverished masses in the
country. The unbiased eligibility criteria and practical procedures followed by NBFCs have
proven to be a reliable source of financial assistance. The multi-dimensional and all- inclusive
approach widens the hopes of several business-minded individuals who always wanted to
convert their dreams into a business. Entrepreneurs can function with lesser worries in mind
because of the lower business loan interest rate involved.

NBFCs contribute to reducing the financial inequality within the country

So far, we are clear on the point that NBFCs provide financial assistance to people in a
holistic and unbiased manner. The reason for this is that NBFCs are considerate of the income
inequality ratios that exist in the country along with status quo biases. Personal finance had
been stopping several ambitious individuals from living the life of their
dreams. The flexibility that NBFCs have provided in terms of eligibility criteria for funding
small business loans contribute to reducing the financial inequality with the success of these
businesses.

NBFCs contribute not only to financial growth but also to the happiness of people
NBFCs are said to be the pillars of the Indian economy. The all-inclusive approach of
the NBFCs motivates people to be their own boss. NBFCs generate a positive spirit of
entrepreneurship by keeping a lower business loan interest rate to raise capital. Therefore, more
and more people are being encouraged to start their own business. The provisions of NBFCs
have made living an independent and sustainable life like a dream come true for many. Hence it
is true that NBFCs contribute not only to financial growth but also to the happiness of people.

Technology-based application procedures of NBFCs are time and energy savers.

An online loan application process is followed by the NBFCs as opposed to the tedious
traditional patterns. Small business loans are available easily and quickly to the public.
The applicants do not have to run from one counter to the other for taking a loan
Minimal paperwork is involved, which means the applicants do not have to fill long
application forms
The applicants do not have to stand in long queues to take the loan
A small business loan can be acquired from the comfort of your home.
Therefore, the online procedure saves a lot of time and energy for the loan applicants.
Technology-based assessments and transparency of NBFCs are noteworthy. Artificial
Intelligence is used to assess loan applications. The innovative strategy and technology-
based assessment make the loan process smooth and hassle-free.

NBFCs are known to follow a transparent selection process.

The credibility of the customers is checked in the best possible ways through online
channels. This makes NBFCs a transparent and reliable source for a small business loan.

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A faster mode of acquiring small business loans is offered

As loan applications are processed quickly, the loan gets credited at a faster rate. The
technology-driven assessment makes funding the loan possible within a few hours. The waiting
time is reduced tremendously, thus making NBFCs the most popular sources for a small
business loan.

NBFCs are living up to current expectations.

Technology has taken over the world to make things faster and easier. NBFCs are keeping up
with the spirit of the modern world and living up to the expectations of their customers. NBFCs
upgrade their systems regularly to live up to the current expectations. Innovative strategies are
regularly devised to suit the needs of the customers.

Flexible rules and regulations of NBFCs help applicants

NBFCs are lenient and flexible when it comes to the repayment of loans. There are a wide
variety of choices given to the customers for repaying loans such as weekly, monthly and so on.
The fine on late repayment of the loan is waivered easily. NBFCs are known to function on
mediums of trust, honesty, and credibility of their customers, unlike every other financial
institutions which work with strict rules and regulations. Therefore, entrepreneurs approach
NBFCs for finding a small business loan with ease.

Lower business loan interest rate is a boon

Loans are available at the NBFCs at low-interest rates. This helps entrepreneurs to opt for a
small business loan without worrying about interest charges. Higher interest rates put an
unnecessary financial burden on entrepreneurs that demotivates them from starting their own
business. NBFCs are a boon for the public as they maintain a lower business loan interest
rate.
A lower business loan interest rate, speedy and hassle-free process, transparency, and flexible
terms and conditions of NBFCs are undoubtedly the best means to accelerate the economic
growth and progress. Small business enterprises must make the best use of NBFCs to boost
their business which in return helps in the overall development of the economy

STATE FINANCIAL CORPORATIONS

(SFC)
The State Finance Corporations (SFCs) are an integral part of institutional finance structure of a
country. Where SEC promotes small and medium industries of the states. Besides, SFC help in
ensuring balanced regional development, higher investment,
More employment generation and broad ownership of various industries.

SFC – State Finance Corporation

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At present in India, there are 18 state finance corporations (out of which 17 SFCs were
established under the SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. which is
established under the Company Act, 1949, is also working as state finance corporation.

Organization and Management

A Board of ten directors manages the State Finance Corporations. The State Government appoints
the managing director generally in consultation with the RBI and nominates the name of three other
directors. All insurance companies, scheduled banks, investment trusts, co-operative banks, and
other financial institutions elect three directors. Thus, the
state government and quasi-government institutions nominate the majority of the
directors.

Functions of State Finance Corporations

The various important functions of State Finance Corporations are:
(i) The SFCs provides loans mainly for the acquisition of fixed assets like land, building,
plant, and machinery.
(ii) The SFCs help financial assistance to industrial units whose paid-up capital and reserves do not
exceed Rs. 3 crore (or such higher limit up to Rs. 30 crores as may be notified by the central
government).
(iii) The SFCs underwrite new stocks, shares, debentures etc., of industrial units.
(iv)The SFCs grant guarantee loans raised in the capital market by scheduled banks,
industrial concerns, and state co-operative banks to be repayable within 20 years.
Working of SFCs
The Indian government passed the State Financial Corporation Act in 1951. It is
applicable to all the States.The authorized Capital of a State Financial Corporation should be
within the minimum and maximum limits of Rs. 50 lakhs and Rs. 5 crores which are fixed by the
State government. It is divided into shares of equal value which were acquired by the respective
State Governments, the Reserve Bank of India, scheduled banks, co- operative banks, other
financial institutions such as insurance companies, investment trusts, and private parties.
The State Government guarantees the shares of SFCs. The SFCs can augment its fund
through issue and sale of bonds and debentures also, which should not exceed five times the capital
and reserves at Rs. 10 Lakh.

Problems of State Financial Corporations

1. No Independent Organization
All SFCs are dependent upon the rules and regulations made by the state government. SFCs’
problem is that all decision of these institutions is dependent on the political environment of the
state. Due to this, the loan is not available at the right time for the rightperson.
2. Corruption:
Like other government offices of our country, we can also see the evil of corruption in state financial
corporation.Hoarding of wealth and money, SFCs’ officer object has become to earn by a good or

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bad way.That is the problem that these institutions have no proper transparency like banks.

ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES (EDPS) IN INDIA

It will not be less than correct to say that India got the political freedom on 15th August
1947, but not the economic freedom. And attainment of economic freedom i.e., emancipation
frompoverty and unemployment was the biggest challenge before the country.

This programme was designed to unleash the talent of potential entrepreneurs and some
selected entrepreneurs. Special emphasis was given on three aspects:

(i) Establishment of small-scale enterprises,

(ii) Its management, and

(iii) To earn profits out of it. By the latter half of 1970s’, the news of GIIC’s EDP spread to
theother parts of the country also.

(i) Local organization to initiate and support potential entrepreneurs till the break-even stage,
(ii) Inter-disciplinary approach,

(iii) Strong information support,

(iv) Training as an important intervention for entrepreneurial development, monitoring and

evaluation, and

(v) Institutional financing.

ENTREPRENEURIAL PROGRAMMES IN INDIA(EDP)

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What is EDP ?

Introduction :

Entrepreneurial Development Programme (EDP) refers to a programme which is formulated

to assist the individuals in reinforcing their entrepreneurial motives, and attaining
competencies and skills which is essential for performing an entrepreneurial role successfully.

Meaning and Definition of Entrepreneurial Development Programme (EDP) :

According to N. P. Singh :

"Entrepreneurship Development Programme is designed to help an individual in strengthening

his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his
entrepreneurial role effectively. is necessary to promote this understanding of motives and
their impact on entrepreneurial values and behavior for this purpose”.

EDP can also be defined as a pre-defined process that recognizes, inculcates, designs and
refines the skills and proficiencies of an individual to establish his own enterprise. In recent
times, EDP has become a professional task which extensively encourages the development of
funded and private businesses. The programme is meant to grow entrepreneurial aptitudes
among people.

Objectives of EDPs :
To make people learn compliance with law.
To develop and fortify entrepreneurial quality, i.e., motivation or need for achievement.
To develop small and medium scale enterprises in order to generate employment and widen the
scope of industrial ownership.
To industrialize rural and backward sections of the society.
To understand the merits and demerits of becoming an entrepreneur.
To investigate the environmental set-up relating to small industries and small businesses.
To design project for manufacturing a product.
To increase the supply of entrepreneurs for quick industrial development.
To prepare individuals to accept the uncertainty involved in running a business.

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To develop managerial skills among small entrepreneurs for improving the performance of small-
scale industries.
To offer profitable employment opportunities to educated young men and women.
To expand the sources of entrepreneurship.
Phases of Entrepreneurial Development Programme (EDP) :
All the EDPs mainly consist of three phases, which are illustrated as below:
1) Pre-Training Phase :
2) Training Phase
3) Post Training phase
Developing a venture can be an exciting and active experience. It is also a lot of hard work,
which can be equally rewarding and enjoyable. Here we present the entrepreneurial journey as
seven specific steps, or experiences, which you will encounter along the road to becoming an
entrepreneur. You’ll find more information about the entrepreneurial journey in other chapters
inthis book.

• Step 1: Inspiration – What is your motivation for becoming an entrepreneur?

• Step 2: Preparation – Do you have what it takes to be an entrepreneur?
• Step 3: Assessment – What is the idea you plan to offer through your venture?
• Step 4: Exploring Resources – What resources and characteristics do you need to make
thisventure work?
• Step 5: Business Plan – What type of business structure and business model will
yourventure have?
• Step 6: Navigation – In what direction will you take your venture? Where will you go
forguidance?
• Step 7: Launch – When and how will you launch your venture?

As you work through each step of the entrepreneurial journey you should prepare for
significant aspects of this experience. You will meet with rewards and challenges, the
consequences that result from the decisions made at various points along your journey. To
visualize the steps of the entrepreneurial

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UNIT-4

Women Entrepreneur: Nature, Definition, Features and inIndian perspectives

Heading: Women Entrepreneurship

Women Entrepreneur: meaning-

Women Entrepreneurs means the women or a group of women who initiate, organize
and operate a business enterprise.
A woman entrepreneur is therefore a confident, creative and innovative woman
desiring economic independence individually and simultaneously creating employment
opportunities for others

In the advanced countries of the world, there is a phenomenal increase in the

number of self-employed women after the World War II.

Need:
They have made their mark in business for the following reasons:
(i) They want new challenges and opportunities for self-fulfillment.
(ii) They want to prove their determination in innovative and competitive jobs.
(iii) They want the change to control the balance between their family responsibilities
and their business lives.

Nature:
The term “women entrepreneur” deals with that section of the female population who
venture out into industrial activities i.e. manufacturing, assembling, job works,
repairs/servicing and other businesses.
The Government of India has treated women entrepreneurs of a different criteria-level
of women participation in equity and employment position of the enterprise.
Women entrepreneurs have taken initiative in promoting and running an enterprise by
having a controlling interest in that particular enterprise.

Definition:
“An enterprise owned and controlled by woman having a minimum financial interest of
51% of the capital and giving at least 51% employment generated to women”
-By Government of India
“Women who innovate initiate or adopt business actively are called women entrepreneurs.”
-J.Schumpeter
“Women entrepreneurship is based on women participation in equity and employment of a
business enterprise.”

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-Ruhani J. Alice

Features:
• Accept challenges
• Ambitious
• Hard work
• Patience
• Motivator
• Adventurous
• Conscious
• Educated
• Intelligent
1. They should be educated and skillful.
2. Must have professional education to become better entrepreneur.
3. She should be capable enough to do innovations and be able to bear risks and uncertainties.
4. Able to make utilisation of various schemes, and aids given by government.
5. She should be capable enough to face male competitors and should possess guts to
move ahead.
6. She should be capable enough to make autonomous investment.
7. She must possess some ethics and egoism and should be egotist as well.

WOMEN ENTREPRENEUR- IN INDIAN PERSPECTIVES:

Women entrepreneurs can be broadly categorized into five categories:-
1) Affluent entrepreneurs – These are daughters and wives of wealthy businessmen.
These women have the financial aid and the necessary resources to start a new
enterprise and take business risks.
2) Pull factors – These are educated women living in urban areas with or without work
experience who take the risk of a new enterprise with the help of financial
institutions and commercial banks. These women take up a new business as a
challenge in order to be financially independent.
3) Push factors – These women take up some business activity in order to overcome
financial difficulties. Generally widows and single women manage an existing
family business or develop a new business due to difficult family situations.
4) Rural entrepreneurs – These women belong to rural areas and choose a business suiting
their resources and knowledge. Business carried out involves low investment,
minimum risk and does not require any special skills.
5) Self-employed entrepreneurs – They are uneducated women who fall below the
poverty line. They choose tiny and small enterprise which are convenient to manage
and adequate for the sustenance of her family.

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Importance:
In modern days, women entrepreneurs are playing a very important role in business,
trade or industry. Their entry into business is of recent origin. Women have already shown
their vital role in other spheres like politics, administration, medical and engineering,
technical and technological, social and educational services. This is true in advanced
countries and now in recent years, they have been entering into these fields in our country.
Their entry into business is a recent phenomenon in India.

The role or importance of women entrepreneurs may be ascertained from the study of the
functions they perform. These functions are as under:
a) Exploring the prospects of starting new enterprises.
b) Undertaking risks and handling economic uncertainties.
c) Introducing innovations.
d) Co-ordinating administration and control.
e) Routine supervision.

Generally, the following three types of business are suitable to the women entrepreneurs:
a) Manufacturing a product for direct sale in the market.
b) Manufacturing a product or a part of the product to meet the short term or long-term order
of a large industrial company, and
c) Operating purely as a sub-contractor of raw materials supplied by the customers.
Generally, the last two types industry or business are known as ancillaries. The women
entrepreneurs prefer to deal in consumer goods which have always a demand in the market.
They prefer to deal in intermediate goods which are used in the production of other
products and mostly they are manufactured to the orders of large companies.

Main Entrepreneurial Traits of Women Entrepreneurs:

Following are main entrepreneurial traits of women entrepreneurs:

(i) Imagination:
It refers to the imaginative approach or original ideas with competitive market. Well
planned approach is needed to examine the existing situation and to identify the
entrepreneurial opportunities. It further implies that women entrepreneurs have association
with knowledgeable people and contracting the right organisations offering support and
services.
(ii) Attribute to Work Hard:
Enterprising women have further ability to work hard. The imaginative ideas have to come
to a fair play. Hard work is needed to build up an enterprise.
(iii) Persistence:
Women entrepreneurs must have an intention to fulfil their dreams. They have to make a
dream translated into an enterprise. Studies show that successful women have worked hard.
They persisted in getting loan from financial institutions and other inputs. They have

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persisted in adverse circumstances and in adversity.

(iv) Ability and Desire to Take Risk:
The desire refers to the willingness to take risk and ability to the proficiency in planning,
making forecast, estimates and calculations. Profits are the reward of risk. Enterprising
women take risk but the risk is well calculated. It offers challenges where chances of
survival and failure are on equal footing.

Scope of Opportunities for Women Entrepreneurs:

The modern world women has been able to overcome the hurdle of society’s perception of
considering them to the confined to the four walls of the house or viewing them as weak
entrepreneurs caught up in limited business area such as papad making, pickle preparation
food items, paintings, handicrafts, etc.

Factors Influencing Women Entrepreneurship:

i. Push Factors:
a. Death of bread winner
b. Permanent inadequacy in income of the family
c. Sudden fall in family income
ii. Pull Factors:
a. Need and perception of Women’s Liberation, Equity etc.
b. To gain recognition, importance and social status.
c. To get economic independence
d. To utilize their free time or education
e. Women’s desire to evaluate their talent

There are four motivating factors which influence a woman entrepreneur:

1. Recognition:
A woman entrepreneur is motivated by recognition in respect of admiration, regard,
esteem and celebrity. It is communication tools that reinforces and rewards the most
important outcomes entrepreneurs create for the business.
2. Influence:
It is the capacity or power of a person to be a compelling force on or produce effects on
the actions, behavior, opinions, etc., of others.
3. Internal:
It is the main factor which motivates businesswomen. It is the internal factors which are
very much important for the motivation. It includes creativity, respect, and happiness of
other people.
4. Profit:
It is not the true motivation which influences an entrepreneur. Welfare of the employees,
payment of tax to the government, is indirectly improving the living conditions of the
entrepreneur. Thus the real motivation for Apple to create and sell popular products like
ipod, iPhone and ipad is probably not money, but the interest.

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Emergence:
This is a dynamic world and it is changing at a greater speed. Changes have accrued in
all spheres of human activity including in their profession and vocation. Liberalisation
has further accelerated the pace of changes. The results of change are tangible and
apparent. It has contributed to the emergence of various classes of entrepreneurs
including women whose entry was insignificant and difficult once upon a time. This is a
boon for sustainedeconomic development and social progress.

The reasons attributed to this include the following;

i. Spread of Education and awareness
ii. Social transformation
iii. Technical and professional degrees
iv. Training programs
v. Government support, legal backup
vi. Aid from financial institutions
vii. Marketing support

Role of Woman Entrepreneurs in Society:

According to Pandit Jawaharlal Nehru, “When women moves forward, the family moves,
the village moves, and the nation moves.”

The role of women entrepreneurs is explained in the following points:

i. Employment Generation:
It implies that women entrepreneurs not only establish their enterprise, but provide job to
others. Women entrepreneurship is about women’s position in the society and their role as
entrepreneurs in the same society. It can be understood in two ways, namely, at the individual
level (number of self-employed) and at the firm level (number of firms owned by women and
their economic impact). In this way, woman entrepreneurs have an important impact on the
economy in terms of their ability to create jobs for themselves as well as for others.
ii. Economic Development:
It signifies that women entrepreneurs contribute to the gross domestic product of the country
by establishing enterprises and producing goods and services. Due to their entrepreneurial
activity, women entrepreneurs bring dynamism in market. In this way, they also help in
increasing the national income of the country.
iii. Better Utilization of Resources:
It implies that the involvement of women in industrial development ensure the effective
utilization of all available resources (labor, raw materials, capital). The issue of women in
the industrialization process has been emphasized only in the last decade when the
‘Declaration of Mexico in July 1975’, the equality of womanhood and their contribution to
individual development became the center of attention.

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iv. Improved Quality of Life:

It implies that women entrepreneurs are now economically independent and take decisions
independently. They are now capable of upbringing their children according to their wish.
They are providing quality education to their children and a better living standard to their
family members. They not only improve their living standards, but also the living
standards of others by providing them the means of earning.

Factors Responsible for Increasing Female Entrepreneurship in India

In spite of the growing number of female entrepreneurs, the share of female entrepreneurs is
still significantly low when compared to their participation rate.

Several factors responsible for increasing the level of female entrepreneurship in India:
1. Nature of Entrepreneurship:
Women enter into entrepreneurial activity because regular employment does not provide
them with the flexibility, control or challenge offered by business ownership.
2. Empowerment:
Indian women are becoming more empowered now-a-days. Legislations are being
progressively drafted to offer them more opportunities at various levels.
3. Social Conditions:
For women, in particular, the relatively high involvement in necessary entrepreneurship
indicates that self-employment is used as a way to circumvent institutional and cultural
constraints with respect to female employment, as well as a way to provide supplemental
family income.
4. Literacy and Education:
Increased levels of education have played a crucial role in initiating the process of
entrepreneurship. It is not only the illiterate that are starting the businesses but those with
education and skills are also exploiting profit opportunities.
5. Multitask Oriented:
Women are known for juggling many tasks at the same time and still producing excellent
results. A woman can talk on the phone, open and read her email and schedule what else
she needs to finish for the rest of the day all at the same time. Men have more trouble with
this multitasking thing; therefore sometimes they miss many opportunities.
6. Being Patient with the Process:
This is an extremely important attribute for entrepreneurs to have. Too often we hear of
visionary entrepreneurs who tried to start their businesses and after a few months gave
up. Very often we find these entrepreneurs gave up on their dreams too soon. They
became impatient with the process. Women know naturally that you must wait in order to
receive positive outcomes.
7. Branding and Marketing Themselves:
Women are natural marketers. They are so passionate and enthusiastic about what they
choose to do that they just do not stop talking about it. They don’t forget to emphasize the
benefits of their services to their potential customers. They understand how to emphasize
the positive.

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8. Collaborator:
Women entrepreneurs are becoming more and more successful because they are natural
collaborators and love doing project together. When they find likeminded women whom
they like and think they can accomplish something with by combining their talents they do
it. A collaborative spirit and attitude reigns with women a competitive attitude is rarely seen
and considered unsavory when witnessed. Women do work they love to do and they feel
great when they can do it with other women.
9. Structural Shift:
One of the primary drivers is a structural shift. Women are now a greater part of the
economic make-up of society; there are more women in the workforce. They are resourceful,
leaving the workforce to stay home and raise a family, re-entering when the kids are grown
or working a flex schedule when their kids go to school.
10. It’s the Blend:
One of the biggest reasons women entrepreneurs are now in the forefront is their desire to
blend career and life ambitions. Their personal goals are oftentimes meshed with career
goals. They put their passions into practice and it shines through in entrepreneurial
endeavors. For them it’s not just a job, it’s a significant part of who they are.
11. Relating to Customers’ Needs:
One of the biggest reasons women entrepreneurs are so successful is they are more
conscious of their customers’ needs. Men for the most part are not customers they’re
consumers. It is the big difference. As a woman they shop for price of course, but what is
just as important is the buying experience. If the service is poor or they can’t relate to the
employees then it doesn’t matter what it costs. It’s all about word of mouth and customer
loyalty.
12. Integrity of Relationships:
Women’s ability to nurture the whole relationship is what makes them great as
entrepreneurs. They naturally listen to understand, so they can connect across business
boundaries to give solid integrity to relationships. Whether they are talking to a major
account, negotiating with a vendor or coaching an employee, it’s more than just about that
one issue. Their want of making a wide and deep relationship is one thing of many that
makes them great entrepreneurs.
13. Resourcefulness of Women:
There are a growing number of work-at-home moms starting a business from their homes
while taking care of their families. Most do it to augment the income of their families,
without leaving their homes. Others want to do something economically and financially
productive with their time if a corporate career is out of the question at this point. Still others
have stumbled upon an opportunity that can be done while staying at home to be with their
children.
14. Women are Social:
Entrepreneurs now have to be engaged in social media to be successful. By nature, women are
social. They can leverage social media in ways that can help jumpstart new businesses
quickly and cheaply. Whether it is engaging customers via Twitter, blog, forum or Facebook,
they are good at gathering people and starting conversations.

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Segments of Women Entrepreneurs:

Four segments of women entrepreneurs exist, Self-help groups; those who are well served and
mentored by microfinance institutions.
1. Grassroots Entrepreneurs:
Those who are driven by a need to augment the family’s finances especially to secure their
children’s future — tailors, flower sellers, STD booth owners, paan shops. With turnover
aspiration of five lakh a year, they are very work focused, as they can see any increase in their
earnings as directly impacting their children’s lives.
They are hungry for formal skills and training and can clearly articulate what they want to
learn that will help them earn more. Domestic family, support, financial support and better
infrastructure and mechanisation is what they ask for.
2. Mid-Rung Entrepreneurs:
They are driven by a need to build reputation, become known, and improve quality and
satisfy creative instincts. Mostly graduate+, they typically have garments shops, poultry
farms, export businesses etc., with turnover aspirations from Rs.50 lakh to Rs.1 crore. Fairly
well supported by the family, their biggest need is for know-how to take the ‘quality of
their business’ to the next level. However, they do not want to scale too much, because to
them, there is an optimal level beyond which, they believe their children will get neglected.
3. Upper Crust:
Drawn from the top-most social class, very well educated, with businesses like export
houses, travel agencies, traders in pharmaceuticals, often adjuncts to their husband’s
businesses, they aspire to turnovers of more than Rs.5 crore.

Association of Women Entrepreneurs:

One significant development that has taken place, in recent years, is the excellent role played
by the various Associations of Women Entrepreneurs. Normally, their main object is to
protect and promote the interests of women entrepreneurs. They try to help women
enterprisers in expediting procedures and formalities required for getting license, if
necessary.

The prominent Women Entrepreneurs Associations in the country are as under:

1. Women Entrepreneurs Association of Maharashtra. (WIMA)
2. Women’s Wing of National Alliance of Young Entrepreneurs.

Women entrepreneurs are generally found in the following area of activity:

a. Agro-business industries.
b. Providing services such as running a canteen or even a petrol pump.
c. Undertake travel and tourism work.
d. Working as sub-contractor for providing raw material or for providing some services
or spare parts to the large scale business unit.
e. Undertake specific sales and marketing work.

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Financial Assistance:
Women face difficulties in getting loans from Bank and Financial Institutions for starting
their business ventures. To overcome this difficulty Financial Institutions and banks have
specialised schemes where in finance is available to women entrepreneurs on concessional
terms. Two of such important schemes are Mahila Udyog Nidhi (MUN) scheme of Small
Industries Development Bank of India and Stree Shakti Package of State Bank of India.

Mahila Udyog Nidhi:

This is a special scheme for the purpose of meeting the gap in the equity when women with
inadequate resources venture come out to set their units. The scheme is re-finance scheme
operated through State Financial Corporations and Scheduled Commercial Banks.

Stree Shakti Package:

It is a unique scheme run by State Bank of India, aimed at supporting entrepreneurship
among women. It is available to enterprises where women own more than 50 percent of
the share capital.

The following concessions are offered under stree shakti package:

1. The margin is lowered by 5 percent as applicable to that type of industrial unit.
2. When the loan amount exceeds Rs. 2 lakhs the interest rate is lowered by 0.5 percent.
3. In case of tiny sector units no security is required for loan up to Rs. 5 lakhs.
In addition women entrepreneurs receiving assistance under this package are also eligible to
get financial assistance by way of interest free loans under the Equity Fund Scheme of SBI
to fully meet their share of equity.

Institutions Assisting Women Entrepreneurs:

In India, large numbers of institutions have been setup for the purpose of promoting women
entrepreneurs. They initiated different programmes for the development of women with the
partial or full support from the central government and state governments.

They are:
Association of Women Entrepreneurs of Karnataka (AWAKE):
AWAKE was established in 1983. The main objective of its establishment was to help
women to start their own business. It is one of the premier institutions in India which is
working in the areas of training and helping the women to become entrepreneurs. The basic
idea of this association is to empower women and join them in the economic mainstream.
AWAKE is focusing its attention on both rural and urban women who have social and
economic backwardness to make them self-reliant AWAKE designs EDPs.
1. Federation of Indian Women Entrepreneurs (FIWE):
This was founded in the year 1993 on the eve of 4th International Conference of Women

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Entrepreneurs held at Hyderabad. The objective of it is to interact with various women

associations of the country through its network to help the members in different activities.
Functions of FIWE:
a. It provides network facilities to women entrepreneurs in the country and abroad to develop
their ventures.
b. It provides facilities to member associations in the field of marketing, quality control,
export management, standardisation etc.
c. It helps the member associations to participate in national and international seminars, trade
fairs, exhibitions to offer new exposure.
d. It helps member organization a better access to different business opportunities.
e. It helps member organizations to expand their business.
2. Self-Help Groups (SHGs):
A self-help group is a voluntary association of women in rural or urban areas formed to
take care of group welfare. The group with the help of commercial banks and other NGOs
get its needs satisfied. Each member of the group, according to byelaw, contributes little
amount to cover seed money. The other part of Fund’ will be taken care off by a financial
institution or NGOs. Sometimes, governments also undertake to provide finance through
financial institutions. In Karnataka, “Stree Shakti Sangh” scheme become very popular. It is
providing funds to women entrepreneurs through financial institutions.
3. Mahila Udyog Nidhi (MUN):
Mahila Udyog Nidhi and Mahila Vikas Nidhi (MVN) of SIDBI have been assisting women
entrepreneurs. MUN is an exclusive scheme for providing equity (i.e. seed capital) and
MUN offers developmental assistance for pursuit of income generating activities to women.
SIDBI has also taken a step to setup an informal channel for credit needs on liberal terms
giving special emphasis to women.
4. The Trade Related Entrepreneurship Assistance and Development (TREAD):
This is a scheme envisaged by Ministry of small scale industries, Government of India. It
helps women entrepreneurs to become economically strong. To achieve this objective, it
provides trade related training, information, counselling and extension activities related to
trades, products, services etc.
5. Bank of India’s Priyadarshini Yojana:
Under this scheme the banks provides long term and working capital assistance under various
categories.
6. Swarna Jayanthi Gram Swarojar Yojana:
This scheme has been in operation since April, 1999. The main objective of this scheme is to
provide proper self- employment opportunities to rural women who are living below poverty
line. The idea behind this is to improve the social and economic standard of rural women.
Under this programme, forming a group of 10-15 women was adopted and encouraged them
to take up an economic activity accounting to their skills and locally available resources.
7. Rashtriya Mahila Kosha:
This fund was setup on March 30, 1993 to facilitate credit support to poor women for
uplifting their socio-economic status. The Support is being extended through NGOs,
Women Development Corporations, Dairy Federations, Municipal Councils etc., Rashtriya
Mahila Kosh is planned to extend loan facilities through these organisations at 8 percent per
annum interest. The financial assistance from this fund is totally security free and it doesn’t

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insist for any kind of collateral security from organisations taking loan from it.

7. Other Schemes:
In addition to the above assistance, women entrepreneurs are also Untitled to financing
under other government sponsored schemes where capital subsidy is available and the rate
of interest is much lower.

They are:
(a) Indian Mahila Kendra
(b) Mahila Samiti Yojana
(c) Mahila Vikasnidhi
(d) Indira Mahila Yoj ana
(e) Working Women’s Forum
(f) Women’s Development Corporations
(g) Marketing of Non-Farm Products of Rural Women
(h) Assistance to Rural Women in Non-Farm Development Schemes
(i) Prime Minister’s Rozgar Yojana (PMRY)
(j) Self-Employment Programme for Urban Poor (SEPUP)
(k) Integrated Rural Development Programme (IRDP)

Key Policy Recommendations:

The key policy recommendations to help the women to participate in entrepreneurial
activity are as follows:
1. Ensuring the availability of affordable child care and equal treatment at the work place
to increase the ability of women to participate in the labor force
2. Improving the position of women in society and promoting entrepreneurship by
making easy access of women to finance
3. Creating government offices for women’s business ownership with the responsibilities
of providing women’s business centers, organizing information seminars and meetings,
and providing web-based information to those wanting to start and grow a business.
4. Incorporating a women’s entrepreneurial dimension in the formation of all SME-
related policies
5. Promoting the development of women entrepreneur networks
6. Evaluating periodically the impact of SME-related policies on the success of women-
owned businesses and the extent to which such businesses take advantage of them
7. Improving the factual and analytical supporting of our understanding of the role of
women e– Project Planning for Women Entrepreneurs
Project planning can be done by female entrepreneurs for which they may take the help of the
experts, depending on the type of project they are engaged in and in accordance with the
guidelines issued.

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Development of Women Entrepreneurs:

Women entrepreneurs in India have been playing a very important role in business or
industry since their entry into this section. The Government of India has been giving
increasing attention to them to improve their performance and play a significant role in the
economic development of the country through self-employment and industrial ventures.
Several policies and programmes have been formulated by the Government to develop
women entrepreneurs in India.
a) Women Entrepreneurial Development Programmes (WEDPs)
b) Marketing Development Fund for Women Entrepreneurs (MDFWE)
c) Mahila Udyam Nidhi (MUN)
d) Mahila Vikas Nidhi (MVN)
e) Micro Credit Scheme (MCS)
i) Industrial Estate for Women Entrepreneurs – There has been an insistent demand for
setting up industrial estates particularly for women entrepreneurs. The Andhra Pradesh State
Government has supported for setting up industrial estates exclusively for women in three
districts.
These industrial estates are meant for (a) setting up electronics, garments, food processing,
printing, bio-technology, handmade paper, small engineering units, accessories etc. (b)
export- oriented units like mushroom processing, computer hardware and software etc, and
(c) software Technology Park for women within the industrial estate.
2) Consortium of Women Entrepreneurs of India (CWEI) – It is a common platform to help
the women entrepreneurs in finding innovate techniques of production, marketing and finance
in the context of the opening up of the economy and the need for upgradation of technology.
It consists of (a) NGOs, (b) Voluntary Organisations, (c) Self-help Groups, (d) Institutions
and (e) Individual Enterprises from urban and rural areas.
3) Mahila Vikas Nidhi – Under this scheme, a cumulative help of Rs. 80.4 million has been
sanctioned during the period of 1999-2001 to 155 NGOs/Agencies benefitting around 21,350
women entrepreneurs, for providing training and employment opportunities to women in
rural areas. The training centres set up by NGOs mostly relate to activities such as
sericulture, spinning, weaving, block printing, handicrafts, handloom products etc.
4) Micro Credit Scheme – This scheme of Rs. 810.50 million has been sanctioned by
SIDBI i.e. Small Industries Development Bank of India to 169 MFIs benefitting over
4,42,000 poor women since the inception of this scheme.
5) Prime Minister’s Rozgar Yojana – Under this scheme, Women-oriented schemes of
IDBI, SFCs (State Finance Corporations, KVIC etc. have been introduced for the benefit of
women entrepreneurs by granting loans.
6) Rastriya Mahila Kash – This was set up in 1993 for providing micro credit poor
women who have no access to financial institutions at reasonable or fair rates of interest.
7) Training Programmes – Various training programmes have been started by the
Government of India exclusively meant for women for self-employment. The training
programmes include Support for Training and Employment Programme of Women
(STEP), Development of Women and Children in Rural Areas (DWCRA) and setting up
of Training- cum-Employment-cum- Production Units (NORAD).
8) District Industries Centres (DICs) – These centres have arranged various lectures,
seminars etc. in girls colleges and technical institutions.

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9) University Grants Commission (UGC) – The UGC has introduced the subject of
entrepreneurship as a compulsory subject in the curriculum in the colleges of all
universities in India.
Thus, various measures have been implemented by the Central Government and State
Governments and other associations and organistions for the development of women
entrepreneurs.

Following are the few suggestions for the development of women entrepreneurs:
1. Women should be considered as a specific target group for all developments.
2. Government should provide better educational facilities and schemes.
3. More Governmental schemes should be launched to motivate women entrepreneurs to
engage in small scale and large-scale business ventures.
4. Adequate training programme has to be conducted for the women entrepreneur.
5. Continuous monitoring and improvement of training programmes is essential for
grooming women entrepreneurs.
6. Making provision of marketing and sales assistance from government part.
7. To encourage more passive women entrepreneurs the Women training programme should
be organised that taught to recognize psychological needs and express them.
8. The financial institutions should provide more working capital assistance both for
small scale venture and large scale ventures.

Motivational and Empowerment Factors for Women Entrepreneurship:

Following are few suggestions for development of women entrepreneurs:
1. Encourage women’s participation in decision making.
2. Training in professional competence.
3. Counseling through the aid of committed NGOs.
4. Continuous monitoring.
5. Women entrepreneurship guidance cell system.
6. Better educational facilities and schemes should be extended to women.
7. Consider women as specific target group for all developmental programme.
8. Adequate training programme on management skills to be provided to women community.

Progress: few known women entrepreneurs:

Entrepreneur Dr. Kiran Mazumdar-Shaw, Chairman and Managing Director of Biocon
Ltd. – The business and managerial skills of Dr. Kiran Mazumdar-Shaw has made her one
of the richest business entrepreneurs in India. She ranks among the elite ranks of the Indian
business fraternity and is a member of premier business organizations like CII, MM
Bangalore and others.
Ekta Kapoor, creative head of Balaji Telefilms – The daughter of star actor Jeetendra and
sister
of Tushar Kapoor, Ekta Kapoor is known in almost all Indian households for her K series
serials. She is one of the front runners of Indian television industry and has been
responsible for the huge profits of her company Balaji Telefilms. Balaji has made crores of

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profit under her.

Sunita Narain, an environmentalist and political activist – A renowned social activist
fighting
for the importance of the Green concept of sustainable development, Sunita Narain has
made India proud. She has been currently chosen as the director of the Society for
Environmental Communications. She was also awarded the prestigious Padma Shri award in
2005.
Neelam Dhawan, Microsoft India managing director – A major name in the Indian business
scene, Neelam Dhawan is the managing director of the Microsoft’s sales and
marketing operations. She is well known for implementing business strategies which
have earned enormous profits for Microsoft.
Naina Lai Kidwai – Naina Lai Kidwai was listed by Fortune magazine as the World’s Top
50
Corporate Women. She is the first Indian woman to crack the prestigious Harvard Business
School. She is one of the top ten business women and the first woman to head the operations
I of HSBC in India was awarded the Padma Shri award for her work.
Sulajja Firodia Motwani – Sulajja Firodia Motwani, a known name in Indian business is
currently the Joint Managing Director of Kinetic Engineering Ltd and manages the overall
operations and business development strategies. She has been nominated as the business ‘Face
of the Millennium’ by magazine India Today and also as the ‘Global Leader of Tomorrow’
by the World Economic Forum.”
Mallika Srinivasan, Director of TAFE India – Named as the one of the top ten business
women of the year in 2006, Mallika Srinivasan is the director of TAFE India. Her skills and
strategies have helped the company earn profits from a meagre Rs. 85 core to a mammoth Rs.
2,900 cores. She is also a leading figure in social services.
Dr. Jatinder Kaur Arora – Dr. Jatinder Kaur Arora has made India proud through her
scientific research for development of women. Presently serving the prestigious post of a
joint director in the Punjab State Council for Science and Technology, she was honoured
with the national award for her brilliant works.
Zia Mody, Senior Partner – Zia Mody was listed as one of the top 25 most powerful business
women by Business Today. Her strategies have helped AZB and Partners earn great profits.
She has also been awarded as the Best Knowledge Manager by Financial Express.
Ritu Nanda, CEO, Escolife – The daughter of ace film personality, Raj Kapoor, Ritu Nanda
has made her presence felt as one of the prominent business women of India. Currently
serving as the CEO of Escolife, she was awarded the Best Insurance Advisor and entered the
Guinness Book of Records for selling 17,000 pension policies in a day.

How to Develop Women Entrepreneurs? (With Efforts):

Right efforts in all areas are required in the development of women entrepreneurs and their
greater participation in the entrepreneurial activities.

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Women Entrepreneurship in National Perspective:

Women entrepreneurs are the women who explore the prospects of opening a new enterprise;
undertake risks, bring about innovations, coordinate administration and control of business
and provide effective leadership in all aspects of business. They have curved out a
commendable position in the traditionally male dominated arena of business. According to
the Census of India 2011, female population of India is 586,469,174 which constitute 48.5
percent of the total population.

Comparison between Women and Men Entrepreneurs:

Women Entrepreneurs:
1. Occupational Background:
i. Housewife
ii. Service related occupational background
2. Sources of Funds:
i. Family and personal funds
ii. Personal loans
3. Reasons for becoming an Entrepreneur:
i. Earning extra money for the family
ii. Keeping oneself gainfully occupied
iii. Inability to seek wage employment
iv. Lack of growth in the present job.
4. Motivation:
i. Flexibility in working hours
ii. To be independent
iii. Achievement – accomplishment of a goal
5. Personality:
i. Flexible and Tolerant
ii. Goal oriented
iii. Adequate self confidence
iv. Enthusiastic and energetic
v. Creative and realistic
6. Support Group:
i. Close friends
ii. Family and husband
iii. Women organisations.

Men Entrepreneurs:
1. Occupational Background:
i. Experience in line of work
ii. Competence in managing business
2. Sources of Funds:
i. Personal savings
ii. Bank finance
iii. Investors.

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3. Reasons for becoming an Entrepreneur:

i. Job frustration
ii. Side activity of present job
iii. Grabbing an opportunity
4. Motivation:
i. Self-image as it relates to status
ii. Desire to grow faster
iii. Achievement – strive to make things happen.
5. Personality:
i. Goal oriented
ii. High level of self confidence
iii. Enthusiastic and energetic
iv. Innovative and idealistic.
6. Support Group:
i. Professionals
ii. Family
iii. Business associates.

Barriers in the Path of Women Entrepreneurs:

There are many barriers or constraints that restrict the expansion of women entrepreneurship.

The major barriers in the path of women entrepreneurs are as follows:

1. Financial Problem:
It refers to the major problem of women entrepreneurs that arise due to the lack of access to
funds. It is really difficult for them to arrange the requisite fund as they may not possess
any tangible security and credit in the market. Generally, the family members of women
entrepreneurs do not have confidence in their capability of running the business
successfully. Women entrepreneurs even face problems in financing day-to-day operations
of enterprises, including purchasing of raw materials and paying wages to labors. The lack
of access to funds makes the condition of women entrepreneurs extremely vulnerable. The
complexities and the complications in the process of obtaining bank loans usually deter
women from establishing enterprises.
2. Production Problem:
Production problem act as a main problem that discourages women to be entrepreneurs. The
data shows that the participation of women entrepreneurs in the production is minimal due to
complications involved in the production process. In a manufacturing enterprise, production
involves the coordination of a number of activities. Improper coordination and delay in
execution of any activity cause problems in production. This may become difficult for
women entrepreneurs to coordinate and control all the production activities.
3. Marketing Problem:
Marketing problem refers to the problems of women entrepreneurs in marketing their
products or services. Lack of mobility and heavy competition in the market makes the
women entrepreneurs dependent on middlemen. Middlemen take a huge amount of money
to market the products. Women entrepreneurs lack information on changing market and find

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it difficult to capture the market and make their products popular.

4. Socio-Cultural Barriers:
Socio-cultural barriers refer to the constraints and barriers imposed on women entrepreneurs
by the society. In conventional countries, such as India, the major role of a woman is
acknowledged towards her family. She has to perform primarily her family duties
irrespective of her career as a working woman or an entrepreneur. A woman entrepreneur has
to bear double responsibilities, she has to manage her family as well as her business.
In our society, more importance is given to educating a male child than a female child. This
results in lack of education and vocational training of women. Lack of education and
technical skills becomes the root cause of lack of awareness of opportunities available by
women entrepreneurs. Our society even gives more preference to male labor than to female
labor. A male labor is paid more wages than a female labor. It is ascertained that male labor
force are generally reluctant to work under a female boss.
5. Lack of Confidence:
It refers to the personal problem of women entrepreneurs. Women have been dependent on
their family members for a long time. They have been always protected and guided by the
male members of their family. Right from taking any decision to going anywhere they are
accompanied by male. This makes women feel less confident even about their own
capabilities.
Despite these all barriers women entrepreneurs have proved themselves in all the walks of
industrial activities. They are successfully performing and managing their roles at work and
home. They have made a great level of adjustment and tuning between two roles of a
woman. They are confident, creative, and are very much capable of running an enterprise,
regardless of all the barriers in their path. They are equally talented as men and need a
congenial environment to grow themselves.
Entrepreneurship does not depend upon man or woman. It is an attitude of mind and
requires suitable motivation duly supported by cordial external conditions. Therefore, women
entrepreneurs need to be supported by congenial environment to develop the risk-taking and
decision-making qualities.

Operational Problems Faced by Women Entrepreneurs:

Women as entrepreneurs may face certain problems while working that could demoralize
them completely at the outset.

However, with little grit, perseverance, and devotion they could overcome most of
challenges and emerge stronger.

i. Product Choice:
First problem, albeit not unique to gender, is the choice of the product or service. Ability to
choose and decide to undertake a manufacturing or trading activity with an inclination to take
calculated, moderate risks have to be cultivated among women like any other entrepreneur.
ii. Identity:
Some aspiring women could face a mental block regarding their identity. In a deeply
patriarchal society they are often identified as wife, daughter, and mother, which eclipses

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their individuality. Seldom are they confident of their abilities and skills. Once this block is
overcome, they can become successful entrepreneurs and create an independent identity for
themselves and their products or service.
iii. Marketing:
A majority of women entrepreneurs face marketing problems. Since some play multiple
roles in their respective enterprises, they have to prioritize their duties which more often than
not results in giving less importance to marketing.
iv. Accounts and Finance:
The general perception is that women are good at maintaining records and are very
calculative in their financial matters. But this alone does not help them significantly. Most
entrepreneurs do not have adequate knowledge about accounting, and are also ignorant about
banking terminologies and procedures. This may be because they might have given more
significance to production and sales. Although accountancy and financial management are
separate subjects altogether, women should familiarize themselves with elementary
knowledge of the same.
v. Motivation:
Not all women are fortunate to have cooperative and understanding family members in the
event of failures. Initiative, independence, self-confidence, positive thinking are among the
qualities that should be nurtured to make a positive impact on the business.
vi. Problem-Solving:
Most women in spite of their abilities face stress and strain when problems arise. This again
may stem from the dual responsibility on the domestic and professional front, which are
most of the time in conflict.
vii. Life Style:
The life style of a woman entrepreneur distinctly differs from that of ‘9 a.m. to 5 p.m.’
executives and could entail keeping uncertain working hours.
All these aspects must be fully understood by those interested in promotion of women
entrepreneurship.

Suggestions for Increasing Women Entrepreneurs

The women entrepreneurs are less in India than any other developed countries, since they face
social, cultural, economic, technical problems. Venture means a small enterprise and it will
become an enterprise which deals with comparatively large scale units and will become an
entrepreneur in the end.
There is a need of entrepreneurs and it can be gapped to some extent if women entrepreneurs
also increase in number.

Several women conferences have concluded to encourage women entrepreneurship:

1. Female fetus should not be aborted and given preference.
2. Girls should be imparted education and be given equal rights in nutrition,
education, training and skill building activities and in employment.
3. Along with the fact that they should be given equal right in employment they should
be paid equally for equal work done.
4. Women should be given freedom to invest in properties and sharing of income.

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5. Private agencies and firms should provide them loans without any partiality and on
lower rates, if possible, after legal formalities and search for authenticity.

Measures to Strengthen Women Entrepreneurship:

To strengthen women’s entrepreneurship, all the present development programmes and
policies should be planned properly and implemented effectively in order to attain self-
sufficiency and self-reliance.
“Women constitute half of the world’s population, accomplish about two thirds of its work
hours receive one-tenth (1/10) of the world’s income.” — Union Commission on status of
Women

The following measures can strengthen self-employment, which will generate additional
income leading to economic independence of women:
1. Identification and organization of innovative and high income generating activities
suitable for woman.
2. Development of entrepreneurship abilities of women by organizing special types
of training.
3. Encouraging women through formal and non-formal education to involve themselves in
the entrepreneurship effective planning at the micro level.
4. Adequate representation of women experts in case of women related
development planning.
5. Central and state Govt. to place more emphasis on untouched areas to involve women.

Growth and Future Challenges:

1. Women’s entrepreneurship as an untapped source of economic growth;
2. Women have a lower participation rate in entrepreneurship than men;
3. Women choose different industries than men do;
4. Such industries are perceived as being less important to economic growth
and development;
5. Mainstream government policies and programmes do not take into account specific
needs of women entrepreneurs.

DIFFERENT SEGMENTS OF ENTREPRENEURIAL ENVIRONMENT:

Introduction
• Entrepreneurship environment refers to the various facets within which enterprises-
big, medium, small and other have to operate. The environment therefore,
influences the enterprise. By and large, an environment created by political, social,
economic, national, legal forces, etc influences entrepreneurship.
• Entrepreneurial environment is broadly classified into six important segments, namely,
(1) Political environment, (2) Economic environment, (3) Social environment,
(4) Technological environment, (5) Legal environment, and (6) Cultural

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environment
Environment
• Political-Political Atmosphere, Quality of Leadership
• Economic-Economic Policies, Labour, Trade, Tariffs, Incentives, Subsidies
• Social-Consumer, Labour, Attitudes, Opinions, Motives
• Technological-Competition And Risk, Efficiency, Productivity, Profitability
• Legal-Rules, Regulations
• Cultural-Structure, Aspirations And Values
Private Enterprise and Development
The existence of uncertainty in the economic call for the attention of entrepreneurs to play a
leading role in the growth process.
Individual entrepreneurs such as farmers and small businessmen and individual enterprises
.

Entrepreneurial Urge
Entrepreneurship is the creative ‘elan’ of industrial development, which for historical
reasons is feeble in backward areas. It is not feasible to expect entrepreneurial urge among
people who live in poverty, illiteracy and ignorance

Significance of Entrepreneurial Environment

A study of socio-political and economic environment has a great social and economic
significance to the growth of entrepreneurship. Modern business is treated as a social and
economic institution and is affected by the political, social and economic forces. The political
environment, industrial policy, licensing policy, foreign exchange regulations, backing
policy, technological development and social change form the framework within which an
enterprise
has to work. It is for these reasons that all business plans must be based on the immediate
Infrastructural Network
It has been argued that the development of industries be preceded by development of
agriculture which introduces certain economic changes that culminate in industrial activities.
“
protection and quantitative restriction should be directed at the types of product and
technique which cater for a highly unequal income distribution and reflect entrenched vested
interests” (Paul Streeten: “Industrialization in a United Development Strategy,” World
Development, January, 1975). Actually the production of simple goods depends on the
character and potential of a particular backward areas; and the essential infrastructure so
development that it would be capable of sustaining active linkages between the subsidiary
units in the villages and the central unit.

Environmental Analysis
• Identify the beneficiaries or target group

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• Analyse the environment for immediate feasible enterprises in an integrated manner;

• Delineate the linkage and institutional arrangement;
• Recommend appropriate organizational structures to provide necessary promotional
support.

What tax and monetary benefits are available for women entrepreneurs in india?
To encourage women entrepreneurs, the Indian government offers them certain tax and monetary
benefits. These include property tax rebate, stamp duty concession, low interest rates on home loans,
credit subsidy for houses etc.
Stamp duty concession on registration of property
Stamp duty concession is offered by some states if a property is registered under the name of a
woman. According to the Delhi government’s official website, stamp duty rate (payable at the time
of registration of property if it is acquired by sale deed/conveyance deed/gift deed) for a male is 6%
and for a female is 4%.
Property tax rebate
Some municipal corporations also offer rebate on property tax. Here also, the rates vary from one
municipal corporation to another within a state. So, women must look for these conditions before
getting their property registered.
To encourage women, certain tax and monetary benefits are offered to women by the Indian
government.
Lower rate of interest
Apart from concession on stamp duty and rebate on property tax, women are also offered lower rate
of interest on home loans by banks for property registered under a woman’s name. State bank of
India offers a concession of five basis points or 0.05% (1 bps=0.01%) for home loans to women.
Credit subsidy on purchase of house
Under the ‘housing for all’ Programme, the house for which subsidy is availed under the pradhan
mantri awas yojana (pmay) should either be co-owned by a woman or the woman should be applicant
of the subsidy.
Income tax slabs
Tax slabs for ay 2022-23

Existing tax regime New tax regime u/s 115bac

Income tax slab Income tax rate Income tax rate

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Up to ₹ 5,00,000 Nil Nil

₹ 5,00,001 - ₹
20% above ₹ 5,00,000 5% above ₹ 2,50,000
10,00,000

₹ 1,00,000 + 30% above ₹ ₹ 12,500 + 10% above ₹

Above ₹ 10,00,000
10,00,000 5,00,000

Functions of Women Entrepreneur in Entrepreneurship Development

Functions of woman entrepreneurs

1. Planning
Planning is the basic managerial function of a woman entrepreneur. It helps in determining the
course of action for achieving various entrepreneurial objectives like what to do when to do, how to
do and who will do a particular task.

2. Organizing
Every woman entrepreneur needs personnel to look at the different aspects of the enterprise. She sets
up the objectives, goals to be achieved by its personnel. The function of organizing is to arrange,
guide, coordinate, direct and control the activities of other factors of production i.e. men, materials,
money, and machines so as to accomplish the objectives of the enterprise.

3. Staffing:
Every woman entrepreneur has to perform the function of staffing which includes manpower
planning, recruitment, selection, and training, placement of manpower, development, promotion,
transfer, and appraisal, and determination of employee remuneration.

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4. Directing
Directing is concerned with carrying out the desired plans. It initiates organized and planned
activities and ensures effective performance by subordinates towards the accomplishment of group
activities.

5. Leadership
A woman entrepreneur has to issue various orders, instructions and guide her subordinates in their
work to improve their performance and achieve enterprise objectives. It is the ability to build up
confidence and zeal among people and to create an urge in them to be a successful leader, she must
possess the qualities of foresight, drive, initiative, self-confidence, and personal integrity.

6. Motivation
A woman entrepreneur has to provide some personal incentive to the subordinates to motivate,
persuade and inspire them for contributing their best towards the achievement of enterprise
objectives.

7. Supervision:
After giving instructions, the woman entrepreneur has to see that the given instructions are carried by
subordinates at work to get the required and directed work done and to correct the subordinates
whenever they go wrong.

8. Coordination
Coordination is one of the most important functions. It creates a team spirit and helps in achieving
goals through collective efforts to provide unity of action in the pursuit of common objectives.

9. Controlling
Controlling is the process that enables to get its policies implemented and take corrective actions if
the performance is not according to the pre-determined standards.

Importance of Women Entrepreneurs

• She wanted to be the boss.

• She had a lot of ideas.
• She wanted to change the world.

Creating Economic Impact

In 1980, only half of women participated in the workforce compared to nearly 80% of men and only
15% of women held bachelor’s degrees.2 Today, women make up the majority (56%) of college
students,3 and account for 47% of the total workforce in the U.S.4 In addition, women are founding
companies at a historic rate, with more than 9 million women-owned businesses in the United States
today.5

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Creating Diversity and Social Impact

The women-owned movement has brought immense diversity to the business world and has made it
stronger than ever. Rose Leadem from Entrepreneur Magazine, once wrote: “Female entrepreneurs
and executives are creating new models of leadership and providing organizations with valuable
insights and solutions.”

1. Funding

When Congress passed The Women’s Business Ownership Act in 1988, it legally ended
discrimination in financial lending and eliminated state laws that required married women to have a
husband co-sign for all loans. Lenders were quick to recognize this as a great opportunity and by the
early to mid-1990s, we saw a significant increase in the launch of financing initiatives to help
aspiring women entrepreneurs. Wondering whether or not these legislative and lending initiatives
made an impact? You bet they did! A study performed by American Express found that, from “1997
to 2013, the number of women-owned companies increased by 59 percent, while revenues from those
companies grew by 63 percent.” Not to mention that today, one in five U.S. businesses with revenues
of $1 million or more is women-owned.7

2. Mentorship

We recognize that starting a business can be a frightening journey for anyone, but remember, it was
not until 1988 that women could obtain a loan without a co-signer. So while men have been
entrepreneurs for centuries, this is still relatively new to most women. That is why having a trusted
mentor can be instrumental to success.

3. Experience

We also need to continue supporting programs that give women the education and experience
required to tackle the entrepreneurial world. Currently, there are groups at a more local level, like
the Center for Women & Enterprise (CWE), that help women, as well as minorities and veterans, get
the training, assistance and mentoring that they need to attain success. In addition to partnering with
fellow WBEs and serving on The Women’s Enterprise Forum, Polaris Direct continues to be
involved in our regional WBENC chapter. Our CEO and co-founder, Judith Maloy, serves on the
New Hampshire CWE Advisory Board—promoting and supporting women entrepreneurs at all
levels.

Driving Change

Let’s not forget those female entrepreneurs are also the key to shaping the next generation. When it
comes to motivating young women, they are leading by example; influencing their attitudes and
ambitions. While high-level female role-models, like Cheryl Sandberg and Sara Blakely, are
incredibly inspiring, don’t discount the value of local-level women in business.

A survey shows the following reasons for women to become the entrepreneur

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• Lack of job opportunity

• The increasing cost of living
• Due to high education, they are entering into entrepreneurial activities
• A lot of opportunities in a market
• Family background of having business

In India women, entrepreneurs are classified as follows

1. Women with adequate education & professional qualification get engaged in the business
2. Middle-class women who have an education but lack training
3. Women who take up a business enterprise who face financial difficulties

Government Of India has made certain efforts through industrial policies

• 7-5 year plan

This plan has included a special provision for the development of women.1991 industrial policy
highlights a special training programme to develop women entrepreneur. The objective of these plans
was to increase the number of women in the field of small industry & to create self-employment

• 8-5 years plan

This plan gave importance to the development of the SSI sector. Before the implementation of this
plan, the percentage of women entrepreneur was 9 % & was targeted to 20%

In 1996 the Department of SSI under the ministry of industry had taken initiative to train lakh
women entrepreneurs. Through various schemes like

1. Mahila Gramudyog Scheme

2. Jawahar Rojagar Uyojaga Scheme
3. Ibis Mahila Udyog Vidhi
4. Urban Poverty Education Programme
5. Scheme Of Nabard
6. Shakti Package for Women’s
7. Schemes of SBI

These were to stimulate growth among women

There is a federation of the society of women entrepreneur which also supports women entrepreneur.
Besides this at state level also various programs are conducted

For Eg –women Industrialist Association of Maharastra was set up in 1985

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CHALLENGES AND PROBLEMS FACED BY WOMEN ENTREPRENEURS IN INDIA

WHILE STARTING A BUSINESS

PROBLEMS FACED BY WOMEN ENTREPRENEURS IN INDIA

Here are the 15 common challenges and problems that every women entrepreneur faces while
starting a business in India and how to overcome them:-

1. Fewer sectors are Women friendly

2. Lack of Social and Institutional Support
3. Poor Funding Prospects
4. Lack of Access to Professional Networks
5. Pressure to Stick to Traditional Gender Roles
6. Lack of an Entrepreneurial Environment
7. Limited Mobility
8. Lack of Education
9. Low Risk-Bearing Ability
10. Balancing Responsibilities between Family & Business
11. Stiff Competition
12. Limited Industry Knowledge
13. Missing Role Models
14. Social Construct
15. Safety Concerns

1. Fewer sectors are Women friendly

Despite the policies and measures to promote gender equality, men still dominate India’s
entrepreneurial ecosystem. According to a recent report, most women-owned businesses in the
country operate in low-revenue sectors, while men control the more profitable sectors like
manufacturing, construction, and the like.

The male-centric nature of many industries also forces women entrepreneurs to operate in sectors
that are historically called “women-friendly”, such as education, apparel, and beauty care, among
others. It limits their experience, opportunities, and capabilities to a significant extent.

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2. Lack of Social and Institutional Support

Most women business owners don’t get the social support they require to kick start their business
from families, peers, and immediate ecosystems. Lack of mentorship from the business community is
also one of the main challenges faced by women entrepreneurs in the country.

The case is no different when it comes to institutional support. Though there are schemes for
promoting female entrepreneurship, many women don’t receive timely guidance or help from
authorities. The absence of a proper support network adversely impacts their confidence and ability
to take risks.

3. Poor Funding Prospects

As unfair as it might sound, the funding scene in India has massive gender biases. Women-led
businesses in the country lack access to capital due to the prejudices of investors and other factors.
According to a report by Innoven Capital, of all the companies that received funding in 2019, only
12% had at least one female founder.

Many VC firms and angel investors are reluctant to invest in women-led businesses, while banks and
financial institutions consider women less credit-worthy. Moreover, many Indian women don’t have
property or assets in their name, which comes up as a problem while applying for collateral loans or
private financing.

4. Lack of Access to Professional Networks

Limited access to professional networks is another one of the basic problems of women
entrepreneurs in India. According to the Google-Bain survey, female business owners are less
integrated with formal and informal networks. The survey further indicates that over 45% of urban
small business owners suffer due to insufficient avenues of network development.

Studies also show that most of the existing professional networks are dominated by men, making it
difficult for women to access or navigate such spaces. Consequently, they miss out on opportunities
to grow their business, find collaborators and vendors, and build social capital.

5. Pressure to Stick to Traditional Gender Roles

Patriarchy conditions both men and women to play certain defined gender roles. Women are
expected to cook, do domestic chores, raise kids, care for the elderly, and the like. Juggling familial
and professional responsibilities is a challenge in itself, and even more so when you set out to build a
brand.

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The pressure to stick to traditional gender roles is among the main challenges faced by women
entrepreneurs. Often, they are asked to give up entrepreneurship and take up an “easy” profession
that helps them focus more on family and kids. What’s more, a woman who chooses her career over
other things is looked down upon.

6. Lack of an Entrepreneurial Environment

Entrepreneurship is a long journey that involves a lot of learning, un-learning, and upskilling. An
environment that exudes a strong entrepreneurial spirit is crucial for a person to become a successful
business owner. However, many women often suffer from the lack of such a productive environment.

To begin with, many women are forced to manage their businesses from home due to familial
responsibilities. Consequently, they lose out on opportunities to go out, interact with the business
community, and build their market access. It also impedes their learning opportunities, access to
resources and mentors, and more.

7. Limited Mobility

Limited mobility is one of the basic problems of women entrepreneurs in India. They cannot travel
alone or stay at hotels for business purposes without worrying about safety. What’s more, many
hotels in India still don’t allow women to check-in unless accompanied by a man!

Though many financially independent women have started investing in vehicles, the number of
women owning motorized vehicles in India is still fewer than men. All these factors come together to
restrict the mobility of female business owners.

8. Lack of Education

One of the biggest credentials for a modern entrepreneur is having prior experience in running a
successful business. To supplement the lack of experience in running a business the entrepreneur
should have professional experience of working in the relevant industry or a business management
degree. Unfortunately in India, the education of women does not get its due importance. This results
in many budding female entrepreneurs lacking the education required for running a successful
business. As women are getting access to higher education, they are leveling the playing field.

9. Low Risk-Bearing Ability

In order to invest in and run a successful business, the entrepreneur needs to be able to bear some
inherent risk. Women often do not have financial freedom and do not have practice in making
independent decisions. They also lack confidence in their own decisions, which makes them risk-
averse. This is gradually changing as with each passing generation women are taking charge of their
finances and mitigating the risks.

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10. Balancing Responsibilities between Family & Business

Family is often seen as an extension of women. It is expected from married women to enter
motherhood within a certain age and also play a major role in rearing their children. This also leads
to the young mothers having to take a break from their careers and prioritize their families. Running
a business is a demanding task that often puts women in conflict with their family commitments and
even makes them feel guilty about prioritizing their business.

11. Stiff Competition

The modern economic environment and market conditions have made the competition between
businesses fierce. They face challenges from their competitors as well as competition within their
business for leadership. They need to prove their worthiness every step of the way to their colleagues
and investors to gain their confidence. They also need to manage a lot of output while using limited
resources for the survival of their business.

12. Limited Industry Knowledge

Many industry sectors such as manufacturing are still seen as men’s forte. Women do not have
access to the industry contacts, mechanisms, and know-how that are necessary for running the
business successfully. Despite the gradual breaking of stereotypes, there is still a general lack of
exposure in these areas. Being educated in STEM disciplines (science, technology, engineering, and
mathematics) can bridge the gap that woman entrepreneurs currently face. Digital literacy has also
brought the revolution in empowering women to gain the right tools in gaining the right knowledge.

13. Missing Role Models

One of the big challenges that budding women entrepreneurs face is that they do not have enough
positive role models. Because of the lack of role models, it is difficult for them to visualize how
would success look like. They also have difficulty finding women mentors and coaches who can
groom them and provide meaningful feedback. They also struggle to find insightful articles and
literature that can provide insights into their professional and personal challenges.

14. Social Construct

Due to the long-standing patriarchal tradition in the country, gender roles have been stringently
designed. The women have been confined to a supportive role and it is not expected from them to
take a lead in the business and professional world. Although this view is changing, it still causes
frequent conflicts and rifts in the social life of budding women entrepreneurs. There are still
persisting negative stereotypes that women are not fit for leadership roles, which need to be broken.

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15. Safety Concerns

The poor state of law and order has given rise to crime against women. The hostile and risky
environment poses serious challenges for women entrepreneurs who need mobility to manage their
business ventures. This limits the women from reaching many locations on their own and sometimes
necessitates the company of a man for simply their safety. With important law reforms, vigilant law
enforcement, and an effective judicial system, the situation can be sufficiently improved to create a
safer environment for women attempting to enter entrepreneurial roles.

Motivating Factors of Increasing Women Entrepreneurs in India

In this age in India, we can proclaim proudly that women entrepreneurs in our country is not an
uncertain phenomenon. While Indra Nooyi, Kiran Mazumdar Shaw, and the likes paved path for
women to step forward and conformed their spots in the boardrooms, a couple of decades ago,
women in our country have adopted entrepreneurship in small and medium scale from ancient times
though most of it began with a compulsion to manage their families and homes.

Women Empowerment

The contemporary Indian woman is no more in a want-based environment significantly. Taking the
forefront in entrepreneurship is now a matter of preference and women are no more restricting
themselves to specific sectors but their ingenuity and skill span across sectors – starting from
traditional sectors such as handicrafts and textiles, agro-products, food processing, women
entrepreneurs are currently venturing across sectors such as agro-products, hospitality, BFSI, real
estate development, ITES, Pharmaceuticals, tourism, etc.

Export Oriented Units 100% EOU Incentives Fiscal and Special Package for Star Export
House.

EOU Incentives

• No import licences are required by the EOU units and import of all industrial inputs exempt
from customs duty.
• Supplies from the DTA to EOUs are regarded as deemed exports and are hence exempt from
payment of excise duty which means that high quality inputs are available at lower costs.
• On fulfillment of certain conditions, EOUs are exempted from payment of corporate income
tax for a block of 5 years in the first 8 years of operation. Export earnings continue to be
exempt from tax even after the tax holiday is over.
• Industrial plots and standard design factories are available to EOUs at concessional rates.
• Single window clearance for EOU. For example, the State Government of Kerala as well of
Karnataka has constituted single window clearance mechanisms such as District Single
Window Clearance Board (in Kerala) and Karnataka Udyog Mitra (in Karnataka) for the
purpose of speedy issue of various licences, clearances.

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Attractive Policy Provisions for EOUs :

• EOU can also import second hand capital goods without any age limit.
• 50% of physical exports can be sold in domestic market on payment of concessional duty.
• EOUs can process and export rice (Basmati & Non-Basmati).
• EOUs including Gem & Jewellery units are permitted to sub-contract upto 50% of their
production (or) production process in DTA / other EOUs.
• EOUs are allowed to utilize plant and machinery for job work DTA units provided the goods
are exported directly from the EOU premises.
• EOUs in Agriculture and allied sectors and in granite sector may transfer the capital goods
and

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UNIT V: START-UPS AND INCUBATION

Startup defined: A startup is a young company established by one or more entrepreneurs to create
unique and irreplaceable products or services. It aims at bringing innovation and building ideas
quickly.
Types of Start-ups

1. Scalable startups: Companies in a tech niche often belong to this group. Since technology
companies often have great potential, they can easily access the global market. Tech
businesses can receive financial support from investors and grow into international
companies. Examples of such startups include Google, Uber, Facebook, and Twitter. These
startups hire the best workers and search for investors to boost the development of their ideas
and scale.
2. Small business startups: These businesses are created by regular people and are self-funded.
They grow at their own pace and usually have a good site but don’t have an app. Grocery
stores, hairdressers, bakers, and travel agents are the perfect examples.
3. Lifestyle startups: People who have hobbies and are eager to work on their passion can
create a lifestyle startup. They can make a living by doing what they love. We can see a lot of
examples of lifestyle startups. Let’s take dancers, for instance. They actively open online
dance schools to teach children and adults to dance and earn money this way.
4. Buyable startups: In the technology and software industry, some people design a startup
from scratch to sell it to a bigger company later. Giants like Amazon and Uber buy small
startups to develop them over time and receive benefits.
5. Big business startups: Large companies have a finite lifespan since customers’ preferences,
technologies, and competitors change over time. That’s why businesses should be ready to
adapt to new conditions. As a result, they design innovative products that can satisfy the
needs of modern customers.
6. Social startups: These startups exist despite the general belief that the main aim of all
startups is to earn money. There are still companies designed to do good for other people, and
they are called social startups. Examples include charities and non-profit organizations that
exist thanks to donations.
The role of start-ups in the growth of the Indian economy

• Employment Creation: India has 112 million working-age people between the ages of 20 and
24, compared to China’s 94 million. In the absence of government jobs, this demographic
dividend is accelerating the country’s startup culture. As of August 29, 2022, India had emerged
as the world’s third-largest startup ecosystem, with over 77,000 DPIIT-recognized startups
spread throughout 656 districts. These startups are simultaneously enabling more jobs than large
companies or enterprises in the same industry. Therefore curbing the unemployment problems in
developing nations like India.

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• New Investments: Many multinational corporations are now outsourcing their tasks to small
businesses in order to focus on their core competencies. As a result of this trend, not only Indian
venture capitalists but also many multinational corporations are closely monitoring the progress
of Indian start-ups to invest their money. For example, Accenture gave 1.35 million dollars
worth of business to startups within the last year, giving startups an opportunity to make a
significant impact on both the Indian and global markets.

• Research and Development: Start-ups heavily subsidize Research and Development (R&D) in
countries like India as they frequently have to deal with high-tech and knowledge-based
services. The startup’s R&D team acts as an innovation seeker and keeps the company updated.
Start-ups, therefore, encourage a pragmatic approach or independent research at the academic
establishment. This motivates students or researchers to put their ideas into practice by
collaborating with the start-up, which more importantly helps develop means of economic
expansion.

• Better GDP: Despite elevated inflation pressures owing to rising global food and fuel prices,
Indian Gross domestic product (GDP) is expected to grow by 6.9% in the fiscal year (FY) 2022-
23 and 6.2% in FY 2023-24. As GDP plays an important role in a country’s economic
development, it will become feasible to increase revenue domestically and consumer capital can
also circulate throughout the nation if we keep promoting and supporting more start-up
initiatives.

• Democratizing the Technology Benefits: Many startups not only drive innovation and
technology, but also demonstrate how their benefits reach the most remote customers. Fintech
start-ups are now reaching out to remote areas with their solutions and making financial
solutions easily accessible in tier 2 and tier 3 cities. Hesa, a Fintech and Agritech startup is one
solution for all rural problems by bridging the rural-urban divide with technology and labour. It
is successfully facilitating banking transactions, managing supply chains, and increasing the
visibility of farmers’ rural products. Similarly, e-commerce start-ups such as Zypp uses EV
technology to make last-mile delivery sustainable and emission-free. Due to these innovative
startups, it has become easier for local entrepreneurs operating in rural areas to market and sell
their products. Local entrepreneurship is no longer limited to a particular region but is capable of
competing on a global scale, assisting India in becoming a stronger economy.

Government initiatives to promote startup entrepreneurship in India

The government of India is on a mission to build a strong startup ecosystem. For the support
and benefit of entrepreneurs, the government has created a ministry that is dedicated to assisting new
businesses and providing them with valuable expertise and other facilities in order to grow. The
Indian government has launched various plans and programs in recent years with the goal of assisting
startups and promoting the ‘culture’ of entrepreneurship among Indians.

Indian government initiatives to encourage startups

Atma Nirbhar Bharat App Innovation Challenge

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Of all the government initiatives in India, this scheme was meant to challenge young Indian tech
developers to come up with innovative apps that would benefit Indians and people across the world.
The tech community of the country came together to develop apps that help with a number of things
such as work from home, learning languages, translation apps, news, health and wellness,
entertainment as well as business to name a few areas.

SAMRIDH Scheme

This stands for the Startup Accelerators of MeitY for Product Innovation and Growth and was
launched by the then minister of electronics information and technology. This scheme is designed
especially to provide funding to startups along with helping them grow and become successful by
bringing skill sets together.

Startup India Seed Fund

Worth Rs.1000 crores, this scheme has been introduced to enable startups to grow without the worry
of capital shortage and support ideas from aspiring entrepreneurs. As per the union budget for the
year 2022, this provides government funding for startups in India and the allocation of funds for
startup funding is 283.5 crores for the year 2022.

Startup India Initiative

The idea of this scheme is to increase wealth and employability to those wishing to start their own
businesses but not having the means to do so. This is a long term project and the overall age for a
startup to be eligible for this aid has been increased from two years to seven years. This is one of the
best government sponsored schemes that has enabled numerous entrepreneurs to make their business
dreams a reality.

Startup Leadership Program

This is a government sponsored leadership program that empowers outstanding innovators and
founders. It was launched in 2016 in India and has a world class 6 month training program and
lifeline network.

Aspire

This is a scheme that is designed to improve the social and economic aspects of life in the rural areas
and is one of the most important schemes sanctioned by the Indian government. Launched in 2015,
its main purpose was to offer proper knowledge to entrepreneurs to start their business and emerge as
employers. Through empowering people the ASPIRE scheme aims mainly at increasing
employment, reducing poverty and encouraging innovation in rural parts of the country. The main
idea is to promote the agribusiness industry.

Chunauti

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This is a pandemic influenced scheme and a government of India initiative to invite startups to
develop solutions for problems during the pandemic. The challenge invites applications from startups
that are working in domains related to software development, startups registered with DPIIT and
individual academicians or researchers, educators, entrepreneurs are also welcome to apply.

Qualcomm Semiconductor Mentorship Program

The mobile chipset manufacturing giant, Qualcomm has partnered with the Center for Development
of Advanced Computing and to conduct a mentorship program for startups that are working in the
semiconductor space and provide them with valuable guidance that will help them grow.

ATAL Innovation Mission

In order to create a promotional platform for academicians and draw upon national and international
experiences to encourage the development of a culture of innovation, research and development, the
ATAL Mission was founded and a substantial amount of funds were allocated to the same.

Funding Options For Startups

1. Angel investors

Angel investors are individual investors that invest in startups at an early stage, i.e. seed
stage. Having a deep understanding of the pain points of entrepreneurs and finding opportunities in
startups, these investors invest a lesser amount than venture capitalists and expect higher returns.
Angel investors, in some cases, are experienced entrepreneurs who have been through the process of
starting and growing a business. They also act as mentors to young and budding entrepreneurs.Before
choosing a startup to invest in, angel investors screen the startup, research, and see how much the
founder is passionate and invested in the startup. Once convinced, angel investors give funding in
exchange for convertible debt or equity ownership in the startup.

Ex: Sanjay Mehta, Anupam Mittal, Kunal Bahl, Kunal Shah, and Sachin Bansal are some popular
Indian angel investors.
3. Angel Networks & Platforms
Through these networks and platforms, angel investors pool their capital to invest in businesses,
providing larger investments to startups. The platform receives equity ownership in the startup
and benefits if it succeeds. As startup investing is risky, angel networks & platforms enable angel
investors to hedge risks and provide larger funds.
Ex: AngelList, Venture Catalysts, and LetsVenture are some popular angel networks & platforms.
3. Venture Capital Funds
Venture Capital Funds are provided by venture capital firms. These are financing firms that
provide capital to startups and emerging companies. Unlike angel investors, VC funds provide large
amounts of capital to startups, helping them grow and expand. In return, they get equity or equity-
linked instruments. Fueling the vision of thousands of entrepreneurs, these VcCfirms exit when the
startup releases an IPO or is acquired.

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Some prominent Indian VC Firms are 100X.VC, Mumbai Angels Network, Kalaari Capital and
Blume Ventures.
4. Corporate Venture Capital

Corporate Venture Capital refers to the investment made by large organisations directly
into a private enterprise or a startup. Through corporate venturing, startups get resources like
funding, marketing expertise, or strategic direction. Depending on the deal, organisations can get
equity in return, or they can use the resources of the startup like proprietary technology, in-demand
product, etc.
Ex: Reliance Ventures, Mahindra Partners, and Brand Capital are some popular CVC firms.

5. Venture Debt Funds

Though most common, equity is an expensive source of finance for entrepreneurs. That is
why non-banking financial companies (NBFCs) provide an alternate form of debt funding to VC-
backed startups under a hybrid scheme known as venture debt funds.

Venture debt funds lend money in exchange for non-convertible debentures (NCDs) and equity
warrants. These funds are gaining prominence, and last year Indian startups raised about Rs 4,500
crore ($600 million) of venture debt.
Some firms that provide venture debt financing to Indian businesses are Trifecta Capital, InnoVen
Capital India, Alteria Capital and Stride Ventures.
6. Accelerators & Incubators

Accelerators and incubators help startups grow by providing necessary resources like
management training, networking with highly specialised professionals, office space, equipment, etc.
Generally found in major cities, accelerators and incubators run programs for four to eight months,
providing entrepreneurs with funding assistance, mentors, and a platform to connect with investors
and other startups. In return, they take an equity stake.

Ex: GSF Accelerator, Microsoft Accelerator, Google Launchpad Accelerator, and Y Combinator are
some of the popular accelerator programmes for Indian startups.
7. Revenue Based Financing
This kind of financing allows investors to provide capital to a startup in exchange for a certain
percentage of the company’s ongoing total gross revenues.

Revenue-Based Financing is becoming quite popular among the stakeholders, and India has seen the
emergence of various revenue-based lending organisations..
Ex: Klub, GetVantage and Velocit are some revenue-based financing firms for Indian startups.
8. Government Grants & Funds
The Government of India, through its several initiatives and schemes, is backing the Indian
startup ecosystem and providing them with the support they need. Aiming to build a robust startup

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ecosystem, the Government’s Startup India program offers an 80% rebate on patent costs and income
tax exemption to startups registered under the scheme for the first three years.
In 2021, the government also launched the Startup India Seed Fund scheme, which
provides funding support to early-stage startups. The government has allocated Rs 1,000 crore for the
Fund of Funds for Startups this year, as well as Rs 283.5 crore for the Startup India Seed Fund
Scheme (SISFS).
9. Crowdfunding

It is a less popular startup funding alternative in which funding is raised from a large number
of people. This method of raising funds is easy compared to bank loans, venture capital, and angel
investors, which involve complicated procedures. Equity crowdfunding is another option, but its
legality in India is debatable.

Ex: SeedInvest Technology, GripInvest, StartEngine, GoFundMe, and Indiegogo are some of the
notable crowd-funding platforms for startups.
10. Banks and NBFCs
As the startup ecosystem is flourishing, banks provide loans for all stages of business, but the
terms differ. Startups can opt for bank loans for their different business needs like equipment loans,
working capital loans and startup business loans.Banks require higher collateral for an idea-stage
startup, but for equipment loans, there may be no need for collateral.

Ex: Bajaj Finserv, J&K Bank, HDFC Bank and Lendingkart are popular NBFCs and Banks that offer
loans to Indian startups.
INCUBATION
Definition of Business Incubator: An organization designed to accelerate the growth and success of
entrepreneurial companies through an array of business support resources and services that could
include physical space, capital, coaching, common services, and networking connections.
Sherman and Chappell have defined “Business incubator as an economic development tool
primarily designed to help create and new businesses in a community. Business incubators help
emerging businesses by providing various support services, such as assistance in developing business
and marketing plans, building management teams, obtaining capital, and access to a range of more
specialized professional services. They also provide flexible space, shared equipment, and
administrative services”.
The formal concept of business incubation began in the USA in 1959 when Joseph Mancuso opened
the Batavia Industrial Center in a Batavia, New York, warehouse. Incubation expanded in the U.S. in
the 1980s and spread to the UK and Europe through various related forms. The U.S.based
International Business Innovation Association estimates that, there are about 7,000 incubators
worldwide.Incubation activity has not been limited to developed countries; incubation environments
are now being implemented in developing countries and raising interest for financial support from
organizations such as UNIDO and the World Bank.
Business incubation programs are often sponsored by private companies or municipal entities
and public institutions, such as colleges and universities. Their goal is to help create and grow young
businesses by providing them with necessary support and financial and technical services.

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Incubators provide numerous benefits to owners of startup businesses. Their office and
manufacturing space is offered at below-market rates, and their staff supplies advice and much-
needed expertise in developing business and marketing plans as well as helping to fund fledgling
businesses. Companies typically spend an average of two years in a business incubator, during which
time they often share telephone, secretarial office, and production equipment expenses with other
startup companies, in an effort to reduce everyone's overhead and operational costs.
Benefits of incubation

o Business and Technical Assistance

o Affordable/Flexible Lease Space
o A Network of Relationships with other Business Owners
o Ability to Adjust Business Model to Market Conditions
o Financial Assistance and Advice
o Preservation of Working Capital
The Different Stages of Incubation for Startups

1. The pre incubation stage: Preparing for incubation

The pre-incubation stage is a critical and often overlooked step in the process of launching a
successful business. It is the period of time before entering an incubator program, when
entrepreneurs focus on building the necessary foundations for their business idea. During this stage,
entrepreneurs must take the necessary steps to prepare for incubation, ensure their business
concept is viable and create a comprehensive business plan that outlines their goals and strategies.

Pre-incubation requires hard work and dedication, but it is also an invaluable opportunity to refine
your business idea and make sure you have a good understanding of the market, your customer base
and the competitive landscape. It’s also a great chance to get feedback from experienced
entrepreneurs and mentors who can provide invaluable advice on how to make your business
successful.

The first step in pre-incubation is to identify your target market and create a customer profile. Its
important to understand who you are selling to and what their needs are as this will inform all aspects
of your business plan. Once you have gathered all the necessary data, you can start refining your idea
and building your business plan.

When developing your business plan, be sure to include detailed descriptions of your product or
service, the competitive landscape, pricing information, customer acquisition strategies and long-
term goals. Make sure that you have clearly defined your competitive advantages and how you will
differentiate yourself from other businesses in the market. Additionally, its important to conduct
market research to understand current trends in the industry and how they might affect your product
or service.

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Once your business plan is complete, you should also create an executive summary that outlines the
main points of the plan. This document can be used as a presentation tool when pitching to potential
investors or incubators. Additionally, its important to create financial projections that outline the
anticipated costs associated with launching and running your business. Having accurate financial
projections will help investors determine whether or not they should invest in your venture.

Pre-incubation is a critical stage for any aspiring entrepreneur. By taking the time to develop
a comprehensive business plan, conduct market research and create financial projections during this
stage, entrepreneurs can ensure that their venture is well prepared for success when entering an
incubator program.

2. The early incubation stage : The beginning of the journey

The early incubation stage of a business is a time of great excitement and anticipation. As the
entrepreneur begins to form their idea, they also begin the fundamental steps of building the
infrastructure of their business, such as: deciding on a business model and name, identifying key
customers and partners, and researching markets and competitors. The early incubation stage is
essential for the success of any business, as it lays the foundation for the company’s future growth,
direction, and profitability.

The early incubation stage is all about testing the market and developing an initial business plan. Its
important to be creative and flexible at this stage, as you want to explore different avenues and
consider different approaches to your business. You may need to adjust your original ideas
depending on feedback from potential customers or even the market itself.

During the early incubation stage, entrepreneurs should focus on validating their idea by doing
extensive market research and validating their assumptions with customers. This process involves
testing your product or service with potential customers to see if theyre willing to buy it or use it and
identifying any gaps in the market that your product or service can fill. By taking time to properly
validate your concept, you can be sure that you’re creating something that people actually need or
want.

During this stage, entrepreneurs should also focus on developing a business model. This involves
defining how you will make money from your product or service, including pricing strategies and
identifying target customers. An important part of this process involves understanding your
competitors, what sets you apart from them, and how you can differentiate yourself in order to attract
customers.. It’s important to find people who are passionate about the project, who share your vision,
and who are willing to put in the hard work required to make it a reality.

Finally, once all these pieces are in place, you’ll need to create a plan for funding your business.
Depending on your goals, this could involve seeking investment from venture capitalists or angel
investors, obtaining bank loans or grants, or bootstrapping your own funds through personal savings
or family contributions.

3. The post incubation stage: launching your startup

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CH.VENKATESWARLU-ASSISTANT PROFESSOR-AITS-MBA-DEPT
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Once you’ve reached the post-incubation stage, your startup is ready to launch. This is a crucial part
of the process, as its when you’ll be able to start making money and spreading the word about your
product or service.

The first step in launching your startup is to create a business plan. This should include your mission
statement, goals, budget, target market, marketing strategy, and other details about your
business. Once you have your business plan in place, you’ll need to decide on a name for your
startup. It’s important to choose something that reflects the purpose and values of your company.

When it comes to pricing your products or services, it’s important to do your research and find out
what your competitors are charging for similar products or services. You don’t want to price yourself
too low or too high aim for something in the middle that will attract customers without putting you at
a financial disadvantage.

Finally, you’ll need to consider how youll manage customer service and technical support after
launch. This includes responding to customer inquiries quickly, resolving customer issues promptly,
and providing helpful advice when needed. Having good customer service is key to building
customer loyalty and trust in your business.

Launching a startup can be an exciting and challenging process, but if done correctly it can be
incredibly rewarding. By taking the time to go through each stage of incubation thoroughly and
carefully executing your launch plan, you can ensure that your startup has the best chance of success.

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CH.VENKATESWARLU-ASSISTANT PROFESSOR-AITS-MBA-DEPT