209-ALL UNITS Startup and Venture ManagementMBA SEM 2 ALL PPTS
209-ALL UNITS Startup and Venture ManagementMBA SEM 2 ALL PPTS
Management
Generic Elective – University
Level
Unit 1
• Being an Entrepreneur:
The entrepreneur, Profile analysis, behavior and
motivations, Lean Start –up, The entrepreneurial
ecosystem, Entrepreneurs and strategic decisions
, Sustainability of Entrepreneurship: Dilemmas of
an entrepreneur for success; Handling doubts
on survival of business, Struggles-Causes of
failure– Product/ market , financing, managerial-
Resilience. Legal Fundamentals - When, how
and where to incorporate.
The entrepreneur
• entrepreneurs
– people who own, operate, and take the risk of a
business venture
• entrepreneurship
– running a business of one’s own
Profile analysis( addressing
strength and weakness)
• SELLING
• DISRUPTOR
• KNOWLEDGE
• DETERMINATION
• DELEGATOR
• PROFITABILITY
• RELATIONSHIP
• RISK
• CONFIDENCE
• INDEPENDENCE
Meaning of entrepreneurial behavior
• Entrepreneurial behavior is directly
concerned with the understanding, prediction
and control of human behavior in
enterprises.
• Definition “Entrepreneurial behavior is a
subset of entrepreneurial activities concerned
with understanding, predicting and
influencing individual behavior in
entrepreneurial settings.” -Callahan
• Entrepreneurial behavior represents the
behavioral approach of management.
• 1.It emerged as a distinct field of study because of the
importance of human behavior in enterprise.
• 2. Cause and effect relationship: Human
behavior is generally taken in terms of cause and
effect relationship. It provides generalization that
entrepreneurs can use to anticipate the effect of
certain activities on human behaviour.
• 3. A branch of social sciences: Entrepreneurial behavior
is greatly influenced by other social sciences viz.,
psychology, sociology and anthropology.
• 4. Three levels of analysis: Entrepreneurial
behavior is the study of three levels of analysis
i.e. individual behavior, inter-individual
behavior and the behavior of organizations.
• 5. A science as well as an art: The systematic
knowledge about human behavior is a science
and the application of behavioral knowledge
and skills is an art.
Entrepreneurial motivation.
Motivation has been derived from the word
‘motive’ which implies the inner state of mind
that activates, provokes and directs our
behavior towards the goal . Motivation is a
process that motivates a person into action
and induces him to follow the course of action
till the goals are finally achieved.
• Motivating Factors:
• ( A ) Internal Factors :
• Educational Background .
• Occupational Experience .
• Desire to do work independently .
• Desire to branch out to manufacturing.
• Family Background
( B ) External Factors :
• Assistance from Government.
• Assistance from financial institutions.
• Availability of technology.
• Availability of raw material.
• Demand of the particular product.
• Achievement
• . Power
• Affiliation
• Independence
• Extension
• Personal achievement
• Social achievement
Entrepreneur
s
Ecosystem
•Education system
•Market structure
•Infrastructure
•R&D system
•Financial sector
•Corporate sector
•Government
Entrepreneurial Ecosystem
Leadership and
Government
Early
Customer Financial
s Capital
Networks
Labour
Educational Success
Institutions Stories
Social Norms
stability in decision-making.
Where to incorporate-location of the startup
Unit 2
• Customer Discovery:
Entrepreneurial Opportunity Search and Identification;
Market Intelligence, Market analysis , Market research,
Customer validation, developing your business model,
Crafting your value proposition, Product Development ,
Managing the product development process,
Long Tail markets, Product launch goals, Go-to- Market
Strategy, The role of selling in a startup, Sales
forecasting for startups, Mapping buyer response
modes. Social media Promotion tools.
Entrepreneurial Opportunity Search
and Identification
• The ability to identify business opportunities is
an essential characteristic of an entrepreneur
• Opportunity- favorable position or a range
for advancement.
STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY
• Generating Ideas
• Screening Process
• Formulating the Concept of the Business
Generating Ideas
TRENDS
*Once the segments of the product's market are
determined, the market trends of the product needs to
be analyzed from time to time.
*Identify the trends in the market segments within which
the product fits.
*If the market segment is growing and is projected to
continue to grow, then it is an upward trend.
*If the trend is for new products then the company
should replace older models, with new ones and that is
called downward trend for the older products.
MARKET GROWTH RATE
• Keep a track of the market condition.
• Sales growth of complementary products.
•Product life cycle phases can be understood.
How to estimate the Market Growth Rate ??
– Historical data
– Demographic information
MARKET
PROFITABILIT
Y
• Profit potential for a market can be used as a
guideline to determine how difficult it is to
make money in the market.
•Porter`s 5 forces identifies the 5 factors that
effect the market profitability.
Porter`s 5 forces
INDUSTRY COST STRUCTURE
• Identifying key factors for success.
•Porter's value chain model is useful for
determining where value is added and for isolating
the costs.
•The cost structure also is helpful for formulating
strategies to develop a competitive advantage.
Market research
• Marketing research involves collecting,
organizing, analyzing and communicating
information that can be used in order to make
an informed marketing decision.
• Performing market research will complement
your marketing mix strategy as it enables you
to make educated decisions regarding
selecting markets, your image or branding and
products or services.
Online Research
• Online research: the use of computer
networks, including the Internet, to assist in
any phase of the marketing research process
including development of the problem,
research design, data gathering, analysis, and
report writing and distribution
key steps in Marketing Research
1. Define the Problem
2. Collect the Data
3. Analyze and interpret the data
4. Reach a conclusion
5. Implement your research
Define the Problem
• In this stage you need to identify the actual
problems that are relating to the apparent
symptoms.
• What information is needed in order to solve
the problem?
• For example, poor sales within a business are
not the problem, they are the symptom of a
larger issue such as a weak marketing strategy.
Further business problems may
include:
• Who are your target customers?
• What method could be implemented to reach
these customers?
• Who are your customers and what advantages
and disadvantages do they have over your
business?
• What size is the consumer market you are
trying to engage?
Collect the Data
• There are two types of market research that can
be performed:
1. Primary research - involves collecting
information from sources directly by conducting
interviews and surveys, and by talking to
customers and established businesses.
2. Secondary research - involves collecting
information from sources where the primary
research has already been conducted. Such
information includes industry statistics, market
research reports, news paper articles, etc.
Collection methods and techniques
• Qualitative research is where you seek an
understanding of why things are a certain way.
For example, a researcher may stop a shopper
and ask them why they bought a particular
product or brand.
• Quantitative research refers to measuring
market phenomena in a numerical sense, such
as when a bank asks consumers to rate their
service on a scale of one to ten.
Analyze and interpret the data
• You must attach meaning to the data you
have collected during your market research to
make sense of it and to develop alternative
solutions that could potentially solve your
business problem.
• You should determine how the
knowledge you have gained through
researching your market can be applied
and used to develop effective business
strategies.
Implement your research
• Put your final solution into practice.
• Without completing this step your
research could potentially have been a
waste of your time and resources.
Marketing Research Agencies in India
• IMRB International (“Indian Market Research
Bureau”)
• IMRB has been responsible for establishing
the first and television audience measurement
system and the first radio panel in the country
• IMRB International's specialized areas are
consumer markets, industrial marketing,
business to business marketing, social
marketing and rural marketing
Customer validation
• Lower Case
• Customers testing real unreleased products in
real environments.
• Upper Case
• A distinct discipline for gathering and
synthesizing representative customer
feedback to produce a more successful
product. Specific proven research and testing
methodologies utilized to capture unique
actionable insight about the customer
experience of actual products throughout
• Customer Validation –
• The Second Step
• Validation comes after discovery
• Make early sales
• Constrain spending
• Step one
• Ready to sell product
• Acquire activity customer
• A high-fidelity MVP (Minimum Viable
Product) addresses whether your product
solves that problem. You build a low-fidelity
MVP first to ensure that the problem is worth
solving, then you build the high-fidelity
MVP to ensure that you are solving the
problem.
• Develop sales collateral
• Sales road map
• customer validation your goal is to find the
user segment with the most potential, identify
early adopters, and learn about their habits,
needs, problems, and perspectives in relation
to your business. Learning about your target
audience will help you find the right product-
market fit so you can create business solutions
that solve a genuine user problem.
Crafting your value proposition
• Using Facebook
• Facebook’s casual, friendly environment
requires an active social media marketing
strategy. Start by creating a Facebook Business
Fan Page. You will want to pay careful
attention to layout, as the visual component is
a key aspect of the Facebook experience.
• Facebook is a place people go to relax and
chat with friends, so keep your tone light and
friendly. And remember, organic reach on
Facebook can be extremely limited, so
• Google+
• Google+ entered the scene as a Facebook
competitor, but it now serves a more niche
audience. It won't work for everybody, but
some communities are very active on
Google+.
• On Google+ you can upload and share photos,
videos, links, and view all your +1s. Also take
advantage of Google+ circles, which allow you
to segment your followers into smaller groups,
enabling you to share information with some
• Pinterest
• Pinterest is one of the fastest growing social
media marketing trends. Pinterest’s image-
centered platform is ideal for retail, but
anyone can benefit from using Pinterest for
social media purposes or sales-driving ads.
• Pinterest allows businesses to showcase their
product offerings while also developing brand
personality with eye-catching, unique
pinboards. When developing your Pinterest
strategy, remember that the social network's
• Twitter is the social media marketing tool that lets you
broadcast your updates across the web. Follow
tweeters in your industry or related fields, and you
should gain a steady stream of followers in return.
• Mix up your official tweets about specials, discounts,
and news with fun, brand-building tweets . Be sure to
retweet when a customer has something nice to say
about you, and don’t forget to answer people’s
questions when possible. Using Twitter as a social
media marketing tool revolves around dialog and
communication, so be sure to interact as much as
possible to nurture and build your following
• LinkedIn is one of the more professional social
media marketing sites. LinkedIn Groups is a
great venue for entering into a professional
dialog with people in similar industries and
provides a place to share content with like-
minded individuals. It's also great for posting
jobs and general employee networking.
• Encourage customers or clients to give your
business a recommendation on your LinkedIn
profile. Recommendations makes your
business appear more credible and reliable for
new customers. Also browse the Questions
• YouTube is the number one place for creating
and sharing video content, and it can also be
an incredibly powerful social media marketing
tool. Many businesses try to create video
content with the aim of having their video “go
viral,” but in reality those chances are pretty
slim. Instead, focus on creating useful,
instructive “how-to” videos. These how-to
videos also have the added benefit of ranking
on the video search results of Google, so don't
under-estimate the power of video content!
• Using social media in marketing does more
than improve site traffic and help businesses
reach more customers; it provides a valuable
venue for better understanding and learning
from your target audiences.
Unit 3 The Financial Road Map:
• Planning/Budgeting, Developing a financial
roadmap, financial statements: the four
components, How to budget for startup success,
Bootstrapping and alternative sources of funding,
Informal capital– Friends & Family, Role of
Government in ED, various schemes - PMEGP,
CGTMSE, MPDA, SFURTI. Role of MSDE ; Schemes
by MSDE: PMKVY, SANKALP, STAR. Crowd funding,
Venture capital, Private Equity, Financing Mix and
the Financing continuum shareholding- Cliff -
Vesting schedule-Relative importance of
Operational Involvement, The Pitch, Preparing for
your investor presentation, Elements of the
perfect investment pitch.
Planning
• A financial plan is often seen as the basis for
many other parts of the business plan. This
particular plan, designed to meet the financial
objectives you have set, is important in that it
pulls together the one common denominator of
all other plans - and that is cash. The financial
plan for the business will have at its heart
standard features:
• profit forecast
• cash flow forecast
• projected balance sheet
• The financial plan you set should be tailored to meet
your individual business needs. To do so, it
will refer to your particular business circumstances
and may also include one or all of a range of other
financial tools, such as:
• business funding structure
• working capital analysis
• sales forecast
• returns achieved on sales
• break-even analysis
• contribution from production
• stock analysis
Looking into these different forms of analysis will
quickly show you that they individually serve
differing business requirements. You will need to
decide which are most relevant to your business
situation and from which you will gain most
advantage.
Budgeting
• Business budgeting is one of the most
powerful financial tools available to any small-
business owner. Put simply, maintaining a
good short- and long-range financial plan
enables you to control your cash flow instead
of having it control you.
Developing a financial roadmap,
• Begin with the end in mind
To chart your course, you need to start with big-picture
perspective. What is your ultimate destination? Do you
want to prep for a sale, grow, get acquired? It’s important
to aim for your goals from the get-go. Visualizing your
business dream as a reality will help guide you as you
navigate the smaller steps and stages along the way.
Then, get specific. Identify the benchmarks that you want
your company to hit in six months, one year, five years
and ten years from now. Quantify what it will take to
meet these milestones, and what steps you’ll need to have
lined up to get there worked daily on the small steps
• Mind the gas in your tank
Your vision tells you where you’re going, but your cash flow
will determine if you can make it there. Calculate your
start-up costs and one-time expenses. Don’t
underestimate these, which is a common mistake.
If you plan for everything to take twice as long and cost
twice as much as you think it will, then you’re covered. If
you don’t, and it does, that’s a problem. Document your
fixed monthly expenses and estimate your variable ones.
Your sales projections will tell you what income you need to
be profitable. To figure out where you break even, create
a simple spreadsheet to track all of your income vs.
expenses on a weekly basis.
Look down the road ahead - and expect a few
detours(to visit somewhere along the way )
• There will be the inevitable bump in the road, likely with its
share of unexpected costs. It is important to have a liquid
emergency fund of three-to-six months’ worth of expenses
as a reserve for slower times and unforeseen complications.
• For example, I know the founders of an extremely popular
dating site. They had more cash reserves in their business
than they needed, but wisely did not raise their spending
just because they could.
• The future growth of your business is built on your present
success. By bootstrapping, you’re effectively scaling your
expansion funded by your growth, avoiding the common
trap of overexpansion. With a smart map for the journey
ahead, you’re ready to jump on the road.
financial statements
• Financial statements are a collection of summary-level
reports about an organization's financial results,
financial position, and cash flows. They are useful for
the following reasons:
• To determine the ability of a business to generate cash,
and the sources and uses of that cash.
• To determine whether a business has the capability to
pay back its debts.
• To track financial results on a trend line to spot any
looming profitability issues.
• To derive financial ratios from the statements that can
indicate the condition of the business.
• To investigate the details of certain business transactions, as
outlined in the disclosures that accompany the statements.
financial statements: the four
components
• The standard contents of a set of financial statements are:
• Balance sheet. Shows the entity's assets, liabilities, and
stockholders' equity as of the report date. It does not show
information that covers a span of time.
• Income statement. Shows the results of the entity's
operations and financial activities for the reporting period. It
includes revenues, expenses, gains, and losses.
• Statement of cash flows. Shows changes in the entity's cash
flows during the reporting period.
• Supplementary notes. Includes explanations of various
activities, additional detail on some accounts, and other
items as mandated by the applicable accounting framework,
such as GAAP or IFRS.
How to budget for startup success
• 1. A set budget helps you stay focused.
• Calculating every cost in the present and future for a
startup can be overwhelming, especially when there
are unforeseeable expenses. However, mapping out
specific costs (and, of course, setting aside funds for
emergencies, too) is the best approach.
• “The exercise of thinking through what will be
required before beginning a project (i.e., counting
the cost)
• It's not just about estimating expenses either; it can
end up shaping the strategy of the whole company.”
• From staffing to machinery, entrepreneurs should
estimate their startup budget. Having a set budget
maintains focus on what or what not to spend,
reinforces the startup’s progress and perseveres
toward the end goal.
• 2. It’s OK to adjust your budget but stick to it.
• Because life doesn’t always allow people to stick to
their intended goal, flexibility is key. Sometimes
startup owners need to readjust their budget more
than once, and that’s OK. But it’s also best to
readjust focus and keep the budget in mind.
• Creating a startup budget is a dynamic process that
fluctuates as much as the initial goal and company
do. However, adjusting the budget is just as
important as sticking to the original plan. Be open to
change, but remember to stick to the revamped
budget.
• 3. Avoid a half-built business.
• Running out of funds is one of the worst
repercussions when an entrepreneur doesn’t set
or stick to his or her budget. Half-built businesses
aren’t worth much to the entrepreneur or
business world, so prioritizing costs helps avoid
this doomed scenario.
• “The obvious consequence of failing to make a
budget is the increased probability of running out
of resources to meet your objective, like ending
up with a half-built house,”
• 4. Don’t dig yourself into a debt hole.
• Having an unlimited startup budget may seem like an
ingenious idea at the time, but startup owners will dig
themselves into an abysmal debt hole in the end. Businesses
that set a realistic budget steer clear if that trap.
• A startup business may flourish while accruing debt, but
success and profitability diminish once that debt needs to be
reimbursed. Calculate each expense more than once, and
determine what should be the startup’s best (and most
realistic) budget. It’s better to catch costly expenses in the
beginning rather than in the end when swimming in a pool
of debt.
Bootstrapping and alternative sources
of funding
• Starting a business with little capital or formal
investment
• Using your own finances (savings, credit card,
loans) or ‘friends, family and fools’
• Selling your time/expertise on the side
(consulting)
• Selling an early product to fund company
development
• Leveraging other sources of funding (government
grants, crowd funding)
• Bootstrapping is the only option for companies
that won’t grow quickly or provide a
significant ROI to investors
• Even companies who will get investment
later may need to reach certain
milestones/levels of traction on their own first
• Some entrepreneurs choose to bootstrap to
maintain control/full ownership over their
company
• Forces you to focus on priorities and leverage
what you have (time, expertise, money)
Crowd funding
• Crowd funding is by definition, “the practice of
funding a project or venture by raising many
small amounts of money from a large number
of people, typically via the Internet.”
• Donation based
• Reward based
• Equity Based
Crowd funding companies
Government Grants
Economic
Entrepreneurship Development
⦿ Constraints:
- Government Regulation and Policies.
- Entrepreneurial Education.
- Transfer and Commercialisation of R&D.
⦿ Enablers:
- Commercial Infrastructure
- Market Dynamics
- Ease of Access To Physical Infrastructure
- Cultural and Social Norms
Financial
Sector
Reforms
Micro, small and medium Enterprises
Schemes for establishing and developing
enterprises:
Small Enterprises
Credit Linked Capital Subsidy Scheme (For Tech
Upgradation)
SFURTI- Scheme for Funding of Regeneration of Traditional
Industries
Micro and Small Enterprises-Cluster Development
Programme
⦿ Major Steps:
Online and Single Window Systems
Facilitation Cells and Incubators
Unified Portals for registrations
Introduction of Individual State Ranking
Requirement of only three documents for import
and export.
⦿ Budget 2016-2017:
Proposed amendment in Companies Act to
improve enabling environment for start-ups.
‘Ek Bharat Shreshtha Bharat’: connect people
through exchanges in varied areas, including trade.
⦿ Launched in September, 2014
⦿ To boost Entrepreneurship, in
manufacturing and also in infrastructure
and service sectors.
⦿ Vision: Attract Capital and
Technological Investment
⦿ Objective: Job Creation and Skill
Enhancement in 25 key sectors of economy.
⦿ Key Policies:
Ease of doing business
Getting away with archaic laws
100 Smart Cities
Skills and Jobs for youth, etc.
⦿ Major Challenges:
Creating healthy business
environment
Removal of unfavourable factors
Lack of world class R&D
More focus on MSMEs
⦿ Four pillars of Make In India:
New Processes
New Infrastructure
New Sectors
New Mindsets
⦿ Major Steps:
Invest India: National Investment Promotion and
Facilitation Agency
Investment Facilitation Cell
Start-up India: To boost entrepreneurship
Atal Innovation Mission (AIM): Innovation Promotion
Platform
Self-Employment and Talent Utilization (SETU):
Techno-
Financial, incubation and facilitation programme.
⦿ For supporting financial needs of small and medium
enterprise sector and promoting start-ups and
entrepreneurship :
India Aspiration Fund under SIDBI: for VC Funding to
MSME
SIDBI Make In India Loan For Small Enterprises (SMILE):
Quasi-equity and term based short-term loans, on
liberal terms.
Micro Units Development Refinance Agency
(MUDRA) Bank: Development and Refinance to
Micro-Units.
⦿ Aims: Turn India’s youths from ‘Job seekers to job
creators.’
⦿ Major Features:
A National
Perspective
Ministry of Skill Development &
Entrepreneurship
Systemic
Challenge
sVocational training lacks aspiration
Po
and advocacy
li
cy Lack of synergy between
education and skills
Quality
Non conformity to
international standards
PMKVY – Apprenticeship
Hybrid Model Pradhan
Mantri Kaushal Vikas
LMIS– Labour
Yojana Market Information System
(PMKVY)
Various schemes - PMEGP, CGTMSE,
MPDA, SFURTI.
Prime Minister Employment
Generation Program (PMEGP) 15th
•
August
Credit Linked subsidy scheme
2008
• Implemented through KVIC and DICs
• Helps in establishing new self-employment ventures/
projects and micro enterprises
• The objective is to bring together rural and urban
artisans and unemployed youth(>18yrs. of age) and
give them opportunities to start their own businesses,
thereby preventing migration.
• assistance of upto 25 lakhs for manufacturing
enterprise and 10 lakhs for service sector During year
2015-16 ~2 lakh employments generated and Rs.631Cr.
of subsidy utilized.
CGTMSE 30th August 2000
• Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE)
SNVM
• Entrepreneurial Leadership:
Building and managing the founder team,
Attracting and retaining the right people, The
Team - Board/Governance, The role of a
successful board, Different board models for
different ventures, How to assemble a board
of advisors, separating leadership from
management,
• Legal Matters- Organizational form–
partnership, sole proprietorship, Tax, Legal
expenses, hiring the service providers.
Employee management and leadership in the
workforce, Recruiting, selection and hiring,
Hiring the first employee.
Separating Leadership
From Management
Leadership And Management
• What is leadership, and what is the difference
between leadership and management? In a
nutshell, the difference is:
• Leadership is setting a new direction or vision for
a group that they follow, ie: a leader is the
spearhead for that new direction
• Management controls or directs
people/resources in a group according to
principles or values that have already been
established.
• There is a lot of overlap between leadership and
management. Often the two are part of the same
role,
• because many leadership or management roles
involve a combination of both - i.e. there is a
continual
• adjustment of the direction (leadership) and
controlling resources to pursue that direction
• (management).
• Leadership development methods and tips
• This leadership tips webpage is a general guide to
modern ethical progressive leadership. See also the
leadership theories article for explanations and
summaries of the main leadership theories.
• This leadership tips webpage is a general guide to
modern ethical progressive leadership. See also the
leadership theories article for explanations and
summaries of the main leadership theories.
• Explaining and understanding the nature of good
leadership is probably easier than practicing it.
Good
leadership requires deep human qualities,
beyond conventional notions of
authority.
• In the modern age good leaders are an enabling
force, helping people and organizations to
perform and develop, which implies that a
sophisticated alignment be achieved - of people's
needs, and the aims of the organization.
• The traditional concept of a leader being the
directing chief at the top of a hierarchy is
nowadays a very incomplete appreciation of
what true leadership must be.
• Effective leadership does not necessarily
require great technical or intellectual capacity.
These attributes might help, but they are not
pivotal.
Taxe
s
• Sole proprietorship
Income from business is taxed as personal
income.
• Partnership
Partners pay only personal income tax.
Legal Matters- Organizational form
Partnershi
p
• Legal Matters- Organizational form–
partnership, sole proprietorship, Tax,
Legal expenses, hiring the service
providers.
Partnershi
p
• Plurality of members: More than one person
involve with the formation of partnership
business.
• Contractual relation : The relationship of partners
depends on contract among them.
• Legal business :The business must be legal in the
eye of law. Two or more than two persons involve
with the illegal business is not a partnership.
• Lawful business : The partnership business which
must be legal in the eye of law.
• Earning and sharing profit: The profit which is
earned from the partnership business must be
shared among the partners according to the
predetermine ratio.
• Mutual organization: This is the mutual
organization where each and every member
freely involves with the business.
• Mutual confidence and trust: Partnership
business formed depends on mutual trust and
confidence.
Legal Matters- Sole
proprietorship
• This legal form is the simplest, providing
maximum control and minimum government
interference.
• Currently used by more than 75 percent of all
businesses, it is often the suggested way for a
new business that does not carry great personal
liability threats. The owner simply needs to
secure the necessary licenses, tax identification
numbers, and certifications in his or her name,
and you are now in business
Legal expenses
Idea
generation
Environmental scanning
Feasibility analysis
gs
2. Internal
environment :
• Raw material : it refers to in terms of availability of raw
material required for the process of production. If the
material availability is at distance place and is very
expensive then entrepreneur should give second thought to
the same.
• Production/ operation : it assess the availability of
various machineries, equipments, tools and techniques
that would be required for production.
• Finance : it studies total requirement of finance in terms
of start up expenses, fixed expenses, running expenses etc.
• Market : refers to study on potential customer and target
customers in market.
• Human resource : refers to demand and supply of
required human resource in market and estimation of
expenses to be incurred on human resource.
Feasibility analysis : refers to conducting detailed
analysis in relation to every aspect relevant to business and
determining credibility ofbusiness.
• Market analysis : is conducted to estimate the demand
and market share for proposed product and service in
future. Demand and market analysis is based on factors
like consumption pattern, availability of substitute goods
and services etc.
• Technical and operational analysis : is to assess
operational ability of proposed business enterprise.
Technical or operational analysis collects data on following
parameters :
1. Material availability
2. Material requirement planning
3. Plant location
4. Plant capacity
5. Machinery and equipment.
• Marketing plan : lays down the strategies of marketing
which can lead to success of business plan. Strategies are in
terms of marketing mix which includes ( product, price,
place, promotion ) which determines the potential demand
of customers for product in the market.
• Production plan / operational plan : production plan is
drafted for manufacturing sector where as operation plan is
designed for business into service sector. It comprises of
strategies on parameters such as location layout, cost,
availability of material, human resource etc.
• Organizational plan : defines type of ownership pattern
in company, sole trading concern, family business, private
or public limited company etc.
• Financial plan : financial plan indicates the requirement
of proposed business enterprise. Which includes fund
flow, cash flow statement, break even point, projected
ratio, projected balance sheet.
Project report preparation : project report is a
written document that describes step by step strategies
involved in starting and running business.
Evaluation , control and review : as company
operates in dynamic environment company has to
monitor and review strategies and policies to stay in
line with competition existing in market.
MARKET PLAN
Market plan refers to plan that describes market
condition and strategy related to how products and
services will be distributed, priced and promoted in
market.
INDUSTRY ANALYSIS : prior to preparation of
market plan entrepreneur are required to conduct
industry analysis section of the business plan. Industry
analysis provides information about national and local
market that affection marketing operation of company.
Industry analysis also involves collecting information
about competitors which is available in form of
secondary data by news papers, article, websites,
catalogs, promotions, interview with distributors,
customers etc.
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STEPS INVOLVED IN
MARKET RESEARCH
2. Gathering 3. 4.
1.Define data from Gathering Analyzing
purpose and
secondary data from and
objective
sources primary interpreting
sources the result.
STEPS IN MARKETING RESEARCH
Defining the purpose or objective : it refers to
entrepreneur should be clear nature of information
required by the business, sources through which
required data will be collected, whether required data
will be from primary or secondary source of
information.
Gathering data from secondary sources : secondary
source of information refers to data available about
competitors strategy and their position in the market.
Required information on competitors is available
through magazines, new papers, libraries etc.
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Gathering information from primary source :
primary data required for market research is collected
through methods such as observation, networking,
interviewing, focus group, exhibition etc.
Analyzing and interpreting results : results should
be evaluated and interpreted depending on the
objective of research process. Summarizing results will
provide in preliminary insights about competitors
market position and their image in competitive
environment.
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CHARACTERISTICS/ IMPORTANCE OF MARKET
PLAN
it should provide strategy for accomplishing the company
mission and goal.
It must provide for the use of existing resources and
allocation of all equipment , financial resources, human
resources in company.
It should provide for continuity so that each annual
marketing plan can successfully meet long term goals and
objectives of company.
It should be simple and specific in nature so as to provide
appropriate road may in terms of planning market strategy
for company.
It should focus on criteria to be evaluated to assess market
success of the company.
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MARKET
PLAN
DEFINING THE BUSINESS SITUATION
MARKET STRATEGY
IMPLEMENTATION OF MARKETPLAN
STEPS IN PREPARING MARKET
PLAN
1. Defining business situation refers to understand past
and present business achievements of new venture. It give
basic insight about scenario persisting in market, response
of customers to new venture in market, and helps in
predicting customer acceptance of company product in
market.
2. Defining target market : target market refers to group
of potential customers towards which venture aims its
market plan. Knowledge of target market will provide basis
for determining appropriate market action strategy to meet
needs of customers. Target market also includes market
segmentation which involves process of dividing market
into definable and measurable groups for purpose of
targeting market strategy.
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3.Considering strength and
weakness
business refers to :core areas
strength of
which company is
specialized in which may be abundance experience of
company in similar area of business and weakness may
be in terms of production capability, or layout which
permits limited space for equipment and operation.
4.Establishing goals and objectives : marketing goals
of the company should be clear and specific in nature
as it has to clearly indicate about nature of product,
target customers ,sales promotion , advertising
support etc.
5. Defining market strategy and action program : it
refers to specific activities outlined to meet the venture ,
business plan objectives and goals.
a. Product and service : indicates description of product or
service to be marketed in the new venture.
b. Pricing : refers to price to be charged for product in
market before which company is required to consider
various aspects such as cost, margin , competition etc.
c. Distribution : refers to means through which product will
be made available to customer in market which involves
decision relating to nature of product, distribution
channel, middlemen etc.
d. Promotion : refers to various channels through which
entrepreneur will advertise company product to
customers in market.
6.Marketing strategy : it involves understanding the n ature
of product and accordingly planning in for
marketing product. Entrepreneur may market
product directly to customers
consumer while
manufacturing products are to be sold to
business than customers in market. Dell
computers markets its products both to
customers as well as business people.
7. Budgeting marketing strategy : after drafting
marketing plan entrepreneur is required to
estimate total expenses to be incurred in process
of implementing market plan. Expense of
marketing plan should be in line with planned
expense of entrepreneur. gs
8.Implementation of market plan : market plan
https://www.facebook.com/ialwaysthinkprettythin
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DIMENSION TO BE COVERED WHILE DRAFTING
PRODUCTION OR OPERATION PLAN
Plant location : refers to geographic location were the
infrastructure of company will be built and
operations of the company will take place. Following
aspects should be taken care of before choosing plant
location
:
a. Vicinity to rawmaterials
b. Availability of raw materials
c. Availability of labour
d. Proximity to market
e. Climate condition
f. Cost of location
g. Tax, subsidies and loans
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Plant layout : is pattern in which space would be
arranged in order to utilize the machinery, equipment,
and manpower. Effective designing of plant layout
reduces unnecessary movement of employees and
helps in effective utilization of time and resources in
company. Variables to be considered while planning
plan layout :
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DEVELOPING
MANAGEMENT TEAM
LEGAL FORM OF
BUSINESS
Liability Transferabili Capital Management Raising
ownership Cost Continuity
of t y of requirement control
owner interest capital
BOARD OF
ADVISORS
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STEPS IN ORGANIZATIONAL
PLAN
Developing management team : refers to set of
employees employed in the company who are in charge of
managing the activities on the operating part of
organization.
Legal form of organization : refers to composition and
legal existence of business. Business may be proprietorship,
partnership or corporation form of business. Three legal
forms of business are:
a. Corporation is legal entity that is run by stock holders
having limited liability. It is regulated by the statute and
is treated as separate legal entity for liability and tax
purpose.
b. Proprietorship : is form of business with single owner
who has unlimited liability, controls all decisions, and
receives profit.
c. Partnership : two or more individuals having unlimited
liability who have pooled resources to own a business.
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• Ownership : it refers to pattern of investment and control
of owners in company, which includes conditions relating
to sharing of profit and loss in business.
• Liability of owners : of business covers two aspect either
members of business will have limited or unlimited liability
depending on legal form of business agreed by partners.
• Costs of starting business: refers to expenses incurred in
starting the business and proportion of contribution from
every member of business or sources through which
required finance of business will be raised.
• Continuity of business : refers to question on who will
take over business operations in future and what will be
members role in coming future.
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Transferability of interest : entrepreneur will have two
options in relation to transferability of interest
owner may transfer his interest after assessing
credibility of member in business or may sell interest
with his own wish.
Capital requirement : refers to amount of capital
required to start up business venture, sources through
which required finance for company will be obtained,
what will be contribution of members or the owner
towards business.
Management control : it refers pattern in which
control of business will be hand of individual person
or members in business. It also comprises of power of
members in terms of decision making, guiding
business activity in company.
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Distributionof profit and l o ss : profit of the firm may be
shared as per the terms and conditions agreed
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Designing the organization : it comprises of formal and
explicit indication to the members of the organization as
though what is expected from them. These expectation are
group in following area :
a. Organization structure refers to task, responsibility and
accountability of every member in the business.
b. Planning, measurement and evaluation of schemes
communicate goals and strategies to attain desired goals
in business.
c. Rewards : forms of rewards and yardstick based on which
employees will be rewarded in company.
d. Selection criteria refers to guidelines for selecting
employees in company.
e. Training : refers to determining skill requirement of
employees in company and accordingly design training
program for employees in company.
Building the management team : this process
involves to see that strategy of business should be in
line with objective of the company, management team
of the company should be role model for employees in
company and accordingly plan and guide employees
towards organization goal attainment. Management
team of the company should be flexible to try new
techniques and innovation in the company.
Management team should focus on hiring efficient
employees in company and develop core values which
guide and regulate employees behavior and attitude in
company.
Role of board of directors : board of directors in the
company are required to review operating and capital
budget, developing long term strategic plan for
growth and expansion, supporting day to day
activities, resolving conflicts among owners or
shareholders, ensure proper use of assets, developing
network source of information for entrepreneurs.
Board of advisors and organization : board of
advisors are not permanent employees of the company.
They are set of expertise who guide business in terms
of management and technical issues in company.
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FINANCIALPLA
it studies total requirement of N
finance in terms of start
up expenses, fixed expenses, running expenses etc.
financial plan indicates the requirement of proposed
business enterprise. Which includes fund flow, cash
flow statement, break even point, projected ratio,
projected balance sheet.
C OPERATING AND CAPITAL
O BUDGET
M
P
O PRO FORMA OF INCOME
E STATEMENT
N
E PRO FORMA OF CASH
T FLOW
OF
F
I PRO FORMA BALANCE
SHEET
N
BREAK EVEN
A ANALYSIS
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Proforma of cash flow : refers to projected cash
available calculated from projected cash accumulation
minus projected cash dismemberment. It is result of
difference between actual cash receipts and cash
payments. Cash flow takes place in company only
when payments are made or received.
Proforma of balance sheet : summarizes the
projected assets, liabilities, and net worth of new
venture. Balance sheet represents the position of the
business at end of year. Assets represent the items that
are owned or available to be used in venture operation.
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Break even analysis : entrepreneur in initial stage is
required to know when profit may be achieved which
will help him understand financial potential of tart up
business. BEA is useful technique to analyze how
many units have been sold or how much sales order
have to be achieved in order to break even. Break even
is volume of sales where venture neither makes profit
nor loss.
Proforma for sources and application of funds :
summarizes projected source of fund available to the
venture and how these funds will be distributed.
CONTENTS OF PROJECT
1.
REPORT
Cover page : page of the project report should
contain the title of the project, name, address so that
the readers of the report can easily contact
entrepreneur relating to queries of report.
2. Table of contents : table of content are compiled
after the main body of the project report is finalized.
Topics covered in the project report along with the
page number should be mentioned in the project
report.
3. Executive summary : should be written after the
completion of project report as it gives brief gist of
project. Length of the executive summary should not
exceed more than two pages.
4.Company information and industry : here they
should explain the ownership form of the company,
which should contain the reason for venturing into the
proposed business plan, how do you plan to satisfy the
needs and expectation of the potential customers and
existing competitors in industry. It should also include
SWOT analysis ofcompany.
5.Technical plan : in this part of the report the key
aspect analyzed during the technical feasibility of the
report should be highlighted. The choice of the
product and service to be offered should be justified.
Report should be able to explain how the product of
the company is creative and innovative from the
existing product in the market.
6. Marketing plan : this aspect of the product should
focus on the industry and market feasibility conducted at
earlier stage. It should describe about the pricing policy,
findings of market research, how large is the market for the
product to be offered by the company, details about
marketing strategy adopted by the company to promote
the product, target customers company is focusing on.
7. Operations plan : it describes about the
manufacturing and service delivery process to be utilized
for production of chosen product and service. It should
explain about the innovation brought in the process of
production which makes it better when compared to
existing competitors. It should also focus on the location,
availability of resources required for production.
8. Organizational plan : it gives information about the
management team who are part of the company. It focuses
on the management and technical skills possessed by the
employees in company and how it will prove to be
beneficial for the work process to be carried in the
company. It should highlight as though why even after
possessing such efficient skills they preferred joining
your organization.
9. Project timeline : this chapter explain about the
network diagram which explains about the time
duration required for the project. Diagram explains
about the various activities in the project, which are
sequentially organized and the time duration
required for the execution of the project is arrived by
estimating time required for completion of every
activity for the formation and later process of the
company. gs
10.Critical risk and assumption : it explain about the
various assumption made during the formation of the
company E.g. rather then considering the previous sales
forecast for similar product to be offered by the company,
the organization may have gone in for expert advise, their
may be various risks related to the product and kind of
service company is planning to offer in the market all these
details should be highlighted in this part of the report.
11.Social plan : it explains about how company project will benefit
the society. It should highlight how company will
generate employment opportunities, lead to skill
development of local people, provision of goods
services to be provided to the local people, and
utilization of
local resources etc. It should also include various help
provided by the financial agencies and government to start
SSI in country.
12.Exit strategy : this is the negative aspect of the
business but the company should explain how they
would close down the business if the company is not
able to earn the expected profitability, the investors
will be keen to know as though how their investment
can be recovered in such situation.
13.Financial plan : it is important part of the report
which will contain brief content all the sections with
numbers in monetary terms. It explain about the
financial composition of the company, various sources
through which company has raised required finance,
total expenditure incurred by the company which will
be effectively explained through the means of break
even analysis and ratio analysis in the company
financial report.
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14.Conclusion : this summarizes the key aspect of the
report in concise manner. It should end the report on a
positive note so that the readers develop positive
image about the report.
15.Appendices : it contains conclusion part of the
report and supplement data which is important part
for the report but cannot be included in the initial
topics of the report.
Risk analysis and possible exit strategies
Risk analysis is the process of identifying and
analyzing potential issues that could negatively
impact key business initiatives or projects. This
process is done in order to help organizations avoid
or mitigate those risks.
Performing a risk analysis includes considering the
possibility of adverse events caused by either natural
processes, like severe storms, earthquakes or floods, or
adverse events caused by malicious or inadvertent
human activities. An important part of risk analysis is
identifying the potential for harm from these events,
as well as the likelihood that they will occur.
Why is risk analysis important?
Enterprises and other organizations use risk analysis to:
anticipate and reduce the effect of harmful results from
adverse events;
evaluate whether the potential risks of a project are balanced
different markets
Product extension: Both businesses’ products go well together
2. Acquisition
An acquisition is when a company buys another business. With
an acquisition exit strategy, you give up ownership of your
business to the company that buys it from you.
One of the positives of going with an acquisition is that you get to
name your price. A business might be apt to pay a higher price
than the actual value of your business, especially if they’re a
competitor.
But if you’re not ready to let go of your business, an acquisition
might not be the right exit strategy for you. You may need to sign
a noncompete agreement promising not to work for or start a
new business similar to the one you just sold.
There are two types of acquisition: friendly and hostile. If you
have a friendly acquisition, you agree to be acquired by a larger
business. However, a hostile acquisition means that you do not
agree. The acquiring business purchases stakes to complete the
acquisition.
3. Sell to someone you know
You may want to see your business live on under
someone else’s ownership. In many cases, you can sell to
someone you know as an exit strategy.
Take a look at some of the people you could sell your
business to:
Family member (e.g., child)
Friend
Employee
Business colleague
Customer
4. Initial public offering
An initial public offering, or IPO, is the first sale of a
business’s stocks to the public. This is also known as
“going public.”
Unlike a private business, a public business gives up
part of their ownership to stockholders from the
general public. Public businesses tend to be larger.
They also (generally) go through a high-growth
period. By taking your business public, you can
secure more funds to help pay off debt.
However, going public might be difficult for small
businesses because it costs a significant amount of
time and money. If you want a fast exit strategy, an
IPO might not be the way to go.
5. Liquidation -Another exit strategy for small
business is liquidation. With liquidation,
business operations end and your assets are
sold. Liquidation is a clear-cut exit strategy
because you don’t need to negotiate or merge
your business. Your business stops and your
assets go to the people you owe money to.
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