Matching Entrepreneur with the Project

Matching Entrepreneur with the Project

Steps for 'Starting up a Business'

Introduction

An entrepreneur possessing the keen attitude for setting up a small scale unit and firmulate a business plan and take a number of steps to give shape to his business today idea. He is to prepare project report and obtain various approvals and sanctions. The various steps to be taken by entrepreneurs to start a small business unit.

Step 1 : Selection of the Product

An entrepreneur may select a product according to his own capacity and motivation. As an innovative entrepreneur he may design a new product or like an imitative one he may copy an established existing product in tefirms of additional uses, comfort or saving in cost.

The economic viability of product should cover the following demand aspects,

·        Volume of existing demand in the domestic market

·        Volume of aggregate existing demand

·        Volume of potential demand

·        The degree of import substitution

·        Degree of substitution of an existing product

·        The volume of demand by big unit for ancillary product

The information can be obtained from various technical publication, state development agencies etc.

Step 2 : Selection of firm of ownership

The most commonly chosen firms of ownership for SSI are

·        Sole proprietorship

·        Family ownership

·        Partnership

·        Private limited company

The first two firms are mostly preferred for having unified control over the unit. The next two firms highly facilitate the pooling of nancial resources, managerial and technical skills and business experience.

However to an appropriate extent especially where the family ties and resources are strong, partnerships are in no way distinguishable from family concern.

Step 3 : Selection of Site

An entrepreneur has ve options for the selection of site,

1. From state development corporation like SIDCO, SIPCOT, MMDA, TNHB

2. From the industrial estate constructed by the state industrial development agency (SIDA)

3. Choose from plot/sheds developed by private developers

4. Buy private land and develop the same for industrial use

5. The last option is to select a site/shed available in free trade zone

While selecting, following factors to be considered,

·        Situated in one's native place

·        Site which enjoys all the incentives provided by the Government

·        The place near the market

·        The site which o ers a suitable labour supply and raw material

·        The site with modern infrastructural facilities

Step 4 : Designing Capital Structures

The initial capital of a new venture comes from the following sources,

·        Own capital

·        Long tem loan

·        Tefirm loan from banks and nancial institutions

In recent years, the institutional landing has increased rapidly, but it has not yet become the dominant source of funds for small industry. Bank play an important role in providing working capital nance.

However, an analysis of capital structure of small scale units reveals that the support from the nancial institution is not adequate and that they should gear up their administrative machinery and produce better performance in order to ful ll the objectives and targets adequately.

Step 5 : Acquisitions of Manufacturing know-how?

Many institution like government research laboratories, research and development divisions of industries and also individual consultants provide the manufacturing know - how. In the case of ancillary units, it is provided by the main unit itself, both domestic as well as foreign.

Sometimes, it is provided by the plant and machinery suppliers, both domestic as well as foreign. The scale of operation is linked closely with technology, nancial and market demand

Step 6 : Preparation of Project Report

It is necessary to prepare a project report according to the firmat of the loan application of the concerned team building institution. An entrepreneur may get these reports done by a consultant or technical consultancy organization.

The project report being compiled by the entrepreneur should accomplish the purpose of providing a 'Bird's eye view' of the entire spectrum of activity.

The project report may contain the following feasibility

·        Technical feasibility

·        Economic viability

·        Financial implication

·        Managerial competency