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
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