Steps in Promoting an Entrepreneurial Venture

Steps in Promoting an Entrepreneurial Venture.

The various steps involved in starting a venture have been highlighted.

1. Selection of the product

An entrepreneur may select a product according to his aspiration, capacity and motivation after a thorough scrunity of micro and macro environment of business. He/she may select a brand, new product or may like to select imitation one or he/she may improve upon an existing product in terms of additional features like comforts, convenience, ease of operation, lower price etc. An entrepreneur has to conduct economic viability of the project.

2. Selection of form of ownership

Entrepreneur has to choose the form of organisation suitable and appropriate for his venture namely family ownership, partnership and private limited company. Family ownership and partnership forms of organisation are suited for exercising unified control over the venture while the company form of organisation may be preferred for pooling of more financial resources, managerial and technical skills and business experience for carrying on medium to large venture.

3. Selection of Site

Entrepreneur has to choose suitable plot for accommodating his venture. He has four options open to him for housing his venture. These have been mentioned below.

• State Development Corporation like SIDCO, SIPCOT, MMDA, TNHB and Directorate of Industries may allot plot to entrepreneur

• Entrepreneur can have a factory sheds constructed by State Industrial Development Agency

• Entrepreneur can start ventures in the land developed by private developers

• Entrepreneur may buy private land and develop it for industrial use.

Following things may be considered in choosing the site namely:

•  Nearness to Native Place

•  Incentives provided by the Govt.

•  Nearness to Market

•  Availability of Labour and Raw Materials in a particular area.

•  Infrastructure Facilities

4. Designing Capital Structure

Entrepreneur has to determine the source of financé for funding the venture. He/she may mobilise funds from his own savings, loans from friends and relatives, term loans from banks and financial institutions.

5. Acquisition of Manufacturing know-how

Entrepreneur can acquire manufacturing know-how from Government research laboratories, research and development divisions of industries, and individual consultants. At times, main units may supply manufacturing know-how to entrepreneurs starting ancillary units or plant and machinery suppliers may provide this facility to entrepreneurs. Besides, manufacturing know-how can be obtained by foreign technical collaboration.

6. Preparation of project report

Project reports needs to be prepared according to the format prescribed in the loan application form of term lending institutions. An entrepreneur can get the report prepared either by technical consultancy organisation or by auditors or by consultants or by development agencies. This report should cover aspects like sources of finance, technical know-how, sources of labour and raw materials, market potential and profitability. The project report should include the following

• Technical Feasibility.

It should mention the following

• Description of product specification

• Raw materials availability

• Manufacturing process

• Quality control measures

• Availability of water, power, transport and communication facilities

• Economic Viability

It essentially involves compilation of demand for domestic and export market, installed capacity of machines, market share, revenue expected, and suitable price structure.

• Financial Viability

It should cover the aspects like

• Non-recurring cost such as Land and Building, Plant and Machinery etc.

• Recurring expenses like wages, salaries, and overheads etc.

• Probable cost of production

• Profit on expected sales

• Managerial Competency

Entrepreneur has to include the mechanism for managing the venture in the project report. In the case of small sized ventures, the owner or partners may take care of managerial activities while a team of managerial personnel is to be brought in for manning various managerial positions across different levels of management in the case of corporate form of organisation. He has to provide details of the organisational structure contemplated in the project report for implementing the venture.

• Provisional Registration Certificate

Entrepreneur has to apply for Provisional Registration certificate. It will be issued to entrepreneur after the fulfilment of certain conditions for a period of one year subject to renewal of two periods of six months duration. If an entrepreneur is not able to commence production beyond the extension period, further extension will not be granted.

• Permanent Registration Certificate

Once the venture has commenced production or when it is ready to commence production, it is eligible to get permanent registration certificate.

• Statutory Licence

Entrepreneur has to obtain Municipal License from the authority concerned. Then the Entrepreneur has to register the unit with the Central and Sales Tax Department. If a unit comes within the provisions of Factories Act, he/she has to register it with Inspector of Factories or it has to register the unit under the Shops and Establishment Act.

• Power Connection

Entrepreneur has to make application to Assistant Divisional Engineer of State Electricity Board for power connection after paying Security Deposit and fulfilling the official formalities prescribed.

• Arrangement of Finance

Entrepreneur requires two types of finance namely long term and short term. While long-term requirements are needed for acquiring fixed assets, short-term requirement are meant for meeting working capital needs. Entrepreneur has to bring in promoters contribution (seed capital) prescribed by financing agencies.