14GEE81 ENTREPRENEURSHIP DEVELOPMENT

UNIT-III

S.Janarthanan
Assistant Professor( Sr.G)
Department of EIE
Kongu Engineering College
Perundurai,Erode-638060
 UNIT – III
• Business Plan: Objectives of a Business Plan,
Business Planning Process, Opportunity
Identification and Selection, Contents of a
Business Plan, Functional Plans.
 Meaning of a Business Plan
• It is a written statement of what entrepreneur
proposes to take up.
• “ The formal written expression of the
entrepreneurial vision, describing the strategy
and operations of the proposed venture”-
Mar J. Dollinger
• A “Business Plan” is a “Selling/Strategy
Document” that conveys the excitement and
promise of your business to any potential backers
and stakeholders.
 OBJECTIVES OF BUSINESS PLAN
 To objectively evaluate the prospects of business.
 To monitor the progress after implementing the
plan.
 To persuade others to join the business.
 To visualize the concept in terms of marker
availability, organizational, operational and
financial feasibility.
 To seek loans from financial institutions
 To identify the strengths and weakness of the plan
 Business Planning Process

Evaluation
Feasibility Project Control
Idea Environmental
Scanning
Report
Generation Analysis Preparation and
Review
 Business Planning Process-
1. Idea generation
• Idea generation : It is the first step in the business planning process.
This step differentiates entrepreneur from usual business. An
entrepreneur may come up with new business idea or may bring in
value addition to existing product in the market. Sources of new
idea for entrepreneurs are :
Consumers/ customers
Dealers, retailers

Research and
development

Employees
 Business Planning Process
2. Environmental scanning
• Environmental scanning :
once the entrepreneur is
through the idea
generation stage, next
entrepreneur is required
to conduct environmental
scanning which includes
analyzing external and
internal environment that
affects business idea.
 Business Planning Process-
2. Environmental scanning - External Environment

1. Socio cultural appraisal – culture and Tradition:

People acceptance
2. Technological appraisal – Idea into Product
3. Economic appraisal – Status of the Society : Capita
income, National income, Consumption income
4. Demographic appraisal- Population of the Pattern :
Sex, Age
5. Government appraisal- legislation, Policies, incentives
 Business Planning Process
2. Environmental scanning - Internal Environment

Internal Environment
1. Raw material
2. Production/ operation
3. Finance
4. Market
5. Human resource
 Business Planning Process
3. Feasibility analysis
• Feasibility analysis : refers to conducting detailed analysis
in relation to every aspect relevant to business and
determining credibility of business.
 Feasibility analysis is the process of determining
whether a business idea is viable.
 It is the preliminary evaluation of a business idea,
conducted for the purpose of determining whether
the idea is worth pursuing.
 Feasibility analysis takes the guesswork (to a certain
degree) out of a business launch, and provides an
entrepreneur with a
 more secure notion that a business idea is feasible or
viable.
 Business Planning Process
• 4. Project report preparation : project report is
a written document that describes step by
step strategies involved in starting and
running business.

• 5. 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.
 SWOT analysis
• Strengths: characteristics of the business or
project that give it an advantage over others.
• Weaknesses: characteristics of the business that
place the business or project at a disadvantage
relative to others.
• Opportunities: elements in the environment that
the business or project could exploit to its
advantage.
• Threats: elements in the environment that could
cause trouble for the business or project.
SWOT analysis
SWOT analysis

Example
 Opportunity Identification and Selection
OPPORTUNITY TO START A BUSINESS
The ability to identify business opportunities is an
essential characteristic of an entrepreneur
Opportunity- favorable position or a range for
advancement
Opportunity Identification and Selection:
Dynamics of Entrepreneur and Enterprise
Combination

Suitable
Not
FAILURE FAILURE
Entrepreneur

Suitable

SUCCESS FAILURE

Suitable Not Suitable

ENTERPRISE
 STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY
1. Generating Ideas
2. Screening Process
3. Formulating the Concept of the Business
 STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY- 1. Generating Ideas
Search for a Product or Service idea

From Previous From Hobbies From Casual From a Deliverable

Employment Observation Search

Magazines and From Product Government Use Creative

other Previous Licensing Agencies and Thinking
Publications Employm information Departments
ent Services

Evaluate the Possible Alternatives Determine your Preferences

 STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY- 1. Generating Ideas
Source: Environment
• Scan & Understand the needs & wants of
people Abraham Maslow -psychologist People
generally have different kinds of basic needs
such as food, clothing, shelter, safety ,
socialization, recognition for self-esteem & self-
fulfillment
• Taking macro-perspective or viewing larger
environment where business will be situated
(looking at the Social, Technological, Economic,
Environmental, & Political)
 STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY- 2. Screening Process
A. Looking Closely at the market
B. Looking at People’s skills
C. Looking at Available Business Assistance
Program
STEPS IN ARRIVING AT BUSINESS - 2. Screening Process
: COLLECTING INFORMATION

A. Looking Closely at the market

 Demand & Supply Gap Analysis
 Import-Export Movement
 Product Substitution
 Forward-Backward Industry Linkages
B. Looking at People’s skills
 Observe your Community
 STEPS IN ARRIVING AT BUSINESS OPPORTUNITY-
: COLLECTING INFORMATION

C. Looking at Available Business Assistance

Program
 Visit DTI Office
 Government & Private Institutions
 Non-Government Organizations
 STEPS IN ARRIVING AT BUSINESS
OPPORTUNITY -3
3. FORMULATING THE CONCEPT OF THE
BUSINESS
• Environmental Analysis The Environmental
Analysis gives an indication whether the
business can survive or not.
 Characteristics of Ideal Business.
Requires no investment
Has a recognized, measurable market
A perceived need for the product or service
A dependable source of supply for the
required inputs
Requires no labour force
Provides 100% gross margin
Buyers purchase frequently
Characteristics of Ideal Business ..
 Receives favourable tax treatment
 Has a receptive, established distribution system
 Has great publicity value
 Customers pay in advance
 No risk of product liability
 No technical obsolescence
 No physical perishability
 Impervious to weather conditions
 Possesses some proprietary rights
 Characteristics of Ideal Business …
Market Issues Finance Issues
• What products or services • Debt-Equity Ratio
are you selling? • Taking fund from Loan or
• To whom do you sell? Equity
• Does someone represent • Working Capital Issues-
you or distribute your Study on SMEs
products or services? • Risk Management/Hedging
• How do you promote
sales?
• How do you price your
output?
• What do customers expect?
 Ideas , Opportunity , Selection
• Enerninginwork.com – Data Entry Job
• Employment News
• Google - Entrepreneur Forum ..
• http://tamilentrepreneur.com
• Magazines – Nanayam , Outlook Business,
Business India, Business Today, The Franchising
World, Images Retail
• Import / Export Business
• https://www.recruitment.guru/government-
jobs/
 Contents of a Business Plan
1. General Information 11. Products
2. Promoter 12. Market
3. Location 13. Requirement of working
4. Land and Building Capital
5. Plant and Machinery 14. Requirement of Funds
6. Production Process 15. Cost of Production and
7. Utilities Profitability of first ten
years
8. Transport and 16. Break-Even Analysis
Communication
9. Raw Material 17. Schedule of
Implementation
10. Manpower
Contents of a Business Plan
General Information – Product Profile and
Details

Promoter – Name , Education and Experience

Location

Land and Building- Area, Cost , Plan Layout

Plant and Machinery – Details , Capacity,

Suppliers, Cost
 Contents of a Business Plan
Production Process – Process Chart,
Technical know how, production program
Utilities – Water, Power, Steam,
compressed air , cost, source of utilities

Transport and Communication – Mode ,

Possibility of getting and cost

Raw Material- List of Material , Quality

and Quantity, cost
Manpower- Skilled and semi Skilled,
Training and cost
Contents of a Business Plan
Products- product mix , estimated sales,
distribution channels, input-output ration,
product substitute
Market- End users of product, distribution of
market as local, national and international,
trade practices
Requirement of working Capital- working
capital required, sources of working capital

Requirement of Funds – land, building,

machinery, preliminary expenses

Cost of Production and

Profitability of first ten years

Break-Even Analysis

Schedule of Implementation
 Business Plan Basics

• Students at any level of education can use the

concept of preparing a business plan as a method
of exploring all kinds of ideas for starting a
business. It is merely a series of questions that
lead you to think about the requirements and the
possibilities of any kind of business. Until you
start to ask these questions, you aren't able to
visualize the details necessary to be successful in
a business.
• There are many different approaches to writing a
business plan, some more complex than others.
 basic components of a business plan
1. providing a description of the business,
2. choosing the best marketing strategy,
3. identifying the management plan, and
4. analyzing the finances needed to start the
business and make it successful.
A VARIETY OF APPROACHES Business Plan

 a business needed in your town

 a business using your own personal skills and talents
 a business that involves exports to another country
 a home-based business
 a business that could be started with $1,000
 a business that would require $50,000 to start
 a business that would require $1,000,000 to start
 a franchise that you develop and offer nationally
 a service business
 a partnership between two students in the class
 a corporation formed by small groups in the class
 for the worst possible business idea you can imagine ...try it, you
will be surprised.
 BUSINESS PLAN QUESTIONS

1. How can you describe the business...in only one paragraph

please?
2. What is your product, or service?
3. Who will buy it?
4. Where should you locate the business?
5. How can you attract customers?
6. What is your competition?
7. How much should you charge for the products or service?
8. What advice do you need and who can provide it?
9. How will you organize the managers and/or workers of the
business?
10. How will you split the profits? Who is responsible for the losses?
 BUSINESS PLAN QUESTIONS…
11. What should you consider to be able to produce the product and get it to the
customer?
12. How much money is needed to get the business started?
13. How many customers will you have per month and how much will they buy per
month?
14. How much does it cost to make the product or provide the service?
15. What are your operating costs? (Include your own salary)
16. How much money will your business earn each month by selling your product or
service?
17. How much investment will you need to keep the business going until you make a
profit?
18. What is your potential profit per year for Year I, Year II, and Year III?
19. How much money do you need to borrow to start this business?
20. How will you make the business grow in the future?
 Ideas for Starters
• Lemonade stand • Jewelry making
• Refreshment stand at local games • Catalog sales
• Child care • Temporaries agency
• Hot dog stand • Computer service business
• Yard care • Add value to an existing product
• Developing a web page for others (packaging, new Marketing local
• Youth community center crafts design, new customers,
different size)
• Shopping service for seniors
• Travel services
• Pet sitting
• Musical group
• Delivery services
• Repair services (shoes, electrical
• House cleaning service equipment, cars, clothing, etc.)
• Janitorial services for local
businesses
• Selling used clothes
 QUESTIONS FOR CREATIVE THINKING
 What kind of business would you start if your family would
lend you Rs.5000 to get it started?
 What kind of business would you start if you and two
classmates had access to a loan for Rs.100,000?
 What kind of business could you start if you want to do
business with another country?
 What type of business could you start while still going to
school?
 What type of business could you start using the skills you have
now?
 What type of business could you run while also working in a
part time job (to provide the security of a salary while the
business grows)?
 How could you start a business and then later make it into
your own franchising business for purposes of expansion?
 Writing the Business Plan

1. Organize all the relevant information about

your business. ...
2. Write the executive summary last. ...
3. Gather all the information together and
prepare multiple drafts. ...
4. Sell yourself and your business. ...
5. Present and explain your financial data.