Unit 1

Concepts of Entrepreneurship
• The concept of entrepreneurship was first established in the
1700s, and the meaning has evolved ever since. Many
simply equate it with starting one’s own business. Most
economists believe it is more than that.
• To some economists, the entrepreneur is one who is willing to bear the
risk of a new venture if there is a significant chance for profit.
• Others emphasize the entrepreneur’s role as an innovator who markets
his innovation.
• Still other economists say that entrepreneurs develop new goods or
processes that are not currently being supplied.
• In the 20th century, economist Joseph Schumpeter (1883-1950)
focused on how the entrepreneur’s drive for innovation and
improvement creates change.
• Schumpeter viewed entrepreneurship as a force of “creative
destruction.” The entrepreneur carries out “new combinations,”
thereby helping render old industries obsolete. Established ways of
doing business are destroyed by the creation of new and better ways to
do them.
• Business expert Peter Drucker (1909-2005) took this idea
further, describing the entrepreneur as someone who
actually searches for change, responds to it, and exploits
(make good use of it) change as an opportunity.
For e.g.: A quick look at changes in communications—
from typewriters to personal computers to the Internet—
illustrates these ideas
• Most economists today agree that entrepreneurship is a
necessary ingredient for stimulating economic growth
and employment opportunities in all societies.
• In the developing world, successful small businesses are
the primary engines of job creation, income growth, and
poverty reduction. Therefore, government support for
entrepreneurship is a crucial strategy for economic
development.
Definition of Entrepreneur
• The term ‘entrepreneur’ is a French origin which
means ‘go between’ or ‘between-takers’.
• An entrepreneur is a person who creates a new
enterprise by assembling inputs (i.e. land, labour and
capital) for production purposes.
• He assumes all risk and uncertainty, in order to
achieve profit and growth of the business venture by
identifying new opportunities and combining
resources for the purpose of capitalizing them.
• He innovates new ideas and business processes.
• Entrepreneurship has traditionally been defined as the
process of designing, launching and running a
new business, which typically begins as a small
business, such as a startup company, offering a product,
process or service for sale or hire, and the people who
do so are called 'entrepreneurs
 Attribute(Traits) of an Entrepreneur
The attributes of a successful entrepreneur are given below:
• Risk taker
• Creative (spark that drives the development of new products or services or ways to do
business)
• Dedication (what motivates the entrepreneur to work hard, 12 hours a day or more)
• Flexibility (ability to move quickly in response to changing market needs)
• Determination (extremely strong desire to achieve success)
• Leadership (ability to create rules and to set goals)
• Passion (what gets entrepreneurs started and keeps them there)
• Self-confidence ( It comes from thorough planning, which reduces uncertainty and the
level of risk, it also comes from expertise)
• Commitment
• Capacity to analyze
• High need for achievement
Types of Entrepreneurs
1. Innovative entrepreneurs:
• These entrepreneurs have the ability to think newer, better and more
economical ideas of business organization and management. They are
the business leaders and contributors to the economic development of
a country.
• Inventions like the introduction of a small car ‘Nano’ by Ratan Tata,
organized retailing by Kishore Biyani, making mobile phones
available to the common may by Anil Ambani are the works of
innovative entrepreneurs.
Types
 INNOVATIVE
Innovative entrepreneurs:
• These entrepreneurs have the ability to think newer, better and
more economical ideas of business organization and management.
They are the business leaders and contributors to the economic
development of a country.
• Inventions like the introduction of a small car ‘Nano’ by Ratan
Tata, organized retailing by Kishore Biyani, making mobile
phones available to the common may by Anil Ambani are the
works of innovative entrepreneurs.
Imitating entrepreneurs:
• These entrepreneurs are people who follow the path shown by
innovative entrepreneurs. They imitate innovative entrepreneurs
because the environment in which they operate is such that it does
not permit them to have creative and innovative ideas on their own.
• Such entrepreneurs are found in countries and situations marked with
weak industrial and institutional base which creates difficulties in
initiating innovative ideas.
• Development of small shopping complexes is the work of imitating
entrepreneurs. All the small car manufacturers now are the imitating
entrepreneurs.
Fabian entrepreneurs:
• The dictionary meaning of the term ‘fabian’ is ‘a person seeking
victory by delay rather than by a decisive battle’. Fabian
entrepreneurs are those individuals who do not show initiative in
visualizing and implementing new ideas and innovations, they
wait for some development which would motivate them to initiate
unless there is an imminent threat to their very existence.
 Drone entrepreneurs:
• The dictionary meaning of the term ‘drone’ is ‘a person who lives
on the labor of others’. Drone entrepreneurs are those individuals
who are satisfied with the existing mode and speed of business
activity and show no inclination in gaining market leadership. In
other words, drone entrepreneurs are die-hard conservatives and
even ready to suffer the loss of business.
Forced entrepreneurs:
• The entrepreneurs are the victims of circumstances. They are
forced to become entrepreneurs to fashion their own economic
livelihood.
• They start a new venture to create self-employment based on
innovation.
Empire Builder Entrepreneurship:
 The entrepreneurship go on creating new ventures one after
another. They do not get involved in day to day activities but keep
strategic control.
 Behavioral Entrepreneurship
Solo Operators:
• The entrepreneurs work alone. If needed, they employ few
employees.
• They create a niche in the market place.
Active Partners:
• The entrepreneurs operate with partners. All Partners participate
actively in the operation of business as a team.
Inventors:
• These entrepreneurs are interested in becoming entrepreneurs.
• They have competence to invent new products and processes.
 Challengers:
• These entrepreneurs like challenges. They start a new venture because
of the challenge it presents. After meeting one challenge, they look for
new challenges.
Buyers:
• The entrepreneurs like to buy out an on-going business.
• They do not like to face risk by starting their own business
Life Timers:
• These entrepreneurs take business as a part of their life style.
• Their business depends on personal skills. Their intention is to earn an
income for themselves and their family.
 Focus Group
Women Entrepreneurs:
• They are women in independent business.
• Development of Consciousness and desire for independence makes them entrepreneurs.

Minority Entrepreneurs:
• They are minority race in business. Discrimination prompts them to start new ventures.

Immigrants Entrepreneurs:
• They are the person who goes from one country to another to start business.
• Most of them are educated, experienced and skilled.

Part-time Entrepreneurs:
• They work for a salary but also run independent business on a part-time basis.
 Home-based Entrepreneurs:
• They run business from their homes. E-commerce has led to the growth of such entrepreneurs.

Family Business Entrepreneurs:

• They are family members who operate and control business. They are widespread all over the
country.

Corpreneurs:
• They are couples who work together as co-owners of business. Both husband and wife work
hard in their defined roles.
• They start small scale ventures
Intrapreneur:
• A person employed to work independently within a company in order to introduce innovation
and to revitalize and diversify its business.
• They handled new ventures based on innovation. Such ventures are large scale.
Function
 Planning: It is predetermined future. It sets targets to convert new idea into
reality. Through planning entrepreneurs carry out the following functions:
• Setting Goals: Goals are set for new ventures in terms of growth, profit, leadership
and services. They are set for a long term.
• Formulating policies and procedures, Preparing work schedules and budgets.
• Developing Business Plan: This consist of action plans related to production,
marketing and finance. Contingency plans are developed to cope with risks.
Organizing: It establishes a structure for the new ventures through organizing.
Entrepreneurs carry out the following functions
• Grouping the task: Tasks requited to achieve the goals are grouped together and
the authority and responsibility for each position is established.
• Assigning Jobs to different employees of different department.

• Delegating necessary authority to fulfill given responsibility.

 Mobilizing Resources: Entrepreneurs determine the resources required for the new venture. They
mobilize the needed resources. Resources can be:
• Financial Resources: These resources can be mobilized from friends, relatives, banks and other
sources.
• Human Resources: Skilled and Knowledgeable employees are hired to fulfill the goals of the
enterprise.
• Technology Resources: Advanced technology are purchased to transform new ideas into useful
products.
 Relationship Management: Entrepreneurs manage a variety of relationship
• Exchange Relationship: They are related with the procurement of inputs and
marketing of outputs. For e.g: with suppliers and customers
• Professional Relationship: Entrepreneurs manage professional relationship
within the ventures. This is essential to motivate employees for higher
productivity. They tackle labour problems
• Government Relationship: Entrepreneurs manage relationship with
government and regulatory agencies to get licenses, facilities, financing and tax
concessions.
• Social Relationship: Membership in clubs, professional associations and
relations with local community are used to manage social relationship.
 Control
• Financial Control: Entrepreneurs ensures proper allocation and utilization of
financial resources. This is needed to control costs and minimize wastage.
• Production Control: Entrepreneurs achieve proper combinations of inputs for
production, Quality control is ensured and Efficiency is improved.
• Management Control: Entrepreneurs ensures management control in the new
ventures. They make key decisions themselves to solve problems.
 Role and Importance of entrepreneur in
economic growth
• The entrepreneur who is a business leader looks for ideas and puts
them into effect in fostering economic growth and development.
Entrepreneurship is one of the most important input in the economic
development of a country.
• The entrepreneur acts as a trigger head to give spark to economic
activities by his entrepreneurial decisions. He plays a
pivotal(essential) role not only in the development of industrial sector
of a country but also in the development of farm and service sector.
• The major roles played by an entrepreneur in the economic
development of an economy is discussed in a systematic and orderly
manner as follows:
(1) Promotes Capital Formation:
• Entrepreneurs promote capital formation by mobilizing the unused
savings of public. They employ their own as well as borrowed
resources for setting up their enterprises. Such type of entrepreneurial
activities lead to value addition and creation of wealth, which is very
essential for the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
• Entrepreneurs provide immediate large-scale employment to the
unemployed which is a chronic (constant) problem of underdeveloped
nations. With the setting up of more and more units by entrepreneurs,
both on small and large-scale numerous job opportunities are created
for others. As time passes, these enterprises grow, providing direct and
indirect employment opportunities to many more. In this way,
entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards
economic development of the nation.
(3) Promotes Balanced Regional Development:
• Entrepreneurs help to remove regional disparities through setting up of
industries in less developed and backward areas. The growth of
industries and business in these areas lead to a large number of public
benefits like road transport, health, education, entertainment, etc.
Setting up of more industries lead to more development of backward
regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
• Economic power is the natural outcome of industrial and business
activity. Industrial development normally lead to concentration of
economic power in the hands of a few individuals which results in the
growth of monopolies. In order to redress this problem a large number
of entrepreneurs need to be developed, which will help reduce the
concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
• It stimulates equitable redistribution of wealth and income in
country to more people and geographic areas, thus giving benefit to
larger sections of the society. Entrepreneurial activities also
generate more activities and give a multiplier effect in the economy.
(6) Increasing Gross National Product and Per Capita Income:
• Entrepreneurs are always on the look out for opportunities. They
explore and exploit opportunities, encourage effective resource
mobilisation of capital and skill, bring in new products and services
and develops markets for growth of the economy. In this way, they
help increasing gross national product as well as per capita income
of the people in a country. Increase in gross national product and
per capita income of the people in a country, is a sign of economic
growth.
(6) Improvement in the Standard of Living:
• Increase in the standard of living of the people is a characteristic
feature of economic development of the country. Entrepreneurs
play a key role in increasing the standard of living of the people
by adopting latest innovations in the production of wide variety of
goods and services in large scale that too at a lower cost. This
enables the people to avail better quality goods at lower prices
which results in the improvement of their standard of living.
(7) Promotes Country's Export Trade:
• Entrepreneurs help in promoting a country's export-trade which is
an important ingredient of economic development. They produce
goods and services in large scale for the purpose of earning huge
amount of foreign exchange from export Hence import
replacement and export promotion ensure economic
independence and development.
Traits
 Achievement Orientation:
• Entrepreneurs have strong need for achievement. This need serves as the prime
motivator for them.
• It drives them towards accomplishment of challenging tasks. It makes them
creative. It provides them desire to succeed.
Hard Working:
• Entrepreneurs are motivated to consistently work hard by developing necessary
time and efforts. They work hard endlessly with persistence and perseverance.
They possess high level of energy, enthusiasm and diligence (Paying attention
to the task consistently).
 Desire for Responsibility:
• Entrepreneurs feel personally responsible for the results. They accept responsibility with
enthusiasm (a feeling of excitement). They have passion for business.
Optimistic: (Expecting or Presenting the best possible Outcome)
• Entrepreneurs are highly optimistic. They effectively deal with problems, mistakes and failures.
They remain optimistic about future. They are self confident. They behave that success depends
on their own efforts. They have confidence in their ability to succeed.
Independence:
• Entrepreneurs like independence in work. They like to be their own boss. They set their own
routine. They are independent-minded. They are job giver and not a job seeker.
 Foresight:
• Entrepreneurs have good foresight about likely changes future business
environment. They anticipates future opportunities and timely actions
• They can anticipates changes in markets, consumer preferences and
technology. They plan a strategy for future growth. They have a long term
perspectives.
Preference for Risk:
• Entrepreneurs are risk takers. They have willingness to take moderate to high
risk. They possess self-confidence to overcome risks and for achieving their
goals.
 Innovative:
• Entrepreneurs are continuously involved in innovation. They are creative. They
produce products to suit the changing needs of the consumers. The do research
to find out the present customers needs and accordingly they innovate new
products suiting the preferences of consumers in order to satisfy them.
Flexibility:
• Entrepreneurs are always flexible to adapt to the changing demands of
consumers, markets and environments. They are flexible in their operation and
activities. They are responsive to suggestions as well as criticism.
Good Managers and Leaders: Entrepreneurs are good managers. They make
decisions to solve problems. They bring together all the resources-men,
material, money and machines-needed to produce products. They prepare
business plan. They create network of relationships. They effectively manage
time and stress.
Entrepreneurs are also leaders. They motivate and
influence people. They take initiative according to the demands of the
situation. They are credible in word and deed.
 Entrepreneurial Motivation
• The word motivation originally comes from the Latin word
mover, which means “to motive”.
• The term motivation has been derived from the English word
‘motive’.
• Motive is an inner state of our mind that moves or activates or
directs our behaviours towards our goals. Motives are expressions
of a person’s goals or needs. They give direction to human
behaviour to achieve goals or fulfill needs.
• Motive is always internal to us and is externalized via behaviour.
• Accordingly, the entrepreneurial motivation may be defined as the
process that activates and motivates the entrepreneur to exert higher
level of efforts for the achievement of his/her entrepreneurial goals.
• In other words, the entrepreneurial motivation refers to the forces or
drive within an entrepreneur that affect the direction, strength, and
persistence of his / her behavior as entrepreneur.
• So to say, a motivational entrepreneur will be willing to exert a
particular level of effort (intensity), for a certain period of time
(persistence) toward a particular goal (direction).
 Entrepreneurial Motivation Conti…..
Motivation is a psychological process. It gives purpose and direction to behaviour of
entrepreneur to put higher levels of efforts.
It induces entrepreneur to use skills and abilities to perform effectively.
It is an inner state within the entrepreneur that energizes, directs and sustains
behaviour towards goal achievement.
There are three primary reasons for people to become entrepreneurs
and start their own business. They are:
• Be their own boss
• Pursue their own ideas
• Pursue financial rewards:
Point of Difference Entrepreneurship Small Business

Goals Achievement, Profitability Personal goals, Normal

and rapid growth profits and growth, financial
independence.

Practices Need and innovative Normal management

practices strategic Practices
management

Size Grow from small to large Generally stay in small in

size through rapid growth size, not dominant in its field
Unit-2: Women Entrepreneurship

By: Dr. Bhagwati Prasad Chaudhary

 Concept of Women Entrepreneurship

• Women are a significant force in the entrepreneurial world.

Chinese leader Mao-Utse-Tung had once said, “ women hold
up half the sky”. It is because half of the world’s population is
women. Women are regarded better half of the society.
• Traditionally, women’s work was regarded to remain with the four
walls of the house to undertake the domestic works. Now women
have come outside the wall of house due to the expansion of
education and awareness.
• Now, the women have also begun to start business independently
and have also succeeded. In this regards, women entrepreneurship
refers to the overall course of action undertaken by women in
starting and managing their enterprise for achieving certain
goals. It is women’s involvement in the process of creating new
venture through risk-taking, innovating and managing for
rewards.
• Women entrepreneurship refers to an enterprising skill or
knowledge for a business venture initiated, organized and run by
women or groups of women.
• It is defined as an “enterprise owned and controlled by a women
having minimum financial interest of 51 percent of the capital
and giving at least 51 percent of the employment generated in
the enterprise to women.
• Therefore, women entrepreneurship is the process of creating
new venture by women through risk-taking innovating and
managing for rewards. It is concerned with developing a new
idea, based on which a risk-bearing, unique product, service or
method is marketed by means of setting up a new independent
business venture or by using an already existing one.
• Women entrepreneurs can be defined as a women or group of
women who initiate, organize and run a business enterprise.
 Impact of Women Entrepreneurship
Following are some of the major impact of women
entrepreneurship.
• Enhancing esteem (The condition of being respected) and self-
confidence of women.
• Building Positive image of women in the society.
• Developing ability to think constructively.
• Posting decision-making and action through collective process.
• Ensuring participation with equal footing (status with respect to the
relations between people or groups) in all the spheres of life.
Women empowerment through entrepreneurship
The following measures help women empowerment through entrepreneurship:
• Treat women as a special target group for entrepreneurship development
programmes.
• Establish vocational training institutes for skills development of women.
• Design institutional support system to suit the requirement of women
entrepreneurs.
• Reform laws to provide access to institutional finance and promote equality for
women.
• Involve women in decision making in matters related to entrepreneurship
development.
• Increase status of women.
• Develop networks of women entrepreneurs.
• Identify investment opportunities for women entrepreneurs and advocate
effectively for securing their rightful place in national economy.
 Women entrepreneurship in Nepal
• In present time there is consensus that women should be an
inseparable part of the development efforts. The economic
and social empowerment of women is a necessary factor for
the development of the nation.
• With a view to raising women’s participations in various
sectors, Nepal Government has introduced some policies.
Specially Nepal’s Industrial Policy, 2010 has made some
special provisions for women entrepreneurs. Some of them
are as follows.
• Women will be represented at policy making level relating to
industry and business.
• Arrangements will be made for easy group loan for cottage and
small industries from banking and cooperative institutions.
• Women will get priority in venture capital.
• Industry in the name of women will get 35 percent reduction in
registration fee.
• Women will get priority to establish industry in industrial
districts.
• Women participation will be ensured in training, conferences,
seminars and study tours relating to technology development.
• Sales counter will be established for good produced by women
entrepreneurs in regional sales emporiums.
• Women participation will be mandatory in government organized
industrial exhibitions.
• Export loan will be made available to women’s.
• Patent, design and trademark registered in the name of women will get
20 percent reduction.
• Women entrepreneurship development fund will be established.
• Industry Ministry will have a separate unit for women.
• Directive will be implemented to check gender-based violence at
workplace.
• Plans, policies, and programmes related to industrial promotion will be
based on gender analysis and assessment, gender audit and gender
budget.
 Problems of Women entrepreneurship
Some of the specific problems faced by women entrepreneurs are
presented below:
• Problem of Finance
• Scarcity of Raw Materials
• Stiff Competition
• Limited Mobility
• Lack of Education
• Family Ties
• Male Dominated Society
• Low Risk-Bearing Ability
In addition to above problems, inadequate infrastructural facilities,
shortage of power, high cost of production, social attitude, low need for
achievement and social-economic constraints also hold the women back
from entering into business.
1) Problem of Finance:
• Women usually do not have property on their names.
• Banks also consider women less credit worthy and discourage
women borrowers on the belief that they can at any time leave
their business.
2) Scarcity of Raw Materials:
• Suffer because of the scarcity of raw materials and necessary
inputs.
• High price of raw materials
3) Stiff Competition:
• Do not have enough money for advertisement. Thus they have to
face stiff competition for marketing their products.
• Such a competition sometimes leads to loss and closure of women
enterprise.
4) Limited Mobility:
• In Nepal, women mobility is highly limited compared to men due to
various reason. A single women asking for room is still looked upon
suspicion. Similarly, women working in night shifts, staying alone
in a room or return late in the night are still problems in Nepal.
Moreover Sexual Harassment is also one of the major issue.
5) Lack of Education:
• In Nepal many women are still illiterate. Illiteracy is the root cause of
socio-economic problems. Due to the lack of education and that too
qualitative education, women are not aware of business, technology,
market knowledge, management skills and function, financial
management, etc.
• Less education cause low motivation on women to step forward.
6) Family Ties:
• In Nepal, it is mainly a women's duty to take care of family, children,
other elder people and other members of the family.
• In case of married women, she has to strike a fine balance between her
business and family. Her total involvement in family leaves little or no
energy and time to devote for business. In this regard, support of husband
is needed. It is said that if the husband is educated then it positively
influence women's entry into business activities.
7) Male Dominated Society:
• Male domination still prevails in Nepalese culture and society. The
constitutions of Nepal Speaks of equality between sexes, but in practice,
women are looked upon as weak in all respects compared to men. This, in
turn, serves as a barrier to women entry into business.
8) Low Risk-Bearing Ability:
• Women in Nepal lead protected life. They are less educated and
economically not self-dependent. This leads them to low-risk bearing
capacity while running an enterprise. They are not very strong minded to
bear risks. Risk bearing is an essential requisite of a successful
entrepreneur.
 Challenges of Women Entrepreneurs
Entrepreneurship was once considered a man's domain, but the
tide has shifted: More than 9 million U.S. firms are now owned
by women, employing nearly 8 million people and generating
$1.5 trillion in sales, according to 2015 data from the National
Association of Women Business Owners.
 1. Defying social expectations
• Most female business owners who have attended networking events
can relate to this scenario: You walk into a crowded seminar and
can count the number of women there on one hand. When women
entrepreneurs have to talk business with primarily male executives,
it can be unnerving.
• In this sort of situation, women may feel as though they need to
adopt a stereotypically "male" attitude toward business:
competitive, aggressive and sometimes overly harsh.
• But successful female CEOs believe that remaining true to yourself
and finding your own voice are the keys to rising above
preconceived expectations.
 2. Limited access to funding
• Investors typically look for businesses that can grow their
valuation "If you have experts on your founding team that can
execute the business [operations] well, investors will have
confidence in those people. In this regard women has a big
challenge in gaining trust of Investors.
 3.Building a support network
• With the majority of the high-level business world still being
dominated by men, it can be difficult for the women to develop
high networks which is very much essential.
• "As most of business today still rings true with the philosophy
that 'It's not what you know; it's who you know,' this can be a
huge factor in your ultimate success."
• Knowing where to find the right support network isn't always
easy. Due to this female entrepreneurs are facing challenges.
 4. Balancing business and family life

• Work-life balance is a goal of many entrepreneurs regardless of

their gender, but mothers who start businesses have to
simultaneously run their families and their companies. And in
this area, traditional gender expectations often still prevail.
• "Being a mother while running a business is very challenging,"
 5. Coping with a fear of failure
• According to Babson College's 2012 Global Entrepreneur Monitor,
the fear of failure is the top concern of women who launch startups.
Failure is a very real possibility in any business venture, but Delia
Passi, CEO of WomenCertified and founder of the Women's Choice
Award, said it shouldn't be viewed as a negative.
• "You need to have massive failure to have massive success," Passi
said. "You may need 100 'noes' to get one 'yes,' but that one 'yes' will
make you more successful tomorrow than you were today.“
• "I have stopped worrying if people will treat me differently in
business because of my gender … and have stopped comparing
myself to others, including men," she said. "The bottom line is, if
you're successful, no one cares whether you are man or a woman."
 Steps to overcome the Challenges of Women
Entrepreneurs.

Some essentials steps to overcome the challenges of women

entrepreneurs are given below.
Unit 3: Growth of Entrepreneurship

By: Dr. Bhagwati Prasad Chaudhary

 The concept of socio-economic growth
-Socio-economic growth is one of the key outcomes of entrepreneurship development in a
nation. It is the process of social and economic development in a society.
-Socio-economic growth is measured with indicators, such as
• Per capita income: measures the average income earned per person in a given area (city,
region, country, etc.) in a specified year. It is calculated by dividing the area's
total income by its total population.
• Life expectancy: is a statistical measure of the average time an organism is expected to live
• Literacy: It means the ability to read and write.
• Levels of employment: It means measuring number of employment of the country.
• Environmental protection: It means protecting environment from deforestation, ozone
layer depletion, air and water pollution etc.
-Changes in less-tangible factors are also considered, such as
• Personal dignity: It is an individual or group's sense of self-respect
• Freedom of association: The right to be a part of or form societies,
clubs, and other groups of people, and to meet with people
individually, without interference by the government.
• Personal safety: refers to the freedom from physical harm and threat
of physical harm, and freedom from hostility, aggression, harassment,
and devaluation by members of the academic community.
• Freedom from fear of physical harm: worry about being victimized
• The extent of participation in civil society: Civil society considered
as a community of citizens linked by common interests and collective
activity.
 Entrepreneurship is the driving force for socio-economic growth in
the following ways:
• Capital Formation
• Employment Creation
• National Integration
• Utilization of Resources
• Revenue Generation
• Export Promotion
• Equitable-Distribution of Wealth
(1) Promotes Capital Formation:
• Entrepreneurs promote capital formation by mobilizing (make
ready for action) the idle (Not in active use) savings of public.
They employ their own as well as borrowed resources for
setting up their enterprises. Such type of entrepreneurial
activities lead to value addition and creation of wealth, which is
very essential for the industrial and economic development of
the country.
(2) Employment Creation:
• Entrepreneurs provide immediate large-scale employment to the
unemployed which is a chronic problem of underdeveloped nations.
• With the setting up of more and more units by entrepreneurs, both
on small and large-scale numerous job opportunities are created for
others.
• As time passes, these enterprises grow, providing employment
opportunities to many more.
• In this way, entrepreneurs play an effective role in reducing the
problem of unemployment in the country which in turn clears the
path towards socio-economic growth of the nation.
3) National Integration (The act of combining into an integral whole):
• The growth of industry and business leads to a lot of public benefits like
transport facilities, health, education, entertainment etc. When the
industries are concentrated in selected cities, development gets limited to
these cities.
• When the new entrepreneurs grow at a faster rate, in view of increasing
competition in and around cities, they are forced to set up their enterprises
in the smaller towns away from big cities. This helps in the development of
backward regions. This stimulates the process of economic development in
the nation. These all also promote national integration.
 4) Utilization of Resources:
The natural resource are useful raw materials that we get from the Earth that can be
effectively utilized for functioning of an enterprise towards economic development which
might otherwise remain unutilized.
• Animals-Foods (milk, cheese, steak, bacon) and clothing (wool sweaters, silk shirts, leather
belts)
• Coal-Electricity
• Minerals-Coins, wire, steel, aluminum cans, jewelry
• Natural gas-Electricity, heating
• Oil-Electricity, fuel for cars, airplanes etc.
• Plants-Wood, paper, cotton clothing, fruits, vegetables
• Sunlight-Solar power, photosynthesis
• Water-Hydroelectric energy, drinking, cleaning
5) Revenue Generation:
Enterprise is the most important source of government revenue. The development of industries
and commercial activities contribute more to maximize government revenue. Government
imposes various taxes to business concerns like
• Custom duty: A tax levied on imports (and, sometimes, on exports) by the customs
authorities
• Value added tax: Indirect tax on the domestic consumption of goods and services.
• Royalties: Payment to the holder of a patent, copyright or resources for the right to use their
property.
• Income tax: Annual charge levied on both earned income (wages, salaries, commission) and
unearned income (dividends, interest, rents).
These revenues are used for the betterment of administrative work and also in
development works.
6) Export Promotion:
• Export promotion has been defined as “those public policy action which actually or
potentially enhance exporting activity at the company, industry, or national level”.
• Nepal is the 150th largest export economy in the world and the 99th most complex
economy according to the Economic Complexity Index (ECI).
• Exports in Nepal increased to 6507.50 Million NPR in March from 6129.70 Million NPR
in February of 2016. Exports in Nepal averaged 5422.55 Million NPR from 2001 until
2016
The top exports of Nepal are
• Knotted Carpets,
• Flavored Water,
• Non-Retail Synthetic Staple Fibers ,
• Yarn,
• Synthetic Filament Yarn
• Woven Fabric and
• Coated Flat-Rolled Iron.
7) Equitable Distribution of Wealth:
• Industrial development normally may lead to concentration of
economic powers in a few hands. This concentration of power
in a few hands has its own evils in the form of evils (harms) in
the form of monopolies. In such as case, entrepreneurship
stimulates equitable distribution of wealth, income etc.
• Developing a large number of entrepreneurs helps in dispersing
the economic power amongst the population by weakening the
harmful effects of monopoly.
 Factors affecting entrepreneurial growth
There are so many factors that affect entrepreneurship or entrepreneurial growth or development. The
factors may have positive and negative effects on entrepreneurship development. The positive effect
promotes entrepreneurship whereas the negative effects hampers entrepreneurship development. The
factors are grouped and discussed under two categories such as economic factors and non-economic
factors
Entrepreneurship growth is the result of interplay of many economic factors. Economic factors are the
important factors that affect the entrepreneurship growth. Some of these factors are listed below:
1) Economic System: The economic system prevailing in a country
determines the scope of private entrepreneurs and their activities. The
prevailing economic systems can be grouped into three categories such
as:
a) Free Market Economics (Capitalism): Free market refers to
an economy where the government imposes few or no restrictions and
regulations on buyers and sellers. In a free market economy, all the
factors of productions such as land, labor and capital are privately
owned and production is carried on by private enterprise. What to
produce, how to produce and for whom to produce, all these economic
problems are settled by the forces of demand, supply and mechanism.
• USA presents an example of free market economy.
• Free market economy or capitalism is good for entrepreneurship growth
because it respects entrepreneurship and individual initiative.
b) Centrally Planned Economy:
• A centrally planned economy is an economic system in which the
state or government makes economic decisions rather than the
interaction between consumers and businesses. Unlike a market
economy in which private citizens and business owners make
production decisions, a centrally planned economy controls what is
produced and the distribution and use of resources.
• For e.g.: North Korea, Cuba
• This type of economic system is not suitable for entrepreneurship
growth.
c) Mixed Economy:
Here both the public sector and private sector co-exist as in
Nepal. In many mixed economies, several basic and strategic
industries are owned and managed by the state. The state
regulates the activities of the private sector so that it may serve
the interest of the nation rather than its own interest
2) Capital:
• Capital is one of the most important factors of production for
the establishment of an enterprise. Increase in capital
investment in feasible projects results in increase in profits
which help in accelerating the process of capital formation.
Entrepreneurship activity too gets a boost with the easy
availability of funds for investment.
• Availability of capital facilitates for the entrepreneur to bring
together the land, machine and raw material to combine them
to produce qualitative goods. Capital is therefore, regarded as
lubricant (Oil) to the process of production.
3) Human Resource/ Labor:
• The quantity and quality of human resource is another factor
which influences the emergence of entrepreneurship. Human
Resource is an important factor of production. In this regards
qualitative labors are important for the growth of
entrepreneurship development.
• For e.g.: the productivity in Japan is high due to its human
resource (labour) being very efficient and skilled.
4. Raw Materials
• The necessity of raw materials is crucial for establishing any
industrial activity and its influence in the emergence of
entrepreneurship. In the absence of raw materials, neither any
enterprise can be established nor can an entrepreneur be emerged
• It is one of the basic ingredients required for production. Shortage
of raw material can adversely affect entrepreneurial environment.
Without adequate supply of raw materials no industry can function
properly and emergence of entrepreneurship to is adversely
affected.
5) Markets:
Products and Services are produced for customers or markets. If
there is no market there will not be the use of all kinds of
factors of production. Thus, the size, composition and growth
of market influence entrepreneurship development.
6) Franchising:
• It is the strategy whereby the franchisor gives the franchisee
the right to use its brand name and all related trade marks in
return for royalties.
• Franchising is popular among fast-food enterprises. For e.g.:
Mcdonald’s, Pizza Hut, Berger and KFC
• Franchising promotes mainly new business venture to get entry
into global markets. Basically, franchising represents an
opportunity for the entrepreneur to expand the business.
7) Competition:
• It is the action of competing; an activity in which several
organizations compete.
• Competition is the challenge for the entrepreneur. It affects on
achieving their objectives. Competition such as monopoly,
oligopoly and monopolistic etc restricts the entrepreneurship
development.
Non Economic Factors affecting Entrepreneurship
Growth
Rural entrepreneurship-types
 Rural entrepreneurship-problems
The major problems of rural entrepreneurship are given below
• Finance Problem
• Technical know-how
• Management Problem
• High Costs
• Lack of Information
• Lack of Promotional Strategy
 Factors affecting rural entrepreneurship
• Economic Factors
• Legitimacy
• Government Actions
Tourism entrepreneurship-Types
 Tourism entrepreneurship-problems
• Inadequate Infrastructure
• Decreasing number of tourists
• Ineffective marketing
• Environmental Damage
 Factors affecting Tourism entrepreneurship
• Vision, mission and goals
• Visa
• New and Innovative products
• Infrastructure development
• Quality of Services
• Tourist Safety
• Pollution control and environmental protection
• Marketing Promotion
• Domestic Tourism
• Human Resources
• Use of local products
• Competitive advantages
• Annual budgets
4.1. Concept of entrepreneurial Competency:
Generally, an individual characteristic of a person
which leads to superior performance is called
competency.

It is an underlying trait of an individual which leads to

his/her senior performance in a job.

It is the sum total of knowledge, skills, ability and

motives.
United Nations Industrial Development
Corporation (UNIDO) has defined competency
as "a set of skills, related knowledge and
attributes that allow an individual to perform a
task."

In this regard, the underlying characteristics,

qualities, skills and abilities of entrepreneurs
which leads superior performance are known
as entrepreneurial competencies. All these
traits are required for setting up and operating
new business ventures.
According to Man, Lau & Chan- “Total ability the
entrepreneur to perform this role successfully.
Several studies have found positive relationship
between existences of competencies and venture
performance”.

According to Bird (1995)- “Entrepreneurial

competencies can be defined as underlying
characteristics such as generic and specific
knowledge, motives, traits, self-images, social roles,
and skills that result in venture birth, survival, and/or
growth.”
Entrepreneurial competency is underlying
characteristics possessed by a person which
result in new ventures creation, survival and
growth. It is formed by individual
characteristics.
1) Hardworking
2) Information Seeking
3) Creative
4) Risk Taking
5) Opportunity seeking and Initiative
6) Demand for Efficiency & Quality
7) Persistence/Determination
8) Goal Setting
9) Networking
10) Independence and self confidence
The need for entrepreneurial competency development is
clear from the following points.

1) Develop Entrepreneurs: EDC programmes are

essential for developing, creating and improving
competencies of entrepreneurs. These programes are
the main tools for entrepreneurs development. It
develops entrepreneurs self-confidence to start new
venture business.
2) Achievement Motivation: EDC programmes are
important to develop achievement motivation for
potential entrepreneurs. Effective education and
training programmes provide motivation to achieve
superior performance.

3) Provide managerial knowledge: EDC programes are

needed to develop managerial skills, ability and
knowledge for entrepreneurs to make decision and to
solve problems. Managerial knowledge is essential for
entrepreneurs to provide quality service and to get the
jobs done.
4) Develop new venture: EDC programmes create
change through innovation, new product development
and modern technology which are applicable and
helpful for development of new ventures.

5) Provide Information: EDC programes are storing

different kinds of information ralated with
entrepreneurship. Such as production, finance,
marketing, incentives, quality improvement, legal
provision and risk environment. All these information
are benefited for entrepreneurship development.
In shortly………..
1) To provide long term direction to the business
2) To identify and recognize opportunities
3) To enhance organizational productivity
4) To solve organizational problems
5) To make effective decisions based on environmental analysis
6) To seek information.
7) To assess and manage risk
8) To be creative and innovative
9) To bring workplace competencies
1. Gaining first hand knowledge about competencies.
Various competencies cannot be cultivated without clearly
understanding their meaning significance and relevance. An
earnest attempt must be made to understand at length the
various competencies which are required for the efficient
performance of the assigned task.
2. Competency Recognition. An individual’s behaviour or
performance depends upon the competencies he/she
possesses. Therefore in order to get desired behaviour we
should be in a position to know as to what are the
competencies required in the individuals to perform in a
particular manner. Under this step an effort is made to
recognize the competency.
3. Self Assessment. After getting clear out idea about the
competencies required for a particular type of
behaviour, it is for the entrepreneur to see as to what
extent he/she possesses these competencies and to what
extent he/she is employing these competencies for
achieving the desired goal.

4. Comparison of Competencies. The next step is to

compare individual competencies with the
competencies required for the desired performance.
Wherever we find deficiencies an earnest attempt is
made to find out the reasons for the same.
5. Developing Competencies and feedback. Once it is
realized that an individual does not possess a particular
competency required for a particular type of behaviour,
the next step will be to develop this competency.
Assistance from various behaviourial scientists may be
taken for devising out ways and means for developing
the required competency. In order to ensure that the
required competency becomes part of the individual’s
behaviour, he is asked to practice the needed
competency repeatedly.
1) Analytical Competency: It is the ability of
identifying, analyzing and solving problems under
condition of risk and uncertainty.

2) Interpersonal Competency: It is the ability of

leading, influencing, communicating and supervising
and controlling to the people. It is the trait to get
along with people and motivate people to perform
jobs.
3) Emotional Competency: It is the capacity to get
stimulated by emotional and interpersonal crises. It
involves bearing high level or responsibility.
Entrepreneurs should have perseverance to succeed in
their purpose.
Basically, The ECDPs are conducted for the
development of entrepreneurial competency of
the entrepreneurs. These competencies make
the entrepreneur different from others and
helps to perform their work effectively. It
consists of following steps:
1) General Introduction to entrepreneurship:
Through the ECDPs programs, firstly, the
participants are exposed their knowledge,
experience and background of
entrepreneurship for individual, social and
national development, required traits and
nature of behaviour for entrepreneurship,
regulation guiding entrepreneurship,
infrastructure and facilities available etc.
2) Motivational Training: After general
introduction of entrepreneurship, the
participants who need do develop their
entrepreneurship, this step motivate them
through training and development programs.
Under this, They made to positive attitude,
develop self confidence and get inspiration to
start new business.
3) Management Skills:
In this step, participants acquire
management skills such as planning,
organizing, leading, decision making,
motivating, communicating, supervising
and controlling etc. They also obtain the
knowledge of manufacturing, marketing,
finance, accounting and staffing etc. All
these skills are applicable for set-up new
business.
4) Support system and procedures:
In the step, the participants are obtained
supportive governmental and non-
governmental organization or institutions.
There are different organizations which
provide support to the establish and
operation of local, medium and large
scale entrepreneurship.
5) Feasibility Study: The evaluation of
capability of new venture in terms of
resource acquisition and utilization is
called feasibility study. Effective
feasibility study demands certain physical
and non-physical resources. Hence, in
this step ECDPs measures regarding
skills and knowledge of entrepreneurs.
 6) Industrial Visit: In this step the
participants are involved in industrial
visit to make them acquainted with the
actual situation. It exposes the
participants with the real world and they
can better understand about the
behaviour, personality and thoughts
required to be success entrepreneur.
1) Pre-Training Phase: It is the pre-design phase of
ECDPs. This phase includes preparation of
following aspects:
a) Setting of goals and scope: in this phase, the
entrepreneurs should be stated clear goals and
scope of entrepreneurship. He/she should make
clear vision of what competencies need to be
develop?, which geographical area should be
covered ?, which target group should be selected ?,
what should be the structure of ECD? and What
should be the duration of ECD? etc.
b) Infrastructure Needs: In this phase they identified
needed infrastructure for ECDPs. It includes In-house
or out sourced modality of delivery, Training aids
needed, Transport facilities needed etc.

c) Curriculum Design: In this phase they determined

curriculum for ECDPs. It includes what is the
training methods to used ?, how many modules
should be provided?, What should be the mix of
theory and practice and training materials for
participations etc.
d) Responsibility for ECDPs: This phase declared that
who is responsible for ECDPs ?, Who should be
coordinate for ECDPs and How to get support top
level management for ECDPs.

e) Budget: This phase make clear plans about budget.

It acknowledged how much budget should be
allocated? How should be participants pay a fee and
should their be allowances for participants and
resource persons.

f) Publicity of ECDPs: This phase fill-up application

form for advertisement and prepared news for
medias.
2) Implementation Phase: This is the delivery phase
of ECDPs. Its main objective is to bring permanent
and desirable change in one's behaviour towards need
for achievement. It is concerned with following
aspects:
i) Selection of participants for ECDPs.
ii) Delivery of ECDPs by resource persons through
various training methods.
iii) Enhance and development of entrepreneurial
knowledge and skills of participants
iv) Motivation, involvement and commitment express
by participants.
v) Assesses discipline of participants during ECDPs
delivery.
3) Post training Phase: This is the follow up
phase of ECDPs. The main objective of this
phase is to prepare the participants for
entrepreneurship. It is concerned with
following aspects:
i) Evaluation of ECDPs effectiveness by
participations, trainers and experts.
ii) Review for future improvement for ECDPs.
iii) Audit of ECDPs expenses.
iv) Follow up studies to track performance of
participants.
Evaluation is the systematic and objective process of
checking, measuring and assessing effectiveness of
programs. It is intended to improve current activities
and plans for future activities. ECDPs should be
evaluate to ensure its effectiveness. It provides
feedback, suggestions, comments and complimentary
about ECDPs and verifies ECDPs success. The
criteria for evaluation are given below:
1) Establish new venture.
2) Change in level of activity of enterprises
3) Number of persons employed.
4) Investment of capital (including fixed assets)
5) Quality of products or services.
6) Sales, profit, repayment of loans
7) Increase in achievement orientation.
8) Managerial skills developed
9) Sustability of curriculum, training methods, trainers
and logistics.
10) The activity level of respondents.
1) Observation Method: With this
method, the participants are closely
observed in the period delivery of
ECDPs by independent experts. He/she
survey change in knowledge, skills,
attitudes and motives .
2) Test -Retest Method: With this method, the
evaluator test is administered before starts
ECDPs and again retest is administered after
ECDPS ends. The change in test score
indicates ECDPS effectiveness.
3) Participant Survey: With this method, the
evaluator asked different questions to participants
through questionnaires. The questionnaires are
concerned with following aspects:
-Achievement of ECDPs objectives.
-Content and methods of ECDPs.
-Physical facilities and logistics.
-Behavioural changes resulting from ECDPs
-Suggestions for improvement in ECDPs.

4) Cost Effectiveness Analysis: This method

assesses the benefits and costs of ECDPs. The
benefits are realized in future.
Different Institutions and Agencies Operating ECDPs in
Nepal
Government Non-government
Agriculture Dev. Bank Federation
A) Governmental Sector:
1) Agriculture Development Bank: It is one of the
commercial bank in Nepal. It provides financial
support to agro based entrepreneurs.

It also supports the farmers through small farmer

development bank.

It conducts various training and development

programes for the development of entrepreneurship.

The agricultural training institute also provides training

programes for the development of entrepreneurial
competency.
2) Micro Enterprise Development Program
(MEDEP):
MEDEP is a collaborative effort of the government of
Nepal and the United Nation's Development program
(UNDP) to promote employment and income
generating opportunities.

Its main objective is to development of micro

entrepreneurs and creation of self employment through
enterprises.

It identifies potential entrepreneurs and trains and guides

them . Its main functions are given below:
1) Provide skill and business training and other support to
women, poor and disadvantaged people to set up
micro enterprises.

2) It works with the government to improve the policy

environment.

3) It helps to business support services and representative

organizations for micro entrepreneurs.

4) It supports potential entrepreneur through skill

enhancement, micro credit support, service support,
preparation of business plan and skill enhancement.
3) Department of Labour: It is an agency of
government of Nepal. It provides basic skills
training for employment in industry and non-
agricultural self employment.

It operates two vocational training centers in

kathmandu and biratnagar and one dozen
labour supply centers in various parts of the
country. It gives training in following subjects:
Manufacturing-Oriented Service Oriented
Carpentry Hair cutting
Masonry General mechanics
Tailoring General electrical
Weaving, Knitting Automobile mechanic
Cane and bamboo Machine repair
Embroidery Plumbing
Shoe making House wiring
Ceramics Electronics
Furniture Welding
Computer
4) Cottage and Small Industries Training Centre
(CSITC) : It is one of the pioneer of ECDPs in
Nepal. It has 12 main branches and 36 branches
offices.
Its main objective is to conduct skill development
programs such as EDT (entrepreneurship
development training and skill training for the
promotion, expansion and strengthening of cottage
and small industries in Nepal.

It also has a special training programs for women

entrepreneurship development. Which are given
below:
Bag Making Basketry
Bamboo Crafts Bee Keeping and Processing
Bicycle and Riksa Repairing Bidi Making
Box making Candle Making
Carpentary Carpet Weaving
Cement Roofing Tiles Carpet Weaving
Churi Ghee Processing Coffee Processing
Bakery Dairy Ghee
General engineering works Dalmoth and Potato Chips
Woolen Shawal Weaving Dhaka Weaving
Solar Heater Envelop and File making
Radio TV Repair House Wiring
Product Design Photography
5) Department of Cottage and Small Industries (DCSI):
This is a department which is situated under the ministry of
Industry. It was started formal skills training since 1939. It
operates through 27 district level offices.

It is basically concerned with policy implementation,

regulation and promotion of cottage and small industries. It
performs regulatory functions such as register, renew and
extend facilities for industries.

It organized short term, mid term and long term skill

development programes.

It also provides DCSI entrepreneur motivation training that

aims at developing entrepreneurs. It provides following
types of training:
Tailoring Jam/Jelly
Hosiery Entrepreneur Motivation
House wiring Dhaka Weaving
Radio/TV Repair Carpet weaving
Candle Making Carpentry
Soap Making Fabric Painting
Food Processing Chips manufacture
Vegetable Drying Electrical repair
Painting
6) Industrial Enterprise Development
Institute Nepal (IEDIN): It was established in
1996 as a successor of industrial Enterprise
Development Center. It is committed to
entrepreneurship development through training
, research, consultancy and enterprise
education. Its main objective is to provide
services to a maximum number of
organizations involved in enterprise
development. It conducts the following
functions:
1) Micro enterprise creation training.
2) Training programes on market development.
3) Training programes on business management
4) Trainig programes on double entry book-
keeping with VAT and office management
training.
5) Training programes on selling skill,
marketing and corporate social responsibility.
6) Local capacity building programes
Training on entrepreneurship development
programes.
7) National Productivity and Economic
Development Center (NPEDC):
The NPEDC was established in Feb. 1994. Its main
objective is to participate in the national development
process by making efforts to increase the pace of
industrialization and productivity improvement in the
country through planning , research, consultancy,
training seminars and information services.
8) Nepal Academy of Tourism and Hotel
Management (NATHAM): It was established
in 1972. It provides skill training in hotel and
tourism such as food and beverages,
housekeeping, front office, trekking guide and
ticketing trainings etc. It also runs a bachelor
level academic programmes
B) Non-governmental Sector: The following non-
government institutions are involved in ECD programes:
1) Women Entrepreneur Association Nepal (WEAN): This
is a non-profit organization and was established in 1987.
Its main objective is to represent the collective efforts of
women entrepreneurs in the economic progress of the
nation and decision making at national and international
level.
Its vision is to contribute to nation building through socio-
economic empowerment of women and the mission is to
promote women entrepreneurship through advocacy,
networking, information dissemination, capacity building
and promotion of women entrepreneurs throughout the
country.
2) Federation of Nepalese Chamber of Commerce
and Industry (FNCCI):
FNCCI is the nationally and internationally recognized
umbrella organization of private business in Nepal.
It was established in 1965 A.D. with the vision of
development of women entrepreneurs. Similarly, the
FNCCI has lunched small and medium Enterprise
Development Project (SMEDEP) to support, promote
and facilitate development of small and medium
enterprises.
It assists the existing entrepreneurs through
management improvement programes. It has also
established agriculture center for the development,
training and consultancy of agro –enterprises and
entrepreneurs.
3) Federation of Business and Professional Women
Nepal (FBPWN):
It is a pioneer social professional and non-profit
organization. Its main objective is to encourage
young women to initiate and develop their own
business.
It increases skills, knowledge and attitude for the
fulfillment of that purpose.
It offers opportunity to the women for the development
of professional, social and intellectual skills and
increase their value in the work force.
4) Nepalese Young Entrepreneurs Forum (NYEF):
It is a membership based non-profit organization. Its
aim to create outstanding entrepreneurs through
exchange of ideas, fellowships, education, training
and advocacy among the Nepalese youth.

It conducts different programs to enhance

entrepreneurial capabilities in Nepal. It provides the
participants knowledge and experience in pursuing
entrepreneurship.
 Chapter- 5
Entrepreneurial Venture Creation
• This chapter give us knowledge and fulfill
following objectives:
• Idea generation
• Idea selection process
• Feasibility study analysis
• Preparing business plan- concept, significance
and elements
• Venture creation – venture project
formulation, implementation and evaluation
5.1. Concept of Idea Generation:
Idea generation is the creative process of solving
problem or exploiting opportunities.
It involves developing many thoughts, selecting a
best idea, developing plan to implement the idea
and finally putting the idea into practice.
It can be defined as an understanding and thought in
one's mind.
It is the plan for doing something. It may be tangible
which can be touched or seen or intangible which
is symbolic .
It may be both intentional and unintentional.
Idea generation is one of the innovating and
creative process.
It is needed to entrepreneurs to starts and grow
their entrepreneurship.

It can be possible through the vision, insight,

observation, experience, education training
and exposure of entrepreneur.
It can be generated through environmental
scanning and market survey.
5.2. Techniques/Methods of Idea Generation:
1) Brainstorming: Brainstorming is a group
method for obtaining new ideas and solution.
It is using brain to storm any issue.
In this method, a group of people meets together
and express themselves as well as listen
others.

During brainstorming session, ideas are not

criticize or rewarded.
It is more fun than pressure. It takes 10 minutes
to 1 hour and the members are also not
required to prepare much.
2) Delphi Technique: It is a structured
forecasting technique.
In this technique, a group of experts are formed
from different disciplines but the participants
do not bring together.
Ideas and forecasts are obtained from all
participants through questionnaires.
The exports are encouraged to revise their
earlier opinion or idea in connection to the
replies of other members of their panel.
During this process the group coverage towards
the common idea which is correct.
3) Survey: It is the process of gathering
information from a sample of people.
The sample group represent all over population.
Sample is not selected haphazardly.
It is done in a systematic way.
This technique is useful to generate new product,
service and business ideas.
4) Library and Internet Research: The
business ideas may be generated from trade
journals, industry specific magazines and
industry reports which may be obtained
through library.

Internet research is also much useful for

generating business ideas. Google, Yahoo,
email, websites, etc are internet engines for
idea generation.
5) Focus Group: A focus group is the team of
concerned areas.
They represent various socio economic
background.
The group members are asked about their
perception, opinion, beliefs and attitude
towards a product, service, concept and
advertisement which lead developing of new
ideas.
In an interactive group setting, the participants
are free to talk with other group members. The
members come up with their ideas .
6) Checklist Method: It is the method in which
new ideas are developed through a list of
related suggestions.
The entrepreneur use list of questions to guide
the direction of developing new ideas.
• 7) Problem Inventory Analysis: Under this
technique, the customers are provided with a
list of problems or ideas associated with the
existing products.
• They asked to discuss about the products that
have similar problems.
• It removes the difficulty of developing new
products entirely.
8) Scientific Method: Under this method, new
ideas are developed through inquiry and
testing.
It consist of principles and processes, conducting
observation and experiments and validating the
hypothesis.
This method involves the entrepreneur defining
the problem, analyzing the problem, gathering
and analyzing data, developing potential
solutions and choosing the best solution.
5.3. Sources of New Idea Generation
The entrepreneurs can develop or create new
ideas from the following sources.
1) Situational Survey: Situational survey is the
process of analyzing to external environment.
Under this, entrepreneurs survey changes
factors of external environment. The factors
are as follows:
a) Technological Changes: Technological
changes can be taken as basic sources of
generating new ideas. Technology includes
inventions and innovation. Invention means
discovering new ideas and innovation refers
to practical application of idea.
Technological change leads to the introduction of
new product, change in the method,
organization of product, change in quality of
resources, new way of distribution, storing
and disseminating of information etc.
• The technological changes such as radio,
television, printing press, computer, internet,
automation, robotics, informatics,
biotechnology and artificial intelligence. Etc.
b) Political-Legal Changes: Political – legal
changes are also providing new ideas in
following ways:
i) Changing in political ideology, philosophy,
party system, government formation system,
role of parties create new ideas.
ii) Privatization and liberalization create
opportunities and ideas in private sectors.
The government service and public utilities
are going private in fast pace.
iii) Many other legal provisions such as
patents, trademark, copyright, franchising are
also generating new ideas.
c) Socio-Cultural Change: Socio- cultural
change also emerged new ideas and projecting
demand for various goods and services in
following ways.
i) Social change is reproduced by changing life
style, social norms, values, desire and needs
customers.
ii) The changing of social conditions, customers
taste and preference provide new ideas for
business opportunities.
iii) Demographic changes reflected trends in size,
distribution, age mix, urbanization and
migration of population. Such changes
generate new demand which provide new
ideas.
iv) The change in cultural aspects also provide
new business opportunities. At present people's
desire and culture more luxuries and
entertainment. they like restaurant, dance bar,
party palace, resort, cinema, water part,
rafting, cloths, beauty parlour, cosmetic goods
and services.
d) Economic Change: The economic changes
also provide entrepreneurial new ideas in
following ways:
i) The study of economic policy such as fiscal
policy, industrial policy, monetary policy,
foreign exchange policy, trade policy, tourism
policy, privatization policy and labour policy
etc provide new ideas for entrepreneurship.
ii) The changing in customers taste and
preference provide new business ideas to
entrepreneurs.
iii) Industrial changes arrival through natural
events or human events also provide
entrepreneurial ideas. Like solar power
presents many sources of ideas for aspiring
entrepreneurs.
iv) At present, avenues for decreasing cost,
increasing productivity and providing better
services also new sources of ideas.
2) Present Work Environment: The following
factors in the present work environment of
entrepreneurs can be sources of new ideas:
i) Entrepreneurs' mission, goals, strategies and
priorities provide new ideas.
ii) Entrepreneurs' effort to overcome problem or
identify opportunities provide new ideas.
iii) Entrepreneurs' creativity, experience, hobby
and interest also provide new ideas.
iv) Products of existing companies can be a
source of new ideas. Features, quality and
customer preference of those product s give
the new ideas.
3) Outside Sources:
i) Outside consultant and exports can provide
promising new ideas to start new business
venture.
ii) Suggestions form friends, family and
different groups generate new ideas.
iii) National and international trade fairs and
exhibitions also provide excellent opportunity
to know about new products.
iv) Activities and strategies of competitors also
can be provide new ideas.
v) Governmental rules, regulations, proposals,
reports, plans, policies provide new ideas.
vi) Foreign countries can also be a good source
of new ideas.
vii) Customers need and requirement can be an
important source of ideas.
viii) Television, newspapers and other media or
publications also source of ideas.
4) Research and Development: when the
Scientists, Technologists, Researchers and
Specialists are perform innovative, invention
and creative activities known as research and
development. Such activities are creating new
ideas and thoughts about entrepreneurship.
Many researcher and development works are
use Labs and practice form.
They published new ideas in journals,
magazines, reports, proposal, articles and
websites.
 5.4. Selection of Best Idea
The entrepreneurs are acquiring different
types of ideas through experience,
observation, experiment and different
sources. But all kinds of ideas cannot be
used as business opportunities. Before
selection of appropriate idea, all ideas are
evaluated. The steps of selection of best
idea are given below:
1) Evaluation of Ideas: This is the step of
assessing or measuring developed ideas.
When the entrepreneurs generate ideas
through different sources, firstly evaluated all
ideas using following criteria's:

i) Profit Test: Under this test entrepreneurs

evaluate potential profit level of ideas. The
potential profit should be evaluate on the
basis of production, marketing and financial
aspects.
ii) Constrains Test
Before selecting an idea, it should be ensured
whether the resources required for the idea
would be available adequately or not.

The idea should fit with raw materials, financial

resources, human resources, time, technology
and other constrains.

Similarly, the idea should be compatible with the

entrepreneur's interest, personality and
resources.
iii) Risk Test: New idea can be test in terms of
risk level. This test evaluate idea risk and
process risk.
Idea risks are associated with technical aspects
of the idea whereas process risks are
associated with process, procedures, tools,
techniques and performance of idea.
Under this test, potential risk is identified and
evaluated to expect what may go wrong.
2) Selection of Best Idea: After evaluation of
different ideas then choose a best idea on the
approach of entrepreneurs objectives, policies,
availability of technology and finance. The
evaluate ideas are classified into three level:
i) Promising Ideas: They are possible
alternatives for new opportunities. They can
be select.
ii) Marginal Ideas: They are stored for future
uses.
iii) Reject Ideas: They are totally rejected or
dropped.
 5.5. Feasibility Study
• A feasibility study is an evaluation or analysis
of the potential impact of a proposed project or
programmes.
• This study is conducted to assist decision
makers in determining whether or not to
implement a particular project.
• It addresses things like where and how the
business will operate. It provides in-depth
details about the business
In other words, a feasibility study is a controlled
process for identifying problems and
opportunities, determining objectives,
describing situations, defining successful
outcomes and assessing the range of cost and
benefits associated with several alternatives for
starting any business venture.
Mainly, feasibility study aims to objectively and
rationally uncover the strengths and
weaknesses of the existing business or
proposed venture, opportunities and threats as
presented by the environment.
In conclusion, feasibility study means making
evaluation as to whether the business venture
is profitable or not for the selection of that
venture.
It is an effective way to safeguard against
wastage of further investment or resource. It is
conducted during the deliberation (care) phase
of the business development.
 5.6. Preparing Business Plan
5.6.1. Concept of Business Plan:
A business plan is a written statement regarding
what the entrepreneur is going to do.
It is a document that is describing venture's
opportunity, its product or service, context,
strategy, team, required resources and
potential financial returns.
It gives the answer- where are we now? , Where
do we want to be ? and how are we going to
get there ? .
• A business plan is a document about the future
of a business. It demonstrates the feasibility of
the prospective business. It also provide
roadmap of its operation.

• According to Dollinger "A business plan is the

formal written expression of the
entrepreneurial vision, describing the strategy
and operations of the proposed venture.

• In conclusion, business plan is fundamental

guidelines in operating a business.
5.7. Significance of Business Plan
1) Create a new business
2) Business growth
3) Attract investors
4) Risk management
5) Means of communication
6) Establish benchmark
7) Provide guidelines
8) Business control
9) Increase efficiency
 5.8. Elements of Business Plan
1) Executive Summary: This steps present
summary of the entire business plan. It also
called a synopsis (outline) of business.
It describes company's business concept,
financial requirements, market opportunities,
target customers, operations, technology,
Project management, sales and profit
projections, plans of investors and current
business positions etc.
2) Company Description: This section of a
business plan presents mission, vision,
objectives and goals of the company.
It also provides current status, name, nature and
future trends of the industry.
This is the part of business plan also includes the
description of products and services and shows
how they are different in the marketable.
It provides a brief history of the company along
with the source of business idea and driving
force behind its inception (start).
3) Market Analysis: This section generally covers
the company's competition, customers,
technology, legal concerns, political trends,
products and market acceptance etc.
The competitive analysis details the competitors
strengths and weaknesses .
It provides a basis for discovering market
opportunities.
A customer analysis provides a picture of who buys
and uses the company's product or services.
It also analyzes market segmentation. Market may
be segmented in a number of ways like
geographical, demographical, psychological
segmentations .
4) Development and Production Aspects:
This section describes the most important
elements relating to the research, development
and production of the firm's basic product or
services.
It also explains production process, resource
requirements and quality assurance .
This section mainly presents three issues. Firstly
it presents, stage of product or service
development, secondly, the challenges and risk
in the market and thirdly, it describes patents,
trademarks, copyright etc.
5) Marketing Aspects: This section describes
marketing plans, strategy and future sales of
the company.
It focuses on marketing and selling products and
services.
It deals company's concept, marketing research,
market mix-product, price, place, promotion
and distribution.
It also describes data wise forecasting of sales in
first three to five years
6) Financial Aspect: This section includes the
sources and usage of funds .
It demonstrates the financial viability of the
venture such as cash flow statement, BEP,
financial ratio, cost control, income statement,
balance sheet and budgeting plans etc.
7) Organization and Management Aspect:
This section presents the strengths of the
venture's management team, members profile,
experience and educational background.
It includes the description and formation of
Board of Directors.
It also shows organizational structure or chart
which is a graphic representation of how
authority and responsibility are distributed.
8) Ownership: This section contains information
about the venture's ownership.
It describes the legal form of the business, the
contractual obligations, sole proprietorship,
partnership and company etc.
It also describes equity position and deal
structure of the company.
9) Critical Risks: This is the section of risk
analysis. At first, the entrepreneur should
indicate the potential risks, next should be a
discussion of what might happen if these risks
are become reality. Finally, the entrepreneur
should discuss the strategy that will be
employed to prevent of risks.
10) Summary and Conclusion:
In this section, key features are briefly
summarizes and highlighted. It includes firm's
overall strategic, reasons for success, unique
resources, sales and profit projection, capital
requirements and ownership percentage of
investors.
It describes all over title or stage briefly.
 11) Scheduling and Milestones: This section provides
key dates scheduling to finance, marketing and
production. For example-

S.N. Particulars Months

1st 2nd 3rd 4th 5th 6th 7th

1 Project Report Formulation
2 Approve Bank loan
3 Land Purchase and building
construction
4 Machinery Installation
5 Trial Production
6 Commercialization
12) Appendix: This section shows
supplementary information such as
organizational chart, important calculation,
patents, management resumes, advertisements
and articles etc.
 5.9. Venture Creation
Venture creation is the act of formation and
development of a new business enterprise.

It can be define as the process of turning a new

idea or technology into a new business that can
succeed and attract investors.
Venture creation simply consist of following
steps:
1) Venture Project Formulation:
This phase of venture creation is involves
generation of new ideas, making plans,
feasibility study, industry analysis and
development of an effective business model.

It should be made detail plans about venture

project such as infrastructure, engineering
design, routine budget and financial analysis.
2) Venture Project Implementation:
It is the stage of attempts and activities are done
to convert the business plan into action.
At this stage, venture project is implemented.
It involves acquisition of fund, building
relationship with the staffs, suppliers and
customers.
It includes enactment on production, marketing,
human resources and financial plans.
3) Venture Project Evaluation:
This is the phase of comparing the actual
performance of the business with the
predetermined standard.
At this stage, the real results are seen.
Under this stage, organizational performance or
activities are monitored to ensure that the
direction of project implementation is in the right
way.
Evaluation ensures the adjustment between
venture project formulation and implementation.
 Class Assignment
1) Suppose you are planning to establish a small
scale enterprise in Geta Kailali for
manufacturing Sagarmatha Biscuits . Prepare
an imaginary business plan on the basis of
above mentioned elements of business plan.
 Self Rating Questionnaire
1. I welcome challenges and opportunities
2. Before starting a new project, I collect a great deal of information
3. I devote the most of my time to my work
4. I try to find ways and means to accomplish my task within the
shortest possible time.
5. I start my work with full confidence that I will succeed
6. I prefer to do tasks that I know well
7. I try to influence people to do what I want
8. I work for long hours to completer my work
9. I think of many new ideas
10. I change my decisions when others succeed to convince me that I
am wrong.
11. I look for new opportunities like a watch dog.
12. I always try to continuous my efforts in spite of several odds come
in the way.
13) I try to find ways to do things for less cost.
14) When I am confused, I seek others advice.
15) I take the advantages of opportunities as and when there
arise.
16) I want to see my enterprise the best of its type.
17) I do not let my work interfered by others.
18) I try to get the maximum return from my limited
resources.
19) I do my work systematically and logically.
20) I apply alternative approaches to solve the problems.
21) I stick with my decisions even if others disagree with me .
22) I am always in search of people who can help me in my
work.
23) I prefer to do risky ventures.
24) I try to take lessons from my past doings.
25) I do my level best to satisfy others through my work.
 The Rating
A B C D
75 and 50-75 25-50 Less than
above 25
4 3 2 0
 Scoring
Questions A B C D
1
2
3
4
5
6
7
8
9
10
11
12
 Practical Exercise for Writing a
Business Plan
Segments Key Elements
1. Executive Summary
No more than three page.
You must capture the reader's interest
What, how, why, where and so on must be
summarized
 Chapter- 6
Legal Issues of Entrepreneurial
Venture
6.1. Legal Requirement for Venture Creation:
Entrepreneurs Need to establish their venture
under the certain legislative framework. Such
framework creates opportunities and threats
for the business ventures.
Successful entrepreneurs carefully monitor and
check changes in laws and regulations in order
to take advantages of the opportunity .
The following legal acts and provisions are
needed to follow for venture registration and
operation. It also called legal structure
Legal Structure
The legal structure of country may be divided
into courts of law and business legislations:
They are explained as bellow:
Business Legislations : Under the business
legislations , the basic laws are explained as
bellow:
A) General Business Law:
The laws which are related to the registration,
operation, management is known as general
business law. Major lows are explained below
1) Private Firm Registration Act 2014 (1958)
This act deals with the provisions of registering
and operation of sole trading concern owned
and managed by an individual.

It makes business liabilities as personal liabilities

of the owner.

All types of sole trading concern registered

under the private firm registration act 1014.
This act defines that each and every sole trading
concern department for legal recognitions.

As commerce related business should be

registered with the department of commerce
and industrial business or small cottage
industry should be registered with the
department of industrial or small cottage
industry.
2) Partnership Act 2020 (1964)
This act highlights the legal provision on
partnership firm. It deals with registration,
renewal, operation and dissolution of
partnership firms.

It makes partnership deed as the main document

to guide partnership activities.

Under this act , a partnership firm is required to

be registered with the concerned agency of the
government.
3) Company Act 2063 (2006)
This act deals with the formation, management
operation and liquidation of companies in
Nepal . It limits the liabilities of shareholders.
This act makes provision for two types of
companies- private limited and public limited.

4) Cooperative Act 1960: This act deals with

formation and operation of cooperatives in
Nepal. It was amended in 1991.
5) Industrial Enterprise Act 2049 (1992):
This act deals with establishment of industrial
units and enhancement of their competitive
position.
It has classified industries based on nature like-
manufacturing industries, energy based
industries, agro and forest based industries,
mineral industries, tourism industries, service
industries.
6) Contract Act 2000 :
This act deals with matters relating to contract,
such as consideration, adjudication and
conclusion.

7) Arbitration Act 1999

This act deals with arbitration for settlement of
disputes.
B) Labour Laws:
The rules and regulations, which are related to
wages, hours of work, payment of bonus,
dispute settlement, unionism and labour
relations etc. are called labour laws. The major
labour laws are explained as below:
1) Labour Act 2048 (1992)
Laboru act 2048, is concerned with making
provisions for the rights, interest, facilities
and safety of workers and employees working
in enterprise of various sectors.

It has 11 chapter and 92 sections to regulate the

concerned field.
2) Trade Union Act 2049(1992):
Trade Union Act 2049 is concerned to make
legal provision regarding registration,
operation of trade union and other necessary
provisions and promotion of professional and
occupational rights of the persons engaging in
self employment and the workers working in
various industry or trade.
3) Industrial Training Act 2039(1982) :
This act deals with requirements for industrial
establishments to provide training to workers
in industrial skills.
It is to make arrangement relating to training that
teaches industrial skill in industrial enterprises.
4) Bonus Act 2030 (1974):
This act regulates the payment of bonus to
employees and workers.

It specifies that the bonus shall not exceed ten

percent of the net profit.

It also states that the amount of bonus to an

individual will depend on the amount of
monthly salaries and wages.
5) Child Labour Act 2057 (2000):
This act makes the following provision for the
childs:
- Children below 16 years have been defined as
child.
- Children below 14 years must not be employed
as labour .
- Children must not be employed in specified
hazardous jobs such as tourism, workshop,
cold storage, public transport, construction,
tobacco, carpet, plastic, glass, beer and liquor
etc.
C) Finance and Investment Laws:
Rules and regulations related to investment,
taxation, foreign exchange, subsidies, stock
exchange and technology transfer are called
finance and investment laws. The major
finance and investment laws are given below:
1) Foreign Investment and Technology
Transfer Act 2049 (1992):
This act deals with the procedures, rules and
regulation of foreign investment and
technology transfer in Nepal.

Its main objective is to promote foreign

investment and technology transfer for
making the economy practical, dynamic and
competitive through the maximum
mobilization of the limited capital, human and
the other natural resources.
2) Foreign Exchange Regulation Act 2019
(1961)
This act regulates the exchange of foreign
currencies and provides authorized foreign
exchange dealers.

It deals with the licensing provisions related to

the exchange of foreign currency in Nepal.

It states that the person or firm or institutions

wishing to involve in foreign exchange
transactions .
3) Income Tax Act 2058 (2002):
This act deals with the legal provision of income
tax administration in the country.

This act has related to calculation of income tax,

tax exemption (discount), tax deductions, tax
accounting, timing, administration, collection,
penalties and offences.
4) Value Added Tax Act 2052 (1996):
This act has highlighted different provisions of
VAT administration.
Some of them are registration for VAT,
obligation of registrants, penalty, VAT
exemption etc.
This act provisions relating registration for VAT,
classification of goods and services for VAT,
VAT administration and penalty.
5) Customs Act 2063:
This act deals with customs duties on imports
and exports. It regulates international trade of
Nepal.

6) Export-Import Act 1956:

This act deals with control of export and imports
through licensing. At present, Nepal has
adopted Open General Licensing Policy.
D) Consumer and Environment Protection
Laws:
The rules and regulations which are related to
protection of consumers' right and interest as
well as environment is called consumer and
environment protection laws. The major acts
are explained below:
1) Consumer Protection Act 2054 (1999):
This act deals with protection of consumers'
rights including protection from malpractices,
misleading, propaganda and irregular quality
and quantity.

2) Food Act 1966:

It deals with protection of health of the people
from non-qualitative foods. It has provisions
of monitoring the ensure the right quality of
the food products.
3) Nepal Standard Act 2037 (1980):
This act was established Nepal council of
standard in 1982. Its main function is to
determine the standard of various products and
review such standards.
4) Black Market and Some other social crime
and punishment Act 2032(1977):
This act is enacted to regulate the market and
monitor the price of goods and services.

Under this act, selling goods at artificial price is

considered as a punishable offence.
E) Intellectual Property Rights Laws: The laws
which are related to protection of patent,
design, trademarks and copyrights are called
intellectual property rights laws. They are
described as follows:
1) Patent, Design and Trade Mark Act 2022
(1965):
Patent, design and trademark are intellectual
property.

They are the creation of human mind. This act

has provisions of registration and non-
registration of patent and design.

It has also provision of registration, non-

registration of trademark and classification of
goods and services for trademark.
2) Copyright Act 2002:
This act deals with protection of copyright of
literary, artistic, scientific and other works.

It defines the rights of the beneficiary including

transfer, terms and licensing of copyright.
 6.2. Sole Trading Concern
Registration:
Concept: The business form which is established by a
single person investing his own capital, active
participation in management, bearing risk of loss and
sharing profit is known as sole trading concern.
The Investor alone plays the role of an owner, manger,
controller, decision maker and risk bearer.
investor applies his/her own skills, intelligence,
knowledge and capability for the successful operation
and management of the firm.
According to A.N. Agrawal “ A person who establishes
and manages a business for his own account and risk is
known as a sole proprietorship business.”
Procedures of Registration:
In Nepal, a sole trading concern is registered under
the Private Firm Registration Act 2014. It has
following procedures:
• 1) Apply for Registration: Application form is
needed to be filled up and apply for registration.
The application must include the following
things:
• a) Name and address of the firm
• b) Nature and objectives of the business
• c) Amount of capital investment
• d) Name and address of owner including father's,
mother's and grandfather's name.
• e) Other details as prescribed by the concerned
department.
2) Deposit Registration Fee:
After the submission of application form,
amount of registration fee should be deposited
in the Nepal Rastra Bank in the account of the
concerned department.

The amount of registration fees depends upon

the amount of capital investment in the
business.
 Capital Registration Fee Renewal Fee
Up to 1,00,000 700 100

1,00,001 to 3,00,000 2100 125

3,00,001 to 5,00,000 4100 150

5,00,001 to 10,00,000 7600 200

10,00,001 to 50,00,000 10100 250

50,00,001 and above 15100 300

3) Receiving the Certificate of Registration:
After the submission all documents and
deposited voucher in the concerned
department, the authorized body check all the
documents. If all the required documents are
completed, he/she got a certificate of
registration. It is the evidence of registration
and firm can start within six months.
 6.3. Partnership firm Registration
• Concept: The business unit that is established by two or more
members on mutual understanding through joint investment,
organization and management for mutual benefit.

• It is an association of two or more persons to carry on a business with

combined finance, skill and ability for the purpose of operating
business for mutual profit.

• The partners of firm, may be involved in management, they share

profit bear losses and pay liability as prescribed in agreement.

• They decided jointly the objectives of business, amount of capital,

ratio of investment and share profit and loss.
• Procedures of Registration:
According to partnership act 2020 section 5 every
partnership firm must be registered in Nepal.

It should be registered with the concerned government

office within 6 months of its formation.

The registration gives recognition to the firm.

In case a partnership firm is not registered within time the

transactions of the firms are not recognized legal.

The partnership act 2020 has determined the following

procedures for the registration of a firm.
1) Apply for Registration: Application form is
needed to be filled up and apply for
registration to concern department of Nepal
government. The application must include the
following information:
• 1) Full name and address of the firm.
• 2) Full name and address of the partners.
• 3) Objectives of the firm and brief description
of works.
• 4) Type of partner and capital invested by each
partner.
• 5) Method of sharing profit and loss.
• 6) Process of computing profit and loss.
• 9) Duration of firm or agreement.
• 9) Other details as prescribed by the concerned
department of Government of Nepal
10) The application must be duly signed by all
the members, partnership deed and copy of
citizenship certificate must be enclosed along
with the application form.
2) Deposit Registration Fee:
Registration fee should be deposited in Nepal
Rastra Bank in the account of the concerned
department.

The voucher of deposit should be submitted to

concerned department along with the
application form.

The amount of registration fees depends upon

the amount of capital investment in the
business.
Capital Registration Fee Renewal Fee
Up to 1,00,000 700 100

1,00,001 to 3,00,000 2,100 125

3,00,001 to 5,00,000 4,100 150

5,00,001 to 10,00,000 7,600 200

10,00,001 to 50,00,000 10,100 250

50,00,001 15,100 500

3) Receiving the Certificate of Registration:
After the submission all documents and
deposited voucher in the concerned
department, the authorized body check all the
documents. If all the required documents are
completed and they satisfied then he/she got a
certificate of registration.
 6.4. Company Registration
• Concept: Company is a voluntary association of
people for profit, having a separate legal
existence, continuous succession, common seal
and limited liability.
• It collects capital by issuing share to the
promoters and general shareholders under the
company act of the nation.
• The share of company is easily transferable from
one person to another.
• It is known as an artificial person created by law
because it can do the works like a person.
Procedures of Company Registration:
1) Verify the company name: In the first step
of company registration, The uniqueness of
the proposed company name should be
verified in the office of the company
Registrar.
Verification of the company name can be done
online as well.
To reserve the available company name.
The company name must submit an application
to the office of the company registrar.
2) Verification essential documents: In this
step of company registration, The
entrepreneurs normally verifying and drafting
the memorandum, articles of association and
prospectus.

3) Attached stamp to registration form: The

entrepreneurs can buy a stamp to be attached
to the registration form for Rs 5 from the post
office.
4) Register at the office of the company
Registrar:
To register a company, the promoter must submit
an application as prescribed. After the online
filing entrepreneurs are required to visit the
office of company registrar and submit all the
original documents for further verification.
The registration fee is based on following basis:
Capital Registration
Up to 1,00,000 1,000
1,00,001 to 5,00,000 4,500
5,00,001 to 25,00,000 9,500
25,00,001 to 1,00,00,000 16,000
1,00,00,001 to 2,00,00,000 19,000
2,00,00,001 to 3,00,00,000 22,000
3,00,00,001 to 4,00,00,000 25,000
4,00,00,001 to 5,00,00,000 28,000
5,00,00,001 to 6,00,00,000 31,000
6,00,00,001 to 7,00,00,000 34,000
7,00,00,001 to 8,00,00,000 37,000

8,00,00,001 to 9,00,00,000 40,000

9,00,00,001 to 10,00,00,000 43,000

10,00,00,001 and above 43,000 plus Rs 30 for each additional

Rs 1,00,000
5) Make a Company Rubber Stamp:
The entrepreneurs can make a company rubber
stamp at the seal maker.

6) Register for VAT and Income Tax:

According to the value added tax act 2052, the
company must disclose the office address and
withhold 10% tax of the rent for at least 3
months and deposit it to the tax office.
7) Enroll the employees in the provident
Fund:
Every month 10 percent is deducted from the
basic salary of each employee.

The contribution is made to the provident fund

and released upon employee retirement.
 6.5. PAN Registration
• Permanent Account Number (PAN) is a
permanent account number of tax payer
person and company.
• It is a unique identification number, which is
issued to all the taxpayers.
• It is allotted only once in the lifetime of a
taxpayer.
• PAN registration procedures are given below:
1) Agency: Department of Inland Revenue
Office
2) Application Fee- Rs 10 (Ticket fee)
3) License Fee- No fees
4) Maximum Processing Time- 1 day
5) Validity – No time bound
6) Requirements:
- Apply application form
- Apply memorandum of Association and
Articles of Association of the company
- Photocopy of the citizenship certificate, two
passport size photo of the individual or partners
who signs in application form
- Hand drawn sketch of the business location or
main office.
- Power of attorney in case a representative is sent
for registration .
- Proof of deposit if requested by Inland Revenue
office .
- Company Registration Certificate from company
Registration Office, Department of Commerce,
Department of Small and Cottage Industries,
Village Development Committee or
Municipalities.
 6.7. VAT Registration
• Value Added Tax (VAT) is a form of indirect
taxation.
• It is multi staged, commodity and services based
tax which is levied on the value added of business
at different stages of production and distribution.
• The main purpose of VAT is to increase revenue
mobilization by making effective process of
collecting revenues required for the economic
development of the country.
• It collects revenues effectively by regulating the
process of collection.
VAT was introduced on 16 Nov. 1997 in Nepal.
It was implemented fully from the year
1998/99. Vat replaces the old sales tax,
contract tax, hotel tax and entertainment tax.
The following are the provision of VAT
registration in Nepal.
1. Agency- Department of Inland Revenue
Office
2. Application Fee- Rs 100 (Ticket fee)
3. License Fee- No fees
4. Maximum Processing Time- 1 day
5. Validity – No time bond
6) Requirements:
- Apply application form
- Apply memorandum of Association and Articles of
Association of the company.
- Photocopy of the citizenship certificate, two passport
size photo of the individual or partners who signs in
application form
- Hand drawn sketch of the business location or main
office.
- Power of attorney in case a representative is sent for
registration .
- Proof of deposit if requested by Inland Revenue office .
- Company Registration Certificate from company
Registration Office, Department of Commerce,
Department of Small and Cottage Industries, Village
Development Committee or Municipalities.
6.8. Obtaining Intellectual Property
Rights
Concept of Intellectual Property: Intellectual
property is the product of human imagination,
creativity and inventiveness.
It refers to creation of the mind such as
inventions, literary and artistic works and
symbols, names, images and designs used in
commerce.
It consists of certain intellectual creations by
entrepreneurs or their staffs that have
commercial value and are given legal property
rights.

Intellectual property rights are creation of the

mind. They can neither be seen or touched.
The main forms of business intellectual
property rights are Patens, Trademark,
Copyrights and Trade secrets.
1) Patent: It is an exclusive right granted by the
government for an invention.
It provides the patent owner with the right to
decide when and how the invention can be
used by others.
It denotes the granting of limited monopoly
power designed to encourage invention and
innovation.
It grants right to the inventors to build, use and
transfer or to keep with themselves their
invention.
A patent grant an inventor the right to exclude
others from making, using, offering for
selling an invention for a fixed period of time.

When the time period time is ends, the patent

goes into the public area and anyone may use
it.

According to Milton H. Spencer " A patent is an

exclusive right conferred by a government on
a inventor, for a limited time period.
 Types of Patent:
Utility Patent It is granted for new process,
machines, manufactures and
compositions of matters.
Design Patent It is granted for any original
ornamental design for an article of
manufacture
Plant Patent It is granted for botanical creations
that have been sexually hybrid
roses, ornamental trees, food grains
and assortment of special purpose
herbs and vegetable plants.
• Steps of Patent Registration:
1) The first step in securing a patent is the filing of
a patent application. He/she should submit an
application to the department of industry with
the following particulars:
- Name, address and occupation of inventor.
- Manner and nature of right acquired, if applicant
is not the inventor.
- Process of producing, operating and using the
patent.
- Principle or formula on which the patent is
based.
- Map or drawing of the patent with description.
2) No Registration: The Department does not
register any patent under this act in the following
circumstances:
i) Already registered in another person's name
ii) Not invented by the applicant or the right to
patent not received.
iii) If the patent is likely to adversely affect the
public health, conduct or morality or the
national interest.
3) Term: The term of the patent is valid only for a
period of seven year from the date of
registration. It can be renewed for two terms of
seven years each.
2) Copyright:
It is the rights that creators have over their
literary and artistic works.
The works are in tangible forms such as books,
music, paintings, films, computer programms,
database, advertisements, maps and technical
drawings etc.
The creator has right to determine how the work
is used and obtain the economic benefits
from the works.
It is original creative works of authors,
composers and others from unauthorized
copying of their works. It extends protection
to form of expressing ideas.
It is an exclusive property right granted to
authors and originators of artistic productions.
3) Trademark: A trademark is an individual
word, name, mark, symbol, design, logo or
device that a company uses to identify and
distinguish its products from others.

It enhances the visibility of products and

services. It also provides useful information to
the customers.

The owner has unlimited exclusive right to use

the trademark as long as it is in use. The right
of use can be sold to others.
• Steps of Registration:
1) Application: A person desirous to register the
trademark of his/her business registered
should submit to the department an
application in the prescribed format along
with four specimen of such trade marks.

2) Registration: The department registers

trademark in the name of the applicant after
necessary investigation.
3) Prohibition: No trade mark may be used as a
registered trade mark without registering it at
the department.

4) Term: The title of the person in whose name a

trademark has been registered remains valid
for a period of seven years from the date of
registration.
5) Punishment: if one uses trademark of others
without transforming the ownership or written
permission or the trade mark registered is not
brought into use within one year from the date
of registration.

The department imposes a fine not exceeding

one hundred thousand rupees and articles and
goods concerned with such offense are also
confiscated.
4) Trade Secrets: A trade secret is any formula,
pattern, physical device, idea, process or other
information that are the sources of competitive
advantages in the marketplace.

They include marketing plans, product formulas,

financial forecasts, employee rosters,
customers lists, research and development,
pricing information and laboratory notebooks
etc. ,
The owner has the exclusive right to use, sell and
license the trade secrets.
 Labour Laws
• The major provision of the labour act 1992 are as
follows:
• 1) Appointment: This act has defined formal
selection of employees through advertisement and
appointment letter has to be provided to the
selected workers.

• 2) Prohibition of engaging non Nepalese: Non

Nepalese citizens are not permitted to be engaged
at work in any of the posts until the Nepalese
citizens are available for appointment.
3) Security of Service: The service of any
permanent workers may not be terminated
without given and prescribed procedures.

4) Compulsory Retirement: The investor may

compulsorily retire any worker who has
crossed the age of fifty five.
• 5) Working hours: According to this act, no
worker is deployed in work for more than eight
hours per day or forty eight hours per week
and they are provided one day as weekly
holiday for every week.

• 6) Extra Wages: If the worker is engaged to

work for more than eight hour in a day he/she
is paid overtime wages at the rate of one and
half time of his/her ordinary rate of wages.
7) Remuneration: A minimum remuneration
fixation committee is formed to fix the
minimum remuneration, allowance and other
facilities.

8) Provision related to minor: No minor can be

engaged in works without adequate directives
about the concerned working areas
9) Welfare Fund: An entrepreneur should
establish a welfare fund, as prescribed for the
welfare and benefit of the workers.

10) Special Provision: This act has made special

provision for the Tea-estate, construction
business, transportation business, hotel, travel,
trekking, adventure, rafting, jungle safari etc.
11) Central Labour Advisory Board: The
government may constitute a central labour
advisory board to receive necessary opinion
and advice in relation to formulating policies
and drafting of laws with regards to labour

12) Labour Relation Committee: The

entrepreneur should constitute a labour relation
committee in each enterprise in order to create
friendly atmosphere between the workers and
the management and to develop healthy
industrial relation.
13) Labour Court: Nepal government can
establish labour court by publishing a notice in
the Nepal Gazette. The authority and the
location of such court is prescribed in such
notice.

14) Personal Claims or complaints: If any one

or more workers have any personal claim or
complaint against entrepreneur relating to the
service, the concerned worker may file it in
writing with the concerned proprietor.
15) Submission of Claims of collective dispute:
The claims relating to collective right, interest
or privilege have to be presented in writing to
the concerned proprietors signed by at least
fifty one percent of the concerned workers.
 Contract Laws
• The major provision of contract act 2056 are as
follows:
i) Definition: Contract is an agreement to do
something between two or more parties
which is enforceable by law.
Similarly, offer is defined as a proposal made by
one to another with a view to obtain agree
from that another.
Acceptance is an agree given by the person to
whom it is made in the same sense as the
offer has intended
ii) Contractual capacity: It deals with the
contractual capacity of the contracting parties
person of minor, persons of unsound mind
and other persons disqualified by law are
treated as incapable to enter into a contract.
iii) Autonomous of Parties: The contracting
parties have right to choose the subject mater
of contract to fix the nature and amount of
consideration, the terms and conditions.

iv) Offer and Acceptance: It also has the

provision to deal with the offer and acceptance
their communication, revocation and the
different consideration when an offer and
acceptance is treated as cancelled.
v) Indirect and contingent contract: It has
stated the different conditions where a contract
is made.

vi) Void and voidable contract: It provides a

list of contract which are declared by law as
void.

vii) Specific contracts: It has provided the

different provision for general and specific
contract
viii) Performance of Contract:
It has also provide different provisions relating to
the ways and manner of performance, time
date and place of performance, persons who
are bound to perform a contract, who can
demand for performance and the conditions
where a contract need not to perform etc.
Ix) Breach of Contract: This act also has the
provisions of breach of a contract and the
different preparation available to the injured
party in case of beach or non performance of
contract where a contract has been breached by
one the another party can apply before the
court for the rescission of contract damages,
specific performance and injunction.
 Environmental Laws
The main provision of environment protection
act 2053 (1997) are as follows:
1) Definition: This act has defined environment
as the interaction and inter relationship
among the components of natural, economic,
cultural, social systems and human activities
and their components.
• Pollution means the activities that significantly
degrade, damage the environment or harm on
the beneficial or useful purpose of the
environment by changing the environment,
directly or indirectly.
2) Prevention and Control of Pollution:
Nobody shall create pollution in such a manner
as to cause significant adverse impacts on the
environment and people's health dispose or
cause to be disposed sound, heat, radioactive
rays and wasters from any mechanical devices,
industrial enterprises or other places which
country to be prescribed standard.
3) Environment Inspector:
In order to carry out or cause to be carried out
the acts of the mitigation, avoidance or control
of pollution or the acts required to be carried
out in accordance with the initial
environmental examination or the
environmental impact assessment report, the
ministry may , by fulfilling the procedures
prescribed by the public service commission,
appoint environmental inspectors .
4) Protection of National Heritage: It shall be
the duty of the concerned agency or
department to protect national heritage.

5) Environment Protection Area: Government

of Nepal may be a notification in the Nepal
Gazette, maintain any place within Nepal
containing natural heritage, rare wildlife,
biological diversity, plant and places of
historical and cultural importance, which are
considered extremely important from
viewpoint of environment protection.
6) Establishment and Operation of
Environment Protection Fund:
A found named environment protection fund
shall be established for the protection of
environment, prevention and control of
pollution and protection of the National
Heritage.
• 7) Power to constitute Environment
Protection Council:
• Government of Nepal may to provide policy
guidance and suggestions to government of
Nepal with regard to environment protection
and also to have coordination among different
agencies, constitute an environment protection
council comprising of environment experts and
representation of the person form recognized
political parties at national level as well.
8) Compensation may be given: In case in
consequence of the creation or disposal of
pollution, sound, heat or wastes by anybody
opposing to this act or rules or guidelines
framed hereunder, any person or organization
affected from such actions.
• 9) Punishment:
• In case any person carries out any act contrary
to the approved proposal, the prescribed
authority may stop such act immediately and if
any person or organization has done such act
may according to the degree of offence punish
him/her with a fine.
 Unit 7:
Financing of Entrepreneurial Venture
7.1. Need for financial planning:
Finance is one of the important prerequisites to
start any types of enterprise.
It is needed to begin, maintain business venture
and its operations.
So, entrepreneurs should carefully prepare
financial planning and estimate initial capital
requirements for start up of the venture.
In such planning the entrepreneur should clearly
answer the following three questions:
- How much money is needed ?
- Where will money come from ?
- When does the money need to be available ?

Thus , financial planning deals with futurity of

present decision in terms of financial aspects
of an entrepreneurial venture.
Financial planning is needed to estimate the
following matters:
1) Fixed Assets Requirement: The assets which
are long-term and relatively of permanent
nature are known as fixed assets.

They are not converted into cash within one year

but they provide benefit over a long period of
time.

The expectation is that they will be used rather

than sold. The important fixed assets are:
- Land and Building
- Plant, Equipment and machinery
- Vehicles including cars, delivery vans and
trucks
- Furniture and fixtures
- Patent, trademarks, copyrights.
- Others:
No business can run before fixed assets are in
place. However, the needs of fixed assets
depend on the nature, size and location of
business venture.
2) Current Assets Requirement: The assets
which are short term and can be converted into
cash amount with in one year are called current
assets:
It also called liquid assets or gross working
capital .
It has include following assets:
- Cash- actual money in hand, deposited in bank
and current purchasing power in hands.
- Marketable Securities- shares, debentures,
bonds and other securities.
Accounts Receivables- Receivables are the amount
due to from debtors to who goods and services
have been sold on credit.

Bills Receivables: They represent the promises

made in writing by debtors to pay exact sums of
money after some specific period of time.

Inventory- It has includes raw materials, work in

process and finished goods.

Prepaid Expenses- Prepaid expenses are the

expenses of future period paid in advance.
Example- Prepared insurance, prepared rent etc.
3) Business Promotion Costs: At the time of
business starting different kinds of expenses
are arrival which are called business promotion
cost. They can be fees by lawyers, CA,
accountants, consultants and other registration
charges.

4) Personal Living Expenses: if other income is

not available, the entrepreneur should be
estimated personal living expenses for capital
requirement.
Financial planning is needed due to the following
reasons:
1) Ensure availability of required funds
2) Helps in investing finance in right projects
3) Helps in operational activities.
4) Base for financial control.
5) Helps in proper utilization of finance
6) Helps in avoiding business shocks and surprises.
7) Link between investment and financing decision
8) Helps in coordination
9) Links present with future
 Sources of Finance for
Entrepreneurial Ventures
The capital requirement for entrepreneurial
ventures can be arranged from two sources.
They are:
1) Angel Investors: The individuals who invest
their personal capital directly in start ups, take
high risk and offered new venture creation are
called angel investors. They also called
Private investors.
They are the people with high wealth and
incomes, educated and have successes as
entrepreneurs.
They normally invest small amount in the
business with a high growth potentiality. They
also found to organize in group and focus the
businesses in local areas.

They investigate the venture carefully before

investing. They are invisible wealthy investors.
They invest in equity type investment of high
risk.
2) Venture Capitalists: It is the money that is
invested by venture capital firms in start-up and
small business with a high growth potentiality.

It is different to angle investors as the venture

capitalists invest in the later part of the business
whereas angles invest in start up.

Venture capital firms collect money from high net

worth individuals, pension plan, university
endowments, foreign investors and other sources.
 Types of Financing
Types of Financing

Equity Financing Debt Financing

1) Equity Financing: It is an important
component of capital structure of a business.
It is obtaining funds for the business in exchange
of ownership.
It can also be obtained by the owner or his/her
relatives, friends and sales or shares. The
angel investors and venture capitalists may
also involve in equity financing.
The equity investors get return on their
investment in the form of dividend and by
selling their stock or shares.
The sources of equity financing are given below:
a) Personal Funds: They are personal resources
or saving of the entrepreneur invested in
venture. This ensure control of venture. It
provides credibility to the venture.

b) Relatives and Friends: The relatives, family

members and friend might be interested to
invest in the venture. This type of
contribution often comes in the form of loans
or investment.
c) Sales of Shares: Public limited companies can
offer shares in the market to raise long term
capital.
The share can be two types- ordinary share and
preference share. Ordinary shareholders have
voting rights and preference shareholders have
priority in dividends.
d) Angel Investors: They are individuals who
invest directly their own wealth in the
ventures. They investigate the venture
carefully before investing.
e) Venture Capitalists:
It is the invested money by venture capital firms
and bankers to start of small business with a
high growth potentiality.

They generally acquire shares or provide loans

with share options. They invest for five or
more years.
2) Debt Financing: It is another important
source of generating fund for a business.
It is borrowed capital . It comes from the lender.
It involves getting loan or issuing debenture or
bond.
It is also part of the capital structure of venture.
The sources of debt financing are given below:
a) Banks or Financial Institutions:
Banks are main sources of debt financing.
Specially commercial banks or different
financial institutions are major suppliers of
short term loan to ventures. Banks provide
two types of funds- overdraft and loans.
Overdraft means drawing more than what is
present in bank account. They are short
duration of time. Bank loans are long term
source of finance.
b) Debentures: the ventures are issued
debentures and bonds for financing. They
carry fixed rate of interest. They are form of
long term loan obtained by a public limited
company for a large sum and paid back over
several years.

c) Micro Credit: It is offered to small

entrepreneurs. It involves relatively small
amount. The loan is provided in group
guarantee basis. It is normally offered to
deprived rural people.
• D) Private Sources: Many entrepreneurs
begin their business by borrowing money from
friends and relatives.
• Such lenders provide flexible terms of
repayment than banks or other lenders.

• They are also comfortable to invest in start-ups

as well.
 Sources of Short Term Loans for Ventures
Short term loan is that type of finance which
becomes matures within one year.

It is needed to meet the day to day business

activities such as purchase of raw materials,
supply of goods and services, payment of salaries
and to make other regular basis expenses.

The quantity of short term fund required depends

on the nature, size of the business, cost and time
of production, terms of sales and purchase etc.
• The main sources of short term loans for business
ventures are as follows:
1) Bank overdraft: A bank overdraft is the facility
extended by a bank to companies to withdraw
funds from their account in excess of the
balance.

The bank provide this facility against a certain fee

and on the basis of collateral.

It allows the companies to withdraw money from

the account even if there is no balance.
2) Trade Credit: It is also known as accounts
payable. If the supplier allows a small business
to delay payment on the product or services it
purchases termed as trade credit.

3) Accrual Accounts: They are the expenses

which have been incurred but not yet paid. The
most important items of accruals are wages
and salaries, interest and taxes. They arise
automatically from the day to day operation of
the firm.
4) Specialized Agencies: They are agencies of
government for promoting and assisting
entrepreneurs. They generally provide loan at
subsidized rate of interest.
Nepal agricultural development bank and rural
development Banks provide loans to small
businesses.
Some non government organizations also
provide loans for income generating small
businesses.
5) Advance from customer: Advance from
customers refer to money collected by a
company prior to providing a product or
services. A company can fulfill its short term
financial requirements through this as well.
6) Discounting Bills of Exchange: A company
can also fulfill its short term finance through
discounting the bill. The company may sell its
bill to a bank at a certain rate of discount. After
getting the bill, the bank will pay cash to the
company equal to the face value less interest
discount at an agreed rate. This process is
called discounting bills of exchange.
7) Factoring: Factoring is a transaction in which
a business sells its accounts receivable to a
third party known as a factor.

A factor is a finance company or bank that buys

receivables from business for a fee and then
collects the payments directly from the
customers.
It is also called accounts receivable financing.
8) Public Deposits: Public deposits are the
unsecured deposits invited by companies from
the public for working capital needs.
A company wishing to invite public deposits
makes an advertisement in the newspaper. The
public can fill up the prescribed form and
deposit their money with the company.
The rate of interest on public deposits mainly
depends on the period of deposit.
 Chapter- 8
Institutional Support to
Entrepreneurship Development
8.1. Concept of Institutional Support:
The institutional support refers to the support
provided to the entrepreneurs by different
institutions.
The institutions can be government, semi-
government, partnership, cooperatives and
private organizations.
They facilitate entrepreneurship development
and growth by providing various resources and
facilities.
We know that different types of resources and
facilities are required in order to establish
business ventures such as finance,
infrastructure, transport, communication,
consultancy service, marketing service, easy
availability of raw materials, training and
development etc.
The organizations unable to make such
resources. So, in this situation, the ventures
need institutional supports from different
sectors .
 8.2. Need for Institutional Support
Institutional supports are essential and needed to
the business ventures. Particularly, small
entrepreneurs need uppermost institutional
support for the development of
entrepreneurship.

It motivates small entrepreneurship for all over

development. The following are the reasons
behind institutional support to
entrepreneurship development.
1) Easy access to Capital
2) Development of competency
3) Development of Infrastructure
4) Supply of Raw Material
5) Access to Market
6) Government Policies
7) Information Support
8) Create Awareness
 8.3. Financial Support Agencies
The agencies and institutions which are
providing credit or loan facilities to the
entrepreneurs are called financial support
agencies.

There are many governmental and non-

governmental agencies that assist to financial
support for entrepreneurship development.

Some major agencies are explained as bellow:

1) Rural Development Bank:
Nepal Rural Development Bank Limited was
existence in 15 Aug. 2014 (30 Shrawan
2071).

This bank was established after the successful

merge of five rural development banks which
were working in the five development region
as a public limited company.

This is regulated under Bank and Financial

Institution act 2063
It is a micro finance bank in national level and
provides micro finance service to the rural
people.

Its target group is rural women. It distributed

loan to the group of women without collateral.

Currently it has 183 branches in 52 districts of

Nepal.
Vision: The main vision of Nepal Rural
Development Bank is to support the socio
economic status of the rural poor people
through micro finance services and
participatory self development of the Nepal

Mission- Its mission is to create income and

generate self employment and to improve the
socio-economic environment through micro
credit of the rural poor people.
Objectives:
i) To provide micro credit to the rural people
for agriculture, industry and service business.
ii) To provide financial services to mobilize skill
and resources available in the rural area.
iii) To encourage habit of saving.
iv) To provide service of financial intermediary
through institutional investment.
v) To provide loan deprived women for their
income and self employment.
2) Micro finance institutions:
The history of microfinance in Nepal is
relatively new. The Nepali government's
attempt to promote microfinance services dates
back to 1975.
It was recognized as an official poverty
alleviation tool only in the country’s Sixth Plan
(1980/81-1984/85).
The sector has gained momentum after the
restoration of democracy in 1991.
Micro finance is often seen as an effective
strategy for extending financial services to the
poor and disadvantaged groups not reached by
the formal financial sector.
There are a number of micro finance institutions
that provide financial service to the poor group
of people. They are
1) Micro Finance Development Banks
(Classified under category D by the NRB)
2) Rural Development Bank
3) Saving and Credit Cooperatives
4) Financial Intermediary NGOs
(Licensed by the NRB)
Functions of Micro Finance Institutions:
1) Supply micro-credit without collateral or security.
2) Obtaining credit or loan from any licensed
institutions or foreign organizations.
3) Evaluating the schemes of micro-credits
4) Engaging in micro-enterprises
5) Providing technical assistance and training
6) Monitoring the micro credit utilization
7) Accepting deposit with or without interest and
refund such deposit.
8) Exchanging with Nepal Rastra Bank
9) Performing such other functions as may be
prescribed of Nepal Rastra Bank.
2) Commercial Bank-
A commercial banks is that financial institution,
which is established to accept deposits and
grant loan to the industries, individual and
traders with a view to earn profit.
It provides various financial service with
collateral. Nepal Bank Limited is first
commercial bank in Nepal which was
established in 30 Kartik 1994 B.S. At present
28 commercial bank in Nepal.
Functions of Commercial Bank
A) Primary Functions:
1) Acceptance of deposit 2) Saving Account
3) Current Account 4) Fixed Account
5) Creation of Credit 6) Financing foreign trade
7) Remittance of funds
B) Secondary Functions:
1) Agency Service 2) General Utility Service
Objectives of Commercial Bank
1) To mobilize savings through current, saving and
fixed deposit a/c
2) To grant loans and advances.
3) To provide treasury services.
4) To Facilitate cross border payment services.
5) To provide custody services.
6) To provide wealth management services and sales
of investment and insurance products and
financial planning services.
7) To provide hire purchase and leasing facilities.
8) To provide any other business that central banks
with the approval of Ministry of finance,
prescribe from time to time.
3) Micro enterprise development projects and
programs :
Micro-Enterprise Development project and
Programme is non-profit organization of Nepal
to translate the broader vision of the
government's Ninth Five Year Plan, which is to
try and address poverty through the
development of micro-enterprises among low-
income families.
The Government of Nepal (GoN) and the UNDP
started implementing Micro Enterprise
Development project and Program in 1998.

Some of the Micro enterprise development

projects and programes in Nepal are mentioned
as below:
i) Industrial Enterprise Development
Institute (IEDI):

IEDI is a national resource organization

committee to entrepreneurship
development through training,
research, consultancy and enterprise
education.
ii) Micro Enterprise Development Programme
(MEDEP):
it has evolved as a model of entrepreneurship
development with potentials of exciting
thousands of people out of poverty. Its Target
group the rural poor, women and
disadvantaged people.
iii) Small Farmer's Development Programme
(SFED):
This programe was launched in 1975 by
Agricultural Development Bank with the
assistance of Asian Development Bank.
Its main purpose is to organize small farmers into
group to provide credit on a group guarantee
basis.
Nepal government policy is to convert SFDP groups
into cooperatives.
GTZ of Germany is providing technical asistance to
move SFDP groups into small Farmers'
Cooperative Limited .
iv) Micro Credit Project for Women (MCPW):
This project was initiated by the Ministry of
Local Development in 1994with donor
assistance.
It uses NGOs for service delivery to poor
women.
The target clients are poor women in rural and
urban areas.
It financed both agricultural and non-agricultural
activities .
Logistic support agencies:
Major logistic support agencies are explained as
following:
A) Government Agencies: The government of
Nepal provides a number of special facilities
and incentives through its various agencies.
They are given below:
1) Ministry of Industry: The ministry of
industry is the key institute for development
of industrial planning and policy making as
well as their implementation.
It conducts a number of activities and progrmes
for the growth and development of industrial
sector in Nepal.
Micro Enterprise Development Programme is
one of them.
It focuses on the development of small and
medium scale enterprises for the economic
development of the nation.
2) Department of Industry: It is one of the
department under ministry of industry.

It was incorporated to implement the policy,

rules and regulations of the government of
Nepal to enhance the Nepalese economy
through industrialization.

Its main activities are to assist in industrial and

foreign investment policies, grant permission
to industries and register the middle and large
industries with capital above 30 million.
3) Department of Cottage and Small
Industries:
This is a department under the ministry of
industry.
It is concerned with formulation and
implementation of policies for the
development of cottage and small industries in
Nepal.
It has been organizing a number of skill
development programs for entrepreneurship
development.
Some of them are hosiery, sewing, furniture,
wood craft, textile, handicraft etc.

It also performs some administrative functions

such as registration, renewal and offering
facilities to cottage and small industries.
4) Office of the Company Registrar:
This agency provides services of company
registration, monitoring and necessary advice
from a place.
It was established in 2049 to carry out all the
activities related to company administration.
It conducts its activities according to Nepal
Company Act 2063.
5) Nepal Tourism Board (NTB):
It is an autonomous institution devoted for the
development of tourism. Lacking of
promotion, the tourism market is decreasing
both in the domestic and international area.

Thus, this board is concerned with regulation and

promotion of tourism industry in Nepal.
B) Specialized and consultancy agencies:
Specialized agencies are concerned with
promotional support to entrepreneurship. They
also established by government to make
available specialized services to the industries
and business companies.
Major specialized and consultancy support
agencies are given bellow:
1) Industrial Promotion Board (IPB):
The IPB is being formed under the chairmanship
of Minister for industry. This board was
incorporated industrial enterprise act 2049.
Its main objectives are
i) TO increase the pace of industrialization in
the country.
ii) To formulate the policy regarding industry
and investment
iii) To coordinate between central and
Implementing level.
Functions, duties and power
1) To render (provide) necessary cooperation in
formulating and implementing policies, laws
and regulations for industrialization.
2) To give guidelines in attaining the objectives.
3) To maintain coordination between the policy
and implementation level of the industrial
policy.
4) To make recommendation to government of
Nepal for the inclusion of any industry in the
classification of industries.
2) One window Service Committee:
It is a committee under the Department of
Industry. It makes necessary decisions for
making available the facilities and concessions
to any industry under industrial Enterprises Act
1992 from a single place.
It also perform such functions as may be
delegated by the Board under its functions,
duties and power and recommends
3) Nepal Industrial Development Corporation
(NIDC):
Nepal government was established NIDC in July
1959 to introducing many innovative concepts
and development activities.
The objective of NIDC is to mobilize financial
resources for economic development of the
country by way of providing financial,
managerial and technical assistance for the
establishment, modernization, expansion of the
private and public enterprises.
4) Industrial Enterprise Development
Institute:
IEDI was established in 1996 as a Industrial
Enterprise Development Centre. It is
committed to entrepreneurship development
through training, research, consultancy and
enterprise educaiton.
Its main aims is to provide service to a maximum
number of organizations involved in enterprise
development.
5) Investment Board Nepal (IBN):
It was established in 2011 by the investment
Board Nepal Act. It is formulated to promote
economic development in Nepal by creating an
investment friendly environment.
It also managing public private partnership
(PPPs), cooperatives and domestic and foreign
private investment.
6) Nepal Tea and Coffee Development Board
It was established in 1993 for betterment and
enhancement of tea and coffee sectors. Its main
objectives are
i) Assist to formulate and implement the tea and
coffee development policy.
ii) Identify problems and ways to solve them for the
development of tea and coffee sector.
iii) Mange import of tools and equipment for the tea
and coffee production process.
iv) Conduct research and studies for the
development of tea and coffee sectors.
v) Establish coordination and networking with all
the stakeholders of tea and coffee sectors.
vi) Support tea and coffee industries.
7) Cottage and Small Industry Development
Board (CSIDB):
It was established in 1993. The main objectives
of CSIDB are to provide support services for
promotion, expansion and strengthening of
cottage and small industries.
The main target groups are potential
entrepreneurs, rural poor unemployed youth,
women, Dalits, backward and disadvantages
groups.
8) Export Council of Nepal (ECN):
It was established in 1996 by a group of business
entrepreneurs involved in export business.
It is a non profit association for the promotion of
export business.
Its contribution is to development of national
economy, foreign currency earning, employment
and increase in productivity.
It organizes varieties workshop, training,
interaction, discussion, awareness program etc.
which are related to export and export promotion.
9) Industrial District Management Limited
(IDML):
It was founded as a separate corporate entity in
July 1988 with the overall management and
supervision of all industrial districts .
It is wholly an undertaking of government of
Nepal incorporated under the company act in
the form of a public limited company.
Its shareholders are Ministry of Industry
Commerce and Supplies, Auditor General
Office and Nepal Industrial Development
Corporation
10) Trade and Export Promotion Centre:
It was established in Nov. 2006 with the objective of
promoting foreign trade in general and export trade in
particular of the country. Its main functions are:
i) Advice the Government of Nepal in formulating
policies for the development of trade and export
ii) Support in achieving the goal of poverty alleviation
through the development of rural economy.
iii) Lunch programes by establishing coordination among
different agencies for increasing the production of
exportable products.
iv) Study and identify the problems of foreign trade and
advice the government with appropriate alternate.
v) Organize buyers/seller meet and conduct training
seminar and workshop.
Industrial estates:
Industrial estates are specific areas zoned for
industrial activity in which infrastructure such
as roads, power and other utility services are
provided to facilitate the growth of industries
and to minimize impacts on the environment.
Nepal has established industrial estates to
promote and support entrepreneurship. Such
industries are making available various
facilities such as land, building, water, post
office, health center, warehouse, electricity,
telephone, bank, canteen, security etc to the
Nepalese entrepreneurs.
The history of Industrial estate in Nepal had
started with the establishment of Balaju
Industrial Estate for the first time in 2016 B.S.

After that ten industrial estates were established

on after another in Hetauda, Patan, Nepalgunj,
Dharan, Pokhara, Butwal, Bhaktapur,
Biratnagar, Dhankuta and Rajbiraj.

In addition, 65 industries estates are under

construction in Nepal.