Entrepreneurship and Small Business Enterprises

Unit-2:
New Venture Creation
Introduction:
New Venture Creation is a cross-disciplinary entrepreneurship course open
to 9th semester students. The elective equips enrolled students with an
entrepreneurial skillset, opportunistic networking and fosters innovation and
new business start-ups.

Entrepreneurial Mobility

Movement and mobility is an integral part of human life. Entrepreneurs,

being human beings, do also move from one location to another and also
from one occupation to another. This movement of entrepreneurs from one
location to another and from one occupation to another occupation may be
termed as entrepreneurial mobility.

It means movement of entrepreneurs from one place to another and

likewise from one profession to another, which affect the swiftness and
pattern of entrepreneurship development.

There are some important factor influences the entrepreneurial mobility in a

given situation and time:

Education: An entrepreneur must be an educated person. An educated

entrepreneur tends to be more mobile than an uneducated one.

Training and Experience: An entrepreneur must be properly trained and

must have some past experience in business or industry. Technical
knowledge and experience influence entrepreneurial mobility.

Availability of facilities: The entrepreneurs may move from the areas with
no or fewer facilities to the areas with more and better facilities.
Political Conditions: The entrepreneurial mobility is also influenced by
political factors, such as tax policy, political stability, trade restrictions etc.

Models for opportunity evaluation

The Opportunity Evaluation process can be excellent in helping you focus

on key issues in developing your invention and will challenge your thinking
of how to develop it further. There are no right or wrong answers in an
opportunity evaluation – only informed evidence that an invention will
succeed or fail.

To evaluate opportunities, ask the following questions:

*What is the need you fill or problem you solve? (Value Proposition)
*Who are you selling to? (Target Market)
*How will you make money? (Revenue Model)
*How will you differentiate your company from what is already out there?
(Unique selling proposition)
*What are the barriers to entry?
*How many competitors do you have and of what quality are they?
(Competitive Analysis)
*How big is your market in dollars? (Market Size)
*How fast is the market growing or shrinking? (Market Growth)
*What percentage of the market do you believe you could gain? (Market
Share)
*What type of company will this be? (Lifestyle or High Potential, Sole
Proprietorship or Corporation)
*How much will it cost to get started? (Start-up Costs)
*Do you plan to use debt capital or raise investment? If so, how much and
what type? (Investment needs)
*Do you plan to sell your company or go public (list the company on the
stock markets) one day? (Exit Strategy)
*If you take on investment, how much money do you think your investors
will get back in return? (Return on Investment)
The RAMP Model

Let’s take the above questions and term them into a model that you can
use to evaluate your business ideas. This is called the RAMP model.

Let’s start with the first letter, R, which stands for Return. Return really is
return on investment.

Discuss Exit Strategy (acquisition or IPO).

Is it profitable? Will your revenues be higher than your expenses?
Time to break even. How long will it take before you have positive cash
flow? How long until the company begins to have an aggregate net
income?
Investment Needed. How much money will it take to start up this venture?
Now let’s look at A. A stands for advantages.

Look at the cost structure (suppliers, what each element will cost to
source or manufacture).
Barriers to entry (large competitors, regulations, patents, large capital
requirements).
Intellectual Property. Do you have a proprietary advantage such as a
patents or exclusive licenses on what you will be selling?
Distribution Channel. How will you be selling your product? Will you sell it
direct to the consumer via the Internet, sell it to wholesales, sell it to
businesses, or sell it to retail stores? If you can develop a unique
distribution channel this can surely be an advantage.
Now let’s look at M. M stands for Market.

The Need. Is there big need for this product or service? Try to avoid ideas
that sound cool but there is no real need for. Make sure your product or
service fills a need or solves a problem.
Target market. Who are you selling to? Businesses? Consumers? What
demographics? What is the size of the market?
Pricing. What will you charge, what will be the price, will there be a high
enough markup?
Finally let’s look at P. P stands for potential.

Risk vs. Reward. How risky is the opportunity? Will there be a high reward
for the founders and investors if the company succeeds?
The Team. Is the team right for the business? Do the members of the team
have knowledge in this area?
Timing. Is the market ready for your product? You may have a great idea
for flying cars, but if consumers are not ready for your product you may not
be able to turn your idea into a successful business.
Goal Fit. Does the business concept fit the goals of the team to create a
high potential or lifestyle business?
By using the RAMP model you should be able to do a thorough job
analyzing your business ideas and opportunities presented to you.

Business Plan

Purpose:

☰
Writing center
Writing Center Business WritingBusiness Plan

Business Plan
What is a Business Plan?
A business plan is a carefully worded statement of business goals.
Whether written on behalf of an established business or a startup, it
includes reasons the goals are attainable, along with plans for achieving
them. Most business plans include background information about the
individuals, organizations, or teams who will be responsible for making
these goals reality.

The Purpose of a Business Plan

A business plan is essentially a decision-making tool. Its content and
format is determined both by the business’s goals and by the intended
audience. Such a plan for a nonprofit group, for example, might discuss the
way the organization’s mission fits with stated goals. It is crafted in order to
ask for a loan to start a new company or expand an existing one, on the
other hand, focuses primarily on the business’s ability to repay the loan on
or ahead of schedule.

These are just a couple of very different examples of the purpose of a

business plan. What both have in common is that banks, venture
capitalists, and others who have an interest in financing business
endeavors are concerned about the potential for default that can happen
when a poorly planned business fails.

What to Include in a Business Plan

The contents of a business plan vary. As you read examples of what to
include in a it, you’ll notice recommendations for including at least some of
the following information:
The following are the standard content of business plan

*Cover page
*Table of contents
*Executive summary
*Mission statement
*Business description
*Analysis of current business environment
*SWOT analysis / matrix detailing strengths, weaknesses, opportunities,
and threats
*Industry Background
*Analysis of current competition
*Market analysis
*Marketing plan
*Operations plan
*Management summary
*Financial plan
*Legal concerns and financial liabilities that could have a negative effect on
potential investors
*Any additional information including milestones and attachments
More important than the question of “What is a business plan?” is the
question about what makes a good business plan. The most successful
plans help make businesses understandable, credible, and attractive to
those who are unfamiliar with that particular business niche. Writing a great
plan doesn’t necessarily guarantee success, but it does reduce the
potential for failure in the long run.

Preparation of business plan:

As always, when preparing your plan, keep your audience in mind.

Businesslike is almost always best as a fallback decision on how to make a
good first impression. Also ask in advance if the recipient wants a hard
copy or an e-copy of your plan. In the digital age, we want to give people
what they want.

Once you’ve prepared your plan for presentation, you need to put it in front
of the right people. There are six steps for doing so:

1. Obtain leads and referrals. Find names, addresses and phone numbers
of the type of investors you wish to target. Ask people you know for
referrals. Network as much as possible.

2. Research your target. Learn as much as possible about how much

money people have to invest, industries they’re interested in and other
requirements. Search venture capital directories, Who’s Who, news
articles, websites and similar sources.

3. Make your pitch. First, email or mail an introductory letter to your target
letting them know you have a plan you'd like to send. Sending unsolicited,
unanticipated business plans with a mere cover letter won't typically get
your plan read. Not only are most people too busy to read whatever comes
across their desk or lands in their inboxes, they also don't want to be sued
someday for “stealing your ideas,” even if they never read your plan.

A letter of introduction is your way of asking them if they'd be interested in

reading your business plan. Within the letter, explain why you've selected
them and what you have to offer, in a brief compelling manner.

You should also explain generally what you’re looking for—an investor, a
loan, a long-term supplier relationship or something else. Often this will be
obvious from the circumstances. If you’ve received a personal referral,
you’ll want to include who gave you the referral very early on, probably in
the first sentence following the salutation. Never underestimate the power
of a personal referral from a friend, colleague or acquaintance. It may not
land you an investor, but it gets your foot in the door. When emailing the
individual, you might put the referral in the subject line.

In a world of “who you know” and the power of networking, many of the
people you'll be sending your plan to will be referred by others. In some
cases, you may even have some personal connection to the person other
than a referral. For instance, perhaps you once met this individual while
networking or worked together at a company or organization.

Finally, in the letter of introduction, you may want to detail the terms under
which you're presenting your plan. For instance, you may say that you're
not submitting the plan to any other investor. Or you may explicitly point out
that you're currently seeking financing from a number of sources, including
this one. If there's a deadline for responding to your plan, if you wish to
stress that the plan is confidential and must be returned to you, or if you'd
like to ask the recipient to pass it on to someone else who may be
interested, this is the place to do so. Somewhere between sending the
introductory letter and sending the plan—if the person agrees to see it—is
where you can email a non-disclosure agreement if you plan to include
one.
If you don't hear from them within a week or so, send a follow-up email, and
try once more about two weeks later (in case they were out of town or
swamped with other work). If this doesn’t produce a meeting, look
elsewhere.

4. Try to meet people in person. Despite the fact that we're living in a text,
email and conference-call age, you should still try to meet your recipient
face to face, especially if you're seeking any type of funding. It’s very hard
to get such a commitment through a few texts or by email. Skype may
work, but meeting in person for a major financial commitment is best. If
they want to keep all communication electronic, then follow their lead.

5. Defuse objections. Although you may think you’ve answered everything

in your plan, you haven’t. Prepare a list of possible objections—potential
competitors, hard-to-buttress assumptions and the like—that your investor
may raise. Then prepare cogent answers. Have friends, co-workers and
your team play devil’s advocate and provide every possible objection or ask
tough question, then formulate your answers.

6. Get a commitment. You won’t get an investment unless you ask for it.
When all objections have been answered, be ready to offer one last
concession—“If I give your representative a board seat, can we do this
today?”—and go for the close.

Procedure for setting up enterprise

So you may be in for a real challenge when you decide to take the plunge,
ditch your day job, and become a business owner. The stage is often set in
the beginning, so making sure you follow all of the necessary steps when
starting your business can set the foundation for success.

Here are 10 steps that are required to start a business successfully. Take
one step at a time, and you'll be on your way to successful small business
ownership.
Step 1: Do Your Research
Most likely you have already identified a business idea, so now it's time to
balance it with a little reality. Does your idea have the potential to succeed?
You will need to run your business idea through a validation process before
you go any further.

In order for a small business to be successful, it must solve a problem, fulfill

a need or offer something the market wants.

There are a number of ways you can identify this need, including research,
focus groups, and even trial and error. As you explore the market, some of
the questions you should answer include:

Is there a need for your anticipated products/services?

Who needs it?
Are there other companies offering similar products/services now?
What is the competition like?
How will your business fit into the market?
Don't forget to ask yourself some questions, too, about starting a business
before you take the plunge.

Step 2: Make a Plan

You need a plan in order to make your business idea a reality. A business
plan is a blueprint that will guide your business from the start-up phase
through establishment and eventually business growth, and it is a must-
have for all new businesses.
The good news is that there are different types of business plans for
different types of businesses.

If you intend to seek financial support from an investor or financial

institution, a traditional business plan is a must. This type of business plan
is generally long and thorough and has a common set of sections that
investors and banks look for when they are validating your idea.
If you don't anticipate seeking financial support, a simple one-page
business plan can give you clarity about what you hope to achieve and how
you plan to do it. In fact, you can even create a working business plan on
the back of a napkin, and improve it over time. Some kind of plan in writing
is always better than nothing.

Step 3: Plan Your Finances

Starting a small business doesn't have to require a lot of money, but it will
involve some initial investment as well as the ability to cover ongoing
expenses before you are turning a profit. Put together a spreadsheet that
estimates the one-time startup costs for your business (licenses and
permits, equipment, legal fees, insurance, branding, market research,
inventory, trademarking, grand opening events, property leases, etc.), as
well as what you anticipate you will need to keep your business running for
at least 12 months (rent, utilities, marketing and advertising, production,
supplies, travel expenses, employee salaries, your own salary, etc.).

Those numbers combined is the initial investment you will need.

Now that you have a rough number in mind, there are a number of ways
you can fund your small business, including:

Financing
Small business loans
Small business grants
Angel investors
Crowdfunding
You can also attempt to get your business off the ground by bootstrapping,
using as little capital as necessary to start your business. You may find that
a combination of the paths listed above work best. The goal here, though,
is to work through the options and create a plan for setting up the capital
you need to get your business off the ground.

Step 4: Choose a Business Structure

Your small business can be a sole proprietorship, a partnership, a limited
liability company (LLC) or a corporation. The business entity you choose
will impact many factors from your business name, to your liability, to how
you file your taxes.

You may choose an initial business structure, and then reevaluate and
change your structure as your business grows and needs change.

Depending on the complexity of your business, it may be worth investing in

a consultation from an attorney or CPA to ensure you are making the right
structure choice for your business.

Step 5: Pick and Register Your Business Name

Your business name plays a role in almost every aspect of your business,
so you want it to be a good one. Make sure you think through all of the
potential implications as you explore your options and choose your
business name.

Once you have chosen a name for your business, you will need to check if
it's trademarked or currently in use. Then, you will need to register it. A sole
proprietor must register their business name with either their state or
county clerk. Corporations, LLCs, or limited partnerships typically register
their business name when the formation paperwork is filed.

Don't forget to register your domain name once you have selected your
business name. Try these options if your ideal domain name is taken.

Step 6: Get Licenses and Permits

Paperwork is a part of the process when you start your own business.

There are a variety of small business licenses and permits that may apply
to your situation, depending on the type of business you are starting and
where you are located. You will need to research what licenses and permits
apply to your business during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place.
One of the most important systems for a small business is an accounting
system.

Your accounting system is necessary in order to create and manage your

budget, set your rates and prices, conduct business with others, and file
your taxes. You can set up your accounting system yourself, or hire an
accountant to take away some of the guesswork. If you decide to get
started on your own, make sure you consider these questions that are vital
when choosing accounting software.

Step 8: Set Up Your Business Location

Setting up your place of business is important for the operation of your
business, whether you will have a home office, a shared or private office
space, or a retail location.

You will need to think about your location, equipment, and overall setup,
and make sure your business location works for the type of business you
will be doing. You will also need to consider if it makes more sense to buy
or lease your commercial space.

Step 9: Get Your Team Ready

If you will be hiring employees, now is the time to start the process. Make
sure you take the time to outline the positions you need to fill, and the job
responsibilities that are part of each position. The Small Business
Administration has an excellent guide to hiring your first employee that is
useful for new small business owners.

If you are not hiring employees, but instead outsourcing work to

independent contractors, now is the time to work with an attorney to get
your independent contractor agreement in place and start your search.

Lastly, if you are a true solopreneur hitting the small business road alone,
you may not need employees or contractors, but you will still need your
own support team. This team can be comprised of a mentor, small
business coach, or even your family, and serves as your go-to resource for
advice, motivation and reassurance when the road gets bumpy.

Step 10: Promote Your Small Business

Once your business is up and running, you need to start attracting clients
and customers. You'll want to start with the basics by writing a unique
selling proposition (USP) and creating a marketing plan. Then, explore as
many small business marketing ideas as possible so you can decide how
to promote your business most effectively.

Once you have completed these business start-up activities, you will have
all of the most important bases covered. Keep in mind that success doesn't
happen overnight. But use the plan you've created to consistently work on
your business, and you will increase your chances of success.

Central level start up

The Indian government has introduced over 50+ startup schemes in past
few years. Each startup scheme is missioned towards boosting the Indian
startup ecosystem.

Consider this. Close to 4,400 technology startups exist in India and the
number is expected to reach over 12,000 by 2020. India is also at third
place behind US and Britain in terms of the number of startups.
Furthermore, in line with its global counterparts, India has its own billion
dollar club to boast about. This includes startups like Flipkart, Snapdeal,
Ola, InMobi, Hike, MuSigma, Paytm, Zomato, and Quikr. With the next
$100 Mn funding raise, fintech startup MobiKwik too looks to join the
unicorn club.

Entrepreneurship is no longer being condemned as jugaad.

Nirmala Sitharaman, MoS, Commerce and Industry made this statement
during the launch of the Startup India Action Plan on January 16, 2016, by
PM Narendra Modi. In the past 18 months, the Indian Government has
come up with a wide array of startup schemes and startup funds to
encourage launch and growth of startups in the country. However, of the
many initiatives, only a few such as Fund of Funds, Tax exemption, gain
hype across the startup community.

indian government-startup shemes-startups

These startup schemes have been introduced over a period of time and
many of these were introduced before the launch of Startup India plan. But
most of the startups are either not aware of these different schemes or do
not have a clear idea on how to avail them.

Keeping this in mind, we at Inc42 have tried to curate an exhaustive list

with the details of these 50+ startup schemes floated by the Indian
government to date to support the Indian startups, SMEs, MSMEs,
Businesses, Research Institutes, Incubators, Accelerators, etc. Indian.
Sectors that these government schemes for startups operate under range
from tech-specific verticals to agritech, greentech, science and academic
innovation and more.

State level T- Hub

T-Hub, a government of Telangana initiative, is India's largest incubator for

Startups
T-Hub is a unique public/private partnership between the government of
Telangana, 3 of India’s premier academic institutes (IIIT-H, ISB & NALSAR)
and key private sector leaders. It stands at the intersection of the start-up,
academic, corporate, research and government sectors.

Our Vision :

T-Hub is designed for technology-related start-ups, and its mission is to

catalyze the creation of one of the tightest and most vibrant entrepreneur
communities in the world in order to encourage and fuel more start-up
success stories in India. We will do this in the following ways:

> Attract the best start-ups and entrepreneur organizations from across the
world to Hyderabad.

> Work with an extensive network of partners to help entrepreneurs launch

and scale innovative companies.

> Equip innovators and organizations alike with the entrepreneurship skills
required to succeed, using methodologies that transcend traditional
learning.

Other institutional initiatives towards start ups

Lets have look on list of government schemes for entrepreneurship

development in India.
*Startup India Initiative. ...
*ASPIRE. ...
*MUDRA Bank. ...
*Ministry Of Skill Development and Entrepreneurship. ...
*Atal Innovation Mission. ...
*eBiz Portal. ...
*Dairy Processing and Infrastructure Development Fund (DIDF).