ENGINEERING MANAGEMENT & ENTREPRENEURSHIP

MODULE-04

Entrepreneurial competencies
Entrepreneurial competencies are the set of skills, knowledge, and personal characteristics that
contribute to an individual's ability to successfully start, manage, and grow a business. These
competencies are critical for entrepreneurs to navigate the challenges of entrepreneurship,
identify opportunities, and make informed decisions that lead to business success.

Entrepreneurial competencies can be divided into various categories, and they often overlap.
Below is a detailed breakdown of key entrepreneurial competencies:

• Opportunity Competencies

These competencies enable entrepreneurs to recognize and act on business opportunities. They
involve identifying unmet needs in the market and creating innovative solutions.

• Opportunity Recognition: The ability to spot market gaps or emerging trends that can
be turned into profitable business ventures.
• Creativity and Innovation: The capacity to think outside the box, generate new ideas,
and develop innovative products or services that meet customer needs.
• Market Awareness: Understanding the market environment, including customer
behaviour, competition, and industry trends.

2. Conceptual Competencies

These are intellectual skills related to business planning and strategic thinking.

• Vision: The ability to define a clear and compelling future direction for the business.
• Strategic Thinking: The ability to analyze situations, anticipate future trends, and
make strategic decisions that align with long-term goals.
• Business Planning: The capability to develop comprehensive business plans that
outline business models, value propositions, and execution strategies.

3. Organizing Competencies

Organizing competencies refer to an entrepreneur's ability to assemble and manage the

necessary resources to execute the business plan.

• Resource Management: The ability to manage human, financial, and physical

resources efficiently and effectively.
• Time Management: Skill in prioritizing tasks and managing one's time to focus on the
most critical activities.
• Team Building: The ability to build, manage, and lead a team effectively, ensuring
each member is motivated and productive.

4. Managing Competencies

These competencies help entrepreneurs oversee operations and ensure that the business runs
smoothly.

• Leadership: The ability to inspire and motivate others to work toward the achievement
of common goals.
• Decision-Making: The capacity to make informed decisions, often under pressure, that
balance risk and reward.
• Risk Management: Skill in identifying, assessing, and managing risks in the business
environment.

5. Relationship Competencies

Relationship competencies are the skills needed to build and maintain strong networks and
relationships with stakeholders, customers, and partners.

• Networking: The ability to establish and maintain beneficial relationships with key
stakeholders, including investors, suppliers, customers, and mentors.
• Negotiation: The skill to negotiate favorable terms with partners, customers, and
suppliers.
• Communication: Effective communication is essential for conveying ideas,
motivating teams, and establishing strong relationships with clients, investors, and
employees.

6. Financial Competencies

Financial competencies refer to the skills needed to manage the financial aspects of the
business.

• Financial Literacy: Understanding key financial statements (e.g., balance sheet,

income statement, cash flow) and using financial data to make business decisions.
• Budgeting and Cost Control: The ability to create and manage budgets, control costs,
and ensure profitability.
• Funding and Investment: The knowledge to raise capital, manage investments, and
optimize business finances for growth.
7. Personal Competencies

Personal competencies are the intrinsic qualities and traits that define an entrepreneur’s
attitude, behaviour, and approach to challenges.

• Self-Confidence: Believing in one’s ability to succeed, which helps to overcome

challenges and setbacks.
• Resilience: The ability to bounce back from failures and setbacks, maintaining focus
on the long-term vision.
• Adaptability: Being flexible and willing to pivot when things don’t go as planned.
• Passion and Motivation: A deep drive to pursue the entrepreneurial venture and stay
committed despite difficulties.

8. Ethical Competencies

Ethical competencies ensure that an entrepreneur operates their business responsibly and
maintains a good reputation.

• Integrity: The ability to act honestly and ethically in all business dealings.
• Social Responsibility: Awareness of the impact of the business on the community and
environment, and the ability to make decisions that promote sustainability and ethical
practices.

9. Learning Competencies

Entrepreneurs must continuously learn and adapt to new information, market shifts, and
emerging technologies.

• Self-Learning: The ability to learn from experiences, feedback, and mistakes.

• Continuous Improvement: The habit of seeking new knowledge and skills, whether
through formal education or self-directed learning.
• Critical Thinking: The ability to analyse situations from multiple perspectives and
make logical, data-driven decisions.
Why Are Entrepreneurial Competencies Important?

• Success in Business: The right mix of entrepreneurial competencies helps business

owners overcome obstacles, take calculated risks, and seize opportunities in a
competitive environment.
• Growth and Sustainability: Entrepreneurs with strong competencies are more likely
to scale their businesses and make them sustainable over time.
• Innovation and Adaptation: The rapid pace of change in business environments
requires entrepreneurs to adapt quickly and innovate to stay competitive.
• Competitive Advantage: Possessing these competencies enables entrepreneurs to
make decisions that differentiate their business from competitors and provide value to
customers.

Employees with entrepreneurial Employees without entrepreneurial

competencies employees competencies
The ultimate need is freedom and creativity; The ultimate need becomes job security;
hence, these employees take more risks. hence, these employees take very few
risks.
These employees don’t worry about time-based Time-based compensation is taken
compensation and are very invested in their seriously and employees work only for
jobs. what they feel their salary is worth.
Such employees are self-motivated and driven Most employees function better when they
and don’t require a lot of monitoring. are told what to do and are monitored.
Employees end up owning decisions and Employees like handing over
responsibilities. They enjoy accountability. responsibilities to others, doing only what
is asked of them.
Employees have a sense of ownership to the Employees consider the organization as
organization. just a workplace to become financially
stable.
Capacity Building for Entrepreneurs

Capacity building in entrepreneurship development is crucial for nurturing and enhancing the
entrepreneurial skills and knowledge through structured training and institution-building
programs. It plays a vital role in preparing individuals to successfully navigate the complexities
of starting and managing their own businesses. Below are the key pillars and elements
necessary for successful capacity building in entrepreneurship.

Capacity Building Pillars of Entrepreneurship

Operational Capacity Building

• Insight into Industry Dynamics: Gaining a comprehensive understanding of business

operations within an industry is crucial. This involves acquiring hands-on experience
across various business functions to understand what drives success.
• Practical Experience: Working in different roles within businesses provides invaluable
insights into effective leadership, organization, and planning for operations.

Management Capacity Building

• Management Experience: Building upon operational experience, gaining management

experience is essential for understanding how to effectively manage resources, operations,
and people.
• Tools for Business Management: The experience gained from managing at different
levels within a business equips future entrepreneurs with the necessary skills for running
their own businesses.

Financial Management Capacity Building

• Financial Acumen: Entrepreneurs need to be adept at managing finances, which includes

building and understanding financial statements and analyzing financial trends and
indicators.
• Understanding Financial Health: Learning to interpret financial reports is critical for
assessing a business's financial situation, which is key for making informed decisions.

Personal Capacity Building

• Entrepreneurial Traits: Certain personal traits and behaviors, such as dedication,

perseverance, ambition, and honesty, are fundamental for entrepreneurial success. These
can be developed over time.
Model for Capacity Building

Benefits of Capacity Building

• Minimizes Dependency: Capacity building reduces reliance on external experts,

encouraging local solutions and actions for community issues.
• Fosters Ownership and Empowerment: It promotes a sense of control over one's future
development, enhancing the ability to address community issues independently.
• Enhances Skills and Knowledge: Capacity building strengthens the confidence, skills,
knowledge, and resources necessary for tackling various projects.
• Cultural and Contextual Sensitivity: Approaches tailored to the specific needs and
culture of a community often yield more appropriate and sustainable solutions.
• Reciprocal Growth: It acknowledges that both the entrepreneur and the community
benefit and grow through the capacity building process.
What is a Business Opportunity?
A business opportunity is like a golden chance for someone who wants to start their own
business and make money. It's when you notice something missing in the market or
something people really need but can't find easily. For example, maybe people want a new
type of gadget, or there's a service everyone wishes they had. When you see this gap or need,
that's the opportunity part. Now, what you do is come up with a product or service that fits
right into that gap or fulfils that need. It's like solving a problem for people, and when they
pay for your solution, that's how you make a profit. So, a business opportunity is like finding
a key to success by spotting what people want and creating something to give it to them.

Importance of a Business Opportunity

The importance of a business opportunity lies in its potential to bring about substantial
positive changes for entrepreneurs and the broader economy.

1) Revenue Generation: At its core, a business opportunity is a pathway to making money.

Successfully identifying and tapping into opportunities can lead to substantial financial gains.
This not only benefits individual business owners but also contributes to the economic well-
being of the community and the nation as a whole.

2) Innovation: Opportunities act as catalysts for innovation. They bring forth challenges or
needs within the market that demand creative solutions. Entrepreneurs, driven by the desire
to capitalise on these opportunities, are prompted to think outside the box. This process often
results in the development of new products, services, or more efficient business processes,
fostering ongoing innovation within industries.

3) Economic Growth: Successful businesses arising from identified opportunities play a

pivotal role in fostering economic development. They generate job opportunities, employing
individuals within the community. Additionally, these businesses stimulate economic
activity by engaging in transactions with suppliers, customers, and other businesses. This
ripple effect contributes to the overall growth of the economy.

4) Competitive Edge: Recognising and acting on a business opportunity before competitors

is akin to securing a strategic advantage. Being ahead in the game allows entrepreneurs to
establish themselves in the market, build a customer base, and solidify their position. This
competitive edge is crucial for the long-term success and sustainability of a business,
establishing a foothold that is challenging for competitors to overcome.

5) Adaptability: Businesses actively seeking and capitalizing on opportunities are inherently

more adaptable to market changes. By staying attuned to emerging trends, consumer
preferences, and technological advancements, these businesses can adjust their strategies
swiftly. This adaptability is crucial for navigating the dynamic business landscape, ensuring
that the company remains relevant and resilient in the face of changing market conditions.
How to Identify a Business Opportunity?
1. Market Research: Market research is like putting on a detective hat for your business. It
involves digging into market trends, understanding what customers want, and checking out
what your competitors are up to. By analysing the market you can uncover gaps or needs that
haven't been met, laying the groundwork for potential business opportunities.

2. Problem Solving: Successful businesses often start with a problem in need of a solution.
Identifying problems in the market or recognizing areas where things could be better is the
first step. Then, it's about coming up with innovative solutions that make life easier or more
enjoyable for customers. It's like being a detective and an inventor rolled into one – finding
problems and creating solutions.

3. Networking: Networking is your business's social circle. By staying connected to industry

peers, mentors, and experts, you get a sneak peek into what's happening in your field.
Sometimes, opportunities come from these connections – hearing about a gap in the market
or getting advice from someone who's been there before. Networking is like having friends
who share tips and open doors to potential opportunities.

4. SWOT Analysis: SWOT analysis is your business's self-reflection. It stands for strengths,
weaknesses, opportunities, and threats. By evaluating these aspects, you get a clearer picture
of where your business stands and what possibilities lie ahead. It's like having a roadmap that
shows you where you can shine, where you need improvement, and where opportunities
might be hiding.

5. Technology Trends: Keeping an eye on technology trends is like looking into a crystal
ball for business opportunities. Technology is always evolving, and sometimes, new
opportunities emerge as a result. It could be finding ways to use the latest gadgets or
leveraging emerging technologies to solve problems in your industry. It's like riding the wave
of innovation to discover new possibilities for your business.
Entrepreneurial mobility

Entrepreneurial mobility refers to the movement of entrepreneurs and their ventures within or
between different geographic locations, industries, or sectors. It encompasses the ability of
entrepreneurs to adapt, innovate, and seize opportunities by relocating or expanding their
businesses as circumstances change. Several factors can influence entrepreneurial mobility:
1. Market Conditions: Economic factors, such as market size, demand, competition, and
regulatory environment, can significantly impact entrepreneurial mobility. Entrepreneurs may
choose to relocate or expand their businesses to regions or industries with more favorable
market conditions, higher growth potential, or lower barriers to entry.
2. Access to Resources: Availability of resources, including capital, talent, infrastructure, and
support services, can influence entrepreneurial mobility. Entrepreneurs may relocate or expand
their ventures to access resources that are scarce or unavailable in their current location, such
as venture capital, skilled labour, or specialized expertise.
3. Technology and Connectivity: Advances in technology and communication have facilitated
greater entrepreneurial mobility by reducing geographic barriers and enabling remote work,
collaboration, and networking. Entrepreneurs can leverage technology to operate their
businesses from virtually anywhere, allowing them to tap into global markets and
opportunities.
4. Government Policies and Incentives: Government policies, such as tax incentives, grants,
subsidies, and regulatory reforms, can influence entrepreneurial mobility by creating
favourable conditions for entrepreneurship and investment. Entrepreneurs may be attracted to
regions or countries that offer supportive policies and incentives for business growth and
innovation.
5. Quality of Life: Quality of life factors, including cost of living, infrastructure, education,
healthcare, and cultural amenities, can affect entrepreneurial mobility. Entrepreneurs may
choose to relocate their businesses to cities or regions that offer a higher quality of life for
themselves and their employees, contributing to talent attraction and retention.
6. Industry Dynamics: Changes in industry dynamics, such as technological disruptions, shifts
in consumer preferences, or emerging market trends, can drive entrepreneurial mobility.
Entrepreneurs may relocate or pivot their businesses to capitalize on new opportunities or
address evolving challenges within their industries.

7. Networking and Collaboration: Entrepreneurial ecosystems and networks play a crucial role
in facilitating entrepreneurial mobility by providing access to mentors, investors, partners, and
customers. Entrepreneurs may relocate to cities or regions with vibrant entrepreneurial
ecosystems that offer opportunities for networking, collaboration, and knowledge sharing.

8. Risk and Uncertainty: Entrepreneurs’ willingness to take risks and embrace uncertainty can
influence their mobility decisions. Entrepreneurs who are more risk-tolerant and adaptable may
be more likely to relocate or expand their ventures in pursuit of new opportunities, while those
who are risk-averse may prefer to stay in familiar environments.

Entrepreneurial mobility is influenced by a complex interplay of factors, including market

conditions, access to resources, technology, government policies, quality of life, industry
dynamics, networking opportunities, and risk preferences. Entrepreneurs must carefully
evaluate these factors and weigh the potential benefits and challenges of relocating or
expanding their businesses to maximize their chances of success.
MODELS FOR OPPORTUNITY EVALUATION

The RAMP model is a framework designed to evaluate business opportunities by assessing

four key components: Return, Advantages, Market, and Potential.

R - Return

• Profitability: Evaluates whether the business can generate more revenue than its
expenses, leading to profitability.
• Time to Break Even: The time it takes for the business to reach a point where total
revenues equal total expenses, resulting in a positive cash flow.
• Investment Needed: The amount of capital required to start and sustain the business until
it becomes profitable.

A - Advantages

• Cost Structure: Analysis of the costs involved in sourcing or manufacturing the product
or service, including supplier costs.
• Barriers to Entry: Factors that make it difficult for new competitors to enter the market,
such as regulatory hurdles, patents, and significant capital requirements.
• Intellectual Property: Ownership of patents, trademarks, or exclusive licenses that
provide a competitive edge.
• Distribution Channel: The method by which the product or service will be delivered to
customers. Unique or exclusive distribution channels can provide significant advantages.

M - Market

• The Need: The demand for the product or service. It's crucial to identify a clear need or
problem that the product or service addresses.
• Target Market: The specific group of consumers or businesses to whom the product or
service will be marketed, including their demographics and the overall size of the market.
• Pricing: The pricing strategy for the product or service, including considerations of cost,
value to the customer, and competitive pricing.
P - Potential

• Risk vs. Reward: An assessment of the potential risks involved with the opportunity
compared to the potential rewards for founders and investors.
• The Team: The capability and experience of the team behind the business, and whether
they have the necessary skills and knowledge in the relevant domain.
• Timing: The current market conditions and whether they are favorable for the introduction
of the product or service. This includes considering trends and consumer readiness.
• Goal Fit: Whether the business opportunity aligns with the personal and professional
goals of the founders and the team.

By methodically evaluating each of these components, the RAMP model helps entrepreneurs
and investors to make informed decisions about pursuing business opportunities.
MODULE-05

What Is a Business Plan?

A business plan is a document that outlines a company's goals and the strategies to achieve
them. It's valuable for both start-ups and established companies. For start-ups, a well-crafted
business plan is crucial for attracting potential lenders and investors. Established businesses
use business plans to stay on track and aligned with their growth objectives. This article will
explain the key components of an effective business plan and guidance on how to write one.

Purposes of business plans

In simple terms, a business plan is a guide that details what the business wants to achieve and
how it is going to do this. Business plans are developed for both internal and external purposes.
Internally, entrepreneurs develop business plans to help put the pieces of their business
together. The most common external purpose for a business plan is to raise capital.
Internal Purposes
The business plan is the road map for the development of the business because it:

• Defines the vision for the company

• Establishes the company’s strategy
• Describes how the strategy will be implemented
• Provides a framework for analysis of key issues
• Provides a plan for the development of the business
• Is a measurement and control tool?
• Helps the entrepreneur to be realistic and to put theories to the test

External Purposes

The business plan is often the main method of describing a company to external audiences,
such as potential sources for financing, and key personnel being recruited. It should assist
outside parties to understand the current status of the company, its opportunities, and its
needs for resources such as capital and personnel. It also provides the most complete source
of information for valuation of the business.
WHY DO SOME BUSINESS PLAN FAIL?

Business plans can fail for many reasons, ranging from poor planning and lack of research to
execution issues and external factors. Here’s a breakdown of the most common reasons why
business plans fail:

1. Lack of Market Research

• Misunderstanding the Target Market: Without understanding the needs,

preferences, and behaviours of your target market, you may end up developing a
product or service that no one wants or needs.
o Example: A tech start-up builds a complicated app for seniors without
considering that the target demographic struggles with technology or doesn't
have the interest.

• Overestimating Demand: Sometimes, entrepreneurs assume that a market will

embrace a new product based on their own beliefs, but fail to validate demand with real
customers. This can lead to overconfidence in the market size or the product's appeal.

2. Insufficient Capital and Cash Flow Issues

• Underestimating Start-up Costs: Many businesses fail because entrepreneurs don’t

adequately estimate how much money they need to get started or to cover the first few
months of operations. Unexpected costs can arise, and without enough capital, the
business may run out of money before it becomes profitable.

• Poor Financial Planning: Even if the business plan has enough capital initially, poor
cash flow management can cause failure. Mismanagement of operating expenses,
overspending on marketing or equipment, or inadequate pricing strategies can drain
funds quickly.

3. Lack of Clear Business Model

• Unclear Revenue Streams: A business may have a great idea, but if it lacks a clear
and sustainable revenue model, it will struggle to stay afloat. For example, relying on
one-time sales or having no clear path to recurring revenue can be problematic.
• Failure to Adapt the Business Model: Sometimes businesses fail because they try to
force a model that doesn’t fit the market, customer needs, or competition. The inability
to pivot or adapt can lead to stagnation and eventual closure.
4. Weak Leadership and Management

• Lack of Experience or Skills: A business can fail if the team lacks the necessary skills,
experience, or knowledge to run the company. This includes everything from
operations and marketing to finance and leadership.
• Inability to Delegate: Entrepreneurs who try to do everything themselves often get
overwhelmed and burnout. A successful business requires a team of skilled people, and
micromanaging or doing everything solo can stifle growth.

5. Poor Marketing and Customer Acquisition

• Ineffective Marketing Strategy: Even if a business has a great product, it won’t

succeed without effective marketing. If you don’t know how to reach and engage your
target audience, sales will not materialize.
o Example: A new clothing brand fails to generate buzz because they don’t have
an effective social media or advertising strategy, leading to low awareness and
minimal sales.
• Failure to Understand Customer Acquisition Costs (CAC): Businesses often
underestimate the cost of acquiring customers and fail to develop an effective strategy
for retaining them, which leads to inefficient spending on marketing and advertising.
o Example: A SaaS company spends a lot on digital ads without understanding
how much it costs to acquire a customer and whether the lifetime value (LTV)
justifies the investment.

6. Underestimating Competition

• Not Analysing Competitors: Some business plans fail because they underestimate
the competition, fail to analyse it, or believe their product is "too unique" to be
challenged by competitors. Without a competitive analysis, businesses may struggle
to differentiate themselves.
• Failure to Differentiate: Even in a competitive market, businesses need to clearly
differentiate their offering. A failure to identify and communicate a unique value
proposition can result in customers opting for alternatives.

7. Ignoring the Importance of Customer Experience

• Failure to Build Relationships: Businesses that don’t prioritize customer service or

fail to meet customer expectations will lose out in the long run. Word-of-mouth,
reviews, and customer loyalty are powerful drivers of growth.
o Example: A new online store with poor customer support and slow delivery
times gets negative reviews, which hampers their ability to attract new
customers.
• Not Listening to Customer Feedback: Businesses that fail to listen to their customers’
feedback may overlook critical product flaws or market shifts. A lack of customer
responsiveness can lead to disengagement and lost sales.
o Example: A software company refuses to fix bugs or address user complaints,
causing customers to abandon the product.

8. Poor Timing

• Launching Too Early or Too Late: Timing is critical. Launching a product or service
too early, when the market isn’t ready, or too late, when competitors have already
established themselves, can lead to failure.

9. Failure to Innovate or Evolve

Complacency: Businesses that don't continuously innovate, improve, or evolve with the
market risk becoming obsolete. Stagnation in product offerings or services can lead to
customer disengagement.
The National Small Industries Corporation (NSIC)

The National Small Industries Corporation (NSIC) is a government of India organization

aiming to help develop, stimulate, and service small-scale micro and medium-sized enterprises.
Close to sixty years ago, in 1955, the unit was set off as an autonomous body by the Ministry
for Micro, Small and Medium Enterprises (MSME’s)

Functions of NSIC

The NSIC is an administration organization in India that supports and advances the
development of small-scale businesses. A portion of the vital elements of NSIC include:

1. Facilitating Marketing Support: NSIC provides marketing help to small ventures by

promoting their products and services, arranging trade fairs and exhibitions, and facilitating
participation in domestic and international trade occasions.

2. Credit Support: NSIC offers different credit-related plans to small enterprises, including
giving monetary help through its assets or working with advances from banks and economic
foundations. It likewise assists in the method involved with obtaining government endowments
and motivating forces.

3. Technology Support: NSIC helps small enterprises adopt modern technologies and update
their assembly processes. It offers specialized help, project preparation, and consultancy
services to improve competitiveness and efficiency.

4. Capacity Building: NSIC conducts ability development programs, business venture

improvement programs, and other training initiatives to upgrade the capacities of small
enterprises and their employees.

5. Single Point Registration: NSIC operates the Single Point Registration Plan (SPRS), which
empowers independent ventures to register themselves as soldiers for government
procurement. This registration gives them opportunities to participate in government tenders
and agreements.

6. Export Facilitation: NSIC helps small enterprises investigate and extend their commodity
potential. It also provides direction on sending procedures, documentation, and market
intelligence to assist small-scale enterprises with entering worldwide business markets.
PROCEDURE FOR SETTING UP AN ENTERPRISE

Setting of an enterprise is a complex process. Various institutions and organizations are

providing training to young people to understand the process of setting up enterprise unit. The
entrepreneur should have complete knowledge of men, material, machinery, market, and
products. A number of formalities like approval and clearance from government departments
are to be completed before setting up an enterprise. The setting of an enterprise involves the
study of business opportunities, developments of a feasible business plan and identification,
determination and arrangement of men, materials, machinery and market for products. This
learning object explain the detail procedure to setup a business enterprise.

WAYS TO SETTING UP AN ENTREPRICE:

1. Conduct market research: Market research will tell you if there’s an opportunity to turn
your idea into a successful business. It’s a way to gather information about potential customers
and businesses already operating in your area. Use that information to find a competitive
advantage for your business.

2. Write your business plan: Your business plan is the foundation of your business. It’s a
roadmap for how to structure, run, and grow your new business. You’ll use it to convince
people that working with you or investing in your company is a smart choice.

3. Fund your business: Your business plan will help you figure out how much money you’ll
need to start your business. If you don’t have that amount on hand, you’ll need to either raise
or borrow the capital. Fortunately, there are more ways than ever to find the capital you need.

4. Pick your business location: Your business location is one of the most important decisions
you’ll make. Whether you’re setting up a brick-and-mortar business or launching an online
store, the choices you make could affect your taxes, legal requirements, and revenue.

5. Choose a business structure: The legal structure you choose for your business will impact
your business registration requirements, how much you pay in taxes, and your personal
liability.

6. Choose your business name: It’s not easy to pick the perfect name. You’ll want one that
reflects your brand and captures your spirit. You’ll also want to make sure your business name
isn’t already being used by someone else.

7. Register your business: Once you’ve picked the perfect business name, it’s time to make it
legal and protect your brand. If you’re doing business under a name different than your own,
you’ll need to register with the federal government, and maybe your state government.
8. Get federal and state tax IDs: You’ll use your employer identification number (EIN) for
important steps to start and grow your business, like opening a bank account and paying taxes.
It’s like a social security number for your business. Some — but not all — states require you
to get a tax ID as well.

9. Apply for licenses and permits: Keep your business running smoothly by staying legally
compliant. The licenses and permits you need for your business will vary by industry, state,
location, and other factors

10. Open a business bank account: A small business checking account can help you handle
legal, tax, and day-to-day issues. The good news is it’s easy to set one up if you have the right
registrations and paperwork ready.

11. Decision to be an Entrepreneur: The overriding reason for anyone to think of establishing
a SSI unit can be summarized in one word - opportunity. An opportunity to be your own boss,
to provide a product or service, to implement your ideas, which can generate sufficient surplus,
is reason to think of starting up a SSI unit.

12. Choosing your form of Business Organization: Many first-time entrepreneurs do not
have a clear perspective of the issues, legal or otherwise, involved in choosing one or the other
form of a business. This often results in avoidable mistakes, which later cost time and money
to rectify.

13. Making a Product Choice: Make a careful analysis of the product or service you are
choosing, sometimes in short run, there is a shortage of a particular commodity in the market,
you may even come to know you will get almost two weeks in advance to supply fresh stock.
Does that mean you can jump into that business?

14. Location of Industry: After deciding the issues of product, the next important question is,
where to set up the unit? For many tiny units and service-based units, the home is perhaps the
best starting point.

15. Preparation of Business Plan: A Business Plan is an document where you plan your
Business to have an organized and effective response to a situation which may arise in future.
Business plan is not just for a start-up company but also for those, which are growing. It can
be used it to establish realistic goals or targets to achieve and to determine the current position.
16. Finance and Working Capital to Start Business: To start and set up their business all
SSI units need monetary support. Before seeking fund estimate the cost including that of
working capital required for a minimum of 6-8 months and always keep a provision for buffer.
you can take help of an CA or concerned officials in Entrepreneurship Development Institutes
to work out the total financial cost of your project. Decide the form in which you are going to
raise the capital i.e. should it be equity finance, debt finance, loans or a combination of these

17. Human Resource: Human Resource is an important element to be kept in consideration

while setting up a business. Though, projections for manpower and staffing are made in the
project report, however it is necessary to time the induction of manpower in a planned manner.
SIDC – State Industrial Development Corporation
The full form of SIDC is State Industrial Development Corporations. It was first established in
1995. They are state-owned government corporations that engage in the development and
promotion of medium and large industries. SIDCs aim to develop industrial infrastructure such
as industrial parks and industrial estates along with providing financial assistance. The main
objective of establishing SIDC was to increase the process of industrialization in India.

Objectives of SIDC
The main objectives of SIDC are as follows: -

§ They provide loans to several industrial units in medium and large sectors.
§ It aids in the establishment of entrepreneurship and skill development.
§ It helps in facilitating industrial infrastructure development.

SIDC aims to promote micro, small and medium enterprises.

Functions of SIDC
The main functions of SIDC are: -

§ SIDCs act as an instrument in expediting industrialization in the states of India in which

they are present.
§ SIDCs issue loans, guarantees to various companies belonging to different industries.
§ SIDC takes the construction of sheds, development of industrial areas, and provision of
various infrastructure facilities
§ SIDC undertakes various promotional programs like project identification, techno-
economic surveys, preparation of feasibility studies, and entrepreneurial training.
§ SIDCs procure raw materials from the domestic market and international market and make
it available to the needy small-scale industries as per their requirements.
§ SIDCs take up various schemes to provide the various industrial units with efficient
marketing assistance. SIDCs participate in tenders floated by the state government
departments.
§ To obtain orders and distribute them among various small-scale units, SIDCs make
advance payments.
§ SIDC takes care of the development of various new growth centres.
§ It helps in solving working capital problems of the various industrial units.
§ It helps small scale units to take part in the international trade fair so that the products are
displayed there.
§ Along with finance, they also provide a variety of functions like arranging power, lands,
roads, licenses, etc.
§ SIDCs also promote industrial units run by women entrepreneurs.
§ SIDCs help in setting up skill development centres where workers are trained in various
skills and industrial activities. This is to ensure the supply of skilled labourers to various
small-scale industries.

Some of the State Industrial Development Corporations are: -

§ Gujarat Industrial Investment Corporation Ltd. (GIIC)

§ Haryana State Industrial Development Corporation Ltd (HSIDC)
§ Rajasthan State Industrial Development and Investment Corporation Ltd (RIICO)
State Financial Corporations (SFCs)

State Financial Corporations (SFCs) are the financial institutions that were set up by the state
governments in India, post-Independence. The objective was to provide credit and other
support services to small businesses and farmers. However, over time, SFCs have diversified
their operations and now offer a range of products and services such as capital market
operations, venture capital funding, insurance, etc.

State Finance Corporation

The State Finance Corporations (SFCs) are a vital component of a country’s institutional
finance architecture. The SEC promotes small and medium-sized enterprises in the states,
whereas SFC assists in promoting balanced regional development, increased investment, more
employment generation, and broad industry ownership.

At present, there are 18 state finance corporations in India (out of which 17 are SFCs, according
to the SFC Act 1951). Tamil Nadu Industrial Investment Corporation Ltd. is a state finance
corporation incorporated under the Company Act, 1949.

Functions of SFCs

1. Providing Financial Assistance to Small and Medium Enterprises (SMEs)

• Term Loans: SFCs offer long-term financing for the acquisition of fixed assets such
as land, buildings, machinery, and equipment. These loans are generally repaid over a
period of several years.
• Working Capital Loans: SFCs also provide short-term loans for working capital
needs, helping businesses meet day-to-day operational expenses.

2. Promoting Entrepreneurship and Industrial Development

• Seed Capital Assistance: SFCs often provide financial support to entrepreneurs,

especially first-time business owners, in the form of seed capital to start their business
ventures.
• Industrial Growth: They focus on promoting the establishment and expansion of small
and medium industries in the state, which in turn contributes to local job creation and
regional economic development.
3. Financing for Modernization and Expansion

• Modernization Loans: SFCs provide loans for the modernization of existing industrial
units to improve their production efficiency, upgrade technology, and increase
competitiveness.
• Expansion of Units: They also offer financial assistance to existing units that are
looking to expand their operations or diversify into new products.

4. Financing for Infrastructure Projects

• Infrastructure Development: SFCs can finance infrastructure projects within the

state, such as the construction of industrial parks, warehouses, or other commercial
facilities that support industrial growth.
• Support for Ancillary Units: They help in financing the establishment of auxiliary
units that support larger industries, contributing to a thriving industrial ecosystem

5. Equity Participation

• Equity Investments: SFCs may take an equity stake in promising industrial projects
or enterprises, thereby helping businesses raise capital without taking on excessive
debt.
• Venture Capital Support: Some SFCs also act as venture capital providers, funding
innovative start-ups and emerging industries with high growth potential.

6. Providing Export Financing

• Export Credit: Some SFCs offer financial assistance to small and medium-sized
enterprises engaged in export activities. This includes providing working capital or term
loans to facilitate the production of export goods.
• Export Insurance and Guarantees: In some cases, SFCs also provide export
insurance or credit guarantees to help exporters secure international contracts and
expand their global reach.

7. Promoting Cottage and Village Industries

• Support for Rural Development: SFCs focus on financing small businesses and
cottage industries, particularly in rural and semi-urban areas. This helps in creating
local employment opportunities and reducing migration to urban centres.
• Development of Traditional Industries: They may provide financial support to
traditional industries like handicrafts, handlooms, or agro-based industries, which
contribute to preserving local culture while providing livelihoods.
8. Providing Technical and Managerial Guidance

• Training Programs: Some SFCs organize training programs for entrepreneurs to

improve their management skills, financial literacy, and technical expertise.
• Consultancy Services: They often provide expert consultancy services to help
businesses plan, structure, and manage their operations efficiently.

9. Financing for Women Entrepreneurs

• Women-Specific Schemes: Many SFCs have dedicated schemes to support women

entrepreneurs by providing easier access to finance and creating a more inclusive
entrepreneurial ecosystem.

10. Promoting Research and Development

• Innovation Funding: In some cases, SFCs support R&D in local industries by

providing funding for product development or new technologies, especially for
industries like pharmaceuticals, IT, and manufacturing.
• Technology Upgradation: They may offer financial assistance for the adoption of new
technologies or the setting up of R&D labs within enterprises.

11. Acting as a Catalyst for Regional Development

• Balanced Growth: SFCs help in promoting balanced industrial growth across the state
by directing financial resources to less-developed or backward regions, thus reducing
regional disparities.
• Public-Private Partnerships (PPP): SFCs also facilitate PPP models, supporting large
infrastructure or industrial projects by sharing the financial risk and promoting
investment in underdeveloped areas.

12. Recovery of Loans

• Loan Recovery: SFCs are also responsible for the recovery of loans provided to
businesses. They may follow legal processes to recover dues from defaulters and
minimize the financial risks associated with lending.