Chapter 1,12,13,14,15 dr mani entrepreneurship fall 14 15

transcript

Introduction to EntrepreneurshipLesson-1

Dr. Manishankar Chakraborty

Entrepreneurship

Fall 2014-2015

Introduction

• Oman a gulf country developing very fast.

• Oil resources discovered in 60’s followed by oil export.

• Huge reserves of natural resources.

• Stunning growth in the last 50 years.

• Future plan engrossed in vision 2020

2/18/2015 Dr. Manishankar Chakraborty, ICT, Oman 2

Essence of Vision : Oman 2020

• Develop Omani people to cope with technological progress and attain international competitiveness.

• Develop the private sector for optimally using human and natural resources.

• Promote the use of natural resources.• Distribute benefits of development with all

regions and citizens• Safeguard and build on the achievements of last

25 years.

Challenges facing Oman

• Growing youth population.

• Increased rate of unemployment.

• Expected gradual decline in oil resources.

• Low level of savings.

• Low level of national labor participation/low productivity

• Slow pace of national labor to cope with rapid technological developments.

Solutions to the challenges facing Oman

• Entrepreneurship as a solution can help in-

• Generating employment for others.

• Produce goods and service for exporting.

• Businesses other than oil and gas.

• Reduce dependency on oil and gas.

• Utilize all other natural resources of Oman.

Definition

• Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace.

• It involves the using of new ideas to create a product that satisfies customer needs.

Creativity and Innovation

• Creativity-Something made for the first time, result of a creative process.

• Innovation- Making changes in terms of sizes, shapes and colors.

• E.g. First hand held mobile phone by Dr. Martin Cooper of Motorola in 1973 (Creativity)

• 1G, 2G,3G and I-Phones (Innovation)

Lesson-12Things to remember in writing a business

plan• (1) Make Strategic Plans (For franchised

businesses, its made by the franchiser)

• Setting of Vision/Mission Statements

• Establishing Goals and Objectives

• Identifying Strategies

• (2)Make Operational Plans(For franchisedbusinesses this is prepared by franchiser)

Things to remember in writing a business plan

• First Part

• Setting up policies, methods, procedures and budget

• Second Part

• Choosing location

• Planning operation and physical facilities

• Developing sources of supply for goods and materials

• Planning human resource requirements

• Setting up legal and organizational structure

• Determining approach to the market

• Establishing efficient record system

• Setting up time schedule

• Make financial plans

• Financial planning involves determining what funds are needed, where they can be obtained, and how they can be controlled.

• Financial plans involve-

• Important aspects of the financial plan

• Estimating income and expenses

• Estimating initial investment required

• Locating sources of funds

• 4. Implement the plan

• Start the business

Lesson-13: What is Feasibility Analysis?

• It is the process of determining whether a business idea is viable (practical and possible to do).

• It is the preliminary evaluation of a businessidea, conducted for the purpose ofdetermining whether the idea is worthpursuing (following, doing)

• When to conduct a feasibility analysis?

• The proper time to conduct a feasibility analysis is early in the thinking process of opening a new venture.

• The thought is to screen ideas before a lot of resources are spent on them.

• Components of a properly conductedfeasibility analysis

• It includes four separate components-

• (1)Product/Service feasibility

• (2)Industry/Target Market Feasibility

• (3)Organizational Feasibility

• (4)Financial Feasibility

• (1) Product/Service Feasibility Analysis

• Purpose:

• It is an assessment of the overall appeal of the product or service being proposed.

• Before a prospective firm rushes a new product or service into the department, it should be sure that the product or service is what prospective customers want.

• Components of product/service feasibility analysis

• Product/Service Desirability:• The following questions should be asked to

decide the basic appeal of the product or service:• Does it make sense, Is it reasonable?• Does it solve a problem or take advantage of a

gap in the marketplace?• Is this a good time to introduce the product or

service in the market?

• Product/Service Demand:

• Assess the demand for a product or service, by conducting buying intention survey, library and internet research.

• One of the most effective things an entrepreneur can do is to conduct a thorough product/service feasibility analysis is to hit the streets and talk to potential customers.

• (2) Industry/Target Market Feasibility Analysis

• Purpose:

• It is an assessment of the overall industry and thetarget market for the proposed business.

• Industry:

• An industry is a group of firms producing a similarproduct or service.

• A firm’s target market is the limited portion of theindustry it plans to sell their products.

• Components of industry/target market feasibility analysis

• Industry attractiveness:

• Industries varies in terms of their overall attractiveness. In general, the most attractive industries have the characteristics like growing or shrinking, sell products or services that customers “must have” rather than “want to have”.

• Target Market Attractiveness

• It is to find a market that is large enough for the proposed business but is yet small enough to avoid attracting larger competitors.

• Organizational Feasibility Analysis

• Purpose:

• It is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business.

• Focus on non-financial resources.

• Components of organizational feasibility analysis

• Management Competence:

• A firm should evaluate its ability, of its management team to satisfy itself that management has the necessary expertise to launch the venture.

• Resource Sufficiency

• An assessment of whether an entrepreneur has sufficient resources to launch the proposed venture or not.

• If critical resources are not available in certain areas, it may be impractical to proceed with the business idea.

• Financial Feasibility Analysis

• Purpose:

• It is the final component of a comprehensive feasibility analysis. This helps in seeing whether the business venture is financially viable or not.

• Components of financial feasibility analysis

• Total Start-up Cash Needed:

• It is to determine if the proposed venture is realistic or not given the total start-up cash needed.

• Financial Performance of Similar Businesses:

• Estimate the proposed start-up’s financial performance by comparing it to similar, already established businesses.

• Overall Financial Attractiveness for the proposed venture

• A number of other financial factors are associated with promising business startups such as:

• Steady and rapid growth in sales during the first 5 to 7 years in a clearly defined market niche.

• High percentage of recurring revenue

• Ability to forecast income and expenses with a reasonable degree of certainty

• Internally generated funds to finance and sustain growth.

• Availability of an exit opportunity for investors.

• Role of feasibility analysis in developing business ideas/plan

• Explain from handout.

Lesson-14: What is a Business Plan?

• Business Plan

• It is a written document prepared by the entrepreneur that describes the external and internal elements involved in starting a new venture.

• It is a written narrative that describes what a new business plans to accomplish.

• Who reads the business plan and what are they looking for?

• Most of the new ventures use it for dual purpose, for internal and external use.

• There are two primary audiences for a firm’s business plan-

• A Firm’s Employees(Internal)- Helps all employees to work in sync and move forward consistently and purposefully.

• Investors/Other stakeholders(External)- To show the business is a good base for investors to invest money, as well as draw the attention of society and government.

• Guidelines for writing a business plan

• (a) Structure of a Business Plan

• To make the best impression a business plan should follow a conventional structure such as the outline for the business.

• As investors are busy people and want a plan where they can easily find critical information.

• Apart from facts and figures, a business plan needs to project a sense of readiness(keenness) about the possibilities that surround a new venture.

• (b) Content of the Business Plan

• It should give clear and concise information on all the important aspects of the proposed venture.

• It must be long enough to provide sufficient information, yet short enough to maintain reader interest.

• Most plans are made in 25 to 35 pages.

• (c) Recognizing the elements of the plan may change

• It is important to recognize that the plan will usually change while being written.

• New information emerging while an entrepreneur or a team of entrepreneurs are involved in writing the plan and while seeking feedback.

Lesson-15: Outline of a Business Plan

• An entrepreneur decides what should be included in the business plan.

• Elements of a Business Plan

• Section 1-Executive Summary

• Section-2-Company Description (Description, History, Mission, Products & Services, Current status, Legal status and ownership, Key partnerships)

• Section-3- Industry Analysis (Size, Growth rate, sales projections, trends, long term prospects)

• Section-4- Market analysis (Market segmentation, Target market selection, Buyer behavior, Competitor analysis)

• Section-5- Market Plan (Overall marketing strategy, product, price, promotions and distribution)

• Section-6-Management team and company structure (Management team, Board of directors, company structure)

• Section-7-Operations Plan (General approach to operations, business location, facilities and equipment)

• Section-8- Product/Service Design and Development plan (Development status and tasks, challenges and risks, intellectual property)

• Section-9-Financial projection (Sources and uses of funds statement, assumption sheet, pro forma of income statements, pro forma of balance sheets, pro forma of cash flows

Chapter 1,12,13,14,15 dr mani entrepreneurship fall 14 15

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