Monday 21 January, 2013

How the would-be entrepreneur can become a successful entrepreneur


How the would-be entrepreneur can become a successful entrepreneur – a series
          The success pentagon
            There are five dimensions which act as driving force to become a successful Entrepreneur. They are Attitude, Skills, Knowledge, Habit & Strategy; first three dimensions are familiar to us, it is also known to us as ASK model or the three H model i.e. Heart, Hand & Head.
Attitude: Attitude is related to the state of mind. It is internal and associated with once thinking pattern, the way of interpretations, and the use of language, In short it comprises of self concept i.e. Belief, Feelings & Behavior, Beliefs are thought about self, Feelings are self worth, dare & Behavior is tendency to act towards one’s self in a self-enhancing manner etc. Therefore it is related to mind & heart.
Skills: Skills are of two kinds, one management skills & two technical skills, it’s a combination of head & hand.
Knowledge: Entrepreneurs requires general knowledge of product opportunities, how to set up MSM Enterprises, sales & marketing etc. This is a domain of Head.
Two more dimensions in addition to earlier modules are also equally important.
Habit: One may have a unhealthy habits or healthy habits. Un entrepreneurial habits or entrepreneurial habits, It is very difficult to remove habit. If you remove h-abit remains, if you remove a-bit remains, if you remove b-it remains. So a transformation from an ordinary person to an extraordinary person is a very interesting process.
Strategy: It is specific path of action chosen by the person to achieve his objective.
Considering the path of becoming a successful entrepreneur we would address the issues as follows.
General knowledge –
·        Self Employment & Entrepreneurship
Nowadays the terminologies like livelihood, self employment has become very popular. Dr. Mohmad Unus’s contribution to the innovative idea of Self Help Group (SHG) and the problems in India of educated Unemployed Youth has given rise to livelihood activities for below poverty line people & self employment activities for educated unemployed youth. These are very micro, cottage or that way small activity. But to begin with these initiatives are good as stepping stone towards becoming an entrepreneur.
Entrepreneurship is a broad term. It is being used for those who have potential to become an entrepreneur. And starts sizable activities as small scale industries; they can generate employment for others.
·        The terms micro, small or medium enterprises.
Nowadays the term ‘Industries’ has been changed to ‘Enterprises’
Broadly the Enterprises have been classified in to two areas.
1)     Enterprises engaged in providing or rendering of services. Service enterprises have been defined in terms of their investment in equipment (excluding land & building) and further classified into:
·        Micro Enterprises – investment upto Rs. 10 lakh.
·        Small Enterprises – investment above Rs. 10 lakh upto Rs. 2 crore.
·        Medium Enterprises – investment above Rs. 2 crore upto Rs. 5 crore.
2)     Enterprises engaged in the manufacture or production of goods. Manufacturing enterprises have been defined in terms of investment in plant and machinery (excluding land and building) and further classified into:
·        Micro Enterprise - investment upto Rs. 25 lakh.
·        Small Enterprises – investment above Rs. 25 lakh upto Rs. 5 crore.
·        Medium Enterprises – investment above Rs. 5 crore upto Rs. 10 crore.
One has to compare service enterprises with manufacturing enterprises.
Service Enterprises requires no or less investment, No land or building can be operated from home or rental place, good communication, networking, innovative ideas will do to start it, it involved less risk, easy to start, etc these may be the plus point of service enterprise.
Comparatively one has to take moderate or calculative risk to start manufacturing Enterprises. For livelihood or self employment activities one may use service enterprise as a stepping stone. Whether it is service or manufacturing Enterprise one has to create a structure or set up which will give a sustainable growth to the enterprises.
·        Business opportunities search and scanning (BOSS)
How to select an activity for MSM Enterprise? How to identify the MSM Enterprise activity? These are very fundamental and important issues. Entrepreneurs are opportunity seekers; for them it becomes easy to select or identify the business opportunities. But for general public like educated unemployed youth it may be a tedious, difficult, confusing issue. Many such people drop their idea of becoming an entrepreneur by exploring many good ideas for others.
            In fact this environment is full with business opportunities provided you see it;
            Environment scanning, creativity, project profile scanning etc are the tools for divergent thinking. This divergent thinking is useful to generate as many ideas. During this phase you have to think out of the box, do not consider whether this idea is practical or impractical. Just go on generating ideas.
            Conducting market survey, preparation of preliminary project profile are the tools for convergent thinking. Where practically you have to consider location, place, available resources, customer needs, your network & market, infrastructural advantages, own investment, availability of required manpower, raw material, technology and think convergent & narrow down your choice for selection of enterprise or activity.
            Preliminary market survey would give you the gap between demand and supply. But this terminology has become out dated nowadays. You must have to come up with creative service or product ideas; customer or consumer is always behind what is new. So this new creates a need or demand for the product.
·        Support mechanism for enterprise identification
Development Commissioner, MSM Enterprises has published many books on project profiles they are as follows:
·        Mechanical products
·        Metallurgical products
·        Hosiery products
·        Electrical products
·        Plastic products
·        Chemical products
·        Food/agriculture products
·        Glass & Ceramics products
·        Leather & Sports products
All these books are available on their website, libraries of Centre for Entrepreneurship Development (CEDs) in the State, Technical Consultancy Organization (TCOs) in the State, specific Main/Lead Bank in the State, Chamber of Commerce & Industries in the State, Offices of the Industries Associations, are some of the sources for getting the right kind of data.
District Industrial Centers (DIC) have their offices almost in the every district of all the States. This is also one of the good sources.
·        Market potential for MSM Enterprises   
Again all above mentioned institutions may be supportive in this regard.
Basically entrepreneur has to design a specific questionnaire for conducting a market survey. S/he should identify their market area and carry out the market survey; this would give them an insight of the product/services to be set up. He himself should visit to wholesale and retail markets, bulk consumers etc.
There are few marketing schemes by MSME, MSSIDC, NSIC etc. in case of specific products. Entrepreneurs may take advantage by visiting these organizations.
There is nothing like readymade in this area. Finally it is the efforts of an entrepreneur which will make them survive in the market.
·        Where to set up the enterprise     
Rental premises or place own land & building, co-operative industrial estates, different theme based industrial parks, State Industries Development Corporations etc. These are some of the options where one can start his/her enterprise.
·        Different target who are coming and joining the industrial fields
Following are the different sections of the society who are joining industrial fields nowadays.
-         Below poverty line men & women
-         Uneducated or little educated but experienced workers/skilled class
-         Educated unemployed youth
-         Schedule Class/schedule Tribes
-         Ex-service men
-         Women
-         VRS/CRS/NRI people
-         Science & Technology class
-         Physically challenged class etc
It does not matter whether you have technical background or experience or not. It just requires the fire in belly or the will to start something on own or the spirit of entrepreneurship. Rest of the things can be managed through other sources which are available with others or in the market.
·        Facing the competition
Creative & innovative services or products, latest technology & production process, mass production, reduction in production costs, good-better-best quality of the products, niche marketing-it is the subset of the market on which a specific product is focusing; therefore the market niche defines the specific product/service features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact; service of product costing, are some of the tools to face the competition and win the game.
 


     

Approvals and clearances


Approvals and clearances – a series
            Every SSI/MSM Enterprises has to comply with various regulations which are in force. These include i) regulatory, ii) taxation, iii) environmental, iv) certain product specific clearances. This section looks into the methodology of obtaining these approvals & clearances.
Exemption from compulsory license/industrial license
Licensing in the industries sector is governed by the Government of India, under licensing exemption notification issued in 1991, under the industries Act 1951. In SSI, there are virtually no licensing restrictions. No industrial license is required except in case of 6 product groups include in compulsory licensing (these mainly cover product that can only be made in large scale sector).
But if a SSI unit employs less than 50/100 workers with/without power then it would not require a license from the Government of India even for the 6 product groups covered in licensing under schedule II of the notification.
Subject to this, an entrepreneur can set up a SSI unit anywhere in the country without restriction. The units are of course, subject to the location/land use & zoning restrictions in force under the local laws.
One has to obtain several clearances or permissions depending upon the nature of his/her unit & products manufactured.
Product specific clearances
Regulatory or Taxation Clearances
1.      Registration under Sales Tax Act - Commercial Tax officer.
2.      Registration under Central Excise Act - Collector of Central Excise.
3.      Payment of Income Tax – ITO.
4.      Registration of Partnership deed - Inspector General.
5.      Calibration of weights & measures - Weights and Measures Inspector of State
6.      Power Connection - State Electricity Board
7.      Employee strength exceeding 10 with power connection or 20 without power - Chief Inspector of Factories
Environment & Pollution Related Clearances
The method of granting consent under water and air pollution to MSM Enterprises has been simplified. Except for 17 critically polluting sectors given below, in all other cases MSM Enterprises will merely have to file an application and obtain an acknowledgement which will serve the purpose of consent:-
1.      Fertilizer
2.      Sugar
3.      Cement
4.      Fermentation & Distillery
5.      Aluminum
6.      Petrochemicals
7.      Thermal Power
8.      Oil refinery
9.      Sulphuric Acid
10. Tanneries
11. Copper smelter
12. Zinc smelter
13. Iron & Steel
14. Pulp & Paper
15. Dye and Dye intermediates
16. Pesticides manufacturing and formulation
17. Basic Drugs and Pharmaceuticals
Product Specific Clearances
1.      Establishing a Printing Press - District Magistrate
2.      License for Cold Storage Construction - Designated Official in State
3.      Pesticides - Central/State Agricultural Department - Ministry of Agriculture
4.      Drugs and Pharmaceuticals - Drug license from State Drug Controller
5.      Safety Matches/ Fireworks - License under Explosives Act from Directorate of Explosives, Nagpur
6.      Household Electrical Appliances - License from Bureau of Indian Standards
7.      Wood Working Industry within 8 km from forest - District Forest Officer
8.      Milk Processing & Milk products manufacturing units - Approval under Milk and Milk Products Order from State Agricultural/ Food Processing Industries Department above a designated capacity.
Quality certification has become extremely important in competitive markets & especially in gaining foothold in exports. To avail the certification of ISO 9001-2008, a unit has to undertake significant costs, the small scale industries have been found wanting mainly on account of resource crunch to implement quality systems to obtain this certification.
i)       A scheme has been launched to give financial incentive to these MSM Enterprises who acquire ISO 9001-2008 certification. By reimbursing 75% of their costs of obtaining certification, subject to a maximum of Rs. 0.75 lacs per unit.
ii)    In order to promote modernization & technology up gradation in MSM Enterprises are assisted in improving the quality of their products.