Entrepreneurship and

Economic Development
Prepared By: Engr. Alexis John M. Rubio
Entrepreneurship and Economic
Development
Entrepreneurial spirit of people is greatly
responsible for economic development of any country.

“Government has no business to be in Business”

Government should only govern. Business activity should be left to people, and this
is where entrepreneurs enter the picture.
Entrepreneurship and Economic
Development
I. Entrepreneurs set up enterprises which provide employment
not only to themselves but to many others directly and
indirectly and thereby put into utilization Human Resource of
the country.
II. Entrepreneurs combine resources, put their time and efforts
and produce goods or services. The Value Addition that they
do to the resources brings prosperity to the country.
III. What they contribute – productivity, output, value addition,
income and employment
Entrepreneurship and Economic
Development
IV. Entrepreneurship is a “Low Cost Strategy”. An entrepreneur
works with maximum financial efficiency in order to
maximize his profits. Entrepreneurs rarely indulge
themselves in luxury of Business Class travel and 5 Star Hotel
comforts which the managers avail without fail. Thus, many
such costs are either avoided or kept in check. Entrepreneurs
perform the crucial role themselves.
V. The spirit of Entrepreneurship – Drive, achieving higher
goals, creativity, innovative attitude.
Entrepreneurship and Economic
Development
VI. A dynamic society emerges and the spirit spreads like a
chain reaction – Many entrepreneurs have proved to be
catalyst for growth of a bevy of smaller entrepreneurs.
Jamshedpur was a small town before Tata Steel Plant was
set up. Once the plant came up in the place, many people
set up their small enterprises to cater to the needs of the
growing population.
Product Evolution Process
Evolution Process

I. Intersection of knowledge and a recognized social need

II. Initiation of technological innovation
III. Iterative Synthesis
IV. Development Phase
V. Industrial Phase
Product Planning and Development
Process
I. Idea Stage – Idea – Evaluate
II. Concept Stage – Lab Development – Evaluate
III. Product Development Stage – Pilot Production – Evaluation
IV. Test Marketing Stage – Semi Commercial Production
Evaluation
V. Commercial Stage –
A. Introduction
B. Growth
C. Maturity
D. Decline
Commercialization
I. Role of Government
II. Role of Corporate – Intrapreneurship
III. Role of Individuals – Entrepreneurship
IV. Development of Technology
A. Utilization of materials
B. Exploitation & transformation of energy
C. Understanding and application of Scientific Principles
V. The Role of Government
A. Promotional
B. Neutral
C. Regulatory
The Strategies for an
Entrepreneurial Firm
Below is illustrated recommended strategic response for a
small firm under differing conditions of technological and
finance requirements for various industries
T – Technological Inputs M – Money Inputs
I. Technology – High, Money – High – Industry requires large
skilled resources (difficult to obtain for a start up firm) and
large financial strength (again a difficult proposition for a
new firm). Recommended response – Act as a Supplier or Sub
–Contractor.
The Strategies for an
Entrepreneurial Firm
I. T– High, M– Low – Specialist firm, access to low cost
research
II. T– Low, M– High – Linkage with well– established channels
III. T– Low, M– Low – Well suited to small firm
IV. Low Tech – High Volume – Requires strong Financial Ability
V. High Tech – Low Volume – Requires Strategic Ability
VI. Emerging Options – Franchisee; Sub– contractor
Business Environment &
Entrepreneurship Environment
I. Political – System, Stability, Leadership
II. Socio– cultural – Culture, Community, Values, Ethics,
Attitude
III. Technological – Education, Absorption, Competition,
Innovation
IV. Legal – Regulatory framework, Consumer protection,
Concern for environment, Labour laws
V. Economic – GDP, GNP, Resources, Fiscal, Non– fiscal policies,
Incentives and Subsidies
Dimensions of Environment

I. SPECTACLES – Social, Political, Economic, Cultural,

Technological, Aesthetic, Customer, Legal,
Environmental and Sectoral
II. PEETS – Political, Economic, Ecological, Technological
and Socio– demographical
III. SLEPT – Social, Legal, Economical, Political and
Technological
Factors Influencing
Entrepreneurship
Outline of a Business Plan
I. Introductory page
A. Name and address of the venture
B. Names and addresses of the principals
C. Nature of business
D. Statement of financing needed
E. Statement of confidentiality of the report
II. Executive Summary
III. Industry Analysis
A. Future outlook and trends
B. Analysis of competitors
C. Market segmentation
D. Industry forecasts
IV. Description of Venture
A. Product(s)/Service(s)
B. Size of business
C. Office equipment and personnel
D. Background of entrepreneurs
V. Production Plan or Operations Plan
A. Manufacturing process (amount subcontracted)
B. Physical plant
C. Machinery and equipment
D. Names of suppliers of raw materials
VI. Marketing Plan
A. Pricing
B. Distribution
C. Promotion
D. Product forecasts
E. Controls
F. e– Initiatives
VII. Organizational Plan
A. Form of ownership
B. Identification of partners or principal shareholders
C. Authority of principals
D. Management–team background
E. Roles and responsibilities of members of organization
VIII. Assessment of Risk
A. Evaluation of weaknesses of business
B. New technologies
C. Contingencies plans
IX. Financial Plan
A. Pro forma income plan
B. Cash flow projections
C. Pro forma balance sheet
D. Break–even analysis
E. Sources and applications of funds
X. Appendices (Contains Backup Material)
A. Resumes of principals
B. Letters
C. Market research data and survey results
D. Leases or contracts
E. Price lists from suppliers
F. Facility layout
G. Draft marketing brochure with or without pricing
H. Structure of e– marketing thrusts, if any
Business Plan
Business plans rank no higher than 2/10 as a predictor of a
new venture’s success. With all the uncertainties involved, it is
not easy to forecast or make future projections. An
entrepreneurial venture faces even greater uncertainties. It is
hard to predict even revenues let alone the profits. Thus, every
investor knows that any financial projections for a new company
that stretch beyond a year are an act of imagination.
It does not mean to say that business plans should not
include numbers. Business plans should include numbers but
those numbers should appear in the form of a business model
that shows that the entrepreneurial team has considered the
key drivers of the venture’s success or failure.
Business Plan
Estimation of time and capital is another hurdle faced during
preparation of project plan.
Break even analysis is very important. Also the time when
cash flow will turn positive needs to be estimated. But these
information should come towards the end of the project report.
Business Plan
There are four independent factors critical to every new venture
and should be highlighted in the business plan
I. The People
The most important determinant of success. The men and
women starting and running the venture, as well as, the outside
parties providing key services or important resources for it, such
as its lawyers, accountants and suppliers. An ordinary plan can
succeed if the execution is immaculate, but an outstanding plan
will surely flop without effective execution. Thus, the people
involved in the new venture are most important.
Arthur Rock, a Venture Capitalist legend associated with
companies like Apple, Intel and Teledyne states,
“I invest in people, not ideas”
Business Plan
Three important questions need to be answered in every
business plan:
A. What do they know (about business)?
B. Whom do they know (the customers, the people in the
government, etc.)?
C. How well are they known (their reputation that can be
leveraged with various stakeholders of business like
suppliers, employees and government officials)?
Thus, a business plan should describe each member’s
knowledge of the new venture’s type of products and markets –
from competitors to customers.
Business Plan
II. The Opportunity
A profile of business itself – what it will sell and to whom,
whether the business can grow and how fast, what its economics
are and who and what stands in the way of success.

A good business plan begins by focussing on two aspects of

opportunity:
A. Is the total market for the venture’s product large,
rapidly growing or both?
B. Is the industry now, or can it become, structurally
attractive?
Business Plan
Investors look for a large and rapidly growing market
because it is much easier to obtain a share of a growing
market than to fight with entrenched competitors for a share
of a mature or stagnant market. The business plan should
establish the attractiveness of the industry in terms of
growth potential. Building and launching of the product in
the market place is the next emphasis point in the project
report.
If it were easy to spot the opportunities, they would have
become extinct. They will be killed before they are born.
Business Plan
Pricing is another issue. Difficult to guess but inevitable for any
project report.
Cash flow is equally important. The project report should
include
(a) When does the business have to buy resources, such as
supplies, raw materials and people services?
(b) When does the business have to pay for them?
(c) How long it takes to acquire a customer?
(d) How long before customer sends the business cheque?
(e) How much is the investment for each rupee of sale?
Business Plan
Growth opportunities in terms of place, product, customer
base, etc. needs to be elaborated.
Project plan also needs to discuss the mouse traps that the
business can get caught into and plan to avoid them.
Business Plan
Competition is the next issue that should be addressed in great
detail. Following questions should be answered
(a) Who are the new venture’s current competitors?
(b) What resources do they control? What are their
strengths and weaknesses?
(c) How will they respond to the new venture’s decision to
enter business?
(d) How can the new venture respond to its competitors’
response?
(e) Who else might be able to observe and exploit the
opportunity?
(f) Are there ways to co-opt potential or actual competitors
by forming alliances?
Business Plan
III. The Context
The big picture – The regulatory environment, interest rates,
demographic trends, inflation and the like – basically factors
that change inevitably but can not be controlled by the
entrepreneur.

IV. The Risk and Rewards

An assessment of everything that can go wrong and right and
a discussion of how the entrepreneurial team can respond.
Business Plan
The business plan remains same irrespective of the fact
whether it is an entrepreneurial venture or being launched by
the established company. After all the market does not
differentiate on the basis of whose money it is; whether of the
investor or the shareholders.
THANK YOU!