Ch-9
Small Business and
Entrepreneurship
Micro, Small and Medium Enterprises
(MSME)
As per MSMED Act,2006:The Types of Units Investment Turnover
definition used by the in Plant and
Machinery
Government of India to describe
MSME is based on the investment Micro Rs. 1 Crore Does not exceed
in plant and machinery and Enterprises Rs. 5 Crore
turnover. This measure seeks to
Small Rs. 10 Crore Does not exceed
keep in view the socio- economic Enterprises Rs. 50 Crore
environment in India where
capital is scare and labour is Medium Rs. 50 Crore Does not exceed
abundant. Enterprises Rs. 250 Crore
The MSME Act, 2006
came into force w.e.f.
October, 2006.
1. Balanced regional development:
The constitution off small scale
industries to the balanced regional
Role of development of our country is
small noteworthy. Small industries in India
account for 95% for industrial units
business in in the country.
India with 2. Employment Opportunity
generation: Small scale industries
reference are the second largest employers of
to rural human resources, after agriculture.
They generated more number of
areas. employment opportunities per unit of
capital invested compared to large
industries.
3. Supply of enormous variety of
products: SSIs in our country supply an
enormous variety of products which include
mass consumption goods, readymade
garments, hosiery goods, stationery items,
soaps and detergents, domestic utensils,
leather, plastic and rubber goods,
processed foods and vegetables,etc.
4. Benefits of industrialization: SSIs
which produce simple products using
simple technologies in depend on locally
available resources can be set up anywhere
in the country, specially in rural areas.
Since they can be widely spread without
any location constraints, the benefit of
industrialization can be reaped by every
region.
5. Opportunity for
entrepreneurship: SSIs provide ample
opportunity for entrepreneurship. The
latent skills and talents of people can
be challenged to business idea which
can be converted into reality with a
little capital investment and almost new
formalities to start a small business.
6. Low cost production: SSIs also
enjoys the advantage of low cost of
production. Locally available resources
are less expensive. Establishment and
running cost of small industries are on
the lower side because of low overhead
expenses.
Government schemes
and agencies for small
industries
National It was set up in 1955 with a view to promoting,
aiding and fostering the growth of small business
Small units in India. Functions:
(i) Supply indigenous and imported machines
Industries on easy hire-purchase terms.
Corporation (ii) Procure, supply and distribute indigenous
and imported raw materials.
(NSIC) (iii) Export the products of small business units
and develop export-worthiness.
(iv) Mentoring and advisory services: Serve as
technology business Incubators. Creating
awareness on technological upgradation.
Developing software technology parks and
technology transfer centres.
It was launched on 1 May 1978, with a view to
District providing an integrated administrative framework
at the district level, which would look at the
Industries problems of industrialization in the district, in a
composite manner. Functions:
Centres (i) Identification of suitable schemes for SSIs like
power supply at a concessional rate of 50%,
(DICs) water supply on no-profit, no-loss basis, etc.
(ii) Arranging for credit at concessional rates of
interest.
(iii) Preferential allotment of machinery and
equipment, raw materials, etc. to SSIs.
Concept of
Entrepreneurship
Development:
Entrepreneurship is the process of
setting up one’s own business as
distinct from pursuing any other
economic activity, be it employment or
practicing some profession. The person
who set-up his business is called an
entrepreneur. The output of the
process, that is, the business unit is
called an enterprise.
Characteristics of
Entrepreneurship Development
1. Systematic Activity: Entrepreneurship is a systematic, step-by-step and purposeful activity. It
has certain temperamental, skill and other knowledge and competency requirements that can be
acquired, learnt and developed, both by formal educational and vocational training as well as by
observation and work experience.
2. Lawful and Purposeful Activity: The object of entrepreneurship is lawful business. Purpose of
entrepreneurship is creation of value for personal profit and social gain.
3. Innovation: Entrepreneurship is creative in the sense that it involves innovation — introduction
of new products, discovery of new Markets and sources of supply of inputs, technological
breakthroughs as well as introduction of newer organisational forms for doing things better,
cheaper, fester and, in a manner that causes the least harm to the environment.
4. Organisation of Production: Production, implying creation of form, place and time utility,
requires the combined utilisation of diverse factors of production, land, labour, capital and
technology. Entrepreneur, in response to a perceived business opportunity, mobilises these
resources into a productive enterprise or firm.
5. Risk-taking: It is generally believed that entrepreneurs take high risks. Individuals opting for a
career in entrepreneurship take a bigger risk that involved in a career in employment or practice
of a profession as there is no "assured” pavoff.
Startup The Startup India Scheme is a
flagship initiative of the Government
of India with the objective of carving
India a strong ecosystem for nurturing
innovation and startups in the
Scheme country. This drive will lead towards
sustainable economic growth and
generate large-scale employment
opportunities. The Government of
India aims to empower startups to
grow through innovation and design.
• The scheme specifically aims to:
1. Trigger an entrepreneurial culture and inculcate entrepreneurial values in the
society at large and influence the mindset of people towards entrepreneurship,
2. Create awareness about the charms of being an entrepreneur and the process of
entrepreneurship, especially among the youth
3. Encourage more dynamic startups by motivating educated youth, scientists and
technologists to consider entrepreneurship as a lucrative, preferred and viable
career, and
4. Support the early phase of entrepreneurship development, including the pre-
startup, nascent, as well as, early post startup phase and growth enterprises.
5. Broad base the entrepreneurial supply by meeting specific needs of under
represented target groups, like women, socially and economically backward
communities, scheduled castes and scheduled tribes.
Ways to fund startup
In addition to the government plans that offer startup capital and
bank loans, the funding for startups can also be availed in the
following ways:
• Boot Strapping: Commonly known as self financing, it is considered as the first
funding option because by stretching out. your personal savings and resources,
you are tied to your business. Also, at a later stage, investors consider it as your
merit. However. it is a good option of funding only if the initial requirement is small
and handy.
• Crowd funding: It is the pooling of resources by a group of people for a common
goal. Crowdfunding is not new to India. There are many instances of organisations
reaching out to common people for funding. However, the emergence platforms
that promote crowdfunding is fairly recent to India. These platforms help startups
or small businesses to meet their funding requirements.
• Angel Investment: Angel investors are individuals with surplus cash who have
keen interest to invest in upcoming startup They also offer mentoring or advice
alongside capital
• Venture capital: There are professionally managed
funds which are invested in companies that have huge
potential. Venture capitalists provide expertise and
mentorship.
• Business Incubators and Accelerators: Early stage
business can consider incubator and accelerator
programmes as funding option. These programmes
assist hundreds of startup businesses every year. These
two are generally used interchangeably. However,
incubator is like a parent who nurtures the business
(child), whereas. accelerator helps to run or take a
giant leap in business. Incubators and accelerators ably
connect the startups with mentors, investors and fellow
startups using this platform.
• Micro finance and NFBCs: Micro finance is basically
access to financial services to those who either do not
have access to conventional banking services or have
not qualified for a bank loan. Similarly, NBFCs (Non
Banking Financials Corporation) provides banking
services without meeting legal requirement/definition
of a bank.
IPR (Intellectual Property Right )
Intellectual Property Rights a legal rights conferred upon
the creator owner to prevent others from using the
protected subject matter. It is a legal watch guard of
knowledge.
IP refers to the creation of the human mind, like
inventories, symbols, names, images and design used in
business.
Intellectual 1. Industrial property: which
includes inventories,
property is trademarks, industrial designs
and geographical indications.
divided into 2. Copyright: which includes
two broad literary and artistic works such
as novels, poems, films,
categories: drawings, paintings,
photographs and sculptures
etc.
Why is IPR important for Entrepreneurs?
It encourages creation of new, path breaking inventions,
search as cancer cure medicines. It incentivizes investors,
authors, creators etc. for their works
It allows the work created by a person to be distributed and
communicated to the public only with his or her
permissions. Therefore, it helps in the prevention of loss of
income.
It helps authors, creators, developers and owners to get
recognition for their works.
Types of IPs
1. Copyright: copyright is the right to “not copy”. It is an
exclusive right of the created to prohibit the
unauthorised use of the content which includes
reproducing and distributing copies to the subject
matter.
2. Trademark: A trademark in any word, name or
symbol that helps to identify the goods made by an
individual, company, organization etc. A competition
cannot use the same or similar trademark to sell their
product in the market.
3. Patent: A ‘patent’ is an exclusive right granted by the
government which provide the exclusive ‘right to
exclude’ all others and prevent them for making, using,
offering for sale, selling or importing the inventions.
• Patent can only be filed to get rights over an invention
and not discovery.
• A patent grant exclusive writes to the investors for a
period of 20 years and the process of seeking exclusive
rights of the patent for a fee is called licensing.
4. Design: A ‘design’ include shape, Pattern and
arrangement of lines or colour combination that is
applied to any article.
5. Geographical Indication (GI): A Geographical
indication is primarily an indication which identifies
agricultural, natural or manufactured products or
generating from a definite geographical territory, where a
given quality reputation or other characteristics are
essentially attributable to its geographical origin.
6. Plant Variety: plant variety is essentially grouping
plants into categories based on their botanical
characteristics. It is a type of variety which is bred and
developed by farmers.
