Entrepreneurship 4 Marks Question

The Project Report is basically a business plan that describes all necessary inputs to the enterprise, explains the mode of utilisation of the resources, details the strategies for the execution of the project and also outlines the desired goals.
Uses of the Project Report:
For the entrepreneur- It is a blue print that helps him to explain his idea in factual terms to his associates, financiers, clientele and the market. It can be interpreted in the form of SWOT analysis.
For the Government- There may be several statutory and legal requirements, which can be executed based only on a project report. The entrepreneur has to take the clearance from the local municipal authorities or from the corporation for the location of the enterprise.

Major objectives of preparing the Project Report:

1. Identifying the requirement of the resources.
2. To assess the scope and range of the success of the enterprise before its actual commencement.
3. To obtain the opinions of experts from various fields viz. technical, financial, marketing, production, legal etc.
4. To enable the licensing of the enterprise by the concerned authorities and seeking registration for various activities like land, water, electricity, transport and communications etc.
5. For financial appraisal of the project by financial institutions, banks, insurance companies etc.

Feasibility plan: A comprehensive business plan that encompasses the entire range of activities being planned in the business.
Need of feasibility plan-

1. Helps to assess the periodic requirement of the resources and in raising them.
2. Helps the entrepreneur to give a correct position of the project to the financiers, to the market and to the clientele.
3. Helps to execute the project in an organised and systematic manner.

Feasibility plan is a comprehensive plan that encompasses the entire range of activities being planned in the business. It helps to understand the feasibility of the project, the bottlenecks in the progress and implementation.The feasibility plan will help to assess the periodic requirements of these resources and to raise them.
Helps to give the clear picture on the project to financiers to the market and the clients.
It also helps them to execute the project in an organised and systematic manner so that he does not falter at any stage of his development.

Concepts: Cost- essential to identify various costs involved primarily for the purpose of planning and control.
Revenue-amount received as sale proceeds
Break-even-point is the volume of production at which the firm neither makes a Profit nor a loss.
Calculation of BEP
R(PXQ) = C(F+QXV)
Where Q is the quantity sold at the Break Even Point.
Thus, Q(P-V) = F
Q = F/P-V
Thus BEP = Fixed cost/selling price per unit/variable cost per unit.

Advantages of owner's fund:

1. Provides permanent capital.
2. Provides the right to control over management.
3. Provides risk capital.

Limitations of owner's fund:

1. Difficult to raise if profit earning capacity is not high.
2. The amount of owner's fund depends upon the no of persons who are ready to take the risk of investing their personal savings.

Inputs that will help in designing a sales budget:

1. Analysis of past trends of sales.
2. Understanding the market trends.
3. Understanding the trend of the orders.
4. Understanding the market sales reports.

Four Factors affecting the formulation of financial Plan are:

1.	Objective	-	i.e objectives and standards should be clearly expressed as far as possible in quantitative terms.
2.	Solvency & liquidity	-	Funds should be invested in projects likely to give regular return and adequate cash should also be available.
3.	Optimum Structure	-	Capital Structure should be balanced and optimum.
4.	Simplicity	-	Financial plan should be simple economical, appropriate and flexible.
5.	Provision for contingencies	-	Proper provision should be made for contingencies.

The formats of the business plan are: The depth and detail in the business plan depends on the size and scope of the proposed new venture. There is no fixed content for a business plan as it varies according to the entrepreneur's goals and audience (i.e. who are being targeted). Thus, it is common for especially start-ups to have three or four formats as follows for the same business plan.

• Elevator pitch: It is a three minute summary of the business plan's executive summary. This is often used as a teaser to awaken the interest of potential funders, customers or strategic partners.
• A pitch deck with oral narrative: A hopeful, entertaining slide show and oral narrative that is meant to trigger discussion and interest potential investors in reading the written presentation, i.e. the executive summary and a few key graphs showing financial trends and key decision making benchmark.
• A written presentation for external stakeholders: A detailed, well written, and pleasingly formatted plan targeted at external stakeholders.
• An internal operational plan: A detailed plan describing planning details that are needed by management but may not be of interest to external stakeholders.

Feasibility plan is a comprehensive plan that covers the entire range of activities being planned in the business:

1. Objectives of business: Enlist the short range and long range objectives, details of the back ground of the people involved in creating and promoting the enterprise.
2. Operational Plan: Soul of feasibility report. It shows the strategy being adopted by the entrepreneur in maximising the production. Shows the methods of production, the quality concerns, optimisation of resources, cost effectiveness etc.
3. Financial profile: Exact assessment of the revenue, costs, profits and losses, cash-flow dynamics, stock of both raw materials and finished products loans etc.

1. Introductory profile/ general introduction: This is the title or cover page that provides a brief summary of business plan's contents. The information of general nature contained in the introductory profile includes. Entrepreneur's bio-data, Industry's profile, Constitution and organization, Product details.
2. Description of venture/ business venture: This section of the business plan generally begins with the "mission statement" by the entrepreneur describing the size, scope and nature of the enterprise. This includes description of Site, Physical infrastructure, Raw material, Labour, Utilities, Pollution control, Transport and communication system, Machinery and equipments, Production process.
3. Production Plan: Production, the most important activity of an enterprise, because it is here that transformation of raw material into finished product takes place with the help of energy, capital, manpower and machinery. This includes No manufacturing involved, Partial manufacturing , Complete Manufacturing:
4. Operational plan: Operational plan is a system whereby there is achieved a smooth and coordinated flow of work within the factory so that, by planning and control of all the productive operations in all the stages of manufacture, the final product is completed in accordance with the plans. In operational plans include Routing, Scheduling, Dispatching. Follow-Up Inspection Shipping.
5. Financial plan: Finance is one of the most important pre-requisites to establish an enterprise. Availability of finance facilities the entrepreneur to bring together men, material, machines and methods to produce goods/ services.

Feasibility Analysis: It refers to the analysis which helps in knowing the practical possibility. An entrepreneur starts looking the feasibility like technical feasibility helps in knowing that the idea should be converted into reality using available technology, similarly economic feasibility helps in knowing the cost involved in production and after selling it will earn profit or not. The business plan starts after the feasibility report.
The information gathered and presented in a feasibility study will help entrepreneurs to:

• List in detail all the things they need to make the business work.
• Identify logistical and other business-related problems and solutions.
• Develop marketing strategies to convince a bank or investor that their business is worth considering as an investment; and Serve as a solid foundation for developing their business plans.
• Serve as a solid foundation for developing their business plans.

The major objectives of preparing a Project Report are:

1. Assessing the requirement of an the resources i.e. technical, financial, physical and human.
2. Assess the future prospects of project on venture by finding out scope point of success of the enterprise.
3. Obtain the opinion of experts.
4. To obtain the required licenses, approval or permission from the government.
5. To get financial assistance from financial institutions, banks, insurance companies etc.
6. To calculate the profitability of the idea and to find out the critical component of the idea.

Factors affecting formulation of a financial plan:

1. Objective.
2. Solvency and liquidity.
3. Optimum structure.
4. Simplicity.
5. Provision for contingencies.

Feasibility plan is a comprehensive business plan that encompasses the entire range of activities being planned in the business.
The main features of a feasibility plan are as follow.

1. Executive summary.
2. Objective of the business.
3. Attributes of the product/services.
4. Market survey & analysis.
5. Operational plans.
6. Marketing strategies.
7. Human resources & management.
8. Futuristic projections.

Financing planning is deciding in advance how much to spend on what to spend on the basis of availability of funds.
The steps in the process of financial planning are as follows:

1. Estimation: Amount of funds or capital to be required in future is estimated. Three steps. Here the amount of money to be raised based on goals is determined.
2. Determining securities: For acquiring capital what securities are to be issued is determined here. The form, type, size, etc of the securities are to be determined.
3. Formulation of policies: After estimating the requirement and determining securities the next is formulating policies for administrating the capital. This involves the marking of various targets ensuring proper utilizations of funds etc.

Inspite of certain restrictions imposed on a private company, it enjoys certain privileges under the Companies Act. A substantial number of entrepreneurs prefer to form a private company because of the following important privileges.

1. Only two members are required to form a private company.
2. Only two directors are required to constitute the quorum to validate the proceedings of the meetings.
3. Such company can file a statement in lieu of prospectus with the Registrar of Companies.
4. It can commence its business immediately after incorporation.
5. Holding of a statutory meeting or filing of a statutory report is required by a private company.
6. A non-member cannot inspect the copies of the profit and loss A/c filed with the Registrar.
7. Limit on payment of maximum managerial remuneration does not apply to a private company.
8. Restrictions on appointment and reappointment of managing director do not apply.
9. Maintaining of index of members is not required by a private company.
10. Directors of the private company need not have qualification shares.

Choice of form of structure will have following long-term implications:

1. Level of control, the entrepreneur wishes to have.
2. Vision regarding the current and future size of business.
3. Organisational structure, the entrepreneur will have to deal with.
4. The business vulnerability to lawsuits.
5. Tax implications are different for various forms of business.
6. Expected profit (or loss) of the business.

Values should be kept in mind are:

1. It should avoid any anti-social and unfair trade practices.
2. It should meet social objectives, viz production of good quality goods, generation of employment, etc.

In my opinion, the should be democratic form of organisation where power is decentralised and communication from both the ends. This is because of following reasons:

1. Creativity: This will enhance the creativity as there will be ample freedom of expression in the firm.
2. Team work: Team work will be enhanced as there will be democratic set up. There will be more positive interaction between the employees and the management.
3. Consideration for others: Democratic set up ensures consideration for others. This will create more belongingness in the enterprise leading to more better working environment.
4. Humanism: Human feeling will be more positively and effectively utilised for the betterment of the enterprise and also for enhancing the productivity.

Partnership deed is a written agreement between persons to carry on a business as partners and share gains arising out of business. A partnership deed is necessary for avoiding any misunderstanding and can serve as a proof during litigation.Some contents of a partnership deed are as follows:

1. Name of the firm.
2. Nature of the business.
3. Name of partners.
4. Place of business.
5. Amount of capital to be contributed by each partner.
6. Profit sharing ratio between partners.
7. Loans and advances from the partners and the rate of interest thereon.
8. Drawings allowed to partners and the rate of interest charged thereon.
9. Maintenance of accounts.
10. Duties, powers and obligations of partners.

The values violated by partners by entering into an oral agreement are as follows:

1. Clarity and certainty: By entering into an oral agreement, the partners are promoting ambiguity and uncertainty.
2. Peaceful co-existence: An oral agreement may give rise to future disputes, thus proving to be an obstacle in peaceful co-existence.

If I am the entrepreneur in the stage of deciding a business name of my product then I will not keep the name of the enterprise, similar to one of the enterprises that is already doing really well in the same line of business. Instead I will go for a completely new name for my enterprise and create a brand name of my own. This is because:

1. Honesty: Having a new brand name is a honest attempt to start a new venture.
2. Creative: Altogether new enterprise will mean that the entrepreneur is creative.
3. Initiative: This indicates that the entrepreneur is taking initiative for starting a new thing.
4. Discipline: In this case, by opening a new enterprise with a new brand name indicates that the entrepreneur is well aware of the business ethics and is a strict disciplinarian.

S.No.	Private Company	Public Company
1.	It has a minimum of 2 and a maximum of 50 members excluding its past and present employees.	Has minimum seven people to commence it with no upper limit to membership.
2.	It restricts the right of its members to transfer shares.	It does not restrict any transfer of shares.
3.	Has a minimum paid up capital of one lakh rupees.	Has a minimum paid up capital of five lakh rupees.
4.	Uses the word 'Pvt. Ltd.'at the end of its name.	Uses the word 'Ltd.' at the end of its name.

1. Profession.
2. Business.
3. Business.
4. Employment.
5. Profession.

Most people have good business idea and also try to put their ideas to action to start a business. In the early phase, there are financial constraints to start their business and they solely take the endeavour ahead.
Slowly as the business grows and success over a large area can be envisaged. They try to encash the opportunity by entering into partnership and to make it national or international affair. They form a company and finally, a multinational company is born.

Following are the most commonly adopted techniques for forecasting:

1. Marketing research/ Market test method: A company may conduct a direct market test, and on the basis of its outcome, sales forecast is made. This method may be used either independently or as a supplement to other methods. It is used more frequently by consumer goods marketers. It may also be used by industrial goods marketers. When this method is used by industrial goods marketers, it is called a market probe.
2. Industry sales/ Industry forecast: Under this method, a company estimates its sales by applying a certain percentage (based on past sales or expected sales) to the sales forecast of the whole industry. The sales forecast for the whole industry can be obtained from the Government or trade associations or other outside agencies. This method is very simple. Besides it is quick and less expensive.
3. Survey of buyers’ intentions: Under this method of sales forecasting, first, a list of all potential or prospective buyers is drawn up. Then, a face to face interview with a selected group of potential buyers is conducted. On the basis of the interview, the buyers’ intentions are ascertained and an estimate of the sales of the products of the firm is made. This method is a practical method of sales forecasting. This method or approach is, generally, adopted by industrial marketers, i.e., marketers of industrial goods.
4. Expert opinions: Under this method, the opinions of the experts are sought, and on that basis sales forecasts are made. The experts may be outside experts or top executives of the firm itself, such as the production executive, marketing executive, finance executive, etc.
5. Financial data on similar start-ups.
6. Some trial experience of self or others.

Entrepreneur should add unique selling point in the existing plan to get a creative niche above others. This is because of following reasons:

1. This will indicate that the entrepreneur is creative and so want to solve the problem with creativity.
2. It also will mean that the entrepreneur has the ability to concentrate on the problem and have a suitable solution.
3. Here the entrepreneur will be a problem solver and is not afraid of competition.
4. It also reflects that the entrepreneur has got the quality of endurance which is an essential trait for a successful entrepreneur.

1. Planning, is thinking in advance what is to be done when it is to be done, how it is to be done and by whom it should be done.
2. It's an intellectual thinking process that never ends.
3. It is the organized foresight and the vision based on facts and experience.
4. It bridges the gap between where we are standing and where we want to reach.

Following persons/ professionals are consulted by the entrepreneur while preparing a business plan:

1. Lawyers.
2. Accountants.
3. Marketing consultants.
4. Engineers.
5. Internet sites.
6. Officially appointed or/ and set up banks, specialized financial institutions or agencies to promote entrepreneurship,
7. Friends, relatives, mentors, etc.

No, I will not keep the name of my enterprise similar to one of the enterprises that are already doing really well in the same line of business, rather I will select a completely new name for my enterprise and create a brand value of my own.
The reason behind my decision will be:

1. By selecting a new name and creating a brand value for my enterprise, I will be able to ensure consumer patronage.
2. I will not be attracting penalty under the Patent, Act Copyright and Trademark Act.
3. Consumer's interest can be awakened by adopting a totally new name.

So, I will choose the second option, while deciding a business name for my enterprise.

Following person(s) must have PAN:

1. All existing taxpayers or persons who are required to furnish a return of income, even on behalf of others.
2. Any person carrying on any business or profession whose total sales, turnover or gross receipts are or is likely to exceed five lakh rupees in any previous year.
3. Any person, who intends to enter into financial transaction where quoting PAN is mandatory.
4. The Assessing Officer may allot PAN to any person either on his own or on a specific request from such person.

Difference between partnership and joint Hindu family business are as follows:

	Basis	Partnership	Joint Hindu family business
1.	Members	Minimum-2, Maximum-20 and 10 in case of banking.	Atleast two persons, no maximum limit.
2.	Capital	Partners contribute capital.	Ancestral property
3.	Liability of member	Unlimited and joint risk shared.	Unlimited for Karta and limited for other members.
4.	Control and management	Partners take decisions with mutual consent.	Karta takes all the major decisions.
5.	Continuity	Stable, but affected by status of partners.	Stable business ensures continuity.

TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued by the Income Tax Department. These two are legally compulsory activities that are to be taken by an entrepreneur. In case this is not followed then following may happen:

1. Legal action against the entrepreneur for not following the legal format.
2. Fine to the entrepreneur.
3. Delay in production in future due to non fulfilment of the documents, or.
4. Wastage of time and money in the future.

Raghav should prevent as well respond to risk. This is because of following reasons:

1. Initiative: This will reflect that he is ready to take initiative which is an essential trait for a successful entrepreneur.
2. Creative: This will indicate that the entrepreneur is creative which will mean that the entrepreneur will have more chances of being successful in future.
3. Discipline: Prevention and responding will require the entrepreneur to be disciplined. This will inculcate the disciplined environment in the enterprise.
4. Compassion: Passion is what required by an entrepreneur for the growth and development of the enterprise.

Organizational plan is a part of the business plan that describes the proposed venture’s form of ownership.
Business can be classified as:

1. Manufacturing business: making of a tangible product.
2. Wholesale business: buying of products in bulk from the manufacturers to be sold in smaller lot to retailers.
3. Retail business: selling product directly to the final consumer for final satisfaction.
4. Service business: selling intangible such as time or expertise.

1. Sole proprietorship.
2. Partnership.
3. Cooperative.
4. Company.

An organisational plan is that part of the business plan that describes the proposed venture's form of ownership, i.e. whether it is:

1. Sole proprietorship.
2. Partnership.
3. Joint Hindu family.
4. Cooperative Society.
5. Joint stock company

A business, having whichever form of ownership, can be categorised as follows:

1. Manufacturing business A business that makes a tangible product.
2. Wholesale business A business that buys products in bulk from the manufacturer to E b e sold in smaller lots to the retailers.
3. Retail business A business that sells directly to the final consumer for final satisfaction.
4. Service provider A business that sells intangible goods such as time and expertise, e.g. insurance companies, banks, etc.

Company form of business is suitable for a entrepreneur when:

1. Heavy industry: Venture is a heavy and basic industry type.
2. Large scale: Large-scale operations are involved.
3. Huge fund: Business requires huge funds.
4. High risk: Enterprise involves heavy risks. satu
5. Complex technology: Enterprise is technologically complex and sophisticated, banking heavily upon experts and professionals.

Under Section 3 (i) (ii) of the Companies Act, a public company is a company which is not a private company. By implication, a public company is one which:

1. Has minimum seven people to commence it with no upper limit to membership.
2. Does not restrict any transfer of shares.
3. Invite public to subscribe for its shares, debentures and public deposits.
4. Has a minimum paid up capital of five lakh rupees.
5. Uses the word 'Ltd.' at the end of its name.

Characteristics of business are as follows:

1. Entrepreneur's presence: There must be a someone who takes up an initiative to start and establish a business. He assumes the risks associated with business.
2. Production or procurement of goods and services: The goods are either produced or procured from someone else to supply it to the consumers.
3. Regularity: One time transaction does not constitutes business. Business is done on regular basis.
4. Profit earning: Profit is the reward for undertaking a business activity and assuming risk in the process. It is necessary to earn enough profits for the survival and growth of business.

Values shown by the entrepreneur are:

1. Avoidance of unfair trade practices.
2. Supply of quality products at fair prices.

A businessman can start his business in either of the following ownership forms:

1. Sole proprietorship: It refers to a form of business organisation which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks.
2. Partnership: It is an extension of sole-proprietorship. It is a form of business organization in which two or more than two persons agree to carry on a lawful business with their personal resources for the purpose of earning profits.
3. Joint Hindu family: It is a form of organisation wherein the business is owned and carried on by the members of Hindu undivided family. This form is found in India only and is governed by the provisions of Hindu Law (The Hindu Succession Act, 1956).
4. Cooperative society: It is a voluntary association of persons who join together with the motive of welfare of the members and society at large. It aims to protect and promote economic and social interests.
5. Joint stock company: It is an association of persons formed for carrying out business activities and has a legal status independent of its members. This form is considered most suitable for operating business activities on a large scale.

Calculation of BEP is useful for the entrepreneur because it help in assessing:

1. Minimum level of output to be produced.
2. The effect of change in quantity of output upon the profits.
3. Selling price of the product.
4. Profitable options in line of production.

An operational plan is a system through which a smooth and coordinated flow of work within the factory is achieved through planning and controlling of all the productive operations in all the stages of manufacture, so that the final product is completed in accordance with the plans. So, basically an operational plan aims at getting the work done by making the persons responsible, allocate resources, set a timeline and stipulate performance indicators.Blue print of an operational plan is as follows:

1. Allocate human resources (Who is responsible?).
2. Allocate financial resources (How much budget is required).
3. Set timelines (When will the task commence and be completed?).
4. Set performance indicators (What are we aiming to achieve?)

The following example gives the blue print of an operational plan of a club which is conducting a drive to increase membership:

Strategies	Time frame	Person responsible	Budget	Other resources
Conduct visits to colleges	Two visits per week to selected colleges starting from 1st April. The visits should be completed by 30th April.	Development officer Mr Rahul	Salary of Mr Rahul ₹ 20,000 pm and expenses of trailer ₹ 5,000 pm	Purchase of trailer
Advertise major events through print and broadcast media	Advertisements to be placed in newspapers in March, June and September.	Promotions co-ordinator Mr Prakash	Cost of Advertisements ₹ 50,000

1. According to Section 3 of Indian Companies Act, 1956, "A company means a company formed and registered under this act or any previous act."
2. It is an association of persons who contribute money in the shape of shares and the company gets a legal entity and enjoys a permanent existence.
3. It is an voluntary association of a person's formed for some common object with capital divisible into units of equal value called 'shares' and with limited liability.
4. It is a creation of law that is the birth of this artificial human being is by law and it can be put to death by law only.

Being a law abiding and honest entrepreneur, I will choose the third alternative.The reasons for my selection are:

1. The first alternative, use of cheaper technology will release waste water into adjoining water bodies and pollute them. This results in negative externalities for the society and may even attract penalty from the regulatory bodies.
2. The second alternative, although helps to recycle the waste water but the price of the product is escalated. This escalated price may lead to fall in demand for my product and the competitors will be able to hold a firm footing in my market.
3. The third alternative is the perfect answer.

In addition to recycling the waste water, the price will remain the same by adopting cost cutting methods in other areas of operational plan.
So, I will choose the third alternative.

As an entrepreneur I will go for the material available in India. This is because:

1. It is the social responsibility of the entrepreneur to go for the betterment and the development of the country.
2. This will also mean that the entrepreneur is going for import-substitution. This will save the precious foreign exchange for the country.
3. National awareness value will be reflected here. It means that the entrepreneur is aware about the national problem.
4. By import substitution he will be fulfilling the requirement of the people, indicating that he cares for the society and the problems of the people.

It is true that Karta has all the powers to manage the family business. He takes all the decisions and coparceners are to accept those decisions whether they like it or not. He has an implied authority to take loan through mortgages, etc., for the business. Other members do not have such rights. We know that one person cannot have all the skills. Some may have good financial skills but may lack managerial skills or some may have technical skills but may lack financial skills. So, if the Karta is a man of limited abilities and he does not take required help from coparceners, then any wrong decision taken by him will harm the whole family business. So, we can say that Karta has full capacity to either make or break the family business.The values not regarded by Karta are as follows:

1. Trust and confidence of coparceners.
2. Irresponsible behaviour.

Following are the types of economic activities:

1. Profession.
2. Employment.
3. Business.

1. Profession: "Profession is that occupation in which one professes to have acquired sperialized knowledge, which is used either in instructing, guiding or advising others," Webster's Dictionary It includes Lawyers, Doctors, Chartered Accountants, Company Secretaries, etc. Here, individual apply special knowledge and skills.
2. Employment: Employment is an activity in which an individual works regularly for others and get remuneratioz/ compensation in return, undertaking personal services as per the agreement of employment.
3. Business: Business may be defined as "An activity in which different persons exchange something of value whether goods and services for mutual gain or profit.” Peterson and Plowman.

It is a continuous economic activity undertaken with objective to earn profit by producing, and buying and selling of goods and services.

Any kind of business will fall into one of the four basic categories:

1. Manufacturing:It makes a tangible product.
2. Wholesale: It buys products in bulk from the manufacturers to be sold in smaller lot to retailers.
3. Retail: It sells the product directly to the final consumer for final satisfaction.
4. Service:It sells intangible such as time or expertise.

As an entrepreneur I will go for the third alternative i.e. alternative "C" . This is because of following:

1. It indicates the efficient utilization of resources.
2. It will also mean proper utilisation and re-utilisation of resources. It shows the entrepreneur’s concern for environment.
3. This step indicates that the entrepreneur is aware of his responsibility as a mark of citizenship.
4. This step reflects the resourse fullness trait of the entrepreneur.