Unit 2 Notes

(Entreprenureship Development)

B.COM 1st

Project Proposal

A project proposal is unique to each project, of course, but the format is basically
the same, if you follow a basic outline. We have even created a free project
proposal template to help you structure your document so you don’t have to
reinvent the wheel each time you’re drafting your proposal. This helps you focus
on the substance of the proposed plan, while using an easy-to-follow project
proposal outline.

Most project proposals (including our template) are designed to help you answer
all of those questions as you complete your document. Our project proposal Word
template, for example, is broken up into these six basic parts:

1. Executive Summary: Think of this as the elevator pitch; it sketches out the project
in a way to hook the sponsor.

2. History: Put the project in context; note any precedents and how they can help or
hurt the project’s success.

3. Requirements: Describe in detail the business problem the project solves or what
opportunity does it take advantage of.

4. Solution: Explain the plan to solve the problem or exploit the opportunity.

5. Authorization: Note the people who have authorization throughout the project.

6. Appendix: This is where you attach papers supporting your proposal.

A project proposal is a document that is used to convince a sponsor that a project

needs to be kicked-off to solve a particular business problem or opportunity. It
describes in depth, how the project is going to be commenced so that the sponsor
understands what is involved early.

How to write

A project proposal is the document that facilitates a professional relationship

between an organization and outside contributors. Typically, a project proposal is
the initial framework for establishing the concept of the project and includes what
you want to accomplish, an explanation of objectives, and plans for achieving
them. It is common for a project proposal to include a list of activities or tasks that
will be associated with the project, illustrate the significance of this specific project
idea, and explain the origins of this project.
A project proposal is also the marketing document that kicks off a relationship
between an organization and outside project stakeholders. Creating a proposal
allows an organization to establish a formal, logical presentation to an outside
worker or project donor. Proposals are generally drafted during one of the early
phases of your project (before detailed plans are made and resources are allocated).
Therefore, time and budget estimates are often rough, at best.

Why do you need a project proposal?

A proposal is required to get executive buy-in for a new project, program, or

service at your organization get everyone on the team thinking about the same
goals and priorities need to make new hiring decisions or budget adjustments

What are the advantages of a clear project proposal?

- Establishes Project Viability. Clear proposals prove the viability of a project or

program.
- Clarifies Expectations. Increase clarity regarding requirements and project
roadmap.
- Creates Structure. Structure and organization is established up front, reducing
the chance for misalignment.
 - Increases Budget. Successful proposals lead to approved budgets and financial
support for organizational growth and project replication.
- Fuels Business Growth. Proposals play an integral part in organizational growth,
helping in budget approval and new client adoption.
- Exposes the Brand. Reaching out to stakeholders and building alliances
increases credibility and exposure in the community at large.
- Ensures Future Success. Having detailed your project’s methods and
measurement tools in advance builds accountability into every step of your work.
- Establishes How to Plan for Success. Integrating grant writing into day-to-day
work turns proposals into useful planning documents and detailed templates for
project implementation.

How to Write a Project Proposal

After considering what type of proposal is the best fit for you and your project, it is
time to start planning your document. It is imperative to keep in mind that,
regardless of the proposal type, you will always want to check the following boxes
when starting a proposal document.
 Define your audience.
 Determine the problem being solved by your proposal.
 Conduct research on the current state of the issue and potential solutions.
 Proactively determine the effect that this project will have on company success.
 Establish a timeline and determine the type and amount of resources required.
 Begin to outline your proposal document.

Sample Project Proposal Outline

Section 1: Project Information

This section intends to provide a high-level picture of the project as well as convey
the most critical project details.
Include the following in this section:
 Name of the Organization
 Project Title
 Project Summary
 Project Timeframe
 Prepared By
 Attached Documentation
 Project Contacts (any individuals involved in the project)

Section 2: Project Summary

The goal of this section is to present the reasons for doing this project as well as
stating all of the objectives. In this section in particular, it is very important to
write concisely and clearly. Some project professionals even suggest writing the
project summary last. Before you begin writing, you should be able to answer the
following questions.
 Why are you doing this project?
 What will you be doing?
 How will you be doing it?
 Who will be doing it?
 Where will it be done?
 How long will it take?
 How much will it cost?

Project Background This section of the proposal requires a few succinct

sentences that clarify the problem your proposal is tackling. Here, it is critical to
explain the current state of the problem and why your audience should care about
solving it. Make sure to include references and statistics in this section. Best
practice is to keep this no longer than 1 page.
Project Objectives: Use this section of the proposal to explicitly list the goals that
the project is trying to achieve.

Section 3: Project Methodology

The project methodology section of a proposal is where you detail the plan for how
the objectives mentioned in the previous section will be achieved. This is the first
section of the proposal that details the course of action to remedy the problem and
is meant to prove that adequate research has been done for this decision. To start,
outline the methodology being used, the population being addressed, and establish
the process for reaching your objectives. This section is typically broken into three
parts:
The Project Approach Summary Use a few sentences to describe the overall
approach to the project. This includes how the team will be organized, what tools
will be used, and how changes will be addressed during execution.
Task Breakdown and Time Estimates This is the section of the proposal where a
detailed project schedule is presented. To start, make a list of tasks that are
required for the project as well as an estimation of the hours required to complete
each one. From there, you can take a look at your resource pool and allocate your
team accordingly. The purpose of this section is to establish the time and steps it
will take to achieve the solution, as well as the resources involved in each section.
Here is where you start to see ideas turn into action. A project proposal will often
include a gantt chart outlining the resources, tasks, and timeline.
Project Deliverables This is where you list out all the deliverables you expect to
see after the project is closed. For example, this could be products, information, or
reports that you plan to deliver to a client. Ensure that each deliverable has an
associated estimated delivery date.

Section 4: Project Risk Management

This section is dedicated to managing change during project execution. Clients
know that a proposal rarely covers everything that is required to achieve the given
project, so change management techniques are required. Establish how you will
monitor project success throughout its entire life cycle to show clients that when
and if change occurs, the project will not go haywire. This section is broken into
two parts:
Risk Management Plan A detailed plan of action to minimize the chance of risk
or change during the project lifecycle.
Risk Register A line-item list of risks and potential counter efforts that will be
used to counteract these risks.

Section 5: Project Costs

This section is dedicated to estimating the overall cost of the proposed project and
is broken into three major parts:
 Project Budget This should be a detailed, line-item budget broken up by different
project categories, such as travel, salary, or supplies. Ensure all overhead or
indirect costs are also included in the budget.
Budget Narrative This is a brief list of commentaries on the budget if any further
clarification or justification is needed.
Additional Financial Statements Some projects, depending on complexity, will
require additional financial statements like a profit and loss statement, a tax return,
or funding sources.

Section 6: Conclusion
The conclusion section of a project proposal intends to be a brief review of all the
points already discussed. This is your last chance to win over your audience, so
ensure that you incorporate the most important evidence to receive approval. This
is also the final moment to prove you have adequately researched all solutions and
your proposed method is the best for business.

Section 7: Appendix
This section is dedicated to any additional charts, graphs, images, or reports that
were cited in the proposal. Many times, referenced material will go into the
appendix as it does not naturally fall into the main body copy of the proposal.
Final Thoughts:
 Determine your project proposal type first for an effective presentation.
 Make sure your proposal targets your audience and clearly defines the problems it
will solve.
 Follow the seven sections of a proposal to more effectively convince your
audience.

Need of Project Proposal

 Clearly State Objectives and Expected Outcome

 Provide a Good, Professional First Impression
 Give a Menu List for Clients for Possible Future Projects
 Make Revision Process More Efficient
 Production management
Meaning of Production Management:
Production Management refers to the application of management principles to the
production function in a factory. In other words, production management involves
application of planning, organizing, directing and controlling the production
process.

The application of management to the field of production has been the result
of at least three developments:
(i) First is the development of factory system of production. Until the emergence of
the concept of manufacturing, there was no such thing as management as we know
it. It is true that people operated business of one type or another, but for the most
part, these people were owners of business and did not regard themselves as
managers as well,

(ii) Essentially stems from the first, namely, the development of the large
corporation with many owners and the necessity to hire people to operate the
business,

(iii) Stems from the work of many of the pioneers of scientific management who
were able to demonstrate the value, from a performance and profit point of view,
of some of the techniques they were developing.

It is observed that one cannot demarcate the beginning and end points of
Production Management in an establishment. The reason is that it is interrelated
with many other functional areas of business, viz., marketing, finance, industrial
relation policies etc.

Functions of Production Management:

The definitions discussed above clearly shows that the concept of production
management is related mainly to the organizations engaged in production of goods
and services. Earlier these organizations were mostly in the form of one man shops
having insignificant problems of managing the productions.
But with development and expansion of production organizations in the shape of
factories more complicated problems like location and lay out, inventory control,
quality control, routing and scheduling of the production process etc. came into
existence which required more detailed analysis and study of the whole
phenomenon.

This resulted in the development of production management in the area of factory

management. In the beginning the main function of production management was to
control labor costs which at that time constituted the major proportion of costs
associated with production.

But with development of factory system towards mechanization and automation

the indirect labor costs increased tremendously in comparison to direct labour
costs, e.g., designing and packing of the products, production and inventory
control, plant layout and location, transportation of raw materials and finished
products etc. The planning and control of all these activities required more
expertise and special techniques.

In modern times production management has to perform a variety of

functions, namely:
(i) Design and development of production process.

(ii) Production planning and control.

(iii) Implementation of the plan and related activities to produce the desired output.

(iv) Administration and co-ordination of the activities of various components and

departments responsible for producing the necessary goods and services.

Financial Management

Financial Management is a vital activity in any organization. It is the process of

planning, organizing, controlling and monitoring financial resources with a view to
achieve organizational goals and objectives. It is an ideal practice for controlling
the financial activities of an organization such as procurement of funds, utilization
of funds, accounting, payments, risk assessment and every other thing related to
money.

Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and

control of financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the
earning capacity, market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they
should be utilized in maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe
ventures so that adequate rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair
composition of capital so that a balance is maintained between debt and
equity capital.

Functions of Financial Management

1. Estimation of capital requirements: A finance manager has to make

estimation with regards to capital requirements of the company. This will
depend upon expected costs and profits and future programmes and policies
of a concern. Estimations have to be made in an adequate manner which
increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been
made, the capital structure have to be decided. This involves short- term and
long- term debt equity analysis. This will depend upon the proportion of
equity capital a company is possessing and additional funds which have to
be raised from outside parties.
3. Choice of sources of funds: For additional funds to be procured, a company
has many choices like-
a. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn like in form of bonds.
 Choice of factor will depend on relative merits and demerits of each source
and period of financing.

4. Investment of funds: The finance manager has to decide to allocate funds

into profitable ventures so that there is safety on investment and regular
returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance
manager. This can be done in two ways:
a. Dividend declaration - It includes identifying the rate of dividends and
other benefits like bonus.
b. Retained profits - The volume has to be decided which will depend
upon expansion, innovational, diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards
to cash management. Cash is required for many purposes like payment of
wages and salaries, payment of electricity and water bills, payment to
creditors, meeting current liabilities, maintenance of enough stock, purchase
of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and
utilize the funds but he also has to exercise control over finances. This can
be done through many techniques like ratio analysis, financial forecasting,
cost and profit control, etc.

Marketing Management

According to Philip Kotler, “Marketing management is the analysis, planning,

implementation and control of programmes designed to bring about desired
exchanges with target markets for the purpose of achieving organisational
objectives.

Importance of Marketing Management:

(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Identification of Export market.

(v) Development in the means of communication and modes of transportation

within and outside the country.

(vi) Rise in per capita income and demand for more goods by the consumers.

Consumer management

One definition of Customer Management would be that it encompasses all the

systems, processes and applications needed to manage the customer relationship.

Customer Management systems and applications (also known as CRM, or

Customer Relationship Management) are used to capture, research and analyze
information such as customer behavior, buying preferences and demographics.

Customer retention and loyalty are important goals for successful companies. This
business aim to retain and develop a core customer base. Good customer
management enables companies to ensure the services they provide are in line with
what the customer wants. Importantly, it can also identify further opportunities for
growth.

Forms of Organization

1. Sole-Proprietorship

o Sole provider of capital

o The sole bearer of risks

o Unlimited liability

A sole proprietor is the unquestioned king of his venture. He owns it. He controls it
from the word go. He provides the needed resources and launches the enterprise on
his own. He burns up his candle of energies on everything. He brings his skills,
knowledge and expertise to the table. He plans every step. He hires people, if
additional hands are required. He interacts with customers and does everything
possible to please them.

Advantages:
i. Entrepreneurs can set up units without any fear of unlimited liability.
ii. The liability of the owner is limited
iii. Business secrets need not be divulged to any outsider
iv. Quick decisions can be taken
v. Profits need not be shared with anyone else
vi. Owners can have full grip and control over the business, and
vii. Nominees can easily slip into the shoes of owners who suffer death suddenly.
Disadvantages:
i. The concept is still in its infancy and does not seem to enjoy popularity as of
now.
ii. Single person control may encourage owners to indulge in unethical practices.
iii. The scope for fraud is very high since close control and monitoring from the
regulator is missing.
iv. Owners may indulge in careless, reckless use of critical resources and draw the
shutters down when the going gets tough. The banks and financial institutions who
might have supported the venture might have to bear the losses if owners show
unprofessional and unethical conduct.

2.Hindu Undivided Family (HUF) Business

o Formed by birth in a Hindu family

o The family pool of resources

o Family members are automatic co-owners

o Head of the family (Karta) is the decision maker

o The Karta has unlimited liability

Joint Hindu Family Business is a distinct type of organisation which is unique to
India. Even within India its existence is restricted to only certain parts of the
country. In this form of business ownership, all members of a Hindu undivided
family do business jointly under the control of the head of the family who is known
as the ‘Karta’. The members of the family are known as ‘Co-parceners’. Thus, the
Joint Hindu Family firm is a business owned by co-parceners of a Hindu undivided
estate.
Its main features are:
i. It comes into existence by the operation of Hindu law and not out of contract.
The rights and liabilities of co-parceners are determined by the general rules of the
Hindu law.
ii. The membership of this form of business is the result of status arising from the
birth in the family and its legality is not affected by the minority. Originally, only
three successive generations in the male line (grandfather, father and son)
constituted the membership of this organisation.
By the Hindu Succession Act, a female relative of a deceased member or a male
relative of such a female member was made eligible for a share in the interest of
the related member (called co-parcener) at the time of his death. There is no legal
limit to the maximum number of members.
iii. Registration is unnecessary, but the rights of its members to sue third parties for
claims of debt remain unaffected.
iv. It is managed generally by the Karta. He has the authority to obtain loans
against the family property or in other ways. Other members have no right of
management or to contract loans binding on the joint family property.
v. The manager or the Karta has the last word in the formulation of all policies and
in their execution. He has unquestioned authority in the conduct of the family
business.
vi. The Karta has unlimited liability while the liability of the other members is
limited to the value of their individual interests in the joint family.

vii. The firm enjoys continuity of operations as its existence is not subject to the
death or insolvency of a co-partner or even of the Karta himself. Thus, it has a
perpetual life like the public limited company.
3.Partnership

o Two or more persons can start a partnership firm (maximum 20)

o Profit and risk sharing can be pre-determined

o The firm works for common and mutual goals

o Liability of all partners is joint and several

A partnership is an association of two or more individuals who agree to carry on

business and share gains collectively. According to Section 4 of the Partnership
Act, 1932, partnership is “the relation between persons who have agreed to share
profits of a business carried on by all or any one of them acting for all”.
Contents of a Partnership Deed:
i. The amount of initial capital contributed by each partner
ii. Profit or loss sharing ratio for each partner
iii. Salary or commission payable to the partners, if any
iv. Duration of business, if any
v. Name and address of the partners and the firm
vi. Duties and powers of each partner;
vii. Nature and place of business; and
viii. Any other terms and conditions to run the business

4.Limited Liability Partnership (LLP)

o Limited liability of each partner

o No personal liability of any partner (except in the case of fraud)

o It is a legal entity and is separate from its partners

o
o No maximum limit on the number of partners

LLP, a legal form available world-wide is now introduced in India and is governed
by the Limited Liability Partnership Act, 2008, with effect from April 1, 2009 LLP
combines the meritorious features of both a company and a partnership business.
LLP enables professional expertise and entrepreneurial initiative to combine and
operate in flexible, innovative and efficient manner, providing benefits of limited
liability while allowing its members the flexibility for organizing their internal
structure as a partnership.
Advantages:
i. It is relatively a more stable form of business than partnership (resignation or
death of partner does not impact its existence).
ii. The liability of partners is limited.
iii. It is a body corporate that is separate from its partners.
iv. It is a flexible corporate vehicle that permits corporate dynamism and is not
bound by a restrictive framework.
v. LLP can be set up easily. An existing venture can also be converted into the LLP
without any problem.
vi. It can enhance its resource base quite easily as there is no restriction on the
number of members.
Disadvantages:
i. Secrecy cannot be maintained as its books are subject to audit and inspection.
ii. LLP has more formalities and procedures to be observed when compared to sole
proprietorship or partnership.
iii. It is a new form of business and many tax and legal issues remain unresolved as
of now.

5.Joint Stock Company:

The Companies Act, 1956 defines a company as an artificial person created by law,
having a separate legal entity, with perpetual succession and a common seal. A
company, thus, is a voluntary association of individuals formed to carry out some
lawful activity. The capital—jointly contributed by shareholders (hence the name
joint stock company)—is divided into transferable shares of fixed denomination.
The liability of members is generally limited. A company has an artificial
personality of its own which is different from the shareholders. It has a common
seal and enjoys perpetual existence

 Private Company
 o Minimum members = 2, maximum members = 200, and a minimum of two
directors

o Certain restrictions on the transfer of shares

o Once incorporated, the company can start the business

A private limited company can be formed by at least two individuals having

minimum paid-up capital of not less than Rupees 1 lakh. The maximum number of
members in a private limited company is 50. It cannot raise money—through
shares or debentures—from the general public through an open invitation. It cannot
raise deposits from persons other than its members, directors or their relatives. In a
private limited company, the shares are not freely transferable. Invariably, a private
company is required to use the name ‘private limited’ in its name.

 Public Company
o Minimum members = 7, maximum members = no limit, and a minimum of
three directors

o Shares are freely tradable on the stock exchange through a listing

o Also, post-incorporation, the company must obtain a Certificate of

Commencement of Business to start the business

A minimum of seven members are required to form a public limited company. It

must have a minimum paid-up capital of Rs. 5 lakhs. There is no restriction on
maximum number of members. The shares allotted to the members are freely
transferable. Public limited companies can raise funds from general public through
open invitation by selling its shares or accepting fixed deposits. Such companies
are required to write either ‘public limited’ or ‘limited’ after their names. The
liability of a member of a company is limited to the face value of the shares he
owns.

6.Co-Operative Organization:
Co-operative organization is a society which has as its objectives the promotion of
the interests of its members in accordance with the principles of cooperation. It is a
voluntary association of ten or more members residing or working in the same
locality, who join together on the basis of equality for the fulfillment of their
economic or business interest.

Its main features are:

It is a voluntary organization as a member is free to leave the society and withdraw

his capital at any time, after giving a notice.
ii. The minimum number of members is 10, but there is no limit to the maximum
number of members. However, the members must be residing or working in the
same locality.
iii. Registration of a co-operative enterprise is compulsory. A co-operative society
may be registered with the Registrar of Co-operative Societies.
iv. After registration a co-operative enterprise becomes a body corporate
independent of its members i.e. a separate legal entity.
v. It is subject to the provisions of the Co-operative Societies Act, 1912 or State
Co-operative Societies Act. It has to submit annual reports and accounts to the
Registrar of Societies.
vi. The liability of every member is limited to the extent of his capital contribution.
vii. The shares of co-operative society cannot be transferred but can be returned to
the society in case a member wants to withdraw his membership