Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

Module - III
Enterprise Creation: Starting a small industry
- The various ways in which a small enterprise can be started.
-Starting a business afresh
-Buying an existing business
-Buying a franchise

The major characteristics of a business opportunity

-Good and wide market
-An attractive, acceptable, and
Reliable return on Investment
Brief the various entrepreneurial functions
Scanning the Environment
Locating the business opportunities
Converting the opportunity into reality
Market research or Market study
Business development Plan
Techno Feasibility study
Preparation of the Feasibility Report
Accumulating the Resources
Financial Preparation
Generating Funds
Legal Issues
Organizing Production
Marketing of Products
Managing the Enterprise

Step 1: Do Your Research

Most likely you have already identified a business idea, so now it's time to balance it with a little
reality. Does your idea have the potential to succeed? You will need to run your business idea
through a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer
something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and
even trial and error. As you explore the market, some of the questions you should answer
include:
 Is there a need for your anticipated products/services?
 Who needs it?
 Are there other companies offering similar products/services now?
 What is the competition like?
 How will your business fit into the market?

Page 1
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

Don't forget to ask yourself some questions, too, about starting a business before you take the
plunge.

Step 2: Make a Plan

You need a plan in order to make your business idea a reality. A business plan is a blueprint that
will guide your business from the start-up phase through establishment and eventually business
growth, and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional
business plan is a must. This type of business plan is generally long and thorough and has a
common set of sections that investors and banks look for when they are validating your idea.
If you don't anticipate seeking financial support, a simple one-page business plan can give you
clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a
working business plan on the back of a napkin, and improve it over time. Some kind of plan in
writing is always better than nothing.
Step 3: Plan Your Finances
Starting a small business doesn't have to require a lot of money, but it will involve some initial
investment as well as the ability to cover ongoing expenses before you are turning a profit. Put
together a spreadsheet that estimates the one-time startup costs for your business (licenses and
permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking,
grand opening events, property leases, etc.), as well as what you anticipate you will need to keep
your business running for at least 12 months (rent, utilities, marketing and advertising,
production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small
business, including:
 Financing
 Small business loans
 Small business grants
 Angel investors
 Crowd funding
You can also attempt to get your business off the ground by bootstrapping, using as little capital
as necessary to start your business. You may find that a combination of the paths listed above
work best. The goal here, though, is to work through the options and create a plan for setting up
the capital you need to get your business off the ground.
Step 4: Choose a Business Structure
Your small business can be a sole proprietorship, a partnership, a limited liability company
(LLC) or a corporation. The business entity you choose will impact many factors from your
business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as
your business grows and needs change.

Page 2
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

Depending on the complexity of your business, it may be worth investing in a consultation from
an attorney or CPA to ensure you are making the right structure choice for your business.
Step 5: Pick and Register Your Business Name
Your business name plays a role in almost every aspect of your business, so you want it to be a
good one. Make sure you think through all of the potential implications as you explore your
options and choose your business name.
Once you have chosen a name for your business, you will need to check if it's trademarked or
currently in use. Then, you will need to register it. A sole proprietor must register their business
name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically
register their business name when the formation paperwork is filed.
Don't forget to register your domain name once you have selected your business name. Try these
options if your ideal domain name is taken.
Step 6: Get Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation,
depending on the type of business you are starting and where you are located. You will need to
research what licenses and permits apply to your business during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place. One of the most
important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates
and prices, conduct business with others, and file your taxes. You can set up your accounting
system yourself, or hire an accountant to take away some of the guesswork. If you decide to get
started on your own, make sure you consider these questions that are vital when choosing
accounting software.
Step 8: Set Up Your Business Location
Setting up your place of business is important for the operation of your business, whether you
will have a home office, a shared or private office space, or a retail location.
You will need to think about your location, equipment, and overall setup, and make sure your
business location works for the type of business you will be doing. You will also need to
consider if it makes more sense to buy or lease your commercial space.
Step 9: Get Your Team Ready
If you will be hiring employees, now is the time to start the process. Make sure you take the time
to outline the positions you need to fill, and the job responsibilities that are part of each position.
The Small Business Administration has an excellent guide to hiring your first employee that is
useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is
the time to work with an attorney to get your independent contractor agreement in place and start
your search.
Lastly, if you are a true solopreneur hitting the small business road alone, you may not need
employees or contractors, but you will still need your own support team. This team can be

Page 3
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

comprised of a mentor, small business coach, or even your family, and serves as your go-to
resource for advice, motivation and reassurance when the road gets bumpy.
Step 10: Promote Your Small Business
Once your business is up and running, you need to start attracting clients and customers. You'll
want to start with the basics by writing a unique selling proposition (USP) and creating
a marketing plan. Then, explore as many small business marketing ideas as possible so you can
decide how to promote your business most effectively.
Once you have completed these business start-up activities, you will have all of the most
important bases covered. Keep in mind that success doesn't happen overnight. But use the plan
you've created to consistently work on your business, and you will increase your chances of
success.

Business incubator
A business incubator is a company that helps new and startup companies to develop by providing
services such as management training or office space.

1 Innovation and Entrepreneurship (SINE), IIT Mumbai,

2 Technology Business Incubator, IIT Delhi
3 Technopark Technology Business Incubator (T-TBI), Kerala
4 Startup Village
5 Indian Angel Network (IAN)
6 Technopark TBI
7 Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad

Page 4
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

8 NSRCEL, IIM Bangalore

9 GSF Accelerator
10 Angel Prime
Innovation and Entrepreneurship (SINE), IIT Mumbai
If you’ve heard of Webaroo, Bhugol GIS and SMSGupshup.com, then you must know that these
ventures came into existence because they were nurtured and incubated by SINE – the tech
incubator housed at IIT Bombay. Think LABS Techno solutions, an educational robotics
venture, Myzus Technologies and Elnfinitus are amongst some of the famous businesses that
SINE has incubated. These startups have been successful in raising venture capital investment
after incubation of upto Rs. 3 crore from the market.

Established in 2004, SINE can incubate an average of 15 companies at a time and has an
infrastructure spread over 10,000 sq.ft. They still haven’t opened up to external business
incubation because ideas from within IIT just don’t stop flowing! To know more, visit their
website.

Technology Business Incubator, IIT Delhi

Run by IIT, Delhi, this incubator is accepts icubation applications from either IITD students,
alumni or one of the members of the Acadamic staff only. The selection criteria is quite
stringent. If external startups want to be a part of it, they can explore having tie-ups with the
college professors, which can then enable you entry into TBI.

You can check more details on their website.

Techno park Technology Business Incubator (T-TBI), Kerala

Established in 2006 with the support of the Government of Kerala, T-TBI offers fully furnished
working spaces spread over 15,000 sq.ft, expert opinions and guidance from the industry,
marketing and legal management consultancy and financial assistance.

T-TBI has till date successfully incubated about 60 companies and has had a 92 percent success
rate. In early 2011, T-TBI was chosen as the world’s best software incubating company and the
first Indian organization to have achieved this status. To know more, visit their website.

Startup Village
Startup Village is a different kind of incubator which is a public private enterprise run by
Government of Keral. The Govt has earmarked Rs. 100 crore for Startup Village and want to
incubate over 1000 startups in 10 years.

Interestingly, students entrepreneurs are offered with various perks to be part of this incubator
including getting attendance at college, grace marks and even tax exemption for business

Page 5
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

generated by startups incubated within Startup Village premises. You can find more details on
their website here.

Indian Angel Network (IAN)

IAN in an equity based business incubator center that gives priority to ventures in the areas of
healthcare, gaming and animation cloud computing, retail, mobile VAS, media and
entertainment, alternative energy, education and clean technology. It has been established with
the support of the National Science & Technology Entrepreneurship Development Board and the
Department of Science & Technology of the Government of India.

In addition to the regular functions of a business incubator, the IAN incubator helps startups to
get seed funding and pre angel funding through its tie-up with Small Industries Development
Bank of India. The IAN also has strategic alliances with DST supported incubators, corporate,
R&D labs and many industry associations.

The IAN incubator is particularly famous for the activities it organizes – from its ‘Open
Saturdays’ to angel investors meet to workshops for training entrepreneurs. To know more, visit
their website.

Technopark TBI
Technopark Technology Business Incubator (T-TBI), is the India’s first Non Academic Business
Incubator, hosted and housed inside the Asia Largest IT Park Technopark. Technopark
Technology Business Incubator (T-TBI), a joint association of Technopark, Trivandrum and the
Department of Science and Technology (DST), Government of India, to help the technology
business start-ups.

TBI provides startups with fully furnished office spaces, mentoring support in developing
business and technology plans, networking of business resources, seed capital assistance,
marketing assistance, professional assistance, conference facilities and video conference
facilities.

You can find more information about them here.

Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad

A business incubator housed at India’s prime business school simply cannot be left out of the
list. Having started incubation initiatives since 2007, CIIE has an interesting perspective on why
it doesn’t provide physical space for business incubation. They want entrepreneurs to build their
ideas from wherever they are stationed, so that the local economy benefits from its growth.
From the time it started, CIIE has incubated more than 50 companies, only a handful of which
were owned by IIM students. CIIE has been incubating businesses in the areas of internet and
mobile technology, clean technology, social sector startups and healthcare.

Page 6
Small and Medium Enterprise Management (Compiled Notes) 17 HOE 761

From mentoring clinics to art exhibitions from global warming initiatives to social enterprise
funds, CIIE has evolved as a prestigious business incubation centre in India. Some of the CIIE’s
incubatees are Colored.by, Biosense, Boond, Croak.it, Flick2Know, Ideophone, amongst a host
of others. To know more, visit their website.

NSRCEL, IIM Bangalore

NSRCEL is an incubation center run and managed by IIM, Bangalore. They offer various
incubation offers all the basic facilities to startups including an office space, desktops, Hi Speed
Internet facility, Uninterrupted Power supply etc. The incubator provides mentoring from their
eminent faculties and also offers seed money support to some of the incubatee companies. The
funding is primarily through government grants and its disbursement is in accordance with the
guidelines that have been laid down by the primary funding agency.

Screening is done by the screening committee before startups can get into NSRCEL. You can
check more information on their website here.

GSF Accelerator
GSF is a private accelerator rather than a incubator. However, many startups from their portfolio
have been quite successful. Some of them have got acquired by likes of Facebook or then raised
hefty Series A funding after being mentored at GSF and hence we are including them in the list.

According to their website, GSF wants to push innovation and entrepreneurship in India through
angel and seed investing. Their larger mission is to encourage flow of informed, knowledgeable
mentorship capital to the start-ups in India and beyond.

AngelPrime
AngelPrime was launched recently in 2011 in Bengaluru by well known names in the Indian tech
industry like Bala Parathasarathy, Shripati Acharya and Sanjay Swamy. The areas that
AngelPrime aims to incubate in are mobile payments, e-commerce and smartphone / tablet apps.
It has already begun incubating a mobile payments company and a smartphone and tablet startup.

Unlike the CIIE, Angel Prime believes in incubating their ventures at their office space so that
they can be closely monitored. Angel Prime has an edge in its services because the founders
bring their previous corporate networks and experiences into incubating new ventures. To know
more, visit their website.

Business incubators play a large role in reducing the gap between new products / services in
stages of ideation to their commercial rollout. It also provides an equal platform to all
entrepreneurs so that they can create products and services that will benefit all sections of the
society.

Page 7