|The setting up of small enterprise involves number of activities to be
completed and several important issues to be
understood. Apart from these the entrepreneur has to take many important
decisions in order to be successful.
The project of establishing the small industry can be explained
in the following step by step approach:
The First Step:
The individual has to take the decision to get self-employed
rather than scout for job.
The personality traits
of the to be entrepreneurs are:
Intuition: Instantaneous and instinctive perception of Opportunities
Vision :Imaginative foresight
Optimism : Faith in oneself and confident endeavor in search of opportunities
Dynamism : An ability to face the pace of change
Enterprise: Rational risk taking and capacity to manage men & material
Determination: Indomitable will.
The second step:
Decision on the type of activity to be undertaken or the
identification of the dream project. Thousands of
manufacturing projects, service ventures, Business activities are possible
under the small industry sector
classified as mechanical, electrical, electronics, glass, ceramics, hosiery,
food leather, and other categories.
Entrepreneurs have to carefully think over on the project selection
taking into consideration several factors such as:
a) His inclination/aptitude towards the project,
b) His background such as education, technical skills, and training
c) Potential for making profits
d) Availability of technical know-how, machinery and raw materials
e) Substantial market/demand for the products/services planned
f) Capacity to invest : the project investment requirements should
be within the limits of the entrepreneur.
The third step:
Deciding on the size of the project:
The level of Investment will decide the status of the venture under
any of the following categories:
small manufacturing industry, ancillary industry, export oriented unit, tiny
sector, service venture or Business enterprise. One has to take this decision depending on one's investment capacity
Location of the Project:
The selection of the place to setup venture as to be done taking into
consideration the following:
a) Nearness to market b)Availability of basic infrastructures like power, water, roads, trained
labor, communication facilities etc
c) Availability of industrial sheds and so on.
Fifth Step: Preparation of the Project
This is an important step which not only describes all the features
of the project but also justifies the feasibility of the
dream with all the details to convince not only the entrepreneur but
also others who are to commit resources for the project. Many financial institutions
prescribe specific formats in which the report has to be prepared. One has
check and decide the format according to the needs. A study of technical
feasibility is to ensure that the activity
proposed can be accomplished and that the inputs are not only adequate
but also optimum. However
the project report should cover the entire spectrum of activity and
include the following:
a) Land & Building b) Plant & Machinery c) description of the
product/service/business d) production process
and technology e) Inputs required such as raw materials, power, water,
f) Plant layout & flow chart
Decision should also be taken on ownership (proprietary/partnership).
Sixth Step: Financial Viability
The project should not only technically feasible but also financially
viable. Financial viability means that the products/services can be produced
at reasonable cost, marketed at competitive price with decent profit. The
project report should contain proposed investments in capital items, working
capital needed, &Breakeven level of operation. The Financial feasibility
analysis is complete only when the total financial requirements for implementing
the project are assessed and sources of financing the project identified. While
considering financial feasibility, the ability of the promoter entrepreneur
to bring in his share of contribution must always be kept in view.
Step Seven :
Long Term Finance Funding requirements of a Project are of Long term
needs for acquiring fixed asses like land & Building,
Plant & Machinery and for security deposits and working capital margin. Short term advances for working Capital in the form of pledge/hypothetication/cash
credit/bills facility. The term Loans for fixed assets land, building, plant
& machinery are preferably got from State Financial Corporation.
Step eight : Arrangement of Finance - Working
The Industrial Unit needs short term loans for its working capital
requirements. Working Capital is required for:
Purchase of raw materials, Consumable Stores/Spares ,Stock in Process
Manufacturing Expenses ,Credit Sales/Bills Receivable
Step Nine : Provisional registration as small industry
District Industries Centers issue the registration based on Project
report of the Entrepreneurs. This registration is required to obtain Industrial
sheds from Government built Estates, to obtain license from Municipal
get power connection from electricity board, to apply for loans from Banks.
Step Ten: Acquiring Industrial Shed
Factory Building can be rented or owned. Investment in Land & Building
is better to be avoided in the initial stages to prevent locking up of
funds and increase of borrowed capital. It is advisable to go in for Industrial
sheds in approved areas or estates.
If the factory building is to be constructed it should be ensured that
the land is free from encumbrances, it can be used for industrial purposes
and all needed infrastructure facilities are available. Before starting
construction activities, the entrepreneur has to obtain necessary license
from corporation or municipal authorities and should also ensure the plan
of the building conform to the norms stipulated by the inspector of factories.
small industry development corporation of the state offer constructed sheds
in the industrial estates.
Step Eleven : Purchase of Machinery
The requirements of machinery, spares, tools etc are to be carefully
assessed and the proper size of plant & machinery should be decided. Once
fixed assets are created it will be difficult to change them. The machinery
should be necessary and adequate.
It is some time cheaper and convenient to have some components bought
out or got done on job works basis from outside making investments on machinery
for making them. The Names of different machines & suppliers be obtained.
get Quotations, evaluate specifications, quality, delivery time, price and
decision to be taken to place orders for machines.
Step Twelve :Raw Materials
Entrepreneur has to ensure timely availability of raw materials for
continuous production. Modern Material Management & Inventory methods
have to be understood & followed.
Step thirteen: Statutory Licenses
Many product lines if taken up for manufacturing need licenses and
one cannot ignore them. Manufacture of drugs & Cosmetics need license
from drug controllers, food processing industry from ministry of agriculture,
of factories, Pollution Control Boards, Commercial Tax departments, Collector
of Central Excise and so on depending on the products to be made.
Step Fourteen : Man Power Needs
A realistic assessment of the man power requirement in skilled, semiskilled
and unskilled category should be made after deciding on the size of operations.
have to be carefully made at the right time.
Step Fifteen: Synchronizing various aspects
The various aspects of preliminary operations to establish an industry
should be synchronized within a time frame. The machinery orders should
be placed in such a way that it arrives after the shed is constructed and
ready. The man power is to be in place just before the machine arrive and
the power connection will be available. The orders for materials and other
tools etc be placed at appropriate time. The Statutory clearances should
be obtained while the entire exercise is in progress.
Step Sixteen: power Connection
The power connection should be obtained without delays. It is always
better to contact the Electricity Board once the location
is decided and quantum of power needed is estimated to check
availability of power lines. Applications should have been submitted on
time and authorities convinced on all procedural aspects.
Step Seventeen: Production
Entrepreneur should draw blue
print of layout of factory, install machinery & plan production. once
planned then production to be commenced taking care of quality & time
Step Eighteen: Sales
Marketing is the most important aspect the entrepreneurs are to plan
for. Making a study of Government marketing assistance's programs, appointing
distributors, dealers, retailers have all to be carefully done appropriate
to products marketing strategy. Watching competitors & taking care of
customers are very important.
We congratulate you...If you have read all
the 18 Steps - BEST OF LUCK