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Note for Entrepreneurship Development - ED by Milind Narayan Datar

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MANAGING A SUCCESSFUL ENTERPRISE 1. MANAGEMENT OF AN ENTERPRISE The basics of management of an enterprise are as follows: A. Planning the enterprise involves selecting objectives and strategies, policies, programmes and procedures for achieving them. Planning also includes decision making on production, pricing and marketing of products. Market survey is essential to get an idea of the market. Market survey may be conducted with reference to the availability of raw materials equipments, marketing and distribution, and consumer bahaviour etc. B. Organizing involves establishing an international structure of roles through determination of activities required to achieve the goals, grouping of activities, delegation of authority and coordination etc. C. Staffing demands defining the workforce, utilization of manpower, appointment, promotion and remuneration is including downsizing and organization unity. D. Leading the entrepreneurial unit in terms of addressing the desire, attitude and behaviour of individual and groups amidst challenges towards opportunities. E. Controlling is the measuring and correcting the activities of staff to assure that events conform to plan. It measures the performance against goals. F. Finance is most crucial that warrants the personal influence and rapport with the financial institutions to get it materialized. The entrepreneur has to show the required faith and credibility, and strength of the enterprise to get the required credit. G. Quality control determines the future of one's inspirational climb up. Quality products create wide market, thus making the entrepreneur's task of intervention easy amidst stiff challenges. H. Marketing linkage should be diligently built up by making the products cost competitive, unique and indispensable before the consumers. I. Alternative opportunity refers to the next best option that could be explored or employed on the face of parallel enterprises and challenge to ones entrepreneurship venture. 2. STEPS OF RUNNING A SUCCESSFUL ENTERPRISE Following four steps are essential for running am Enterprise successfully and effectively; 1. Planning. 2. Budgeting. 3. Monitoring and evaluation of an enterprise. 4. Follow up in running an enterprise. 1. PLANNING Planning is an initiatory function in the sense that it is initiated in the first place to formulate a systematic programme in detail for doing or achieving a mission still unformed or undeveloped. It is a function which implies a comprehensive and extensive task of devising and lying out in distinguished sections a detailed programme of actions to be carried out to convert an idea into a

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safe and sound business entity. Planning for an enterprise, as generally observed, is the groundwork in preparation for making a proposed venture start and grows smoothly. A. Importance of Planning Many business ideas end up in complete failure as they are unable to produce the desired results despite long and hard efforts. Of course, there is not a single practice model which would guide through numerous critical situations and help translate ideas into well grounded realities. Recent studies, however, suggest that there are noticeable similarities among the key preliminary preparations that most successful entrepreneurs accomplish before they are ready to launch their new ventures. These commonly observable facts serve to trace, in general, the way aspiring entrepreneurs may make preparations so that they cannot only get off to a good start but also transform their dreams into gainful business enterprises. Many researchers, therefore, have a message that what every ambitious individual should note about the right approach to make hard work result challenging business environment; secondly, examine own abilities and limitations; thirdly, make an advance realization of problems that will or may come; fourthly, determine whether a proposed venture can be expected to succeed and grow in the long run; and, finally, if assured or prospects, carefully plan the course of conduct of related activities essential to sustainable progress. Thus, business or project planning is regarded as fundamental to a good start in entrepreneurial career. B. Project Plan - A Basic Document In simple words, a project plan is a basic document which gives an explicit but precise account of what one has in mind to achieve and, in that context, it defines: What will have to be done? When will be done? How will be done? Who will do? How much will it cost? A project plan spells out the principal features and the future prospects of a proposed business. Besides, it provides analyses of and insights into vital issues that are to be attended to and sorted out with an eye to achieving the ultimate goal. Many prefer to call it an orderly presentation of a detailed programme of actions for doing, making or achieving something proposed for consideration and acceptance. Others suggest that a project plan is a well defined written argument, based on relevant facts, figures and estimates. It portrays an overall picture of a business proposal, attempts to justify its technical feasibility as well as commercial success and makes clear suggested course of actions in distinguished sections. Some authors are of the view that the phrases project plan, business plan, business schemes, feasibility plan and feasibility plan and feasibility report are alike in meaning or significance. Accordingly, these expressions are frequently used interchangeably. C. Project Plan-Benefits and Utilities A project plan serves as a useful tool to bring greater success in attaining objectives of a business. That being the case, some of the major benefits and utilities derivable from this document are: • Highlights basic elements. Regardless of size, nature, main objective and location of a venture, as also investment, risk and uncertainty involved in it, a project plan lays stress on the basic elements common to almost every business. The basic elements include ownership; business

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location; objective; policies and strategies; resource requirements; budget estimates; and anticipated ways and means to accomplish goals. • Deals with decisive issues. Before everything else, a decision has to be reached as to whether or not to go for any investment in the proposed venture. More importantly, a project plan justifies the individual capacity to mobilize resources entrepreneurial ability of the would-be entrepreneur. • Assists in evaluation. A project plan assists in evaluating overall merit of a new business idea. • Serves to gain support. A project plan serves as a means to look for and acquire requisite financial and material assistance from external sources. • Helps timely implementation. A project plan document serves as a handbook to be followed in the process of organizing, directing, coordinating and controlling planned activities aimed at ensuring timely implementation of objectives. • Facilitates registration. A project plan, of course, is essential for seeking from a competent authority permission to engage in a business. Both permission and registration by respective authorities are essentially necessary to commence and carry out any business activity and to seek financial assistance from commercial banks as also specialized financial institutions. • Prepares groundwork. It aids to prepare the ground for a new unit. Said simply, project planning is one of the vital elementary tasks necessary to make ready the groundwork for primarily a new venture, large or small, and seldom for expansion, diversification or modernization of an existing unit. 2. BUDGETING A budget is a statement of anticipated results during a designated time period expressed in financial terms - as revenue, expense and capital budgets or non financial terms - as in budgets of direct labour hours, materials, physical sales volume or units of production. Budgeting is a key managerial process because it together constitutes functions of planning, controlling and coordinating. Budgeting is a process of preparing budgets. The primary objective of budget is to ensure the optimum utilization of available funds for the purpose of producing at minimum cost and selling in a competitive market at maximum profit. George R. Terry has described budget as "an estimate of future needs, arranged according to an orderly basis, covering some or all the activities of an enterprise for a definite period of time." In broad sense, a budget constitutes a statement of planned or expected results in quantitative terms for a specified future period. It may be expressed either in financial or physical terms like machine hrs, units or products or in any other numerically measurable terms. In simple words budget is a statement of expected results expressed in numerical terms. A. Importance of budgeting • To plan for the efficient and smooth running of project/ business/ an enterprise. • To keep up the production schedule. • To coordinate the various activities of project/ business/ an enterprise. • To effect control on various departments. • To help in decentralization. • To help in delegation of authority. • To plan and control receipts and payments.

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• To control the development. • To arrange the capital. • To control the research projects. • To establish standards of evaluation. • To help the management in its corrective action. On the basis of purpose for which budgets are prepared, they are classified as revenue and expense budgets, sales budget, production budget, production cost budget, and selling and distribution cost budget, capital expenditure budget, cash budget and master budget. The budget coordinates production, sales and finance. It compels small entrepreneurs to think on a continuing basis to maximize profits. B. Budgetary control Budgetary control is a tool of management used to plan, carryout and controls the operations of the business. The entrepreneur finds it quite handy in planning the growth of his business or enterprise. "Budgetary control is a device or technique of managerial control through budgets." George R. Terry has described budgetary control as 'a process of finding out what is being done and comparing the actual results with the corresponding budget data in order to approve accomplishments or to remedy differences by either adjusting the budget estimates or correcting the cause of difference. The process of budgetary control involves planning, coordination, recording, control, appraisal and follow up various activities planned and implemented based on budgets. Budgetary control provides basis for administrative control, direction of sales effort, production planning and control over stocks. 3. MONITORING AND EVALUATION OF AN ENTERPRISE Monitoring and evaluation provides with better means for learning from past experience, improving service delivery, planning and allocating resources and demonstrating results as part of accountability to key stakeholders. Although evaluation is distinguished from monitoring, they are in fact interdependent. Monitoring presents what has been delivered and evaluation answers the question "what has happened as a result of the intervention?" Impact evaluation is a particular aspect of evaluation, focusing on the ultimate benefits of an intervention. A. Monitoring: It is regular systematic collection and analysis of information to track the progress of programme implementation against pre-set targets and objectives. It means to keep a careful check of project activities over a period of time. To work to its full potential, any kind of project needs to set out proposals and objectives. Then a monitoring system should be worked out to keep a check on all the various activities, including finances. This will help project staff to know how things are going, as well as giving early warning of possible problems and difficulties. It is performed while a project is being implemented, with the aim of improving the project design and functioning while in action. Monitoring gives information on where a policy, program or project is at any given time (or over time) relative to respective targets and outcomes. Monitoring focuses in particular on efficiency, and the use of resources. Monitoring · Clarifies program objectives. · Links activities and their resources to objectives. · Translates objectives into performance indicators and sets targets. · Routinely collects data on these indicators, compares actual results with targets. · Reports progress to managers and alerts them to problems.

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