HSBTE. IVth Semester. ENTREPRENEURSHIP DEVELOPMENT AND MANAGEMENT.

Definition of MSME (micro, small, and medium enterprises), significant provisions of the MSME Act, the importance of feasibility studies, technical, marketing, and finance-related problems faced by new enterprises, major labor issues in MSMEs and its related laws, Obtaining financial assistance through various government schemes like Prime Minister Employment Generation Program (PMEGP) Pradhan Mantri Mudra Yojana (PMMY), Make in India, Start-up India, Stand up India, National Urban Livelihood Mission (NULM); Schemes of assistance by entrepreneurial support agencies at National, State, District level: NSIC, NRDC, DC: MSME, SIDBI, NABARD, Commercial Banks, SFC’s TCO, KVIB, DIC, Technology Business Incubator (TBI) and Science and Technology Entrepreneur Parks (STEP). Unit II

Definition of MSME (micro, small and medium enterprises)

The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 is designed to promote and facilitate the growth of micro, small, and medium enterprises (MSMEs). The Act provides clear definitions for micro, small, and medium enterprises based on the investment in plant and machinery or equipment, as well as turnover. The categorization was revised and updated in 2020. It includes higher investment limits.

1. Micro Enterprises:

• Manufacturing Enterprises: Investment in plant and machinery does not exceed ₹1 crore.

• Service Enterprises: Investment in equipment does not exceed ₹50 lakhs.

2. Small Enterprises:

• Manufacturing Enterprises: Investment in plant and machinery is more than ₹1 crore but does not exceed ₹10 crore.

• Service Enterprises: Investment in equipment is more than ₹50 lakhs but does not exceed ₹5 crores.

3. Medium Enterprises:

• Manufacturing Enterprises: Investment in plant and machinery is more than ₹10 crores but does not exceed ₹50 crores.

• Service Enterprises: Investment in equipment is more than ₹5 crores but does not exceed ₹20 crores.

The turnover limits are as follows:

• 1. Micro Enterprises: Turnover does not exceed ₹5 crores.

• 2. Small Enterprises: Turnover is more than ₹5 crores but does not exceed ₹50 crores.

• 3. Medium Enterprises: Turnover is more than ₹50 crores but does not exceed ₹250 crores.

Significant provisions of the MSME Act

The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 is designed to promote and facilitate the growth of micro, small, and medium enterprises (MSMEs). It provides various benefits and support. Some of the significant provisions of the MSME Act are:

1. Definition of MSMEs: The Act provides clear definitions for micro, small, and medium enterprises based on the investment in plant and machinery or equipment, as well as turnover.

2. Registration of MSMEs: MSMEs register themselves under the Act to avail of various benefits. Benefits are access to credit, incentives, subsidies, and other support measures.

3. Credit Facilities: The banks and financial institutions have a preference for MSMEs in granting loans.

4. Collateral-Free Loans: MSMEs are eligible for collateral-free loans. This makes easier credit and finance for business operations.

5. Credit Linked Capital Subsidy Scheme (CLCSS): The Act implements schemes like CLCSS. It provides capital subsidies for technological up-gradation and modernization.

6. Delayed Payment Protection: The Act provides the right to claim interest on the delayed payment from buyers.

7. Constitution of Advisory Committees: The central and state governments constitute advisory committees to advise promote and develop MSMEs.

8. Market Promotion Assistance: The act has various schemes and initiatives to promote the marketing of products and services of MSMEs.

9. Technology Upgradation and Quality Certification Support: MSMEs are encouraged to adopt better technologies and achieve quality certifications. The Act supports them through various measures.

10. Reservation Policy: The government to implement a reservation policy for MSMEs in the manufacturing sector. Items are reserved for manufacturing by MSMEs only.

Importance of Feasibility Studies

Feasibility studies for new enterprises evaluate various aspects of a business idea. The following are the importance of feasibility studies:

Importance of Feasibility Studies for New Enterprises:

1. Risk Identification and Mitigation: Feasibility studies identify risks and challenges associated with a new enterprise. Understanding these risks allows entrepreneurs to develop strategies to reduce failure.

2. Resource Optimization: Entrepreneurs can assess the financial, technical, and operational requirements by a feasibility study. This helps to optimize the resources used. It ensures that capital, time, and efforts are invested efficiently.

3. Informed Decision-Making: Feasibility studies allow informed decision-making. Entrepreneurs assess the viability of a business idea.

4. Market Understanding: Feasibility studies provide information on the target market, customer needs, and industry trends. This information allows businesses to make their products or services to meet customer demands.

5. Investor and Stakeholder Confidence: Feasibility studies demonstrate planning and risk management commitment. A well-prepared feasibility study can instill confidence and attract external support.

6. Legal and Regulatory Compliance: Feasibility studies identify legal and regulatory requirements. It ensures compliance and reduces the risk of legal issues.

7. Competitive Analysis: Feasibility studies analyze existing competitors and market saturation. This information helps to establish a business effectively.

8. Financial Viability: Financial feasibility studies assess the economic viability of the business. Projections for revenue, expenses, and profitability determine financial stability in the long run.

Importance of Technical-Related Problems Faced by New Enterprises

The following are several reasons to address technical problems for new enterprises:

• 1. Efficient Operations: Technical issues can delay the operations. New enterprises streamline their processes and ensure a smoother workflow by resolving these problems.

• 2. Competitive Advantage: Businesses need technology to compete in a highly competitive market. Enterprises adopt innovative solutions, stay ahead of the competition, and meet or exceed industry standards by adopting new technology.

• 3. Customer Satisfaction: Technical problems directly impact customer experience. Resolving technical challenges is very important to maintain customer satisfaction.

• 4. Data Security and Privacy: New business deals with sensitive customer and business data. It is must to protect the confidentiality and privacy of information.

• 5. Scalability and Growth: Technical challenges slow down the scalability of a business. A technical infrastructure allows enterprises to scale their operations. It helps to increase demands and support growth without disruptions.

• 6. Innovation and Adaptability: The ability to innovate and adapt new technologies helps in the long-term success of any business.

• 7. Cost Optimization: Technical issues lead to increased operational costs. Addressing these problems helps in optimizing costs and resources.

• 8. Compliance and Regulations: Many industries are regulated by the Government. Solving technical issues is very important for compliance with these regulations. It avoids legal implications and maintains a reputation.

• 9. Collaboration and Communication: Efficient communication and collaboration are essential for the success of modern enterprises. Addressing technical problems in these areas facilitates smoother communication within the organization and with external stakeholders.

• 10. Brand Reputation: Technical problems severely damage a brand's reputation. Addressing these issues maintains trust among customers, partners, and investors.

Importance of Marketing-Related Problems Faced by New Enterprises

Marketing plays an important role in the success of new enterprises. Understanding and addressing these marketing-related problems is essential for the success of new enterprises.

• 1. Limited Budgets: New enterprises operate with controlled budgets. It makes it challenging to invest heavily in marketing efforts. Creativity and proper use of resources overcome this challenge.

• 2. Building and Awareness: Establishing a brand identity and gaining recognition is a difficult task for new enterprises. Consumers move towards familiar brands. Thus new businesses need to invest in brand awareness. Effective use of social media and innovative branding techniques overcome this problem.

• 3. Understanding Target Audience: Identifying and understanding the target audience is essential for marketing. It requires market research and utilizing analytics tools to understand consumer preferences.

• 4. Competition from established players: New entrants face competition from established players in the market. This competition requires a a differentiated product or service, and marketing strategies. Highlighting unique features to convince consumers.

• 5. Adapting to Market Trends: The trends in business change rapidly. New enterprises stay alert and adapt to these changes. Keeping up to date with technological advancements, consumer preferences, and industry trends is essential.

• 6. Inline Visibility and Digital Marketing: A strong online presence is a must for success. New enterprises struggle with creating and maintaining an effective online presence through websites, social media, and other digital channels. Investing in digital marketing or hiring experts in the field is essential.

• 7. Measuring and Analyzing ROI: Determining the return on investment (ROI) for marketing efforts is challenging. Implement analytics tools and closely monitor performance indicators (KPIs). It helps in assessing the effectiveness of marketing campaigns.

Importance of Finance-Related Problems Faced by New Enterprises

Finance plays an important role in the success of new enterprises. The following are some main finance-related challenges faced by new enterprises:

1. Capital Acquisition: New enterprises require capital to start and operate. Accessing funding sources, such as loans, investors, etc is essential for initial setup, hiring, purchasing inventory, and other operational expenses.

2. Cash Flow Management: A healthy cash flow is essential for the day-to-day operations of a new enterprise. Mismanagement of cash flow leads to problems. It will be difficult to pay suppliers, cover operational expenses, and invest in growth opportunities. Effective financial planning ensures a cash flow.

3. Budgeting and Financial Planning: New enterprises must create budgets and financial plans. This includes forecasting revenues and expenses, setting financial goals, and plans for unexpected challenges. Financial planning helps businesses to make informed decisions and adapt to changing market conditions.

4. Risk Management: Financial challenges come with risks. New enterprises identify and assess financial risks such as market volatility, currency fluctuations, interest rate changes, and economic uncertainties. Implementing risk management is essential to safeguard the financial health of the business.

5. Invest Relations: Enterprises seek external funding and maintain positive relationships with the investors. Transparent communication and financial reporting build trust and confidence among investors.

6. Compliance and Regulations: Adhering to financial regulations and compliance is vital for the sustainability of a business. Failing to comply with tax laws, accounting standards, and other financial regulations results in legal issues and financial penalties.

7. Financial Efficiency: .New enterprises operate with limited resources. Thus, financial efficiency is a must for survival and growth. Optimizing operational processes, minimizing unnecessary expenses, and maximizing the return on investment are essential.

8. Business Valuation: Business valuation is important to attract investors. Sound financial management positively influences the value of the business.

Obtaining financial assistance through government schemes Prime Minister Employment Generation Program (PMEGP)

India's Prime Minister Employment Generation Program (PMEGP) is a credit-linked subsidy program. It is implemented by the Ministry of Micro, Small and Medium Enterprises (MSME). The following is a general guide to obtaining financial assistance through PMEGP:

1. Eligibility Criteria: Individuals, institutions, self-help groups, or traditional industries with specific project proposals are eligible.

2. Project Proposal: Clearly define the business idea, objectives, expected outcomes, and financial requirements.

3. Selecting the Project Category: Identify the appropriate project category as per PMEGP guidelines.

4. Training Programs: Attend any mandatory Entrepreneurship Development Programs (EDPs) or skill development training as required by the PMEGP. These programs aim to equip individuals with the necessary business management skills.

5. Application Form: Obtain the PMEGP application form from the Khadi and Village Industries Commission (KVIC) official website. KVIC is the nodal agency for implementing PMEGP.

6. Submission of Application: Submit the duly filled application form along with the necessary documents to the respective offices at the district or block level.

7. Project Appraisal: The submitted project proposal undergoes scrutiny by the District Level Task Force Committee (DLTFC) and State Level Task Force Committee (SLTFC).

8. Sanction and Loan Disbursement: The entrepreneur proceeds to obtain a loan from the designated financial institution after approval from DLTFC or SLTFC. The loan is provided by banks or financial institutions associated with the program.

9. Credit-Linked Subsidy: PMEGP offers a credit-linked subsidy. Here, a large portion of the project cost is subsidized by the government. The remaining amount can be availed as a loan from the financial institution.

10. Implementation of the Project: Once the loan is disbursed, the entrepreneur implements the project as per the approved proposal. Regular monitoring and reporting is the part of the program's guidelines.

11. Repayment of Loan: Repay the loan to the financial institution as per the agreed-upon terms.

12. Monitoring and Evaluation: The progress of the project is periodically monitored by relevant authorities. Comply with requirements and guidelines for continued support.

Obtaining financial assistance through government schemes Pradhan Mantri Mudra Yojana (PMMY)

The Pradhan Mantri Mudra Yojana (PMMY) is a government initiative in India to provide financial support to micro and small enterprises. The scheme offers financial assistance through loans provided by various financial institutions. The following are general guides on how to obtain financial assistance through the Pradhan Mantri Mudra Yojana:

1. Understand Mudra Categories: PMMY categorizes loans into three segments, namely Shishu, Kishor, and Tarun. It is based on the stage of growth and funding requirements of the business.

2. Identify a Lending Institution: Approach participating financial institutions such as public sector banks, private sector banks, regional rural banks (RRBs), and microfinance institutions (MFIs). Check the official website of Mudra or inquire at a local bank for a list of participating institutions.

3. Business Plan: Develop a business plan outlining the business idea, the purpose of the loan, and how the funds will be utilized.

4. Visit the Nearest Bank/Branch: Visit the nearest branch of a participating financial institution to inquire about Mudra loans. Discuss business proposals with the bank and obtain information on the application process.

5. Loan Application Form: Collect the Mudra loan application form from the bank. Fill out the form accurately, It requires all the necessary details related to your business, personal information, and the amount of loan required.

6. Choose the Mudra Category: Specify the category of Mudra loan you are applying for (Shishu, Kishor, or Tarun) based on your business requirements.

7. Submission of Documents: Submit the completed loan application along with the necessary supporting documents. The required documents may include proof of identity, address, business plan, and other documents as specified by the lending institution.

8. Loan Processing: The bank will process your loan application and conduct due diligence to assess the feasibility of your business and your repayment capacity.

9. Loan Approval: If the loan application is approved, the bank will communicate the terms and conditions, interest rates, and repayment schedule.

10. Loan Disbursement: Upon acceptance of the loan terms, the funds will be disbursed to your bank account. Ensure that you use the funds for the intended business purposes.

11. Repayment: Repay the Mudra loan as per the agreed-upon schedule. Timely repayment is crucial to maintaining a positive credit history and ensures your eligibility for future financial assistance.

Obtaining financial assistance through government schemes Make in India

The "Make in India" initiative is a government program aimed at promoting and encouraging manufacturing in India. While it does not directly provide financial assistance, it creates an environment conducive to manufacturing growth and facilitates ease of doing business. If you are looking to benefit from the Make in India initiative, consider the following steps:

1. Understand the Make in India Initiative: Familiarize yourself with the objectives, sectors, and focus areas of the Make in India. The program Make in India aims to boost manufacturing, promote innovation, and facilitate job creation.

2. Identify Your Sector: Determine the specific sector or industry in which you want to establish or expand your manufacturing business. Made in India covers various sectors, including automobile, textiles, electronics, defense, and more.

3. Business Registration and Compliance: Register your business and ensure compliance with all regulatory requirements.

4. Research Incentives and Subsidies: Make in India itself does not provide direct financial assistance, there may be sector-specific incentives, subsidies, or schemes offered by central or state governments.

5. Government Subsidies and Grants: Explore other government schemes that offer financial assistance, subsidies, or grants for manufacturing-related activities. For example, the Ministry of Micro, Small, and Medium Enterprises (MSME) offers various schemes to support small and medium enterprises.

Obtaining financial assistance through various government schemes Startup India

"Startup India" is an initiative by the Government of India that aims to foster entrepreneurship and promote the growth of startups in the country. The initiative provides various support measures, including financial assistance, to help startups during their early stages. The following are general guides on how to obtain financial assistance through Startup India:

1. Understand Startup India: Familiarize yourself with the objectives and components of the Startup India initiative. It focuses on simplifying regulations, providing funding support, and creating an ecosystem conducive to the growth of startups.

2. Register Your Startup: To avail of benefits under the Startup India initiative, you need to register your startup on the official Startup India portal. Provide the necessary details about your business, including its structure, founders, and nature of operations.

3. Incorporate Your Business: Ensure that your startup is legally incorporated as a Private Limited Company, Limited Liability Partnership (LLP), or a registered partnership firm.

4. Compliance with Definition: Verify if your startup meets the government's definition of a startup. It includes an entity incorporated in India for up to ten years. It has an annual turnover not exceeding ₹100 crores in any of the preceding financial years.

5. Apply for Recognition: Provide the necessary documents, including a letter of recommendation from an incubator or an industry association after recognition as a "Startup" through the Startup India portal.

6. Avail Tax Benefits: As a recognized startup, you can avail of various tax benefits, including a three-year income tax exemption provided your total turnover does not exceed ₹25 crores.

7. Access Funding Support: Explore various funding opportunities provided by the government and financial institutions. The government has launched schemes like the Fund of Funds for Startups (FFS). This provides financial support.

8. Participate in Startup India Seed Fund: The government announced the Startup India Seed Fund Scheme to provide financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization.

9. Connect with Incubators and Accelerators: Join government-recognized incubators and accelerators that support startups. These organizations often provide funding, mentorship, and other resources to help startups grow.

10. Apply for Grants and Competitions: Keep an eye on government grants, competitions, and challenges specifically designed for startups. Many government departments and agencies conduct such programs to encourage innovation.

11. Explore State-Specific Schemes: Different states in India offer additional schemes to support startups. Explore state-specific initiatives and incentives that can complement the support provided by the central government.

12. Network with Industry and Investors: Attend networking events, industry conferences, and investor meet-ups to connect with potential investors, mentors, and industry experts who can provide financial support and guidance.

13. Stay Informed: Regularly check the official Startup India portal and other relevant government websites for updates on new schemes, policies, and opportunities for financial assistance.

Obtaining financial assistance through government schemes Stand Up India

"Stand Up India" is a government initiative in India aimed at promoting entrepreneurship among women, Scheduled Caste (SC) and Scheduled Tribe (ST) communities. The program was launched on April 5, 2016, by the Prime Minister of India, Narendra Modi. The primary objective of Stand Up India is to empower and enable these poor sections of society by providing them with financial assistance and support to start their own businesses.

Obtain financial assistance through the Stand Up India scheme:

1. Eligibility Criteria: Women entrepreneurs and individuals from Scheduled Caste (SC) and Scheduled Tribe (ST) categories aged above 18 years. The business should be in the manufacturing, trading, or services sector.

2. Loan Application: To avail of financial assistance under Stand Up India can approach any of the participating banks.

3. Loan Amount: Loans ranging from Rs. 10 lakhs to Rs. 1 crore. The loan amount can be used for setting up a new business or for expanding an existing one.

4. Interest Rates: Interest rates for Stand Up India loans are competitive and are determined by the lending institutions. The interest rates may vary based on the applicant's creditworthiness and the project's viability.

5. MUDRA Card: A MUDRA (Micro Units Development and Refinance Agency) card is issued to borrowers under Stand Up India. This card is like a credit card and can be used for various business-related expenses.

6. Collateral Requirements: No collateral security is required for loans up to Rs. 10 lakhs. For loans above Rs. 10 lakhs to Rs. 1 crore, the banks may ask for collateral or a third-party guarantee.

7. Repayment Terms: The repayment period for Stand Up India loans is flexible and depends on the nature of the business. Banks usually provide a pause period for the initial months.

Obtaining financial assistance through government schemes National Urban Livelihood Mission (NULM)

The National Urban Livelihood Mission (NULM) is a program of the Government of India. It focuses on reducing poverty in urban areas. It provides livelihood opportunities to the urban poor. The program was launched in September 2013. It aims to enhance the employability and income of the urban poor through skill development.

Individuals can obtain financial assistance through the NULM:

1. Eligibility Criteria: The program targets the urban poor, street vendors, rickshaw pullers, street food vendors, ragpickers, and other marginalized groups.

2. Components of NULM: NULM consists of several components and financial assistance. It can be obtained through various sub-components such as:

• i. Self-Employment Program (SEP): Provides financial support to individuals for setting up micro-enterprises.

• ii. Skill Training and Capacity Building: Focuses on imparting skills and providing training to enhance employability.

• iii. Social Mobilization and Institution Development (SM&ID): Aims to organize the urban poor into self-help groups for mutual benefit.

3. Application Process: Individuals or groups interested in availing financial assistance under NULM approach the Urban Local Bodies (ULBs) or Community Service Organizations (CSOs). They are responsible for implementing the program.

The application process involves submitting proposals, business plans, or project reports.

4. Financial Assistance for Self-Employment: The eligible candidates can receive financial assistance for setting up micro-enterprises or small businesses. The amount of financial assistance depends on the nature of the project proposal.

5. Skill Training and Capacity Building: NULM provides financial support for skill development programs to enhance the employability of the urban poor. Individuals can enroll in training programs offered by training centers or institutions.

6. Social Mobilization and Institution Development: Financial support is provided for organizing the urban poor into self-help groups and building their capacities. The focus is on creating a supportive environment for livelihoods.

7. Interest Rates and Repayment: Interest rates and repayment terms depend on the specific financial assistance and the implementing agency.

8. Monitoring and Evaluation: The implementation of NULM is monitored at the national, state, and city levels to ensure effective utilization of funds and achievement of program objectives.

Alok Bains