MAHARANA PRATAP GROUP OF INSTITUTIONS

KOTHI MANDHANA, KANPUR

(Approved by AICTE, New Delhi and Affiliated to Dr. AKTU, Lucknow)

Digital Notes
[Department of Management]
SubjectName : Innovation &
Entrepreneurship

SubjectCode : KMB N 302

Course : MBA
Branch : -
Semester : III
Preparedby : Mr. MayankTripathi

Reference No./MBA/MT/IE/MBAN302/21/3

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 Unit – 4
From Idea to Opportunity

1. Idea Generation – Sources and Methods

What is Idea Generation?

Idea generation is something that is done to overcome the challenges in the company or the business.
Ideas are generated based on creativity, and the need of the business is looked upon. It usually requires many people, their
feedback, and their innovative ideas. Then the selection of the best of the ideas is then made.

The making of plans then takes place so that the shortlisted idea gets implemented. In this manner, a creative and fresh
idea will be an edge over the competitors.

Sources of Idea Generation

A good idea can come from anywhere and at any time. An idea generation source refers to the people or places
from where the idea was inspired. It can be affected by both external, as well as internal sources. The R&D
department or the analytics employees are a part of the internal sources.

On the other hand, external sources combine to form suppliers, focus groups, educational
institutions, distribution channels, customers, government, and competitors.

Most people know all about brainstorming: people sit in a room and come up with as many ideas as they can.
They don’t censor themselves for idea quality or feasibility. Some simply put out ideas off the top of their head,
while others use Google to come up with ideas.

There are better ways than the standard brainstorming method, however, to take up problems and develop new
ideas for them.

1. The 5W+H Method

An ideal generated idea is the one which must answer, Who, What, Where, Why, When and How, which is the
method of 5W and H. These were the parameters, on which, if the ideas are generated, might result in a great
solution which on implementation might prove to be the best one.

2. Social Listing
A problem arises when more of the competitors are into the same product line as yours. So, to reduce the
communication gap, this social listing is done. It can be done by-polls on social media sites such as Facebook,
Twitter, etc.

The customers’ reactions are taken, and through this reaction, ideas are being formatted so that the customers
feel attracted towards the product and our product turns out to collect huge revenues.

3. Brainstorming

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It is prevalent as well as a popular tactic followed by every business. All the suggestions from the overall group
of people are considered; may it be right, may it be wrong. All that matters here is the idea.
A very quick session on brainstorming and filtering the final idea is done before the execution step.

4. Role-Playing
Working in the same office or with the same colleges, some people might feel bored. As a result of this, all the
business persons need to do is switch places, then trying to ask for ideas will help.

Trying to embrace their view does not guarantee immediate results but would act to be the best one in the long
run. Because it acts as a motivation for colleges and sometimes might lead to great results. This might turn out
to give incredibly new and unique ideas that can be generated.

5. Mind Mapping
Mind mapping can turn out to be another successful method in generating ideas. It can be done by
diagrammatically representing the task of the concept.

A non-linear graphical layout can represent it. Or it can be said that brain-mapping is a screenplay in which one
central character that has a leading role is placed between the map, while the elements that link to it must be
centered around the movie.

6. Think In Reverse
This being a very popular method or idea-generating step will help in the long run. But how can this one be
possible? Sometimes, if we know what is not to be done, we can get to know where the mistake has taken place
if we try thinking this way.

If we aim to think about every possible mistake to reach the desired goal, thinking in advance will help. In the
end, making the idea an all-rounder hit.

7. Idea Capture
Some people might have the same opinion, and their ideas might clash, about any problem in the same manner
at the same time. Hence, to avoid the same situation, Idea Drop software can be used, such as similar ideas
strike off.

8. Questioning Assumptions
In the industry, many times, the work is confined to get all the things done. Hence, this might lead to untapped
opportunities and questions, leading to a barrier to generating ideas.

Thus to avoid the same situation, a creative challenge must be designed, from this collection of feedback and
assumptions might be done. Now looking for that idea or assumption that can be utilized for the present
problem must be chosen.

9. Collaboration
As the name suggests, two or more people work together to achieve a particular goal. This method is again the
most popular one. Many people join their hands for a particular project or so; this is done because a team
always has more ideas and innovations than one business person.

10. The Story Boarding Method

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It is a method in which the ideas or the concepts are placed to look like that of a cartoon strip. Then a story is
being developed from it. Ideas are being taken from every colleague, and then a sticky note is then being passed
on aboard.
This makes a story. In this manner, the ideas interact, and a connection is established in them.

2. Individual Creativity

Creativity in entrepreneurship

Creativity eliminates the limits to the mindset and skill set of an investor.
However, a lot of people associate creativity with lack of restraint and believe it can cause chaos. Conversely,
leadership is all about control and order.
As such, entrepreneurship and creativity form a perfect combination. It no longer takes number-crunching skills
and practicality to run a successful business.
Over time, creativity has become an integral component of good business acumen. Lack of creativity could
easily drag your business into the stagnation mode.
Here is why creativity is critical to entrepreneurs.

High overall success

There is a misconception that people only needs intelligence to achieve everything they need in life.
However, it takes time for aspiring entrepreneurs to realize that creativity plays an integral role as well.
Unfortunately, a lot of learning institutions stress more on intelligence than creative thinking. It could perhaps
be because intellectual knowledge is measurable whereas creativity can be challenging to spot. Nonetheless,
dynamics are changing, and entrepreneurs are beginning to realize the importance of bringing creative people
on board. Creative workers can be a game changer in your company if you harness and shape their skills
adequately.

Increase productivity

Creativity allows an entrepreneur to disconnect from the accustomed and move into uncharted territories with
an aim to discern unique and useful solutions.
It has, therefore, become essential for both leaders and employees to develop creative skills.
Entrepreneurs are providing the necessary technological resources such as visual collaboration, which is often
confused with video conferencing to help their workers discover innovative solutions and ideas.
In fact, this is an extremely cost-effective strategy to increase workplace productivity. Innovation and creativity
bring an entrepreneur to the success path.

Exploit employee potential

You are probably utilizing only half of your employee’s potential by not encouraging workplace creativity.
Fortunately, entrepreneurs increasingly realize the ocean of creative ideas that remain untapped and dormant.
Tapping all these opportunities can result in improved financial strategies, increased profitability, and quick
decision making. Creativity also enables an enterprise to stay ahead of the curve.

Transcend boundaries
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Creativity enables entrepreneurs to find some of the path-breaking discoveries.
As such, it’s essential to allow collisions and blur to take place to transcend boundaries set by disciplines.
That way, it’s easier for an entrepreneur to get new perspectives towards solving a financial or operational
problem.
Creativity lets an entrepreneur connect distinct aspects and extrapolate feasible solutions from unrelated
concepts.

Encourage critical thinking

Creativity is slowly turning out to be one of the best ways to alleviate problems plaguing today’s enterprises.
Problem-solving works best when coupled with highly disciplined and focused thinking. Entrepreneurs can
think in either divergent or convergent thinking mode.
Convergent thinking involves in-depth analysis and enables an entrepreneur to find the most feasible solution to
a managerial or financial problem.
It allows entrepreneurs to use various data sources such as accounting software and computer systems.
In contrast, divergent thinking encourages creativity by enabling business owners to explore possible solutions
for the same problem.
While entrepreneurs can combine both thinking modes, divergent thinking ensures an enterprise gets the best
resolution.

Foster innovation

Manufacturers create unique products to not only meet customer expectations but exceed them as well.
As such, entrepreneurs need to be cautious to ensure their products are relevant and useful to the users.
While it may be hard to spot this from the beginning, things start to get more evident as your idea turns into a
reality.
In fact, this is the time an entrepreneur begins to realize how innovation and invention differ. The invention
refers to a new, unique concept while innovation is an idea which is as unique and useful as the original one.
You need to be creative and view an idea differently to be innovative. That way, it’s easier to turn a concept
into a reality.

3. Idea to Business Opportunity

It’s one thing to be able to identify industries and businesses that are poised for major market success. But
entrepreneurship requires more than just finding an idea that can make a lot of money. For entrepreneurs to tap
into the motivating power that drives lasting success, the ideas they conceive must be powerful enough to
change the world through major economic, social or environmental impact.

If your idea meets that criterion, quite simply, you’ll be far more motivated to get through the entrepreneurial
challenges that will follow if your product or services are a force for good. The reason is that it will
be something you can truly become emotionally invested in. The challenge, of course, is identifying these
business ideas in the first place.

How to do that? Here are five simple ways through which you can identify world-changing business ideas:

 Find opportunities in your own community.

 Draw upon your own personal experiences.

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  Look for ideas that get other people involved.
 Go out of your way to ask others how you can help.
 Give back through meaningful work.

Importance of Creativity in Entrepreneurship

1. To Face Cut-Throat Competition

2. Clubbing of Goals Becomes Possible
3. Entry of New Products in Market
4. Best Communication
5. Forecast of Changes
6. Integration with Firm (When the employee develops new ideas, he automatically associates himself with the
reputation, problems, and goals of the firm.)
7. Establishment of Cordial Relations
8. Building up Feelings of Continuity in the Group (The Creativity is that ideas which builds continuously
emerging feelings of the group.)
9. Abundance of Resources in Place of Scarcity
10. Success in Reducing Cost of Labour and Production
11. Increasing Power to Make Organisation Capable

4. Opportunity Assessment
Opportunities come in many different shapes and sizes, therefore the key and first step towards success is to
identify them as such. This often presents a fundamental challenge to organizations and businesses alike.
Understanding and making the most out of opportunities in a constantly shifting environment and market
requires an intrinsically creative, flexible and methodical approach. Not many organizations – no matter
whether they are start-ups or corporations – have the time, the resources or the expertise to conduct a broad and
thorough market opportunity assessment.

Opportunity Assessment is the process of identifying and screening project ideas. Implementing a structured
process to summarize and prioritize ideas will target limited resources to those ideas with the highest business
priorities.

Opportunity assessment is a more in-depth review of business opportunity, including market research and due
dedication that includes systematic property investigation, opportunity development, timing, legal
responsibility issues, applications of the opportunity, barriers to entry, industry trends, growth potential, market
positioning, competitive investigation, financial prediction and pricing, resource requirement investigation,
licensing, etc.

6. Market Opportunity Assessments

A market opportunity assessment is the process of synthesising market research and client data to identify
opportunities for growth in a specific market or business area and formulate an actionable strategy to realise this
growth. Marketing opportunity assessment is defined as taking a deeper look at the current state of a market to
find out whether there is room to introduce new products, attract new consumers, and improve the overall
business strategy to achieve and maintain growth within the company.
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A nuanced market assessment will utilise a pragmatic approach that is tailored specifically to the client and the
market they operate in, while leveraging tried and trusted research and analysis methodologies, underpinned by
a comprehensive and up-to-date understanding of economic theory.

Market opportunity assessments can (and should) be conducted by all organisations, whether they are
businesses – large and established or young and ambitious companies – not-for-profit organisations, charities, or
public and government institutions, B2B or B2C. Any organisation will benefit from identifying opportunities
of where and how they can reach more people and potential clients.

All types of businesses and organizations can benefit from performing a market opportunity analysis. Whether
you own a start-up, a medium-sized, or a large-scale business, the insights gained will be invaluable.

Both B2Bs and B2Cs should also take advantage of market assessments. A good market audit will help
companies tailor their strategies based on the data that they collect. This, in turn, will help entrepreneurs and
marketers reach out to their audiences better by giving them exactly what they need.

7. Process of New Venture

Process of new venture creation:

(i) Ideation, opportunity (venture idea) recognition, (ii) shaping the entrepreneurial intention, (iii) preparation,
(iv) networking, (v) entry, (vi) value creation, (vii) exit, and (viii) organization.
Last stage shows the birth of an organization, and is not considered as a stage in this process.

Stage 1- Ideation, opportunity (venture idea) recognition:

P1: A new venture idea or an opportunity initiates the process of new venture (start- up) creation.
P2: A venture idea or an opportunity motivates the intended individual or entrepreneur to start a start-up
company.

Stage 2- Shaping the entrepreneurial intention: Shaping the entrepreneurial intention is another dilemma.
There are many new venture ideas which never come into existence, or would fail if introduced by someone
who does not have enough intention to follow the idea though. He or she will start the process, but would be
likely to fail, since entrepreneurial intention might not exist. New venture creation is a planned and therefore
intentional behavior. Thus, shaping the entrepreneurial intention is a critical issue.

P3: Shaping the entrepreneurial intention affects the process of new venture (start- up) creation.

Stage 3- Preparation: As mentioned earlier, research on entrepreneurial intention is a factor that motivates
entrepreneurs to organize a series of activities. “Entrepreneurial intention is defined as the commitment to
starting a new business”. Indeed, starting a business needs resource mobilization, creating competence, and
activity organization.

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P4a: Entrepreneurial intention motivates the intended individual or entrepreneur to mobilize resources.
P4b: Entrepreneurial intention motivates the intended individual or entrepreneur to create competence.
P4c: Entrepreneurial intention motivates the intended individual or entrepreneur to organize activities.

Here, the mentioned three elements, i.e. resource mobilization, creating competence, and activity organization,
are called “preparation”. There are activities to be undertaken by the entrepreneur in order to prepare for
business start-up. He calls these activities “pre-start activities”.

P4: Entrepreneurial intention motivates the intended individual or entrepreneur to be prepared.

Stage 4- Networking: Networking is another requirement to initiate a successful business: On the one hand,
networking without preparation might lead to failure in the very early stage of new venture creation , since the
potential entrepreneur might fail to make relevant and useful connections based on his or her potentials, needs
and requirements. Also, he or she might waste time on irrelevant networking activities. On the other hand,
networking can help the intended individual or entrepreneur to enter the market and create value.

Stage 5- Entry: After the preparation stage, and networking, start-up companies try to offer their products or
services to the market. This is called entry. Entry is a critical stage, which affects the success or failure of the
new venture (start-up). While entry strategies for different start-ups might differ, a successful entry is vital for
any start-up. As argue, entry barriers constrain the new venture (start-up) creation, and do not let them take
advantage of available opportunities.

Stage 6- Value creation: Value creation, which lies at the heart of entrepreneurship, is an integral part of new
venture (start-up) creation. The more a new venture creates value, the more successful and valuable it will be.
Stage 7- Exit: Once a start-up company offers its new products and enters the market, if not before, it is time to
make a serious decision about the best exit strategy? Created value, both economic and social, generated in the
entry stage helps the entrepreneur choose an efficient and effective exit strategy. Generally exit strategies are
merger and acquisition, initial public offering (IPO), family business succession, etc. However, it is important to
think about an exit strategy at the outset and before the business is formally launched.

(A business exit strategy is a plan that a founder or owner of a business makes to sell their company, or share in
a company, to other investors or other firms. ... If the business is making money, an exit strategy lets the owner
of the business cut their stake or completely get out of the business while making a profit.)

The process of new venture (start-up) creation

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8. Developing a Business Plan

Business Plan
Every business owner needs a way to organize and present information about how he or she intends to develop,
grow, and manage his or her business. A business plan is the perfect tool. When well-crafted, a plan will catch
the attention of potential investors and customers while encouraging them to support the business. When seen
this way, a business plan becomes the foundation for any successful business.
A business plan can be constructed by building upon four essential cornerstones:

 Business Idea
 Market Analysis
 Marketing Strategy
 Financial Analysis

Business Idea
The Business Idea section sells the business’s vision and briefly outlines how that vision will be accomplished.
A basic idea can be expanded into a plan by including three key elements:
 Business Summary – A simple description of the business, the need for its product or service, its
intended audience, and its competitive advantage. When shared with others, it shouldn’t take longer than 30
seconds.
 Keys to Success – A series of short statements that describe the value the business promises to deliver to
its potential customers.
 Management and Staff Summary – Short statements that draw attention to the personal strengths of
the people who will be part of running the business.

Market Analysis
Before taking on the risks of a business, it is important for business owners to know general market conditions,
where the new business will fit inside a particular industry, who their customers will be, and who will be the
competition.
Sources for this information can be found through:
 Local chambers of commerce
 Networking contacts
 Online resources
 Universities
 Competitor businesses

Marketing Strategy
Once market and industry information is obtained, and customer and competitor profiles have been developed,
the marketing strategy is written next. A good strategy should include these four P’s:
 What specific Product or service does the business offer?
 What Pricing structure will be used?
 Where your business will be located (Place)?
 What will be done to Promote the business?

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A marketing strategy is about determining a proper balance between each of these elements. If the business will
be more successful in a high traffic area, then location has more importance. If the competition is high, better
advertising and pricing could help.

Financial Analysis
This is the section of the business plan for exact numbers and business costs. If a business is selling a lot of
product but still losing money in the long run, the business will fail. Based on the previous information
collected, the business owner can provide a fairly accurate estimate of the business’s costs and what will affect
them. The following suggestions will also help:
 Start-Up Costs – All businesses need some starting capital (money invested in the business) to deal
with initial costs. These are the items that are one-time purchases.
 Monthly Expenses – These are the ongoing costs like inventory, utilities, and insurance. Also included
in this section is a breakeven point analysis (what the business needs to make to cover costs and show a profit).
These numbers can help determine start-up costs and financing options.
 Financing Options – These are the possible sources for the capital to start a business.
 Sales Forecasts – This is an estimate on how much product the business will need to sell to cover
expenses, and what can reasonably be sold based on the market research conducted earlier.

Business plan is the blue print of the step-by-step procedure that would be followed to convert a business idea
into a successful business venture. A business plan first of all identifies an innovative idea, researches the
external environment to list the opportunities and threats, identifies internal strengths and weakness, assesses
feasibility of idea and then arranges resources (production/ operation, finance, human resources) in the best
possible manner to make the plan successful.

The objectives of business plan are:

 To give directions to the vision formulated by entrepreneur.

 To objectively evaluate the prospects of business
 To monitor the progress after implementing the plan.
 To persuade others to join the business.
 To seek loans from financial institution
 To visualize the concept in terms of market availability, organizational, operational and financial feasibility.
 To guide the entrepreneur in actual implementation of the plan.
 To identify strengths and weakness of the plan.
 To identify challenges in terms of opportunities and threats from the external markets.
 To clarify ideas and identify gaps in management information about their business, competitors and the
market.
 To identify the resources that would be required to implement the plan.
 To document ownership arrangements, future prospects and projected growths of the business venture.

Preparing a business plan is not an easy task. Business plan makes the entrepreneur forcibly plan all the critical
dimensions of business and it also ensures that entrepreneur does a thorough research about the planned
business venture. The process of researching and writing the business plan helps to identify the gaps in the
existing plan. For any business venture all the functional plans (Marketing, operations/ production, finance,
human resource) have to be prepared. The functional plans reveal the resources required, strategies planned and
the budgeted expenditure of each functional area. It also determines when would the company break even and
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when would it start registering profits. Here we would like to state that preparing a business plan is not just one
time activity but is an ongoing process. A successful business enterprise constantly keeps improvising its
business plan based on market dynamics and learning experiences. The challenge in preparing a business plan
for an entrepreneur is to communicate the business idea clearly and precisely to the stakeholders. Business plan
is a written document, which has to be produced to various stakeholders to get their consent. The shareholders
require it to know the ownership patterns and future prospects, the government need it to give various
certifications like pollution controls, the financial institutions like venture capitalist need it to estimate the
prospects and the risks involved in disbursing funds to the business venture.

9. Essential Components of a Business Plan

Effective business plans must contain several key components that cover various aspects of a company's goals.
The most important parts of a business plan include:

1. Executive summary
2. Business description
3. Market analysis and strategy
4. Marketing and sales plan
5. Competitive analysis
6. Management and organization description
7. Products and services description
8. Operating plan
9. Financial projection and needs
10. Exhibits and appendices

1. Executive summary

The executive summary is the first and one of the most critical parts of a business plan. This summary provides
an overview of the business plan as a whole and highlights what the business plan will cover. It's often best to
write the executive summary last so that you have a complete understanding of your plan and can effectively
summarize it.

Your executive summary should include your organization's mission statement and the products and services
you plan to offer or currently offer. You may also want to include why you are starting the company if the
business plan is for a new organization.

2. Business description

The next part of a business plan is the business description. This component provides a comprehensive
description of your business and its goals, products, services and target customer base. You should also include
details regarding the industry your company will serve, and any trends and major competitors within the
industry. You should also include you and your team's experience in the industry and what sets your company
apart from the competition in your business description.

Related: What To Include in a Strategic Business Plan (With Template)

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 3. Market analysis and strategy

The purpose of the market analysis and strategy component of a business plan is to research and identify a
company's primary target audience and where to find this audience. Factors to cover in this section include:

 Where your target market is geographically located

 The primary pain points experienced by your target customers
 The most prominent needs of your target market and how your products or services can meet these needs
 The demographics of your target audience
 Where your target market spends most of their time, such as particular social media platforms and
physical locations

The goal of this section is to clearly define your target audience so that you can make strategic estimations as to
how your product or service will perform with this audience.

4. Marketing and sales plan

This part of your business plan should cover the specifics of how you plan to market and sell your products and
services. This section should include:

 Your anticipated marketing and promotion strategies

 Pricing plans for your company's products and services
 Your strategies for making sales
 Why your target audience should purchase from your company versus your competition
 Your organization's unique selling proposal
 How you will get your products and services in front of your target audience

5. Competitive analysis

Your business plan should also include a detailed competitive analysis that clearly outlines a comparison of
your organization to your competitors. Outline your competitors' weaknesses and strengths and how you
anticipate your company to compare to these. This section should also include any advantages your competition
has in the marketplace and how you plan to set your company apart. You should also cover what makes your
business different than other companies in the industry, as well as any potential issues you may face when
entering the marketplace if applicable.

6. Management and organization description

This section of your business plan should cover the details of your business's management and organization
strategy. Introduce your company leaders and their qualifications and responsibilities within your business. You
can also include human resources requirements and the legal structure of your company.

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7. Products and services description

Use this section to further expand on the details of the products and services your company offers that you
covered in the executive summary. Include all relevant information about your products and services such as
how you will manufacture them, how long they will last, what needs they will meet and how much it will cost
to create them.

8. Operating plan

This part of your business plan should describe how you plan to run your company. Include information
regarding how and where your company will operate, how many employees it will have and all other pertinent
details related to your organization's operations.

Related: How to Write a Strategic Plan: Guide to Strategic Planning

9. Financial projection and needs

The financial section of your business plan should detail how you anticipate bringing in revenue and the
funding you'll need to get started. You should include your financial statements, an analysis of these statements
and a cash flow projection.

10. Exhibits and appendices

The final section of your business plan should include any extra information to further support the details
outlined in your plan. You can also include exhibits and appendices to support the viability of your business
plan and give investors a clear understanding of the research that backs your plan. Common information to put
in this section includes:

 Resumes of company management and other stakeholders

 Marketing research
 Permits
 Proposed or current marketing materials
 Relevant legal documentation
 Pictures of your product
 Financial documents

10. Preparation of Project Plan

Project Planning Terms

Before we dive into how to create a project plan, it helps to be familiar with some of the terms that you’ll run
across. Here is a list of general terms you’ll encounter in this guide.

 Deliverable: The results of a project, such as a product, service, report, etc.

 Stakeholder: Anyone with a vested interest in the project—project manager, project sponsor, team

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 members, customers, etc.
 Tasks: Small jobs that lead to the final deliverable.
 Milestone: The end of one project phase, and the beginning of the next.
 Resources: Anything you need to complete the project, such as personnel, supplies, materials, tools,
people and more.
 Budget: Estimate of total cost related to completing a project.
 Tracking & Monitoring: Collecting project data, and making sure it reflects the results you planned
for.

Project Planning Steps

The project planning process is critical for the success of your project, and as a project manager, you have to
think about all the elements that make up your project management plan such as work, time, resources and
risks.

Now, we’re going to take you through the main project planning steps:

1. Outline the business case

2. Meet with key stakeholders
3. Define project scope
4. Assemble a project team
5. Determine a project budget
6. Set project goals & objectives
7. Outline project deliverables
8. Create a project schedule
9. Assign tasks to your team members
10. Do a risk analysis
11. Create your project plan
12. Report your progress

By following these project planning steps, you’ll clarify what you need to achieve, work out the processes you
need to get there and develop an action plan for how you are going to take this project plan outline forward.

1. Outline the Business Case

If you have a project, there’s a reason for it—that’s your business case. The business case outlines reasons why
the project is being initiated, its benefits and the return on investment. If there’s a problem that is being solved,
then that problem is outlined here. The business case will be presented to those who make decisions at your
organization, explaining what has to be done, and how, along with a feasibility study to assess the practicality of
the project. If approved, you have a project.

2. Meet with Key Stakeholders

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Every project has stakeholders, those who have a vested interest in the project. From the ones who profit from
it, to the project team members who are responsible for its success. Therefore, any project manager must
identify who these key stakeholders are during the project planning process, from customers to regulators.
Meeting with them is crucial to get a better picture of what the project management plan should include and
what is expected from the final deliverable.

3. Define Project Scope

It refers to the work required to accomplish the project objectives and generate the required deliverables. The
project scope should be defined and organized by a work breakdown structure (WBS). Therefore, the project
scope includes what you must do in the project (deliverables, sub deliverables, work packages, activities, tasks),
but also what is nonessential. The latter is important for the project plan, because knowing what isn’t high
priority helps to avoid scope creep; that is, using valuable resources for something that isn’t key to your
project’s success.

4. Assemble a Project Team

You’ll need a capable project team to help you create your project plan and execute it successfully. It’s
advisable to gather a diverse group of experienced professionals to build a multi-disciplinary team that sees
your project management plan from different perspectives.

5. Determine a Project Budget

Once you define your project scope, you’ll have a task list that must be completed to deliver your project
successfully. To do so, you’ll need resources such as equipment, materials, human capital, and of course,
money. Your project budget will pay for all this. The first step to create a project budget is to estimate the costs
associated with each task. Once you have those estimated costs, you can establish a cost baseline, which is the
base for your project budget.

6. Set Project Goals & Objectives

Goals and objectives are different things when it comes to planning a project. Goals are the results you want to
achieve, and are usually broad. Objectives, on the other hand, are more specific; measurable actions that must
be taken to reach your goal. When creating a project plan, the goals and objectives naturally spring from the
business case, but in this stage, you go into further detail. In a sense, you’re fine-tuning the goals set forth in the
business case and creating tasks that are clearly defined. These goals and objectives are collected in a project
charter, which you’ll use throughout the project life cycle.

7. Outline Project Deliverables

A project can have numerous deliverables. A deliverable can be a good, service or result that is needed to
complete a task, process, phase, subproject or project. For example, the final deliverable is the reason for the
project, and once this deliverable is produced, the project is completed. As defined in the project scope, a
project consists of subprojects, phases, work packages, activities and tasks, and each of these components can
have a deliverable. The first thing to do is determine what the final deliverable is, and how you will know that
the quality meets your stakeholder’s expectations. As for the other deliverables in the project, they must also be
identified and someone on the team must be accountable for their successful completion.

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 8. Create a Project Schedule
The project schedule is what everything hangs on. From your tasks to your budget, it’s all defined by time.
Schedules are made up by collecting all the tasks needed to reach your final deliverable, and setting them on a
project timeline that ends at your deadline. This can make for an unruly job ahead, which is why schedules are
broken into phases, indicated by milestones, which mark the end of one project phase and the beginning of the
next.

9. Assign Tasks to Your Team Members

The plan is set, but it still exists in the abstract until you take the tasks on your schedule and begin assigning
them out to your team members. Their roles and responsibilities must be clearly defined, so they know what to
do. Then, when you assign them tasks from your plan, they should be clear, with directions and any related
documentation they will need to execute the tasks.

10. Do a Risk Analysis

Every project has some level of risk. There are several types of risk such as scope risk, technical risks and
schedule risk, among others. Even if your project plan is thorough, internal and external factors can impact your
project’s time, cost and scope (triple constraint). Therefore, you need to regard your planning as flexible. There
are many ways to prepare for risk, such as developing a change management plan, but for now, the most
important thing to do is to track your progress throughout the execution phase by using project status reports
and/or project planning software to monitor risk.

11. Create your Project Plan

As discussed above, a project management plan is a document that’s made of several elements. Before we get
into a detailed explanation of each of them, it’s important to understand that you should include them all to have
a solid project plan. The components that you’ll need might vary depending on your project, but in general
terms, you’ll need these main documents to create your project management plan:

 Project charter
 Project schedule
 Project budget
 Project scope statement
 Risk management plan
 Change management plan
 Cost management plan
 Resource management plan
 Stakeholder management plan

12. Report Your Progress

Your ultimate goal is to ensure a successful project for your stakeholders. They’re invested, and will not be
satisfied twiddling their thumbs without looking at project status reports to track progress. By constructing a
work breakdown structure (WBS) during the project planning phase you can break down the project for them so
that they understand how your project plan will be executed. Keeping stakeholders informed is important to
manage their expectations and ensure that they’re satisfied. Having regular meetings where you
present progress reports are a great way to show them that everything is moving forward as planned and to field
any questions or concerns they might have. Your stakeholder management plan will specify how you’ll engage
stakeholders in the project.

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11. Business Planning Process:

Preparing a Business Plan

Preparing a Business Plan is not an easy task. A plan, which looks very lucrative/ feasible at the first instance,
might actually not be when details are drawn. Hence documenting the business plan is the first step that an
entrepreneur should take. The various steps involved in preparing a business plan are:

I Preliminary Investigation: Before preparing the plan entrepreneur should:

- Review available business plans (if any).
- Draw key business assumptions on which the plans will be based (e.g. inflation, exchange rates, market
growth, competitive pressures, etc.)
- Scan the external environment and internal environment to assess the strengths, weakness, opportunities and
threats.
- Seek professional advice from a friend/ relative or a person who is already into similar business. (If any)

Business Planning Process

As discussed above the successful entrepreneur lays down a step-by-step plan that she/ he follows in starting a
new business. This business plan acts as a guiding tool to the entrepreneur and is dynamic in nature – needs a
continuous review and updating so that the plan remains viable even in the changing business situations. The
various Steps involved in Business Planning Process are:

Preliminary Investigation
 Idea Generation
 Environmental Scanning
 Feasibility Analysis
 Project Report Preparation
 Evaluation, Control & Review

1. Idea Generation

As discussed in the previous chapters, entrepreneurship is not just limited to innovation (generation of entirely
new concept, product or service but it also encompasses incremental value addition to the concept/ product/
services offered to the consumer, shareholder & employee). Hence value addition is the key word that an
entrepreneur needs to keep in mind while generating new ideas even at the inception stage. Idea generation is
the first stage of business planning process. This step differentiates between an entrepreneur and businessman
distinctly. An entrepreneur is
highly creative person who gets an innovative idea about a product or service that could be brought into the
market. Let us make it very clear again at this stage that it is not necessary to have an idea which is entirely
new; even value added to the new products in the market is included in the innovative products/ services. Idea
generation is the first
stage of business planning process. It involves generation of new concept, ides, products or services to satisfy
the existing demands, latent demands & future demands of the market. The various sources of new ideas are:

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Consumer/ Customers
Existing Companies
Research & Development
Employees
Dealers, retailers

The various methods of generating new ideas are:

a) Brainstorming
b) Group discussion
c) Data collection through questionnaires/ schedules etc from consumers, existing companies, dealers, retailers
d) Invitation of ideas through advertisements, mails, internet
e) Value addition to the current products / services
f) Market research
g) Commercializing inventions
h) These days even contests are being organized to identify business ideas like ‘business bazzigaar’ on Star TV
which invites Participation in the contest and rewards the best business plan.
Screening of the new ideas should be done so that promising new ideas are identified and impractical ideas are
eliminated.

2. Environmental Scanning

Once a promissory idea emerges through idea generation phase the next step is environmental scanning which is
carried out to analyze the prospective strengths, weakness, opportunities & threats of the business enterprise.
Hence before getting into the finer details of setting up business it is advisable to scan the environment – both
external & internal and collect the information about the possible opportunities, threats from the external
environment and strength & weaknesses from the internal environment. The various variables to be scanned are
in terms of Socio-cultural, economic, governmental, technological, demographic changes taking place in the
external environment and availability of raw material, machinery, finance, human resource etc with the
entrepreneur. The various sources for gathering the information are Informal Sources (Family, friends,
colleagues etc.) and formal sources (bankers,
magazines, newspaper, government departments, seminars, suppliers, dealers, competitors). The Objective for a
successful environmental scanning should be to maximize the information and hence the entrepreneur should
collect information from as many resources as possible and then analyze them to understand whether the given
information would be supportive / obstructive to the business venture. The more supportive the information the
greater is the confidence for the success of the business.

External Environment

Socio-cultural Appraisal
It assesses the social and cultural norms of a society in a given period of time. The variables that are appraised
are values, beliefs, norms, fashions and fads of a particular society. It can help in understanding the level of
rigidity/ flexibility of a given society towards a new product/ service/ concept. Take for example the socio
cultural norms of United States and United Arab Emirates. Americans are experimenting and adventurous
whereas Arabs are conservative. If an entrepreneur wishes to introduce an innovative product like bungee
jumping its acceptability would be more in America than in UAE.

Technological Appraisal
It assess the various technological know-how available to convert the idea into a product, it can also be done to
assess the various modern technologies expected in the near future & their receptiveness by the industry. For
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Example an entrepreneur has an idea of manufacturing tobacco free herbal cigarettes which would not harm the
health of the smokers, the technological appraisal can assess whether manufacturing of this kind of product is
possible or not.

Economic Appraisal
It assesses the status of economy in a given society in terms of inflation, per capita income & consumption
pattern, balance of payment, Consumer price index etc. The healthy economy offers greater opportunities for
growth & development of the industry. And hence gives greater confidence to the entrepreneur about the
success of his business venture.

Demographic Appraisal
It assesses the overall population pattern of a given geographical region. It includes variables like age profile,
distribution, sex, education profiles, income distribution etc. The demographic appraisal can help in identifying
the size of target customers.

Governmental Appraisal
It assesses the various legislations, policies, incentives, subsidies, grants, procedures etc formulated by
government for a particular industry. The softer the government norms for the industry the easier it is for the
entrepreneur to establish and run the business. Take for example the government policies of subsidized
electricity in Uttaranchal. A manufacturing unit highly dependent on power has added advantage for setting up
industry there. On the other hand take Uttar Pradesh here the electricity is not just expensive but there is acute
shortage of it as well and the entrepreneurs in UP are dependent on personal generators for electric supply
which automatically increases the cost of product and hence it would be a wise decision on the part of an
entrepreneur to setup/shift his manufacturing unit to Uttaranchal.
Another example on governments role is analyzing the feasibility of comes from government’s decision on
allowing partial entrance to FDI in retail segment because of this particular clause the multi-national retail
outlets like Wal-Mart are not able to enter the Indian markets though the market potential and financial
feasibility is in abundance.

Internal Environment

Raw Material
It assesses the availability of raw material now and in near future. If the availability of raw material is less now
or would be less in future then entrepreneur should give a serious thought for establishing a venture as the entire
system can come to a standstill for the availability of raw material.

Production/ Operation
It assesses the availability of various machineries, equipments, tools & techniques that would be required for
production/ operation.

Finance
It assesses the total requirements of finance in terms start-up expenses, fixed expenses and running expenses. It
also indicates the sources of finance that can be approached for funding

Market
It assesses the present, potential and latent demands of the market.

Human Resource

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It assesses the kind of human resource required and its demand and supply in market. This further helps in
estimating the cost and level of competition in hiring & retaining the human resource. As stated above the
objective of the environmental scanning should be to gather information from as many sources as possible and
to maximize this information for enhanced probability of success in the business.

3. Feasibility Study

It is done to find whether the proposed project (considering the above environmental appraisal) would be
feasible or not. It is important to demarcate environmental appraisal & feasibility study at this point.
Environmental appraisal is carried out to assess the external & internal environment of the geographical area/
areas where entrepreneur intends to setup his business enterprise whereas feasibility study is carried out to
assess the feasibility of the project itself in a particular environment in greater details. Hence, though feasibility
study would be dependent on environmental appraisal yet it is far more descriptive. The various variables/
dimensions are:

Market Analysis
Market analysis is to be conducted for the following reasons:
To estimate the demand of the proposed product / service in future
To estimate the market share of the proposed product/ service in future.

The demand analysis & market share is based on number of factors like consumption pattern, availability of
substitute goods/ services, type of competition etc. Wide variety of information has to be collected to make
these estimations.

A preliminary discussion with consumers, retailers, distributors, competitors, suppliers etc is carried out to
understand the consumer preferences, existing, latent & potential demands, strategy of competitors & practices
of distributors, retailers etc. The objective of a formal study needs to be comprehensive enough that they are
able to generate the desired answers to the following questions:

1. Who are the consumers (customers) both present & prospective?

2. What is the present & future demand?
3. How is the demand distributed seasonally (for eg. Air conditioners are required from May to September in
most part of our country)
4. How is demand distributed geographically?
5. How much price the consumer is willing to pay
6. What is the marketing mix of competitors?
7. What marketing mix would the consumers accept?

In nearly all cases research is required to obtain enough information to answer the above questions and to
identify whether project is feasible or not. This is done through a market research.

Technical/ Operational Analysis

Technical/ Operational Analysis is done to assess the operational ability of the proposed business enterprise.
The cost and availability of technology may be of critical importance to the feasibility of a project or it may not
be an issue at all.

Key Questions to be answered are:

a) What are the technological needs for the proposed business?

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b) What other equipment does the proposed business need?
c) From where will this technology & equipment be obtained?
d) From where can the technology & raw material be obtained?
e) What would be the equipment & technology cost?

Technical/ Operational Analysis collects data on the following parameters:

- Material availability
- Material Requirement planning
- Plant location
- Plant capacity
- Machinery & equipment
- Plant layout

a) Material Availability: It is imperative to assess the availability of the raw material required for production of
goods/ services. The feasibility study of material should make an account of following variables:

- The availability of quality & quantity of raw material

- The factors on which the availability of raw material is dependent
- Price sensitivity (elasticity) of raw material
- Perishable time of raw material

b) Material Requirement: Planning is undertaken to analyze the quantity of material that would be required to
let the production run smoothly, it would be dependent on material availability variable mentioned above.

c) Analysis of Choice of technology: It is done to identify whether the product developed at the idea generation
stage is technologically feasible or not i.e; it answers the questions like:

- Whether a technology for the product exists or not?

- If technology exists in more than one form then which technology would be more profitable to the company?

The choice of the technology would be affected by:

- Capacity of Plant
- Amount of investment
- Availability of technology
- Production cost
- Latest developments
- Quantity of planned production
- Affect of environment

d) Plant Location
Plant location refers to fairly broad area where the enterprise is to be established like city, industrial zone or
costal area. Plant location is the physical layout of the business and is affected by process of production, safety
of personnel, minimum production cost, scope of expansion, proper space utilization etc.

The choice of the location is affected by the following:

- Proximity to raw material & markets

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- Availability of infrastructure like power, transportation, water, means of communication
- Favorable Government policies
- Other factors like climatic condition, availability of manpower etc can affect the decision of plant location
e) Machineries & equipment:
Machinery & equipment is dependent on production technology, plant capacity, investment cost of buying,
maintenance & running cost.

Financial Feasibility
Once the analysis of marketing, Operation & organization has been done successfully, finally financial
feasibility is done to assess financial issues of the proposed business venture. Following cost estimates have to
be done:
a) Cost of Land & building: depending on the requirement & the availability of funds the land & building can
be hired, can be taken on lease or purchased.
b) Cost of Plant & Machinery: It includes estimates of cost of plant & machineries, their running &
maintenance cost
c) Preliminary cost estimation is made to assess how much cost would be required in conducting market survey,
preparing feasibility report, expenses in registering & incorporating machine, establishment expenses, expenses
in raising capital from public & other miscellaneous expenses.
d) Provision for contingencies needs to be done to cover certain unexpected expenses which can emerge due to
change in the external environment like increase in price of raw material like transport cost goes up if the petrol
prices are revised.
e) Working capital estimates for running the business are also made.
f) Cost of production, which would include raw material cost, labour cost, overhead expenses, utilities like
power, water, fuel etc.
g) Sales & production estimates: Based on the plant capacity the production & sales estimates are made which
help in estimating profitability
h) Sales & Production estimates: based on the plant capacity the production & sales estimates are made which
help in estimating profitability
i) Profitability projections are made on the following parameters:
i) Cost of production
ii) Sales expenses
iv) Administrative Expenses
v) Expected sales

Summation of all above gives gross profit.

Based on the above information following projections are made:

1. Break even point
2. Cash flow statement
3. Balance sheet statement
4. Multiyear projections are made (see financial plans for details)

 Drawing Functional Plans:

After positive results from the feasibility study functional plans are drawn. (Some of the scholars and writers
prefer to include feasibility study with the functional plans but they have been taken separately in this book as
feasibility study is precursor to plan & is done to check viability of the projected from various dimensions,
whereas after the feasibility study gives positive indication about the viability of the proposed projected one can

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go into the details of drawing functional plans which would plan the strategies for all the operational areas :
marketing, finance, HR & production.

a) Marketing plan:
Marketing plan lays down the strategies of marketing which cant lead to success of business. These strategies
are in terms of Marketing Mix (Product, Price, Place & promotion). From the market feasibility study &
marketing research, potential/ present demands of customers is determined which helps in understanding the
profile of customers & hence help in laying down the strategies for segmentation of the market, identification of
the target market & laying down strategies for target market.

b) Production/ Operation Plan

Production plan is drawn for business enterprise in manufacturing sector whereas operational plans are drawn
for business enterprise in service sector. The production / operation plan should include strategies for the
following parameters:

1) Location & reasons for selecting the location

2) Physical layout
3) Cost & availability of machinery, equipments, raw material
4) List of suppliers & if possible distributors
5) Cost of manufacturing/ running the operations
6) Quality Management
7) Production scheduling, Capacity management & inventory management.
8) Changes in above in case of expansions of business

c) Organizational Plan
Organizational plan defines the type of ownership: it could be single proprietary, partnership, company, private
limited or public limited. It also proposes an organizational structure & proposes the Human resource
management practices that would govern the successful running of the proposed business enterprise.

d) Financial Plan
Financial plan indicates the financial requirements of the proposed business enterprise
1) Cost incurred in smooth running of all the financial plans (Marketing, Operation & human resource)
For example cost incurred in marketing plan would include Forecasting sales, for production plan it includes
cost of goods, for organizational plan it includes cost of compensation to employees
2) Projected cash flows
3) Projected Income statement
4) Projected Break even point
5) Project ratios
6) Projected balance sheet

4. Project Report Preparation

After environmental scanning and feasibility analysis, project report is being prepared. The business plan is a
written document that describes step-by step strategies involved in starting and running a business.

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5. Evaluations, Control & Review

As stated earlier it is imperative to continuously review and evaluate the business constantly. This is because the
competition in today’s globalized world is high and the technological changes are taking place at much faster
rates. In this dynamic business environment it is important to evaluate, control and review the business
periodically and introduce changes to keep up with the market share.
To cope up with the rising competition Hindustan Liver Limited (HLL) had come up with a new strategy: New
Product Every Month!

12 Project Report Preparation

Project report helps to understand the opportunities, problems and weakness of the business. It guides the
entrepreneur in actually starting up and running the business venture. It helps him to monitor whether the
business is growing as was projected in the business plan or not. It helps in documenting the cost estimates of
the business. It can be used as a handy tool to persuade investors and financial institution to fund the project. It
can help in proper utilization of all the resources. It can keep the morale of employees, owners and investors up.
It can finally lead to a sustainable development of the organization.

Essentials of a Project Report:

1. The project report should be sequentially arranged.

2. The project report should be exhaustive (covering all the details about the proposed project)
3. The project report should not be very lengthy and subjective
4. The project report should logically and objectively explain the projections.
5. The projections should be appropriately be made from two to ten years.
6. The project report should be professionally made to exhibit that the promoters have entrepreneurial acumen
and sound experience.
7. The project report should justify the financial needs and financial projections
8. The project report should also justify market prospects and demands.
9. The project report should be attractive to the financial agencies and investors.
10. The project report should also have a high aesthetic value.

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