UNIT – 2

Process for Entrepreneurship-Business Planning,

Implementation and Evaluation
General Steps of Business Planning Process

• 1. Idea generation: This is the first preliminary stage of business planning process. New
ideas can be obtained from consumers, employees, research and development, market
intermediaries etc. certain methods also can be utilized by entrepreneur/business
organization such as group discussion, brain storming, market research etc.

• 2. Assessing the environment: Before venturing into the commercialization of promising

ideas generated by previous steps. It is necessary to thoroughly analyze both macro
(external) and micro (internal) environments so as to know strength, weakness,
opportunities and threats faced by the organization/entrepreneur. Here it is necessary
to collect maximum information for all the environmental factors which will have both
short term and long term impact on the organization /entrepreneurs future plans.
• 3. Feasibility analysis: On finding the environment suitable for the
enterprise, detailed feasibility study is to be carried out viz., market
feasibility, technical/operational feasibility and financial feasibility.
Market feasibility is concerned with ascertaining present and future
aggregate demand for the enterprise product/service and expected
market share of the proposed enterprise. Different methods of demand
analysis are used for this purpose. Technical/operational feasibility
helps to know the operational ability of the proposed enterprise. The
technical feasibility covers the parameters of raw material availability,
material requirement planning, plant location, plant capacity,
machinery & equipment, plant layout etc. Financial feasibility is also
carried out at the end to assess financial issues of the proposed
enterprise. Different cost estimates and profitability projections are
done. If all these feasibility studies indicate viability of the proposed
enterprise then detailed functional plans covering all functions
(production, finance, marketing, human resource etc) are made.
• 4. Project report preparation: Using the information so far
collected, a project report/ business plan is prepared. A
business plan is a written document describing step by
step strategies to establish and operate an enterprise.

• 5. Evaluation, control & review: In order to retain leading

position in today’s competitive business world, it is
necessary for an enterprise to continuously evaluate the
functioning and do necessary revisions in the light of
changed circumstances.
.

Figure 4: The OECD/EUROSTAT framework for Entrepreneurship indicators – adding

indicators to the categories for entrepreneurial performance

Entrepreneurial Performance

Firms Employment Wealth

High Growth Firm Rate by

Employer firm birth rate High Growth Firm Rate by Turnover
Employment

Employer firm death rate Gazelle Rate by Employment Gazelle Rate by Turnover

Business churn Ownership rate start-ups Value-added by young firms

Net business population growth Ownership rate business population Productivity contribution, young firms

Innovation Performance, young or small

Survival rate, 3 and 5 years Employment: 3 and 5 year old firms
firms

Proportion 3 and 5 year survival Average firm size after 3 and 5 years Export Performance, Small firms
Risk and Rewards of Entrepreneurship
 The Risks of Entrepreneurship
No Steady Pay Check
• If you are an entrepreneur, this means that you will often have to give up the security of a
steady salary at the end of the month. This means that if your business is not doing so well,
it can have a serious effect on your personal income.

Sacrificing Personal Capital

• A lot of times entrepreneurs have to use their own savings to get their business off the
ground until they have developed it enough to be ready for external funding from angel
investors, government grants, loans or crowdfunding campaigns. If you are not planning to
take investment or look for funding, the strain on your savings can be even larger.

Relying on Cash Flow

• It can be a real challenge to secure enough cash flow in your business on an ongoing basis.
This is particularly true if one of your bigger clients pays late or you lose a client, then costs
can quickly exceed your revenues and you will need to tap into savings to pay the bills.
 
Interest in Your Product/Service
• Even with a lot of research and tests, you only have an estimate of people’s interest in
your product/service, and that interest is somewhat unpredictable. This means that your
financial projections can be flawed, which can have major effects on your company.

Trusting Key Employees

• If you are starting your business, you won’t have the resources to hire a full team, which
means you will have a small group of people putting a lot of effort into the product to get
it going. This means that you will have to put a lot of trust in this small group of people to
get the job done, otherwise your timeline can be completely wrong.
 
Betting on a Crucial Deadline
• Finances are often tight in a start-up and investors want to see progress, which means
that several milestones can be tied to a certain deadline. This means that entrepreneurs
regularly have to worry about hitting a specific deadline and need to make sure to have a
follow up plan if it does not work out.
Committing Personal Time (and Health)
• You will spend countless hours working on your business to make it successful, which will make you
miss out on personal time and often entrepreneurs end up sacrificing their health by not sleeping
enough, being under constant stress and eating unhealthy foods.
 
Emotional Risk
• Starting a business will mean that you will go through an emotional rollercoaster – you may feel
others had it easier to start with, there might be jealousy of a competitor who got into press,
romantic difficulties because you are spending so much time on the business, self-doubt, problems
with time management and not enough time to see your family and friends, feeling of rejection by
investors, press, etc., or problems with your fellow co-founders or employees. It can also be a large
burden to be responsible for the business all by yourself, which can be scary and lead to feelings of
loneliness.
 
Risk of Scaling
• As your business is growing, a new set of challenges will be awaiting you, spanning from hiring
more employees, opening another office, technical upgrades, launching a new product to acquiring
another business. There are a lot of pitfalls on the way so you need a strong support network and a
team you can trust to help you with these challenges.
 The Rewards of Entrepreneurship
 

Control
• A major benefit of starting you own venture is that you have a large degree
of agency and control of what is happening in your company. You can
decide whom you want in your team and you set the vision for the company
and make strategic decisions.
 
Excitement
• Building your own business can be a very exciting and highly enjoyable
process as you get to apply your skills and abilities to solve problems, make
fascinating breakthroughs and meet interesting people. Your work is
dynamic, as the company constantly needs to adapt as it is growing so you
never get bored. There is no better feeling then creating something out of
nothing, and you get to work with people who are not only your
customers/suppliers, but also your friends.
Freedom
• The freedom you have will also add to your life satisfaction and
make you more fulfilled. You have the freedom to choose if you
want to work from home or while you are travelling, and you
can choose when you want to work.
 
New Skills
• Even if you have expertise in certain areas, in the beginning
you have to do a bit of everything and this way you will learn
about accounting, design, marketing, public speaking, how to
delegate, how to be more creative, about sales and much more.
Furthermore, you have to learn how to fail as well as face
rejection but still get back up on your feet.
 
Rational Salary
• Another advantage is that your salary is directly related to how much
work you put in and how many new contracts you close. Over are the
days where you put in so much more effort than your co-worker but
get paid the same and you also don’t need to wait for a raise anymore.
 Impact
• You get to see the impact you make first hand as you work closely with
your customers and the problems you solve make a real difference in
people’s lives. Furthermore, you create jobs which will attract talent to
your local area and also helps economic development.
Flexibility
• Because you own the company, you can decide how to organize your
schedule and when to take time off, but the truth is that entrepreneurs
often have to work very long hours, particularly in the beginning.