UNIT - 5

New Venture Creation and Promotion

Contents
– Procedure for Setting Up an Enterprise;
■ Selection of a Project,
■ Decide on the Constitution,
■ Obtain Registration,
■ Obtain Clearances from Departments as Applicable,
■ Arrange for Land/Shed, Arrange for Plant and Machinery, Arrange for Infrastructure,
■ Prepare Project Report,
■ Apply for and Obtain Finance,
■ Implement the Project and Obtain Final Clearances;
– Project Life Cycle,
– Project Scheduling - Gantt Charts, Network Techniques;
– Project Management Software; Capital Budgeting;
– Generating an Investment Project Proposal;
– Project Analysis; Market Analysis, Technical Analysis, Financial Analysis, Economic Analysis,
– Project Evaluation and Selection;
– The Payback Period;
– Benefit - Cost Ratio (BCR), Project Financing Equity Financing;
– Angel Investing; Debt Financing; Miscellaneous Sources;
– Project Implementation Phase;
– Capital Structure and Cost of Capital;
 The key steps to set up an enterprise are:

Selection of a Project: This involves choosing a specific product or service, selecting

an appropriate location, conducting a feasibility study, preparing a business plan, and
creating a project profile.

Decide on the Constitution: Entrepreneurs need to determine the legal structure of

their enterprise, such as sole proprietorship, partnerships, corporations, cooperatives,
or franchising.

Obtain Registration: Obtaining necessary registrations like SSI Registration,

Provisional Registration Certificate (PRC), and Permanent Registration Certificate
(PMC) is crucial for legal compliance and availing benefits.
Obtain Clearances from Departments as applicable: Entrepreneurs must
secure clearances from relevant departments to ensure compliance with
regulations and standards.

Arrange for Land / Shed: Securing suitable land or industrial shed is

essential for setting up the physical infrastructure of the enterprise

Arrange for Plant and Machinery: Entrepreneurs need to acquire the

necessary machinery and equipment for their business operations, either
through direct purchase or schemes like NSIC Hire Purchase.
Arrange for Infrastructure: Setting up the required infrastructure, including
land development, building construction, and utility connections, is vital for
operational readiness.

Prepare Project Report: Developing a comprehensive project report

detailing the business plan, financial projections, and operational strategies is
crucial for securing funding and approvals.

Apply for and Obtain Finance: Entrepreneurs should explore various means
of finance, such as equity financing, angel investing, debt financing, and other
sources, to fund their enterprise.

Implement the Project and Obtain Final Clearances: Finally, entrepreneurs

need to execute the project, obtain all necessary clearances, and ensure
compliance with regulations before commencing full operations.
Project Life Cycle
The Project Life Cycle, involves a series of phases that projects progress through in a
specific sequence.

Concept of a Project:
A project refers to a planned work involving one-time activities, with ownership patterns
varying from government-private partnerships to individual enterprises.

Types of Projects:
Different types of projects are highlighted, such as balancing projects, modernisation
projects, expansion projects, replacement projects, rehabilitation/reconstruction projects,
and plant relocation projects, each serving specific objectives within an organisation.
 Project lifecycle Stages:
Initiation Phase: In this phase, the project objective or need is identified and
documented in a business case with recommended solution options, and a feasibility
study is conducted to determine project viability. Once the solution is approved, the
project is initiated, a project manager is appointed, major deliverables are identified,
and the project team begins to take shape.

Planning Phase: The planning phase involves further developing the project
solution in detail, identifying all work to be done, defining tasks and resource
requirements, and creating a project plan outlining activities, assignments,
dependencies, and timeframes. Additionally, preparing a project budget, conducting
risk management, identifying stakeholders, establishing communication plans, and
documenting quality and acceptance plans are crucial aspects of this phase.
Execution Phase: During this phase, the project plan is implemented.
Resources are onboarded, work is performed as planned, and the project
manager leads the team towards successful delivery. Tasks are defined clearly,
and progress is tracked and measured using tools like Gantt charts and
burndown charts. Risk mitigation strategies are implemented, costs are
monitored, and team members are motivated and informed of progress.

Closure Phase: The closure phase marks the conclusion of project activities.
The finished product or service is handed over to stakeholders or owners. A
retrospective is conducted to assess what went well and areas for improvement.
Stakeholders are informed of the project's completion through impact reports.
A project closeout report is created to summarise accomplishments and
celebrate successes.
Project scheduling
■ Identify Entrepreneurial Goals and Objectives: Clearly define the goals and
objectives of the entrepreneurial project or venture. This could include launching a new
product or service, entering new markets, securing funding, or achieving growth targets.

■ Breakdown Tasks: Develop a comprehensive list of tasks or activities required to

achieve the entrepreneurial goals. Break down these tasks into smaller, manageable
components to facilitate scheduling and execution.

■ Prioritize Tasks: Prioritize tasks based on their importance and urgency in relation to
achieving entrepreneurial objectives. Identify tasks that are critical to the success of the
venture and prioritize them accordingly.
Project scheduling
■ Sequence Tasks: Determine the sequence in which tasks need to be completed. Identify
dependencies between tasks and establish a logical order of execution. Some tasks may
need to be completed before others can begin, while others can be executed
concurrently.

■ Resource Allocation: Identify the resources required to complete each task, including
human resources, financial resources, technology, and expertise. Allocate resources
based on availability, skill sets, and project requirements.

■ Estimate Task Durations: Estimate the time required to complete each task. This may
involve consulting with experts, conducting market research, or using historical data
from similar projects. Factor in uncertainties and risks to develop realistic duration
estimates.
Project scheduling

■ Develop a Project Schedule: Use project management tools such as Gantt charts, Kanban boards, or
project management software to create a detailed project schedule. Assign start and end dates to each
task, taking into account dependencies, resource availability, and constraints.

■ Monitor Progress: Monitor progress against the project schedule regularly. Track actual vs. planned
progress, identify deviations, and take corrective actions as needed to keep the project on track. This
could involve adjusting timelines, reallocating resources, or revising priorities.

■ Risk Management: Identify potential risks and uncertainties that could impact the project schedule
or the success of the entrepreneurial venture. Develop risk mitigation strategies and contingency
plans to address these risks proactively.

■ Communication and Collaboration: Foster open communication and collaboration among team
members, stakeholders, and partners involved in the entrepreneurial project. Keep stakeholders
informed about progress, changes, and challenges, and solicit feedback to drive continuous
Gantt Chart

■ A Gantt chart is a commonly used graphical depiction of a project

schedule. It's a type of bar chart showing the start and finish dates of a
project's elements such as resources, planning, and dependencies.

■ Henry Gantt (1861-1919), an American mechanical engineer, designed

the Gantt chart.
Gantt Chart

■ The Gantt chart is the most widely used chart in project management. These charts are
useful in planning a project and defining the sequence of tasks that require completion. In
most instances, the chart is displayed as a horizontal bar chart.

■ Horizontal bars of different lengths represent the project timeline, which can include task
sequences, duration, and the start and end dates for each task. The horizontal bar also shows
how much of a task requires completion.
Gantt Chart
■ A Gantt chart helps in scheduling, managing, and monitoring specific tasks and resources in
a project.

■ The chart shows the project timeline, which includes scheduled and completed work over a
period of time.

■ The Gantt chart aids project managers in communicating project status and completion rate
of specific tasks within a project, and also helps ensure the project remains on track.

■ By convention, it is a standard tool that makes communication unified among the

engineering and project management community.
Gantt Chart
Networking Technique
■ Networking technique often refers to methods used to model and manage project activities
and their relationships.

■ Critical Path Method (CPM):

■ CPM is a project management technique used to determine the longest sequence of

dependent tasks and the shortest time needed to complete a project.
■ It involves creating a network diagram that illustrates the sequence of activities, their
dependencies, and their duration estimates.
■ The critical path represents the longest path through the network and determines the
minimum amount of time required to complete the project.
■ By identifying the critical path, project managers can focus on activities that directly impact
project duration and ensure they are completed on time to prevent delays in project
completion.
Program Evaluation and Review Technique (PERT)
■ PERT is another project management technique used to estimate the duration of a project by
considering uncertainty in task duration estimates.

■ It involves creating a network diagram similar to CPM but with three time estimates for each
task: optimistic, pessimistic, and most likely.

■ These time estimates are used to calculate a weighted average duration for each task, taking
into account the uncertainty or variability in task durations.

■ PERT analysis provides a range of possible project completion times and helps project
managers better understand and manage project risk.
CRITICAL PATH METHOD
PERT