One out of 7 days in a week, I feel like giving up my entrepreneurial journey!

There are challenges, failures and commercial setbacks on one side and then on the other side is the lure of a lucrative job, other people making it big and comfort of spending time with family. Is it now no, this has been going on from the day I launched my startup, when I was a baby entrepreneur! So why am I sharing this I want to discover ways to keep a startup motivated, make a difference to your startup and learn for myself in the process.

1. Keep executing but do not forget to plan I have come across several startups, which were so bent on execution that they forgot to plan way forward. Somewhere down the line, you have to sit back and take note of what is working (scale up fast) and what is not working (give up fast). Give about 100 days for anything to take shape, and put your soul and heart to it for that time, but after that leave it as if you were a tourist! 2. Spend time in training yourself as well as your team At Nurture Talent, we spend a lot of time sharpening the axe collecting information for startups, updating about new schemes/techniques, new venture ideas/opportunities, gaps of aspiring students and professionals and visiting networking events/meets. This may take about 70-80% of our time. But its a very important part of our business, so we see it as an investment. Training is not only for team members, it is also for the owner of the venture. So invest some money into yourself go out and learn new skills of finance, marketing etc. 3. Remember why you started up If you wanted to be an entrepreneur, stick to it. If your venture is not doing well, try new things. If things do not improve, then become a co-founder of another venture. Always remember why you started up were you pushed or pulled into entrepreneurship? Once an entrepreneur, always an entrepreneur! 4. Share your experiences with people you trust If you are not doing well, no point in fooling yourself by writing on Facebook, had a successful launch of a new product. Go out and meet your mentors, share your problems and seek solutions. The problem may not get solved asap or you may not work on the advice, but Arjun will never lose by speaking to Krishna. Try someone in your family or your business network, whosoever you trust. 5. 1% extra is all that is required to win Entrepreneurship is about giving that 1% extra a little word here, a small effort there! Make a call to your customer you met 1 year back. Make someone awesomely happy with your service or products! What does not work is reading about others success stories, spending time on Facebook etc. Please add your views to this list, and make others happy. Amit Grover is an individual with passion about entrepreneurship. He is the CEO and Founder of Nurture Talent Academy- Indias 1st training institute for entrepreneurs. He is an IIT Delhi

and IIM Indore graduate and has previously worked with renowned companies like Infosys, Asian Paints and Onida. He is also a part of Mumbai Angels, a not for profit organization of angel investors and actively helps with funding and mentoring early stage companies. He has been invited in the past as mentor, judge, panelist, speaker at leading institutes like IIM Ahemdabad, IIM Kolkata, IIT Bombay, IIT Kharagpur, IIT Delhi, NITIE Mumbai, NMIMS Mumbai, DY Patil Mumbai, SIES College Mumbai, IPS Academy Indore, Proton Business School Indore, Chetana College Mumbai and Atharva College Mumbai.

Entrepreneurial Motivation - introduction Are you spending all your time in other peoples business? Is your energy and effort spent minding other peoples concerns? I am not referring here to gossiping, rumour mongering or any such vice. I am referring to the thing that makes thousands of people in this country get up early in the morning, leave their families and their homes and make a mad dash through crazy traffic like its the end of the world. That thing is work. More specifically, it is employment. Whether in the formal or informal sector it is the dominant activity in many of our lives throughout the world. It is a necessary evil for most of us because deep down we would rather not be working for anyone else, but somehow we accept that it is the only way to get by. Once the paycheck arrives at the end of the month we feel relieved, though only for a little while, that we have our needs met. By the 10th of the month the waiting starts all over again. We have to endure the rest of the month until the next paycheck. That is a reality for a lot of people, not only in Zambia, but throughout the world. We have become slaves to our salaries. Making a living is killing us. It should be making our lives better. Entrepreneurial motivation - who are you working for? When you go to work everyday, whose purpose are you fulfilling? It is the purpose of the company or organization you are working for. You are employed to help your organization achieve its objectives. If someone else took over your position they would still do the same things you do in order to achieve the organizations objectives. If you are working for an individual the same reasoning applies. You are working to fulfill the purpose given to you by that individual. In both cases you are minding someone elses business. Entrepreneurial motivation - you are not what you do However the situation gets more complex: many of us have been led into the belief that the organisations purpose is our own purpose. We whole-heartedly take up the cause of the organisation as our own. Our thoughts and ideals slowly but surely come to be replaced by those of our workplace. We become the perfect employees. Whats wrong with that? Everything. You are not what you do. Your work is not who you are. Unfortunately, our education system hasnt helped in this regard. It has trained us to become what we study. If you study law you become a lawyer, studying auto mechanics makes you a mechanic and studying cooking makes you a cook.

The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone elses business and making that person rich.Those are the wise words of Robert Kiyosaki, author of Rich Dad Poor Dad. Entrepreneurial motivation - minding other people's business When you mind someone elses business they may be achieving their objectives, but you are definitely not. It doesnt matter how big your salary is. The fact is your boss or the owner of the business will always make more money than you. Why not mind your own business and make your own fortune? Dont get me wrong. There is a lot of value in working for someone else: if you know why you are working there. It should not be, as most of us think, simply to be able to get a salary. Neither should it be your sole purpose in life. Working for someone else should fulfill three main objectives: Entrepreneurial motivation - work to develop yourself Firstly, it should be a way of learning and getting more knowledge and skills. People that work simply for the purpose of getting paid are often not the most productive people. It is those that realise the value that working is adding to their knowledge and skills as individuals that always perform better and that are always ready for the next challenge. Such people know that what they will get from their job will ultimately help them to mind their own business by equipping them with what they need mentally to be able to fulfill their own purpose. Entrepreneurial motivation - work to invest Secondly, working should be a means of being able to meet your basic needs whilst you work on your real purpose. Everything worthwhile takes time to build and become self sustaining and profitable. During this building phase you obviously need something to help you along. Entrepreneurial motivation - work for financial independence Thirdly, it should be a way of raising the finances needed to be able to mind your own business. Your salary is not meant to be spent as soon as it is received. Robert Kiyosaki says the poor and middle class work for money. The rich have money work of them. Some of the money you earn should be utilized in helping you to become financially independent. It should be invested. That may be in the form of having a business, buying stock or shares or anything else, so long as your money is growing. Your money should be put to work for you. Entrepreneurial motivation - delay gratification Unfortunately, the more we earn the more we spend on luxury items. Everyone wants an expensive car and a humongous house. Thats good. Just make sure that you get those things after you have built up a good financial base. Would a smaller house and a cheaper car not do in the meantime? Of course it would. Maybe you can invest the rest of the money into something that will yield far greater benefits in the long run. The employee mentality is what keeps most of us slaves to the economy and other people. We need to stop minding other peoples business and start minding our own. At the very least we should do both. But do both well. Entrepreneurial motivation - conclusion Paul the apostle said that you study to be quiet, and to do your own business, and to work with your own hands, as we commanded you that you may have lack of nothing. This statement was made close to two thousand years ago. Are we so slow to learn that up to this time we dont understand its message?

As a dreamer, you need to understand its significance and mind your own business. Never lose track of your vision for your life. Do not ever get so busy making a living that you forget to live your life. You are all you can be. Go on and be it!

I hope you have enjoyed these articles on motivation and that they will be of benefit to you as you reach out to your dreams. Return from Entrepreneurial Motivation to Newspaper Articles on Motivation Articles on motivation - Lessons from a baby

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Small businesses on Dalrymple Street inGreenock, Scotland

A small business, also called a mom and pop store by some in the United States, is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. The legal definition of "small" varies by country and by industry, ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees in the European Union,[2] and fewer than 500 employees to qualify for many U.S. Small Business [1] Administration programs. Small businesses can also be classified according to other methods such as sales, assets, or net profits.

Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses,photographers, small-scale manufacturing, and online business, such as web design and programming, etc.
Contents
[hide]

1 Characteristics of small businesses

o o o

1.1 Size definitions 1.2 Demographics 1.3 Franchise businesses

2 Advantages of small business 3 Problems faced by small businesses

o o o

3.1 Small business bankruptcy 3.2 Social Responsibility 3.3 Job Quality

4 Benefits of Supporting Local Business 5 Marketing the small business 6 Contribution to the economy 7 Sources of funding 8 Business Networks and Advocacy Groups 9 See also 10 References 11 External links

[edit]Characteristics [edit]Size

of small businesses

definitions

The legal definition of "small" varies by country and by industry. In the United States the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing [1] businesses and less than $7 million in annual receipts for most nonmanufacturing businesses. The definition can vary by circumstance for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the [2] healthcare reform bill Patient Protection and Affordable Care Act. In the European Union, a small business generally has under 50 employees. However, in Australia, a small business is defined by the Fair Work Act 2009 as one with fewer than 15 employees. By comparison, a medium sized business or mid-sized business has under 500 employees in the US, 250 in the European Union and fewer than 200 in Australia.

In addition to number of employees, other methods used to classify small companies include annual sales (turnover), value of assets and net profit (balance sheet), alone or in a mixed definition. These criteria are followed by the European Union, for instance (headcount, turnover and balance sheet totals). Small businesses are usually not dominant in their field of operation. The table below serves as a useful guide to business size nomenclature. Business Size definitions

AUS

US

EU

Minute/Micro 1-2

1-6

<10

Small

<15

<250

<50

Medium

<200 <500

<250

Large

<500 <1000 <1000

Enterprise

>500 >1000 >1000

Most cells reflect size not defined in relevant legislation Some definitions are mulit-parameter, e.g., by industry, revenue, market share [edit]Demographics According to a survey run in the United States among businesses having <500 employees in late [3] 2010, about 50% of minute/micro-businesses are owned by women. [edit]Franchise

businesses

Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchiser). McDonald's restaurants, TrueValue hardware stores, and NAPA Auto Parts stores are examples of a franchise. The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable. However, some franchisees conclude that they suffer the "worst of both worlds" feeling they are too restricted by corporate mandates and lack true independence. However, in some chains, such as the aforementioned TrueValue and NAPA, franchises may have their own name alongside the franchise's name. [edit]Advantages

of small business

A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can easily serve specialized niches, something that would have been more difficult prior to the internet revolution which began in the late 1990s. Adapting to change is crucial in business and particularly small business; not being tied to

any bureaucratic inertia, it is typically easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and maturity. Independence is another advantage of owning a small business. One survey of small business owners showed that 38% of those who left their jobs at other companies said their main reason for [citation needed] leaving was that they wanted to be their own bosses. Freedom to operate independently is a reward for small business owners. In addition, many people desire to make their own decisions, take their own risks, and reap the rewards of their efforts. Small business owners have the satisfaction of making their own decisions within the constraints imposed by economic and other [4] environmental factors. However, entrepreneurs have to work very long hours and understand that ultimately their customers are their bosses. Several organizations, in the United States, also provide help for the small business sector, such as [5] the Internal Revenue Service's Small Business and Self-Employed One-Stop Resource. [edit]Problems

faced by small businesses

Small businesses often face a variety of problems related to their size. A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions - it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. For example, if the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court, under the theory of undercapitalization. In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs. When they first start out, many small business owners underprice their products to a point where even at their maximum capacity, it would be impossible to break even. Cost controls or price increases often resolve this problem. In the United States, some of the largest concerns of small business owners are insurance costs [6] (such as liability and health), rising energy costs, taxes and tax compliance. In theUnited Kingdom and Australia, small business owners tend to be more concerned with excessive [7] governmental red tape. Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business. Additional business management skills are needed to keep a business running smoothly. Still another problem for many small businesses is the capacity of much larger businesses to influence or sometimes determine their chances for success. [edit]Small

business bankruptcy

When small business fails, the owner may file bankruptcy. In most cases this can be handled through [citation needed] a personal bankruptcy filing. Corporations can file bankruptcy, but if it is out of business and valuable corporate assets are likely to be repossessed by secured creditors there is little [citation needed] advantage to going to the expense of a corporate bankruptcy. Many states offer exemptions for small business assets so they can continue to operate during and after personal

bankruptcy. However, corporate assets are normally not exempt, hence it may be more [citation needed] difficult to continue operating an incorporated business if the owner files bankruptcy. [edit]Social

[citation needed]

Responsibility

Small businesses can encounter several problems related to Corporate social responsibility due to characteristics inherent in their construction. Owners of small businesses often participate heavily in the day-to-day operations of their companies. This results in a lack of time for the owner to coordinate [8] socially responsible efforts. Additionally, a small business owner's expertise often falls outside the realm of socially responsible practices contributing to a lack of participation. Small businesses also face a form of peer pressure from larger forces in their respective industries making it difficult to [9] oppose and work against industry expectations. Furthermore, small businesses undergo stress from shareholder expectations. Because small businesses have more personal relationships with their patrons and local shareholders they must also be prepared to withstand closer scrutiny if they want to [10] share in the benefits of committing to socially responsible practices or not. [edit]Job

Quality
[11]

While small businesses employ over half the workforce and have been established as a main [12] driving force behind job creation the quality of the jobs these businesses create has been called into question. Small businesses generally employ individuals from the Secondary labor market. As a [13] result, in the U.S. wages are 49% higher for employees of large firms. Additionally, many small businesses struggle or are unable to provide employees with benefits they would be given at larger firms. Research from the U.S. Small Business Administrationindicates that employees of large firms are 17% more likely to receive benefits including salary, paid leave, paid holidays, bonuses, [14] insurance, and retirement plans. Both lower wages and fewer benefits combine to create a job [15] turnover rate among U.S. small businesses that is 3 times higher than large firms. Employees of small businesses also must adapt to the higher failure rate of small firms. In the U.S. 69% last at least [16] 2 years, but this percentage drops to 51% for firms reaching 5 years in operation. [edit]Benefits

of Supporting Local Business

By opening up new national level chain stores, the profits of locally owned businesses greatly decrease and many businesses end up failing and having to close. This creates an exponential effect. When one store closes, people lose their jobs, other businesses lose business from the failed [17] business and so on. In many cases large firms displace just as many jobs as they create. Not only that but it also increases the costs of taxes. Instead of increasing a communitys revenue, big businesses actually shift money away from the community. Independent businesses depend on the many resources that a community can supply. They hire architects, contractors, hardware stores, interior designers, local advertisement agencies, accountants, business attorneys, and insurance companies. Local businesses also are more likely to supply locally produced products than chains, ultimately benefiting their community Large corporations on the other hand eliminate the need for local goods and services. >. [Milchen] A lack of diversity can decrease the revenues in a community. When towns are interesting, they attract people from out of town. More personality and individuality can lead to more tourists, which, in turn leads to money placed directly into the community [Santa Fe Independent Business Report] ). The diversity of businesses is also important to the individuality of consumers. Oftentimes, independent retailers can adjust the products that they sell in order to fit the needs of their consumers and the unique tastes of their community. Local businesses are also more likely to support unique, new, and/or controversial products. Local bookstores can provide controversial books and can support small authors or local authors. The same idea helps out with local art and music. Bookstores

and music shops are more likely to support local art and music than the mainstream stuff that large corporations provide.[Mitchell] Business chains decrease a communitys individuality because they ultimately choose what products reach their customers. This greatly narrows what products are available and shrinks diversity. [edit]Marketing

the small business

This unreferenced section requires citations to ensureverifiability.

Finding new customers is the major challenge for Small business owners. Small businesses typically find themselves strapped for time but in order to create a continual stream of new business, they must work on marketing their business every day. Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print, email marketing, and internet. Electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service. Another means by which small businesses can advertise is through the use of deal of the day websites such as Groupon and Living Social. These Internet deals encourage new visitors to small businesses.

Example of keyword analysis based on market competition.

Many small business owners find internet marketing more affordable. Google AdWords and Yahoo! Search Marketing are two popular options of getting small business products or services in front of motivated Web searchers. Successful online small business marketers are also adept at utilizing the most relevant keywords in their site content. Advertising on niche sites can also be effective, but with the long tail of the internet, it can be time intensive to advertise on enough sites to garner an effective reach. Creating a business Web site has become increasingly affordable with many do-it-yourself programs now available for beginners. A Web site can provide significant marketing exposure for small businesses when marketed through the Internet and other channels. Some popular services are WordPress, Joomla and Squarespace. Social media has proven to be very useful in gaining additional exposure for many small businesses. Many small business owners use Facebook and Twitter as a way to reach out to their loyal customers to give them news about specials of the day or special coupons and generate repeat business. The relational nature of social media, along with its immediacy and 24-hour presence lend intimacy to the relationship small businesses can have with their customers, while making it more efficient for them to communicate with greater numbers.Facebook ads are also a very cost-effective way for small businesses to reach a targeted audience with a very specific message. In addition to the social networking sites, blogs have become a highly effective way for small businesses to position themselves as experts on issues that are important to their customers. This can be done with a proprietary blog and/or by using a backlink strategy wherein the marketer comments on other blogs and leaves a link to the small business' own Web site.

A solid public relations strategy that utilizes speaking engagements, press releases, feature stories, events and sponsorships can also be a very cost-effective way to build a loyal following for a small business. [edit]Contribution

to the economy

In the US, small business (less than 500 employees) accounts for around half the GDP and more [18] than half the employment. Regarding small business, the top job provider is those with fewer than 10 employees, and those with 10 or more but fewer than 20 employees comes in as the second, and those with 20 or more but fewer than 100 employees comes in as the third (interpolation of data from [19] the following references). The most recent data shows firms with less than 20 employees account [20] for slightly more than 18% of the employment. According to The Family Business Review, There are approximately 17 million sole-proprietorships in the US. It can be argued that a sole-proprietorship (an unincorporated business owned by a single person) is a type of family business and there are 22 million small businesses (less than 500 employees) in the US and approximately 14,000 big businesses. Also, it has been found that small businesses created the most new jobs in communities, In 1979, David Birch published the first empirical evidence that small firms (fewer than 100 employees) created the most new jobs and Edmiston claimed that perhaps the greatest generator of interest in entrepreneurship and small business is the widely held belief that small businesses in the United States create most new jobs. The evidence suggests that small businesses indeed create a substantial majority of net new jobs in an average year. Local businesses provide competition to each other and also challenge corporate giants. Of the 5,369,068 employer firms in 1995, 78.8 percent had fewer than 10 employees, and 99.7 [21] percent had fewer than 500 employees. [edit]Sources

of funding

Small businesses in Biloela, Central Queensland, Australia, 1949

Small businesses use several sources available for start-up capital:

[22]

Self-financing by the owner through cash, equity loan on his or her home, and or other assets. Loans from friends or relatives Grants from private foundations Personal savings Private stock issue Forming partnerships Angel investors Banks

SME finance, including Collateral based lending and Venture capital, given sufficiently sound business venture plans

Some small businesses are further financed through credit card debtusually a poor choice, given that the interest rate on credit cards is often several times the rate that would be paid on a line of credit or bank loan. Many owners seek a bank loan in the name of their business, however banks will usually insist on a personal guarantee by the business owner. In the United States, the Small Business Administration (SBA) runs several loan programs that may help a small business secure loans. In these programs, the SBA guarantees a portion of the loan to the issuing bank and thus relieves the bank of some of the risk of extending the loan to a small business. The SBA also requires business owners to pledge personal assets and sign as a personal guarantee for the loan. The 8(a) Business Development Program assists in the development of small businesses owned and [23] operated by African Americans, Hispanics, and Asians. Canadian small businesses can take advantage of federally funded programs and services. See Federal financing for small businesses in Canada (grants and loans). [edit]Business

Networks and Advocacy Groups

Small businesses often join or come together to form organizations to advocate for their causes or to achieve economies of scale that larger businesses benefit from, such as the opportunity to buy cheaper health insurance in bulk. These organizations include local or regional groups such as Chambers of Commerce, as well as national or international industry-specific organizations. Such groups often serve a dual purpose, as business networks to provide marketing and connect members to potential sales leads and suppliers, and also as advocacy groups, bringing together many small businesses to provide a stronger voice in regional or national politics. Small Business Development Centers (SBDCs), operates in only 3 states, provide free and confidential counseling and low-cost training to small businesses. The largest regional small business group in the United States is the Council of Smaller Enterprises, [24] located in Greater Cleveland.

The Key Management Processes in Small Business

TK, Yahoo! Contributor Network Dec 27, 2010 "Share your voice on Yahoo! websites. Start Here."

MORE: Small Business Owners Business Owners Tqm Improve Productivity

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Business process management is an approach that creates, harmonizes and promotes business activities by enhancing effectiveness, efficiency and conformity to requirements in order to have a sustainable productivity and profitability. It improves effectiveness, efficiency, capacity, and ability of the business to perform by initiating conformity, flexibility, innovations, and integration of strategies, processes, procedures and methods. In a small business set-up, the management process may be tailored to suit the business context and avert the business owner form undergoing unnecessary expense from applying the process. Small business organizations are usually limited by size, resources and ability. They are sensitive and fragile to manage. Any wrong 'move' can send the whole venture into disarray. Nonetheless, small businesses owners need to apply the management process elements of design, model, execute, monitor and optimize. A business owner has to formulate the management function based on the manpower and the customer needs. Often than not, small business set-up are complicated by the issues of ownership and management. For instance, the managers and employees of most small business set-up are mainly family members. This implies that there is influential 'force' of blood relation that interferes with the normal management process. This creates a loophole in the management function of the business and often what should have been a typical management role assumes a 'supportive' role. In designing the management function, the owner has to understand the kind of employees is dealing with. These are family members whose behavior is affected by the misconception that this is 'their' property. Therefore, a clear cut explanation has to be made to the employees that personality and business entity are two but different things. Even the owner of the business and the business itself are but two different entities. The owner can create changes that are aligned to the business growth. These entail promoting practices that improve effectiveness and efficiency while at the same time takes care of the product quality and customer satisfaction. The owner of the small business is conscious that the business is fragile and cost of operation must be scaled-down significantly. There must be optimum utilization of the available resources including time to record efficiency. Execution implies that the changes, strategies, measures, processes, procedures and approaches are rolled to action. The human and technological resources are acted upon to produce the desired results. The workers must be manipulated to make use of their skills, talents, efforts, time, willpower, energy and know-how to realize real results. The owner should apply human

skills of intellectual, intuitive and analytical forms to insinuate the workers to perform. The owner should bear in mind that the family members can greatly put down the initiative to further the business to higher profile. The misconception of the reality in business, as witnessed within the small business 'family-type' workers, is the greatest challenge to the growth of small business and that is why some small entities remain unexpanded. There is need to monitor the effectiveness and efficiency of the applied changes. This means that when the owner has identified changes such as manpower, strategies such as boosting the morale of the workers, and technological innovations such as installation of a new production machine, these are put into practice and there must be a control and measure of the results and progress of the implementations. If a new production machine is installed and there is no significant improvement in quantity production, this implies that the employees are not effective and efficient as required. The owner can revisit the issue to correct the menace. Optimization can be rephrased as continual improvement of sustainable application. When the strategies, innovations, and human manipulation are done, these implementations that yield results need to be optimized. This implies that they have to be applied sustainably through improving on effectiveness and efficiency. There should be continual improvement which means the costs of operations are brought down, the productivity is increased, and quality is improved through constantly adding value and customer buying behavior enhanced. This translates to good and sustainable profitability.

SMALL INDUSTRIES DEVELOPMENT ORGANISATION (SIDO) ORGANISATIONAL STRUCTURE OF SIDO Small Industries Development Organisation (SIDO) an apex body at Central level for formulating policy for the development of Small Scale Industries in the country, is headed by the Additional Secretary & Development Commissioner (Small Scale Industries) under Ministry of Small Scale Industries Govt. of India. SIDO is playing a very constructive role for strengthening this vital sector which has proved to be one of the strong pillars of the economy of the country. It functions through a network of the field offices namely 30 SISIs, 28 Br. SISIs, 4 RTCs, 7 FTSs, various training and production centers and specialized institutes spread over different parts of the country. It is rendering the services in the following areas :Advising the Govt. in policy matters concerning small scale sector. Providing techno-economic and managerial consultancy, common facilities and extension services. Providing facilities for technology up-gradation, modernization quality improvement & infrastructure. Human resources development through training and skill up-gradation. Providing economic information services. Maintaining close liaison and vital linkage with the Central Ministries, Planning Commission, Financial Institutions, State Govts. & similar other developmental organizations/agencies related to the promotion and development of SSI Sector. Evolving and coordinating policies for development of ancillaries. Monitoring of PMRY Scheme Monitoring the working of different Tool Rooms & PPDC's

Policy Support To Small Scale Industries Presentation Transcript

1. POLICY SUPPORT TO SMALL SCALE INDUSTRIES RITU MCOM(E-COM) ROLL NO 15 2. INTRODUCTION After attaining independence in 1947 India adopted mixed economic planning as a method to achieve economic development. Along with the Large Scale sector the thrust was on Small Scale sector because of it decentralized, its small size, use mainly indigenous technology, employment intensity and its suitability for rural area with limited technoeconomic structure. Industrial policies over the year have focused to promote SSIs through various incentives related to financial, fiscal and infrastructure measure; along with a heavy industrial base. 3. The various provisions under Industrial Policy Resolutions formulated by the government in assisting the small scale industries (SSI) The various fiscal incentives for SSIs

4. INDUSTRIAL POLICY RESOLUTION AND SSIs INDUSTRIAL POLICY RESOLUTION 1948 1.1 SSIs are particularly suited for the utilization of local resources and creation of employment opportunities . 1.2 The primary responsibility for developing small industries by creating infrastructure has been provided to state government . 1.3 Central government frame the broad policies and coordinates the efforts of State Government for development of SSIs. 5. 2. INDUSTRIAL POLICY RESOLUTION 1956 2.1 It stated that besides continuing the policy support to cottage, village and small industries by differential taxation or direct-subsidies, the aim of state policy would be that the development of this sector is integrated with that of large scale industry. 2.2 The focus was to improve the competitive strength of SSIs. 2.2.1 to achieve this 128 items were exclusively reserved for production in SSIs, and 166 items were reserved for exclusive purchase by government from this sector. 6. 3 INDUSTRIAL POLICY RESOLUTION 1977 The main thrust of policy was effective promotion of cottage ,village and small industries widely dispersed in rural area and small towns. This thinking specified the following things: 504 items were reserved for exclusive production in the small scale industries . The concept of District Industrial Centers (DICs) was introduced to that in each district a single agency could meet all the requirement of SSIs under one roof. Technological up gradation was emphasized in traditional sector . Special marketing arrangement through the provision of services, such as, production standardization, quality control, market survey, were laid down. 7. 4 INDUSTRIAL POLICY RESOLUTION 1990 Main feature of this resolution are as follows: 1. It raised the investment ceiling in plant and machinery for SSIs. 2. It created central investment subsidy for this sector in rural and backward area. Also, assistance was granted to woman entrepreneurs for widening the entrepreneurial base. 3. Reservation of items to be produced by SSIs was increased to 836. 4. Small Industries Development Bank of India was established to ensure adequate flow of credit to SSIs. 5. Stress was reiterated to upgrade technology to improve competitiveness. 6. Special emphasis was laid on training of woman and youth under Entrepreneurial Development Programme. 7. Activities of Khadi and Village Industries Commission and Khadi and Village Industrial Board were to expand.

8. 5.INDUSTRIAL POLICY RESOLUTION 1991 The basic thrust of this resolution was to simplify regulations and procedures by delicensing, deregulation . Its salient feature are: SSIs were exempted from licensing for all articles of manufacture. The investment limit for tiny enterprises was raised to Rs.5 lacs irrespective of location. Equity participation by other industrial undertaking was permitted up to a limit of 24% of shareholding in SSIs. Factoring services were to launch to solve the problem of delayed payment to SSIs. Priority was accorded to small and tiny units in allocation of indigenous and raw materials. Market promotion of products was emphasized through co-operatives, public institutions and other marketing agencies and corporations. 9. COMPREHENSIVE POLICY PACKAGE FOR SSIS AND TINY SECTOR 2000 The exemption for excise duty limit raised from 50 lakhs to Rs One crore to improve the competitiveness. The third census of small scale industries by the ministry of SSI was conducted. which also covered sickness and its causes in SSIs. The limit of investment was increased in industry related service and business enterprises from Rs 5 lakhs to Rs 10 lakhs. The scheme of granting Rs 75000 to each small scale enterprise for obtaining ISO 9000 certificate was continued till the end 10 th plan. SSI associations were motivated to develop and operate testing laboratories. One time capital grant of 50% was given on reimbursement basis to each association. The limit of composite loan was increased from Rs10 lakhs to Rs 25 lakh. The coverage of ongoing Integrated Infrastructure Development (IID) was enhanced to cover all area in the country with 50% reservation for rural area and 50%earmarking of plots for tiny sector. The family income eligibility limit of Rs 24000 was enhanced to Rs 40000 per annum under the Prime Minister Rozgar Yozna (PMRY). 10. INDUSTRIAL POLICY PACKAGE FOR SSI 2001-02 This policy emphasizes the following: The investment limit was enhanced from Rs 1crore for to Rs 5 crore for units in hosiery and hand tool sub sectors. The corpus fund set up under the Credit Guarantee Fund Scheme was increased from 125 crore to 200 crore . Credit Guarantee cover was provided against an aggregate credit of Rs 23 crore till December 2001. 14 items were de-reserved in June 2001 related to leather goods, shoes and toys. Market Development Assistant Scheme was launched exclusively for SSI sector. Four UNIDO assisted project were commissioned during the year under the Cluster Development Programme .

11. INDUSTRIAL POLICY ON SSIS 2004-05 Policy initiatives for this year are as follows: The national commission on Enterprises in the Un-organized/Informal Sector was set up in September 2004.It suggested measures considered necessary for improvement in the productivity of these enterprises, generation of large scale employment opportunities, linkage of the sector to institutional framework in area like credit ,raw material supply, infrastructure, technology up gradation ,marketing facilities and skill development by training . 85 items were de-reserved in October 2004. The investment limit in plant and machinery was raised from Rs One crore to Rs 5 crore in October 2004,in respect of seven item of sports goods to help to upgrade the technology and enhance competitiveness. The Small and Medium Enterprise (SME) fund of Rs 10000 crores was stared by SIDBI since April 2004,with 80% of the lending for SSI units. The interest rate was 2%below the prevailing Prime Lending Rate (PLR) of the SIDBI. The reserve Bank of India raised the composite loan limit from Rs 50 lakhs to Rs One crore. Promotional Package for small enterprises was initiated. 12. POLICY PACKAGE FOR SME 2005-06 THIS POLICY PACKAGE CONTAINS THE FOLLOWING POINTS 180 items were dereservation. Small and Medium Enterprises were recognized in the services sector , and were treated on par with SSIs in the manufacturing sector. The corpus of the Credit Guarantee Fund was raised from Rs 1132 crore in March 2006 to Rs 2500 crore in five years. Credit Guarantee Trust for Small Industries (CGTSI) was advised to reduce the one time guarantee fee from 2.5% to 1.5% for all loans. Insurance cover was extended to proximately 30,000 borrowers, identified as chief promoters, under the CGTSI. The sum assured would be Rs 200000 per beneficiary and the premium will be paid by CGTSI. The emphasis was laid on Cluster Development model not only to promote manufacturing but also to renew industrial towns build new industrial township . The model is now being implemented, in nine sector including khadi and village industries, handlooms, textiles, agricultural products and medicinal plants. 13. FISCAL INCENTIVES TO SSIs Fiscal incentives are provided through tax concessions granted in the form of exempted of direct or indirect taxes leviable on production or profits, besides special tax concessions. These incentives have been provided to promote the SSIs and discussed in following: 14. TAX HOLIDAY With effect from financial year 2005-06, deduction in respect of profit and gains for small scale industrial undertaking is available under Section 80IB. Small scale industrial undertaking can claim deduction at the following

rates: If SSI unit is owned by a company , the deduction available is 30% for first 10 year , If SSI unit is owned by a co-cooperative society, the deduction to be availed is 25% for first 10 years , and If any other person owns SSI units ,the deduction to be claimed is 25% for first 10 years .

15. TAX EXEMPTION CONDITIONS: No small scale or ancillary undertaking shall be subsidiary of, or owned or controlled by other industries undertaking . The SSI unit should commence business between 1 st April1991 and 31 st March 2002. SSI unit can manufacture any nature/type of goods /article to avail deduction. They should employ at least 10 workers in manufacturing process carried out with aid of power or at least 20 worker in manufacturing process carried out without the aid of power. This tax exemption from total income is allowed from the assessment year in which the unit being to manufacture or produce goods or articles. 16. EXCISE CONCESSIONS Government of India has provided a major relief by grating full exemption from the payment of central excise duty on a specified output and thereafter slabwise concessions. The following concessions are available to them in this regard: 17. 1, SS units producing goods up to Rs.100 lakhs are exempted from payment of excise duties. 2. SSI units having turnover less than Rs.60 lakhs per annum need not have a separate storeroom for storing the finished products. 3.SSIs are also not required to maintain any statutory records such as daily stock account of production and clearance , raw material account ,personal ledger account etc. their own record are adequate for excise purpose. 4. There is no distinction between registered and unregistered units for SSI concessions for SSIs has been based on annual turnover rather than SSI registration . Duty liability is to be discharged by 15 th of following month. 5. The SSI exemption is available for home consumption ,as well as in respect of goods exported to Nepal & Bhutan. 6. Normally ,excise officers are not expected to visit SSI units paying less than Rs.11lakhs duty annually . 7.With effect from 1-4-1994, Gate Pass System was replaced by manufacturer invoice to cover clearance of goods as the duty-paying document. 18. TWO STREMS OF CONCESSIONS TO SSIs. SSI Scheme (without CENVAT) : With effect from 1 st April 2000. The rate of duty applicable to such manufactures whose turnover does not exceed Rs.3 crores in the pervious financial year in respect of excisable goods for home consumption from one or more factories of the same manufacturer or from factory by one or

more manufacturer: RATE OF DUTY IN RESPECT OF CLEARNCE OF EXCISABLE GOODS VALUE OF CLEARENCE(RS) RATE OF DUTY UP TO RS.100 Lakhs NIL 100-300 Lakhs normal rate of duty

19. SSI Scheme (with CENVAT): with effect 1 st April 2003. It provides the concessional rate of duty in respect of clearance of specified goods for home consumption and also states that all clearance of the specified goods which are used for captive consumption in production of the specified goods shall be subjected to be nil rate of duty. Rate of duty in respect of clearance of Specified goods. Value of clearance (Rs) Rate of duty up to 100 lakhs 60%of normal rate 100-300 lakhs normal rate of duty 20. MEASURES FOR PROMOTION AND DEVELOPMENT OF SSIs Central and state Government have formulated several schemes to make the SSIs vital and competitive. Reservation policy Governments purchased preference policy for SSI products. Governments price preference policy for marketing SSI products. Technical assistance Raw material assistance Financial assistance New initiatives 21. RESERVATION POLICY Out of 836 items reserved in 1989,39 items were dereserved in four phases viz., 15 items in 1997 9 items on 1999 1 item on 2001 and, 14 item on 2001.subsequently, 51 item were dereserved in 2002, 75 item in 2003 and 85 items in 2004, 108 in March 2005 and 180 in May 2006. Now 298 items stand reserved for this sector. 22. GOVERNMENTS PURCHASE PREFERENCE POLICY FOR SSI PRODUCTS Under the Store Purchase Policy of the Government 409 items of store were reserved for exclusive purchase from KVIC/Womens Development Corporation/Small Scale units in 1989. This list reviewed . In February2004, the Committee (set up to consider the question of inclusion of additional items) revised list and 358 items were approved , after deleting items having common nomenclature and addition of some new ones. This list also includes 8 handicraft items reserved for purchase from the Handicraft Sector. 23. GOVERNMENT PRICE PREFERENCE POLICY FOR MARKETING SSI PRODUTS These facilities includes the following : Price preference up to 15%in case of selected items. No registration fee. A consortium to channelize and identify for the production of SSIs both in India and abroad. 24. The Single Point Registration scheme of NSIC the following benefits are given to SSIs units, which get them registered with the NSIC: Availability of tender sets free cost. Exempted from

payment of Earnest Money Deposit. Exempted from payment of Security Deposit up to the monetary limit for which the unit is registered. Price preference up to15% over the lowest quotation of the large scale units. The benefit is available to compensate them on a/c of non-availability of economies of scale ,poor resource base, poor access to raw material as compared to the large scale sector.

25. TECHNICAL ASSISTANCE Technology audits and benchmarking Technology needs assessment Technology sourcing Application of new acquisition. Technology acquisition . Material testing facilities through accredited laboratories. Product design including Computer Aided Designs. Common facility support in machining Energy and environment services at selected centers. Classroom and practical training for skill upgradation 26. NEW INITIATIVES Advisory and Mentoring services Technology Business Incubators > Information technology. > Production design. > Energy and Environment > Bio-Technology . > Electronics and Communications Suppliers Rating Accreditation Services.

What is the Role and Importance of Small Scale Industry in India?

CHINMOY KUMAR BUSINESS In a developing country like India, the role and importance of small-scale industries is very significant towards poverty eradication, employment generation, rural development and creating regional balance in promotion and growth of various development activities. It is estimated that this sector has been contributing about 40% of the gross value of output produced in the manufacturing sector and the generation of employment by the small-scale sector is more than five times to that of the large-scale sector. This clearly shows the importance of small-scale industries in the economic development of the country. The small-scale industry have been playing an important role in the growth process of Indian economy since independence in

spite of stiff competition from the large sector and not very encouraging support from the government. The following are some of the important role played by small- scale industries in India. 1. Employment generation: The basic problem that is confronting the Indian economy is increasing pressure of population on the land and the need to create massive employment opportunities. This problem is solved to larger extent by smallscale industries because small- scale industries are labour intensive in character. They generate huge number of employment opportunities. Employment generation by this sector has shown a phenomenal growth. It is a powerful tool of job creation. 2. Mobilisation of resources and entrepreneurial skill: Small-scale industries can mobilize a good amount of savings and entrepreneurial skill from rural and semi-urban areas remain untouched from the clutches of large industries and put them into productive use by investing in small-scale units. Small entrepreneurs also improve social welfare of a country by harnessing dormant, previously overlooked talent. Thus, a huge amount of latent resources ;re being mobilised by the small-scale sector for the development of the economy. 3. Equitable distribution of income: Small entrepreneurs stimulate a redistribution of wealth, income and political power within societies in ways that are economically positive and without being politically disruptive. Thus small-scale industries ensures equitable distribution of income and wealth in the Indian society which is largely characterised by more concentration of income and wealth in the organised section keeping unorganised sector undeveloped. This is mainly due to the fact that small industries are widespread as compared to large industries and are having large employment potential. 4. Regional dispersal of industries: There has been massive concentration of industries m a few large cities of different states of Indian union. People migrate from rural and semi urban

areas to these highly developed centres in search of employment and sometimes to earn a better living which ultimately leads to many evil consequences of over-crowding, pollution, creation of slums, etc. This problem of Indian economy is better solved by small- scale industries which utilise local resources and brings about dispersion of industries in the various parts of the country thus promotes balanced regional development. 5. Provides opportunities for development of technology: Small-scale industries have tremendous capacity to generate or absorb innovations. They provide ample opportunities for the development of technology and technology in return, creates an environment conducive to the development of small units. The entrepreneurs of small units play a strategic role in commercialising new inventions and products. It also facilitates the transfer of technology from one to the other. As a result, the economy reaps the benefit of improved technology. 6. Indigenisation: Small-scale industries make better use of indigenous organisational and management capabilities by drawing on a pool of entrepreneurial talent that is limited in the early stages of economic development. They provide productive outlets for the enterprising independent people. They also provide a seed bed for entrepreneurial talent and a testing round for new ventures. 7. Promotes exports: Small-scale industries have registered a phenomenal growth in export over the years. The value of exports of products of small-scale industries has increased to Rs. 393 crores in 1973-74 to Rs. 71, 244 crores in 2002-03. This contributes about 35% India's total export. Thus they help in increasing the country's foreign exchange reserves thereby reduces the pressure on country's balance of payment. 8. Supports the growth of large industries: The small-scale industries play an important role in assisting bigger industries and projects so that the planned activity of development work is timely attended. They support the growth of large industries by providing, components, accessories and semi finished goods required by them. In fact, small industries can breath vitality into the life of large industries. 9. Better industrial relations:

Better industrial relations between the employer and employees helps in increasing the efficiency of employees and reducing the frequency of industrial disputes. The loss of production and man-days are comparatively less in smallscale industries. There is hardly any strikes and lock out in these industries due to good employee-employer relationship. Of course, increase in number of units, production, employment and exports of small- scale industries over the years are considered essential for the economic growth and development of the country. It is encouraging to mention that the small-scale enterprises accounts for 35% of the gross value of the output in the manufacturing sector, about 80% of the total industrial employment and about 40% of total export of the country.