Saturday, September 6, 2008

Types of Business Plan

There can be two types of Business Plan - internal or external .

1.0 Externally Focused Plans

Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals.

1.1 For Profit

With for-profit entities, external stakeholders include investors and customers.

1.2 Non Profit

External stake-holders of non-profits include donors and the clients of the non-profit's services.

1.3 Government

For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.

2.0 Internally Focused Business Plan

Internally focused business plans target intermediate goals required to reach the external goals.

2.1 Revamping Systems

This business plans may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization.

2.2 Reviewing Performance

An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures.

2.3 Strategic Plans

Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Friday, September 5, 2008

East Indian SME's

The entrepreneur and their SME's constitute an important part of the economy of East India. The SME's here constitute a quarter of India's unorganized manufacturing companies. Employment in East India's SME's constitutes approximately a third of the employment in India.

Given the critical nature of the entrepreneur to this region's economy there would be following measures taken to encourage the local climate of innovation.

1. Small Business and Entrepreneurship training institute should be started where grass root entrepreneurs can learn the basic business skills.

2. Government should help to encourage credit and lending for start-up companies.

3. Intellectual Property Rights (IPR) should be promoted and protected.

4 Red-tape should be reduced, single window system should be introduced.

5. Foreign investment should be facilitated; small companies can be service providers to foreign companies.

6. Infrastructure, connectivity enhanced.

7. Entrepreneurs should have facilities that can they rise up after failure . For this purpose,there is a need of
restructuring Bankruptcy laws

8. Government should encourage entrepreneur to start export oriented units and provide necessary support in case
they where subject to Bad debts.

Thursday, September 4, 2008

Business Formulae

Once you find your own business formula , you can take you business in many levels . Its just like mathematics, where there is a importance of understanding the formula.In business, the business model is the formula. Further it is important to understand, how to apply that formula, to solve different Business problem.

I think,that is the Journey of Business , from idea to implementation.

Wednesday, September 3, 2008

Why do you need a Business Plan ?

There has been always a question in an Entrepreneurs mind that " Do I need a plan ? ". My answer is simple - Yes you need it . And these are reasons why you need it ?

Planning helps to focus and set the priorities right . Often, we find that startups gets overwhelmed, with issues popping one after another . That is where we need a plan, to keep ourselves focused and not get carried away.

Here is how a business plan helps

1. Creates focus in your mind .
2. Helps to define priorities
3. Take rational decision
4. Present the Business to different stakeholders
5. Have the grip in the Cash Flow of the Business
6. Rope in partners, investors , critical employees

Yes .. you need a plan in this complex economic structure of the globalized world to make your business successful .

The Export Scenario of Indian SMEs

Indian SMEs have achieved considerable progress in terms of growth of number of units, gross output, employment generation and exports, yet  exports of manufactured goods from India from the small scale sector still constitutes less than 10 percent of the total output of this sector.  This is due to the vast domestic market for manufactured goods in India; the Indian small entrepreneur hesitates to venture into the export markets due to his inability to undergo risks of international trade. 

It also needs to be emphasised that the modern sector of the Indian SMEs, which uses latest state-of-the-art technologies, has already developed a niche in establishing sound sub­contracting arrangements among large enterprises in India in the automobiles, electrical, electronics, chemicals, pharmaceuticals, software development and other sectors. 

Indian SMEs have already attained a status, in terms of technologies and managerial skills, to enter into supply arrangements for a number of intermediate products to support the output of large industries at costs and standards which are internationally competitive. SME’s contribution to exports is significant, more than 50 percent including indirect exports.  Their contribution is particularly phenomenal and more than 50 percent in marine products, processed foods, woollen garments and in traditional products.

 Indian SMEs achievements in the  consumer durables industrial electronics and software development have been acknowledged all over the world and exports of electronic soft and hardware products from India have already achieved a niche in the international markets.


Tuesday, September 2, 2008

Smaller enterprise are much greater in number

In most economies, smaller enterprises are much greater in number. In the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition. Globally SMEs account for 99% of business numbers and 40% to 50% of GDP.

In India, SME constitute an important segment . The contribution of SSIs alone has been greater than 7% to GDP and 40% to Industrial production. It is the second largest provider of employment after agriculture. SMEs also contribute to 35% to total exports directly and a significant amount of exports indirectly through large trading houses or third parties. The SMEs are dominant players in some of India’s major export sectors namely Textiles and Garments, Leather products, Gems and jewelry, Handicrafts among others. They also contribute substantially in industrial goods segments in sectors such as electricals, engineering, rubber and plastics.

Addressing participants in the award ceremony for SME sector in 1st Sepetembor,2008, the Indian Prime Minister, Dr Manmohan Singh, elaborated the importance of the SME sector for employment generation.

"The very positive contribution that this sector makes to employment is of utmost importance to our vision of shared and equitable growth. This sector provides employment to over 42 million people. It contributes about 45 per cent of the total manufacturing output and nearly 40 per cent of India's exports. It is the capacity of this sector to generate economic activity at the local level that prompted Gandhiji to give the pride of place to Khadi. He dreamt of an India comprising of self contained villages using local raw materials, local skills, serving local markets and providing employment to people locally near the places where they live," said Singh.

The Prime Minister further elaborated the resilience and the adaptability of this sector in the wake of a changing economic scenario.

"This sector has shown continued dynamism in terms of growth in the number of enterprises, production and the capacity to contribute to manufacturing output and exports. There were apprehensions about the impact of liberalization on the growth of this sector. However, experience during the past decade has amply demonstrated that this sector cannot only survive competition, but can also grow faster than the overall manufacturing sector. This demonstrates the high degree of resilience, entrepreneurial skills and the capacity for adaptation of people operating in this important sector," he added.

This again shows the importance of the SME in the growth of Indian economy, and also its unique contribution on employment generation.

Monday, September 1, 2008

New RBI Governer ? Good news for Indian SME ?

The RBI wants inflation down at 7 percent by the end of the 2008/09 fiscal year in March. It stepped up monetary tightening aggressively in June and July as inflation, driven by high fuel and commodity prices, headed for double digits.

The benchmark lending rate is at 9.0 percent, its highest in seven years, and the central bank has also tightened banks' reserve requirements to stop surplus cash stoking prices.

The effect of tightening monetary policy had directly fall on the interest rate of Loans where both SME's and household got effected. The tightening monetary policy has also showered its curse on the growth of the SME Sector.

While economists expected Dr. Subbarao to keep the central bank's anti-inflation stance with tightening monetary policy, as a Bank regulator it is yet to experience what would be his stance on opening up the Banking sector to more foreign Banks.

Further,there are real concerns about how he would handle the relationship between the finance ministry and the central bank as the government heads towards national polls due by May, with India's budget pressured by subsidies and policies such as a loan waiver for poor farmers.

While the central bank has gained greater independence in recent years, the finance minister has often urged banks to keep their interest rates steady to ensure credit flow for development, even as the RBI was raising them.

Dr Subbarao's task will be tricky. Long term, the government wants the $1 trillion economy to grow 8-10 percent a year to reduce poverty and create jobs but it has slowed from annual rates of 9 percent or more in the past three years.

At the same time, as elections loom, policy makers are concerned inflation will be a ballot box issue as it hits India's millions of poor the hardest.

The challenge is the growth rates have to go up to 10 percent to fight poverty and deprivation. At the same time, inflation will have to be kept under control given the political expectations in numerous elections coming up. Inbetween , Dr Subbha rao has to really do a lot of balancing act to make the both side of equation, in a stable condition. Once this balance is achieved , it could be really good news to SME's.

Sunday, August 31, 2008

Increasing sources of risk capital

Sources of risk capital is extremely limited in low income countries . Infact , that is the reason at first place , that those countries are denoted as low income countries. There should be an initiative taken to increase the supply of such financing .As , risk capital is the basis of entrepreneurial ecosystem in a particular domain and demography.

The Investor could invest by using an wholesale approach , establishing a private equity like vehicle which will be managed by Independent Investment Management Firms , which could be selected on a competitive basis. Thus it will develop the capacity of Investment manager to successfully invest risk capital in small business in low income countries.