Sunday, 27 December 2015

Factory requirements

For an entrepreneur, to ensure the availability of the raw material for production is very important. The selection of the factory site has to be near the place of the availability of raw materials. The factory site has also to be near the electricity sub station in village areas to get constant power supply. It should preferably be near the market for your products also.

There are two types of loan. They are term loan and working capital loan.

The term loan is given on the machinery that you require for your industry.

The working capital requirements will include the daily recurring expenditure to run your factory that is how much you need to meet your daily expenses to run your business. You should arrange for at least three months of this recurring expenditure from banks or any other source. It is very important aspect of your business. If you need to raise this money from banks then do not wait to raise it afterwards but you should arrange it for at the time of getting term loan . The term loan and working capital loan should be financed together for smooth running of your factory. If you have been able to get the term loan from a financial institution and need to take out working capital loan from another financial institution then you can carry the approved letter for the term loan on machineries to the banks or other financial institutions.

The entrepreneur may also have to apply for a No Objection Certificate (NOC) from the Pollution Board.

In taking loan from a financial institution, you may have to show a Provisional Registration Certificate (PRC) that you obtain from District Industries Centre (DIC). You submit your Industry Scheme to DIC office for approval and after its approval you are granted a Provisional Registration Certificate which is valid for upto 5 years. This certification helps in getting N.O.C. also. You get a Permanent Registration Certificate after coming into production from DIC.

An entrepreneur needs to have a Provisional Registration Certificate, a project proposal and his/her dynamism while approaching the banks for loan.

The entrepreneur has to apply for the electricity connection from the State Electricity Board and the representative from the electricity board at the time of giving electricity connection comes for inspection of the site. The representatives from financial institution along with the representative of the supplier of machinery also comes for inspection of the site/machines after the delivery of the machines and also in the case of the supply of defective machines.

Saturday, 19 December 2015

Trading skills

There are six main components of National Urban Livelihood Mission (NULM) in Ranchi, Jharkhand .  There is Employment through Skill Training and Placement (ESTP) component and there is also Self Employment Programme (SEP) component. Under SEP an individual can take up to 2 lakhs personal loan and for group loan it is, Rs 10 lakh which is being provided by banks. They can avail 7 percent subsidy on loan interest. The urban poor can take advantage of this programme. They have to show Below Poverty Line (BPL) card or they have to show an income of Rupees 72000/- annually. There are sixteen skill training providers/agencies in Ranchi and they are given Rupees 15000/- for the training of a youth and they have to give training for approximately 540 hours. They are given Rupees 30/- for an hour of training to a youth. The youth after training is given a RDAT (Regional Directorate of Apprenticeship Training) certification and send for placement by these agencies. There is also a component under NUML which is Support to Urban Street Vendors in which after a survey an I card will be issued to them and a vending zone will be provided.

According to one agency of NULM, there are sixteen agencies in Ranchi.These agencies are training  youth between 18 to 35 years. The skill building is done on seventeen trades like textiles and garments, retail service and marketing, production and manufacturing, gems and jewellery, food processing and preservation, Tourism, Hospitality, Travel & Trade, Need Based Skill Development etc. Interested youth are given training for 500 hours then they are send to placement cell. Companies HR come to select them and for those youth who have not been selected they are send to SEP for municipality task force approval. Through SEP they are send to Banks for availing bank loan for business. The target in Ranchi/Jharkhand is to train 40,000 urban poor youth.

Friday, 18 December 2015

Sick Industry

 When an entrepreneur starts his/her business he/she may not know about the various problems that may crop up like may be the raw material availability which was there at the time of taking loan but it may not be there at the time of the production, the market security which was there at the time of taking loan but it may not be there at the time of marketing the products then the entrepreneurs may not be able to repay the loan to the bank. The industry may become sick. And if the entrepreneur now wants to take another loan to start another venture to repay the loan then it may be difficult for the entrepreneur to convince the bank for bank loan. So the entrepreneurs if they ensure/have other sources to repay the bank loan other than manufacturing and marketing the products from their industries then he/she may be able to repay the bank loan and may be prevent their industries from becoming sick.

If the entrepreneur takes additional loan to start another business/industry may be smaller than the main loan that may be included in the project proposal/industry scheme that may be sanctioned at the time of taking the main loan but the entrepreneur may start the other business/industry at an appropriate time and the additional bank loan is free from interest till that time he withdraws the money for his business venture from bank then the entrepreneur may be able to save his industry from  becoming sick that is it may be another activity other than his main activity to fund for his non repayment of loan which is just like other big industries who can use the funds from their other activities to fund the one that is in need. Or the entrepreneur may take loan for two industries at a time.  

According to a financial institution, for revival of a sick industry, bank will examine its viability when bank funds are involved. When the entrepreneur approaches the bank for a different loan that is for another business, banks will see the previous loan incurred by the entrepreneur, its entire liability to the market that is the bank will first create these liabilities, will see the own funds the entrepreneur will be able to contribute for the new unit and minimum percentage by the bank for loan. Bank will be examining the proposal. The bank may not be interested to fund for another business after the unit become sick. If the entrepreneur wants to go for two business at a time, the bank will see how it can be handled by the entrepreneur, his past experience, the local market for the product and the time period of the loan. The entrepreneur can go for several activities at a time.

According to a senior officer of a financial institution, when an account becomes Non Performing Asset (NPA), the bank will see the reasons for NPA. The bank will analyze the reasons. The reasons could be that that there is no adequate power supply to the unit, market is not there, raw material is not available, capital is required, the operating cost is not much then the bank will provide counseling and may be with counseling the problems may go away or the bank will go for additional funding in case, if it is possible that with further funding the problems can go away. If an entrepreneur wants to start two enterprises at a time then the bank will see his/her capacity that is whether he/she (a single/lone entrepreneur) has the capacity to handle two businesses or not, the project is viable or not. It is a hypothetical question. The entire economy will be affected. Banks will try to discourage.

According to another financial institution, when an industry becomes sick, loan may be restructured as per RBI guidelines. It will depend on financier. If the entrepreneur is not able to repay the loan at all, then the bank will take action to try to recover its loan amount. If an entrepreneur wants to go for two units at a a time, it won't be easy for the entrepreneur to run two units. There will be stress.

Sunday, 13 December 2015

Empowerment of girl child into business and entrepreneurship

Girls can be motivated right from their childhood to become entrepreneurs. They can learn the basics of business right from their childhood.

In their daily routine girl children are making paintings. Some are good, some are o.k. If those paintings could be sold by the child's mom and dad by becoming their marketing managers then in this process the girl child will learn about marketing. When the girl child is buying the toys she is also learning  about the cost/pricing of the toys, their appeal for her - that is why  she is attracted to the toy which may be because of the packaging or may be for having fun with that toy. She can learn in this process about how important packaging is. She may also buy the toys because her parents could afford it. So she also learns about the affordability of the product as one aspect of buying a thing. She also shows or tells her friends about her purchase, how good it is, and how affordable it is and how fun it is to play with it. That is how she is building a brand and can learn about how to build a brand. Her friends also wants to buy those toys so the word of mouth marketing creates a market for those toys and she learns about this marketing strategy. She chooses a toy from a variety of toys available in the market and she chooses the ones that she likes which is more fun to play with and that is affordable. She can learn from there that the customers have a variety to choose from the market and liking is an important part of buying things. It adds value to the product. She learns the marketing potential of a product. Girl children can learn about the tools like pen, pencils, crayons, erasers etc that are used in making a painting that is she can learn about the tools required for the production of paintings. Here she can learn about the production part. The girl child has a gullack/piggy banks at home where she saves her money. She sees her money grow. She learns to deposit money, grow the money and spend the money  that is she learns how to invest money wisely. She makes her financial plans and deals with her piggy bank accordingly. She can be motivated to use her money for her future business. When the child's parents chooses a location to buy the toy products for her she can also learn the advantages of a location from them.

According to a small businessman, this kind of small tips to parents would motivate parents and parents will put efforts in the development of entrepreneurial skills in their children regardless of what in future they may make their career in. 

According to a financial institution, parents and guardians, school teachers and principals can play a role in their motivation towards entrepreneurship. Camps can be put up in rural areas for information and motivation of their interest. Banks can help in motivation in financial schemes.

According to another financial institution, a father who is in agriculture or in service class does not have the courage to take the risk involved in a business. The culture of industry has to be developed and after ten to twelve years only the picture may change. Entrepreneurship has to be in our culture. Industrialization and commercialization of societies is required. Government has to play a major role in this. The confidence has to be built. The government can build a 100 square feet two room parks where initially the skills of entrepreneurship and principals of business could be taught to youth. So that they can start with small risk appetite and from there they can develop to take more risk. Government can start with ten families security. NGOs also have to play a major role.

According to a senior officer of a financial institution, a contract cannot be signed by a minor. There is a programme under which each bank has to adopt a school to give financial literacy training that include skill development, banking, etc. There is also National Urban Livelihood Mission programme. 

Micro business solutions

Depending on the suitability of agro climatic zone, crops like vegetables, fruits, spices, ornamental crops like flowers etc are grown. The soil PH is also seen. The suitability of crops for different areas are decided by the scientists from the beginning based on their research work. There are government schemes to help the farmers. There are farmers into micro businesses.

According to a farmer, marketing of the products is difficult. He had to give rent of Rupees 10/- for a kg of Pumpkin but due to depreciation in rate he had to sell it for a lesser price in the market. Environment is not supportive.  Food inflation is there.  Rice, wheat, pulse has a minimum selling price and they can be stored. But tomatoes etc are produced and sold directly by farmers. If there are ten farmers and all of them produce tomatoes then there will be food inflation so marketing of products will be difficult. But this can be overcome. If a group of farmers produce different crops then there will be no food inflation. The variety of crops could be chosen by a group of farmers that requires no specific technology. So it is required to create awareness and simultaneously provide motivation to the farmers so that they can go for crop variation. For example, when there is season for potato, cauliflower etc, the farmers can go for those crops because they are suitable for that season and also produce different crops then and only then food inflation can be controlled and farmers can have better lives and be in this business. There should also be cold storage facilities. The farmers are now a days aware to make more income by growing certain crops before the season and selling the products at a higher price.

According to an agriculture organization, seeds are provided to farmers at a subsidized rate. It is difficult to motivate farmers for micro businesses and change of businesses. For example, because if a farmer is producing wheat then he is inclined to produce only wheat in his plot ensuring the supply of wheat for not only this year but will keep a stock also for the next year. He will not be inclined to produce flowers even in a small portion of his plot so that he could sell them and get better money. Seed money is being provided to a group of women that include even girls for their training in cultivation and food processing.

Saturday, 5 December 2015

Entrepreneur quality

Entrepreneurs including women entrepreneurs have these qualities:

  • Dreams - They have big dreams.
  • Determination - They are determined to succeed. They never give up. 
  • Fearless - They are not afraid of their problems,. They find solutions to overcome problems.
  • Passionate -  They cling to their idea because they think they can do it. 
  • Highly motivated - It is inner motivation. They really want to set up their industry. They want to be the owner of their business and recruit employees.
  • Intelligent - They are intelligent. Although they do not have business sense they use their intelligence to move in their business.
  • Dynamic - They are dynamic. They are highly impressive. 
  • Exploring attitude - They explore thoroughly before finally taking a decision.
  • Courageous - They have the risk taking ability. They are highly courageous.
  • Their dream is their child and they cannot let it go. They nurture the growth of their business.
  • Decision - They can take quick decision. They usually take right decisions. They even take spot decisions.
  • Achievers - They want achievements, awards etc.
  • Management - They have good management skills whether it is labourers, staff, material or money management.
  • Leaders - They are the leaders.
  • Wealth - They want to accumulate wealth and fortune.
  • Recognition - They want to be recognized. They want name and fame.
  • Success - They believe in success. They have to succeed.
  • Active - They are highly active.
  • Hard working - They are very hard working.
  • Honesty - They are honest. They believe in honesty.
  • Different - They are different.
  • Punctual - They are punctual.
  • Can Do It attitude - The entrepreneurs have the Can Do It attitude. 
  • They are the gems.