The document provides an overview of key concepts for setting up a new business venture including business planning, feasibility analysis, and organizational structure. It discusses developing a business plan, which includes assessing internal and external elements such as finance, marketing, and human resources. The business plan should establish where the business currently stands, where it aims to go, and how it will get there. Additional topics covered include writing mission and vision statements, performing cost-benefit analysis, choosing an appropriate legal structure, and addressing potential legal issues.

1. Module II
Setting New Venture
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2. INTRODUCTION
Setting New Venture
• Feasibility Analysis
• Making business Plan
• Cost Benefit Analysis
• Report Writing for business.
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3. WHAT IS BUSINESS PLAN?
• Includes all external and internal elements
involved in starting a new business.
• External and internal elements includes:
Finance
Marketing
Manufacturing
Technology
Human Resource
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4. WHAT IS BUSINESS PLAN? (CONT.)
Questions raised while making business plan:
1. Where am I now?
2. Where I am going now?
3. How will I get there?
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5. WHO READS THE BUSINESS PLAN?
1.
2.
3.
4.
5.
6.
7.
Employees
Investors
Bankers
Venture capitalists
Suppliers
Advisors
Consultants
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6. IMPORTANCE OF B-PLAN
1. It helps in determining the viability of venture in
the market.
2. It provides guidance to the entrepreneur in
organizing his or her planning activities.
3. It serves as an important tool in helping to obtain
financing.
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7. INFORMATION NEEDS
1. Market information
2. Operation information
a)
b)
c)
d)
e)
f)
Location
Manufacturing information
Raw material
Equipment
Labor skills
Space
3. Financial information
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8. FEASIBILITY ANALYSIS
•
•
•
•
•
•
•
Environment and market analysis.
Legal considerations
Start-up costs
Working capital requirements
Equity requirement
Equipment and building
Target market
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9. WRITING THE BUSINESS PLAN
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10. WRITING THE BUSINESS PLAN (CONT.)
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11. WRITING THE BUSINESS PLAN
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12. USING AND IMPLEMENTING
BUSINESS PLAN
• Measuring Plan Progress
– Inventory control
– Production control
– Quality control
– Sales control
– Disbursements
• Updating the plan
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13. WHY SOME BUSINESS PLANS FAIL?
• Goals set by entrepreneur are unreasonable.
• Goals are not measurable.
• Entrepreneur has not made total commitment to
the business.
• Entrepreneur has no sense of potential threats or
weaknesses to the business.
• No customer need was established for the
proposed product or service.
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14. COST BENEFIT ANALYSIS/
FINANCIAL ANALYSIS
1. Operating & capital budget
2. Pro forma income statements
sales - cost of goods sold = Gross profit
operating expenses (salaries, insurance, selling
expenses, advertising, rent, taxes, depreciation,
interest)
Profit before tax = Gross profit – total
operating expenses
calculate Profit after tax
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15. COST BENEFIT ANALYSIS/
FINANCIAL ANALYSIS (cont.)
3.
4.
5.
6.
Pro forma of cash flows
Pro forma of balance sheet
Pro forma of sources and applications of funds
Financial ratios
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16. MEASURING & EVALUTING
ORGANIZATIONAL PERFORMANCE
1. Quantitative measures
2. Qualitative measures
Organization Efficiency and Effectiveness
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17. LEGAL FORMS OF BUSINESS
ORGANIZATION
1.
2.
3.
4.
5.
6.
Sole proprietorship
General partnership
Limited liability partnership
C corporation
S corporation
Limited liability company
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18. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Sole proprietorship:
Ownership requirement: One owner
Liability: Unlimited personal liability
Advantages:
1. Low start-ups.
2. Freedom from most regulations
3. Owner has direct control
4. All profits go to owner
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19. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
5. Easy to go out of business if needed.
Disadvantages:
1. Unlimited personal liability
2. Personal finance at risk
3. Total responsibility
4. May be more difficult to raise financing.
5. Limited by your personal skills and capabilities.
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20. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
General Partnership
Ownership requirement: Two or more owners
Liability: Personal assets of partners are at risk
Advantages:
1. Ease of formation
2. Pooled talent
3. Pooled resources
4. Somewhat easier access to financing
5. Some tax benefits
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21. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Disadvantages:
1. Unlimited personal liability
2. Divided authority and decisions
3. Potential for conflicts
4. Continuity of transfer of ownership
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22. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Limited Liability Partnership:
Ownership requirement: Two or more owners
It’s a combination of general partners and
limited liability partners. General partners
actually operate and manage the business. They
are the one who have unlimited liability.
Liability: Limited, although one partner must return
retain unlimited liability
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23. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Advantages:
Good way to acquire capital from limited partners.
Disadvantages:
1. Cost and complexity of forming can be high
2. Limited
partners
can’t
participate
in
management of business without liability
protection.
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24. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
C corporation: Corporation is a legal business entity that is
separated from its owners and managers. Corporation
don’t trade stocks publicly. It works according to laws of
state in which it operates.
Ownership requirement: Unlimited number of
shareholders
Liability: Limited
Advantages:
1. Limited liability
2. Transferable ownership
3. Continuous Existence
4. Easier access to resources
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25. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Disadvantages:
1. Expensive to set up
2. Closely regulated
3. Double taxation
4. Extensive record keeping
5. Charter restrictions
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26. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
S corporation (Subchapter S Corporation): It is same as
C corporation, but is unique in that owners are
taxed as a partnership as long as certain criteria are
met.
1. It must be domestic corporation.
2. It cant have nonresident alien as a shareholder.
3. It can issue only one class of common stock, which
means all shares carry same rights, except voting
rights.
Ownership requirement: Up to 75 shareholders
Liability: Limited
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27. LEGAL FORMS OF BUSINESS
ORGANIZATION (cont.)
Advantages:
1. Easy to set up
2. Enjoy limited liability protection and tax benefits
of partnership
Disadvantages:
1. Must meet certain requirements
2. May limit future financing options
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28. LEGAL ISSUES
•
•
•
•
•
Choosing a business name, slogan
Patents
Contracts
Employment Laws
Copyrights
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29. LEGAL ISSUES (cont.)
Choosing a business name, slogan:
Company’s name should not be trademarked by
some other company. (Trademark can be a
name, phrase, logo, symbol)
Patents:
Patent as a legal property that allows a holder to
prevent others from employing this property for
their own use for a specific period.
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30. LEGAL ISSUES (cont.)
Three types of patents:
1. Utility patent
2. Design patent
3. Plant patent
Utility patent:
It covers inventions that work uniquely to
perform some function.
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31. LEGAL ISSUES (cont.)
Design patent:
• New shape
• New design
Plant patent:
New living plants like flowers, trees and vegetables.
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32. LEGAL ISSUES (cont.)
What is invention?
1. Novelty
2. Non-obviousness
3. Usefulness
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33. LEGAL ISSUES (cont.)
Contracts:
Its an agreement that creates legal obligations and
is enforceable in the court of law.
Four essentials of contracts:
1. Mutual assent (both parties must agree)
2. Consideration (both parties must do or pay
something as stated in the contract)
3. Legality of object (cant force to do something
illegal)
4. Capacity of object (minors, unsound mind, drug
addicted person)
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34. LEGAL ISSUES (cont.)
Employment Law
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35. LEGAL ISSUES (cont.)
Copyrights:
Copyright protects original works of authorship.
It does not protect the idea itself, but it allows
someone else to use the idea or concept in a
different manner.
(e.g.) Music CD, books, theatrical works; oral
presentations; drawings, paintings, buildings and
sculptures; photographic works; and computer
programs etc.
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36. TYPES OF ORGANIZATION STRUCTURE
1.
2.
3.
4.
Mechanistic organization
Organic organization
Virtual organization
Boundary-less organization
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37. TYPES OF ORGANIZATION STRUCTURE (cont.)
Mechanistic organization:
1. High specialization
2. Rigid departmentalization
3. Clear chain of control
4. Narrow spans of control
5. High formalization
6. Limited information networking throughout the
organization
7. Little participation in decision making by employees
8. Focuses on efficiency and cost minimization.
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38. TYPES OF ORGANIZATION STRUCTURE (cont.)
Appropriate for these situations:
1. Cost efficiencies are critical
2. Large organization
3. Standardized products produced in routine
fashion
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39. TYPES OF ORGANIZATION STRUCTURE (cont.)
Organic organization:
1. Little work specialization
2. Minimum formalization
3. Little direct supervision of employees
4. Flexible in job
5. Employees are highly trained
6. Wide span of control
7. Cross functional teams
8. Decentralized
9. Free flow of information
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40. TYPES OF ORGANIZATION STRUCTURE (cont.)
Appropriate for these situations:
1. Innovation is critical
2. Smaller organization
3. Customized products produced
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41. TYPES OF ORGANIZATION STRUCTURE (cont.)
Virtual organization:
1. Each person contributes his or her skills
2. People are linked by common goal and
information technology
3. Knowledge management
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42. TYPES OF ORGANIZATION STRUCTURE (cont.)
Boundary-less organization
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43. ORGANIZATIONAL VISION AND MISSION
Vision and mission:
Vision is a broad comprehensive picture of what
an entrepreneur wants his or her organization to
become.
It articulates current and future decisions and
actions.
(e.g.) Microsoft
A computer on every desk
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44. ORGANIZATIONAL VISION AND MISSION (cont.)
1.
2.
3.
4.
5.
Once vision is made, a mission statement talk
about what organizational unit do and hope to
achieve the vision of company.
Organization unit includes:
Customer service team
Product development project
R and D department
Employee training
Technology
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45. ORGANIZATIONAL VISION AND
MISSION (cont.)
Benefits:
• A clear vision helps in aligning everyone towards
the same future state or objective, providing a
basis for goal congruence
• A clear mission provides the basis for developing
plans that can be executed to achieve the vision
• Values statements make clear behaviors that are
expected of everyone
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46. ORGANIZATIONAL VISION AND
MISSION (cont.)
Vision Statement Creation:
Organizational
Purpose
Summary of
what Org. does
Broad
Goals
Core values and beliefs
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47. ORGANIZATIONAL VISION AND
MISSION (cont.)
Mission Statement Creation:
• To create your mission statement, first identify your organization's
"winning idea".
• This is the idea or approach that will make your organization stand
out from its competitors, and is the reason that customers will
come to you and not your competitors.
• Next identify the key measures of your success. Make sure you
choose the most important measures (and not too many of them!)
• Combine your winning idea and success measures into a tangible
and measurable goal.
• Refine the words until you have a concise and precise statement
of your mission, which expresses your ideas, measures and
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desired result.

48. ORGANIZATIONAL VISION AND
MISSION (cont.)
Example:
Take the example of a produce store whose winning
idea is "farm freshness". The owner identifies two
keys measures of her success: freshness and
customer satisfaction.
The mission statement of Farm Fresh Produce is:
"To become the number one produce store in Main
Street by selling the highest quality, freshest farm
produce, from farm to customer in under 24 hours on
75% of our range and with 98% customer
satisfaction."
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