Entrepreneurship
This domain tests whether you can move from an idea to a viable venture: testing demand, costing a product, computing break-even, choosing a legal form and identifying genuine support schemes.
Core rules
- Path: idea → opportunity (real need, feasibility, profitability) → business plan → funding → launch → review.
- A value proposition states why a customer buys from you rather than a competitor; a market survey tests that claim before money is spent.
- Costs split into fixed (rent, salaries) and variable (raw material, packaging). Price must cover both plus margin.
- Break-even units = fixed cost ÷ (selling price − variable cost per unit); the bracket is the contribution per unit.
- Legal forms: sole proprietorship (unlimited liability), partnership, LLP, private limited (separate legal entity).
- Support: Udyam registration for MSMEs, GST once turnover crosses the threshold, DPIIT Startup India recognition; funding through Mudra loans, Stand-Up India, bank credit, angel investors.
- Digital tools: social-media marketing, e-commerce, ONDC, digital payments, accounting software.
Worked example
Fixed cost ₹50,000 a month, selling price ₹100, variable cost ₹60. Contribution = ₹40 per unit. Break-even = 50,000 ÷ 40 = 1,250 units a month. At 1,000 units the venture loses ₹10,000 (contribution ₹40,000 minus fixed ₹50,000). Reasoning: dividing fixed cost by price alone (500 units) badly understates the requirement.
Traps that cost marks
- Treating revenue as profit.
- Dividing fixed cost by price instead of contribution per unit.
- Assuming Udyam registration automatically brings funding.
- Ignoring working capital needs in the first months.