BSEB Inter Entrepreneurship cheat sheet

Entrepreneur (Schumpeter): the agent who carries out new combinations - new product, new method, new market, new source of supply, new organisation - and thereby causes creative destruction.

Entrepreneur (Cantillon): the risk-bearing buyer at a known price and seller at an uncertain price; the function is arbitrage under uncertainty, not capital ownership.

Distinguish: entrepreneur supplies innovation and risk-bearing; manager supplies coordination for a salary; capitalist supplies funds for interest; intrapreneur innovates inside an existing firm.

Four-factor production model: land, labour, capital, enterprise - enterprise is the organising factor that combines the other three and claims residual profit or bears residual loss.

Entrepreneurial process stages in order: idea/motivation → opportunity identification → feasibility and business plan → arrangement of resources → launch → growth and consolidation.

Push vs pull factors: push = unemployment, low income, job dissatisfaction; pull = profit motive, independence, role models, market gap. Push-dominant founders show lower survival rates in small-trade ventures.

Functions of an entrepreneur: risk assumption, innovation, organisation building, management of resources, and social responsibility toward workers, consumers and the local economy.

Traits associated with venture survival (not with entry): need for achievement, internal locus of control, moderate risk-taking, tolerance of ambiguity, persistence after failure.

Opportunity vs idea: an idea is a thought; an opportunity is an idea that is attractive, durable, timely and anchored in a product or service that creates value for a buyer or user.

Four-question screen: Does it create value for the customer? Can it be delivered at a profit? Is the window of opportunity open long enough to earn returns? Is the team able to execute?

Sources of opportunity: technological change, regulatory change, demographic shift, social change, value-chain inefficiency, and unsatisfied customer complaint patterns.

Gap analysis: compare what the market currently offers against what a defined customer segment needs; the gap is the opportunity space, not the product idea itself.

Market sizing: TAM (total addressable market) ≥ SAM (serviceable available market) ≥ SOM (serviceable obtainable market, realistically capturable in 3 years).

Opportunity cost test: a venture is worth pursuing only if expected return exceeds the return from the founder's next-best alternative, including salary forgone.

Timing rule: entering before customer readiness wastes promotion spend; entering after competitors have locked distribution raises customer acquisition cost - first-mover advantage is real only where switching costs or network effects exist.

Opportunity screening must be documented: a written screening scorecard with weighted criteria (market size, margin, capital need, competition, founder fit) prevents selection on enthusiasm alone.

PESTEL components: Political, Economic, Social, Technological, Environmental, Legal - used to map external forces the venture cannot control.

Economic environment indicators relevant to a small firm: per-capita income, inflation rate, interest rate, credit availability, and the size and growth of the relevant segment.

Five Forces (Porter): rivalry among existing firms, threat of new entrants, threat of substitutes, bargaining power of suppliers, bargaining power of buyers; high combined force pressure implies low industry profitability.

Idea generation techniques: brainstorming (quantity first, no criticism), focus groups, customer observation, lead-user interviews, reverse brainstorming, and the 5W1H checklist (what, why, who, when, where, how).

Delphi technique: anonymous, iterative expert opinion with controlled feedback across rounds; used where data are absent and expert judgement is the only input.

Brainstorming rules: defer judgement, encourage wild ideas, build on others' ideas, record all ideas - evaluation is a separate later stage.

Environmental scanning output is a SWOT matrix: internal Strengths and Weaknesses (controllable) crossed with external Opportunities and Threats (uncontrollable).

Idea screening funnel: many raw ideas → screened ideas → concept tested → prototype → business plan; each stage must reduce count, otherwise the funnel is not doing work.

Business plan sections: executive summary, promoter background, product/service description, market analysis, marketing plan, operations plan, management and organisation, financial projections, risk assessment, implementation schedule.

Feasibility types: market feasibility, technical feasibility, financial feasibility, economic feasibility, managerial feasibility, and environmental/legal feasibility - all must clear before launch.

Project cost = fixed capital (land, building, plant, machinery) + working capital margin + preliminary and preoperative expenses + provision for contingencies.

Break-even quantity = Fixed Cost ÷ (Selling Price per unit − Variable Cost per unit); break-even sales value = Fixed Cost ÷ P/V ratio, where P/V ratio = Contribution ÷ Sales.

Margin of safety = (Actual Sales − Break-even Sales) ÷ Actual Sales; a falling margin signals rising fixed cost or falling contribution.

Market assessment inputs: demand estimate from secondary data (census, industry reports) plus primary survey; competitor price band; distribution channel map; customer willingness to pay.

Project report appraisal criteria used by lenders: promoter contribution, debt–equity ratio, debt service coverage ratio (DSCR), projected cash flow, collateral, and break-even level.

Cash flow differs from profit: profit is accrual; cash flow is actual receipts minus payments. A profitable firm can fail from working capital shortage - the plan must show a month-wise cash budget.

Legal form decision rule: sole proprietorship (lowest compliance, unlimited liability) → partnership (shared capital, unlimited liability) → LLP (limited liability, fewer compliance duties than a company) → private limited company (limited liability, higher compliance).

Scale decision: micro, small and medium classification under the MSMED Act is by investment in plant and machinery and by annual turnover; benefits and registration follow the classification.

Registration sequence for a small unit: name/entity registration → Udyam registration → GST registration if turnover crosses threshold → trade licence → bank account → statutory registrations (PF, ESI) as applicable.

POSDCORB (Gulick): Planning, Organising, Staffing, Directing, Coordinating, Reporting, Budgeting - the classic enumeration of management functions.

Span of control: narrow span gives tall structure with more supervision layers; wide span gives flat structure with faster decisions but higher supervisory load per manager.

Delegation chain: assign responsibility, grant matching authority, and create accountability - authority without responsibility creates recklessness; responsibility without authority creates paralysis.

Launch readiness checklist: licences in hand, supplier agreements signed, first stock received, pricing finalised, staff trained, and a 90-day cash buffer.

First-year failure causes in small enterprises: underestimating working capital, wrong location, weak record-keeping, and founder overload from doing every function personally.

Marketing mix 4P: Product (quality, features, packaging), Price (cost-plus, penetration, skimming, competitive parity), Place (channel length and intensity), Promotion (advertising, sales promotion, personal selling, publicity).

Market segmentation bases: geographic, demographic, psychographic, behavioural; a segment is viable only if measurable, accessible, substantial and actionable.

Positioning statement form: 'For [target segment], [brand] is the [category] that delivers [benefit], because [reason to believe].'

Pricing rules: penetration price is set below competitors to buy market share and requires a cost structure that survives low margins; skimming sets a high launch price and requires low price elasticity and a genuinely novel offer.

Channel decision rule: direct selling gives higher margin per unit but caps reach; adding intermediaries lowers margin per unit but raises volume - choose the length that maximises total contribution, not price.

Promotion budget for a small firm is usually set as a percentage of expected sales or as matching spend of competitors; measurement is by cost per enquiry and conversion rate.

Sales funnel metrics: leads → qualified leads → proposals → closed sales; conversion rate = closed sales ÷ leads; customer acquisition cost = total selling spend ÷ new customers acquired.

Customer retention economics: repeat buyers cost less to serve than new buyers; a small firm should track repeat-purchase rate and complaint resolution time as core marketing metrics.

Accounting equation: Assets = Liabilities + Owner's Equity; every transaction preserves this balance (double entry).

Golden rules: debit the receiver and credit the giver (personal accounts); debit what comes in and credit what goes out (real accounts); debit expenses and losses, credit incomes and gains (nominal accounts).

Working capital = Current Assets − Current Liabilities; the working capital gap is the part of current assets not covered by current liabilities and must be financed.

Sources of finance: own funds (savings, retained profit, friends and family), institutional (bank term loan, cash credit, overdraft), government schemes (subsidy, margin money), and equity (angel, venture capital) - match tenor of funds to life of asset.

Term loan vs cash credit: term loan finances fixed assets and is repaid over years; cash credit finances stock and receivables and is renewed annually against hypothecation.

Three key statements: trading and profit & loss account (performance over a period), balance sheet (position on a date), cash flow statement (movement of cash).

Ratio set for a small firm: current ratio (CA ÷ CL), debt–equity ratio, net profit ratio (net profit ÷ sales), stock turnover (cost of goods sold ÷ average stock), and DSCR (cash available for debt service ÷ debt service).

Resource mobilisation rule: the cost of a source must be lower than the return on the asset it funds; equity is not 'free' money because it dilutes control and claims on future profit.

HR cycle for a small firm: job analysis → recruitment → selection → induction → training → performance appraisal → compensation → separation.

Job analysis outputs: job description (duties, responsibilities) and job specification (qualifications, skills, experience) - the pair is the basis of recruitment and appraisal.

Training methods: on-the-job (apprenticeship, coaching, job rotation) and off-the-job (lecture, case study, role play, vestibule training); choose based on cost and risk of error on the live job.

Statutory labour obligations commonly applicable: minimum wages, working hours and overtime, Provident Fund and ESI where thresholds are crossed, and workplace safety provisions.

Operations decisions: capacity (how much can be produced), process layout (product vs process layout), quality control, inventory policy, and scheduling.

Economic order quantity = √(2 × annual demand × ordering cost ÷ holding cost per unit per year); it minimises the sum of ordering and carrying cost.

Inventory control tools: ABC analysis (classify by value - A items high value, tight control), reorder level = (average usage × lead time) + safety stock.

Quality tools usable without specialists: check sheet, Pareto chart (80/20 prioritisation of defects), cause-and-effect (fishbone) diagram, and control chart.

Udyam registration (replacing Udyog Aadhaar) is the gateway to MSME benefits: subsidy schemes, collateral-free credit, delayed-payment protection and tender preferences.

Credit guarantee: the CGTMSE scheme gives collateral-free credit guarantee cover to eligible micro and small enterprises through member lending institutions.

Institutional map: District Industries Centre (DIC) for local registration and incentives; SIDBI for MSME credit refinance; NSIC for marketing support and raw material; KVIC for village industries; NIESBUD and EDII for entrepreneurship training.

Startup India: recognition by DPIIT gives access to self-certification of compliance, tax benefits under the specified provisions, and easier exit; the Fund of Funds operates through SEBI-registered alternative investment funds.

Stand-Up India targets bank loans to scheduled caste/tribe and women entrepreneurs for greenfield enterprises in manufacturing, services, trading and agriculture-allied activity.

Mudra loans are classified by stage: Shishu (smallest ticket), Kishore (mid), Tarun (larger) - the category determines the ticket size band, not the sector.

Ecosystem components: finance providers, incubators and accelerators, mentors, universities and skilling bodies, government agencies, professional services (legal, accounting), and the local customer base.

Incentive types offered by states: capital subsidy, interest subsidy, power tariff concession, stamp duty exemption, and preferential land allotment in industrial areas.

Social enterprise definition: an organisation whose primary objective is to address a social or environmental problem, using commercial methods to generate surplus that is reinvested in the mission rather than distributed to shareholders.

Distinguish: charity depends on donations and does not trade; social enterprise trades and earns revenue; commercial enterprise maximises profit for owners - the difference is the primacy of mission in surplus distribution.

Triple bottom line: People, Planet, Profit - performance is judged on social, environmental and financial results together, not on profit alone.

Business ethics domains: honesty in advertising, fair pricing, product safety, fair treatment of employees, transparent accounting, and avoidance of bribery and conflict of interest.

Sustainable operations levers for a small firm: reduce energy and water use, cut material waste, use recyclable packaging, source locally, and dispose of effluent lawfully - waste reduction is usually a direct cost saving.

Corporate social responsibility under Section 135 of the Companies Act applies to companies crossing the specified thresholds of net worth, turnover or net profit, with a prescribed minimum spend on CSR activities.

Ethical decision test: would the action survive disclosure to customers, employees and regulators? If it needs concealment, it is not merely a legal risk but an ethical failure.

Measuring social impact: define the target group, the change produced, and the counterfactual (what would have happened without the intervention); output counts (people trained) are not the same as outcome change (incomes raised).