UNIT 3 BUSINESS CREATION AND SUPPORT

Steps for Setting up a Business Ownership

Structure Registration Licensing and Legal
Formalities

Need for financial planning - Sources of Finance

- Internal and external sources - Term loans -
Venture Capital, Export Finance, Angel Investors

Institutional Support to Entrepreneurs - NSIC,

SIDO, SSIB, SSID, SISIS, DICS, TCOs, Industrial
Estates and Specialised Institutions
SMALL BUSINESS IN INDIA

Booming
FORMALITIES FOR
STARTING UP SMALL
BUSINESS
ENTREPRISE
 STEP 1 -
SELECTION OF PROJECT
A.PRODUCT OR SERVICE
SELECTION

•
Contact these organisations to get an idea about a product/ service.

1. District Industry Centres which undertake

2. Technical Consultancy Organisations monitoring,
research, market-
3. Centres for Entrepreneurship Development
development, export
4. Small Industry Service Institutes promotion, and such
5. Leading banks other work.
6. Industrial Extensions Bureaus
7. National Industial Development Corporation, New Delhi
8. Khadi and Village Industries Commission, New Dethi
9. Commissioner of Cottage Industries
10. Entrepreneurship Development Institute of India, Ahmadabad
11. National Institute of Entrepreneurship and Small Business Development,
New Delhi
12. National Institute of Stall Industry Extension and Training, Hyderabad
13. Small Industries Development Bank of India, Lucknow
In case the entrepreneur is looking for a product which has export potential

What should be the contents of

Consider the following four
export-product portfolio?
parameters that can influence
the development of export-
product portfolio.
What are the special
requirements for packaging if one
has to export the products?

Does it meet the product's

quality specification of the
country concened? What product adaptations are
needed to be made for
exporting a product to a specific
country?
 B. LOCATION SELECTION
Where to set the City, Town,Village
Unit?

Connections to
Major cities( road ,
Many tiny units - Raw material General Rail etc)
Simply Organized
set up in home sources
Consideration

Law and
Agents - assist Manpower
Order
entrepreneurs with skills
Technology
land availability , price

water
INDUSTRIAL
Supply
INFRASTRUCTURE
POSITION

Power
supply
Disposal
Point
 Income tax concession
FINANCIAL
Investment subsidy - State /central govt
INCENTIVE exemption
POSITION

Housing
SOCIAL
INFRASTRUCTURE
POSITION Education

Health
 SITE SPECIFICATION
CONSIDERATION

Non Agricutural site

Railway Line, National, and State Highways: Ensure

access but may need to exclude certain plot areas
for construction.

Underground Utilities: Avoid building over

telephone lines, power lines, or drainage/gas lines.
Accessibility:
Road Access: Ensure good access to highways and
main roads provided by the state.

Environmental Factors
Wind Direction: In India, wind - north to south. A
factory in the north emitting gas/odors could
impact densely populated southern areas.

Soil Type: Loose soil may require additional

construction costs.
 C.PROJECT FEASIBILTY STUDY

MARKET ANALYSIS
Aggregate demand of the product
/service in future.

Customer behaviour, preference , taste

Competitive analysis
 TECHNICAL ANALYSIS
Technical analysis seeks to determine whether the prerequisites
for the successful commissioning of the project have been
considered and reasonably good choices have been made with
respect to location,size process, and so on.

1.Have preliminary tests and studies been conducted?

2.Is the availability of raw materials, power, and other inputs
confirmed?
And so on
 FINANCIAL ANALYSIS
Financial analysis seeks to ascertain whether the proposed
project will be financially viable in the sense of being able-to -
meet the burden of servicing debt and whether proposed
project will satisfy the return expectations of those who
provide the capital.

ECONOMIC ANALYSIS

Economic analysis, also referred to as social cost-benefit

analysis, is concerned judging of a project from the larger, social
point of view.
 ECOLOGICAL ANALYSIS
Ecological analysis done particularly for major projects.

Environment-polluting industries (like bulk drugs, chemicals, and

leather processing.).

The key questions raised in ecological analysis are as follows.

1.What is the likely damage caused by the project to the
environment?
2.What is the cost of restoration measures required to ensure that
the damage to the environment is contained within acceptable
limits)
D.BUSINESS PLAN
 E.PROJECT PROFILE
A project profile gives a bird's-eye view of the proposed
project.

This may be used for obtaining the Provisional

Registration Certificate (PRC) from the District
Industries Centre and for making, applying for
Industrial Areas Development Board for Land or State
Small Industries Development Corporation (SSIDC) for
shed and other infrastructures.
Information Heads in a project report
Introduction
Promoter background
product description
market and marketing
Details of infrastructure needed
Plant and machinery
cost of project - finance
cost of production and profitability
2. DECIDE ON THE CONSTITUTION

https://youtu.be/nsV461YIr6c?si=_z4VoYHop0jZhmvP
 3.OBTAIN SSI REGISTRATION

Small-scale and ancillary units with investments in plant and

machinery under Rs. 1 crore should register with the
Directorate of Industries of the State government.

Provisional Registration Certificate (PRC)

Purpose:
Allows entrepreneurs to initiate steps to establish the unit.
Necessary for applying for infrastructure, finance, and other
resources.
https://services.india.gov.in/service/detail/application-form-for-provisional-
registration-as-small-scale-industries

https://dcmsme.gov.in/publications/forms/SetingN
ewSSIForms/applyprv.html
Application Requirements:
Prescribed court fee stamp
Copy of the project profile
Partnership deed/Memorandum and Articles of Association
Affidavit on appropriate stamp paper

Benefits:
Obtain term loans and working capital under priority sector lending.
Access to land, accommodation, and other approvals.
Obtain No Objection Certificates and clearances from regulatory
bodies.

Validity:
Initially valid for two years, renewable if needed.
Permanent Registration Certificate

Purpose:
Issued when the unit goes into commercial production.

Benefits:
Apply for scarce and imported raw materials.
Obtain working capital from banks/financial institutions.
Central excise duty concessions.
Eligibility for Government Stores Purchase Programme, Ancillary
Development Programme, and Export Promotion Programme.
Access to sales tax exemptions and other incentives.
Incentives/Concessions:
Income-tax and sales tax exemptions (as per State policy).
Power tariff incentives and raw material availability.
Price and purchase preferences for produced goods.

Renewal:
Permanent registration of tiny units should be renewed every
five years.
De-registration

Process of removing a small-scale industrial unit from

the official registry, thereby revoking its status and
benefits as an SSI unit.

This occurs if the unit violates specific regulations, such

as exceeding investment limits, manufacturing
unlicensed items, or failing to maintain independent
ownership.
 STEP 4.OBTAIN CLEARANCES FROM DEPARTMENTS AS
APPLICABLE
Several clearances are required from different authorities depending
on the type of industry and location of unit

Agriculture land conservation

Building plan approval
Factories Act
Trade license
Pollution Control Board clearances
Sales tax registration
Food adulteration Act license
Drugs and cosmetics license etc
 STEP 5 : ARRANGE FOR LAND AND SHED

Industrial Land - State Industrial Areas Development Board

purchased privately - converted for industrial use.

Industrial Shed - rented or purchased (under a hire-purchase

scheme).
Application Formalities:
-Submit a completed application form with the following
documents:
- Copy of Provisional Registration Certificate (PRC)
- Detailed project report
-Certified copies of educational qualifications, experience, and
other relevant documents
 STEP 6 : ARRANGING PLANT AND MACHINERY

Purchasing Options

Direct Purchase: Buy from recognized

manufacturers/dealers or fabricators.

Hire Purchase Scheme: Available through the

National Small Industries Corporation (NSIC),
where machinery is leased and becomes property
after all installments are paid.
Choose from approved suppliers listed by banks and State Financial
Corporations (SFCs).

Material Procurement:
- Buy from reputable dealers, get multiple quotations, and verify
prices including transportation.
- Ensure the quality and quantity upon delivery.

Machinery and Equipment:

Seek advice from organizations like DIC - District Industries

Centers, SISI - Small Industries Service Institutesand , NSIC -
National Small Industries Corporation
 Many SSI entrepreneurs opt for second-hand machines, which
can result in outdated production methods and hinder
efficiency.

Funding for Modern Machinery:

- The National Small Industries Corporation (NSIC) provides

machinery and equipment to small industrial units with long

repayment periods and moderate interest rates.

 STEP 7 : ARRANGING INFRASTRUCTURE

Single Window Agencies (SWAs):

- Provide clearances for land, power, and other facilities.
- Assist with loans and incentives for small-scale industries.

https://tnswp.com/DIGIGOV/swp-tnswp.jsp

State Government Incentives:

- Offer concessions and subsidies for land, water tariffs,
power, transport, pollution control, and quality equipment.
STEP 8 : PROJECT REPORT
STEP 9 : APPLY AND OBTAIN FINANCE
STEP 10: OBTAIN FINAL CLEARANCES

Construct shed
Arrange for raw materials

Recruit Personnel

Order for machinery Marketing