Business plan

Business plan is an integral part of the management of a financial institution. It should

build the institution’s aims and objectives. It is a documented conclusion of how the
business will create its resources to achieve its goals and how the institution will evaluate
progress.

Business plan is an inclusive plan, which is the outcome of comprehensive planning by the
institution’s managers and management. It should practically predict market demand,
customer base, competition, ecological and economic conditions. The plan must mirror
sound banking standards and illustrate practical assessment of risk with respect to
economic and competitive conditions in the market to be served.

An institution with a special objective or focus like debit card, credit card, trust only, cash
management, or bankers’ bank should domicile this special or unique characteristic in
detail in the appropriate sections of the plan.

Sources of Product

The motto of sourcing a product might seem exciting to a new entrepreneur, but it's really
very simple and easy. It simply means searching for products at an average price that can
easily resell at a retail price.

While establishing a new enterprise like some e-commerce site or a physical retail
business, an entrepreneur needs a stable, flexible and reliable source of inventory.
Otherwise, the entrepreneur ends up disappointing the customers through absence of
product variety, back orders and many more.

Pre-Feasibility Study

A feasibility study provisions as a filter, cleaning and screening of ideas with absence of
potential for building a successful entrepreneurship. An entrepreneur promises the required
resources for constructing a business plan. On the other hand, business planning is a
“planning tool or machinery used for converting an idea into reality.

It constructs on laying a base of the feasibility study but ensures a more comprehensive
examination of the business. It is very important to motivate feasibility study whenever
necessary by entrepreneurs as they target the workability and profitability of a business
venture. It regulates if the business plan is viable or not, so that the client’s money, time,
effort, and resources for an entrepreneurship could be saved.

Criteria for Selection of Product

Mostly, it is preferred to select a bunch of criteria depending on which selection of the
product could depend on. Ranks or costs or weights are allocated to each criteria to
achieve an objective examination.

There are three basic stages or steps in selection of products or services. These are −

 Idea Generation − Ideas or investment opening come from different sources, like
business or economical newspapers, institutes for researches, consultation firms,
natural resources, universities, competitors and many more. Idea generation begins
from a simple examination of the business’s strengths and weakness. Ideas are also
spawned through brainstorming, desk research and different types of management
consensus procedures.

 Evaluation − Screening or filtering of the product ideas is the initial stage of

evaluation. They mark the potential value of a product, time, money and tools
required, fitting of potential product into the business’s long range sales plan and
availability of skilled people to monitor its marketability. Every product or asset that
is identified should be modestly examined. A pre-feasibility study is expected at this
stage in order to get a clear picture for different associated aspects like cost and
benefit of the product market, technical and financial aspect, etc.

 Choice − A product that is commercially viable, technically feasible and

economically desirable is chosen and relevant machineries are set in motion.

Ownership

Owning a business is the first decision to be made in constructing a business. The main
reasons to own a business are −

 Being the sole trader

 Being a partner

 Being a shareholder or stakeholder

Sole ownership means all decisions are to be made by self and profits can be owned.
However, the sole trader needs to monitor lots of responsibilities and duties and needs to
work extremely hard.

Establishing a partnership makes it possible to distribute the workload, but profits have to
be shared and there may be conflicts between partners. Establishing a private company,
makes it possible to increase extra capital for the business by selling shares. In contrast,
building up a company needs time and paper work. Shareholders take a portion of the
profits. When the business is expanded across the nation, it is declared as a public
company and its shares are traded on the stock exchange.

Capital

In terms of entrepreneurship, capital can be described as a region's funding with factors

conducive to the construction of new entrepreneurship and it creates a positive impact on
the region's economic output.

Higher level of entrepreneurship capital regions express higher levels of output and
productivity, in contrast to those lacking entrepreneurship capital that tend to produce
lower levels of output and productivity. The result of entrepreneurship capital is powerful
than that of knowledge capital.

Entrepreneurs are expected to hold three types of capital to acquire success in starting a
new venture −

 Social capital − It is a quality acquired from the structure of an individual’s

network relationships. It is not an intrinsic feature of an individual. The network is
owned by the members of the network and is not solely the property of the
individual. Social capital ensures the relationships by which an entrepreneur
receives opportunities to utilize human and financial capital.

 Human capital − It indicates attributes possessed by individuals like personality,

education, intelligence, and job experience. Creating value by the acquisition of
human capital, specifically building a management team tends to be the biggest
challenge for seed stage founders and investors of new ventures. A start-up with an
experienced management team will receive a higher valuation by investors.

 Financial capital − It is any economic resource scaled with respect to money used
by entrepreneurs and businesses to purchase what they need to make their
products, or to facilitate their services to the sector of the economy upon which
their operation is based, like retail, corporate, investment banking, etc.

Small companies or businesses always look for ways to grow their business and increase
sales and profits. There are probable techniques that companies must use for executing a
growth strategy. The technique used by a company to expand business is highly dependent
upon its financial situation, the competition and even government regulations and policies.
 Growth Strategies in Business

Some common growth strategies marked in small scale business are −

 Market penetration

 Market expansion

 Product expansion

 Diversification

 Acquisition

Market Penetration

One of the growth strategies reported in business is market penetration. A small company
uses a market penetration strategy when it agrees to market existing products within the
same market. Increasing market share is the only way of growing through existing
products and markets.

Market share is the share of unit and dollar sales a company acquires within a certain
market when compared to all other competitors. The best way to increase the market
share is by lowering the prices of the commodities.

Market Expansion

Market expansion is another remarkable growth strategy, which is often referred to as

market development that involves selling current products in a new market. There are
different reasons explaining why a company needs to consider a market expansion
strategy.

Competition may be such that there is no scope for growth within the current market. If an
entrepreneur is unable to search for new markets, then it is not possible to increase sales
or profits. A small company considers using market expansion strategy if it successfully
finds use of its product in a new market.

Product Expansion

A small scale company can expand its line of products or add new features to increase
sales and profits. When small companies use a product expansion technique, it is also
referred as product development.
The selling continues within the current market. A product expansion growth strategy
basically works well when there is a change in technology. Companies may also be
compelled to add new products as older ones become outdated.

Diversification

Growth strategies in business involve diversification. By diversification, we mean a

company selling new products in new markets. This type of strategy is highly prone to risk
and losses.

A small company acknowledges the plan carefully while utilizing a diversification growth
strategy. Marketing research is important to identify if consumers in the new market will
potentially like as well as buy the new products.

Acquisition

Growth strategies or method to expand business also engages acquisition of other

businesses. In acquisition, a company purchases another company to expand its functions.
A small company uses this type of strategy to bolster its product line and enter new
markets.

An acquisition growth strategy is very risky, but not as risky as a diversification strategy,
as in this case the products and market are already authorized. A company must have
complete knowledge of exactly what it wants to achieve when using an acquisition
strategy, mainly due to the significant investment required to execute it.

Product Launch

Launching a new product or service in the market is both exciting and a cautious effort on
the part of the company. Before presenting the product to the masses, a few things are to
be considered.

Steps in Product Launch

New strategies are required to get the attention one deserves. Following 10 steps are
essential to be considered while launching a new product in the market −

 Start early − Reporters will write when there is a news and not when you want. Get
a head start and start preparing long before the release date. Initiate outreaching
 practices 6 to 8 weeks before the official release date and then keep the news and
the level of practice going up and above the official release date.

 Reach out to your influencers − It is considered as a sub-step for the first step.
Influencers can be cordial customers, aspects, prospects, or even bloggers who
have a noticeable online presence. Motivating people to use the products or services
and then documenting it to review articles or posts. These people are excellent
resources to interact with analysts offering an excellent pre-launch platform.

 Brief the industry analysts − During the initial phase, it is very important to
analyze the industry completely. Scheduling calls with industry analysts and
investing time to document compelling briefing requests is very crucial.

 Fill the social space with leaks − Focus on people who are naturally anxious to
learn about the offerings. For example, ‘arriving shortly’ tweets and ‘leaked’ photos
of a product creates intrigue and builds interest.

 Don’t expect a "big bang" release − Until and unless the product or service to be
launched is truly revolutionary, or unless you have a huge release event planned,
the official launch date should only represent the day that the product will be
actually available.

 Keep the release rolling − Nobody knows when reporters will have time to write,
so give them their own space and some chance to write about the offering after the
official release date. Update the products with some fresh news like announcements
concerning novel use of the product, discounts, customer stories, details about how
the offering provides return on investment (ROI) to customers, etc. to stay in the
news.

 Do something unusual − Do something out of the box, to generate curiosity about

the product or service and grab attention rather than following the usual product
launch method used by zillions of companies.

 Involve all the partners − Channel and marketing partners who have a financial
stake in the successful launching of the product are natural allies. As the number of
people that are talking about the launch increases, the better chances it will gain
market share.
  Make the product accessible − Free trials, downloads, product videos, and demos
make it very easy for the customers as well as the sellers to learn and study about
the product or service, so this should be taken care of.

 Ignore the elements that do not drive the business − Unless the contribution
appeals to the mass customers, don’t stress on likings on social site like the number
of Facebook likes and Twitter followers you collect. Instead try using these social
channels for more meaningful engagement.

Industrial Policies & Regulations

Industrial policy can be defined as a statement stating the role of government in industrial
development, the position of public and private sectors in industrialization of the country,
the comparative role of large and small industries.

In short, it is a proclamation of objectives to be achieved in the fields of industrial

development and the steps to be taken for achieving these objectives. So, the industrial
policy formally represents the spheres of activity of the public and private sectors.

Objectives
It enlists the rules and procedures that will monitor the growth and pattern of industrial
activity. The industrial policy is neither fixed nor flexible. It is constructed, modified and
further modification is done according to the changing situations, requirements and
perspectives of developments.

The major objectives of industrial policy are discussed below.

Rapid Industrial Development

The industrial policy of the Government of India focuses at increasing the level of industrial
development. It explores ways to construct favorable investment environment for the
private sector and also for mobilizing resources for the investment in public sector. In this
way, the government roots to promote rapid industrial growth in the country.

Balanced industrial Structure

The industrial policy is crafted to correct the prevailing downgraded industrial structure.
Say for example, India had some fairly developed consumer products industries before
independence but the capital goods sector was not at all developed, also basic and heavy
industries were by and large absent.
Thus, industrial policy had to be enclosed in such a way that imbalances in the industrial
structure are corrected by laying stress on heavy industries and development of capital
goods sector. Industrial policy explores methods to maintain balance in industrial structure.

Prevention of Concentration of Economic Power

The industrial policy explores to facilitate a borderline of rules, regulations and reservation
of spheres of activities for the public and private sectors. This is targeted at minimizing the
dominating symptoms and preventing focus of economic power in the hands of a few big
industrial houses.

Balanced Regional Growth

Industrial policy also targets at correcting differences of region in industrial development.

It is a well-known fact that some regions in our country are quite developed industrially,
like Maharashtra and Gujarat, while others are marked as industrially backward regions,
like Bihar and Orissa. It is the job of industrial policy to amend some programs and
policies, which will result in the development of industries or industrial growth.

The first industrial policy statement of the Government of India was formed in 1948 and
was modified in 1956 in industrial development policy dominated by the public sector till
1991 with some minor modifications and amendments in 1977 and 1980.The year 1991
noticed far reaching changes that were made in the 1956 industrial policy. The new
Industrial Policy of July 1991 witnessed the border outline for industrial development at
present.

Industrial Policy Resolution 1956

In April 1956, the Indian Parliament adopted Industrial Policy Resolution of 1956 (IPR
1956). It is marked as the first comprehensive documented statement on industrial
development of India. It systematizes three different groups of clearly defined industries.

The policy of 1956 regulated to design the basic economic policy for a very long time. The
Five-Year Plans of India confirmed this fact. With respect to this Resolution, the
establishment of a socialistic pattern of society was seen through the objective of the social
and economic policy in India. It ensured more powers to the governmental authorities.

Companies were grouped into categories. These categories were −

 Schedule A− Those companies which were considered as an exclusive

responsibility of the state or the society.
  Schedule B − Companies which were marked as progressively state-owned and in
which the state would basically establish new companies, but in which private
companies would be anticipated only to supplement the effort of the state.

 Schedule C − The left companies and their future development would, in general,
be neglected and would be entirely dependent to the initiative and enterprise of the
private sector.

Even though there was a category of companies left to the private sector that is those
companies that are above Schedule C. The sector was monitored by the state by a system
of licenses. So to set up a new company or to widen production, obtaining a license from
the government was a prerequisite to be fulfilled. Launching of new companies in
economically backward areas was incentivized through easy licensing and subsidization of
important inputs, like electricity and water. This step was taken to encounter regional
differences that existed in the country. In fact, the license to boost the production was
issued by convincing the government that the economy required more of the products and
services.

Some other salient behavior of the IPR 1956 was fair and non-biased treatment for the
private sector, motivating the village and small-scale companies, eradicating regional
differences, and the requirement for the provision of amenities for labor, and attitude to
foreign capital. This Industrial Policy of 1956 is also referred to as the Economic
Constitution of the country.

Policy Measures

Some of the essential policy measures were declared and procedural simplifications were
undertaken to opt for the above stated objectives. Following are some of the policy
measures −

Liberalization of Industrial Licensing Policy

A list of goods demanding compulsory licensing is reviewed on an ongoing regular basis.

Currently, only six industries are monitored under compulsory licensing mainly on account
of environmental, safety and strategic considerations that need to be taken care of. In the
same way, there are only three industries reserved specifically for the public sector. The
lists of goods under compulsory licensing and industries reserved for the public sector are
included in Appendix III and IV respectively.
Introduction of Industrial Entrepreneurs' Memorandum (IEM)

Companies which don’t require compulsory licensing are expected to file an Industrial
Entrepreneurs' Memorandum (IEM) to the Secretariat for Industrial Assistance (SIA).
Industrial approval is not needed for these types of exempted industries. Amendments are
also permitted to IEM proposals filed after 1.7.1998.

Liberalization of the Locational Policy

A crucially reformed locational policy in tune with the liberalized licensing policy is in place.
Approval from industries are not required from the Government for locations not within the
range of 25 kms of the periphery of cities having a population of more than one million
apart for those industries, where industrial licensing is compulsory. Non-polluting
enterprises like electronics, computer software and printing can be located within 25 kms
of the periphery of cities with more than one million population. Other industries are
allowed in such locations only if they are located in an industrial area so designated prior to
25.7.91. Zoning and follow land use regulations as well as environmental legislations.

Policy for Small Scale Industries

Reservation of goods that are manufactured exclusively for small scale industries ensures
effective measure for protecting this sector. Since 24th December 1999, entrepreneurial
undertakings with a maximum investment up to rupees one crore are within the small scale
and ancillary sector.

Non-Resident Indians Scheme

The general policy and provisions for Foreign Direct Investment as available to foreign
investors or company are completely applicable for NRIs as well. With addition to this, the
government has broadened some concessions mostly for NRIs and overseas corporate
bodies having more than 60% stake by the NRIs. These include investment by NRI/OCB in
the real estate and housing sectors, domestic airlines sector up to 100%.They are also
permitted to invest up to 100% equity on non-repatriation basis in all activities except for a
small negative list.

EHTP vs STP Scheme

For constructing strong electronics company along with a view to modify export, two
schemes viz. Electronic Hardware Technology Park (EHTP) and Software Technology Park
(STP) are in function. Under EHTP/STP scheme, the inputs are permitted to be procured
free of duties.
Policy for Foreign Direct Investment (FDI)

Promotion of FDI forms a vital part of India's economic policies. The role of FDI in boosting
economic growth is by way of infusion of capital, technology and modern management
activities. The Department has put in place a liberal and transparent foreign investment
egime where all the practices are opened to foreign investment on automatic route without
any limit on the extent of foreign ownership.