Class 11

Business Studies
Chapter 9

Small Business
&
Entrepreneurshi
p
 SMALL BUSINESS

Small scale industries contribute significantly to

the development process and acts as a vital link in
industrialization in terms of production,
employment and exports for economic
prosperity by widening the entrepreneurial base
and use of local raw materials and indigenous
skills
Types of
Small
Business
 Types of Small Business
Business enterprises are classified as
Manufacturing Enterprises, Service Enterprises,
Village Industries and Cottage Industries

Among these manufacturing and service enterprises are

again subdivided into Micro, Small and Medium Enterprises
 Types of Small Business
The definition used by the Government of India to
describe small industries is based on the investment in
plant and machinery

The Micro, Small and Medium Enterprises Development

(MSMED) Act 2006 has been passed by the Government
of India to address the issues of small enterprises
 Types of Small Business
Investment in Plant and Machinery
Types of Business Manufacturing
Services Enterprises
Enterprises

Not exceeding Rs. 1 Not exceeding Rs. 10

Micro Enterprise
crore Lakhs

More than Rs. 1 crore

More than 10 lakhs but not
Small Enterprise but not exceeding Rs.
exceeding 2 crores
10 crores

More than 10 crores More than 2 crores but not

Medium Enterprise
exceeding 5 crores
 Village
Industries
 Village Industries
They are located in rural area which produces any
goods, renders any service with or without the use
of power and in which the fixed capital investment
per head or artisan or worker is specified by the
central government from time to time
 Cottage
Industries
 Cottage Industries
They are also known as Rural Industries or
Traditional Industries

They are not defined by capital investment criteria but on

the basis of it’s characteristics
 Characteristics of Cottage Industries
• Organised by individuals with private resources.
• Normally use family labour and locally
available talent.
• Simple equipments are used.
 Characteristics of Cottage Industries

• Small capital investment.

• Produce simple products, normally in their
own premises.
• Production of goods using indigenous technology.
 Role of
Small Business
in Rural India
Small business organizations play an
important role in the socio economic
development of the country
 Role of Small Business in Rural India
1. Multiple sources of income for family
 Role of Small Business in Rural India
2. Self employment opportunities
Small business provides self employment
opportunities in commerce, manufacturing and
service segments
 Role of Small Business in Rural India
3. Promotion of agro industries
Small business helps to promote agro based
rural industries
 Role of Small Business in Rural India
4. Employment Opportunities
It provides employment opportunities
for artisans and the weaker sections of
society
 Role of Small Business in Rural India
5. Migration of rural people has been stopped
Migration of rural people to urban areas in search of
employment has been stopped
 Role of Small Business in Rural India
6. To over come poverty
Helped to solve the problem of poverty and
unemployment
 Role of Small Business in Rural India
7. Equality of income
Helped to reduce the income inequalities up to a
certain extent
 Role of Small Business in Rural India
8. Industrial growth
Accelerated industrial growth of the country
Role of Small Business in Rural India
1. Multiple sources of income for family
2. Self employment opportunities
3. Promotion of agro industries
4. Employment Opportunities
5. Migration of rural people has been stopped
6. To over come poverty
7. Equality of income
8. Industrial growth
Problems of Small
Business
 Problems of Small Business
1. Finance
One of the severe problems faced by SSIs is that
of non-availability of adequate finance to carry out
its operations
 Problems of Small Business
2. Raw materials
Availability and procurement of raw material is
another major problem faced by the SSIs

Their bargaining power is relatively low due to the small

quantity of purchases
 Problems of Small Business
3. Managerial skills
SSIs are generally promoted and operated by
single person, who may not possess all the
managerial skills required to run the business

They are also not in a position to afford

professional managers
 Problems of Small Business
4. Labour
Productivity per employee is relatively low and
employee turnover is generally high due to low
remuneration

It also faces lack of specialization

 Problems of Small Business
5. Marketing
In most of the cases, marketing is a weaker area of
small organisations; therefore exploitation of
middlemen is very more
 Problems of Small Business
6. Quality
Many small businesses do not follow the desired
standards of quality due to shortage of finance
and resources
 Problems of Small Business
7. Capacity utilization
Many of the SSIs are operating below full capacity
due to lack of marketing skills or demand

It will cause to increase its operating cost and leads to

sickness and closure of the business
 Problems of Small Business
8. Technology
Most of the SSIs use outdated technology,
resulting in low productivity and uneconomical
production
 Problems of Small Business
9. Sickness
Due to many internal and external problems, most
of the SSIs are in the edge of sickness
 Problems of Small Business
10. Global competitions
Most of the SSIs face competitions not only from
medium and large industries, but also from
Multinational Companies in the areas of quality,
technology, finance, managerial skills etc.
 Problems of Small Business
1. Finance
2. Raw materials
3. Managerial skills
4. Labour
5. Marketing
6. Quality
7. Capacity utilization
8. Technology
9. Sickness
10. Global competitions
Government Assistance
to Small Industries
and Small Business Units
Govt. Assistance to Small Business
1. National Bank for Agriculture and
Rural Development (NABARD)

Head Quarters: Mumbai

 Govt. Assistance to Small Business
National Bank for Agriculture and Rural Development
●
Set up in 1982 for integrated rural development.
●
Provides finance to small industries, cottage and
village industries and artisans.
●
Offers counselling and consultancy services.
●
Training and development programs for
rural entrepreneurs.
 Govt. Assistance to Small Business
2. Rural Small Business Development Centre
(RSBDC)
 Govt. Assistance to Small Business
Rural Small Business Development Centre
●
It is an initiative of world association for small and medium
entrepreneurs.
●
It is sponsored by NABARD.
●
Giving management and technical assistance to
micro and small entrepreneurs in rural areas.
●
Organizing programs on rural entrepreneurship,
skill upgradation workshop, training programs
 Govt. Assistance to Small Business

3. National Small Industries Corporation (NSIC)

 Govt. Assistance to Small Business
National Small Industries Corporation
●
Set up in the year 1955 to promote and foster the growth of SSIs in
India.
●
Supply of indigenous and imported machines on hire
purchase basis.
●
Supply of raw materials – locally and imported.
●
Support in export of products.
●
Monitoring and advisory services.
●
Providing latest technology.
●
Awareness on technological upgradation.
●
Development of software technology parks and technology transfer
centres.
Govt. Assistance to Small Business
4. Rural and Women Entrepreneurship
Development (RWED)
 Govt. Assistance to Small Business
Rural and Women Entrepreneurship Development
●
To create a business environment to encourage rural and
women entrepreneurs.

●
To enhance the productivity of labors and institutions.

●
To provide training for women entrepreneurs.

●
To give advisory services in all respects.
Govt. Assistance to Small Business
5. Scheme of Fund for Regeneration of
Traditional Industries (SFURTI)
 Govt. Assistance to Small Business
Scheme of Fund for Regeneration of Traditional Industries
●
Established in 2005 to make traditional industries
more productive and competitive.
●
Implemented by Ministry of Agro and Rural Industries
in collaboration with State Governments.
●
To develop clusters of traditional industries in various parts of
the country.
●
To make traditional industries more innovative and profitable.
●
To create sustainable employment opportunities in
traditional sector.
Govt. Assistance to Small Business
6. District Industries Centres (DICs)
 Govt. Assistance to Small Business
District Industries Centres
●
Established in 1978
●
To support small entrepreneurs at district level.
●
Provides all facilities and support to set up small and village industries.
●
Identification of suitable schemes for entrepreneurs by Central and State
Govts.
●
Preparation of feasibility reports on each industry.
●
Arrangement of credit facilities and equipments.
●
Arrangement of raw materials.
●
To impart training for artisans, entrepreneurs etc.
 Govt. Assistance to Small Business
1.National Bank for Agriculture and Rural
Development (NABARD)
2. Rural Small Business Development Centre
(RSBDC)

3. National Small Industries Corporation (NSIC)

4. Rural and Women Entrepreneurship Development

(RWED)

5.Scheme of Fund for Regeneration of Traditional

Industries (SFURTI)
6. District Industries Centres (DICs)
Entrepreneurship
Development
 Entrepreneurship Development
Entrepreneurship is the process of setting up of one’s own
business
The person who sets up the business is entrepreneur and
the outcome of the process (business unit) is called
enterprise

The word entrepreneur is derived from the French verb

entreprende, which means to undertake.
 Entrepreneurship Development

“Entrepreneur is a person who organizes the business,

undertakes the risk and enjoys the profit”

– Richard Cantillon_French Economist

 Entrepreneurship Development
An entrepreneur is basically a businessman and he brings
together the factors of production such as land, labour and
capital and organizes it
 Entrepreneurship Development
An entrepreneur is more than a businessman, if a
businessman brings some innovation to his activities and
eyes on value addition to his products or services, he is
called an entrepreneur

All entrepreneurs are businessmen, but all businessmen

are not entrepreneurs
 Entrepreneurship Development
Entrepreneurship is the purposeful activity of an
individual or a group of associated individuals,
undertaken to initiate, maintain or organize profit
oriented business unit for production or distribution
of economic goods and services
Characteristics of
Entrepreneurship
 Characteristics of Entrepreneurship
1. Systematic activity
Entrepreneurship is a systematic, step by step and
purposeful activity

It requires skill, knowledge and competency which can be

acquired, learnt and developed through education,
training, observation and experience
We can say the entrepreneurs are made but not born
 Characteristics of Entrepreneurship
2. Lawful and purposeful activity
The aim of entrepreneurship is to run a lawful
business
 Characteristics of Entrepreneurship
3. Innovation and Creativity
Entrepreneur brings innovation and creativity to the
business
 Characteristics of Entrepreneurship
4. Organizes production
The entrepreneur brings the idea of business and
the factors of production, thus he organizes the
production activities
 Characteristics of Entrepreneurship
5. Risk taking
The entrepreneur takes all the risks in the
business as he brings all the factors of
production including capital
 Characteristics of Entrepreneurship

1. Systematic activity
2. Lawful and purposeful activity
3. Innovation and Creativity
4. Organizes production
5. Risk taking
Start-up India
Scheme
 Start-up India Scheme
Startup India Scheme is an important initiative by
Govt. of India to promote a strong ecosystem for
nurturing innovation and start-up (new
enterprises) in the country
 Start-up India Scheme
As per the notification of the Ministry of Commerce and
Industry, a startup means:
1. An entity incorporated or registered in India.
2. Not older than 5 years.
3. Annual turnover does not exceed Rs.25 crores in any
preceding year.
4. Working towards innovation, development or
commercialisation of products or services with the support of
technology or Intellectual Property Rights (IPR) and Patents.
 Popular Start-ups in India
Paytm, Flipcart, Snapdeal, Swiggy, Bigbasket,
Byju’s App, Ola Cabs, Make My Trips,
ShopClues, Zomato, Redbus, Uber Eats etc.
Aims & Objectives of Start-up Scheme
1. Trigger an entrepreneurial culture
Aims & Objectives of Start-up Scheme

2. Create awareness about the charms of

entrepreneurship among the youth
Aims & Objectives of Start-up Scheme
3. Encourage more dynamic startups by
motivating educated youth as a good career
@ AGE OF 19
 Aims & Objectives of Start-up Scheme
4. To support the startups in various stages such
as pre-startup stage, nascent (beginning stage) and
early post startup stage
 Aims & Objectives of Start-up Scheme
5. To promote under represented target groups
such as women, backward communities, scheduled
castes, scheduled tribes etc.
 Aims & Objectives of Startup Scheme
1. To develop an entrepreneurial culture
2. Awareness among the youth
3. Encourage more dynamic startups
4. To support the startups in various stages
5. To promote under represented target groups
Start-up India
Action Point
 Start-up India – Action Point
1. Simplification and hand-holding
Formalities simplified and extended support to the
startup ventures
 Start-up India – Action Point
2. Start-up India Hub
To create a single point contact for the entire startup
system and to enable knowledge exchange and
access to funding
 Start-up India – Action Point
3. Legal support and fast tracking Patent
Examination
To give protection for patents, trademark
and
designs of innovative startups through SIPP
(Startups Intellectual Property Protections)
 Start-up India – Action Point
4. Easy Exit
In the event of failure and wind up of operations,
they can reallocate capital and resources towards
more productive avenues

Thus the entrepreneurs can easily exit from the

business if required
 Start-up India – Action Point
5. Incubator setup
The government envisages setting up of incubators
across the country in PPP mode (Private Public
Partnership)
 Start-up India – Action Point
6. Tax exemption
The profit of startup initiatives are exempted from
Income Tax for a period of 3 years
 Start-up India – Action Point
1. Simplification and hand-holding

2. Startup India Hub

3. Legal support

4. Easy Exit

5. Incubator setup

6. Tax exemption
Ways to Fund
Start-up
 Ways to Fund Start-up
1. Boot Strapping
Self financing by the promoters from their personal
savings and resources
 Ways to Fund Start-up
2. Crowd Funding
Pooling resources by a group of people for a
common goal especially through internet platforms
 Ways to Fund Start-up
3. Angel Investment
Angel investors are the individuals with surplus cash
who have keen interest to invest in startups

They also offer mentoring or advice along with capital

 Ways to Fund Start-up
4. Venture Capital
Venture capitalists provide professionally managed funds
to companies and startups that have huge potential

It is also called risk capital as it is invested in new ventures

Eg: Accel Partners, Blume Ventures etc.
 Ways to Fund Start-up
5. Business Incubators and Accelerators
Incubators provide funds for startups in the early
stage of its business, whereas accelerators help the
startups to run or to take a giant leap in business

Eg: Angel Prime, Khosla Labs, Startup Village

 Ways to Fund Start-up
6. Microfinance and NBFCs
Microfinance is a category of financial services targeted at
individuals and small business who lack access to conventional
banking or who have not qualified for a bank loan

Eg: BSS Microfinance P Ltd. , Asirvad Microfinance Pvt. Ltd.

etc.
 NBFCs
Non Banking Financial Companies are registered
under Indian Companies Act and they perform
lending functions to public but they cannot accept
demand deposits

Eg: Mahindra & Mahindra Financial Services Ltd.,

Muthoot Finance Ltd., Bajaj Finance Ltd. etc.
 Ways to Fund Start-up
1. Boot Strapping
2. Crowd Funding
3. Angel Investment
4. Venture Capital
5. Business Incubators and Accelerators
6. Microfinance and NBFCs
 Intellectual
Property Rights
(IPR)
 Intellectual Property Rights (IPR)
Intellectual Property is a category of property that
includes intangible creations of human intellect

The most prominent types of intellectual properties are

trade secrets, copyrights, patents, trademarks etc.
 Intellectual Property Rights (IPR)

All inventions begin with an idea

Once the idea becomes an actual product, that idea
is treated as an intellectual property
 Intellectual Property Rights (IPR)
The legal rights conferred on such products (idea) are
called IPR

Once it is allotted to a person by the Govt. authority, he/she

can rent, give or sell it to others
 Intellectual Property Rights (IPR)
Intellectual property is divided into two categories:

1. Industrial properties
Trademarks, industrial designs etc.

2. Copyrights
Literary and artistic works such as novels,
poems, plays, films music, photographs,
drawings, paintings, sculptures,
architectural designs etc.
Importance of IPR
 Importance of IPR
1. Path-breaking inventions
It encourages new inventions in all segments
Eg: Cancer cure medicines
 Importance of IPR
2. Incentive
It incentivize inventors, authors, creators etc. for their work
 Importance of IPR
3. Helps to prevent loss of income
It allows the inventor to sell the rights to third parties
and thus he/she can generate income
 Importance of IPR
4. Recognition
It helps authors, creators etc. to get recognition for their work
 Importance of IPR
1. Path-breaking inventions

2. Incentive

3. Helps to prevent loss of income

4. Recognition
 Types of
Intellectual Properties
 Types of IPs
1. Copy Right
It is the right to “not copy” conferred upon the
creators of literary, artistic, musical, sound
recording, films etc.
 Types of IPs
2. Trademark
Any word, name, or symbol that gives an identity to
goods or service made by an individual, company,
organization etc.

To register the trademark you can visit

www.ipindia.nic.in
 Types of IPs
3. Geographical Indication
GI is an identification which identifies agricultural,
natural or manufactured products originating from a
definite geographical territory

Eg: Banaras Brocades, Kashmiri Pashmina Woolen

Shawl, Nagpur Orange etc.
 Types of IPs
4. Patent
It is an exclusive right granted by the government to
prevent others from making, using, offering for sale,
selling or importing the invention

For an invention to be patentable, it must be new, non-

obvious (not easily discoverable) and having an industrial
application
 Types of IPs
5. Design
It includes shape, pattern etc. that is applied to any article
Eg: Design of a car, house, bottle etc.

The term of protection of a design is valid for 10 years,

which can be renewed for further 5 years
After that it will come under public domain
 Types of IPs
6. Plant Variety
It is a type of variety which is bred and developed by
farmers

Eg: hybrid versions of potatoes, rice, pepper etc.

This lead to the growth of seed industry
 Types of IPs
7. Semiconductor Integrated Circuits
Layout Design
It is used to perform electronic circuitry
function

Eg; Computer Chip

 Types of IPs
1. Copy Right
2. Trademark
3. Geographical Indication
4. Patent
5. Design
6. Plant Variety
7. Semiconductor Integrated Circuits Layout Design