Small Business Notes Business Studies Class 11 | MSME and Entrepreneurship

 Small Business Notes Business Studies Class 11

Meaning of Small Business:

Meaning of MSME:

MSME( Micro, Small and Medium Enterprises)

The definition used by the Government of India to describe MSME is based on the investment in plant and machinery and turnover:

Types	Investment in Plant & Machinery	Turnover
Micro Enterprises	Does not exceed 1 crore	Does not exceed 5 crore
Small Enterprises	More than 1 crores but does not exceed 10 crores	More than 5 crores but does not exceed 50 crores
Medium Enterprises	More than 10 crores but does not exceed 50 crores	More than 50 crores but does not exceed 250 crores

Importance of Small Business in India:

1. Employment Opportunities:MSME are the second largest employers of human resources, after agriculture. They are considered to be more labour intensive and thus provide job opportunities. 
2. Variety of Products: Small industries manufacture a variety of products ranging from domestic products like utensils, leather, plastic, steel products, stationery items, vegetables etc.It also manufactures technologically sophisticated items like televisions, automobiles parts, calculators etc. It also produces various handicrafts, handlooms and other products. 
3. Balanced Regional Development: MSME produce use simple technologies and depend on locally available resources and thus, can be set up anywhere in the country. They can be widely spread without any locational constraints, the benefits of industrialisation can be reaped by every region.
4. Contribution to Exports: It also contributes to exports.
5. Low Cost of Production: Small scale industries can be started with simple indigenous technology which helps in reducing the cost of production.
6. Development of Entrepreneurship:The latent skills and talents of people can be channelled into business ideas which can be converted into reality with little capital investment and almost nil formalities.
7. Quick Decisions: Due to the small size of the organisations, quick and timely decisions can be taken without consulting many people.

Entrepreneurship Development

Entrepreneurship - Process of setting up one's own business

Entrepreneur - The person who set up his/her business 

Enterprise- Output of entrepreneurship process i.e. the business unit 

Features/Characteristics of Entrepreneurship:

1. Systematic Activity: It is a systematic activity which requires certain knowledge, skill and competency.
2. Lawful and Purposeful Activity: Entrepreneurship is concerned with establishment of a lawful and purposeful business. Therefore, any illegal activity can not be called entrepreneurship.
3. Innovation: Entrepreneurship is creative as it involves creation of value. It involves innovation- introduction of new products, new methods, discovery of new markets, sources of inputs or technological improvement.
4. Organisation of production: Entrepreneurship involves mobilisation of resources (land, labour, capital and technology) into a productive enterprise. 
5. Risk Taking: Entrepreneurship involves a high degree of risk because there is no guarantee of getting profits. 

Need of Entrepreneurship: 

The need for entrepreneurship can be understood from the following points:

1. Innovation: Entrepreneurship helps in emergence of new ideas in the form of new product, new services or new technology. 
2. Increased Profits: As compared to other form of economic activities, there is a greater chance of earning higher profits. 
3. Employment Opportunities: Entrepreneurship helps in providing job opportunities to a large number of people. 
4. Economic Development: Entrepreneurship helps in development of nation by providing employment opportunities, increasing exports and improvement in standard of living of people.  
5. Optimum Utilisation of Resources: Entrepreneurship helps in making best possible use of available resources. 

Entrepreneurship Process

The main steps in entrepreneurship process includes:

1. Idea generation
2. Opportunity evaluation
3. Planning
4. Launching the enterprise
5. Growth

Institutional Support to Small Scale Business:

National Small Industries Corporation: Set up by the Ministry of Micro, Small and Medium Enterprises, Government of India in 1955. 

Functions of NSIC:

a. To supply indigenous and imported machines on easy hire purchase terms.

b. To supply indigenous and imported raw materials.

c. To help in export of products of small scale business units.

d. Providing mentoring/advisory services.

e. Serves as technology incubators.

f. Creating awareness on technological upgradation.

g. Developing software technology parks and technology transfer centres.

District Industries Centre: It was launched on 1st May 1978 with an aim to provide an integrated administrative framework at district level to look at the problems of industrialisation. 

Functions of DICs

a. Identification of suitable schemes.

b. Preparing feasibility reports.

c. Arranging for credit.

d. Providing machinery and equipment.

e. Providing raw materials

Startup India Scheme:

Startup India is an initiative of government of India. It was announced by the Prime Minister Narendra Modi during his speech on 15th August 2015. It was launched in 16th January 2016.

Under this scheme, several financial and other benefits are provided to the entrepreneurs. 

Ways to fund start up:

1. Bootstrapping: Under this, the entrepreneur invests his/her personal savings in the business.
2. Crowdfunding: Under this, funds are collected from a large number of people through the medium of internet.
3. Angel Investors: Angel Investors are the rich people invest in the start ups having high growth potential. 
4. Venture Funds: Under this, venture funds invest in the risky but potentially profitable business. 
5. Incubators and Accelerators: These organisations provide financial assistance to the startup. The organisations which financially help the startup at the start are called incubators. When the startup starts developing, the organisation which gives financial help is called accelerator. 
6. Contests: Under this, competition for the entrepreneurs engaged in startups is organised. The one who has the best idea and gives a better presentation is declared the winner. 
7. Bank Loan: Under this, loans can be taken from banks. 
8. Non Banking Financial Companies: Under this, loans/financial help can be taken from NBFCs. 

Intellectual Property Rights:

Types of Intellectual Property Rights:

1. Copyright: Copyright refers to the right given to the creator on his/her literary and artistic creations. The facility of copyright is available on books, novels, painting, movie, music etc. 
2. Patent: Patent refers to the right given to a creator as a result of his/her creation of a new and useful product/process. 
3. Trademark: Trademark is a special name or symbol which is used to give a distinguishing identity to a business. It is a right under which no other person or business concern can use the well protected identity.