Entrepreneurial Planning

This page contains the CBSE entrepreneurship class 12 chapter Entrepreneurial Planning notes. You can find the questions/answers/solutions for the chapter 2 of CBSE class 12 entrepreneurship in this page.

The contents of a business plan are usually as follows:

Ideally the business owner/the entrepreneur should prepare the business plan. They can consult other experts during the course of preparation. However, they should take the sole responsibility of preparing the business plan themselves.

The following formats are available to design a successful business plan.

Shipping represents a sequence of steps to accomplish a business transaction. When properly planned for, it helps in completing a business trasaction with optimum efficiency and least expenses. Shipping primarly depends on the

Proforma income statement is a statemnet that is used to provide the summary of all the profits earned by a new enterprise, in the first year. It projects the profit computed by subtracting projected costs and expenses from the projected revenue.

While preparing the proforma income statement, the first thing to be computed is the ‘sales by month’. Any of the following available forecasting techniques are used for this purpose.

While preparing the proforma income statement one need not be conservative for the sake of initial planning. However if the estimates are conservative and result in substantial profits, it adds credibility to the bright future prospects of the enterprise.

Break even point occurs when the enterprise is earning an income equivalent to its expenses. In other-words, at break-even point represents a state of the business where in it is neither making profits nor incurring losses. Put it differently, the revenue and the cost are equal in magnitude.

Break-even point is critical to any business due to the following reasons.

Break-even analysis is used in deciding how much sales volume helps the business to break-even. The volume of sales thus computed help the business to get an estimate of the number of sales to be made to meet the total of variable and fixed expenses.

Target market refers to the group of specific potential customers who are interested in availing the products or services provided by the enterprise. Deciding the “target market” is a very complex task. Deciding on the target market involves

TAN is acronym for Tax deduction and collection Account Number. It is 10 digit long and is a combination of alphanumeric characters. Every one who are responsible or required for deducting or collecting the tax at source, on behalf of Income Tax Department, should apply for and obtain the TAN. It is mandatory to furnish TAN while filing the TDS or TCS returns either directly or online. It should be quoted while paying any TDS/TCS challan or certificate.

A business plan is a document, generally prepared by the entrepreneur himself/herself, documenting all the internal and external elements essential to setup an enterprise. The business plan projects

Elevator pitch is shorter version of the executive summary of the business plan. When presented to someone it is usually seen that the elevator pitch finishes in around 3 minutes. It is used to give a quick introduction about the enterprise to the potential investors, partners and even customers. The primary motive of elevator pitch is usually to grab the attention of the audience and attract them towards the upcoming venture.

According to Alford and Beatty production planning is defined as the technique of forecasting or picturing ahead, every step in a long series of separate operations,

Production planning should give a clear picture of the following.

An enterprise which is not manufacturing any products can completely eliminate this from the business plan.

The following are the factors that affect the operational plan.

There are typically two sources of funds available for an enterprise to finance its needs. They can be summarized into two types.

An entrepreneur should not completely rely on on source of financing i.e. Along with their own funds they should invest the outsider funds so as to make up the complete capital. The ratio in which the owner funds and the outsider funds should be calculated so that

The following is the explanation of the objectives of an operational plan.

The organizational plan consists of the following details documented in high clarity. By reading the organizational plan the potential investors can get a clear picture of the associated rights or authorities or roles and responsibilities of each member in the organization.

the following are the common techniques that are required to calculate the forecasting income.

The following are the various steps that should be considered while preparing a marketing plan.

PAN is acronym for Permanent Account Number. It is issued by the income tax department and consists of alphanumeric characters.

It should be quoted in all the transactions performed by a person with the income tax department. For instance, it should be quoted in the following instances.

All documents related to financial transactions should compulsorily include the PAN number.

PAN number is issued to a person when they fall into one or more of the following categories.

Operational plan can be defined as the planning and control of each and every operation in production, at every step of the manufacturing process to result in a coordinated and smooth completion of work withing a factory. Operational plan ensures that the final product is as per the plan.

The operational plan is indeed a blueprint of the actual operation and is produced well before the actual operations begin. The following facts support this statement.

Organisational Plan: The organizational plan is a part of the business plan that details the enterprise’s form of ownership. It provides detailed information about the who has what kind of authority in the enterprise and how each member of the enterprise deal with other while executing their managerial functions.

Classification of bussiness into different categories: Businesses in general can be segregated into four basic categories. They are as follows.

1. Manufacturing: Any business that produces a tangible product will fall into this category.

2. Service: Any business that offers something that is intangible such as expertise (An accountant’s expertise) or time (a teachers time) or advice (a lawyer’s advise).

3. Wholesale: Any business that purchases the products from the manufacturer in buld and then sells the product in small quantities to the retailers.

4. Retail: Any business that sells a product directly to the end consumer whose need is satisfied by the product.

For an entrepreneur to start a business the following choices of business are available.

1. Sole proprietorship: This form of business is owned, managed and controlled by a single person, responsible for procuring all the required funds. The business can not be transferred into others’ name. The owner is liable for all the losses and all the profits are enjoyed by the owner only. This kind of business is easier to start and shut down. It has very limited liability.

2. Partnership: This form of business is owned, managed and controlled by two or more persons. These persons enter a mutual oral or on paper agreement to form the partnership and share the profits and losses together. This form of ownership has unlimited liability. Each partner enjoys implied authority. Each partner is liable for their and others’ actions. Partners can transfer their shares or sell them after getting a consent from other partners. Partners can discontinue the partnership by giving a notice. It continues as long as all the partners are willing to continue.

3. Joint Hindu Family Business/firm (HUFs): Joint Hindu Family or Hindu Undivided Family Business is prevailing only in India. It is governed by Hindu law. This form of business is owned, managed and controlled by male members of a joint Hindu family.
HUFs have been defined under Hindu law as a family comprising male who have a common ancestor, including their wives and unmarried daughters.
This form of partnership is formed by the status or operation of Hindu law. Only members born in the family can become partners. Others can also become partners but only if they are adopted by someone in the family. Only the eldest male member has rights to manage or verify the accounts of the business. Liability is defined by the share a partner has in the business. However, the eldest member, also known as Karta, has unlimited liability. Any new born male can become the member. The business can be shut down only if all the members provide their consent.

4. Cooperative: A cooperative form of business is formed by a society. Its primary object is mutual help. Profit is secondary objective.
Members can join or leave at their own will. The members select the management committee which will be responsible for managing the affairs of the business. The capital is procured from the members. Shares can not be transferred. This form of enterprise is limited by the Cooperative societies act and the State cooperative societies act. Profits are limited to 9% of the share. Excessive profits are shared among members depending on their contribution to the society.

5. Joint Stock Company: For a private company minimum two persons are required and for a public company minimum seven persons are required. In addition to this, the company exists as an individual and has its own personality. Thus the company will have a common seal which is used as a signature of the company. The company neither has any liability nor it can have any shares. The company is managed by the directors. The actions of the company are governed by The Indian Companies Act, Memorandum of Association, Articles of Association. The company can be liquidated through legal proceedings.

While preparing the financial plan, the following areas should be dealt with at-most consideration as they form the key areas.The following are the areas which need to be given due consideration while preparing a financial plan. The more the emphasis is laid on these areas the more will be the effectiveness of the financial plan.

The following are the major financial items that should be included in the financial plan.

Business Plan: A business plan is formal document prepared by the entrepreneur consisting of all the extensive details of internal and external elements to be considered for starting a new business. The business plan covers the following:

Thus a business plan is a detailed document consisting of all the tasks performed as part of the business. Along this information it also serves as

Importance of business plan: A business plan is important to all the stakeholders who are interested to get an insight of the

The business plan is very handy to

The following are the different elements of an operational plan.

1. Routing: Routing deals with the work flow of a product or service from the stage the raw materials are procured to the stage the final product is produced/service is accomplished.

2. Scheduling: Scheduling deals with the exact start and end time of each operation. Indirectly, scheduling is concerned with the duration required to complete each operation.

3. Dispatching: Dispatching deals with the starting of the production exactly as per the plan. In scheduling the required

are issued thus giving the desired shape to the production plan.

4. Follow-up: Follow-up deals with the evaluation and appreciation of the work completed till now. It ensures that the errors or defects in the product or process are dispatched accordingly. Follow up is also known as expediting function. This component ensures that

5. Inspection: Inspection deals with the established standards to ensures that these standards are maintained in the materials or product or performance. Inspection ensures that there are separate laboratories or processes established to ensure that the product or service is within the prescribed quality standards.

6. Shipping: Shipping deals with the deliver of the finished product or service to the consumer.

Financial plan is a representation of critical financial data related to

The objective of the financial plan is to ensures that all the interested stakeholders get a clear idea of

Thus it facilitates the timely gathering of the funds and there by becoming a key factor in the success of the enterpreneur and enterprise. By reading the financial plan, the stakeholders can get detailed information regarding

Thus with a well documented financial plan and executing it, the entrepreneur will be able to pu the critical resources i.e. materials, men, machines and methods to produce goods and services on time.

Investment decisions under financial plan refers to the strategies with which the funds are wisely invested in various assets. A well planned and investigated investment decision can generate maximum income and thus contribute to maximum returns on all the investments. In the financial plan the investment decisions are documented under the proforma investment decisions section. The divestment of investment under the working capital and fixed assets is estimated and should be clearly documented in this proforma.

The following are the areas in which the investment should be on the basis of priority.

A properly formatted investment decision gives an idea about the exact amount funds to be raised so as start the venture. This will be of great help for efficiently running the enterprise. Any insufficiency or surplus of funds can have an adverse impact on the success of the enterprise. So, proforma investment decision plays a critical role in estimating the exact amount of funds required and how they should be distributed based on the priority. For this reason due attention should be paid while preparing the proforma investment decisions.

Manpower planning refers to the process where in the entrepreneur plans the human resources in such a way that the enterprise has the human resources who

As quoted by Hicks and Gullet The people working in a firm make it what it is.
Thus the quantity and quality of the people working in an organization have a direct impact on the performance of the business and the productivity levels in the organization. For this reason, the manpower planning is critical for every business. Manpower planning ensures that the skilled human resources are recruited for the organization there by contributing to the success of the organization. In the long term it is essential that the organization has a work force who are loyal to the organization, efficient, are experts and dedicated.
Manpower planning thus helps the organization to choose