Related General Topics of Entrepreneurship ENTREPRENEURS IN PAKISTAN:Salient Features of Entrepreneurs in Pakistan are:

Age Pattern: “The mean age of entrepreneur was found to be 42 years and of their enterprises 12 years. It is comparable to the Korean age pattern (46)”.

Corporate status: Sole owner: He works with his own hands combines the entrepreneur function of initiating the business making investments, taking decisions and performing managerial functions”. Heritage: “Caste played an important role in certain industries and on the other hand heritage is dominant. But overall it is much diversified.”

Educational Level: “Differing from industry to industry 60% have school education and 30% have college or better education only 10% have professional or graduation level”.

Skills Level: Majority is skilled in family business Most of training is as a family member. Technically they are very skilled in heredity business. New generation has professional education

Sizes and Investment: “Majority started in a small way with less than 10 workers and 1/2 to 2/3 of the firms started with less than 50,000 investments”

Growth: “The growth was fast in case of small firms than in large firms”.

Profitability: “Rate of profit is higher in case of small industries in comparison with the large industries.”

The Industrial History of Pakistan: Pakistan’s industrial history has been dominated by a single-minded emphasis on industry and that is of large-scale enterprises.

The fall out of that development strategy was formally adopted in the 60’s as conscious policy step in the start of second policy plan period (1960-1965) has been large scale industrial holdings, accounting for much of the country’s assets and capital. The feeling among the masses is that a few families control 70 to 80 percent of the country’s assets, led to political rebellion. That rebellion also culminated in the dismemberment of the eastern part of the country. The primary causes for that tragedy, were basically economic in nature. The upheaval also generated a parallel economic thought, exclusive to the peculiarities of Pakistan’s economy. That economic thought advocated across the board nationalization of economic assets as a vehicle for ensuring social justice in the society. The fall out of that strategy was two pronged: 1. Inefficient labor 2. Shaken Business Confidence The reaction to that policy mix in the early 1980’s was revert

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back to the Ayubian model of economic development. The model was characterized by:

1) Promotion of large-scale units 2) Expansion of large-scale enterprises 3) Banking sector turned to cater to large loans

The IMF conditions and poor recovery rate of huge borrowings played a major role in creating a negative point for the progress curve. These constraints further pushed the economy towards recession, industry towards sickness and individual units towards default. All these factors precipitated the rethinking of a strategy to revive the growth of economy. It was due to non-involvement of banks that medium scale and small-scale enterprises has got the attention of the stakeholders i.e. the economic managers and the private sector. The development of Small to Medium Enterprise (SMEs) suits the current situation on account of the following factors.

1) Low overhead cost, low level of financing 2) Lesser pressure on the banking system 3) Employment generation 4) Entrepreneurial developments 5) Vendor based development.6) Development of large-scale industry on firm basis7) A more just distribution of resources and profits.

The pre-requisites for the development of SME sector rest heavily on an infrastructure tuned to support such developments that include:

A banking system customized for SME development. One window operation

Currently, our banking system continues to be the large sector banker. Despite talk of SME development under the auspices of SMEDA and development of SME Bank and Khushali Bank, the financial sector’s general response has been influenced by the security issue, i.e. against which asset the bank would be advancing loans to the small and medium scale business entity. In the absence of a customized banking setup, the development in the SME sector so far has been evolutionary and not the result of any conscious activities. The growth of Pakistani entrepreneurship in good in region and can be compared with INDIA, Sri Lanka and Malaysia I respect of following:

Country Rising Stars % Lost opportunity %Pakistan 60.4 10.0Sri Lanka 57.1 38.7Inida 52.3 29.3Malaysia 59.6 27.7

(continued…..)

GENDER DEVELOPMENT STATUS WOMAN AS AN ENTREPRENEUR IN PAKISTAN:

Each of the two genders of any society constitutes roughly half of the population, and Pakistan is no exception. People of both genders embody not only labor force, but also knowledge and creativity, which may be

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mobilized, to achieve economic ends. Discarding either of the genders, therefore, implies foregoing the potential benefits, which arise from mobilizing the respective human resources for development.

Pakistani women have been engaged in the production process for ages. Their participation in the economic activities in the modern society has also progressed beyond agriculture into the local market economy. Women are increasingly migrating to urban areas for employment in a range of cottage industries, such as carpet weaving, textiles and handicrafts. In search for wage employment, women are moving into small business and self-employment ventures thereby creating many formal and informal opportunities for work.

Women entrepreneurship in the formalized sense, however, remains a new concept. Our current strategies also tend to focus on increasing women’s participation in the labor force. The business environment for women in Pakistan reflects a complex interplay of many factors made up of social, cultural, traditional and religious elements. These have taken shape over many centuries; are anchored in patriarchal system and are clearly manifested in the lower of women. The form of constitutional structures, policy documents, regulatory arrangements and institutional mechanisms is contemporary rather than traditional, so it is cosmetically impartial.

Yet the gender bias is rigid and deep-rooted as it draws legitimacy from the perpetuation of a traditional mind-set, established rituals and a firm belief system. It has conclusively been shown that women business owners encounter more obstacles, and face more risks, financially, socially, economically, culturally and legally than male business owners face.

The Government of Pakistan is well aware of the potential of the women in our society and the contribution they can make towards economic development. Women are continuously being encouraged to enter the business stream of the country and are being provided incentives. However, there still is a strong dearth of focused initiatives that need to be taken by existing business facilitation institutions.

The new scenario is giving rise to woman as entrepreneur as they have opened their own chamber of commerce. The woman bank is in Place and we can see lot of women coming up in-services sector, apparel, education and many such occupation.

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT:

The role of entrepreneurship in economic development involves initiating change in the structure of business and society. One theory of economic growth depicts innovation as the key, not only in developing new products, but also in stimulating investment interest. The new capital created expands the capacity for growth (supply side), and new spending utilizes the new capacity and output (demand side.) In spite of the importance of investment and innovation in the economic development of an area, there is still a lack of understanding of few factors which are as follows:

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• The product-evolution process is the process through which innovation develops and commercializes through entrepreneurial activity, which in turn stimulates economic growth. It begins with knowledge in the base technology and ends with products or services available in the marketplace.

• The critical point in the process is the intersection of knowledge and a recognized social need, called the iterative synthesis. This point often fails to evolve into a marketable innovation.

• Most innovations introduced in the market are ordinary innovations, with little uniqueness.

• Technological innovations refer to new products with significant technological advancements.

• Breakthrough innovations mean the development of new products with some technological change.

Regardless of the level of uniqueness or technology, each innovation evolves into and develops towards commercialization through one of three mechanisms: the government, entrepreneurship, or entrepreneurship. Entrepreneurship has assisted in revitalizing areas of the inner city. Individuals in inner-city areas can relate to the concept and see it as a possibility for changing their present situation.

Entrepreneurial Business Plan:

A comprehensive business plan is crucial for a start-up business. It defines the entrepreneur’s vision and serves as the firm’s resume.

Reasons for writing a business plan: The main reasons for writing business plan are as:

1. To convince oneself that the new venture is worthwhile before making a significant financial and personal commitment.

2. To assist management in goal-setting and long-range planning. 3. To attract investors and get financing.

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4. To explain the business to other companies with which it would be useful to create an alliance or contract.

5. To attract employees.

A business plan can help an entrepreneur to allocate resources appropriately, handle unexpected problems, and make good business decisions.

A well-organized plan is an essential part of any loan application. It should specify how the business would repay any borrowed money. The entrepreneur also should take into account all startup expenses and potential risks so as not to appear naive.

However, according to Andrew Zacharakis, a common misperception is that a business plan is primarily used for raising capital. Zacharakis, a professor of entrepreneurship at Babson College, suggests that the primary purpose of a business plan is to help entrepreneurs gain a deeper understanding of the opportunity they envision. He explains: “The business plan process helps the entrepreneur shape her original vision into a better opportunity by raising critical questions, researching answers for those questions, and then answering them.”

Some entrepreneurs create two plans: a planning document for internal use and a marketing document for attracting outside investment. In this situation, the information in each plan is essentially the same, but the emphasis is somewhat different. For example, an internal document intended to guide the business does not need detailed biographies of the management. However, in a plan intended for marketing, the background and experience of management may be the most important feature.

A standard business plan is usually about 40 pages in length. It should use good visual formatting, such as bulleted lists and short paragraphs. The language should be free of jargon and easy to understand.

The tone should be business-like and enthusiastic. It should be strong on facts in order to convince people to invest money or time in the new venture.

The basic elements of a standard business plan include:

1) Title Page2) Table of Contents3) Executive Summary 4) Company Description 5) Product/Service6) Market and Competition7) Marketing and Selling Strategy8) Operating Plan9) Management/Organization10) Financing11) Supporting Documents

The executive summary is the cornerstone of a good plan. This is the section that people read in order to decide whether to read the rest. It should concisely summarize the technical, marketing, financial, and managerial

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details. More importantly, it needs to convince the reader that the new venture is a worthy investment.

The company description highlights the entrepreneur’s dream, strategy, and goals.

The product/service section should stress the characteristics and benefits of the new venture. What differentiates it from its competition? Is it innovative?

The financial components of a new venture’s business plan typically include three projections: a balance sheet, an income statement, and a cash-flow analysis. These require detailed estimates of expenses and sales. Expenses are relatively easy to estimate. Sales projections are usually based on market research, and often utilize sales data for similar products and services produced by competitors.

Writing a business plan may seem overwhelming. However, there are ways to make the process more manageable. First, there are many computer software packages for producing a standard business plan. Numerous books on entrepreneurship have detailed instructions, and many universities sponsor programs for new businesses.

Sources of Finance or Capital for Entrepreneurship/Entrepreneur:

Many entrepreneurs struggle to find the capital to start a new business. There are many sources to consider, so it is important for an entrepreneur to fully explore all financing options. He also should apply for funds from a wide variety of sources.

1. Personal Savings:2. Banks3. Credit Cards4. Friends and Family5. Venture Investors6. Government Programmes

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2. Personal Savings: Experts agree that the best source of capital for any new business is the entrepreneur’s own money. It is easy to use, quick to access, has no payback terms, and requires no transfer of equity (ownership). Also, it demonstrates to potential investors that the entrepreneur is willing to risk his own funds and will persevere during hard times.

2. Banks: Banks are very conservative lenders. As successful entrepreneur Phil Holland explains, “Many prospective business owners are disappointed to learn that banks do not make loans to start-up businesses unless there are outside assets to pledge against borrowing.” Many entrepreneurs simply do not have enough assets to get a secured loan from a lending institution.

3. Credit Cards: The entrepreneur’s personal credit cards are an easy source of funds to access, especially for acquiring business equipment such as photocopiers, personal computers, and printers. These items can usually be obtained with little or no money paid up front and with small monthly payments. The main disadvantage is the high rate of interest charged on credit card balances that are not paid off in full each month.

4. Friends and family: These people believe in the entrepreneur, and they are the second easiest source of funds to access. They do not usually require the paperwork that other lenders require. However, these funds should be documented and treated like loans. Neither part ownership nor a decision-making position should be given to these lenders, unless they have expertise to provide. The main disadvantage of these funds is that, if the business fails and money goes lost, a valuable relationship may be jeopardized.

However, if an entrepreneur has money in a bank savings account, she can usually borrow against that money. If an entrepreneur has good credit, it is also relatively easy to get a personal loan from a bank. These loans tend to be short-term and not as large as business loans.

5. Venture investors: This is a major source of funding for start-ups that have a strong potential for growth. However, venture investors insist on retaining part ownership in new businesses that they fund. Following are the three types of Venture investors as:

Formal institutional venture funds are usually limited partnerships in which passive limited partners, such as retirement funds, supply most of the money. These funds have large amounts of money to invest. However, the process of obtaining venture capital is very slow. Several books, such as Galante’s Venture Capital & Private Equity Directory, give detailed information on these funds.

Corporate venture funds are large corporations with funds for investing in new ventures. These often provide technical and management expertise in addition to large monetary investments. How-ever, these funds are slow to access compared to other sources of funds. Also, they often seek to gain control of new businesses.

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Angel investors tend to be successful entrepreneurs • who have capital that they are willing to risk. They often insist on being active advisers to businesses they support. Angel funds are quicker to access than corporate venture funds, and they are more likely to be invested in a start-up operation. But they may make smaller individual investments and have fewer contacts in the banking community.

6. Government programs: Many national and regional governments offer programs to encourage small- and medium-sized businesses. In the United States, the Small Business Administration (SBA) assists small firms by acting as a guarantor of loans made by private institutions for borrowers who may not otherwise qualify for a commercial loan.

Franchising:

Definition: Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Characteristics of Franchising:

Businesses for which franchising work best have one or several of the following characteristics:

1) A good track record of profitability.2) Easily duplicated.3) Detailed systems, processes and procedures.

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4) Around a unique or unusual concept.5) Broad geographic appeal.6) Relatively easy to operate.7) Relatively inexpensive to operate.

As practiced in retailing, franchising offers franchisees the advantage of starting up quickly based on a proven trademark, and the tooling and infrastructure as opposed to developing them.

Franchise agreement:

A Franchise Agreement is a legal, binding contract between a franchisor and franchisee, enforced in the United States at the State level.

Prior to a franchisee signing a contract, the Trade Commission regulates information disclosures under the authority of The Franchise Rule. The Franchise Rule requires a franchisee be supplied a Uniform Franchise Offering Circular (UFOC ) or Franchise Disclosure Document (FDD ) prior to signing a franchise agreement, a minimum of ten days before signing a franchise agreement.

A typical franchise agreement contains: Uniform Franchise Offering Circular (UFOC)or FDD Franchise

Disclosure Document (FDD) Disclosures required by state laws Parties defined in the agreement Recitals, such as Ownership of System, and Objectives of Parties Definitions, such as:

Agreement, Territory Area, Area Licensee, Authorized deductions, Gross Receipts, License Network, The System Manual, Trademarks, Start Date, Trade name, Termination, Transfer of license.

Licensed Rights, such as:Territory, Rights Reserved, Term and Renewal, Minimum

Performance Standard Franchisor’s Services, such as:

Administration, Collections and Billing, Consultation, Marketing, Manual, Training

Franchisee Payments, such as:Initial License Fee, Training Fees, Marketing Fund, Royalties, Renewal fee & Transfer fee

Franchisee Obligations, such asUse of Trademarks, Financial Information, Insurance, Financial and Legal responsibility

Relationship of Parties, such asConfidentiality, Indemnification, Non-Compete

Transfer of License, such as:Consent of franchisor, Termination of license, Termination by

licensee. Other provisions Governing law Amendments Waivers Arbitration Severability

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The following US-listing tabulates the early 2010 ranking of major franchises along with the number of sub-franchisees (or partners) from data available for 2004. These inclues.

1. Subway (Sandwiches and Salads) | Startup costs $84,300 – $258,300 (22000 partners worldwide in 2004).

2. McDonald's | Startup costs in 2010, $995,900 – $1,842,700 (37,300 partners in 2010)

3. 7-Eleven Inc. (Convenience Stores) |Startup Costs $40,500- 775,300 in 2010,(28,200 partners in 2004)

4. Hampton Inns & Suites (Midprice Hotels) |Startup costs $3,716,000 – $15,148,800 in 2010Also give examples of franchises in Pakistan

Entrepreneurial Marketing Plan:

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