Page 32 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 2: Classifications and Models of Entrepreneurship

2.3.6 Managing the Finance of Business Notes

Finance is the life blood of a business. It can either make a business or break it. Under-capitalization
and Over-capitalization are very harmful to the business. Managing the finance of his business
is a big challenge for an Indian Entrepreneur. He must manage both Fixed and Working capital
properly. He must borrow money from the right source. He must manage his Cash Flow
properly. He must invest his excess funds correctly. He must create sufficient Reserves and
surpluses. He must provide enough depreciation for his fixed assets, so that he can replace them
when they become old and outdated. He must provide for repairs and maintenance of machines.
He must also take steps to provide for but avoid bad debts.

2.3.7 Challenges in the Field of Production

The Indian entrepreneurs have to face many challenges in the field of production. They must
replace all outdated plants and machineries with new modern ones. They must provide
continuous training to their production staff. They must use good quality raw-materials to
produce high quality finished goods. They must have a good Inventory Control system. This
will avoid Over-stocking and Under-stocking. Over-stocking will block the working capital,
and Under-stocking will block the production process. Indian entrepreneurs should use a part of
their profits for Research and Development (R&D). They must pay special attention to Quality
Control (QC). Nowadays most companies also use Total Quality Management (TQM) to ensure
their finished goods are of good quality.
2.3.8 Balancing Economic and Social Objectives

This is also a big challenge before Indian entrepreneurs. They must balance between earning
high profit and doing social-welfare activities. They must use modern machines without causing
unemployment and harm to the environment. They must earn a profit without reducing quality
of their goods and services. They must earn a profit without charging high prices for their
products. They must not cause any type of pollution in the society. They must accept their
communal responsibilities and donate a small part of their profit (money) for social causes.
They must pay all their taxes and duties. They must not use unfair and unethical practices to fight
cutthroat competition.

Self Assessment

Fill in the blanks:
11. ……………… entrepreneurs must prepare themselves with new, better, and innovative
business tactics and skills.
12. Modern technology not only improves quality of produced goods and services, but it also
helps to reduce their ………. of production.
13. Replacement of old machines with modern machines is a big ……………….. before an
Indian entrepreneur.
14. Presence of …………… in the workforce has brought new challenges before Indian
entrepreneurs.

15. Working women experience more ………… than their male counterparts.

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