Course: Intermediate Program in Entrepreneurship
Semester –IV
4 Years Courses
Prof. Swami Bhatt (IE)
Unit 3 Pitching Investors and Business Negotiation
Pitching: Meaning
A proposal sent to a prospective client meant to persuade them to try a
brand's products or services. This can also describe the presentation
given to potential investors.
A marketing pitch is a summary of a product or service you're trying to
sell. They are often brief speeches highlighting key features of your
business that you may use for networking, securing investors or
suggesting ideas to your managers.
The Importance of a Business Pitch
1. Why a business pitch is important
A business pitch is important because it's the first impression you make on
potential investors. It's your chance to sell them on your business idea and
get them excited about investing in your company.
Your business pitch should be clear, concise, and persuasive. It should
explain what your company does, what problem it solves, and why it's a
good investment.
1. Start with a strong elevator pitch.
Your elevator pitch is a short, 30-60 second summary of your business. It
should be clear, concise, and persuasive.
2. Tell a story.
Investors are more likely to remember a story than a list of facts and
figures. Use your pitch to tell a compelling story about your company and
what it does.
3. Focus on the problem you solve.
Investors want to know that your company is solving a real problem.
They're not as interested in your product or service itself.
4. Explain your business model.
Your business model is how you make money. Be sure to explain it in your
pitch so investors understand how you'll generate revenue.
5. Describe your target market.
Investors need to know who your target market is and why they'll want to
buy your product or service.
Component of Pitch Deck
The best startup pitch decks include the following components:
Problem
Vision
Unique Value Proposition
Team
Milestones
Business Model
Competition
Ask
1. Problem
The most successful startups have built a product or service that solves
consumers’ problems. Use this slide to talk about the problem that you are
solving and how consumers will benefit from your targeted solution. Ideally,
this section will tell a relatable story. By painting a simple and relatable
narrative, investors will have a better understanding of your business,
industry, and funding goals.
2. Vision
A startup is as strong as its vision. Use this section to talk about your
company’s overall mission. Keep it short and simple. This should be a short
one-sentence overview. It might be tempting to compare your startup to
another well-known company:
We’re like Spotify for video games.
We’re like Uber for pet owners.
It might be tempting to draw these kinds of comparisons, but dropping a
high-profile name for the sake of dropping a high-profile name isn’t a great
strategy. Instead, your startup’s vision should reflect its unique sentiments
and beliefs.
3. Unique Value Proposition
Your value proposition should showcase how your startup is uniquely
qualified to address customers’ pain points. If there’s a bit of crowding in
your industry, what unique solutions or discoveries has your startup
unlocked? How is your startup equipped to solve customers’ problems?
How is your startup situated to achieve massive growth?
4. Team
This section should highlight key team members, their experience, and the
key expertise that they bring to your startup. Don’t be afraid to talk about
their experience at previous organizations or businesses. How is this team
uniquely qualified to build and manage a high-growth (and profitable)
startup?
“Why is your team the best for this startup idea? Show that you have the
relevant experience and skills for the business,” recommends Iskender
Dirik, contributor at TheNextWeb. “If you have experience in working
together, make this explicit.”
5. Milestones
Before seeking financial investment, startup founders must gain some
early traction. Perhaps you’ve secured some early crowdfunding? Maybe
you have a dedicated following of high-paying customers? Tell investors
about the growth you’ve achieved thus far and how a new funding round
might expedite that growth.
“List the few main items that you’ve already achieved in the first column.
These typically include traction, product, and fundraising. You want to show
investors that you’re a natural born hustler and that you’re already making
the magic happen. Now they feel more comfortable giving you their
money,” says Mike Lingle, contributor at 10xU.
6. Business Model
Overall, this slide should speak to the unique operational and functional
capacity of the business. How does the business work? How does the
business make money? Ideally, your startup’s business model will be unlike
any other. What new mechanism or marketing strategy does your business
use to drive greater profits?
7. Competition
The number one mistake most startup founders make is saying that they
are without competition. Every startup has at least one competitor. This
section should talk about other entities in the marketplace. What are your
competitors doing? Moreover, what are they doing wrong? Show investors
how your startup’s product/service is superior.
“Don’t ever say anything bad about your competitors — you don’t know who
might be sitting in the room that’s an investor/board member/mentor of
one of them,” recommends Donna Griffit, a startup storyteller and pitch
alchemist. “It also reflects badly on you that you have to belittle your
competition to make yourself look good.”
8. Ask
Finally, the last section of your startup pitch deck should outlines
specifically what investor’s money is going towards and why these funds
are necessary to grow the company. The ask is one of the most important
sections in your startup pitch deck. Be sure to back up this number with
plenty of data and expert insights. You need to prove that your startup is
worth the investment, and this is the section to do it!
Negotiation: Meaning
The negotiation definition can be stated as a form of technique that
two or more people use to resolve any kind of conflict. It's a
procedure of coming up with a way to deal with interpersonal conflict.
Individuals generally prefer a reasonable conclusion for their
viewpoint throughout every conflict.
Negotiation is a discussion in which two or more parties attempt to reach
an agreement through bargaining. Here are a few examples of negotiation
in business: Salary negotiation: Candidates for jobs can bargain with an
employer about their salary and benefits.
Primary Negotiation Strategies.
5 Negotiation Styles
An effective negotiation strategy depends on having a solid understanding
of each of the five negotiation styles. Here’s a closer look at each style:
1. Accommodating: Accommodating negotiators prioritize maintaining the
relationship between the negotiating parties. Those who exhibit the
accommodating style seek to satisfy the other party's needs while
minimizing the level of conflict involved in the negotiation.
2. Avoiding: Negotiators with an avoiding style prefer to remain objective
and avoid creating tension. They’ll often defer responsibility to a
counterpart in an attempt to remain neutral. They do not actively pursue
their own interests or the interests of the other party.
3. Collaborating: The collaborative negotiation style is a joint problem-
solving technique. It aims to create a win-win scenario. Collaborative
negotiators are great at finding innovative solutions to complex problems.
By working together with the other party, those exhibiting the collaborating
style aim to find creative solutions that satisfy the needs of all parties
involved.
4. Competing: Competitive negotiators are results-oriented and focused on
getting their own way. They do not focus on the relationship with the other
party or maintaining a good rapport. Those with a competitive negotiation
style are usually less willing to compromise and, in extreme cases, can be
aggressive.
5. Compromising: The compromising style aims to find a middle ground
that is mutually beneficial to all parties. However, it is different from the
collaborative style in that it does not aim for a win-win scenario. Instead,
compromising negotiators seek a solution in which both parties sacrifice
part of what they want for resolution. Think of haggling for a lower price at
a flea market—the buyer offers the seller a lower price, hoping they’ll meet
somewhere in the middle. In this situation, neither party gets everything
they want, but they walk away with their need or desire partially fulfilled.
Designing and delivering effective business presentations.
Step 1: Identify and state the purpose of the presentation. Find focus by
being able to clearly and simply articulate the goal of the
presentation—what are you trying to achieve? This is helpful for you and
your audience—you will use it in your introduction and conclusion, and it will
help you draft the rest of the presentation content.
Step 2: Outline major sections. Next, break the presentation content into
sections. Visualizing sections will also help you assess organization and
consider transitions from one idea to the next. Plan for an introduction,
main content sections that help you achieve the purpose of the
presentation, and a conclusion.
Step 3: Draft content. Once you have an outline, it’s time to fill in the details
and plan what you are actually going to say. Include an introduction that
gives you a chance to greet the audience, state the purpose of the
presentation, and provide a brief overview of the rest of the presentation
(e.g. “First, we will describe the results of our study, then we’ll outline our
recommendations and take your questions”)
tep 4: Write presentation notes. For a more effective presentation style,
write key ideas, data, and information as lists and notes (not a complete,
word-for-word script). This allows you to ensure you are including all the
vital information without getting stuck reading a script. Your presentation
notes should allow you to look down, quickly reference important
information or reminders, and then look back up at your audience.
Step 5: Design supporting visuals. Now it’s time to consider what types of
visuals will best help your audience understand the information in your
presentation. Typically, presentations include a title slide, an overview or
advance organizer, visual support for each major content section, and a
conclusion slide. Use the visuals to reinforce the organization of your
presentation and help your audience see the information in new ways.
Course: Intermediate Program in Entrepreneurship
Semester –IV
4 Years Courses
Prof. Swami Bhatt (IE)
Unit 4 Company Formation
Formation of business entity
Business formation is the decisions that need to be made when creating
the structure of your business. Choosing between different business
structures, such as a sole proprietorship, a partnership, an LLC, a
corporation, and a non-profit, will impact the future business decisions
you'll make for your business.
Forms of business entity
Sole proprietorship
A sole proprietorship is the simplest business entity, with one person (or a
married couple) as the sole owner and operator of the business. If you launch
a new business and are the only owner, you are automatically a sole
proprietorship under the law. There’s no need to register a sole proprietorship
with the state, though you might need local business licenses or permits
depending on your industry.
General partnership
Partnerships share many similarities with sole proprietorships — the key
difference is that the business has two or more owners. There are two kinds
of partnerships: general partnerships, or GPs, and limited partnerships, or LPs.
In a general partnership, all partners actively manage the business and share
in the profits and losses.
Like a sole proprietorship, a general partnership is the default mode of
ownership for multiple-owner businesses — there’s no need to register a
general partnership with the state.
Limited partnership
Unlike a general partnership, a limited partnership, or LP, is a registered
business entity. To form a limited partnership, therefore, you must file
paperwork with the state. In an LP, there are two kinds of partners: those who
own, operate and assume liability for the business (general partners), and
those who act only as investors (limited partners, sometimes called “silent
partners”).
Limited partners don’t have control over business operations and have fewer
liabilities. They typically act as investors in the business and also pay fewer
taxes because they have a more tangential role in the company.
C corporation
A C corporation is an independent legal entity that exists separately from the
company’s owners. Shareholders (the owners), a board of directors, and
officers have control over the corporation, although one person in a C corp
can fulfill all of these roles, so it is possible to create a corporation where
you're in charge of everything.
With this type of business entity, there are many more regulations and tax
laws that the company must comply with. Methods for incorporating, fees,
and required forms vary by state.
S corporation
An S corporation preserves the limited liability that comes with a C
corporation but is a pass-through entity for tax purposes. This means that,
similar to a sole prop or partnership, an S corp’s profits and losses pass
through to the owners’ personal tax returns. There’s no corporate-level
taxation for an S corp.
Limited liability company
A limited liability company takes positive features from each of the other
business entity types. Like corporations, LLCs offer limited liability protections.
But, LLCs also have less paperwork and ongoing requirements, and in that
sense, they are more like sole proprietorships and partnerships.
Another big benefit is that you can choose how you want the IRS to tax your
LLC. You can elect to have the IRS treat it as a corporation or as a pass-
through entity on your taxes.
Steps for incorporation of private/public limited company
1. Limited risk to personal assets – The shareholders of a private limited
company have limited liability. This means that as a shareholder you will be
liable to pay for company’s liability only to the extent of the contribution
made by you. The shareholders do not have any personal liability and hence
need not pay for the company’s liability out of their own assets.
2. Legal Entity – A PLC has a separate legal entity different from you. This
means that the Company is responsible for the management of its assets
and liabilities, debtors and creditors. You will not be held responsible for
the losses of the company. So, the creditors cannot proceed against you to
recover the money.
3. Raising Capital – Even though registering a PLC comes with compliance
requirements, it is preferred by entrepreneurs as it helps them raise funds
through equity, expand and at the same time limits the liability.
4. Trustworthiness – Companies in India are registered with the Registrar
of companies(ROC) under the Companies Act 2013. Anyone can check the
details of the company through the Ministry of Corporate Affairs (MCA)
portal. Also, details of all the directors are provided while the formation of
the company. Hence a PLC form of business structure is trusted more.
5. Continue Existence – A company has ‘perpetual succession’, i.e.
continue or uninterrupted existence until it is legally dissolved. A company,
being a separate legal person, is unaffected by the death or cessation of
any member but continues to be in existence irrespective of the changes in
membership.
Procedure for setting up a business in India.
Steps to Starting a Business in India
1. Checking the Company Name Availability
Before any company registration can take place, you must check whether the
proposed name is available. This can be done online, where applicants may
check the availability of their desired company names on the MCA 21 website.
Once approved, the selected company name appears on the website.
2. Acquiring a Director Identification Number (DIN)
A Director Identification Number (DIN) is a special identification number that
is provided to any existing or potential directors of companies that are
incorporated. A provisional DIN can be obtained by filling a DIN-1 application
form online.
Then, a printed and signed version of the form must be forwarded to the
ministry along with identity and address proof for their approval. A permanent
DIN is issued after the verification of the documents and the subsequent
approval of the request.
3. Acquiring a Digital Signature Certificate
A digital signature certificate is an issued electronic key that validates and
identifies the holder of this certificate. One of the approved agencies
registered with the ministry can issue this certificate. An application form,
identity proof, and permanent address proof must be submitted by the
company directors when applying for a Digital Signature Certificate.
4. Obtaining an Incorporation Certificate
An incorporation certificate is provided by the Ministry of Corporate Affairs
and is used as proof for the constitution of the company. To apply, the
following forms must be digitally filed on the official Ministry of Company
Affairs website – e-form 32, e-form 1 and e-form 18.
Along with Form 1, the Registrar of Companies must be provided with one
copy of each: The Memorandum and Articles of Association (MoA and AoA),
the consent of directors, and a stamped copy establishing the power of
attorney.
The certificate of incorporation will be automatically sent to the e-mail ID as
provided in the information submitted with the forms while incorporating the
company.
5. Creating a Company Seal for official documentation
A company seal is required to be placed on papers for sharing certificates and
other official documents. The total cost of acquiring an official seal is
dependent on the number of words that need to be engraved on it, the number
of seals issued, and the time period for the delivery of the seals. It is to be
noted here that the requirement to maintain a company seal is not mandatory
for private companies.
6. Stamping of all Company Documents
The application to have the company’s incorporation documents stamped
must always have the unsigned copies of the Memorandum and Articles of
Association attached alongside the payment receipt for the same. Stamp duty
should be paid online for such documents to the Registrar of Companies.
Following this application, the Superintendent will return the copies - one of
which is stamped, signed and embossed in an official capacity. Finally, the
company promoters must sign the MoA and AoA, with all required information
being filled in their own handwriting.
7. Acquiring a Permanent Account Number (PAN)
Filing of Form 49A is required for the application of PAN. Once a unique PAN
is acquired, a physical version of the PAN card will be delivered to your
registered address by official post. The PAN application may also be done
online, but the required documents will still need to be physically sent for final
verification.
8. Acquiring a Tax Account Number (TAN)
As per the Government of India, a Tax Deduction Account Number or Tax
Collection Account Number (TAN) is a special number issued by the Income-
tax department to all entities who are required to either deduct or collect tax
at the source.
To obtain this number, the form 49B must be filled out and submitted at a TIN
Facilitation Center. Once the application has been verified, it is forwarded to
the Income Tax Department and the TAN is issued. The application for a TAN
can be done either offline or through the NSDL website.
9. Obtaining a certificate from the State/Municipal Inspector under the Shops
and Establishment Act
A statement that includes the employer/manager’s names, company’s
designated name and permanent postal address and business category must
be provided to the State Shop and Establishment Inspector along with the
payment of applicable fees. This is a vital step in trade license registration as
all companies must be registered within one month (30 days) of the opening
of their business.
10. Applying for GST Registration
GST registration is mandatory for any entity seeking to undertake the supply
of goods and services across states while maintaining an annual aggregate
turnover of more than INR 40 lakhs/20 Lakhs. This should be prioritized
before any other process for new company registration. For further
information on GST Registration and documents required for the application,
you may visit the following link.
GST registration is mandatory if you are a seller or are planning to be a seller
on Amazon.in (exception: if deals only with GST-exempt categories).
11. Obtaining a Profession Tax Certificate from the State Profession Tax Office
Every employer (who is not a government officer) is liable to taxation and
must obtain a certificate of registration from the relevant authority. A
company is required to file Form 1 to the State Profession Tax Office to apply
for the Profession Tax Certificate, if applicable.
12. Completing a National Employees’ Provident Fund Registration
Every employer is required to provide their worker information to the local
Employee Provident Fund Organization (EPFO). This must be done in the
prescribed manner so that an Establishment Code Number (ECN) can be
allotted to the company. This process is within the sole purview of the
employer, and no separate applications need to be made by the employees.
Note that this will only be required if the provisions of the Employees'
Provident Fund and Miscellaneous Provisions Act, 1952 are applicable on the
company.
