Engineering Management Full Knowledge Notes PDF

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Full Engineering Management Knowledge Notes Summarised.

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Kieran Gomes 2016 Engineering Management Notes.

Unit 6-8: Entrepreneurship Section 1 Entrepreneur, which means – to undertake. Oxford Dictionary – A person who sets up a business, taking on financial risk in the hope of profit. Richard Cantillion – an entrepreneur is someone who takes the risk of running an enterprise by paying a certain price for securing and using resources to make a product and reselling the product for an uncertain price. Joseph Schumpeter - an innovator playing the role of a dynamic businessman adding material growth to economic development Timmons - Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled Characteristics      

commitment and determination leadership opportunity obsession tolerance of risk, ambiguity and uncertainty creativity, self-reliance and ability to adapt motivation to excel

Bianchi  being an offspring of self-employed parents  being fired from more than one job  being an immigrant or a child of immigrants  previous employment in a firm with more than 100 people  being the oldest child in the family; and  being a college graduate. Types of Entrepreneurs Based on Timing of Venture Creation:   

Early starters Experienced Mature

Based on Socio-cultural Variables:  1st generation entrepreneurs  From Business families  Minority entrepreneurs  Women Entrepreneurs

Kieran Gomes 2016 Engineering Management Notes.

Section 2 Business ideas Warren Buffet says, DzTodayǯs successful companies live and die according to the quality of their ideasdz. Peter Drucker, DzInnovation is the specific instrument of entrepreneurs, the means by which they exploit change as an opportunity for a different business Unique Selling Point (USP) What do you offer that no one else offers? What do you do that is better? WHY YOU? Higher quality / lower price, more for less, Same for less, Less for more, Some interesting USPs Breast milk ice cream Civet Coffee The Mac effect Planning SMART Targets o Specific o Measureable o Attainable o Realistic o Timed SWOT Analysis    

Strength Weakness Opportunity Threat

Value Chain RAW MATERIAL -> MANUFACTURE -> CONSUMER

^ RECYLING

Kieran Gomes 2016 Engineering Management Notes.

Porters five forces | Threat of new entrants > Bargaining power of suppliers ^ Threat of substitutes < Bargaining power of customers @ Competitive rivalry within the industry Elevator pitch Imagine you have 1 minute in an elevator with a VIP. What would you say? Your Elevator pitch is a clear concise statement of what your company is going to do, how it is going to do it and who is going to do it. Business model       

Crucially important is this will relate to CASH FLOW. Strategy Business plan B2B (Business to Business) B2C (Business to Consumer) C2C (Consumer to Consumer) Service (no tangible product to sell)

Exit strategy – Success  How are you going to wind up the business?  What is your exit strategy? Why think about this now?  What does Success look like? The image of success will dictate direction of the business idea.  Your exit strategy will affect many of your decisions.  Company Name. Charlie D Ltd. Charlie’s tutoring. Exit strategy – Failure  What is your exit strategy? Sounds bizarre to be thinking about this at the early stages. Stop loss. What are you prepared to lose.  What does Failure look like? Really important to know when to get out. Really hard to get out.  Your exit strategy will affect many of your decisions. Could save your house. Just one more investment.

Kieran Gomes 2016 Engineering Management Notes. Section 3 Building a TEAM Role and responsibilities CEO – Chief Executive Officer COO – Chief Operations Officer CFO – Chief Finance officer CSO – Chief Scientific officer Chairman of the board Managing Director Director Share holders HR Marketing Sales Finance Reception Cleaning Section 4 Company set-up Types of legal Entity     

Personal Sole trader Ltd. company Partnership LLP (Limited Liability Partnership) PLC (Public Limited Company

1. Personal    

All of you have this status You work for a company Earn money usually through PAYE Some will file tax returns Self Assessment May own and rent a house Have more than one job Any other income Claim Tax Relief outside of your Tax Code

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Key Attributes Pay tax on income Have personal liability

2. Personal Tax

Kieran Gomes 2016 Engineering Management Notes.

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Avoidance. Taking steps to legally reduce your tax bill. Tax avoidance schemes. Evasion. Illegal measures of lowering your tax bill. Very topical atm. Tax credits. Cycle to work scheme. Additional Pension Contributions. Company reroute of income. Off shore accounts

3. Sole Trader 

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You work for yourself. - You are the company - Can take on staff File tax returns Self-Assessment - Market stall holders - Mini businesses - Ebay shops - Consultants Key Attributes - Must register with HMRC within 2 years of starting trading - Pay tax on Profit - Pay national insurance - Registering for VAT £81K turnover - Have personal liability for the business - Have a business name.

4. Limited Company Ltd. 

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You work for the company.  - Company is a separate entity to you. - Separate funds, bank accounts, loans etc. - Limited by shares. I suggest 100 so 1% each - Shares are tradable but not publicly Register with Companies house - Annual return - Company accounts Register with HMRC - Tax returns - VAT registration Key Attributes - Company is an entity in its own right

Kieran Gomes 2016 Engineering Management Notes. -

Limitations of liability Though directors are still accountable Pay staff through PAYE Registering for VAT £81K Have a business name Government incentives

5. Limited Liability Partnership, LLP  Basically combinations of the Ltd. rules and the Sole trader rules for 2 or more people working together.  Very popular in legal and accounting firms.  You work for the Partnership. - Partnership is a separate entity to you. - Separate funds, bank accounts, loans etc. - Limited by shares.  Register with Companies house. - Annual return. - Accounts.  Register with HMRC. - Tax returns. - VAT registration. Key Attributes. - Company is an entity in its own right. - Limitations of liability. - Though directors are still accountable. - Pay staff through PAYE. - Registering for VAT £81K. - Have a business name. 6. Public Limited Company (PLC)  A public company is intended as a vehicle not only for a business but also for public investment in that business.  You work for the company. - Company is a separate entity to you. - Separate funds, bank accounts, loans etc. - Limited by shares. - Shares are publicly tradable on stock markets. - More complicated compliance arrangements to protect the public shareholders.  Register with Companies house. - Annual return. - Company accounts. 

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Register with HMRC. - Tax returns. - VAT registration.

Kieran Gomes 2016 Engineering Management Notes. 

Key Attributes. - As with Ltd. - Directors have serious obligations to the Shareholder. - Information dissemination is vital to the stock price.

Section 5: Entrepreneurial finance Important Items of Finance - Balance Sheet - Profit & Loss - Assets - Cash Flow - Working capital - Risk and Reward 1. Balance sheet  Total value : Is the understood value of the company and its assets  Top line Money in  Bottom line Money out  Accountants wet dream Negative bottom line 2. Profit and loss  Turnover Sum of all the money coming into the company  Cost of sales Costs associated with all the sales / services  Administrative costs Costs of running the business  Profit What is left over turnover – all costs  Loss A negative profit 3. Assets  Fixed (Tangible assets) Actual things that you have procured. All have a value attached. Value depreciates over time. Often 50% per year.  Intangible Assets Reputation. Client base. Can have value or indeed negative value 4. Cash flow  Cash is KING  Many profitable companies go under as a result of poor cash management  Fixed and Variable costs

Kieran Gomes 2016 Engineering Management Notes.   

Fixed costs Independent of sales numbers Variable costs Dependent on sales numbers Balance between these decide on your business model and finance options available

5. Risk and Reward  When you look at it, it is far harder to calculate than it first appears  Risk and Reward concepts apply to everything you do in life and to a certain extent every decision you have ever made - Crossing the road - Driving your car fast - Going out to the pub - Canoeing down white water rivers - Loaning your mate money - Betting on the stock markets  Risk v Reward graph Engineering risks   

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Perceived risk. The risk attributed to an activity. Actual risk. Quantified risk for a specific task Chemical COSHH Explosive / fire Physical Heavy weights Machinery Risks to staff, students members of the public

Managing the risk       

Written risk assessment State the risk State the likely hood State the mitigating factors There are many templates for this and none of them are good for everything Legal documents as they show that you have thought about the risks Must not be changed after the fact

Section 6: Entrepreneurial funding Sources of Debt  Personal bankrolling  Directors loan

Kieran Gomes 2016 Engineering Management Notes.            

Shareholders loan Family and friends Formal and informal Banks Equity Government grants Charity grants Stock market floatation Venture Capital Angel investing Peer to Peer Lending Kick-starter

Securing debt  Drawing up the business plan  Identifying sources of debt finance  Presenting the proposal  If the manager is considering your proposal favourably, you will have to go for further talks  Once the two parties have broadly agreed, details have to be worked out  Can be costly Principles of good lending  Purpose  Safety  Profitability  Other considerations Security  Collateral, inside and outside  Personal guarantee  Maturity  Covenants (Agreement through paper work)  Track Record Equity of finance  

Advantages: Initially cheap money. Forms ties to the company. Growth related reward. No interest to contend with Disadvantages: Dilution of shareholding. Increased 3rd party governance. Increased external controls. Increased commitment to stated strategy

Peer to Peer Lending     

P2P Collection of many small investors grouping together to fund a company Easy source of funding for companies Can pay good interest rates Need to be short term projects

Kieran Gomes 2016 Engineering Management Notes.  

Community based Not only money is traded

Venture Capital Venture capital is characterised by  Financing of new and potentially high growth companies  Investments primarily in the form of equity participation  Assistance in the early days of enterprise  Willingness to take on higher risks  Expectation of higher rewards Section 7: A business plan Uses of a business plan:  Equity funding  Bank finance  Alliances  Recruitment  Clarify the business  Others  GENERAL UNDERSTANDING Always refer to three projections  Optimistic  Realistic   Pessimistic 9 Key sections of a business plan 1. Executive summary 2. The company 3. The management team 4. The industry and the market 5. Operations 6. Sales and Marketing 7. Financial plan 8. Risks and contingencies 9. Appendices

1. Executive summary The executive summary is the most important section of the business plan. It is basically the whole business plan condensed into a few paragraphs. The main objective of the executive summary is to entice the reader to go through the entire plan in detail. 2. The company

Kieran Gomes 2016 Engineering Management Notes.

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Company details History Current status Future Concept of what you do, investors like a story/journey to have got where you are now.

3. The management team      

Justify the team and the roles. Many entrepreneurs try and do the wrong roles within the management structure Technical and professional qualifications Quality of work experience Evidence of moral integrity Experience and reputation Financial capacity and networking

4. The industry and the Market    

An industry is a collection of sellers A market is a collection of buyers Competition, good or bad? Industry and Competitors

5. Operations       

How will you do things? Gantt chart Technology Raw Material strategy Value chain analysis Production Planning Quality and HR policy

6. Sales and Marketing  Target segments  Branding and promotion  Product and distribution  Packaging and Prices 7. Financial Plan  Funds sought  Project financial statements  Costing details  Break even and payback analysis  Cash flow  Break Even  Return on capita

Kieran Gomes 2016 Engineering Management Notes. 8. Risks and contingencies  Identify major threats and risks as the always exists. Not necessarily a bad thing but as opportunities  Outline strategies for countering them, quantifying their impact 9. Appendices  Copy of documents pertaining to incorporation or formalization of partnership  CV’s of the entrepreneurs and key employees  Copies of various permits and permission granted  Copies of paper pertaining to sale or lease of land for the business  Photographs of location  Layout of factory  Product prototype evidence  Storyboards of advertisement  Projected balance sheet  Projected cash flow statements...