Business plan to open a Handicraft work

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it's about handicraft work , how to open handicraft work



It has been a good learning experience to do the detailed project report on setting up of the Handicraft industry in the RIICO industrial area, Jhunjhunu as a part of my MBA program. The study has been made an attempt to gain better understanding about how actually the manufacturing plant is set up. Under this, at first I generated the product idea of handicraft, matching with my profile. The main objective of the project is to the study the feasibility analysis of the handicraft manufacturing plant. After the idea generation, the industry analysis at both the global and domestic level was done to understand the market trends and other factors. Then the market analysis was done through the survey in form of questionnaires and interviews of the manufacturers. After this using the statistical techniques did the demand analysis. With this the demand estimation, the technical analysis was done. After completing the technical analysis, the financial analysis was done to check the financial feasibility of the project. It involved the preparation of cash flow statements, working capital requirement schedules, profitability statements and the balance sheets of 3 years. This provided the data for using the performance indicators and other capital budgeting techniques. Lastly, the risk analysis was done to estimate the risk involved in the project. On the whole it was a wonderful experience & a great learning opportunity. The complete project was an eye opener which added to my theoretical knowledge. There were times when I was disheartened & disappointed, but there were times when things went right & made me feel proud. Success does not come at once; one has to start right from the scratch & struggle his way through all hardships with courage & determination.



The idea of handicraft manufacturing was conceived by looking the aptitude & qualifications of the conceiver (myself).

Qualifications:- MBA in Marketing & HR - BCA Along with the above qualification belongingness to a Business, family will support my project. The idea was generated as my Uncle is a manufacturer and exporter of wooden handicraft. So this project would provide me an in-depth knowledge to set up a handicraft-manufacturing mill in Jhunjhunu. The Indian Handicraft Industry is showing continuous growth rate of 15% every year. The profitability with which the current firms are running nationally as well as internationally is also one of the factors for conceiving the idea of handicraft manufacturing mill. Thus, taking all of the above factors into account the idea of setting up a handicraftmanufacturing mill was established.



Firm:The firm namely Shekhawati Handicrafts, Jhunjhunu will be a sole proprietorship firm and will function from Jhunjhunu under the concerned persons name (myself).

Promoter:Decision for entrepreneurship is promoted by 5 major reasons. These are:

Personal Characteristics

Personal Environment

Personal Goals

Decision to Behave Entrepreneurially Business Environment


Moreover, it is an Idea/Innovation that leads towards Entrepreneurship i.e.; idea comes first and entrepreneurship follows afterwards.



IntroductionHandicrafts are unique expressions and represent a culture, tradition and heritage of a country. The Handicraft Industry is one of the important productive sectors. Various attempts have been made to define this broad and diversified industry. The following definition strives to cover diversity and complexity of Handicraft Industry. Defining Handicrafts: Definition According to United Nations Educational, Scientific and Cultural






Symposium on Crafts and the International Market: Trade and Customs Codification, Manila, Philippines, October 1997: Handicrafts can be defined as products which are produced either completely by hand or with the help of tools. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Handicrafts are made from raw materials and can be produced in unlimited numbers. Such products can be utilitarian, aesthetic, artistic, creative, culturally attached, decorative, functional, traditional, religiously and socially symbolic and significant. Definition according to Govt. of India: Handicraft can be defined, which is made by hand; should have some artistic value; they may or may not have functional utility.

Importance of Handicrafts:

The Cultural Importance: Handicrafts play very important role in representing the culture and traditions of any country or region. Handicrafts are a substantial medium to preserve of rich traditional art, heritage and culture, traditional skills and talents which are associated with peoples lifestyle and history.

The Economic Importance: Handicrafts are hugely important in terms of economic development. They provide ample opportunities for employment even with low capital investments and become a prominent medium for foreign earnings. 4


Industry Analysis

India is a country of rich culture, history and traditions. India is one of the major producer and supplier of Handicrafts products in the world. India has been major producer and supplier of handicrafts products since very long time. Before the industrial development, this art and industry was a potential economic advantage for the country. During recent years, the importance of handicrafts has been surged due to their cultural and financial values. The small-scale industries including handicrafts can play a major role in the development of the economy of both developed and the developing countries equally. The 90-95% of the total industrial products of the world is produced in small workshops run by less than 100 people. For instance, Japan, which is at the peak of the economic development, has considered 84% of its industries as small and medium scale industries. In countries such as India and China, handicrafts are as high as the mechanized products in quality and volume, and are a major source of their foreign earnings. These countries are focusing on the development of handicraft industry, in order to strengthen the economy. The Indian handicrafts industry is highly labour intensive, cottage based and decentralized industry. The industry is spread all over the country mainly in rural and urban areas. Most of the manufacturing units are located in rural and small towns, and there is huge market potential in all Indian cities and abroad. Handicraft industry is a major source of income for rural communities employing over six million artisans including a large number of women and people belonging to the weaker sections of the society. The Handicraft sector is highly creative sector and produces large variety of crafts products. This industry is localized segment of the domestic and international market. In India the production of craft products are done on both large and small scale. Because of low capital investment people can start their business on small scale. Through this flexibility the demand and supply can be managed Hough Indian Handicraft industry is considered a cottage industry, but it has evolved as one of the major revenue generator over the years. There has been consistent growth of 15% over few years and the industry has evolved as one of the major contributor for export and foreign revenue generation.


There is huge demand for the Indian Handicraft products in both national and international market. To match the demand and supply with quality, there is need to have greater technological support and innovativeness with the uniqueness in industry.

Key Facts of Indian Handicrafts Industry

Indias rich cultural diversity and heritage provides a unique and huge resource for developing craft products.

The Indian Handicraft Industry is showing continuous growth rate of 15% every year. Handicrafts industry is one of the important segments of decentralized sector in India. Major parts of industry operates in rural and semi urban areas throughout the country and has potential Indian and International market with around 67000 exporters to tap the market.

According to the national census of handicrafts, undertaken by the National Council for Applied Economic Research the value of handicrafts produced last year were of Rs 26, 213 Crores.

This Industry provides huge employment opportunities to artisans that include women and people belonging to backward and weaker society. This is one of the major sources of income there.

Indias contribution in world market is 1.2% The total exports of crafts items: - Rs. 134129.2 millions. Industrys share in India's exports:- 1.51 % In spite of having diversified products, some part of Indian market are still untapped and market is price sensitive.

Products are high priced in big and metro cities, which are beyond, reach of people belonging middle and lower middle class.

Craft producers have to compete on price, quality and delivery for different segments. There is poor promotion for craft products in national market. There is lack of awareness about new traditions and among craftsmen and there is need of technological support and training. 7

Classification:Handicrafts industry comprises diversified products portfolio and there is large variety available in market. Handicrafts products can be distinguished into following: Metal ware, Wood ware, Hand printed textiles, Embroidered and crocheted goods, Shawls, Carpets, Bamboo products, Zari goods, Imitation jewellery, Paintings, Earthenware, Jute products, Marble Sculpture, Bronze Sculpture, Leather Products and other (are u going to produce all these ) miscellaneous handicrafts.

SWOT Analysis Strengths:

Large, diversified and potential market. There is large product variety and range is available because of diversified culture. It has strong, diversified and supportive retail infrastructure. Diversified product range that service different market. Cheap labour rates that result to competitive price. Need low capital investment. There is flexible production flexibility. Low barriers of new entry. Easy creation and development of production centres. There is no need for macro-investment. Industry provides potential sources of employment. Products are high value added, and handicrafts have various applications. It is the potential source of foreign revenue because of higher export.


Lack of infrastructure and communication facilities. Unawareness about international requirements and market. Lack of co-ordination between government bodies and private players. Inadequate information of new technology. Inadequate information of current market trends. Less interest of young people in craft industry. Lack of skilled labour. Still confined to rural areas and small cities and untapped market.


Lack of promotion of products.


Rising demand for handicraft products in developed countries such as USA, Canada, Britain, France, Germany, Italy etc. Developing fashion industry requires handicrafts products. Development of sectors like Retail, Real Estate that offers great requirements of handicrafts products. Development of domestic and international tourism sector. E-Commerce and Internet are emerged as promissory distribution channels to market and sell the craft products.


Competition in domestic market. Quality products produced by competing countries like China, South Africa. Better Trade terms offered by competing countries. Increased and better technological support and R and D facility in competing countries.

Limitations of Handicraft Industry

Inspite of having diversified products, some part of Indian market is still untapped and market is price sensitive. Products are high priced in big and metro cities, which are beyond the reach of people belonging middle and lower middle class. Craft producers have to compete on price, quality and delivery for different segments. There is poor promotion for craft products in national market. There is lack of awareness about new traditions and among craftsmen. It is difficult to balance the cultural and commercial value of handicraft products. Inadequate supply chain management and distribution reduces the sectors commercial viability and economic sustainability. Lack of Technological support and training. Lack of Research and development for key handicraft sectors like, ceramics, paper making etc. There is shortage of skilled craftsmen and labour to match the competition. 9

Lack of ability to produce in large scale and create economies of scale. Inadequate material testing and performance measurement. Inappropriate energy supplies to rural and sub-urban areas. Untapped and inaccessible market due to poor transportation infrastructure. There are inadequate training centres to develop skilled craftsmen.

Possible Initiatives should be taken to overcome the limitations of industry

The primary objective is to create an environment that helps the industry to compete on the global basis. To build the environment that will focus on: Wealth Creation, Infrastructure Development, Training, Technological Development, and Poverty Alleviation etc. to enhance the sector performance.

Awareness should be increased among craftsmen and customers through Trade Events, Seminars, Craft Forums and advertisements. More training centres should be opened to provide proper training to craft persons. There should be more trade shows to facilitate craft producers to access the market. Transportation infrastructure should be improved to access the untapped market that would be beneficial to reduce the transportation cost. Promotion of cultural tradition and heritage. Promotion of Indian Tourism to attract the foreign customers. Developing technologies to recycle natural resources to produce new products and ensure waste minimization, product durability and reliability. Promoting Partnership and collaboration with private sector. There should be market platform for craft producers belonging to rural areas to market their products. Development of electronic platform by using internet to provide information, database, and marketing and distribution solution. Increased Private participation in industry. There should be optimized distribution network and supply chain management. Through improving labour productivity in a high labour intensive and price competitive market. There should be proper balance between cultural and commercial value of craft products to sustain business opportunities. 10

Through using low cost production methods the sustainability of small business can be improved.

Value Addition ModelThe performance of Handicraft Industry can be improved and the greater value...