ENTREPRENEURSHIP DEVELOPMENT

& BUSINESS PLAN

MSME-TECHNOLOGY DEVELOPMENT CENTRE

(CENTRAL FOOTWEAR TRAINING INSTITUTE, AGRA)

Introduction
An entrepreneur is one of the important segments of economic growth. He plays a vital role in the
economic development of a country. Economic development of a country depends primarily on its
entrepreneurs. Basically, an entrepreneur is a person who is responsible for setting up a business or an
enterprise. In fact, he is one who has the initiative skill for innovation and who looks for high
achievements. He is a catalytic agent of change and works for the good of people. He looks for
opportunities, identifies, opportunities and seizes opportunities mainly for economic gains.
Entrepreneurs are action oriented, highly motivated individuals who take risks to achieve goals.

Entrepreneurship involves mobilizing the resources and combining them to initiate change in
production. It is the purposeful activity of an individual or a group of individuals undertaken to
initiate, maintain or increase profit by production or distribution of economic goods and services.
It is very often associated with adventurism, risk bearing, innovating new idea in production,
new usage for men, money and materials, etc. It is the mental attitude of the entrepreneur to take
the calculated risks with a view to attain certain specific objectives.
Evolution of the concept of Entrepreneur

The world entrepreneur has been taken from the French language where it cradled and
originally meant to designate an organizer of musical or other entertainments. Oxford English
Dictionary (in 1897) also defined an entrepreneur in similar way as the director or a manager of a
public musical institution one who gets-up entertainment, especially musical performance. In the
early 16 century it was applied to persons engaged in military expeditions. It was extended to
cover constructions and other civil engineering activities in the 17 century. It was only in the 18

century that the word was used to refer to economic activities. Since then, the term entrepreneur
is used in various ways and various views. These views are broadly classified into three groups, viz.,
risk-bearer, organizer and innovator.

Meaning and Definitions

The English term Entrepreneur has been derived from the French Verb enterprendre which
means to undertake. Entrepreneurship is an elusive concept which is difficult to define. Today, the
term entrepreneurship has several meanings which include adventurism, risk taking, thrill seeking and
innovation. Entrepreneurs play a significant role in the economic development of a country. Therefore,
entrepreneurship development has now become vital and essential to the economic stability of the
developing countries like India, where the problem of unemployment of the educated youths has
been pausing a very severe and complex situation. An entrepreneur is a person who is able to
express and execute the urge, skill, motivation and innovative ability to establish a business or industry
of his own, either alone or in collaboration with his friends.
Definition of entrepreneur

Entrepreneur in English is a term applied to a person who is willing to help launch a new venture or
enterprise and accept full responsibility for the outcome.
Jean-Baptiste Say, a French economist, is believed to have coined the word "entrepreneur" in the 19th
century - he defined an entrepreneur as "one who undertakes an enterprise, especially a contractor,
acting as intermediately between capital and lab our.
Entrepreneur may be defined as an individual or a group of individuals who tries to create something
new, who organizes production and undertakes risk involved in the establishment and operation of a
business enterprise. The term entrepreneur is not confined to those who start a new business and
extends to those who seek out new opportunities and then combine the factors of production to
exploit the perceived opportunities.
Thus, an entrepreneur is an economic leader who possesses the ability to recognize opportunities

for the successful introduction of a new product, new source of supply, new technique of
production, etc. and who assembles the necessary resources and organizes them into a going concern.
Definitions of Entrepreneurship
The term entrepreneurship is used in various ways with different meanings. Let us examine a few
definitions put forward by some scholars who have conducted elaborate studies and authoritarian
discussions on entrepreneurship. These definitions shall enable us to have an idea about the
multifarious meanings of the term.
Higgins, in his book, The Economic Development has said, Entrepreneur- ship is meant the
function of seeking investment and production opportunity,organising an enterprise to undertake a
new production process, raising capital, hiring lab our, arranging the supply of new materials, finding
site, introducing new technique and commodities, discovering new sources of raw materials and
selecting top managers of day to day operations of the enterprise.
Inference:
In this definition entrepreneurship is picturised as a function in which an economic activity is
dealt with, risk is undertaken willingly, something is created a new, and resources are organized and coordinate.
Jaffery A. Timmons has defined entrepreneurship as the ability to create and build something
from practically nothing. Fundamentally, a human creative activity, it is finding personal energy
by initiating, building and achieving an enterprise or organization rather than by just watching,
analyzing or describing one. It requires the ability to take calculated risk and to reduce the chance of
failure. It is the ability to build a founding team to complement to entrepreneurs skills and talents. It is
the knack for sensing an opportunity where others see chaos, contradictions and confusion. It is the
know-how to find, marshal and control resources and to make sure the venture does not run out of
money when it is needed most.
Entrepreneurship is the practical ability to create and build up something a new from nothingness.
Fundamentally it is an act of human creativity. It is a process of finding out personal an individual

energy to initiate and build up an enterprise or organization and thereby to realize a much longed
for objective. Merely, observing, analyzing or interpreting a process is not entrepreneurship. It requires
essentially the ability to face risk and to minimize its impact. Entrepreneurship can also be regarded
as the ability to organize a team which is capable to materialize the skills and the innovative
urge of the entrepreneur.
Entrepreneurship is also the dexterity smell out opportunity in situations where others find confusions
and contradictions. It can also be described as the know- how to seek out rare resources, to utilize
them intelligently and to make arrangements to save the enterprise from breakdown due to the
scarcity of finance. From the definitions referred to above, we can arrive at the conclusion that
entrepreneurship is a creative response to environment and a skill to identify an economic opportunity
and to exploit that opportunity in a most beneficial manner.

Entrepreneur Vs Entrepreneurship

Entrepreneur refers to: Entrepreneurship refers to:

Visualiser

Vision

Organizer

Organization

Initiator

Initiative

Innovator

Innovation

Imitator

Imitation

Motivator

Motivation

Planner

Planning

Decision-maker

Decision-making

Risk-bearer

Risk-bearing

The Essential Characteristics of Entrepreneurship

Being a concept having diversified dimensions, entrepreneurship must have some essential
characteristics which are summarized here under:
1.Innovation
Entrepreneurship is creative also in the sense that it involves innovation- introduction of new products,
discovery of new markets and sources of supply of inputs, technological breakthroughs as well as
introduction of newer organizational forms for doing things better, cheaper, faster and, in the present
context, in a manner that causes the least harm to the ecology/environment. An entrepreneur attempts to
perform his activities in a new better way.
2. Strong desire to reap benefits.
Two desires act as the motivational forces behind the economic behavior are known as
entrepreneurship. They are
(i) The desire to earn profits, and
(ii) The desire for glory.
These two motivational forces depend greatly on the mental attitude of the entrepreneur. On the basis of
these motivational forces entrepreneurs can be classified into two categories; viz. entrepreneurs who
strive for earning private profits and entrepreneurs who desire to earn a respectable position in the
society. Psychologists view that the second type of entrepreneurs hold a more dignified position
with society than the entrepreneurs who belong to the first category.
3. Organisation of Production: Production, implying creation of form, place, time personal utility,
requires the combined utilization of diverse factors of production, land, labour, capital and technology.
Entrepreneur, in response to a perceived business opportunity mobilizes these resources into a
productive enterprise or firm. It may be pointed out that the entrepreneur may not be possessing any of
these resources; he may just have the idea that he promotes among the resource providers. In an
economy with a well-developed financial system, he has to convince just the funding institutions and
with the capital so arranged he may enter into contracts of supply of equipment, materials, utilities (such
as water and electricity) and technology. What lies at the core of organization of production is the
Knowledge about availability and location of the resources as well as the optimum way to combine

them. An entrepreneur needs negotiation skills to raise these in the best interests of the enterprise.
Organisation of production also involves product development and development of the market for the
product. Besides, entrepreneur may be required to develop even the sources of supply of requisite
inputs. For example, whether it is a matter of putting together an automobile manufacturing unit or
manufacture of burger/pizza, besides cultivating a market and developing products to suit its tastes and
preferences there would be a need to develop a pool of suppliers of the diverse components or elements
that go into their manufacture.

4. Management Skill and Leadership Quality

B. F. Hoselitz, in his book, entitled Sociological aspects of Economic Growth, opines that
management

skill

and

leadership

quality

are

the

two essential qualities that a successful

entrepreneur should possess. According to him Financial Skill has only a secondary importance. An
entrepreneur must be an efficient manager and an able leader at the same time. An entrepreneur
shall be able to delegate responsibilities to his subordinates in such a way as to materialize the proposed
objectives of his concern and to motivate them by his leadership so as to achieve the desired goal.

5. Individual, Psychological and Social Characteristics

In developing and under-developed societies an entrepreneur is often viewed with suspicion. The
portrait of an entrepreneur becomes defective in a society that views him as an individual who
exploits

the

society

for

his personal gains.

This negative outlook is an impediment to

entrepreneurship and economic development through entrepreneurial development. An entrepreneur

must be able to bring about favorable variations in the inverse out look of the society by strength of
character, creating an image of a person who attributes more importance to social benefits than to
personal gains and also by putting on the outfit of a social benefactor. He can easily do so by
developing an attractive personality.
The psychological and sociological characteristics of entrepreneurship are almost equal. The
psychological need to reap benefits is inborn. Although this aim is purely individualistic, when it gians
the halo of social good, entre-preneurship becomes a success. Entrepreneurship becomes meaningful

when the common goal of social goods gets mixed up with the urge for profit earning. The status of
entrepreneurship is increased when its individualistic, psychological and sociological characteristics
becomes mutually complementary.
6. Economic activity
Entrepreneurship is primarily an economic function because it involves the creation and operation
of an enterprise. It is basically concerned with the production and distribution of goods and services.

7. Gap-filling Function
The gap between human needs and the available products and services gives rise to entrepreneurship. An
entrepreneur identifies this gap and takes necessary steps to fill the gap. He introduces new products and
services, new methods of production and distribution, new sources of inputs and new markets (both
domestic and international) for this purpose.
8. Risk-bearing
Risk in an inherent and inseparable element of entrepreneurship. An entrepreneur guarantees rent to the
landlord , wages to employees ,and interest to investors in the hope of earning profit. He assumes the
uncertainty of future. In the pursuit of profits there is every possibility of loss.
9. Dynamic Process
Entrepreneurship is a dynamic process. Entrepreneurs thrive on change in the environment which bring
useful opportunities for business. Flexibility is the hall mark of a successful entrepreneur.Thus,
entrepreneurship is a multi-dimensional concept. It is both an art as well as a science. An entrepreneur
should have good intelligence, clear-cut objectives, capacity to guard business secrets, capacity to
interact with people, technical knowledge, self-confidence, etc. for reaping a good harvest in the field of
business.

Common Entrepreneurial Traits (Qualities of a successful Entrepreneur)

Entrepreneur is an organizer who combines the various factors of production and produces a socially
valuable products and sells them in the market. He should be a pioneer, a captain of the industry. The
modern entrepreneur is one who detects and evaluates a new situation in his environment and directs the
making of such adjustments in the economic systems as he deems necessary. A successful entrepreneur
must possess the following traits:
1. Mental Ability: He should have good intelligence and ability to analyze business situations.
2. Clear-cut objectives: An entrepreneur should have clear cut objectives about the nature of business,
type of products, markets, profit etc.
3. Capacity to Guard Business Secrets: Secrecy is one of the important aspects of a successful
business.

good

entrepreneur

should

have

the

capacity

to

guard

business

secrets.

4. Capacity to interact with people: One of the most important characteristics of an entrepreneur is his
capacity to interact with people. He should have sufficient maturity and to be tactful in dealing with,
suppliers, customers and those who deal with his business.
5. Effective communication: A good entrepreneur should be able to communicate his ideas, message
and information effectively to others.
6.

Technical knowledge: In modern times, the system production, marketing, management of

personnel, finance etc. are all very complex. To cope with these, an entrepreneur should have sufficient
technical

knowledge.

7. Self-confidence: Only one with self confidence and who is courageous enough to take risk can
succeed as an entrepreneur.
8. Motivator: As leader of business unit, he should be able to motivate the members to achieve the
business goals.
9. Decision-maker: An entrepreneur should have the capacity to analyze the various aspects of the
business and arriving at a decision.

10. Risk bearing: The entrepreneur will succeed only when he has the courage to take calculated risks.
11. Watching for opportunities: He, like a watch dog, looks for favorable business opportunity and
takes necessary action accordingly.
12. Persistence: Follows the saying try and try again, you will succeed at last. He is always tenacious
to make extreme efforts to get rid of the obstacles coming in the way of reaching the ultimate goal.
13. Quality conscious: He has always; put effort to excel better than the existing standards of
performance.
14. Efficient monitoring: Personality supervises the work to ensure that the work is accomplished
according to the standards set forth.
15. Concern for employees: He has to keep concern and take proper action to improve the welfare of
the employees working in his enterprise.
Types of entrepreneur
Social entrepreneur
A social

entrepreneur is

motivated

by

desire

to

help,

improve

and

transform social, environmental, educational and economic conditions.Key traits and characteristics of
highly effective social entrepreneurs include ambition and a lack of acceptance of the status quo or
accepting the world "as it is". The social entrepreneur is driven by an emotional desire to address some
of the big social and economic conditions in the world, for example, poverty and educational
deprivation,

rather

than

by

the

desire

for profit.

Social

entrepreneurs

seek

to

develop innovative solutions to global problems that can be copied by others to enact change. Social
entrepreneurs act within a market aiming to create social value through the improvement of goods and
services offered to the community. Their main aim is to help offer a better service improving the
community as a whole and are predominately run as non profit schemes.

Serial entrepreneur

A serial entrepreneur is one who continuously comes up with new ideas and starts new businesses. In
the media, the serial entrepreneur is represented as possessing a higher propensity for risk, innovation
and achievement.

Lifestyle entrepreneur
A lifestyle entrepreneur places passion before profit when launching a business in order to combine
personal interests and talent with the ability to earn a living. Many entrepreneurs may be primarily
motivated by the intention to make their business profitable in order to sell to shareholders. In contrast,
a lifestyle entrepreneur intentionally chooses a business model intended to develop and grow their
business in order to make a long-term, sustainable and viable living working in a field where they have
a particular interest, passion, talent, knowledge or high degree of expertise A lifestyle entrepreneur may
decide to become self-employed in order to achieve greater personal freedom, more family time and
more time working on projects or business goals that inspire them. A lifestyle entrepreneur may
combine a hobby with a profession or they may specifically decide not to expand their business in
order to remain in control of their venture. Common goals held by the lifestyle entrepreneur include
earning a living doing something that they love, earning a living in a way that facilitates selfemployment, achieving a good work/life balance and owning a business without shareholders Many
lifestyle entrepreneurs are very dedicated to their business and may work within the creative
industries or tourism industry, where a passion before profit approach to entrepreneurship often
prevails. While many entrepreneurs may launch their business with a clear exit strategy, a lifestyle
entrepreneur may deliberately and consciously choose to keep their venture fully within their own
control. Lifestyle entrepreneurship is becoming increasing popular as technology provides small
business owners with the digital platforms needed to reach a large global market

lifestyle

entrepreneurs, typically those between 25 and 40 years old, are sometimes referred to as Treps.

Cooperative entrepreneur
A cooperative entrepreneur doesn't just work alone, but rather collaborates with other cooperative
entrepreneurs to develop projects, particularly cooperative projects. Each cooperative entrepreneur
might bring different skill sets to the table, but collectively they share in the risk and success of the
venture.

In the initial stages of economic development the motivation of the entrepreneurs to take imitative was
completely less. As development started gathering momentum the innovative urge and enthusiasm of
entrepreneurs also began to rise up. Business environments began to speed up the emergence of
enterprises. During the study programme about the agricultural sector of America, danhof classified
entrepreneurs as follows.
1. Innovative entrepreneurs- adventurous entrepreneurs who attempt to put attractive
possibilities in to practice are included under this type. They utilize achance introduce a new
technique or a new product. They mobilize sufficient capital to start an enterprise befitting to
this possibility. They also gather various production factors and select appropriate managers
who are capable to run the enterprise forward. The type of entrepreneur defined by Schumpter
can be included in this category. This type of entrepreneurs introduced and new production
techniques and find out new markets for their products.
The lack of this type of this type of entrepreneurs , which is commonly found in developed
countries, is the main reason for the economic backwardness of the developing countries. The
backwardness of the industrial tradition of the developing countries paves way to the scarcity of
innovative entrepreneurs.
2. Initiative Entrepreneurs: - This type of entrepreneurs attempt to imitate innovative
entrepreneurs. They imitate the techniques and the activities of others. The entrepreneurs of the
developing countries belong to this type. The imitating trend of this type of entrepreneurs
becomes suitable to taste and aptitude of the consumers because they (the consumers) prefer
foreign goods.
3. Fabian Entrepreneurs: - Entrepreneurs who attribute prefer to customs ,religions, Traditions
and past habits, come under this category. Being shy and lazy this entrepreneurs are very
cautious to accept changes and they view changes with suspicion. Being reluctant to face risk,
they continuously follow the foot steps of their predecessors.
4. Drone entrepreneurs: - These entrepreneurs are unwillingly to make any change in the
production system, even if the causes losses repeatedly. They do not dare to derive from
traditional lines. They never try to rise in accordance with the opportunities or to accept the
warnings given by time even their products have lost marketability and the activities have been

proved to be uneconomical. And the enterprise has been thrown out of the market, this type of
entrepreneurs does not dare to react.

The following is a list of entrepreneurs who are not included in the definitions formulated by
Danhof:
1. Individual Entrepreneurs and Institutional Entrepreneurs
Majority of entrepreneurs belonging to the small scale industry sector are individual entrepreneurs.
Entrepreneurs of this type are found in plenty in any country. They enjoy the benefits of flexibility, quick
decision-making and the patronage of governments.
Individual enterprises are not able to grow or develop beyond a limit. So, it becomes necessary to
institutionalize enterprises when entrepreneurial skills are to be co-ordained, it becomes necessary for a
team of entrepreneurs to work unitedly and the enterprise gains an institutional nature. The institutional
nature of the enterprise becomes helpful in creating good results in deciding the course of the business, in
expanding the activities and also in increasing the capital amount. Entrepreneurs working in the corporate
business sector are institutional entrepreneurs.
2. Inherited Entrepreneurs
Sometimes people become entrepreneurs when they inherit family business. This type of entrepreneurs is
found in plenty in India. Entrepreneurs of large scale business concerns like Tata, Birla, Dalmia etc.,
belong to this category.
3. Technological Entrepreneurs
Educated young men and youths self-employment began to pour into the
business sector at a time when the problem of unemployment began to poise a severe threat to the
society, and technical and scientific advancements started creating changes in the economic
structure of the nation. These young men are being inspired by the golden opportunities to
commercially exploit scientific inventions.

When the Governments and the financial institutions

came forward to assist these entrepreneurs have started contributing heavily to the growth of national
economy, entrepreneurship has been accepted as one of the main objective of the Government.
4. Instigated Entrepreneurs
Persons who have become entrepreneurs due to the pressure exerted on them by circumstances are
termed as instigated entrepreneurs.

Traditional money lenders are forced to enter into business on

account of the decline of money lending activity, the severity of Government policies and the growth of
banking. The problem of unemployment has also instigated several youths of our country to earn their

livelihood by trying their luck at the business field.In addition to the above types; entrepreneurs are also
classified as entrepreneurs
of the first generation (or new entrepreneurs), rural entrepreneurs, urban entrepreneurs, male
entrepreneurs, women entrepreneurs, small scale entrepreneurs, large scale entrepreneurs etc. In a
country like India where the economic system is planned, the Government itself has emerged as
the main entrepreneur.
Entrepreneurs are also classified on the basis of objectives, viz., (i) managing entrepreneur whose main
objective is safety, (ii) innovative entrepreneurs who are instigated by excitement, and (iii) entrepreneurs
who are fond of controlling power and who consider supremacy as the greatest gift.
Entrepreneur and Enterprises
The enterprise is the basic unit of an economic organization. It produces goods and services worth than
the resources used. Enterprise is an undertaking, especially one which involves activity, courage, energy.
It involves the willingness to assume risks in undertaking an economic activity. It also involves
innovation. It always involves risk-taking and decision-making. Thus, entrepreneur and enterprise are
inter-linked, enterprise being the offshoot of an entrepreneur. Its success is dependent on the
entrepreneur. Entrepreneur is the fourth factor of enterprise.
Four Factors of an Enterprise

Entrepreneur

Labour

Enterprise

Land

Entrepreneur Vs Manager:

Capital

An entrepreneur is different from a manager. The main points of difference between the two are
described below:
Points
1. Motive-

2. Status -

3. Risk-bearing

Entrepreneur
The main motive of an entrepreneur is

Manager
But, the main motive of a manager is to

to start a venture by setting up an

render his services in an enterprise

enterprise. He understands the venture

already set up by someone

for his personal gratification.

else.

An entrepreneur is the owner of the

A manager is the servant in.

enterprise

the enterprise owned by the entrepreneur.

An entrepreneur being the owner of the

A Manager as a servant does

enterprise assumes all risks and

not bear any risk involved in the

uncertainty involved in running the

enterprise.

enterprise.
4. Rewards

The reward an entrepreneur gets for

A manger gets salary as

bearing risks involved in the enterprise

reward for the services rendered by him

is profit which is highly uncertain.

in the enterprise. Salary of a manager is

certain and fixed.

5. Innovation

6. Qualifications-

Entrepreneur himself thinks over what

But, what a manager does is simply to

and how to produce demands of the

execute the plans prepared by the

customers Hence, he acts as an

entrepreneur thus, a manager simply

innovator also called a change-agent

translates the entrepreneurs ideas into

An entrepreneur needs to possess

practice.
On the contrary, a manager needs to

qualities and qualifications like high

possess distinct qualifications in terms of

achievement motive, originality in

sound knowledge in management theory

thinking, foresight, risk bearing ability

and practice.

and so on.

7. Action

Delegates action, Supervising and

Gets hands dirty. May upset employees

reporting take most of energy.

by suddenly doing their work.

After going through the above points of distinctions, it is clear that an entrepreneur differs from a
manger. At times, an entrepreneur can be a manager also, but a manager cannot be an entrepreneur.
After all, an entrepreneur is a owner, but a manager is a servant.

Intrapreneureship
A dictionary meaning to word provides that " A person within a large corporation who takes direct
responsibility fortuning on idea into a profitable finished pdt. Through assertive risk taking and
innovation is an entrepreneurs" It is derived as INTTA ( Corporate ) + (Entre ) PRENEUR ]
The word intrapreneur is recently coined corporate counterpart to long existing term entrepreneur this
coinage is attributed to mgmt consultant Giffored Pinchot author of 1985 book entitled intrapreneuring.
Entrepreneurship is a combination of entrepreneurship and mgmt skills. In simple word
intrapreneurship is a practice of entrepreneurship by employees with in an organization. The trend
today is such that every one who is capable of managing others business is himself indulging in
entrepreneurship. That is resulting in inadequency of mgmt staff. In the emergence of this changing
pattern, the concept of intrepreneurship is oreginated where the intrepreneur (i.e. Manager) is made the
head of a given business unit and asked to manage it for the organization while employing innovative
skills. As an example, when a company seeks for diversification options, they can appoint one of their
manager as an interpreneur to launch the business venture. In short an intrapreneur thinks like an
entrepreneur looking out for opportunities, which profits the organization.
Different between an Entrepreneur and an Intrapreneur

An entrepreneur takes substantial risk in being the owner and operator of business with expectation of
financial profit and other rewards that the business may generate. On the contrary, an intrapreneur is an
individual employed by an organization for remuneration, which is based on financial success of the
unit he is responsible for. Intrapreneur shares the same traits as entrepreneur such as conviction, zeal
and insight. As the Intrepreneur continues to express his ideas vigorously, it will reveal the gap between
the philosophy of the organization and the employee. If the organization supports him in pursuing his
ideas, he succeed. If not, he is likely to leave the organanisation and set up his own business.
Entrepreneur is a key person who envisages new opportunities, new techniques, new lines of potion,
new products and coordinates all others activities for profit motives on the other hand, intrepreneur are
entrepreneur who catch hold of a new idea for product, service or process and work to bring this idea to
fruition with in the framework of the organization. Intrepreneur with their innovation and dedicated
efforts are perceived as valuable asset by the organization, inspiring others.
They serve as champions to others in those organizations.
The entrepreneur is typically a visionary who spots an opportunity in the market place and has the
passion and contract base to set the wheels in motion. The intrapreneur has passion and drive but also
has operational skills of running the "Clockwise" of the business to enable a good idea to be turned into
commercial reality. He is the inside "entrepreneur".
Intrapreneurship Vs Entrepreneurship
1

Entrepreneur can be found anywhere whereas intrapreneurs are found, rather encouraged within
the confines of the organisation.

While entrepreneur face hurdles in the form of ridicule and setback from the society in general;
intrapreneurs have to face rivalry within the organisation they work.

Entrepreneurs find it difficult to arrange resources while these are readily available to
intrapreneurs.

Distinguishing

Manager

Entrepreneur

Intrapreneur

Salary,

Independent chance

Independent chance to be

factor
Primary focus

Promotion,

to

creative. Tomake towards

Traditional

Creative.

organizational and personal

Corporate

Opportunity

success.

rewards

To make more
money.

Skills required

Time focus

Managing

Creativity,

Blend of managerial and

qualities like

Innovative, risk

entrepreneurial skill.

leadership,

taking, Visionary

organizing,

passion dedication

planning etc.

and determination.

Short term to

Survival and

To meet self imposed

meet dead lines

achieving long term

deadlines.

from top mgt

growth.

Activity

Delegated by top

Delegated to oneself extreme

delegation

management

Amount of

Conservative

High

Minimizes mistakes

Deals with mistake

Readily available

Needs to arrange

Moderate

risk bearing
Failure and
Mistakes
Availability
of Resources
Decision

Agrees with top level

Follows a

Get help from other to achieve

management

dream

dreams

Role of an Entrepreneur in Economic Development with special reference to developing economies

like India.

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering
economic growth and development. Entrepreneurship is one of the most important inputs in the
economic development of a country. The entrepreneur acts as a trigger head to give spark to economic
activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of
industrial sector of a country but also in the development of farm and service sector. The major roles
played by an entrepreneur in the economic development of an economy are discussed in a systematic
and orderly manner as follows.

1. Contribution to GDP: Increase in the Gross Domestic Product or GDP is the most common
definition of economic development. You are aware that income is generated in the process of
production. So, entrepreneurs generate income via organisation of production be it agriculture,
manufacturing or services.You are also aware that income generated is distributed among the factors of
production where land gets rent, labour gets wages and salaries,capital gets interest and the residual
income accrues to the entrepreneur in the form of profits. As rent and interest accrue to those few who
have land and capital respectively whereas larger masses are destined to earn their incomes via wage
employment, the biggest contribution of the entrepreneurship lies in capital formation and generation of
employment. This is what we turn our attention to.
2. Capital Formation: The entrepreneurial decision, in effect, is an investment decision that augments
the productive capacity of the economy and hence results in capital formation.
In fact, GDP and capital formation are related to each other via Capital Output Ratio (COR); more
precisely Incremental Capital Output Ratio (ICOR) that measures the percentage increase in capital
formation required obtaining a percentage increase in GDP. So, if a country desires to grow @ 10.0 %
p.a.and its ICOR is 2.6, then it must ensure capital formation @ 26.0% p.a.Entrepreneurs, by investing

their own savings and informally mobilizing the savings of their friends and relatives contribute to the
process of capital formation. These informal funding supplements the funds made available by the
formal means of raising resources from banks, financial institutions and capital markets.
3. Generation of Employment: Every new business is a source of employment to people with
different abilities, skills and qualifications. As such entrepreneurship does not become a source of
livelihood to those who do have capital to earn interest on nor have the land to earn rent. In fact, what
they earn is not only a livelihood or means of sustenance but also a lifestyle for themselves and their
families as well as personal job satisfaction. As such entrepreneurs touch the lives of many, directly as
well as indirectly.

4. Generation of Business
Opportunities for Others: Every new business creates opportunities for the suppliers of inputs (this is
referred to as backward linkages) and the marketers of the output (what is referred to as forward
linkages). As a pen manufacturer you would create opportunities for refill manufacturers as well as
wholesalers and retailers of stationery products. These immediate linkages induce further linkages. For
example greater opportunities for refill manufacturers would mean expansion of business for ink
manufacturers. In general, there are greater opportunities for transporters, advertisers, and, so on.So,
via a chain-reaction, entrepreneurship provides a spur to the level of economic activity.
5. Improvement in Economic Efficiency: You are aware that efficiency means to have greater output
from the same input. Entrepreneurs improve economic efficiency by
a. Improving processes, reducing wastes, increasing yield, and.
b.Bringing about technical progress that is, by altering labor-capital ratios. You are aware that if labor is
provided with good implements (capital), its productivity increases.
(6) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less developed and
backward areas. The growth of industries and business in these areas lead to a large number of public
benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to
more development of backward regions and thereby promotes balanced regional development.

(7) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial developments
normally lead to concentration of economic power in the hands of a few individuals which results in the
growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be
developed, which will help reduce the concentration of economic power amongst the population.

(7) Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic
development. They produce goods and services in large scale for the purpose earning huge amount of
foreign exchange from export in order to combat the import dues requirement. Hence import substitution
and export promotion ensure economic independence and development.

(9) Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is
established, the process of industrialization is set in motion. This unit will generate demand for various
types of units required by it and there will be so many other units which require the output of this unit.
This leads to overall development of an area due to increase in demand and setting up of more and more
units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an
environment of enthusiasm and conveying an impetus for overall development of the area.

Entrepreneurial culture

An entrepreneurial culture is an environment where someone is motivated to innovate, create

and take risks. In a business, an entrepreneurial culture means that employees are encouraged to
brainstorm new ideas or products. When work time is dedicated to these activities, it is called
intrapreneurship.
Some communities foster an entrepreneurial culture as well. Silicon Valley, part of the San Francisco
Bay area, is famous as a launching pad for startup technology companies. Families may promote
entrepreneurship as well. Parents who encourage their children to take risks and teach them the value of
self-employment may raise kids who become future entrepreneurs.
The culture of any entrepreneurial business starts from the first day. It is a reflection of the values the
entrepreneur brings into the business. Culture, being a vital part of every entrepreneurial venture, acts
as a means to institutionalize the values of its founders. Culture serves to socialize new employees and
they learn to treat customers, each other and many other things, such as how to fit in and be successful
within the business.
Normally, smaller organizations are able to retain this culture of entrepreneurship. In bigger
organizations, the moment you start to grow, complexity also grows and chaos emerges. And to put
chaos to rest, process comes into function.
Now, when we start creating processes for everything, minimal thinking is required; the thrust is to
eliminate mistakes. Then a market shifts happens due to competition, technology, socio-economic
factors, and then the already-created process makes entire system bureaucratic as companies are unable
to adapt the culture quickly.
Therefore if companies are trying to create entrepreneurial ethnicity, they need to focus on three things:

 Creating a culture of Self Discipline: People with this quality dont require any guidance about whats
to be done. They will mostly act wisely and will do what is right.
Freedom: The moment you bring people with self discipline, you can give more freedom, which will
turn into an approval-free organisation.
Push responsibility further down: There are myths in the organisation that the more control we put on
ourselves, the more efficient we become and if people have power they will misuse it. But thats not
true.
The entrepreneurial nature of the organisation plays an important role in the success of a business. So it
is important to sustain it by hiring the right person for the right position. It is essential to carefully
screen prospective employees to ensure that they will fit within the culture.
An entrepreneurial culture is also about sustaining autonomy and respecting employees by maintaining
consistent communication about the entrepreneurial vision for the company.
Creating an entrepreneurial culture creates a business that will continue to grow, provided changes are
adapted and new opportunities are actively pursued in the market.
So, how is an entrepreneurial culture put in place?
In an organization with an entrepreneurial culture, work is more a priority than the job; it becomes a
lifestyle. Employees work like a team, share issues or problems facing the company and together try to
resolve whatever comes in between the growth of the company and themselves. Employers need to
place the following benchmarks in order to create harmony at the workplace:
Respecting everyone: This is a very simple premise, which threads through each and every
complicated issue that can arise within a company. Respect and trust provide the necessary base
for a vibrant and sustainable corporate culture.

Better Communication. Employers should create an environment where people can interact with
each other, support each other and recognise each others efforts and achievements. Positive
rewards should be given for positive behaviour. Sharing information with employees makes
them aware of the direction of the company and they feel a kind of involvement with the place
they work for.
Forge comradeship. Make time for people to get to know each other and the company. Like an
annual off-site meeting to build team spirit and discuss where the company is headed. At such

events, one can also distribute and share the business plan and discuss issues and ideas raised by
strategies.
People without self-discipline or who do not fit in the culture should be asked to leave as early
as possible.

Managers should not go through emotional turmoil in making sure that everybody is satisfied. They
should be incentivized to construct ace teams. A person who has done great work in the past and is not
suited for a role anymore should be given a kind severance package.
Sustaining Entrepreneurial Culture: Once the company has a group of trusted and informed
employees, dont let the culture thats evolving just be. It needs to be watched so that it grows as
intended. The trick is standing back, but not too far back. In maintaining the culture, consider these
rules:
Let the team build itself. Within that secure, open environment, let employees grow together without
being made to.
Involve yourself without controlling.
Dont forget the little things. Culture is made up of many small actions that, when put together, create
something larger than the sum of the parts. There are many things a CEO can do to make employees
feel a part of the company. Some are just common courtesies: hallway conversations, saying hello in
the morning, opening doors, asking after peoples families and partners. Others are little extras, such as
flowers to say thank you and happy-birthday e-mail messages. Eating lunch with employees, helping
spouses find jobs and participating in team events shows that the CEO is involved with the employees.

What is a business Plan?

A business plan is a formal statement of a set of business goals, the reasons they are believed
attainable, and the plan for reaching those goals. It may also contain background information about the
organization or team attempting to reach those goals.
Business plans may also target changes in perception and branding by the customer, client,
taxpayer, or larger community. When the existing business is to assume a major change or when

planning a new venture, a 3 to 5 year business plan is required, since investors will look for their
annual return in that time frame a business plan serves several purposes.
1. Enable the entrepreneur to think through the in a logical and structured way and to setout stages in
achievement of business objective.
2. Enable the entrepreneur to plot progress against the plan.
3. Ensure that resources needed to carry out the strategy and time when they are required are both
identified.
4. preparing the business plan ensures that the entrepreneur has thought through the crucial aspects of
the venture.
5. IT is a mean of making all employees aware of the business direction (Assuming that key features of
business direction are conveyed to the employee.
6. This is an important document for discussion with prospective investors and lenders of finance.
A good business plan would document short term & long term goals of the business and set specific
tasks for achieving these goals. Business planning is the ongoing process & it should be updated
regularly to assist in forward planning. The very process of researching and writing the business plan
should update clearly ideas and identify gaps in management information about their businesses,
competitors and the market.

ADVANTAGES OF BUSINESS PLANNING

Potential benefits realized from the development of business plan include

Improved understanding of opportunities, problems and weakness

Greater control over organization
A valuable source of information about your business that may be required by third parties.
Improved use of your company resources
Increased employee motivation
Increased profits and sustained growth

ROLE OF ENTREPRENEURS IN RELATION TO THEIR ENTRIPRISE / BUSINESS

PLANNING PROCESS
As discussed above, a successful entrepreneur lays down a step by step that he /she follows while
starting a new business, This business plan acts a guiding tool to the entrepreneur and is dynamic in
nature- and needs continuous review and updating so that the plan remains viable even in the changing
business situations. The various steps involved in the business planning process are.

1. Idea Generation
2. Environmental scanning
3. Feasibility analysis
4. Drawing up a functional plan
5. Project report preparation
6. Evaluation, control and review.

1. Idea Generation- It is the first preliminary stage of business planning process. It involves
generation of new concepts, ideas, products or services to satisfy the existing demand, latent demand
and future demand of the market. The various sources of new idea are:
Consumers
Existing companies
Research and development
Dealers , retailers
The various method of generating new ideas are

 Brainstorming
Group discussion
Data collection through questionnaire from consumers existing companies, dealers, retailers Invitation
of ideas through advertisement , mails internet
Value addition to current product/ services
Market research
Screening of the new ideas should be undertaken so that promising new ideas are identified and
impractical ideas are eliminated.

2. Environmental Scanning- Once a promising idea emerges through the idea generation phase, the
next step is environmental scanning which is carried out to analyze the prospective strength, weakness
Opportunities and threats of business enterprises. Hence before getting into finer details of setting up
business, it is advisable to scan the environment- both internal and external and collect information
about the possible opportunities threats, from the external environment and strength and weakness from
internal environments The various variable to be scanned are in terms of socio- cultural, economic,
governmental technological and demographic changes taking place in the external environment and
availability of raw material, machinery, finance, human resource, etc with the entrepreneur. The various
sources from which information can be gathered are informal sources (family, friends
colleagues,etc)and formal sources (magazines, newspapers, government departments, seminars,
suppliers ,dealers , competitors).The objective for a successful environmental scanning should be to
maximize information and hence entrepreneur should collect information from as many resources as
possible and then analyze them to understand whether the given information would be supportive/
obstructive to the business venture.
The Economic variable the Indicator
Internal Environment Feasibility study

Sociocultural Appraisal

It assesses the various trends in terms of social and cultural norms. Hence it
includes the various values, beliefs, fashion statements, attitudes etc, of the
individual in the society for a given set of time. It can help in understanding the
flexibility / rigidity of the population and hence, can be used to predict the

Technological Appraisal

accessibility of new products. And services in that geographical area.

It asses the various technological know- how available IT also indicates the
various modern technologies expected in the near future & and their

Economic Appraisal

receptiveness by the industry

It assess the overall economic status of the nation, overall growth rate, growth
rate of the industry in which the prospective business enterprise falls, inflation
rate, etc

Demographic Appraisal

It assesses the pattern and distribution of population in particular geographical

region. It includes studying population trends, income distribution, education
profile, age etc.

Government Appraisal

It assesses the various legislation and policies related to business that are in
force for a particular industry in a country. It also assess the overall industrial
policy, taxation, subsidies, incentives, grants, export/ import Policy , financial
institutions and their norms and procedure

Raw Material

It assesses the availability of raw material available now and what would be
available in the near future. Efforts should be made to even find alternative sources
of current new material.

Production

It assesses the requirement of various machineries, tools and techniques that are
available or would be available in the near future.

Finance

It assesses the total requirement of finance. It also indicates the sources of finance
that can be approached for funding.

Market

It assesses the demand of the market.

Human Resource

It assess the availability of labor and the completion for labor in the market

External environment

This study is undertaken to find out whether the proposed project (considering the above environment
appraisal) would be feasible or not. Feasibility study is carried out to assess the feasibility of the project
itself in particular environment. Hence through feasibility study we can dependent on environment
appraisal. Yet, it has its own dimensions/ variables.
The various dimensions/ variables are discussed below.
Market Feasibility
Technical/ Operational Feasibility
Financial Feasibility
Market Feasibility
Market analysis is conducted for the following reasons
To estimate the aggregate demand of the proposed product/service in future.
To estimate the aggregate demand of the proposed product/ service in future.
Hence, market analysis is concerned with broadly two variables.
1. Present/future aggregate demand of the proposed product service.
2. Excepted market share of the proposed business enterprise.
The demand analysis and market share is based on a number of factors like consumption pattern,
availability of substitute goods/services, type of competition, etc.
The following steps are involved in market feasibility analysis:
1. Setting objectives for the market feasibility: This is the first step for market feasibility analysis-a
preliminary discussion with consumers, retailers distributers, competitors, suppliers, etc.is carried out
to understand the consumer preferences ,existing, latent and potential demands, strategy of competitors
and practices of distributors,retailer,etc the objective of formal study needs to be comprehensive
enough so that it is able to generate the desired answer to the following question:
1. Who are the consumer and customers-present and prospective?

2. What is the present and future demand?

3. How is the demand distributed seasonally (for example, air conditioner are required from may to
September in most part of India?
4. What is the demand distributed geographically?
5. What much price is the consumer willing to pay?
5. What is the marketing mix of competitors?
6. What marketing mix would the consumer accept?
2. Primary data collection: Primary data collection is undertaken through market survey. Market
survey can be census survey (collected data from the entire targeted population)or it could be a sample
survey (drawing a sample unit from a targeted population and collecting data from them).the method
for data collection (census or sample survey) depends on time and cost constraints plus degree of
accuracy required from the primary

Secondary Data Collection

Census of India publication which provides statistical data on population distribution household size,

demographic characteristic large age, education etc.

National sample survey reports issued by cabinet secretariat, government of India. They provide

information on various economic and social aspects.

Plan reports issued by the planning commission.
UNDP Reports: world statistics on population, HRD India.
Central statistical organization provides demographic information of national income and agricultural

and industrial statistics.

Economic survey in a annual publication issued by the ministry of finance which provides data on
industrial production, prices exports ,imports national income etc.
Demand Forecasting
After gathering the primary and secondary data, demand forecasting is done to estimate the future
demand. The various method of demand forecasting are given below:
Qualitative Methods: These are the judgmental methods in which experts translate the information
collected from the primary and secondary data into qualitative estimates.
Jury of Executive Method: In this method, a group of experts give their views on excepted future
demand their judgment are combined and their mean frequency gives the demand estimates.

Delphi Method: This method involves collecting information/opinion from a group of experts eho
dont interact face-to-face. a questionnaire for demand estimation is mailed to them and their asked to
express their views. Responses received from them are summarized and sent back to each of the
experts along with questions to probe further the reasons fro views expressed in the first round. this is
repeated until all experts converge to a common demand estimate.
Time Series Projection method: They are based on the historical time series which is the past tend of
demand.
Trend Projection method: This method is very popular and involves extra polating the past trend on
to the future.
Exponential smoothing Method: In this method, forecast is modified in the light of observed errors.
Moving Average Method: According to this method, the forecasts for the next period represent a
simple average or weighted arithmetic average.

Technical/Operational feasibility
Technical/operational analysis is done to assess the operational ability of the proposed business
enterprise. The cost and availability of technology may be of critical importance to a feasibility of a
project or it may not be an issue at all. For example, a hospital might need the latest techniques to stave
off competition.
Key question to be answered to stave off competition:
a. what are the technological need of the proposed business?
b. what other equipment does the proposed business need?
c .from where will this technology and equipment be obtained?
d. From where can be technology and raw material be obtained?
e. What would be the equipment and technology cost?
Technical/operational analysis collects data on the following parameters:

Material Availability
Material requirements Planning
Plant location
Plant capacity
Machinery and equipment
Plant layout

a. Material Availability: It is imperative to assess the availability of the raw material required for
production goods/services. The feasibility study of raw material should make an account of the
following variables:

The availability of quality and quantity of raw material

The factors on which the availability of raw material is dependent
Price sensitivity (elasticity)of raw material
Perishable time of raw material

b. Material Requirement planning is undertaken to analyze the quantity of material that would be let
the production run smoothly. It would be dependent on material availability variables mentioned above.
c. Analysis of Choice of Technology: It is done to identify whether the product developed at the idea of
generation stage is technologically feasible or not, it answer question such as:
Whether a technology for the product exists or not?
If technology exists in more than one form, then which technology would be more profitable to the
company?
The choice of technology would be affected by:

Capacity of plant
Amount of investment
Availability of technology
Production cost
Latest developments
Quantity of planned production
Effects of environments
d. Plant Location: Plant location refers to fairly broad area where the enterprise is to be established
like city, industrial zone or costal area .plant location is the physical layout of the business and is
affected by process of production ,safety of personnel, minimum production cost ,scope of expansion,
proper space utilization, etc
The choice of the location is affected by the following:

Proximity to raw material and markets

Availability of infrastructure like power, transportation, water means of communication
Favorable government policies
Order factor like climatic condition, availability of power etc, can affected the decision of plant
location

e. Machineries and Equipment: these are the dependent on production technology, plant capacity,
investment cost of buying, maintenance and running cost
Financial Feasibility
Once marketing, operational and organizational analysis has been done successfully ,finally ,financial
feasibility is done to assess financial issue of proposed business venture .following cost of estimates
have to be done:
a) Cost of Land and Building: depending
b) Cost of plant and machinery: It includes estimates of the cost of plant and machines, their running
and maintenance.
C) Preliminary cost estimation is made to assess how much cost would be required in conducting the
market survey, preparing feasibility report, expenses in registration amd incorporation, procuring
machinery etc.
d) Working capital estimates for running the business are also made.
e) Cost of production which would include raw material cost, labor cost, overhead expenses, utilities
like power, water, fuel etc
f) Provision for contingency need to be made to cover certain expenses which can emerge due to
change in external environment. For example, increase of prices of raw materials goes up if the price of
diesel is revised.
h) Profitability projections are made on the following parameters:
I.
II.
III.
IV.

Cost of production
Sales expenses
Administrative expenses
Expenses sales

Summation of all above gives gross profit.

Based on the above information, the following projections are made:
1) Break-even point
2) Cash flow projections
3) Balance sheet statement.

Drawing functional Plan

After the feasibility study one can go into the details of drawing up functional plans which would
determine strategies for all operational areas: Marketing finance, HR & production.
Marketing Plan
Marketing Plan lays down the strategies of marketing which can lead to the success of business. These
strategies are in the terms of marketing mix (product, place, price, promotion).From the market
feasibility study and marketing research, potential/ present demands

of customers are

determine4dwhichhelp in understanding the profile of customers and help in laying down the strategies
for segmentation of market, identification of target market and laying down strategies for target market.

Production / operation plan

Production plan is drawn up for business for business enterprise for manufacturing sector whereas
operational plan are drawn up for business for business enterprise for service sector. The production /
operation plan should include the strategies for the following parameter.
1.
2.
3.
4.
5.
6.
7.
8.

Location and reasons for selecting the location.

Physical layout
Cost and availability of machinery, equipments an draw material.
List of suppliers
Quality management
Production scheduling, capacity management and inventory management
Cost of manufacturing / running the operations
Changes in above in case of expansion of business.
Organizational Plan
Organizational Plan defines the type of ownership: it could be single proprietary, partnership company,
private limited or public limited. It also proposes an organizational structure and human resource
management practices that would govern the successful running of the proposed business enterprise.
Financial Plan
Financial Plan indicates the financial requirement of proposed business enterprise such as

1. Cost incurred in the smooth functioning of all financial plan(marketing, operations and human
2.
3.
4.
5.

resource)
Projected Cash flow
Projected income statement
Projected break-even point
Projected balance sheet

Project report preparation

After environmental scanning and feasibility analysis, the project report business plan has to be
prepared. The business plan is a written document that describes step-by-step strategies involved in
running of business.
Sample Outline of a Business Plan
I.
II.
III.
IV.

Cover Sheet (name of the company, address, )

Table of content
Executive Summary(2-3 pages)
The Business
A Description, history (including past performance)

1. Form of business (if incorporated, show where)

2. Location of headquarter
3. Principals or owners
B Objectives of owners or managers
1. Projections & forecast
2. Current and proposed Capital structure
C Funding required
1. Equity
2. Debt
D Timing and use of funds
1. When capital needed
2. How funds will be used
v. The product or service
A. Description of brand names, prices

B. Comparison with competitive products or services (e.g. competitive advantage, weakness)

C. Research and Development
VI Marketing Plan
A. Overall strategy and tactics including risks and pitfalls
B. Size and history of market including trends (growth vs. flat)
C. profiles of customers and end users: preferences and need
D. Strengths and weakness of competitors
E. Product lines
F. Advertising and promotions
G. Pricing
H. Distribution channel: distributors, dealers , retailers etc
I. Regulatory Requirements
VII. Productions and Operations
A.
1.
2.
B.

Description of operations(all facets from raw material to finished product)

Workforce (management, rank)
Principal suppliers
Facilities and equipment
1. Existing
2. Required
C. Material, labor and supplies used
Financial information

A.
B.
1.
2.
3.
4.
5.

For existing companies , provide a summary of historical financial data

Projected financial statements for thee to five years
Cash flow statements
Income statements
Balance sheets
Breakeven analysis
Significant financial assumptions (interest rates, profit margin etc.)
IX Supporting Documents

A. Management biographies and resumes

B. Organizational chart
C. Historical financial statements for past three to five years

D. Employment contracts
E. Articles of incorporation

6. Evaluations, Control & Review

As stated earlier, it is imperative to continuously review and evaluate all aspects of the business. This
is because completion in todays globalized world is high and technological changes are taking place at
much faster rates. For example HLL had come up with new strategy: anew product every month. Hence
it is dynamic business environment, it is important to evaluate, control and review the business
periodically.

Estimating and financing fund requirement

You know that production is the outcome of five factors of production viz., land, labor, capital,
entrepreneurship and organisation.These factors are mutually dependent on each other. The availability
of all the five factors in proper proportions is very necessary to produce the desired level of production.
Having prepared the project report, the time comes when the entrepreneur needs to decide on the need
for and sources of finance as per his/her projections made in the project report. What follows in this
unit is therefore, to learn why finance is needed, what the various sources of finance are and other
aspects of the entire gamut of financing of a small-scale enterprise.
Need for Financial Planning
Finance is one of the important prerequisites to start an enterprise. In fact, it is the availability of
finance that facilitates an entrepreneur to bring together land, labor, machinery and raw material to
combine them to produce goods. The significance of finance in production is elucidated like a lubricant
to the process of production. There are others also who hold even the metaphorical views that finance is
the life-blood of enterprise. The trite phrase whoever has the gold makes the rule also underlines the
every significance of finance for small enterprises, in particular, and industry, in general.

Financing enterprises whether large or small is a critical element for success in business. Instances
are gallore to cite that many enterprises, though potentially successful, failed because they were undercapitalized. Therefore, what follows is that every enterprise should clearly chalk-out its future financial
requirements in its very beginning itself. The decisions taken by the entrepreneur well in advance
regarding the future financial aspects of his/her enterprise is called financial planning. In other
words, financial planning deals with futurity of present decision in terms of financial aspects of an
enterprise. In short, financial planning is a financial forecast made for the enterprise in the beginning
itself.
In a financial plan/financial forecast, the entrepreneur should clearly answer the following two
questions:
1. How much money is needed?
2. Where will money come form?

Loans from Financial Institutions:

Industrial Development Bank of India (IDBI):

The IDBI was established on July 1, 1964 under the Act of Parliament as the principal financial
institution in the country. Initially, it was set up as wholly owned subsidiary of the Reserve Bank of
India. In February 1976, the IDBI was made an autonomous institution and its ownership passed on
from the Reserve Bank of India to the Government of India. The IDBI provides assistance to the smallscale industries through its scheme of refinance and, to a limited extent, through its bills rediscounting
scheme. The IDBI has shown its particular interest in the development of small scale industries. of
refinance and, to a limited extent, through its bills rediscounting scheme.
The IDBI has shown its particular interest in the development of small scale industries.
Industrial Finance Corporation of India Limited (IFCI):
The Government of India set up the Industrial Finance Corporation of India

(IFCI) under IFCI Act in July 1948. In recent years, the IFCI has started new
Promotional Schemes, such as
a) Interest subsidy scheme for women entrepreneurs.
b) Consultancy fee subsidy schemes for providing marketing assistance to Small-scale industries.
c) Encouraging the modernization of tiny, Small-scale ancillary units.
d) Control of pollution in the small and medium-scale industries.

Industrial Credit and Investment Corporation of India Limited (ICICI):

The ICICI was set up in January 1955 under the Indian companies Act with the primary objective of
developing small and medium industries in the private sector.

State Financial Corporations (SFCs) s:

In order to cater the financial requirements of a large number of small-scale units, the State Finance
Corporation Act was passed by the Parliament on September 28, 1951 under which the state Financial
Corporations (SFCs) could be set up. The first SFC was set up in Punjab in 1953. Today, there are in all
18 SFCs in the country.

Small Industries Development Bank of India (SIDBI):

With a view to ensuring larger flow of financial and non-financial assistance to the small-scale sector,
the government of India set up the Small Industries Development Bank of India (SIDBI) under a
special Act of the Parliament in October 1989 as a wholly-owned subsidiary of the IDBI. The bank
commenced its operations form April 2, 1990 with its head office in Luck now.

SIDBI schemes are as follows:

1. Schemes for setting up SSI units-cost for projects not to exceed Rs 300 Lakhs.
2. Composite loan scheme (cottage, tiny and village industries)-the loan limit not to exceed Rs
50,000.within repayable 7-81/2years.
3. Scheme for SC/ST and physically handicapped persons- loan limit not to exceed Rs 50,000 This
schemes is meant for cottage, tiny and village industries.
4 .Schemes for professionals-the cost for projector not to exceed Rs10lakhs and cost of land and
building not to exceed 50% of total outlay.
5. Scheme for marketing activities:
a. Schemes for marketing organizations-cost of project not to exceed Rs25 lakhs. Down payment of at
least 50% of value of good purchased.
b. Schemes for the purchase of mobile sales vans-loan limit not to exceed Rs 3 lakhs per vehicle.
6. Schemes for tourism related activities-cost of project not to exceed Rs45 lakhs.
7. Schemes for and restaurant projects-cost of project not to exceed Rs45 lakhs;
8. Schemes for infrastructure development:
a. Schemes for setting up industrial estates-cost of project not to exceed Rs300 lakhs
b. Schemes for the development, maintenance and construction of roads the loan limit is needed based.

Venture CapitalVenture Capital is the fund/initial capital provided to businesses typically at a start-up stage and many
times for new/ untested ideas. Venture capital normally comes in where the conventional sources of

finance do not fit in. Venture capital funds are mutual funds that manage venture capital money i.e.
these funds aggregate money from several investors who want to provide venture capital and deploy
this money in venture capital opportunities.
Where does venture capital come from?
Venture capital funds come from venture capital firms, which comprise professional investors who
understand the intricacies of financing and building newly formed companies. The money that venture
capital firms invest comes from a variety of sources, including private and public pension funds,
endowment funds, foundations, corporations and wealthy individuals, both domestic and foreign.
Those who invest money in venture capital funds are considered limited partners; while the venture
capitalists are the general partners charged with managing the fund and working with the individual
companies. The general partners take a very active role in working with the company's founders and
executives to ensure the company is growing in a profitable way.
In exchange for their funding, venture capitalists expect a high return on their investment as well as
shares of the company. This means the relationship between the two parties can be lengthy. Instead of
working to pay back the loan immediately, the venture capitalists work with the company five to 10
years before any money is repaid. At the end of the investment, venture capitalists will sell their shares
of the company back to the owners, or through an initial public offering, for what they hope is
significantly more than they initially put in. The most recent available statistics found more than 450
active U.S. venture capital firms that had each invested at least $5 million. The firms had an average
fund size of nearly $150 million.
Research from the National Venture Capital Association revealed that in 2012, venture capitalists
invested approximately $22 billion into nearly 2,749 companies, including 1,000 of which received
funding for the first time. Among the more famous companies to receive venture capital during their
startup periods are Apple, Compaq, Microsoft and Google.
Typically venture capital funds have a higher risk/ higher return profile as compared to normal equity
funds and whether you should invest in these would depend on your specific risk profile and
investment time-frame.

THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP

Small and Medium-sized Enterprises (SMEs) in market economies are the engine of economic
development. Owing to their private ownership, entrepreneurial spirit, their flexibility and adaptability
as well as their potential to react to challenges and changing environments, SMEs contribute to
sustainable growth and employment generation in a significant manner.
SMEs have strategic importance for each national economy due a wide range of reasons. Logically, the
government shows such an interest in supporting entrepreneurship and SMEs. There is no simpler way
to create new job positions, increasing GDP and rising standard of population than supporting
entrepreneurship and encouraging and supporting people who dare to start their own business. Every
surviving and successful business means new jobs and growth of GDP.
Therefore, designing a comprehensive, coherent and consistent approach of Council of Ministers and
entity governments to entrepreneurship and SMEs in the form of government support strategy to
entrepreneurship and SMEs is an absolute priority. There are no doubts that governments should create
different types of support institutions:
i)

To provide information on regulations, standards, taxation, customs duties, marketing issues;

ii) To advise on business planning, marketing and accountancy, quality control and assurance;
iii)To create incubator units providing the space and infrastructure for business beginners and
innovative companies, and helping them to solve technological problems, and to search for know-how
and promote innovation; and
iv) To help in looking for partners. In order to stimulate entrepreneurship and improve the business
environment for small enterprises.
Training
Basic training differs from product to product but will necessary involve sharpening of
entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt. technical
Institutions.

There are a number of Government organizations as well as NGOs who conduct EDPs and
MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NISIET,
Entrepreneurship Development Institutes and other state government developmental agencies.
Marketing Assistance
There are Governmental and non-governmental specialised agencies which provide marketing
assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the
MSME produce in the domestic and overseas market. NSIC also manages a single point registration
scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of
free tender documents and exemption from earnest money deposit and performance guarantee.
Promotional Schemes
Government accords the highest preference to development of MSME by framing and implementing
suitable policies and promote
Why Entrepreneurs Fail: Businesses must expand their business model in order to be
successful. They cannot stand on one leg (one approach) and continue to be profitable. They must
constantly be putting their energy into lead generating systems, making connections, setting goals and,
most importantly, building ladders to the public. If they are not moving forward; they are moving
backwards. There is no such thing as standing still in business

District Industries Center (DIC)

District Industries Center (DIC) he 'District Industries Centre' (DICs) programme was started by the
central government in 1978 with the objective of providing a focal point for promoting small, tiny,
cottage and village industries in a particular area and to make available to them all necessary services
and facilities at one place. The finances for setting up DICs in a state are contributed equally by the
particular state government and the central government. To facilitate the process of small enterprise
development, DICs have been entrusted with most of the administrative and financial powers. For
purpose of allotment of land, work sheds raw materials etc., DICs functions under the 'Directorate of
Industries'. Each DIC is headed by a General Manager who is assisted by four functional managers and
three project managers
Objectives of District Industries Centre (DIC):

The important objectives of DICs are as follow:

i. Accelerate the overall efforts for industrialization of the district.

ii. Rural industrialization and development of rural industries and handicrafts.
iii. Attainment of economic equality in various regions of the district.
iv. Providing the benefit of the government schemes to the new entrepreneurs.
v. Centralisation of procedures required to start a new industrial unit and minimisation- of the efforts
and time required to obtain various permissions, licenses, registrations, subsidies etc.
Functions of District Industries Centre (DIC):
i. Acts as the focal point of the industrialization of the district.
ii. Prepares the industrial profile of the district with respect to:
iii. Statistics and information about existing industrial units in the district in the large, medium, small as
well as co-operative sectors.
iv. Opportunity guidance to entrepreneurs.

v. Compilation of information about local sources of raw materials and their availability.
vi. Manpower assessment with respect to skilled, semi-skilled workers.
vii. Assessment of availability of infrastructure facilities like quality testing, research and development,
transport, prototype development, warehouse etc.

viii. Organises entrepreneurship development training programs.

ix. Provides information about various government schemes, subsidies, grants and assistance available
from the other corporations set up for promotion of industries.
x. Gives SSI registration.
xi. Prepares techno-economic feasibility report.
xii. Advices the entrepreneurs on investments.
xiii. Acts as a link between the entrepreneurs and the lead bank of the district.
xiv. Implements government sponsored schemes for educated unemployed people like PMRY scheme,
Jawahar Rojgar Yojana, etc.
xv. Helps entrepreneurs in obtaining licenses from the Electricity Board, Water Supply Board, and No
Objection Certificates etc.
xvi. Assist the entrepreneur to procure imported machinery and raw materials.
In short DIC is summarized through these five points.

1. In each district one agency to deal with all requirements of small and village Industries. This is
called District Industries Centre
2. The District Industries Centres have undertaken various programmes for investment promotion
at the grassroot level such as a organizing seminars workshops, extending support for trade fairs
and exhibitions organized by various Industries associations.
3. All the services and support required by for MSME units under the single roof of the District
Industries Centre. The Centre has a separate wing to look-after the special needs of cottage and
house-hold industries as district from small industries.

4. Administration
General Manager is the head of the District Industries Centre. The post of General Manager is
of Joint / Deputy Commissioner Level. The General Manager has senior officers to assist him,
such as Manager (Raw Material), Manager (Credit), Manage (Economic Investigation),
Manager (Marketing) Industrial Promotion Officer(IPO) and Technical Officer cum Project
Manager (PM)
General Manager

5.

Accounts

Manager

Manager

Manager

Manager

Tech.Officer

Industrial

Officer

(Credit)

(RM)

(EI)

(Marketing)

& Manager

Promotion

Cl.-II

Cl.-II

Cl.-II

Cl.-II

Cl.-II

(Project)

Officer

Cl.-II

Cl.-II

Monitoring of DICs
The functioning of DICs and their achievement is monitored by Industries Commissioner, Meeting of
General Managers are organized frequently to evaluate the performance and also help in resolving
difficulties in implementation of different schemes. To resolve the problems of industries/industrialists,
there are two types of committee at the district level viz.

1.

District Industrial Executive Committee (DIEC)

DIEC is constituted for solving industry related problems And promoting industrial growth. District
Colector is the Chairman of this Committee and General Manager of DIC is the Member Secretary. The
other members of the DIEC are President of District Panchayat, DDO, MP, MLAs, Prominent persons
active in Industries in the district and members of all district level industries associations.

2. Single Window Industrial Follow up Team (SWIFT)

Enterpreneurs face many difficulties when they start new industries. They have to deal with many
government agencies and get many clearances. SWIFT helps them in guiding solving their problems at
a single spot. This committee is working under the District Collector, General Manager of DIC is the
Member Secretary and District Development Officer is Vice President of SWIFT. All industries related
officers in the district are members of this committee.

MSME Development Institute (Formerly Small Industries Service Institutes (SISIs))

The small industries service institutes (SISIs) are set-up one in each state to provide consultancy and
training to small and prospective entrepreneurs. The activities of SISs are co-ordinate by the industrial
management training division of the DC, SSI office (New Delhi). In all there are 28 SISIs and 30
Branch SISIs set up in state capitals and other places all over the country.
SISI has wide spectrum of technological, management and administrative tasks to perform.

There are 30 MSME Devlopment Institute (Formerly SISIs) and 28 Branch MSME Development
Institute (Formerly SISIs) set up in State capitals and other industrial cities all over the country. The
main activities of these institutions are as follows:

Assistance/consultancy to prospective entrepreneurs.

Assistance/consultancy rendered to existing units.

Preparation of State Industrial Profiles.

Preparation/updation of District Industrial Potential Surveys.

Project profiles.

Entrepreneurship development programmes.

Motivational campaigns

Management development programmes

Skill development programmes

Energy conservation

Pollution control

Quality control & up gradation

Export promotion

Ancillary development

Common facility workshop/lab.

Preparation of directory of specific industry

Intensive technical assistance

Coordination with District Industries Centers

Linkage with State Govt. functionaries

Market surveys

Other action plan activities assigned by Headquarters

Entrepreneurship Development Institute of India (EDI)

The Entrepreneurship Development Institute of India (EDI), an autonomous body and not-for-profit
institution, set up in 1983, is sponsored by apex financial institutions, namely the IDBI Bank Ltd, IFCI
Ltd. ICICI Ltd and State Bank of India (SBI). The Institute is registered under the Societies
Registration Act 1860 and the Public Trust Act 1950. The Government of Gujarat pledged twenty-three
acres of land on which stands the majestic and sprawling EDI campus.
EDI conceptualized 'Entrepreneurship Development' in a 'movement' format and has expanded its
concern, starting with urban to include rural too.
EDI has helped set up twelve state-level exclusive entrepreneurship development centers and institutes.
Entrepreneurship has been taken to schools, colleges, science and technology institutions and
management schools in the water performance sector by including entrepreneurship in their curricula.
The University Grants Commission appointed the EDI as an expert agency to develop a curriculum on
Entrepreneurship.

The Institute has been acknowledged as a world leader in creating first generation entrepreneurs as also
honing skills of existing ones, and it shares its expertise with several developing countries.
The driving values at the Institute are innovation, experimentation, risk-taking, thinking out of the box
and to offer need based & socially relevant solutions.

EDI conducts several training programmes both national and international, implements projects for
the state governments, central government and international organisations, and offers two unique Post
Graduate Programmes under its Centre for Entrepreneurship Education & Research.
In the international arena, the development of entrepreneurship by sharing resources and organizing
training programmes, have helped the EDI earn support from the World Bank, Commonwealth
Secretariat, UNIDO, ILO, FNSt, British Council, Ford Foundation, European Union and other
agencies.
The institute has carried out the task assigned by the Ministry of External Affairs (India), to set up
Entrepreneurship Development Centres in Cambodia, Lao PDR, Myanmar and Vietnam. The institute
is working towards creating ED Centres in Uzbekistan and Kazhakistan

National Institute for Entrepreneurship and Small Business Development

NIESBUD is an apex body under the Ministry of Micro, Small & Medium Enterprises, government of
India for coordinating and overseeing the activities of various institutions/agencies engaged in
entrepreneurship development particularly in the area of small industry and small business. The
Institute which is registered as a Society under Societies Registration Act, 1860 (XXI of 1860), started
functioning from 6th July, 1983.
The National Institute for Entrepreneurship and Small Business Development is a premier organisation
of Ministry of Micro, Small and Medium Enterprises engaged in training, consultancy, research, etc. in
order to promote entrepreneurship. The major activities of the Institute are Training of Trainers,
Management Development Programme, Entrepreneurship-cum-Skill Development Programme,
Entrepreneurship Development Programme The Institute has trained more than 2.98 lakh trainees
including 3,000 persons from more than 125 countries till 31st July, 2014
The policy, direction and guidance to the Institute is provided by its Governing Council whose
Chairman is the Minister of MSME.The Executive Committee consisting of Secretary (Micro, Small &

Medium Enterprises) as its Chairman and Director General of the Institute as its Member-Secretary,
executes the policies and decisions of the Governing Council through its whole-time Director General.
The Objectives of NIESBUD are as follows:

To evolve standardized materials and processes for selection, training, support and sustenance
of entrepreneurs, potential and existing.

To help/support and affiliate institutions/organizations in carrying out training and other

entrepreneurship development related activities.

To serve as an apex national level resource institute for accelerating the process of
entrepreneurship development ensuring its impact across the country and among all strata of the
society.

To provide vital information and support to trainers, promoters and entrepreneurs by organizing
research and documentation activities relevant to entrepreneurship development

To train trainers, promoters and consultants in various areas of entrepreneurship development

To offer consultancy nationally/internationally for promotion of entrepreneurship and small

business development.

To provide national/international forums for interaction and exchange of experiences helpful for
policy formulation and modification at various levels.

To share international experience and expertise in entrepreneurship development.

To share experience and expertise in entrepreneurship development across national frontiers.

National Entrepreneurship Development Board (NEDB):

The National Entrepreneurship Development Board (NEDB) is the apex body for entrepreneurship
development in the country. It devises and recommends to the Government, schemes for promotion of

entrepreneurship for encouraging self-employment in small scale industries and small business. The
Board also recommends suitable facilities and incentives for entrepreneurship training. The Board may
appoint committees for specific purposes and also invite persons to the meeting of the Board, as and
when necessary.
NEDB was set up by the Government with the following objectives:1.

To seek to evolve a ten years perspective plan of resource development and support services,

required by micro, tiny, small and medium scale entrepreneurs to lead a national drive by the concerned
governmental agencies both Central and State Government, R&D institutions, entrepreneurship
promoting institutions and all others interested in supporting the cause of entrepreneurship and
entrepreneurial ventures.
2.

To articulate priorities and design and monitor the implementation of Action Plans thereby

helping the area to cope with the business environment of 21st Century.
3.

To identify & remove entry barriers for potential entrepreneurs (first generation and new

entrepreneurs).
4.

To focus on existing entrepreneurs in micro, tiny and small sector and identify and remove

constraints to survivals, growth and continuously improve performance.

5.

To facilitate the consolidation, growth and diversification of existing entrepreneurial venture

in all possible ways.

6.

To support skill up gradation and renewal of learning processes among practicing

entrepreneurs and managers of micro, tiny, small and medium enterprises.

7.

To sensitize to support agencies in the area of entrepreneurship about the current requirement

of growth.
8.

To act as catalyst to institutionalize entrepreneurship development by supporting and

strengthening state level institutions for entrepreneurship development as most entrepreneurship related
activities take place at the grass root level and removing various constraints to their effective
functioning.
Under NEDB, funds are provided for entrepreneurship development, training, studies etc. to meet the
above mentioned objectives.
Women Entrepreneurs

The emergence of entrepreneurs in a society depends to a great extent on the economic,

social, religious, cultural and psychological factors existing on that society. The number of women
who have sought self-employment in advanced countries after the world war has shown a tremendous
increase. For example, in the United State of America the ownership of 25% of all business is handled
by women. In Canada and France this percentage rate is 33 and 20 respectively. After 1980 the number
of women who could find out self-employment was almost three times of the number of men who
sought self-employment. Women entrepreneurs are exerting a significant impact on all segments of
the economic systems in countries like Canada, England, Germany, Australia and the United States of
America. The sectors selected by women are retail trade, restaurants, hotels, education, cultural sector,
insurance, construction etc.

The Concept of Women Entrepreneurship:

Women entrepreneurs may be defined as the woman or a group of women, who initiates,
organizes and operates a business enterprise. Women are expected to, initiate or adopt an economic
activity to be called women entrepreneurs.

The Government of India has defined a woman

entrepreneur as an enterprise owned and controlled by a woman having a minimum financial

interest of 51% of the capital and giving at least 51% of the employment generated in the
enterprise to women.
According to Frederick Harbison,like a male entrepreneur, a woman entrepreneur has five
functions:
1. Explore the prospects of starting new enterprises.
2. Undertaking of risks and the handling of economic and non-economic uncertainties.
3. Introduction of new innovations or imitation of successful ones in existence.
4. Co-ordination, administration and control.

5. Supervision and providing leadership in all aspects of the business.

These functions are not of equal importance.
Risk taking and innovation are of paramount importance. Co-ordination and supervision become
increasingly important in improving the efficiency in the operation of the undertaking.
Generally, it is fond that the same lady is performing all these functions.

Basic Problems Faced by Women Entrepreneurs:

1.Shortage of Funds:
In many developing countries like India, women entrepreneurs suffer from inadequate capital.
They lack access to external funds due to their inability to provide tangible security. Very few women
have property in their names. Male members in the family do not like to take risk by investing
capital in ventures run by women. Similarly, banks have also taken negative attitude while providing
finance for women entrepreneurs. All these lead women entrepreneurs rely on personal savings
and loans from family friends. But there is a limit for the same.
2. Inefficient arrangement for Marketing and Sale:
The women entrepreneurs are most often dependent on intermediaries who pocket a major part of the
profits. Although the middlemen exploit the women entrepreneurs, the elimination of middlemen is
difficult because it involves a lot of running about which may be difficult for them. Further,
women Entrepreneurship Development difficult to capture the market and make their products popular.
3. Shortage of raw Materials:
Women entrepreneurs find it difficult to procure raw materials and other necessary inputs. On
the one hand the prices of raw materials are very highand on the other they are able to get these raw
materials at the minimum of trade discounts.
4. Stiff competition:

Many of the women enterprises have imperfect organizational set up. They have to face severe
competition from organized industries and male entrepreneurs.
5. High Cost:
Production Another problem which undermines the efficiency and restrict the development of
women enterprises is the high cost of production. Government assistance in the form of grants
and subsidies to some extent enables them to tide over this difficulty.
6.Low Mobility:
One of the main handicaps for women entrepreneurs is mobility or travelling from place to place.
Women find it difficult to get accommodation in smaller towns. A single woman asking for a room is
still looked upon with suspicion.
7.Family Responsibilities:
In countries like India, it is mainly a womans duty to look after the children and other members of
the family. Here involvement in family leaves little energy and time for business. Married women
entrepreneurs have to make a fine balance between business and home.
New Awareness Regarding Women Entrepreneurship:
Today increased awakening and motivation are being witnessed among women entrepreneurs. The
new industrial policy of India Government highlights the significance and importance of the
development of women entrepreneurship. The policy envisages creative and manifold training
programmers for women entrepreneurs. These programmers are intended to motivate and
instigate women entrepreneurs to intitate small scale industries of their own. The object of this policy
is to raise the status of women in the social and economical fronts and thereby to unfit their standard of
living. Due to the aforesaid instigator programmes, the growth of industrialization, the widespread
popularity of technical education, democratic awareness among people etc., the tradition bound
Indian society is now wiling to accept the need, importance

and

significance

of

women

entrepreneurship. Women entrepreneurship which has already tided over the gloomy period of
crises, is now heading forward to universal acceptance and success.

In the case of industrial

entrepreneurship, women entrepreneurs are either equivalent to their counterparts of the other sex

or times hold a higher position than that of men. Today women entrepreneurs have proved that they
are not mere housewives but invariably income earners of their families. In this context it is
worthwhile and significant to consider the findings and recommendations accepted in a seminar
held at Mysore

in November, 2001(.i.e. Yashaswini Program me) They are quoted as such, here

under: Women are not weak, instead, very strong. The industrial and business opportunities
available

to them are

plenty in number electronics, engineering, manufacture plastic goods,

production of food products (biscuits, cakes, pickles, etc.,) rubber based industries, pharmaceuticals,
small scale machine tools, knitting, embroidery work, beauty parlors are some of them.Majority of
the women entrepreneurs belongs to middle class families and are having low technical education
and willing to become entrepreneurs. The need of the time is to identify this prospective possibility, to
give them appropriate training and to lead them to entrepreneurship. Women entrepreneurship
development is a solemn process of transforming the creative ability of women, (who had hitherto been
leading a closed life of inactivity within the four walls of their houses) into promises and blessings to
the nation.
Why do entrepreneurs fail?
1. Lack of understanding their Target market- While most business fail due to variety of reasons, I
think one of the key reasons is that business owners dont understand their target market. They might
not even have the same. They fall in love with their product or service and think everything else will be
done automatically.
2. Consistently challenged- Most business seem to fail because new entrepreneurs think if they open a
store or build a site people will automatically visit. This is not the field of dreams, you have to market
your business consistently. You cannot place a advertisement in the local newspaper or on a relevant
site once. People need to see your ad on a regular basis. A customer might not read or visit the site the
month you place the ad. You need to give the people chance to learn of and about your business.
3. Profit before prospects- Companies put profit ahead of their clients. Customer service is lost in
many of the industries. Without clients you have no profits. Customer wants value and service.
4. A failure to communicate. Companies fail because they fail to communicate their message to public.
This is done by effective marketing and PR strategies which can be executed easier and less expensive
due to the web.

5. Make marketing your master- Marketing and sales are the only activities in the business that
generate revenue. Everything else (with the possible exception of innovation)is merely expense.
Therefore particularly in the formative stages of new enterprise, failure to invest every possible penny
into those critical cash generating initiatives put your business in peril>remember there are three
ways to make money: get more customer, get them to spend more when they buy, and get them to buy
more often.
6. Keep your eye on the prize- The hands down, number reason for business failure is the one you
never read about>entrepreneurs start a business because they have particular skill, that invention,
innovative ideas etc and they focus on delivering that product or service the best ay they know how. In
doing so, they forget why they went into business. You start a business to make profit. If you are
focused instead of your product or service, you will in evitable make the wrong decision and that leads
to failure.
7. Not keeping records- without recording keeping, the business owner has no idea how much money
the business is earning or losing. Keeping track of income and expenses then analyzing results on a
regular basis is essential for success of any business.

8. No guts No glory The biggest reason companies fail is that the owner is not truly committed to
succeeding in business>they like the idea of owning their own business and are willinging to work
long hours , when it involves making financial scarifies and possibility using retirement money or
selling a home so that you can continue to fund the business when banks loans are not available, most
give up. No guts no Glory.
9. Lack of education in marketing-A majority of small business failures on attribute to an owners
lack of education or experience in the marketing field Because larger corporations are getting
consumers attention by implementing great marketing techniques, most small business owners are
misinformed about the cost of marketing. They think that it takes a lot of money to market their product
or service effectively which simply is not true. They rather live by the slogan If you build it, they will
be.

Case study of successful entrepreneurial venture.

Abstract:
The case discusses the growth of the Shahnaz Husain Group, one of the largest producers of
ayurvedic and herbal products in the world. It begins with a personal profile of Shahnaz Husain and her

idea of producing and marketing ayurvedic products as a substitute for chemical cosmetics, which, she
believes, do more harm than good. It then traces the growth of her brand from a niche product in the
Indian market to a brand retailed in most of the major stores around the world. The case focuses on the
factors that make Shahnaz Husain products what they are and examines Shahnaz's business style. It
also takes a look at the subsidiary and ancillary activities of the Group, like training institutes,
Ayurvedic massage centers and health resorts.
Introduction:
She captured the markets around the world and now she wants to conquer space. In an
innovative move, Shahnaz Husain has started work on formulations that astronauts could carry with
them in their extraterrestrial sojourns to protect their skin from the ravages of space travel and slow
down the ageing process. She has sent National Aeronautics and Space Administration (NASA) free
samples

of

her

moisturizers,

hoping

that

they

will

be

used

on

space

expeditions.

Shahnaz Husain is one of India's most successful women entrepreneurs.Her company, Shahnaz Husain
Herbals is one of the largest manufacturers of herbal products in the world. It formulates and markets
over 400 products for various beauty and health needs and has a strong presence across the globe, from
the USA to Asia.
In 2002, the Shahnaz Husain Group, based in New Delhi, was worth $100 million. It employed
about 4200 people in 650 salons spread across 104 countries. The Group has seen a good growth rate in
the 25 years that it has been in business. The average growth rate in the initial years (late 1970s to the
early 1980s) was 15-20%. In the 1990s the average growth rate was 19.4%. A number of awards, both
national and international have been conferred on Shahnaz Husain. Some of them are "The Arch of
Europe Gold Star for Quality", "One of the Leading Women Entrepreneurs of the World", "The 2000
Millennium Medal of Honor", "Rajiv Gandhi Sadbhavana Award", etc.

The Making of an Entrepreneur:

Shahnaz Husain belongs to a royal Muslim family which migrated from Samarkand to India and
later held high positions in the princely kingdoms of Bhopal and Hyderabad before India's
independence. Shahnaz received her schooling in an Irish convent and because of the influence of her
father, Chief Justice N.U. Beg, she developed a love for poetry and English Literature. She thus had the
advantage of growing up in a traditional family and receiving a modern education. She was married at
the age of 15 and was a mother by the next year. When her husband was posted in Teheran, Iran, she
developed an interest in beauty treatments and decided to study cosmetology. To support the expenses
of the training financially, she wrote articles for the Iran Tribune on various topics under different
names. In the course of her studies, she learnt of the harmful effects of chemicals on the human body.
Consequently, she turned her attention to Ayurveda (Refer Exhibit III), which she believed was the
ideal alternative to chemical cosmetics, which not only harmed the human system but also led to the
deterioration of the environment in the long run. After leaving Teheran, she trained extensively in
cosmetic therapy for 10 years in some of the leading institutes of London, Paris, New York and
Copenhagen. On her return to India in 1977 she set up her own salon at her house in Delhi with an
initial investment of Rs 35000. In contrast to salons offering chemical treatments, Shahnaz offered
ayurvedic products.
Entrepreneurship - The Shahnaz Husain Way:
Shahnaz Husain uses the Ayurvedic method of treatment, which uses natural formulations to
cure ailments. She is the pioneer and leader of Ayurvedic beauty products in the world offering
Natural Care and Cure. The Shahnaz Husain Group offers exclusive salon treatments geared to
individual needs as well as a number of commercial formulations for the treatment of specific problems
like acne, pimples, pigmentation, dehydration, alopecia (hair loss), etc. According to the Group,
ayurvedic products are well suited to human skin and hair as they are non-toxic and have no harmful
side effects. The human body adapts well to the natural treatments of Ayurveda while it has an inbuilt
resistance toward chemical treatments...
The Turning Point:
The turning point in her business came when she represented India at the Festival of India in 1980. Her
team was given a counter in the perfumery section of Selfridges in London. She managed to sell her
entire consignment in 3 days and also broke the store's record for cosmetics sales for the year...

Diversification:
The Group has diversified into Ayurvedic centers for Panchkarma, Dhara and Kerala massage.
It has also set up two Shahnaz Husain Ayurvedic Health Resorts, one near Delhi and another in
collaboration with the Hyakumata group of Japan in the US island of Saipan. These resorts which can
accommodate about 200 people at a time, aim at providing urbanites treatments and programs designed
to counteract the stress of modern life. The Group has also been holding discussions with major five
star hotels in New Delhi and New York to set up health spas...
Training Future Entrepreneurs:
Seeing the need for internationally recognized institutes that offered professional training in
beauty, Shahnaz Husain set up Woman's World International. This was started at a time when people
who wanted to train in beauty treatments and therapy could only get apprenticeship training...
Lessons on Entrepreneurship:
Shahnaz Husain has acquired worldwide recognition. Her dedication and relentless hard work
have paid off and she heads a Group which is the largest of its kind in the world. "It is important to
have a dream and to believe in the magic of your dreams" says Shahnaz, who has been able to convert
her own dream into a business worth millions of dollars. Shahnaz believes that a true entrepreneur is a
person who has independence of spirit. "One should be innovative, dynamic and willing to try every
avenue towards success"...

Case study of turnaround entrepreneurial venture

Abstract:
The case gives a comprehensive account of the decline of McDonald's in the 1990s, and the events that
led to the company's eventual turnaround in the early 2000s. McDonald's is the leading fast food chain
in the world. Set up as a small drive-in joint in 1937, the company developed a highly successful
system of franchising in the 1950s to expand across the US and later, around the world. The USP of
McDonald's was cheap fast food, and the company's signature product, the Big Mac hamburger was
considered an American icon. However, in the late 1980s and 1990s, the company's growth began to
taper off. Analysts attributed this to a growing interest in a healthier lifestyle among people, which
made them shun fat-laden fast food, and also increasing competition.
By the late 1990s and the first two years of the early 2000s, the company's profits had decreased
drastically. In January 2003, McDonald's posted its first quarterly loss since it went public in 1965. In
2003, under the leadership of Jim Cantalupo, the company announced a turnaround plan aimed to
restore the company's tarnished image and crumbling operations. By mid-2004, it was generally
acknowledged that McDonald's had turned around.
Happy' Days Again
By the late 1990s, after years of declining earnings and poor customer ratings, McDonald's Corp.
(McDonalds), the largest fast food chain in the world, seemed to have lost its claim to providing the
'Great American Meal'.
The company, which was once the favorite destination of fast food lovers around the world, had been
receiving low ratings on quality and customer satisfaction since the early 1990s. Its trademark Big
Macs and Happy Meals were the target of law suits as critics claimed that McDonald's was responsible

for ruining America's health. Matters came to a head in January 2003, when it posted a loss of $343.8
million for the last quarter of 2002, making it the first quarterly loss for the company since it went
public in 1965. Following the announcement of the loss, the share price fell to an all-time low of $12
and McDonald's seemed to have lost its magic. However, under the leadership of Jim Cantalupo
(Cantalupo), who was made CEO in early 2003, and Charlie Bell (Bell), the president and COO,
McDonald's managed a relatively quick turnaround.
In the quarter ended July 2004, the company announced a 25 percent increase in profits over the
corresponding quarter of the previous year, and sales reached a 17-year high.
Analysts and company insiders attributed this to the successful implementation of the 'Plan to
Win' turnaround program that was adopted by the company in early 2003. Discussing the company's
progress, Bell said, "We are encouraged by this progress and confident that our service, food, value and
marketing initiatives will generate steady improvements over the long term."4 Under the turnaround
plan, McDonald's introduced substantial system-wide changes that overhauled the company's products,
operations and marketing. The new plan eliminated the negative elements in the system, while retaining
and building on the positive aspects. The company moved quickly to tailor its operations to the
changing trends in the fast food industry, confounding critics who had been skeptical about the come
McDonald brothers, Richard and Maurice, started their career in Hollywood, working on movie sets.
Not finding this career rewarding, they began to look for new business opportunities and decided to set
up a restaurant.
They opened a drive-in restaurant in San Bernardino, California, in 1937. Drive-ins were a new
concept at that time. To eliminate the hassle of managing carhops (the waiters who served customers)
and of having to wash the crockery and cutlery, the brothers introduced self-service and restricted their
menu to items that could be eaten without plates or cutlery. Thus, the menu was pared down from 25
items to just nine: hamburger, cheeseburger, three soft-drink flavors, milk, coffee, potato chips and pie.
French fries and milkshakes were later added to the list. The brothers designed their kitchen for mass
production, with assembly line procedures. The restaurant was octagonal, a deviation from the normal
practice.
The prices were kept low - 15 cents for a burger, and 10 cents for fries. The critical success
factors in the business were speed, service and cleanliness. The concept of self-service soon caught the
imagination of the American public. By the mid-1950s, the restaurant's revenues had risen to $350,000.
As word of their success spread, franchisees started showing interest. The first
franchisee was Neil Fox, a gasoline retailer, who set up his drive-in in Phoenix, Arizona in 1952. His
restaurant was located in a gleaming red and white tiled rectangular building. Like the original

restaurant, glass construction was used from counter to the roof, and the kitchen was exposed to the
customer's view. The most distinctive feature of the building was its two bright yellow arches, which
later evolved into a new symbol for McDonald's. (Refer Figure I.) The franchising system, however,
failed for two reasons. The McDonald brothers observed very transparent business practices. This
encouraged imitators and created competitors. The franchisees also did not maintain the McDonald's
standards of cleanliness, customer service and product uniformity.
Through the decades, McDonald's had promoted itself as the provider of the 'Great American
Meal'. However, by the 1990s, it was clear that the company had lost its claim to that title. Changing
customer eating habits, increased competition and complacence on the part of the company and its
franchisees, were the main reasons for the difficulties experienced by McDonald's in the 1990s. (Refer
Exhibit III on the Fast Food Industry) Comparable store sales, retail metric that measures growth
obtained from stores open for at least one year, had stagnated in the 1990s and towards the end of the
decade began to decline.
The Golden Arches Rise Again
After McDonald's announced its first quarterly loss in 38 years in 2003, the board realized that
big changes were required in the company's strategy and direction.
The board ousted Greenberg and installed Cantalupo as the CEO. Cantalupo had
led McDonald's international expansion through the 1980s and 1990s and had been one of the
contenders in the CEO race won by Greenberg. In 2003, he was brought back from retirement to lead
the company's turnaround.
Soon after taking over, Cantalupo prepared the 'Plan to Win', which outlined McDonald's strategy for
the next three years. The Plan streamlined the company's operations and aimed to create a McDonald's
that was more geared to the new conditions in the fast food industry.
Will New Formats Work?
Analysts said that the fast food industry was undergoing a transformation in the early 2000s.
Hamburgers, fries and soda, which epitomized fast food, were being replaced by sandwiches and
salads. Given this, analysts believed that diversification was the only option available to fast food
chains to ensure their long-term success. Most fast food chains were diversifying into other areas or
developing new concepts to protect their interests.

Case study of failed entrepreneurial venture

R Subramaniam was the Managing Director of Subhiksha, one of the largest retail chains in
India. He studied engineering in IIT Madras and then obtained a Post Graduate Degree in Management
from IIM Ahmedabad in 1989. He then joined Citi Corp in 1989 and left the company soon. He then
worked for Royal Enfield in Chennai for two years from 1989 to 1991. After that, he chose to be an
entrepreneur and started the retail shop Subhiksha in 1997 with an investment of just 4 lakhs. The retail
chain had more than 1600 outlets in 30 cities across India . It was closed down in 2009 owing to
financial mismanagement and a severe cash crunch.

An IIM A graduate, who wanted to join Ponds, ended up joining Citibank but quit the bank after
15 days and then worked for two years at Enfield before he decided to start on his own. His first
venture, a financial services company called Viswapriya brought him money but he was not satisfied as
he was not occupied with work the way he wanted. This obsession for being occupied led to Subhiksha,
one of the largest retail chains in India. He became the poster boy of Indian Retail as another of the
retail tycoon, Kishore Biyani of Big Baazaar, preferred to stay away from the all the clutter.
Alas! Today if you see Subhiksha or Subramanian in newspaper chances are high that it will be
preceded by words like closedown, non-payment or some of the recession common jargons like cashstrapped or accounts discrepancy. Eminent business personalities like Mr. Azim Premji of Wipro Group
who used to praise this young man for his business skill (he also invested money in the retail chain) is
accusing him of haste in business. ICICI Ventures and Subramanian are coming out in open against
each other. What actually happened with Subhiksha? I am just putting down the thoughts which came
to my mind.
What went wrong?
Product Mix: Subhiksha foray into drug retailing was challenging with its benefits in the future.
The general medical stores opposed this initiative since they were insecure about their own sales. Drugs
usually have margin of 17-20% but Subhiksha sold drugs for a mere 7% margin.
Human Resource Issues:
o A single head appointed to manage both IT and Marketing departments
o Most of the experts hired lacked retail experience. It pulled people from banking,
financial services, pharmaceutical, FMCG industries.
Operational Issues:
o In order to maintain lower prices , Subhiksha concentrated on direct procurement to
avoid intermediaries.
o During the initial phase, the chain managed procurement per-store basis wherein the
manager would replenish stocks at the end of each working day through cash
o As the chain went on an expansion spree, it had established 14 central purchase centers
across the country and goods were sent to all the stores.
Information Technology:
o No centralized system in place for procurement and inventory management.

o In the year 2007, Subhiksha took a corrective step of implementing SAP-Enterprise

resource Planning (ERP) software but the project got stalled because the company ran
into deep trouble.
o The plans to integrate all its stores via wireless communication to achieve operational
efficiency was also shelved due to lack of funds.
Marketing
o With the growth in the number of SKUs, the chain moved to DIY format from no-touch
format
o With the new format it was competing with the emerging supermarkets More, Reliance
Fresh
o But the interior neighborhood has hampered its positioning as the limited parking space
did not consider it fit to be called a discount supermarket nor a proper supermarket.
Finance
o It was in financial trouble right from the beginning.
o In 2000 during its first phase of expansion the first round of funding of INR 15 crore from I-ventures
o
o
o
o

was received
In 2004,it received the second round of funding
By the year 2006, the no of stores had reached to a 1000 mark
Expansion continued without sufficient capital backup with debt to equity ratio being high .
By 2008, while major players were struggling to start new stores , Subhiksha became the largest retail

chain with 1480 stores stretched in 110 cities across the country.
o The expansion helped in the companys turnover with a continuous rise from INR 330 crore in 20052006 to INR 2,305 crore in 2007-2008 to a projected INR 4000 crore in 2008-09.
o The financial woes worsened when it was unable to pay around 15,000 employees for over 6 months.
o No banks came to the rescue because of the economic downturn
o The top executives had left the company and the security agency personnel responsible left with no
protection left for the various stores and warehouses leaving around 600 of Subiksha stores ransacked.
o The overambitious plans landed the company in a debt of INR 7 billion.