ENTREPRENEUR

MEANING:

An entrepreneur is one of the important segments of

economic growth. Basically he is a person 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 puts
up new green field projects that create wealth, open up many
employment opportunities and leads to the growth of other sectors.
The word ‘entrepreneur’ is derived from the French verb
entreprendre. It means “ to undertake”. In the early 16th century,
the Frenchmen who organized and led military expeditions were
referred to as “entrepreneurs”, Around 1700 A.D., the term was
used for architects and contractors of public works.
The term “ entrepreneur” was applied to business initially by
the French economist, Caltillon, in the 18th century, designate a
dealer who purchases the means of production for combining them
into marketable products. Another Frenchman J.B. Say, expanded
Cantillon’s ideas and conceptualized the entrepreneur as an
organizer of a business firm, central to its distributive and
production functions. Beyond stressing the entrepreneur’s
importance to the business, Say did little with his entrepreneurial
analysis.
According to J.B.Say, an entrepreneur is the economic
agent who unties all means of production, the labour force of the
one and the capital or land of the other and who finds in the value
of the products his results from their employment, the
reconstitution of the entire capital that he utilizes and the value of
the wages, the interest and the rent which he pays as well as profit
belonging to himself. He emphasized the functions of co- ordination,
organization and supervision. Further, it can be said that the
entrepreneur is an organizer and speculator of a business
enterprise. The entrepreneur lifts economic resources out of an area
of lower into an area of higher productivity and greater.
The New Encyclopaedia Britannica considers an entrepreneur
as “ an individual who bears the risk of operating a business in the
face of uncertainty about the future condition.
As professor Jan Tin Bergen points out “ The best entrepreneur
in any developing country is not necessarily the man who uses
much capital, but rather the man who knows how to organize the
employment and training of his employees. Whoever concentrates
on this is rendering a much more important service to his country
than the man who uses huge capital.
Joseph A. Schumpeter thus writes “ The entrepreneur in an
advanced economy is an individual who introduces something new
in the economy- a method of production not yet tested by
experience in the branch of manufacture concerned, a product with
which consumers are not yet familiar, a new source of raw material
or of new markets and the like’
Briefly, an entrepreneur is one who innovates, raises money,
assembles inputs, chooses managers and sets the organization
going with his ability to identify them. Innovation occurs through (1)
the introduction of a new quality in a product (2) a new product(3) a
discovery of a fresh demand and a fresh source of supply and (4) by
changes in the organization and management.
New Concept of Entrepreneur – The term “entrepreneur” has
been defined as one who detects and evaluates a new situation in
his environment and directs the making of such adjustments in the
economic system as he deems necessary. He conceives of an
industrial enterprise for the purpose, displays considerable
initiative, grit and determination in bringing his project to fruition
and in this process, performs one or more of he following.
• Perceives opportunities for profitable investment
• Explores the prospects of starting such a manufacturing
enterprise
• Obtains necessary industrial licenses
• Arranges initial capital
• Provides personal guarantees to the financial institutions
• Promises to meet the shortfalls in the capital and
• Supplies technical know-how.

The term “ entrepreneur’ is to be understood in its totality

and not in a fabricated manner. The term “ entrepreneur’ can only
be understood with a bearing on economic, psychological,
sociological and cultural bearings. The social responsibility is
essentially a part of entrepreneurial outlook on life.

Fig:1 Basics of an Entrepreneur

ORGANISATION

INNOVATION
URGE RISK
SKILL
ENTERPRISE
VISION
GROWTH

MANAGEMENT

So, “Entrepreneurs are individuals motivated by a will for

power, special characteristics being an inherent capacity to select
correct answers,energy, will and mind to overcome fixed talents of
thoughts, and a capacity to withstand social opposition”.

Characteristics of an entrepreneur:
 A successful entrepreneur must be a person with technical
competence, initiative, good judgement, intelligence, leadership
qualities, self confidence, energy, attitude, creativeness, fairness,
honesty, tactfulness and emotional stability.
Mental ability: Mental ability consists of intelligence and creative
thinking. An entrepreneur must be reasonably intelligent and should
have creative thinking and must be able to engage in the analysis
of various problems and situations in order to deal with them. The
entrepreneur should anticipate changes and must be able to study
the various situation under which decision have to be made.
Clear objectives: An entrepreneur should have a clear objectives
as to the exact nature of the goods to be produced and subsidiary
activitie to be undertaken. A successful entrepreneur may also have
the objective to establish the products, to make profit or to render
social service.
Business secrecy: An entrepreneur must be able to guard
business secrets. Leakage of business secrets to trade competitors
is a serious matter which should be carefully guarded against by an
entrepreneur. An entrepreneur should be able to make a proper
selection of his assistants.
Human relations ability: The most important personality traits
contributing to the success of an entrepreneur are emotional
stability, personal relations, consideration and tactfulness. An
entrepreneur must maintain good relations with his customers if he
is to establish relations that will encourage them to continue to
patronize his business. He must also maintain good relations with
his employees if he is to motivate them to perform their jobs at a
high level of efficiency. An entrepreneur who maintains good human
relations with customers, employees, suppliers, creditors and the
community is much more likely to succeed in his business than the
individual who does not practice good human relations. Human
relations ability can also be referred to as tactfulness.

Fig: 2 Characteristics of an Entrepreneur

 ADMINISTRATIVE
ADMINISTRATIVE
ABILITY
TECHNICAL ABILITY ORGANISATION
TECHNICAL ORGANISATION
KNOWLEDGE SKILL
KNOWLEDGE SKILL

EFFECTIVE
EFFECTIVE INTELLIGENCE
INTELLIGENCE
COMMUNICATION
COMMUNICATION

PUBLICRELATIONS ENTREPRENEUR CREATIVITY

PUBLICRELATIONS ENTREPRENEUR CREATIVITY

EMOTIONALSTABILITY INNOVATION
EMOTIONALSTABILITY INNOVATION

SOUNDKNOWLEDGE CLEAROBJECTIVE
SOUNDKNOWLEDGE CLEAROBJECTIVE

BUSINESSSECRECY
BUSINESSSECRECY

Communication ability: Communication ability is the ability to

communicate effectively. Good communication also means that
both the sender and the receiver understand each other and are
being understood. An entrepreneur who can effectively
communicate with customers, employees, suppliers and creditors
will be more likely to succeed than the entrepreneur who does not.
Technical knowledge: An entrepreneur must have a reasonable
level of technical knowledge. Technical knowledge is the one ability
that most people are able to acquire if they try hard enough.
An entrepreneur who has a high level of administrative
ability, mental ability, human relation ability, communication ability
and technical knowledge stands a much better chance of success
than his counterpart who possesses low levels of these basic
qualities.
Some key characteristics of a successful entrepreneur are:
Motivator: An entrepreneur must build a team, keep it motivated
and provide an environment for individual growth and career
development.
Self confidence: Entrepreneurs must have belief in themselves
and the ability to achieve their goals.
Long term involvement: An entrepreneur must be committed to
the project with a time horizon of five to seven years. No ninety-
day wonders are allowed.
High energy level: Success of an entrepreneur demands the
ability to work long hours for sustained periods of time.
Persistent problem solver: An entrepreneur must have an
intense desire to complete a task or solve a problem. Creativity is
an essential ingredient.
Initiative: An entrepreneur must have initiative accepting personal
responsibility for actions and above all make good use of resource.
Goal setter: An entrepreneur must be able to set challenging but
realistic goals.
Modern risk taker: An entrepreneur must be a moderate risk
taker and learn from any failures.
These personal traits go a long way in making an
entrepreneur a successful man or woman.

CLASSIFICATION :
The entrepreneur have been broadly classified according
to the types of business, use of professional skill, motivation, growth
and stages of development are discussed below

A. Entrepreneur according to the type of business:

ACCORDING TO THE TYPE OF BUSINESS

BUSINESSENTREPRENEUR

TRADING ENTREPRENEUR

INDUSTRIAL ENTRPRENEUR

CORPORATE ENTREPRENEUR

AGRICULTURAL ENTREPRENEUR

RETAIL ENTREPRENEUR

SERVICE ENTREPRENEUR

Business entrepreneur: Business entrepreneurs are individuals

who conceive an idea for a new product or service and then create
a business to materialize their idea into reality.
Trading entrepreneur: Trading entrepreneur is one who
undertakes trading activities and is not concerned with the
manufacturing work.
Industrial entrepreneur: Industrial entrepreneur is essentially a
manufacturer who identifies the potential needs of customers and
tailors a product or service to meet the marketing needs.
Corporate entrepreneur: Corporate entrepreneur is a person who
demonstrates his innovative skill in organizing and managing
corporate undertaking.
Agricultural entrepreneur: Agricultural entrepreneurs are those
entrepreneurs who undertake agricultural activities as raising and
marketing of crops, fertilizers and other inputs of agriculture.

B.Entrepreneur in technology:
 ACCORDING TO THE USE OF TECHNOLOGY

TECHNICAL ENTREPRENEUR

NON TECHNICAL ENTRPRENEUR

PROFESSIONAL ENTREPRENEUR

HIGH TECH ENTREPRENEUR

LOW TECH ENTREPRENEUR

Technical entrepreneur: A technical entrepreneur is essentially

compared to a “craftman”.He concentrates more on production
than on marketing. He demonstrates his innovative capabilities in
matter of production of goods and rendering of services.
Non- technical entrepreneur: Non- technical entrepreneurs are
those who are not concerned with the technical aspects of the
product in which they deal. They are concerned only with
developing alternative marketing and distribution strategies to
promote their business.
Professional entrepreneur; Professional entrepreneur is a person
who is interested is establishing a business but does not have
interest in managing or operating it once it is established. Such an
entrepreneur is dynamic and he conceive new ideas to develop
alternative projects.

C.Entrepreneur and Motivation:

ACCORDING TO THE MOTIVATION

PURE ENTREPRENEUR

INDUCED ENTREPRENEUR

MOTIVATED ENTREPRENEUR

SPONTANEOUS ENTREPRENEUR

Pure Entrepreneur: A pure entrepreneur is an individual who is

motivated by psychological and economic rewards.
Induced entrepreneur: Induced entrepreneur is one who is
induced to take up an entrepreneurial task due to the policy
measures of the government that provides assistance, incentives,
concessions and necessary overhead facilities to start a venture.
Motivated entrepreneur: New entrepreneurs are motivated by
the desire for self fulfillment.
Spontaneous entrepreneur: These entrepreneurs start their
business by their natural talents.
D.Growth and entrepreneur:

ACCORDING TO THE GROWTH

GROWTH ENTREPRENEUR

SUPER GROWTH ENTREPRENEUR

Growth entrepreneur: Growth entrepreneurs are those who

necessarily take up a high growth industry which has substantial
growth prospects.
Super growth entrepreneur: Super growth entrepreneurs are
those who have shown enormous growth of performance in their
venture.

E.Entrepreneur and stages of development

ACCORDING TO THE STAGES OF

DEVELOPMENT

FIRST GENERATION
ENTREPRENEUR

MODERN ENTREPRENEUR

CLASSICAL ENTREPRENEUR

First generation entrepreneur: A first generation entrepreneur is

one who starts an industrial unit by innovative skill.He is essentially
an innovator, combining different technologies to produce a
marketable product or service.
Classical entrepreneur: A classical entrepreneur is one who is
concerned with the customer and marketing needs through the
development of a self supporting venture.
ENTREPRENEURIAL DEVELOPMENT PROGRAMME (EDP) :
Entrepreneurial development is a process in which
persons are injected with motivational drives of achievement and in
sight to tackle uncertain and risky situations especially in business
undertakings. The process of entrepreneurial development focuses
on training, education, reorientation and creation of conducive and
healthy environment for the growth of enterprises.
Meaning: EDP is an effective human resource development tool.
It designed to help a person in strengthening and fulfilling his
entrepreneurial motive and in acquiring skills and capabilities
necessary for playing his entrepreneurial role effectively.
Objectives of the Programme:
In line with the national programme for the promotion
and development of small and medium industries in the
countryside, the Industrial Service Institute (ISI) under the
Department of Industrial Promotion (DIP) launched the EDP to give
substance to the government’s policies of stimulation of
economicgrowth, dispersing industries to rural areas and promoting
the processing of local raw materials. The EDP was considered a
part of the industrial development policy which was articulated in
the Five Year National Economic and Social Development Plan.
The Programme had sought to develop entrepreneurial
activities in the rural areas of Thailand as a vehicle for economic
growth with the achievement of the following objectives:
1. To promote the development of small and medium
enterprises that would encourage self - employment among
potential entrepreneurs.
2. To provide, in the rural areas, special programmes designed
to stimulate new ventures and encourage expansion of
existing activities of small and medium industries.
3. To generate employment and self employment opportunities
in the processing of indigenous raw materials for local
consumption and export.
4. To develop entrepreneurial opportunities for potential
entrepreneurs and upgrade managerial skills for existing
entrepreneurs.
For a sound training programme for entrepreneurship development
in India , the expert group constituted by the NIESBUD accepted
that it must be able to help selected entrepreneurs to:
1. Develop and strengthen their entrepreneurial quality /
motivation.
2. Analyse environment related to small industry and small
business.
3. Select project / product.
4. Formulate projects.
5. Understand the process and procedure of setting up of small
enterprise.
6. Know and influence the source of help / support needed for
launching the enterprise
7. Acquire the basic management skills
8. Know the pros and cons of being an entrepreneur and
9. Acquaint and appreciate the needed social responsibility /
entrepreneurial disciplines.
Some of the other important objectives of entrepreneurial
training are:
1. To let the entrepreneur set or reset the objectives of his
business and work individually and along with his group for
their realization.
2. To prepare him for accepting totally unforeseen risks of
business after such training.
3. To enable him to take strategic decisions
 4. To enable him to build an integrated team to fulfill the
demands of tomarrow.
5. To communicate fast, clearly and effectively
6. To develop a broad vision to see the business as a whole and
to integrate his function with it
7. To enable him to relate his product and industry to the total
environment, to find what is significant in it and to take it into
account in his decisions and actions.
8. To enable him to cope with and co ordinate all relevant paper
work, most of which is statutorily obligatory.
9. To make him accept industrial democracy that is accepting
workers as partners in enterprise and
10. To strengthen his integrity, honesty and compliance with law
the key to success in the long run.

Entrepreneurial Development Cycle

1.Entrepreneurial education
2.Planned publicity for entrepreneurial opportunities
3. Identification of potential entrepreneurs through scientific method
4. Motivational training to new entrepreneurs
5. Help and guidance in selecting products and preparing project reports.
6.Making available techno economic information and product profits
7.Evolving locally suitablenew products and processes
8.Availability of local agencies with trained personnel for entrepreneurial
counseling and
promotion.
9.Recognition of entrepreneurial skills

1. Registration of unit
2. Arranging finance
3. Providing land, shed, power, water etc
4. Guidance for selecting and obtaining
simulat machinery
support 5. Supply of scarce raw materials
ory 6. Getting licences / import licences
Entrepreneu
7. Providing common facilities
rial 8. Granting tax relief or other subsidy
9. Offering management consultancy
cycle 10. Help marketing product
11. Providing information.

sustaini
ng

i. Help modernization
ii. Help diversification / expansion / substitute production
iii. Additional financing for full capacity utilization
iv. Deferring repayment / interest
v. Diagnostic industrial extension / consultancy source
vi. Production units legislation / policy change
vii. Product reservation / creating new avenues for marketing
viii. Quality testing and improving service
ix. Need based common facility centre