Entrepreneurship

Defining Entrepreneurship
The term entrepreneurship comes
from the French verb entreprendre and
the German word unternehmen, both
means to undertake.
Despite its current prominence,
entrepreneurship still remains a vague
concept.

Understanding entrepreneurship
through various sciences
Economics:

- One who brings resources,

labor, material and other assets into
combinations that make their value greater
then before and also one who introduces
changes, innovation and new order.
Psychology: - A person who is typically
driven by some forces, which create a desire
to obtain or attain something.

Understanding entrepreneurship
through various sciences
Sociology:

- A person whose actions would

determine his social status and who
contributes to the development of society.

Management:

- A person who has a vision

and generates an action plan to achieve it.

Entrepreneurship definition
Joseph

Schumpeter (1934) he added the

concept of innovation to the theory of
entrepreneurship. According to him
entrepreneur is the bearer of mechanism for
change, and anybody could be an
entrepreneur if he/she carries out new
combinations.

Entrepreneurship definition
Schumpeter listed five different kinds of innovations
or ways to act as entrepreneur: The introduction of new good or quality of good.
The introduction of new method of production.
The opening of a new market.
The utilization of some new sources of supply of
raw materials or intermediate goods.
The carrying out of some new organizational form
of the industry

Entrepreneurship definition
Stevenson

and Sahlman (1987):

entrepreneurship is the relentless pursuit of
opportunity without regard to resources
currently controlled. Moreover, they believe
that there is an underlying process in
entrepreneurship that starts with the
identification of opportunity and ends with
harvesting the fruits of ones labours

Entrepreneurship definition
Peter

Drucker he defines an entrepreneur as

one who always searches for change, responds
to it, and exploits it as an opportunity.

Bygrave

& Hofer (1991): defined the

entrepreneurial process as all the functions,
activities, and actions associated with the
perceiving of opportunities and the creation of
organizations to pursue them.

Entrepreneurship definition
An

individual, who identifies,

recognizes upcoming opportunity
and is able to organize resources
to establish an enterprise
capitalizing on that opportunity is
an entrepreneur.

Entrepreneurship Highlights
Diversity

- Entrepreneurship principle is
applicable in diverse settings.
Great potential - Mostly entrepreneurial
ventures are started as small enterprises but
grow rapidly
Creative thinking - Entrepreneurs identify
opportunities creatively.

Difference in entrepreneur & manager

Entrepreneur

involved with the start-up

process
assumes financial, material
and psychological risks
driven by perception of
opportunity
initiates change
is his own boss
gets uncertain rewards

Manager

running the business over a

long period of time
does not have to bear risks
Driven by resources he
currently possesses
follows rules & procedures
is a hired employee
gets fixed rewards and
benefits

Entrepreneurship characteristics
Entrepreneurship

is viewed as a function
involving identification and use of
opportunities which exist in the market.

Entrepreneurs

bear risks in converting the

ideas into action and pursuing opportunities.

Characteristics continued
Entrepreneurship

innovative action

involves creative and

Entrepreneurs

undertake managerial
activities as part of their work.

An

entrepreneur constantly strives for

excellence in his/her field of work.

Qualities of successful entrepreneurs

Initiative

In the world of business,

opportunities come and go. He should be
able to initiate action and take advantage of
opportunity. Once you miss the opportunity it
will not come again. Therefore, initiative on
the part of entrepreneur is a must.

Qualities of successful entrepreneurs

Willingness

to assume risk

In any
business there is an element of risk. in other
words it is not necessary that every business
shall earn profit. This deters individuals to
take up business. However, an entrepreneur
always volunteers to take risks to run a
business and be successful.

Qualities of successful entrepreneurs

Ability

to learn from experience

An entrepreneur
may commit mistakes. However, once an
error is committed, it should not be repeated
as that will lead to heavy losses. So, one
should learn from his mistakes.

Qualities of successful entrepreneurs

Motivation

Motivation is key to success. Once

you get motivated to do something you will
not rest unless you complete it. For example,
sometimes you become so much interested
in reading a story or a novel that you do not
sleep unless you complete it.

Qualities of successful entrepreneurs

Self-confidence

For achieving success in life,

one should have confidence in himself or
herself. A person who lacks confidence can
neither do any work himself nor can inspire
others to work. Self confidence is reflected in
courage, enthusiasm and the ability to lead.

Qualities of successful entrepreneurs

Orientation

towards hard work

There is no
substitute for hard work in life. While running
a business, everyday, one problem or the
other may arise. The businessman has to be
vigilant about it and solve it as early as
possible. This requires hard work on the part
of entrepreneur. He cannot afford to say that
now office time is over and I will not work.

Qualities of successful entrepreneurs

Decision making ability

In running an enterprise, the
entrepreneur has to take a number of decisions. He
should therefore be capable of taking suitable and
timely decision. In other words he must take right
decision at the right time. In the present world things
move very fast. If an entrepreneur does not have the
ability to take timely decision, he might miss
opportunity and incur losses.

Functions of an entrepreneur
Identifying

entrepreneurial opportunity
There are
many opportunities in the world of business. An
entrepreneur senses the opportunities faster
than others do. And therefore, keeps his eyes
and ears open and apply imagination, creativity
and innovativeness in attaining business
success.

Functions of an entrepreneur
Turning

ideas into action

An entrepreneur
should be capable of turning his ideas into
reality. He collects information regarding the
ideas, products, practices to suit the demand
in the market. Further steps are taken to
achieve the goals in the light of the
information collected.

Functions of an entrepreneur
Feasibility

study
The entrepreneur conducts
studies to assess the market feasibility of the
proposed product or services. He anticipates
problems and assesses quantity, quality, cost
and sources of inputs required to run the
enterprise. Such a blue print of all the
activities is termed as a business plan or a
project report.

Functions of an entrepreneur
Resourcing

The entrepreneur needs

various resources in terms of money,
machine, material, and men to running the
enterprise successfully. An essential function
of an entrepreneur is to ensure the
availability of all these resources.

Functions of an entrepreneur
Setting

up of the Enterprise

For setting
up an enterprise the entrepreneur may need
to fulfill some legal formalities. He also tries
to find out a suitable location, design the
premises, install machinery and do many
other things.

Functions of an entrepreneur
Managing

the enterprise
One of the important
function of an entrepreneur is to run the
enterprise. He has to manage men, material,
finance and organize production of goods
and services. He has to market each product
and service, after ensuring appropriate
returns (profits) of the investment.

Functions of an entrepreneur
Growth

and Development

Once the
enterprise achieves its desired results, the
entrepreneur has to explore another higher
goal for its proper growth and development.
The entrepreneur is not satisfied only with
achieving a set goal but constantly strives for
achieving excellence.

Types of entrepreneurs
Necessity

based / Opportunity based

Profit oriented / Social entrepreneurs
Serial entrepreneurs
Intrapreneurs
First generation / family business

Intrapreneurship
Pinchot

(1985) defines an intrapreneur as a

"person who focuses on innovation and
creativity and who transforms a dream or an
idea into a profitable venture, by operating
within the organizational environment."

Intrapreneurship
It

is the practice of using entrepreneurial

skills without taking on the risks or
accountability associated with
entrepreneurial activities. It is practiced by
employees within an established
organization using a systemized business
model.

Intrapreneurship
Employees,

perhaps engaged in a special

project within a larger firm are supposed to
behave as entrepreneurs, even though they
have the resources and capabilities of the
larger firm to draw upon.

Intrapreneurship

Intrapreneurship types
Employee

Intrapreneur
Self-employed Intrapreneur franchising,
multi level marketing

How Intrapreneurship could be

promoted in organizations: Support

from ownership and top management

Recognition that Intrapreneurship is compatible
to the existing culture
Communication channels that are open
Allocation of resources to the new innovations
Rewards for Intrapreneurship
Follow through by the intrapreneurs in order to
see the finished product.

Rules for the intrapreneur to get his or

her idea accepted
Do

any job needed to make your project work

regardless of your job description
Share credit wisely
Remember, it is easier to ask for forgiveness
than permission
Come to work each day willing to be fired
Ask for advice before asking for resources

Rules for the intrapreneur to get

his or her idea accepted
Follow

your intuition about people; build a team

of the best
Build a quiet coalition for your idea: early
publicity triggers the corporate immune system
Never bet on a race unless you are running in it
Be true to your goals, but realistic about ways to
achieve them
Honor your sponsors.

Successful entrepreneurs

Arun

Jain, Chairman & CEO of Polaris

Software Lab Limited, emphasizes that it is
quality consciousness which has made him
one of the most highly successful first
generation entrepreneurs.

Successful entrepreneurs
Dhirubhai

Ambanis company Reliance is

one of the few Indian enterprises truly on the
world stage employing thousands of people
and with a turnover of many crores of
rupees.
Mr. D.H. Ambani is a perfect example of an
ENTREPRENEUR.

Successful entrepreneurs

Madhuri

Mathur, made the life of ladies in

kitchen easier by bringing out the idea of a
kitchen machine that would blend, chop,
mince and grind that culminated into sumeet
mixer.

Successful entrepreneurs

Shahnaz

Husain introduced herbal cosmetics

to the world. Her creams and lotions have
found their way into salons in different parts
of the globe. She has 650 salons at 104
countries.

Successful entrepreneurs

As

the inventor of Hotmail, Sabeer Bhatia

strengthened India's IT revolution. Hotmail went
from strength to strength as the Web email
address of choice for an estimated 200 million
users worldwide.

Shri Jhunjhunwala is an Entrepreneur

Shri

Jhunjhunwala of Varanasi is a
businessman engaged in the production of
Jhula Vanaspati. He started his business
career from a humble beginning. He had a
small retail shop of oil and ghee. His earning
was limited and not sufficient to meet the
needs of his family. He started looking for an
opportunity to earn more.

Government policies/programs related

to entrepreneurship promotion
Government specially focuses on development of :1. Rural areas
2. Women
3. Economically Weaker sections
Of the society in form of various policies and
programs to promote entrepreneurship.

Government policies/programs related

to entrepreneurship promotion
Indian Government has been very actively promoting
the cause of entrepreneurship in form of various
policy initiatives like: IRDP Integrated Rural Development Program
PMEGP Prime Minister Employment Generation P.
NREGA National Rural Employment Guarantee Act
RGUMY - Rajiv Gandhi Udyami Mitra Yojna etc.

Government policies/programs related

to entrepreneurship promotion
The

Ministry of Micro, Small and Medium Enterpri

ses
is the nodal Ministry for formulation of
policies, programmes and schemes, their
implementation and related co-ordination, for
the promotion and development of small
scale industries in India.

Government policies/programs related

to entrepreneurship promotion
Micro,

Small and Medium Enterprises De

velopment Organization (MSME-DO)
:- the Office of the Development
Commissioner (Micro, Small and Medium
Enterprises) . It is the apex body for assisting
the Government in formulating, coordinating,
implementing and monitoring policies and
programmes for micro, small and medium
enterprises (MSMEs) in the country.

Government policies/programs related

to entrepreneurship promotion
National Small Industries Corporation Ltd (NSIC) :- it
helps in promoting, aiding and fostering the growth of
micro, small and medium enterprises in the country,
with a focus on commercial aspect of their operations.
It deals in the areas of raw material procurement,
product marketing, credit rating, acquisition of
technologies, adoption of improved management
practices, etc.

Government policies/programs related

to entrepreneurship promotion
Khadi and Village Industries Commission (K
VIC)
:- established under the Khadi and Village
Industries Commission Act, 1956, as a
statutory organization engaged in promotion
and development of khadi and village
industries for providing employment
opportunities in the rural areas.

Government policies/programs related

to entrepreneurship promotion
Coir Board :- is a statutory body, for the promotion and
development of coir industry in India as well as for
uplifting the living conditions of the workers engaged
in this industry.
National Commission on Enterprises in the Unorgan
ised Sector (NCEUS)
has been set up for addressing the wide range of
issues affecting the productive potential of the
unorganized micro and small productive units.

Government policies/programs related

to entrepreneurship promotion
For the development of training modules, undertaking
research and providing consultancy services for
entrepreneurship development in the small scale
sector:1. National Institute for Micro, small and Medium Enterp
rises (NIMSME)
at Hyderabad
2. National Institute of Entrepreneurship and Small Bu
siness Development (NIESBUD)
at Noida

An entrepreneur has to obtain several clearances or

permissions depending upon the nature of

his unit and products manufactured.
Regulatory or Taxation Clearances
Environment & Pollution Related Clearances
Product Specific Clearances

Regulatory or Taxation Clearances

Registration

under Sales Tax Act

Commercial Tax officer of area concerned
Registration under Central Excise Act
Collector of Central Excise or his nominee for
area
Payment of Income Tax.- ITO of the area
concerned
Registration of Partnership deed - Inspector
General of area concerned

Regulatory or Taxation Clearances

Calibration

of weights & measures - Weights

and Measures Inspector of State
Power Connection - Designated Officer of
State Electricity Board
Employee strength exceeding 10 with power
connection or 20 without power - Chief
Inspector of Factories

Environment & Pollution Related

Clearances

The method of granting consent under water

and air pollution to SSI units has been
simplified. Except for 17 critically polluting
sectors, in all other cases SSI units will
merely have to file an application and obtain
an acknowledgement which will serve the
purpose of consent.

Product Specific Clearances

Establishing

a Printing Press - District

Magistrate
License for Cold Storage Construction Designated Official in State
Pesticides - Central/State Agricultural
Department - Ministry of Agriculture
Drugs and Pharmaceuticals - Drug license
from State Drug Controller

Product Specific Clearances

Safety

Matches/ Fireworks - License under

Explosives Act from Directorate of Explosives,
Nagpur
Household Electrical Appliances - License from
Bureau of Indian Standards
Wood Working Industry within 8 km from forest District Forest Officer
Milk Processing & Milk products manufacturing
units - Approval under Milk and Milk Products Order
from State Agricultural/ Food Processing Industries
Department above a designated capacity.

Filing of Entrepreneurs Memorandum

with District Industry Centre of its area
Any

person who intends to establish a micro

or small enterprise, at his discretion shall file
the Memorandum of Micro, Small Enterprise
with District Industries Centre of its area.

Business Plan Basics

Students

at any level of education can use

the concept of preparing a business plan as
a method of exploring all kinds of ideas for
starting a business. It is merely a series of
questions that lead you to think about the
requirements and the possibilities of any kind
of business. Until you start to ask these
questions, you aren't able to visualize the
details necessary to be successful in a
business.

Preparing a Business Plan

The

design of the business plan depends on

the kind of venture envisaged and what plan
should accomplish
Clarity
Objectivity
Interest
Simple
Consistent style
Realistic

Elements of a business plan

1.
2.
3.
4.
5.
6.
7.
8.
9.

Executive summary
Product or service
Management team
Market and competition
Marketing and sales
Business system and organization
Operations and implementation schedule
Opportunities and risk
Financial planning

Elements of B-plan Executive

summary

Value to the customer

Innovativeness
Uniqueness
Management expertise
Financial profitability
Readiness to launch the project
Risk analysis

Elements of B-plan product/service

The

product / service concept

What customer need is proposed to be
fulfilled
How your product is different from others
Ability to sustain the innovation
Stage of development
Quality specifications

Elements of B-plan management

team
Capability

of the team to run a

promising business
The core entrepreneurs
Professional experience
Genesis of the project idea
The management team

Elements of B-plan management

team
The

company description
Legal ownership
Mission and objectives
Geographical information

Elements of B-plan target market

Targeted market segment

Demographic profile
Buying sensitivity
Purchasing patterns
Potential revenues
Special strategies required

Elements of B-plan Market

analysis

Size and growth trends

Maturity of the industry
Vulnerability to economic factors
Seasonality factors
Technological factors
Regulatory issues
Supply and distribution requirements
Other Influencing factors

Elements of B-plan Competition

Competing services
Competitive position
Strengths and weaknesses of
competitors
Barriers to entry
Possible future competition
Positioning vis-a-vis the competition

Common pitfalls Market

Everybody

is waiting for my product

Lack of clarity on dimensions of
dissatisfaction
Insensitive to potential competition
No clear appreciation of the entry barriers
What stage of product life cycle you are
entering
Planning and action based on analysis of
industry competitiveness

How to get market knowledge

Gut

feel is not good enough

Volume determination quantitative analysis
Behavior determination qualitative analysis
Data collection primary and secondary
sources
Questionnaire design
Careful extrapolation

Elements of B-plan operations

Location
Sources and complexity of technology
Plant, equipment, facilities,
infrastructure
Recruitment, training and retaining
personnel
Input materials sources, cost
Production, capacity utilization

Common pitfalls - Technology

In-house

Challenges of prototype and commercializing

Technology expertise with only one person
Collaboration
Proven technology, Untested technology
Exclusivity, technical feasibility
Absorption
Acquisition, Assimilation, Fine tuning

Elements of B-plan Implementation

schedule
Prepare

a realistic 3 to 5 yr. plan to inspire

credibility

Identify major milestones

Plan for aggregating resources
Ramp up plan
Human resource planning
Investment scheduling
Strategic partnerships

Common pitfalls - Roll out plan

Location

poor home work on availability,

suitability, cost and further development cost
Availability of quality inputs workforce,
power, water, transport, parking space
Equipment installation and after sales
support
Personnel attracting, training and retaining

Elements of B-plan Opportunities

& risks
Identify

major trends in external environment

Identify major competitive forces operating
on the firm
Possible impact of the forces on the firms
competitiveness in future
Which are the most likely scenarios and what
are their implications to us

Elements of B-plan Financial plan

Is

the business concept profitable an worth

investing in
Plan for investment, source of funds, cash
flow, liquidity and steps for improving
profitability

Elements of B-plan Financial plan

Prepare

Project cost
Projected income
Break-even analysis
Projected cash flow statements
Pro forma balance sheets

Common pitfalls - Finance

Optimistic

assessment of project cost and

funding
Lack of budgeting of trial production
Not taking fully into account the cost
implications
Improper assessment of working capital
The gap between sanction and disbursement
Lack of efforts in confidence building with
investors

Business Plan Basics

Basic

components of a business plan can be

organized as follows:
providing a description of the business,
choosing the best marketing strategy,
identifying the management plan, and
analyzing the finances needed to start the
business and make it successful.

Business Plan Basic- questions

How

can you describe the business...in only

one paragraph please?
What is your product, or service?
Who will buy it?
Where should you locate the business?
How can you attract customers?
What is your competition?
How much should you charge for the products
or service?

Business Plan Basic- questions

What

advice do you need and who can

provide it?
How will you organize the managers and/or
workers of the business?
How will you split the profits? Who is
responsible for the losses?
What should you consider to be able to
produce the product and get it to the
customer?

Business Plan Basic- questions

How

much money is needed to get the

business started?
How many customers will you have per
month and how much will they buy per
month?
How much does it cost to make the product
or provide the service?
What are your operating costs? (Include your
own salary)

Business Plan Basic- questions

How

much money will your business earn each

month by selling your product or service?
How much investment will you need to keep the
business going until you make a profit?
What is your potential profit per year for Year I, Year
II, and Year III?
How much money do you need to borrow to start
this business?
How will you make the business grow in the future?

QUESTIONS FOR CREATIVE

THINKING
What

kind of business would you start if your

family would lend you $5000 to get it started?
What kind of business would you start if you
and two classmates had access to a loan for
$100,000?
What kind of business could you start if you
want to do business with another country?
What type of business could you start while
still going to school?

QUESTIONS FOR CREATIVE

THINKING
What

type of business could you start using

the skills you have now?
What type of business could you run while
also working in a part time job (to provide the
security of a salary while the business
grows)?
How could you start a business and then
later make it into your own franchising
business for purposes of expansion?

Questions- Financing the venture

How

much will be needed for development of the

product or service?
How much will be needed for setting up
operations?
How much will be needed for working capital?
Where will the money come from? What if more
is needed?