Entrepreneurship

Entrepreneurship is the act of being an entrepreneur, which is a Fresh word

meaning “on who undertakes an endeavor.” Entrepreneurs assemble resources
including innovations, finance and business acumen in an effort to transform
innovations into economic good. This may result in new organizations or may be
part of revitalizing mature organizations in response to a perceived opportunity.
The most obvious form of entrepreneurship is that of starting new businesses;
however, in recent years, the term has been extended to include social and
political forms of entrepreneurial activity. When entrepreneurship is describing
activities within a firm or large organization, it is referred to as intrapreneurship
and may include corporate venturing, when large entities start spin-off
organizations.
According to Schumpeter, “Entrepreneurship is based on purposeful and
systematic innovation. It included not only the independent businessman but
also company directors and managers who actually carry out innovative
functions”.

In all above definitions, entrepreneurship refers to the functions performed by

an entrepreneur in establishing an enterprise. Just as management is regarded
as what managers do, entrepreneurship may be regarded as what
entrepreneurs do. In other words, entrepreneurship I the act of being an
entrepreneur. Entrepreneurship is a process involving various actions to be
undertaken to establish an enterprise. It is, thus, process of giving birth to a new
enterprise.
Characteristics of Entrepreneurship

1) Decision Making: A decision is a course of action which is consciously

chosen from among a multiple of alternatives to achieve the desired
result. As entrepreneurship involves both risk and uncertainty, decision
making is crucial on the part of the entrepreneurs to establish and run the
enterprise successfully.
2) Accepting Challenges: Entrepreneurship means accepting challenges
amidst risk and uncertainty. While accepting entrepreneurship as a
career, the entrepreneur accepts the challenges of all odds and puts his
efforts to convert the odds into viable business opportunities by pooling
together the resources for building and running the enterprise.

3) Risk Taking: This characteristic feature implies assuming the

responsibility for loss that may occur due to unforeseen contingencies of
the future. Entrepreneur, by his deep insight and scientific approach,
analyses the situation objectively and reduces the risk considerably on
one hand and enhances the profit factor on the other.

4) Building Organization: Entrepreneurship presupposes the initiative

and skill on building organization. It is by delegation of authorities and
proper leadership that organization can be built up. As per the views of
Harbison, organization building is the most critical skill need for
entrepreneurship as it facilitates the economic use of other innovations.

5) Skillful Management: For effective management of an enterprise, the

role of an entrepreneur to initiate and supervise design of organization-
improvement projects in relation to upcoming opportunities is very much
important.

6) Innovation: David Mc Clelland identified two important characteristics

of entrepreneurship- first doing things in a new and better way, which is
synonymous to innovation given by J.A. Schumpeter and second, decision
making under uncertainty. So innovation is one of the most important
characteristics of entrepreneurship.

7) Mobilization of Resources: resources are the help needed to carry out

activities resulting in accomplishment of goal. They are found in scattered
manner in the environment and required to be perceived, identified and
mobilized by entrepreneurs to attain business goal. Thus, entrepreneurs
make themselves distinct from the rest of population because of their
innate capability to mobilize resources.

EXAMPLES OF ENTERPRENEUR

 Bill Gates, founder of Microsoft. There are probably not many

people that have not been touched by one of his products, such as
Microsoft Windows, Microsoft Office and Internet Explorer.
  Steve Jobs, co-founder of Apple computers, which produces Macs,
iPods and iPhones, as well as Apple TV.
 Mark Zuckerberg, the founder of Facebook.
 Pierre Omidyar, founder of eBay.
Comparison Chart
BASIS FOR
ENTREPRENEUR ENTREPRENEURSHIP
COMPARISON

Meaning An entrepreneur is an Entrepreneurship is a risky

individual or a team activity of commencing a
thereof, having an business usually a start up
innovative idea, and company, offering distinct
takes every step to turn products and services to the
the idea into reality, target customers, which may
while bearing the risks. or may not get success.

What is it? Person who has an idea Process which gives shape to
and gives shape to it. the idea.

Represents An innovator, who A procedure through which an

chased the dream, till it innovation is done.
becomes true.

Business Venture He/She is the one who It is the activity, which an

sets up the business entrepreneur undertakes to set
venture, to turn a up the business venture.
concept into reality.

Intrapreneurship

Intrapreneurship is actually a clever combination of two words. It is the

combination of ‘intra’ meaning within the company or corporate and ‘preneur’.
Essentially an intrapreneur is a person who works within the company but has taken
on an individual project by himself. So an intrapreneur is responsible for turning an
idea or vision into a successful finished product.

So an intrapreneurship is basically a combination of entrepreneurship and

management skills. The key difference is that in an intrapreneurship the
intrapreneur is not the lone risk taker, but he is an employee of the firm.

But he still requires to have all the skill and knowledge of an entrepreneur, even
some assertive risk-taking.

In recent years everyone with the skills and ability of an entrepreneur chooses to
start their own business. This left a dearth of talent in management.

So with the evolution of intrapreneurship, the manager was made the head of the
business unit and asked to run it like an entrepreneur. This helped in bridging the
gap.

An intrapreneur is nothing but an entrepreneur within the boundaries of

the organisation. An intrapreneur is an employee of a large organisation,
who has the authority of initiating creativity and innovation in the
company’s products, services and projects, redesigning the processes,
workflows and system with the objective of transforming them into a
successful venture of the enterprise.

The intrapreneurs believe in change and do not fear failure, they discover
new ideas, looks for such opportunities that can benefit the whole
organisation takes risks, promotes innovation to improve the
performance and profitability, resources are provided by the organisation.
The job of an intrapreneur is extremely challenging; hence they are
appreciated and rewarded by the organisation accordingly.

From last few years, it has become a trend that large corporations appoint
intrapreneur within the organisation, to bring operational excellence and
gain competitive advantage.

Differences between Entrepreneurship and Intrapreneurship

Definition Intrapreneurship is the Entrepreneurship is the
entrepreneurship within an dynamic process of creating
existing organization. incremental wealth.

Core objective To increase competitive To innovate something new of

strength and market socio-economic value.
sustainability of the
organization.

Primary motives Enhance the rewarding Innovation, financial gain tad

capacity of the organization independence.
and autonomy.

Activity Direct participation, which is Direct and total participation

more than a delegation of in the process of innovation. _
authority.

Risk Hears moderate risk. Bears all types of risk.

Status Organizational employee The free and sovereign

expecting freedom in work. person doesn’t bother with
status.

Failure and Keep risky projects secret Recognizes mistake and

mistakes unless it is prepared due to failures so as to take new
high concern for failure and innovative efforts.
mistakes.

Decisions Collaborative decisions to Independent decisions to

execute dreams. execute dreams.

Whom serves Organization and Customers and entrepreneur

intrapreneur himself. himself.

Family heritage May not have or a little Professional or small

professional post. business family heritage.
Relationship with Authority structure delineates A basic relationship based on
others the relation. interaction and negotiation.

Time orientation Self-imposed or There is no time bound.

organizationally stipulated
time limits.

The focus of on Technology and market. Increasing sales and

attention sustaining competition.

Attitude towards Follows self-style beyond Adaptive self-style

destiny given structure. considering Structure as
inhabitants.

Who is a Manager?
A manager, on the other hand, is not an owner of an enterprise. Instead, he is the
one that is responsible for the management and administration of a group of people
or a department of the organization. His day to day job is to manage his employees
and ensure the organization runs smoothly.

A manager must possess some of the same qualities as an entrepreneur, like

leadership, accountability, decisiveness etc. He must also be a good manager of
people. So qualities such as warmth and empathy are also very important in a
manager.

BUSINESS PLAN

Definition: A written document describing the nature of the business, the sales
and marketing strategy, and the financial background, and containing a
projected profit and loss statement

A business plan is also a road map that provides directions so a business can plan
its future and helps it avoid bumps in the road. The time you spend making your
business plan thorough and accurate, and keeping it up-to-date, is an investment
that pays big dividends in the long term.

Mar J. Dollinger has defined the business plan as “the formal written
expression of the entrepreneurial vision, describing the strategy and
operations of the proposed venture.”
According to Jack M. Kaplan, “The term business plan means the
development of a written document that spells out like a roadmap where
you are, where you want to be, and how you want to get there.”

business plan is a written statement of what an entrepreneur proposes to

take up. It is a kind of guide frost or course of action what the entrepreneur
hopes to achieve in his business and how is he going to achieve it. In other
words, business plan serves like a kind of big road map to reach the
destination determined by the entrepreneur. Webster New 20th Century
Dictionary defines a project as a scheme, design, a proposal of something
intended or devised.

IMPORTANCE OF BUSINESS PLAN

1. See the whole business. Business planning done right connects the dots in
your business so you get a better picture of the whole. Strategy is supposed
to relate to tactics with strategic alignment. Does that show up in your plan?
Do your sales connect to your sales and marketing expenses? Are your
products right for your target market? Are you covering costs including
long-term fixed costs, product development, and working capital needs as
well? Take a step back and look at the larger picture.

2. Strategic Focus. Startups and small business need to focus on their special
identities, their target markets, and their products or services tailored to
match.

3. Set priorities. You can’t do everything. Business planning helps you keep
track of the right things, and the most important things. Allocate your time,
effort, and resources strategically.

4. Manage change. With good planning process you regularly review

assumptions, track progress, and catch new developments so you can
adjust. Plan vs. actual analysis is a dashboard, and adjusting the plan is
steering.

5. Develop accountability. Good planning process sets expectations and

tracks results. It’s a tool for regular review of what’s expected and what
happened. Good work shows up. Disappointments show up too. A well-
run monthly plan review with plan vs. actual included becomes an
impromptu review of tasks and accomplishments.

6. Manage cash. Good business planning connects the dots in cash flow.
Sometimes just watching profits is enough. But when sales on account,
 physical products, purchasing assets, or repaying debts are involved, cash
flow takes planning and management. Profitable businesses suffer when
slow-paying clients or too much inventory constipate cash flow. A plan
helps you see the problem and adjust to it.

7. Strategic alignment. Does your day-to-day work fit with your main
business tactics? Do those tactics match your strategy? If so, you have
strategic alignment. If not, the business planning will bring up the hidden
mismatches. For example, if you run a gourmet restaurant that has a drive-
through window, you’re out of alignment.

8. Milestones. Good business planning sets milestones you can work

towards. These are key goals you want to achieve, like reaching a defined
sales level, hiring that sales manager, or opening the new location. We’re
human. We work better when we have visible goals we can work towards.

9. Metrics. Put your performance indicators and numbers to track into a

business plan where you can see them monthly in the plan review meeting.
Figure out the numbers that matter. Sales and expenses usually do, but
there are also calls, trips, seminars, web traffic, conversion rates, returns,
and so forth. Use your business planning to define and track the key
metrics.

10.Realistic regular reminders to keep on track. We all want to do

everything for our customers, but sometimes we need to push back to
maintain quality and strategic focus. It’s hard, during the heat of the
everyday routine, to remember the priorities and focus. The business
planning process becomes a regular reminder.

SIGNIFICANCE OF ENTERPRENEURIAL IN ECONOMIC

DEVELOPMENT

1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the issues
of industrial securities. Investment of public savings in industry results in
productive utilization of national resources. Rate of capital formation
increases which is essential for rapid economic growth. Thus, an
entrepreneur is the creator of wealth.

2. Improvement in Per Capita Income:

Entrepreneurs locate and exploit opportunities. They convert the latent
and idle resources like land, labour and capital into national income and
wealth in the form of goods and services. They help to increase net
national product and per capita income in the country, which are
important yardsticks for measuring economic growth.

3. Generation of Employment:
Entrepreneurs generate employment both directly and indirectly.
Directly, self-employment as an entrepreneur offers the best way for
independent and honorable life. Indirectly, by setting up large and small
scale business units they offer jobs to millions. Thus, entrepreneurship
helps to reduce the unemployment problem in the country.
4. Balanced Regional Development:
Entrepreneurs in the public and private sectors help to remove regional
disparities in economic development. They set up industries in backward
areas to avail various concessions and subsidies offered by the central and
state governments.

Public sector steel plants and private sector industries by Modis, Tatas,
Birlas and others have put the hitherto unknown places on the
international map.

5. Improvement in Living Standards:

Entrepreneurs set up industries which remove scarcity of essential
commodities and introduce new products. Production of goods on mass
scale and manufacture of handicrafts, etc., in the small scale sector help
to improve the standards of life of a common man. These offer goods at
lower costs and increase variety in consumption.

6. Backward and Forward Linkages:

An entrepreneur initiates change which has a chain reaction. Setting up of
an enterprise has several backward and forward linkages. For example-
the establishment of a steel plant generates several ancillary units and
expands the demand for iron ore, coal, etc.

These are backward linkages. By increasing the supply of steel, the plant
facilitates the growth of machine building, tube making, utensil
manufacturing and such other units.
6. Economic Independence:
Entrepreneurship is essential for national self-reliance. Industrialists help
to manufacture indigenous substitutes of hitherto imported products
thereby reducing dependence on foreign countries. Businessmen also
export goods and services on a large scale and thereby earn the scarce
foreign exchange for the country.

Such import substitution and export promotion help to ensure the

economic independence of the country without which political
independence has little meaning.

7. Reduces Concentration of Economic Power:-

Economic power is the natural outcome of industrial and business activity.

Industrial development 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. 

8. Wealth Creation and Distribution:-

It stimulates equitable redistribution of wealth and income in the interest of the

country to more people and geographic areas, thus giving benefit to larger
sections of the society. Entrepreneurial activities also generate more activities and
give a multiplier effect in the economy

9.Creating innovation :-An entrepreneur is a person who always look

for changes from combining the factors of production, he also introduces
new ideas and new combination of factors. He always try to introduce
newer and newer technique of production of goods and services. An
entrepreneur brings economic development through innovation.

10.Improvement in the Standard of Living:-Increase in the standard of living of

the people is a characteristic feature of economic development of the country.
Entrepreneurs play a key role in increasing the standard of living of the people
by adopting latest innovations in the production of wide variety of goods and
services in large scale that too at a lower cost. This enables the people to avail
better quality goods at lower prices which results in the improvement of their
standard of living.
11.Entrepreneurship puts new business ideas into practice.:-In doing so, it
creates jobs that facilitate personal development. With their innovative and
disruptive ideas, entrepreneurs can tackle social problems too. It‟s a worthy
pursuit to consider, but if it‟s not for you, see how to pass down its principles to
the next generation and enrol in How to Encourage and Teach Our Children