CHAPTER 1

INTRODUCTION
Entrepreneurship is viewed by economists to be a combination of innovation and risk taking. When such activity thrives, high growth rates are achieved as well as opportunities offered to all segments of society, including the poor. The latter benefit form growth and employment as well as through opportunities for entrepreneurship. Entrepreneurship need not always be wealth-creating and growth inducing. But it shows that entrepreneurship can be directed towards the accumulation of wealth through unproductive enterprise. Rents can be earned from government awards of licenses and titles that impede market and goods development. The system of incentives that a country sets up in its governance mechanism can either promote healthy entrepreneurship leading to economic growth and prosperity or rent seeking where productive activities are at a discount. In the latter case, a society gets stuck in a low poverty-low growth trap. As Pakistan is one of the most important countries of the world, it has natural resources in plenty. The people of our country are very industrious and hardworking. They have creative minds. They want to earn a lot by utilizing their minds, because they have ideas but they dont know how to convert these ideas in actions. Lack of information is one of the hurdles in their way to start their own business because they are not aware of the risks involved in entrepreneurship. Economic development as a conscious mechanism in countries like Pakistan is a recent post colonial phenomenon. This was an exciting period in which international agencies and international aid were founded with the objective of achieving economic development and eradicating poverty everywhere. The international research network with fledgling domestic

counterparts dedicated themselves to developing policy instruments for delivering this noble objective of plenty everywhere. In country like Pakistan the entrepreneurs face many kind of problems that increase the risks for entrepreneurs. To mitigate these risks of entrepreneurs research is held by me as the research report of BBA. People of the Pakistan are very hard working and want to become entrepreneurs but due to some risks their hops die before birth to become entrepreneurs. Growth is a result of knowledge accumulation and entrepreneurship. It is innovation and ideas that drive growth and not just infrastructure development and investment promotion that most development policy sought to promote in its early period. In this view growth is all about new ideas and innovation which entrepreneurs take the risk of bringing to the market .If the innovative idea must be implemented in a smaller set up and the evidence being that small firms account for only a negligible part of the R&D being actually undertaken then the question arises from where do the small firms get their innovative ideas? The knowledge spills over from the firm or research institute producing knowledge to another firm that commercializes it. This focus upon the role that knowledge spillover plays in generating increasing returns and hence economic growth. The role of geographical proximity has also been recognized in knowledge spillovers. Although the telecom revolution has reduced the cost of transmitting information, knowledge which is based on structures and analysis is not easily acquired and requires specific investment. It is not surprising that even in todays info tech world, industries tend to cluster together. In order to make them aware about the risks of entrepreneurship, I am going to conduct a research, which will be beneficial for the people of our country. This research will leave a positive impact on the economy and will be a source of prosperity.

BACKGROUND
As Pakistan is one of the most important countries of the world, it has natural resources in plenty. The people of our country are very industrious and hardworking. They have creative minds. They want to earn a lot by utilizing their minds, they have ideas but they dont know how to convert these ideas into actions. Lack of information is one of the hurdles in their way to start their own business because they are not aware of the risks involved in entrepreneurship. In order to make them aware about the risks of entrepreneurship, we are going to conduct a research, which will be beneficial for the people of our country. This research will leave a positive impact on the economy and will be a source of prosperity.

BROAD PROBLEM AREA

Various researches have been conducted previously on risks of entrepreneurship. Hence this study will describe the entrepreneurial risks in detail. The problem is being classified into following sub-problems, which are mentioned below: With respect to my observation as well as after conducting literature review I came to conclusion that broad problem area is as follows: To find out the entrepreneurs prospective about mitigation of risks involved in entrepreneurship in Pakistan from that we will be able to teach the up coming people, that what are the techniques to avoid and reduce the risks of entrepreneur for the development of Pakistan Following are some of the risks involved in entrepreneurship: Resistance from family, Finance,

Rules and laws, Competition, Fear of loss, Lack of communication etc.

OBJECTIVES
The most successful economies in the world are also the most entrepreneurial. International research demonstrates that at as much as one third of growth in national income is due to entrepreneurial activity. Firstly Recognizing the Opportunity to create a greater awareness of the opportunities and benefits of entrepreneurship in order to encourage more people to start a business or want to grow the business they are in, and to develop a greater entrepreneurial culture within our institutions, communities and businesses. Secondly in Creating Enterprises to create a greater number of sustainable start-up businesses in Wales with potential for further growth, particularly by under-represented groups of society such as women, the young, Welsh language speakers, ethnic minorities and retired workers. Thirdly, going for Growth to increase the number of businesses in industry that grow, thereby creating wealth, employment and opportunity. The people of Pakistan will better understand the entrepreneurial risks after the research recommendations. To find and minimize the risks involved in entrepreneurship. A source of prosperity of the country Even a layman can start his own business. To reduce the complexity of these risks.

BENEFITS
Economy will grow (prosperity) The up coming entrepreneurs will reach to conclusions too quickly Unemployment will decrease in the country. Provides a vehicle for using your gifts and talents to help others Promotes independence and the opportunity to make your own business decisions Provides flexibility in that you are able to set your own pace and schedule Provides an opportunity to achieve financial independence Provides self-fulfillment Improves economic and financial literacy Increases self-esteem and respect

PROBLEM STATEMENT PROBLEM STATEMENT

With respect to my observation as well as after conducting literature review I came to conclusion that problem statement is as follows:

How to mitigate the entrepreneurial risks in Pakistan.

THEORETICAL FRAMEWORK

Independent Variables

Dependent Variable

Resistance from family

Mitigation Of Entrepreneurial Risks

Trust on partners

Previous experience

Finance

Unfavorable laws and rules

Competition

Fear of loss

Lack of communication Skills

The nature of this study is correlation. In this study I am considering eight variables that can affect each other.

This study shows that efficiency and effectiveness of entrepreneurs are the key factor that supports the performance of the economy. As stated earlier in the problem statement that this study is being conducted to describe and minimize the entrepreneurial risks.

HYPOTHESES

GENERATION OF HYPOTHESIS Ha1: More would be the resistance from family less would be the mitigation of
Entrepreneurial Risks.

Ho1: There is no relationship between resistance from family and mitigation of

Entrepreneurial Risks.

Resistance from family risks

Mitigation Of Entrepreneurial

Ha2: Less would be the trust on partners less would be the mitigation of Entrepreneurial Risks. Ho2: There is no relationship between the lack of trust and mitigation of Entrepreneurial Risks.

Trust on partners risks

Mitigation Of Entrepreneurial

Ha3: More would be the previous experience the more would be the mitigation of Entrepreneurial Risk. Ho3: There is no relationship between the previous experience and mitigation Entrepreneurial risks. Mitigation Of Entrepreneurial risks of

Previous experience

Ha4: More would be the finance the more would be the mitigation of entrepreneurial Risks. Ho4: There is no relationship between the finance and mitigation of entrepreneurial Risks Finance risks Ha5: Unfavorable laws and rules there would be less mitigation of entrepreneurial Risks. Ho5: There is no relationship between the rules and laws and mitigation of Entrepreneurial Risks. Mitigation Of Entrepreneurial risks Ha6: More would be the competition less would be the mitigation of entrepreneurial Risks. Ho6: There is no relationship between the competition and mitigation of Entrepreneurial risks. Mitigation Of Entrepreneurial risks Ha7: More would be the fear of loss more would be the mitigation of Entrepreneurial Risks. Ho7: There is no relationship between fear of loss and mitigation of entrepreneurial Risks. Mitigation Of Entrepreneurial risks Mitigation of Entrepreneurial

Unfavorable laws and rules

Competition

Fear of loss

Ha8: Lack of communication & marketing skills less would be the mitigation of Entrepreneurial Risks. Ho8: There is no relationship between communication & marketing skills and Mitigation of Entrepreneurial Risks. Mitigation Of Entrepreneurial risks

Lack of communication Skills

CHAPTER 2

LITERATURE REVIEW

Everyone wants to have his own business because no one wants to be inferior. A word of caution - although entrepreneurship can be highly rewarding, it presents many challenges as well. If you

have an idea for a business, can gather the resources to create the business, are able to risk the money and time to start it, and then manage or oversee it - you are an entrepreneur. However, there also is a 'dark' side of entrepreneurship. This aspect of the entrepreneurial profile has a destructive source that exists within the energetic drive of successful entrepreneurs. In examining this dual-edged approach to the entrepreneurial personality there are a number of major traits that characterize this dark side. Economic development as a conscious mechanism in countries like Pakistan is a recent post colonial phenomenon. This was an exciting period in which international agencies and international aid were founded with the objective of achieving economic development and eradicating poverty everywhere. The international research network with fledgling domestic counterparts dedicated themselves to developing policy instruments for delivering this noble objective of plenty everywhere. Unfortunately, 60 years later poverty persists and many countries like Pakistan are caught in a poverty trap. The international research enterprise has rededicated itself in the last 20 years to understanding the reasons for this policy, aid and donor failure. The answer has come in five different forms. (a) Economic growth requires institutional prerequisites which underpin human transactions. These prerequisites are those that human civilization has evolved over the years rule of law, democratic institutions, sound legal framework including an efficient and independent judiciary, modern economic governance including property rights and market developing regulation, and a free and open media. Without these the environment remains very uncertain and full of risk which impairs entrepreneurship and investment.

(b) Economic aid works only where the policy and institutional environment is sound. This again lends support to the primacy of institution argument. A society that achieves the institutional set up described above goes on to achieve economic development. (c) Growth is a result of knowledge accumulation and entrepreneurship. It is innovation and ideas that drive growth and not just infrastructure development and investment promotion that most development policy sought to promote in its early period. In this view growth is all about new ideas and innovation which entrepreneurs take the risk of bringing to the market . (d) Easterly (2003 and 2005) presents perhaps the most critical view of the international establishment for the development policy. In his view most aid and aid inspired policy as well as centralised and this is assumes that an entrepreneur is a person who is willing to put his or her career and financial security on the line and take risks in the name of an idea, spending time as well as capital on an uncertain venture. Entrepreneurship is thus being taken as a process of discovering, evaluating and exploiting opportunities. In a world where ideas drive economies, it is no wonder that innovation and entrepreneurship are often seen as inseparable bedfellows. The governments around the world are starting to realise that in order to sustain progress and improve a countrys economy, the people have to be encouraged and trained to think out-of-the-box and be constantly developing innovative products and services. Entrepreneurial small firms are one such mechanism transmitting the spillover of Knowledge. Thus, an increase in the role of entrepreneurship activity may facilitate such knowledge Entrepreneurs people within communities who organize, manage, and measure the risks of a business or enterprise are essential to building the economies of urban and rural areas across the country. Rural areas conventionally lost their young people to big cities with more career

opportunities. Eventually, the more businesses will create the more jobs, the more jobs, the better the economy, the better the economy, that outcome the better our life style. We cannot deny the role of Young Entrepreneurs in building the improved economy. Young Entrepreneurs often try to bring new business ideas those are based on New Business Models and Emerging Technologies. However, Conventional entrepreneurs never try to become a pioneer in these markets. In fact, they try to follow other businesses and industry leaders to reduce the level of risk. I agree with them up to some extent, but the adoption of business strategy in limits is not always healthier for significant business growth. I have studied nine articles and seven surveys of the expertise which is very knowledge based. According to the previous studies I have conclude that there are many risks that involved in entrepreneurship in Pakistan. According to the literature survey I analyze many risks and find out many ways of removing these risks. I also find out that how entrepreneurship will become effective in Pakistan. There is a great deal of literature devoted to extolling the rewards, successes, and achievements of entrepreneurs. Now, it is still not clear that how entrepreneurship become effective so I took various purposes and variables which play most important role to overcome the entrepreneurship risks in Pakistan.

CHAPTER 3

METHODOLOGY

HYPOTHESIS TESTING STUDY

The mitigation of entrepreneurial risks is hypothesis testing study because it is analytical and predictive in nature. Its also explains the nature of certain relationships. It describes the effects of variables on mitigation of entrepreneurial risks.

TYPES OF INVESTIGATION CORRELATION STUDY:

Mitigation of entrepreneurial risks is correlation study because it identified the number of factors related with the problem.

EXTENT OF RESEARCH INTERFERENCE

Natural environment with minimum interference.

STUDY SETTING NON CONTRIVED:

This study takes place in none contrived natural environment where no interference takes place. Its takes place as field study in the environment.

UNITS OF ANALYSIS INDIVIDUALS:

Individuals are the unit of analysis refers to the level of aggregation of data collection during the subsequent data analysis stage.

CROSS SECTIONAL:
The study of mitigation of entrepreneurial risks is cross sectional because data is collected only one time.

ANALYSIS
After conducting research I found lot of variables, which becomes causes of risks. When I met with many entrepreneurs and successful managers I found that they have same point of view on many points. I will discuss only those points which are common for all entrepreneurs and managers. First is resistance from family and friends. When any person thinks to start his or her own business, they mostly face this problem, as the thing which is in mind of entrepreneur, that is not easy to understand for other persons like their family members and friend because risks are must in starting new business and every person not have ability to take risk. So the person who are going to take risk or we can say who staring his or her own business have some ambitions in their mind and little bit they already know about risks involve. But due to lot of encouragement from family and friends which can be really create disturbance for businessman. In Pakistan people are very intellectual and have ability to become successful entrepreneurs but lot of them cannot start their own business due to financial problem. In Pakistan lot of students those have lot of abilities to launch new product, software, research etc but due to lack of financial resources they cannot do. I found that many businessman

start business and they have ability to enhance their business on higher level but due to shortage of finance they couldnt. Rules & laws of Pakistan are not favorable for all businesses. Our Govt. does not support business sector. After conducting research i found every entrepreneur is facing this problem. One thing which is very helpful for all businessman, which is our natural resources, like cotton. Our cotton is no. 1 in world, so that our textile sector in development. Govt. does facilitate new starter of business. In Pakistan there are no any rules and laws which promote those persons who have ability to do something which can build economy of Pakistan. In Pakistan when any businessmen becomes successful in any field of business and earn lot of money, lot of other businessman starts the same business. Due to this, competition increase and profit ratio decrease. So lot of businessman has to leave Market. Many intellectual persons have lot of abilities to start business but due to fear of loss they do not start their own business. They think that if they will spend their money in business they may loose their money. But for become successful entrepreneur we must have to take risk. One person cannot establish business on higher level alone, so for increase capital and expertise some time we have to make partnership. But partnership become successful only when each partner have trust on each other but in Pakistan its very common problem that any person does not have trust on other so its also have big effect on becoming successful entrepreneur. Some time any person start business and due to any usually unknown reason he or she fails in business. But due to this they do not take risks to start their own business in future. But how we can say that if we are fail at once then definitely would be fail next time?

RESEARCH INSTRUMENT
As the research is based on quantitative data and primary source was used to collect data, therefore the instrument used to conduct the research is questionnaire. A questionnaire is consisting of pre-formulated written set of questions to which respondents record their answers usually within rather closely defined alternatives. The other reason for using questionnaire as research instrument is that it fulfills all the research requirements without occupying much time of both the respondent and the researcher. In this study questionnaire were distributed among different entrepreneurs of almost all field of life specially located in Faisalabad as well as Lahore. Questionnaires was distributed and administered personally as the survey confined to the local area (Faisalabad).

RESPONDENTS OF THE STUDY

Up coming people who want to be an entrepreneur in the near future in Pakistan are the respondent of this study. I measured the impact of finance, lack of communication, fear of loss, lack of trust, previous experiences, govt. rules and regulations, on the entrepreneurs in Pakistan. Entrepreneurs are the one who can compare their abilities, skills and know the significance of the role played by this study