Entrepreneur

The word entrepreneur is derived from the French verb enterprendre. It means to undertake The Frenchmen who organized and led military expeditions were referred to as entrepreneurs. Around 1700 A.D. the term was used for architects and contractor of public works.

The entrepreneur
In many countries, the entrepreneur is often associated with a person who starts his own new business. Business encompasses manufacturing, transport, trade and all other self employed vocation in the service sector.

Encyclopedia Britannica
An individual who bears the risk of operating a business in the face of uncertainty about the future conditions.

Oxford Dictionary
A person who sets up a business or businesses, taking on financial risks in the hope of profit

Schumpeter's Definition
-An economist

The entrepreneur in an advanced economy is an individual who introduce something new in the economy- a method of production not yet tested by experience in the branch of manufacturing, a product with which consumers are not yet familiar, a new source of raw material or of new markets and the like.

Druckers Views on Entrepreneur

-Management guru

Peter Drucker has aptly observed that, An entrepreneur is one who always searches for change, respond to it and exploit it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or different service Innovation is an instruments of entrepreneurship

Richard Cantillon
-French economist

A person who pays certain price for a product to resell it at an uncertain price thereby making decision about obtaining and using resources while assuming the risk of enterprise

Adam Smith
-An economist

The entrepreneur is an individual who forms an organization for commercial purpose. He/She is proprietary capitalist, a supplier of capital and at the same time a manager who intervenes between the labor and the consumer. Entrepreneur is an employer, master, merchant but explicitly consider it as capitalist

In nut shell
Entrepreneur-a person who sets up venture/ business Entrepreneurship-the process or action of setting up of new venture/Business Enterprise-the venture so set up (venture/Business) Entrepreneurship has been considered as the propensity of mind to take calculated risk with confidence to achieve a predetermined business objectives

Corporate manager
Manager is one who manages all the resources to match with the organizational needs. In the managerial role resources are allocate to solve the problem and improve the administrative efficiency.

Entrepreneur Vs Entrepreneurship
Entrepreneur 1. Refer to a person 2. Visualiser 3. Creator 4. Organizer 5. Innovator 6. Technician 7. Initiator 8. Decision-maker 9. Planner 10. Leader 11. Motivator 12. Programmer 13. Risk taker Entrepreneurship Refers to process Vision Creation Organization Innovation Technology Initiative Decision Planning Leadership Motivation Action Risk taking

Corporate/Traditional Manager Vs Entrepreneur

Manager 1.Want promotion, traditional corporate rewards & power. 2.Respond to quotas & budgets, weekly, monthly etc planning horizons. 3.Deligates, more of supervision than self involvement. 4.Decision making in accordance with the likes of senior manager Entrepreneur 1.Wants freedom, goal oriented, self reliant and self- motivated. 2.End goals of 5-10 years growth of business in view as guide. 3.Direct involvement. Gets hands dirty

4.Follow dreams with vision

Corporate/Traditional Manager Vs Entrepreneur

Cont..

Manager 5.Is primarily on events inside corporation

6.Avoid risk 7.Strive to avoid mistakes and surprises.

Entrepreneur 5.Is primarily on technology and market place 6.Like moderate risk 7.Deal with mistake and failure as learning experience.

Five core elements of Entrepreneurship

1.Creativity & innovation -identify opportunity 2.Ability to apply Creativity -translate into action i.e. ability of getting things done 3.Drive & passion to change the status quo 4.Focus on creating values -by doing things in cheaper, better & faster manner. 5.Risk taker -doing things different

Pure entrepreneurs
Who create venture from the raw material of their own ideas and hard work. They convert it into a successful business with their instinct for opportunity and sense of timing, their hard work and idea producing ability. -Dhirubhai Ambani -Narayan Murthy Who takeover the business after founder retire, die or sell out and continue to built and innovate are qualify as entrepreneur but not pure entrepreneur

Entrepreneurial Attitude
a) b) c) d) e) f) g) Tendency to take moderate risk An eye for economic opportunity Imaginative Initiative Believe they can change the environment Enjoy freedom of expression Find satisfaction from successful completion of task

Entrepreneurship in a developing economy

Need pure entrepreneurs There is scope and need of non pure entrepreneurs

Entrepreneurship as career option

Wage employment 1.Limited scope 2.Routine type 3.Status quo 4.Problem avoiding 5.Dependant 6.Consume national wealth 7.Fixed earning Entrepreneurial employment 1.Unlimited scope 2.Creative job 3.Innovative 4.Problem solving 5.Independent decisions 6.Generate national wealth 7.Growing earning

Need of entrepreneurship
1.Employement generation 2.Improves national income 3.Dispersal of economic power 4.Balance regional development

Entrepreneurial values
Values are generalized and organized conception influencing the behavior and nature of human being. it is set of beliefs about the various aspect of the world. value provide standards that guide behavior. values are also reflective of a culture and are widely shared by those belonging to that culture.

Entrepreneurial values
1.Innovativness- can be seen through in the following actions. 1.Enjoying change 2.Experimenting with new ideas 3.Facing uncertainty in order to try new idea 4.Finding problems to solve 5.Working on problem causing great difficulties to others 6.Looking for unstructured assignment 7.Appreciating and contributing to new ideas generated by others 8.Using existing methods, equipments, material & services for unconventional services

Entrepreneurial values
Contd.

2.Independence 3.Outstanding performance 4.Respect for work

Entrepreneurial characteristics
1.Need to Achieve- Desire to be a winner 2.Perseverance- Quality to stick to it 3.Moderate risk taker- Prefer middle of the road 4.Use of feedback- Knowing how they perform 5.Facing Uncertainty- Tolerance for ambiguity and unfamiliar situations 6.Stress Taker- Posses drive and energy

Entrepreneurial characteristics
Contd..

7. Self-confidence- Faith in their abilities 8. Initiative- Seeking responsibility 9.Positive self concept- aware of oneself and internal locus of control 10. Motivators- Posses interpersonal skills 11.Flexibility- Flexible in decisions 12.Analitical ability- Unaffected by personal likes and dislikes 13.Independance- Dislikes working for others 14.Ability to find and explore opportunity

Entrepreneurial Motivation
MotivationThe process of arousing action, sustaining the activity in progress and regulating the pattern of activity. An inner state that energies activities and directs or channels behavior towards goal

Factors that motivate entrepreneur

1.

Entrepreneurial Ambition
To make money To gain social prestige To secure self-employment or independent living

2.

Compelling Reasons
Unemployment Dissatisfaction with existing job or occupation To put the idle funds in entrepreneurship To use technical or professional knowledge and skills

3.

Facilitating Factors
Previous knowledge, experience or association with same or similar line of business activity Influence and encouragement by family members, friends and relatives

Factors promoting entrepreneur

Internal Factor Desire to work independently Occupational experience Technical/Trade/Qualification and knowledge External factors Supportive government policies Availability of financial assistance Ancillary support Availability of infrastructural facilities like industrial plot, electricity, technical facilities etc.

Classification of entrepreneurs
According to the types of business
1. Trading entrepreneurs 2. Industrial entrepreneurs Large/Medium/Small/Tiny 3. Corporate entrepreneurs 4. Agricultural entrepreneurs Plantation/Horticulture/Dairy/Forestry 5. Retail entrepreneurs 6. Service entrepreneurs

According to the use of Technology 1. 2. 3. 4. 5. Technical entrepreneurs Non-technical entrepreneurs Professional entrepreneurs High-tech entrepreneurs Low-tech entrepreneurs

According to the Motivation

1. 2. 3. 4. Pure entrepreneurs Induced entrepreneurs Motivated entrepreneurs Spontaneous entrepreneurs According to the Growth 1. Growth entrepreneurs 2. Super-Growth entrepreneurs

According to the stages of Development 1. First generation entrepreneurs 2. Modern entrepreneurs 3. Classical entrepreneurs According to the Area 1. Urban entrepreneurs 2. Rural entrepreneurs

According to gender and age

1. Men entrepreneurs 2. Women entrepreneurs Young/Old/Middle-age

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

Other or Unclassified Traditional entrepreneurs Skilled/Unskilled entrepreneurs Imitating entrepreneurs Inherited entrepreneurs Forced entrepreneurs National/International entrepreneurs Immigrant entrepreneurs

Type of entrepreneur -According to Business today

The reactors
Kumar Manglam Birla Sulajja Motwani Sanjiv Goenka Azim Premji

The path breakers

Dhirubhai Ambani Brij Mohan Munjal Narayan Murthy

Type of entrepreneur -According to Business today

The pioneers Dilip Chhabria-Car Design Raman Roy- Spectramind eServices Ekta Kapoor- Balaji Telifilms The gamblers Sanjay Reddy- GVK Industries Suhag Khelmani- Techno Clean India

Socio-Economic origins of Entrepreneurship

Cast/Religion Family background Level of education Level of perception Occupational background Migratory character Investment capacity Ambition/Motivation

Culture
Culture represents the manner in which members of a group (whether in society or a business group) regulate their behavior in order to be in harmony with each other and with other groups in that society It manifests itself in their pattern of behavior, form or art and music, language, customs and practices and in the belief that are shared

Elements of culture
Culture consist of tangible man-made objects clothing, building, eating habit and intangible concept such as laws, morals and knowledge. In addition, culture includes the values, character, skills acceptable within the particular society Culture in a society is learned and passed on from one generation to next

Entrepreneurial culture
Entrepreneurial culture implies vision, values, norms & traits that are conducive for the development of the economy

Sub-cultures of Entrepreneurship
Culture of business- It is sum total of the norms, beliefs and values that regulate the behavior of individuals and groups within any given corporation, how they work together and pursue the goals many organizations not aware of their culture

Business ethics- ethics is that branch of philosophy which is concerned with rightness or wrongness, goodness or badness of human conduct
Ethics are supposed to provide the basis for deciding whether a particular course of action is morally correct or wrong.

Productivity culture- All productivity improvements stems from people productivity as people constitute the motive power for all resources

A key to productivity is the attitude of employees who work together

Total quality culture- TQC is way of marking an integration of all efforts in the organization in achieving total quality and customer care
TQC helps in improvement of quality of work life employees satisfaction and customer satisfaction

Barriers to entrepreneurship
1. Economic barriers 2. Non economic barriers 3. Personal barriers

Economic barriers
Capital Labor Raw material

Non economic barriers

Cultural block Practical values Importance of logic Respect for entrepreneurs Tradition binding Emotional block

Personal barriers
Lack of sustained motivation Difficulty with ambiguity Inability to dream and use subconscious Risk avoidance Lack of clean perception Impatience in solving problem

Blowing of the Myths

Age factor Sex-Male/Female Money Experience Undergoing an EDP Entrepreneurship means manufacturing Education and entrepreneurship Government incentive

Intrapreneurship Corporate entrepreneurship

The process by which other new ventures are born within the confines of an existing corporation. It involves expansion by exploring new opportunities through new combination of existing resources. The top executives inside the organization should be encouraged to be entrepreneurs within the enterprise rather than going outside

Intrapreneurship Vs Entrepreneurship
Entrepreneurship Is an independent businessman Himself raises the capital from various sources Guarantees the return to investors/creditors Bear full risk of business Intrapreneurship Semi dependant on the promoters/owners Dose not raises the capital from various sources Dose not guarantees the return to investors Dose not fully bear risk of business

Intrapreneurial climate
1. Concentrate on R & D (Technology) 2. Encourage trial and error and experimentation 3. Not insist on any preconceived parameters 4. Make resources easily available & accessible 5. Encourage multi disciplinary team approach 6. Establish long-term horizon for evaluating success 7. Allow to carry on by own 8. Appropriately rewarded 9. Flexibility of changing the corporate objective 10. Whole hearted support of top management

Businesses need intrapreneurs

Threat from smaller aggressive entrepreneurial driven firms In large corporate house the organizational culture thwarts creativity and innovation

 Intrapreneurs are the powerhouses within companies that create new businesses, that keep a company or organisation moving forwards, they motivate colleagues and keep profits up. Intrapreneurial employees are energetic, enthusiastic, imaginative and inventive. They have ideas for creating new products or services often working on them in their own time. They can see how savings can be made. How processes can be improved.

Intrapreneurial characteristics
Being visionary Creativity Encouraging team work Build group of supporter Persistence

Intrapreneurs Activity
Corporate venturing Innovativeness Self renewal Pro activeness

Classification of corporate entrepreneurship

1. 2. 3. 4. 5. Administrative entrepreneurship Opportunistic entrepreneurship Acquisitive entrepreneurship Imitative entrepreneurship Incubative entrepreneurship

Fostering intrapreneurial culture

Corporate strategy should aim at developing intrapreneurial confidence Big corporate to learn to act like small enterprise Assure intrspreneurship is valued Encourage diverse thinking

Creativity, Innovation and Idea Generation

Brings change in the use of resources in

the society Helps to find out solution of social problems Opportunities are identified and new ventures, that add value to the society are established.

Creativity
Ability to conceive To be creative person must work for long hours and hard to generate multiple solution Preservation of curiosity Creativity is prerequisite for innovation Creative ability is universally distributed

Innovation
It is the process of doing new things Ideas have little value until thy are converted into useful products or services

Innovation transforms creative ideas into useful applications.

The creative process

Stage 1- Task presentation Understanding problem & getting motivated Stage 2- Preparation Collecting information and knowledge

Stage 3- Incubation Subconscious assimilation of knowledge

The creative process

Cont..

Stage 4- Idea Generation Evolving alternative ideas or solution Stage 5- Idea validation Verified as realistic & useful application

Stage 6- Outcome Assessment Assessment of creative process

Component of creative performance

1.
i. ii. iii.

Intrinsic Motivation
Processing diverse information Seeing no obvious side of an issue Exploring alternative solution paths

2.
i.

Skills in the task domain

Knowledge of the problem area

3.
i. ii. iii. iv.

Skill in creative thinking

Make random association between ideas Visualize potential solutions See the divergent uses of single idea Generate number of diverse alternatives

Creativity, Innovation & Entrepreneurship

Entrepreneurship is the creative activity. An entrepreneur is an innovator who introduces something new in an economy innovation may be in Introducing a new manufacturing process Introducing a new product Locating new source of raw material/semi finished product Opening new market Developing a new combination of means of production

Creative Enterprise
Having open channel of communication Using teams for solving problems Decentralized organization structure Playful culture and freedom of discussion Allocation of resources to creative personal and projects without caring for immediate payoff

The Business Idea

-Selection criteria

1. Enable entrepreneurs to utilize the skills 2. Enable the use of locally available raw materials 3. Helps making product that have demand 4. Enable the use of any technical know how 5. Enable the entrepreneur to solve a current problem existing in the market

Sources of the business ideas

Discussion with other people Looking through book Visiting shops & attending trade shows Information from research institutes Brainstorming Converting hobby into business

Entrepreneurship product match

1. Skills needed for the business idea are available with the entrepreneur 2. Fund available match the fund needed for the business idea 3. Entrepreneurs weakness does not badly effect making and selling the product 4. Ensure the opportunities sought by entrepreneurs are the opportunities offered by the business

Dynamics of project identification

1. Need of the society 2. Capability of the entrepreneurs 3. Resources available in the environment

Woman entrepreneurs
-Ministry of Industry

Woman entrepreneurs are those who operates and control an enterprise, and whose holding in the enterprise is at least 51 percent.

Financial Assistance
Mahila udyog nidhi Stree shakti package

Occupational Background Sources of funds Reasons for becoming an entrepreneur

Housewife Service related occupational background Family and personal funds Personal loans Earning extra money for the family Keeping oneself gainfully occupied Inability to seek wage employment Lack of growth in the present job Flexibility in the working hours To be independent

Motivation

Personality

Support group

Flexibility and tolerant Goal oriented Adequate self confidant Enthusiastic and energetic Creative and realistic Close friends Family and husband Woman organizations

Barriers of Woman Entrepreneurs

Family ties Social attitude towards woman Low mobility Male dominance Lack of education Non-availability of finance Severe competition No risk bearing capacity Too much dependence on middlemen

Problems of New Ventures

Financial Problems Administrative Problems Marketing Problems Production Problems

Financial Problems
Long term capital Working capital Recovery Taxation Inadequate finance

Administrative Problems
Lack of proper planning Poor project implementation Poor management Inadequate capacity utilization Low level of technical skills Lack of strategies Problem of inadequate infrastructure (location, power, water, communication) Bureaucratic red tape and regulations

Marketing Problems
Lack of knowledge about the market Competition from large industries Branding problems Distribution problems Inadequate advertising and sales promotion Poor bargaining power Unfamiliarity with export procedures and market

Production Problems
Shortage of raw material Underutilized capacity Poor quality control Inadequate utility services Problem of outdated technology Low scale of production Lack of standardization

Sickness in Industry and Business

Demand recession Under-utilized capacity Industrial unrest Plant breakdown Obsolete technology Obsolete machinery Shortage of raw material Competition and trade wars Inadequate finance Diversion of funds Dependence on single product and single customer Incompetent management

Turnaround Strategies
Emergency stageLiquidation of surplus assets Manpower cut Debt restructuring Better housekeeping

Stabilization stageCost cutting Improved effectiveness Renovation of plant Product differentiation Return to normal stagePlan new products Enter new market Establishing strategic alliance

The four entrepreneurial pitfalls - Peter Drucker

Entrepreneurial pitfalls where the new and growing business typically gets into trouble All four are foreseeable and avoidable

First Pitfall
The first come when the entrepreneur has to face the fact that the new product or service is not successful where he or she thought it would be but is successful in a totally different market Many businesses disappear because the founder-entrepreneur insist that he or she knows better than the market

Second Pitfall
Entrepreneur believes that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most Growing bodies need to be fed, and business that grows fast devours cash The businesses pays attention to cash flow, gets beyond the cash crunch, and grows rapidly beyond expectation

Third Pitfall
When the business grows, the person who founded it is incredibly busy. Rapid growth puts an enormous strain on a business. You outgrow your production facilities. And you don't see that you are outgrowing your management base. You should create the management team

Fourth Pitfall
After the long time when the business is successful, entrepreneur asked himself What do I want to do? What is my role? Those are the wrong questions instead of that you should be asking What does the business need at this stage? Do I have those qualities?

Ten myths about entrepreneurs

Myth 1: Small and medium-sized enterprises (SMEs) are the job creators. Reality : Only a certain type of SME-the dynamic companies and entrepreneurs are the high growers and job generators. Myth 2: New companies are the fundamental source of growth in employment Reality :High job growth is produced by both old and new companies.

Myth 3: Growing companies come from new and high-growth sectors Reality : Dynamic companies come from all sectors Myth 4: Entrepreneurs of growing companies are young and well educated Reality :Dynamic entrepreneurs are of all ages and educational levels

Myth 5: Growing companies are developed by an energetic and self-sufficient entrepreneurs Reality :Dynamic companies are built by teams or a partnership of entrepreneurs with a professional approach to management. Myth 6: Growing companies target large and growing markets. Reality :Dynamic companies target market segments where they can be leaders or strong challengers.

Myth 7: Growing companies target mainly domestic markets where they can dominate such market. Reality : Dynamic companies target a significant proportion of their sales to export markets where they can learn and grow. Myth 8: successful growing companies use low-cost strategies to compete . Reality : Dynamic companies compete with high-quality products and superior services.

Myth 9: Successfully growing companies rely primarily on unique technology. Reality : Dynamic companies rely primarily on people, whom they carefully recruit, train and develop Myth 10: Growing companies use sophisticated sources of financing to built their companies. Reality : Dynamic companies are predominantly self-funded, with assistance from bank loans.