MODULE​ ​3.

ENTREPRENURSHIP
Introduction
Entrepreneur is a person who discovers new ideas and business opportunities,
brings together funds to establish a business, organise and manage its operation in
order​ ​to​ ​provide​ ​economic​ ​goods​ ​and​ ​services.
Entrepreneur has strong conviction, self motivation, and the will to grow and also
courage​ ​to​ ​go​ ​bankrupt​ ​if​ ​they​ ​fail​ ​in​ ​their​ ​venture.

Entrepreneurship is a dynamic activity which helps the entrepreneur to bring

changes in the process of production, innovations in business, new ideas and usage
of​ ​resources,​ ​establishing​ ​new​ ​markets​ ​etc.

VARIOUS​ ​DEFINITION​ ​OF​ ​an​ ​ENTERPRENEUR

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

He​ ​is​ ​the​ ​one​ ​who​ ​innovates,​ ​and​ ​introduces​ ​something​ ​new​ ​in​ ​the​ ​economy.
-Jospeh​ ​A.Schumpter

He shifts economic resources out of an area of lower and into an area of higher
productivity​ ​and​ ​greater​ ​yield.​ ​ ​ ​ ​ ​ ​ ​ ​ ​–J.B.Say[French​ ​economist]
 He searches for change ,responds to it and exploits opportunities. Innovation is the
specific​ ​tool​ ​of​ ​an​ ​entrepreneur​ ​ ​ ​ ​ ​ ​ ​ ​ ​-Peter​ ​F.Drucker

Enterprenurs are people who have the ability to see evaluate business opportunities
,together with the necessary resources to take advantage of them, and to intimate
appropriate​ ​action​ ​to​ ​ensure​ ​success.​ ​ ​–International​ ​labour​ ​orgaisation​ ​[ILO]

He is a critical factor in economic development and an integral part of economic

transformation​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​-​ ​William​ ​ ​Diamond.

The word entrepreneur is derived from a Sanskrit word called Antaraprerana.

–​ ​Poornima​ ​ ​Charantimath

Entrepreneurial​ ​ ​Development​ ​ ​Process

Enterpreneurial​ ​development​ ​can​ ​be​ ​explained​ ​in​ ​five​ ​stages.

Stage​ ​1Perceiving​ ​,identifying​ ​and​ ​evaluating​ ​an​ ​opportunity
Stage​ ​2Drawing​ ​up​ ​a​ ​business​ ​plan
Stage​ ​3​ ​Marshalling​ ​resources
Stage4​ ​Creating​ ​the​ ​enterprise
Stage5Consolidation​ ​and​ ​management

Ideas can come from various sources. The opportunities should be evaluated
carefully. The identification of project is followed by assessing the resource position..
Once the enterprise is established, entrepreneur should always look for indefinite future,
growth,​ ​development​ ​or​ ​atleast​ ​continuation.

Entrepreneur​ ​as​ ​an​ ​innovator

According to Joseph A. Schumpeter “An 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​ ​life”
According​ ​to​ ​him​ ​the​ ​functions​ ​of​ ​entrepreneur​ ​are
1.​ ​Introduction​ ​of​ ​new​ ​product

2.​ ​Introduction​ ​of​ ​new​ ​methods​ ​of​ ​production

3.​ ​Developing​ ​new​ ​markets​ ​and​ ​fresh​ ​sources​ ​of​ ​raw​ ​materials.

4.​ ​Make​ ​changes

Entrepreneur​ ​as​ ​Risk-Bearer
According to Richard Cantillon “An Entrepreneur is defined as an agent who buys
factors of production at certain prices in order to combine them into a product with
view​ ​to​ ​selling​ ​it​ ​at​ ​uncertain​ ​prices​ ​in​ ​future”
Entrepreneur​ ​as​ ​Organiser
According to Jean-Baptiste Say “An Entrepreneur is one who combines the land of
one,​ ​the​ ​labour​ ​of​ ​other​ ​and​ ​capital​ ​of​ ​yet​ ​another​ ​and​ ​thus,​ ​produces​ ​a​ ​product”
By selling the product, he pays interest on Capital, rent on Land, Wages to
Labourers​ ​and​ ​what​ ​remains​ ​is​ ​his​ ​Profit.
Hence an entrepreneur can be defined as a person who tries to create something
new, organizes production and undertakes risks and handles economic uncertainty
involved​ ​in​ ​enterprise.
Characteristics​ ​of​ ​Entrepreneur
 ● Action oriented, highly motivated and ready to take risk at all levels to
achieve​ ​a​ ​goal

● Should​ ​have​ ​unwavering​ ​determination​ ​and​ ​commitment

● Creativeness​ ​and​ ​result​ ​oriented,​ ​hard​ ​working

● Accepts​ ​responsibilities​ ​with​ ​enthusiasm

● Self-confident,​ ​dedicated​ ​and​ ​self​ ​disciplined

● Both​ ​thinker​ ​and​ ​doer,​ ​planner​ ​and​ ​worker

● Future​ ​and​ ​vision,​ ​intelligent,​ ​imaginative​ ​and​ ​self-directed

Qualities​ ​of​ ​Entrepreneur

The​ ​important​ ​qualities​ ​of​ ​an​ ​entrepreneur​ ​are:
1)​ ​Success​ ​and​ ​achievement:​ ​The​ ​entrepreneurs​ ​are​ ​self​ ​directed​ ​to​ ​achieve​ ​goals.

2)​ ​Risk​ ​bearer:​ ​He​ ​accepts​ ​risk,​ ​understand​ ​and​ ​manage​ ​risk.

3)​ ​Opportunity​ ​explorer​:​ ​He​ ​always​ ​identifies​ ​opportunity​ ​and​ ​explores​ ​them.

4) ​Planner: ​He is a good planner and doer. He plans and follows the plans
sincerely​ ​to​ ​achieve​ ​the​ ​goals.

5) ​Stress taker: ​He should accept and bear any amount of stress that may evolve
in​ ​the​ ​business.

6) ​Facing uncertainties​: They should face the uncertainties and unexpected

outcomes​ ​and​ ​accept​ ​them.

7) ​Independent: ​He is independent and his own master. He is a job giver and not
job​ ​seeker.
8) ​Flexible​: He is an open minded person, flexible to adopt to demanding situation
changes.

9)​ ​Self-confident:​ ​He​ ​directs​ ​his​ ​abilities​ ​towards​ ​the​ ​accomplishment​ ​of​ ​goals.

10) ​Motivator: ​He initiates and influences people, motivates the people to
accomplish​ ​the​ ​goals.
Functions​ ​of​ ​an​ ​Entrepreneur
An Entrepreneur has to perform a number of functions right from the generation of
idea up to the establishment of an enterprise. He also has to perform functions for
successful running of his enterprise. The following are the main functions of an
Entrepreneur.
1. Idea generation​: The first and the most important function of an Entrepreneur is
idea generation. Idea generation implies product selection and project
identification. Idea generation is possible through vision, insight, keen observation,
education, experience and exposure. This needs scanning of business environment
and​ ​market​ ​survey.
2. Determination of business objectives: ​Entrepreneur has to state and lay down
the business objectives. The Entrepreneur must be clear about the nature and type
of​ ​business​ ​in​ ​accordance​ ​with​ ​the​ ​objectives​ ​determined​ ​by​ ​him.
3. Rising of funds: ​All the activities of the business depend upon the finance and
hence fund raising is an important function of an Entrepreneur. An Entrepreneur
can raise the fund from internal source as well as external source. He should be
aware of different sources of funds. He should also have complete knowledge of
government sponsored schemes such as PMRY, SASY, REAP etc. in which he can
get government assistance in the form of seed capital, fixed and working capital for
his​ ​business.
4. Procurement of machines and materials: ​Another important function of an
Entrepreneur is to procure raw materials and machines. Entrepreneur has to
identify cheap and regular sources of raw materials which will help him to reduce
the​ ​cost​ ​of​ ​production.
While procuring machineries he should specify the technical details and the
capacity. He should consider the warranty, after sales service facilities etc before
procuring​ ​machineries.
5. Market research: ​Market research is the systematic collection of data regarding
the product which the Entrepreneur wants to manufacture. Entrepreneur has to
undertake market research to know the details of the intending product, i.e. the
demand for the product, size of the market/customers, the supply of the product,
competition,​ ​the​ ​price​ ​of​ ​the​ ​product​ ​etc.
6. Determining form of enterprise​: Entrepreneur has to determine form of
enterprise depending upon the nature of the product, volume of investment etc. The
forms of ownership are sole proprietorship, partnership, Joint Stock Company,
co-operative society etc. Determination of ownership right is essential on the part
of​ ​the​ ​entrepreneur​ ​to​ ​acquire​ ​legal​ ​title​ ​to​ ​assets.
7. Recruitment of manpower: ​To carry out this function an Entrepreneur has to
perform​ ​the​ ​following​ ​activities.
a)​ ​Estimating​ ​man​ ​power​ ​requirement​ ​for​ ​short​ ​term​ ​and​ ​long​ ​term.

b)​ ​Laying​ ​down​ ​the​ ​selection​ ​procedure.

c)​ ​Designing​ ​scheme​ ​of​ ​compensation.

d)​ ​Laying​ ​down​ ​the​ ​service​ ​rules.

e)​ ​Designing​ ​mechanism​ ​for​ ​training​ ​and​ ​development.

8. Implementation of the project: ​Entrepreneur has to develop schedule and
action plan for the implementation of the project. The project must be implemented
in a time bound manner. All the activities from the beginning to the end are to be
accomplished by him in accordance with the implementation schedule to avoid
cost and time over run. He has to organize various resources and coordinate
various activities. This implementation of the project is an important function of
the​ ​Entrepreneur.
All the above functions of the Entrepreneur can precisely be put into three
categories​ ​of​ ​innovation,​ ​risk​ ​bearing,​ ​and​ ​organizing​ ​and​ ​managing​ ​functions.
Types​ ​of​ ​Entrepreneur
Entrepreneurs​ ​are​ ​classified​ ​in​ ​a​ ​number​ ​of​ ​ways​ ​as​ ​discussed​ ​below.
Clearance​ ​Danhof’s​ ​Classifications:​ ​Danhof​ ​classifies​ ​Entrepreneur​ ​into​ ​four​ ​types.
1) Innovative entrepreneur: ​This category of Entrepreneur is characterized by
their innovativeness. This type of Entrepreneur, sense the opportunities for
introduction of new ideas, new technology, discovering of new markets and
creating new organizations. Such Entrepreneur are very much helpful for their
country​ ​because​ ​they​ ​bring​ ​about​ ​a​ ​transformation​ ​in​ ​life​ ​style.

2) Adoptive or imitative entrepreneur: ​Such entrepreneurs imitate the existing

entrepreneur and set their enterprise in the same manner. Instead of innovation,
they may just adopt the technology and methods innovated by others. Such types of
entrepreneur are particularly suitable for under-developed countries for imitating
the​ ​new​ ​combination​ ​of​ ​production​ ​already​ ​available​ ​in​ ​developed​ ​countries.
3) Fabian entrepreneurs: ​Fabian entrepreneurs are characterized by great caution
in experimenting any change in their enterprises. They imitate only when it
becomes perfectly clear that failure to do so would result in a loss of the relative
position​ ​in​ ​the​ ​enterprises.

4) Drone entrepreneurs: ​Such entrepreneurs are conservative or orthodox in

outlook. They always feel comfortable with their old fashioned technology of
production even though technologies have changed. They never like to get rid of
their traditional business, traditional machineries and traditional system of business
even​ ​at​ ​the​ ​cost​ ​of​ ​reduced​ ​returns.

Arthur H Cole Classification: Arthur H Cole classifies entrepreneurs as empirical,

rational​ ​and​ ​cognitive​ ​entrepreneur.
1) ​Empirical: ​He is entrepreneur hardly introduces anything revolutionary and
follows​ ​the​ ​principle​ ​of​ ​rule​ ​of​ ​thumb.

2) ​Rational: ​The rational entrepreneur is well informed about the general

economic​ ​conditions​ ​and​ ​introduces​ ​changes,​ ​which​ ​look​ ​more​ ​revolutionary.
3) ​Cognitive: ​Cognitive entrepreneur is well informed, draws upon the advice and
services of experts and introduces changes that reflect complete break from the
existing​ ​scheme​ ​of​ ​enterprise.

Classification​ ​Based​ ​on​ ​the​ ​Scale​ ​of​ ​Enterprise

1) ​Small scale: ​These entrepreneurs do not posses the necessary talents and
resources to initiate large-scale production and to introduce revolutionary
technological​ ​changes.
2) ​Large scale: ​They possess the necessary financial and other resources to initiate
and introduce new technological changes. They possess talent and research and
development​ ​facilities.

Other​ ​Classification
Following​ ​are​ ​some​ ​more​ ​types​ ​of​ ​entrepreneurs​ ​listed​ ​by​ ​behavior​ ​scientists.
Solo operators​: These are the entrepreneurs who essentially work alone, introduce
their own capital and if essential employ very few employees. In the beginning
most​ ​of​ ​the​ ​entrepreneurs​ ​start​ ​their​ ​enterprises​ ​like​ ​them.
Active partners​: Such entrepreneurs jointly put their efforts and resources. They
actively participate in managing the daily routine of the business concern.
Entrepreneurs who only contribute their funds but not actively participate in the
business​ ​are​ ​called​ ​simply​ ​‘Partners’.
Inventors: ​Such entrepreneurs are creative in character and feel happy in inventing
new products, technologies and methods of production. Their basic interest lies in
research​ ​and​ ​innovative​ ​activities.
Challenge: ​Such entrepreneurs plunge into industry/business because of the
challenge it presents. When one challenge seems to be met, they begin to look for
new challenges. They convert odds and adversities into opportunities and make
profit.
Buyers: ​These are the entrepreneurs who do not like to face the hassles of building
infrastructure and other facilities. They simply purchase the existing one and by
using​ ​their​ ​experience​ ​and​ ​expertise​ ​try​ ​to​ ​run​ ​the​ ​enterprise​ ​successfully.
Life timers: ​Such entrepreneurs take business as an integral point of their life.
Family enterprises, which mainly depend on exercise of personal skill, fall in this
category.
Industrial entrepreneurs: ​Such entrepreneurs engage in manufacturing and
selling​ ​products.
Service entrepreneurs: ​Such entrepreneurs engage in service activities like repair,
consultancy,​ ​beauty​ ​parlor​ ​etc​ ​where​ ​entrepreneurs​ ​provide​ ​service​ ​to​ ​people.
Business entrepreneurs: ​They are also called as trading entrepreneurs which buy
and​ ​sell​ ​goods.
Agricultural entrepreneurs: ​They engage themselves in agricultural activities
like​ ​horticulture,​ ​floriculture,​ ​animal​ ​husbandry,​ ​poultry​ ​etc.
Corporate entrepreneurs: ​Corporate entrepreneurs undertake their business
activities​ ​under​ ​legally​ ​registered​ ​company​ ​or​ ​trust.
Rural entrepreneurs: ​Entrepreneur’s selecting rural-based industrial opportunity
in either khadi or village industries sector or in farm entrepreneurship are regarded
as​ ​rural​ ​entrepreneurs.
Women entrepreneurs​: According to government of India an entrepreneurs is
defined as an enterprise owned and controlled by a woman and having minimum
financial interests of 51% of the capital and giving at least 51% of the employment
generated in the enterprise to women. Women entrepreneurs play an important role
in​ ​economy​ ​especially​ ​in​ ​rural​ ​areas.
Type​ ​of​ ​entrepreneurs
1)​ ​According​ ​to​ ​the​ ​type​ ​of​ ​business
i)​ ​Business​ ​entrepreneur​ ​ii)​ ​trading​ ​entrepreneur
iii)​ ​industrial​ ​entrepreneur
(a)Large​ ​(b)medium​ ​(c)small​ ​and​ ​(d)tiny
iv)corporate​ ​entrepreneur
v)​ ​agricultural​ ​entrepreneur
(a)​ ​plantation​ ​b)​ ​horticulture​ ​c)​ ​dairy​ ​d)​ ​forestry
vi)​ ​Retail​ ​entrepreneur
vii)​ ​Service​ ​entrepreneur
2)​ ​According​ ​to​ ​the​ ​use​ ​of​ ​technology
i)​ ​technical​ ​(ii)​ ​non​ ​technical​ ​(iii)​ ​professional​ ​(iv)high​ ​tech​ ​(v)low​ ​tech
3)​ ​According​ ​to​ ​the​ ​motivation
(i)pure​ ​(ii)induced​ ​(iii)motivated​ ​(iv)spontaneous
4)​ ​According​ ​to​ ​growth
i)growth​ ​(ii)super​ ​growth
5)​ ​According​ ​to​ ​stages​ ​of​ ​development
(i)​ ​modern​ ​(ii)classical​ ​(iii)urban
6)​ ​According​ ​to​ ​the​ ​area
(i)​ ​urban​ ​(ii)​ ​rural
7)​ ​According​ ​to​ ​the​ ​gender​ ​and​ ​age
(i)men​ ​(ii)​ ​women
8)According​ ​to​ ​the​ ​sale​ ​of​ ​operation
i)small​ ​(ii)large
9)​ ​Entrepreneurs​ ​and​ ​motivation:
Are those entrepreneurs who use the motivation as a force to achieve their
objectives​ ​are​ ​classified​ ​as
(i) Pure: ​Is an individual who is motivated by the economic rewards. And
undertakes​ ​an​ ​entrepreneurial​ ​activity​ ​out​ ​of​ ​personal​ ​satisfaction,​ ​ego​ ​and​ ​status.
(ii) Induced: ​Is one who is induced to take up entrepreneurship task due to the
policy measures of the government which provides assistance, incentives,
concessions​ ​and​ ​necessary​ ​overhead​ ​facilities​ ​to​ ​star​ ​new​ ​venture.
(iii) Motivated entrepreneurs: ​Are motivated by the desire of self fulfillment.
They come into being because of the making and marketing of the new product for
the​ ​use​ ​of​ ​customers​ ​who​ ​is​ ​further​ ​motivated​ ​by​ ​the​ ​reward​ ​in​ ​terms​ ​of​ ​profit.
(iii) Spontaneous entrepreneur: ​Start their business by their natural talents are
the persons who take initiative, are bold confidence and have strong conviction in
their​ ​inborn​ ​ability.

MYTHS​ ​OF​ ​ENTREPRENEURSHIP

1.​ ​Entrepreneurs​ ​are​ ​born​ ​not​ ​made
Characteristics of entrepreneurs are not taught, however the recognition of
entrepreneurship​ ​as​ ​a​ ​discipline​ ​helping​ ​to​ ​dispel​ ​the​ ​myth.
2.​ ​Entrepreneurs​ ​are​ ​academic​ ​and​ ​social​ ​misfits
3.​ ​Entrepreneurs​ ​fit​ ​an​ ​ideal​ ​profile
Based on case studies and research findings, researchers presented checklist of
characteristics of successful entrepreneur. But standard entrepreneurial profile is hard to
assemble. Contemporary studies provide more accurate insights into the various profiles of
successful​ ​entrepreneur.
4.​ ​Money​ ​is​ ​essential​ ​to​ ​become​ ​an​ ​entrepreneur.
Large number of business failure occurs because of lack of adequate financing. Yet,
money​ ​itself​ ​is​ ​not​ ​only​ ​the​ ​protection​ ​against​ ​the​ ​failure.
5.​ ​Luck​ ​is​ ​needed​ ​to​ ​be​ ​an​ ​entrepreneur
“Luck​ ​happens​ ​when​ ​preparation​ ​meets​ ​opportunity”.​ ​Prepared​ ​entrepreneur
Exploits the opportunity when it arises often appears to be lucky. Luck is a combination of
preparation,​ ​determination,​ ​desire,​ ​knowledge​ ​and​ ​innovativeness.
6.​ ​Great​ ​idea​ ​is​ ​vital​ ​ingredient​ ​in​ ​a​ ​recipe​ ​for​ ​success.
7.​ ​Best​ ​friend​ ​will​ ​be​ ​a​ ​great​ ​business​ ​partner
Teaming up with known people may not be a good idea as it may lead more
misunderstanding.
8.​ ​Having​ ​no​ ​boss​ ​is​ ​great​ ​fun
Its not just having no boss is great fun as it is required to observe vendors, bankers,
investors,​ ​suppliers,​ ​customers​ ​continuously.
9.​ ​One​ ​can​ ​make​ ​lots​ ​of​ ​money
Many​ ​sacrifices​ ​are​ ​needed​ ​to​ ​expect​ ​lot​ ​of​ ​money.
10. Putting down the optimism and survival strategy most businers refuse to accept the
possibility​ ​of​ ​failure.
11.​ ​Life​ ​is​ ​much​ ​simpler​ ​if​ ​I​ ​work​ ​myself
As​ ​a​ ​contrary,​ ​working​ ​for​ ​yourself​ ​is​ ​more​ ​strenuous​ ​than​ ​working​ ​for​ ​others.

ENTREPRENURIAL​ ​DEVELOPMENT​ ​MODELS

​ ​1​ ​Psychological​ ​models
2,​ ​Sociological​ ​models
3.​ ​Integrated​ ​models

1. Psychological​ ​models
● McClelland gave significant lead in identification of determinants of
entrepreneurship.
He founds that identifying achievement orientation as the key variable in the
development​ ​of​ ​entrepreneurship.
He also suggests motivation training programme as a policy measure make
entrepreneur​ ​willing​ ​and​ ​eager​ ​to​ ​exploit​ ​the​ ​oppourtunity.
● Evertt Hagen’s theory of social change emphasis on “creative personality” and
explains​ ​the​ ​casual​ ​sequence​ ​of​ ​entrepreneurial​ ​behavior
● John Kunkel suggest “Behaviourist model” and he also suggest that entrepreneurial
behavior is a function of surrounding social structure. Kunkel model is based upon
the​ ​experimental​ ​psychology.
2. Sociological​ ​model
 ● Frank W Young’s theory of entrepreneurship is a theory of change based upon the
society’s​ ​incorporation​ ​of​ ​relative​ ​sub-groups.
The relativeness of sub-group with low status in a larger society will lead to
entrepreneurial behavior if the group has better institutional resources than others in
the​ ​society​ ​at​ ​the​ ​same​ ​level.
3. Integrated​ ​Models
● T​ ​V​ ​Rao​ ​in​ ​“Entrepreneurial​ ​disposition”​ ​has​ ​included​ ​following​ ​factors.
(a) Need to motive for the prospective entrepreneur has a greatest possibility of
achieving​ ​the​ ​goals.
(b) Long term involvement either at thinking level or activity level in entrepreneurial
activity.
(c) Personal, social and material resources are related to entry and success in
entrepreneurial​ ​activity.
(d) Socio-political system to be perceived as suitable for establishment and
development​ ​of​ ​his​ ​enterprise.
B​ ​S​ ​Venkata​ ​Rao’s​ ​5​ ​stages​ ​for​ ​promoting​ ​small​ ​entrepreneurship
1. Stimulation
Includes creation of an industrial atmosphere, policy statement, publicity of
industrial development programmes, formation of schemes, creation of support
institution.
2. Identification
Identify prospective entrepreneur in rural artisans, factory workers, graduates in business
administration​ ​and​ ​management.
3. Development
Include organization of motivation and managerial training programmes with
advice​ ​to​ ​technology,​ ​formulation​ ​of​ ​bankable​ ​project,​ ​location.
4. Promotion
Include​ ​govt.​ ​policy​ ​initiatives​ ​promoting​ ​small​ ​entrepreneurship.
5. Follow​ ​up
Includes reviewing the policies and programmes of government and seeking
follow​ ​up​ ​with​ ​a​ ​view​ ​to​ ​making​ ​more​ ​effective.

M​ ​P​ ​AKHORI’s​ ​ENTREPRENURIAL​ ​DEVELOPMENT​ ​CYCLE

Suggested​ ​following​ ​components​ ​for​ ​the​ ​promotion​ ​and​ ​development​ ​of​ ​entrepreneurship.

1. Stimulatory​ ​activities
These activities ensures the emergence of entrepreneurs in the society. They generate initial
motivation and offer opportunity to acquire skill which can be achieved by the following
activities.
o Entrepreneurial​ ​education
o Planned​ ​publicity​ ​for​ ​entrepreneurial​ ​opportunities
o Identification​ ​of​ ​potential​ ​entrepreneurial​ ​through​ ​scientific​ ​methods
o Motivation​ ​training​ ​to​ ​new​ ​entrepreneurs
o Help​ ​and​ ​guidance​ ​in​ ​selecting​ ​the​ ​products​ ​and​ ​preparing​ ​project​ ​reports
o Making​ ​available​ ​techno-economic​ ​information​ ​and​ ​product​ ​profiles
o Evolving​ ​locally​ ​suitable​ ​new​ ​products​ ​and​ ​processes
o Availability​ ​of​ ​local​ ​agencies​ ​with​ ​trained​ ​personnel
o Creating​ ​entrepreneurial​ ​forums
o Recognition​ ​of​ ​entrepreneurs
2. Sustaining​ ​activities
These activities help a person to develop into entrepreneur. These activities nurture and help
entrepreneurship​ ​to​ ​grow.The​ ​various​ ​support​ ​are​ ​given​ ​below
o Registration​ ​of​ ​unit
o Arranging​ ​finance
o Providing​ ​infrastructure
o Guidance​ ​for​ ​selecting​ ​and​ ​obtaining​ ​machinery
o Supply​ ​of​ ​scare​ ​new​ ​materials
o Getting​ ​license/import​ ​licenses
o Providing​ ​common​ ​facilities
o Granting​ ​tax​ ​relief/subsidy
o Offering​ ​management​ ​consultancy​ ​service
o Help​ ​marketing​ ​the​ ​product
o Providing​ ​information

3.​ ​Sustaining​ ​activities

 These activities help in continuous and efficient functioning of entrepreneurship. The
various​ ​sustaining​ ​activities​ ​are​ ​as​ ​follows.
o Help​ ​modernization
o Help​ ​diversification/expansion/substitute​ ​production
o Additional​ ​financing
o Deferring​ ​repayment
o Diagnostic​ ​industrial​ ​extension/consultancy​ ​services
o Production​ ​units​ ​legislation/policy​ ​change
o Product​ ​reservation/​ ​creating​ ​new​ ​avenues​ ​for​ ​marketing
o Quality​ ​testing​ ​and​ ​approving​ ​services
o Need-based​ ​common​ ​facilities​ ​centres

Problem​ ​faced​ ​by​ ​entrepreneurs

A large number of entrepreneurs particularly in the small enterprises fail due to
several problems and barriers. Karl. H. Vesper has identified the following
barriers:
i.​ ​Lack​ ​of​ ​a​ ​viable​ ​concept
ii.​ ​Lack​ ​of​ ​market​ ​knowledge
iii.​ ​Lack​ ​of​ ​technical​ ​skills
iv.​ ​Lack​ ​of​ ​seed​ ​capital
v.​ ​Lack​ ​of​ ​business​ ​know​ ​how
vi.​ ​Lack​ ​of​ ​motivation
vii.​ ​Social​ ​stigma
viii.​ ​Monopoly​ ​and​ ​protectionism
ix.​ ​Inhibitions​ ​due​ ​to​ ​patent
x.​ ​Government​ ​regulations.
xi.​ ​Globalization​ ​and​ ​entry​ ​of​ ​foreign​ ​goods.

Problems​ ​can​ ​be​ ​broadly​ ​divided​ ​into​ ​INTERNAL​ ​and​ ​EXTERNAL​ ​problems
INTERNAL​ ​Problem
1.​ ​Planning
(a)​ ​Technical​ ​feasibility
 ▪ Inadequate​ ​technicalknow-how
▪ Locational​ ​disadvantage
▪ Outdated​ ​production​ ​process
(b)​ ​Economic​ ​viability
▪ High​ ​cost​ ​of​ ​inputs
▪ Break-even​ ​point​ ​too​ ​high
▪ Uneconomic​ ​size​ ​of​ ​project
▪ Choice​ ​of​ ​idea
▪ Feeble​ ​structure
▪ Faulty​ ​planning
▪ Lack​ ​of​ ​strategies,​ ​motivation​ ​and​ ​vision
▪ Overestimation​ ​of​ ​demand
2.​ ​Implementation
3.​ ​Production
(a)​ ​Production​ ​management
(b)​ ​Labour​ ​management
(c)​ ​Marketing​ ​management
(d)​ ​Financial​ ​management
(e)​ ​Administrative​ ​management

EXTERNAL​ ​problems​ ​of​ ​entrepreneur

● Infrastructural
● Financial
● Marketing
● Marketing
● Taxation
● Rawmaterial
● Industrial​ ​and​ ​financial​ ​regulations
● Inspection
● Technology
● Lack​ ​of​ ​direction
● Competitive​ ​and​ ​volatile​ ​environment

Other​ ​management​ ​problems

1.​ ​Managerial​ ​deficiency
2.​ ​Finance
3.​ ​Manufacturing​ ​and​ ​technical​ ​problems
4.​ ​Product​ ​Planning
5.​ ​Selection​ ​of​ ​equipment,​ ​plant,​ ​machinery
6.​ ​Human​ ​resource​ ​development
7.​ ​Technical​ ​know-how
8.​ ​Preparation​ ​of​ ​project​ ​report

CAPACITY​ ​BUILDING​ ​OF​ ​ENTREPRENURSHIP

1.​ ​Create​ ​the​ ​right​ ​environment​ ​for​ ​success
2.​ ​Ensures​ ​that​ ​entrepreneurs​ ​have​ ​access​ ​to​ ​right​ ​skills
3.​ ​Ensures​ ​that​ ​entrepreneurs​ ​have​ ​access​ ​to​ ​“smart”​ ​capital
Eg​ ​Venture​ ​capitalist,​ ​Angel​ ​investors
4.​ ​Enable​ ​networking​ ​and​ ​exchange