UNITED COLLEGE OF ENGINEERING & RESEARCH, NAINI,

ALLAHABAD
(DR. A.P.J ABDUL KALAM TECHNICAL UNIVERSITY,
LUCKNOW)
(Formally Uttar Pradesh Technical University)

IDEA TO BUSINESS MODEL

(KOE-060)

BY- Ms. Anjali Maurya

UNIT-2
 Entrepreneurship
Topics of unit
 Introduction to Entrepreneurship
 Meaning and concept of entrepreneurship
 Difference between Entrepreneurship & wage
employment
 Functions of an Entrepreneur
 Entrepreneur vs Manager role of
entrepreneurship in economic development
 Barriers to entrepreneurship

Need of Entrepreneurship
• Increases national production
 • Balanced area development
• Dispersal of economic power
• Reinvestment of profit for the welfare of the area of profit generation
• Development is a function of motivation and human resource
• Entrepreneurial awareness
Enterprise
• An enterprise is the business organization that is formed and which provides goods and
services, creates jobs, contributes to national income, exports and overall economic
development.
• Entrepreneur is a person who starts an enterprise. The process of creation of enterprise
is called entrepreneurship.
• Entrepreneur is the actor, entrepreneurship is the act. The outcome of the actor and the
act is called the enterprise.
• The word Entrepreneur stems from the French word ‘entrependre’ meaning ‘one who
undertakes’.
• An entrepreneur is a person who starts an enterprise. He/she is the key individual
central to entrepreneurship who makes things happen. He /she searches for change and
responds to it. A number of definitions have been given for an entrepreneur-
• The economists view him/her as a fourth factor of production along with land labour and
capital.
• Technical people feel that entrepreneurs are innovators who come up with new ideas
for products, markets or techniques.
 • To put it very simply an entrepreneur is someone who perceives opportunity, organizes
resources and exploits the opportunities. Computers, mobile phones, credit Cards and
ready to eat foods are all examples of entrepreneurial ideas that got converted into
products or services.

Meaning of Entrepreneur

• The entrepreneur is defined as someone who has the ability and desire to establish, administer
and succeed in a startup venture along with risk entitled to it, to make profits.

• The best example of entrepreneurship is the starting of a new business venture.

• The entrepreneurs are often known as a source of new ideas or innovators, and bring new ideas
in the market by replacing old with a new invention.
• Entrepreneurship can be described as a process of action an entrepreneur undertakes to
establish his/her enterprise.

• It is a creative activity. It is the ability to create and build something from practically nothing.

• Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive
benefits by setting up a venture. It comprises of numerous activities involved in conception,
creation and running an enterprise.

• It is an outcome of complex socio-economic, psychological, technological, legal and other

factors. It is a dynamic and risky process. It involves a fusion of capital, technology and human
talent.

• Entrepreneurship is a philosophy- it is the way one thinks, one acts and therefore it can exist in
any situation be it business or government or in the field of education, science and technology
or any others.

Entrepreneur Vs Manager

Entrepreneur Manager

An entrepreneur is involved period manager with running business over

of time with the start-up process
An entrepreneur assumes financial, A manager does not have to bear
risks
material and psychological risks
An entrepreneur is driven A manager is functioning by the
resources he currently possesses.
by perception of opportunity
An entrepreneur initiates change A manager follows rules and
procedures.
An entrepreneur is his own boss A manager is a hired employee.

An entrepreneur gets uncertain A manager gets fixed rewards

rewards and salary.
The Entrepreneurship development concept
• In the context of employment generation, the three terms- Income generation, Self-
employment and Entrepreneurship are often used interchangeably.
• Income generation is the initial stage in the entrepreneurial process in which one tries
to generate surplus or profit. They are often taken on part- time or casual basis to
supplement income e.g. a man with farm might rear some poultry birds to gain some
profit.
• Self-employment is the second stage in the entrepreneurial process and refers to an
individual’s fulltime involvement in his own occupation. e.g. a person who starts a tea
shop and remains happy and satisfied and has no plans to add on any other items or to
grow in any other manner [e.g. supplying snacks/cool drinks/sandwiches to others in the
vicinity.
• Entrepreneurship is the terminal stage of the entrepreneurial process wherein after
setting up a venture one looks for diversification and growth. An entrepreneur is always
in search of new challenges. An entrepreneur is not a routine businessman he might not
have resources but he will have ideas. He is innovative and creative. He can convert a
threat into an opportunity. Small businessmen might shut-down or change his business
if he anticipates losses but an entrepreneur will try again after analyzing the situation.
On the other hand, an entrepreneur can leave a perfectly running business to start
another venture if he so desires.
• Functionally all entrepreneurs are self-employed and income generating persons but the
reverse is not true- all self-employed and income generating persons are not
entrepreneurs. If seen on a continuum, income generation, self-employment and
entrepreneurship can be considered as the initial, middle and final stages of the
entrepreneurial growth process. Income generating experience encourages self-
employment, which in turn facilitates graduating into entrepreneurship.
Difference between wage employment and entrepreneurship

Wage Employment Entrepreneurship

Work for other Own boss

Follow instructions Make own plans
Routine job Creative activity
Earning is fixed, never negative Can be negative sometimes, generally
surplus
Does not create wealth Creates wealth, contributes to GDP

Can choose form- Can choose from-

Government service Industry Trade or Service enterprise
Public sector, private sector

Definitions
• “Entrepreneurship is the attempt to create value through recognition of business
opportunity, the management of risk-taking appropriate to the opportunity, and
through the communicative and management skills to mobilize human, financial and
material resources necessary to bring a project to fruition”.’
• In the opinion ‘of A.H. Cole, “Entrepreneurship is the purposeful activity of an individual
or a group of associated individuals, undertaken to initiate, maintain or aggrandize
profit by production or distribution of economic goods and services”.
• 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 carry out innovative functions”.
• In all the 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 is the act of being an entrepreneur.
• Entrepreneurship is a process involving various actions to be undertaken to establish an
enterprise. It is, thus, the process of giving birth to *new enterprise.
• Innovation and risk-bearing are regarded as the two basic elements involved in
entrepreneurship. Let us understand what these two terms mean.
Characteristics of Entrepreneurship
Not all entrepreneurs are successful; there are definite characteristics that make
entrepreneurship successful. A few of them are mentioned below:
• Ability to take a risk- Starting any new venture involves a considerable amount of
failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate
and take risks, which is an essential part of being an entrepreneur.
• Innovation- It should be highly innovative to generate new ideas, start a company and
earn profits out of it. Change can be the launching of a new product that is new to the
market or a process that does the same thing but in a more efficient and economical
way.
• Visionary and Leadership quality- To be successful, the entrepreneur should have a
clear vision of his new venture. However, to turn the idea into reality, a lot of resources
and employees are required. Here, leadership quality is paramount because leaders
impart and guide their employees towards the right path of success.
• Open-Minded- In a business, every circumstance can be an opportunity and used for
the benefit of a company. For example, Paytm recognised the gravity of demonetization
and acknowledged the need for online transactions would be more, so it utilized the
situation and expanded massively during this time.
• Flexible- An entrepreneur should be flexible and open to change according to the
situation. To be on the top, a businessperson should be equipped to embrace change in
a product and service, as and when needed.
• Know your Product- Company owner should know the product offerings and also be
aware of the latest trend in the market. It is essential to know if the available product or
service meets the demands of the current market, or whether it is time to tweak it a
little. Being able to be accountable and then alter as needed is a vital part of
entrepreneurship.

Functions of Entrepreneurship
The various functions of entrepreneurship are
• Innovation and creativity,
• Risk taking and achievement
• organization and management,
• Catalyst of Economic Development,

• Overcoming Resistance to Change and Research.

These have been depicted, at a glance, with the help of the given Figure and are being discussed,
in brief:
Functions of Entrepreneurship
1. Innovation and Creativity – Innovation generally refers to changing processes or
creating more effective processes, products and ideas. For businesses, this could mean
implementing new ideas, creating dynamic products or improving your existing services.
Creativity is defined as “the tendency to generate or recognize ideas, alternatives, or
possibilities that may be useful in solving problems, communicating with others.
Creativity and innovation have always been recognized as a sure path to success.
Entrepreneurs think outside of the box and explore new areas for cost-effective
business solutions.
2. Risk taking and Achievement – Entrepreneurship is a process in which the entrepreneur
establishes new jobs and firms, new Creative and growing organization which is
associated with risk, new opportunities and achievement. It results in introducing a new
product or service to society. In general, entrepreneurs accept four types of risks namely
Financial Risk, Job Risk, Social & Family Risk & Mental & Health Risk, which are as
follows:
(a) Financial Risk – Most of entrepreneurs begin by using their own savings and
personal effects and if they fail, they have the fear of losing it. They take risk of failure.
(b) Job Risk – Entrepreneurs, not only follow the ideas as working situations, but also
consider the current risks of giving up the job & starting a venture. Several
entrepreneurs have the history of having a good job, but gave it up, as they thought that
they were not cut out for a job.
(c) Social and Family Risk – The beginning of entrepreneurial job needs a high energy
which is time consuming. Because of these undertakings, he/she may confront some
social and family damages like family and marital problems resulting on account of
absence from home and not being able to give adequate time to family.
(d) Mental Health Risk – Perhaps the biggest risk that an entrepreneur takes it is, the
risk of mental health. The risk of money, home, spouse, child, and friends could be
adjusted but mental tensions, stress, anxiety and the other mental factors have many
destructive influences because of the beginning and continuing of entrepreneurial
activity.
3. Organization and Management – The entrepreneurial organization is a simple
organizational form that includes, one large operational unit, with one or a few
individuals in top management. Entrepreneurial management means the skills necessary
to successfully develop and manage a business enterprise. A small business start-up
under an owner-manager is an example of an entrepreneurial organization. Here, the
owner- manager generally maintains strict control over business operations. This
includes directing the enterprise’s core management functions.
4. Research – An entrepreneur is a practical dreamer and does a lot of ground-work before
taking a leap in his/her ventures. In other words, an entrepreneur finalizes an idea only
after considering a variety of options, analyzing their strengths and weaknesses by
applying analytical techniques, testing their applicability, supplementing them with
 empirical findings, and then choosing the best alternative. It is then that he/she applies
the ideas in practice. The selection of an idea, thus, involves the application
of research methodology.
5. Overcoming Resistance to Change – New innovations are generally opposed by people
because it makes them change their existing behavior patterns. An entrepreneur always
first tries new ideas at his/her level. It is only after the successful implementation of
these ideas that an entrepreneur makes these ideas available to others for their benefit.
His/her will power, enthusiasm and energy help him/her in overcoming the society’s
resistance to change.
6. Catalyst of Economic Development – An entrepreneur plays an important role in
accelerating the pace of economic development of a country, by discovering new uses
of available resources and maximizing their utilization. Today, when India is a fast
developing economy, the contribution of entrepreneurs has increased multi-fold

WHY ENTREPRENEURSHIP?
• Unemployment
• Profit
• The need to learn more

• The need for a lifestyle not bound by a 9-5 job: There’s a lot of hype about having a
flexible lifestyle but the truth in entrepreneurship is that you’re going to work really
hard and really long, so don’t choose this way of life if you’re thinking it’s a shortcut.
That being said, you will work hard, but there’s much more flexibility to the
entrepreneurial lifestyle than the traditional nine to five and two weeks of vacation time
that corporate life permits.
• LACK OF A FORMAL EDUCATION: Some people become entrepreneurs because they
haven’t had the privilege of receiving an extensive education. Entrepreneurship is an
arena where the Idea and results take precedence over educational background.
• BEEN THROUGH THE SCHOOL OF HARD KNOCKS: School of hard knocks is an idiomatic
phrase meaning the experience gained from living, especially from disappointment and
hard work – often regarded as a means of education. There come certain points in life
where, in assessing experience, one concludes that one has been through more than
enough to not be afraid to branch out on one’s own. Everyone goes through the school
of hard knocks; it’s always a question of what one does with the experience.
 CHARACTERISTICS OF ENTREPRENEUR

CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR

1. COMMITMENT/RESILIENCE
Entrepreneurship will dole out constant challenges, some of which you’ve
already considered but many of which you’ll never see coming. You will face
complex financial problems, decision- based dilemmas, long hours, sudden
changes and predictions that may fail; personal lives may even be challenged a
well.
You must remember that all these challenges, while difficult to face, are a
natural part of being an entrepreneur. Success in business ownership is rarely a
matter of how many challenges you face so much as it is a matter of how you
face those challenges. Triumphant entrepreneurs have a level of resilience,
which allows them face an almost constant slew of challenges without ever
weakening their resolve.

2. RISK TAKER
 Entrepreneurs are risk- takers, ready to dive dip into the future of uncertainty.
Successful entrepreneurs are willing to risk their time and money on unknowns,
but they also keep resources and plans for dealing with them.
3. SELF-BELIEF, HARD WORK AND DISCIPLINED DEDICATION
Entrepreneurs believe in themselves and are confident and dedicated to their
project. Their intense focus on and faith in their idea may be misconstrued as
stubbornness, but it is this willingness to work hard and defy odds that make
them successful.
4. RESOURCEFULNESS
More often than not an entrepreneur has limited resources especially at the
initial stages of the business. Successful entrepreneurs figure out how to get the
most out of these resources.
5. OBJECTIVITY
Objectivity connotes a lack of bias, judgment or prejudice. Entrepreneurs need to
be dispassionate when it comes to making business decisions because emotion,
bias and sentiment can result in poor choices.
6. ADAPTABLE AND FLEXIBLE
Being inflexible about client and market needs leads to failure. Successful
entrepreneurs welcome all suggestions for optimization that may enhance their
offering and satisfy client and market needs.
7. KNOWLEDGE OF THE PRODUCT AND MARKET
Entrepreneurs must know their product and market. A lack of awareness of the
changing market needs, competition and external factors can cause a business to
fail.
8. DEPENDABILITY
There is a strong positive relationship between your perceived level of reliability
and the success of your business. Your clients expect you to be dependable and
will evaluate you on the extent to which you do what you say you will do.
9. PROACTIVITY
Successful entrepreneurs anticipate problems in advance and deal with them
before they occur.
10. MONEY MANAGEMENT SKILLS
Successful entrepreneurs plan for present and future financial obligations and
set aside an emergency fund. Even after securing funds or going fully
operational, a successful business person keeps a complete handle on cash flow,
as it is the most important aspect of any business.
11. EFFECTIVE PALNNNG SKILLS
Successful entrepreneurs have a business plan in place, but remain capable of
dealing with unforeseen possibilities.
12. EXCELLENT COMMUNICATION SKILLS
 Exemplary communication is important because you must accurately exchange
information in a fast-moving world. Of importance is the ability to listen and truly
understand where a person is coming from.

13. TECHNICAL KNOWLEDGE AND SKILLS

Every business requires unique technical skills and knowledge on the part of the
owner. You MUST be good at what you do for your business to succeed. This
often means getting additional training and education on an ongoing basis.
PROS OF ENTREPRENEURSHIP
1. THE FREEDOM TO PURSUE YOUR OWN VISION
You can have your own view of the world and entrepreneurship is the only avenue
where you pursue that view and see the fruition of your vision.
2. POTENTAIL EARNINGS OF AN ENTREPRENEUR EXCEED A SALARIED EMPLOYEE
As an employee an employee, no matter how hard you work, the financial remuneration
you receive is limited to your salary and an occasional bonus. As a self-employed
person, you can earn so much more if you hit the right business idea and execute the
business well.
3. THE CONTROL AND FLEXIBILITY OF YOUR OWN TIME.
As your own boss, you work when you want to work; and stop if you want to stop. You
can tailor your work according to your lifestyle and accommodate various tasks. You
can work in however way you please – in your pajamas, with the TV loudly blaring –
without getting a memo from the personnel department. Self- employment means
freedom from rules.
4. THE OPPORTUNITY TO LEARN AND GAIN KNOWLEDGE
The entrepreneur often wears many hats – the strategic planner, the marketer, the
customer service rep, and the sales rep, even the bookkeeper. There are a million
things you probably didn’t know before you started your business that you will be
forced to learn.
5. THE SENSE OF PRIDE AND FULFILLMENT IN ACCOMPLASHING THINGS
As an entrepreneur, you make things happen. You create a vision, layout the plans and
pursue the steps needed to make the business a success. Doing all these things can
give an incredible feeling of pride and joy – seeing your website used by people,
finding your products in stores and getting compliments from customers on how your
business as helped them.
6. THE CHANCE TO SHARE YOUR LEARNING
At the end of the day, you can have the chance to teach and share with others the
things you’ve learned as an entrepreneur. Sharing what you learned can be a way of
giving back to the community.
7. WORK SCHEDULE
 The work schedule of an entrepreneur can be unpredictable. A major disadvantage of
being an entrepreneur is that it requires more work and longer hours than being an
employee.

8. NO REGULAR SALARY
Being an entrepreneur often means giving up the security of a regular paycheck. If the
business slows down, your personal income can be at risk.
9. ADMINISTARTIVE TASKS
When you run a business, especially at the initial stages, you need to check on finances
and other administrative tasks; Salaried employees mostly handle specific tasks. This
isn’t the most fun aspect of being your own boss, but it is crucial to the success of your
venture.
10. COMPETEITION
As a small business owner, staying competitive is critical. You will need to differentiate
your business from others like yours in order to build a solid customer base and be
profitable.
11. DISRUPTION OF ONES PERSONAL LIFE
Most of your time will be spent trying to keep your business afloat and this could have
adverse effects on your personal life.
Importance of Entrepreneurship:
• Creation of Employment- Entrepreneurship generates employment. It provides an
entry- level job, required for gaining experience and training for unskilled workers.
• Innovation- It is the hub of innovation that provides new product ventures, market,
technology and quality of goods, etc., and increase the standard of living of people.
• Impact on Society and Community Development- A society becomes greater if the
employment base is large and diversified. It brings about changes in society and
promotes facilities like higher expenditure on education, better sanitation, fewer slums,
a higher level of homeownership. Therefore, entrepreneurship assists the organization
towards a more stable and high quality of community life.
• Increase Standard of Living- Entrepreneurship helps to improve the standard of living of
a person by increasing the income. The standard of living means, increase in the
consumption of various goods and services by a household for a particular period.
• Supports research and development- New products and services need to be researched
and tested before launching in the market. Therefore, an entrepreneur also dispenses
finance for research and development with research institutions and universities. This
promotes research, general construction, and development in the economy.
Entrepreneurship barriers

 Financial barriers: This is one of the most prominent barriers in the life of an
entrepreneur. Such barriers are quite common. Availability of funds is of great
significance. If a delay happens in gathering enough funds, then it may further delay the
commencement of an enterprise. Also, various business operations need a persistent
flow of funds.
 Personal barriers: Personal barriers are caused because of the emotional and
psychological blocks of an entrepreneur. Let us have a look at the various types of
personal barriers:
 Lack of practical knowledge: Many youngsters believe that an entrepreneur must have an
adequate educational background to make the business successful, but the reality is completely
different. Most of the schools and colleges focus on bookish knowledge instead of
providing practical knowledge to the students. Every entrepreneur may have the same bookish
knowledge but it is their practical knowledge that makes them unique in this highly competitive
market. Lack of this practical knowledge can also become a barrier in the path to the success of
a business.

 Lack of motivation and encouragement: When an idea does not turn out to be fruitful,
these entrepreneurs give up quite easily. Even a minor failure is enough to demotivate
them.
 Inability to depend on and trust others: These entrepreneurs often find it difficult to
trust others while hiring their expert services. They waste much of their time deciding
upon the best service provider and then, too, cannot put their trust completely.
 Lack of patience: If an entrepreneur loses interest because of any hurdle or obstacle,
then he does not have enough patience and perseverance to carry on with the
entrepreneurship. Even the initial losses are enough to discourage them and shut their
enterprises.
 Lack of confidence: These entrepreneurs never have enough confidence. They never
trust in themselves. They are somehow convinced that they will never be able to come
up with a successful business idea. They are always bothered about their inability to
attract enough funding. Hence, they almost give up on their dream of being self-
employed and thus do not carry on with entrepreneurship.
 Lack of vision: There should never be any limitation to what you can achieve. Some
entrepreneurs, after making short progress, lose their vision and show no more interest
in expanding the business.
 Sense of embarrassment/pride: Such entrepreneurs are way too proud or embarrassed
to ask for help from someone.
  Machinery: Machines are extremely significant to carry out multiple operations.
However, machinery does come costly. Also, technology keeps changing quite rapidly,
and hence, machines tend to get obsolete quite often. Thus an entrepreneur needs to
replace them. This process is quite difficult for the entire organization.

How to do it right:
1. Raw material: The situation can get quite distressful if there is no raw material available
during the peak season of the work. This further increases the price of limited raw
materials available because of an increased level of competition.
2. Land and building: For an enterprise, it is necessary that proper acquisition of land is
made. Then, the construction of buildings will also have to be done. However, all these
can be quite expensive. When the land is rented, the fixed cost becomes a cause of
worry for the entrepreneur. He needs to keep paying the rents whether he is making
any profit out of business or not.
3. Infrastructure support: There have to be proper roads, adequacy of power, drainage
facilities, water, and other such infrastructural supports. But because of red-tapism and
increased corruption, things tend to be quite complicated.
4. Labour: For successful entrepreneurship, there has to be the availability of skilled labor,
quality and quantity labor, and committed and loyal employees. Lack of any of these can
lead to severe disruptions in the working procedure of the enterprise.
5. Political barriers: When there are not enough government concessions, and incentives
offered, things start getting difficult for the entrepreneurs. Also, there has to be a
proper socio-economic setting to make things happen the way they need to. A politician
should also focus on making a society economically developed. Only then will things
smoothen up for the entrepreneurs.
6. Societal barriers: Caste and religious affiliations often act as hurdles in the way of a
business.
7. Financial stability and family backgrounds also have to be kept in mind. These, too, can
impact the operations and development of an enterprise.
8. Socio-cultural norms and values often act as barriers for modern-day budding
entrepreneurs. These age-old norms hamper the smooth development and progress of
business enterprises.
9. Degree of disapproval and approval of entrepreneurial behavior.
Entrepreneurship scopes in India
1. India is right now witnessing multiple entrepreneurship projects for the last two
decades. Entrepreneurship is getting all the more popular because of the following
reasons:
2. The higher level of profits
 3. Control over one’s future
4. Proper government measures which support entrepreneurship
5. Reduction in employment opportunity

6. Entrepreneurship is a great source of earning as well as employment for various people.

It actively reduces the monopoly of bureaucrats. Thus it helps in successfully creating a
balanced regional growth and development in the Indian economy. Indian government
successfully conducts development programs so that proper entrepreneurial potential is
identified. Also, they offer effective assistance – both financial and non-financial, to the
entrepreneurs. Multiple entrepreneurship training academies have also been
established to provide apt training to young entrepreneurs.
Role of Entrepreneurs in Economic Development
1. Promotes Capital Formation: Entrepreneurs promote capital formation by mobilizing
the idle savings of public. They employ their own as well as borrowed resources for
setting up their enterprises. Such type of entrepreneurial activities leads to value
addition and creation of wealth, which is very essential for the industrial and economic
development of the country.
2. Creates Large-Scale Employment Opportunities: Entrepreneurs provide immediate
large-scale employment to the unemployed which is a chronic problem of
underdeveloped nations. With the setting up of more and more units by entrepreneurs,
both on small and large-scale numerous job opportunities are created for others. As
time passes, these enterprises grow, providing direct and indirect employment
opportunities to many more. In this way, entrepreneurs play an effective role in
reducing the problem of unemployment in the country which in turn clears the path
towards economic development of the nation.
3. Promotes Balanced Regional Development: Entrepreneurs help to remove regional
disparities through setting up of industries in less developed and backward areas. The
growth of industries and business in these areas lead to a large number of public
benefits like road transport, health, education, entertainment, etc. Setting up of more
industries leads to more development of backward regions and thereby promotes
balanced regional development.
4. Reduces Concentration of Economic Power: Economic power is the natural outcome of
industrial and business activity. Industrial development normally leads 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.
5. 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.
6. 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.
7. Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on
the loo out for opportunities. They explore and exploit opportunities, encourage
effective resource mobilization of capital and skill, bring in new products and services
and develops markets for growth of the economy. In this way, they help increasing gross
national product as well as per capita income of the people in a country. Increase in
gross national product and per capita income of the people in a country, is a sign of
economic growth.
8. 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.
9. Promotes Country’s Export Trade: Entrepreneurs help in promoting a country’s export-
trade, which is an important ingredient of economic development. They produce goods
and services in large scale for the purpose earning huge amount of foreign exchange
from export in order to combat the import dues requirement. Hence import substitution
and export promotion ensure economic independence and development.
10. Induces Backward and Forward Linkages: Entrepreneurs like to work in an environment
of change and try to maximize profits by innovation. When an enterprise is established
in accordance with the changing technology, it induces backward and forward linkages
which stimulate the process of economic development in the country.
11. Facilitates Overall Development: Entrepreneurs act as catalytic agent for change which
results in chain reaction. Once an enterprise is established, the process of
industrialization is set in motion. This unit will generate demand for various types of
units required by it and there will be so many other units which require the output of
this unit. This leads to overall development of an area due to increase in demand and
setting up of more and more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of enthusiasm and conveying
an impetus for overall development of the area.