ENTREPRENEURSHIP

Entrepreneurship may be defined as the visualization and realization of new ideas by insightful individuals,
who are able to use information and mobilize resources to implement their vision. Entrepreneurship is the
ability (i.e., knowledge plus skills) of a person to translate ideas of commencing a business unit into reality
by setting up a business on ground to serve the needs of society and the nation, in the hope of profits.
Entrepreneurship refers to a system that includes entrepreneurs (and potential entrepreneurs), institutions
and government actions. The desired policy outcome of this system is increased levels of entrepreneurial
activity. The concept of entrepreneurship is an age-old phenomenon that relates to the vision of an
entrepreneur as well as its implementation by him. Entrepreneurship is a creative and innovative response
to the environment. It is also the process of setting up a new venture by entrepreneur. Entrepreneurship is
the mixture of many qualities and skills such as imagination, risk taking ability to harness factors of production
i.e. land, labour, technology and various other intangible factors. Entrepreneurship can be described
as process of establishing an enterprise. Entrepreneurship is a creative activity. It is the attitude of mind to
seek opportunities, take calculated risk and derive benefits by setting up a venture. It is the process of
identifying opportunities in the market place, collecting and arranging the resources to exploit these
opportunities for long term gains. Entrepreneurship is the ability of a person to minimise the use of resources
and to put them into the process and get the maximum benefit of out it. He should take into consideration
quality, excellence and consumer awareness for the sustainability of his business. Therefore,
entrepreneurship is the product of team work and ability of an entrepreneur to create, build and work as a
team. Thus, entrepreneur is person, entrepreneurship is a process and enterprise is the object.
Entrepreneurship is the dynamic process of creating incremental wealth. This wealth is created by
individuals who assume the major risks in terms of equity, time, and/or career commitment to providing value
for some product or service. The product or service itself may or may not be new or unique but value must
somehow be infused by the entrepreneur by securing and allocating the necessary skills and resources.
Also, it was generally recognized that entrepreneurs serve as agents of change, provide
creative, innovative ideas for business enterprises, and help businesses grow and become profitable.
Whatever the specific activity they engage in, entrepreneurs in the twenty-first century are considered the
heroes of free enterprise. Many of them have used innovation and creativity to build huge enterprises.
Entrepreneurship is now regarded as the “Pioneer ship” of business. The history of the early industrial
development and trade and subsequent innovation in any country is largely the history of its entrepreneurs.
It describes people with the pioneering spirit, intuition inspiration, and a willingness to work hard and take
risks. They are energetic self-starters who make it their mission to meet business challenges, independently
and are restless in working for someone else, for a salary.
In a nutshell, the concept of entrepreneurship can be understood as follows:
1. Entrepreneurship involves decision-making, innovation, implementation, forecasting of
the future, independency, and success.
2. Entrepreneurship is a discipline with a knowledge base theory and is an outcome of
complex socio-economic, psychological, technological, legal, and other factors.
3. It is a dynamic and risky process.
4. It involves a fusion of capital, technology, and human talent.
5. Entrepreneurship is equally applicable to big and small businesses and to economic and non-
economic activities.
6. Different entrepreneurs might have some common traits but all of them will have some different
and unique qualities.
7. It is the purposeful and organized search for change, conducted after a systematic analysis of
opportunities in the business environment.
8. Entrepreneurship is a philosophy and 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.
9. Entrepreneurship is a creative activity.
 10. It is the ability to create and build something from practically nothing.
11. It is a knack of sensing opportunity where others see chaos and confusion.
12. Entrepreneurship is the attitude of the mind to seek opportunities, take calculated risks,
and derive benefits by setting up a venture.
13. It is made up of activities to conceive, create, and run an enterprise.
To sum up, “Entrepreneurship is a dynamic process of vision, change and creation. It requires an
application of energy and passion towards the creation and implementation of new ideas and creative
solutions. Essential ingredients include the willingness to take calculated risks in terms of time, equity, or
career, the ability to formulate an effective venture team, the creative skill to organize needed resources, the
fundamental skill of building a solid business plan, and, above all, the vision to recognize opportunity where
others see chaos, contradiction, and confusion.’’
DEFINITION
Entrepreneurship is the investing and risking of time, money and effort to start a business and make it
successful.– Musselman and Jackson
Entrepreneurship is defined as anticipating the future requirements of society and successfully meeting these
needs with new, creative and imaginative combinations of resources.– Franklin Lindsay
Entrepreneurship is the purposeful activities of an individuals or a group of associated individuals undertaken
to initiate, maintain and aggrandize profit by production or distribution of economic goods and services.– H.
Cole
History of Entrepreneurship
The term “entrepreneurship” can be traced back to as early as the Middle Ages, when
the “entrepreneur” was simply someone who carried out tasks, such as buildings and construction projects
by applying all the resources at his disposal. However, it was during the 16th century when “business” was
used as a common term, and the “entrepreneur’’ came into focus, as a person, who is responsible for
undertaking a business venture.
Entrepreneurship as a term can be traced back to the economists of the 18th century, and it continued to
attract the interest of economists in the 19th century. In the twentieth century, the word became synonymous
with free enterprise and capitalism.
During the 20th century, within the last two decades, the concept of entrepreneurship has evolved from
being a single individual to an entire organization or a corporation.
Entrepreneurship in India: An Overview
In India, there is a peculiar Joint Family Structure, which has been a source of success for many Indian
businesses. But that success has been possible due to Economic Liberalization in India. That success will
continue, only if the reforms continue and if the risks that could derail the growth due to terrorism, political
corruption, stalled reforms, and growth that focuses only on the urban rich, are tackled well by the
Government.
1. The Pre-1990 Period – For the old business houses, success had come from the close-knit
joint family structure that fosters family values, teamwork, tenacity, and continuity. Under this
structure, generations lived and worked together under one roof. Wealth from the businesses
supported the joint family by providing a social safety net for members. In the structure,
businesses and families were intertwined though they were also distinct entities with separate
rules. Hence, the survival of the family became synonymous with the survival of the business.
Prior to the decade of the 90s, Indian business success was a function of ambition, licenses,
government contacts, and an understanding of the bureaucratic system. Decisions were
based on connections, rather than the market or competition. During this era, entrepreneurship
was subdued, capital was limited and India had very few success stories.
2. The Post-1990 Period – In 1991, the Indian government liberalized the economy, thus
changing the competitive landscape. Family businesses, which dominated Indian markets,
then faced competition from multinationals, which boasted of superior technology, financial
strength, and deeper managerial resources. Thus, Indian businesses had to change
 Characteristics/Nature of Entrepreneurship
Entrepreneurship is a creative and innovative action process of entrepreneur towards establishing an
enterprise.Following are some of the main characteristics of entrepreneurship:
1) Innovation the essence of Entrepreneurship: Entrepreneurship is an innovative function as it involves
doing things in a new and better way. Innovation is the process of doing new things. It can be of a new
product, a new source of raw material a new market, a new method of production, not yet applied in a
particular branch or, manufacturing etc.
2) Economic Activity: Entrepreneurship is basically concerned with the economic activities i.e production
and distribution of goods and services. It is also concerned with the optimum utilisation of available factors
of production and resources.
3) Creation of Value: Entrepreneurship is virtually a creative and a purposeful activity. It leads to creation of
new products, services, approaches, resources, technologies, and markets that contribute some value to a
community or marketplace.
4) Risk Bearing: Risk is an inseparable element of entrepreneurship. An entrepreneur assumes the
uncertainty of future. In the pursuit of profit, there is possibility of loss also.

5) Dynamic Process: Entrepreneurship is a dynamic function. Flexibility is the tool towards successful
entrepreneur. An entrepreneur should adopt all the changes in the environment which bring useful
opportunities for business.
6) Special Skills and Leadership: An entrepreneurship calls for special skills to handle the situations as it
unfolds. An entrepreneur must have the ability to lead and manage in every situation. Entrepreneurship
involves the ability to create and build something from practically nothing. It is the ability to build a founding
team to complement the entrepreneur‟s skills and talents. An entrepreneurship can grow and flourish only if
its founders have required managerial and leadership skills.
7) Human Relations: Entrepreneurship is the ability to work with other people and signing responsibility is a
key to success. It is the ability to make a team, the efforts of which would result in gaining for the enterprise
in every aspect.
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 organisation 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.
Types of Entrepreneurship
1. Small business entrepreneurship
Small business entrepreneurship is defined as an independent or solely owned company that is limited in
size and revenue, depending on the industry. These companies primarily operate within a local community
or region and focus on serving their nearby customers through personalized service and a deep
understanding of the local market dynamics.
The best feature they have is to exhibit adaptability and their ability to respond quickly to local market shifts
and customer preferences. One might not expect revolutionary innovations from these businesses but they
brought up novel approaches within their niche or community.
Small businesses often struggle with the economy due to limited access to large audiences, making it
challenging to scale their operations and increase their market approach compared to larger corporations or
big brands within their niche. Also, there is a continuous threat of global economic fluctuations, which can
significantly impact their stability and growth.
Small businesses create Social Stability, while they might not be major innovators, but they contribute to
enhancing community well-being and a considerable percentage of job creation.
The best examples to understand this concept are Local bakeries, salons, single-location restaurants,
local grocery shops etc.
2. Scalable Start-up Entrepreneurship
Scalable start-up entrepreneurship can be defined as a profitable business model that has the potential for
significant growth and expansion, with innovative technology or a unique approach to a market need, allowing
them to quickly scale and dominate sectors, often transforming or creating entirely new industries.
Unique, innovative products or services and advanced technology are their best features. These core values
distinguished them in the market with new and improvised solutions. These innovations can range from
revolutionary software to groundbreaking products, providing solutions that meet unaddressed needs.
It is often noticed that scalable startups need a substantial initial investment to develop their product and
services, to manage rapid scaling, marketing, research and development, and to ensure that they have the
infrastructure and resources ready to grow quickly and sustainably.
Having a highly skilled team with the right approach to drive innovation and technology which ensures to
bring out problem-solving products or services is the biggest challenge they face during their initial stage.
Along with this, dealing with multiple Regulatory and Legal Issues as they expand in different geographical
markets can create complexities in their scalable business.
Scalable startups have the potential to disrupt existing markets by introducing lower prices and more choices
for consumers. This directly benefits society by enhancing purchasing power and economic stability. As these
startups grow, they create new jobs, contributing to economic growth and providing employment opportunities
to the
3. Large Companies or Big Business Entrepreneurship
Large Companies or Big Business Entrepreneurship can be defined as a commercial entity that has
substantial market influence, extensive resources, and operates in multiple locations. These entities have
huge annual revenue and a large number of employees to undertake large-scale projects, influence market
trends, and drive significant economic growth.
Large Companies usually have a global presence, operating across multiple countries, depending on the
nature of their business. They emphasise on steady growth over a certain period of time rather than leading
an overnight revolution.
Large companies are often at risk of disruption from newer, more innovative players that can move quickly to
exploit emerging trends and technologies. The best example to understand this concept is how OYO
Rooms, founded in 2013 shook up the hospitality industry and challenged major hotel chains like Taj, Oberoi,
and ITC Hotels
On the other side, These Big Corporations often set new industry standards, pushing the envelope of what’s
possible and encouraging industry-wide innovation contributing to a huge impact on society. Along with this,
Large firms have the resources to address major societal challenges through their entrepreneurial projects.
For example, they can invest in sustainable technologies or healthcare innovations that have far-reaching
societal impacts.
4 Social Entrepreneurship
In the broad sense, social entrepreneurship refers to innovative activity with a social objective in either the
‘for-profit sector’, such as in social-purpose commercial ventures or in the ‘non-profit sector’, or across
sectors, such as hybrid structural forms which blend for profit and non-profit approaches.
Under the narrow definition, Social Entrepreneurship refers to the phenomenon of applying business
expertise and market-based skills in the non-profit sector, such as when non-profit organizations develop
innovative approaches to earn income and reinvest that capital for the betterment of society.
They explore new ideas, to make an impact as a socially aware organization. Not only do they have an idea
that must be implemented, but also they know how to implement it and are realistic in their vision of
implementing it.
While traditional businesses often secure funding based on their innovative ideas and potential for profit,
social enterprises must convince investors of the value of their social impact. Also, scaling a social enterprise
can be challenging as it does not have a sustainable profit outcome.
Social entrepreneurship plays a critical role in driving social change, offering new avenues for addressing
social issues by combining innovation, resourcefulness, and opportunity to create solutions that are
sustainable, impactful, and capable of scaling to benefit society at large.
The best example to understand this concept is Anshu Gupta, He founded the non-governmental
organization Goonj which brings inequality between urban and rural region
Functions of Entrepreneurship
The various functions of entrepreneurship are Innovation and creativity, Risk-taking and
achievement and organization and management, Catalyst of Economic Development, Overcoming
Resistance to Change and Market Research. These have been depicted, at a glance, with the help of the
given Figure and are being discussed, in brief, below.
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 and 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
It is a process in which the entrepreneur establishes new job opportunities 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 and Family Risk, and Mental and Health Risk, which are as follows:
1. Financial Risk – Most entrepreneurs begin by using their own savings and personal
effects and if they fail, they have the fear of losing it. They take the risk of failure.
2. Job Risk – Entrepreneurs, not only follow the ideas as working situations but also
consider the current risks of giving up the job and starting a venture. Several
entrepreneurs have a history of having a good job, but gave it up, as they thought that
they were not cut out for a job.
3. Social and Family Risk – The beginning of an 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.
4. Mental Health Risk – Perhaps the biggest risk that an entrepreneur takes is, the risk
of mental health. The risk of money, home, spouse, child, and friends could be adjusted
but mental tensions, stress, anxiety, and other mental factors have many destructive
influences because of the beginning and continuing of entrepreneurial activity. This
can even lead to depression when faced with failure
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. According to Mintzberg, these include interpersonal roles, informational roles, and decision-
making roles. The smaller the organization, the more concentrated these roles are in the hands of the owner-
manager. The entrepreneurial organization is generally unstructured.
4. Market Research
An entrepreneur is a practical dreamer and does a lot of groundwork before taking a leap in his/her ventures.
In other words, an entrepreneur finalizes an idea only after considering a variety of options, analysing 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 behaviour
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 willpower, enthusiasm, and energy help him/her overcome 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 multiple-fold.
The Entrepreneurial Process: A Step-by-Step Guide
Entrepreneurship is the act and art of being an entrepreneur or one who undertakes innovations or introduces
new things, finance, and business acumen in an effort to transform innovations into economic goods.
The most obvious form of entrepreneurship is that of starting new businesses. In more recent times,
the term entrepreneurship has been extended to include elements not necessarily related to business
formation activity, but it also includes specific forms of social entrepreneurship, political
entrepreneurship, or knowledge entrepreneurship.
Following are the steps involved in the entrepreneurial process. This entrepreneurial process is to be
followed, again and again, whenever any new venture is taken up by an entrepreneur, therefore, it is an ever-
ending process.
• Market Research for a New Idea
An entrepreneurial process begins with Market Research for a new Idea. Gathering, analyzing, and
interpreting information about a market, including details about the target market, competition, and consumer
preferences is a crucial factor before working a new innovative Idea. wherein the entrepreneur identifies and
evaluates the business opportunities for him/her.
• Outlining Business Model
The identification and evaluation of opportunities for a newly made Idea is a difficult task. Therefore, it is
crucial to create a structure for a business model on how a company creates, delivers, and captures value.
Once the Outlining is done, the next step is to evaluate it.
• Detailed analysis of promising Idea
An entrepreneur can evaluate the efficiency of an opportunity by continuously asking certain questions such
as, whether the opportunity is worthy of investing, its attractiveness, proposed solutions feasibility, chances
of competitive advantage, and various risks associated with it, etc. Above all, an entrepreneur must analyse
his/her personal skills and capabilities to ensure realisation of entrepreneurial Goals.
• Selection of the Most Promising Idea
Once the analysis is done at both the macro and micro level, then the entrepreneur selects the best possible
option amongst the chosen few, on the basis of the key factors identified by him/her before idea generation.
• Assembling the Resource and Personnel
The next step in the process is resourcing, wherein, the entrepreneur identifies the sources from where the
finance and the human resource can be arranged. Here, the entrepreneur finds the investors for their new
venture and the personnel to carry out the business activities.
• Determining the size of unit
On the basis of the ability to manage resources, the entrepreneur determines the initial size of the business
and the possibilities of expansion.
• Deciding the location of the Business and Planning Layout
This is a significant decision. Entrepreneurs should ideally decide a location where there are Tax holidays
and cheap labour and materials are available in abundance.
• Sound Financial Planning
Once the funds are raised and the employees are hired, the business location and layout have been finalized,
then efforts are made to do sound financial planning with the available financial resources in order to put it to
optimum use.
• Launching the Enterprise
Launching the enterprise by an entrepreneur can be a daunting adventure as the entrepreneur needs to stay
focused and should always be open to suggestions. If he/she is a mission-driven entrepreneur, it must be
remembered that building a truly great company is a marathon, not a sprint.
• Managing the Company
Once the funds are raised and the employees are hired, the next step is to initiate the business operations
to achieve the set goals. First of all, an entrepreneur must decide the management structure or the hierarchy,
which is required to solve the operational problems, as and when they arise.
• Harvesting
The final step in the entrepreneurial process is harvesting, wherein, an entrepreneur decides on the future
prospects of the business, such as its growth and development. Here, the actual growth is compared against
the planned growth and then the decision regarding the stability or the expansion of business operations is
taken.
Ideation
Ideation or idea generation is when entrepreneurs generate and refine business ideas. It involves identifying
a problem or opportunity in the market and developing innovative solutions. Creativity, market awareness,
and customer needs are crucial during this stage.
Entrepreneurs can brainstorm ideas individually or in teams, conduct market research to identify gaps and
trends and seek feedback from potential customers and industry experts. The goal is to build a wide range
of ideas and evaluate their feasibility and potential for success.
Tips for Ideation
• Engage in brainstorming sessions to generate a wide range of ideas.
• Conduct market research to validate the demand and viability of your ideas.
• Improve your concept by seeking feedback from potential customers and industry experts.
Feasibility Analysis
Feasibility analysis is the stage where entrepreneurs assess their business idea’s viability and potential
success. It involves evaluating market potential, competition, resources, and risks. Market research is
essential to understand the target market’s size, demographics, and purchasing behaviours. Competitive
analysis helps identify existing players, their strengths, weaknesses, and opportunities for differentiation.
Assessing available financial and operational resources helps determine the idea’s feasibility.
Entrepreneurs must also evaluate potential risks and challenges, such as regulatory requirements,
technological constraints, and market uncertainties. This analysis helps them make informed decisions about
whether to pursue the idea, modify it, or abandon it.
Tips for Feasibility Analysis:
• Identify your target market and understand its size, demographics, and needs.
• Analyze your competition to identify unique selling points and differentiation strategies.
• Assess the financial and logistical requirements to implement your idea.
Business Planning
Business planning is the stage where entrepreneurs create a detailed roadmap for their venture. It involves
developing a business model, crafting a marketing strategy, establishing financial projections, and setting
operational goals.
The business model outlines how the venture will create, deliver, and capture value. It defines the target
customer segments, value proposition, revenue streams, and cost structure. The marketing strategy outlines
how the product or service will be positioned, promoted, and distributed to reach the target market effectively.
Financial projections estimate revenue, expenses, and profitability over a specific period. They help
entrepreneurs understand the business's financial viability and funding requirements. Setting operational
goals and defining key performance indicators (KPIs) provides a clear focus for implementation and
evaluation.
Tips for Business Planning
• Define your business model and your value proposition.
• Develop a marketing strategy highlighting your target audience, channels, and messaging.
• Create realistic financial projections and consider various funding options.
Execution
Execution is the stage where entrepreneurs transform their plans into action. It involves building a team,
developing products or services, and launching the business. This stage requires effective project
management, resource allocation, and adaptability to navigate challenges and capitalize on opportunities.
Building a talented team is crucial. Entrepreneurs need to identify the necessary skills, recruit the right people,
and create a culture that aligns with the vision and values of the business. Developing and refining the product
or service based on market feedback is essential to meet customer needs and differentiate from competitors.
Launching the business involves bringing the product or service to market, establishing operations, and
implementing marketing and sales strategies. It requires effective coordination of activities, monitoring
progress, and making adjustments as needed.
Tips for Execution
• Build a talented team with complementary skills and shared values.
• Prioritize customer feedback and iterate your products or services accordingly.
• Continuously monitor key metrics and adjust your strategy based on market dynamics.
Growth
The final stage of the entrepreneurial process is growth. This stage involves scaling the business, expanding
into new markets, and optimizing operations. It involves strategic decision-making, resource allocation, and
continuous innovation to sustain and increase market share. Entrepreneurs must seize growth opportunities
while maintaining the core values and vision that led to their initial success.
Entrepreneurs must develop growth strategies that align with their long-term vision. This may include entering
new markets, expanding product lines, forming strategic partnerships, or pursuing mergers and acquisitions.
Marketing, sales, and customer acquisition strategies are crucial in attracting and retaining customers.
Optimizing operations involves streamlining processes, leveraging technology, and improving efficiency. By
constantly adjusting to changing market dynamics, entrepreneurs can stay ahead of their competitors and
take advantage of new opportunities.
Tips for Growth
• Develop a growth strategy that aligns with your long-term vision.
• Invest in marketing, sales, and customer acquisition strategies to expand your reach.
• Continuously innovate and adapt to changing market dynamics.
Addressing Challenges and Obstacles
Entrepreneurship is not without challenges. From limited resources to market uncertainties, entrepreneurs
face numerous obstacles on their journey. Here are some strategies for overcoming common challenges:
Limited Funding: Seek external funding through venture capitalists, crowdfunding platforms, or government
grants. Focus on revenue-generating activities to bootstrap your business.
Competition: Differentiate your product or service through unique value propositions, exceptional customer
service, or innovative marketing strategies.
Uncertainty: Embrace a growth mindset, remain agile, and continuously monitor market trends to seize
emerging opportunities.

Factors responsible to the Success of Entrepreneurship: The success of entrepreneurship is

dependent on certain important factors. Some of the important factors are:
1) Economic Factors: Capital is one of the most important prerequisites to establish an enterprise.
Availability of finance, labour, land, accessibility of customers, suppliers are some of the factors that
contribute to the introduction, survival and growth of a business enterprise.
2) Socio-Economic Factors: The socio economic factors which contribute towards the success of
entrepreneurship are
• Cast/religion
• Family background
• Level of Education
• Level of perception
 • Social Mobility
• Social Security
3) Political Factors: Political environment prevalent in the country also contributes towards the success
of A sound and stable political environment is very important for the growth of entrepreneurship.
4) Work Environment: The work environment in which the employees are working, if it is not satisfactory
then the unsatisfied personal needs for growth and achievement in employment conditions results in
successful entrepreneurship.
5) Government Incentives and Subsidies: Government policies with regard to incentives and subsidies to
the entrepreneurs also contribute to the success of entrepreneurship in the economy.
6) Impact of Services Sector: Growing importance of services in the overall economy has paved the way
for entrepreneurial activity. New industries such as software and business process outsourcing have emerged
and these have a large number of entrepreneurial firms.
Entrepreneur
The word „entrepreneur‟ is derived from the French word “entreprendre‟ which means „to undertake‟. The
term entrepreneur was first brought up by Richard Cantillon, a French baker in 18th Century to mean, “A
person who is uncertainty bearer”. Richard Cantillon was the first person who used the term entrepreneur for
economic activities. J.B.Say another Frenchman, expanded Cantillon‟s ideas and said that entrepreneur
is “an organizer who combines various factors of production to produce a socially viable product”.
So, Entrepreneur is a person who launches his own venture. He organizes, manages and takes the risk of
developing those new products or processes for which the market demand exists but these are not currently
being supplied in the market. An entrepreneur bears the risk of a new venture if there is a chance to earn
profits. He is a front man who brings together various factors of production and creates value by developing
a new product or process. Thus, an entrepreneur may be described as a person who has the ability to explore
the markets, identify opportunities for growth, make best use of available resources and implement actions
to maximize those opportunities.
The entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an
incorporated venture. If one desires to be an entrepreneur, the given equation is what describes, what an
entrepreneur actually is
Entrepreneur + Capital = Products + Customers = Business.
Definitions
1. According to Oxford Dictionary, an entrepreneur is “A person who sets up a business or
businesses, taking on financial risks in the hope of profit”.
2. According to the International Encyclopaedia, an entrepreneur is “An individual who bears the
risk of operating a business in the face of uncertainty about the future conditions”.
3. Schumpeter’s Definition – The 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 manufacturing, a product with which consumers are not yet familiar, a new source of raw
material or of new markets and the like”.
4. Adam Smith’s definition – “The entrepreneur is an individual, who forms an organization for
commercial purpose. She/he is a proprietary capitalist, a supplier of capital, and at the same time a
manager who intervenes between the labour and the consumer. “Entrepreneur is an employer,
master, merchant but explicitly considered as a capitalist”.
5. Peter F. Drucker’s Views on Entrepreneurs – “An entrepreneur is the one who always searches for
change, responds to it and exploits 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”.
In the 20th century, the theorist Arthur H. Cole defined an entrepreneur as an ‘organization builder’
The Origin and Evolution of ‘Entrepreneur’
The term entrepreneur is a French word, and is derived from the French word “enterprendre”. It
means “to undertake”. It is commonly used to describe an individual who organizes and operates a business
or businesses, taking on financial risk to do so.
Around 1700 A.D. the term was used for architects and contractors of public works. In many countries,
the term entrepreneur is often associated with a person who starts his/her own new business.
Qualities of a successful entrepreneur
India has had some of the finest entrepreneurs in history that laid the foundation of Indian economy. We can
see that they all possess certain distinct qualities, some of which are summarised below:
1. Initiative: Being an innovator is a significant characteristic of an entrepreneur. Entrepreneur takes initiative
at the right time to launch a venture, enduring all the struggles of initiation of a new venture.
2. Knowledge and skill: An entrepreneur is a skilled individual who possesses the relevant knowledge relating
to the industry, economy, consumer choices, technology, etc., and prospects of growth for the same in future.
3. Risk taker: An entrepreneur is ready to take the uncertainties associated with the enterprise. An
entrepreneur has the foresight to accept the long-term prospect of success for the enterprise. In doing so,
he/she is ready to withstand the short-term risks associated with the venture.
4. Adaptability: An entrepreneur is adaptable to the changing business environment. As an entrepreneur
starts and grows the business, they constantly monitor the business environment and adapt themselves to
the changes taking place in it.
5. Self-confidence: An entrepreneur is confident of the decisions they take. This self-belief is a key factor that
makes entrepreneurs successful and acts as a catalyst in making them take up risks.
6. Wealth creators: Entrepreneurs are wealth creators that translate great ideas into commercial success.
Those who succeed after taking these risks turn out to be wealth creators for themselves and for the nation
they belong to, by providing valuable employment opportunities to the people. Thus, it is seen that every
successful and economically developed nation has nurtured and promoted the entrepreneurial spirit among
its people
In order to be successful, an entrepreneur should have the following qualities:
• Opportunity-seeking
• Persevering
• Risk Taking
• Demanding for efficiency and quality
• Information-seeking
• Goal Setting
• Planning
• Persuasion and networking
• Building self-confidence
• Listening to others
• Demonstrating leadership
1. Opportunity-seeking: An opportunity is a favorable set of circumstances that creates a need for a new
product, service or business. It includes access to credit, working premises, education, trainings etc. An
entrepreneur always seeks out and identifies opportunities. He/she seizes an opportunity and converts it into
a realistic and achievable goal or plan.
2. Persevering: An entrepreneur always makes concerted efforts towards the successful completion of a
goal. An entrepreneur perseveres and is undeterred by uncertainties, risks, obstacles, or difficulties which
could challenge the achievement of the ultimate goal.
3) Risk Taking: The best entrepreneurs tend to:-
• Set their own objectives where there is moderate risk of failure and take calculated risks
• Gain satisfaction from completing a job well
• Not be afraid of public opinion, skepticism
 • Take responsibility for their own actions
Importance of Risk-taking
• Build self confidence
• Create a feeling of leadership
• Create strong motivation to complete a job well
4) Demanding for Efficiency and Quality Efficiency: Being efficient means producing results with little
wasted effort. Quality refers to:
1. The ongoing process of education, communication, evaluation and constant improvement of
goods/services to meet the customer’s need in a way that exceeds the customer’s expectations;
2. A characteristic of the product or service that makes it fit to use. It makes a product, process, or service
desirable.
3. The ability of a product or service to meet a customer’s expectations for that product or service.
The importance of quality management in entrepreneurship is reflected in the income statement of the
business. There is always a demand for quality products and efficient services. Quality plays an important
role in this new era of globalization because it confers certain benefits which include:
Reduction of waste: Striving to maintain quality means examining all processes that contribute to the creation
of a product, to remove non-productive processes and waste. If businesses keep to their standard of
maintaining the quality of the product, the number of defective products will be reduced. Consumers prefer
to buy quality products. Hence the quality products/services help in increasing the share in market and ensure
that they will not be returned.
Cost-effectiveness: Striving to ensure quality helps businesses to minimize the chances that they will make
mistakes. As a result, the costs of re-doing work or changing the product after it has been sold are greatly
reduced.
An increase in market share: Customers prefer to buy the same product again and again if they are satisfied
with the quality. If they are satisfied with the quality of a product, then they will not only purchase the
product/services more than once, but they will also recommend it to their friends. As a result, this contributes
to an increase in the company’s market share.
Better profitability: Better quality of product satisfies customers. Increased customers means increase sales,
increased shares in market and consequently increased profits.
Social responsibility: By providing quality products and services, a company is more likely to be able to fulfill
its responsibility to the community and meet standards set by government.
Reputation: Quality of goods and services improves the reputation of the business for competition in the
market and growth.
5) Information-seeking: Successful entrepreneurs do not rely on guesswork and do not rely on others for
information. Instead, they spend time collecting information about their customers, competitors, suppliers,
relevant technology and markets. Gathering relevant information is important to ensure that the entrepreneur
makes well informed decisions. Information on the area of market, supply, operations, finance, legislation,
and infrastructure are important for entrepreneurs.
6) Goal Setting A Goal - is a general direction, or long-term aim that you want to accomplish. It is not specific
enough to be measured. It is large in scope, not necessarily time-bound, and is something that people strive
for by meeting certain objectives which will hopefully add up to eventually achieving the goal.
Objectives - are specific and measurable. They are concise and specific. Think of the word “object.” You can
touch it, it’s there, it’s actual, and it’s finite. An entrepreneur must have a goal and an objective which is
specific, measurable, attainable relevant, and time bound (SMART).
Specific: Great goals are well-defined and focused. The moment you focus on a goal, your goal becomes a
magnet, pulling you and your resources toward it. The more focused your energies, the more power you
generate.
Measurable: A goal without a measurable outcome is like a sports competition without a scoreboard or
scorekeeper. Numbers are an essential part of business. Put concrete numbers in your goals to know if you’re
on track.
Attainable: Far too often, entrepreneurs can set goals which are beyond their reach. Dream big and aim for
the stars but keep one foot firmly based in reality.
Relevant: Achievable business goals are based on the current conditions and realities of the business climate.
For example, you may desire to have your best year in business or increase revenue by 50%, but if a national
economic crisis is looming and three new competitors just opened in your market, then your goals are not
relevant to the realities of the market.
Time-Based: Business goals and objectives just don’t get done when there’s no time frame tied to the goal-
setting process. Whether your business goal is to increase revenue by 20% or to find two new clients, it is
important to choose a time-frame to accomplish your goal.
7) Planning: Planning is making a decision about the future in terms of what to do, when to do, where to do,
how to do, by whom to do and using what resources. An effective entrepreneur therefore usually plans his/her
activities and accounts as best as they can for unexpected eventualities.
8) Persuasion and Networking Persuasion is a way of convincing someone to get something or make a
decision in your Favor. It is inducing or taking a course of action or embracing a point of view by means of
argument, reasoning, or entreaty; to convince; to succeed in causing a person to do or consent to something;
to win someone over, as by reasoning or personal forcefulness; to cause to believe; to induce, urge, or prevail
upon successfully.
Importance of Persuasion in Business
We purchase goods from people
We sell goods to people
We need support from people
We work with people.
Without people, be they are suppliers, workers, and most importantly customers, there is no business.
Networking is an extended group of people with similar interests or concerns who interact and remain in
informal contact for mutual assistance or support. In a business environment where we are in, we network
with customers, suppliers, competitors, various firms, different organizations, government offices and family.
9) Building Self-confidence: Self-confidence is the state of being certain that a chosen course of action is
the best or most effective given the circumstances. Confidence can be described as a subjective, emotional
state of mind, but is also represented statistically as a confidence level within which one may be certain that
a hypothesis will either be rejected or deemed plausible. Self-confidence is having confidence in oneself
when considering a capability. Overconfidence is having unmerited confidence-believing something or
someone is capable when they are not.
10) Listening to Others: An entrepreneur does not simply impose his/her idea on others. Rather, he/she
listens to other people in their sphere of influence, analyses their input in line with his/her own thinking and
makes an informed decision.
11) Demonstrating Leadership: An entrepreneur does not only do things by him/herself, but also gets things
done through others. Entrepreneurs inspire, encourage and lead others to undertake the given duties in time.
Entrepreneurial Skills
A skill is simply knowledge which is demonstrated by action. It is an ability to perform in a certain way. An
entrepreneur is someone who has a good business idea and can turn that idea into reality. To be successful,
an entrepreneur must not only identify an opportunity but also understand it in great depth. He or she must
be able to spot a gap in the market and recognize what new products or services fill the gap. He or she must
know what features it will have and why they will appeal to the customer. The entrepreneur must also know
how to inform the customer about it and how to deliver the new offerings. All this calls for an intimate
knowledge of a particular sector of industry. Turning an idea into reality calls upon two sorts of skills, these
are:
I. General management skills and II. People management skills
I) General Management Skills: These are skills required to organize the physical and financial resources
needed to run the venture. Some of the most important general management business skills are:
Strategy Skills – An ability to consider the business as a whole, to understand how it fits within its market
place, how it can organize itself to deliver value to its customers, and the ways in which it does this better
than its competitors.
Planning Skills – An ability to consider what the future might offer, how it will impact on the business and what
needs to be done to prepare for it now.
Marketing Skills – An ability to see past the firm’s offerings and their features, to be able to see how they
satisfy the customer’s needs and why the customer finds them attractive.
Financial Skills – An ability to manage money; to be able to keep track of expenditure and to monitor cash-
flow, but also an ability to assess investments in terms of their potential and their risks.
Project Management Skills – An ability to organize projects, to set specific objectives, to set schedules and
to ensure that the necessary resources are in the right plat of the right time.
Time Management Skills – An ability to use time productively, to be able to priorities important jobs and to get
things done to schedule.
II) People Management Skills: Businesses are made by people. A business can only be successful if the
peoples who make it up are properly directed and are committed to make an effort on its behalf. An
entrepreneurial venture also needs the support of people from outside the organization such as customers,
suppliers and investors. To be effective, an entrepreneur needs to demonstrative a wide variety of skills in
the way he/she deals with other peoples. Some of the more important skills we might include under this
heading are:
Communication Skills – An ability to use spoken and written language to express ideas and inform others.
Leadership Skills – An ability to inspire people to work in a specific way and to undertake the tasks that are
necessary for the success of the venture.
Motivation Skills – An ability to enthuse people and get them to give their full commitment to the tasks in
hand. Being able to motivate demands an understanding of what drives people and what they expect from
their jobs.
Delegation Skills – An ability to allocate tasks to different people. Effective delegation involves more than
instructing. It demands a full understanding of the skills that people possess how they use them and how
they might be developed to fulfill future needs.
Negotiation Skills – An ability to understand what is wanted from a siturations, what is motivating others in
that situation and recognize the possibilities of maximizing the outcomes for all parties.
All these different people skills are interrelated. Here entrepreneurial performance results from a combination
of industry knowledge, general management skills; people skills and personal motivation (see the figure
shown below). The successful entrepreneur must not only use these skills but learn to use them and to learn
from using them. Entrepreneurs should constantly avoid their abilities in these areas, recognize their
strengths and weaknesses, and plan how to develop these skills in the future.
The Entrepreneurial Tasks
We recognize entrepreneurs, first and foremost, by what they actually do – by the tasks they undertake. A
number of tasks have been associated with the entrepreneur. Some of the more important are:
1) Owning Organizations: Ownership lies with those who invest in the business and own its stock – the
principals, while the actual running is delegated to professional agents or managers. Therefore, if an
entrepreneur actually owns the business then he is in fact undertaking two roles at the same time that of an
investor and that of a manager. Here we can also recognize many people as entrepreneur even if they do
not own the venture they are managing.
2) Founding New Organizations: The entrepreneur is recognized as the person who undertakes the task of
bringing together the different elements of the organization (people, property, productive resource, etc. and
giving them a separate legal entity. The entrepreneur makes major changes in their organizational word.
3) Bringing Innovations to Market: The idea of innovation encompasses any new way of doing something so
that value is created. Innovation can mean a new product or service but it can also include a new way of
delivering an existing product or service, new methods of informing the consumer about the product or new
ways of organizing the company.
4) Identification of Market Opportunity: An opportunity is the gap in a market where the potential exists to do
something better and create value. New opportunities exist all the time but they do not necessarily present
themselves. If they are to be exploited they must be actively sought out. Note that opportunity always takes
priority over innovation.
5) Application of Expertise: A slight more technical notion is that they have a special ability in deciding how
to allocate scarce resources in situations where information is limited. It is their expertise in doing this that
makes entrepreneurs valuable to investors.
6) Provision of leadership: Entrepreneurs can rarely drive their innovation to market on their own. They need
the support of other people both from their organizations and from people outside such as investor customer
and supplier.
7) The entrepreneur as manager: At the end of the day the entrepreneur is a manager. The distinction
between an entrepreneur and ordinary manager may lie on what the entrepreneur manager manages, how
they manage, their effectiveness and the effect they have as a manager not by the particular tasks they
undertake.
TYPES OF ENTREPRENEURSHIP
Let us take a look at different types of entrepreneurs. All forms of entrepreneurship are essential and
complementary forces of economic development.
Based on Risk
(a) Innovative Entrepreneurship Entrepreneur comes up with new ideas and turns them into viable business
and find new ways to market the products that make their business stand out from the crowd and sometimes
create a new crowd. Examples are Steve Jobs and Bill Gates.
(b) Imitative Entrepreneurship implements current techniques from which they copy certain business ideas
and improve upon them as to gain an upper hand in the market. Imitative entrepreneurship is characterized
by the adoption of exogenously changing technologies. Examples are development of small shopping
complexes and small car manufacturers.
(c) Fabian Entrepreneurship is concerned with such business organizations in which the individual owner
does not take initiative in visualizing and implementing new ideas and innovation. Dealings are determined
by customs, religion, trading and past practices. They are not too interested in taking risks or changes and
they try to follow the beaten track created by their predecessors.
(d) Drone Entrepreneurship is concerned with such businesses in which owners are satisfied with the existing
mode and speed of business activity and show no inclination in gaining market leadership. They refuse to
make any modification in the existing production methods inspite of incurring recurring losses.
Based on type of Business
(a) Agricultural Entrepreneurship covers a wide spectrum of agricultural activities like cultivation, marketing
of agricultural produce, irrigation, mechanization and agricultural technology.
(b) Manufacturing Entrepreneurship identifies needs of customers and then explores the resources and
technology to be used to manufacture the products to satisfy those needs by converting raw materials into
finished products.
(c) Trading Entrepreneurship procures finished products from manufacturers and sells these to customers
either directly or through middlemen such as wholesalers, dealers, and retailers. These middlemen act as a
link between the manufacturer and customer.
Based on use of Technology
(a) Technical Entrepreneurship deals with establishing and running industry based on science and
technology. They use innovative methods of production.
(b) Non-Technical Entrepreneurship is concerned with the use of alternative and imitative methods of
marketing and distribution strategies to make their business survive and thrive in a competitive market.
Based on Ownership
(a) Corporate entrepreneurship was pioneered by Burgelman. Corporate ownership is where an individual
through innovation and skill organises, manages and controls a corporate undertaking efficiently.
(b) Private Entrepreneurship is where an individual sets up a business as a sole owner of the business and
bears the entire risk involved in it.
(c) State Entrepreneurship is where trading or industrial venture is undertaken by the State or the
Government. (d) Joint Entrepreneurship implies a joint business endeavor between a private entrepreneur
and the Government.
Based on size of Enterprise
1. Micro Enterprises: Any business with a turnover of up to Rupees five crore.
2. Small-Scale Entrepreneurship:A small enterprise has an annual turnover of more than Rupees five crore
but not more than Rs 75 crore.
3. Medium-Scale Entrepreneurship: A business with a turnover over Rs 75 crore and upto Rs 250 crore
4. Large-Scale Entrepreneurship: Business with turnover over Rs 250 crore.
Based on Gender
Women Entrepreneurship
The Government of India defines women entrepreneurship as, “a business enterprise which is owned,
managed and controlled by women having a minimum financial interest of 51 per cent of the capital and
giving at least 51 per cent of employment generated in the enterprises to women.” Schumpeter defines
women entrepreneurship as, “based on women’s participation in equity and employment of a business
enterprise.”
Based on Social Problems
Social Entrepreneurship The concept of social entrepreneurship came around the 1960s but the
establishment of Grameen Bank by Muhammad Yunus in Bangladesh was the first instance where it was
thoroughly used. Social entrepreneurship focuses on social problems and environmental problems aiming at
bringing about transformation. This obligation of contribution to social well-being is primary and in a way,
profit takes a back seat or is more or less secondary but essential to the survival.