ENTREPRENEUR

1.1 MEANING:

An entrepreneur is one of the important segments of economic growth. Basically he

is a person responsible for setting up a business or an enterprise. In fact he is one who has
the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent
of change and works for the good of people. He puts up new green field projects that create
wealth, open up many employment opportunities and leads to the growth of other sectors.

The word entrepreneur is derived from the French verb entreprendre. It means to
undertake. In the early 16th century, the Frenchmen who organized and led military
expeditions were referred to as entrepreneurs, Around 1700 A.D., the term was used for
architects and contractors of public works.

The term entrepreneur was applied to business initially by the French economist,
Caltillon, in the 18th century, designate a dealer who purchases the means of production for
combining them into marketable products. Another Frenchman J.B. Say, expanded
Cantillons ideas and conceptualized the entrepreneur as an organizer of a business firm,
central to its distributive and production functions. Beyond stressing the entrepreneurs
importance to the business, Say did little with his entrepreneurial analysis.

According to J.B.Say, an entrepreneur is the economic agent who unties all means of
production, the labour force of the one and the capital or land of the other and who finds in
the value of the products his results from their employment, the reconstitution of the entire
capital that he utilizes and the value of the wages, the interest and the rent which he pays as
well as profit belonging to himself. He emphasized the functions of co- ordination,
organization and supervision. Further, it can be said that the entrepreneur is an organizer and
speculator of a business enterprise. The entrepreneur lifts economic resources out of an area
of lower into an area of higher productivity and greater.

The New Encyclopaedia Britannica considers an entrepreneur as an individual who

bears the risk of operating a business in the face of uncertainty about the future condition.

As professor Jan Tin Bergen points out The best entrepreneur in any developing
country is not necessarily the man who uses much capital, but rather the man who knows
how to organize the employment and training of his employees. Whoever concentrates on
this is rendering a much more important service to his country than the man who uses huge
capital.

Joseph A. Schumpeter thus writes 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 manufacture concerned, a product with which
consumers are not yet familiar, a new source of raw material or of new markets and the like

Briefly, an entrepreneur is one who innovates, raises money, assembles inputs,

chooses managers and sets the organization going with his ability to identify them.
Innovation occurs through (1) the introduction of a new quality in a product (2) a new

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product(3) a discovery of a fresh demand and a fresh source of supply and (4) by changes in
the organization and management.
New Concept of Entrepreneur The term entrepreneur has been defined as one who
detects and evaluates a new situation in his environment and directs the making of such
adjustments in the economic system as he deems necessary. He conceives of an industrial
enterprise for the purpose, displays considerable initiative, grit and determination in bringing
his project to fruition and in this process, performs one or more of he following.

Perceives opportunities for profitable investment

Explores the prospects of starting such a manufacturing enterprise
Obtains necessary industrial licenses
Arranges initial capital
Provides personal guarantees to the financial institutions
Promises to meet the shortfalls in the capital and
Supplies technical know-how.

The term entrepreneur is to be understood in its totality and not in a fabricated

manner. The term entrepreneur can only be understood with a bearing on economic,
psychological, sociological and cultural bearings. The social responsibility is essentially a part
of entrepreneurial outlook on life.

Fig:1 Basics of an Entrepreneur

ORGANISATION

INNOVA
TION
URGE RISK
SKILL
ENTERPRISE
VISION
GROWTH

MANAGEMENT

So, Entrepreneurs are individuals motivated by a will for power, special

characteristics being an inherent capacity to select correct answers, energy, will and mind to
overcome fixed talents of thoughts, and a capacity to withstand social opposition.

1.2 Characteristics of an entrepreneur:

A successful entrepreneur must be a person with technical competence, initiative,

good judgment, intelligence, leadership qualities, self confidence, energy, attitude,
creativeness, fairness, honesty, tactfulness and emotional stability.
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Mental ability: Mental ability consists of intelligence and creative thinking. An entrepreneur
must be reasonably intelligent and should have creative thinking and must be able to engage
in the analysis of various problems and situations in order to deal with them. The
entrepreneur should anticipate changes and must be able to study the various situations
under which decision have to be made.

Clear objectives: An entrepreneur should have clear objectives as to the exact nature of the
goods to be produced and subsidiary activities to be undertaken. A successful entrepreneur
may also have the objective to establish the products, to make profit or to render social
service.

Business secrecy: An entrepreneur must be able to guard business secrets. Leakage of

business secrets to trade competitors is a serious matter which should be carefully guarded
against by an entrepreneur. An entrepreneur should be able to make a proper selection of his
assistants.

Human relations ability: The most important personality traits contributing to the success
of an entrepreneur are emotional stability, personal relations, consideration and tactfulness.
An entrepreneur must maintain good relations with his customers if he is to establish
relations that will encourage them to continue to patronize his business. He must also
maintain good relations with his employees if he is to motivate them to perform their jobs at
a high level of efficiency. An entrepreneur who maintains good human relations with
customers, employees, suppliers, creditors and the community is much more likely to
succeed in his business than the individual who does not practice good human relations.
Human relations ability can also be referred to as tactfulness.

Fig: 2 Characteristics of an Entrepreneur

ADMINISTRATI
VE ABILITY
TECHNICAL ORGANISATI
KNOWLEDGE ON SKILL

EFFECTIVE

COMMUNICATI INTELLIGENCE

ON

PUBLIC ENTREPR
CREATIVITY
RELATIONS ENEUR

EMOTIONAL
INNOVATION
STABILITY

SOUND CLEAR

KNOWLEDGE OBJECTIVE
BUSINESS
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Communication ability: Communication ability is the ability to communicate effectively.
Good communication also means that both the sender and the receiver understand each
other and are being understood. An entrepreneur who can effectively communicate with
customers, employees, suppliers and creditors will be more likely to succeed than the
entrepreneur who does not.
Technical knowledge: An entrepreneur must have a reasonable level of technical
knowledge. Technical knowledge is the one ability that most people are able to acquire if they
try hard enough.
An entrepreneur who has a high level of administrative ability, mental ability, human
relation ability, communication ability and technical knowledge stands a much better chance
of success than his counterpart who possesses low levels of these basic qualities.

Some key characteristics of a successful entrepreneur are:

Motivator: An entrepreneur must build a team, keep it motivated and provide an
environment for individual growth and career development.
Self confidence: Entrepreneurs must have belief in themselves and the ability to achieve
their goals.

Long term involvement: An entrepreneur must be committed to the project with a time
horizon of five to seven years. No ninety- day wonders are allowed.

High energy level: Success of an entrepreneur demands the ability to work long hours for
sustained periods of time.

Persistent problem solver: An entrepreneur must have an intense desire to complete a

task or solve a problem. Creativity is an essential ingredient.

Initiative: An entrepreneur must have initiative accepting personal responsibility for actions
and above all make good use of resource.

Goal setter: An entrepreneur must be able to set challenging but realistic goals.

Modern risk taker: An entrepreneur must be a moderate risk taker and learn from any
failures.

These personal traits go a long way in making an entrepreneur a successful man or

woman.

2.1 Concept of Entrepreneurship

Schumpter (1934) Entrepreneurship is seen as new combinations including the doing of

new things or the doing of things that are already being done in a
new way. New combinations include 1)introduction of new good,
2)new method of production, 3)opening of a new market, 4)new

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 source of supply, 5)new organizations. Entrepreneur disrupts
equilibrium.

Penrose (1959) Distinguished between entrepreneurial and managerial services. ESs

refer to those contributions to the operations of a firm which relate to
the introduction and acceptance on behalf of the firm of new ideas
such as new products, locations, significant changes in technology,
acquisition of new management personnel, fundamental changes in
the administrative organization, raising capital, making of plans for
expansion. Managerial services execute entrepreneurial services.
Entrepreneurs provides ESs.

Kirzer (1973) The entrepreneur is a decision maker whose entire role arises out of
his alertness to unnoticed opportunities; therefore, entrepreneurship
is the ability to perceive new opportunities. This recognition and
seizing of the opportunity will tend to correct the market and bring
it back toward equilibrium. Entrepreneurial Discovery

Drucker (1985) Entrepreneurship is an act of innovation that involves endowing

existing resources with new wealth producing capacity.

Rumelt (1987) Entrepreneurship is the creation of new businesses. New business

meaning that they do not exactly duplicate existing businesses but
have some element of novelty.

Low & MacMillan (1988)Entrepreneurship is the creation of new enterprise.

Gartner (1988) Entrepreneurship is the creation of organizations, the process by

which new organizations come into existence. Entrepreneurship ends
when the creation stage of the organization ends.

Stevenson et al. (1989) Entrepreneurship is the pursuit of an opportunity w/o concern for
current resources or capabilities.

Amit, Glosten & Muller (1993)Entrepreneurship is the process of extracting profits from new,
unique, and valuable combinations of resources in an uncertain and
ambiguous environment.

Timmons (1994) Entrepreneurship is creating and building something of value from

practically nothing. That is, entrepreneurship is the process of
creating or seizing an opportunity and pursuing it regardless of the
resources currently controlled. (textbook)

Venkataraman (1997) Entrepreneurship research seeks to understand how opportunities to

bring into existence future goods and services are discovered,
created, and exploited, by whom, and with what consequences.

The concept of entrepreneurship as an organized knowledge came into being about hundred
years ago. Though the economists from Adam Smith to Marshall were talking about it but
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without assigning the name of entrepreneurship. They used the terms as employer, the
master, the merchant and the undertaker for carrying out different entrepreneurial activities
now comprising of entrepreneurship. It was eantillon, who first brought out the term
entrepreneur (Murthy 1989) and entrepreneurship was recognized in economic literature.

Considerable attention has focused on the definition of the term entrepreneur.

Schumpeter(1959) considered the entrepreneur as an innovator. He writes that
Entrepreneurship is the carrying out of new combination we call enterprise; the individuals
whose function is to carry them out we call entrepreneurs.

The new combination focuses on five aspects (Schumpeter 1934): The introduction of new
goals, new methods of production, opening up of new markets, new sources of supply of raw
material and new industrial organizations. Say (1964) uses the term entrepreneur to refer to
someone who creates and then, perhaps, operates a new business firm, whether or not there
is anything innovative in those acts. Baumol (1993) sees the Schumpeter type as an
innovating entrepreneur and the Say type as the firm-organizing entrepreneur. People who
get ideas for creating a new business, bring that business into existence and then carry on
the work of the enterprise, are entrepreneurs (Jena 1989). Pprecisely, an entrepreneur is one
who undertakes to organize, manage, and assume the risks of a business. Even a small
business unit is an entrepreneur and his activities are the entrepreneurhip.

Entrepreneurship is a human activity which plays a major role in economic development its
history is as old as human history it indicates to the spirit of enterprise. Such a spirit
transform the man from a nomad to a cattle rarer, to a settled agriculturist, to a trader and
an industrialist (Murthy 1989).

An entrepreneur is a person while entrepreneurship is the process of its actual working.

Entrepreneurship is also consistently equated with the establishment and management of
small business enterprises. In United States, the entrepreneur is often defined as one who
starts his own, new and small business. (Drucker 1985).

Modern literature on economic development classifies the entrepreneurship in four broad

categories. The innovating, The imitating, The Fabian and The drone entrepreneurship
(Williamson and Bultrick 1969). Innovating and imitating entrepreneurship is generally
available in developed countries and very rare and limited in developing countries.
Developing countries have in them the Fabian and Drone types of entrepreneurship.

In all the above definitions, entrepreneurship refers to the functions performed by a

entrepreneur is establishing an enterprise. Just as management is regarded as what mangers
do, entrepreneurship may be regarded as what entrepreneurs do. In other words,
entrepreneurship is a process involving various actions to be undertaken to establish an
enterprise. It is, thus, process of giving birth of a new enterprise.

Entrepreneurship = Entrepreneur + Enterprise

(Process) (Person) (Object)

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Theories of Entrepreneurship

An entrepreneur, as described by the Small Business Association, puts together a business

and accepts the associated risk to make a profit. While this definition serves as a simple but
accurate description of entrepreneurs, it fails to explain the phenomena of entrepreneurship
itself. A number of theories exist, but all of them fall into one of five main categories

Economic Theories
Economic entrepreneurship theories date back to the first half of the 1700s with the work of
Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic,
neoclassical and Austrian Market process schools of thought all pose explanations for
entrepreneurship that focus, for the most part, on economic conditions and the opportunities
they create. Economic theories of entrepreneurship tend to receive significant criticism for
failing to recognize the dynamic, open nature of market systems, ignoring the unique nature
of entrepreneurial activity and downplaying the diverse contexts in which entrepreneurship
occurs.
Resource-Based Theories
Resource-based theories focus on the way individuals leverage different types of resources to
get entrepreneurial efforts off the ground. Access to capital improves the chances of getting a
new venture off the ground, but entrepreneurs often start ventures with little ready capital.
Other types of resources entrepreneurs might leverage include social networks and the
information they provide, as well as human resources, such as education. In some cases, the
intangible elements of leadership the entrepreneur adds to the mix operate as resource that
a business cannot replace.
Psychological Theories
Psychological theories of entrepreneurship focus on the individual and the mental or
emotional elements that drive entrepreneurial individuals. A theory put forward by
psychologist David McCLelland, a Harvard emeritus professor, offers that entrepreneurs
possess a need for achievement that drives their activity. Julian Rotter, professor emeritus at
the University of Connecticut, put forward a locus of control theory. Rotters theory holds that
people with a strong internal locus of control believe their actions can influence the external
world and research suggests most entrepreneurs possess trait. A final approach, though
unsupported by research, suggests personality traits ranging from creativity and resilience to
optimism drive entrepreneurial behavior.
Sociological/Anthropological Theories
The sociological theory centers its explanation for entrepreneurship on the various social
contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George
Washington University research professor, singles out four such contexts: social networks, a
desire for a meaningful life, ethnic identification and social-political environment factors. The
anthropological model approaches the question of entrepreneurship by placing it within the
context of culture and examining how cultural forces, such as social attitudes, shape both the
perception of entrepreneurship and the behaviors of entrepreneurs.
Opportunity-Based Theory
Prolific business management author, professor and corporate consultant, Peter Drucker put
forward an opportunity-based theory. Ducker contends that entrepreneurs excel at seeing
and taking advantage of possibilities created by social, technological and cultural changes.

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For example, where a business that caters to senior citizens might view a sudden influx of
younger residents to a neighborhood as a potential death stroke, an entrepreneur might see
it as a chance to open a new club.
Importance of Entrepreneurship
The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most important
input in the economic development of a country.
The nature of a developing economy is quite different from a developed economy. The
developing economy can be an agricultural country moving towards the industrialization or it
may be the one where in the industry may be in its infancy lacking advance technology.
The modern era is an era of changes. The whole world is becoming a village due to the
industrial revolution and fast developing communication technology. The globalization of
industry and commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. The modern
era is an era of changes. The whole world is becoming a village due to the industrial
revolution and fast developing communication technology. The globalization of industry and
commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. Economic
development is a highly dynamic process characterized by the pattern of demand shifts, new
products are needed, appear for the production of goods within a country.
A developing country needs entrepreneurs who are competent to perceive new opportunities
and are willing to incur the necessary risk in exploiting them. A developing economy is
required to be brought out of the vicious circle of low income and poverty. Entrepreneur can
break this vicious circle. Entrepreneurs and helping government can change a developing
economy in developed economy.
Employment Generation
Entrepreneurs not only give employment to the entrepreneur but also a source of direct and
indirect employment for many people in a country. Unemployment is a chronic problem in
most of the developing and underdeveloped countries. 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
Entrepreneurial development is looked at as a vehicle for employment generation through
promotion of small business. India, being far more developed and forward looking country
than some of the third world countries, can provide lead to entrepreneurial development
activities. However, India can benefit from the well- documented success experiences of
developed countries like USA, Japan and UK in the field of employment generation and small
business promotion.
Promotes Capital Formation
Entrepreneurs mobilize the idle funds which lead to capital formation. The funds which are
used by entrepreneurs is a mix of their own and borrowed. This leads to creation of wealth
which is very essential for development of an economy.
Small Business Plan Dynamism
Great dynamism is one of the qualities of the small and medium enterprises. This quality of
dynamism originates in the inherent nature of the small business. The structure of small and
medium enterprises is less complex than that of large enterprises and therefore facilitates
quicker and smoother communication and decision- making. This allows for the greater
flexibility and mobility of small business management. Also, small enterprises, more often
make it possible for owners, who have a stronger entrepreneurial spirit than employed
mangers, to undertake risk and challenges.
Balanced Economic Development
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Small business promotion needs relatively low investment and therefore can be easily
undertaken in rural and semi-urban areas. This in turn creates additional employment in
these areas and prevents migration of people from rural to urban areas. Since majority of the
people are living in the rural areas, therefore, more of our development efforts should be
directed towards this sector. Small enterprises use local resources and are best suited to rural
and underdeveloped sector
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.
Innovations in Enterprises
Business enterprises need to be innovative for survival and better performance. It is believed
that smaller firms have a relatively higher necessity and capability to innovate. The smaller
firms do not face the constraints imposed by large investment in existing technology. Thus
they are both free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small firms growth in India. An
increased number of small firms are expected to result in more innovations and make the
Indian industry compete in the international market.
Better standards of living
Entrepreneurs play a vital role in achieving a higher rate of economic growth. Entrepreneurs
are able to produce goods at lower cost and supply quality goods at lower price to the
community according to their requirements. When the price of the commodes decreases the
consumers get the power to buy more goods for their satisfaction. In this way they can
increase the standard of living of the people.
Self-Reliance
Entrepreneurs are the corner stores of national self-reliance. They help to manufacture
indigenous substitutes to imported products which reduce the dependence on foreign
countries. There is also a possibility of exporting goods and services to earn foreign exchange
for the country. Hence, the import substitution and export promotion ensure economic
independence and the country becomes self-reliance.
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
Entrepreneurship also facilitates the rate of development of a country by significantly
contributing to the following factors.
By increasing the rate of growth in GDP of a country
Increasing productivity.
Growing employment opportunity.
Increasing economic diversification.
Optimum use of local resources
Continued innovation in techno managerial practices
Improving in international competitiveness.
Entrepreneurs vs. Managers: Whats the big difference?

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 1. The Job of an Entrepreneur Begins Before Even the Business is Created
An entrepreneur will perceive an opportunity, assemble a team, locate resources for his
new business idea, raise the needed capital and start the business while the manager
comes in only after the foundation has been laid and the business established. What this
mean in essence is that the job of a manager begins only after the entrepreneur has done
the ground work. Without entrepreneurs, the managers will have no business to manage.
2. Entrepreneurs are more concerned with the launching and sustainability of a business
in the face of uncertainty while managers are more concerned with the effective and
efficient operation of an on-going business.
3. Managers are specialists; business management specialist to be precise. They are
focused on managing and growing a business. On the other hand, entrepreneurs are
generalist. They need to know a little about everything. An entrepreneur must know a little
about product development and design, business law, accounting, communication and
public speaking, investing, leadership, business systems, finance and insurance,
marketing and sales, raising capital and so on. An entrepreneurs cup must never be full.
4. Entrepreneurs are street smarts; they learn by trial and error, they learn from their
own mistakes and the business mistakes of others. An entrepreneur starts with whatever
is on ground and learns the hard way.
5. Financial freedom is the utmost priority of entrepreneurs. Freedom to do what they
want, freedom to live the kind of life they love and freedom to make a choice. To
managers, security is the utmost priority. Security comes in the form of a steady
paycheck, pension, gratuity, pay raises, job titles, promotions, bonuses and entitlements.
6. An entrepreneur owns the business; a manager is simply an employee that works in
the entrepreneurs business. In essence, a manager owns a job. A manager is paid to run
the entrepreneurs business.
7. The reward of entrepreneurs come in the form of capital gains, asset acquisition, cash
flow, and dividend while the managers reward come in form of salaries, pay offs,
promotion, job title, bonus and incentives.
8. Entrepreneurs thrive on risk and uncertainty. To entrepreneurs, risk and uncertainty
are part of the game of entrepreneurship; risk is what makes the game exciting. Managers
on the other hand are conservative and detest risk; they simply avoid it.
9. Entrepreneurs see mistakes as an avenue to learn something; they learn more from
their business mistakes. Managers avoid mistakes because it will cost them their job.
Besides; that is why they are being paid; to avoid mistakes. That is where the word
professionalism comes in.
10. When entrepreneurs come together to pool resources or network, they form a team
but when managers who are usually employees come together to work towards a common
goal, they form a union.
11. Entrepreneurs are primarily motivated by the need to build a business that solves a
problem or provide a need, while providing them cash flow and freedom. Managers on the
other hand are motivated by the next paycheck, bonus, incentive, pay off, job title and
promotion.
12. Entrepreneurs are committed to the business from its inception till they achieve their
goal. Managers on the other hand are committed till the next paycheck; delay or cut their
paycheck and they are gone
Difference between an Entrepreneur and a Manager:

Bases of
Difference Entrepreneur Manager
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 The main motive of an
entrepreneur is to start a But, the main motive of a
venture by setting up an manager is to render his
enterprise. He understands services in an enterprise
the venture for his personal already set up by someone
1. Motive gratification. else i.e., entrepreneur.

A manager is the servant in

An entrepreneur is the owner the enterprise owned by the
2. Status of the enterprise. entrepreneur.
An entrepreneur being the
owner of the enterprise
assumes all risks and A manager as a servant does
uncertainty involved in run-not bear any risk involved in
3. Risk Bearing ning the enterprise. the enterprise.
A manager gets salary as
The reward an entrepreneur reward for the services
gets for bearing risks involved rendered by him in the
in the enterprise is profit enterprise. Salary of a
4. Rewards which is highly uncertain. manager is certain and fixed.
Entrepreneur himself thinks
over what and how to produce But, what a manager does is
goods to meet the changing simply to execute the plans
demands of the customers. prepared by the entrepreneur.
Hence, he acts as an Thus, a manager simply
innovator also called a translates the entrepreneurs
5. Innovation change agent ideas into practice.

An entrepreneur needs to An manager needs to possess

possess qualities andqualities and qualifications
qualifications like high like low achievement motive,
achievement motive, origi-originality in thinking,
nality in thinking, foresight, foresight, risk -bearing ability
6. Qualifications risk -bearing ability and so on. and so on.

Role of Entrepreneur in economic development

The entrepreneur who is a business leader looks for ideas and puts them into effect in
fostering economic growth and development. Entrepreneurship is one of the most important
input in the economic development of a country. The entrepreneur acts as a trigger head to
give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not
only in the development of industrial sector of a country but also in the development of farm
and service sector. The major roles played by an entrepreneur in the economic development
of an economy is discussed in a systematic and orderly manner as follows.

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(1) Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilising the idle savings of public. They
employ their own as well as borrowed resources for setting up their enterprises. Such type of
entrepreneurial activities lead 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 lead 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 lead 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) Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation 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.

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Increase in gross national product and per capita income of the people in a country, is a sign
of economic growth.

(6) 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.

(7) 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.

(8) 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.

(9) 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.

Evaluation of Entrepreneurship

Relationships. Having existing relationships with necessary customers, partners, hires,

investors, etc. can be save a lot of time, reduce costs, and reduce risk. Without existing
relationships the team will have to form them, which takes time and there is risk in being
able to form them at all. For example, if you dont know how to code, and youll need a
technical co-founder for the business, and you dont know any, thats one more roadblock
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to getting your business off the ground. Which doesnt mean you shouldnt do it, its just
important to consider how many roadblocks youre going to have before you go down the
path.

Access to customers. If I cant get enough customer development interviews within a

reasonable period of time, then it will be that much harder and take that much longer to
get started. Conversely, if I have existing relationships with, or at least easy access to,
customers I can get feedback on my product much easier. When the time is right, sales
and marketing will also be that much easier, shorter, and cheaper with existing access to
customers. For example, if Tim Ferriss wanted to launch a productivity related product, he
would have an advantage because of all of his existing relevant blog traffic and
subscribers. Ive seen access to customers be especially important to enterprise products.
Having relationships with decisions makers helps with customer development and sales.

Passion. Starting a company is hard and time consuming. If Im solving a problem Im

passionate about and/or serving a customer segment I enjoy spending time with, my
overall quality of life will be higher, and I believe I will be more successful. In starting a
company, you inevitably have to ask a lot of people for help. For example, big things like
introductions to key people, or for small things like to share your site with their friends. I
want to be in a business that Im proud of and passionate about so Im motivated to
hustle. Many businesses require spending a lot of time with customers, so Ill want to
enjoy that time. Lifestyle is an important factor to me.

Skill set required. If the skill set required to execute the business plays to the strength
of the team, execution risk should be less. For example, distribution: I wouldnt want to
start a business with a sales distribution strategy if I didnt know sales. Conversely, if its a
consumer app that acquires customer through search, a team of SEO experts could be
pretty effective. If Im trying to solve a hard technical problem, I would want to make sure
I have incredible technical talent on board. I would be more confident in an entrepreneur
thats started one or more ventures previously, or at least has experience in the skill sets
required to start and run the business. As an entrepreneur, Id want to start a business
that requires skills that I have. Of course you can learn, but that becomes one extra cost,
time constraint, and risk.

Ability to validate. How confident can I be, or quickly get, that Im pursuing a viable
business? If I cant get 10 customer development interviews within a week, and begin to
prove theres a viable business within a few months, I dont want to do it. I know that
massively limits my upside, but again, my goals are specific.

Need for financing/ability to generate cash flow. If a lot of money is required to start
testing the concept, either because costs are high or because it will take a while to
become cash flow positive, financing will be required either from founders or investors. If
you dont have any existing relationships to investors, or at least close connections, thats,
another time suck and risk factor. Its certainly surmountable though if youre good.
Raising money, while glorified in the media, does have downsides. For example, you can
lose some control over your business and you have to give up equity (and therefore
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upside). The more cash you need at the start, when your valuation is the lowest, the more
equity you will have to give up.

Diversified. I never want to have all my eggs in one basket. I dont want my life to be
dependent on one customer or employer. I dont want one trend, industry, or customer
group to effect everything Im doing. Its easy for investors to diversify. For entrepreneurs
its a bit harder, but possible. I personally dont have a very wide portfolio now, but I plan
to.

Size of market/opportunity. How much upside is there? If your goal is to build a

massive company, you will need to be in a massive market. This item will largely depend
on personal goals.

Quantity and quality of work. How enjoyable will the work be? How much time will it
require? Most opportunities will require significant time investments. Overall lifestyle is an
important factor to me, so I wouldnt want to spend 100 hours a week doing something I
hate. This factor should likely be considered as a ratio to potential upside (see above). For
example, I would trade 24 hours of awfulness for $1M, but I wouldnt trade 5 years of
awfulness.

Conclusion

A lot of entrepreneurial content encourages persistence, hard work etc. If you put your
mind to it you can do whatever you want. The reality is there are many challenges from
starting to growing, and different factors that can make an opportunity more or less likely
to succeed.

This is a list of notable Indian entrepreneurs.

Name Associated Company

Sridhar Vembu Zoho Corporation
Verghese Kurien Amul
Kunwer Sachdev Su-kam Power Systems
Bhargav Sri Prakash FriendsLearn
Azim Premji Wipro
Lakshmi Mittal ArcelorMittal
Dhirubhai Ambani Reliance Industries
Anand Mahindra Mahindra and Mahindra
Shamit Khemka SynapseIndia
Saji Chameli Orell

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 Name Associated Company
Sachin Bansal and Binny Bansal Flipkart
Grandhi Mallikarjuna Rao GMR Group
Gunupati Venkata Krishna Reddy GVK Group
G. R. Gopinath Air Deccan
N. R. Narayana Murthy Infosys
Shiv Nadar HCL Technologies
V. G. Siddhartha Caf Coffee Day
Krishan Dhir DHITECH Consultancy Services
Kiran Mazumdar-Shaw Biocon
Achyuta Samanta KIIT Group of Institutions
Gautam Thapar Avantha Group
Sunil Mittal Bharti Enterprises
Shekhar Chatterjee Host Dude Solutions
Venugopal Dhoot Videocon
Karsanbhai Patel Nirma
Vishal Gondal Indiagames
Chirag Kulkarni Insightfully
Trishneet Arora TAC Security Solutions
Ardeshir Godrej, Pirojsha Godrej, Adi Godrej Godrej Group
Kallam Anji Reddy Dr. Reddy's Laboratories
Mangal Prabhat Lodha Lodha Group
Jamnalal Bajaj, Rahul Bajaj Bajaj Group
Prathap C. Reddy Apollo Hospitals
Ajay Piramal, Swati Piramal Piramal Enterprises Ltd
Kalanithi Maran Sun Group
Prannoy Roy NDTV
Anil Agarwal Vedanta Resources
Subrata Roy Sahara India Pariwar
Shashi & Ravi Ruia Essar Group
Jagdish Chandra Mahindra Mahindra Group
Naveen Jain Moon Express
Brijmohan Lall Munjal Hero Group

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 Name Associated Company
Jamsetji Tata Tata Group
Walchand Hirachand Walchand group
Khwaja Abdul Hamied Cipla
Kochuousep Chittilapilly V-Guard Industries Ltd
Kishore Biyani Future Group
Naveen Tewari InMobi
Laxmanrao Kirloskar Kirloskar Group
Baba Kalyani Bharat Forge
Anand Deshpande Persistent Systems
Byrraju Ramialinga Raju Mahindra Satyam
Dilip Sanghvi Sun Pharmaceutical
Ekta Kapoor Balaji Telefilms
Dr. G. Surender Rao Yashoda Hospitals
Ramoji Rao Ramoji Group
Kumar Mangalam Birla Aditya Birla Group
Varun Agarwal Alma Mater Store
Ujwal Makhija Phonon Communications
Ashok Soota Happiest Minds Technologies
Ritesh Agarwal OYO Rooms

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