BBA 603 ENTREPRENEURSHIP

The subject aims to familiarize the students with the concept of Entrepreneurship and with the
establishment and management of a new enterprise.

Unit I: Entrepreneurship: Definitions and core elements, Process of Entrepreneurship, Entrepreneurial

Competencies, Barriers to Entrepreneurship, Identification of business opportunities.

Unit II: Establishment of a new enterprise, Choice of product, Market Assessment, Selection of
Technology, Selection of Site, Organizational and Ownership Structure.

Unit III: Preparation of Business Plan, Financing the new enterprise, Financial Management for new
ventures, Source of Finance.

Unit IV: Marketing Management in a new enterprise, Human Resource Management in a new
enterprise, Operations Management in a new enterprise.

1
Unit I: Entrepreneurship

Definitions and core elements

Entrepreneurship can be defined by describing what entrepreneurs do. For example: "Entrepreneurs use
personal initiative, and engage in calculated risk-taking, to create new business ventures by raising
resources to apply innovative new ideas that solve problems, meet challenges, or satisfy the needs of a
clearly defined market."

But as the following definitions state, entrepreneurship is not restricted to business and profit:

"Entrepreneurship involves bringing about change to achieve some benefit. This benefit may be
financial but it also involves the satisfaction of knowing you have changed something for the better".

"Entrepreneurship is essentially the act of creation requiring the ability to recognize an opportunity,
shape a goal, and take advantage of a situation. Entrepreneurs plan, persuade, raise resources, and give
birth to new ventures."

Entrepreneur
The word entrepreneurship descends from the French word 'entreprendre', which indicates an act in
which the individual attempt, try, adventure or undertake an act of some sort.

Entrepreneur is another name of Risk Taker.An entrepreneur is an individual who takes moderate risks
and brings innovation.

“Entrepreneur is a individual who takes risks and starts something new”

Definition

According to J.B.say, “Entrepreneur is an Economic agent to unites all the means of production”
An entrepreneur is an individual who takes moderate risks and brings innovation.

An Entrepreneur is an individual who starts and runs a business with limited resources and planning,
taking account of all the risks and rewards of his or her business venture. The business idea is usually a
new innovation, product or service, rather than an existing business model.

Some facts about entrepreneurs and entrepreneurship:

E: Examine needs, wants, and problems to see how they can improve the way needs and wants are met
and problems overcome.
N: Narrow the possible opportunities to one specific "best" opportunity.
T: Think of innovative ideas and narrow them to the "best" idea.
R: Research the opportunity and idea thoroughly.
E: Enlist the best sources of advice and assistance that they can find.

2
P: Plan their ventures and look for possible problems that might arise.
R: Rank the risks and the possible rewards.
E: Evaluate the risks and possible rewards and make their decision to act or not to act.
N: Never hang on to an idea, no matter how much they may love it, if research shows it won't work.
E: Employ the resources necessary for the venture to succeed.
U: Understand that they will have to work long and hard to make their venture succeed.
R: Realize a sense of accomplishment from their successful ventures and learn from their failures to
help them achieve success in the future.

Characteristics of Successful Entrepreneurs

Entrepreneurs are different from each other, but successful entrepreneurs tend to share certain
characteristics. Not all of them have developed each of the following to the same degree, but they tend
to have developed most of them to some degree. Here are some common characteristics of successful
entrepreneurs.

Entrepreneurs tend to:

 Be passionate about achieving their goals

 Have a spirit of adventure (in fact, the word "adventure" is derived from the latin word
meaning "to venture")

 Have a strong need to achieve and seek personal accomplishment

 Be self-confident and self-reliant
 Be goal-oriented
 Be innovative, creative, and versatile
 Be persistent
 Be hardworking and energetic
 Have a positive attitude
 Be willing to take initiative
 Have a strong sense of commitment

Entrepreneurial ventures require the enterprising individual to arrange for capital, raw materials,
manufacturing locations and skilled employees necessary to produce a good or offer a service.
Marketing, sales and distribution are other important aspects which are controlled by the entrepreneur.

Entrepreneurship has no universal definition like other disciplines as many authors and scholars have
defined it differently according to their own perspective. However, some author‘s definition shall be
considered.

Hisrich (2002) Entrepreneurship is the process of creating something new with value by devoting the
necessary time and effort, assuming accompany financial, psychic, and social risks and receiving the
resulting rewards of monetary and personal satisfaction and independence.

3
Shaw (2004), and Chaten (2000), has defined entrepreneurship as an attitude, and a way of thinking
and learning. It is a state of mind, an artifact, insightful and innovative mentality rather than business
administration. It is a way of perceiving and exploring opportunity wherever it may be found.

The term ‘entrepreneurship’ refers to the functions performed by an entrepreneur. It is the process
involving various actions to be undertaken by the entrepreneur in establishing a new enterprise. In fact,
what an entrepreneur does is regarded as entrepreneurship.

Thus, entrepreneurship can be viewed as a function of:

i. identifying and using the opportunities exist in the market;

ii. converting the ideas into action;
iii. undertaking promotional activities to launch an enterprise;
iv. striving for excellence in his/her field of work;
v. bearing the risk and uncertainties involved, and
vi. harmonizing.

Entrepreneurships can be described as a creative and innovative response to the environment and the
process of giving birth to a new enterprise. Such response can take place in any field of social
endeavour, business, agriculture, education, social work etc.

“Entrepreneurship is the attempt to create value through recognition of business opportunity, the
management of risk taking, and through the communicative and management skills to mobilize human,
financial, and material resources necessary to bring a project to fruition.”

India which followed the path of mixed economy, both the government and the private entrepreneurs
played an equally important role. People have now begun to realize the crucial role the entrepreneurs
have to play for achieving the goal of economic development. They are regarded as the prime movers of
innovations and act as key figures in economic development of a country.

Thus, entrepreneurship:

(a) helps the formation of capital by bringing together the savings and investments of people;
(b) provides large-scale employment opportunities and increases the purchasing power of the
people;
(c) promotes balanced regional development in the country;
(d) helps in reducing concentration of economic power (power to own the factor of production
in a few hands).

4
Core Elements of Entrepreneurship
The four basic elements of entrepreneurship are as follows

1. Innovation

Innovation, i.e. doing something new or something different is a necessary condition to be called a
person as an entrepreneur. The entrepreneurs are constantly on the lookout to do something different
and unique to meet the requirements of the customers. They may or may not be inventors of new
products or new methods of production but they possess the ability to foresee the possibility of making
use of the inventions for their enterprises.

Innovation is the process of doing new things. This distinction is important. While creativity relates to
the ability to conceive, the innovation is doing new things. Ideas have little value until they are
converted into useful products or services. Innovation transforms creative ideas into useful
applications. Hence, creativity is a pre-requisite to innovation.

As per Schumpeter a person is an entrepreneur only when he is engaged in innovative behavior. This
innovative behavior is an entrepreneurial function. According to Schumpeter, entrepreneurship is a
creative activity. An entrepreneur is an innovator who introduces something new in an economy.
Entrepreneurship is doing things that are generally not done in the ordinary course of business.

Innovation may be in:

 Introducing a new manufacturing process that has not yet been tested and commercially exploited.
 Introduction of a new product with which the consumers are not familiar or introducing a new
quality in an existing product.
 Locating a new source of raw material or semi-finished product that was not exploited earlier.
 Opening a new market, hitherto unexploited, where the company products were not sold earlier.
 Developing a new combination of means of production.

In order to satisfy the changing preference of customers nowadays many enterprises have adopted the
technique of innovation. For instance, Pidilite Industries Limited innovated the new Rs 5/- pack of
Feviquick which was accepted by the customers as it was easy to use when it was needed. Since
customers taste and preferences always keep on changing, hence the entrepreneur needs to apply
invention on a continuous basis to meet the customers changing demand for products.

2. Risk bearing

Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a
predetermined business or Industrial objective. The capacity to take risk independently and individually
with a view to making profits and seizing the opportunity to make more earnings in the market-oriented
economy is the dominant characteristic of modern entrepreneurship. In fact he needs to be a risk taker,
not risk avoider. His risk bearing ability enables him even if he fails in one succeed.

Entrepreneurship is a process in which the entrepreneur establishes new jobs and firms, new Creative
and growing organizations associated with risk – taking by new and creative ideas and entrepreneurship
identification of the new opportunities and resources mobilization. It results in introducing a new
product or service to society. In Britain encyclopedia entrepreneur means “a person who organizes and
manages a job or economic association and receives its risks”

5
The Japanese proverb says “Fall seven times, stand up eight”. Though the term entrepreneur is often
used interchangeably with entrepreneurship, yet they are conceptually different. The relationship
between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned with the
performance and co-ordination of the entrepreneurial functions. This also means that entrepreneur
precedes entrepreneurship.

3. Vision

Vision or foresight is one of the main driving forces behind any entrepreneur. It is the energy that drives the
business forward by using the foresight of the entrepreneur. It is what gives the business an outline for the
future – the tasks to complete, the risks to take, the culture to establish, etc. All great entrepreneurs of the
world that started with an entrepreneurship business are known to have great vision. This helps them set out
short term and long term goals for their business and also plan ways to achieve these objectives.

4. Organization

In entrepreneurship, it is essentially a one-man show. The entrepreneur bears all the risks and enjoys all the
rewards. And sure he has the help of employees and middle-level management, yet he must be the one in
ultimate control. This requires a lot of organization and impeccable organizational skills. An entrepreneur
must be able to manage and organize his finances, his employees, his resources, etc. So his organizational
abilities are one of the most important elements of entrepreneurship.

Process of Entrepreneurship
Entrepreneurial process can be defined as steps taken in order to establish a new enterprise. It is a
step-by-step method, one has to follow to set up an enterprise.

There are mainly five steps one needs to follow. These steps are −

 Preliminary steps
 Decision-making steps
 Planning steps
 Implementation steps
 Managerial steps

Preliminary Steps
Preliminary steps are the initial steps one has to follow for establishing a firm. At this stage, the to-be
entrepreneur should be able to make a decision that is going to affect the company.
We can say that an entrepreneur is born at this stage. An entrepreneur searches for business
opportunity and collects information/data from all sources available.

6
Decision-making Steps
Decision-making steps can be defined as those steps or say the lessons learnt by an entrepreneur to
make decisions efficiently.
In this step, the entrepreneur is seen consulting with DIC (District Industrial Centre) and MSME
(Medium Small & Micro Enterprise). Some of the decisions to be taken are −
 Decision of acquiring fund from banks or financial institutions.
 Acquisition of permission, recognition, application.
 Making of PPR (Preliminary Project Report).
 Decision regarding land, building, plant, machinery, labor, raw material, fuel, energy, water
supply, filtration, etc.
In order to make effective decisions that is adaptable and comfortable for the company, the clients and
all those who are directly or indirectly linked to the decision-making step play a very vital role.

Planning Steps
Planning is an assumption or prediction of business requirements and outcome in the future. It
provides a space to review the best strategy to run the business by cutting expenses and maximizing
profit.
Some of the planning steps include −
 Planning for infrastructure like plant and building.
 Getting permission and recognition from the government or any other reputed authority.
 Applying for environmental clearance.
 Purchasing of land and licensing of mines, if necessary.
 Applying for electric connection and water supply.
 Planning the final feasibility, technical feasibility, and operational feasibility.
 Study of PPR and preparation of Detailed Project Report (DPR).
 Getting loan and/or capital investment.
 Acquisition of machineries and planning for installation.
Now, let us move forward to see how this planning step is further transformed to implementation
steps.

Implementation Steps
Implementation is the execution of plan; it is the action taken to implement the plan so that something
actual happens.
Given below are some steps that will help us get a clear picture of how actions in planning steps are
groomed into implementation steps −
 Acquisition of land, setting up building, and purchasing raw materials.

7
  Installation of plant and machineries, and arranging human resource.
 Receiving permission and reorganization letter, and receiving capital investment.
 Starting operation and production.
 Arranging fuel, electricity, and water supply.
 Making infrastructural development, i.e. road, hospital, school, residence, etc.
Implementation is the most important and difficult step, during implementation the actuals come to
figure and something of real value is generated.

Managerial Steps
We have seen about the roles and duties of an entrepreneur. Managerial duties are also very important
for an entrepreneur as well as the organization. Some of the managerial duties to be taken care of are −
 Preparing market policy and strategy.
 Managing promotion of product or services.
 Formulating pricing policy.
 Managing wholesalers and retailers.
 Deciding the profit margin.
 Managing marketing strategy, managing advertisement of product or service, managing
distribution system for efficient distribution.
 Warehouse management.
Each step has its own importance and its own role in the development as well as deterioration of a
company.

Entrepreneurial Competencies

The business operation is considered to be very complex in a competitive business environment which
is constantly changing with fast technological advancements. An entrepreneur is expected to interact
with these environmental forces which require him to be highly competent in different dimensions like
intellectual, attitudinal, behavioral, technical, and managerial aspects. Entrepreneurs are therefore
permanently challenged to deploy a set of competencies to succeed in their entrepreneurial endeavors.

Stuart and Lindsay (1997) has also defined competencies as a person’s skills, knowledge, and personal
characteristics. Entrepreneurial competencies have also been understood in terms of traits, skills and
knowledge (Lau et al., 1999).

Entrepreneurial competencies are defined as individual characteristics that include both attitudes and
behaviours, which enable entrepreneurs to achieve and maintain business success.

8
Components of Entrepreneurial Competencies

1. Attitudinal Competency Attributes

2. Behavioral Competency Attributes
3. Managerial Competency Attributes

1. Attitudinal Competency Attributes

An attitude is a hypothetical construct that represents an individual’s degree of like or dislike for
something. Attitudes are generally positive or negative views of a person, place, thing, or event.
Attitudes are judgments of an individual. `Attitudinal Competency` is the ability to select, maintain or
adapt one’s best attitudes for the present. Behaviour in a given situation can be viewed as a function of
the individual’s attitude towards the situation.

Self Confidence

Self-confidence is an essential trait in an entrepreneur because he is regularly called upon to perform

tasks and make decisions that require great amounts of faith in himself. He needs to have a strong but
realistic belief in himself and his ability to achieve the predetermined goals.

Self Esteem

Self-esteem of an entrepreneur represents his ability to develop healthy confidence and respect for
himself. He feels confident for being capable for life, able and worth or to feel right to achieve
happiness. An entrepreneur respects himself and defends his own interest and needs.

Dealing with Failures

Entrepreneurship is about getting up whenever the business fails, and learning from that failure. An
entrepreneur believes that failure is part of the entrepreneurial process, and often without it, success
would not be possible. Further he is able to make mistakes, learn from them, and quickly recovers and
changes his direction and moves into the future.

Tolerance for Ambiguity

In the entrepreneurial process tolerance for ambiguity refers to the ability of an entrepreneur to perceive
ambiguous situation as desirable, challenging, and interesting and neither denies nor distorts their
complexity of incongruity.

Performance

A successful entrepreneur perceives that his performance is different from others. He believes that it is
his high performance which ultimately differentiates him from low performers.

9
Concern for high quality

An entrepreneur perceives concern for high quality of his products and services to meet or surpass
existing standards of excellence in a faster, better and cheaply. By doing this an entrepreneur remains
ahead of others in the market place.

Locus of Control (LOC)

Locus of control is the system of belief of an individual who perceives the outcome of an event as being
either within or beyond his personal control. Entrepreneurs tend to believe in their own ability to
control the outcomes to their efforts by influencing the existing environment, rather than leave
everything to luck. They strongly believe that they can shape their own destiny.

2. Behavioral Competency Attributes

Behavioral competency of an entrepreneur refers to the underlying characteristics having casual
relationship with effective or superior performances in the process of carrying on his business activities.
The following attributes are tested in order to assesses and find out the nature of behavioral competency
among the respondents.

Initiatives

Initiative of an entrepreneur refers to his behavior with a preference for taking action on different
responsibilities or6 assignments. It further denotes that he is able and willing to do more than what is
required or expected of him in a job.

Sees and Acting on Opportunities

Sees and acting on opportunities refers to the unique entrepreneurial behavior which helps him to be
alert to information and ability to process it in order to identify and recognize the potential business
opportunities even before his competitor.

Persistence

Persistence of an entrepreneur denotes the ability which keeps him constantly motivated even when he
is confronted by obstacles that seem insurmountable and willing to keep trying when things go wrong,
and accepts that, ultimately, it is he who has to make his dream come true. Entrepreneurs seldom give
up when things are not going well.

Assertiveness

Assertiveness of an entrepreneur is about his behavioral aspect that affirms his rights or point of view
without either aggressively threatening the rights of others (assuming a position of dominance) or
submissively permitting others to ignore. Successful entrepreneurs for the most part are assertive.

Need for achievement

10
Successful entrepreneurs are charecterised by a need for achievement which motivates them to take up
responsibilities for finding solutions to problems. Further this quality helps them to set challenging
goals for themselves, assume personal responsibility for the goal accomplishment and they are highly
persistent in the pursuit of these goals.

Need for autonomy

The need for autonomy of an entrepreneur is characterized by a drive to control and influence others, a
need to win arguments, a need to persuade and prevail. Research studies had asserted that strong need
for autonomy/ power/ control/ influence usually will let the enterprises in to trouble because doctorial,
adversarial, and domineering styles make it very difficult to attract and keep people who thrived on
achievement, responsibility and results. Therefore successful entrepreneurs have high need for
achievement while low need for power.

Risk-taking

Entrepreneurs are essentially persons who take decisions under uncertainty and therefore they are
willing to bear risk. Entrepreneurs are usually moderate risk takers. However, successful entrepreneurs
will always prefer to take on those risks that they can manage.

Drive and energy

Entrepreneurs are driven to succeed and expand their business. They are always on the move, full of
energy and highly motivated. They are driven to succeed and have an abundance of self motivation.

Innovation

Innovation refers to the behavior pattern of an individual who has interest and desire to seek changes in
techniques and ready to introduce such changes into his operations when practical and feasible.

Creativity

An entrepreneur is said to be creative when he is able to identify a gap in the market and think up a
product or service to meet that gap. Creativity of an entrepreneur also implies the ability to do old
thinks in a new way or able to give new solutions.

3. Managerial Competency Attributes

Managerial Competency of an entrepreneur is the ability to direct his staff and define the expected
outcomes clearly and finally to get the things done at the best and cheapest ways and means.
Managerial competency is an approach to managing others and to ensure optimal use of available
resources in meeting organizational objectives on a sustained basis.

Information seeking

An entrepreneur has an urge to look for the required information in order to make an informed decision,
for example, selecting, starting and successfully managing the desired business. This calls for the

11
entrepreneurs to personally seek and obtain information that is required to enable him make decisions
and improve knowledge on his/her business.

Systematic planning

An entrepreneur is expected to have systematic planning which will help him to prepare an action plan
for every area of operation in order to achieve the pre determined goals.

Problem solving

Problem solving refers to the application of appropriate knowledge and skills in order to solve a
problem arising while carrying on the business. It requires an entrepreneur to have creative thinking in
order to understand the various techniques involved in resolving different problematic issues of a
business.

Persuasion

Persuasion in entrepreneurship refers to the ability of entrepreneurs to link, convince and influence
other individuals, groups, agencies, creditors, debtors, customers and even competitors in order to
create a contact and maintain good rapport.

Goal setting & Perseverance

Goal setting refers to the ability of an entrepreneur to set clear and specific goals and objectives.
Successful entrepreneurs are able to achieve great things only by overcoming the obstacles that stand in
their way. Therefore they need to have perseverance which implies commitment, hard work, and
patience, endurance apart from being able to bear difficulties calmly and without complaint.

Communication Skill

Communication skill refers to the ability of an entrepreneur to transfer ideas, plans, policies and
programmes to employees, debtors, creditors, customers and everyone who is connected with the
business in order to inform, influence and to express his feelings.

Technical knowledge

An entrepreneur needs to address the rapid technical changes in the industry. Higher levels of
technology must be introduced in the production methods in order to achieve productivity demands.
Therefore he must up date his technical knowledge in order to serve customers quickly and more
effectively.

Social skill

Social skill of entrepreneurs include social perception (the ability to perceive others accurately),
expressiveness (the ability to express feelings and reactions clearly and openly), impression
management (skill in making favorable first impressions on others), and social adaptability (proficiency
in adapting one’s actions to current social contexts) in the process of managing his business.
--------------------------------------------------------------------------------------
12
Barriers to Entrepreneurship
In today’s world, each one us dreams of being an entrepreneur and starting up something that we are
passionate about. It’s all about making a difference in the world of business and solving the pain areas
of the target audience through our offerings of products and services.

Entrepreneurship requires a thorough thought process, radical thinking, market know-how, and a
strategic plan that is clear and crisp. Also, the vision and mission need to be divided as per the short
term and long term goals and objectives.

However, easy and simple it may sound on a piece of paper or the power point presentation slides, there
are various Barriers to Entrepreneurship that each of the entrepreneurs taking the risk has to face and
get through.

1. Finances
We are all bustling with ideas that are unique and can make for an amazing business start-up. But no
matter how good your idea is, you will always need stable finances and funding from the investors to
begin the process and take the first step towards your journey of entrepreneurship.

And getting a sound financial investment or funding can be one of the biggest Barriers to
Entrepreneurship as many of banks, private investors, angel investors, and organizations find it quite
difficult to believe in the start-up ideas owing to the risk of failure and losing their money.

2. Fear of not to be a success

We all go through the fear of failure. And if the fear is associated with the risks and stakes taken in the
stream of business and entrepreneurship, the level of fear elevates.

There is a fear if we are on the right track, is the idea worthwhile, will there be profit, will I find
investors, and various such fears and tensions act as the Barriers to Entrepreneurship.

3. No strategic plan in place

Lack of proper planning and strategy in place is one of the most common Barriers to Entrepreneurship.
Many of us think to build a business out of a hobby without having any sort of long term and short term
vision and plan in mind.

Running a fully-fledged business or being an entrepreneur requires a huge amount of skill set, passion
for excelling, strategic vision, the mission to accomplish the goals, market research, and a lot more.

Right from the target market, finances, human resources, to a proper strategic plan is required to build a
successful business or a brand in the market.

13
4. Human resource issues
Entrepreneurs cannot handle and run a business alone by themselves. We require the support of human
resource to carve a niche in the market.

Employees with the required knowledge, expertise, and experience are needed for the efficiency of the
business processes and high levels of productivity.

First of all, it is quite difficult to find the employees that share the same vision and wavelength of the
business. Plus paying a hefty annual or even a monthly retainer income is a problem of the start up’s as
the finances at hand are always limited, and the overheads and expenses are also to be taken care of.

And secondly, it is also difficult to manage human resources as each of us work with a different
mindset and perspective. Hence, human resources and employees can be as one of the Barriers to
Entrepreneurship.

5. Stringent rules and regulations of the market

It is not very easy for entrepreneurs to enter the new market as there are quite many rules and
regulations imposed by the government authorities.

Plus there are various laws and compliances to be adhered to such as taxation, environmental
regulations, licenses, property rights, and much more than act as the Barriers to Entrepreneurship.

Some of the countries have many corrupt officials that act as a hindrance for the new entrepreneurs and
start-up brands to start or expand their business in the new market. And if the brand is planning to
expand its business operations in any of the foreign countries, it gets even more difficult.

6. Fewer opportunities
Even though there is a lot of talent pool in the market with the aspiring entrepreneurs buzzing with the
ideas, but the opportunities presented to them are quite less and fewer.

Reasons such as nepotism and corruption act as the Barriers to Entrepreneurship with not many vital
and lucrative opportunities.

7. Lack of capacity
Even if there are opportunities presented to the aspiring entrepreneurs, there is a lack of capacity in
some them to embrace the opportunities with open arms. The reasons can vary from lack of knowledge,
lack of education, lack of willingness, lack of strategic knowledge, and cultural hindrances amongst ot o
hers; but the factor of mtivation and zeal gets missing.

To start a new business venture amidst all the risks and market-related issues, it requires a lot of hard
work, passion, and high capacity to handle all of it.

14
8 . Less market experience
The experts always mention that one should never rush in setting up a business. It is quite necessary to
gain a relative amount of work experience by working in the industry domain or sector of choice and as
per the education levels. It also helps to sharpen the required expertise and find the ground in the career
graph.

Once the person is ready to take risks and have a relative amount of market exposure, he is ready to
take the entrepreneurial plunge.

9. Lack of risk-taking capacity

It is always said that entrepreneurs never sail in safe waters and are never confined to their comfort
zones. Lack of risk-taking capacity is the psychological mindset and perspective towards the business
and acts as one of the major Barriers to Entrepreneurship.

The budding entrepreneur has to have a structured and organized approach towards the various business
elements and should risks rather than averting them.

10. Corrupt business situations

As mentioned earlier, if the business situations and the environment are not very supportive and corrupt
for the young and aspiring entrepreneurs, it acts as one of the top Barriers to Entrepreneurship.

Bribing, rampant corruption, unfriendly ties of government with other nations, inconsistent laws,
stringent compliances, and enforcing regulations that are unhealthy and negative in their approach
hamper the growth of businesses in the country.

11 Inadequate training
With no proper education, development, training, entrepreneurial skills, and technical know-how acts as
the Barriers to Entrepreneurship.

12 Lack of practical knowledge

Having a strong educational background is just not enough to pursue business as it requires practical
knowledge as well to stay relevant amidst the various market cycles. And many entrepreneurs lack
practical knowledge.

15
Identification of Business Opportunities

Business opportunity
A business opportunity (or bizopp) involves sale or lease of any product, service, equipment, etc. that
will enable the purchaser-licensee to begin a business. The licensor or seller of a business opportunity
usually declares that it will secure or assist the buyer in finding a suitable location or provide the
product to the purchaser-licensee. This is different from the sale of an independent business, in which
there is no continued relationship required by the seller.

Eckhardt and Shane (2003) [1] argue that when taking the path of entrepreneurship, one of the most
important indictors for future entrepreneurship is the skill of finding the business opportunity. This is
seen as the lynchpin around which the promise of entrepreneurial venture is to be built [2]. Shane and
Venkataraman state that individuals must possess prior knowledge and the cognitive properties
necessary to value such knowledge in order to identify the new opportunity. This normally allows a
triggering of the opportunity which can then move forward to scoping and validation.

Napoleon Hill provided advice on achievement as necessary for success and within anyone's reach;
"The starting point of all achievement is desire. Keep this constantly in mind. Weak desires bring weak
results, just as a small amount of fire makes a small amount of heat."[3] and Winston Churchill
suggested similarly with a piece of inspiration; "Attitude is a little thing that makes a big difference.".

A business opportunity consists of four elements all of which are to be present within the same
timeframe (window of opportunity) and most often within the same domain or geographical location,
before it can be claimed as a business opportunity. These four elements are:

 A need
 The means to fulfill the need
 A method to apply the means to fulfill the need and;
 A method to benefit

With any one of the elements missing, a business opportunity may be developed, by finding the missing
element. A desirable characteristic is for the combination of elements to be unique. The more control an
institution (or individual) has over the elements, the better they are positioned to exploit the opportunity
and become a niche market leader.

_________________________________________________________________________

16
Four ways to identify more business opportunities
To be successful entrepreneurs, we need to be continually innovating and looking for opportunities to grow
our startups.

But how do you find new opportunities to take your startup to new markets and growth levels? Here are four
ways to identify more business opportunities.

1. Listen to your potential clients and past leads

When you’re targeting potential customers listen to their needs, wants, challenges and frustrations with
your industry. Have they used similar products and services before? What did they like and dislike?
Why did they come to you? What are their objections to your products or services?

This will help you to find opportunities to develop more tailored products and services, hone your target
market and identify and overcome common objections.

2. Listen to your customers

When you’re talking to your customers listen to what they saying about your industry, products and
services. What are their frequently asked questions? Experiences? Frustrations? Feedback and
complaints?

This valuable customer information will help you identify key business opportunities to expand and
develop your current products and services.

3. Look at your competitors

Do a little competitive analysis (don’t let it lead to competitive paralysis though) to see what other
startups are doing, and more importantly, not doing? Where are they falling down? What are they doing
right? What makes customers go to them over you?

Analysing your competitors will help you identify key business opportunities to expand your market
reach and develop your products and services.

4. Look at industry trends and insights

Subscribe to industry publications, join relevant associations, set Google alerts for key industry terms
and news and follow other industry experts on social media.

Absorb yourself in your industry and continually educate yourself on the latest techniques and trends.

________________________________________________________________________

17
5 Factors to Use When Evaluating a Business Opportunity
Miranda Marquit— February 18, 2018

(www.business2community.com/strategy/5-factors-use-evaluating-business-opportunity-02011996)

Many of us are faced with business opportunities on a regular basis. Deciding what’s worth embracing,
though, can be difficult. Whether you’re starting a new business or whether you’re trying to expand
your current business with a new opportunity, it’s vital to know how to appropriately evaluate it.

As you look forward, here are some things to consider when deciding whether a business opportunity is
worth embracing:

1. Market Size

One of the most important factors when evaluating a business opportunity is market size. Do a little
market research. Figure out if there is a market for the opportunity — and how big that market is.

Before you move forward, you want to be sure the demand is there. You don’t need to appeal to a
massive market, but it does help if you understand the market. Additionally, knowing how engaged the
market is and how likely they are to pay for what’s being sold can help.

2. Relationships

Does the business opportunity come with some relationships? For example, do you have an “in” that
can help you leverage the opportunity? If you know someone who is technically minded, that can help
you with certain aspects of the opportunity. What are your relationships with potential investors or
customers? When you have more relationships, the opportunity is likely to run smoother.

3. Ability to Manage Cash Flow

Next, you need to look at the ability to manage cash flow. Is there start-up funding for the business?
What about ways to keep funding the business each month. Figure out how the cash flow will be
managed, and take a look at the business plan. You want to make sure that the business is likely to
sustain itself after a period of time.

4. Management Skill sets

What are the skill sets of those involved? If you are evaluating your own business opportunity, you
need to be honest about what you bring to the table, and what you need to make up for. When looking
for a business opportunity to invest in, or expand into, look at the management. What skills do they
have? Are they appropriate and diversified? Do you trust the competence of the principals to make the
opportunity a success?

18
5. Passion and Persistence

Even if there is a bit of a talent deficit, it’s possible, in some cases, to make up for that with passion and
persistence. Are you working with people who will get the job done?

Do you trust that they have the passion to make things happen? Will they approach problems with a
can-do attitude in order to solve them?

When dealing with your own startup, you need to make sure you have the passion and persistence for
the opportunity. Will you push through even though things get a little dark? If you’ve done your
research, and you are confident in your team and your plan, then being able to push through is vital.

Sometimes You Have to Say No

Once you’re done evaluating the business opportunity, it’s time to decide whether it’s a good idea to
make a move. Sometimes, the answer is no. Going through the exercise can help you make these
decisions faster — before you waste too much time on “opportunities” that really aren’t.

Read more at:

www.business2community.com/strategy/5-factors-use-evaluating-business-opportunity-020119

____________________________________________________________________________

Business opportunity classification

Not every business opportunity has the same functioning principle. Let’s take a look at the four
most common types of venture opportunities and their examples:

1. Franchising

A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do

business and offers assistance in organizing, training, merchandising, marketing and managing in return
for a monetary consideration. Franchising is a form of business by which the owner (franchisor) of a
product, service or method obtains distribution through affiliated dealers (franchisees).

They get the business plan already made up and brand recognition is not something they should be
worried about. Some of the most successful examples are 7/11, Dunkin’ Donuts, McDonald’s, Anytime
Fitness, etc.

19
2. Distributing and dealing

A distributor agrees to sell products and/or services another company makes or

provides. Barns&Noble is a good example of the distribution model.

A dealer is pretty much the same as a distributor, but this person focuses more on the product they are
selling. People selling life insurance or cars are great representatives of a dealership.

3. Network Marketing

A network marketer is a person who strives to recruit other marketers in order to create a network of
distributors. If they are good at what they do, they can earn considerable income through commissions
made by the distributors working for them.

People selling Tupperware are the ones who have opted for a network marketing type of business
opportunity.

4. Licensing

Licensing is a business arrangement in which one company gives another company permission to
manufacture its product for a specified payment

Licensing offers three major advantages. First, it may mean you have something unique your
competitors don't. Second, it may mean getting a little better margin because it's unique. And third, it
may mean that 10 percent of the retailers you call on that you've never been able to sell to will finally
take a look because you have something different. And when that happens, you can sell the rest of your
line.

For instance, if you are selling T-shirts, leather jackets, etc. with a license from Harley
Davidson Company to use their name, that is called licensing.

20