ENTREPRENEURSHI

PDEVELOPMENT

Uni
t–1

ConceptofEnt
repr
eneurandEnt
repr
eneur
shi
p
Conceptofent
repr
eneur

Meani
ng

Theword„Entr
epreneur
‟hasbeentakenf
rom theFrenchwor
d.I
tmeansBet
ween
Taker
s.Ent
repr
eneurisanot
hernameofRi
skTaker.

Anent
repr
eneuri
sani
ndi
vi
dual
whot
akesmoder
ater
isksandbr
ingsi
nnov
ati
on.

Ent
repr
eneuri
saper
sonwhoor
gani
ses/managest
her
isksi
nhi
s/herent
erpr
ise.

“
Ent
repr
eneuri
sani
ndi
vi
dual
whot
akesr
isksandst
art
ssomet
hingnew”

AnEnt r
epr
eneurisapersonwhoorgani
zesandmanagesabusinessunder
taki
ng,
assumingther i
skfort
hesakeofpr of
it
.Anyper
son( anyage)whost ar
tsand
operat
esabusinessi
sanentr
epr
eneur
.

Def
ini
ti
on

Accor
dingt
oJ.
B.say
,“Ent
repr
eneuri
sanEconomi
cagentt
ouni
tesal
lthemeansof
pr
oducti
on”

Anent
repr
eneuri
sani
ndi
vi
dual
whot
akesmoder
ater
isksandbr
ingsi
nnov
ati
on.

Anentr
epreneuri
sapersonwhohaspossessi
onofanewent er
pri
se,ventur
eori
dea
andassumessigni
fi
cantaccount
abi
l
ityf
ort
heinher
entr
isksandtheoutcome.

Anentr
epr
eneuris"onewhoundertakesanenter
pri
se,
especi
all
yacont
ract
or,
act
ing
asi
nter
mediat
elybetweencapi
tal
andl abour
.

Char
act
eri
sti
csofanEnt
repr
eneur→

1.Visi
on– 
Heisabletovi
sual
izemarketdemand,soci
o-economi
cenv
ironment
andthef
utur
eofbusi
nessventur
e.

2.Knowledge– Hehassoundconcept
ualknowl
edgeaboutal
lthet
echni
cal
i
ties
ofhi
sbusiness.

3.Desi
ret
osucceed– 
Hehasmul
ti
plegoal
sandaseeksoppor
tuni
ti
est
obe
pr
oduct
ive.

4.I
ndependence– 
Hei
sindependenti
nwor
kanddeci
sionmaki
ng

1
 5.Opt
imi
sm – 
Heknowshowt
oexpl
oitoppor
tuni
ti
es.

6.Val
ueaddi
ti
on– Hedoesnotf
oll
owtheconv
ent
ionalr
uleoft
humb,
theyhav
e
adesi
ret
ocreat
e,i
nnovat
eandaddv
alue.

7.I
nit
iat
ive – 
He t
akes t
he i
nit
iat
ivet
o make an act
ion pl
an f
rom l
i
mit
ed
r
esources.

8.Goal
set
ti
ng– 
Heset
sreal
i
sti
cgoal
s.

9.Pr
obl
em sol
ver– 
Hei
scr
eat
ivei
npr
obl
em sol
vi
ng.

10.
Goodhumanr
elat
ions– 
Hei
sagoodl
eader
,mot
ivat
orandt
eam bui
l
der
.

11.
Communi
cat
ionski
l
ls– 
Hehast
heabi
l
ityt
oper
suadeot
her
s.

Ty
pesofEnt
repr
eneur→

I
. Accor
dingt
oCl
arenceBanhof→

 Aggr
essive/I
nnov
at i
ve ent r
epreneur – The one who uses vari
ous
combinat
ionsofinf or
mationandf act
orsofpr
oduct
iont
oassembl
eand
engi
neernewandi nnovat
iveproducts.

 I
mmitat
ive/
Adopti
veent
repreneur– Theonewhosi
mpl
yadopt
sasuccessf
ul
i
nnov
ati
onintr
oducedbyotherentr
epreneur
s.

 Fabi
anent repr
eneur– Theonewhoi stimidandcautiousinmakingbol
d
deci
sions.Suchanent r
epr
eneuradopt
si nnov
ati
onsinhi sbusi
nessonl
y
whenhef earsthatnoti
nnov
ati
ngmaydamagehi sbusi
ness.

 Droneentr
epr
eneur– 
Adroneentr
epreneuri
sonewhor
efusest
oadoptnew
i
nnovati
onsevenatt
hecostofr
educedretur
ns.

I
I. Accor
dingt
oAut
hurH.Col
e→

 Empir
icalent
repr
eneur– 
Anent
repr
eneurwhodoesnoti
nnov
ateandf
oll
ows
ther
uleofthumb.

  
Rationalentr
epreneur– Ar at
ionalent
repr
eneuri
sonewhokeepshi msel
f
updated with hi
s business,the marketand economi
c condi
ti
ons,and
i
ntroducesrevol
uti
onaryideas.

2
  Cogni
tiv
eentr
epr
eneur– Anent
repr
eneurthatseeksadvi
ceandser
vicesof
exper
tstomakechangeswhi
charerev
olut
ionar
yandrefl
ectacompl
eteshi
ft
fr
om it
sexi
sti
ngstr
uctur
e.

I
II
. Accor
dingt
o Owner
shi
p→

 Publi
c ent
repr
eneurshi
p – These arei ndi
vi
duals who par
tner wi
ththe
gover
nmenttocreat
eenter
priseswhichservethepubl
i
cini
nnovati
veways.

 Pri
vat
eentrepr
eneurshi
p– Theseent
repreneur
sareprofitor
ient
edanddonot
ent
ermarketwhichhavelowmonetar
yr ewardsassoci
atedwithit
.

I
V. Accor
dingt
o Scal
eofent
erpr
ise→

 Largescal
eent r
epr eneur– 
Largescal eent r
epreneursareusuall
yfoundi n
devel
opedcountries.Theseentrepreneursintr
oducer evol
uti
onar
yideasand
areabl
etosustainhighprofi
tsanddev elopnewt echnologi
esastheypossess
thefi
nanci
alcapacityandnecessaryresourcestodoso.

 Smallscale ent
repreneur– Smallscale ent
repr
eneurs do nothavet he
necessaryfunds and technol
ogy t
oi ni
ti
atel ar
ge scal
e product
ion and
i
ntroducerev
olut
ionaryi
deas

ConceptofEnt
repr
eneur
shi
p

Thewor d“ entr
epreneur”isderi
ved f
rom theFrench ver
b“ entr
eprendre”,which
means ‘to undert
ake’.Thisreferstothose who “undert
ake”t he ri
sk ofnew
ent
erpr
ises.Anent erpr
iseiscr
eatedbyanentrepr
eneur
.Thepr ocessofcr eat
ionis
cal
l
ed“entrepreneurshi
p”.

Meani
ng

Entrepreneurshipisapr ocessofact
ionsofanent repreneurwhoi sapersonalways
i
nsear chofsomet hi
ngnew andexpl oitssuchi deasi ntogai nfulopport
unit
iesby
acceptingther iskanduncer t
aint
ywiththeent er
prise.Itisthepr ocessofstarti
nga
business,ast art
upcompanyorot heror gani
zation.Theent repreneurdevel
opsa
business plan,acqui r
es the human and ot herr equired resources,and isf ul
l
y
responsiblef or its success or fai
lure.Ent r
epr eneurshi
p oper ates wit
hin an
entrepr
eneur shipecosystem.

Def
ini
ti
ons

Accor
dingt
oA.
H.Col
e

3
Ent
repreneur
shipisthepurposefulact
ivi
tyofani
ndi
vidualoragroupofassoci
ated
i
ndivi
dual,under
takent oini
ti
ate,maintainoraggr
andizeprof
itbyproducti
onor
di
str
ibuti
onofeconomi cgoodsandser v
ices.

Accor
dingt
oJ.
A.Ti
mmons

Ent
repr
eneur
shi
pist
heabi
l
ityt
ocr
eat
eandbui
l
dsomet
hingf
rom pr
act
ical
l
ynot
hing.

Accor
dingt
oMussel
manandJackson

“Ent
repr
eneur
shi
pisthei nvest
ingandr
iski
ngoft
ime,moneyandef
for
ttost
arta
busi
nessandmakeitsuccessful.

Di
ff
erencebet
weenEnt
repr
eneurandEnt
repr
eneur
shi
p

Ent
repr
eneur Ent
repr
eneur
shi
p

Ent
repr
eneuri
saper
son Ent
repr
eneur
shi
pisapr
ocess.

Ent
repr
eneuri
sanor
gani
zer
. Ent
repr
eneur
shi
pisanor
gani
zat
ion

Ent
repr
eneuri
sani
nnov
ator Ent
repr
eneur
shi
pisani
nnov
ati
on.

Ent
repr
eneuri
sar
iskbear
er. Ent
repr
eneur
shi
pisr
iskbear
ing.

Ent
repr
eneuri
samot
ivat
or. Ent
repr
eneur
shi
pismot
ivat
ion.

Ent
repr
eneuri
sacr
eat
or. Ent
repr
eneur
shi
pisacr
eat
ion.

Ent
repr
eneuri
sav
isual
i
zer
. Ent
repr
eneur
shi
pisav
isi
on.

Ent
repr
eneuri
sal
eader
. Ent
repr
eneur
shi
pisl
eader
shi
p

4
Ent
repr
eneuri
sani
mit
ator
. Ent
repr
eneur
shi
pisani
mit
ati
on.

Pr
ocessofEnt
repr
eneur
shi
p→

(
A)I
dent
if
yanoppor
tuni
ty– 
AnEnt
repr
eneursensesoppor
tuni
ti
esandv
isual
i
zesa
5
mar ketsincet
heyarecr eat
iveandopentonewi deasandseekchal
l
enges.Theylook
forneeds,want s,problemsandchal l
engest hatarenotmetordealtef f
ecti
vely
.
Sincet heiri
deasarei nnovati
vetheygainfi
rstmov ersadvant
agewhichpr ov
ides
productidenti
fi
cat
ionandhi ghercr
edi
bil
it
yinthemar ket
.

(B)Establi
shingav i
sion– Itinvol
vesgenerati
onofi deasusi ngpastexperi
enceand
creat
ivit
ytodev el
opnewandi nnovati
vewayst osolveapr oblem,orsatisf
yaneed.
Outofmanyi deasthemostf easibleandprofi
tablearechosenandnar r
owedt oone
bestidea.Heev al
uat esdiff
erentopportuni
ti
esandt hebusi nessenv i
ronmentt o
assesst he(i
)RealandPer ceivedv al
ueofthepr oduct
/servi
ce( i
i
)Risksandr ewards
associated wit
ht he pr oj
ect( ii
i
)and di f
ferenti
aladv antage inits competit
ive
envir
onment .

(
C)Per suadeother
s– Heformsafoundat
ionteam whi
chconsist
sofagroupof
i
ndivi
dualswhowor kt
oget
hertot
urnhisvi
sionint
oreal
it
y.Theymaybepartner
s,
f
inanci
ers,fami
l
ymembersetc.

(
D)Gather
ingResour ces–  I
tinvol
vesusingabusi nessplantoatt
ractinv
estors,
v
ent
urecapit
ali
sts,partner
s,fi
nanciali
nsti
tut
ions,pr
omoter
setc.
 Themai ntaskis
t
oresear
chandi dent
ifyresourcesthatareneededt otur
ntheideaintoav iabl
e
v
ent
ure.

Resour
cescanbecat
egor
izedi
nto–

•Fi
nancialResources–Personalsavi
ngs,r
etai
nedcapit
al,banks,gov
ernment
i
nst
itut
ions,famil
y,fr
iends,
part
nershi
ps,v
enturecapi
tal
,publi
cissue.

•Oper
ati
ngResour
ces–Theycanbet
angi
bleori
ntangi
ble.

Tangi
ble–(a)machi
nes(b)rawmater
ial
s(c)l
andandbui
ldi
ng(d)of
fi
ce
equi
pment’
s(Anentr
epreneurhast
omakeadecisi
ontobuy,r
entorhi
ret
hem)
.

I
ntangi
bler
esources–(a)company
’si
mage(
b)oper
ati
ngpr
ocedur
es(
c)
t
ranspor
tat
ion(d)management

•Human–Temporary
/per
manentemployees,
Amountofmanpowerneeded,
Recr
uit
ment
,Sel
ect
ionandTr
aini
ngofstaff
,Compensat
ion,
Organi
zat
ioncul
tur
e.

•Informati
on–Anef fi
ci
entmanagementinf
ormationsyst
em isneededi
nor dert
o
hav eti
melyinf
oaboutcust
omers,market
s,compet i
tor
sandexter
nalenv
ironment.
Allthedataisnet
workedonreal
timebasi
st ospeedupactionsbasedon
i
nf ormati
on.

(
E)Cr
eat
enewVent
ure– 
Whenal
lther
esour
ceshav
ebeenar
ranged,t
henextst
ep

6
i
sCr eati
onandestabl
ishmentofanew v entur
eandr unni
ngt hebusi
nessventur
e
successf
ull
y.I
trequir
esal otofenthusiasm andpersuasiontogatheropti
mum
resour
cesanditr
equir
esalotofper
severanceandpassiontobeli
evei
nself
.

(F)Change/ Adaptwitht i
me – Itis necessar
yt o monitorand upgrade the
organizat
ionwithchangingmarketcondi
ti
ons.Itrequir
esav ai
l
abi
li
tyoffundst o
make changes and t he adapt
abi
li
ty of human r esour
ce towards changed
envir
onment .

Ent
repr
eneurv
s.Manager

Thi
sdi
sti
nct
ionbet
weenent
repr
eneurandt
hepr
ofessi
onal
(tr
adi
ti
onal
)manager

Feat
ures Manager
s Ent
repr
eneur

Pr
imar
yMot
ives Want pr
omot i
on and Want s f r
eedom, goal
tr
adi
ti
onalcorpor
aterewards. ori
ented Self
-r
eli
ant
,and
Power-
motivat
ed. sel
f-moti
vat
ed

Ti
meOr
ient
ati
on Ti
meOr ient
ationRespondt o End goals of5-10 year
quotasandBudget s,weekl
y, growt
hofbusinessi
nv i
ew
mont hly, quar t
erl
y, annual as gui
des.Takes action
pl
anni ng horizons,the next nowtomov ethenextstep
promot ion ort r
ansfer
.Next alongway.
stepal ongway .

Act
ion Acti
on Del egat
e act ion. Superv
ising and Get s
Supervi
sing and r epor
ti
ng hands di r
ty. May upset
take mostofener gy.Their employees by suddenl y
work. doi
ng

Ski
l
ls Skil
ls Pr
ofessi
onalt r
aining. Knows business
Often busi ness school i ntimat
ely
.Mor e acumen
tr
ained. Abst
ract anal
y t
ical than manager
ial or

7
 tools, people-
management
, poli
ti
cal skill
. Of ten
andpol i
ti
calski
ll
s.Tr
ainedi
ft echni
cal
l
yt r
ained i
fi n
i
nt echni
calbusi
ness. techni
cal
busi
ness.

Cour
ageandDest
iny CourageandSeesot her
si n Sel
f-
confi
dent
, opt
imi
sti
c,
char
geofhi sorherdest i
ny. cour
ageous.
Can be f orceful and
ambiti
ous,butmaybef earf
ul
ofothers’abil
i
tyi n caseof
opti
mism.

At
tent
ion Pri
mly on ev
ent
s i
nsi
de Pri
mar
il
y on t echnol
ogy
cor
por
ati
on. andmarketpl
ace

Ri
sk Car
eful Li
kemoder ateri
sk.Inv
est
s
heavi
ly, but expects t
o
succeed.

Mar
ketResear
ch Hasmar ketstudi
esdonet o Creates needs. Cr eates
di
scoverand guide pr
oduct productst hatof t
en can’
t
concept
uali
zat
ion. be t ested wi th market
research-pot
ential
customer s don’ t y et
understandt hem.Talksto
customer sandf ormsown
opini
ons.

St
atus Caresaboutst
atussymbol
s. Happysi
tt
ingonanor
ange
I
fjobisget
ti
ngdone. cr
ate

Fai
l
ureandmi
stakes Fai
lureand St
ri
vesto avoid Deals wi
th mistakes and
mistakes and sur pri
ses. fai
l
ures Mi stakes as
Postpones r
ecogni
sing l
earni
ngexperiences.
fai
l
ur e.

Deci
sions Decisi
onsAgreeswit
ht hose Fol
lows pri
vat
e v
isi
on.
i
n power . Del
ays decisi
on Decisi
ve and acti
on-
unti
lhe getsaf eelofhat or i
ented.
bosseswant.

8
Whot
heySer
ve Pl
easeot
her
s. Pleases sel
f and
cust
omer s.

At
tit
ude Towar
d t
he Att
itudeTowar dSeessyst
em Mayr apidl
yadvanceina
sy
stem as nurtur
ing and pr
otect
ive, syst
em,when f rustr
ated;
seekspositi
onwithi
nit. rej
ectthesyst
em andform
hisorherown.

Pr
obl
em-
sol
vi
ngSt
yle Pr
obl
em-
sol
ving Wor
ks out Escapesproblemsi nlar
ge
pr
obl
emswi
thint
hesyst
em. and f or
malst r
uctur
es by
l
eaving and start
ing over
hi
sown.

Fami
l
yHi
stor
y Famil
ymember swor kedf
or Ent
repr
eneuri
al smal l
-
l
argeorgani
sat
ions. busi
ness,professi
onal,or
agri
cult
ural
background.

Si
gni
fi
canceofEnt
repr
eneur
shi
pinEconomi
cDev
elopment

1.Wealth Cr eati
on and Shar i
ng: By est ablishing the busi ness ent i
ty,
entr
epreneursi nvestt
heirownr esourcesandat t
ractcapital(i
nt heform of
debt,equi
ty,etc.)fr
om i
nvestor
s,lendersandt hepublic.Thi
smobi lizespubli
c
wealt
handal l
owspeopl etobenef itfrom t
hesuccessofent r
epreneursand
growingbusinesses.Thiskindofpooledcapitalthatresult
si nwealthcreat
ion
and distr
ibuti
on isoneoft hebasi ci mperativ
esand goal sofeconomi c
devel
opment .

2.CreateJobs:Ent r
epreneursar ebynat ur
eand def i
nit
ion job creators,as
opposedt ojobseeker s.Thesi mpletranslati
onist hatwheny oubecomean
entrepreneur
,t herei sonel essj obseekeri ntheeconomy ,andt heny ou
prov i
deempl oymentf ormul ti
pleotherj obseekers.Thi ski
ndofj obcr eati
on
bynewandexi stingbusinessesi sagainisoneoft hebasi cgoal sofeconomi c
development .Thisiswhyt heGov t.ofIndiahasl aunchedi niti
ati
vessuchas
StartupIndiatopr omot eandsuppor tnew start
ups,andal soot herslikethe
Makei nIndiainiti
ativ
et oat tr
actforeigncompani esandt heirFDIi ntothe
Indianeconomy .Al lthi
sint urncr eatesal otofj oboppor t
unit
ies,andi s
helpinginaugment i
ngourst andardstoagl oball
ev el.

3.BalancedRegi onalDev el
opment :Entr
epreneurssett
ingupnew busi nesses
and industri
alunits help withr egi
onaldev el
opmentby l ocat
ing inless
developedandbackwar dareas.Thegr owt hofindust
ri
esandbusi nessin
thesear easleadstoi nfr
astruct
ureimpr ovementsli
kebetterroadsandr ai
l
l
inks,air
ports,st
ableelectr
ici
tyandwat ersupply
,school
s,hospit
als,
shopping

9
 mall
sandot
herpubl
i
candpr
ivat
eser
vicest
hatwoul
dnotot
her
wisebe
av
ail
abl
e.

4.GDPandPerCapi taIncome:I ndia’

sMSMEsect or,comprisedof36mi ll
i
on
unit
sthatprovi
deempl oymentf ormoret han80mi l
l
ionpeople,nowaccount s
forover37%ofthecount ry’
sGDP.Eachnewaddi t
iontothese36mi ll
ionunits
makesuseofev enmor er esourceslikel and,l
aborandcapi taltodev el
op
productsandservi
cest hataddt othenat i
onalincome,nationalproductand
percapitai
ncomeofthecount ry.Thisgrowt hinGDPandpercapi taincomei s
againoneoftheessentialgoalsofeconomi cdevelopment.

5.StandardofLi v i
ng:Increaseinthest andardofli
vingofpeopl einacommuni ty
i
sy etanot herkeygoalofeconomi cdev elopment .Entr
epreneur sagainplaya
keyroleini ncreasingt hestandardofl ivi
nginacommuni ty.Theydot hisnot
j
ustbycr eatingj obs,butalsobydev el
opingandadopt i
ngi nnovat
ionst hat
l
eadt oimpr ov ement sinthequalityofl i
feoftheirempl oyees,customers,and
otherstakehol dersint hecommuni ty.Forexampl e,aut omationthatreduces
producti
oncost sandenabl esfasterpr oducti
onwi l
lmakeabusi nessuni t
mor eproduct ive,whilealsoprovidingitscustomer swi ththesamegoodsat
l
owerpr ices.

6.Exports:Anygrowingbusinesswi l
leventuall
ywantt ogetst art
edwi thexport
s
toexpandt hei
rbusinesstoforei
gnmar ket
s.Thi si
sani mpor t
antingredi
entof
economi cdevel
opmentsi nceitprovidesaccesst obiggermar kets,andleads
tocurrencyinfl
owsandaccesst ot helatestcutti
ng-edget echnologi
esand
processesbeingusedi nmoredev elopedforeignmarkets.Anot herkeybenefit
i
st hatt hi
sexpansi onthatleadst omor est abl
ebusi nessr evenuedur i
ng
economi cdownturnsinthelocaleconomy .

7.Communi tyDev elopment:Economi cdev el

opmentdoesn’ talwayst r
anslate
i
nto communi ty dev elopment. Communi ty dev elopment r equires
i
nfrast
ructureforeducat i
onandt r
aining,heal
thcare,
andot herpubl
i
cser v
ices.
Forexampl e,youneedhi ghlyeducatedandski ll
edworkersinacommuni t
yt o
att
ractnewbusi nesses.I
fthereareeducat i
onalinst
it
uti
ons, t
echni
caltr
aining
schoolsandi nternshipopport
unit
ies,thatwillhel
pbuildthepoolofeducat ed
andskill
edwor ker s.

Economi
c,Soci
alandPsy
chol
ogi
cal
needsf
orEnt
repr
eneur
shi
p

Theor
yofent
repr
eneur
shi
p

Economi
cTheor
y

 Entr
epreneur
shi
p and economi
c gr
owt
htake pl
ace when t
he economi
c
condi
ti
onsarefavour
abl
e

10
  Economi
cincent
ivesar
ethemai
nmot
ivat
orsf
orent
repr
eneur
ial
act
ivi
ti
es

 Economicincenti
ves i
nclude t
axati
on poli
cy,indust
rialpol
icy,sour
ces of
fi
nanceandrawmat er
ial
, i
nfr
astr
uctur
eav ai
l
abil
ity
,inv
estmentandmar ket
ing
opport
uni
ti
es,accesstoinfor
mationaboutmarketconditi
ons,
technol
ogyetc

Soci
ologi
cal
Theor
y

 Ent
repr
eneur
shi
pisl
i
kel
ytogetaboosti
napar
ti
cul
arsoci
alcul
tur
e

 Soci
ety’
sval
ues,r
eligi
ousbel
i
efs,
cust
oms,
taboosi
nfl
uencet
hebehav
iourof
i
ndiv
idual
sinasociety

 Theentr
epr
eneuri
sar
oleper
for
meraccor
dingt
other
oleexpect
ati
onsbyt
he
soci
ety

Psy
chol
ogi
cal
Theor
y

 Ent
repreneur
ship get
s a boostwhen societ
y has suf
fi
cientsuppl
y of
i
ndi
v i
dualswit
hnecessar
ypsychol
ogi
cal
charact
eri
sti
cs

 Thepsychol
ogi
calcharact
eri
sti
csincl
udeneedf
orhi
ghachi
evement
,av
isi
on
orf
oresi
ght,
abi
li
tytofaceopposit
ion

 Thesechar
act
eri
sti
csareformedduri
ngt heindi
vidual’
supbri
ngingwhich
st
ressonst
andar
dsofexcel
l
ence,
sel
f-
rel
ianceandlowf at
herdominance

Char
act
eri
sti
csofEnt
repr
eneur
shi
p
1. Economi
canddy
nami
cact
ivi
ty

Entr
epreneur
shi
pi s an economic acti
vit
ybecause itinvol
ves the cr
eati
on and
operat
ionofanent er
pri
sewi t
hav iew to cr
eati
ngv al
ueorweal thbyensur i
ng
opti
mum ut i
li
zati
on ofscar ce r
esources.Since thi
sv al
ue creat
ion act
ivit
yi s
perf
ormedcontinuousl
yint hemidstofuncer t
ainbusi
nessenvir
onment,therefore,
entr
epreneur
shi
pisregardedasady namicforce.

2. Rel
atedt
oinnov
ati
on

Entr
epreneur
shipinvol
vesa cont inuoussearch fornew i
deas.Entr
epr
eneurshi
p
compelsani ndiv
idualto conti
nuouslyevaluat
et heexi
sti
ngmodesofbusi ness
operat
ionssothatmoreeffici
entandef f
ect
ivesyst
emscanbeev ol
vedandadopted.

11
I
notherwords,ent
repr
eneurshi
pisacont
inuousef
for
tforsy
ner
gy(
opt
imi
zat
ionof
per
for
mance)inorgani
zat
ions.

3. Pr
ofi
tpot
ent
ial

“Profitpotentialisthelikel
yl evelofreturnorcompensat
iontotheent
repreneurfor
takingont her iskofdev elopingani deai nt
oanactualbusi
nessvent
ure.
”Wi thout
profitpotenti
al ,theeffortsofent repreneurswoul
dremainonlyanabstractanda
theoreti
cal l
eisur eact
ivi
ty.

4. Ri
skbear
ing

Theessenceofent repreneur shipi

sthe‘wil
li
ngnesstoassumer isk’
arisi
ngoutofthe
creati
onandi mplement ati
onofnewi deas.Newi deasar eal waystentati
veandtheir
result
smaynotbei nstant aneousandposi ti
ve.Anent r
epreneurhast ohavepati
ence
to see hi
s effor
ts bearf ruit.Inthe int
erveni
ng period ( ti
me gap bet ween t
he
concepti
onandi mpl ement ationofani deaandi tsresults),anentrepreneurhasto
assumer isk.Ifanent repreneurdoesnothav et hewi ll
i
ngnesst o assumer i
sk,
entrepr
eneurshi
pwoul dnev ersucceed.

5. Ski
l
lful
management

Entr
epr
eneurshipinvolv
esskill
fulmanagement.Thebasi cmanager i
alskil
list he
most impor t
ant char act
eri
sti
c feature of entrepr
eneurshi
p. For ef fecti
ve
managementofanent erpri
se,t
herol
eofanent r
epreneurist
oi ni
ti
ateandsuper vi
se
desi
gnoforganizati
onimprovementproject
sinr
elat
iontoupcomingopportuni
t i
esis
ver
ymuchimpor tant.

6. Accept
ingchal
l
enges

Entr
epreneurshi
pmeansaccept ingchall
engesami dstr i
skanduncertai
nty.Whil
e
accept
ingent r
epreneur
shipasacareertheentr
epr eneuracceptsthechall
engesof
al
loddsandput shiseffor
tstoconv
erttheoddsi ntov iabl
ebusi
nessopportuni
ti
es
bypooli
ngt ogethert
heresour
cesofbui
ldi
ngandr unni ngtheent
erpri
se.

7. Goal
-or
ient
edAct
ivi
ty

The ent repr

eneurwho cr eates and oper
ates enterpri
ses seeks to earn pr
ofi
ts
thr
oughsat i
sf acti
onofneedsofconsumer s;hence,entrepr
eneurshi
pi sagoal -
ori
entedact ivity.Ent
repr
eneur shi
pemphasi zesresults,achi
evementsandt ar
gets
achi
ev ed.I ti s work done not i maginary plans or paper decisions.Hence
entr
epr eneurshipisagoal-
orientedact
ivi
ty.

8. Val
ueCr
eat
ion

Next,wef indt hattheprocessofcr eati

ngv alueisachar act
eri
sti
cindescri
bing
entr
epreneurship.Throughentr
epreneurship,new products,servi
ces,t
ransact
ions,
approaches,resources,t
echnol
ogi
es,andmar ketsar
ecr eatedthatcont
ribut
esome

12
val
uet oacommuni tyormar ket
place.Wecanal soseev aluecreatedwhen,thr
ough
ent
repreneur
ship;resources aret ransf
ormed into outputs such as pr
oducts or
ser
vices.Dur i
ng thist ransfor
mat ion pr
ocess,v alue is creat
ed because t he
ent
repreneurisfashioni
ngsomet hingwor t
hwhileandusef ul.Druckersays,“Unti
l
ent
repreneur
ialact
,everyplantisaseedandev erymi ner
al j
ustanotherr
ock.

9. Dy
nami
cPr
ocess

Entrepreneurshi
pisady namicf uncti
on.Entrepr
eneurt hri
vesonchangesi nt he
environment ,whi
chbri
ngusef ulopportunit
iesforbusiness.Anentrepr
eneurdeals
proactivelywit
hchangingmar kets­andenv i
ronment.Hel ooksatthechangesas
the sour ce ofmarketadv antages,notasa pr oblem.Uncer t
aint
iesare market
oppor t
uni t
iesf
orhi
m.Hecapi tali
zesonf l
eet
ingmarketanomal i
es.

10. Uni
queness

Other characteri
sti
c f ound in entrepreneur
ship i s t hat of uni queness.
Entr
epreneurshi
pi nvolv
es new combinati
ons and new appr oaches with which
entr
epreneursarewill
ingtoexperi
ment.ThroughEntrepreneurshipuniqueproducts
arecreatedanduniqueapproachesar
et r
ied.Entr
epreneurshi
pi sn’tmerel
yimitat
ing
whatothershavedone.I t
’sdoi
ngsomethingnew, somethingunt estedanduntr
ied–
somethingunique.

11. I
nter
estandVi
si
on

Thef ir
stfactorforentrepreneurialsuccessi sinterest.Si
nceent repr
eneurshippay s
offaccor ding t
o performancer athert han timespenton apar ti
cul
aref fort
,an
entrepreneurmustwor ki nanar eat hatinterest
sher .Otherwise,shewillnotbeabl e
tomai ntai
nahi ghlevelofwor ket hi
c, andshewi llmostl i
kelyfai
l.Thisint
erestmust
alsotranslatei
ntoav i
sionf orthecompany ’
sgrowth.Ev eniftheday -
to-
dayact i
vit
ies
ofabusi nessarei nt
erestingt oanent repreneur,thisisnotenoughf orsuccess
unlessshecant urnthisinterestintoav i
sionofgr owt handexpansi on.Thisv i
sion
mustbest rongenought hatshecancommuni cateittoinvestor
sandempl oyees.

12. Ri
skandRewar
ds

Entrepreneurshi
prequiresrisk.Themeasur ementoft hisriskequatestot heamount
oftimeandmoneyy ouinv estintoy ourbusiness.Howev er,t
hisri
skal sotendsto
rel
atedi rect
lytother ewardsi nvolved.Anent repreneurwhoi nv
estsinaf r
anchi
se
paysf orsomeoneel se’sbusi nesspl anandreceivesar espectableincome,whilean
entrepreneurwhounder t
akesgr oundbr eakinginnov at
ionsr i
sksev eryt
hingonan
assumpt i
on thatsomet hing r evoluti
onar
y wi l
lwor kint he market.I fsuch a
revoluti
onaryiswr ong,shecanl oseev er
ything.Howev er ,i
fshei sright,shecan
suddenl ybecomeext r
emelyweal thy.

Qual
i
tiesandPr
e-r
equi
sit
esofEnt
repr
eneur

13
 1.Ful
lofdet
ermi
nat
ion

Tobeasuccessf ulentrepreneuri ti
simpor t
anttosetcl eargoal salongtheway.
Growingbusiness, i
ncreasingsal esandhir
ingnewempl oyeesrequiresever
almicr
o-
goalswithi
nt hem tobeexecut edsuccessfull
y.Thist
y peofwor kloadandchall
enge
i
senought ost opmanypeopl ef rom pur
suingtheent repr
eneur i
alcar
eerpath.One
has to be det er
mined f r
om t he begi
nning to be successful.Ifone isn’
tfull
y
deter
minedt hereisagoodchancet ocrumbleunderthepr essure.

2.Ri
skTaki
ng

Someoft hemostsuccessfulent r
epreneurst ookmaj orri
sks,andt heypai doffina
bi
gway .Ent
repreneursarer
isktakersreadyt odivedeepi nt
oaf utur
eofuncer t
aint
y.
Butnotallr
isktakersaresuccessfulentrepreneurs.Successfulentrepreneurshav e
wil
ltoriskt
imeandmoneyonunknowns,butt heyalsokeepr esources,plansand
bandwi
dt hf
ordealingwith“unknown”inr eserve.Whenev aluatingri
sk,asuccessf ul
entr
epr
eneuralwaysthinkst
hati st
hisriskwor ththecostofcar eer,t
imeandmoney ?
And,whatwill
hedoi fthi
sventuredoesn’tpayof f?

3.Hi
ghl
evel
ofconf
idence

Entr
epr eneur
st hathaveahi ghlevelofconfidencear eabletogetthej obdoneev en
underthemostst r
essf
ulcondi tions.Theyunderstandt hatbigchallengesbreedbig
rewards.Thisist hesamement ali
tythatal
lowssuccessf ulentr
epreneur stospotan
opportunitywhenmostj ustseeapossi blechallenge.Whenmostf ocusont he
chal
lenge, asuccessfulentrepreneurfocusesont hef i
nishli
neandt heendr eward.

4.Cr
avesl
ear
ning

Indust r
iesconst ant
lychangeandev olve.Onl
yt hosethatarealsogrowi
ngthrough
const antlearni
ngwi l
lst
ayahead.Ther ewil
lal
way sbecompet i
torst
ryi
ngtosurpass.
Ther ewi llal
way sbesomeonecl ai
mi ngtobet henextgreatestthi
ng.Asuccessful
entrepreneural waysstayssharp,t
hroughconst antlear
ningaboutthecompet i
tors
andt hei ndustr
y.

5.Under
standsf
ail
urei
spar
toft
hegame

Fai
lurei
soneoft hesecretstosuccess,si
ncesomeoft hebestideasari
sefrom t
he
ashesofashut t
eredbusiness.Asuccessfulent
repr
eneurknowst hatf
ail
ureispart
ofsuccess.Hewi l
ltakethosefai
luresanduset hem aslear
ningexperi
ences.Real
worldexperi
ence,evenfai
li
ng,wil
lteachmor ethanwhatonewoul dev
erlearnina
cl
assroom.

6.Passi
onat
e

Passi
onf uel
sthedri
veanddeterminat
ionr equi
redtobesuccessf
ul.I
foneisn’
tful
l
y
passi
onateaboutwhathe/sheisdoingt headdedst r
essandobstacl
eswil
lbui
ldup
onshouldersandev
entual
l
yber esponsibleforcol
lapse.

14
 7.Adapt
abi
l
ityandFl
exi
bil
i
ty

Ifentrepreneurshadt heabi lit

ytoseewhatwashi di
ngaroundeacht urni twould
makei tmucheasi er
,butunf ort
unatel
yt hatisnott hecase.Therecanbesur pri
ses
aroundev erycorner,ev enwi thawel lthoughtoutpl anandst r
ategy.Asuccessf ul
entrepreneuri s extr
emel yadapt abl
e and has abi lit
yt orespond quicklyin any
sit
uation.It’
sgoodt obepassi onateorev enst ubbornaboutwhaty oudo.Butbei ng
i
nflexibleaboutclientormar ketneedswi l
lleadt ofai
lure.Marketneedsaredy namic:
changes ar ear ecurring phenomenon.Successf ulentr
epreneurs welcome al l
suggest i
onsf oropt imi zat
ionorcust omi zat
iont hatenhancest heiroffer
ing and
sati
sfiescl i
entandmar ket-
needs.

8.MoneyManagement

Successf ulEnt r
epreneurmusthav e excell
entmoney managementski ll
s.Poor
fi
nanci aldecisions,suchasov erspendingorallocat
ingfundst ol
essimpor tanttasks
canqui cklyruinabusi ness.Ittakest i
met ogettoprofi
tabi
li
tyforanyentrepreneuri
al
venture.Ti l
lt hen,capi t
alisl imitedandneedst o beut i
li
zedwi sely
.Successf ul
entrepreneursr eali
zet hi
smandat orymoneymanagementr equirementandpl anfor
presentandf uturefinanci
alobl igati
ons( wi
thsomeaddi tionalbuffer
).Ev enaf t
er
securing fundi ng orgoi ng full
yoper at i
onal
,asuccessf ulbusinessmankeepsa
compl etehandl eoncashf l
ows, asi ti
st hemosti mport
antaspectofanybusi ness.

9.Net
wor
kingAbi
l
iti
es

Alargecollect
ionofbusinesscardsandahugecont actli
stdoesn’
tmakeanexper t
atnetworking.Bui
ldingvalue-
basedr el
ati
onshi
psthatar etr
ulymeani ngf
uliswhat
networki
ng is allabout— t hese arethe rel
ati
onships thatlead t o busi
ness
opport
uniti
esandl ong-
ter
mr elati
onshipsthatar
emut ual
lybeneficial.Const
antl
y
networki
ngwi thpeoplethatcannotonl yhelpmybusi nesscurr
entl
y ,butalsohave
thepotent
ialtohelpyouinthefutureaswell.

10.
Abi
l
ityt
osel
landpr
omot
e

Knowinghow toselli
sanabsolut
elyessent
ialpar
tofbei
ngasuccessfulbusi
ness
owner.Ify
oucan’
texpresswhati
tisthatmakesyourpr
oductorser
viceasol
uti
onto
aproblem,youwi
llbeinforar
oughri
de.

11.
Planni
ng(
ButnotOv
er-
planni
ng)

Ent repr eneurshipisaboutbui l

dingabusinessf rom scratchwhilemanaginglimit
ed
resour ces( including t
ime,moneyand per sonalrelati
onships).I
ti sa long-t
erm
commi tment ,andat tempti
ngt oplanasmuchaspossi bl
eatt hebeginni
ngisanobl e
i
mpul se.I nrealit
y,however,planningf
orev erythi
ngandhav i
ngar eadysoluti
onf or
allpossi bl
er isksmaypr eventy ou f
rom ev en t
aking thef i
rststep.Successful
entrepr eneurs hav e a mi ndsetand t emper amentt o capable ofdealing with
unfor eseenpossi bili
ti
es.

15
 12.
Creat
ivi
tyandPer
suasi
veness

Successfulentrepr
eneurs havet he cr
eati
ve capacityt orecogni
ze and pur
sue
opport
unities.Theypossess strong sel
li
ng skil
ls and are bot
h per
suasi
ve and
persi
stent.Areyouwil
li
ngtopromot eyourbusinesstir
elessl
yandlookf
ornewway s
togetthewor doutaboutyourproductorserv
ice?

13.
Int
erper
sonal
Ski
l
ls

Entrepr
eneursar ealwayscomf or
tabl ewhil
edealingwithpeopleatalllevel
s.Duri
ng
thecour seoft heiracti
on,theycomeacr ossacr osssect i
onofi ndiv
idual
swith
whom t heyhav et o deal.Theyi nteractwit
hr aw mat eri
alsuppli
ers,customers,
bankerset c.fordiff
erentacti
vit
ies.Assuccessf ulentr
epreneur
s,theyshouldbe
personswho l i
ke working wi
th other spossessing the much needed quali
tyof
i
nterpersonalskil
ltodealwit
hpeopl e.

14.
Timeor
ient
ati
on

Entr
epreneurs ant
ici
pat
efut
uretr
ends basi
ng upon thei
rpastexper
ience and
exposure.Theysti
cktot
het
imepr
agmati
call
ywhi
ledoingthei
rjobs.

15.
Leader
shi
p

Entr
epr eneur
sshoul dpossesst hequal it
yofl eadershi
p.Leader
shipistheabil
i
tyto
exer
ti nter
personalinfl
uencebymeansofcommuni cat
iontowardstheachi
evement
ofgoal s.Ent r
epreneurs as the leaders should prov
ide t
he necessarysparkto
motivationbyguiding,i
nspir
ing,assisti
nganddi rect
ingthemember softhegr
oupfor
achi
ev ementofuni tyofacti
on,effortsandpurpose.

16.
Int
ernal
LocusofCont
rol

Successfulentrepreneurs beli
evei nthemselves.Theydo notbel i
evet hatthe
successorf ai
lureort hei
rv ent
urewi l
lbegov er
nedbyf ate,l
uckorsimi
larforces.
Theybelievethattheiraccompl i
shmentsandset backsarewithi
nthei
rowncont rol
andinfl
uenceandt hattheycanaf fectt
heoutcomeoft hei
racti
ons.

17.
Tol
erancef
orAmbi
gui
ty

Starup entrepreneur
sf ace uncer
tai
ntycompounded byconst antchanges that
i
ntroduceambi guit
yandst ressint
oev er
yaspectoft heent
erpr
ise.Setbacksand
surpri
sesareinevit
abl
e.At oler
anceforambi
guityexi
stswhentheentrepreneurcan
dealwitht
hev ari
oussetbacksandchangesthatconst
antl
yconfr
onthim orher.

18.
Int
egr
it
yandRel
i
abi
l
ity

I
ntegr
it
yandr eli
abi
l
ityar
ethegl
ueandf i
berthatbindsuccessfulper
sonaland
busi
nessr
elat
ionshi
psandmaket
hem st
rong.I
ntegr
it
yandrel
iabil
i
tyhelpbui
ldand

16
sustaintrustandconfi
denceamonginv
est
ors,par
tner
s,cust
omersandcredi
tor
s.
Smal lbusinessent
repr
eneur
sinpar
ti
cul
arf
indthesetwocharact
eri
sti
cscr
uci
alto
success.

19.
Tol
erancef
orFai
l
ure

Successf
ulEntr
epr
eneur
s use f
ail
ure as a l
ear
ning exper
ience.I
n adv
erse and
di
ffi
cultt
imest
heyl
ookforoppor
tuni
ty.

Rur
alEnt
repr
eneur
shi
p
Meani
ngofRur
alEnt
repr
eneur
shi
p

Ent
repr
eneur
shi
pemer
gingi
nrur
alar
easi
scal
l
edr
ural
ent
repr
eneur
shi
p.

Est
abl
i
shi
ngi
ndust
ri
esi
nrur
alar
easr
efer
stor
ural
ent
repr
eneur
shi
p.

Rur
alent
repr
eneur
shi
pissy
nony
mousofr
ural
indust
ri
ali
zat
ion.

Def
ini
ti
on

Accor
dingt
otheKVI
C:-

Ruralindust
rymeansanyi ndustryl
ocat
edinrur
alareas,popul
ati
onofwhi chdoes
notexceed10, 000orsuchot herfi
gur
ewhichproducesanygoodsorr endersany
servi
ceswi t
horwi t
houtuseofpowerandi nwhi
cht hefi
xedcapit
ali
nvestmentper
headofanar ti
sanoraworkerdoesnotexceedathousandRupees.

Accor
dingt
oGov
ernmentofI
ndi
a:-

Anyindust
ryl
ocatedinrur
alarea,vi
l
lageortownwit
hapopulat
ionof20,
000and
bel
owandaninvestmentofRs.3cror
esinpl
antandmachi
ner
y.

Cl
assi
fi
cat
ionofRur
alI
ndust
ri
es

Al
lrur
ali
ndust
ri
eshav
ebeencl
assi
fi
edi
ntot
hef
oll
owi
ngsi
xcat
egor
ies:
-

1.Mi
ner
al-
basedi
ndust
ri
es.

2. For
est
-basedi
ndust
ri
es.

3.Agr
o-basedi
ndust
ri
es.

4.Engi
neer
ingandnon-
conv
ent
ional
indust
ri
es.

5.Text
il
eindust
ry(
incl
udi
ngKhadi
),and

6.Ser
vicei
ndust
ry.

Needf
orRur
alEnt
repr
eneur
shi
p
17
Theneedf ordev
elopi
ngr
uralent
repr
eneur
shi
pist
opr
omot
erur
aldev
elopmenti
n
thecount
ry.

Thi
sisj
ust
if
iedasf
oll
ows:

 Rurali
ndust
ri
esbeingl
aborint
ensiv
eser
veasanant
edot
etot
hewi
despr
ead
probl
emsofrural
unemploy
ment .

 I
thel
psi
nreduci
ngdi
spar
it
iesi
nincomebet
weenr
ural
andur
banar
eas.

 These indust
ri
es promote bal
anced r
egi
onaldev
elopmentby di
sper
sing
i
ndustr
iestorural
areas.

 Devel
opmentofrur
ali
ndust
ri
esser
vesasanef
fect
ivemeanst
obui
l
dup
vi
ll
agerepubl
i
cs.

 Ruralindust
ri
esalsohel
ppreser
vetheoldri
chher
it
ageoft
hecount
ryby
protect
ingandpr
omoti
ngartandcr
eat
ivi
ty.

 Rur
ali
ndust
ri
ali
zat
ionf
ost
erseconomi
cdev
elopmenti
nrur
alar
eas.

 Rur
ali
ndust
ri
esal
sol
eadt
odev
elopmentwi
thoutdest
ruct
ion.

Pr
obl
emsofRur
alEnt
repr
eneur
shi
p

Developi
ng r
uralent
repreneur
shi
pi simportantbutnotso easy
.The gener
al
bot
tlenecksi
nthedev
elopmentofvil
l
ageindustr
iesar
e:

 Fi
nanci
alconst
rai
nts.

 Lackoft
echni
cal
know-
how.

 Lackoft
rai
ningandext
ensi
onser
vices.

 Managementpr
obl
ems.

 Lackofqual
i
tycont
rol
.

 Hi
ghcostofpr
oduct
ionduet
ohi
ghi
nputcost
.

 Lackofcommuni
cat
ionandmar
keti
nfor
mat
ion.

 Poorqual
i
tyofr
awmat
eri
als.

 Lackofst
orageandwar
ehouses.

 Obsol
eteandpr
imi
ti
vet
echnol
ogy
.

 Lackofpr
omot
ional
str
ategy
.

Howt
oDev
elopRur
alEnt
repr
eneur
shi
p
18
The foll
owing measur
es may prove eff
ect
ivei
nst
rument
sfor dev
elopi
ng
ent
repreneur
shi
pinrur
alar
easofcount
ry:

 Apol
icyfor
mulat
ionf
orst
rengt
heni
ngt
her
awmat
eri
albasei
nrur
alar
eas
i
nthecountr
y.

 Fi
nanceforr
unni
ngani ndust
ry,needstobemadeav ai
l
ableatsof
tand
easyt
ermsandcondi
ti
onstotheprospect
iveent
repr
eneurs.

 Measuresl
i
kecommonpr oduct
ion-cum-mar keti
ngcent
resbet
akent
o
sol
vethemarket
ingpr
obl
em facedrural
indust
ries.

 I
ncul
cateanddev el
opentrepr
eneuri
alapt
it
udeamongent
repr
eneur
sto
makethem successful
int
heirvent
ures.

 Impar
ti
ngent
repreneuri
aleducat
ionattheschool ,col
legeandUni v
ersit
y
maybeoneoftheef fect
ivewaystoinculcat
etheent r
epreneur
ialat
ti
tude
amongthepr
ospecti
veentrepr
eneursinrural
areasofthecountry.

 Di
sseminati
ng inf
ormati
on about var
ious faci
l
iti
es avai
l
abl
e f
or
pr
ospecti
veent
repr
eneur
stosetupi
ndust
ri
esinr
uralar
eas.

 TheNGOsshouldbeencour
agedt
ocont
ri
but
etodev
elopmentofr
ural
i
ndust
ri
esi
nthecount
ry.

Uni
t–2

19
 TheFunct
ionoft
heEnt
repr
eneuri
nEconomi
cDev
elopmentofaCount
ry

1.Pr
omot
esCapi
tal
For
mat
ion:

Entr
epr
eneurspromot ecapit
alformati
onbymobi li
singt heidlesavi
ngsofpublic.
Theyemploythei
rownaswel lasborrowedresourcesf orsett
ingupthei
rent
erpr
ises.
Suchty
pesofent r
epreneur
ialact
ivi
ti
esleadtovalueaddi t
ionandcreati
onofwealth,
whichi
sveryessenti
alfort
heindustr
ialandeconomicdev el
opmentofthecount
ry.

2.Cr
eat
esLar
ge-
Scal
eEmpl
oymentOppor
tuni
ti
es:

Entr
epreneursprovideimmedi at
el arge-scal
eempl oymentt
ot heunempl oyedwhi ch
i
sachr oni
cpr obl
em ofunder developednat ions.Wi t
htheset t
ingup.Ofmor eand
more uni t
s by ent r
epreneurs,bot h on smal land l ar
ge-scale numer ous job
opport
uniti
es are created forother s.As t i
me passes,t hese enterpri
ses grow,
provi
dingdirectandi ndi
rectemploy mentoppor tuni
ti
estomanymor e.I nthisway,
entr
epreneursplayanef fect
iverol
ei nreducingt heprobl
em ofunempl oymenti nthe
countr
ywhi chintur
ncl earsthepatht owardseconomi cdevelopmentoft henation.

3.Pr
omot
esBal
ancedRegi
onal
Dev
elopment
:

Entrepreneur shelptoremoveregionaldi
spari
ti
esthroughsetti
ngupofi ndustr
iesin
l
essdev el
opedandbackwar dareas.Thegrowthofindustri
esandbusinessi nthese
areasl eadt oal ar
genumberofpubl i
cbenefi
tsli
keroadt r
ansport
,heal
th,educati
on,
entertainment ,etc.Set
ti
ngupofmor eindustr
iesleadst omor edevelopmentof
backwar dregionsandther
ebypromot esbal
ancedregionaldevel
opment.

4.ReducesConcent
rat
ionofEconomi
cPower
:

Economi cpoweristhenat ur
aloutcomeofi ndust
ri
alandbusinessacti
vi
ty .I
ndustri
al
developmentnormallyleadst oconcentr
ati
onofeconomi cpoweri nthehandsofa
few indi
vidual
swhichr esult
sinthegr owthofmonopol i
es.Inordertor edressthi
s
problem al ar
genumberofent r
epreneursneedt obedev eloped,whichwi llhel
p
reducetheconcentr
ationofeconomi cpoweramongstt hepopulati
on.

5.Weal
thCr
eat
ionandDi
str
ibut
ion:

Itsti
mulatesequi t
abl eredist
ribut
ionofwealthandincomeint heinterestofthe
countr
ytomor epeopl eandgeogr aphicar
eas,t
husgivi
ngbenef
ittolargersect
ions
ofthesoci ety.Ent
r epreneuri
alactiv
iti
esal
sogenerat
emor eactiv
iti
esandgi vea
multi
pli
ereffectintheeconomy .

6.I
ncr
easi
ngGr
ossNat
ional
ProductandPerCapi
taI
ncome:

20
Entr
epr eneursareal way sont helookoutforoppor tunit
ies.Theyexplor
eandexpl oi
t
opportuniti
es,encour ageef f
ecti
veresourcemobi l
i
sat i
onofcapitalandskil
l,br
ingin
newpr oductsandser v
icesanddev elopsmar ketsforgrowt hoftheeconomy .I
nthis
way,theyhel pincreasinggr ossnati
onalpr oductaswel laspercapitaincomeoft he
peoplei nacount r
y .Increaseingrossnationalproductandpercapi taincomeoft he
peopleinacount ry, i
sasi gnofeconomi cgr owth.

7.I
mpr
ovementi
ntheSt
andar
dofLi
vi
ng:

Incr
ease inthe standard ofl i
vi
ng oft he peopleis a characteri
sticfeature of
economicdev el
opmentoft hecount r
y.Entr
epreneursplayakeyr oleinincreasi
ng
thestandardofli
vi
ngoft hepeoplebyadopt i
nglatestinnovat
ionsint heproducti
on
ofwidev ari
etyofgoodsandser vicesinlar
gescal ethattooatal owercost .This
enablesthepeopletoav ailbet
terquali
tygoodsatl owerpri
ceswhi chr esul
tsinthe
i
mpr ovementoftheirst
andar dofli
ving.

8.Pr
omot
esCount
ry'
sExpor
tTr
ade:

Entrepr
eneurshelpinpromotingacount ry
'sexport
-t
rade,whichisani mportant
i
ngredientofeconomicdev el
opment.Theyproducegoodsandser v
icesinl arge
scaleforthepur
poseearni
nghugeamountoff orei
gnexchangefrom exporti
nor der
to combatt heimportduesr equi
rement.Henceimpor tsubsti
tut
ion and export
promotionensur
eeconomicindependenceanddevel
opment.

9.I
nducesBackwar
dandFor
war
dLi
nkages:

Entrepreneursl
iketoworkinanenvir
onmentofchangeandtrytomaximiseprofi
ts
byi nnovati
on.Whenanent erpr
isei
sestabl
ishedinaccor
dancewi
tht hechanging
technology,iti
nducesbackwardandforwar
dl i
nkageswhi
chsti
mulat
et heprocess
ofeconomi cdev el
opmenti
nthecountr
y.

10.
Faci
l
itat
esOv
eral
lDev
elopment
:

Entrepreneursactascat al
yticagentf orchangewhichr esul
tsinchainreacti
on.Once
anent erpriseisestabli
shed,thepr ocessofindust
rial
isati
oni ssetinmot ion.This
unitwil
l generat
edemandf orvar i
oust ypesofuni
tsrequiredbyi tandther
ewi l
lbeso
manyot herunit
s whi ch requiret he outputoft his unit
.Thi sleads to overal
l
developmentofanar eaduet oi ncreaseindemandandset ti
ngupofmor eandmor e
units.Int hisway,theent repreneur smul t
ipl
ythei
rent repreneuri
alacti
vit
ies,thus
creati
ng an env ir
onmentofent husiasm and convey i
ng an i mpet
us forov eral
l
developmentoft hear ea.

Met
hodsandPr
ocedur
est
ost
artandexpandone'
sownBusi
ness;

Choi
ceofapr operf
orm oforgani
sat
ioni
scruci
alf
ort
hesuccessofabusiness
ent
erpr
ise.Ev
er yent
repr
eneurhastodeci
de,att
heout
set
,thetypeofowner
ship

21
organisati
on in which hi sent er
prisei st o ber un.Choi ceoff orm ofbusiness
organisati
oniscr uci
albecausei tdet ermi nesther isk,responsi bil
it
yandcont r
olof
theent r
epreneuraswel last hediv
isionofpr ofi
ts.Itisal ongt erm deci
sionbecause
the form ofor ganisation cannotbe changed f requent l
y.The r i
ghtf or
m of
organisati
oncanbehel pingt heenterprisenotonl ythr oughi ni
tial
successbutinlat
er
growtht oo.Therefore,thef orm ofowner shipor ganisati
onshoul dbeselectedaft
er
duecar eandt hought.Abusi nessent erpri
secanbeownedandor gani
sedinseveral
forms.Thesef ormsofbusi nessorgani sationareasunder :

A.Sol
ePr
opr
iet
orshi
p

B.Par
tner
shi
pfi
rm

C. Joi
ntSt
ockCompanyand

D.Cooper
ati
vesoci
ety

SOLEPROPRI
ETORSHI
P

Sole propr
ietor
ship( al
so,call
ed soletrade organisat
ion)isthe oldestfor
m of
businessowner shi
pi nIndi
a.Inasol epropri
etorshi
p,theenterpri
seisownedand
control
ledbyoneper son.Heismasterofhisshow.Hesows, reapsandhar v
eststhe
outputofthiseffor
t.Hemanagest hebusinessonhi sown.Ifnecessar
y ,
hemayt ake
thehelpofhisfami l
ymember s,r
elat
ivesandempl oysomeempl oyees.

Soleproprietor
shipisthesimpleandeasi esttof orm.Itdoesnotrequir
elegal
recogni
tionandat t
endantformali
ti
es.Thi
sf ormist hemostpopul
arforminIndi
a
duet othedisti
nctadvant
agesitoffer
s.Wi
ll
iam R.Bassetopi
nesthat“
Theone-man
control
isthebestintheworldift
hatmanisbi genoughtomanageever
ythi
ng”.

Thei
mpor
tantf
eat
uresofasol
epr
opr
iet
orshi
par
e:

(
i)Sol
eowner
shi
p

(
ii
)Onemancont
rol

(
ii
i)Unl
i
mit
edr
isk

(
iv)Undi
vi
dedr
isk

(
v)Nosepar
ateent
it
yoft
hef
ir
m

(
vi)NoGov
ernmentr
egul
ati
on

Suitabi
li
ty:Thef oregoingdescr
ipt
ionrevealsthatsolepropri
etor
shi
poroneman
controli
st hebesti ntheworldi
fthatmani sbigenought omanageev eryt
hing.But
such a per son doesnotexi st
.Therefore,solepropri
etor
shipissuitabl
ei nt he
fol
lowingcases:

(
i) Wher
e smal
lamountofcapi
tali
srequi
red,e.
g.,sweetshop$,baker
y,
22
 newsst
and,
etc.

(
ii
) Wherequi
ckdeci
sionsar
ever
yimpor
tant
,e.
g.,
shar
ebr
oker
s,bul
l
iondeal
ers,
et
c.

(
ii
i) Wher
el i
mitedri
skisinv
olv
ed,e.
g.,aut
omobi
l
erepai
rshop,conf
ect
ioner
y,
smal
lret
ail
stor
e,et
c.

(
iv) Wher
epersonalatt
ent
iontoindiv
idual‘
tast
esandf ashi
onsofcustomer
sis
r
equi
red,
e.g.
,beaut
yparl
our
,tai
lori
ngshops,lawy
ers,pai
nter
s,et
c.

(
v) Wherethedemandisl
ocal
,seasonalort
empor
ary
,e.
g.,r
etai
ltr
ade,l
aundr
y,
f
rui
tssell
ers,
etc.

(
vi) Wher
efashi
onschangequi
ckl
y,e.
g.,
art
ist
icf
urni
tur
e,et
c.

(
vii
) Wher
etheoper
ati
oni
ssi
mpl
eanddoesnotr
equi
reski
l
ledmanagement

Thus,sol e pr
opri
etorshi
pi s a common form ofor ganisat
ion i
nr etailtrade,
professi
onalfi
rms,householdandpersonalser
vices.Thisform oforganisat
ionis
quite popul
arin ourcount r
y.Itaccountsfort he l
argestnumberofbusi ness
establi
shmentsinI
ndia,inspi
teofit
sli
mit
ati
ons.

PARTNERSHI
P

Theneedf orpartnershipf i
rmf or
m ofor ganisat
ionar osefrom thelimit
ationsofsol e
propri
etorship.Wi t
ht heexpansi onofbusi ness,itbecamenecessar yf oragr oupof
personst ojoinhandst ogetherandsuppl ynecessar ycapit
alandski ll
.Aper sonmay
possessexcept i
onalbusi nessabilit
ybutnocapi tal;hecanhav eaf i
nancingpar t
ner.
Af i
nanciermayneedamanager ialexpertaswel lasat echnicalexpertandal lof
them maycombi netosetupabusi nesswi t
hcommonowner shipandmanagement .
Thus,par t
ner shi
por ganisationhasgr ownoutofnecessi tyt oarrangemor ecapital
;
provi
de bet termanagementand cont rol
,t otake adv antage ofhi gh degr ee of
special
isati
onanddi visi
onofl abour,andt osharether i
sks.

Secti
on4oft heIndi
anPar tnershi
pActof1932def inespartner
shi
pas“ ther el
ation
betweenpersonswhohav eagr eedtoshareprof
it
sofabusi nesscarriedonbyal lor
anyofthem acti
ngforall
”.Owner softhepart
ner
shipbusinessareindivi
duallycalled
“par
tners”andcoll
ecti
velycall
eda“ f
irm”.Thenameunderwhi cht hebusi nessi s
carr
iedoni sknownas“ f
irm name”.Thet ermsandcondi ti
onsofpar tnershipar e
contai
nedinthepart
nershipagreementknownas“ Partner
shipDeed”.

MainFeat
ures:Basedontheabov
ediscussi
on,wecannowl
i
stt
hemainf
eat
uresof
part
ner
shi
pf orm ofbusi
nessowner
ship/
organi
sat
ioni
namoreor
der
lymanneras
fol
l
ows:

(i
)Mor ePersons:Asagai
nstsol
epropri
etor
ship,t
hereshould beatl
easttwo
personssubj
ecttoamaxi
mum oft
enpersonsforbanki
ngbusinessandt
wentyfor

23
non-
banki
ngbusi
nesst
ofor
m apar
tner
shi
pfi
rm.

(i
i
)Profi
tandLossShari
ng:Therei
sanagreementamongt hepar
tner
stoshar
ethe
prof
it
searnedandl
ossesincur
redi
npar
tner
shipbusi
ness.

(
ii
i)Cont
ract
ualRel
ati
onshi
p:Par
tner
shi
pisf
ormed byanagr
eement– or
alor
wri
tt
en-amongthepar
tner
s.

(i
v)Exi
stenceofLawfulBusi
ness:Partner
shipisformedtocar
ryonsomelawful
busi
nessandshareit
sprofi
tsorlosses.Ifthepurposei
stocar
rysomechar
it
abl
e
works,
forexampl
e,i
tisnotr
egardedaspar t
nershi
p.

(v
)UtmostGoodFai
thandHonest
y:Apar
tner
shi
pbusi
nesssol
elyr
est
sonut
most
goodf
ait
handtr
ustamongt
hepart
ner
s.

(
vi)Unli
mitedLiabi
l
ity
:Likesolepr
opri
etor
ship,
eachpartnerhasunli
mit
edli
abi
li
tyin
t
hef i
rm.Thismeanst hatift
heassetsofthepart
nershi
pf i
rmfal
lshorttomeetthe
f
ir
m’sobl i
gati
ons,t
hepar t
ner
’spri
vat
eassetswil
lal
sobeusedf orthepur
pose.

(v
ii
)Restri
ctionsonTransferofShare:Nopartnercant r
ansferhi
sshar
etoany
outsi
depersonwit
houtseekingt
heconsentofal
lotherpar
tner
s.

(vi
i
i)Pri
ncipal
-AgentRel
ationshi
p:Thepartnershi
pf i
rm maybecarriedonbyal l
part
nersoranyoft hem acti
ngf oral
l.Whi
ledeali
ngwi thfi
rm’
str
ansacti
ons,each
part
nerisenti
tl
edtorepr
esentthefir
m andotherpar
tners.I
nthi
sway,
apartnerisan
agentofthefi
rm andoft
heot herpart
ner
s.

Suitabil
i
ty: Theforegoi
ngdescr i
pti
onr eveal
sthatpart
nershi
pf or
m oforgani
sati
onis
appr opr
iatef ormedium-si
zedbusi nessthatrequir
esli
mi t
edcapital
,pooli
ngofskill
andJudgmentandmoder aterisks,li
kesmal lscal
eindustri
es,whol
esaleandr et
ail
tr
ade,and smal lservi
ce concerns li
ke tr
ansportagencies,realestate br
okers,
professionalf i
rmsl i
kechar t
ered accountants,doct
or’
scl ini
cornur si
ng homes,
attorneys,etc.

JOI
NTSTOCKCOMPANY

Wi ththeenl argementoft hescal eofbusi nessoperati

ons,itbecamedi f
fi
cultf ora
sole pr opri
etorship orpar tnershipf irm t o cope witht he problems off inding
additionalresour cesandar r
angi ngf ormor especial
isedmanagement .Inaddi t
iont o
this,theunlimitedl i
abil
it
yoft hesol etraderandpar t
nersalsohinder edt he”busi ness
i
n sev eralway s.Apar tf r
om t hese l i
mi t
ati
ons,t he i
nt r
oducti
on ofadv anced
technologies,economi esofl arge-scalepr oducti
onandot herdev elopment si nt he
fi
eldofi ndustryandcommer cef orcedbusi nessment ot hink“int ermsofbi gger
formsofor ganisation.Thesol epropr i
etorshi
pandpar t
nershipf ail
edt ofacet he
challengeposedbyt hesedev elopment s.Asar esult
,thepresentfrom t hej oi
ntst ock
compani esemer ged.Itwasf oundt hemostsui t
abl
ef or
m ofor gani sationforl arge
scale pr oduction.A j ointst ock company notonl y helped in ov er coming t he

24
l
imit
ationsofsolepropr
iet
orshi
pandpar tner
shipbutal
soplacedhugeamountof
capi
talinthehandsofentr
epreneurandthattoowit
hli
mitedli
abil
i
ty.I
tpr
ovi
dedan
opport
unit
yforever
yperson,r
ichorpoor,
tocontri
but
etoit
scapital
.

Acompanymaybedef i
nedasavoluntar
yassoci
ati
onofpersons,
recogni
sedbyl
aw,
havi
ngadi st
inct
ivename,acommonsealf or
medt ocarr
yon,businessforpr
ofi
t
wit
h-capi
taldivi
si
blei
ntotr
ansf
erableshar
es,li
mit
edli
abi
li
ty,acorporat
ebodyand
per
petual
succession.

Sal
i
entFeat
uresofaCompany

Thedi
sti
nct
ivechar
act
eri
sti
csofacompanyar
easf
oll
ows:

1.Separat
el egalentit
y:Acompanyhasanexi sti
ngenti
rel
ydisti
nctfr
om and
i
ndependentofi tsmember s.Itcanownpr opertyandent
erintocontr
actsin
i
tsownname.I tcansueandbesuedi nitsownname.Therecanbecont ract
s
andsuitsbet weenacompanyandt hei ndi
vidualmemberswhocomposei t.
Theassetsandl i
abil
it
iesofthecompanyar enottheassetsandli
abil
it
iesof
theindi
vidualnumber sandv i
ceversa.Nomembercandi r
ectl
yclai
m any
ownershi
pr ighti
ntheassetsofthecompany ,

2.Artif
iciallega1per son:Acompanyi sanar ti
fici
alpersoncr eatedbyl aw and
existi
ngonl yincont emplati
onofl aw.I tisintangi
bleandi nvisibl
ehav ingno
bodyandnosoul .Itisanar ti
fici
alper sonbecausei tdoesnotcomei nto
existencet hroughnat ur
albir
thandi tdoesnotpossesst hephy si
calattr
ibutes
ofanat uralper son.Likeanat uralperson,ithasr i
ght
sandobl igati
onsi n
termsofl aw.Buti tcannotdot hoseact swhi chonlyanat uralpersoncando,
e.g.,takinganoat hi nperson,enjoyingmar r
iedli
fe,goingt oj ai
l,practi
cing
profession,et c.Acompanyi snotaci t
izenani tenjoysnof ranchiseorot her
fundament alrights.

3.Per petualsuccession:A company enj oys conti

nuous or uni
nterr
upted
existenceanditslif
ei snotaffect
edbyt hedeath,i
nsol
vency,l
unacy
,etc.ofi
ts
member s,ordi
rectors.Member smaycomeandgobutt hecompanysur vi
ves
sol ongasi tisnotwoundup.Bei ngacr eat
ureoflaw,acompanycanbe
dissolvedonlythrought helegalprocessofwindingup.Iti
sli
kear i
verwhich
retainsitsi
dent
itythought hepartscomposingitconti
nuousl
ychange.

4.LimitedLiabi
li
ty:Liabi
li
tyoft hemember sofal i
mitedcompanyi sl imi
tedto
thevalueoftheshar essubscribedtoortot heamountofaguar anteegivenby
them.Unlimit
edcompani esar eanexceptionrat
hert hanthegeneralrul
e.Ina
l
imitedcompany ,member scannotbeaskedt opayany t
hingmoret hanwhat
i
sdueorunpai dont heshareshel dbythem eveniftheassetsofthecompany
areinsuff
ici
enttosat i
sfyinfullt
heclai
msofi tscreditor
s.

5.CommonSeal:Acompanybei
nganart
if
ici
alper
soncannotsi
gnf ori
tsel
f.
Ther
efor
e,t
hel
awprov
idesf
ort
heuseofcommonsealasasubsti
tutef
orit
s
25
 si
gnatur
e.Thecommonsealwi t
hthenameoft hecompanyengravedonit
serv
esasat okenofthecompany’
sapprov
alofdocuments.Anydocument
beari
ngthecommonsealofthecompanyanddulywit
nessed(si
gned)byat
l
easttwodir
ect
orsi
slegal
l
ybindi
ngonthecompany.

6.Transferabil
i
tyofshar
es:Thesharesofapubli
climit
edcompanyar efreel
y
tr
ansferable.Theycanbepurchasedandsoldthr
oughthestockexchange.
Everymemberi sfr
eetot
ransf
erhisshar
estoanyonewit
houttheconsentof
othermember s.

7.Separati
onofowner shipandmanagement :Thenumberofmember si na
publi
ccompanyi sgener al
l
yverylargesot hatal
lofthem ormostofthem
cannott ake act
ive partinthe day-t
o-daymanagementoft he company.
Therefor
e, t
heyelectthei
rrepr
esentati
ves,knownasdir
ect
ors,t
omanaget he
companyont hei
rbehal f
.Repr
esentati
vecont r
oli
sthusanimport
antf
eature
ofacompany .

8.Incorporat
ed associat
ion ofpersons:A company i s an i
ncor
por
ated or
regist
eredassociati
onofpersons.Oneper soncannotconst
it
uteacompany
undert helaw.Inapubl i
ccompany ,atleastsev
enpersonsandinapr i
vate
companyatl easttwopersonsarerequi
red.

CO-
OPERATI
VESOCI
ETY

The co-oper ativef orm ofbusi nessor gani sat

ion developed r atherl ate and has
assumedi mpor tancegr adual ly
.Asamat teroff act,i
tstarteddev elopi ngt omi ti
gate
thelimit
at i
onsofot herf ormsofor ganisationandsubst it
ut ethepr ofit
-mot i
v ewith
servi
ce-mot i
v e.Thus,i tisaspeci alform ofbusi nessowner shipthatdi ff
ersf rom all
otherformswehav edi scussedsof ar.Int hist y
peofor ganisation,t hecapi t
alis
suppli
ed by i ndividuals who buy shar es si mi l
artot hose ofcompany .Each
shareholderhasonev otei nt hemanagementoft hebusi ness,r egar dlessoft he
numberofshar esheowns.Sur pl
usear ningsar edi st
ri
but edtot heshar eholdersin
theform ofdi vidends,whi char eusuallybasedoft hev olumeoft heshar eholders’
purchasesf rom t heco- oper ati
vei ncaseofconsumer s’co- oper ativest ore,ori n
proport
iont ot hegoodsdel i
veredf orsal et ot heco-oper ati
vesoci etyi ncaseof
producer’sco- operativest ore.

Theprimarymoti
vebehi
ndco-oper
ati
vesistosupplygoodsandser
vicesatacost
l
owert hant
heycoul
dbeobtai
nedfrom busi
nessthatar
eoperat
edbyt heownerf
or
prof
it
.

TheInter
nati
onalLabourOf f
icedefi
nesaco- operati
veas“anassociati
onofpersons,
usuall
yofli
mitedmeans, whohav evoluntar
il
yjoinedtogether
,toachiev
eacommon
economic end through the for
mation ofa democr ati
call
y contr
oll
ed busi
ness
organi
sati
on,makingequitablecont
ributi
onstot hecapit
alrequi
redandacceptinga
fai
rshareofri
sksandbenef i
tsoftheunder t
aking”.

26
Feat
uresofCo-
oper
ati
veOr
gani
sat
ion

(i
)Vol untar
yAssoci ati
on:Aco- oper at
iveor gani
sat i
onisav oluntaryassociati
onof
persons.Itsvolunt
arycharacterisoneoft hemostgui dingpr inci
plesofco- operat
ive
organisati
on.Itimpliespri
ncipl
esofco- oper at
iveorgani sati
on.I timpli
est hatevery
i
ndividual,ir
respecti
v eofhiscast e,creed,r eli
gion,sex,et c.isf reeto become
memberoft heco- operat
iveandl eav eitanyt i
me,af tergi v
ingpr opernotice.Ital
so
i
mpl i
est hatnoneshoul dbeforcedorcoer cedtojoinit.

(i
i)Equal Vot
ingRight
s:Inco-operat
iveform oforgani
sati
on,eachmemberhasequal
voti
ngr ight
.Thismeanst hateverymemberi rrespect
iveofhishol
dingsofshar
esor
statusisgi venonev ote.A r i
chper soncannothol dcont r
oloft hecooper
ati
ve
organisati
on on thebasisofhi sweal t
h.Al lmember shav eequalvoiceinthe
managementoft heorganisat
ion.

(i
ii
)Democr ati
cManagement :Democr acyisther ul
eofco- operati
ves.I
n a co-
operat
ivesoci et
ysi nceeachmemberhasequalv oti
ngr i
ght,it
smanagementi s
essent
iall
ydemocr ati
c.Allt
hemember sofasoci etyel
ectabodyofper sonst o
conductandcont r
oltheworkingoft hesoci
ety.Themember sfrequentl
ymeetand
giv
egui del
inest oitsexecut
ive.Thus,aco-operat
iveorgani
sationisanembl em of
tr
uedemocr acy.

(i
v)Ser vi
ce Mot i
ve:Unli
ke,earl
ierf or
ms ofbusiness or gani
sati
on,the pri
mar y
object
iveofestablishi
ngco-oper
ati
vef orm ofor
gani
sationar etorendermaximum
servi
ce toi t
smember s.Here,the aim isnott o earn profi
ts.The cooper
ativ
e
societ
iesdoear nanomi nalamountofpr of
itt
ocover-upadmi nist
rat
iveexpenses.
Thus,co-operat
ivespromotesoci
aljusti
ce.

(v
)Limi t
edRet urnofCapital:Thecapitalinvestedinaco- operati
veisnotgi venan
unduepr ef
erence.Ali
mi t
edr ateofinteresti
sal lowed;becausecapitalappreciat
ion
i
snott hemai nmottoofco- operati
on.Undert heexisti
nglawinI ndi
a,amaxi mum of
10perannum canbegi venasr etur
noncapi talcontri
buti
ontotheco- operat
ive.This
i
saf i
rstchargeonsurplusesoft hesociety.

(v
i)SeparateLegalEnti
ty:Aco-operat
ivesoci
etymustgetit
sel
fregist
eredunderthe
Co-operat
iveSociet
iesAct,1912orundert heCo,
-oper
ati
veSociet
iesActofaSt ate
Government.Likeaj oi
ntstockcompany ,itisaseparat
elegalperson;itcanown
propert
y,enteri
ntocontr
acts,sueandbesuedi ni
tsownname.

(vii
)Equitabl
eDist
ri
butionofSur plus:Unl
ikeotherf orms,ofbusi
nessor ganisati
on,
surplusearnedbyaco-oper ati
vesoci et
yisdistr
ibutedamongi t
smember sequi t
ably
onbasi sothert
hancapitalcontributi
onofthemember s.Asperthelawgov erningCo
-operati
veorgani
sat
ion,25percentofi t
sprofit
saf termeeti
ngitstradi
ngexpenses
andpay ingaf i
xedrateofdi videndoncapi talnotexceeding10percentar et obe
transfer
redtogeneralreserves.Inadditi
on,apor ti
onoft heprofi
tnotexceedi ng10
27
percentmaybeut il
i
zedf orthegeneralwel f
areoft helocali
tyinwhi chtheco-
oper
ati
vesoci et
yi sf unctioni
ng.Ther esidual
,ifany ,maybedi stri
butedamong
membersont hebasi st obedeci dedbythemember scoll
ecti
vel
y.Normal l
y,i
ncase
ofconsumer s’co- operativ
es,t hi
sresi
duali sdistr
ibutedaccordi
ngt opur chases
madebyt hemember sf rom theCo-operat
iveSociety;andincaseofpr oducersco-
oper
ati
ves,thispr ofi
ti sdistri
butedinproporti
ontot hegoodsdeliver
edt otheCo-
oper
ati
vesoci etyforsale.

(vi
ii
)St ateCont rol:Theacti
viti
esoft heco-oper at
ivesociet
iesaresubj ecttocer tain
rul
esandr egulati
onsframedbyt heGov ernment .Therearemanyf ormalit
ieswhi ch
arer equired to be compl eted forget t
ing the societ
yr egist
ered undert he Co-
oper ativeSoci eti
esAct,1912ort heSt at
eCo- operati
veSocieti
esActoft hepar t
icular
State.The audi ted accounts and af f
airs oft he soci
ety arei nspected by t he
Gov er nmentper i
odical
ly.Besidesthis,aco- operat
ivesocietyhast osubmi tannual
repor tsandaccount stotheRegi st
rarofCo- operati
veSocieti
es.

Suit
abi lit
y :The co-oper at
ives are primar i
l
ysui tablef orsmal land medi um si ze
organi sations and par t
icul
arlyf ort r
ading or ganisations.Since the cooper atives
suffer f rom t he limitati
ons of l i
mi t
ed f i
nanci alr esources;lack of ef fi
cient
professi onalmanagement ,excessi veGov er
nmentr egul at
ion,l
ackofmot ivation,etc.
,
theyar e notsui t
abl ef ora l arge size organisation.Howev er,ther
e ar e certain
except ions tot hi
sr ule wher et he co-operatives hav e overcome some oft heir
l
imitat i
ons ment i
oned abov e and ar er unning t heir business on l arge-scale
successf ull
y.Forinst ance t he Kaira Distri
ctMi l
k Pr oducers Cooperative Uni on
Limited,Anand,Guj arat( of Amulf ame) ,the I ndian Farmer s and Fer t
il
izers
Cooper ative(I
FFCO) ,theText il
eco- operati
vesandt heconsumer s’co-oper ati
vesof
Tami lnaduandKer alaar elarge-sizedorganisations, beingrunont heprincipleofco-
operat ion.

CHOI
CEOFASUI
TABLEFORM OFBUSI
NESSORGANI
SATI
ON

Thepr oblem ofchoi ceofasui t

abl
ef orm ofbusinessor gani
sati
onar i
sesatt wo
occasions -whi le star
ting a new business and secondly,when its expansion
becomesessent i
al.Itmaybe not ed t hatther
ei sno si ngl
ef or
m ofbusi ness
organisati
onwhi chmaybeconsi der
edt hebestunderallthecircumstances;i
nf act
,
af or
m ofor ganisati
onwhi chisconsi
der edthebestinonecase,maypr ovetobea
complet efai
lur
ei nanothercase.

Attheti
meofl aunchi
nganew busi
nessenter
prise,t
hechoi
ceoft
hef
orm of
owner
shi
pisdi
ctat
edbysev
eral
fact
orsasgi
venbelow:

1.Nat
ureofbusi
ness-Ser
vice,
trade,
manuf
act
uri
ng.

2. Scal
eofoperat
ions-Volumeofbusiness(l
arge,medium,smal
l
)andsi
zeof
themarketar
ea(local
,nat
ional
,i
nter
nat
ional
)served.

3.Degr
eeofdi
rectcont
rol
desi
redbyowner
s.
28
 4.Amountofcapi
tal
requi
redi
nit
ial
l
yandf
orexpansi
on.

5.Degreeofr
iskandl
i
abil
i
tyandthewi
l
li
ngnessofowner
stoassumeper
sonal
l
iabi
l
ityf
ordebt
sofbusi
ness.

6.Di
vi
sionofpr
ofi
tsamongt
heowner
s.

7.Lengt
hofl
i
fedesi
redbyt
hebusi
ness.

8.Rel
ati
vef
reedom f
rom Gov
ernmentr
egul
ati
ons(
fl
exi
bil
i
tyofoper
ati
ons)

9.Scopeandpl
anofi
nter
nal
organi
sat
ion.

10.
Compar
ati
vet
axl
i
abi
l
ity
.

Itmustbenot edthatt hesefact

orsareint
errel
atedandi nt
erdependent.Fori
nstance,
theamountofcapi t
alr equi
redandt hedegreeofr i
skinvolveddependupont he
natur
eandv olumeofbusi nessoperat
ions.Thedegreeofcont rolandthedivi
sionof
profi
tsarebot hrelatedt ori
skandl i
abil
it
y.Therefore,anent r
epreneurshouldnot
considerthesef actorsi nisol
ati
on.Thei nterr
elat
ionshi
p bet ween thesefactors
shouldbedul yconsidered.

Choi
ceofFor
m ofOr
gani
sat
ionf
orExpandi
ngBusi
ness

Ifanent repr eneurcarr

iesoutofact i
vi
tiesofhisbusinesssuccessfull
yoveraper iod
oft i
me,t her eisli
kelytobeaneedt oexpandhi sbusinesssot hatmuchl arger
dema! 1dsar eeasi l
ymet .Sincether esources-f i
nanci
alandmanager i
al-oft he
entrepreneurar el i
mited,he willhavet or evi
ew the exist
ing form ofbusiness
organisationandf i
ndoutt hepossibi
li
tyofchanger-overtoanotherformtocar r
yout
thenecessar yexpansion.Thus,whileimplementingtheexpansi onprogramme,he
hast ochoosebet weencar r
yingonwi t
ht heexi
sti
ngf orm andchangingtheexisting
form ofor ganisati
on.Themai nproblemst hatanexpandi ngconcer nwillhavet o
attendtoar e:

(
i)I
ncr
easedf
inanci
alr
equi
rement
s.

(
ii
)Needf
ori
nter
nal
re-
organi
sat
ion.

(
ii
i)Needf
orspeci
ali
sedser
vices.

(
iv)I
ncr
easei
nther
iskandt
heper
sonal
li
abi
l
ityoft
heowner
s.

(
v)Ret
ent
ionofef
fect
ivecont
rol
.

(
vi)I
ncr
easedt
axl
i
abi
l
ity
.

Thenat ureandext entoft hepr oblemsment i

onedabov ewi lldependupont he
exist
ingfor
m oforganisat
ion,thenatureandthesizeofbusiness,andtheexpansi
on
programme.Thev ariousalter
nati
v esavail
abl
etoanent repreneur,i
fhedecidesto
changetheexist
ingform oforgani
sation,ar
easfollows:
29
(
a)Asol
etr
adermayempl
oyamanagerorchange-
overt
oapar
tner
shi
p.

(
b)Apar
tner
shi
pmayhav
emor
epar
tner
sorswi
tcht
oapr
ivat
ecompany
.

(
c)Apr
ivat
ecompanymayshi
ftt
oapubl
i
ccompany
.

Env
ironment
alFact
orsaf
fect
ingsuccessofanewBusi
ness.

Var
iousenv
ironment
alf
act
orsi
nfl
uenci
ngt
heent
repr
eneur
shi
par
easf
oll
ows:

A.ECONOMI
CFACTORS

Economic env i
ronmentexer
cises t
he mostdirectand i
mmediat
ei nf
luence on
entr
epreneurshi
p.Theeconomicfactor
sthataf
fectthegr
owthofentr
epreneur
ship
arethefol
lowing:

1.Capi t
al:Capitali
soneoft hemosti mpor tantper quisit
estoest ablishanent erpri
se.
Av ail
abil
i
tyofcapi talfacili
tatesfortheentrepreneurt obr i
ngtoget hert hel andofone,
machi neofanot herandr aw mat eri
alofy etanot hert ocombi net hem t oproduce
goods.Capi talisther efore,regardedasl ubricantt ot heprocessofpr oduction.Our
accumul atedexper iencesuggest sthatwithani ncreasei ncapitalinv estment ,capi
tal
-outputrati
oal sotendst oincrease.Thisresul t
si nincreaseinpr ofitwhi chultimately
goes t o capi talf ormat i
on.Thi s suggestst hat as capi talsuppl yi ncreases,
ent r
epreneurship also incr eases.Franceand Russi a exempl ifyhow t hel ackof
capitalfori ndustrialpur suitsimpeded t hepr ocessofent repreneur ship and an
adequat esuppl yofcapi talpromot edit.

2.Labour :Thequal ityr atherquant it

yofl abouri sanot herf actorwhi chinf l
uencest he
emergence ofent repr eneur ship.Mostl ess developed count ries arel abourr i
ch
nati
onsowi ngt oadenseandev eni ncreasingpopul at
ion.Butent r
epr eneurshipis
encouraged i ft herei s a mobi l
e and f l
exibl
el abourf orce.And,t he pot ential
advantagesofl ow-costl abourar er egulatedbyt hedel et eri
ousef fect sofl abour
i
mmobi li
ty.Theconsi derat i
onsofeconomi candemot ionalsecur it
yi nhibitlabour
mobili
ty.Ent repreneur s,t her efor
e,of tenf i
nddi f
ficultytosecur esuf fi
cientlabour .
Theyar ef or
cedt omakeel abor at
eandcost l
y,arr
angement st orecrui
tt henecessar y
l
abour.Thepr oblem ofl ow- costimmobi l
el abourcanbeci rcumv entedbypl unging
aheadwi t
hcapi tal-
intensi vet echnologies,asGer manydi d.I tcanbedeal tbyut il
izi
ng
l
abour-intensivemet hodsl i
keJapan.Bycont r
ast,t hedi sadvantageofhi ghcost
l
abourcanbemodi fi
edbyi nt r
oductionofl abour-savingi nnov ati
onsaswasdonei n
US.Thus, i
tappear st hatl abourpr oblemscanbesol v
edmor eeasil
yt hancapi talcan
becreat ed.

3.Raw Mater
ial
s:Thenecessi
tyofraw mat
eri
alshar
dlyneedsanyemphasi
sfor
est
abl
ishi
ng any indust
ri
alacti
vi
ty and i
tsinfl
uence i
n the emer
gence of

30
entrepreneurship.Int heabsenceofr aw mat eri
als,nei
theranyent erpri
secanbe
establi
shed norcan an ent r
epr eneurbe emer ged.Ofcour se,i n some cases,
technologicalinnov ati
ons can compensat ef orraw mat er
ialinadequacies.The
Japanesecase,f orexample,wi t
nessest hatlackofr aw materi
alcl ear
lydoesnot
prevent ent repreneurshi
p f r
om emer ging but i nfl
uenced t he di r
ecti
on of
entrepreneurship.Infact,
thesuppl yofrawmat eri
alsisnotinf
luencedbyt hemselv
es
butbecomesi nfluenti
aldependinguponot heropportuni
tycondi ti
ons.Themor e
favourablet hesecondi ti
onsar e,t hemor el i
kel
yi sther aw mat er
ialtohav eits
i
nf l
uenceofent r
epreneurial
emer gence.

4.Mar ket :Thef actremai nst hatt hepot entialoft hemar ketconstitutest hemaj or
determi nantofpr obabl erewar dsf rom ent r
epr eneurialfunct i
on.Frankl yspeaki ng,i f
thepr oofofpuddi ngl i
esi neat ing,thepr oofofal lproduct i
onl iesinconsumpt i
on, i
.e.,
mar ket i
ng.Thesi zeandcomposi tionofmar ketbot hinfluenceent repr eneurshipi n
theirownway s.Pract i
cally,monopol yinapar ti
cularpr oducti namar ketbecomes
mor ei nfluenti
alf orent repr eneur shipt han a compet i
tive mar ket.Howev er,t he
disadv ant age ofa compet it
ive mar ketcan be cancel led to some ext entby
i
mpr ovementi ntranspor tati
onsy stem f aci l
it
at i
ngthemov ementofr awmat erialand
fi
nishedgoods,andi ncreasi ngt hedemandf orproducergoods.D. S.Landeshol ds
the opi ni on thatimpr ov ement si nt ranspor tati
on ar e mor e benef icialto heav y
i
ndust r
yt hant olighti ndust rybecauseoft heiref fectsont hemov ementofr aw
mat erials.PaulH.Wi lken cl aimst hati nstancesofsudden r athert han gradual
i
mpr ovementi nmar ketpot entialpr ovidet hecl earestev idenceoft hei nf
luenceof
thisf act or.Her efer
st oGer manyandJapanast hepr imeexampl eswher e‘ rapid
i
mpr ovementi n-mar ketwasf oll
owedbyr apident repreneur i
alappear ance.Thus,i t
appear st hatwhet herornott hemar keti sexpandi ngandt her at
eatwhi chi tis
expandi ngar ethemostsi gni f
icantchar acteristi
csoft hemar ketforent repreneur ial
emer gence.

5.Infrastructur
e:Expansi onofent r
epreneur shippr esupposespr oper l
ydev eloped
communi cati
onandt ransportati
onf acil
it
ies.Itnotonl yhelpst oenl arget hemar ket,
butexpandt hehor izonsofbusi nesst oo.Takef orinstance,theest ablishmentof
postandt el
egraphsy stem andconst r
ucti
onofr oadsandhi ghway si nIndia.Ithelped
considerableent r
epreneurialacti
v i
ti
eswhi cht ookpl acei nthe1850s.Apar tf
rom t he
abov ef actors,insti
tuti
ons l i
ke trade/busi ness associ ati
ons,busi ness school s,
l
ibrari
es,et c.alsomakev aluablecont ri
but i
ont owar dspr omot i
ngandsust aining
entrepreneurship’i
nt heeconomy .Youcangat heral ltheinformat i
ony ouwantf rom
thesebodi es.Theyal soactasaf orum forcommuni cati
onandj ointact i
on.Ofl ate,
theimpor tancesofbusi nessandi ndust r
yassoci ati
onshav eincreasedt r
emendousl y.
Inthef astchangi ngwor l
dofbusi ness,ent r
epr eneur shav etomov e-coll
ecti
velyi n
ordertobemor eeffecti
veandmor eef f
icient.Theyneedt oconst ant l
ycheckand
i
nfluencet heGov ernment ’
st hi
nkinganddeci sion-maki ng.

B.SOCI
ALFACTORS

31
Socialf
actor
scangoal ongwayi
nencouragingentr
epreneurshi
p.I
nf acti
twasthe
hi
ghlyhelpfulsoci
etyt
hatmadet heindustri
alrev
oluti
onagl or
ioussuccessin
Europe.Themaincomponent
sofsoci
alenvi
ronmentareasf ol
lows:

1.CasteFact or: Ther earecer t

ainculturalpract i
cesandv aluesi neverysoci et ywhi ch
i
nfluencet he’act ionsofi ndiv
iduals.Thesepr act i
cesandv al
uehav eev olv edov er
hundredsofy ears.Fori nstance,consi dert hecast esy stem (theVar nasy stem)
amongt heHi ndusi nI ndi
a.Ithasdi videdt hepopul at
ionont hebasisofcast ei nto
fourdivisi
ons.TheBr ahmana( pri
est)
, t
heKshat riya( warrior),theVaishy a( t
rade)and
theShudr a( artisan) :Ithasalsodef i
nedl i
mi tst ot hesoci almobi l
it
yofi ndividual s.By
socialmobi l
ity’wemeant hef reedom t omov ef rom onecast etoanot her .Thecast e
system doesnotper mi tanindivi
dualwhoi sbor naShr i
drat omov etoahi ghercast e.
Thus,commer cialact i
vi
ti
eswer ethemonopol yoft heVai shyas.Member soft he
threeot herHi nduVar nasdi dnotbecomei nterest edint radeandcommer ce,ev en
whenI ndi ahadext ensivecommer cialinter-r
el ationswi thmanyf oreigncount ries.
Domi nanceofcer t
ai nethnicalgroupsi nent repr eneurshi pi sagl obalphenomenon.
Thepr otest antet hicsi nthewest ,theSammur aiinJapan,t hetradingcl assesi nUS
andt hef ami l
ybusi ness’concer nsofFr ancehav edist inguishedt hemsel v
esas
entrepreneur s.

2.Fami lybackgr ound:Thi sfactori ncludes size offami l

y,type off amilyand
economi cstatusoff amil
y .In a studybyHadi mani,ithasbeen r ev eal
ed t hat
Zami ndarfami l
yhel pedtogainaccesst opoli
ti
calpowerandexhi bithigherlev elof
entrepreneurship.Backgroundofaf amilyinmanuf acturingprovidedasour ceof
i
ndust ri
alentrepreneurshi
p.Occupat ionalandsoci alstatusofthef amilyi nf
luenced
mobi l
ity.Therear ecertai
nci r
cumst anceswher everyfew peoplewoul dhav et obe
venturesome.Forexampl einasoci et ywherethejointf amil
ysyst em isi nv ogue,
thosemember sofj oi
ntf amil
ywho gai nweal thbyt heirhard wor kdeni ed t he
oppor t
unitytoenjoyt hefr
uitsoftheirl abourbecausetheyhav etoshar etheirweal th
withtheot hermember softhef amil
y.

3.Educati
on:Educati
onenabl
esonetounderst
andtheoutsi
dewor l
dandequipshim
witht
hebasi cknowledgeandski
l
lst
odealwi t
hday-t
o-dayproblems.I
nanysoci et
y,
thesystem ofeducati
onhasasigni
fi
cantrol
et opl
ayininculcati
ngentr
epreneuri
al
val
ues.

InI ndia,thesystem ofeducat ionpriort othe20t hcenturywasbasedonr eli

gion.I
n
thisr igi
d sy stem,cr i
tical and quest i
oning at ti
tudes towards society were
discour aged.The cast e sy stem and t he resultantoccupationalstr
ucture were
reinforcedbysucheducat ion.Itpr
omot edt hei deathatbusi
nessisnotar espectabl
e
occupat i
on.Lat er,when t he Brit
ish came t o ourcountry,they i
ntr
oduced an
educat ion system,j ustt o produce cl erks and account antsf orthe EastI ndi
a
Company ,The base ofsuch a sy stem,as y ou can wel lsee,isv ery ant
i-
ent repreneur
ial.Theunf ortunateresultofi tist hatyoungmenandwomeni nour
count ryhav edev el
opedat asteonlyforser vice.Theirtal
entsandcapabi l
it
ieshave

32
notbeenmademuchuseof .Rat herithasbeenwast edinperfor
mi ngrouti
ne
conventi
onaljobs.Oureducat
ionalmet hodshavenotchangedmuchev entoday.
Theemphasi sist i
l
lonprepar
ingst udentsforst
andar
djobs,r
atherthanmar ki
ng
them capabl
eenoughtostandont hei
rfeet.

4.Attit
udeoft heSoci et
y:Ar el
atedaspectt ot heseist heat ti
tudeoft hesociety
towardsent r
epr eneur shi
p.Cer tai
nsoci eti
esencour agei nnovat i
onsandnov elt
ies,
andthusappr ov eent repreneurs’actionsandr ewardslikepr of
its.Cert
ainothersdo
nottoleratechangesandi nsuchci rcumst ances,entrepr eneurshipcannottaker oot
andgr ow.Si milar l
y,somesoci eti
eshav eani nherentdi slikeforanymoney -
maki ng
acti
vi
ty.Itissai d,t hatinRussia,int henineteenthcent ury ,theupperclassesdi dnot
l
ikeent r
epr eneur s.Fort hem,cul t
ivatingthel andmeantagoodl i
fe.Theybelieved
thatr
andbel ongst oGodandt hepr oduceoft hel andwasnot hi
ngbutgod’ sbl
essing.
Russianf ol
k-tal
es,pr overbsandsongsdur ingt hisperiodcar r
iedt hemessaget hat
makingweal ththr oughbusi nesswasnotr i
ght.

5.Cul turalValue:Mot i
vesi mpelment oacti
on.Ent repreneurialgr owt hr equi r es
propermot i
vesl i
kepr ofi
t -
maki ng,acqui si
ti
onofpr esti
geandat tainmentofsoci al
status.Ambi ti
ousandt alentedmenwoul dtakerisksandi nnov ateift hesemot iv es
arest rong.Thest rengt hoft hesemot ivesdependsupont hecultureoft hesoci ety .I f
the cul turei s economi cally ormonet aril
y ori
ented,ent repreneur ship woul d be
appl audedandpr aised;weal t
haccumul ati
onasawayofl i
fewoul dbeappr eci at ed.
Int hel essdev elopedcount ri
es,peopl ear enoteconomi call
ymot ivated.Monet ar y
i
ncent i
v es haver elativelyl ess at t
raction.Peopl e have ampl e oppor tunities of
attaining socialdi stinction bynon- economi c pursuits.Men wi th Or ganisat ional
abili
tiesar e,therefor e,notcdr aggedi ntobusiness.Theyuset heirtalent sf ornon-
economi cends.Theabsenceofpr opereconomi cmot i
vesisagener alchar acter ist i
c
ofagr ariansocietiesi nwhi chpeopl edonotat tachgr eatv al
uet obusi nesst alent s,
i
ndust ri
al l
eadershipet c.

C.PSYCHOLOGI
CALFACTORS

Manyent r
epreneuri
alt
heor
ist
shav epr
opoundedtheori
esofentr
epr
eneur
shi
pthat
concent
ratespecial
l
yuponpsychol
ogi
calf
actor
s.Theseareasf
oll
ows:

1. Need Achi evement: The most i mpor tant psy chological t heories of
entr
epreneur shipwasputf orwardintheearly)960sbyDav idMcCl ell
and.Accor di
ng
toMcCl ell
and‘ needachievement’i
ssocialmot iv
et oexcelt hattendst ochar acteri
se
successfulent r
epreneur
s,especi
all
ywhenr einf
or cedbycul t
uralfactors.Hef ound
thatcertai
nki ndsofpeople,especial
lythosewhobecameent repreneurs,hadt his
charact
er i
stic.Mor eover
,somesoci eti
estendt or eproduceal argerper centageof
peoplewi t
hhi gh‘ needachiev
ement’thanot hersoci eti
es.McCl el
landat tr
ibutedt his
tosociologicalf actor
s.Dif
fer
encesamongsoci etiesandi ndivi
dualsaccount edf or
‘
need achi evement ’being gr
eaterin somesoci eti
esand l essi n certain others.
Analysi
ngt hisphenomenon,PaulWi l
kenhassai d,“ entr
epr eneurshipbecomest he

33
l
inkbet
weenneedachi
evementandeconomi
cgr
owt
h”,
thel
att
erbei
ngaspeci
fi
cal
l
y
soci
alf
act
or.

2.Wi thdrawalofSt atusRespect :Ther ear esev eralot herr esearcherswhohav etri
ed
tounder standt hepsy chologicalroot sofent repreneur shi p.Onesuchi ndiv
iduali s
EverettHagen who st ressest he-psy chologi calconsequencesofsoci alchange.
Hagensay s,atsomepoi ntmanysoci algr oupsexper i
encear adi
callossofst atus.
Hagenat tr
ibutedt hewi t
hdrawalofst atusr espectofagr oupt ot hegenesi sof
entrepreneurship.Giv i
ngabr iefsket chofhi stor yofJapan,heconcl udest hati t
developedsoonert hananynon- west ernsoci etyexceptRussi aduet otwohi storical
dif
ferences.Fi r
st,Japanhadbeenf reef rom col onialdisr uptionandsecondl y,the
repeated long cont i
nued wi thdrawalofexpect ed st atusf rom impor tantgr oups
(smaur ai)initssoci etydr ovethem t or etreat i
sm whi chcausedt hem t oemer ge
ali
enat edfrom tradit
ionalvalueswi thincr easedcr eat i
vit
y .Thisv eryfactledt hem to
thetechnol ogi
cal pr
ogr essthroughent r epreneur i
al roles.

3.Motives:Otherpsy chol
ogicalt
heori
esofent r
epreneurshipst
resst hemot i
vesor
goalsoftheentrepreneur.Coleisoftheopini
ont hatbesideswealth,ent
repreneur
s
seekpower ,pr
estige,securi
tyandservi
cetosociety.St
epanekpoint spar
ticul
arl
yto
non-monetaryaspect s such as i
ndependence,persons’self-
esteem,powerand
regar
doft hesociety.

Reasonsf
orI
nit
ial
Fai
l
uresandVi
sibl
ePr
obl
emsf
orBusi
ness

Thefai
lur
eofnewenterpr
iseandv
isi
blepr
obl
emsf
orbusi
nessmaybet
racedt
othe
fol
l
owingerr
ors/
over
sight
s:

1.Lack ofmanager
ialexper
ience orpoorknowl
edge oft
he par
ti
cul
arl
i
ne of
pr
oduct
ion.

2.Pooraccount
ingsyst
em whi
chr
esul
tsi
nnon-
avai
l
abi
l
ityofbasi
cdat
anecessar
y
fordeci
sion-
maki
ng.

3.Wr ong/
inadequat
eest
imat
eofcash r
equi
rement
sorf
aul
tycapi
talpl
anni
ng/
budgeti
ng.

4.Lackofknowl
edgeaboutt
ax-
rel
atedmat
ter
s.

Abr
iefexpl
anat
ionoft
hesef
act
orsi
sgi
venbel
ow:

1.LackofManager i
alExperience:Thenew entrepreneurshould haveall
-r
ound
knowledgeaboutthev ar
iousaspectsofmanagement .Hehast obearinmindthe
factt
hathecannotaffordtoemployexper
ts/speci
ali
stsforvari
ousspecial
i
sedjobs.
Hence, hehastobeanal l
-r
ounderinmanagementorhi sjobisamultif
acedone.As
anall
-rounderhemustlookaft
er:

(
a)What
,howandwhent
opr
oduce;

34
(
b)Mar
ket
ingoft
hepr
oduct
smanuf
act
ured;

(
c)Account
ingsy
stems;
and

(
d)Fi
nance.

Theownerofasmal lscaleindust
ryshouldbewel l
-versedi
nallthesear eas.Ifhe
fai
lsinoneoft heseareas,thati
senought ogi vehi
m heav yl
osses,whichwi l
lresult
i
nt hefail
ureoft heenterpr
ise.Atechnocratmaygi vemuchemphasi sont echnical
aspects,butignoremar ket
ingetc.Similar
ly,onewhoi swellexperi
encedi nsales
maygi veunduei mportancetomar ket
ing,butignor
est echni
calaspects.Sowhati s
requi
red is a good knowledge aboutal lthe aspects ofproducti
on,mar ket
ing,
accounti
ngandf inance.

2.PoorAccount ingSyst
em:Agoodaccount i
ngsy st
em wouldpr ov
ideinf
ormati
on
regardingcosts,grossmar gi
n,br
eak-evenpointetc.whicharehi ghl
yusefulf
or
decision-maki
ng.Intheabsenceofproperaccount
ingdata,deci
sionmakingwould
bedi f
ficul
tandthedeci
sionsmadewoul dnotgi
vethedesi
redeffect.

3.I nadequat e Estimat e of Cash Requi rement :A pr oper est imate of cash,
requirement swi llhelpt hepr operf uncti
oningoft heent erprise.A new ent erpr
ise
feel
scashcr unchwhen( a)product i
ondoesnotr eachopt imum l evel(b)production
i
sbel owt hebr eak-ev enpoi nt,(c)i
tfail
stocr eateandi ncreaset hedemandf orthe
product/ services.Allt hesef actorsresul
tinthedepl eti
onofcashv er yeasi
ly.Thisis
becauset het imer equi r
edf orthesehasbeencal culat
edwr ongly.Del ayinanyoneof
theseact ivi
tiesmeansmor ecashr equir
ement s.Hencet heent r
epr eneurhast o
esti
mat et het i
meandal sohowamont h-bymont hdelayi nst arti
ngt hepr oj
ectwoul d
propor t
ionat elyincreaset hecapi t
alrequir
ement s.Costsescal atewi ththepassage
oftime;t hereforecal culati
onshav etobemadei nadv ancet akingi ntoaccountt he
capitalrequi rement sbyt akingt hetimefactor.

4.LackofKnowl edgeaboutTaxRel at
edMat ter
s:Theent r
epreneurmustmake
himsel
fawar eoft heprovi
sionsrel
ati
ngt oincome-taxandsalestax.Hemustpay
speci
alattent
iontosal es-
taxlawsandr egulat
ions-especial
l
yobt ai
ningsal
est
ax
regi
str
ati
onatt heappropri
ateti
me,fi
li
ngtaxr et
urnsregul
arl
yetc.

St
epst
oOv
ercomePr
obl
ems

Manyst udi
eshavebeenconduct edtoi denti
fytheproblemsf acedbythenew
ent
erpr
ise.These st
udi
es have mainl
ypi npoint
ed t
he above probl
ems and t
he
fol
l
owingsuggest
ionshavebeenmadet oov er
cometheseprobl
ems:

1.Makeani ntensiv
estudyoft heproposedproject/
product
/serv
ice.Spendal otof
ti
meinpreparingbudgets,costest
imates,col
lecti
ngmar keti
nformati
onet c.These
arer
equir
edt omaket heproposedventureasrealist
icaspossibl
e.Oncet heproj
ect
hasbeenstart
edi tmaynotbepossibletoconsiderormakechanges.

35
2.Fi
nanci
alprudencyr
equi
resthatonehastoadoptaconser
vati
veatti
tudet
owar
ds
est
imati
ngincomeandl i
berali
nexpenses,att
hesamet i
met hereshouldbewi
de
margi
nofsafety.

3.Itisadv i
sabl
etomakeuseoftheserv
icesofbanker
s,managementandtax
consul
tants,andsuppl
i
erset
c.t
oexaminet hepr
oposedpr
ojectandeli
citt
hei
r
suggesti
ons.

4.Accur
ateaccount
ingi nformat
ionisvi
talf
ortherunni
ngoft
heent
erpr
ise.Hence,
theserv
icesofapr ofessionalaccount
antshoul
dbemadeuseofi ndev i
singan
appr
opri
ateaccount
ingsy stem.

5.Prof
essi
onalinv
estor
salwayslookforl
ucrati
vev ent
ures.I
fprofessi
onalinvest
ors
areassoci
atedwiththevent
ure,theywil
lscruti
niseitfr
om diff
erentanglesbefore
makinganyinvest
ment.Thiswillhel
ptheent r
epreneurindeter
mi ni
ngwhet herthe
proj
ecti
sfeasi
bleornotandgivegoodret
urns.

6.Compl yi
ngwithtaxati
onf ormali
ti
esandpay i
ngt axeshav ebecomear egular
headachef ormanyentrepreneurs.Theent
repreneursshouldcollectalli
nformat i
on
regar
dingv ari
oustypesoft axessuchasi ncomet ax,sales-t
ax,excisedutieset c.
evenbefor etheuni
tisstarted:Theymustf amil
iari
sewi t
hchangest akingpl acei n
taxat
ionl awsandseet heuni tgetsthebenefitsoradv antagesofcer t
aint axes.
Income-tax,andexcisedut i
escomeundercent rallawswher eassal es-
taxsome
understatelaws.

Uni
t=3

Feasi
bil
i
tySt
udy

A Feasibil
i
tySt udyi saf i
rststep in explori
ng anew busi nessidea.Itcan be
i
nst r
umentalinf lushi
ng outa busi nessi dea,aswel lasdet er
mining i
ff ur
ther
i
nv estmentint
ot heideaiswarranted.Inshor t,i
tprovi
desaf rameworkbywhi cha
“go”or“no-go”decisi
oncanber eached.Addi ti
onall
y,awell
-r
oundedfeasibi
l
itystudy
canser v
easasol idfoundat
ionforaf ull
-f
ledgedbusinesspl
an.
Pre-
feasi
bil
i
tystudiesarewellresear
chedy etgeneri
cduedi li
gencerepor
tst
hat
faci
l
itat
epotent
ialent
repr
eneur
sinprojecti
dent
if
icat
ionfori
nvestment
Themainobj ecti
veofthepre-f
easibi
l
itystudi
esprepar
edbySMEDAistopr ov
ide
i
nfor
mat i
on aboutinvest
mentoppor tuni
ti
est othesmall& medi
um ent
erpri
ses
(SME‟s)
.Atypicalpr
e-f
easi
bil
i
tystudyprovi
des:
1.Compr
ehensi
vei
nfor
mat
ionf
ori
nvest
mentoppor
tuni
tyi
nabusi
ness.
2.Speci
fi
cinfor
mationr
egar
dingdi
ff
erentbusi
nessareasli
ke,mar
ket
ing,t
echni
cal
,
i
ndustr
iali
nformat
ionetc.f
ortheexist
ingentr
epreneur
stoi mpr
ovethei
rexit
ing
set
up.
3.Pr
ojecti
nvest
menti
nfor
mat
ionandf
inanci
alpr
oject
ionst
osuppor
tvi
abi
l
ityoft
he
busi
ness.

36
 Pr
epar
ati
onofFeasi
bil
i
tyRepor
ts
1.Gener
alI
nfor
mat
ion
Thef easibi
li
tyreportshoul
dincl
udeananal y
sisoft heindust
rytowhichthepr oj
ect
belongs.Itshoulddealwiththepastperf
ormanceoft heindustr
y.Thedescri
pt i
onof
thety peofindustr
yshouldalsobegi v
en( i
.e)thepr i
ori
tyoftheindust
ry,i
ncreasei n
production,rol
eoft hepublicsector,al
location ofinvestmentfunds,choi ceof
techniqueetc.Thisshouldcontaininf
ormat i
onaboutt heent er
pri
sesubmi t
tingt he
feasibil
i
tyreport
.
2.Pr
eli
minar
yAnal
ysi
sofAl
ter
nat
ives
Thisshouldcontai
npr
esentdataonthegapbetweendemandandsupplyforthe
output
swhi char
etobeproduced,
dat
eonthecapaci
tythatwoul
dbeav
ail
ablefr
om
proj
ectsthatareinpr
oducti
onorunderi
mplementat
ionatthetimet
her epor
tis
prepar
ed.
Allopini
onsaretechni
cal l
yf easi
bleshoul
dbeconsider
edatthisprel
iminarystage.
Anaccountofthef or
eignexchanger equir
ementshoul
dbetaken.Theprofit
abil
i
tyof
defer
entopini
onsshoul dal sobel ookedint
oanaccountoft heforei
gnexchange
requi
rementshouldbet aken.
3.Pr
ojectDescr
ipt
ion
Thef easibi
l
ityrepor
tshoul
dpr ovi
deabri
efdescr
ipt
ionofthetechnol
ogychosenfor
the project
.I nf
ormati
on rel
evantfordeter
mini
ng the opt
imali
tyofthe locat
ion
chosenshoul dalsobeincl
uded.
To assiston t
heassessmentoft heenvi
ronmentaleff
ectsofthepr ojectvery
feasi
bil
i
tyreportmustpresenttheinfor
mationonspecifi
cpoint(i
.e)populat
ion,
water,l
and ai
r,eff
ect
sr ai
sing outofthepr oj
ectpol
lut
ion,ot
herenvironmental
disr
upti
onetc.
Reportshoul
dcont ai
nal i
stofi
mpor t
antit
emsofcapitalequi
pmentandal sotheli
st
oftheoperat
ionalrequi
rementsoftheplant
,requi
rementofwater,power
,personnel
,
organi
zati
onalstr
uctureenvi
saged,
transpor
tcostandfactor
saffecti
ngit
.
4.Mar
ket
ingPl
an
I
tshoul dcontainthefoll
owingitems/dataont hemarketi
ngplan.Demandand
prospectiv
esupplyineachoftheareatobeserved.Themethodandthedat
aused
formaki ngest
imatesofdomesti
csupplyandsel
ecti
onofthemarketar
eashoul
dbe
presented.
Esti
matesoft
hedegreeofpri
cesensi
ti
vi
tyshoul
dbepr
esent
ed.I
tshoul
dcont
ainan
anal
ysi
sofpastt
rendsinpr
ices.
5.Capi
tal
Requi
rementandCost
Theesti
mat
esshouldbereasonabl
ycomplet
eandpr operl
yest
imat
edi
nfor
mat
ion
onal
lit
emsofcost
sshoul
dbecar ef
ull
ycol
l
ectedandpresent
ed.
6.Oper
ati
ngRequi
rement
sandCost

37
Operat
ingcostisessenti
all
ythosecostwhi
char
eincl
udedaf
tert
hecommencement
ofcommer ci
alproduct
ion.
I
nformationaboutal
lit
emsofoper at
ingcostshouldbecoll
ected.Operati
ngcost
r
elatetocostofraw mater
ial
sandi nter
mediar
ies,f
uel
s,ut
il
it
ies,l
abour,repai
rand
maintenance,
sel
li
ngandotherexpenses.
7.Fi
nanci
alAnal
ysi
s
Thepur
poseoft
hisanal
ysi
sistopresentmeasur
estoassessthefi
nanci
alv i
abi
li
ty
oft
heproj
ect
.Aperf
ormancebal
ancesheetf
orthepr
ojectdat
ashoul
dbepr esent
ed.
Depreci
at i
onshoul dbeal l
owedont hebasi sspecif
iedbyt heBur eauofpubl i
c
enter
prises.For
eignexchanger equir
ement sshouldbeclearedbythedepar t
mentof
economi canairs.Thefeasi
bili
tyreportshouldtakei
ntoaccountincomet axrebates
forpri
orit
yindustr
ies,
incent
ivesforbackwar dareas,
acceler
ateddepreci
ationetc.
Thesensit
ivi
tyanal
ysi
sshouldalsobepresent
ed.Ther epor
tmustanal
yset
he
sensi
ti
vi
tyofther
ateonthel
evel
andpat
ter
nofproductpr
ice.
8.Economi
cAnal
ysi
s
Socialpr of
it
abil
it
yanal ysisneedsomeadj ust
ment sinthedat arelat
ingt othecost
andr eturntotheenterprises.Onei mportanttypeofadjustmentinvolv
esacor recti
on
i
ninputandcostt or eactt hetruev al
ueoff or
eignexchange,labourandcapi tal.The
enterpriseshoul
dt r
yt oaccesst hei mpactofitsoperati
ononf orei
gnt rade.Indirect
costandbenef i
tsshoul dbei ncluded.Iftheycannotbequant i
fi
edt heyshoul dbe
analyzed.
Sel
ect
ionoff
act
oryl
ocat
ion
Oneoft hemosti mpor t
antdeci sionswhi chmustbemadewhenanewent erpr i
sei s
to be est ablished i sthe choi ce ofi t
sl ocat ion.There maybe manydesi rable
l
ocat i
onsf r
om whi cht omakesel ecti
ons,buti nal lpr
obabi li
tytherewi l
lbeaf ew
sit
eswhi char emor esui t
abl et hant heot her s.Inmosti nstances,t het hreemaj or
factorst hatent erdi r
ect l
yi ntol ocati
onsel ection-r aw mat eri
als,transpor tation
faci
lit
ies,andqual ifi
edl abour -
mustar epr esenti nt herightcombi nati
on.I not her
i
nstances,near nesst oot herpl ant s,suppl yofcheapf uel,power ,andwat er,t he
atti
tudeofl ocalgov er
nmentmaybemor ei mpor tant.I
tisimpossi bl
et or ankt hese
factorsinor derofi mpor tance,si ncef oronet ypeofent erprisenear nesst or aw
mat eri
alsmaybet hemosti mpor tantconsi der ati
on,andf oranot hertypeav ailabilit
y
oftranspor tationf acil
it
iesmayt akepr ecedence.Thebestl ocationist heonet hat
providesagoodbal anceamongal lthesef act ors.
Theprocessofselect
ingasui
tabl
elocat
ionf
oranent
erpr
isei
nvol
vest
hef
oll
owi
ng
thr
eedif
ferentst
eps:
Fir
stSt ep:Thi
ssteprelatestoselect
ionoftheregioninwhi
cht heenter
prisei
stobe
suit
ed.Aspert hisstepdeci si
onistobet akenabouttheStateorDistr
ictwheret
he
organisati
onistobel ocated.Fori
nstance,wit
hrefer
encetoIndia,
theStateinwhi
ch
theplantistobelocatedmaybeDel hi,
Punjab,WestBengal
,Rajast
han,etc.
SecondSt
ep:Af
tert
hesel
ect
ionoft
her
egi
on,t
hedeci
sionr
elat
ingt
oa,par
ti
cul
ar

38
communi t
y,i
nwhichtheplanti
stobelocated,i
stobetakenbyt
heent
repreneur.For
example,i
faccor
dingtothefir
stst
ep,Delhii
sselect
ed,communi
tymayrefertoany
partofDel
hi,
East,
West,NorthorSout
h.
Thi
rdStep:Thisstepper tai
nstotheselecti
onoft heplantsit
ewherethepl
antisto
besit
uated.Cont i
nuingwi ththeexampl eofDel hiasr egi
onandNor thDelhias
community,t
hef actorymaybesetupi nNar elaorindustri
alareaofWazi
rpur.We
havet
oidenti
fyexactpl otnumber,wher
et heplantist
obei nstal
l
edatthi
sst
age.
FACTORSAFFECTI
NGI
NDUSTRI
ALLOCATI
ON
Asalreadydiscussed,thepr ocessofselecti
onofasui tablelocati
onforanindustri
al
enter
pr i
seinvol
vesthesest eps( 1)sel
ecti
onoft hebroadr egioninwhichtheplanti
s
tobel ocat
ed; (
2)choiceoft hecommuni t
yinsidethatregi
on; and(3)decisi
onabout
thespecifi
csitewheret heplantistobesituated.Thefactorsaffecti
ngplantl
ocati
on
arediscussedasunder :
(
1)Fact
orsAf
fect
ingSel
ect
ionofRegi
on
Whilemakingachoiceofasuit
ableregi
onforaproposedindustr
ialent
erpr
ise,the
fol
l
owingfactorsmustbemostsearchi
ngl
yconsi
deredwit
hduer egardtothenature
ofthei
ndustr
y :
(i
)Av ai labilit
yofRaw Mat erial
:Inthesel ecti
onofpl antlocation,t heavai l
abi
li
tyof
raw mat eriali sani mpor tantfactor;becauset hecostofr aw mat eri
alf or
ms,a
subst ant ialpar tofthet otalcostofpr oduction.Thel ocal
isedgr ossmat eri
alshave
gotani mpor tanti
nfluenceont heconcent rati
onofani ndustr
y .Ubi qui
ti
esmaynot
havemaj ori nfl
uenceov erit.Of t
enaf actoryissituatedneart hesour ceofr aw
mat erialswhi charewei ght -l
osi
ngorgr ossorbulkyorheav yinnat ure.Forexampl e,
sugari ndust ryi nIndiai sl ocatedi nU. P.andBi harwher esugar canei sgrown.
Similarly ,jutei ndustrywasat tracted,neart hesour ceofi tsr aw mat eri
alsnear
Calcut ta.
(i
i)Accessi bi
lit
yt ot heMar ket
:Si ncegoodsar emanuf acturedwitht heobj ectof
sell
ingt hem int hemar ket,aneasyaccesst ot hemar ketbecomesani mpor t
ant
considerationint hechoi ceofani ndustr
iallocation.I ndustr
ieswhosepr oductsar e
costlytocar r
yonaccountoff ragil
it
y,perishabi l
i
ty ,orbul karelocat edi ncl ose
proximity,tomar ket.Thist endencybecomesmor eemphasi zediftherawmat erial
s
arelesscost lytot r
anspor torareder i
vedf r
om di versesour ces,andlosel i
ttl
ewei ght
i
nt hemanuf acturingprocessEv oluti
onofnew mar ketsisani mportantf actor.For
exampl e,juteindust r
yhasshownadi spersalt endencyduet othecreat i
onofnew
mar ket
si nU. P.,Bi harandTami lnaduar isi
ngf r
om t hedemandofbagsf ornew
i
ndust r
ieslikesugar ,fl
ourandcement .
(i
ii
)Av ailabil
ityofLabour :Labouri sprobablyt hemosti mpor t
antsi ngl
ef act
or
i
nf l
uencingpl antl ocati
on.I ndustriesingener alandl abour -
intensiv
ei ndustri
esi n
parti
cular,whi chneedmanualwor ker
sinl argenumber s,haveat endencyt obe
l
ocat ei
nt hosear easwher ethesuppl yofl
abouri seasyandwagesar elow.Howev er,
recentl
yl abourhasbecomemobi l
et oagreatext entand,therefore,i
tisav ai
labl
ei n
mostoft her egionsoft hecount r
y.Fur t
her,withthegrowthoft r
adeuni onsandaf ter
theawar dsofi ndust r
ialtr
ibunals,thewage- factorhaslostmuchofi tsimpor t
ancei n
determiningl ocation.

39
Labor ’
satti
tudet owar
dswor kandi t
scont ri
but
iontopr oductiv
ityexertthemajor
i
nflecti
ngtoday .Onthewhole,
industr
ialr
elati
onsaremoredi stur
bedi nsomer egi
on
thani nothers.Theparti
cul
arl
yhost i
l
eat ti
tudeoflabourf or
cei ncertainst
atesor
regionsactsasani mport
antdeter
renttothesett
ingupofi ndustr
iesthere.
(i
v )Tr anspor tand Communi cation Faci l
it
ies: Tr anspor tf acilit
ies i .
e.st orage,
handl i
ng and ser vi
ce facili
ti
es pl ay an i mpor tantr olei nt he l ocat i
on ofany
manuf actur i
ngunder t
aking; asrawmat eri
alsmustbebr oughtt ot hef actoryandt he
fi
nishedpr oduct smustbedespat chedeconomi callyandwi thoutunduedel ay.Inan
somei ndust ri
eswher er aw mat erialsf or
m amaj oritem ofcost ,cheapandeasy
transpor tf acili
ti
esbecomeani mpor tantconsider ati
on.I not hers,wher ether aw
mat erials ar e bulky and t hei
rt ransportati
on r elati
vely cost ly,i twoul d be an
adv antaget ohav ethewor ksl ocat edcloset ot hesour ce,ofsuppl yinor dert o
facili
tatet ransportacti
viti
esandmai nt
ainthet r
anspor tati
onchar ges, att hei
rlowest
possi blelev el.Thatiswhyst eelandi ronwor ksar etobef oundnearcoalandi ron
produci ngar eas.Thus,anent repreneurmayt r
yt oest ablisht hef act orywher et he
transpor tationcastmaybet hemi nimum butt heremaybedev iationsf rom t his;
becauset hepoi ntofmi nimum t ranspor tcostmaynotbet hepoi ntofmi nimum
product ioncost .Howev er,todayt hei ncreasedf l
exibil
it
yandef ficiencyofmodem
formsoft ransporthaveenabl edent repr
eneurst oexer ciseaf reerchoi cei nt he
mat terofl ocat i
onthanint hepast .
(v)Suppl yofCheapFuel ,PowerandWat er:Thef act orofcheapandeasysuppl yof
fuelandpowermustal soent erint
ot hequest ionoft hechoiceofsi teast heitem
refl
ectsitsel
fint hef i
nalcostofpr oducts.Int hepastcoalhadanunr i
vall
edsway
overt heindustr
ialgrowt hinacount r
y.Atpr esent ,t
her eare,however,severalother
sourcesofpower ,e.g.,el
ectr
icity
,gas,oilandwat erpower .Aselectr
icpowercanbe
carri
edt ogreatdistancef r
om itssources,indust r
iest odayhavebeensomewhatf ree
i
nchoosi ngtheirlocat i
onsthr oughoutthecount ry
.Coalassour ceofpowerhas
maintainedpositioni nthosecases,wher ecar boncont entbecomesnecessar y;but
i
not hercasesal ter
nativesourcesofpowerar emaki ngr apidheadway.Howev er
, i
tis
thecostf act
orthatdeci desthef orm ofpowerasi nfluencesthelocati
onofi ndustrial
enterpri
ses.
(vi
)Nat uralandCl imat icConsiderati
ons:Thef actorsl i
ket hel ev elofgr ound,the
topographyofar egion,drainagef aci
li
ties,disposalofwast epr oduct sandcl imate,
etc.
,mayal soaffectl ocati
onofamanuf acturi
ngent er
pr i
se.Extract iv
eindust r
iesli
ke
coal,ir
onor eandbauxi tearel ocatedwi thinf airl
ynar row limi t
sf i
xedbynat ural
conditi
ons.Cl i
mat e al so pl
ays an i mpor tantr ole.Forexampl e,dr ycl i
mat eis
essentialforf l
ourmi ll
i
ngi ndustri
eset c.andt herefore,theyar el ocatedi nKanpur ,
Poonawhi chdonothav edampcl i
mat e.Simi l
arly,forcottont extileindustry,humid
cli
mat eisi mportant ;asundersuchcl imat ethef requencyofy arnbr eakagei slow.
Howev er,t he effectofcl imate has been modi fied to a gr eatext entin many
i
ndust r
iesbyar t
ifi
cialmet hodssuchasdehumi difi
cation,ai
r-condi ti
oning,etc.The.
Advantagesofmoi stclimateinspi nni
ngenj oy edbyBombay ,forexampl e,
hav ebeen
null
if
iedbyt hearti
ficialmethodsofhumi di
fi
cat i
on.
(vi
)Per sonalandHistori
calConsider
ati
on:Someti
mesent er
pri
sesarelocatedat
part
icul
arpl acesonaccountoft hepersonalpr
efer
encesandpr ej
udi
cesoft he
entr
epreneursconcerned.Fori
nstance,Henr
yFordestabl
ishedautomobil
eindust
ry
i
nDet roitbecauseitwashi shomet own.LordNuffi
eldfoundedMor r
isMotorsin

40
Coerl
ey,Sout
h-EastofOxfor
d,becauset
heschooli
nwhi
chhi
sfat
herwaseducat
ed
happenedtobeforsale.
(vii
)Moment um ofanEar l
ySt art:Whenaf ew industri
esar esetupinanar ea,
transportfaci
li
ti
es,part
icul
arl
yrailwaystati
onscomeupt her
e,banksopenbranches,
repairsandmai nt
enanceshopsar eopenedand,ev en,t ownshi
psgrow.Allthese
provideamoment um tothef utureestabli
shmentof .Industri
esintheareas.For
exampl e,DurgapurSteelPlantmaybet i
le.biggestindustri
aluni
tinDurgapurbut
manyot herindustr
ieshavealsobeensetupi nwakeoft heestabl
i
shmentoft he
SteelPlant.
(i
x) Pol i
ti
cal and Strat
egic Considerati
ons: Recent l
y,pol it
ical and strategi
c
considerat
ionsalso havebeen infl
uencing t heselecti
on ofa r egi
on wheret he
businessistobel ocat
ed.Lackofpolit
icalstabil
i
tyinapar t
icularstatestandsinthe
wayofest abl
ishmentofi ndust
ri
alent er
pri
sesand/ ordri
v esawayt hoseal r
eady
establi
shed,ashashappenedi nWestBengal ,PunjabandJammuandKashmi r.
(x)Gov ernmentPol i
cy:In planned economi es l i
ke India,gov ernment s playan
i
mpor tantroleinl ocationofindustr
ies.Suchgov ernment sof tenencour ageset ti
ng
ofindust r
ialenterprisesinthebackwar dregions,bymeansofsubsi dies,
tax-rebates,
prov i
sionofeasyf inance,transportfacil
i
ties,et c.Thispol i
cyhel psinachi evi
ng
balance r egionaldev elopment throughout t he count ry.Recent l
y ,many st ate
gov ernment sinIndiaar eattr
acti
ngindustri
al entr
epr eneurs,byof f
eringthem v ari
ous
i
ncent iveslike,landandpoweratconcessi onalr ates,tax-rebates,etc.tospeedup
thet empoofi ndustrial
i
sationinthei
rrespectivestates.
(xi
)Fi nancialFacili
ti
es:Finance ist he li
fe-blood ofany i ndust r
ialent erprise.
Therefore,the avail
abil
i
tyofadequat ef i
nance atcheaperr ates inf l
uences t he
considerati
onabouti t
slocationtosomeext ent .Howev er
,thefinancialfacil
iti
esar e
notli
kel ytoexerci
semuchi nfl
uenceonl ocati
ondeci si
on;becausecapi talishighl y
mobile.Undercer t
ainspecialcir
cumstances,thisfactormaybecomei mpor tant.For
i
nstance, t
heGov ernmentofI ndi
aencouragedspeci alfi
nanciali
nst i
tuti
onsl i
keI CICI,
IDBI
,andI FCIetc.toprovi
demor efundsatcheaperr atestounderdev elopedr egions
ofthecount rysoast oatt
ractindust
ri
est othoser egions.Witht hesamepur pose,
thenat i
onali
sedcommer ci
albanksar ealsoencour agedt oopenmor ebr anchesi n
suchar eas.
(xi
i)Mi scell
aneousFact ors:Thedecisionabouti ndustri
allocati
onmaybeaf fected
bynumer ousot herfact
or swhichmaynotber educi
bletoeconomi ctermsi nst i
ck
senseoft heterm.“Poli
ceandf ir
epr ot
ection,recreat
ionalandsoci alf
acil
iti
esoft he
communi ty,schoolsandcol l
egesf orempl oy
eesandt heirchil
dren,housing,trends
ofl ocalland v al
ues,telephoneser vi
ce,and t henear nessofcompl ementaryor
serviceplants.sho1;
ll
dal lhaveabear ingonexecut i
vedecisions”.Anyoneoft hese
factorsmayassumedomi nat
ingproporti
onsinapar t
icul
arcase.
(
2)Fact
orsAf
fect
ingSel
ect
ionofCommuni
ty
Aft
erthesel
ecti
onofthemostsui
tablegeneralregi
on,t
hesel
ecti
onofacommuni ty
wit
hinthatregi
onistobedone.Fort hispurpose,acommuni t
ywhichfulf
il
lsthe
fol
l
owingcondit
ionswi
llbemor
esuitableindetermi
ningthel
ocati
onofanindust
rial
ent
erpri
se:

41
(
i)Ther
eshoul
dbeadequat
elabour
-suppl
ybot
hinquant
it
ati
veandqual
i
tat
ivet
erms.
(i
i
)Theprev
ail
ingwage-
rat
esi
nthesamei ndustr
yshouldbereasonabl
e;t
heyshoul
d
notbet
oohightomakethemanuf
actur
ingactiv
iti
esuneconomical
.
(i
ii
)Thegener
alat
tit
udeoft
hecommuni t
ytowardsindust
rymustbecooper
ati
ve.A
communit
ywitharecor
dofi
ll
egal
str
ikesisl
ikel
ytobeawr ongsel
ect
ion.
(i
v)The exi
stence ofothercomplementar
yorsuppl ement
aryenter
pri
se i
nt he
communit
ywi threspecttoraw mater
ial
s,product
s,l
abourdemands,et
c.willbe
hel
pful
tothe1.l
ewent er
pri
se.
(v
)Thereshoul
dbeabsenceoflawsandordi
nanceshav
inganadv
erseef
fecton
oper
ati
onal
effi
ci
encyandt
axbur
denshoul
dbemoderat
e.
(v
i)The l
iv
ing condi
ti
ons i
nt he communi
tyshoul
d be f
avour
abl
e so t
hatt
he
empl
oyeesatl
evelsgetpr
opersoci
alli
fe.
(
3)Fact
orsAf
fect
ingSel
ect
ionofSi
te
Havingsel
ect
edacommuni tyinwhichtheplanti
stobelocat
ed,t
hefinaldeci
sion
concernst
he.Choiceofanexactsit
ewithi
nt hecommuni
ty.Thef
oll
owingar ethe
mainconsi
derat
ionstobegi
veninthesel
ect
ionofasit
e:
(
i)Thesi
zeoft
heplotshoul
dbelargeenoughnotonl
ytoaccommodatethepresent
r
equir
ement
sbutal
soforfut
ureexpansi
onwithi
nthenextoneort
wodecade.
(i
i)Theloadbear
ingcapaci
tyofthelandofsi
teshoul
dbesuffi
cient
lyst
rongsot
hat
heavybuil
dingmaybebuil
t.Faci
l
iti
esforwat
erandpowershoul
dbeav ai
labl
e.
Si
mil
arl
y,f
aci
l
iti
esf
orsewageandef
fl
uentdi
sposal
mustbeav
ail
abl
e.
(
ii
i)Thesi
techosenshoul
dhav
eeasi
l
yappr
oachabl
eroadsandr
ail
li
nks.
(i
v)Theinit
ialcostofthel andanditsdevel
opmentcostsal
soaff
ectt
hedeci
sion
rel
ati
ngt ochoiceofsi te.Someti
mes,l ow pr
icedlandmaytur
noutt obevery
expensi
ve;i
fheavydevelopmentcostsaretobeincur
red.
Economi
c,Techni
cal
,Fi
nanci
alandManager
ial
Feasi
bil
i
tyofPr
oject
.
1.Manageri
alCompet enceSuccessf ulent
repreneur
sar
ef oundtobepossessing
manager
ialandentrepreneuri
altr
aits.Fundi
ngagencieswouldther
efor
e,l
iket
of i
nd
outwhet
hert heindivi
dualinter
estedi nsetti
ngupt heventur
epossessesneeded
manager
ialt
rait
s.
Apr ojectr epor tshoul dcontaininformationsuchasf ami l
ybackgr ound,educat i
onal
quali
ficati
ons, pastexper ienceofser vi
ce,businessori ndustry,i
nterestinotherfi
rms
andi nnov at i
vei deasofpr omot erssoast oenabl efinancialinsti
tutionstoassess
manager i
alcapabi l
it
iesoft heindividual
.Itisnotnecessar yt hatentrepreneurshould
possessal lmanager ialtr
aitsandper form allthefuncti
onshi mself.Heshoul deither
bei naposi ti
ont oper form allsuchf uncti
onshi mselforshoul dbecompet entand
resourceful enought ohi r
eanduset herequiredmanager i
alresources.Pr oj
ectreport
,
shouldt her efore,ment ionaboutt hemanager i
alst
ructureoft heenter pri
se.

42
Iti
sverydi
ff
iculti
ndeedtoev al
uatemanageri
alandentrepr
eneur
ialcapabil
it
iesofan
i
ndivi
dual
.Ev en i
ft he pr
omot erhimselfwantst o eval
uat
e his capabil
iti
es t
he
eval
uati
onmaynotbev erycorrect.I
tisl
i
kel
ytohappenbecauseoft hef actthatt
he
senseofself-est
eem ispr evalentinever
yindiv
idualandi ti
nhibit
spr operself-
assessment
.
2.TechnicalFeasi
bil
i
t y
:Thet echnicalfeasibil
it
yoft heproposal/projectcontai
nsthe
resourceandtechni
callyanalysi
soft hef easibi
li
tystudy.I
tdeals, wit
ht heproducti
on
costoft heit
em.Ifthepr oducti
oncostoft heitem isl
owt heit
em canbesol data
compet i
tiv
epricei
nr el
ati
ont oasi milarqual i
typroduct
.Forexampl e,handoper at
ed
fanatcheapercostwi l
lbeeconomi call
yfeasiblebuttechnicall
yunsound.Theuseof
solarenergymaybet echnicall
yviablebuti tisnoteconomi cal
lyfeasibleyetbecause
theexperimentonthisli
nehasnotbeenf inali
sed.
Techni
cal
appr
aisal
deal
swi
tht
hef
oll
owi
ngcomponent
s:
(
a)Locat
ionoft
heuni
t.
(
b)Si
zeoft
hepl
ant
.
(
c)Pr
ocessofManuf
act
ure.
(
d)Fact
oryl
ayout
(
e)Per
sonnel
.
(
f)Av
ail
abi
l
ityandcostofr
awmat
eri
al.
(
g)Powerandwat
er,
faci
l
iti
es.
(
h)Technol
ogi
cal
viabi
l
ityi
ntheappl
i
cat
ionoft
hef
ini
shedpr
oduct
.
3.Mar ketAnal ysi
s:Thesuccessofpr ojectdependsonhow i tisablet osel lthe
product/ser
vicei nthemar ket.Thisisbecausemar keti
ngi st
heonl yactiv
itywhi ch
produces rev enue while allotheract ivit
ies incurexpendi tur
e.Ther efore,t he
product/ser
vice shoul d be mar ketabl
e. The suppl y and demand f or t he
product/ser
vice hav eto be est imated and see whet herthereis any mar ket
opportunit
y.A det ail
ed mar ketanal ysi
s should be conduct ed covering mar ket
opportunit
yandst r
ategyforconv er
ti
ngt heoppor tunityintoareal
ity
.Itis,therefore,
suggestedthatt hereportshouldcontainthef ol
l
owi nginformati
on:
-Thesi
zeandcomposi
ti
onoft
hepr
esentdemand.
-Marketsegment(
s)i
denti
fi
edfort
heproposedv
ent
ure(Themarketsegmentat
ion
maybedoneont hebasi
sofincome,ageandsexofconsumer
s,geographyofthe
ar
ea,
etc.)
-Shor
tandlong-ter
m demandpr oj
ect
ionoft
heov
eral
lmar
ketandoft
hesegment
(s)
i
denti
fi
edfortheproposedpr
oject.
-Themar ketpenet
rat
ionthatt
hepr oposeduniti
sexpectedtoachi
ev eoverthe,
pr
ojected peri
od.This maybe planned invi
ew oft he i
ncr
easi
ng nati
onaland
i
nternati
onalcompeti
ti
onandchangingneedoftheconsumers.

43
-Br
oadpr ici
ngstructureonthebasi
sofwhichf
utur
edemandhasbeenmadeand
marketpenetr
ati
onr ati
ohasbeencal
cul
ated.
-Thest
rat
egyofmar
ket
ingi
nthet
argetmar
ket
s.
4.Economi cVi abil
i
t y
:Economi cv i
abil
it
yi sani mpor t
antcr it
eriaforev aluatinga
project.What evermaybet hemot ivati
oni nstar
ti
ngapr ojectf rom thepoi ntofv iew
ofthepr omot ers,itshallbenecessar yt hattheoper ati
onsquant ifi
edonay eart o
yearbasi sshoul dgener at
esuf fi
cientprofit
s.Apr ojectwit houtadequat epr ofitsor
which i slikelyt oi ncurlosses,coul d notbecl assi f
ied ascommer ciall
yv iable.
Evaluationofeconomi cv i
abil
it
ycanbecar ri
edoutt hroughpr oject
ionofpr ofitabil
ity
worked outf ora per iod ranging fr
om t hreetot en year s.I n caseoff i
nanci al
applicati
ons, suchpr ojecti
onsshoul dbecar ri
edoutf oraper iodcov eri
ngt het erm of
thel oant obenegot i
atedwi thbanksandf i
nancialinstitutions.I nanycase,t he
profit
abili
tyofapr ojectshouldbeest abli
shedonal ong- t
erm basi s,keepingi nv i
ewa
spreadoff ivey earsaf t
erar easonablelevelofcapacityutil
izat ionisachiev ed.
A Pr ojected Profit
abil
it
yStatementhast o bepr epared byt aking i
nto account
-
capaci t
yut i
l
izati
on and allcosts,itshal
lbenecessar yt o proceed furt
herand
calculatecer t
ainrati
ost oeval
uatetheeconomi cvi
abili
tyofthepr oject
.Someoft he
rati
osar edebtser vicecoveragerati
o,paybackper i
od,av er
ager ateofretur
n,net
presentv alue,break-ev
ensalesandinter
nalrateofreturn.
5.Fi
nanci
alVi
abi
l
ity
:Theappr
aisal
oft
hef
inanci
alaspect
sinv
olv
esscr
uti
nyof
:
(
a)Costoft
hepr
ojectandmeansoff
inanci
ng.
(
b)Cashf
lowest
imat
es.
(
c)Pr
ojectbal
ancesheet
s.
(a)CostoftheProj
ectandMeansofFinanci
ng:Thef
inanci
alplanformeet
ingthe
costoftheproj
ectdependsonhowaccurat
elyt
hecostisesti
mated.Theesti
mate
wil
lhavetoprov
idefor
:
(
i)Landandsi
tedev
elopment
(
ii
)Pl
antandmachi
ner
y.
(
ii
i)Bui
l
dings.
(
iv)Techni
cal
–knowhowf
ees.
(
v)Mi
scel
l
aneousf
ixedasset
s.
(
vi)Pr
eli
minar
yexpenses.
(
vii
)Pr
e-oper
ati
veexpenses.
(
vii
i
)Pr
ovi
sionf
orcont
ingenci
es.
(
ix)Mar
ginmoneyf
orwor
kingcapi
tal
.
Costofthepr
ojecthavi
ngbeenaccurat
elyest
imat
ed,sour
cesoffinanceshoul
dbe
i
denti
fi
ed.Thi
sisinthef
orm ofownfundsandborr
owedfunds.Bor
rowedfundsalso

44
ref
err
edt o-
asdebtconsist
soft
erml oans,def
err
edpaymentguar
ant
ees,publ
i
c
deposit
s,debent
ureset
c.Thedebt
-equit
yproport
ionof2:
1shouldbegeneral
ly
adheredto.
(b)CashFl owEstimates:Acashf l
owst atementisapr oj
ecti
onoff ut
uresourcesof
cashandt heirappli
cation.Int hecashf lowstatement,profi
tisthemostimpor t
ant
sour ceofinf
lowandpr ofi
tdependsonhowaccur atelythecostsofproducti
onand
salesestimatedhav ebeenar riv
edat .Pr of
itt
hatisconsideredasani nfl
ow could
i
ncr easeordecrease-dependingonmanagementpol iciesfol
lowedintheborrowing
units.Thi
sisrefer
redtoasper sonaljudgmentconcept .
(c)ProjectedBal anceSheets:Projectedbalancesheet saretobepr eparedf or.Each
oft hey earscov er
ingt heentir
eper iodoft het er
ml oan.Thepr ojectedbal ance
sheetsr eporttheeffectoftheplanofoper at i
onsont heassets,l
iabi
li
ti
esandcapi tal
ofthebusi nessuni t.Inanaly
singt heprojectedbal ancesheet s,at
tentioni stobe
focusedont hemov ementoff undsandal soanal ysisit
si mpactoft het erml oan
grantedbyt hef i
nanci al
inst
it
uti
onont heasset sandl i
abil
it
iesofthebusinessuni t.
Uni
t=4
GovtsupporttonewEnter
pri
se;
Rol
eofGov
ernmentandPr
omot
ional
agenci
esi
n
Ent
repreneurshi
pDevel
opment
Rol
eofGov
ernmenti
npr
omot
ingEnt
repr
eneur
shi
p
Gover
nmentpl aysav eryimpor tantroleindev elopi
ngentrepreneur
ship.Gov er
nment
dev
elopsindustri
esi nr ur
al andbackwar dar easbygivi
ngv ari
ousfacil
it
ieswi t
hthe
obj
ecti
veofbal ancesr egionaldev elopment .Thegov er
nmentsetpr ogrammest o
hel
pentrepreneursi nthef i
eldoft echnique,f i
nance,marketandentrepreneuri
al
dev
elopmentsot hattheyhel ptoaccel erateandadoptt hechangesi nindustri
al
dev
elopment .Variousinstituti
onswer esetupbyt hecentral
andstategov ernments
i
nordertofulfi
llt
hi sobjecti
v e.
A.I
nst
it
uti
onssetupbyCent
ral
Gov
ernment
1.Smal
li
ndust
ri
esdev
elopmentor
gani
zat
ion(
SIDO)
SIDOwasest abli
shedi nOct ober1973nowunderMi nist
ryofTrade,Indust
ryand
Mar ket i
ng.SIDOi sanapexbodyatCent rall
evelforformulati
ngpolicyfort
he
dev elopmentofSmal lScaleI ndustr i
esint hecountry,headedbyt heAdditi
onal
Secr etary&Dev elopmentCommi ssioner( SmallScaleIndustr
ies)underMinist
ryof
Smal lScaleIndustr
iesGov t.ofIndi a.SIDOi splayi
ngav er
yconst r
uctiv
erolefor
strengt heningthi
sv i
talsector ,
whi chhaspr ovedtobeoneoft hestrongpil
larsoft
he
economyoft hecount ry
.SIDOal sopr ovidesextendedsuppor tthrough
Compr ehensiveplanf orpromot ionofr ur alent
repreneurship.
2.Managementdev
elopmentI
nst
it
ute(
MDI
)
MDIi slocatedatGur gaon( Haryana).
Itwasest
abli
shedin1973andi ssponsoredby
Industri
alFinanceCor por
at i
onofI ndi
a,wit
hobject
ivesofi
mpr ovi
ngmanager i
al
effecti
venessintheindust ry.I
tconductsmanagementdev elopmentpr
ogramsi n
variousfi
elds.Inal
soi ncludesthepr ogr
ammesf ortheoff
icersofI
AS,IES,BHEL,
ONGCandmanyot herleadingPSU’ s.

45
3.Ent
repr
eneur
shi
pdev
elopmenti
nst
it
uteofI
ndi
a(EDI
)
Entrepr eneurshi pDev elopmentI nsti
tuteofI ndia( EDI),anaut onomousandnot -
for-
profitinsti
tute, setupi n1983, issponsor edbyapexf i
nanci alinstit
ut i
ons–t heIDBI
BankLt d.,I
FCILt d.,I
CICIBankLt d.andt heSt at eBankofI ndi a(SBI ).EDIhashel ped
setupt welvest at e-l
evelexclusi v
eent repr eneur shipdev elopmentcent r
esand
i
nstitutes.Oneoft hesatisfyi
ngachi ev ement s,howev er,wast akingent repreneurship
toal argenumberofschool s, coll
eges, scienceandt echnol ogyi nstituti
onsand
managementschool si nsev eralstatesbyi ncludingent repr eneur shipinputsi nthei
r
curri
cul a.Inthei nt er
nat i
onal arena,effor t
st odev elopent repreneur shipbywayof
sharingr esour cesandor ganizingtrainingpr ogr ammeshav ehel pedEDIear n
accol adesandsuppor tfrom theWor ldBank, Commonweal thSecr etariat,
UNI DO, I
LO,
Brit
ishCounci l,For dFoundat i
on, EuropeanUni on, ASEANSecr etariatandsev er
al
otherr enownedagenci es.EDIhasal sosetupEnt repreneur shipDev elopmentCent re
atCambodi a,LaoPDR, My anmarandVi etnam andi sint hepr ocessofset t
ingup
suchcent resatUzbeki stanandf i
veAf ricancount ries.
4.Al
lIndi
aSmal
lScal
eIndust
ri
esBoar
d(AI
SSI
B)
TheSmal lScaleIndust ri
esBoar d( SSIBoard)istheapexadv isor
ybodyconst i
tut
ed
torenderadvicetotheGov ernmentonal li
ssuesper t
ainingt othesmal lscal
esector.
I
tdeterminest hepoliciesandpr ogrammesf orthedev elopmentofsmal li
ndustr
ies
wit
haCent r
al GovernmentMi nisterasit
spr esi
dentandt herepresentati
vesof
var
iousorganizationi.e.Cent r
al Government,StateGov ernment ,Nati
onalSmall
I
ndustri
esCor porati
ons, Stat eFi nanci
alCorporation,
Reser v
eBankofI ndi
a,St
ate
BankofIndia,Indi
anSmal lIndust ri
esBoard,Non- gov
ernmentmember ssuchas
Publi
cServiceCommi ssion, TradeandI ndustri
esMember s.
5.Nat
ional
Inst
it
uti
onofEnt
repr
eneur
shi
pandSmal
lBusi
nessDev
elopment
(NI
ESBUD),NewDelhi
Itwasestabl
ishedin1983bytheGov ernmentofIndia.I
tisanapexbodyto
super
visetheactiv
iti
esofvar
iousagenci esi
ntheentrepr
eneuri
aldevel
opment
progr
ammes.I tisasociet
yunderGov ernmentofIndiaSoci
etyActof1860.
The
majoracti
vit
iesofinst
it
utear
e:
i
)Tomakeef
fect
ivest
rat
egi
esandmet
hods
i
i
)Tost
andar
dizemodel
syl
l
abusf
ort
rai
ning
i
i
i)Todev
elopt
rai
ningai
ds,
tool
sandmanual
s
i
v)Toconductwor
kshops,
semi
nar
sandconf
erences.
v)Toeval
uat
ethebenef
it
sofEDPsandpr
omot
ethepr
ocessofEnt
repr
eneur
ial
Devel
opment
.
vi
)Tohelpsupportgov
ernmentandot
heragenci
esi
nexecut
ingent
repr
eneur
devel
opmentprogrammes.
v
ii
)Tounder
taker
esear
chanddev
elopmenti
nthef
iel
dofEDPs.
6.Nat
ional
Inst
it
uteofSmal
lIndust
ri
esExt
ensi
onTr
aini
ng

46
I
twasest abli
shedin1960wit
hitsheadquarter
satHyderabad.Themai
nobj
ect
ives
ofnat
ionalInsti
tut
eofSmall
Industr
iesExtensi
onTrai
ningare:
i
)Di
rect
ingandcoor
dinat
ingsy
ll
abi
fort
rai
ningofsmal
lent
repr
eneur
s.
i
i
)Adv
isi
ngmanager
ial
andt
echni
cal
aspect
s.
i
i
i)Or
gani
zi
ngsemi
nar
sforsmal
lent
repr
eneur
sandmanager
s.
i
v)Pr
ovi
dingser
vicesr
egar
dingr
esear
chanddocument
ati
on.
7.Nat
ional
Smal
lIndust
ri
esCor
por
ati
onLt
d.(
NSI
C)
TheNSI Cwasest abli
shedin1995byt heCentralGover
nmentwi tht
heobj ect
iveof
assisti
ngthesmal l
indust
ri
esintheGov er
nmentpur chaseprogrammes.The
corporati
onprovi
desav ast-
marketfortheproductsofsmallindust
ri
esthroughits
mar keti
ngnetwor
k.Italsoassi
ststhesmallunitsinexpor
ti
ngt hei
rproductsin
for
ei gncount
ri
es.
8.Ri
skCapi
tal
andTechnol
ogyFi
nanceCor
por
ati
onLt
d(RCTFC)
RCTFCwasest abli
shedin1988wi thanauthori
zedcapitalof15cror
esrupees.The
mainobj ecti
vesofRCTFCar eprovisi
onofriskcapi
talfort
heextensi
onand
expansionofentrepreneuri
aldev
elopmentandv entur
ecapi t
alf
orthepr
ojectswith
hightechniquesfortechnol
ogydevelopmentandt r
ansfer.
9.Nat
ional
Resear
chanddev
elopmentcor
por
ati
on(
NRDC)
NRDCwasestabli
shedi
n1953underDepar
tmentofSci
enceandI
ndust
ri
alResear
ch
underGov
ernmentofI
ndi
a.I
tsmainobj
ecti
vesar
e:
i
)Pr
ovi
dingassi
stancei
ntechnol
ogyt
ransf
er
i
i
)Tr
ansf
eroft
echnol
ogy
i
i
i)Est
abli
shingrelat
ionswit
hv ar
ioustechnol
ogyi
nst
it
uti
onsandcol
l
ect
ingv
ari
ous
i
ndi
genoustechniquesdevel
opedbythem.
10.I
ndi
anI
nvest
mentCent
re
Thisi sanautonomousor ganizati
onest abl
ishedbyCent r
alGovernment.It
smai n
objecti
vei
stoassistinpromotingforeigncooperati
onwithIndi
anentr
epreneursand
providi
ngnecessar
yinfor
mat i
ont oforeignentr
epreneur
s.
11.Khadi
andv
il
lagei
ndust
ri
esCommi
ssi
on(
KVI
C)
KhadiandVill
ageI ndust
ri
esCommi ssi
onestabli
shedbyanActofPar l
iamenti
n
1956.
Itisaservi
ceor gani
zati
onengagedi npromot i
onanddev
elopmentofKhadi
andVil
lageI
ndust
riesinrural
areas.I
tsmainobject
ivesar
e:
i
)Pr
ovi
dingempl
oymenti
nrur
alar
eas.
i
i
)Impr
ovementofski
l
ls
i
i
i)Rur
alI
ndust
ri
ali
sat
ion

47
i
v)Tr
ansf
erofTechnol
ogy
v
)Bui
l
dingst
rongr
ural
communi
tybaseandsel
f-
rel
i
anceamongr
ural
peopl
e.

12.I
ndi
anI
nst
it
uteofEnt
repr
eneur
shi
p(I
IE)
I
twasestabli
shedbyt heDepart
mentofSmal lScal
eIndust
ri
esandAgr oandRur al
I
ndust
ri
esin1953. I
tisaut
onomousor ganizati
onwit
hitsheadquart
ersatGuwahat i
.
I
tsmainobjecti
veistounder
takeresear
ch, tr
aini
ngandconsul
tancyact
ivi
ti
esi
nt he
f
iel
dofsmallindust
ryandent
repreneur
ship.
13.Mi
scel
l
aneousOr
gani
sat
ion
Inaddit
iontoabovevari
ousorgani
zat
ionsatal
lIndi
alevelareassi
sti
ngandar e
engagedinent
repr
eneurdev
elopment
.Thesei
ncl
udeICICI
,IFCI
,SI
DBI,UTI,I
DBI
,II
BI
etc.
14.Nat
ional
All
i
anceofYoungEnt
repr
eneur
s(NAYE)
Ithassponsor ednumberofent r epr
eneuri
aldevelopmentschemeincoll
aborati
on
withv ar
iouspubli
csectorbanks.Themai nobjecti
veoftheschemeistoencourage
youngent repr
eneurstoexploreinvestmentandsel f–empl
oymentopportuni
ti
es.It
arrangesforthei
rtrai
ningandassi st
sthem inprocuri
ngnecessar
yfi
nance.In1975
NAYEal sosetupaWomen’ sWi ngtomakewomensel f
-r
elai
ntandtoraisetheir
status.
15.Cent
ref
orEnt
repr
eneur
ial
Dev
elopment(
CED)Ahmedabad
I
twassponsor edbyt heGov ernmentofGuj aratandpublicf
inanci
ali
nst
it
uti
ons
operat
ingintheSt at
e.Itconductsentrepreneurialdevel
opmentprogr
ammesat
var
iouscent
res.Theimpor
tantfeat
uresoftrainingprogr
ammear e:
i
)Tr
aini
ngpr
ogr
ammeswer
econduct
edaf
tersur
veyf
oroppor
tuni
ti
eswasmade.
i
i
)Appropri
atel
inkagewasestabl
i
shedwi
thsuppor
ti
ngagenci
essuppl
yi
ngf
inance,
f
act
orysheds,r
awmat er
ial
s,et
c.
i
i
i)Behav
iour
alt
est
swer
econduct
edt
osel
ectt
heent
repr
eneur
s.
i
v)Tr
aini
ngpr
ogr
ammescov
eredt
heor
eti
cal
andpr
act
ical
aspect
s.
v
)Ful
lti
mepr
ojectl
eadert
ookf
oll
owupact
ionaf
tert
het
rai
ningwasov
er.
16.I
nst
it
utef
orEnt
repr
eneur
ial
Dev
elopment(
IED)
I
twassetupbyt heIDBIinassociat
ionwit
hotherfi
nanci
ali
nsti
tut
ions,
publi
csect
or
banksandtheStat
eGov ernments.TheIEDswassetupt oful
fi
llt
heentrepr
eneur
ial
devel
opmentneedsoftheindust
rial
l
ybackwardStatesi
nthecountry
.
17.Techni
cal
Consul
tancyOr
gani
sat
ion(
TCOs)
Anet
wor
kofTCOshasbeenest
abl
i
shedbyAl
lIndi
aFi
nanci
alI
nst
it
uti
onsandSt
ate
48
Governmentthroughoutthe country.These organizati
ons have been setup to
prov
idecomprehensivepackageofservicestoentrepreneursingener
alandt osmal
l
busi
nessentr
epreneursinpart
icul
ar.Theirmainf
unct i
onsi ncl
udethefol
l
owi ng:
i
)Ident
if
yingpot
ent
ial
indust
ri
alpr
oject
.
i
i
)Pr
epar
ingpr
ojectr
epor
ts,
feasi
bil
i
tyr
epor
tsandpr
e-i
nvest
mentst
atus.
i
i
i.I
dent
if
yingpot
ent
ial
ent
repr
eneur
s.
i
v.Pr
ovi
dingt
echni
cal
andadmi
nist
rat
ivesuppor
t.
v
.Conduct
ingt
echno-
economi
cst
udi
esoft
hepr
oject
s.
v
i.Conduct
ingmar
ketr
esear
chandsur
vey
s.
v
i.Render
ingadv
icet
osetupl
abor
ator
iesanddesi
gncent
re.
18.Publ
i
cSect
orBanks.
Publi
csect orbanksi nassociati
onwi t
hNAYEhav ebeenconduct i
ngentrepr
eneur i
al
developmentpr ogr ammes.Themai nt hrustoft hesebankshasbeent oidentify
potenti
alentrepreneur sinr ur
alandbackwar dareas.Forexampl ePunj abNational
Bankst ar
tedent repreneuri
alassistancepr ogr
ammei nMar ch1977i ntheStatesof
WestBengalandBi har.Simil
arl
y,BankofI ndi
ast art
edent r
epreneuri
alassi
stance
programmesi nceAugust1972i ntheStatesofPunj ab,Raj
asthan,HimachalPradesh,
J&kandt heUni onTer r
itor
iesofChandigar handDel hi
.
Thei
mpor
tantFor
msofent
repr
eneur
ial
assi
stancear
e:
i
)Ident
if
yingpot
ent
ial
ent
repr
eneur
s
i
i
)Ident
if
yingv
iabl
epr
oject
s.
i
i
i)Assi
sti
ngi
npr
epar
ati
onofpr
ojectpr
ofi
l
es
i
v)Hel
pingi
npr
ojectev
aluat
ion.
v
)Ar
rangi
ngpr
act
ical
trai
ning.
v
i)Fi
nanci
ngt
hepr
oject
s.
B)I
nst
it
uti
onssetupatSt
ateLev
el
There are a numberofi nsti
tuti
ons est
abl
i
shes atstat
el evelf
oror ganizi
ng,
devel
oping, dev el
opi
ng, assist
ing and making successful ent
repreneuri
al
devel
opmentpr ogrammes.Prominentamongt
heseare:
i
)Smal
lIndust
ri
esSer
viceI
nst
it
ute(
SISI
)
i
i
)St
ateFi
nanci
alCor
por
ati
on(
SFC)
i
i
i)St
ateSmal
lI
ndust
ri
esCor
por
ati
on(
SSI
C)
i
v)Di
str
ictI
ndust
ri
esCent
res(
DIC)

49
v
)Techni
cal
Consul
ti
ngOr
gani
sat
ionLt
d.(
TCO)
v
i)I
ndust
ri
alDi
rect
orat
es
v
ii
)Commer
cial
andCooper
ati
veBanks
v
ii
i)St
ateI
ndust
ri
alDev
elopmentCor
por
ati
on
i
x)I
ndust
ri
alEst
ates

x)St
ateI
ndust
ri
esCor
por
ati
on
TheabovementionedStat
eandCentrall
evelI
nstit
utionshav epr
ov i
dedanumberof
concessi
onsandfaci
li
ti
estopromoteentr
epreneurdev elopmentinIndi
a.Theyhav
e
al
soplayedanimport
antrol
einbal
ancedindustr
ialdevelopmentinthecountr
y.
Ent
repr
eneur
shi
pDev
elopmentPr
ogr
ammesi
nIndi
a
EDPi sapr ogrammemeantt odev el
opentrepreneur
ialabil
it
iesamongt hepeopl e.In
otherwor ds,i
tr efer
st oinculcat
ion,development,andpol i
shingofent r
epreneur ial
skil
lsintoaper sonneededt oest abli
shandsuccessf ullyrunhi s/herent erpri
se.
Thus, t
heconceptofent repreneurshi
pdev elopmentprogrammei nv ol
vesequippinga
personwi thther equi
redski l
l
sandknowl edgeneededf orstart
ingandr unningt he
enterpri
se.
Theobj
ecti
vesofanentrepr
eneuri
aldevel
opmentpr
ogramme( EDP)maybedi
vi
ded
i
ntotwocat
egori
es:shor
t-t
erm obj
ect
ives,
andl
ong-t
erm obj
ect
ives.
Shor t
-ter
m Obj ecti
ves:Short-t
erm obj ecti
v esimplyt
heobjecti
veswhi charet obe
achieved immedi at
ely aft
er t he compl eti
on of the pr
ogramme.Pr epari
ng a
personalit
yf ort heent r
epreneurialv enture,making hi
m compet entto scan t
he
environmentandsi tuat
ionwi thint heexi sti
ngregul
ator
yframewor karetheshor t
term objecti
ves.Inbrief
,shortterm obj ect
iveistohel
papartici
pantinthefi
xati
onof
his/hergoalofl i
feasentrepreneurisati
on.
Long-t
erm Obj ect
ive:I
nt helongr un,anentrepr
eneurialdevel
opmentpr ogr
amme
seekstoequi ptheparti
cipantswithallt
heskil
lsrequi
redfortheestabl
ishmentand
smoothr unningofbusinessv entur
es.Theult
imat eobject
iveisthatt
hepar t
ici
pant
undertr
ainingshouldestabli
shhis/herownventur
e.
Thus,
theobj
ect
ivesofanent
repr
eneur
ial
dev
elopmentpr
ogr
ammear
easf
oll
ows:
(
i)Toenl
arget
hesuppl
yofent
repr
eneur
sforr
api
dindust
ri
aldev
elopment
;
(i
i
)To develop smalland medium enterpr
ises sectorthisis necessar
yfor
empl
oymentgenerat
ionandwi
derdisper
salofi
ndustr
ialownershi
p
(
ii
i)Toi
ndust
ri
ali
ser
ural
andbackwar
dregi
ons;
(
iv)Topr
ovi
degai
nful
sel
f-
empl
oymentt
oeducat
edy
oungmenandwomen;
(
v)Todi
ver
sif
ythesour
cesofent
repr
eneur
shi
p,and;

50
(vi
)toi
mprov
etheper
formanceofsmal
lscal
eindust
ri
esbydev
elopi
ngmanager
ial
ski
ll
samongsmal
lent
repr
eneur
s.
PhasesofEnt
repr
eneur
ial
Dev
elopmentPr
ogr
amme
Anent
repr
eneur
ial
dev
elopmentpr
ogr
ammeconsi
stsoft
hreebr
oadphases:
1.Pr
e-t
rai
ningPhase
2.Tr
aini
ngPhase
3.Post
-t
rai
ningPhase
1.I
nit
ial
Phase:
Thisphase i
ncl
udest
he act
ivi
ti
esand t
he pr
epar
ati
onsr
equi
red t
olaunch t
he
tr
aini
ngprogr
amme.
Themai
nact
ivi
ti
esoft
hisphasear
e:
(
a)Ar
rangementofI
nfr
ast
ruct
uref
ort
rai
ning
(
b)Pr
epar
ati
onoft
rai
ningsy
ll
abusandappl
i
cat
ionf
orm
(
c)Ti
eupofguestf
acul
ty
(
d)Desi
gni
ngt
ool
sandt
echni
quesf
orsel
ect
ingt
het
rai
nees
(
e)For
mat
ionofsel
ect
ioncommi
tt
ee
(
f)Publ
i
cit
ycampai
gnf
ort
hepr
ogr
amme
Thus,
ini
ti
alst
ageinvol
vest
heidentif
icat
ionandsel
ect
ionofpot
ent
ialent
repr
eneur
s
andprov
idi
ngini
ti
almoti
vat
iont
ot hem.
2.Traini
ngPhase:I
nthisphaset hetraini
ngpr ogr
ammei simplementedtodev el
op
mot i
vati
onandskil
l
samongt heparti
cipants.Theobjecti
veofthisphaseist obri
ng
desir
ablechangesint
hebehav iouroft hetrai
nees.Thet r
ainer
shav etojudgehow
much,andhow f arthet r
aineeshav emov edint hei
rentrepreneuri
alpursui
ts.A
tr
ainershoul
dseethefol
lowingchangesi nthebehav i
ourofpart
icipant
s.
(
a)I
sther
eanychangei
nhi
sent
repr
eneur
ial
out
look,
rol
eandski
l
l?
(b)I
shemotivat
edt
opl
ungef
orent
repr
eneur
ialv
ent
ureandr
iskt
hati
sexpect
edof
anentr
epr
eneur?
(
c)Whatki
ndofent
repr
eneur
ial
behav
iourdoest
het
rai
neel
ack?
(d)Doeshepossesstheknowl
edgeoft
echnol
ogy
,resour
cesandot
herr
elat
ed
entr
epr
eneur
ial
knowl
edge?
(
e)Isheskil
l
fuli
nchoosi
ngt
her
ightpr
oject
,mobi
l
isi
ngt
her
ightr
esour
cesatt
he
r
ightt
ime?
3.Post
-Tr
aini
ngorFol
l
ow-upPhase:Undert
hisphasei
tisassessedthathowfart
he
obj
ecti
vesofthepr
ogrammehavebeenachieved.Moni
tor
ingandf ol
lowupreveal
s

51
drawbacksintheear l
ierphasesandsuggestsgui
deli
nes,forframingthef ut
ure
poli
cy.Int his phase inf
rastr
uct
uralsuppor
t,counseli
ng and assistance in
establ
i
shingnewenterpri
seandindevel
opi
ngtheexi
sti
ngunitscanalsoberevi
ewed.

Sel
ect
ionofPot
ent
ial
Ent
repr
eneur
s
Thef i
rstst epi nt heEDP i sthepr operi dentif
icationandsel ecti
onofpot ential
entrepreneur s.Selectionandt r
aini
ngofanunsui t
abl epersont ogoi ntoindependent
businessi sanat ionalwasteaswel lashar mf ultot heper sonconcer ned.Hi sfai
lure
i
nbusi nesswoul dr esul
tinlossofprestige,orsoci alstandingandaset backi nlife.
Ther ef
or e,utmostcar eshouldbegi vent ot heirfami lybackground,ent repreneurial
ski
llsandsui tabil
it
yt othet r
adechosen.Sel ectionofpot enti
alent repreneurshas
twoessent ialcomponent s;namely(A)ident if
icationofent r
epreneurialtrai
tsint he
potentialent repreneurs,and(B)ident
ifi
cationofsui tableandv iabl
epr oj
ectforeach
i
dent if
iedent repreneur
A)I
dent
if
yingEnt
repr
eneur
ial
Trai
ts
Everyparti
cipantmusthav eami ni
mum levelofel igibi
li
tyfordevel
opi
ngi ntoan
entr
epreneur.Entr
epreneuri
altrai
tsincl
udesoci o-personalandhumanr esources
charact
eri
sti
cs.Abriefdescri
pti
onofthesecharacteri
sticsisgiv
enbelow:
(i
)Cast e and family background:Cast e and family backgr
ound help create
entr
epreneur
ialenvir
onmentand occupat ionalawarenessf orthe ent
repr
eneurs.
Therearecer t
aincasteswhi charet r
aditi
onall
yinvol
vedi ncert
aintypesofwor k.
Matchingofcasteswithtrades,ther
efore,appearst
obel ogical
.Mostpeopleprefer
toacceptfamil
iart
askseasily.
(i
i)AgeandEducat i
on:Researcheshavereveal
edt haty oungerpeoplear emor e
successfulentr
epreneurs.Thi
smaybebecauseol derpeoplear emorer el
uctantto
takeriskyventur
es.Theyar emor econcer
nedwi t
hav oi
dingfail
urethanachi ev
ing
success.A mi nimum l evelofeducati
on i
s essentialto perfor
m f unct
ions li
ke
meetingoffi
cial
s,etc.
(i
ii
)Sizeandt ypeoff amily:Thesizeoft hef amil
yandt heent r
epreneur’
sstat
usi n
thefamilyareimportant.Asmal lentrepreneurhasgener all
yt odependuponf ami l
y
member sashecannotaf fordtohirewor kers.Inalargef amil
yt heentrepr
eneurmay
commandl i
tt
leauthorit
y.Butot herearningmember soft hefami l
ymayenabl ehim
topayundi vi
dedat t
ent i
ont ohi senterprisebypr ov idi
ngf i
nancialsupporttot he
famil
y.A j ointfami l
y has gener al
ly a gr eaterr isk-
bearing capacity
.Butt he
entr
epreneurhasgreatercommandov erthef amilyresourcesinanucl earfami
ly.
(i
v)Socialpar
tici
pat
ion:Thi
sdet er
minestheamountofi nfluencetheent repr
eneur
wil
lbe abl et o muster outsi
de hisimmedi atefamily circl
e.Gr eater social
part
ici
pati
on improv
es the abil
i
tyt oinf
luence and t
herebyt he success oft he
entr
epreneur
.

52
(v)Achi
evement-
moti
vation:I
tistheurgetoimproveone-
sel
finrel
ati
ontoagoal.I
t
i
ncludesboth per
sonalachievementand socialachi
evement.Itisthebasisof
entr
epreneur
shi
pasentrepreneur
swithhighneedachi
evementsucceedbet
ter
.
(vi
)Riskt akingwi l
li
ngness:Itr efer
st oseeki
ngchallengeinone’sact
ivi
ty.Two
personsmayv iewthesamev entureasinvol
vi
ngdiff
erentdegr
eesofri
sk.I
fbothof
them goforthesamev entur
e, i
tmeanst hatt
hepersonpercei
vi
nggreat
eramountof
ri
skinthev enturehasthehigherr i
sk-
taki
ngwill
i
ngness.
(vi
i
)Per sonalef f
icacy:Ithasbeendef inedast hegeneralsenseofadequacyi na
person.Itist het endencyi nanindivi
dualtoacceptsuccessorf ai
lurewhichar e
within hi
s cont rol.Per sonaleffi
cacy is an import
ant factor contri
buti
ng t o
entrepr
eneurialbehav i
ourofperson.Itr
epresent
sthepotenti
aleffecti
venesspresent
attheinnerlevel.
B)I
dent
if
icat
ionofEnt
erpr
ise
Once an ent r
epr eneurhav ing necessar y socio-personaland human r esource
character
isti
csisi denti
fi
ed, i
tisnecessar ytoidentifyasui tabl
eent erpri
seorpr oj
ect
forhim.Theent erpr
isemustbemat chedwi tht hepot ent i
alentrepreneur.Allthe
backgroundi nf
or mationlikehisskil
ls,exper i
encei nt hef i
eld,thephy si
calresources
avai
lable,famil
yoccupat ion,etc.shoul dbet akeni ntoconsi derati
on.Hav ingfounda
suit
abletradeanent repreneurneedst ot horoughlyexami neitsv i
abili
tyintermsof
fi
nancialimpl i
cations.Ther aw mat erialsav ai
labil
ity,themar keti
ngav enuesand
profi
tabil
i
tyoft heent er
pr i
sehav et obeexpl ored.I twoul dal soinv ol
v edetai
led
‘
explorati
onofser vi
cesneededandav ailabl
eint hear ea.
Cont
ent
sofTr
aini
ngPr
ogr
amme
(1)Techni
calKnowledgeandSki ll
s:Theent
repreneurhastobewel lconversantwith
theprocessofmanuf actureandt r
adingforwhi chapr act
icaltr
ainingbasedon
soundtheoryi
sessential.Heneedstoknowt heeconomi caspectsofthetechnology
i
ncludi
ngcostsandbenef i
ts.Fi
eldtr
ipstoafewi ndust
ri
alunit
sandi nplanttrai
ning
canbev er
yhelpf
ul.
(2)AchievementMot i
vati
onTr aini
ng(AMT) :Thepur poseofAMTi st odevel
opt he
needt oachieve,risktaki
ng,initi
ati
veandot hersuchBehav i
ouralorpsychol
ogical
trai
ts.A mot iv
ation developmentpr ogramme cr eates sel
f-
awareness and self
-
confidence among t he parti
cipants and enabl
es t hem tothink posi
ti
vel
y and
real
isti
call
y.Withoutachievementmot ivat
iontrai
ning,anEDPbecomesanor dinary
executivedevel
opmentpr ogramme.
(3)Suppor
tSy st
emsandPr ocedures:Traini
ngneedst oincludei nformat i
onabout
supportsy
stems.Thepar t
icipantshav et obeexposedt oagenci esl ikethel ocal
banksandot herfinanci
ali nsti
tut
ions,industrialservicescor porationsandot her
i
nsti
tuti
onsdeali
ngwi thsuppl yofr aw mat erials,equipment,et c.Thesessi onon
supportsyst
ems needs t o also include the pr ocedures forappr oaching them,
appl
yingandobtainingassistancef r
om them andav ai
lingoftheser vicesprovided
bythem.Al i
nkagebet weent het r
aini
ngi nsti
tuteandt hesuppor tsy stem agenci es
canbeestabli
shedbypar t
icipati
onoft heseagenci esi nsponsor i
ngandf i
nanci ng
theEDP.
(
4)Mar
ketSur
vey
:Thepar
ti
cipant
sshoul
dbegi
venoppor
tuni
tyt
oact
ual
l
yconduct
53
marketsur
veysf
orthei
rchosenproj
ect
s.Thi
swouldhel
pexposethecandi
dateto
themarket
ingav
enuesavai
labl
eandcouldbefol
l
owedbysessi
onsonmet hodsof
deal
ingi
nthemarket
s.
(5)Manager i
alSki l
l:Onceapar tici
pantisabletost arttheenterpr
ise,her equir
es
manager i
alskil
ls.Al istoftheagenciesalongwi t
hdet ai
lsoft heformalit
iestobe
compl eted,specimenf or
mst obef i
ll
edinwoul dgreatl
yfaci
lit
atetheent r
epreneurs.
Itshoul di ncl
ude al laspects off inanci
almanagement .Manager i
alskill
s are
part
icularl
yessent ialforasmal lscaleentrepr
eneurwhocannotaf fordtoempl oye
speciali
stsi ndi f
ferentareasofmanagement .Theai m shouldbet oenabl ethe
part
icipanttol ookatanent erpr
iseinitstotal
i
tyandt odev el
opov eral
lmanager ial
understanding.
(6)Proj
ectPrepar
ati
on:Alotoftimeneedstobedev otedt
otheact
ualpr
epar
ationof
proj
ects.Theiracti
veinvolvementint hi
st ask would pr
ovi
de t
hem necessar
y,
understandi
ngandalsoensur
et hei
rper
sonalcommi tment
.
Suppor
tSy
stems
Aft
erequippinghimselfwiththerequi
sit
eskil
l
s,t
henewent repreneurisnowr eadyto
setuphisent erpr
ise.I
nordertolaunchhisnewv enture,herequiresassistanceand
supportofmanyagenci es.Thesearethesuppor
tsy stemswhi chform alar geandan
i
mpor t
antpar toftheEDP.Thestrengthandcoor
dinationofthesuppor tsy stem for
m
thebackboneofanEDP.Cr edi
t,servi
ceandimpl ement i
ngi nstit
uti
ons,f ormt he
thr
eemaj orsuppor tsy
stems
Product
ion :Once product
ion st
artsthe entr
epreneurhas toi ni
ti
ate suppl
yof
product
sthroughsuitabl
emar ket
ingchannel.Thus,producti
onandmar ketingar
e
themostcr ucialst
agesinanent r
epr
eneuri
alendeav our.Fail
urei
nei t
herwould
meanabr eakdowninEDP.
The EDP consist
s offi
ve di
sti
nctstages-
sel
ect
ion,trai
ning,suppor
tsyst
ems,
product
ion and moni
tor
ing.I
ti s a dynamicinter
rel
ati
onship bet
ween t
hese
components.
Moni
tor
ingandFol
l
owUp
Forthesuccessofanyent repreneuri
aldevel
opmentcont i
nuousmoni t
oringand
fol
lowupi sessenti
al.I
tisonlythroughpropermoni tor
ingthatdefectsandpr obl
em
canbei dent
if
iedandr emoved.Car eisrequi
redsot hatthemoni t
oringprocedureis
nottoobureaucrat
icwhererul
esbecomei nhi
bit
iveratherthanpromot i
ve.Monitor
ing
shouldprovi
decontinuousgui
dancet oensurebetterresul
ts.
Moni t
or i
ngandf oll
ow- upshoul dbeconducteddur i
ngeachst agepr etraini
ngand
post-tr
aining oft he EDP.Pr e-t
raini
ng f
oll
ow up i nvol
ves evaluati
on oft raining
i
nfrastructure and t raining syl
labus.Post-
tr
aining phase is designed t o hel p
entrepreneursachiev etechnical,
managerial
,marketingandfinancialski
lls.Different
ty
pesoff oll
ow-upst rategiesmayDer equi
redf ormot i
vat
ed,semimot ivat
edand
unmot ivat
edent repreneur s.I
tisnecessar
ytosust ai
nthemot iv
ationoft hef i
rstt ype
andt oimpr ovethemot ivati
oninthesecondcaset hr
oughcounsel i
ng,etc.
TheTar
getGr
oup

54
TheEDPsmaybeor
gani
sedf
orany
oneoft
hef
oll
owi
ngt
argetgr
oups:
(1)Techni calandot herQual i
fiedPer sons:Thisgroupconsi st
sofper sonswhohav e
pursuedt echni calandal li
edcour sesofst udy.Forinstance,degree/diplomahol ders
i
n sci ence,engi neer i
ng and t echnology are an i mportantgr oup inI ndia.The
government and Semi -Gov ernment agenci es/ i
nsti
tuti
ons oper ate speci al
entrepreneur i
al developmentpr ogrammesandschemesofassi stanceforthisgroup.
Thet raini
ngpr ogrammef orsuchpeopl emaybedesi gnedt oenableandassi stthem
i
nset tingupt heirownmanuf act uri
nguni t
s.Theindust r
iesselectedfort hi
spurpose
maybe di rect l
yr elated witht heirqualif
icati
ons and exper ience.Forexampl e,
graduat esinel ectronicsmaybet r
ainedtoest abl
ishandoper atesuccessf ul
lyplants
formanuf acturingTVset s,
v i
deos, andotherelectroni
citems.
(2)Ex- Ser
vicemen:Per sonswho hav er etired fr
om t hear my ,navyand ai r
force
constitut
e an impor t
antgr oup forent r
epr eneuri
alt raining.These personshav e
acquiredmanyusef ulskill
sandexper i
encedur i
ngthei rser vi
ceperiod.Theytendt o
behi ghlydisci
pli
ned,har dwor king,enter
prisingandi nnov ati
ve.Therefor
et heycan
become successf ul ent repreneurs aft
er pr oper ent repreneur
ial tr
aini
ng. The
Gov ernmentofIndiaprov idesspeci alf
acil
i
tiesandpr eferencei nordertorehabi
li
tate
them.Manyex- servi
cemen ar esuccessf ullyoper ati
ng t heirown manuf acturi
ng,
trai
ningandser vi
ceent erprisesinthecount ry.
(3)Busi ness Executi
ves:Some busi ness execut i
ves wantt o starttheirown
i
ndependentent erpr
isesaftergett
ingsuff
icientbusinessexper i
ence.Someoft hem
havecertaini
nnov at
iveideaswhichtheyarenotabl etot r
yint hei
rexisti
ngfir
msdue
tolackofsuffi
cientautonomyoraut hori
ty.Someamongt hem arenotsat i
sfi
edwi th
thei
rpr esenteconomi c and socialstatus.Af t
erent repreneuri
alt r
aini
ng senior
businessexecutivescanbecomesuccessf ulentrepreneurs.Theyal readypossess
knowledgeofmanagement .Whatt heyneedi st r
ainingandsuppor tf orlaunching
thei
rownent erpri
ses.
(4)WomenEnt repreneurs:Womenar eent eri
ngthewor l
dofbusinessini ncreasi
ng
numbers,especiall
yt r
adi t
ionalfood processing i
ndustr
ies l
i
ke spices,agar bati
,
papad,sauces,etc?Sev eralgovernmentandnon- gover
nmentor ganisati
onse. g.
FICCILadi
esOr gani
sati
on,et c.ar
et herefore,or
ganizi
ng ent
repr
eneur i
alt r
aini
ng
progr
ammesf orwomen.
(5)S.C.andS.T.Ent r
epreneurs:GovernmentofI ndiai
scommi t
tedtotheupl i
ft
ment
ofschedul ed castes (S.C.
)and schedul ed Tr ibes (S.
T.)Therefore,speci f
ied
percentagesofjobshavebeenr eservedforthesecastes.Butallper
sonsf r
om t hese
groupscannotbeof f
ered empl oyment.Ther ef
ore,provi
ding sel
f-
employmenti s
usefulf orthei
reconomi c and socialdevelopment.Gov ernmentagenci es give
preferencetoS.C.andS. T.entrepr
eneursinpr ovi
dingfi
nanceandot hernecessar y
faci
lit
ies.
(6)Speci alAgenci es and Schemes:The Gov ernmentofI ndia has established
speciali
sedagenci esf ortraini
ngentrepreneurs.Speci alschemeshav eal sobeen
l
aunchedt otrain,developandassi stentrepr
eneur s.Someoft hespecialagenci es
andschemesf orentr
epr eneuri
aldevel
opmentar egivenbel ow.Thesepr ogrammes
should be conduct ed i n pl
aces where necessar yi nfrast
ructuref ort r
aining is
avai
lableandpr oxi
mityoft hesupportagenciesisassur ed.Thiswoul dunder li
net he
needf orproperselecti
onoft hetrai
nees.Itshouldbeensur edthatthet r
aineesshow

55
i
nterestinsettingupindustries.Forthispur pose,weshoul dthinknewtechniquest o
maket hepr ocessofselectionmor eappr opriat
e.Poori nvol
vementont hepartoft he
i
nsti
tutionsasal sot r
aineesandani ncorrectselect
ionoft argetgroupscontr i
bute
l
argelytothef ail
ureofanumberofEDPs.Oneoft heobj ect
soft r
aini
ngshouldbeon
changingt heat ti
tudeandsetofmi ndofy oungpeopl efrom securi
ty-oriented
acti
vit
iestor i
sk-t
akingthroughent r
epr eneurshipdevelopment.

Ent
repr
eneur
shi
pDev
elopmentPr
ogr
ammeOr
gani
sat
ions
There are sever
al organi
sati
ons engaged i n conducting entrepr
eneurshi
p
devel
opmentprogrammesi nIndia.Thel ead i
nthemat terwasgi venbySmal l
I
ndustri
esDevel
opmentOrgani
sati
onthroughitsSmal
lIndustr
iesSer
viceCentr
es.
Int he ar ea of cr eati
ng t he insti
tuti
onali nfr
astructuref or entrepreneurship
development ,thef i
rstst epofI ndiaf i
nancialinsti
tuti
onsi ncludingIFCIwast he
establishmentofEnt r
epreneur shi
pDev el
opmentI nsti
tut
eofI ndia(EDII)inMar ch,
1983,atAhmedabadasar esourceorganisati
onatt henat i
onallevel
.TheCent ral
Gov ernment al so est ablished i n the same y ear the Nat ionalI nsti
tut
ef or
EntrepreneurshipandSmal lBusinessDev elopment( NIESBUD)atNewDel hi,wi
ththe
obj
ect ive of co- coordinating act i
vi
ti
es r el
ated t o entrepreneurshi
p and smal l
businessdev elopment .Bot ht heseorganisati
onsar ewor kinghandi nhandf orgivi
ng
afil
lipt ot
heent repreneurshi pdevelopmentmov ement .
Inadditi
on,inst
it
utionsestabli
shedbythegovernmentare:RuralEntr
epreneurshi
p
DevelopmentInsti
tute(RED)atRanchii
n1983,RuralManagementandManagement
cent
res( RMEDC)atMahar asht
raandTrai
ningcum Dev elopmentcentr
es( RDCS)
aimincreasi
nginteract
ionbetweenentr
epr
eneursandenterpri
se.
Thi
sapart,ahostofmanagementinst
it
uti
onsvar
iousuni
ver
sit
ieshav
eincl
uded
ent
repr
eneur
shi
pdevel
opmenti
nthei
rCurri
cul
um.
Other or ganisati
ons t hat have-been act iv
ely conduct i
ng ent r
epreneurship
devel
opmentpr ogrammesar eStateBankofI ndi
a; f
inancialinsti
tut
ionssuchasI DBI
;
Entr
epreneurialMot i
vati
onTrai
ningCent reinNorthern-EasternRegion;XavierCentre
forEntrepreneurship Devel
opment,Ahmedabad;st atef i
nancialcorporations;the
Centr
ef orentrepreneurshi
pDevelopment ,Hubli
;Smal lIndustri
esExtensionTr ai
ning
I
nstit
ute, Hy derabad; Nat i
onal Sci ence and Technol ogy Ent r
epreneurship
DevelopmentBoar det c.
Fori nst i
tut
ionali
si
ngt heent repreneurshi
pdev elopmentact ivi
tiesatt hest atelevel,
Insti
t utesofEnt r
epreneur
shi pDev elopment( IEDs)i nUt t
arPr adesh, Bi
harandOr issa
haveal readycomei nt
oexi stencewi ththesuppor tofI ndia’sf i
nancialinsti
tuti
ons,
concer nedSt ateGov er
nment sandbanks, andar ecar ry
ingont heiracti
vit
iesonaf ull
-fl
edged basi s.During t
he per i
od underr eview,a Cent ref orEnt repreneurshi p
Dev elopment( CED)wasr egisteredinMadhy aPr adeshon17t hNov ember ,1988,
takenupl aterbyIFCI.AnInstituteforEntr
epr eneur shipDev elopmentwasal sosetup
atGoaunderDBont hesamepat t
ernasot herI EDs.Apr oposa1t osetupanI EDf or
Nort h-Eastern.Regi
onwasal sounderconsi derat i
onbyt heNor t
hEast ernCounci l.A
few St ateGov er
nment sofKar nataka,Andhr aPr adesh,Raj ast han,etc.
,hav eal so
56
expr essedt hedesi r
et osetupCEDsi nt hei rrespect iveSt at es.Thepr oposal sof
these St ate Gov ernment st o be consi der ed on t heirmer it
s by t he f inanci al
i
nst itutionsi nduecour se,whi l
et hef ocusoft henat ionalor gani sati
onsl i
keEDI I
,
NIESBUD et c.
,cont i
nuedt obeon( a)i nst i
tuti
onalent repr eneur shipact i
v i
ti
es,( b)
gener ating,shar peningandshar i
ngknowl edget hroughr esear chdocument at
ionand
publ i
cat ion,( c) cr eat i
ng and dev elopi ng pr ofessi onal si n t he di scipline of
“entrepr eneur ship”t oemer geandf lourish,and( e)dev elopi ngnew pr oduct sand
pursui ngmar ketsegment sf orcar r
yingt heent r
epr eneur shipdev elopmenti npr iority
areasandsect i
onsoft hepeopl e.TheSt at elev elI nstitutes/ CEDsendeav or edt o
carryoutatt hegr ass-rootl ev el topr ov i
det hesuppor tofhumanr esour cest ov ar i
ous
Stateanddi stri
ctEDPsl evelor gani sationsengagedi nent repr eneur ship.TheSt ate-
l
ev elor ganisat i
ons al so cont inued t o pr ov i
de i ndust r
ialext ension mot ivat i
on
serv i
ces,busi nessoppor t
uni tiesgui dance,pr ojectcounsel ing,et c.,andhel pedi n
i
nitiatingent r
epr eneur shi patschooll eveli nt hecar eerpl anningoft hey ounger
gener ation.Fort hi stheseor gani sat i
onsconduct ed, duringt heper iodunderr ev i
ew, a
numberofwor kshops,semi nar s,conf erencesand br oughtoutwel lresear ched
publ i
cat ions,f ort raining ofent repreneur s.The or gani sat ions al so pr oduced a
numberofv ideo f il
ms as audi o- vi
sualai ds fort rai
ni ng t he ent repreneur s and
mot iv ati
ngt hem t owar dsent er priseset ti
ngandoper atingt hesameonsoundand
healthi erlines.
ManagementDev
elopmentI
nst
it
ute(
MDI
)
Fordev el
opingandi mpr ovingt hequal i
tyofday -
to-daymanagement ,whichi sso
crucialforthesuccessofanyi ndust r
ialventur
e,asalso,withav i
ewt oencour aging
professionali
zat
ioninmanagement ,I
FCIhadsponsor edi n1973,theManagement
Devel opmentInsti
tute(MDI )atGur gaon( Haryana)nearDel hi
.MDIisnowar eputed
centreofmanagementt raining,r esearchandconsul t
ancy,itspri
megoalbei ngt o
i
mpr ovemanager i
aleffecti
venessi nt heindustr
y/gov ernmentandbanki ng’sectors
oft heeconomy .Researchst udiesunder takenbyMDar ei nbothmacr oar easof
economi candindustri
aldev el
opmentasal soinmi croareasr el
evanttoaspeci fi
c
i
ndust r
yoreconomi cactivi
ty.
Ament i
onwasmadei nt helastyear’
sAnnualReportaboutMDhav ingbeenchosen
bytheGov ernmentofIndia,Depart
mentofPer sonnelandTrai
ningasanagencyfor
conduct
ing thefir
st-
everi ntensi
ve15 mont h NationalManagementPr ogr
amme
(NMP)f orGov er
nmentOf fi
cersbelongi
ngt oI AS/Group‘
A’Ser v
icesaswel las
execut
ivesfrom publ
icandpr i
vat
esectororganisat
ionshavi
ngpotenti
altoacqui
re
topposi
tions.
MDIconduct ”ManagementDev elopmentPr ogrammesi nv ariousdiscipl
ines.These
programmesi ncludedt hepr ogrammesf orofficersoft heI ndianEconomi cSer vi
ce
(I
ES) ,Indi
anAdmi nistrativeSer vices(IAS)andf ortheexecut iv
esofanumberof
PSUsof ,li
keOi l&Nat uralGasCommi ssion( ONGC) ,Bhar atHeav yEl ectri
calLtd.
(BHEL) ,BharatAlumi nium Co.Lt d.(BALCO) ,Expor tCreditGuar anteeCor porationof
I
ndi a(ECGC) ,BureauofI ndianSt andards( BIS),
Hi ndustanZi ncLtd.(HZL) ,Hindustan
Machi neTool sLt d.( HMT) ,IndianDr ugsandPhar maceut icalsLtd.:(IDPL),Ut t
ar
PradeshSt ateIndust ri
alDev elopmentCor porationLtd.( UPSI DC),Madhy a Pr adesh
FinancialCorporati
on( MPFC) ,
etc.
MDIal
sohadconduct
edi
nKar
nat
akaapr
ogr
ammeonI
dent
if
icat
ion,
Promot
ionand

57
Impl ement ation ofI ndust ri
alProjects’( I
PI I
P)speci allycatering tot heneedsof
officer sofDi stri
ctI ndust ri
esCent res( DICs) ,Stat
el evelPromot i
onalandFi nanci al
Institutions,Commer cialBanks,et c.I n addi ti
on,a number of pr ogrammes,
part i
cular l
y i n concer ning st r
ategic pl anning, mar keti
ng of new pr oduct s,
strengt heni ng ofcooper ativ
e shor tt erm cr edi
tsy st
em,mar keting and sal es,
managementconsul tancy ,dev el
opmentbanki ng;l abour-managementr elat
ions,
humanr esour cesdev el opment ,
evaluat i
onofsmal li
ndust ri
esfinancingperfor mance,
roleofdi rectors,mer chantbanki ng,l easing,wor ki
ngcapi t
alfinancing,technology
transf er,management ,document ation and r ecovery practi
ces ofDev elopment
Financi ngI nstit
uti
ons,et c.,werecar r
iedoutbyMDIandi tssubsidiaryDev elopment
Banki ngCent re(DBC) .Asmanyas23wor kshopswer econduct edbyMDIundert he
Planni ng Commi ssi on I nt
ernati
onal Labour Or ganisati
on Uni ted Nat i
ons
Dev elopmentPr ogramme,I n-
houseManagementConsul t
ancyDev elopmentPr oject
(PhaseI I).
The Nat
ionalI
nst
it
utef
orEnt
repr
eneur
shi
p and Smal
lBusi
ness Dev
elopment
(NI
ESBUD)
The Del hi
-based Nat i
onalI nsti
tutef or Entr
epreneurship and Smal lBusiness
Development( NIESBUD) ,establi
shedbyt heGov er
nmentofI ndia,i
sanapexbodyf or
coordinati
ng and ov erseeing the acti
vit
ies ofv ar
ious inst
it
utions and agencies
engagedi nentrepreneurshipdev el
opmentpar ti
cular
lyinthelar eaofsmallindustry
andsmal lbusiness.TheI nstit
ute,regi
steredasaSoci et
yunderGov er
nmentofI ndia
Societi
esActXXIof1860, star
tedfuncti
oni ngf
rom 6July,1983.
Overt hey ear s,theI nstitutest andsdev otedtoev olvi
ngmodelsy ll
abif ortraining
vari
oust argetgr oups- byef fect i
v etraini
ngst r
ategi es,met hodology ,manual sand
tool
s;f acil
itati
ngandsuppor tingCent ral
/Stat
egov ernment sandot heragenci esi n
benefi
tandaccel erati
ngent r
epr eneurshi pdevelopment ; conduct
ingpr ogrammesf or
motivators, tr
ainersandent r
epr eneurswhi charecommonl ynotunder takenbyot her
agencies.Abov eal lorgani si
ngt hoset hathelpindev elopingentrepreneur ialculture
i
swor t happr eciati
oni nsoci ety.TheI nstit
uteisal sot hesecr et
ariatoft heNat ional
Entr
epr eneur ship Dev elopmentBoar d( NEDB),t he apexbodywhi ch det ermi nes
poli
cyf orent repreneur shipdev elopmenti nthecount ry.TheI nsti
tut e,therefor e,
perf
ormst het askofpr ocessi ngt herecommendat ionsmadebyt heBoar d.
Obj
ect
ives
Themai
nobj
ect
ivesoft
heNI
ESBUDar
e:
— Toaccelerat
etheprocessofent
repreneur
shi
pdevel
opmentensur
ingi
tsi
mpact
t
hroughoutthecount
ryandamongallsegmentsoft
hesoci
ety
.
— To help/
suppor
tinst
it
uti
ons/
agenci
es in carr
ying outact
ivi
ti
es r
elat
ing t
o
ent
repr
eneur
shi
pdevel
opmentwit
hgreat
ersuccess.
— Toev olv
est andar
disedprocessofselect
ion,t
rai
ningsuppor
tand,sust
enanceto
potent
ialentr
epreneursenabl
ingthem t
osetupandr unthei
rent
erpr
isesuccessf
ull
y.
— Topr ovi
dev i
tali
nformati
onsupporttotrai
ner
s,pr
omot er
sandent
repr
eneur
sby
organisi
ng document at
ion and research work rel
evant t
o ent
repr
eneur
shi
p
development.

58
—Toprov
idefunct
ionalf
orumsf
orint
eract
ionandexchangeofexper
ienceshel
pful
f
orPol
i
cyfor
mulati
onandmodifi
cat
ionatvari
ousl
evel
s.
Act
ivi
ti
es
The act i
v it
ies oft he Instit
uteinclude ev ol
vi
ng effecti
vet rai
ning str
ategi
es and
met hodology ;st andardising modelsy ll
abif or t
raini
ng v ari
ous t ar
getgr oups;
formulatingsci entif
icsel ect
ionpr ocedures;devel
opingt rainingai ds,manual
sand
tools; facilit
ati
ng and suppor ti
ng Cent ral
/Stat
e/other agenci es in executi
ng
entrepreneur ship dev elopment pr ogr
ammes; maxi mising t he benef it
s and
acceleratingt heprocessofent repreneurshipdevel
opment .
Thevar
iousf
unct
ionswhi
cht
heNat
ionalI
nst
it
utehasbeencal
l
edupont
oper
for
m
areasf
oll
ows:
•To or gani
se and conductt
rai
ning pr
ogr
ammes;•To co-or
dinat
et he t
raini
ng
act
ivi
ti
esofv ar
iousinsti
tut
esandorgani
sat
ionsi
nthecount
ryi
mparti
ngtrai
ningin
ent
repreneur
shi
p;
•Toaf
fi
li
atei
nst
it
utesandor
gani
sat
ionsconduct
ingent
repr
eneur
shi
ptr
aini
ng;
•Toidenti
fy,trai
nandassi stpotenti
alent
repr
eneur
samongstt echni
calandnon-
t
echni
calper sonnelin set
ting up sel
f-
employmentvent
ures i
n smallindust
ri
es
i
ncl
udingservicei
ndustr
ies;
•To hol
d examinati
onsand t
est
sand conf
ercer
ti
fi
cat
esand di
plomasont
he
t
rai
ner
saswel l
ast r
ainees;
•Toundertakedocument
ati
onandr
esear
chi
nthef
iel
dofent
repr
eneur
shi
pand
smal
lbusi
nessdevel
opment;
•To conductwor kshops,seminar
s and conferences et
c.forpromoti
on and
dev
elopmentofent
repreneur
shi
pinsmallscal
eindustri
esandsmal
lbusi
ness;
•To publi
sh li
ter
atur
eforf
urt
her
ance ofent
repr
eneur
shi
p and smal
lbusi
ness
dev
elopment;
•Toprovideaforum f
ori
nter
acti
onandexchangeofviewwit
hagenci
esengagedin
var
ious aspect
s ofentrepr
eneurshi
pin smallindust
ri
es and smal
lbusiness
devel
opment.
•To assistin set
ti
ng up ofregi
onaland stat
elev
elt
rai
ning i
nst
it
utes f
or
ent
repr
eneur
shi
pandsmallbusi
nessdevel
opment
.
TheI nstit
utei nter
actswithal lotherorgani
sati
oncentresengagedi nconducting
entrepreneurship devel
opmentpr ogrammes int he countr
y and provides t
hem
suppor tinvariousareasincludingfundi
ngofpr ogrammeswher ev
ernecessaryand
feasibl
e.The I nst
it
ute addressesi t
sel
ft o worki
ng wit
ht hem in enhanci
ng the
effi
ciencyandut il
i
tyofent r
epreneurshi
pdev el
opmentpr ogr
ammesbr i
ngingabout
co-ordinati
on.
Withthesetti
ngupoft hi
si nst
it
ute,ent
repr
eneurshipdevel
opmentinIndiathr
ough
organi
sedtrai
ninghasassumedaddedsi gni
fi
cancepar t
icul
arl
yfort
rai
ningeducat
ed
unemployedyouthfort
akingupself-
employmentv ent
ures.

59
Ent
repr
eneur
shi
pDev
elopmentI
nst
it
uteofI
ndi
a(EDI
I)
Entrepr eneur shipDev el
opmentI nst i
t uteofI ndi a( EDI I
),t hepr i
ncipalagencywi th
specialr esponsi bili
t yforent repr eneur shipdev elopmenti nt hecount ry ,hasbeen
focussi ngat tent i
onondev elopi ngpr ogr ammesf orent repr eneur shipdev elopment
and innov ati
vet raining techni quesf ort rainer s.The i nst itute hasdev eloped an
experiment al
,EDPf orwomen,keepi ngi nv iewt heirspeci alneedsandt hef i
r stsuch
EDP was conduct ed in Sept ember1988.EDI Iov ert he y ears has car ried out
experiment sinr ur alent r
epreneur shipdev el opmenti nacl ust erofv i
ll
ageofU. P.and
Orissai ncol l
abor ationwi thav olunt ar yor gani sation.EDI Ipr epar edav i
deocasset t
e
ont hef ocussedbehav i
ourev enti nter viewt echni que”f orassessi ngent repr eneurial
potent i
al .Inaddi ti
on,i fconduct edanent repr eneur s’meet ,ent repr eneurialpot enti
al.
In addi tion,itconduct ed an ent r
epr eneur s’meet ,ent repr eneur ship dev elopment
ori
ent ation pr ogr ammes and t raining pr ogr amme f ort rainer s,besi des gi vi
ng
professi onalassi st ancet ov ari
ousi nst i
tutionsf ort heirent repr eneur i
aldev elopment
activi
ties.EDI Icont inuedt oof feri tsser v
icet oSr iLanka,Nepal ,Keny a,Ghanaand
otherAf ricanCommonweal t
hCount r ies.Thei nstitutehasor gani sedaspeci alcamp
onent repr eneur shi pi nwhichmor et han2, 000st udent shadpar tici
patedi nv ari
ous
activi
tiescr eatingi nterestinent repr eneur ialpur suits.Int heNehr uCent enar yYear ,
EDIIbr oughtoutabookent i
tled“ Self-madeI mpactmaki ngEnt repreneur s”basedon
ast udyunder takenbyi t
.
I
nst
it
utesf
orEnt
repr
eneur
shi
pDev
elopment
Aspar tof‘ astrategyofgi vi
ngspecialattent
iontoent r
epr
eneur shipdevelopment
needsoft hemor ebackwar dstates,IDBIhadannouncedt hepr oposalt
osetup
I
nstit
utes f orEnt repr
eneurship Development( I
EDs)i n association wit
h other
fi
nancialinsti
tuti
onsandbanksandt heSt at
eGov ernment
s.I EDssetupi nUttar
Pradesh,BiharandOr i
ssahavebecomeoper ati
onalandtheproposedl EDinMadhy a
Pradeshhasal readybeenr egi
stered.
IEDint heUPhadconduct edmor ethan16EDPs, besidestrainingstatelev
el t
rainers.
Italsohasconduct edprogr ammesoni ndust r
ialextensionmot iv
ati
on,busi ness
opportunityguidanceandpr ojectcounsellingf orwomen,ent r
epreneuri
alawar eness
workshopf orex- servi
ceman,st atelevelmeetofEDPconduct i
ngagencies,studies
on“ Factorsi nhibit
ingandf acil
itati
ngt ur
nar oundpossi bi
li
tiesinsmal lsector”and
“Rel
ev ance ofhi llwoolscheme. ”I ED in Or issa had conduct ed I
IEDPs whi ch
benefited 307 t r
ainees. It also conduct ed f our Management Dev elopment
Programmes,f ourent r
epreneurshipawar enesscampsandl ecture-
cum-discussion
sessionon“ ProblemsandPr ospectsofI ndo- USTr adeandI nvestment.“I
EDi nBihar
conduct edtwoEDPsandor ganisedanent repreneur s’meetdur ingtheperiodunder
revi
ew.
Sci
enceandTechnol
ogyEnt
repr
eneur
shi
pPar
ks(
STEPs)
Aspar toft hepr ogrammef orsupport
ingtheset t
ingupof15STEPsj oi
ntlywith
otheri nstitut
ions,I DBIov ert he years has assisted seven STEPs,v i
s,t hose
sponsor edbyt heBi rl
aInsti
tuteofTechnology(BIT),Ranchi,Nati
onalEntr
epreneurs
Chemi calPar k( NECP) ,RegionalEngi
neeri
ngCol l
egeTr ichy
,(TREC),HarcourtButl
er
Technol ogical I nsti
tute (HBTI), Kanpur, Sri Jay achamaraj
endra Col l
ege of
Engineer i
ng”( SJCE) ,My sore,Guru Nanak Engi neering Coll
ege,Ludhiana and
Maul anaAzadCol l
egeofTechnol ogy,Bhopalwiththeaggr egateassi
stanceofRs.

60
6.
2crore.Whi
lethefir
stfiv
eSTEPswer esanctionedassist
ancepri
oror1988-89,t
he
l
asttwoweresanctionedassi
stanceduri
ngther eporti
ngperi
od.STEPsproposedby
Guru Nanak Engi neer
ing College wil
l speci ali
se in machine- tool
s and
el
ectr
omechanicalcontr
olequipmentwhi l
et heSTEP sponsor edbytheMaul ana
AzadColl
egeofTechnologywil
lbespecial
isi
ngi nelectr
oni
csandpowerengineer
ing.
BIT-STEP has dev el
oped a uni que t echnol ogy f or aut omati
c wi re l ength
measur ementsy stem andi mpor tsubst i
t utivest ainlessst eelwedgewi rescr een,
besidesot hert echnol ogiesf ori ndustrialappl i
cat ions.NECP i sengaged i nt he
preparati
on of pr oject pr ofi
les of sel ect ed i mpor t
ed dr ugs.TREC- STEP has
developedt echnologyf orhi -
techpai ntsf ornucl earappl i
cati
ons,besi
desot herhi -
techandi mpor t-
subst ituti
vepr oduct s.Commer cialpr oductionhadalreadybeen
start
edbysev enTREC- STEPent repr eneur s.St udentent r
epreneursofHBTI -STEPar e
workingonpr oj
ectswhi chincludef i
brer einf orcedconcr eteandplast
iccomponent s.
SJCE- STEPhasal readyt ransferredt echnol ogyofl iquidl evelpumpcontrollertoone
ofitsentrepreneursf orcommer cialexploi tationandei ghtoft heSTEPentr epreneur s
haveest abl
ishedt heiruni t
s.
TheEnt r
epreneuri
alMot i
vati
onCentresetupi nAssam i nthenor t
heast er
nregionof
I
ndia,conduct sentr
epr eneuri
aldevelopmentprogr ammes.I ntheearli
erstages,28
off
icers dr
awn f rom v ari
ous departments oft he state gov er
nmentwer e giv
en
tr
aining in ent r
epreneur i
al mot i
vati
on, economi c i nvesti
gation and sur vey,
managementofsmal lenterpri
seet c.i
nt he.Smal lIndust ri
esExtensiont r
aini
ng
I
nstitut
ei n Hyderabad.Theseof fi
cerst hen j
oined thev ari
ousbr anchesoft he
Entrepr
eneurialMotiv
ationTr ai
ningCentreinsi
xdi str
ict
s.
The Ent r
epr eneur ialMot iv
at i
on Tr aining Cent re gav e wi de publ i
ci tyt o t he
entrepreneurialdev elopmentpr ogr ammesandi nv i
tedappl i
cat i
onsf r
om educat ed
unempl oyed per sons.Sel ection was made based on psy chologi calt ests and
personali nterv iews.Sel ected ent repreneurs wer e given pr eli
mi nary mot i
vati
on
trai
ning oft wo weeks f ordev el opi ng orst rengt hening the mot i
v ation f orsel f
-
empl oyment ,manager i
al andeconomi caspect sofent repreneur ialdev elopment .The
entrepreneurs wer ef ur ther assi st ed i n select ing ent erprises f or t hemsel ves,
conduct i
ngmar ketsur v ey sandpr epar ingeconomi callyviableandf easi bleproject
reports.TheCent r
eact edasl i
nkagencyandhel pedt heent repr eneur si nobt aining
fi
nancef r
om banksandot heri nst itutions,andr eady madeshedsaswor kingspace.
TheCent r
ef ur therpr ovided10percentoft hesanct i
onedamountasseedmoney
wher evernecessar y .Anev aluat ionr eveal
edt hatbyMar ch1975,t henumberof
entrepreneurst rainedcamet o1, 550,ofwhi ch1, 053ent repreneur s( 68percent )
compl etedt heirpr ojectr epor tsand581wer egi veni n-pl
antt raini
ng.Amongt hose
whocompl etedt hepr oj ectr epor ts,310ent repr eneur swer eassi stedi nobt aining
sanct i
onoff i
nanci alassi stance.Oft hese310ent repreneur s,279( 90percent )
actuallyestablishedt heirent erprisesandst ar
tedf unctioni
ng.
TheXav i
erInstituteofSoci alSer vi
cei nRanchi :Itwasi nv ol
vedwi t
ht r
ibal
sand
peoplefrom thev il
lagesintraini
ngt obecomeent r
epreneurs.Agr oupofyoungt ri
bal
youthsconstitutedi ntoal ocalorganisationforpromot i
onofsoci o-
economicand
healthschemes( knownasVi kasMai t
ry)receiv
edsomef undsf r
om theIndo-Ger
man
SocialServi
ceSoci etyinNew Del hiin1975.Theydesi r
edt hatanent r
epreneurship
developmentpr ogr ammeber unforthem.Apr oj
ectleaderwhohi msel
fwasat ri
bal
wasappoi nt
ed:Thepr ogr
ammewasor ganisedand20candi dat
eswer eselect
ed, al
l

61
belongi ng t ot r
ibalar eas.I nsel ecti
ng,l i
tt
lei mpor tancewasgi vent o academi c
qual ifi
cat ions.Cl ari
tyofpr esentat ionofgoal sanddet erminat i
ont or eacht hatgoal
wer et hei mpor tantconsi derati
ons.Fourmont hsf ull-t
imet rai
ningwasar ranged.
Dur i
ngt hedayt heent repreneur swor kedasappr enticesi nshopsoft het ypet hey
i
nt endedt osetupt hemsel ves.Int heev eni
ng,t heygotagr oundi ngi nt hebasi sof
achi ev ement s,mot ivation,leader shi pandcommuni cat ion,management ,finances,
cost ing,l awsandt axat i
on,mar ket ingandpr ojectpr epar ati
on.Af tercompl et i
onof
thet rainingcour se,t heent repreneur swentbackt ot heirr espect ivev il
lagesand
mademi ni-
mar ketsur v ey.Theybr oughtbackt hef iel
ddat aandwor kedt hesei nt
oa
projectpr oposalf orf inancingbyt hebank.Thef i
nanci ngwasunder takent hrough
thei nt ermedi acyofVi kasMant riKaly anSanghandt heor ganisat ionunder tookt o
standguar ant eef ort hey oungent repreneurs.Cont i
nuousandsust ainedf ollow-up
act i
on was under t
aken.Thi s was t he responsi bil
it
yoft he pr ojectof fi
cerand
assist antpr ojectof fi
cer .A successr at
eof60percentwasat tained.TheSt ate
gov er nmentl atergav eassi stancet ot hei nsti
tutef orconduct ingent r
epreneur ial
dev elopmentpr ogrammesf orunempl oyedengi neers,di plomahol der s,graduat es
andI TIt rainedboy sandt heinstitutehasdonewel l
.
Dev el opmentBanks:These i nst itutions prov i
de,v it
ali nput sl ike finance and
dev elopmentassi stance.I FCI,I CICI ,andI DBIar eoper ati
ngatt heal lI ndial ev el
wher easSFCsandSI DCsar efunct ioningatt heSt atel evel.IFCI ,ICI CIandI DBIt ake
speci alinteresti npr omot ingent repr eneurship,par t
icularl
yi nbackwar dar easand
ruralcent r
est hr oughassi st
ancet ov ar
iousi nsti
tuti
ons,conduct ingEDPIandby
prov idingfinancialassi stancet onewent r
epreneurs.Thesei nstitut ionsal sopr ovide
activ esuppor tt oot heri nsti
tut i
onsl i
keTCOs,Nat ionalSci enceandTechnol ogy
Entr epreneurshi p Dev elopment Boar d of I ndia ( NSTEDB) , Ent repr eneur shi p
Dev el opmentI nst i
tuteofI ndi
a( EDI I
)andot heragenci es.Inor dert oencour ager ur al
andt i
nyent er
pr iseI DBIpr ovi
desf inancialsuppor tt osel ect edv ol untaryagenci es.
Anot herimpor tantst ept akenbyI DBIt oencour ageent r
epreneur shi pamongsci ence
and t echnologygr aduat esi st hrough Sci enceand Technol ogyEnt repr eneur shi p
Par ks’( STEPs) .I DBIal sooper atesSeedCapi t
alSchemef ort echni callyqual i
fied
entrepr eneursi nsmal lscal esect ort omeetapar tofpr omot er ’sequi tycapi t al
.
Speci alconcessi ons ar e gi ven t o women,SC/ ST and phy si cal l
y handi capped
entrepr eneurs.I FCIpr ov i
desr iskcapi talassistancet onew ent repr eneur st hrough
theRi skCapi t
alFoundat ion( RCF) .I n1955NSI Cwassetupt opr omot ethegr owt h
ofsmal l
scaleindust ries.
Inadditiont otheabov e,Statelevelfinancialinsti
tuti
ons(SFCs)anddev el
opment al
i
nstitut
ions ( SI
DCs)r enderf inancialassi stance to new entrepreneur
si nt he
respectiveState.SomeSt ategov ernment shav eal sosetupStateSmal lI
ndustri
es
Corporations to promot e smal lscal e ent r
epreneurs.Many st at
es have setup
Entrepreneurs.Gui dance Bur eaus,consul t
ancy or gani
sati
ons,Stores Purchase
Organisations,Stat
esmal lindustr
iescor porationsandsuchot herbodiestoassist
entrepr
eneur sintheirr
espect i
vear eas.
Rol
eofCommer
cial
Banks
Ini
ti
all
y,TheStateBankofIndiawast heonlybankamongstcommer cialbanksto
comeoutwi th acomprehensiv
epr ogrammef orentrepr
eneurship development
.
From theort
hodoxrol
eofcommer ci
albanks,t
heStateBankofIndiapioneer edasa
premierbanki
nginst
it
uti
oninIndiabyassumingtherol
eofadev elopmentbank.The

62
sixt
iesandear l
yseventiessawmanyi mpor tantstri
destowar dst heful
fi
ll
mentoft his
objective.Thebankr ecognisedt heimportanceofsmal l
-scal
ei ndustri
esinindustri
al
developmentandst artedfinancingsmal l
-scaleindustri
esonal argescale.Tocat er
tot hespeci fi
cneedsoft hissect orapackageofschemesandpr ogrammeswas
formulat edbythebank.Thesear ein(i
)Liberali
sedschemeoff inanci
ngsmal l
-scale
i
ndust ries wherein 75 percentoft he pr oj
ectcosti s metas bank l oan;( ii
)
Entrepreneurschemef orfinancingtechnicall
y-quali
fi
edper sonswher etheent ire
projectcostcoul dbef i
nancedbywayoft erml oan;and( i
ii
)Equi tyFundSchemef or
prov i
dinginter
est-f
reeloant omeett heequitygapupt oRs.1l akh.
Non-
fi
nanci
alSuppor
t
Inspi
teofli
beralisationi nfi
nancingpolicyandgov ernmenti ncentiv
es,thepr ogress
i
ndustr
ial
i
sationwasnotsor apid.Reali
singthatmer eprovi
sionoff inancialsupport
wasnotsuf fi
cientforbr ingi
ngaboutt hatdesiredchange,t heneedwasf eltfor
evol
vi
ngapol i
cyofpr ovi
dingfornon- f
inancialassistance.Anumberofmeasur es
werether
eafterinit
iated-devel
opmentofmanagementski ll
soft heSSIbor rowers
thr
ough ManagementDev el
opmentPr ogr ammesand ManagementAppr eciat
ion
Progr
ammes.Thebankwentt otheext entofconduct i
ng.tr
ainingpr ogrammesf or
devel
opmentofent repreneuri
alat t
it
udeandf i
nancingsuchent r
epreneur s.Itwas
i
ndeedthebeginningofanewbanki ngera.
Tosetupani ndustry,t heabi l
i
t ytomeett hemar ginmoneyr equirement soft he
smal l
-scalepr ojectitselfisnotenough,butent repreneur i
alchar acteri
sticshav et o
beident i
fiedandr ei
nf orcedi ntheent r
epreneuroft hatindustry.Thust heimpor t
ant
characteristi
csoft heent r
epreneur,namel y,psy chological,economi c,socialand
manager ialchar act
eristics,havet obel earnt,under stoodanddi gestedbyev ery
prospectiveent repr
eneur .Fort hesuccessoft hei ndustry,theman behi nd t he
proj
ecti smor ei mpor tantthani tsfi
xedasset s;theent repreneurhast obet r
ained
well.I
ndust ri
al andTechni calConsultancyOr ganisationLimited( I
TCO) ,assubsi diary
ofI ndust r
ialDev el
opmentBank ofI ndia,hav ing a pr ofessionalexper i
ence i n
counsel l
ingt heent repr eneurs,ident
ifyi
ngt hepr ojectideasandpr epar i
ngdet ail
ed
proj
ectr eportsandconduct ingEDPs.
Thesepr
ogr
ammescov
eral
leducat
edunempl
oyedy
out
hs
1.Hav i
ngast
rongdesi
ret
osetupani
ndust
ryandhav
ingt
heconf
idenceofi
ts
success.
2.Wi
thbasi
ctechni
cal
qual
i
ficat
ionofS.
S.C.wi
th5y
ear
sindust
ri
alexper
ience.
3.I
ntheagegr
oupof21t
o35y
ear
s.
4.Abl
etoinvestt
her
equi
redshar
ecapi
tal(
25percentofpr
ojectcost
)tot
he
sel
ect
edpr
oject
.
5.Wi
thi
ndependentt
hinki
nganddeci
sion-
maki
ngst
atus.
6.Cl
aimi
ngnat
ivi
tyoft
hedi
str
ict
.
Thiscoursei sintendedto giveawor ki
ngknowl edgeofi
ndust
rialpr
omot i
onal’
agenci
es,projectrepor
tpreparati
on,gener
almanagementofsmall
-scal
eindustr
ies,
besi
dest ransfor
mi ng t
hepr ospect
iveentrepr
eneursbyachi
evementmot i
vati
on.

63
Thesepr
ogr
ammesi
ncl
udet
heacademi
cinput
snecessar
yfort
hepur
pose.
Ev
aluat
ionofEDPs
Developingent r
epreneurshi
phasbecomeamov ementi nIndiainther ecenty ears.
EDPs hav e been consi dered as an ef f
ective instr
ument f or dev eloping
entrepreneurshi
pi nthecountrysi
de.HundredsofEDPsar econductedbysome686
organisati
onst oi mpartent r
epreneuri
altr
aini
ngt opar t
ici
pantsint housands.As
ment i
onedear l
i
er,themai nobj ecti
veofEDPsi sheldt obeent erpri
sescr eator.
Hence, itseemsnecessar ytoseewhet hertheobject
iveofEDPsi sf ulf
il
ledornot .I
n
si
mpl e wor ds,therei s a need t o hav
ear etrospecti
vel ook into how many
parti
cipantshaveact ual
l
yst art
edtheirownenterpri
sesaftercomplet i
ngt hetraining.
Thiscal l
sforevaluat
ionofEDPs.
Sof arsome16ev aluati
onst udi
eshav ebeenconduct edbyv ari
ousor ganisations
andindiv idualresearchers.Nodoubt ,t
hesestudiesvaryintheirobject
ives, coverage
and cont ent.But ,one common t hr
ead in al
loft hem i st he assessmentof
eff
ectivenessori mpactof EDPs,howsoev er,l
oosely,defi
ned.Oneoft heear li
est
att
empt si nthi
sdi r
ect i
onwasmadebyat eam ofresearchersandexper tsappoi nted
bytheGuj ar
atCor porati
onst oevaluat
etheeffecti
venessofEDPs.Themostr ecent
andnat ionwi deev aluati
onst udyonEDPsi soncar ri
edoutbyt heEnt r
epr eneurship
DevelopmentI nstituteofI ndi
a,Ahmedabad.Her e,wear epr esenti
ngthebi rd’
sey e
vi
ewont hef i
ndingsoft hisstudy.
Pr
obl
emsf
acedbyEDPs
EDPssufferonmanycount s.Thepr obl
emsandl acunaeareonthepartofal
lthose
who arei nvol
ved i
nt he process,be i tthe tr
ainer
s and the t
rai
nees,the ED
organi
sat
ions,the supporti
ng or ganisat
ions and the stat
e gover
nments.The
i
mpor t
antprobl
emsEDPsf acear elistedasfol
lows:
1.Trai
ner
-moti
vat
ionsar
e,notf
oundupt
othemar
kinmot
ivat
ingt
het
rai
neest
ost
art
thei
rownenter
pri
ses.
2.EDor gani
sati
onsl
acki
ncommi
tmentandsincer
it
yinconducti
ngtheEDPs.I
n
somecases,EDPsareusedasameanstogenerat
esurpl
us(income)fort
heED
organi
sati
ons.
3.Non-
conduci
veenv
ironmentand const
rai
ntsmaket
het
rai
ner
mot
ivat
ors’r
ole
i
nef
fect
ive.
4.The ant
it
heti
c at
ti
tude ofthe suppor
ti
ng agenci
es l
ike banks and f
inanci
al
i
nst
it
uti
onsserv
esasstumblingbl
ockinthesuccessofEDPs.
5.Sel
ect
ionofwr
ongt
rai
nees,
al
sol
eadst
olowsuccessr
ateofEDPs.
Thus,i
tis cleart
hatt
he pr
obl
ems ar
e notwi
tht
he st
rat
egy butwi
thi
ts
i
mplement
ati
on.
Onewayofev aluat
ingt
heEDPsi stoassessthei
ref
fect
ivenessi
ndev el
opi
ng‘need
forachiev
ement ’among t
he entr
epreneur
s.Thisis al
so call
ed ‘
the qual
i
tati
ve
eval
uati
on’ofEDPs.

64
65