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Entrepreneurship

1. Definition of Entrepreneurship and Small Business

 Small business
o It is an organization, partnership or sole proprietorship that has fewer
resources and annual revenue than a medium or large company.
 Entrepreneurship
o It refers to the concept of developing and managing a business venture
to gain profit by taking several risks in the corporate world.

2. Characteristics of Entrepreneurship
 Ability to take a risk
o Starting any new venture involves a considerable amount of failure risk.
Therefore, an entrepreneur needs to be courageous and able to evaluate
and take risks, which is an essential part of being an entrepreneur.
 Innovation
o It should be highly innovative to generate new ideas, start a company and
earn profits out of it. Change can be the launching of a new product that
is new to the market or a process that does the same thing but in a more
efficient and economical way.
 Visionary and Leadership quality
o To be successful, the entrepreneur should have a clear vision of his new
venture. However, to turn the idea into reality, a lot of resources and
employees are required. Here, leadership quality is paramount because
leaders impart and guide their employees towards the right path of
success.
 Open-Minded 
o In a business, every circumstance can be an opportunity and used for the
benefit of a company. For example, Paytm recognized the gravity of
demonetization and acknowledged the need for online transactions would
be more, so it utilized the situation and expanded massively during this
time.
  Flexible
o An entrepreneur should be flexible and open to change according to the
situation. To be on the top, a businessperson should be equipped to
embrace change in a product and service, as and when needed.
 Know your Product
o A company owner should know the product offerings and also be aware
of the latest trend in the market. It is essential to know if the available
product or service meets the demands of the current market, or whether it
is time to tweak it a little. Being able to be accountable and then alter as
needed is a vital part of entrepreneurship.

3. Types of Entrepreneurship

 Small Business Entrepreneurship

o These businesses are a hairdresser, grocery store, travel agent, consultant,
carpenter, plumber, electrician, etc. These people run or own their own business
and hire family members or local employee. For them, the profit would be able to
feed their family and not making 100 million business or taking over an industry.
They fund their business by taking small business loans or loans from friends
and family.
 Scalable Startup Entrepreneurship
o This start-up entrepreneur starts a business knowing that their vision can change
the world. They attract investors who think and encourage people who think out
of the box. The research focuses on a scalable business and experimental
models, so, they hire the best and the brightest employees. They require more
venture capital to fuel and back their project or business.
 Large Company Entrepreneurship
o These huge companies have defined life cycle. Most of these companies grow
and sustain by offering new and innovative products that revolve around their
main products. The change in technology, customer preferences, new
competition, etc., build pressure for large companies to create an innovative
product and sell it to the new set of customers in the new market. To cope with
the rapid technological changes, the existing organizations either buy innovation
enterprises or attempt to construct the product internally.
  Social Entrepreneurship
o This type of entrepreneurship focuses on producing product and services that
resolve social needs and problems. Their only motto and goal is to work for
society and not make any profits.

4. Importance of Entrepreneurship

 Creation of Employment

o Entrepreneurship generates employment. It provides an entry-level job, required

for gaining experience and training for unskilled workers.

 Innovation

o It is the hub of innovation that provides new product ventures, market, technology
and quality of goods, etc., and increase the standard of living of people.

 Impact on Society and Community Development

o A society becomes greater if the employment base is large and diversified. It

brings about changes in society and promotes facilities like higher expenditure on
education, better sanitation, fewer slums, a higher level of homeownership.
Therefore, entrepreneurship assists the organization towards a more stable and
high quality of community life.

 Increase Standard of Living

o Entrepreneurship helps to improve the standard of living of a person by

increasing the income. The standard of living means increases in the
consumption of various goods and services by a household for a particular
period.

 Supports research and development

o New products and services need to be researched and tested before launching in
the market. Therefore, an entrepreneur also dispenses finance for research and
development with research institutions and universities. This promotes research,
general construction, and development in the economy.

5. Entrepreneurship Development
  Entrepreneurship development is the means of enhancing the knowledge and skill of
entrepreneurs through several classroom coaching and programs, and training. The
main point of the development process is to strengthen and increase the number of
entrepreneurs. This entrepreneur development process helps new firms or ventures get
better in achieving their goals, improve business and the nation’s economy. 

6. Risks of Starting a Small Business

 Financial risk
o The biggest risks facing many small organizations are financial. Founders often
have invested their life savings or taken out significant loans to get the
organization off the ground, so there is a lot of pressure to be successful. 
 Strategic risk
o It can be hard to know what steps to take when your organization is brand new.
There are probably not formalized decision-making processes in place, and
each stage of the business life cycle comes with its own challenges. 
 Reputation risk
o Reputation risk is one of the most overlooked risks. A company’s reputation is its
single, most important asset. This is particularly important for small businesses
because they need to create a good reputation in order to grow: if nobody has
heard of your organization or only knows bad things about it, they're not likely to
become a customer. 
 Liability risk
o While all organizations are subject to liability risk, you're most vulnerable at a
small size, in part because of reputation risk. You also may not have the
resources to effectively pay for damages without risking cash flow. 
 Business interruption risk
o Your organization can be disrupted at any time. 
 Security risk
o Cyber risk is the threat of financial loss, disruption, or reputational damage to an
organization due to some sort of failure from its IT systems. Hackers are
becoming increasingly skilled and sophisticated. At the same time, organizations
are collecting more personal data from their customers.
7. Starting a Business

I. Do Your Research
o Most likely you have already identified a business idea, so now it's time to
balance it with a little reality. Does your idea have the potential to succeed?
You will need to run your business idea through a validation process before
you go any further.
II. Make a Plan
o You need a plan in order to make your business idea a reality. A business
plan is a blueprint that will guide your business from the start-up phase
through establishment and eventually business growth, and it is a must-have
for all new businesses.
III. Plan Your Finances
o Starting a small business doesn't have to require a lot of money, but it will
involve some initial investment as well as the ability to cover ongoing
expenses before you are turning a profit. 
IV. Choose a Business Structure
o Your small business can be a sole proprietorship, a partnership, a limited
liability company (LLC) or a corporation. The business entity you choose will
impact many factors from your business name, to your liability, to how you file
your taxes.
V. Pick and Register Your Business Name
o Your business name plays a role in almost every aspect of your business, so
you want it to be a good one. Make sure you think through all of the potential
implications as you explore your options and choose your business name.
VI. Get Licenses and Permits
o Paperwork is a part of the process when you start your own business. There
are a variety of small business licenses and permits that may apply to your
situation, depending on the type of business you are starting and where you
are located. You will need to research what licenses and permits apply to
your business during the start-up process.
VII. Choose Your Accounting System
 o Small businesses run most effectively when there are systems in place. One
of the most important systems for a small business is an accounting system.
VIII. Set Up Your Business Location
o Setting up your place of business is important for the operation of your
business, whether you will have a home office, a shared or private office
space, or a retail location.
IX. Get Your Team Ready
o If you will be hiring employees, now is the time to start the process. Make
sure you take the time to outline the positions you need to fill, and the job
responsibilities that are part of each position. 
X. Promote Your Small Business
o Once your business is up and running, you need to start attracting clients and
customers. 

8. Writing a Business Plan

 Executive summary
o Briefly tell your reader what your company is and why it will be successful. Include
your mission statement, your product or service, and basic information about your
company’s leadership team, employees, and location. You should also include
financial information and high-level growth plans if you plan to ask for financing.
 Company description
o Use your company description to provide detailed information about your company.
Go into detail about the problems your business solves. Be specific, and list out the
consumers, organization, or businesses your company plans to serve. Explain the
competitive advantages that will make your business a success. Are there experts on
your team? Have you found the perfect location for your store? Your company
description is the place to boast about your strengths.
 Market analysis

o You'll need a good understanding of your industry outlook and target market.
Competitive research will show you what other businesses are doing and what their
strengths are. In your market research, look for trends and themes. What do
successful competitors do? Why does it work? Can you do it better? Now's the time to
answer these questions.

 Organization and management

o Tell your reader how your company will be structured and who will run it. Describe
the legal structure of your business. State whether you have or intend to incorporate
your business as a C or an S corporation, form a general or limited partnership, or if
you're a sole proprietor or LLC. Use an organizational chart to lay out who's in charge
of what in your company. Show how each person's unique experience will contribute
to the success of your venture. Consider including resumes and CVs of key members
of your team.

 Service or product line

o Describe what you sell or what service you offer. Explain how it benefits your
customers and what the product lifecycle looks like. Share your plans for intellectual
property, like copyright or patent filings. If you're doing research and development for
your service or product, explain it in detail.

 Marketing and sales

o There's no single way to approach a marketing strategy. Your strategy should evolve
and change to fit your unique needs. Your goal in this section is to describe how you'll
attract and retain customers. You'll also describe how a sale will actually happen.
You'll refer to this section later when you make financial projections, so make sure to
thoroughly describe your complete marketing and sales strategies.

 Funding request
 o If you're asking for funding, this is where you'll outline your funding requirements. Your
goal is to clearly explain how much funding you’ll need over the next five years and
what you'll use it for. Specify whether you want debt or equity, the terms you'd like
applied, and the length of time your request will cover. Give a detailed description of
how you'll use your funds. Specify if you need funds to buy equipment or materials,
pay salaries, or cover specific bills until revenue increases. Always include a
description of your future strategic financial plans, like paying off debt or selling your
business.

 Financial projections

o Supplement your funding request with financial projections. Your goal is to convince
the reader that your business is stable and will be a financial success. If your business
is already established, include income statements, balance sheets, and cash flow
statements for the last three to five years. If you have other collateral you could put
against a loan, make sure to list it now. Provide a prospective financial outlook for the
next five years. Include forecasted income statements, balance sheets, cash flow
statements, and capital expenditure budgets. For the first year, be even more specific
and use quarterly — or even monthly — projections. Make sure to clearly explain your
projections and match them to your funding requests. This is a great place to use
graphs and charts to tell the financial story of your business.  

 Appendix

o Use your appendix to provide supporting documents or other materials were specially
requested. Common items to include are credit histories, resumes, product pictures,
letters of reference, licenses, permits, or patents, legal documents, permits, and other
contracts.

9. Obtaining Funding

 Venture capital
o he business of venture capital is frequently misunderstood. Many startup
companies complain about venture capital companies for failing to invest in new
ventures or risky ventures.
 Angel investment
 o angel investment is much more common than venture capital, and usually is
much more available to startups, and at earlier growth stages too.
 Commercial lenders
o Banks are even less likely than venture capitalists to invest in, or loan money to,
startup businesses. They are, however, the most likely source of financing for
established small businesses.
 The Small Business Administration (SBA)
o The SBA guarantees loans to small businesses and even to startup businesses.
The SBA doesn’t make loans directly; it guarantees loans so commercial banks
can safely make them. They are normally applied for and administered by local
banks. You normally deal with a local bank throughout the process of getting an
SBA loan.
 Other lenders
o Aside from standard bank loans, an established small business can also turn
to accounts receivable specialists to borrow against its accounts receivables. The
most common accounts receivable financing is used to support cash flow when
working capital is hung up in accounts receivable.
  Friends and family funding
o If I could make only one point with budding entrepreneurs, it would be that you
should know what money you need and understand that it is at risk. Know how
much you are betting, and don’t bet money you can’t afford to lose.

10. Partnering and Strategic Networking

11. Entrepreneurship Skills

 Curiosity
o  Great entrepreneurs are tasked to discover new problems, reveal potential
niche opportunities, refactor their original business process, and innovate.
 Time management
o Careful priority planning, defining milestones, execution, and iteration are all
important.
 Strategic thinking
 o  Learning to decompose a problem to its core and reveal opportunities for
growth.
 Efficiency 
o You need high performance when it comes to solving a problem. Applying the
80/20 rule and other techniques for yielding higher results in less time. 
 Resilience
o  Handling rejections, stress, burnouts, lack of focus, slow progress.
Determination and eagerness to fight the same dragon every morning are
instrumental when it comes to building a business from scratch.
 Communication
o  Crisp and concise communication is paramount for each and every interaction
with clients, partners, peers, clients, prospects.
 Networking
o  Growing a network facilitates business opportunities, partnership deals, finding
subcontractors or future employees.
 Finance
o  Finance management will make or break a business.
 Branding
o  Building a consistent personal and business brand tailored to the right
audience.
 Sales
o Being comfortable doing outreach and creating new business opportunities.
Finding the right sales channels that convert better and investing heavily in
developing them.

12. Careers in Entrepreneurship

13. Agencies that make business legitimate entities

 BIR (Bureau of Internal Revenue)

 DTI (Department of Trade and Industry)
 SEC (Security and Exchange Commission)
 City Hall
 Local Barangay