CHAPTER TWO

SMALL BUSINESS MANAGEMENT

Introduction
Specifying size and standard to define small business is necessarily arbitrary, because people adopt
different standards for different purposes. Based on socio- economic conditions, countries define small
business differently. But all may use size and economic criteria as a base to define small business. Size
criteria include number of employees and the startup capital. Size does not always reflect the true
nature of an enterprise; in addition, qualitative characteristics are used to differentiate small business
from other business. The economic/control definition covers market share, independence and
personalized management.
Small and medium enterprises (SMEs) cover a wider spectrum of industries and play an important role
in both developed and developing economies. Ethiopia is no exception and SMEs occupy a prominent
position in the development of the Ethiopian economy. While the small entrepreneurs can set up a
unit even with less capital, enjoy quick returns and have the flexibility to handle the vagaries(change)
of the market, they have to face many problems like lack of finance, poor operations management,
lack of experience, poor financial management, etc,. The process of setting up a venture begins with
searching for an opportunity. Identifying a good opportunity is a difficult task and involves scanning
the environment and the use of creativity and innovation.
2.1. Concepts and definition of Small Business
Specifying size and standard to define small business is necessary because people adopt different
standards for different purposes. For example, legislators may exclude small firms from certain
regulations and specify ten employees as the cut-off point. Moreover, a business may be described as
“small” when compared to larger firms, but “large” when compared to smaller ones. For example,
most people would classify independently owned gasoline stations, neighborhood restaurants, and
locally owned retail stores as small business.
Similarly, most would agree that the major automobile manufacturers are big businesses. And firms of
in-between sizes would be classified as medium on the basis of individual viewpoints. There are two
approaches to define small business. They are:
1. Size criteria 2. Economic/control criteria.
1. Size Criteria
Even the criteria used to measure the size of businesses vary. Size refers to the scale of operation.
Some criteria are applicable to all industrial areas, while others are relevant only to certain types of
business. Examples of criteria used to measure size are: number of employees; volume, and value of
sales turnover, asset size, and volume of deposits, total capital investment, volume/value of
production, and a combination of the stated factors.
Even though number of employees-is the most widely used yardstick, the best criterion in any given
case depends upon the user’s purpose. To provide a clearer image of the small firms, the following
general criteria for defining a small business are suggested by Small Business Administration (SBA)
• Financing of the business is supplied by one individual or a small group. Only in a rare case would
the business have more than 15 or 20 owners.
• Except for its marketing function, the firm’s operations are geographically localized.
• Compared to the biggest firms in the industry, the business is small.

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 • The number of employees in the business is usually fewer than 100.
Australia Manufacturing services <100 employees
<20 employees

Germany SME <500 employees

France SME 10 -499 employees
China SME Depends on product group.
Usually 100 employees: investment ceiling US $8 million.

Indonesia SME <100 employees

Malaysia SME <175 full time workers investment US $1 million

This size criteria-based definition of SMEs varies from country to country. All over the world, number
of employees or capital investment or both has been used as the basis for defining SMEs.
The following are size criteria definitions of SMEs in some of the developing and developed countries:
Using capital as size criteria, Ministry of Trade and Industry of Ethiopia adopted official definition of
Micro and Small enterprises as follows:
Microenterprises are business enterprises found in all sectors of the Ethiopian economy with a paid-
up capital (fixed assets) of not more than Birr 20,000, but excluding high-tech consultancy firms and
other high-tech establishments.
Small Enterprises are business enterprises with a paid-up capital of not less than Birr 20,000 but not
more than Birr 500,000, but excluding high-tech consultancy firms and other high-tech establishments.
2. Economic/Control Criteria
Size does not always reflect the true nature of an enterprise. In addition, qualitative characteristics may
be used to differentiate small business from other business. The economic/control definition covers:
• Market share
• Independence
• Personalized management
All three of these characteristics must be satisfied if the business is to rank as a small business.
• Market share: The characteristic of a small firm’s share of the market is that it is not large enough
to enable it to influence the prices of national quantities of goods sold to any significant extent.
• Independence: Independence means that the owner has control of the business himself. It, therefore,
rules out those small subsidiaries which though in many ways fairly autonomous, nevertheless have to
refer to major decisions (e.g., on capital investment) to a higher level of authority,
• Personalized Management: It is the most characteristics factor of all. It implies that the owner
actively participates in all aspects of the management of the business, and in all major decision-
making process. There is little delegation of authority. One person is involved when anything material
is involved.
• Technology: Small business is generally labor intensive. Only few are technology intensive.
• Geographical area of operation: The area of operation of a small firm is often local.

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Generally, small business is a business that is privately owned and operated, with a small number of
employees and relatively low volume of sales. Small businesses are normally privately owned
companies, partnerships, sole proprietorships, or cooperatives.

2.2. Economic, social & political contributions of small business enterprise

Small and medium enterprises (SMEs) cover a wider spectrum of industries and play an important role
in both developed and developing economies. Ethiopia is no exception and SMEs occupy a prominent
position in the development of the Ethiopian economy. Over the years, the number of SMEs is
growing from time to time. They need a strong support on Scio- economic and political ground. Some
of the contributions are hereunder.
• Equitable distribution of wealth and decentralization of economic power
Unregulated growth of large-scale industries results in concentration of economic· power in the hands
of a few and consequently gross inequalities in the distribution of income and wealth will occur. On
the other hand, income generated in a large number of small enterprises is dispersed more widely and
its benefit is derived by the large segments of the society. This is due to wide spread ownership and
decentralized location of small scale enterprises. In this way small scale enterprises bring about greater
equality of income distribution. It is also argued that most of the small scale units are either
proprietary or partnership concerns. As a result, relations between workers and employers are more
harmonious in small enterprises than in large enterprises. Small enterprises also encourage
competitive spirit and generate the impetus to self development.
• More Employment creation capacity
Economic planners have realized the necessity of encouraging small enterprises because they require
less capital but generate more employment. The small-scale sector has the capacity to generate a much
higher degree of employment than the large-scale sector. This is because small scale enterprises are
labor intensive and thus create more employment with a given level of capital. More production
needs more capital in such a situation. The small firms will stand in good position because they are
less capital intensive and more labor intensive.
• Removing Regional Imbalance
Another problem is the continuous shifting of people from rural to urban areas which causes over-
crowding in cities with slum conditions due to lack of social and medical amenities which require
heavy investments. This problem can be solved by inducing people to set up small firms in rural areas.

Large scale industries have the tendency to concentrate in big cities. As a result semi urban and rural
areas remain deprived of the benefits of industrialization. Moreover, undue concentration of large
industries in urban areas creates several problems, e.g., pollution, shortage of civic facilities, etc. Due
to lack of employment opportunities in the country side, people migrate in large numbers to big cities.
Small scale units can be located in rural and semi urban areas to reduce regional disparities.
• Ancillary Function
Many small-scale enterprises supply parts and accessories to bigger enterprises. This ancillary function
involves specialization in specific areas and results in greater profitability.
• Export Promotion

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Small-scale enterprises are opening up fresh avenues in the export market in our world. Realizing the
importance of the small-scale sector in the economy the Ethiopian government has adopted several
measures to speed up the growth of small enterprises.
2.2.1. Advantages of going into Small Business
The desire for individuals to own and operate their own small business is growing. As stated earlier,
this continual creation of new business is at the heart of free enterprise system. For individuals
pursuing a career in business ownership, numerous benefits can be attained personally as well as
professionally. The next section explains the following common advantages of owning a small
business:
• Independence
Most small business owners enjoy being their own boss; they like the freedom to do things their own
way. Although a great deal of responsibility is associated with this independence, they are also willing
to assume it.
• Financial Opportunities
Another major reason for going into business for oneself is financial opportunity. Many small business
owners make more money running their own company than they would be working for someone else.
• Community Service
Sometimes an individual will realize that a particular good or service is not available. If the person has
reason to believe the public will pay for such output, he or she will start a small company to provide it.
• Job Security: When one owns a business, job security is ensured. The individual can work as long
as he or she wants; no mandatory retirement exists.
• Family Employment
Another advantage is the opportunity to provide family members with employment. This has several
benefits. First, owner-managers want to perpetuate their business and how better to do it, then to get
children or relatives to take it over. Second, higher moral and trust usually occur more in family-run
businesses than others. Third, in times of severe economic downturn, small business owners can
provide employment for family members.
• Learning from Challenge
Many small business owners are attracted by the challenge that accompanies going in to business for
oneself. Research reveals that most successful small business owners like to feel they have a chance to
succeed (they want to know success is possible) and the chance to fail. They learn from the past failure
or success.
• Introducing Innovation:
New products that originate in the research laboratories of big business make a valuable contribution
to our standard of living. There is question, however, as to the relative importance of big business in
achieving the truly significant innovations. The record shows that many scientific breakthroughs
originated with independent inventors and small organizations.
• Catering for small or niche markets: Large firms with high overheads must produce high levels
of output to spread costs. By contrast, small firms are able to make a profit on much lower sales
figures. They can therefore sell into much smaller markets that are ignored by larger organization: e.g.
a local window cleaner serving a few hundred houses, a specialist jeweler with personal clients.

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2.3 Small Business Failure factors
The following are some of the major factors, which cause most small business failures.
• Poor operations management – The manager lacks the ability to operate a small business.
• Lack of experience – Many owners start businesses in industries in which they have no experience
• Poor financial management – Many owners start with too little money and with little or no
understanding of financial spreadsheet applications.
• Over-investing in fixed assets – Owners who over-invest in fixed assets may find themselves with
no access to funds for working capital.
• Poor credit practices – Owners often sell on credit to meet (or beat) the competition and find that
they lack the additional working capital required or the ability to collect receivables.
• Failure to plan – The lack of a strategic plan to guide the business in the long run
• Unplanned and uncontrolled growth – Growth is natural and healthy, but unplanned growth can
be fatal to a business.
• Inappropriate location – Owners who choose a business location without proper analysis,
investigation, and planning often fail. Too often, owners seek “cheap” sites and locate themselves
straight into failure.
Other common causes of business failure include neglect, fraud, and disaster.
• Neglect occurs whenever an owner does not pay sufficient attention to the enterprise. The owner
who has someone else manage the business while he or she goes fishing often finds the business
failing because of neglect.
• Fraud involves intentional misrepresentation or deception. If one of the people responsible for
keeping the business’s books begins purchasing materials or goods for himself or herself with the
company's money, the business might find itself bankrupt before too long.
• Disaster refers to some unforeseen happening. If a hurricane hits the area and destroys property in
the company's yard, the loss may require the firm to declare bankruptcy. The same is true for fires,
burglaries, robberies, or extended strikes.

2.3.1. Problems in the Ethiopian Small Business

Small-scale businesses have not been able to contribute substantially to the economic development,
particularly because of financial, production, and marketing problems. These problems are still major
handicaps to their development. Lack of adequate finance and credit has always been a major problem
of the Ethiopian small business.
Small-scale units do not have easy access to the capital because they mostly organized on proprietary
and partnership basis and are of very small size. They do not have easy access to industrial sources of
finance partly because of their size and partly because of the fact that their surpluses which can be
utilized to repay loans are relatively small. Because of their size and partly because of the limited
profit, they search for funds for investment purposes. Consequently, they approach traditional money
lenders who charge extra high rate of interest hence small enterprise continue to be financially weak.
Small scale enterprises find it difficult to get raw materials of good quality at reasonable prices in the
field of production. Furthermore, the techniques of production, which the enterprises have adopted, are
usually outdated. Because of their poor financial position they are not able to buy new equipment,
consequently their productivity suffers.
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 Small business owner can avoid some of the common pitfalls that lead to business failure by:
• Knowing the business in depth
• Developing a solid business plan
• Managing financial resources
• Understanding financial statements
• Learning to manage people effectively…
2.4. Entrepreneurship and Business Enterprise Creation
Once an individual decides to take up entrepreneurship as a career path, to be a job provider instead of
a job seeker, he/she has to establish an enterprise. However, setting up of a small new enterprise is a
very challenging as well as a rewarding task. Several problems are involved in this task. It is extremely
important to take utmost care in identifying the product or service to be launched by the entrepreneur;
otherwise it might prove to be a costly mistake. He/ she must develop sensitivity to changes around
him/her, which can provide business opportunities and then carefully scan his/her environment to
generate ideas. After tentatively identifying four to five ideas, he/ she should go in for detailed
assessment and feasibility study. This will help the entrepreneur to crystallize one idea in an objective
and systematic manner, which will greatly enhance his/ her chances of success.
Figure 2 shows the entrepreneurial process to set up a business. And then the detail of each process is
herewith.

2.4.1. Opportunity scouting/ sensing

The entrepreneurial process begins with identifying an opportunity and evaluating it through an initial
screening process. If it appears reasonable, a detailed business plan can be made. If not it can be
discarded.
Clearly, except in rare cases, opportunities just do not ‘occur’ to the individual. These have to be
actively searched/ scouted for. Hence, the startup process for a new venture creation begins with
scouting for opportunities.

. Figure 2 - Opportunity – Idea - Analysis

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 The process may start from an arm’s length, that is, one may just look around one’s immediate
context- family, community, and job and build up a case for business from the bottom-up. Else, one
may take a top-down approach, starting from the scanning of the international and macroeconomic
environment and conducting/using industrial/consumer surveys and identifying appropriate business
ideas. An entrepreneur can sense and intelligently seize opportunities, which exist in the environment.
Often it is said that necessity is the mother of all inventions. However, in the context of
entrepreneurship, opportunities besides existing in the environment in the form of needs and problems
of people around might have to be ‘created.’ Thus, the entrepreneurs meet not only the existing needs;
but they also create the new needs as well.
2.4.2. Opportunity scanning
Once the entrepreneur perceives opportunities, it becomes important for him/ her to scan the
environment. It is quite possible that many of the promising opportunities might not make commercial
sense. Scanning involves close examination of the environmental conditions and their impact upon the
business idea. It is not a superficial exercise but rather an attempt to look beyond the immediate
opportunities to the emerging trends. An attempt can be made to modify, adapt, rearrange, substitute,
combine, reverse etc. What to be scanned by an entrepreneur are shown as follows:
I. ENVIRONMENTAL ANALYSIS
Entrepreneurship does not exist in a vacuum. It is affected by and affects the environment.
Relationship between entrepreneurship and environment is shown in the figure below.

Figure 3 – Entrepreneurship Vs Environment

As the economies are getting internationally integrated, for an analysis of the environment of
entrepreneurship you would be required to develop an understanding of macroeconomic, and
industry/sector specific factors.
a. Macro environment
The macro environment of an entrepreneur consists of the political, technological, social, legal and
economic environments. All of these are not immediate part of the entrepreneur’s venture yet they
have an impact on his enterprise. Let us now examine the elements of the macro environment of the
entrepreneur one by one.
• Political Environment
Entrepreneurship can flourish under a stable and conducive political climate. Government policies
which give priority to growth of trade and industry, infrastructural facilities, and
institutional support gives a stimulus to entrepreneurship. Considering the employment and export
potential, the short gestation period and the fact that small industries act as a seedbed for nurturing and
developing entrepreneurship, the government is supportive of the small-scale sector. It has created an
extensive institutional framework for provision of finance, technology as well as help in marketing is
made available by government institutions.

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• Technological Environment
The level of technology, the trends and the rate of change in technology all have a direct impact on
enterprise creation. Changes in technology, both innovation and invention change industry structures
by altering costs, quality requirements and volume capabilities. In the advanced countries of the West
more pure inventions have been taking place which created new industries for example Automobile,
Aeronautical, Computer Hardware, Telecommunications, Pharmaceuticals etc. In developing
economies there is usually an imitation of the above through greater process innovation.
It has been observed that many small units use obsolete technologies and do not invest in research and
development (R&D). As a result their goods are of poor quality and lack standardization. A direct
consequence of this is their inability to face competition. In many industries the technological
threshold is low and as a result the success of an entrepreneur promotes many others to start similar
businesses and he loses the initial competitive advantage. On the other hand if he/she uses certain
costly technology chances of others to quickly becoming his competitors are less.
• Socio-Cultural Environment
The customs, norms and traditions of the society also play an important role in either hindering or
promoting enterprise. For example, we sometimes say that the Gurage people are very enterprising. In
many traditional communities of our country working of females out of the home environment is
frowning upon. Many times the choice of occupation is also dictated by the family traditions.
Socio-cultural factors are also crucial for the operations of multinational companies. It is very
important for a multi-national company to understand the socio-cultural background of its customers
in the host country. Socio-cultural environment is also concerned with attitudes about work or quality
concerns, ethics, values, etc.
• Legal Environment
The laws of the country can make the process of setting up business very lengthy and difficult or vice-
versa. The labor laws and legal redressing system also have a bearing on business operations. Patents,
agreements on trade and tariffs and environmental laws also need to be studied. Copyright, trademark
infringement, dumping and unfair competition can create legal problems in the shape of long drawn
out court battles. Simpler legal procedures can facilitate the process of new venture creation and its
smooth functioning including setting up of ancillaries, foreign tie-ups and joint ventures.
• Economic Environment
Liberalization, globalization and opening of the economy of Ethiopia, has increased the space for
business operations. It has also opened channels for foreign investors to start operations. The resultant
competition, rapid and complex changes have generated uncertainties, which have to be handled by
the entrepreneurs.
b. Sectoral Analysis
After having understood the general environment in which the business has to take birth, it is
important to study the sector or industry conditions in which the entrepreneur proposes to launch a
venture. This will help to put the proposed venture in the proper context. The purpose of industry
analysis is to determine what makes an industry attractive- this is usually indicated either by above
normal profits or high growth rates. For such analysis one should study the history of the industry, the
future trends, new products developed in the industry, forecasts made by the government or the
industry. It is also advisable to study the existing or potential competition, threat of substitutes and

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entry barriers. Sometimes there might be bilateral agreements between countries regarding some
sectors or government policy that is sector specific or some event that throw up challenges.
There might be certain constraints regarding availability of technology, manpower or raw materials,
which are industry specific. Similarly there might be certain strengths of a particular sector, which
might outweigh some negative general trends. Currently the cement and steel sector are on an upward
swing with a favorable climate in the housing sector as well as government’s thrust on the construction
sector.
II. SWOT analysis
At this stage, conducting a SWOT analysis will help the entrepreneur to clearly identify his/her own
strengths and weaknesses as well as the opportunities and threats in the environment. Threats in the
environment can arise from competition, technological breakthroughs, change in government policies
etc. He / she might posses certain unique skills or abilities, which along with his/ her knowledge and
experience can provide him/ her cutting edge.
Strengths are positive internal factors that contribute to an individual’s ability to accomplish his/her
mission, goals and objectives. Weaknesses are negative internal factors that inhibit an individual’s
ability to accomplish his/her mission, goals and objectives. An entrepreneur should try to magnify his
strengths and overcome or compensate for his/her weaknesses.
Opportunities are positive external options that an individual could exploit to accomplish his/her
mission, goals and objectives. Threats are negative external forces that hinder an individual from
accomplishing his/her mission, goals and objectives. These could arise due to competition, change in
government policy, economic recession, technological advances etc. An analysis of the above can give
the entrepreneur a more realistic perspective of the business, pointing out foundations on which he can
build future strengths and remove obstacles. The hierarchical approach to the development of business
idea is given below.

Figure 4 – Hierarchical environmental analysis

The entrepreneur has to use the opportunities provided by the environment, combine these with his/her
unique strengths in terms of knowledge, skills, experience etc. and then take a decision to launch a
particular product or service. The proposed product / service should be compatible with the capability
of the entrepreneur, resources available in the environment and the need of the society.
2.4.2.1. Opportunities In Contemporary Business Environment

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We have observed above that the business environment is constantly evolving as a result of
demographic, technological, legal and other changes. These constantly throw up new challenges for
entrepreneurs. Some opportunities, which can be explored by the potential entrepreneur, are given
below.
• Niche Marketing
Niche marketing is a marketing strategy, which can be intelligently used by a small entrepreneur. The
entrepreneur can try and identify a very specific market segment called a niche. By providing personal
service, convenience and value to the customers the small entrepreneur can successfully compete with
the bigger market players. The standardized goods produced on large scale cannot cater to the special
requirements of a small segment of the market. For example there is an emerging niche in the world
food market for health conscious people who want to consume only organically grown foods.
• Service Sector
Unlike products, services are not tangible, they cannot be stocked, and they cannot be marketed
through wholesalers and retailers - if you want a haircut you will have to go the barber or a beauty
saloon. Production and consumption are simultaneous. Another advantage of setting up a service
enterprise is that they require lower investments compared to the manufacturing sector.
• Franchising
Franchising takes a proven formula for success and expands it. Business franchising is a name given to
relationship in which the owner of a product, process or service allows a local operator to set up a
business under that name, for a specified period. Franchising is an arrangement between the buyer
who is called a franchiser and the seller who is called the franchisee. The buyer gets the right to sell
the trademark product or service to the franchisee. He is relieved of most of the functions involved in
setting up of an enterprise and gets the benefit of visibility and recognition. Usually the franchiser
looks after the training, design and layout, etc. for the franchisee. The franchisee is able to expand his
market geographically without having to worry about day-to-day operations. The licensing system
gives the franchisee barriers to entry, standardization and incentives for growth. However the
franchisee is obliged by the franchising agreement to be careful that the standards of quality are
adhered to.
• Tourism
Tourism is amongst the fastest growing industries the world over; it is the highest foreign exchange
earning sector for many countries and offers tremendous opportunity for entrepreneurship and
employment. It includes any business connected with the activities of tourists: -
• Travel arrangement (rail, road, air or sea)
• Accommodation (hotels, motels, guest houses)
• Food
• Entertainment
Apart from the potential in providing these direct services, tourists use many indirect services. For
example, they hire taxis for local site visit, they need guides and interpreters. There is a shortage of
service providers in all these areas. The gap between the demand and supply is likely to increase in the
foreseeable future opportunity. The growing segments of tourism include Cultural Tourism, Heritage
Tourism, Adventure Tourism, Eco-Tourism, Rural-Tourism, and Religious Tourism. Some people
have even capitalized on the high cost of Medical Services abroad and have promoted Medical
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Tourism. It is clear from the above that this sector has untapped potential which can be exploited by
potential entrepreneurs.
• Entertainment
The entertainment industry is another sector, which boasts of very high rates of growth. There are
innumerable entertainments ranging from news, sports, cartoons, family dramas, music, religious etc.
Music industry is also flooded with music videos, remixes, music and film nights, preparation and
launch of CDs and DVDs.
Enterprises can be set up to provide services for pre and post production including script writing,
music, dubbing, animation, editing to name a few. Like the tourism sector the entertainment sector too
has a host of feeder activities attached to it - supply of jewelry, food, banners, posters which provide
endless entrepreneurial opportunities.
• Green Entrepreneurship
Conservation and Environment protection are presently getting a lot of attraction. Green
Entrepreneurship signifies concern for the environment. Such business activity should be chosen
which has the least adverse impact on the environment. This concept also stresses upon the prevention
of waste at the source rather than at the end of the process. It concentrates on new and creative ways to
recycle usable materials, use of substitutes or processes that are less polluting as well as adoption of
waste minimization strategies.
2.4.3. Idea Generation
The starting point for any successful new venture is the basic product / service to be offered. This idea
can be either generated internally or externally .For a new entrepreneur it becomes very difficult to
filter information from the business environment, identify opportunities, evaluate them and then
crystallize one specific idea. Developing a hobby, difficulty in obtaining a satisfactory product or
service, evaluating new products being offered in the market and active engagement in Research and
Development can help in generating a number of ideas.
A reading of the Economic Times, business magazines, watching special business programs on the
television, discussions with professionals, friends, even teachers, surfing the internet all help to
provide valuable inputs .A study of government policies for example tax incentives and holidays for
setting up projects in backward area can help an entrepreneur to arrive at some decision . Attending an
Entrepreneurial Development Programs can provide him/her with a sound understanding of all the
steps one has to take to initiate and run a venture. The sources of idea generation are listed in the
figure below.

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Once the idea or group of ideas is generated it has to screened or evaluated to determine its
appropriateness for further development. Ideas showing the most potential are subjected to a feasibility
analysis and a Project Appraisal is then made. You will learn about these stages of a venture starter in
the next chapter
2.4.3.1. Role of Creativity and Innovation in Idea Generation
It is frequently commented that the only constant thing in business is change. It is a true statement as
the business environment is constantly changing for any number of reasons. There can be
technological break thorough like the IT revolution, demographic changes like nuclear families,
working parents, which have fueled a demand for day care centers, old people’s homes, fast food etc.
Changes in tastes and preferences have resulted in mushrooming of restaurants and designer clothes. A
natural disaster can create a demand for tents, blankets, medicines, torches, food etc. An entrepreneur
with his/her vision, creativity and innovation can capitalize on these changes and create customers.
Creativity is the ability to bring something new into existence. Innovation is the translation of an idea
into application, which has a commercial value. Creativity is a prerequisite for innovation. It can be
developed by any individual who has a concern for excellence and is willing to work hard. A creative
person develops new alternatives and offers innovative solutions.
It is through their creative thinking that entrepreneurs find solutions to problems, handle adversity and
exercise control over business. Creativity helps not only in doing different things but also in doing the
things differently. Idea generation, as part of creativity process, a number of ideas and solutions are
generated depending upon the personal knowledge, experience, insight etc. of the potential
entrepreneur.

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