Introduction

Entrepreneurship is to a large degree a mind-set, always striving to do new things in an

innovative and better way. The meaning of entrepreneurship is derived from the French
seventeenth-century term for someone who “undertakes” and more specifically someone who
undertakes a specific project or activity. In the nineteenth century, the French economist Jean
Baptiste Say refined the meaning of entrepreneurship to individuals who create value by shifting
resources from lower- to higher-valued activities. The higher value activities can be activities
that bring value to both individuals and society.

It is the twentieth-century thought on entrepreneurship from Joseph Schumpeter, an Austrian

born and then Harvard University–based economist and sociologist, which has most influenced
contemporary thinking about entrepreneurship. In Schumpeter’s view, entrepreneurs are
innovators who drive the “creative destruction” process, reforming or revolutionizing the pattern
of production. In many respects, sustainable businesses are significantly changing, if not
revolutionizing, the patterns of production and service delivery, transforming business practices
in ways that benefit the environment and society.

The Virtual Evolution of the Industrious Entrepreneur

In the Middle Ages in Europe only a quarter of the population worked outside of agriculture.
They consisted of merchants, craftsmen, and textiles. The market place for the first time became
a central focus. The period saw 10% of the population controlling 50% of the wealth.

Then with colonial expansion and advancement in ship building lead to the creation of The
Dutch East India Company in 1637. The Company owned at its peak over 4785 ships that
transported more than 2.5 million tons of goods. Among these goods would be Tobacco and
Sugar Cane, which would be traded and sold for cash at the numerous trading posts popping up
all over the growing young country the US.

Industrial Revolutions

Refining times came along with the industrial revolution. The entrepreneurs of the area were
forward thinking individuals and where able to transform the US as well as the global landscape,
with remarkable advancements in technology, transportation, energy and communication. The
most telling development of this age was the enormous expansion of a centralized credit system.
This new and expanding system led to the first ideas known as inflation.

Influence on Advertising

As credit and inflation was taking of around the world and in the US, the advertising industry
finally found its own well-grounded foothold. The industry saw a 4% increase with over 600
million dollars of revenues in the year 1910. Mass media had become a reality with newspapers,
radio and a TV ad boom in 1948. Advertising revenues increased by an earth shaking 515%
between 1947 and 1948.

Information Age

The PC brought with it the rise of the information age. The internet opens the air waves to a
global reach and constant connection between individuals and business in every part of the
world. The small merchant is finally able to reach buyers 24/7 on every continent. In 2012 the
overall value of the merchandise sold on EBAY has increased by an average of 14% every year
since its inception. The most interesting statistic about EBAY is that 57% of revenues are from
outside the US.

With the advancements of GOOGLE advertising resources and Cloud storage and interaction,
today’s inventors and entrepreneurs are hitting their stride with crowd sourcing to increase the
industries pace of innovation. Generating new ideas or by completing tedious tasks by organizing
the resources of larger groups of people. P&G says that of all new products are generated from
crowd sourcing which has seen an increase in new product development of over 50%.

What the Future Holds

What is the future of entrepreneurship headed? The digital information, share mobile economy is
hear and is sure here to stay. Have an idea, kick it around the mind share community, enlist
individuals with development and building tasks, market and secure investors. Are you ready for
the future because it is here today!

Entrepreneurship is characterized by the following features:

1. Economic and dynamic activity:

Entrepreneurship is an economic activity because it involves the creation and operation of an

enterprise with a view to creating value or wealth by ensuring optimum utilisation of scarce
resources. Since this value creation activity is performed continuously in the midst of uncertain
business environment, therefore, entrepreneurship is regarded as a dynamic force.

2. Related to innovation:

Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an

individual to continuously evaluate the existing modes of business operations so that more
efficient and effective systems can be evolved and adopted. In other words, entrepreneurship is a
continuous effort for synergy (optimization of performance) in organizations.

3. Profit potential:
“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the
risk of developing an idea into an actual business venture.” Without profit potential, the efforts
of entrepreneurs would remain only an abstract and a theoretical leisure activity.

4. Risk bearing:

The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and
implementation of new ideas. New ideas are always tentative and their results may not be
instantaneous and positive.

An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period (time
gap between the conception and implementation of an idea and its results), an entrepreneur has to
assume risk. If an entrepreneur does not have the willingness to assume risk, entrepreneurship
would never succeed.

Importance of Entrepreneurship

Entrepreneurship is considered as an important pre–requisite for economicdevelopment.

Entrepreneurs, who imbibe the quality of entrepreneurship, play a major role not only in
organizing production, but in a broader sense, promote the process of economic development.
According to Joseph Schumpeter the function of an entrepreneur is to reform or revolutionize the
pattern of production by exploiting an invention or more generally an untried method of
producing a new commodity or producing an old one in a new way, by opening up a new source
of supply of raw materials or new outlet for product by organizing an industry. To undertake
such new things is not an easy task and constitutes a distinct economic function, first because
they lie outside of the routine tasks which everybody understands and secondly, because the
environment resists in many ways that vary according to social conditions from simple refusal
either to finance or buy new things to physical attack on man who tries to produce it. To act with
confidence beyond the range of familiar options and to overcome the resistance requires
aptitudes that are present in only a small fraction of the population and that define the
entrepreneurial type as well as the entrepreneurial function.

Entrepreneurship is important because it helps to drive the economy, it allows people to bring
creativity into the marketplace, it creates companies with the potential to hire millions of people
and it brings new products and services to market. In addition, impact entrepreneurship, in which
businesspeople pay attention to the social impact of their products and investments, aims to
improve society and the environment.

‘Inclusive Growth’, thus has become the central issue of policy making inthe recent past.
Promotion of entrepreneurship consequently has emerged as a political tool to address the
imbalances and to ensure balanced regional development. The role of entrepreneurship in
economic development involves more than just increasing per capita output and income; it
involves initiating and constituting change in the structure of business and society. This change
is accompanied by growth and increased output, which allows more to be divided by the various
participants. The factor responsible for change, development, and ultimately economic growth is
innovation. Innovation is the key for not only in developing new products (or services) for the
market but also in stimulating investment interest in the new ventures being created.

One of the essential inputs in any economic advancement of a country is entrepreneurship. The
more entrepreneurship activity the more will be the economic development. If it has
entrepreneurship, any type of economic climate could establish to its gains. It is necessary to
acknowledge entrepreneurial activities as a different and crucial aspect of production.
Entrepreneurship is the life blood of any economic climate and it applies even more to the
developing economy.

Entrepreneurs act as starter leader to give spark to economic activities by entrepreneurial

judgments. Entrepreneurs play major roles not only in the growth of industrial sector of a country
but also in the development of farm and service sector. In addition to the above economic
advantages entrepreneurship promote in wealth creation and distribution. It also help in
increasing gross national product and per capita income. This will create improvement in the
standard of living of a society. Countries export trade will be enhanced by entrepreneurship
activities. All in all entrepreneurship facilitates overall development of a country.

Importance of Entrepreneurship to Economy

1. Economic Independence
2. Wealth creation
3. Employment Generation
4. Improvement in Standard of Living
5. Balanced Regional Development
6. Development of managerial capabilities
7. Creation of organizations

Economic Independence: The desire for independence is one of the strong forces that drive an
individual to seek entrepreneurial careers. They prefer independence to dependence. They
believe in self-reliance. They don’t like working for others. The love for pursuing goals to realize
their potential results in the creation of organizations which did not exist before. New processes,
products and services are created. Social changes are brought out. Thus, entrepreneurial activities
displayed by motivated individuals, on the whole, help the nation to attain self-reliance and to
gain respectability in the comity of nations. A wonderful example can be cited in our own
country in form of the Green Revolution, the tremendous entrepreneurial qualities exhibited by
Indian farmers in the 1960s and 70s enabled to transform India into a net exporter of food grains
from the state of an importer.
At the micro level too, promotion of entrepreneurship fosters economic empowerment of the
people who otherwise would look up to the Government for their livelihood. This has amply
been demonstrated in many regions of the country by the various NGOs and developmental
agencies’ initiatives by spreading micro and tiny enterprises through the availability of micro-
credit. These experiences show empowerment of people which in turn contributes to the
empowerment of a nation over a period of time.

Wealth Creation: Entrepreneurs create organizations. They bring intouse resources which
otherwise would remain idle. They combine the available resources judiciously in such a way
that new combinations of resources are conceived. New asset bases are created through which
wealth creation process is ignited. Entrepreneurial function thus is appropriately compared to
that of a spark plug in an internal combustion engine. With one decision taken by an individual
to strike, the whole process is set in motion. An organization is born when economic activity is
triggered. Along with his/her unit, a number of ancillary/supporting services units come into
existence. The whole place/region, depending on the size, volume and scope of enterprise gets
new life. It enhances the employment generation potential of a place and consequently leads to a
higher income and quality of life both directly and indirectly. Improvements in infrastructural
facilities like banking, transport, telecommunications, housing and other civic amenities take
place in the process.

Employment Generation: The oft repeated saying that entrepreneurs are ‘job makers and not
job seekers’ is more than true. Bulk of the jobs is created by entrepreneurial ventures. Compared
to the western industrialized nations, creation of jobs for millions of young women and men is a
major challenge faced by many Asian nations, given the size ofpopulations in these countries.
The problem is more acute for nations like India which is the second largest populous nation,
next to China in the world. Government cannot by itself absorb such a large number of people in
gainful employment. Government’s primary task is governance of the nation. Therefore, much is
expected through private initiative. Entrepreneurs are called upon to play an important role in job
creation through their initiative. Meaningful employment to the vast masses is possible only
through the entrepreneurial ventures across the nation-be it organized or unorganized,
manufacturing or services, urban or rural sectors. Apart from industrial entrepreneurship, social
entrepreneurship aimed at economic and social empowerment of rural, less privileged weaker
sections and illiterate people through NGOs and self-help groups (SHGs) is gaining increased
attention, of late. The latest buzz is ‘inclusive growth’-amulti-pronged approach involving
Government, private sector and independent social service agencies is the need of the hour. It
calls for a high degree of entrepreneurial initiatives at various levels across the nation.

Improvement in Standard of Living: Many of the products andservices that we take for
granted today are the gifts to the mankind by the creative efforts of enterprising people. It is
somewhere someone’s imagination and the willingness to try out new things that has been
changing the quantity of life. Imagine for a while how human life would have been, but for the
contributions of Thomas Edison, Wright brothers, Alexander Graham Bell, down to the present
day innumerable entrepreneurs whose contributions touch almost every aspect of human life-be
it products or services like healthcare, transportation, banking and insurance,
telecommunications, media and entertainment and social awakening.

Thus, the progress of the mankind is invariably interwoven with the achievements of the
entrepreneurs. It is everybody’s knowledge that today we are just a mouse click away from the
supply of many products and services.

Balanced Regional Development: Different regions of the world are endowed with different
resources. Nature has been kind to some regions while it is harsh to some regions leading to wide
variances in respect of economic development. Such variances obviously contribute to the
differences in the economic and social development causing social tensions leaving a feeling of
economic and social exclusion among the people of less developed regions. One of the root
causes for the social tensions, disturbances and upheavals is the uneven development of various
regions. The problem is more pronounced in developing nations like India. The divide between
urban and rural, developed and underdeveloped states as reflected in the wide disparities in
income and consumption levels, quality of life and general awareness have become issues of
major concern to the policy makers. Government has accordingly initiated several measures to
address this lopsided growth and uneven distribution of income generating opportunities. One
important initiative in this direction is through the promotion of entrepreneurship in the less
developed regions, empowerment of the people belonging to less privileged segments of the
society. The emphasis now is to reach out to such sections through appropriate entrepreneurship
models. Provision of capital, incentives, schemes, tax rebates, development and infrastructural
facilities, launching of entrepreneurship development campaigns -all aim at promoting
entrepreneurial ventures in the less developed regions.

Development of managerial capabilities: The biggest significance of entrepreneurship lies in

the fact that it helps in identifying and developing managerial capabilities of entrepreneurs. An
entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of
cost and benefits implications, and finally chooses the best alternative.

This exercise helps in sharpening the decision making skills of an entrepreneur. Besides, these
managerial capabilities are used by entrepreneurs in creating new technologies and products in
place of older technologies and products resulting in higher performance.

Creation of organizations: Entrepreneurship results into creation of organizations when

entrepreneurs assemble and coordinate physical, human and financial resources and direct them
towards achievement of objectives through managerial skills.
Concept, becoming an entrepreneur

Being an entrepreneur is a high-risk, high-reward position. It's full of stressful situations, sure,
but it's also chock full of rewards and a sense of accomplishment. It's not as hard as it seems -- as
long as you have some diligence, patience, and, of course, a good idea, you'll be your own boss
sooner than you think!

Examining Your Personality

Think about your priorities. Ask yourself some questions about what you want out of life, as well
as out of your business. What does achieving your goals in life look like? What is important to
you? What are you willing to sacrifice? Consider what you need to make these priorities and
goals happen. Is it a certain amount of money? A certain amount of free time to spend with
friends and family?

Decide whether your personality is a good fit for entrepreneurship. Becoming your own boss is a
goal for many people, but some people are better suited to this lifestyle than others. Knowing
how you are likely to react to events will help you achieve your goals. Are you comfortable with
a lot of responsibility? Entrepreneurs often have no backup and are responsible for the success or
failure of their business. Do you enjoy interacting with people? Almost all entrepreneurs have to
do a lot of customer service, particularly at first. If you aren’t good with people, you may have
difficulty getting your business off the ground. Are you able to accept uncertainty and even
failure? Even the most successful entrepreneurs -- for example, Bill Gates, Steve Jobs, and
Richard Branson -- have had businesses fail on them, often several times, before they found a
formula that worked. Do you thrive on problem-solving and creative solutions? Entrepreneurs at
all levels face many problems that they need to find creative solutions for. A high tolerance for
frustration and the ability to think through problems will serve you well as an entrepreneur.

List your strengths. Be honest with yourself as you consider your strengths and weaknesses.
When you talk to potential investors or sell to clients, you will need to have a very clear idea of
what your strengths are so you can communicate them to others.

Determine to succeed. Energy and determination will get you through many of the hurdles you
will face as a beginning entrepreneur. Be idealistic enough to believe in yourself, but pragmatic
enough to examine the realities of your situation.

Setting Your Foundations

Brainstorm a great idea. Most businesses start with one compelling idea — whether it's a
service people need, a product that would make life easier, or something that combines both.The
business world is full of great ideas (and many not-so-great ones). What will set yours apart is
whether you can find a niche need to fill.

You don’t necessarily have to do something revolutionary or brand-new to be successful. You

just have to be better at something than your competitors.

You will likely be more successful if you do something you know and love. Going into computer
programming might make your business very marketable, but if your heart’s not in it you won’t
have the energy to keep yourself going.

If you’re having trouble thinking of an idea, create a list of things about your target market, such
as places they shop and things they purchase. Narrow the list down to about three items, keeping
cost, manufacturing time, and popularity in mind. Find the easiest, most realistic product you can
offer.

Research your market. The key to starting a business is to know whether there is a demand for
your product or service. Is what you can offer something that is not being done as well as it could
be? Is it a need that doesn’t have enough supply to support demand?

There are many sources of free industry information. Search online for industry and trade
associations in your target market and read the articles and press releases they post. You can also
get valuable demographic information from census data.

The U.S. Small Business Administration has a website with excellent suggestions on how to
come up with venture ideas, conduct market research, how to write a business plan, and how to
recruit investors. It is an invaluable source of reliable information if you’re starting a business.

Talk to potential customers/clients. You can have the greatest product or service in the world,
but if nobody wants to pay you for it, your business will crash and burn. Talking to others will
also help you prepare to persuade investors.

Ask for honest feedback when you talk to potential customers. Your friends may try to be nice to
you when you propose your idea, but critical feedback that points out weaknesses or problems
will be much more useful, even if it isn’t always easy to hear.

Determine what you can risk. Entrepreneurship is always a game of risk and reward, but often
the risk is greater (especially in the beginning). Take stock of all your assets and figure out how
much money (and time and energy) you actually have to invest.

In addition to considering your savings, credit, and other sources of capital, consider how long
you can afford to go without making a profit. Small businesses are rarely profitable immediately;
can you afford to not draw a salary for perhaps several months or even a few years?
Understand the idea of “acceptable loss.” According to ‘’Forbes’’, “acceptable loss” is the
idea that you should first determine the possible downside of your business venture and then
invest only what you can actually afford to lose should your business turn out differently than
you’d hoped. This limits the scale of failure if your venture doesn’t work out.

Commit to a goal, not a plan. One of the most important things in becoming an entrepreneur is
flexibility. You can’t control everything about your business, and adaptation is vital to survival.
If you’re overly committed to a plan, you may sabotage yourself.

Writing Your Business Plan

Create a business plan. A business plan typically describes what your company does (whom
does it serve? what does it provide?), provides a market analysis, includes a detailed description
of the product or service, and projects the expected financial future of your company for the next
3-5 years. If you are hoping to attract investors, they will want to see a detailed, thorough
business plan.

Write a company description. This should be a brief summary of what your business does,
what needs it satisfies and how, and why it is superior to other ventures of its kind. Be concrete
and specific, but keep this short -- imagine it as an “elevator pitch”.

Present your market analysis. If you have done good market research, you should be able to
talk in specifics about your chosen industry or field, your target consumer market, and your
projected market share. This section should be as detailed as possible, as it needs to convince
investors that you know what you’re doing.

One of the mistakes many beginning entrepreneurs make is failing to narrow their target market
and trying to sell to too wide an audience. While it’s tempting to believe that everyone needs and
will love your product or service, the reality is that they won’t. It’s okay to start small.

Include a section on organization and management. Even if your company is only you at this
point, use this section to provide information on who owns your company, what their
responsibilities are, and how you will structure your business as it expands. (Will you have a
board of directors? How will your employees be organized?) Investors want to see that you have
thought about the future of your company.

Provide information on your service or product. This is where you can get into the specifics
of what exactly your business will provide your customers. What are you going to provide? What
need will it fill? What competitive advantages does it have over other similar products? [19]

Provide details from potential customers’ point of view. If you have already talked to potential
customers, you should have a good idea what their opinions of your service or product are.

If you are planning to sell a proprietary good or service, include any patent information or other
ways you plan to protect your intellectual property. Investors don’t want to invest in a business
only to have their product scooped by a competitor.

Describe your marketing and sales strategies. This section will focus on how your business
plans to attract and keep customers. How do you plan to reach your target consumers? How will
you use marketing to grow your business? Do you already have potential customers lined up, or
will you have to start completely from scratch?

Outline a funding request. If you are seeking investors or a bank loan, you will need to state
exactly what you need to get your business started. You should include any amount you are
investing yourself, how much money you need from your investors, and (most importantly) how
you plan to use this funding.

Investors like specifics. A funding request that just says “I need a million dollars” is less likely to
be persuasive than a requests that breaks down costs and expenditures.

Outline your financial projections. If you’re just starting out, you won’t have much historical
financial data to work with. You should include any collateral you have that can guarantee your
loan, but only list what you can truly afford to lose.

You should also include information on prospective financial data. This may seem like simply
making up numbers, but it should incorporate the data from your market analysis. How well are
your competitors doing? What do their expenditures and cash flows look like? You can use these
to help you make projections for your company.

Make sure that your financial projections match the figures in your funding request. If your
projections show that you will need $500,000 but you’ve only asked for $200,000, this could
suggest to investors that you haven’t done your homework.

Preparing Your Pitch

Develop an elevator pitch. This type of pitch is called an elevator pitch because it should be
concise and informative enough to let someone know who you are, what your business does, and
why they should be interested -- all in the time it takes to ride an elevator.[25]

First, consider the problem or need that your venture addresses. This is often effectively stated as
a question, which is why TV advertisements often begin with questions such as “Did you know
that….” or “Are you tired of…” or “Have you ever had a problem doing…”.
Second, consider how your product or service fixes the issue you’ve identified. This should be
no more than 1 or 2 sentences, but should be as specific as possible without getting into jargon.

Third, describe the main benefit of your product or service. This could be a description of how it
achieves something for the customer, or how it outperforms your competition.

Finally, consider what you need from investors to get your venture going. This part can be
longer, because it needs to express your basic needs, your experience and credentials, and why
your investors can trust you to succeed.

Keep your elevator pitch short! Many experts suggest that it should not be longer than one
minute. Remember: attention spans are short. Hook your audience quickly, or you may not hook
them at all.

Create a PowerPoint that summarizes your business plan. This should summarize all the
information in your business plan. You should be able to deliver it, without rushing, in about 15
minutes.

Practice your pitches. You will likely be jittery about pitching your business at first, so get in
some practice. You can rehearse delivering your elevator pitch and discussing your business plan
with friends, coworkers, and other colleagues.

Ask for feedback. You will probably make mistakes at first. Ask the people you practice with
for honest feedback. Were you expressing your ideas clearly? Did you sound nervous? Did you
talk too quickly or too slowly? Where do you need to explain more, and are there explanations
you could cut?

Taking Your Ideas to Others

Network, network, network. Attend trade and industry shows in your field and talk with
exhibitors. Join relevant professional associations. Build a strong social network with other
entrepreneurs, both online (using social media and professional sites like Linkedin) and in
person.

Attending networking events such as local fairs hosted by your chamber of commerce is a great
way to connect with other entrepreneurs in your area. These connections can provide you with
support, ideas, and opportunities.

Be generous to others. Don’t consider networking with other entrepreneurs only in terms of what
they can give you. If you offer advice, ideas, and support to others, they will be more likely to
want to help you as well. Nobody likes to feel exploited.
Pay attention to others’ ideas. Even if you’re in direct competition with someone, you can
probably still learn from them. You can learn from others’ mistakes as well as their successes,
but only if you listen to them.

Develop a strong brand. You need to be able to effectively communicate your business to
others in person and online, and that means having a strong brand presence. Professional-looking
business cards, a website, and social media accounts (Twitter, Facebook, Pinterest, YouTube,
etc.) that provide information about your business in an attractive, cohesive way will help show
that you’re serious about your venture. It will also give people the opportunity to look you up
and learn more about you.

Look at the websites and branding of some successful companies. See what they have in
common, what they do that’s interesting, and try to emulate that formula with your own brand.
(Never steal or copy someone else’s intellectual property, though.)

Consider starting a professional blog, especially if you are in a service field. This can be an
excellent way to show off your experience and ideas and help investors and customers get to
know you.

Ask network contacts to refer you to investors. Chances are, you know someone who knows
someone who’s looking for something to invest in. Many investors won’t consider “blind
submissions” (business plans sent without invitation) but are happy to hear a pitch from an
entrepreneur recommended by someone they already know and trust.

Remember to return this favor whenever possible. People are more likely to want to help you if
they feel that you will help them when and if you can. Goodwill is essential for an entrepreneur
to have.

Acquire investors. Pitch your idea to any potential investor to get money to start your company.
The type of business you’re starting will help determine who wants to invest in it. Networking is
an excellent way to hear about investing tips and opportunities.

Keep in mind that venture capitalists (often referred to in the business world as “VCs”) are
focused on two things: how much money investing in your business will make them, and how
soon that profit will happen. While hundreds of thousands of businesses are started every year,
only about 500 a year get VCs as investors.

If you are providing a professional service, such as consulting, accounting, law, or medicine,
consider forming a partnership with someone who is already established in that profession.
Someone who is familiar with your field (and your knowledge of it) may be more likely to invest
in your success.

Starting small and pleasing a small number of customers at first is a high-probability way to get
there. If you can get your business started without spending a lot of money that might be your
best route.

Sell. Sell and distribute your product. If you're getting revenue, then you're in business! You're
testing your theories about the market, you're finding out what really works and what doesn't,
and you're getting fuel for more ideas and improvements. Stay flexible and keep working hard!

The Entrepreneurial Process

The process of starting a new venture is embodied in the entrepreneurial process, which involves
more than just problem solving in a typical management position. An entrepreneur must find,
evaluate, and develop an opportunity by overcoming the forces that resist the creation of
something new. The process has four distinct phases: (1) identification and evaluation of the
opportunity, (2) development of the business plan, (3) determination of the required resources,
and (4) management of the resulting enterprise. Although these phases proceed progressively, no
one stage is dealt with in isolation or is totally completed before work on other phases occurs.
For example, to successfully identify and evaluate an opportunity (phase 1), an entrepreneur
must have in mind the type of business desired (phase 4).

Identify and Evaluate the Opportunity

Opportunity identification and evaluation is a very difficult task. Most good business
opportunities do not suddenly appear, but rather result from an entrepreneur’s alertness to
possibilities, or in some case, the establishment of mechanisms that identify potential
opportunities. For example, one entrepreneur asks at every cocktail party whether anyone is
using a product that does not adequately fulfill its intended purpose. This person is constantly
looking for a need and an opportunity to create a better product. Another entrepreneur always
monitors the play habits and toys of her nieces and nephews. This is her way of looking for any
unique toy product niche for a new venture.

Although most entrepreneurs do not have formal mechanisms or identifying business

opportunities, some sources are often fruitful: consumers and business associates, members of
the distribution system, and technical people. Often, consumers are the best source of ideas for a
new venture. How many times have you heard someone comment, “If only there was a product
that would…” This comment can result in the creation of new business. One entrepreneur’s
evaluation of why so many business executives were complaining about the lack of good
technical writing and word- processing services resulted in the creation of her own business
venture to fill this need. Her technical writing service grew to 10 employees in two years.

Due to their close contact with the end user, channel members in the distribution system also see
product needs. One entrepreneur started a college bookstore after haring all the students
complain about the high cost of books and the lack of service provided by the only bookstore on
campus. Many other entrepreneurs have identified business opportunities through a discussion
with a retailer, wholesaler, or manufacturer’s representative.

Finally, technically oriented individuals often conceptualize business opportunities when

working on other projects. One entrepreneur’s business resulted from seeing the application of a
plastic resin compound in developing and manufacturing a new type of pallet while developing
the resin application in another totally unrelated area—casket moldings.

Whether the opportunity is identified by using input from consumers, business associates,
channel members, or technical people, each opportunity must be carefully screened and
evaluated. This evaluation of the opportunity is perhaps the most critical element of the
entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or
service has the returns needed compared to the resources required. This evaluation process
involves looking at the length of the opportunity, its real and perceived value, its risks and
returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or
differential advantage in its competitive environment.

The market size and the length of the window of opportunity are the primary basis for
determining the risks and rewards. This risks reflect the market, competition, technology, and
amount of capital involved. The amount of capital needed provides the basis for the return and
rewards. The methodology for evaluating risks and rewards frequently indicates that an
opportunity offers neither a financial nor a personal reward commensurate with the risks
involved. One company that delivered bark mulch to residential and commercial users for
decoration around the base of trees and shrubs added loam and shells to its product line. These
products were sold to the same customer base using the same distribution (delivery) system.
Follow-on products are important for a company expanding or diversifying in a particular
channel. A distribution channel member such as Kmart, Service Merchandise, or Target prefers
to do business with multi-product, rather than single-product, firms.

Finally, the opportunity must fit the personal skills and goals of the entrepreneur. It is
particularly important that the entrepreneur be able to put forth the necessary time and effort
required to make the venture succeed. Although many entrepreneurs feel that the desire can be
developed along the venture, typically it does not materialize. An entrepreneur must believe in
the opportunity so much that he or she will make the necessary sacrifices to develop the
opportunity and manage the resulting organization.

Opportunity analysis, or what is frequently called an opportunity assessment plan, is one method
for evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be
shorter; focus on the opportunity, not the entire venture; and provide the basis for making the
decision of whether or not to act on the opportunity.

An opportunity assessment plan includes the following: a description of the product or service,
an assessment of the opportunity, an assessment of the entrepreneur and the team, specifications
of all the activities and resources needed to translate the opportunity into a viable business
venture, and the source of capital to finance the initial venture as well as its growth. The
assessment of the opportunity requires answering the following questions:

 What market need does it fill?

 What personal observations have you experienced or recorded with regard to that market
need?
 What social condition underlies this market need?
 What market research data can be marshaled to describe this market need?
 What patents might be available to fulfill this need?
 What competition exists in this market? How would you describe the behavior of this
competition?
 What does the international market look like?
 What does the international competition look like?
 Where is the money to be made in this activity?

Developing a Business Plan

A good business plan must be developed in order to exploit the defined opportunity. This is a
very time-consuming phase of the entrepreneurial process. An entrepreneur usually has not
prepared a business plan before and does not have the resources available to do a good job. A
good business plan is essential to developing the opportunity and determining the resources
required, obtaining those resources, and successfully managing the resulting venture.

Determine the Resources Required

The resources needed for addressing the opportunity must also be determined. This process starts
with an appraisal of the entrepreneur’s present resources. Any resources that are critical need to
be differentiated from those that are just helpful. Care must be taken not to underestimate the
amount of variety of resources needed. The downside risks associated with insufficient or
inappropriate resources should also be assessed.

Acquiring the needed resources in a timely manner while giving up as little control as possible is
the next step in the entrepreneurial process. An entrepreneur should strive to maintain as large an
ownership position as possible, particularly in the start-up stage. As the business develops, more
funds will probably be needed to finance the growth of the venture, requiring more ownership to
be relinquished. Alternative suppliers of these resources, along with their needs and desires, need
to be identified. By understanding resource supplier needs, the entrepreneur can structure a deal
that enables the recourses to be acquired at the lowest possible cost and the least loss of control.

Manage the Enterprise

After resources are acquired, the entrepreneur must use them to implement the business plan.
The operational problems of the growing enterprise must also be examined. This involves
implementing a management style and structure, as well as determining the key variables for
success. A control system must be established, so that any problem areas can be quickly
identified and resolved. Some entrepreneurs have difficulty managing and growing the venture
they created.

Types of Entrepreneurship

Entrepreneurial development today has become very significant; in view of its being a key to
economic development. The objectives of industrial development, regional growth, and
employment generation depend upon entrepreneurial development.

Entrepreneurs are, thus, the seeds of industrial development and the fruits of industrial
development are greater employment opportunities to unemployed youth, increase in per capita
income, higher standard of living and increased individual saving, revenue to the government in
the form of income tax, sales tax, export duties, import duties, and balanced regional
development.

Make sure you ask yourself these five questions:

 Why do I want to start this business?

 What resources do I need?

 How do I fit into the rest of the world?

 What is my business structure?

 Do I have the skills & aptitude to be an entrepreneur?

Not all entrepreneurship is the same. Steve Blank clearly describes four different types:

1. Small Business Entrepreneurship

Today, the overwhelming number of entrepreneurs and startups in the United States are still
small businesses. There are 5.7 million small businesses in the U.S. They make up 99.7% of all
companies and employ 50% of all non-governmental workers.

Small businesses are grocery stores, hairdressers, consultants, travel agents, internet commerce
storefronts, carpenters, plumbers, electricians, etc. They are anyone who runs his/her own
business. They hire local employees or family. Most are barely profitable. Their definition of
success is to feed the family and make a profit, not to take over an industry or build a $100
million business. As they can’t provide the scale to attract venture capital, they fund their
businesses via friends/family or small business loans.

2. Scalable Startup Entrepreneurship

Unlike small businesses, scalable startups are what Silicon Valley entrepreneurs and their
venture investors do. These entrepreneurs start a company knowing from day one that their
vision could change the world. They attract investment from equally crazy financial investors –
venture capitalists. They hire the best and the brightest. Their job is to search for a repeatable and
scalable business model. When they find it, their focus on scale requires even more venture
capital to fuel rapid expansion.

Scalable startups in innovation clusters (Silicon Valley, Shanghai, New York, Bangalore, Israel,
etc.) make up a small percentage of entrepreneurs and startups but because of the outsize returns,
attract almost all the risk capital (and press.)

3. Large Company Entrepreneurship

Large companies have finite life cycles. Most grow through sustaining innovation, offering new
products that are variants around their core products. Changes in customer tastes, new
technologies, legislation, new competitors, etc. can create pressure for more disruptive
innovation – requiring large companies to create entirely new products sold into new customers
in new markets. Existing companies do this by either acquiring innovative companies or
attempting to build a disruptive product inside. Ironically, large company size and culture make
disruptive innovation extremely difficult to execute.

4. Social Entrepreneurship

Social entrepreneurs are innovators who focus on creating products and services that solve social
needs and problems. But unlike scalable startups their goal is to make the world a better place,
not to take market share or to create to wealth for the founders. They may be nonprofit, for-
profit, or hybrid.

Types of Entrepreneurs:

Depending upon the level of willingness to create innovative ideas, there can be the following
types of entrepreneurs:

1. Innovative entrepreneurs:

These entrepreneurs have the ability to think newer, better and more economical ideas of
business organization and management. They are the business leaders and contributors to the
economic development of a country.
Inventions like the introduction of a small car ‘Nano’ by Ratan Tata, organised retailing by
Kishore Biyani, making mobile phones available to the common may by Anil Ambani are the
works of innovative entrepreneurs.

2. Imitating entrepreneurs:

These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They
imitate innovative entrepreneurs because the environment in which they operate is such that it
does not permit them to have creative and innovative ideas on their own.

Such entrepreneurs are found in countries and situations marked with weak industrial and
institutional base which creates difficulties in initiating innovative ideas.

In our country also, a large number of such entrepreneurs are found in every field of business
activity and they fulfill their need for achievement by imitating the ideas introduced by
innovative entrepreneurs.

Development of small shopping complexes is the work of imitating entrepreneurs. All the small
car manufacturers now are the imitating entrepreneurs.

3. Fabian entrepreneurs:

The dictionary meaning of the term ‘fabian’ is ‘a person seeking victory by delay rather than by
a decisive battle’. Fabian entrepreneurs are those individuals who do not show initiative in
visualizing and implementing new ideas and innovations wait for some development which
would motivate them to initiate unless there is an imminent threat to their very existence.

4. Drone entrepreneurs:

The dictionary meaning of the term ‘drone’ is ‘a person who lives on the labor of others’. Drone
entrepreneurs are those individuals who are satisfied with the existing mode and speed of
business activity and show no inclination in gaining market leadership. In other words, drone
entrepreneurs are die-hard conservatives and even ready to suffer the loss of business.

5. Social Entrepreneur:

Social entrepreneurs drive social innovation and transformation in various fields including
education, health, human rights, workers’ rights, environment and enterprise development.

They undertake poverty alleviation objectives with the zeal of an entrepreneur, business practices
and dare to overcome traditional practices and to innovate. Dr Mohammed Yunus of Bangladesh
who started Gramin Bank is a case of social entrepreneur.
Traits of an Entrepreneur

Do you have what it takes to be a successful entrepreneur? Not all entrepreneurs are created from
the same blueprint. They come from different geographic locations, upbringings, income
brackets and social classes, as well as education levels. While there isn’t a foolproof map to
entrepreneurial greatness, one thing is consistent -- successful entrepreneurs all possess the
following 10 traits.

1. Full of determination

When you set out to become an entrepreneur it will require you to set very clear goals along the
way. Growing your business, increasing sales and hiring new employees require several micro-
goals within them to be executed successfully.

This type of workload and challenge is enough to stop many people from pursuing the
entrepreneurial career path. You have to be determined from the beginning to be successful --
before you even start. If you aren’t fully determined to make it there is a good chance you will
crumble under the pressure.

2. Not afraid to take risks

Some of the most successful entrepreneurs took major risks, and they paid off in a big way.

When most people hear the word “risk” they relate it to a financial risk, but to an entrepreneur
there are many other risks in their business venture such as competitive risk, technological
change risk, ethical risk, sustainability risk, fraud risk etc…. Many would assume it isn’t possible
to start a business with very little money, but those who aren’t afraid to take risks don’t see
things such as limited funding as a handicap.

3. High level of confidence

Entrepreneurs that have a high level of confidence are able to get the job done even under the
most stressful conditions. They understand that big challenges breed big rewards. This is the
same mentality that allows successful entrepreneurs to spot an opportunity when most just see a
possible challenge. When most focus on the challenge, a successful entrepreneur focuses on the
finish line and the end reward.

4. Craves learning

You have to stay sharp, and that requires that you are constantly learning. Industries constantly
change and evolve -- only those that are also growing through constant learning will stay ahead.
You will always have competitors breathing down your neck trying to surpass you. There will
always be someone claiming to be the next greatest thing.
Staying sharp, through constant learning, will enable you to stay ahead and avoid getting passed.
Read books and wake up earlier in the morning to read industry news -- do everything you can to
constantly learn and absorb new information.

5. Understands failure is part of the game

Richard Branson said it best: “Few first ventures work out. It is how a beginning entrepreneur
deals with failure that sets that person apart. In fact, failure is one of the secrets to success, since
some of the best ideas arise from the ashes of a shuttered business.”

If you understand that failure is part of being an entrepreneur, you will take those failures and
use them as learning experiences. Real world experience, even failing, will teach you more than
you would ever learn in a classroom.

6. Passionate about his or her business

Passion fuels the drive and determination required to be successful, whether you are building a
company from the ground up or buying an Internet business that already has a proven track
record.

You have to thoroughly enjoy what you are doing -- there will be long days and nights and at
some points along the way your business will consume you. If you aren’t fully passionate about
what you are doing the added stress and obstacles will build up on your shoulders and eventually
be responsible for your collapse.

7. Highly adaptable

If entrepreneurs had the ability to see what was hiding around each turn it would make it much
easier -- but unfortunately that is not the case. There can be surprises around every corner, even
with a well thought out plan and strategy.

If you are extremely adaptable it gives you the ability to respond quickly in any situation. This
allows you to make decisions that will navigate you out of trouble and allow you to thrive in
environments that would sink those that aren’t adaptable.

8. Good understanding of money management

It doesn’t matter if you are bootstrapping your business, using personal credit cards or have
millions of dollars from investors -- you must have excellent money management skills. Poor
financial decisions, such as overspending or allocating funds to less important tasks can quickly
ruin a business.

Have a clear financial map drawn out -- what are your essential monthly expenses and
obligations? How much can you allocate monthly for items that fall outside of the “essential”
category? Stick to your plan and make sure all founders and shareholders are on the same page.
Money problems can destroy a business the same way they can ruin a marriage.

9. Expert at networking

A large collection of business cards and a huge contact list doesn’t make you an expert at
networking. Building value-based relationships that are truly meaningful is what networking is
all about -- these are the relationships that lead to business opportunities and long-term
relationships that are mutually beneficial.

I am constantly networking with people that can not only help my business currently, but also
have the potential to help me in the future as well. Don’t be selfish when networking. You
should always know how you can help someone and provide value to them before even thinking
about how the relationship will be potentially beneficial to you.

10. Ability to sell and promote

If you can’t express what it is that makes your product or service a solution to a problem, you
will be in for a rough ride. If you, the creator, can’t explain it, then who will?

Functions of an Entrepreneur:

The important functions performed by an entrepreneur are listed below:

1. Innovation:

An entrepreneur is basically an innovator who tries to develop new technology, products,

markets, etc. Innovation may involve doing new things or doing existing things differently. An
entrepreneur uses his creative faculties to do new things and exploit opportunities in the market.
He does not believe in status quo and is always in search of change.

2. Assumption of Risk:

An entrepreneur, by definition, is risk taker and not risk shirker. He is always prepared for
assuming losses that may arise on account of new ideas and projects undertaken by him. This
willingness to take risks allows an entrepreneur to take initiatives in doing new things and
marching ahead in his efforts.

3. Research:

An entrepreneur is a practical dreamer and does a lot of ground-work before taking a leap in his
ventures. In other words, an entrepreneur finalizes an idea only after considering a variety of
options, analyzing their strengths and weaknesses by applying analytical techniques, testing their
applicability, supplementing them with empirical findings, and then choosing the best
alternative. It is then that he applies his ideas in practice. The selection of an idea, thus, involves
the application of research methodology by an entrepreneur.

4. Development of Management Skills:

The work of an entrepreneur involves the use of managerial skills which he develops while
planning, organizing, staffing, directing, controlling and coordinating the activities of business.
His managerial skills get further strengthened when he engages himself in establishing
equilibrium between his organization and its environment.

However, when the size of business grows considerably, an entrepreneur can employ
professional managers for the effective management of business operations.

5. Overcoming Resistance to Change:

New innovations are generally opposed by people because it makes them change their existing
behavior patterns. An entrepreneur always first tries new ideas at his level.

It is only after the successful implementation of these ideas that an entrepreneur makes these
ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the
acceptance of his ideas by others. This is a reflection of his will power, enthusiasm and energy
which helps him in overcoming the society’s resistance to change.

6. Catalyst of Economic Development:

An entrepreneur plays an important role in accelerating the pace of economic development of a

country by discovering new uses of available resources and maximizing their utilization.

Entrepreneur, and Entrepreneurial venture

To successfully turn an entrepreneurial endeavor into a stable business, leaders must leverage
their networks to fill critical skills gaps as the business evolves. Move from starters to
transformers to sustainers.

An organization need to have different people at different stages: starters to prove the
technology, transformers to take the technology to market, and sustainers to manage the business
on an ongoing basis. The framework is appropriate for smaller organizations and for groups,
units, and divisions within larger organizations.

Example: Evolution of Desktone

For those of you that don’t know, Desktone is in the business of virtual workspaces – “applying
server virtualization to desktops.” When McKay joined Desktone his challenge was scaling from
an entrepreneurial venture to a real, ongoing business.

The company had great ideas for the product, but needed help on areas like “how to go to
market.” Their core promise of “Access anywhere” resonated with people looking for the
freedom to use any device anywhere. The time was right to accelerate things.

Start with Starters

These are the entrepreneurs or intrapreneurs passionate about their ideas. As Eric Wagner laid
out in his article on 7 Traits of Incredibly Successful Entrepreneurs, these people are abundantly
curious, creative, and visionary communicators and leaders who love risk and action and are
tenacious beyond belief. You don’t want to get in their way as they drive to get the ball rolling.
Let them do what they do at the start.

Shift to Transformers

Once the idea or technology is proven, it’s time to go to market. This requires an entirely
different set of skills. You need new people, a new approach, a new vision and a new financial
model depending upon your route to market. For example, Desktone chose to go to market
through channel partners, requiring a completely different approach than would going direct.

This is where you need to leverage your network. The world is full of people who want to help
and can help with things like packaging, pricing and market communication. You don’t have to
hire and onboard all these people full time for this transformational stage – but you do need to
tap into their expertise.

Evolve to Sustainers

The good news about successfully going to market is that you get customers. That bad news is
that customers complicate your life. All of a sudden you need things like systems and
processes. Entrepreneurs hate systems and processes. Transformers know you have to have them,
but find them less fun than transforming things. Thus, the people best suited to manage
sustaining systems and processes with the appropriate levels of detail and discipline are different
than the starters and transformers.

This is why each phase of building an ADEPT team starts with acquiring and ends with
transitioning. As McKay put it, “The world is changing so dramatically, you’ve to stay on top of
it.” Change the team as the bus changes if you want to avoid getting run over by your own bus.

Make your organization ever more ADEPT by Acquiring, Developing, and Encouraging,
Planning, and Transitioning talent:
  Acquire: Recruit, attract, and onboard the right people
 Develop: Assess and build skills and knowledge
 Encourage: Direct, support, recognize, and reward
 Plan: Monitor, assess, plan career moves over time
 Transition: Migrate to different roles as appropriate

Distinction among entrepreneurs and Owner-Manager

“When entrepreneurs and investors come together to pool resources, they form a team. When
employees and self-employed specialists come together to network, they form a union.” – Robert
Kiyosaki

Sometimes, both of them are mistaken as being the same but they are not. However, both
entrepreneurs and managers are needed for the growth of any business. One cannot do without
the other. So without much ado, below are 12 differences between entrepreneurs and managers.

Entrepreneurs vs. Managers: What’s the big difference?

1. The Job of an Entrepreneur Begins before Even the Business is Created

An entrepreneur will perceive an opportunity, assemble a team, locate resources for his new
business idea, raise the needed capital and start the business while the manager comes in only
after the foundation has been laid and the business established. What this mean in essence is that
the job of a manager begins only after the entrepreneur has done the ground work. Without
entrepreneurs, the managers will have no business to manage.

2. Entrepreneurs are more concerned with the launching and sustainability of a business in the
face of uncertainty while managers are more concerned with the effective and efficient operation
of an on-going business.

3. Managers are specialists; business management specialist to be precise. They are focused on
managing and growing a business. On the other hand, entrepreneurs are generalist. They need to
know a little about everything. An entrepreneur must know a little about product development
and design, business law, accounting, communication and public speaking, investing, leadership,
business systems, finance and insurance, marketing and sales, raising capital and so on. An
entrepreneur’s cup must never be full.

“A cup that is full is useless.” – Chinese proverb

4. Entrepreneurs are street smarts; they learn by trial and error, they learn from their own
mistakes and the business mistakes of others. An entrepreneur starts with whatever is on ground
and learns the hard way. That’s why most of the successful entrepreneurs of the world are school
dropout billionaires. On the other hand, managers are thoroughly trained in school in the area of
business management. That’s why they are referred to as MBAs. Entrepreneurs get their
education from the streets.

“Business and financial intelligence are not picked up within the four walls of school. You pick
them up on the streets. In school, you are taught how to manage other people’s money. On the
streets, you are taught how to make money.” – Ajaero Tony Martins

5. Financial freedom is the utmost priority of entrepreneurs. Freedom to do what they want,
freedom to live the kind of life they love and freedom to make a choice. To managers, security is
the utmost priority. Security comes in the form of a steady paycheck, pension, gratuity, pay
raises, job titles, promotions, bonuses and entitlements.

6. An entrepreneur owns the business; a manager is simply an employee that works in the
entrepreneur’s business. In essence, a manager owns a job. A manager is paid to run the
entrepreneur’s business.

7. The reward of entrepreneurs come in the form of capital gains, asset acquisition, cash flow,
and dividend while the managers reward come in form of salaries, pay offs, promotion, job title,
bonus and incentives.

8. Entrepreneurs thrive on risk and uncertainty. To entrepreneurs, risk and uncertainty are part of
the game of entrepreneurship; risk is what makes the game exciting. Managers on the other hand
are conservative and detest risk; they simply avoid it.

“Without the element of uncertainty, the bringing off of even, the greatest business triumph
would be dull, routine and eminently unsatisfying.” – J. Paul Getty

“You must take risks, both with your own money or with borrowed money. Risk taking is
essential to business growth.” – J. Paul Getty

9. Entrepreneurs see mistakes as an avenue to learn something; they learn more from their
business mistakes. Managers avoid mistakes because it will cost them their job. Besides; that is
why they are being paid; to avoid mistakes. That is where the word “professionalism” comes in.

10. When entrepreneurs come together to pool resources or network, they form a team but when
managers who are usually employees come together to work towards a common goal, they form
a union.

11. Entrepreneurs are primarily motivated by the need to build a business that solves a problem
or provide a need, while providing them cash flow and freedom. Managers on the other hand are
motivated by the next paycheck, bonus, incentive, pay off, job title and promotion.
12. Entrepreneurs are committed to the business from its inception till they achieve their goal.
Managers on the other hand are committed till the next paycheck; delay or cut their paycheck
and they are gone.

“I’m not afraid of turning 80 and I have lots of things to do. I don’t have time for dying.” –
Ingvar Kamprad

FURTHER READING

The terms "entrepreneur" and "small business manager" are sometimes used interchangeably, but
an entrepreneur plays a different role than a small business manager. Not all entrepreneurs make
great managers, and not all managers are cut out to be entrepreneurs.

Entrepreneurs Start Companies, Managers Run Them

Entrepreneurs are the dynamic forces behind the planning and launching of new business
enterprises. They may be involved in all aspects of a company throughout its life span, beginning
with the raw startup stage, when the venture is little more than an idea. They handle issues
ranging from the company's product design to determining the most efficient production methods
and even finding the company's first customers. A small-business manager is someone who
operates a company that has survived the startup stage. His goal is to keep the company growing
and operating efficiently. In some cases the founder/entrepreneur may bring in a skilled small-
business manager to build the company into a larger entity. He may recognize that his creative
vision can take the company only so far, and having an experienced manager on board to direct
day-to-day operations will allow the business to continue to grow.

Risk

Entrepreneurship involves recognizing, and being willing to accept, the risk that the venture may
fail. For the entrepreneur, failure could mean a loss of the money he has put into the company, a
loss of the time he has devoted to creating the business, as well as the personal disappointment
that comes from business failure. Small business managers face the risk of failure as well, but
once the company has attained certain milestones, most importantly positive cash flow and
sustained revenue growth, the chances of failure are reduced. Small business managers must deal
with the pressure of continuing to build the company in the face of ever-increasing competition.

Skill Sets

Entrepreneurs that are most successful usually possess an unusual vision, the ability to identify
what products and services customers will want or need in the future, and designing products or
services to meet those needs. Small business managers who operate established companies do
not necessarily need this predictive ability. For example, someone who operates a restaurant
franchise needs to be focused on operational efficiency -- controlling food and labor cost and
maximizing customer satisfaction. The creative part -- the concept, décor and menu -- has
already been done for him by the company he purchased the franchise from. Many entrepreneurs
manage the big picture such as creating strategies rather than overseeing the completion of the
smaller tactics and tasks that must be done to implement the strategies. Small business managers
are adept at administration -- making sure all of these tasks are completed on schedule and within
budget.

Working Environment

An entrepreneurial company takes on the personality of its "creator," the entrepreneur. If he is at

the office 20 hours a day, the other team members will have to commit to long hours as well. An
entrepreneurial environment is characterized by high energy, lots of ideas flowing and a sense of
excitement about the company's future success. A small-business manager seeks to create the
most efficient, well-organized work environment possible. A goodmanager is an effective
communicator and motivator -- he can inspire those who work for him to put forth a maximum
effort. For him, the excitement comes from seeing his bottom-line profit grow through the years.
His job is not a thrill ride -- it's more of a slow, steady climb to success.

Entrepreneur vs. Small Business Owner, Defined

An Entrepreneur is an individual who starts and runs a business with limited resources and
planning, taking account of all the risks and rewards of his or her business venture. The business
idea is usually a new innovation, product or service, rather than an existing business model.Such
entrepreneurial ventures target high-returns, with high level of uncertainty. The entrepreneur is
willing to put his or her financial security and career at stake to take risks on an idea, spending
time as well as capital on an uncertain venture.

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

Today’s technological advancements (like online ventures) have allowed the entrepreneurs to
skip a few mandatory needs (like procuring manufacturing facilities, door-to-door marketing) or
outsourcing selected functions (like marketing, sales & distribution), but the risk is still borne by
the entrepreneur.

Entrepreneurship is different from:

 Inheriting and/or running an existing businesses (family owned, co-owned)

 Working for other businesses or entrepreneurs for a salary
 Being a commission agent
  Selling already available goods or services as a franchisee or dealership

There is a very fine line between running a small business (SB) and an entrepreneurial venture
(EV) as they have a lot in common. Initial stages of both SB and EV need significant hard work
and dedication, but over a period of time very few SBs become EV. The following guidelines
help to differentiate between the two.

What are the primary difference between Small Businesses and Entrepreneurial Ventures?

 Small Business usually deal with known and established products & services,
Entrepreneurial Ventures are for new innovative offerings
 SBs aim for limited growth and continued profitability while EVs target rapid growth and
high productivity returns
 Small Businesses deal with known risks; Entrepreneurial Ventures take deep dive
with lots of unknown risks

EVs generally impact economies & communities in a significant manner, which also results in a
cascading effect on other sectors like job creation. Small businesses are more limited in this
perspective and remain confined to their own domain and group.

Theories of Entrepreneurship and Entrepreneurial Motivation

People use the terms "entrepreneur" and "entrepreneurship" interchangeably. The entrepreneur is
the person who starts his own business. The exact definition of "entrepreneurship" still remains a
vague concept, though various entrepreneurship theories have defined the concept.

Early Theories of Entrepreneurship

Richard Cantillon (1680-1734) was the first of the major economic thinkers to define the
entrepreneur as an agent who buys means of production at certain prices to combine them into a
new product. He classified economic agents into landowners, hirelings, and entrepreneurs, and
considered the entrepreneur as the most active among these three agents, connecting the
producers with customers.

Jean Baptise Say (1767-1832) improved Cantillion’s definition by adding that the entrepreneur
brings people together to build a productive item.

Frank Knight's Risk Bearing Theory

Frank Knight (1885-1972) first introduced the dimension of risk-taking as a central characteristic
of entrepreneurship. He adopts the theory of early economists such as Richard Cantillon and J B
Say, and adds the dimension of risk-taking.
This theory considers uncertainty as a factor of production, and holds the main function of the
entrepreneur as acting in anticipation of future events. The entrepreneur earns profit as a reward
for taking such risks.

Alfred Marshall’s Theory of Entrepreneurship

Alfred Marshall in his Principles of Economics (1890) held land, labor, capital, and organization
as the four factors of production, and considered entrepreneurship as the driving factor that
brings these four factors together.

The characteristics of a successful entrepreneur include:

1. thorough understanding of the industry

2. good leadership skills
3. foresight on demand and supply changes and the willingness to act on such risky
foresights

Success of an entrepreneur however depends not on possession of these skills, but on the
economic situations in which they attempt their endeavors.

Many economists have modified Marshall’s theory to consider the entrepreneur as the fourth
factor itself instead of organization, and which coordinates the other three factors.

Max Weber’s Sociological Theory

The sociological theory entrepreneurship holds social cultures as the driving force of
entrepreneurship. The entrepreneur becomes a role performer in conformity with the role
expectations of the society, and such role expectations base on religious beliefs, taboos, and
customs.

Max Weber (1864-1920) held religion as the major driver of entrepreneurship, and stressed on
the spirit of capitalism, which highlights economic freedom and private enterprise. Capitalism
thrives under the protestant work ethic that harps on these values. The right combination of
discipline and an adventurous free-spirit define the successful entrepreneur.

Mark Casson's Economic Theory

Mark Casson (1945) holds that entrepreneurship is a result of conducive economic conditions.

In his book "Entrepreneurship, an Economic theory" he states the demand for entrepreneurship
arising from the demand for change.

Economic factors that encourage or discourage entrepreneurship include:

 1. taxation policy
2. industrial policy
3. easy availability of raw materials
4. easy access to finance on favorable terms
5. access to information about market conditions
6. availability of technology and infrastructure
7. marketing opportunities

Joseph Schumpeter’s Innovation Theory

Joseph Schumpeter’s innovation theory of entrepreneurship (1949) holds an entrepreneur as one

having three major characteristics: innovation, foresight, and creativity. Entrepreneurship takes
place when the entrepreneur

1. creates a new product

2. introduces a new way to make a product
3. discovers a new market for a product
4. finds a new source of raw material
5. finds new way of making things or organization

Schumpeter’s innovation theory however ignores the entrepreneur’s risk taking ability and
organizational skills, and place undue importance on innovation. This theory applies to large-
scale businesses, but economic conditions force small entrepreneurs to imitate rather than
innovate.

Other economists have added a dimension to imitating and adapting to innovation. This entails
successful imitation by adapting a product to a niche in a better way than the original product
innovators innovation

Israel Kirtzner’s Theory of Entrepreneurship

Israel Kirzner (1935) hold spontaneous learning and alertness two major characteristics of
entrepreneurship, and entrepreneurship is the transformation of spontaneous learning to
conscious knowledge, motivated by the prospects of some gain.

Kirzner considers the alertness to recognize opportunity more characteristic than innovation in
defining entrepreneurship. The entrepreneur either remedies ignorance or corrects errors of the
customers.

His entrepreneurship model holds:

1. The entrepreneur subconsciously discovering an opportunity to earn money by buying

resources or producing a good, and selling it
 2. Entrepreneur financing the venture by borrowing money from a capitalist.
3. Entrepreneur using the funds for his entrepreneurial venture
4. Entrepreneur paying back the capitalist, including interest, and retaining the "pure
entrepreneurial profit.”

Leibenstein’s Theory of Entrepreneurship

Harvey Leibenstein (1922-1994) consider entrepreneur as gap-fillers. The three traits of

entrepreneurship include:

1. recognizing market trends

2. develop new goods or processes in demands but not in supply
3. determining profitable activities

Entrepreneurs have the special ability to connect different markets and make up for market
failures and deficiencies.

Peter Drucker’s Theory of Entrepreneurship

Peter Drucker (1909-2005) holds innovation, resources, and an entrepreneurial behavior as the
keys to entrepreneurship. According to him entrepreneurship involves

1. increase in value or satisfaction to the customer from the resource

2. creation of new values
3. combination of existing materials or resources in a new productive combination

This section of the chapter focuses on the major theories of entrepreneurial motivation. As
human behavior is largely motivated to accomplish a certain goal or objective, an attempt is
made to find out factors that actually drive the entrepreneurs to success. The main features of
these theories are presented as follows:

David Mc Clelland’s Needs Theory of Motivation

McClellands Theory of Achievement Motivation hold that people have three motives for
accomplishing things: the need for achievement, need for affiliation, and need for power. Need
for achievement and need for power drive entrepreneurship.

David McClelland (1917-1988) considers entrepreneurs as people who do things in a better way
and makes decisions in times of uncertainty. The dream to achieve big things overpowers
monetary or other external incentives.

McClelland’s experiment reveled that traditional beliefs do not inhibit an entrepreneur, and that
it is possible to internalize the motivation required for achievement orientation through training.
David McClelland (1961) is most noted for describing three types ofMotivational needs,
elaborated in his book, The Achieving Society:

 Achievement motivation (n-ach) – The need for Achievement

 Authority/power motivation (n-pow) – The need for Power Affiliation
 Motivation (n-affil) – The need for Affiliation

These needs are found in varying degrees in all workers and managers, and this mix of
motivational needs characterizes a person's behavior, both in terms of being motivated and in
motivation others.

i) The need for achievement (n-ach)

The n-ach person is ‘achievement motivated’ and therefore seeks achievement,

attainment of realistic but challenging goals, and advancement in the job. There is a
strong need for feedback as to achievement and progress, and a need for a sense of
accomplishment.

ii) The need for authority and power (n-pow)

The n-pow person is 'authority motivated'. This driver produces a need to be influential,
effective and to make an impact. There is a strong need to lead and for their ideas to
prevail. There is also motivation and need towards increasing personal status and
prestige.

iii) The need for affiliation (n-affil)

The n-affil person is 'affiliation motivated', and has a need for friendly relationships and
is motivated towards interaction with other people. The affiliation driver produces
motivation and need to be liked and held in popular regard. These people are team
players.

Difference between Entrepreneur and intrapreneurs

The concept of entrepreneurship is seen as the process of uncovering and developing an

opportunity to create value through innovation and seizing that opportunity without regard to
either resources (human and capital) or the location of the entrepreneur – in a new or existing
company (Churchill, 1992).

Intrapreneurship represent the initiation and implementation of innovative systems and practices
within an organization, by some of its staff under the supervision of a manager who takes the
role of an intrapreneur, in order to improve the economic performance of the organization, by
using a part of its resources, namely those that previously have not been used in an appropriate
manner. Intrapreneurship improves the economic and financial performance of the company, by
applying a more efficient use of the resources and by using a suitable motivational system for its
employees (Istocescu, 2003).

Unlike the entrepreneur, the intrapreneur acts within an existing organization. The intrapreneur is
the revolutionary inside the organization, who fights for change and renewal from within the
system. This may give rise to conflicts within the organization, so respect is the necessary key in
order to channel these conflicts and transform them into positive aspects for the organization.
Even though intrapreneurs benefit from using the resources of the organization for the
implementation of the emerging opportunities, there are several motives why innovation is more
difficult to implement in an existing organization, such as (Malek&Ilbach, 2004):

The size: the bigger the organization the more difficult it is to have an overview of the actions of
every employee

Lack of communication: Specialization and separation, help in concentrating on the areas of

interest, but hinder communication.

Internal competition: Internal competition amplifies the problem because instead of sharing the
knowledge with others it borders the knowledge sharing. Everyone wants to keep the information
for themselves.

Feedback received in case of success/mistake: Costs in case of failure are too great and the
reward for a successful outcome too small. Intrapreneurs must be allowed to commit mistakes,
because such mistakes are an inevitable part in the entrepreneurial process. The recognition of
success is also very rare. No company provides payment in advance for what an entrepreneur
might accomplish, but a lot of them like to talk about the concept of intapreneurship and
expected their employees to get involved and assume their risk. But finally, when motivated
employees get involves and have success their only reward is a small bonus.

Dullness: Many companies are slow and reluctant to change. Intrapreneurs bump many times
into the well-known sentence “We always did it this way”, which leaves little or no space to
creativity. The willingness to try new things appears only when the company's shortcomings
become apparent, but even so they don’t give room to an innovative leadership.

Hierarchies: Organizational hierarchies compel employees to ask permission for actions that fall
outside their daily duties. The more complex the hierarchy the more difficult it is to impose
change. Hierarchies

Of late, a new breed of entrepreneurs is coming to the fore in large industrial organizations. They
are called ‘intrapreneurs’. They emerge from within the confines of an existing enterprise.
According to Gifford Pinchot (1985), “Intrapreneur is an entrepreneur within an already
established organization.” In big organizations, the top executives are encouraged to catch hold
of new ideas and then convert these into products through research and development activities
within the framework of organization. The concept of Intrapreneurship has become very popular
in developed countries like America.

It is found that an increasing number of intrapreneurs is leaving their jobs in big organizations
and is starting their own enterprises. Many of such intrapreneurs have become exceedingly
successful in their ventures. What is more that they are causing a threat to the organizations they
left? Such intrapreneurs breed to the innovative entrepreneurs who inaugurate new products.

Difference between Entrepreneur and Intrapreneur:

Having understood the meanings of entrepreneur and intrapreneur, now the two can easily be
distinguished from each other on the following bases:

Differences Entrepreneur Intrapreneur

An entrepreneur is An intraprenuer is dependent

independent in his operations on the entrepreneur, i.e. the
Dependency owner.

An entrepreneur himself Funds are not raised by the

raises funds required for the Intrapreneur.
Raising of Funds enterprise.

Entrepreneur bears the risk An intraprenuer does not

involved in the business. fully bear the risk involved in
Risk the enterprise.

An entrepreneur operates On the contrary, an

from out side intraprenuer operates from
Operation within the organization itself.

An entrepreneur begins his An intrapreneur sets up his

business with a newly set up enterprise after working
Orientation enterprise. someone else’s organization.
 As an entrepreneur An intrapreneur establishes
establishes new business, so his business after gathering
Experience he does not possess any experiences through working
experience over the business. in the other organizations.

Managerial Versus Entrepreneurial Decision Making

The difference between the entrepreneurial style and the managerial style (administrative
domain) involves five business dimensions.

Strategic Orientation.

 The entrepreneur’s strategic orientation depends on his or her perception of the

opportunity.
 When the use of planning systems is the strategic orientation, the administrative domain
is operant.

Commitment to Opportunity.

 The entrepreneurial domain is pressured by the need for action and has a short time span
in terms of opportunity commitment.
 The administrative domain is not only slow to act on an opportunity, but the commitment
is usually for a longer time span.

Commitment of Resources.

 An entrepreneur is used to having resources committed at periodic intervals, often based

on certain tasks or objectives being reached.
 In acquiring these resources the entrepreneur is forced to maximize resource use.
 In the administrative domain, the commitment of resources is for the total amount
needed.
 Administrative-oriented individuals receive personal rewards by effectively
administering the resources under their control.

Control of Resources.

 The administrator is rewarded by effective resource administration and has a drive to own
or accumulate as many resources as possible.
 The entrepreneur, under pressure of limited resources, strives to rent resources on an as-
needed basis.
Managerial Structure.

 In the administrative domain, the organizational structure is formalized and hierarchical

in nature.
 The entrepreneur employs a flat organizational structure with informal networks.

Corporate Vs Entrepreneurial culture

Corporate culture is the pervasive values, beliefs and attitudes that characterize a company and
guide its practices. To some extent, a company's internal culture may be articulated in its mission
statement or vision statement.An entrepreneurial culture is an environment where someone is
motivated to innovate, create and take risks. In a business, an entrepreneurial culture means that
employees are encouraged to brainstorm new ideas or products. When work time is dedicated to
these activities, it is called intrapreneurship.

Corporate versus Entrepreneurial Culture conducive for entrepreneurship

Smaller, aggressive, entrepreneurial firms are developing more new products and becoming
dominant in certain markets. Many companies are attempting to create the same spirit, culture,
and rewards of entrepreneurship in their organizations.

The typical corporate culture has a climate and reward system that favors conservative decision
making. Emphasis is on gathering large amounts of data as the basis for a rational decision.
Risky decisions are often postponed until hard facts are gathered or a consultant is hired. Often
there are so many approvals required that no individual feels personally responsible for the
project.

The guiding principles in a traditional corporate culture are:

1. Follow instructions given

2. Do not make mistakes

3. Do not fail

4. Do not take initiative

5. Stay within your turf and protect your backside

6. This restrictive environment is not conducive to creativity, flexibility, and risk taking

The guiding principles of entrepreneurs

Aspects of an Entrepreneurial culture are quite different:

1. Develop visions, goals, and action plans
2. Be rewarded for actions taken
3. Suggest, try, and experiment
4. Create and develop
5. Take responsibility and ownership
There are differences in the norms of the two cultures.

The traditional culture is hierarchical in nature, with established procedures, lines of authority,
and control mechanisms. These support the present corporate culture, and do not encourage new
venture creation.

The culture of an entrepreneurial firm has a flat organizational structure with networking,
teamwork, sponsors, and mentors. Close working relationships help establish an atmosphere or
trust that facilitates accomplishment of visions. Individuals make suggestions across functional
areas, resulting in cross-fertilization of ideas. The two cultures produce different types of
individuals and management styles.

Motivation

Traditional managers are motivated primarily by promotion and typical corporate rewards.
Entrepreneurs and entrepreneurs thrive on independence and the ability to create. Entrepreneurs
expect their performance to be suitably rewarded There are also time orientation differences.
Managers emphasize the short run, entrepreneurs the long run, and entrepreneurs somewhere in
between. Entrepreneurs use a midpoint mode between delegation of managers and direct
involvement of entrepreneurs.

Entrepreneurs and entrepreneurs are moderate risk takers; managers are much more cautious.
Most entrepreneurs fail at least once, and Entrepreneurs learn to conceal risky projects from
management until the last possible moment. Traditional managers tend to be most concerned
about those at higher levels, entrepreneurs serve self and customers, and Entrepreneurs add
sponsors.

Climate for Entrepreneurship

In establishing an Entrepreneurial environment, certain factors and leadership characteristics

need to be present.

The first of these is that the organization operates on the frontiers of technology. Since research
and development are key sources for new product ideas, the firm must operate on the cutting
edge of technology and encourage and supporting new ideas instead of discouraging them.

Second is experimentation, or trial and error, is encouraged. Successful new products usually do
not appear fully developed; instead they evolve. A company wanting to establish an
Entrepreneurial spirit has to establish an environment that allows mistakes and failures. Without
the opportunity to fail, few corporate Entrepreneurial ventures will be developed.

Third an organization should make sure that there are no initial opportunity parameters, such as
turf protection, inhibiting creativity in new product development.

Fourth, the resources of the firm need to be available and easily accessible. Often, insufficient
funds are allocated not to creating something new but instead to solving a problem that have an
immediate effect on the bottom line. Some companies, such as Xerox, 3M, and AT&T have
established separate venture capital areas for funding new internal ventures.

Fifth a multidisciplinary team approach needs to be encouraged. One key to Entrepreneurial

success is the existence of "skunkworks" involving key people. Developing the needed team
work for a new venture is further complicated by the fact that a team member's promotion within
the corporation is related to performance in the current position, not in the new venture. The
corporate environment must establish a long time horizon for evaluating the success of the
overall program.

Sixth the spirit of entrepreneurship cannot be forced on individuals; it must be voluntary. Most
managers in a corporation are not capable of being successful Entrepreneurs. Those who do
emerge from this self-selection process must be allowed the latitude to carry a project through to
completion. An Entrepreneur falls in love with the new venture and will do almost anything to
ensure its success.

The seventh characteristic is a reward system. The Entrepreneur needs to be appropriately

rewarded for the energy and effort expended on the new venture. An equity position in the new
venture is one of the best motivational methods.

Eight a corporate environment favorable for entrepreneurship has sponsors and champions
throughout the organization that supports the creative activity and resulting failures.

Finally the Entrepreneurial activity must be whole-heartedly supported by top management.

Intrapreneurial Leadership

Intrapreneurship is a topic that has become increasing more popular as large companies struggle
to find ways to maintain their competitive edge in this difficult economy. Intrapreneurship is
similar to entrepreneurship, except that it focuses on ways corporations can act
“entrepreneurially” from within established organizations.

According to a survey by Ernst & Young, internal company entrepreneurs or “intrapreneurs”

need specific characteristics in order to lead a rapidly growing organization because “large and
well-established companies often comprise rigid structures that can stifle the entrepreneurial
spirit.”

Characteristics and skills necessary for becoming a successful intrapreneur include:

 Knowledge of the internal and external environment

 Visionary and willing to challenge the status quo
 Diplomatic and able to lead cross-functional teams
 Ability to build a professional-support network
 Ability to persevere, even in the face of uncertainty.
 Adaptability
 Courage

A successful intrapreneur needs to not only understand all aspects of the external environment;
they must be able to navigate the large, and sometimes maze-like, internal corporate environment
which can often be weighed down with politics.

Bringing a new product or service to market can be much more difficult within a corporate
environment when forced to follow company policy or lengthy approval processes. In order to
overcome this challenge, a successful intrapreneur needs to be a visionary leader; they must
“have a dream and overcome obstacles to achieving it by selling the dream to others” (Hisrich,
Peters, and Shepherd, 2010, p. 54). This requires that corporate entrepreneurs encourage change
and challenge the current way of doing things through creative management options and by
thinking “outside the box.”

Because bringing innovative ideas to market within large companies often requires the
knowledge and skills of employees from many different departments, intrapreneurs also need
advanced skills in diplomacy and the ability to drive multi-disciplinary teamwork.

“A good corporate entrepreneur makes everyone a hero” (Hisrich et al., 2010, p. 54). They do
this by being open and honest, sharing credit wisely, and building a coalition of trusted advisors
and supporters within the company. The encouragement and assistance from their professional-
support network will help the intrapreneur persevere in the face of obstacles and adversity.

Even though generating innovative ideas becomes more difficult as organizations grow in size
and complexity (Ernst & Young, 2010), intrapreneurs can effectively lead rapidly growing
organizations by focusing on cultivating these important characteristics and skills.

Entrepreneurial Feelings

Feelings of entrepreneurs are a rather unexplored topic. Especially people outside the startup
scene often don’t understand them.

Entrepreneurs come from a variety of back grounds, family situations & work experiences.
What is the difference between investors and entrepreneurs?

Both of them are known to be risk takers. Both of them also help our economy grows by making
the business sector booms. They may overlap in some aspects, but the two are different from
each other. The following are the differences and dissimilarities between an investor and an
entrepreneur:

1. An entrepreneur focuses on a new business idea, while an investor may focus on existing
business ideas.
2. The entrepreneur usually approaches an investor to finance the equity of his business, while an
investor approaches an entrepreneur, whom is potentially profitable, to invest money and earn
income from his or her investment.
3. An entrepreneur contributes idea and passion (but may also invest money), while an investor
primarily invests money on the business.
4. An entrepreneur is passionate and dedicated to his idea and would stick to it despite suffering
some losses or period of breakeven, while an investor is practical and reasonable to an idea and
may leave it when losses occur.
5. An entrepreneur is usually optimistic to his business, while an investor is more pessimistic and
more focused on the things that might go wrong in the business.
6. Entrepreneurs view more on the qualitative side of business, while investors view more on the
quantitative or financial side of the business.
7. An entrepreneur, when starting a business, expect many things (both quantitative and
qualitative), while an investor, when investing his or her money on a business, expects more on
the ROI (return on investment).
8. Entrepreneurs don’t necessarily focus on calculating the most approximate figure of return on
a business, while investors usually calculate the return of business and arrive at an approximated
or estimated figure.
9. Entrepreneurs could start entrepreneurship even without money, while money is a necessity
for investors to start investing.
10. Although they can be both owners of a business, an entrepreneur manages the business and
knows it more from its sales and operation to the feelings and behaviors of its employees and
customers, while an investor may only know the business based on the financial and quantitative
reports of the business.

Remember that although entrepreneurs and investors differ from each other, they need each
other and they can be a great team to build a successful business. Furthermore, an entrepreneur
can also be a financial investor of his or her own business, while an investor can also be more
involved in the business he or she has invested. Finally, every nation or community needs great
entrepreneurs and investors to develop its economy.
CHAPTER 3 - Concept of Socio Economic growth
Socio-economic development is the process of social and economic development in a society. It
is society, where entrepreneurs accumulate factors of production to provide some value to
customer as per social needs. Socio-economic development is measured with indicators, such as
GDP, life expectancy, literacy and levels of employment. There are various factors responsible
for Socioeconomic growth.

Entrepreneurship is also driven by such above mentioned socio economic factors. Entrepreneurs
are closely linked with such factors and are motivated to take risk taking into consideration of
those factors. Entrepreneurship Development makes a powerful impact on the economic
development of the country. The success of the entrepreneur depends on the environmental
factors such as social, economic, legal, political and technological factors which influence their
activities thus leading to successful entrepreneurship. The socio-economic factors are the major
key factors influencing the entrepreneurial behavior and operation of the business and thus the
need for the study and the due influence.

Role of Entrepreneurship in Socio - Economic Growth and Development

The important role that entrepreneurship plays in the economic development of an economy can
now be put in a systematic and orderly manner as follows:

1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.

2. It provides immediate large-scale employment. Thus, it helps reduce the unemployment

problem in the country, i.e., the root of all socio-economic problems.

3. It promotes balanced regional development.

4. It helps reduce the concentration of economic power.

5. It stimulates the equitable redistribution of wealth, income and even political power in the
interest of the country.

6. It encourages effective resource mobilization of capital and skill which might otherwise
remain unutilized and idle.

7. It also induces backward and forward linkages which stimulate the process of economic
development in the country.
8. Last but no means the least, it also promotes country’s export trade i.e., an important
ingredient to economic development.

Thus, it is clear that entrepreneurship serves as a catalyst of economic development. On the

whole, the role of entrepreneurship in economic development of a country can best be put as “an
economy is the effect for which entrepreneurship is the cause”

Further various other common role of entrepreneurship in socio economic development is listed
below:

 Venture capital formation and industrialization

 Changes in employment and income levels
 Equitable distribution
 High Productivity
 Export promotion

Factors affecting entrepreneurial Growth

Entrepreneurship is not random, but influenced by four distinct factors: economic development,
culture, technological development and education. In areas where these factors are present, you
can expect to see strong and consistent entrepreneurial growth. In areas where they are lacking,
entrepreneurship is likely to stagnate. One of the most important factors affecting
entrepreneurship is economic environment. It comprises of capital, labor, raw material and
market demand. Entrepreneurship does not emerge and grow spontaneously. Rather it is
dependent upon some factors that affect entrepreneur growth. It these factors are positive then
the growth is more on the contrary less. These factors are mainly environmental factors.

(1). Economic Factor:

Economic environment exercises perhaps the most direct and immediate influence on
entrepreneurship. It has some conditions which are following below.

(a). Markets:

The size are composition of market both influence entrepreneurship in their own ways.
Practically, monopoly in a particular product in the market becomes more influential for
entrepreneurship than a competitive market.

(b). Capital:

Availability of capital help to bring together the labour at one, machine of another and raw
material of yet another to combine them to produce product.
(c). Labour:

Labour is the most important factor of economic condition of entrepreneurship. It appears that
the labour problem can’t protect entrepreneurship from emerging.

(d). Raw materials:

Without raw materials business can’t be started, because production isn’t possible.

(e). Industrial policy:

It includes rules, incentives.

(f). Fiscal policy:

It include tax, vat.

(2). Social Factors:

Social environment in a country exercises a significant impact on the emergence of

entrepreneurship. The main components at social environment are as follows:-

(a). Social Mobility:

It means the people of society transfers from one place to another exchange culture, attitude etc.
If mobility is positive then growth is also positive.

(b). Security:

Entrepreneurship security is an important facilitator of entrepreneurial behavior. Insecurity

doesn’t hinder entrepreneurship, but rather that different kinds of insecurity will result in
different kinds of entrepreneurship.

(c). Legitimacy of entrepreneurship:

Illegal activities are not under business as well as entrepreneurship. High degree of legitimacy
support to start business.

(3). Political Factor:

It is also a important factor to the entrepreneur. A country’s economic growth depends on its
political factors. The political factors are as follows:-
(a). Political stability:

(b). Political ideology of government:

Political ideology of government influences the development of entrepreneurship. It political

ideology is favorable to bus growth then entrepreneurship takes new initiative to from business.

(c). Nature of change in political ideology:

Due to the change of government the political ideology also changes again and again. As a result
new sectors arise by declining the previous sectors.

(4). Psychological Factor:

Many entrepreneurial theorists have propounded theories of entrepreneurship that concentrate

especially spontaneously psychological factors. These factors are following:

(a) Need for achievement:

Need for achievement motivate to enhance business tasks for success. It is psychological power.

(b) Perception and motivation:

Eternally support entrepreneurial behavior. Especially perception and motivation with positive
forces to enter into business.

(c). Learning and personality:

More learning about business increases business efficiency. Different personality including
reformist, innovator, ret realists, retails affect business.

(5). Legal factor:

It means the country’s law and order situation. It the law order situation keep calm and quiet the
entrepreneurial growth may be high. Various types of legal factor are as follows:
(i). Income tax law.
(ii). Labor law.
(iii). Wage law.

Rural Entrepreneurship

Rural Entrepreneurship can be defined as entrepreneurship emerging at village level which can
take place in a variety of fields of Endeavour such as business, industry, agriculture and acts as a
potent factor for economic development”
Nepal lives in its villages, nearly 70 % of the total population live in rural areas where
agriculture and allied activities are the main stay of their lives. The economic development of our
country largely depends on the development of rural areas and the standard of living of its rural
mass.

In simple words, rural entrepreneurship implies entrepreneurship emerging in rural areas. In

other words establishing industries in rural areas refers to rural entrepreneurship. This means
rural entrepreneurship is synonymous with rural industrialization.

How can development take place in rural areas?

a) Local resources should be used optimally for an entrepreneurial venture and the farm produce
distribution should be improved.

b) This entrepreneurial occupation would lower down the levels of discrimination and reduce the
number of migrants from rural to urban areas.

c) 6M viz man, money, material, machinery, management and market must be provided for rural
entrepreneurship to be a revenue generator.

Types of Rural Entrepreneurship

There are four basic types of rural entrepreneurship. These are: -

a) Individual Entrepreneurship

b) Group Entrepreneurship

c) Cluster formation

d) Co-operatives

All the village industries come under the umbrella of opportunity or areas where rural
entrepreneurship can evolve. Some of these are agro based industry, forest based industry,
mineral based industry, textile industry and engineering services.

Need for rural entrepreneurship

a) Reduce the levels of unemployment. The occupation provided by rural entrepreneurs would
serve as an antidote to this.

b) Reduce income disparities.

c) Reduce the number of migrants from rural to urban areas.

d) Balanced regional development.

e) To build up village republics.

f) Preserve the heritage of the country through art and creativity.

g) This leads to economic development of the rural areas and country as a whole.

Challenges for rural entrepreneurs

There are a number of bottlenecks which create difficulties in efficient working of the rural
entrepreneurs. These are: -

a) Lack of technical expertise among the rural masses.

b) Financial constraints.

c) Lack of training modules and support services.

d) High cost of production.

e) Expensive quality control which if not adhered to lowers down the standards.

f) Storage and warehouse issues.

g) Lack of marketing and promotional strategies.

h) Low levels of education.

How can rural entrepreneurship be promoted to the masses living in the villages: -

a) Soft and easy conditions for financing budding entrepreneurs.

b) The raw material base should be strengthened in the villages.

c) The production centres can be made the marketing end points and thus solve issues faced
regarding the same.

d) Development of entrepreneurial attitude among the local masses by imparting entrepreneurial

education at school and college level.

e) Provide and educate them about various benefits and facilities available for rural
entrepreneurs.

Effect of Globalization on rural entrepreneurship

To establish a causal linkage between globalization, a macro concept and rural entrepreneurship,
a micro concept is a tedious task. However it is somewhat easier to identify channels through
which the aspects of globalization can impact the rural industries to a extent of its welfare.

a) Global production and efficiency can serve to be the benchmarks for the local entrepreneurs.

b) Improved access to foreign technology.

c) Trade openness results in faster growth.

d) Various policy benefits at national and global level.

Opportunities for rural entrepreneurs

a) Rural Entrepreneurship Development Programme

b) Regional Rural Development Centres

c) Social rural entrepreneurship

d) Food for work program

e) Bank of technology

f) Rural innovation funding

In the last three decades, across the world there have been major shifts in rural economies. Rural
enterprises are important generators of employment and economic growth both locally and
internationally. It is important to stress that rural entrepreneurship in its core essence does not
differ from entrepreneurship in urban areas. Entrepreneurship in rural areas is finding a unique
blend of resources be it within the boundaries of agriculture or outside.

Tourism Entrepreneurship

Tourism enterprises’ refer to the different forms of tourist related business ventures permitted
within the National Constitution. Like any other enterprise, tourism enterprises are also business
ventures having similar preparative principles, but working on a very wide scale.

Sinclair and Stabler (1997) have defined the tourism enterprise as “a composition of products
involving transport, accommodation, catering, natural resources, entertainment and other
facilities and services, such as shops and banks and other tour operators.”
A ‘tourism entrepreneur’ may be defined as a person or a group of persons producing and
managing tourism products. In this process the entrepreneur must have the commonly prescribed
entrepreneurial traits along with service sector specialties.

As revealed by Shaw and Williams (2002), the service sector specialties involve two
fundamental objects: “One concerns the commercial structure of the industry (especially the
dominance of certain activity components and ownership groups), while the second relates to an
understanding of the general organization of economic power structures.”

As regards the definition of tourism entrepreneurship, we believe that the most useful and
convincing way to define tourism entrepreneurship is to establish its congruence with
entrepreneurship it has emanated from.

Accordingly, tourism entrepreneurship can be defined as the professional application of

knowledge, skills and competencies and/or of monetizing a tourism related new idea, by an
individual or a set of people by launching an enterprise de novo or diversifying from an existing
one (distinct from seeking self-employment as in a profession or trade), thus, to pursue growth
while generating wealth, employment and social good.

In other words, tourism entrepreneurship refers to the activities of the major group of stake-
holders of this service sector primarily designed for the effective and profitable interaction of
demand for and supply of tourism products; at the same time assuring competitive
professionalism and gainful socio-economic status.

In simple words, it embraces all sorts of activities involved in creation and operation of a legal
tourism enterprise. A legal tourism enterprise excludes all forms of tourism or tourism like
activities which are against the generally accepted laws of the Land. For example, in India,
wildlife hunting, flesh-trading (prostitution), drug trafficking, etc. are considered illicit and
illegal and hence, do not fall within the purview of tourism enterprises.

FURTHER READING

As Nepal slowly emerges out of political instability and moves towards a relatively stable
political and economic environment, the country’s tourism industry is experiencing a phoenix-
like growth to attract investments. According to a study, travel and tourism industry currently
contributes 9.4 % of the GDP and employees around 55,000 people. In 2012 alone, tourism and
travel attracted $147 million worth of investment, and the rate of investment is expected to grow
by 4.4 % annually for the next 10 years Predominantly, entrepreneurial or investment
opportunities in tourism industry has been basically divided into two segments – investment
opportunities in capital intensive luxury infrastructure and services mostly catering to travelers
with deep pockets and opportunities in micro-entrepreneurial tourism activities like teashops, and
guest houses, often run by substandard management and in unhygienic conditions, mostly due to
lack of proper training in hospitality.

The existing stage of the industry has created a huge gap in the middle market tourist segment,
opening up huge entrepreneurial opportunities. This segment can be defined as middle class
population travelers: those who do not want to compromise on quality and hygiene but want it at
an affordable price. Within this middle market segment, there are emerging opportunities to
capitalize on the bourgeoning domestic travelers' boom. Domestic travel spending generated
about 66 % of direct travel and tourism GDP in 2012 compared with 34.3 % from foreign
visitors. Domestic travel spending is expected to grow by 9.8 % in 2013, whereas foreigners
travel spending by only 2.1 %. For an industry that had been designed by the foreign tourist, the
growing influx of domestic travelers has been a wake-up call.

With rising disposable income and increased awareness, more middle market domestic travellers
are opting for adventure activities and interaction opportunities with rural culture and nature in
unique destination; places that give them a wholesome experience with comfortable
accommodation facilities. A great example is a homestay facility inside a goat cheeses factory in
Makwanpur District, where the travellers can also learn about cheese making, the Nepali way.

The current challenge is that one, the accommodation facilities in these unique areas falls short
of basic hospilaity standards, and due to lack of a web presence and promotional information,
very little is known about them prior to the trip. For instance, to find out the availability of rooms
at a destination or of an innovative tourism product, one would have to depend on word of mouth
or be physically present at the location, which is highly inconvenient.

By recognizing various gaps in tourism value chain, one startup tourism venture (yet to be
named) lead by Ankit Rana has already forayed into converting these challenges into
entrepreneurial opportunities. Rana and his team are deploying two major tools – technology and
basic hospitality training to convert existing challenges into scalable business models in the
largely unorganized hospitality sector. The startup plans to build an internet-based platform that
will list aggregated accommodation options of potential home stays, farm stays and guest houses
around the country. Along with management advice on operations and pricing, the startup will
take charge of marketing and promotional activities of its listed accommodation partners.
Currently, a majority of the accommodation providers in rural settings do not maintain websites
because of limited marketing expertise and lack of access to the web. This platform will also
allow travelers to learn more about the listed facilities, including, photos of rooms available,
destination specific activities, accommodation content, and customer feedback. The startup plans
to leverage high penetration of mobile technology among the accommodation providers to feed
in real-time availability of room inventory in the online platform and facilitate online booking
based on real time payment solutions.
Apart from establishing an online footprint for the facilities, the startup will also work towards
improving the quality of available accommodation options. Trainings and workshops related to
hospitality, hygiene and safety issues will buttress accommodation providers to create more
value. In the long run, the startup has plans to provide financial support (loans and equity) to
accommodation providers to finance improvements in their rooms and furnishing. Non-
investment revenues for the startup will come from commissions on servicing direct inquiries for
local travel and logistics, and a fixed transaction fee on bookings through its online platform.

Types of tourism Entrepreneurship

The tourism industry is made up of many different business types. Understanding the types of
business in the tourism industry will help you decide what areas of interest you the most and
would be the most suitable for you to pursue.

When exploring the possibility of your tourism area:

 Will it suit the demands of the market?

 Will it suit your personality, skills, interests, knowledge and experience?

 Will you be able to offer something unique?

 Will your idea sustain a viable business?

Various business related to tourism :

1. Tour Operator and tourist transportation service

2. Backpacker Accommodation and Hosted Accommodation

3. Events, Cultural, Arts & Heritage

4. Ticketing, travel and tours

5. Tourist information services (Remote communication system)

6. Audio devices for Museums, art gallery, monuments etc...

7. Restaurant business

8. Souvenirs, Map, book stores

9. Handicrafts, Local products etc..

Various types of tourists

 Business tourist
 Nature tourism
 Heritage cultural tourism
 Recreation tourism
 Sports tourism
 Pilgrimage tourism
 Health / Medical tourism
 Adventure tourism
 Ecotourism

Problems in tourism Entrepreneurship

 Lack of infrastructure
 Communication bottleneck
 Lack of trained tourism manpower
 Internal conflicts
 Safety facilities for tourists
 Lack of proper tourist information centers

Factors affecting tourism entrepreneurship

 Environment Factor (Climate, Landscape)

 Socio-Economic factor (Accessibility, Accommodation, Amenities (Facilities), Ancillary
services (Hospitals, info desk, insurance, communication etc..)
 Historic and cultural factors
 Religious factors
 Other factors

Emerging concepts in Entrepreneurial Growth

Internet trend

Online tools revolutionized social interaction and have set the tone for the way businesses
interact with consumers. To stay competitive, traditional companies have sprinted online, rushing
to assemble virtual communities and tune in to their dialogue. Wiki-innovation seems to be the
wave of the future, but what does the online movement really mean for the future landscape of
business? One possible trend is the rise in entrepreneurship rates, despite a inflexibly sad
economy. Another may be a shift in the old power profile, as young minds take a new and
leading role in the economy.

When the Internet ‘revolution’ took off in the 1990s, widespread access to information made the
world a little smaller. With the rise of blogs, self-expression took flight and the explosive range
of public opinion brought about a so-called 'democratization' of influence. Today statistics and
media attention suggest that we’ve entered a new phase—a democratization of
entrepreneurship. Sudden access to new audiences, new ideas and low overhead costs has made
it easy and attractive to start a business online, and entrepreneurs are flocking to the challenge.

The entrepreneurship rate is higher than before the recession started. Interestingly, this upward
trend contrasts with a recent downward trend in employer business creation. There seems to be a
unique enthusiasm for the entrepreneurial space, despite decreased risk-taking in other industries.
According to the Harvard Business School admissions office, there has also been a small but
consistent rise in the percentage of graduates starting their own companies—from 4.5 percent of
the class in 2009 to 6 percent in 2011. “The time for entrepreneurship is now" !

The momentum of online business may have another potentially radical impact on the profile of
new entrepreneurs. Not only are the business recruits younger, but many seem to come from
backgrounds not traditionally associated with business. There have always been unconventional
founders with interdisciplinary experience, but it looks like that net is widening today. Since
businesses from all sectors benefit from a digital presence, entrepreneurs are breaking out from
all sectors.

E commerce trend

Small businesses and entrepreneurs are rushing to the Internet to do business and reach new
markets. While e-commerce is used for advertising, business-to-consumer and business-to-
business transactions, small businesses and entrepreneurs encounter several challenges. This
paper examines both the opportunities and challenges that are posed by the use of e-commerce
and makes recommendations to small businesses and entrepreneurs so they can overcome the
challenges and exploit the opportunities presented by e-commerce.

The Internet and the World Wide Web (WWW) are revolutionizing the way organizations are
functioning around the world. The Web is used by organizations in a myriad of ways, some of
which include collaborating, communicating information, obtaining information, providing
information, and sharing information. One application of the Web that is grabbing headlines in
virtually every media is Internet commerce or Electronic Commerce (e-commerce). E-
commerce--the marketing, promotion, buying and selling of goods and services over the Internet
is experiencing unprecedented growth (Williams, 1999). In the past 2 or 3 years, e-commerce
growth has been astonishing and is expected to continue at a similar rate over the next four years.
Over the past few years, a decrease in the prices for software and hosting services has reduced
the barriers to entry in the online environment. Even the smallest of businesses can now have a
presence on the web and conduct commerce. Selling online, however, is not without its perils.
Blindly diving headfirst into the Internet without a complete understanding of technical,
managerial, and competitive challenges may result in stressed operations or bankruptcy.
A question, then, arises: should small businesses and potential entrepreneurs embrace the
Internet? The answer to this question lies in how well a business understands e-commerce
opportunities in its environment and implements strategies to take advantage of these
opportunities.
Chapter 4 - Concept of Entrepreneurship competency
Competency as a term has been used in management literature for a long time now. However, its
role and importance has been understood only in the recent decade. It is defined as the sum of
experiences, knowledge, skills and attitude which we acquire during our life time for
effective performance in a task or job. Competency is the concept of knowledge, skills and
attitude of the person. The term competency has a number of definitions which depends on the
specific task to be performed by individuals under different conditions. Boyatzis (1982)
conducted a study on approximately 2000 managers and he identified and assessed hundred
potential competencies. He defined competency as: “A capacity that exists in a person that
leads to behavior that meets the job demands within the parameters of organizational
environment, and that, in turn brings about desired results”.

Spencer & Spencer (1993) define competency as an underlying characteristic of an individual

that is casually related to criterion referenced effective and/or superior performance in a
job or situation. This indicates that there are certain identifiable traits that constitute a person's
characteristics and level of performance in a job situation. Underlying characteristic means the
competency is a fairly deep and enduring (durable) part of a person's personality and can
predict behavior in a wide variety of situations and job tasks. Casually-related means that a
competency causes or predicts behavior and performance.

It is commonly understood that competency is a combination of knowledge, skills abilities and

other characteristics which are required for successful job performance. Practically, Competency
is a broad concept. It helps a person to perform better in practical form. It is the transformation of
knowledge, skills and attitudes to performance for a particular task successfully. Competency is
helpful in distinguishing the superior performers from other performers.

Defining Entrepreneurial Competency

Entrepreneurial competency is defined as the individual characteristics. Entrepreneur is a person

who undertakes risk for gaining profit in the business venture. According to Baum & Locke
(2004) “Entrepreneurs must also be willing to experiment different strategies in the pursuit of
profitable outcome because it is the entrepreneur's energy, creativity & motivation that trigger
the production of superior product & services”. Therefore, entrepreneurship requires certain
strategic skills for profitable functioning. Entrepreneurship Development institutes identifies
certain factors which are required by entrepreneur to give the success to the business as well as
to the economy of the country. These factors are might be initiative, see and act on opportunities,
persistence, knowing, concern for high quality of work, commitment to work contract,
persuasion, efficiency orientation, systematic planning, problem solving, self-confidence,
assertiveness, use of influence strategies, monitoring and concern of employee welfare.
Entrepreneurial competency thus becomes critical for an SME to become competitive in the
globalized world. Entrepreneurs play a very important role for business survival and its success.
For the survival and success of the business entrepreneurs required skills and abilities. Bird
(1995) “maintains that entrepreneurial competencies are defined as underlying characteristics
possessed by a person which result in new ventures creation, survival, and /or growth.” Man,
Lau& Chan (2002) refer to these competencies as the “total ability of the entrepreneur to
perform this role successfully. Several studies have found positive relationship between
existences of competencies and venture performance”.

Entrepreneurship Development

The concept of an entrepreneur is refined when principles and terms from a business, managerial,
and personal perspective are considered. In almost all of the definitions of entrepreneurship,
there is agreement that we are talking about a kind of behaviour that includes:

 initiative taking,
 the organizing and reorganizing of social and economic mechanisms to turn resources
and situations to practical account and
 acceptance of risk or failure.

To an economist, an entrepreneur is one who brings resources, labour, materials, and other assets
into combinations that make their value greater than before, and also one who introduces
changes, innovations, and a new order. To a psychologist, such a person is typically driven by
certain forces; the need to obtain or attain something, to experiment, to accomplish, or perhaps to
escape the authority of others. To one businessman, an entrepreneur appears as a threat, an
aggressive competitor, whereas to another businessman the same entrepreneur may be an ally, a
source of supply, a customer, or someone who creates wealth for others, as well as finds better
ways to utilize resources, reduce waste, and produce jobs others are glad to get.

Entrepreneurship development is concerned with the study of entrepreneurial behaviour, the

dynamics of business set-up, development and expansion of the enterprise. Entrepreneurship
development (ED) refers to the process of enhancing entrepreneurial skills and knowledge
through structured training and institution-building programmes. It basically aims to enlarge the
base of entrepreneurs in order to hasten the pace at which new ventures are created. This
accelerates employment generation and economic development.

Entrepreneurship development focuses on the individual who wishes to start or expand a

business. Small and medium enterprise (SME) development, on the other hand, it also focuses on
developing the enterprise, whether or not it employs or is led by individuals who can be
considered entrepreneurial. Furthermore, entrepreneurship development concentrates more on
growth potential and innovation than SME development does. However, many of the lessons
learned from experiences in both types of development are similar.
Entrepreneurship is promoted to help alleviate the unemployment problem, to overcome the
problem of stagnation and to increase the competitiveness and growth of business and industries.
Various attempts have been made to promote and develop entrepreneurship. By giving specific
assistance to improve the competence of the entrepreneur and his enterprise so as to enhance his
entrepreneurial objectives and accommodate more people to become entrepreneurs as well.

ACHIEVING SUSTAINABLE ENTREPRENEURSHIP DEVELOPMENT

There is a pervasive tendency to equate entrepreneurship development (ED) with self-

employment. Many self-employed individuals are indeed entrepreneurs, but the majority are not.
Their businesses are simply microenterprises in the informal sector, with little growth potential.
The promotion of self-employment is a worthwhile objective, but it should not be confused with
ED. Entrepreneurship development programmes that in reality focus only on self-employment
are less likely to succeed in creating economic growth.

Entrepreneurship development should be about helping people start and grow dynamic
businesses that provide high value added. In determining the difference, it is useful to look at
potential growth sectors or geographic areas and to explore criteria for selecting beneficiaries
who are entrepreneurial. A needs assessment before programme formulation is useful. An
analysis of high-growth economic sectors enables more focused support to entrepreneurs in the
most promising sectors of the economy.

Entrepreneurship development programmes should be formulated to identify risks and determine

the likelihood of success, identify the factors that affect the levels of entrepreneurship in a
country. These factors include the perception of opportunity, degree of respect accorded to
entrepreneurs, acceptance of wide disparities in income and a family environment which is
oriented towards business.

Entrepreneurship development programmes require a selection process that attempts to identify

those target groups that have some of the key prerequisites for entrepreneurial success. While it
can be argued that public funds should be spent on those who most need help, a selection process
deploys limited resources where they are most effective, to the overall benefit of the community.
Beneficiaries may be individuals and/or groups.

An entrepreneurship development programme should help aspiring entrepreneurs to recognize

and design unique, innovative business opportunities, based on an analysis of local conditions
and their own special skills. The programme can help the entrepreneur to diversify based on
his/her basic knowledge of a product or skill in a certain sector without distorting the local
markets. In a truly entrepreneurial approach, innovative capacity matters more than the size of
the market. Diversification can be accomplished by introducing a novelty or new product feature,
stressing quality or value added, anticipating a new market or even creating a market.
Entrepreneurial development programmes may have to include support for;

 Entrepreneurship orientation and awareness.

 Development of the competencies (skills, experience and attitudes) necessary to
recognize a market opportunity and organize the resources to meet it.
 Improvement of business performance for growth and competitiveness.

ED training is usually more effective when linked to finance and other services such as
marketing, quality assurance and productivity improvement. For example, involving the
development banks at an early stage of the support process helps to prepare the entrepreneur for
the credit process and facilitates the bank’s appraisal of the business plan.

Successful entrepreneurship also depends on supportive and coordinated government policies.

Entrepreneurship is conducive to economic growth and the creation of employment. Government
programmes and policies have a significant impact on the level of entrepreneurship within a
country. While many governments profess support for entrepreneurial businesses, they often lack
specific policies and coordinated programmes designed to support entrepreneurial activity.

In Nepal, the major factor impeding the development of entrepreneurship is the lack of adequate
electric power which most times result in high cost of running businesses. However, there are
other obstacles to successful entrepreneurial development initiatives. Liberalizing imports,
ending public monopolies and opening public services to private-sector provision of goods and
services enhance the conditions for entrepreneurship growth.

Fostering entrepreneurship involves ensuring that markets for capital, labour, goods and services
are working well. It also requires that impediments to entrepreneurship be removed and that
conditions be established in which innovation and risk-taking can flourish. Government policy-
makers also seek to foster entrepreneurship through programmes which, for example, augment
the supply of information and enable reliable transportation of goods and services, encourage
networking, facilitate the provision of finance, and seek to create positive attitudes towards
entrepreneurial activity.

Focused policies that facilitate access to finance, professional services and training for start-up
companies, that simplify business registration, reporting and taxation, etc. are essential to
entrepreneurial venture creation. Seminars and the study of entrepreneurial development abroad
can be included in programs addressing entrepreneurship policy.

Need for Entrepreneurial competency development

The competency results in superior performance. This is exhibited by one’s distinct behaviour in
different situations. The popular Kakinada experience conducted by McClelland and winter
(1969) has proved beyond doubt that the entrepreneurial competency can be injected and
developed in human minds through proper education and training. Competency finds expression
in human behaviour.

Entrepreneurial competencies are the skills necessary for an entrepreneur to:

 venture into an enterprise

 organize and manage an enterprise ably and competently

 realize the goal for which the enterprise is established

How to develop and sharpen the entrepreneurial competency is suggested in the following
method or procedure consisting of four steps:

1. Competency Identification and Recognition

2. Competency Assessment

3. Competency Mapping

4. Development Intervention

Brief description about each of these follows in turn:

1. Competency Identification and Recognition:

Acquisition of a new behaviour like entrepreneurial behaviour begins with understanding,

identifying and recognizing of what entrepreneurial behaviour means. In other words, the first
step involved in developing the entrepreneurial competency is first to identify and recognize the
set of competencies required to effectively behave like an entrepreneur.

2. Competency Assessment:

Once the set of competencies is identified and recognized to behave like an entrepreneur, the
next step is now to see what entrepreneurial competencies the person actually possesses. In other
words, the actual competencies possessed by an entrepreneur are examined against the required
set of competencies to effectively behave or act like an entrepreneur.

Where one stands with respect to a set of required competencies to act like an entrepreneur or
what is the level of one’s competence can be ascertained by asking the relevant questions to a
competence.

3. Competency Mapping:
Now, the actual competencies possessed by an entrepreneur are compared with the competencies
required to become a successful entrepreneur to ascertain the gap in the entrepreneurial
competencies of an entrepreneur (Cooper 2000). This is called in the human resource training
and development lexicon as ‘Competency Mapping.’ In other words, this is just like ‘training
needs identification’ in case of HR training.

This is presented as follows:

A popular performance tool used to map the (entrepreneurial) competency is based on “Skill to
Do / Will to Do’ chart.”Skill to Do’ refers to the entrepreneur’s / individual’s ability to do the job
and to Do’ refers to the entrepreneur’s individual’s desire or motivation to do the job.

In other words, the ‘Ability to Do / No Ability to Do’ dimension of this comes within the
purview of the “Entrepreneurial Competence’ and the “Will to Do /No Will to Do’ dimension
comes within the purview of the ‘Entrepreneurial Commitment.’

This may result in four possible situations as shown in the following Figure

These four situations mean the following:

(A) Ability to Do / Will to Do:

Among all four situations, this is the ideal one. The entrepreneur is fully able, i.e. qualified and is
performing his job as designed and desired. He is supposed to be star or ideal performer as an
entrepreneur.

(B) No Ability to Do / Will to Do:

In this situation, the entrepreneur is putting out his efforts to perform the job, but is not getting
the desired results out of his efforts. It means he is lacking ability or skill to perform the job.
Thus, it implies that the entrepreneur needs training, or say, ‘competency building.

(C) Ability to Do / No Will to Do:

Here, the entrepreneur is qualified or possesses the ability to do his job but is not willing to
perform the same. This implies the lack of desire or motivation. Thus, the entrepreneur needs to
be motivated to perform his job.

(D) No Ability to Do / No Will to Do:

The entrepreneur has deficiency in both ability and will (motivation). In a sense, he is just like
deadwood and his entrepreneurial job is in jeopardy. Thus, the entrepreneur either needs to
continue like this or disappear from the entrepreneurial role.

4. Development Intervention:

After understanding, internalising and practicing a particular behaviour or competence, one

needs to make an introspection of the same in order to sharpen and strengthen one’s competency.
This is called ‘feedback’.

In simple terms, feedback means to know the strengths and weaknesses of one’s new behaviour.
This helps one know how the new behavior has been rewarding. This enables one to sustain or
give up the exhibition of a particular behavior or competence in his future life.

Entrepreneurial competency Development programs

Entrepreneurs perform vital functions in economic development to mobilize capital, add value to
natural resources and services, develop the means to produce necessary goods and services,
create employment and develop the means by which trade is conducted. Without entrepreneurs,
there would be no economic development. Most management training programs strengthen skills
in business accounting, feasibility analysis, and marketing and inventory control.

But few, if any address the fundamental question of how to identify entrepreneurial potential,
enhance that potential and stimulate new sources of entrepreneurship.
Through the various organizations working on behalf of entrepreneurship research project, we
seek to know successful entrepreneurial behaviors and their consistency from country to country.

The Entrepreneurship Development Program equips local institutions with the capacity to
conduct and sustain the program over time. The installation incorporates:

 Selecting, training and certifying local trainers

 Training local staff in participant recruitment and administrative support for EDP.

 Training local program staff, bank officials and trainers in procedures for identifying

 Individuals with high entrepreneurial potential.

Various Entrepreneurship workshop are offered in Nepal to the existing and potential
entrepreneurs and to specialized audiences including technology entrepreneurs, unemployed
university graduates, outplaced civil servants, and indigenous micro-business owners. It has been
offered as a standalone program and integrated into broader programs of employment and job
creation.

As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among
the people. In other words, it refers to inculcation, development, and polishing of entrepreneurial
skills into a person needed to establish and successfully run his / her enterprise. Thus, the
concept of entrepreneurship development programme involves equipping a person with the
required skills and knowledge needed for starting and running the enterprise.

Objectives of EDP:

The major objectives of the Entrepreneurship Development Programs (EDPs) are to:

a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.

b. Analyze environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small enterprise.

f. Know the sources of help and support available for starting a small scale industry.

g. Acquire the necessary managerial skills required to run a small-scale industry.

h. Know the pros and cons in becoming an entrepreneur.

i. Appreciate the needed entrepreneurial discipline.

j. Besides, some of the other important objectives of the EDPs are to:

k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and strive
for their realization.

l. Prepare him / her to accept the uncertainty in running a business.

m. Enable him / her to take decisions.

n. Enable to communicate clearly and effectively.

o. Develop a broad vision about the business.

p. Make him subscribe to the industrial democracy.

q. Develop passion for integrity and honesty.

r. Make him learn compliance with law.

In Broader sense various programs includes:

 Promotional Packages

 HR development programs

 Training programs

 Entrepreneurial motivation

Phases of Entrepreneurship competency development programs

Phase of Entrepreneurship Development Programme: Training Phase and Post-Training Phase!

Pre-training phase:

Pre-training phase consists of all activities and preparation to launch training programme. Pre-
training phase of EDP consists of the following activities :

 Selection of entrepreneurs for the training program.

 Arrangements of infrastructure are for the programme like selection of place of training.
  Deciding guest faculty for the programme from education industry and banks.

 Taking necessary steps for inauguration of programme.

 Formation of selection committee to select trainees from the programme.

 Making provision with regard to publicity and campaigning for the programme.

Training Phase:

The main objective of this phase is to bring desirable change in the behaviour of the trainees. In
other words, the purpose of training is to develop ‘need for achievement’, i.e. motivation among
the trainees.

Accordingly, a trainer should see the following changes in the behaviour of the trainees:

a. Is he/she attitudinally tuned very much towards his/her proposed project idea?

b. Is the trainee motivated to plunge into entrepreneurial career and bear risks involved in it?

c. Is there any perceptible change in his entrepreneurial attitude, outlook, skill, role, etc.?

d. How should he/she behave like an entrepreneur?

e. What kinds of entrepreneurial traits the trainee lacks the most?

f. Whether the trainee possesses the knowledge of technology, resources and other knowledge
related to entrepreneurship?

g. Does the trainee possess the required skill in selecting the viable project, mobilizing the
required resources at the right time?

Some of the questions listed above also answer the basic underlying assumption in designing a
suitable training programme for the potential entrepreneurs. Having trained the trainees, the
trainers need to ask themselves as to how much, and how far the trainees have moved in their
entrepreneurial pursuits.

Post-Training Phase (Follow-up):

The ultimate objective of Entrepreneurship Development Programme is to prepare the

participants to start their enterprises. This phase, therefore, involves assessment to judge how far
the objectives of the programme have been achieved. This is also called ‘follow-up’. Follow-up
indicates our past performance, drawbacks, if any, in our past work and suggests guidelines for
framing future policies to improve our performance.
In nutshell, the purpose behind EDP follow-up is to:

a. Review the pre-training work;

b. Review the process of training programme; and

c. Review past training approach.

Evaluation of Entrepreneurship Competency Development Programs

Entrepreneurship Development Programmes : Evaluation and Problems of EDPs!

Developing entrepreneurship has become a movement in Nepal in the recent years. EDPs have
been considered as an effective instrument for developing entrepreneurship in the countryside.
Hundreds of EDPs are conducted by some organisations to impart entrepreneurial training to
participants in thousands.

The main objective of EDPs is to make the EDP trainee an enterprise creator. Hence, it seems
necessary to see whether, the objectives of EDPs is fulfilled or not. In simple words, there is a
need to have a retrospective look into how many participants have actually started their own
enterprises after completing the training. This calls for the evaluation of EDPs.

In nutshell, the effectiveness of EDPs cannot be considered as impressive because about 07 out
of every 10 trainees did not start enterprises after undergoing the EDP training. It means there
are some problems or lapses here and there in conducting the EDPs’. Therefore, there lies the
need for looking at the problems and constraints of EDPs.

One way of evaluating the EDPs is to assess their effectiveness in developing ‘need for
achievement’ among the entrepreneurs. This is also called the ‘qualitative evaluation of EDPs.

The behavioural scientists use the following criteria to assess the effectiveness of EDPs in
motivating the entrepreneurs:

a. Activity level of the respondents

b. New enterprise established

c. Total investments made

d. Investments in fixed assets made

e. Number of people employed

f. Number of jobs created

g. Increase in profit

h. Increase in sales

i. Quality of product/service improved

j. Quicker repayment of loans

In other behavioural experiments, the impact of EDPs is measured with the help of indices
relating to the entrepreneurial behaviour.

The entrepreneurial behaviour is measured on the following four dimensions:

1. Planning Orientation

2. Achievement Orientation

3. Expansion Orientation

4. Management Orientation

Problems of EDPs:

EDPs suffer on many counts. The problems and lacunae are on the part of all those who are
involved in the process, be it the trainers and the trainees, the ED organisations, the supporting
organizations, and the state governments.

The important problems EDPs face are but not confined to the following only:

a. Trainer-motivations are not found upto the mark in motivating the trainees to start their own
enterprises.

b. ED organisations lack in commitment and sincerity in conducting the EDPs. In some cases,
EDPs are used as means to generate surplus (income) for the ED organisations.

c. Non-conducive environment and constraints make the trainer-motivators’ role ineffective.

d. The antithetic attitude of the supporting agencies like banks and financial institutions serves as
stumbling block in the success of EDPs.

Thus, it is clear that the problems are not with the strategy but with its implementation.
Different Agencies and Institutions operating in Entrepreneurship Competencies Development programs

Micro-enterprise Development program

Entrepreneurs play a catalytic role in economic development of a country. It involves adoption of

new forms of business organizations, new technologies and new enterprises producing goods not
previously available at a location. Entrepreneurship development is one of the key components
of the Programme. It develops confidence and increases risk-bearing capacity of the potential
entrepreneurs. Engaging in enterprise may not be of interest to all poor people. However, for
people who have been challenged due to lack of education and productive skills, the
Programme's empirical research has proved that imparting basic entrepreneurial and management
skills could generate an overwhelming interest towards micro-enterprises. Access to micro-
credit, markets and resources may not guarantee the success of an enterprise in the absence of
entrepreneurship and basic management skills. The indoctrination of the ILO-promoted Start and
Improve Your Own Business (SIYB) and Micro-Enterprise Creation training for the poor people
have proved to be catalyst in the expansion of micro-enterprises in rural Nepal. To ensure that
poor people with an interest in enterprise development are aware of the programme and its
activities, the following entrepreneurship development activities are carried out.

Identification and selection of potential entrepreneurs

The identification and selection of potential participants with entrepreneurial competencies is a

critical step in the Programme. The Programme has developed special screening criteria which
tests the entrepreneurial characteristics of the target participants. The selection procedures of the
Programme aim to assess the potential entrepreneurial competencies of target groups,
particularly women, who are eager to become entrepreneur, and to select those who, by virtue of
their behavioural and entrepreneurial profiles, have a better probability of success.

Micro-enterprise creation and development training

The Programme has developed a micro-enterprise creation and development (MECD) training
package with the assistance of Industrial Enterprise Development Institute (IEDI) for potential
entrepreneurs. The package includes Micro-Enterprise Creation (MEC) and Micro-Enterprise
Assistance Training (MEA). The MEC training exposes the potential entrepreneurs to the
fundamentals of micro-enterprise, help build confidence, and to provide basic knowledge and
skills in starting micro-enterprise. The training has four modules consisting of (i) development of
entrepreneurial competency, (ii) business identification and selection, (iii) market and marketing
concepts, and (iv) preparation of business plans.

The Programme has also initiated SIYB, a step-by-step entrepreneurship development package
developed by ILO with technical support from UNDP for rural setting. The SIYB helps
entrepreneurs to gradually acquire knowledge and business skills for business creation and
development. The Programme has also formed a self-sustaining fund management committee
including ILO, UNDP, MEDEP and related Programme partners for continuous production, sale
and reproduction of the SYIB materials and managing the 'self-sustaining fund' for promoting
entrepreneurship in rural setting of the country.

Various Institutions in Nepal

Government Agencies

Department of Labor

Department of cottage and small indutries

Industrial enterprise development institute

Cottage and small industries training center

Nepal Tourism Board

Non- Government Agencies

FNCCI Federation of Nepalese chamber of commerce and industries

Morang Merchants association

Women entrepreneurs Association of Nepal

Federation of business and professional women in Nepal

Chapter 5 - Entrepreneurial Venture Creation

Idea Generation
Idea Generation is the foundation of the process of discovering new sustainable business
opportunities New ideas often arise from simple questions like ‘What is this?’, ‘What is it for?’,
‘What could it be for?’ Questioning the basic uses of utensils we use in everyday life and
common customs and rules opens up space for many new opportunities. Therefore, looking at
things from a different angle is the first step to innovate and invent new solutions. This activity
aims to boost participant’s creativity and help them to develop creative ideas that make a
difference.

Idea Generation is a process of deliberately brainstorming. There are a number of tools and
considerations that can help generate powerful ideas. These tools have been shown to be
particularly relevant to the pursuit of sustainability-driven ideas. In addition, this section
provides participant with important considerations for the development of sustainable
products/services and will bring their attention to the major opportunity areas for sustainable
businesses.

The process of creating, developing, and communicating ideas which are abstract, concrete, or
visual. The process includes the process of constructing through the idea, innovating the concept,
developing the process, and bringing the concept to reality.

Business idea generation and opportunity analysis are the foundation building block for
launching a new business or venture. The origin of a business idea and the analysis of the
opportunity needed to build and grow such idea into a business structure is one necessary
marriage in entrepreneurship.

The process of generating business idea could be learn and developed. This is a unique quality
that an entrepreneur need to develop if he wants to generate business ideas that would later
become a business structure.

Existing entrepreneurs will find this section very helpful in assisting them to generate new
business ideas or concepts that will grow their business in term of product or services they
rendered.

Idea generation (ideation) is an emerging buzzword representing the creative process of

generating, developing, and communicating new ideas, while an idea is understood as a basic
element of thought that can be visual, concrete, or abstract. Ideation can be contrasted with
brainstorming in that brainstorming is a specific instance of ideation. Brainstorming employs
specific rules (such as disallowing any contributor to negate any idea offered during a
brainstorming session), while ideation encompasses all techniques that can be used to generate
ideas.

In this section, we will discuss the concept of business idea generation, available methods for
generating new business ideas, creative problem-solving techniques, innovation, types of
innovation, difference between innovation and creativity. The purpose of is to provide fresh
impetus for the prospective entrepreneur to see the idea of becoming a business owner in the
Nigerian environment as a possibility.

Methods of Generating New Ideas for Entrepreneurs (Techniques of gathering Ideas)

Even with a wide variety of sources available, coming up with an idea as the basis for a new
venture can still be a difficult problem. The entrepreneur can use several methods to help
generate and test new ideas including focus groups, brainstorming and problem inventory
analysis.

The following are some of the key methods to help generate end test new ideas:

1. Focus Groups ? these are the groups of individuals providing information in a structural
format. A moderator leads a group of people through an open, in-depth discussion rather than
simply asking questions to solicit participant response. Such groups form comments in open-end
in-depth discussions for a new product area that can result in market success. In addition to
generating new ideas, the focus group is an excellent source for initially screening ideas and
concept.

2. Brainstorming ? it is a group method for obtaining new ideas and solutions. It is based on the
fact that people can be stimulated to greater creativity by meeting with others and participating in
organized group experiences. The characteristics of this method are keeping criticism away;
freewheeling of idea, high quantity of ideas, combinations and improvements of ideas. Such type
of session should be fun with no scope for domination and inhibition. Brainstorming has a
greater probability of success when the effort focuses on specific product or market area.

3. Problem inventory analysis? it is a method for obtaining new ideas and solutions by focusing
on problems. This analysis uses individuals in a manner that is analogous to focus groups to
generate new product areas. However, instead of generating new ideas, the consumers are
provided with list of problems and then asked to have discussion over it and it ultimately results
in an entirely new product idea.
Identify and Evaluate the Opportunity

Opportunity identification and evaluation is a very difficult task. Most good business
opportunities do not suddenly appear, but rather result from an entrepreneur’s alertness to
possibilities, or in some case, the establishment of mechanisms that identify potential
opportunities. For example, one entrepreneur asks at every cocktail party whether anyone is
using a product that does not adequately fulfill its intended purpose. This person is constantly
looking for a need and an opportunity to create a better product. Another entrepreneur always
monitors the play habits and toys of her nieces and nephews. This is her way of looking for any
unique toy product niche for a new venture.

Although most entrepreneurs do not have formal mechanisms or identifying business

opportunities, some sources are often fruitful: consumers and business associates, members of
the distribution system, and technical people. Often, consumers are the best source of ideas for a
new venture. How many times have you heard someone comment, “If only there was a product
that would…” This comment can result in the creation of new business. One entrepreneur’s
evaluation of why so many business executives were complaining about the lack of good
technical writing and word- processing services resulted in the creation of her own business
venture to fill this need. Her technical writing service grew to 10 employees in two years.

Due to their close contact with the end user, channel members in the distribution system also see
product needs. One entrepreneur started a college bookstore after haring all the students
complain about the high cost of books and the lack of service provided by the only bookstore on
campus. Many other entrepreneurs have identified business opportunities through a discussion
with a retailer, wholesaler, or manufacturer’s representative.

Finally, technically oriented individuals often conceptualize business opportunities when

working on other projects. One entrepreneur’s business resulted from seeing the application of a
plastic resin compound in developing and manufacturing a new type of pallet while developing
the resin application in another totally unrelated area—casket moldings.

Whether the opportunity is identified by using input from consumers, business associates,
channel members, or technical people, each opportunity must be carefully screened and
evaluated. This evaluation of the opportunity is perhaps the most critical element of the
entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or
service has the returns needed compared to the resources required. This evaluation process
involves looking at the length of the opportunity, its real and perceived value, its risks and
returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or
differential advantage in its competitive environment.

The market size and the length of the window of opportunity are the primary basis for
determining the risks and rewards. This risks reflect the market, competition, technology, and
amount of capital involved. The amount of capital needed provides the basis for the return and
rewards. The methodology for evaluating risks and rewards frequently indicates that an
opportunity offers neither a financial nor a personal reward commensurate with the risks
involved. One company that delivered bark mulch to residential and commercial users for
decoration around the base of trees and shrubs added loam and shells to its product line. These
products were sold to the same customer base using the same distribution (delivery) system.
Follow-on products are important for a company expanding or diversifying in a particular
channel. A distribution channel member such as Kmart, Service Merchandise, or Target prefers
to do business with multi-product, rather than single-product, firms.

Finally, the opportunity must fit the personal skills and goals of the entrepreneur. It is
particularly important that the entrepreneur be able to put forth the necessary time and effort
required to make the venture succeed. Although many entrepreneurs feel that the desire can be
developed along the venture, typically it does not materialize. An entrepreneur must believe in
the opportunity so much that he or she will make the necessary sacrifices to develop the
opportunity and manage the resulting organization.

Opportunity analysis, or what is frequently called an opportunity assessment plan, is one method
for evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be
shorter; focus on the opportunity, not the entire venture; and provide the basis for making the
decision of whether or not to act on the opportunity.

An opportunity assessment plan includes the following: a description of the product or service,
an assessment of the opportunity, an assessment of the entrepreneur and the team, specifications
of all the activities and resources needed to translate the opportunity into a viable business
venture, and the source of capital to finance the initial venture as well as its growth. The
assessment of the opportunity requires answering the following questions:

 What market need does it fill?

 What personal observations have you experienced or recorded with regard to that market
need?
 What social condition underlies this market need?
 What market research data can be marshaled to describe this market need?
 What patents might be available to fulfill this need?
 What competition exists in this market? How would you describe the behavior of this
competition?
 What does the international market look like?
 What does the international competition look like?
 Where is the money to be made in this activity?
Personal characteristics of a entrepreneur

1. Passion & Motivation

If there's one word that describes the fundamental trait in an entrepreneurship, it would be
passion.

o Is there something that you can work on over and over again, without getting bored?
o Is there something that keeps you awake because you have not finished it yet?
o Is there something that you have built and want to continue to improve upon, again and
again?
o Is there something that you enjoy the most and want to continue doing for the rest of
your life?

Your demonstration of passion and motivation will determine your success in any
entrepreneurial venture. From building and implementing a prototype, to pitching your idea
to venture capitalists, success is a function of passion and determination.

2. Risk Taking

Entrepreneurs are risk takers ready to dive deep into a future of uncertainty. But not all risk
takers are successful entrepreneurs. What differentiates a successful entrepreneur from the rest
in terms of risk? Successful entrepreneurs are will to risk time and money on unknowns, but
they also keep resources, plans and bandwidth for dealing with "unknown unknowns" in
reserve. When evaluating risk, a successful entrepreneur will ask herself, is this risk worth the
cost of my career, time and money? And, what will I do if this venture doesn't pay off?

3. Self-belief, Hard work & Disciplined Dedication

Entrepreneurs enjoy what they do. They believe in themselves and are confident and dedicated
to their project. Occasionally, they may show stubbornness in their intense focus on and faith in
their idea. But the flip side is their demonstrated discipline and dedication.

4. Adaptability & Flexibility

It’s good to be passionate or even stubborn about what you do. But being inflexible about client
or market needs will lead to failure. Remember, an entrepreneurial venture is not simply about
doing what you believe is good, but also making successful business out of it. Market needs are
dynamic: changes are a recurring phenomenon. Successful entrepreneurs welcome all
suggestions for optimization or customization that enhances their offering and satisfies client
and market needs. A product you develop for yourself alone may qualify as a hobby, but a
product for the market should satisfy market needs.

5. Understand Your Offering – And Its Market

Entrepreneurs know their product offering inside and out. They also know the marketplace and
its dynamics inside and out. Remaining unaware of changing market needs, competitor moves
and other external factors can bring even great products to failure (for example, Blockbuster).
6. Money Management

It takes time to get to profitability for any entrepreneurial venture. Till then, capital is limited and
needs to be utilized wisely. Successful entrepreneurs realize this mandatory money
management requirement and plan for present and future financial obligations (with some
additional buffer). Even after securing funding or going fully operational, a successful
businessman keeps a complete handle on cash flows, as it is the most important aspect of any
business.

7. Planning (But not Over-planning)

Entrepreneurship is about building a business from scratch while managing limited resources
(including time, money and personal relationships). It is a long-term commitment, and
attempting to plan as much as possible at the beginning is a noble impulse. In reality, however,
planning for everything and having a ready solution for all possible risks may prevent you from
even taking the first step. Successful entrepreneurs do keep some dry powder in reserve, but
more importantly they maintain a mindset and temperament to capable of dealing with
unforeseen possibilities. Do a feasibility analysis; identify time and capital thresholds; take the
deep dive with your limited resources. If your thresholds are crossed, look for alternatives and
be prepared to take the next exit.

8. Networking Abilities

How do you tap your network for solutions? Many people seek comfort in commiseration:
friends, colleagues and neighbors are happy to complain with you about "the global slowdown,”
poor demand, or unfair competition; but that won't improve the bottom line. What do successful
entrepreneurs do? They reach out to mentors with more experience and extensive networks to
seek valuable advice.

Having such networking abilities, including more experienced mentors, is a key characteristics
of successful entrepreneurs.

9. Being Prepared to Take the Exit

Not every attempt will result in success. The failure rate of entrepreneurial ventures is very high.
At times, it is absolutely fine to take the “practical” exit route and try something new, instead of
continuing to make sunk cost investments in the same venture. Many famous entrepreneurs
weren't successful the first time around. But they had the serenity and foresight to know when to
cut their losses.

10. Entrepreneurs Doubt Themselves – But Not Too Much

You may ask yourself, am I an entrepreneur? And the very question may put you in doubt about
the answer. Even if you don't have the flair of Steve Jobs or the hair of Binod chaudhary, if you
have the courage to ask yourself intimidating questions – Can I do this? Do I want to do this? –
you have the stuff to be an entrepreneur.
Encouraging and protecting ideas

As a business grows, pitching becomes increasingly important. As the business

seeks investors, new clients, or even new employees, a business owner must
repeatedly reveal details about the company to others.

Idea theft is an ongoing concern for many of these business owners, who see
themselves as having an advantage by being at the forefront of the market. A
competitor could snatch the idea and put it to use themselves, leaving the
business with little recourse.

Interestingly, however, the top response to this concern is that most people have
no interest in taking someone else’s idea and turning it into a multimillion-dollar
business. This is especially true of investors, whose reputations could be severely
damaged by such behavior. Those who want to start their own businesses
generally have ideas in spades and are seeking funding to get those ideas off the
ground, just as you are.

Still, while the vast majority of people aren’t out to steal your idea, it is a
possibility. There are a few steps businesses can take to help prevent theft as they
begin to share their ideas with others.

Avoid Revealing Too Much

One of the best ways to secure your idea is to only reveal what is absolutely
necessary. If you’re pitching an idea to a potential client, give only the details
necessary to convey the idea. It’s not necessary to share every detail of how your
product works, for instance, when you can get the same information across by
revealing the need your product or service fulfills. One exception to this may be
when you’re pitching to investors or lenders, who will likely want to know
everything about your product before taking a financial risk on it.

Use Non-Disclosure Agreements

A non-disclosure agreement can help protect your idea before revealing it to

workers or other associates. However, it’s important to note that many investors
will balk at signing an NDA (Non-Disclosure Agreements) before you speak with
them. Since the balance of power is in their favor, this may be something you’ll
have to give up if you want investors. The same holds true for potential clients.
Instead of requiring a signature, consider simply printing a confidentiality
statement on your business plan.

Apply for a Provisional Patent

A patent can incur far more expense than a startup is able to pay. During the
process of shopping your idea around, a provisional patent can protect your idea
for the first year. After twelve months, the provisional patent expires, however,
with no option of being extended.

Trademark Your Name

A trademark can provide an additional layer of protection, since a company’s name

is often tied closely with its idea. Also, by establishing a trademark, you also have
added protection in the event a legal issue should arise. The documentation
required to register a trademark can serve as written proof that your business
idea was in the works at a specified time. These dates will be crucial in
establishing the exact date your idea was in the works in the event someone else
tries to dispute this fact.

Research the Recipients

Whether you’re revealing an idea to a potential investor, a possible client, or a

contractor, do your part in researching that person or company prior to your
appointment. Information is so easily available now, a business owner can
determine someone’s reputation before deciding to do business with that person.
Look for any disputes with previous business partners and make sure the person
has established a positive reputation in his or her chosen field.

Preparing business plan

A business plan is a formal statement of business goals, reasons they are

attainable, and plans for reaching them. It may also contain background
information about the organization or team attempting to reach those goals.

Business plans may target changes in perception and branding by the customer,
client, taxpayer, or larger community. When the existing business is to assume a
major change or when planning a new venture, a 3 to 5 year business plan is
required, since investors will look for their investment return in that timeframe.
 The Importance of a Business Plan
A few years ago, a software company surveyed its users to determine how helpful a business
plan was to success. The results were reviewed by the University of Oregon for validation, and
seem to point to the improved outcomes for those with business plans:
 Of those who created plans, 64 percent grew their businesses, compared to 43 percent of
companies that hadn’t yet finished a plan.
 Those who created plans were more likely to secure a loan or investment capital.
A Babson College study discovered a written business plan wasn’t all that important — unless
you were trying to raise money. In cases involving raising capital or getting a loan, businesses
with plans were more likely to get the funding they needed.

Consider the company Coffee House, Inc. The founders are excited about providing a coffee
shop for customers using their own brand of coffee. They plan to grind the beans at the coffee
house to provide fresh coffee, as well as sell some of their product in bulk to customers who
want to brew at home. They can also sell accessories to help customers make the most of their
coffee experience, at the shop and at home.

Coffee House isn’t sure about how to proceed or measure success. A business plan can take ideas
from the founders, put them to paper and provide a roadmap to take action.

You’ll Be Glad You Have a Business Plan

Any business hoping to raise funds, either with the help of loans or through venture capital,
needs a plan. If you show up at the bank to ask for a loan, all the decision-makers will want to
see a business plan. Venture capitalists also like to know that you are organized and informed
and that you have a strategy to help them realize a return on their investment.

However, you can benefit from a business plan beyond raising money. Even if you aren’t
currently looking for funding, you’ll be glad to have a direction when you are trying to figure out
what your next step should be. The market analysis section can help you clarify your efforts so
you focus on just the right thing to find your niche and exploit it.

A good business description can help you stay on track, while sales strategies can remind you of
how you plan to increase your revenue. Your business plan is about organizing and planning
ahead so you have the lay of the land and are ready to build your business in a way that makes
sense. When you face uncertainty and you aren’t sure where to go next, your business plan can
provide you with the guidance you need.

7 Elements of a Business Plan

Your well-thought-out business plan lets others know you’re serious, and that you can handle all
that running a business entails. It can also give you a solid roadmap to help you navigate the
tricky waters. The seven components you must have in your business plan include:
 Executive Summary
 Business Description
 Market Analysis
 Organization Management
 Sales Strategies
 Funding Requirements
 Financial Projections
All of these elements can help you as you build your business, in addition to showing lenders and
potential backers that you have a clear idea of what you are doing.

1. Executive Summary
The executive summary is basically the elevator pitch for your business. It distills all the
important information about your business plan into a relatively short space. It’s a high-level
look at everything and should include information that summarizes the other sections of your
plan.

One of the best ways to approach writing the executive summary is to finish it last so you can
include the important ideas from other sections.

Coffee House, Inc.’s executive summary focuses on the value proposition of the business. Here’s
what they’ve written into their plan:

“Market research indicates that an increasing number of consumers in our city are interested in
the experience of coffee. However, there isn’t a viable place for them to meet and learn locally.
Instead, they only have access to fast coffee. Coffee House, Inc., provides a place for people to
enjoy fresh-ground beans and truly enjoy their cup.

“Coffee House, Inc., provides a hub for a subculture of coffee, offering customers a place to
purchase their own coffee-grinding supplies in addition to enjoying the modern atmosphere of a
coffee house.

“The founders of Coffee House, Inc., are coffee aficionados with experience in the coffee
industry and connections to sustainable growing operations. With the experience and expertise of
the Coffee House team, a missing niche in town can be fulfilled.”

2. Business Description
This is your chance to describe your company and what it does. Include a look at when the
business was formed, and your mission statement. These are the things that tell your story and
allow others to connect to you. It can also serve as your own reminder of why you got started in
the first place. Turn to this section for motivation if you find yourself losing steam.
 Some of the other questions you can answer in the business description section of your plan
include:

 What is the business model? (What are your customer base, revenue sources and products?)
 Do you have special business relationships that offer you an advantage?
 Where are you located?
 Who are the principals?
 What is the legal structure?
 What are some of the market opportunities?
 What is your projected growth?
Answering these questions narrows your focus and shows potential lenders and backers how
you’re viewing your venture.

3. Market Analysis
This is your chance to look at your competition and the state of the market as a whole. Your
market analysis is an exercise in seeing where you fit in the market — and how you are superior
to the competition.

As you create your market analysis, you need to make sure to include information on your core
target market, profiles of your ideal customers and other market research. You can also include
testimonials if you have them.

Part of your market analysis should come from looking at the trends in your area and industry.
Coffee House, Inc., recognizes that there is a wide trend toward “slow” food and the idea of
experiencing life. On top of that, Coffee House surveyed its city and found no local coffee
houses that offered fresh-ground beans or high-end accessories for do-it-yourselfers.

Coffee House can create an ideal customer identity. The ideal customer is a millennial or
younger member of Gen X. He or she is a professional and interested in experiencing life and
enjoying pleasures. The ideal customer probably isn’t wealthy, but is middle class, and has
enough disposable income to have a hobby like coffee. Coffee House appeals to professionals
who work (and maybe live) in a downtown area. They meet their friends for a good cup of
coffee, but also want the ability to make good coffee at home.

4. Organization and Management

Use this section of your business plan to show off your team superstars. In fact, there are plenty
of indications that your management team matters more than your product idea or pitch.
Venture capitalists want to know you have a competent team that has the grit to stick it out. You
are more likely to be successful and pivot if needed when you have the right management and
organization for your company.

Make sure you highlight the expertise and qualifications of each member of the team in your
business plan. You want to impress.

In the case of Coffee House, Inc., the founders emphasize their connections in the world of
coffee, particularly growers that use sustainable practices. They can get good prices for bulk
beans that they can brand with their own label. The founders also have experience in making and
understanding coffee and the business. One of them has an MBA, and can leverage the executive
ability. Both have worked in marketing departments in the past, and have social media
experience, so they can highlight their expertise.

5. Sales Strategies
How will you raise money with your business and make profits a reality? You answer this
question with your sales strategy. This section is all about explaining your price strategy and
describing the relationship between your price point and everything else at the company.
You should also detail the promotional strategies you’re using now, along with strategies you
hope to implement later. This includes your social media efforts and how you use press releases
and other appearances to help raise your brand awareness and encourage people to buy or sign up
for your products or services.

Your sales strategy section should include information on your web development efforts and
your search engine optimization plan. You want to show that you’ve thought about this, and
you’re ready to implement a plan to ramp up sales.

Coffee House needs to make sure they utilize word of mouth and geolocation strategies for their
marketing. Social media is a good start, including making Facebook Live videos of them
demonstrating products and how to grind beans. They can encourage customers to check in when
visiting, as well as offer special coupons and promotions that activate when they come to the
house to encourage sales.

6. Funding Requirements
Here’s where you ask for the amount of money you need. Make sure you are being as realistic as
possible. You can create a range of numbers if you don’t want to try to pinpoint an exact number.
Include information for a best-case scenario and a worst-case scenario. You should also put
together a timeline so your potential funders have an idea of what to expect.

It can cost between $200,000 and $500,000 to open a coffee house, and profit margins can be
between 7 and 25 percent, depending on costs. A well-run coffee house can see revenues of as
much as $1 million a year by the third year, according to the Chronicle. Some of the things
Coffee House, Inc., would include in its timeline are getting premises, food handlers’ permits
and the proper licenses, arrange for regular supply and get the right insurance. How long these
items take depend on state and local regulations. No matter your business, get an idea of what
steps you need to take to make it happen and how long they typically take. Add it all into your
timeline.
7. Financial Projections
Finally, the last section of your business plan should include financial projections. Make sure
you summarize any successes up to this point. This is especially important if you hope to secure
funds for expansion of your existing business.
Your forward-looking projections should be based on information about your revenue growth
and market trends. You want to be able to use information about what’s happening, combined
with your sales strategies, to create realistic projections that let others know when they can
expect to see returns.

Even though it can be time-consuming to create a business plan, your efforts will be rewarded.
The process is valuable for helping you identify potential problems, as well as help you plan
ahead. You’ll be more organized and better prepared for success.

Venture creation

The process of turning a new idea or technology into a business that can succeed and will attract
investors: Potential entrepreneurs trying to identify a possible business idea, pay attention to
everything in the media that relates to venture creation. Start-up entity developed with the intent
of profiting financially. A business venture may also be considered a small business. Many
ventures will be invested in by one or more individuals or groups with the expectation of the
business bringing in a financial gain for all backers. Most business ventures are created based on
demand of the market or a lack of supply in the market. Needs of consumers are identified for a
product or a service and the entrepreneur and investors will proceed to develop the idea, market
the idea, and sell the product or service developed.

Venture project formulation, implementation and evaluation

Choosing a format of business organization

After deciding that you're going to start your own business, your next step should be to begin
planning the most basic organizational aspects of your business. These choices can be vital to the
success of your business.

Naming your business. First, what are you going to name your business. You need a name that is
unique, or whoever started using it before you will be very unhappy with you. The name must convey
what your business is and does.

Organizing your business. Second, you have to choose a form of organization. This decision
dictates what organizational formalities must be followed, how income is reported, and numerous
other issues. Research the issue carefully before making a decision. Don't forget that this decision
can and should be revisited as your business circumstances change.
There are several choices among entity types, and each has its advantages and disadvantages.
Make sure that you consult with your attorney or accountant before making a final decision.
Choose one of the following:

 Sole proprietorship

A sole proprietorship is the most common form of business organization. It's easy to form and offers
complete managerial control to the owner. However, the owner is also personally liable for all
financial obligations of the business.

The simplest structure is the sole proprietorship, which usually involves just one individual who owns
and operates the enterprise. If you intend to work alone, this may be the way to go.

There are a few disadvantages to consider, however. Selecting the sole proprietorship business
structure means you're personally liable for your company's liabilities. As a result, you're placing your
own assets at risk, and they could be seized to satisfy a business debt or legal claim filed against
you.

Raising money for a sole proprietorship can also be difficult. Banks and other financing sources are
reluctant to make business loans to sole proprietorships. In most cases, you'll have to depend on
your own financing sources, such as savings, home equity or family loans.

 Partnership

A partnership involves two or more people who agree to share in the profits or losses of a business.
A primary advantage is that the partnership does not bear the tax burden of profits or the benefit of
losses-profits or losses are "passed through" to partners to report on their individual income tax
returns. A primary disadvantage is liability-each partner is personally liable for the financial
obligations of the business. Partnership

If your business will be owned and operated by several individuals, you'll want to take a look at
structuring your business as a partnership. Partnerships come in two varieties: general partnerships
and limited partnerships. In a general partnership, the partners manage the company and assume
responsibility for the partnership's debts and other obligations. A limited partnership has both general
and limited partners. The general partners own and operate the business and assume liability for the
partnership, while the limited partners serve as investors only; they have no control over the
company and are not subject to the same liabilities as the general partners.

Unless you expect to have many passive investors, limited partnerships are generally not the best
choice for a new business because of all the required filings and administrative complexities. If you
have two or more partners who want to be actively involved, a general partnership would be much
easier to form.

In addition, each general partner can act on behalf of the partnership, take out loans and make
business decisions that will affect and be binding on all the partners (if the general partnership
agreement permits). Keep in mind that partnerships are more expensive to establish than sole
proprietorships because they require more extensive legal and accounting services.

Protect yourself and your business with a partnership agreement.

Starting a business with a partner? It may be difficult to talk about problems during your honeymoon
stage, but that's exactly when you should. A written partnership agreement helps guide you when
questions arise.
What is each partner's investment? Is one investing cash and the other energy? Do any of the
partners own equipment that you'll use in the business, and does that fact deserve consideration as
part of the start-up investment?

What are the responsibilities and duties of each partner? Be specific about each partner's role in the
day-to-day operations of the company.

If a partner becomes disabled, how long will he or she get a share of the profits? If a partner dies,
what happens to that share? A good way to deal with this issue: life insurance on all partners.

Can the partners have other outside partnership interests? In particular, can interest be in similar or
competitive businesses?

What will you do if one partner wants to withdraw? Typically, you'll set up a buyout agreement, but
it's a very good idea to decide on the terms before the situation arises. You'll also want to include a
noncompete covenant.

How will you restrict partnership-interest transfers? Can a partner transfer his or her ownership to
anyone, or can you limit that transfer? This means the remaining partners won't find themselves in
partnership with someone they object to. This is frequently used to protect the business in the event
that one of the partners gets a divorce and his interest becomes a part of the divorce settlement.

Can a partner pledge his or her interest as collateral for a loan?

Are additional contributions mandatory? If the business needs capital in the future, are partners
required to make capital contributions?

 Limited liability company

A hybrid form of partnership, the limited liability company (LLC) , is gaining in popularity because it
allows owners to take advantage of the benefits of both the corporation and partnership forms of
business. The advantages of this business format are that profits and losses can be passed through
to owners without taxation of the business itself while owners are shielded from personal liability.

 Limited liability partnership

A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the
jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In
an LLP, one partner is not responsible or liable for another partner's misconduct or negligence.

 Corporation

A corporation is a legal entity that is created to conduct business. The corporation becomes an
entity-separate from those who founded it-that handles the responsibilities of the organization. Like a
person, the corporation can be taxed and can be held legally liable for its actions. The corporation
can also make a profit. The key benefit of corporate status is the avoidance of personal liability. The
primary disadvantage is the cost to form a corporation and the extensive record-keeping that's
required. Using the corporate structure is more complex and expensive than most other business
structures. A corporation is an independent legal entity, separate from its owners, and as such, it
requires complying with more regulations and tax requirements.
The biggest benefit for a small-business owner who decides to incorporate is the liability protection
he or she receives. A corporation's debt is not considered that of its owners, so if you organize your
business as a corporation, you're not putting your personal assets at risk. A corporation also can
retain some of its profits, without the owner paying tax on them. Another plus is the ability of a
corporation to raise money. A corporation can sell stock, either common or preferred, to raise funds.
Corporations also continue indefinitely, even if one of the shareholders dies, sells the shares or
becomes disabled.

The corporate structure, however, comes with a number of downsides. A major one is higher costs.
Corporations are formed under the laws of each state with their own set of regulations. You'll
probably need the assistance of an attorney to guide you through the maze. In addition, because a
corporation must follow more complex rules and regulations than a partnership or sole
proprietorship, it requires more accounting and tax preparation services.

Another drawback: Owners of the corporation pay a double tax on the business's earnings. Not only
are corporations subject to corporate income tax at both the federal and state levels, but any
earnings distributed to shareholders in the form of dividends are taxed at individual tax rates on their
personal income tax returns.

To avoid double taxation, you could pay the money out as salaries to you and any other corporate
shareholders. A corporation is not required to pay tax on earnings paid as reasonable compensation,
and it can deduct the payments as a business expense. Keep in mind, however, that the IRS has
limits on what it believes to be reasonable compensation.

CHAPTER 6
Environment Protection Act,2053(1997)
Environment protection Act, 2053 (1997) is concentrated to make legal provisions in order to
maintain clean and healthy environment by minimizing, as far as possible, adverse impacts likely to
be caused from environmental degradation on human beings, wildlife plants , nature, and physical
objects ; and to protect environment with proper use and management and natural resources, taking
into consideration that sustainable development could be achieved from the inseparable inter-
relationship protection .the main provisions of this act are as follows:

 A proponent shall have to carry out Initial Environmental Examination and Environmental
Impact Assessment of the proposals as prescribed.
 No one shall implement or cause to be implemented a proposal without getting it approved
from the concerned agency or the Ministry
 A proponent who is desirous of implementing any proposal shall have to submit such a
proposal, accompanied by the report on Initial Environmental Examination or Environmental
Impact Assessment of the proposal, to the concerned agency for the approval of such a
proposal.
 Nobody shall create pollution in such a manner as to cause significant adverse impacts on
the environment or likely to be disposed sound, heat radioactive rays and wastes from any
mechanical devices, industrial enterprises, or other places contrary to the prescribed
standards.
 It shall be the duty of the concerned agency to protect National Heritage. For the purpose of
the protection of National Heritage, the concerned agency shall be required to prepare and
 maintain an inventory and such as inventory shall also include the objects or places listed in
the World Heritage list available within Nepal.
 Government of Nepal may, by a notification in the Nepal Gazette, maintain any place within
Nepal containing natural heritage or aesthetic, rare wildlife, biological diversity, plant, and
places of historical and cultural importance, which are considered extremely important from
viewpoint of environment protection, as an Environment Protection Area.
 Government of Nepal may establish different laboratories as required or may prescribe any
existing laboratory to help in the activities related to environment protection and pollution
control.
 In case any person carries out any act without getting a proposal approved under section 6
or any act contrary to the approved proposal, the prescribed authority may stop such act
immediately, and if any person or organization has done such act, may according to the
degree of offence punish him/her with a fine up to one hundred thousand rupees.
 A person who is not satisfied with the decision or order made by the prescribed authority
may appeal to the concerned Appellate Court within thirty five days from the date of the
decision or order.

Bonded Labor (Prohibition) Act, 2058 (2002)

Bonded Labor (Prohibition) Act, 2058 (2002) is concerned to make provisions in order to put a ban
on bonded labor (Kamaya Shram), to rehabilitate the freed bonded laborers and to uplift their
livelihood from the perspectives of social justice. The main provisions are as follows:

 Bonded labor (Kamaya Shram)” means the labor or service to be rendered for a creditor for
the following reasons without wages or with normal wages.
 Every person who is serving as bonded laborer at the time of the commencement of this Act
shall, ipso facto, be freed from bonded labor after the commencement of this Act.
 No one shall keep or employ any one as a bonded laborer after the commencement of this
Act.
 After the commencement of this Act, no bonded laborer shall be obliged to pay back the
bonded debt obtained by him/her from any creditor.
 Notwithstanding anything contained in the prevailing law, all the deeds (instrument) or written
or gentleperson agreement (verbal agreement) concluded between the creditor and the
bonded laborer in respect of debt shall, ipso facto, be void after the commencement of this
Act.
 The creditor shall refund the property taken by him/her as a mortgage or guarantee, if any, in
the course of providing debt to the bonded laborer to the concerned person within a period of
Three months after the commencement of this Act.
 The Government of Nepal may designate any of its’ officer to work as a Welfare Officer in
order to perform the work, as may be required, in respect of the right and interest of the free
bonded laborers

Foreign Employment Act, 2007 (2064)

Foreign Employment Act, 2007 (2064) is concerned to amend and consolidate laws relating
to foreign employment in order to make foreign employment business safe, managed and
decent and protect the rights and interests of the workers who go for foreign employment
 and the foreign employment entrepreneurs, while promoting the business. The main
provisions are as follows:
 Foreign employment means employment which a worker gets abroad.
 The Government of Nepal shall, by a notification in the Nepal Gazette, specify countries for
carrying on the foreign employment business. Out of the countries specified, the Government
of Nepal may prohibit the carrying on of the foreign employment business in any country and
suspend such business for a certain period.
 Any minor who has not completed eighteen years of age shall not be sent for foreign
employment.
 No gender discrimination shall be made while sending workers for foreign employment
pursuant to this Act.
 No one shall carry on the foreign employment business without obtaining a license pursuant
to this Act. An institution intending to carry on the foreign employment business shall make
an application to the Department for the license setting out the details as prescribed.
 Prior to the departure of a worker for foreign employment, a contract shall be made between
the employer institution or its agent and the worker and the license and the worker on the
terms and conditions of employment, terms and condition to be observed by both parties and
remuneration to be received by the worker, after getting the worker to clearly understand
such terms and conditions and provisions of remuneration.
 A foreign employment welfare fund shall be established under the Board for the social
security and welfare of the workers who have gone for foreign employment and returned
from foreign employment and their families.
 The Department shall monitor and inspect, from time to time, the office of the licensee in
relation to whether this act or the rules farmed under this act or direction given under this Act
have been observed or not and for the purpose, it may inspect the records and other relevant
document maintained by the licensee.
 If any employer institution does not provide employment in accordance with the terms
prescribed in the agreement, the worker or his or her agent may make a complaint along with
evidence, with the Department for compensation.
 If any person carries on the foreign employment business in contrary to Section 10 of this Act
or collects any amount with intent to engage a person in foreign employment or sends a
person abroad by giving false assurance or lures a person to be engaged in foreign
employment, the amount so received and an amount to be set by fifty percent of that amount
shall be recovered from that person as compensation and the expenses incurred by that
other person in going to and coming from abroad shall also be realized and that person shall
be punished with a fine of thee hundred thousand rupees to five hundred thousand rupees
and with imprisonment for a term of three years to seven years. In the event that such
person has not yet sent that person abroad, half the punishment shall be imposed.

Child Labor (Prohibition and Regulation) Act, 2000 (2056)

Child Labor Act, 2000 (2056) is concerned to prohibit engaging children in factories, mines
or similar risky activities and to make necessary provisions with regard to their health,
security, services and facilities while engaging them in other activities. The main provisions
are as follows:

 The child means a mirror not having completed the age of sixteen years
  No child having not attained the age of 14 years shall be engaged in work as a laborer. No
child can be engaged in any risky business or work referred to in the schedule. No child can
be engaged in works as a laborer against him/her will by way of persuasion,
misrepresentation or by subjecting him/her to any influence or fear or threat or coercion or by
any other mean.
 In case any enterprise has to engage a child in work, an approval has to be obtained from
the concerned labor office or any authority or official prescribed by that office and from the
father, mother, or guardian of the child.
 Prior to engage a child as a labor in an enterprise, certificate of qualification has to be
obtained that the child is able to work as a labor.
 No child shall be engaged in work for a period after six o’clock at the morning. No child shall
be engaged in work for more than six hours in a day and more than thirty six hours In a week
either giving or not giving additional remuneration.
 An enterprise engaging children as workers shall not discriminate on the grounds of sex,
race, religion, caste, or tribe and shall provide equal remuneration and benefits for the same
work.
 The provisions to be made by an entrepreneur with regard to health and safety of the child
engaged in an enterprise shall be prescribed.
 In case of dispute relating to age of a child engaged in an enterprise, his/her age as per the
date of birth referred to in the birth registration certificate shall be deemed to be his real age.
 Nepal government shall from child labor Prohibition Committee in order to provide health,
safety, education, vocational training to children engaged in an enterprise; in order to provide
for appropriate employment for children; to discourage to have children involved in work and
to get necessary suggestions and options for prohibiting child labor.

Chapter 7 - Financing of Entrepreneurial Venture

Completing a financial plan is the last step in writing a business plan. The plan includes a
projected profit-and-loss statement for the next three to five years and a cash flow statement. A
balance sheet is sometimes included as well as a break-even analysis. The financial plan is
important, because it establishes the financial goals of the company. That is not the only reason
it's important.

Determine the Feasibility of the Company

When you begin to contemplate starting a business, you assume it will be successful, but many
entrepreneurs find out after launching the company that success can be elusive. Creating a
business plan with the accompanying financial plan is really a feasibility study of what it takes to
be successful. If the resources are out of your reach, you don't have the experience or the market
is too unstable at the moment, the financial plan will make that clear. You may find that the price
you plan on charging for your products or services is materially higher than what your
competitors are charging. Or perhaps the price is fine, but your manufacturing costs are too high
and it will be difficult to earn a profit.

Variance Analysis
Monitoring the actual results against the line-item budget in the financial plan gives you the
opportunity to take whatever steps are necessary to get back on track. For example, if you're not
reaching the projected revenue, either the projections are wrong or the marketing program is not
as effective as you thought. Knowing the assumptions behind the projections is important to find
out why the projections have been missed. In other words, you need to know what you did right
and what went wrong.

Forecast Financing Requirements

Starting a business requires money. The forecast financial plan demonstrates how much money is
required and when. If you don't have the required amount of funding to start the business, you
may have to begin on the smaller scale your funding allows. The financial plan also shows you
where a shortfall will occur. Adjust the revenue and expense projections to avoid the shortfall or
make sure you have other funds available, such as your own savings or a loan to cover any cash
deficit.

Obtain Funding

Investors and lenders request to see the entrepreneur's business plan, including the financial plan
with projections and assumptions behind the forecast. If the financial plan is unrealistic, a
common mistake with entrepreneurs, the loan or investment will not be forthcoming. Another
reason the financial plan is important is because it lets you know what type of financing would
be more appropriate. For example, if you need less than $1 million to get started, then venture
capital firms won't be interested. VCs invest larger amounts of money.
Most people have heard of the benefits of personal financial planning and want to better manage
their personal finances. Yet it can seem so overwhelming. If you're not sure where to start, this
financial planning primer can help. It establishes priorities for anyone at any financial stage of
life and lays out, in eight simple steps, just how to take control of your finances.

Step 1. Create and review a financial plan.

Basically, a financial plan is a written set of goals, strategies and timelines for accomplishing
these goals: buying your first home, funding or managing a retirement nest egg, funding your
children's education, paying off debts, and so on. Writing out this plan, whether on a yellow pad,
a spreadsheet or with the help of a certified financial planner (CFP) professional motivates you
to be accountable and implement your to-do list of action steps. It provides direction, gives you a
benchmark from which to evaluate your progress, and helps you prioritize the most efficient use
of your financial resources.

Be sure to review your plan periodically to adjust for changing financial circumstances or
desires, or life events such as a change in marital status, job loss, retirement, the birth of a child,
or a death in the family.

Step 2. Organize your financial records.

It's much easier to successfully manage your finances if you know what those finances are. So
gather up the following financial records:

investment accounts
bank statements
tax returns
mortgage and credit card statements
insurance policies
estate planning documents

Then organize them so you can find and access them easily. By getting them all together, you'll
be able to more easily evaluate where you're at today and can set the stage for your goals and
priories going forward. And while you're at it, don't forget to inventory your personal
possessions. This documents not only their value for planning purposes but also provides a
record for your insurance company in the event your possessions are lost due to a theft or natural
disaster.

Step 3. Calculate your net worth.

Once your financial records are organized, calculate your net worth. This is simply a matter of
figuring out what you own less what you owe. If your assets (house, bank accounts, investments
and so on) exceed your liabilities (mortgage, student loans, credit card debts, etc.), then your net
worth will be positive. On the other hand, if you owe more than you own, you'll have a negative
net worth.
Net worth is the best measurement of the state of your financial health and should be used as the
basis for any financial decisions you make. Your goal should be to increase your net worth on an
annual basis. At year-end, you should recalculate your net worth and compare it against last
year's benchmark. By doing this, you'll instantly be able to see your progress.

Step 4. Establish a spending plan.

A spending plan details where your money comes from and where it goes. The inflows include
your salary, bonus, interest income and any other source of income you have. Inflow is the part
that's generally easiest to recall. The outflow section is a detailed listing of where your money
goes. The most important outflow should be your savings. If you're living within your means,
then your inflow will equal your outflow.
Having a balanced spending plan should be a financial priority regardless of where you are in life
or what your net worth is. A spending plan identifies the key areas where you want your
resources to go and highlights wasted spending. It can also provide an early warning of
impending financial problems.
If this is your first time establishing a spending plan, consider using a software tool such as a
spreadsheet or a software package like Quicken to help you. These tools could significantly cut
down the amount of time and effort it takes to develop your plan.

Step 5. Build an emergency fund.

Ideally, you want to have enough cash on hand to cover three to six months of basic living
expenses should you lose your regular sources of income. Depending on your job security, you
may want to increase the number of month's worth of reserves. For example, self-employed
individuals may want to have twelve months of reserves, especially if their income is variable in
nature.

Step 6. Reduce or minimize consumer debt.

Debt drags down the rest of your financial efforts like a heavy anchor. If your consumer debt--
credit cards, student loans, auto loans and personal loans--is eating up 15 to 20 percent or more
of your monthly spending, make reducing it a priority. And why waste funds paying what are
most likely very high interest rates on your cards and loans?

Step 7. Draft four, key estate-planning documents.

Every adult should have (1) a will; (2) a durable power of attorney, which appoints someone to
handle your legal and financial affairs if you're unable to; (3) a living will, which declares what
life-sustaining medical treatments you want should you be incapacitated; and (4) a health-care
durable power of attorney, which appoints someone to oversee your medical interests should you
no longer be able to. Different states have different names for the medical documents, but they're
all critical to your smart financial planning.

Step 8. Obtain adequate insurance.

Managing risk is essential to your long-term financial security. The point of having insurance,
from medical and disability coverage to life, auto and homeowner's, is to protect you from
financial catastrophe. Simply stated, you buy insurance to cover expenses you couldn't make out
of your own pocket. It's imperative to keep in mind that you should buy insurance when you
don't need it, because when you do need it, you can't get it.

Sources of finance for entrepreneurial ventures

When looking for financing to take your business to the next level, you can increase your
chances of success by setting your sights far beyond the traditional business loan.

An angel investor
An angel investor (also known as a business angel, informal investor, angel funder, private
investor, or seed investor) is an affluent individual who provides capital for a business start-up,
usually in exchange for convertible debt or ownership equity. Usually, a former entrepreneur or
professional who provides starting or growth capital in promising ventures, and helps also with
advice and contacts. Unlike venture capitalists, angel investors usually operate alone (or in very
small groups) and play only an indirect role as advisors in the operations of the investee firm.
They are deemed to be 'angels' in comparison with grasping investors who are termed 'vulture
capitalists.' Also called business angel.
Venture capital (VC)
Venture capital (VC) is a type of private equity, a form of financing that is provided by firms or
funds to small, early-stage, emerging firms that are deemed to have high growth potential, or
which have demonstrated high growth (in terms of number of employees, annual revenue, or
both). Venture capital firms or funds invest in these early-stage companies in exchange
for equity–an ownership stake–in the companies they invest in. Venture capitalists take on the
risk of financing risky start-ups in the hopes that some of the firms they support will become
successful. The start-ups are usually based on an innovative technology or business model and
they are usually from the high technology industries, such as information technology (IT), social
media or biotechnology.

The typical venture capital investment occurs after an initial "seed funding" round. The first
round of institutional venture capital to fund growth is called the Series A round. Venture
capitalists provide this financing in the interest of generating a return through an eventual "exit"
event, such as the company selling shares to the public for the first time in an Initial public
offering (IPO) or doing a merger and acquisition (also known as a "trade sale") of the company.

In addition to angel investing, equity crowdfunding and other seed funding options, venture
capital is attractive for new companies with limited operating history that are too small to
raise capital in the public markets and have not reached the point where they are able to secure
a bank loan or complete a debt offering. In exchange for the high risk that venture capitalists
assume by investing in smaller and early-stage companies, venture capitalists usually get
significant control over company decisions, in addition to a significant portion of the companies'
ownership (and consequently value).

Start-ups like Uber, Airbnb, Flipkart, ReviewAdda, Xiaomi & Didi Chuxing are highly valued
startups, where venture capitalists contribute more than financing to these early-stage firms; they
also often provide strategic advice to the firm's executives on its business model and marketing
strategies.

Venture capital is also a way in which the private and public sectors can construct an institution
that systematically creates business networks for the new firms and industries, so that they can
progress and develop. This institution helps identify promising new firms and provide them with
finance, technical expertise, mentoring, marketing "know-how", and business models. Once
integrated into the business network, these firms are more likely to succeed, as they become
"nodes" in the search networks for designing and building products in their domain. However,
venture capitalists' decisions are often biased, exhibiting for instance overconfidence and illusion
of control, much like entrepreneurial decisions in general.

Types of financing
Bootstrapping
Believe it or not, it’s entirely possible to build a company without taking outside money -- and in
some cases, it’s the best option.
Bootstrapping typically entails building a company from some combination of personal savings
and borrowed money from friends and family.

While this might sound like a dicey proposition, smart founders are able to get the most bang for
their buck by launching their companies in countries like Vietnam or Chile, where the cost of
living is relatively low, and by applying for government grants to tide them over until the
revenues start rolling in.

In recent years, bootstrapping has been made more attractive by crowdfunding platforms like
Kickstarter and Indiegogo, which allow members of the public to give cash donations in
exchange for early access to a company’s product or other perks. This tool allows founders to
gain access to capital without giving up potentially valuable equity, and helps them get a gauge
of consumer demand prior to launch.

Equity funding
If bootstrapping isn’t a possibly, founders might do well to trade a stake in their company for a
capital infusion. While venture capital firms are best for startups who need lots of cash and
intend to grow extremely quickly, there are plenty of other equity options for founders with
different business strategies.

For starters, new founders may want to try getting their company into an accelerator, a two- or
three-month program designed to help startups work through the early stages of their
development and find potential investors at the program’s conclusion.

Accelerators have launched success stories like Dropbox and Airbnb, whose founders received a
small amount of funding and valuable mentorship from experienced entrepreneurs in exchange
for somewhere between a 7% and 10% stake in their companies.

Startup founders can find a similar combination of funding and mentorship by seeking out angel
investors, a group of rich individuals -- often former entrepreneurs themselves -- who make
small investments in new companies.

On the other end of the spectrum, startups also sometimes receive what are called “strategic
investments” from larger, more established companies looking for an edge over their
competitors. For instance, Microsoft made a $15 million investment in Foursquare last year in a
deal that allowed it to start using the company’s check-in data.

Debt funding
It’s not always a good idea for a young startup to go into the red early in its lifespan, so debt
funding is best thought of as something of a last resort. However, in certain situations where a
small amount of money is needed very quickly, it might make sense for a company to take out a
regular, old loan and spare itself the hassle of finding an investor.

Debt financing includes both secured and unsecured loans. Security involves a form of collateral
as an assurance the loan will be repaid. If the debtor defaults on the loan, that collateral is
forfeited to satisfy payment of the debt. Most lenders will ask for some sort of security on a loan.
Few, if any, will lend you money based on your name or idea alone.

Difference between Debt and equity financing

Equity financing often means issuing additional shares of common stock to an investor. With
more shares of common stock issued and outstanding, the previous stockholders' percentage of
ownership decreases. Debt financing means borrowing money and not giving up ownership.

Debt financing means borrowing money and not giving up ownership. Debt financing often
comes with strict conditions or covenants in addition to having to pay interest and principal at
specified dates. Failure to meet the debt requirements will result in severe consequences.

Types and Sources of Financing for Start-up Businesses

Financing is needed to start a business and ramp it up to profitability. There are several sources
to consider when looking for start-up financing. But first you need to consider how much money
you need and when you will need it.

The financial needs of a business will vary according to the type and size of the business. For
example, processing businesses are usually capital intensive, requiring large amounts of capital.
Retail businesses usually require less capital.

Debt and equity are the two major sources of financing. Government grants to finance certain
aspects of a business may be an option. Also, incentives may be available to locate in certain
communities and/or encourage activities in particular industries.

Equity Financing
Equity financing means exchanging a portion of the ownership of the business for a financial
investment in the business. The ownership stake resulting from an equity investment allows the
investor to share in the company’s profits. Equity involves a permanent investment in a company
and is not repaid by the company at a later date.

The investment should be properly defined in a formally created business entity. An equity stake
in a company can be in the form of membership units, as in the case of a limited liability
company or in the form of common or preferred stock as in a corporation.
Companies may establish different classes of stock to control voting rights among shareholders.
Similarly, companies may use different types of preferred stock. For example, common
stockholders can vote while preferred stockholders generally cannot. But common stockholders
are last in line for the company’s assets in case of default or bankruptcy. Preferred stockholders
receive a predetermined dividend before common stockholders receive a dividend.

Personal Savings

The first place to look for money is your own savings or equity. Personal resources can include
profit-sharing or early retirement funds, real estate equity loans, or cash value insurance policies.
Life insurance policies - A standard feature of many life insurance policies is the owner’s ability
to borrow against the cash value of the policy. This does not include term insurance because it
has no cash value. The money can be used for business needs. It takes about two years for a
policy to accumulate sufficient cash value for borrowing. You may borrow most of the cash
value of the policy. The loan will reduce the face value of the policy and, in the case of death, the
loan has to be repaid before the beneficiaries of the policy receive any payment.

Home equity loans - A home equity loan is a loan backed by the value of the equity in your
home. If your home is paid for, it can be used to generate funds from the entire value of your
home. If your home has an existing mortgage, it can provide funds on the difference between the
value of the house and the unpaid mortgage amount. For example, if your house is worth
$150,000 with an outstanding mortgage of $60,000, you have $90,000 in equity you can use as
collateral for a home equity loan or line of credit. Some home equity loans are set up as a
revolving credit line from which you can draw the amount needed at any time. The interest on a
home equity loan is tax deductible.

Friends and Relatives

Founders of a start-up business may look to private financing sources such as parents or friends.
It may be in the form of equity financing in which the friend or relative receives an ownership
interest in the business. However, these investments should be made with the same formality that
would be used with outside investors.

Venture Capital

Venture capital refers to financing that comes from companies or individuals in the business of
investing in young, privately held businesses. They provide capital to young businesses in
exchange for an ownership share of the business. Venture capital firms usually don’t want to
participate in the initial financing of a business unless the company has management with a
proven track record. Generally, they prefer to invest in companies that have received significant
equity investments from the founders and are already profitable.

They also prefer businesses that have a competitive advantage or a strong value proposition in
the form of a patent, a proven demand for the product, or a very special (and protectable) idea.
Venture capital investors often take a hands-on approach to their investments, requiring
representation on the board of directors and sometimes the hiring of managers. Venture capital
investors can provide valuable guidance and business advice. However, they are looking for
substantial returns on their investments and their objectives may be at cross purposes with those
of the founders. They are often focused on short-term gain.

Venture capital firms are usually focused on creating an investment portfolio of businesses with
high-growth potential resulting in high rates of returns. These businesses are often high-risk
investments. They may look for annual returns of 25 to 30 percent on their overall investment
portfolio.

Because these are usually high-risk business investments, they want investments with expected
returns of 50 percent or more. Assuming that some business investments will return 50 percent or
more while others will fail, it is hoped that the overall portfolio will return 25 to 30 percent.
More specifically, many venture capitalists subscribe to the 2-6-2 rule of thumb. This means that
typically two investments will yield high returns, six will yield moderate returns (or just return
their original investment), and two will fail.

Angel Investors

Angel investors are individuals and businesses that are interested in helping small businesses
survive and grow. So their objective may be more than just focusing on economic returns.
Although angel investors often have somewhat of a mission focus, they are still interested in
profitability and security for their investment. So they may still make many of the same demands
as a venture capitalist.

Angel investors may be interested in the economic development of a specific geographic area in
which they are located. Angel investors may focus on earlier stage financing and smaller
financing amounts than venture capitalists.

Government Grants

Federal and state governments often have financial assistance in the form of grants and/or tax
credits for start-up or expanding businesses.

Equity Offerings

In this situation, the business sells stock directly to the public. Depending on the circumstances,
equity offerings can raise substantial amounts of funds. The structure of the offering can take
many forms and requires careful oversight by the company’s legal representative.

Initial Public Offerings

Initial Public Offerings (IPOs) are used when companies have profitable operations, management
stability, and strong demand for their products or services. This generally doesn’t happen until
companies have been in business for several years. To get to this point, they usually will raise
funds privately one or more times.

Warrants
Warrants are a special type of instrument used for long-term financing. They are useful for start-
up companies to encourage investment by minimizing downside risk while providing upside
potential. For example, warrants can be issued to management in a start-up company as part of
the reimbursement package.

A warrant is a security that grants the owner of the warrant the right to buy stock in the issuing
company at a pre-determined (exercise) price at a future date (before a specified expiration date).
Its value is the relationship of the market price of the stock to the purchase price (warrant price)
of the stock. If the market price of the stock rises above the warrant price, the holder can exercise
the warrant. This involves purchasing the stock at the warrant price. So, in this situation, the
warrant provides the opportunity to purchase the stock at a price below current market price.
If the current market price of the stock is below the warrant price, the warrant is worthless
because exercising the warrant would be the same as buying the stock at a price higher than the
current market price. So, the warrant is left to expire. Generally warrants contain a specific date
at which they expire if not exercised by that date.

Debt Financing
Debt financing involves borrowing funds from creditors with the stipulation of repaying the
borrowed funds plus interest at a specified future time. For the creditors (those lending the funds
to the business), the reward for providing the debt financing is the interest on the amount lent to
the borrower.

Debt financing may be secured or unsecured. Secured debt has collateral (a valuable asset which
the lender can attach to satisfy the loan in case of default by the borrower). Conversely,
unsecured debt does not have collateral and places the lender in a less secure position relative to
repayment in case of default.

Debt financing (loans) may be short term or long term in their repayment schedules. Generally,
short-term debt is used to finance current activities such as operations while long-term debt is
used to finance assets such as buildings and equipment.

Friends and Relatives

Founders of start-up businesses may look to private sources such as family and friends when
starting a business. This may be in the form of debt capital at a low interest rate. However, if you
borrow from relatives or friends, it should be done with the same formality as if it were borrowed
from a commercial lender. This means creating and executing a formal loan document that
includes the amount borrowed, the interest rate, specific repayment terms (based on the projected
cash flow of the start-up business), and collateral in case of default.

Banks and Other Commercial Lenders

Banks and other commercial lenders are popular sources of business financing. Most lenders
require a solid business plan, positive track record, and plenty of collateral. These are usually
hard to come by for a start- up business. Once the business is underway and profit and loss
statements, cash flows budgets, and net worth statements are provided, the company may be able
to borrow additional funds.

Commercial Finance Companies

Commercial finance companies may be considered when the business is unable to secure
financing from other commercial sources. These companies may be more willing to rely on the
quality of the collateral to repay the loan than the track record or profit projections of your
business. If the business does not have substantial personal assets or collateral, a commercial
finance company may not be the best place to secure financing. Also, the cost of finance
company money is usually higher than other commercial lenders.

Government Programs
Local governments have programs designed to assist the financing of new ventures and small
businesses. The assistance is often in the form of a government guarantee of the repayment of a
loan from a conventional lender. The guarantee provides the lender repayment assurance for a
loan to a business that may have limited assets available for collateral. The best known sources
are the Small Business Administration and the Rural Development programs.

Bonds
Bonds may be used to raise financing for a specific activity. They are a special type of debt
financing because the debt instrument is issued by the company. Bonds are different from other
debt financing instruments because the company specifies the interest rate and when the
company will pay back the principal (maturity date). Also, the company does not have to make
any payments on the principal (and may not make any interest payments) until the specified
maturity date. The price paid for the bond at the time it is issued is called its face value.

When a company issues a bond it guarantees to pay back the principal (face value) plus interest.
From a financing perspective, issuing a bond offers the company the opportunity to access
financing without having to pay it back until it has successfully applied the funds. The risk for
the investor is that the company will default or go bankrupt before the maturity date. However,
because bonds are a debt instrument, they are ahead of equity holders for company assets.

Lease
A lease is a method of obtaining the use of assets for the business without using debt or equity
financing. It is a legal agreement between two parties that specifies the terms and conditions for
the rental use of a tangible resource such as a building and equipment. Lease payments are often
due annually. The agreement is usually between the company and a leasing or financing
organization and not directly between the company and the organization providing the assets.
When the lease ends, the asset is returned to the owner, the lease is renewed, or the asset is
purchased.

A lease may have an advantage because it does not tie up funds from purchasing an asset. It is
often compared to purchasing an asset with debt financing where the debt repayment is spread
over a period of years. However, lease payments often come at the beginning of the year where
debt payments come at the end of the year. So, the business may have more time to generate
funds for debt payments, although a down payment is usually required at the beginning of the
loan period.

Equity Financing Debt Financing

Personal Savings Friends and Relatives
Friends and Relatives Banks and Other Commercial Lenders
Venture Capital Commercial Finance Companies
Angel Investors Government Programs
Government Grants Bonds
Equity Offerings Lease
Initial Public Offerings
CHAPTER 8 - Institutional support – concept and need

Institution support - See book !

Financial support agencies

There are many organizations that support the ongoing growth of entrepreneurs and
businesses. Some are good, while others provide little to no value. Looking into each one to
discern their potential value could prove time-consuming and tedious.

But there is definitely value to be gained from being a part of the right organizations, and it's
something every entrepreneur should be considering. It can lead to new relationships and
connections, partnerships, business ideas and even new clients and customers.

Also, if you've ever thought about teaching others, giving back and being a part of the
development of future entrepreneurs and businesses, then it's time for you to get involved in a
high-caliber organization.

Rural Development Banks, micro finance institutions, commercial banks; Micro enterprise
development projects and programs;

Logistic support agencies - government, specialized and consultancy agencies;

Industrial estates

Role of Government in promoting entrepreneurship incentives, subsides and grants.

Export oriented units-Fiscal and Tax concession, role of financial institutes in the entrepreneurship
development in Nepal.

Introduction to Entrepreneurship Development Projects in Nepal with reference to IED, MEDEP

and ELAM. (MEDEP,- ELAM).

MEDEP (Micro-Enterprise Development program)

It has been witnessed that micro-enterprises have become increasingly popular in the new
development agenda across the globe and more so in the developing world to create income and
employment opportunities. The programme's objectives and goals are to translate the broader
vision of the government's Ninth Five-Year Plan, which is to try and address poverty through the
development of micro-enterprises among low-income families. Our programme is a multi-
partnership initiative between the state institutions and the private sector to promote micro-
enterprises among the poor for economic empowerment.

Introduction
Nepal's economy is predominantly based on agriculture (34% of GDP) and provides livelihoods
to approximately 70% of the population. Employment in the agricultural sector is seasonal and
unemployment rate is above 40%. Nepal's rural economy has been hugely dependent on
agriculture and in the last three to four decades, the country has been witnessing a rapid increase
in population, while the growth in agriculture has remained unparallel. The agriculture sector
grew by an average of 2.39 percent during the FY 1994/95 and FY 1998/99, which is slightly
above the present rate of population growth of 2.27 percent. This has accentuated the incidence
of poverty particularly in the rural areas. Lack of employment opportunities coupled with the
alarming rate of population growth has resulted in the underutilization of between 40 to 60% of
the adult workforce in Nepal.

To meet the economic necessities of the rural masses and in particular to cater to the needs of
those living below the poverty line, the Government of Nepal and the UNDP entered into a
technical collaboration to promote off-farm employment and income-generating opportunities.
The partnership between the Nepal Government and the UNDP established MEDEP in July 1998
in 10 districts of Nepal, covering two districts each from the five development regions. Initially
designed as a five-year programme, interest in the programme by funding agencies resulted in
the extension of the programme for another four years to cover an additional fifteen districts until
December 2007. With the success of the programme, MEDEP was extended for the third phase
(2008-2013) covering additional 13 districts and thus reaching out to the hardcore poor of 38
districts. See the map for MEDEP's coverage during different phases.

MEDEP's impressive achievements led the Government in its Interim Plan to allocate $3 million
to 45 districts and to gradually replicate the MEDEP model in the name of Micro Enterprise
Development for Poverty Alleviation (MEDPA) across Nepal's all 75 districts. Eventually, in the
fourth phase (August 2013 - July 2018), government’s MEDPA will gradually take over
MEDEP’s role of creating and sustaining entrepreneurs and MEDEP will more focus towards
capacity building of government line agencies and private organizations for the sustainable
delivery of micro enterprise Development services.

Objectives

The aim of the programme is to help low-income families become entrepreneurs, promote the
development of their enterprises, and then create a strong partnership between consumers of
micro-enterprise products and services and local service delivery institutions. This is expected to
boost micro-entrepreneurs to create a new and dynamic business sector in rural areas of Nepal.
The development aim of the programme is to contribute to the government's efforts to reduce
poverty in the country. Its goals are two folds: one to reduce poverty among low-income families
in rural areas, and the other is to ensure the institutional development and capacity building of
local service delivery organisations to work as catalysts in the development of rural micro-
enterprise sector. To give direction to the pilot initiative, the programme has set out with three
distinct goals and objectives.

 The main purpose of the project is to address the issues of rural unemployment and lack
of economic opportunities for the poor. In this context, the programme had set out to
establish 6,000 micro-enterprises between July 1998 to December 2003 during phase I of
the programme. The programme exceeded the target. Likewise, during phase II, it had set
 a target to set up more than 13,000 micro-enterprises by December 2007. The objective
of the programme is to help support the promotion of micro-enterprises on a sustainable
footing.

 In the process of creating income and employment opportunities, the programme's

objective is to build the capacity of state and private institutions that provide necessary
services required for setting up micro-enterprises.

 The programme has set out to advocate for policy change and formulation which could
support the development and strengthening of the micro-enterprise sector. Facilitating in
creating policy conducive environment for rural economies to be linked to national
private sector businesses is one of the core objectives of the programme.

Target Group

When the programme set out to implement its activities in 1998, its target group and
beneficiaries were clearly defined to specifically include those living below the country's poverty
line. According to the National Living Standard Survey those whose per capital income was less
than 4,404 according to market prices of 1995/1996 were classified as people below the poverty
line. With the progression of time, the figure was adjusted to 6,400 according to market prices of
2003/2004. Likewise, rural women were a sub-sector of the poor target group and MEDEP set
out with an objective to have at least 70% women participation in its programme. The selection
of the target group was within the larger framework of the United Nations Millennium
Development Goals to reduce poverty by half by 2015. However, with the country traversing
through political instability and conflict, the scopes of the programme's target group broadened.
To act as a catalyst in the country's peace and development process, new target groups were
identified under the UNDP's Crisis Prevention and Recovery (CPR) initiative. In addition to
those living below the poverty line and women, the programme identified its new beneficiaries
as the following:

 Hardcore poor families (those having annual income of less than Rs 4,404)

 Poor scheduled caste (Dalit - there are 26 different scheduled castes in Nepal)

 Poor Indigenous groups (there are 59 different indigenous groups of which 12 are ethnic
minority groups among which 8 have been listed as endangered ethnic groups).

 Differently Able (physically and mentally challenged)

 Deprived Women (divorced women, women-headed households)

Vision

Ensure that poor people have access to secure and easy financing and access to business
development services

The Industrial Enterprise Development Institute (IEDI)

The Industrial Enterprise Development Institute (IEDI), a national resource organization
committed to entrepreneurship development through training, research, consultancy and
enterprise education was established in 1996 as a successor of Industrial Enterprise Development
Centre which itself was a successor of former Small Business Promotion Project (SBPP), a joint
project of Ministry of Industry and German Technical Cooperation (GTZ) established in 1984.
The approach pioneered and developed in Nepal by the project is being implemented in more
than 70 countries in Asia, Africa and South America, under the name of CEFE (Creation of
Entrepreneurs, Formation of Enterprises).

With a need to provide sustainability and weathering the challenges of entrepreneurship

development in Nepal, IEDI’s new focus is to provide services to a maximum number of
organizations involved in enterprise development. With this in mind, IEDI’s main thrust has
become the capacity development of intermediary organizations. For this, it carries out R&D,
testing and dissemination of best practices in business development services, suitable to the
different target groups and regions in Nepal.

Objective of IEDI

 To assist organizations, institutions, industries and enterprises through need-based

services such as trainings, entrepreneurship and management development, feasibility
studies, consultancy and training of trainers.

 To provide quality support services to industry/enterprise development.

 To carry out need-based action research to provide quality services for enterprise
promotion and development.

 To conduct need-based programs to develop technical, entrepreneurial and management

related know-how and skills.

 To carry out research and development related activities.

 To establish and develop projects and organizations for enterprise development.

Small Business Management:

1. Training Program on Market Development: Two training programs on Market Development

were conducted by IEDI, Nepalgunj Branch during June, 2010 in Bardiya. The organizer of the
program was Space Nepal. The participants were the Mukta Kamiya of Nepalgunj. The main
objectives of these training were to upgrade their knowledge on marketing and also to formulate
appropriate marketing strategies. Altogether sixty participants attended the program including
ten male.

2. Training Program on Business Management: A training program on Business Management

was conducted by IEDI from May 25-28, 2010 in Kathmandu. The participants were from
fourteen zone of the country involved in different enterprises in Kathmandu. The program was
supported by Nepal Sahayog Samaj, Kathmandu. The major contents of the program included
basic knowledge on marketing, salesmanship and book keeping. Altogether twenty-two
participants attended the program including seven female. Similarly, another five days training
program on Business Management was conducted by IEDI, Nepalgunj Branch from July 4-8,
2010 in Nepalgunj. The participants of the program were the staff of different NGOs of
Nepalgunj. Altogether twenty participants including eight male attended the training.

3. Double Entry Book-keeping with VAT & Office Management Training: A five days training
on Double Entry Book Keeping with VAT and Office Management was conducted by IEDI from
July 29 – August 2, 2010 in Butwal. This program was organized by Oshin Power Service
Private Limited, Butwal for its employees. The objectives of the program were to reinforce the
importance of book keeping in business and to make the participants able to keep records under
double entry book keeping system and also to enhance the capability of owners & employees in
office management, correspondence skills, filing system and decision making. Altogether twelve
participants attended the program including one female. A training program on Double Entry
Book Keeping was conducted by IEDI from June 11-13, 2010 in Itahari. This program was
supported by SNV-Nepal. The participants were the staff of different Bio-gas Companies.
Altogether twenty participants attended the program including two female.

4. Training Program on Selling Skill, Marketing and Corporate Social Responsibility (CSR): A
training program on Selling Skill, Marketing and Corporate Social Responsibility was conducted
by IEDI for the Enterprise Support Providers of Elam / Helvetas from July 5-9, 2010 in Hetauda.
The training was organized by Elam/Helvetas, Rautahat. The main objective of the training was
to enhance the knowledge and skills of participants on selling skills, marketing and corporate
social responsibility. Altogether twenty-five participants attended the program including three
female.

5. Local Capacity Building (LCB) Program: IEDI conducted a training program on Account
Management from June 11-13, 2010 for the executives and staff of Bio-gas Companies in Itahari.
Twenty-two participants attended the training program. Mr. Lekhnath Itany of IEDI was the
resource person of the program. The training was organized by LCB program of SNV/Nepal.

Workshops/Seminar

1. Entrepreneurship and Business Awareness Workshop: Two workshops on Entrepreneurship

and Business Awareness were conducted by IEDI during June, 2010 in Chitwan and Pokhara.
These workshops were organized by Yuwa Akakas Under Shtri Shakti (S2), Kathmandu, which
is involved in the capacity building activities of youth of rural communities. The objective of the
workshop was to make the participants aware with entrepreneurship & business concepts.
Altogether fifty-six youths of Chitwan & Pokhara participated these workshops including sixteen
male.

2. Workshop on Conflict Resolution, Team Building and Leadership: Two Workshops on

Conflict Resolution, Team Building and Leadership Development were carried out by IEDI from
August 8-10, 2010 in Birtamod and from August 11-13, 2010 in Itahari respectively. Forty-five
staff of Bio-gas Companies and representatives of Nepal Bio-gas Promotion Associaton (NBPA),
Itahari attended the workshops. These workshops were organized and conducted under the Local
Capacity Building (LCB) program of SNV/Nepal. The workshops were facilitated by Mr.
Bishwa Karki as a lead resource person and Mr. Sushil Sharma, as a resource person of IEDI.
3. Follow-up Workshop: A curriculum of Enterprise Education has been implemented in Butwal
Technical Institute (BTI) in a pilot basis in joint effort of INCLUDE/GTZ, Canadian
Cooperation Office (CCO), Swiss Development Cooperation (SDC), United Mission to Nepal
(UMN) and IEDI since 2005. To know the impact of the curriculum and its prospectus, a half
day follow-up workshop was organized in BTI on 10 July 2010.The workshop was participated
by 17 persons including course teachers, BTI officials, on the job training (OJT) provider
entrepreneurs and past and regular students. All the stakeholders participated in the workshop
valued the curriculum very positively. They expressed that the level of competency of the
students is high as compared to the past students who had not taken the enterprise education
course. They have also requested to integrate the curriculum and methodology of Business Start-
up Course in the enterprise education syllabus. Also, BTI officials and teachers showed urgent
need for refresher course on enterprise education.

Skill Development Training:

1. Training on Bamboo Processing for the Disadvantage Group: IEDI, Pokhara Branch
conducted a skill development training on Bamboo Processing from June 1-7, 2010 in Lekhnath
13, Pokhara. The participants were the landless dalit & janajati of Lekhnath 13, Pokhara. This
program was jointly organized by IEDI & Lekhnath Municipality. Altogether there were fifteen
participants including four male.

Potential Programs (Entrepreneurship Development):

1. Micro Enterprise Creation (MEC) Training: A five days MEC training was conducted by
IEDI, Nepalgunj Branch from May 20-24, 2010 in Nepalgunj. The participants were the staff of
different NGO’s of Nepalgunj. The objectives of the program were to develop the trainees’
entrepreneurial competencies and enable them to identify and select project ideas and prepare
appropriate business plans. Altogether twenty-one female attended the program. Another MEC
training was conducted by IEDI, Pokhara Branch from July 3-7, 2010 in Chorepatan, Pokhara.
This program was jointly organized by IEDI & Bridge-Nepal, Pokhara. Altogether twenty-two
participants attended the program including six male. A five days MEC training was conducted
by IEDI from July 8-13, 2010 in Kathmandu. This program was jointly organized by IEDI with
Srijansil Mahila Udham Sahakari Sanstha, Sukedhara and Jagaran Nepal, Anamnagar. The
objective of the program was to enhance capacity of co-operative members who want to start
business & manage it systematically. Altogether twenty five female participated the program.
Similarly, IEDI Narayangadh Branch conducted MEC Training from May 20-24, 2010 in
Chitwan. The program was jointly organized by IEDI & Dalit Mahila Sangh, Chitwan. The
participants were Dalit Women of Chitwan. Altogether there were twenty-five participants
including one male.

2. Training of Trainers on Entrepreneurship Development Program (EDP-ToT): A six days EDP-

ToT was conducted by IEDI from May 15-20, 2010 in Banepa. The organizer of the program
was Nepal Federation of Saving and Credit Co-operative Union Limited (NEFSCUN),
Kathmandu. The program objectives were to develop the trainees’ entrepreneurial competencies,
impart basic knowledge and skills on identification and selection of appropriate business and
prepare business plan and also to upgrade their knowledge & skill on business management and
marketing. The participants of the training were the members of NEFSCUN. Altogether eighteen
participants attended the program including five male.

ELAM

Elam, an Informal Sector Enterprise Development Generation Programme of HELVETAS Swiss

Inter cooperation Nepal, focuses on employment generation based on the promotion of local
resource value chains and their value addition. This includes natural resources as well as
resources that are locally available, e.g. waste from local manufacturing processes. The
programme was initiated in 2003 in the Tarai of the Central Development region initially
focusing on off-farm job creation and enterprise development. In 2006 the programme was
expanded to the Tarai of the Far Western Development region by adding farm based enterprise
development components for job creation and livelihood improvement of disadvantaged groups.
In late 2012 first activities of the programme were initiated in the mid hill district Syangja.

CONTEXT AND BRIEF HISTORY OF THE PROJECT

The Government of Nepal has given priority to employment generation through its periodic plan
and policy. In January 2012, Elam was restructured and was given an adapted mandate of
exploration, innovation, product testing and development and the implementation of enterprising
activities. After this restructuring, the project now focuses on three main components:

Research and Exploration: Based on sector assessments and area potential surveys, potential
products are identified for testing and further business development.

Pilot Implementation: Successfully tested products are piloted at a small scale with the
involvement of the private sector in order to attract funding for further up scaling.

Capacity Development and Consulting: Elam builds local capacity for business services
through the development of Enterprise Service Providers, and for extension services through the
development of Local Resource Persons.

Private business houses and organizations are involved for product development, diversification
and market linkage. In order to foster learning and develop capacity within HELVETAS Swiss
Inter cooperation Nepal, Elam facilitates knowledge exchange on business plan development,
enterprise development and job creation amongst relevant HELVETAS Swiss Inter cooperation
Nepal projects.

IMPLEMENTATION STRATEGY

Elam primarily uses local service providers for business services, while technical and extension
services continue to be provided to primary stakeholders through private sector local service
providers. It coordinates with relevant government agencies for project steering, experience
exchange and local fund generation/co-funding. Elam engages the private sector for product
development and testing, product diversification, market linkage, technology improvement, buy-
back guarantees, business exposure, credit linkage and risk sharing and facilitates businesses for
enterprise development and job creation.

STAKEHOLDERS AND PARTNERS

Private sector enterprise service providers, business associations and organizations, private
industries, traders and buyers, local government agencies are our primary stakeholders and
partners.

COVERAGE

Project activities are implemented in Kailali, Kanchanpur, Banke, Bara, Bardiya, Parsa,
Rautahat, Sarlahi and Syangja.

RESOURCES

Elam has a total of four technical staff and an annual budget of CHF 208,000 in 2014.

OBJECTIVES

The project aims at disadvantaged women and men in Nepal to benefit from employment
opportunities based on the productive use of local resources. The project will innovate promising
products or approaches based on the use of local resources and with the potential for gainful
employment for poor and disadvantaged. With the support of funding agencies these products
and approaches will be validated resulting in gainful employment. The project provides advisory
services to our HELVETAS Swiss Inter cooperation projects related to business development
services.

PRESENT STATUS

 Business relationship is being developed among business stakeholders in different value-

chains like banana, herbal processing, pineapple and turmeric in order to enterprise
development and job creation.
 All together 13 tissue culture based private led banana nurseries were established with a
capacity of 250,000 banana suckers in Kailali, Kanchanpur, Banke, Bardiya, Chitwa,
Bara Morang and Jhapa districts in the partnership of Nepal bio-tech Private Limited,
Kathmandu and banana farming is expanded in 135 hector in 2013 and 2014.
 Crop insurance scheme is introduced in banana farming as piloting in the partnership of
Nepal Insurance Company Limited. Kathmandu in 2013.
 The banana local resource person’s development package has been accredited by the
Nepal Skill Test Board as level one from Council for Technical Education and
Vocational Training and training manual prepared based on this curriculum.
 All together 23 banana paper making enterprises were established. Banana paper making
enterprises is expanded in other areas of the country in the partnership of private sector
development organizations and different organizations of Nepal government.
 Semi-automatic machine and technology developed and piloted it for paper making in
sarlahi district. There is opportunity to expand it in other areas.
  Product diversifications enterprises were established in three places Kailali, Kanchanpur,
and Sarlahi.
 Seven distillation units, one big factory and traders were identified to initiate enterprising
activities in the herbal processing sub sector resulting in 875 households benefiting from
it.
 A memorandum of understanding was signed by HELVETAS Swiss Intercooperation
Nepal, Energizing Development of the German Agency for International Cooperation and
the National Association of Community Electricity Users Nepal for piloting enterprising
activities in Syangja and Banke districts with the productive use of electricity.
 A memorandum of understanding was signed by Elam project/HELVETAS Swiss
Intercooperation Nepal with different organizations like MEGA Bank Limited., Nepal
Insurance Company Limited., Vocational Skills and Training Center of Nepal
government, traders associations and Enterprise Service Providers for providing business
support services in order to develop market system in different value-chains in Elam
working districts.

The Federation of Woman Entrepreneurs' Associations Of Nepal (FWEAN) is the apex body for
the Woman Entrepreneurs' Associations of Nepal (WEAN) Chapers. It was established on July
11th, 2003 with a vision to contribute to nation building through the socio-economic
empowerment of women and a mission to promote women entrepreneurship through advocacy,
networking, information dissemination, capacity building and the promotion of women
entrepreneurs throughout the country.

FWEAN works in four thematic areas, namely:

1. Advocacy and lobbying with the government and related organizations on issues
pertaining to women’s economic empowerment.

2. Creation and promotion of entrepreneurship in all rural and urban areas of Nepal.

3. Establishment of WEAN Chapters in all seventy-five districts of Nepal.

4. Promotion and empowerment of members through its programs and activities.

In the area of advocacy and lobbying, FWEAN has been holding National Consultation
Workshops every year to identify the issues related to women’s economic empowerment.
Women from different districts gather together, not only to raise issues, but also to provide
suggestions for empowering women at various levels.

So far, some of the issues that have been identified and lobbied with the government have given
rise to the establishment of the Women Entrepreneurship Development Fund. At present, the
total fund amount available for female entrepreneurs is forty million, with a promise of
increasing this fund annually. This fund will be released to the women entrepreneurs in the form
of a loan at low interest rates, and with no collateral required.
Women have always found it difficult to market their goods, so with the intention of promoting
their businesses, FWEAN lobbied with the government in order to establish the Woman’s Craft
Village. This will provide a venue for women entrepreneurs from different sectors to come
together to market and showcase their products. The land for this project has already been
identified and the department of Cottage and Small Industry has agreed to provide the basic
infrastructure for the necessary building, however this has yet to be handed over.

Obtaining collateral free loans from banks has always been a challenge for women entrepreneurs,
so FWEAN has been lobbying with the government and the Nepal Rastra Bank to ensure that
women entrepreneurs can have access to collateral free loans. Nepal Rastra Bank has already
directed their branches to provide collateral frees loan up to Rs. 500,000 at low interest rates.

For the creation and promotion of entrepreneurship in rural and urban areas, FWEAN has been
providing skill based and capacity building trainings. It has also been advocating for a safe and
healthy population by training women on certain issues, for example vermin composting and
organic farming. Such trainings have been provided in the Kathmandu valley and in the districts
of Surkhet, and Dang.

FWEAN has also been providing skill based enterprise development trainings in the rural areas
of Bhardev and Devichaur, in the district of Lalitpur. This training has been implemented in
partnership with the Lutheran World Federation Nepal (LWF), with support from
the International Labour Organization of Nepal. Several programs have been conducted, with the
focus of these programs being to bring women from the informal sector into the formal business
sector by registering their businesses through support systems in place and offered by FWEAN.