Introduction to Entrepreneurship

Unit-1

Entrepreneur

Basically, an entrepreneur is a person responsible for setting up a business or an enterprise.

He has the initiative, and skill for innovation and who looks for high achievements. He is a
catalytic agent of change and works for the good of people. He puts up new green
field projects that create wealth, open up many employment opportunities and lead to the
growth of other sectors.

Definition of Entrepreneur

David McClelland
An entrepreneur is a person with a high need for achievement. He is energetic and a moderate
risk-taker.

Peter Drucker
An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is
a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a
resource.

Entrepreneurship
Entrepreneurship can be described as a process of action an entrepreneur undertakes to
establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create
and build something from practically nothing. It is a knack for sensing opportunity where
others see chaos, contradiction and confusion. Entrepreneurship is the attitude of mind to
seek opportunities, take calculated risks and derive benefits by setting up a venture. It
comprises numerous activities involved in the conception, creation and running of an
enterprise
According to Peter Drucker
Entrepreneurship is defined as a systematic innovation, which consists in the purposeful and
organized search for changes, and it is the systematic analysis of the opportunities such
changes might offer for economic and social innovation

Definition of Entrepreneurs Today

Entrepreneurship is the process of creating something new and assuming the risks and
rewards.

Four aspects of being an entrepreneur today:

• Involves creation process.
• Requires devotion of time and effort.
• Involves the rewards of being an entrepreneur.
• Requires assumption of necessary risks

Difference between Entrepreneur and Entrepreneurship

Types of Entrepreneurs
Based on their working relationship with the business environment they are functioning in,
various types of entrepreneurs can be found. The chief categories are these four types of
entrepreneurs, i.e.

 Innovative entrepreneurs,
 Imitating Entrepreneurs,
 Fabian Entrepreneurs
 Drone Entrepreneurs

1. Innovative Entrepreneurs: This type of entrepreneur is more interested in introducing

some new ideas into the market, organization or in the nation. They are drawn towards
innovations and invest a lot of time and wealth in doing research and development.

2. Imitating Entrepreneurs: These are often disparagingly referred to as ‗copy cats‘. They
observe an existing successful system and replicate it in a manner where all the
deficiencies of the original business model are addressed and all its efficiencies are
retained. These entrepreneurs help to improve an existing product or production process
and can offer suggestions to enhance the use of better technology.

3. Fabian Entrepreneurs: These are entrepreneurs who are very careful in their approaches
and cautious in adopting any changes. They are not prone to sudden decisions and try to
shy away from any innovations or change that doesn‘t fit their narrative.

4. Drone Entrepreneurs: These are entrepreneurs who do not like change. They are
considered as old school‘. They want to do business with their own traditional or
orthodox methods of production and systems. Such people attach pride and tradition to
even outdated methods of doing business.

Knowledge and Skills of Entrepreneurs

1. Ability to Solve Problems

In this world, there is no entrepreneurship that will succeed perpendicularly. Problems do
arise but we should apply different tactics to handle them. Before winning a battle, failures
are guaranteed. Have the skills to predict risks and come up with risk management plans to
solve the problem.

2. Ability to Manage Money

An ultimate goal of doing business is to make a profit (money). How do you expect to
manage a business if you don’t have the skills to manage money? Budgeting for the
business will also be a big challenge to any business which is not well handled will result in a
loss.

3. Networking with the Right People

Before venturing into any business, you must set goals for it. Create the right linkages and
fish out resourceful people to acquire business ideas. Out of the entrepreneurs, you spend
time with, define your role model and work towards achieving that. Learn more from
successful ones and ask them how they manage. Share as many challenges as possible to get
solutions to the problems affecting the business.

4. Building Relations with Customers

In a real sense, business without customers is like dead wood. In business engagements, we
either sell services or products. Make sure the ideas you employ, the decisions you make and
the services offered meet customer needs. Do a lot of research where necessary to get a viable
solution. Sell the skills acquired into the business so as to attract more customers.

5. Being Resourceful

The moment an entrepreneur knows how to manage money; the next question should be how
he can source for more to pump the business to a greater profit. Have the capacity to identify
the sources of funding. This also involves a convincing voice to sell out the business and
attract more funding.

6. Managing Stress Efficiently

Stress can kill entrepreneurs if not well handled and managed. There will always be a time
when all options that you try will hit the wall. Frustration occurs in the process of trying to
fix this. Don’t let stress put you down, instead, turn them into an opportunity to grow. Apply
useful tactics for business growth.

7. Managing People Effectively

Managing people takes different dimensions. Use different parameters to gauge people’s
capabilities. Identify their weakness and work on them. Productivity can only be achieved by
having an effective team on board. Motivate and build them every day. Treat employees with
equality as it brings respect. Timely feedback about the business will be experienced.

8. Capacity Building
Limited skills can affect the growth of a business. Enhance the team's performance by
training them in key areas. Identify the gaps in each and every team member and plan for
capacity-building sessions. This will give them the strength to handle complicated issues as
commitment levels go high. As an entrepreneur, this will form a basis for handling employee
misconduct issues.

9. Learning Ability
The market demands changes and affects business every now and then. Don’t assume you
know every detail about your business. How to build customer trust in an online business? A
business if strategized well moves very fast. Emerging trends should be monitored and
applied with immediate effect to avoid business disruption.

10. Identifying Strengths and Weakness

Nobody is perfect in this world. It is crucial to identify what you are good at (strength).
Identify weaknesses so they don’t overpower the strengths. This will help in making an
informed decision about your business. Acting on weaknesses with courage and sheer
strength will help you go a long way.

Characteristics of Successful Entrepreneurs

Every successful entrepreneur has traits and qualities which have enabled them to get to their
position. If you want to accomplish something similar and create a successful business, you
must adopt these same attributes.
1. Curiosity: Successful entrepreneurs are naturally curious individuals who are always
seeking new opportunities and insights. They are constantly learning and seeking
ways to improve their businesses.
2. Structured Experimentation: Entrepreneurs are often faced with uncertainty and
risk. Successful entrepreneurs are skilled at experimenting with new ideas and testing
their assumptions in a structured and systematic way.
3. Adaptability: Successful entrepreneurs are able to adapt to changing circumstances
and market conditions. They are flexible and open-minded, willing to pivot their
business strategies as needed.
4. Decisiveness: Entrepreneurs must make many decisions on a daily basis, often with
limited information. Successful entrepreneurs are decisive and able to make tough
decisions quickly and confidently.
5. Team Building: No entrepreneur can succeed alone. Successful entrepreneurs are
able to build and manage effective teams, delegate tasks, and empower their
employees to succeed.
6. Risk Tolerance: Entrepreneurship involves taking calculated risks. Successful
entrepreneurs are willing to take risks and embrace uncertainty in order to achieve
their goals.
7. Comfortable with Failure: Failure is an inevitable part of entrepreneurship.
Successful entrepreneurs are comfortable with failure and view it as an opportunity to
learn and grow.
8. Persistence: Entrepreneurship requires persistence and a willingness to keep going in
the face of obstacles and setbacks. Successful entrepreneurs are tenacious and
resilient.
9. Innovation: Successful entrepreneurs are able to identify new and innovative ways to
solve problems and meet customer needs. They are creative and always looking for
ways to improve their products or services.
10. Long-Term Focus: Entrepreneurship is a long-term game. Successful entrepreneurs
have a clear vision of where they want to go and are willing to invest the time and
resources needed to achieve their goals.
Process of Entrepreneurship:

 Identification of an opportunity: An entrepreneur always understands the potential

opportunities as well as visualizes a new market opportunity. Such entrepreneurs are
 highly creative and always ready to embrace and apply new ideas and combat new
challenges. Entrepreneurs keep a check on the requirements, necessities, wants
challenges, and problem areas. They always get the first-mover’s advantage and
higher credibility in the new market scenario.
 Establishment of a vision: Generation of ideas, creativity, coupled with past
experiences, can satisfy needs and tackle problems. There will be so many ideas. But
the most feasible and profitable one will be finalized. An entrepreneur always
evaluates as well as assesses the risks and rewards associated as well as the real and
perceived value of the service. He also keeps a check on the competitive business
environment.
 Persuading others: An entrepreneur builds a foundation team. This team includes
people who consistently work together for the accomplishment of a common goal.
They wish to turn the vision into reality. The team may include family members,
partners, financiers, etc.
 Gathering of important resources: Entrepreneurs come up with effective business
plans for attracting investors, partners, venture capitalists, promoters, financial
institutions, and so on. A successful entrepreneur will be able to research and identify
resources that are required for converting an idea into a feasible venture.
 Adaptability: Monitoring and upgrading the organization according to the ever-
changing market scenario is quite important for an entrepreneur. There have to be
enough funds ready for making the required changes. The adaptability of human
resources is also necessary for surviving the dynamic business environment.
 Creation of new venture: After an entrepreneur is done with the arrangement of all
the required resources, he needs to create and establish a new venture and run the
business venture with utmost proficiency. He needs to show a lot of enthusiasm and
passion. Also, he needs to be perseverant enough to keep faith in himself and his
ideas.

Factors Affecting Emergence of Entrepreneurship

1. Economic Factors
2. Social Factors
3. Psychological Factors
4. Political Factors
Economic Factors

1. Capital
Capital Is A Crucial Requirement While Initiating An Entrepreneurial Activity. It Is Capital
Which Is Essential To Procure Land, Material, Machines Etc. An Entrepreneur Is Able To
Procure All The Necessities Of Production When Adequate Capital Is Available With Them.
This, In Turn, Leads To Entrepreneurial Growth.
2. Labor
To Carry Out a Successful Business, Inexpensive As Well As Skilled Labor Is Essential. This
Will Increase The Overall Productivity Of The Venture, Leading To The Growth And
Development Of The Entrepreneur’s Venture.
3. Raw Material
Another Factor Affecting Entrepreneurship Development Is The Availability Of Quality Raw
Material At Affordable Costs. If The Raw Material Is Readily Available And Is Within The
Manufacturing Unit’s Proximity, It Will Help Reduce The Cost Of Production. However, This
Problem Can Be Solved By Ensuring A Strong Supply Chain, But This Might Increase The
Cost Of Manufacture.
4. Market
In Simple Terms, A Market Is A Place Where Both Producers And Customers Interact. This Is
Where Actual Selling And Buying Takes Place. The Market Is The Place Where The Future
Course Of The Business Rests. If A Consumer Isn’t Willing To Buy A Product Offered By
The Entrepreneur, Then The Venture Is Bound To Fail. However, If The Entrepreneur’s
Product Is Able To Serve The Purpose And Solve The Problems Of The Customers, This
Means That The Demand For The Product Is Present In The Market. This Will Increase Sales
Of The Business, Which Will Lead To Entrepreneurial Growth.
5. Infrastructure
Expansion of entrepreneurship presupposes properly developed communication and
transportation facilities. It not only helps to enlarge the market, but expand the horizons of
business too. Take, for instance, the establishment of a post and telegraph system and the
construction of roads and highways in India. It helped considerable entrepreneurial activities
which took place in the 1850s. Apart from the above factors, institutions like trade/ business
associations, business schools, libraries, etc. also make valuable contributions towards
promoting and sustaining entrepreneurship in the economy. You can gather all the
information you want from these bodies. They also act as a forum for communication and
joint action.

Social Factors
1. Social Mobility
By social mobility’ we mean the freedom to move from one caste to another. The caste
system does not permit an individual who is born a Shridra to move to a higher caste. Thus,
commercial activities were the monopoly of the Vaishyas. Members of the three other Hindu
Varnas did not become interested in trade and commerce, even when India had extensive
commercial interrelations with many foreign countries. The dominance of certain ethnical
groups in entrepreneurship is a global phenomenon
2. Family Background
This factor includes the size of the family, the type of family and the economic status of the
family. In a study by Hadimani, it has been revealed that the Zamindar family helped to gain
access to political power and exhibit a higher level of entrepreneurship. The background of a
family in manufacturing provided a source of industrial entrepreneurship. The occupational
and social status of the family influenced mobility. There are certain circumstances where
very few people would have to be venturesome. For example in a society where the joint
family system is in vogue, those members of a joint family who gain wealth through their
hard work are denied the opportunity to enjoy the fruits of their labour because they have to
share their wealth with the other members of the family
3. Education
Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of
education has a significant role to play in inculcating entrepreneurial values. In India, the
system of education prior to the 20th century was based on religion. In this rigid system,
critical and questioning attitudes towards society were discouraged. The caste system and the
resultant occupational structure were reinforced by such education. It promoted the idea that
business is not a respectable occupation. Later, when the British came to our country, they
introduced an education system, just to produce clerks and accountants for the East India
Company, The base of such a system, as you can well see, is very anti-entrepreneurial. Our
educational methods have not changed much even today. The emphasis is still on preparing
students for standard jobs, rather than marking them as capable enough to stand on their feet.
4. Attitude of the Society
A related aspect to these is the attitude of the society towards entrepreneurship. Certain
societies encourage innovations and novelties and thus approve entrepreneurs’ actions and
rewards like profits. Certain others do not tolerate changes and in such circumstances,
entrepreneurship cannot take root and grow. Similarly, some societies have an inherent dislike
for any moneymaking activity. It is said, that in Russia, in the nineteenth century, the upper
classes did not like entrepreneurs. For them, cultivating the land meant a good life. They
believed that rand belonged to God and the produce of the land was nothing but god’s
blessing. Russian folk tales, proverbs and songs during this period carried the message that
making wealth through business was not right.

5. Cultural Value
The cultural values of a country also impact the growth of entrepreneurship. If the culture has
a leaning toward the growth of the economy and money-making business, there are higher
chances of entrepreneurs flourishing in the country. There are certain countries whose
cultures encourage a strong work ethic. These kinds of countries are the ideal places to start a
business or company for an entrepreneur.

Psychological Factors

1. Status Respect
Status respect is another psychological factor that affects entrepreneurship growth.
Academicians stated that withdrawal of expected status respect forces group of society or
individuals to opt for something different or unique to get the status respect and most of the
time to express, dissatisfied individuals opts for entrepreneurship. Hagen (1962) supports this
fact through the example of Japan’s development. He stated that Japan experienced high
growth in entrepreneurship due to the withdrawal of status respect from colonial rule and the
Samurai group which forced Japan’s society to increase innovation and creativity.

2. Motivation For High Achievement

According to D. McClelland’s theory of need achievement, primarily, motivation for high
achievement is the major psychological determinant for entrepreneurship development. This
theory advocates that entrepreneurship emerges in a society that reflects the need for
achievement. A society that has a high need for achievement would expect high growth in
entrepreneurship. McClelland further states that due to the need for high achievement one
succeeds and the other fails in entrepreneurship due to low motivation. Further, it is
suggested that the need or motivation for high achievement can be developed through
training.

Government/ Political Factors

Various government policies like the Economic Policy, Taxation Policy, Import-Export
Policy, Licensing Policy, etc. If the government provides basic infrastructural facilities, like
electricity, transport, banking, insurance, communication, water, raw materials, warehousing
facilities, etc. It certainly results in the development of entrepreneurship or entrepreneurship.

Managerial and Entrepreneurial Approach

 Scope/Opportunities of Entrepreneurship in the Hospitality Industry
Everything from the customer shift to virtual and mobile booking, to changing travel habits,
to new industry players are bringing novel challenges and numerous business opportunities
for entrepreneurs in the field of hospitality. While hotel operators created rigid bureaucratic
systems, entrepreneurs have the chance to push creative ideas to advance the industry and
gain attention from consumers. The hospitality industry particularly lends itself to
entrepreneurship. Understanding the local market is the key to success and requires an
entrepreneurial mindset in order to succeed.

1. Hotels
People, especially tourists or those who travel a lot due to their office work or any meetings,
will always need somewhere to sleep, and often the big hotel chains are expensive.
Meanwhile, a building with some history, a proper fried breakfast and an owner who not only
knows the area but the people who live there, could be a far more enticing prospect for the
visitor. You need to be prepared for your evenings to no longer be your own and you’ll have
to put in a lot of hard work.

2. Coffee Shop
There is a reason that coffee shops or cafes seem to be ubiquitous: people like them! (Ok, you
can recall, Friends, the famous Central Perk). You can give your coffee shop a historical or a
dim light look depending on what works for your cafe. Yes, you will have to keep
experimenting. Create homemade cakes, buns and breakfasts, and pair these feasts with fresh
hot drinks, to entice both visitors and locals alike. Memorabilia and a stylish décor will
enhance the experience, and these venues can also be used to host networking events and live
music/arts as is evident nowadays

3. Food Franchise
It is perhaps every foodie’s dream to own a restaurant. Even many of us opt for hotel
management courses with a view that someday in future they will open a restaurant. An easy
way to do this is to buy the franchise rights to international brands. An advantage of bringing
in a well-known franchise is that the branding work is already taken care of by the MNC and
they have set processes in place that a new franchisee only has to follow.
4. Pub or Nightclub
Owning or running a pub or club is an exciting way to earn a living. There are also many
ways to stand out from the crowd, with the choice of a menu of local specialities giving you a
point of difference to attract customers to a pub. Clubs can make a name for themselves
through their live music too – with special DJs able to pull in the crowd of a pub in big
numbers.

5. Travel Agency
Starting a business in the travel and tourism industry offers enormous appeal. If you are an
experienced traveller with contacts in other countries forming your own travel agency you
might be able to create your own specific, niche tours abroad. Perhaps your contacts will visit
multiple regions and countries, and enjoy the fact that it’s a local travel agent delivering their
bookings.

6. Contract Catering
A catering company is hired by a company or organisation to provide catering services every
day or on a very regular basis. The range is huge. A lot of large businesses will use a contract
caterer to provide food to their staff. Schools and universities use them for their students.
Attractions like museums, galleries and sports venues have a contract caterer to run their
restaurant or café.

7. Event Management
It is one of the most profitable entrepreneurial opportunities. The number of companies or
individuals organizing and hosting events has been growing rapidly. It varies from large-scale
international events to small-time private events. Event managers organize events such as
product launching, theme parties, birthday parties, wedding celebrations, exhibitions,
workshops, corporate seminars, company conferences, musical concerts, road shows,
celebrity promotions, film awards, fashion, celebrity shows etc.

Emergence of entrepreneurship

During earlier times India’s prosperity attracted communities across boundaries

Strategies adopted by the Mughals and Turkish
• Turk Mughals settled down in India and shared prosperity. They bought currency with
them and disrupted the barter system.

The strategy of the British

• Wanted to offload surplus supply due to the Industrial Revolution in India to balance
the demand and supply situation in the U.K
• Managed to acquire power and became the ruler.
• Banned manufacturing in India. Sent all raw materials (cotton, oilseeds etc) to the UK
for conversion and value addition thus transferring wealth to the UK

18th Century
• Indian Industry remained a non-starter. The major thrust was on cash crops neglecting
food grains resulting in severe famine. Indian Economy was dominated by the British
economy.

1920
• World War prevented the transfer of raw materials to Manchester. British decided to
manufacture in India itself. Initiated the first Indian Industry. The Mumbai Textile
Mill.

1930s to mid-1940s
• Mahatma Gandhi directed his captains to set the basic Infrastructure for Industrial and
Economic development. These are the founder entrepreneurs of India. They
developed various areas of basic infrastructure.
A) JRD Tata: Aviation, steel, railway, post & telegraph, power, roads, textile etc
B) G.D Birla-Textile, vehicles, power, cement, chemicals, heavy industries, aluminium,
cement etc
C) S. L Kirloskar-Machine tools, farm equipment, pumps etc
d) Jamnalal Bajaj-Two wheelers, 3 wheelers etc

Independence 1947
• British went back leaving the business to their employees/agents/market
intermediaries.

The late 1960s

• The nationalisation of banks and Insurance companies made available huge funds for
SSI and entrepreneurial development. It made investment available to the common
man challenging business monopoly

The 1970s to mid-1985

• The emergence of new generation entrepreneurs because of funds and supporting govt
policies.
• Technocrats, artisans, rural craftsmen, and educated, uneducated youngsters created
the greatest ever SSI development.
• This resulted in excellent interdependence of SSI and the organized sector creating the
highest-ever growth rate of 8.9% and a very high addition to GDP.
• The organised sector could expand, and diversify without any direct investment and
SSI could share the prosperity.

Mid 1980s
• Indian industry remained protected by license raj, permits, quotas, and monopolistic
market resulting in loss of export and entry of cheaper better goods in the gray
market(Germany & Japan) resulting in a worse BOP (Balance of Payment) Situation
and industrial sickness. Closure of several industries in the organized sector.
1990s
• Liberalisation sets reforms rolling by scrapping export regulations. Delicensing,
making import and export simpler, direct FDI in all sectors, concessions for technical
know-how and collaboration. Indian entrepreneurship started.
The mid-1990s
• The third generation of entrepreneurs Rahul Bajaj, Mahindra, Ambani, Ratan Tata,
and Kumarmangalam Birla proved their competencies in managing various large
companies
2000
• Indian Entrepreneurship took a great leap in the global market entering into the
service Industry (IT, BPO, Bio-Technology, hospitality etc)
India established leadership in several areas-
• Bajaj-Largest manufacturer of 2-wheelers
• Ambuja cement-cheapest manufacturing of cement