ENTREPRENEURSHIP DEVELOPMENT and SMALL BUSINESS

MANAGEMENT 63 A

UNIT I CONCEPT OF ENTREPRENEURSHIP

Meaning of Entrepreneur

The entrepreneur is defined as someone who has the ability and desire to
establish, administer and succeed in a startup venture along with risk entitled to
it, to make profits. The best example of entrepreneurship is the starting of a
new business venture. The entrepreneurs are often known as a source of new
ideas or innovators, and bring new ideas in the market by replacing old with a
new invention.

It can be classified into small or home business to multinational companies. In

economics, the profits that an entrepreneur makes is with a combination of
land, natural resources, labour and capital.

In a nutshell, anyone who has the will and determination to start a new
company and deals with all the risks that go with it can become an
Entrepreneur.

Definitions of Entrepreneurship

(i) According to Peter F. 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”.

(ii) According to Ricardo Cantillon “Entrepreneurship entails bearing

the risk of buying at a certain price and selling at uncertain prices.”

Characteristics of Entrepreneur
Passion and Self-Motivation: Entrepreneurs are driven by a strong passion for
their ideas and ventures. They have a deep-rooted enthusiasm for what they do,
which fuels their motivation and keeps them focused and dedicated to
achieving their goals.

Risk-Taking and Tolerance for Uncertainty: Entrepreneurs are comfortable

with taking risks and are willing to embrace uncertainty. They understand that
starting and running a business involves inherent risks and are prepared to face
and manage them to pursue their entrepreneurial vision.

Creativity and Innovation: Entrepreneurs are often creative thinkers who can
generate new ideas and think outside the box. They are adept at identifying
gaps in the market and developing innovative solutions to address them.

Adaptability and Flexibility: Entrepreneurs must be adaptable and flexible in

their approach. They can adjust their strategies and plans based on changing
circumstances, market conditions, and customer feedback. They embrace
change and view it as an opportunity for growth and improvement.

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Resilience and Perseverance: Entrepreneurship can be challenging, and

setbacks and failures are part of the journey. Entrepreneurs demonstrate
resilience by bouncing back from failures, learning from their mistakes, and
persisting in facing obstacles. They have the determination to keep going, even
when things get tough.

Vision and Goal-Orientation: Entrepreneurs possess a clear vision of what

they want to achieve and a long-term perspective. They set ambitious goals and
create actionable plans to bring their vision to life. They maintain focus on their
objectives and continuously work towards realizing them.

Strong Leadership and Management Skills: Entrepreneurs are effective

leaders who can inspire and motivate their teams. They can communicate their
vision, delegate tasks, and provide guidance. They understand the importance
of building and managing a cohesive team to achieve business success.

Networking and Relationship Building: Entrepreneurs understand the value

of networking and building relationships. They seek opportunities to connect
with mentors, industry experts, potential partners, and customers. They
leverage their networks to gain knowledge, support, and business opportunities.

Must read: Role of Entrepreneur

Financial and Business Acumen: Entrepreneurs have a solid understanding of

financial and business principles. They can manage finances, create budgets,
analyse market trends, and make informed decisions to drive their ventures
forward.

Continuous Learning and Adaptation: Entrepreneurs thirst for knowledge

and are committed to continuous learning. They stay updated on industry
trends, new technologies, and best practices. They are open to feedback,
embrace new ideas, and adapt their strategies based on new information.

Functions of Entrepreneurship

The various functions of entrepreneurship are Innovation and

creativity, Risk taking and achievement and organization and
management, Catalyst of Economic Development, Overcoming
Resistance to Change and Research. These have been depicted, at a
glance, with the help of the given Figure and are being discussed, in
brief, below.
 According to Bill Bernbach, co-founder of Doyle Dane Bernbach – “an idea can turn
depending on the talent that rubs against it’’.

(i) Innovation and Creativity – Innovation generally refers to changing

processes or creating more effective processes, products and ideas. For
businesses, this could mean implementing new ideas, creating dynamic
products or improving your existing services. Creativity is defined as
“the tendency to generate or recognize ideas, alternatives, or possibilities
that may be useful in solving problems, communicating with others.
Creativity and innovation have always been recognized as a sure path to
success. Entrepreneurs think outside of the box and explore new areas
for cost-effective business solutions.

(ii) Risk taking and Achievement – Entrepreneurship is a process in

which the entrepreneur establishes new jobs and firms, new Creative and
growing organization which is associated with risk, new opportunities
and achievement. It results in introducing a new product or service to
society. In general, entrepreneurs accept four types of risks namely
Financial Risk, Job Risk, Social & Family Risk & Mental & Health Risk,
which are as follows:
 (a) Financial Risk – Most of entrepreneurs begin by using
their own savings and personal effects and if they fail, they have the fear
of losing it. They take risk of failure.

(b) Job Risk – Entrepreneurs, not only follow the ideas as

working situations, but also consider the current risks of giving up the
job & starting a venture. Several entrepreneurs have the history of having
a good job, but gave it up, as they thought that they were not cut out for a
job.

(c) Social and Family Risk – The beginning of

entrepreneurial job needs a high energy which is time consuming.
Because of these undertakings, he/she may confront some social and
family damages like family and marital problems resulting on account of
absence from home and not being able to give adequate time to family.

(d) Mental Health Risk – Perhaps the biggest risk that an

entrepreneur takes it is, the risk of mental health. The risk of money,
home, spouse, child, and friends could be adjusted but mental tensions,
stress, anxiety and the other mental factors have many destructive
influences because of the beginning and continuing of entrepreneurial
activity. This can even lead to depression, when faced with failure.

(iii) Organization and Management – The entrepreneurial organization

is a simple organizational form that includes, one large operational unit,
with one or a few individuals in top management. Entrepreneurial
management means the skills necessary to successfully develop and
manage a business enterprise. A small business start-up under an owner-
manager is an example of an entrepreneurial organization. Here, the
owner-manager generally maintains strict control over business
operations. This includes directing the enterprise’s core management
functions. According to Mintzberg, these include the interpersonal
roles, informational roles and decision-making roles. The smaller the
organization, the more concentrated these roles are in the hands of the
owner-manager. The entrepreneurial organization is generally
unstructured.

(iv) Research – An entrepreneur is a practical dreamer and does a lot of

ground-work before taking a leap in his/her ventures. In other words, an
entrepreneur finalizes an idea only after considering a variety of options,
analysing 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/she applies the ideas in practice. The selection of an idea, thus,
involves the application of research methodology.

(v) Overcoming Resistance to Change – New innovations are generally

opposed by people because it makes them change their existing
behaviour patterns. An entrepreneur always first tries new ideas at
his/her level. It is only after the successful implementation of these ideas
that an entrepreneur makes these ideas available to others for their
benefit. His/her will power, enthusiasm and energy help him/her in
overcoming the society’s resistance to change.

(vi) 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. Today, when India is a fast developing economy, the
contribution of entrepreneurs has increased multi-fold.

Different Types of Entrepreneurs

Classification by Clarence H. Danhof

Innovative Entrepreneur
An innovative entrepreneur is visionary and seeks new opportunities to create
and develop groundbreaking ideas, products, or services. They are known for
their ability to think creatively, take calculated risks, and disrupt traditional
business models.

Examples of innovative entrepreneurs include Elon Musk, the CEO of Tesla

and SpaceX, who revolutionized the electric vehicle and space exploration
industries, and Mark Zuckerberg, the co-founder of Facebook, who
transformed how people connect and communicate globally.

Imitative Entrepreneur
An imitative entrepreneur is an individual who focuses on replicating existing
business ideas, products, or services with minor modifications or adaptations.
They are skilled at identifying and duplicating successful business models in
different markets or contexts. While imitative entrepreneurs may lack novelty,
they can still succeed by capitalizing on proven concepts.

Example: Franchise owners who replicate established brand concepts and

operate multiple outlets.

Fabian Entrepreneur
A Fabian entrepreneur adopts a cautious and incremental approach to
entrepreneurship. They tend to proceed gradually, making calculated decisions
and mitigating risks as they progress. Fabian entrepreneurs prioritize stability
and long-term sustainability over rapid growth. They carefully analyze market
conditions, customer demands, and resource availability before making
strategic moves.

Example: A small business owner who gradually expands their operations,

carefully considering market trends and customer feedback.

Drone Entrepreneurs
The another type of entrepreneur is Drone. These individuals resist embracing
new opportunities and fail to capitalize on them. They adhere to conventional
methods and are unwilling to adapt their production processes, even if it results
in losses. Their resistance to change earns them the label of “laggards.”
Importance of Entrepreneurship:

 Creation of Employment- Entrepreneurship generates employment. It

provides an entry-level job, required for gaining experience and training
for unskilled workers.
 Innovation- It is the hub of innovation that provides new product
ventures, market, technology and quality of goods, etc., and increase the
standard of living of people.
 Impact on Society and Community Development- A society becomes
greater if the employment base is large and diversified. It brings about
changes in society and promotes facilities like higher expenditure on
education, better sanitation, fewer slums, a higher level of
homeownership. Therefore, entrepreneurship assists the organisation
towards a more stable and high quality of community life.
 Increase Standard of Living- Entrepreneurship helps to improve the
standard of living of a person by increasing the income. The standard of
living means, increase in the consumption of various goods and services
by a household for a particular period.

Supports research and development- New products and services need to be

researched and tested before launching in the market. Therefore, an
entrepreneur also dispenses finance for research and development with
research institutions and universities. This promotes research, general
construction, and development in the economy.

What is Green Entrepreneurship

Green Entrepreneurship is the process of consciously addressing environmental

and social requirements and problems, as well as developing brilliant, original
business concepts that will provide a solution. These concepts carry a high
degree of risk, which benefits the environment while assisting in the
maintenance of financial sustainability. For instance, many companies now
forgo paper invoices in favor of paperless invoicing in the interest of
sustainable company growth and ecological entrepreneurship.

Green Entrepreneurship Definition

Green Entrepreneurship Definition – Protecting the environment and leaving a

clean environment for future generations are today’s most pressing problems. It
is crucial for the growth of green entrepreneurship that society’s perception of
the environment and green production is evolving daily and being promoted.
This will inevitably increase awareness of the significance of critical issues like
energy saving, environmental protection, the promotion of reusability, and
economic growth.

An area of business that is constantly expanding is entrepreneurship.

Ecological approaches are now influencing entrepreneurial activities as a
consequence of recent ecological issues.

Green Entrepreneurship Importance for Green Marketing

Awareness

Boost company recognition and competitive advantage. Because the product

fosters brand confidence among environmentally aware consumers, a
sustainable marketing strategy is still necessary for achieving community
engagement and brand engagement. Ecological marketing has a big impact on
consumer behavior. Developing your brand to align with environmental
principles is a clever strategy to draw in eco-aware customers. There are
countless possibilities for innovation and authenticity in this new economy of
“green” consumers. According to studies, companies that consider the
environment enjoy greater customer appeal and enduring loyalty.
Green Entrepreneurship Importance for Implement Environmental
Legislation

Pressure on Indonesian and Malaysian palm oil farmers has come from the
EU’s Renewable Energy Directive, which mandates a gradual phase-out of
palm oil used for biofuels by 2030. The EU is willing to reevaluate the strategy,
but a significant decline in forestry is the key. The company will be more
prepared for future laws and fees if it has adopted a green business concept.

Achieving Green Investment Goals and Obtaining Loans with Better

Conditions

Finance is now the primary motivator of green business, with green financing
becoming more widespread, as opposed to acting as a barrier to it in the past.
Progress on the international stage can be seen in the government and financial
industries. For instance, shifts in national-level policies may be influenced by
international agreements to safeguard and manage the shared interests of the
global environment.

Read – Corporate Partnerships

Green Entrepreneurship Importance for Creates New Trade

Opportunities

Businesses that differentiate their goods have access to new markets.

Businesses can incorporate sustainability to varying extents and capabilities.
Some companies change their production and consumption habits throughout
the value chain, while others use greener inputs or market greener goods and
services.

Green Entrepreneurship Importance for Reduce Operation Cost

After adopting more environmentally friendly business practices, many

businesses have noticed increased operational efficiencies. When you consider
that improved resource management and conservation lead to more efficient
operations and lower costs, it makes sense.

Green Entrepreneurship Importance for Improving Employee Morale

Going green affects more than just consumers’ perceptions positively. Working
for an ecologically friendly company makes employees feel safer. Employees
believe that their health is taken care of and that they are valued individuals
rather than throwaway goods. Employee morale will increase if you involve
them in company-wide green projects. Employees do not want to quit a place
that makes them feel like they are part of a caring work community, so it is also
a good way to lower employee turnover.

Read – Barriers to Entrepreneurship

Green Entrepreneurship Importance for Creating Green Jobs

Small- and medium-sized businesses (SMEs) are the backbone of most

economies, creating significant amounts of jobs and boosting GDP.
Entrepreneurs with a strong sense of purpose and commitment identify, create,
and seize business opportunities to grow their enterprises. Therefore,
entrepreneurship fosters creativity as well as long-term growth in both the
economy and society. By offering green goods and services, introducing
greener production methods, increasing demand for green goods and services,
and generating green jobs, green entrepreneurs serve as the engine for
launching and maintaining a green economy.

Green Entrepreneurship Introducing New Green Products and Services

A green product is one that is environmentally friendly and made to have as

few negative effects on the ecosystem as possible throughout its entire life
cycle. Green services are also the same as green products. Green services give
Sustainable service to customers while protecting the ecological environment
and society. Electric cars, Renewable energy sources like solar and wind, and
eco-friendly dishwashers are some examples of those green products. Energy
Star certification, Forest Stewardship Council, and USDA Organic certification
program are some of examples green services.

What is digital entrepreneurship?

Digital entrepreneurship is a term that encompasses online businesses that

individuals create and run. Online entrepreneurial ventures can be sources of
passive income or active sites for selling goods and services. This can offer an
entrepreneur new ways of finding customers, reducing costs and collaborating
with others. Digital entrepreneurs combine business, market knowledge and
network technology to reinvent traditional business practices through
digitization.

Characteristics of digital entrepreneurship

Ventures in digital entrepreneurship have a few defining characteristics.

They're typically sole proprietorships or businesses with small teams. They
usually operate entirely online, but some may also offer their services locally
via digital hubs and internet distribution. These businesses may have lower
average overhead costs, which can help them to be more resilient to changes in
markets.

4 benefits of being a digital entrepreneur

Here are four key benefits of being a digital entrepreneur that you can consider:

1. Scalability

Most digital entrepreneurs start by fulfilling a niche market or inventing a

product or service, then scaling the business to a wider audience once it's
achieved some measure of success. Working with digital markets can allow an
entrepreneur to scale a company in a way that's both productive and cost-
effective.
This potential for growth without having to expand a business physically or
rent additional space may encourage digital entrepreneurs to take more
opportunities to scale the business, since the level of risk may be lower than
with a traditional business.

2. Adaptability

Digital entrepreneurship also allows businesses to pivot their services, branding

and pricing without adding significant turnaround time. For example, a venture
of this sort may adjust its pricing by altering online marketing information
rather than investing in changing physical advertisements. It could also rebrand
by focusing on changing aspects of its website, marketing materials and
products rather than adjusting the layout or design of a physical location.

3. Accessibility

While location can be a primary factor in determining the success of a physical

store, online shops and businesses are typically accessible from customers'
homes. This means that the potential customer base for an entrepreneurial
endeavor is initially much larger, though it may rely more on advertising to get
website traffic. This factor can help smaller size operations compete with larger
companies for customers without the necessity of growing to the same size as
their competition.

4. Profitability

Starting a business on the internet can allow a company to scale its earnings,
such as by earning revenue from advertisements online by receiving a
percentage of profit each time a user clicks, views or interacts with the
advertisement. A digital company can also market to potential customers by
creating content, such as videos detailing products or services. With a website,
it may also be easier to implement subscription payment methods for services
or renewable products, which can help secure a consistent customer base.

5 tips for digital entrepreneurship

Here are five tips you can follow if you're considering a career in digital
entrepreneurship:

1. Set goals

To develop achievable goals, it's helpful to assess the current scale of the
entrepreneurial venture. Setting goals can help you create landmarks for
business growth, which may motivate you professionally. Developing a plan
for how you intend to achieve your goals can also help the business maintain
direction, which can assist it in targeting the ideal customer base.

2. Keep learning

Due to the online nature of digital entrepreneurship, the technology the

business interacts with is likely to change frequently. Keeping up to date with
the latest standards for web design, advertising and website functionality can
help businesses to grow and maintain an active customer base. For example,
you can learn fundamental skills related to programming to help you write code
that enhances the company's online security and improves its efficiency.

3. Network actively

Networking with other entrepreneurs and creating relationships can promote a

business to higher degrees of success. These relationships can become
partnerships or collaborations and expose the company's goods or services to
other markets and consumer bases. Effective networking can also create a
mutually beneficial relationship between companies in which each business
hires the other for specific services, materials or goods, rather than working
with competitors.
4. Monitor costs

Tracking the business' expenses and profits, then compiling it all in one place
can help you keep perspective on a business' performance and its needs. This
practice can also help you monitor the company's progress in terms of meeting
its financial goals. Consider review your record at the end of every quarter to
help you plan the next quarter effectively and make any necessary changes to
daily operations.

5. Build prototypes

After completing prep work, research and planning, it's beneficial to create a
prototype to ensure a product operates properly. Businesses can create
prototypes by using 3D printing machines or collaborating with other
companies that create small-scale versions of large products or to-scale replicas
of a planned idea. A prototype can help you assess the product effectively and
aid you in pitching it to potential customers or partners. If you plan to offer a
service, planning a simulation of the offering can also allow you to gather
insight before you begin working with customers.

ENTREPRENEURIAL MOTIVATION
Entrepreneur is human being who has his dignity, self-respect, values,
sentiments, aspirations, dreams apart from economic status. Indeed, economic
betterment and social upliftment motivates a person to distinguish from others.
Entrepreneurship is to a great extent the product of motivation. Motivation
refers to the inner drive that ignities and sustains behaviour to satisfy needs.
Behaviour is always caused and it is not spontaneous. In other words, human
behaviour is goal directed or directed towards satisfaction of needs. A person’s
behaviour is shaped by several sociopsychological factors such as his goals,
education level, cultural background, work experience, etc. When a person,
feels some need tension arises in his mind until the need is satisfied. The
tension motivates him to take action. If the action is successful need is satisfied
otherwise the person changes the action until the need satisfaction occurs.
CONCEPT OF MOTIVATION
The term ‘motivation’ has its origin in the Latin word “movere” which means
to “move”. Thus, motivation stands for movement. One can get a donkey to
move by using a “Carrot or a stick”, with people one can use incentives, or
threats or reprimands. However, these only have a limited effect. These work
for a while and then need to be repeated, increased or reinforced to secure
further movement. The term motivation may be defined as “the managerial
function of ascertaining the motives of subordinates and helping them to realise
those motives.”
Need for Achievement Theory
Another well-known need-based theory of motivation, as opposed to hierarchy
of needs or satisfaction-dissatisfaction, is the theory developed by David C.
McClelland and his associates. McClelland developed his theory based on
Henry Murray’s (1938) developed long list of motives and manifest needs used
in his early studies of personality.

McClelland’s need theory is closely associated with learning theory, because

he believed that needs are learned or acquired by the kinds of events people
experience in their environment and culture. He found that people who acquire
a particular need behave differently from those who do not have.

His theory focused on Murray’s three needs: achievement, power, and

affiliations. In the literature, these three needs are abbreviated as “n Ach”, “n
Pow”, and “n Aff” respectively.

A brief description of these three follows:

Need for Achievement (“n Ach”):

This is the drive to excel, to achieve in relation to a set “standard, and to strive
to succeed. In other words, need for achievement is a Behaviour directed
towards competition with a standard of excellence. McClelland found that
people with a high need for achievement perform better than those with a
moderate or low need for achievement, and noted regional, national differences
in achievement motivation.

Through his research, McClelland identified the following six

characteristics of high need achievers:

High-need achievers have a strong desire to assume personal responsibilities

for performing a task or finding a solution to a problem.

2. High need achievers tend to set moderately difficult goals and take
calculated risks?

3. High need achievers have a strong desire for performance feedback?

4. They have need for achievement for attaining personal accomplishment.

5. They look for challenging tasks.

6. The high need-achievement individuals are not buck-passers.

Need for Power (“n Pow”):

The need for power is concerned with making an impact on others, the desire to
influence others, the urge to change people, and the desire to make a difference
in life. People with a high need for power are people who like to be in control
of people and events. These result in ultimate satisfaction to man.

People who have a high need for power are characterized by:

Need for Affiliation (“n Aff”):

The need for affiliation is defined as a desire to establish and maintain friendly
and warm relations with other people. The need for affiliation, in many ways, is
similar to Maslow’s social needs.
The people with high need for affiliation have the following
characteristics:

1. They have a strong desire for acceptance and approval from others.

2. They tend to conform to the wishes of those people whose friendship and
companionship they value.

3. They value the feelings of others.

As regards the above three needs, McClelland holds the view that all three
needs may simultaneously be acting on an individual. But, in case of an
entrepreneur, the high need for achievement is found dominating one.
Why Do Entrepreneurs Take Risks?

A review of literature since the year 2000 on the personality traits of

entrepreneurs confirms the prominence of risk-taking. There’s rarely a
guaranteed outcome in business. Entrepreneurs are comfortable with
uncertainty. Risk aversion is a predictor of whether an individual will become
an entrepreneur (low-risk aversion) or stay an employee (high-risk aversion.)

Entrepreneurs take risks because they’re necessary to start and grow a business.
Some of the risks an entrepreneur might face include:

 Leaving a full-time job and steady paycheck

 Using personal savings with no guarantee of a return on investment
 Misjudging interest in a product or service
 Putting trust in coworkers
 Giving away time, energy, sleep, the ability to enjoy personal interests,
etc.
Many entrepreneurs dedicate the majority of their waking hours, at least in the
initial phase, to their business. Entrepreneurs may make myriad personal
sacrifices to get a business off the ground.

Once the business is running, an entrepreneur continues to make calculated

risks to grow a business. Risks can be classified as:

 Competitive risk: losing business to similar service or product providers

 Credibility risk: getting consumers to trust and be interested in a product
or service with no brand recognition
 Financial risk: having the cash flow needed to stay in operations
 Market risk: knowing whether or not a product or service is what the
market demands
 Technology risk: facing business operations interruptions due to
technology failure, or choosing a technology that is not the best for the
business
There are many ways to mitigate these risks and make them more likely to turn
into rewards. Research, marketing, planning, testing and reporting are a few
strategies entrepreneurs use when taking calculated risks.

Benefits of Taking Risks as an Entrepreneur

Ask most successful entrepreneurs, and they’ll tell you their business success
was influenced by taking a risk at some point. Taking risks is the way to create
opportunity and progress. When an entrepreneur takes certain risks the
competition is not willing to take, they can become leaders in their field.

Risk-taking shows a team that the entrepreneur is a true business visionary and
leader who believes in the potential reward on the other side. Risk-taking
enables and encourages innovation, which can be an important product/service
differentiator.
Failed risks aren’t always negative. Sometimes, they provide the most valuable
business lessons an entrepreneur can learn. Failure helps shape future business
strategies and can eventually lead to business growth.

What is innovative entrepreneurship?

Innovative entrepreneurship is the practice of establishing creating new

business ideas intending to generate profit, assist their community and
accomplish company goals. Innovation helps an individual entrepreneur or a
group of entrepreneurs to improve or replace a particular product, process or
service. It allows them to upgrade the products by creating new ideas and
values. Innovative entrepreneurs incorporate various strategies to overcome the
challenges in their businesses. It may require entrepreneurs to have a clear
strategy and a vision to introduce something innovative to the company.

Developing new ideas may require challenging yourself continuously and

exploring new paths or methods. This type of entrepreneurship can help
professionals focus on collecting ideas from a variety of places and find enough
data to build the perfect strategy to implement these ideas. Entrepreneurs can
introduce innovation to the business through product development, process
improvement, service and business model improvement.

Types of innovative entrepreneurs

There can be different types of innovation strategies and outcomes depending

on the business sector. Here are some popular types of innovative
entrepreneurs:

Social entrepreneurs

A social entrepreneur is someone who detects social problems and develops

effective strategic plans to resolve them. They are good at bringing people
together and motivating them to work for the same cause. Social entrepreneurs
possess visionary thinking that helps them to motivate others to work together
to develop and implement new and creative ideas.

The major sectors in which social entrepreneurs can make their contributions
are health, education, sanitation and other related sectors. Social entrepreneurs
have the potential to bring a positive change to society by developing
sustainable and innovative solutions.
Startup entrepreneurs

Startup entrepreneurs introduce people with their innovative ideas and provide
employment opportunities to them. A startup can provide opportunities to gain
new skills that can help professionals to excel in their careers. Many startup
entrepreneurs offer a friendly work environment and promote an innovative
mindset in the workplace. They often use innovative marketing strategies to
promote their businesses. Startup entrepreneurs also create strategies to provide
better customer experiences.

Enterprise entrepreneurs

Enterprise entrepreneurs may work for organisations that are already in the
market for a period of time. They find innovative ideas and strategies that can
help the company in maintaining or gaining a reputation in the growing market.
They focus on finding new opportunities and take advantage of them to make a
profit for the company.

Similar to other entrepreneurs, enterprise entrepreneurs may also master certain

skills for achieving great success in their professions. Some of the essential
skills to become an enterprise entrepreneur are great innovative thinking,
organisational skills, willingness to take risks, attention to detail and excellent
marketing skills.

Skills of innovative entrepreneurs

Innovative entrepreneurs possess different skills that can help them to develop
innovative ideas and plans for the business. They use their skills to enhance the
reputation and profit of a company in the market. Here are some essential skills
that can help you become an innovative entrepreneur:

Knowledge about the industry

An innovative entrepreneur may require a good understanding of the industry

to determine the nature of the business environment. This can help them to
understand how the market can affect the performance of the company.
Innovative entrepreneurs use their knowledge about the market trends to
understand the working strategies their competitors are using.

Great communication skills

With excellent communication skills, innovative entrepreneurs can build strong

relationships with other professionals. This can help them to effectively
communicate with team members and find solutions that can help in improving
the productivity of the business. While communicating with people, innovative
entrepreneurs focus on listening more than speaking.

Active listening can provide a clear understanding of different tasks. Great

communication skills can also improve the image of innovative entrepreneurs
by making them empathetic and trustworthy. Innovative entrepreneurs with
great communication skills can effectively communicate with other
professionals and assist in the successful implementation of strategic plans.

Strategic thinking

Strategic thinking can help innovative entrepreneurs to position the company in

the competitive market. It can also help them maintain a clear vision. With
strategic thinking, entrepreneurs can bring something new and innovative to
assist the company in keeping up with the latest market trends. After
developing strategic plans, innovative entrepreneurs make a clear vision of
where they want to go with the plan and collect all the necessary resources to
avoid any possible issues that may impact the company's success.

Networking

Innovative entrepreneurs use their networking skills to connect with different

professionals in the industry. Building a strong network and the ability to
connect with various kinds of people can help innovative entrepreneurs to find
the best possible human resources for the company. This can allow them to
attract impressive talents to their team as well.

Role of Entrepreneurs in Economic Development

Role of Entrepreneurs in Economic Development – 7 Ways: Capital

Formation, Improvement in Per Capita Income, Generation of
Employment and a Few Others

Economic development essentially means a process of upward change

whereby the real per capita income of a country increases over a period of
time. Entrepreneur plays a vital role in economic development.
Entrepreneurs serve as the catalysts in the process of industrialization and
economic growth. Technical progress alone cannot lead to economic
development, unless technological breakthroughs are put to economic use
by entrepreneurs.

It is the entrepreneur who organizes and puts to use capital, labour and
technology. Accordingly, “development does not occur spontaneously as a
natural consequence when economic conditions in some sense are right. A
catalyst is needed and this requires entrepreneurial activity to a
considerable extent, the diversity of activities that characterizes rich
countries can be attributed to the supply of entrepreneurs.”

The entrepreneur is the key to the creation of new enterprises that energize
the economy and rejuvenate the established enterprises that make up the
economic structure.

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Entrepreneurs initiate and sustain the process of economic

development in the following ways:

1. Capital Formation:

Entrepreneurs mobilize the idle savings of the public through the issues of
industrial securities. Investment of public savings in industry results in
productive utilization of national resources. Rate of capital formation
increases which is essential for rapid economic growth. Thus, an
entrepreneur is the creator of wealth.

2. Improvement in Per Capita Income:

Entrepreneurs locate and exploit opportunities. They convert the latent and
idle resources like land, labour and capital into national income and wealth
in the form of goods and services. They help to increase net national
product and per capita income in the country, which are important
yardsticks for measuring economic growth.

3. Generation of Employment:

Entrepreneurs generate employment both directly and indirectly. Directly,

self-employment as an entrepreneur offers the best way for independent and
honorable life. Indirectly, by setting up large and small scale business units
they offer jobs to millions. Thus, entrepreneurship helps to reduce the
unemployment problem in the country.

4. Balanced Regional Development:

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Entrepreneurs in the public and private sectors help to remove regional

disparities in economic development. They set up industries in backward
areas to avail various concessions and subsidies offered by the central and
state governments.
Public sector steel plants and private sector industries by Modis, Tatas,
Birlas and others have put the hitherto unknown places on the international
map.

5. Improvement in Living Standards:

Entrepreneurs set up industries which remove scarcity of essential

commodities and introduce new products. Production of goods on mass
scale and manufacture of handicrafts, etc., in the small scale sector help to
improve the standards of life of a common man. These offer goods at lower
costs and increase variety in consumption.

6. Economic Independence:

Entrepreneurship is essential for national self-reliance. Industrialists help to

manufacture indigenous substitutes of hitherto imported products thereby
reducing dependence on foreign countries. Businessmen also export goods
and services on a large scale and thereby earn the scarce foreign exchange
for the country.

Such import substitution and export promotion help to ensure the economic
independence of the country without which political independence has little
meaning.

7. Backward and Forward Linkages:

An entrepreneur initiates change which has a chain reaction. Setting up of

an enterprise has several backward and forward linkages. For example- the
establishment of a steel plant generates several ancillary units and expands
the demand for iron ore, coal, etc.

These are backward linkages. By increasing the supply of steel, the plant
facilitates the growth of machine building, tube making, utensil
manufacturing and such other units.

Entrepreneurs create an atmosphere of enthusiasm and convey a sense of

purpose. They give an organization its momentum. Entrepreneurial
behavior is critical to the long term vitality of every economy. The practice
of entrepreneurship is as important to established firms as it is to new ones.