INTRODUCTION TO ENTREPRENEURSHIP
Entrepreneurship is the attempt to create value
through recognition of business opportunity, the
management of risk taking, and through the
communicative and management skills to mobilize
human, financial, and material resources necessary to
bring a project to fruition.
Adam Smith: An individual, who undertakes the
formation of an organization for commercial purposes
by recognizing the potential demand for goods and
services, and there by acts as an economic agent
and transforms demand into supply.
Peter F. Drucker: An entrepreneur is one who always
searches for changes, responds to it and exploits it as an
opportunity. He believes in increasing the value and
consumer satisfactions.
IMPORTANCE OF ENTREPRENEURSHIP
• Helps the formation of capital by bringing together
the savings and investments of people
• Provides large-scale employment opportunities and
increases the purchasing power of the people;
• Promotes balanced regional development in the
country
ADVANTAGES OF ENTREPRENEURSHIP
To an Individual
• Provides Self Employment for the entrepreneur
• Entrepreneur can provide employment for near &
dear one as well
• Entrepreneurship often provides an employment and
livelihood for next generations as well.
• Freedom to use own ideas – Innovation and creativity
• Unlimited income / higher retained income – Bill
Gates has risen to become richest in the world in a
single life time through entrepreneurship
• Independence
• Satisfaction
To the nation
• Provides larger employment – Entrepreneurs provide
employment for self as well as other people and is
source of employment creation.
• Results in wider distribution of wealth – This is a
logical sequel of above issue. Higher the employment,
greater the distribution of wealth
• Mobilizes local resources, skills and savings
• Accelerates the pace of economic development –
Entrepreneurship is the government’s one of the most
trusted vehicles for economic development
• Stimulates innovation & efficiency
QUALITIES OF SUCCESSFUL ENTREPRENEUR
• Initiative: An entrepreneur must have an innovative
aptitude, pick the right opportunity, and initiate action.
• Wide Knowledge: An entrepreneur should have wide
knowledge of the economic and non-economic
environment of business like the market, consumer
attitudes, technology, etc.
• Open mind and optimistic outlook: He/she must
possess a dynamic and optimistic outlook so as to
predict changes in the business environment.
• Leadership Qualities: An entrepreneur should possess
the qualities of a good leader.
• Willingness to assume risk: Entering any venture is
full of risks and uncertainties. In order to deal with
various kinds of risks and uncertainties efficiently, the
entrepreneur should have willingness to assume risks.
• Adaptability: He/she should be prepared to adapt to
the changes taking place in the system.
• Self-confidence: For achieving success in life, one
should have confidence in himself/ herself.
• Orientation towards hard work: He has to put in extra
efforts to ensure success of the enterprise started by
him.
FUNCTIONS OF AN ENTREPRENEUR
• Conception of an idea: An entrepreneur is the person
with a creative mind who can identify business
opportunities and take steps for the conversion of ideas
into successful business.
• Promotion: Now-a-days many entrepreneurs have
assumed the role of promoters of large companies.
• Innovation: An entrepreneur tries to develop new
technology, products and markets. The entrepreneur
uses his creative abilities to do new things and exploit
opportunities in the market.
• Bearer of risks and uncertainty: starting of a new
business venture involves good amount of risk and
uncertainty. To start with, it is the entrepreneur who
assumes risks and is prepared for the losses
• Arranging necessary capital: Arranging funds is one of
the biggest hurdles in setting up a new entrepreneur.
• Staffing: An entrepreneur has to design the
organizational structure and recruit suitable persons for
various positions.
TYPES OF ENTREPRENEURS
• According to the types of business
– Trading Entrepreneur
– Industrial Entrepreneur
– Agricultural Entrepreneur
– Service Entrepreneur
• According to the use of technology
– Technical Entrepreneur
– Non-technical Entrepreneur
• According the Area
– Urban Entrepreneur
– Rural Entrepreneur
• According to gender
– Men Entrepreneur
– Women Entrepreneur
ISSUES AND PROBLEMS FACED BY
ENTREPRENEURS
• Selection of business: The entrepreneur might be
having a very good business idea. However, successful
implementation of the idea into business activity
involves a painstaking exercise.
• Choice of form of business enterprise: There are
various options available to the entrepreneur as far as
the choice of form is concerned.
• Financing: The problem of arranging finance always
troubles the entrepreneur.
• Location: The problem of locating the business unit is
another issue for consideration that should be carefully
handled by entrepreneur.
• Size of the unit: Size of the business is influenced by
several factors like technical, financial and market
considerations.
• Suitable manpower: If the size of business is large, the
entrepreneur has to find suitable competent persons
for various functional areas.
IMPORTANCE OF ENTREPRENEURSHIP
Entrepreneurship teach us to..
• creates opportunity
• ensures social justice
• instills confidence
• stimulates the economy
• take risks
• fail and to persevere
• become creative, inventive and innovative
Entrepreneurship is a key driver of our economy.
-The 1987 Philippine Constitution recognizes
entrepreneurship as an engine of economic growth.
-Article XII Section 1 highlights the role of private
enterprises in supporting equitable distribution of
income and wealth, sustaining production of goods and
services and expanding productivity, therefore raising
the quality of life
Entrepreneurship is more than just an economic term
— it is a way of thinking.
- People exposed to entrepreneurship frequently
express that they have more opportunity to exercise
creative freedoms, higher self-esteem, and an overall
greater sense of control over their own lives.
-Entrepreneurship is a way of inspiring creative
individuals to pursue opportunities despite its risks.
Personal Attributes
• Creativity is the spark that drives the development of
new products or services or ways to do business. It is
the push for innovation and improvement.
• Dedication is what motivates the entrepreneur to
work hard. Planning of an ideas must be joined by hard
work to succeed.
• Determination is the extremely strong desire to
achieve success. It includes persistence and the ability
to bounce back after rough times.
•Flexibility is the ability to move quickly in response to
changing market needs. It is being true to a dream while
also being mindful of market realities.
•Leadership is the ability to create rules and to set
goals.
• Passion is what gets entrepreneurs started and keeps
them there.
•Self-confidence comes from thorough planning, which
reduces uncertainty and the level of risk.
•“Smarts” consists of common sense joined with
knowledge or experience in a related business or
endeavor.
Why should becoming an entrepreneur be any
different?
• Required Education
- educational requirements for entrepreneurs are
nonspecific
- all entrepreneurs need capital, so the ability to write
an effective business plan is vital
• Required Skills
-tolerance for risk taking and a willingness to leave the
security of a conventional and tedious job
-the ability to multitask is a key
• Career Outlook
-earnings for entrepreneurs vary drastically, and income
is often unstable, especially in the early days of a new
business
Career Opportunities in Entrepreneurship
• Business consultant – provides advice about business
issues, such as the development and implementation of
business plans, how to streamline operations or how to
expand into a new market.
• Management analysts – The person who evaluates a
business’ systems, procedures and operations, they may
also review a business’ financial matters, such as the
ratio of income to expenditures.
• Sales – Someone who works in sales or runs the -Organization Building
department needs to know how businesses run. They -Absorb uncertainty
need to know how to represent a company, manage -Frame the Challenge
accounts, and follow up on leads. -Build Commitment
• Research and development – To work in R&D, you
need to understand business concepts, procedures, and Entrepreneurs…Traits
practices. With all of the training and education -Self-confident and optimistic
someone has received learning about entrepreneurship, - Able to take calculated risk
they are well prepared for this type of position. - Respond positively to changes
• Not-for-profit fundraiser – Being able to raise funds - Flexible and able to adapt
requires understanding the importance of business and - Knowledgeable of markets
networking - Able to get along well with others
• Relationships. It is a great place for someone with this - Independent minded
type of degree because you will have experience in
studying advanced concepts that can be used to your Entrepreneurs…Traits II
advantage on the job. - Energetic and diligent
• Intrapreneur – is an inside entrepreneur, or an - Creative, need to achieve
entrepreneur within a large firm, who uses - Dynamic Leader
entrepreneurial skills without incurring the risks - Responsive to suggestions
associated with those activities. - Take initiatives
- Resourceful and persevering
Entrepreneur – One who creates a new business in the - Perceptive with foresight
face of risk and uncertainty for the purpose of achieving
profit and growth by identifying and assembling the Personal traits and characteristics of Entrepreneurs
necessary resources to capitalize on them. - Flexibility
- Internal locus of control
CONCEPT OF ENTERPRENEUR - High energy level
-RISK BEARER - Passion and action orientation
-ORGANISER - Self-confidence
-INNOVATOR - Tolerance for ambiguity
- Self-reliance and desire for independence
Schumpter’s Definition of Entrepreneur - Reform or - High need for achievement
revolutionize the pattern of production by exploiting an
invention or more generally , an untried technological Entrepreneurial Motivation
possibility for producing a new commodity Motivation is an inner spirit that activates and direct
Drucker’s view on Entrepreneur - Innovation is a our behavior towards our goal.
specific tool of entrepreneurs, this means by which they
exploit changes as an opportunity for different business FACTORS RESPONSIBLE FOR ENTREPRENEURS
or a different service INTERNAL FACTORS
- Desire to do something new
Characteristics of Entrepreneurs - Educational Background
-Desire for responsibility - Experience
-Preference for moderate risk
-Confidence in their ability to succeed EXTERNAL FACTORS
-Desire for immediate feedback - Govt. assistance and support
-High level of energy - Availability of labor and raw material
-Future orientation - Encouragement from big business houses
-Skilled at organizing - Promising demand for the product
-Value achievement over money
TYPES OF ENTREPRENEUR
Functions of Entrepreneur -According to the type of business
-Innovation - According to the use of technology
-Risk Taking - According to the motivation
- According to the growth
- According to the area
- According to the gender & age
- According to the sale of operation
Type of Business
• Business Entrepreneur - individuals who conceive an
idea for a new product or service & then create a
business to materialize their idea.
• Trading Entrepreneur - Is one who undertakes trading
activities & is not concerned with the manufacturing
work
• Industrial Entrepreneur - a manufacturer who
identifies the potential needs of customers & tailors a
product to meet the marketing needs-
• Corporate Entrepreneur - is a person who
demonstrates his innovative skill in organizing &
managing corporate undertaking
• Agricultural Entrepreneur - Is one who undertake
agricultural activities as raising & marketing of crops,
fertilizers & other input.
• Retail Entrepreneur
• Service Entrepreneur
Use of Technology
• Technical Entrepreneur - he demonstrates his
innovative capabilities in matter of production of goods
& rendering services
• Non- Technical Entrepreneur - concerned only with
developing alternatives marketing & distribution
strategies to promote their business
• Professional Entrepreneur - a person who is interested
in establishing the business but does not have interest
in managing it once
According to Motivation
• Pure Entrepreneur (an individual who is motivated by
psychological & economic rewards)
• Induced Entrepreneur (is one who induced to take up
entrepreneurial task due to the policy measures of the
Govt.)
• Motivated Entrepreneur (they are motivated by the
desire of self fulfillment)
• Spontaneous Entrepreneur (those who start their
business their by natural talents (inborn abilities)
According to area
• Urban Entrepreneur
• Rural Entrepreneur
According to gender & age
• Men Entrepreneur
• Women Entrepreneur
According to sale of operation
• Small scale Entrepreneur
• Large scale Entrepreneur
CLASSIFICATION OF ENTREPRENEURS
• INNOVATING ENTERPRENEURS – Is one who
introduces a new goods,inaugrates new method of
production, discovers new market & reorganizes the
enterprise
• IMITATIVE ENTERPRENEURS – These are
characterized by readiness to adopt successful
innovations inaugurated by innovating entrepreneurs
• FABIAN ENTERPRENEURS – These are characterized
by a great caution & skepticism in experimenting any
changes in their enterprises
• DRONE ENTERPRENEURS – These are characterized by
a refusal to adopt opportunities to make changes in the
production formulae even at the cost of severely
reduced returns relative to the other like producers.
THEORIES OF ENTREPRENEURSHIP
• ECONOMIC THEORY – Economic incentives are the
main drive for the entrepreneurial activities. The
persons inner drives have always been associated with
economic gains .Thus these incentives are regarded as
sufficient conditions for the emergence of industrial
entrepreneurship.
• SOCIOLOGICAL THEORY – Sociologists argue that
entrepreneurship is most likely to emerge under a
specific social culture. Social values are the most
important determinant of the attitudes & role
expectations.
• PSYCHOLOGICAL THEORY – This theory,
entrepreneurship is most likely to emerge when a
society has sufficient supply of individuals possessing
particular characteristics. Schumpter believes that
entrepreneurs are primarily motivated by will of
conquer. Mc Clelland asserts that it is high need for
achievement that motivates people towards
entrepreneurial activities.
Barriers to Entrepreneurship
-Lack of viable concept
- Lack of market knowledge
- Lack of technical skills
- Lack of capital
- Lack of business know how
- Time presences and distractions
- Legal constraints and regulations
Culture
- The sum total of social behavior that includes at least
three elements namely, knowledge and beliefs, ideals
and preferences.
- Entrepreneurial culture implies vision,values,norms
and traits that are conductive for the development of
the economy.
- The emerging market environment and globalization is
challenging every organization & every person in the
organization to consider, evaluate and bring out the
changes in thinking, vision and action.
Nature of Culture
- Basic beliefs and assumptions about the company
- Emotional aspect
- Reflect history
- Inherently symbolic
- Substance and Form
• Discovery: The stage in which the entrepreneur
generates ideas, recognizes opportunities, and studies
the market.
• Concept Development:
- Develop a business plan: a detailed proposal
describing the business idea.
- Choose business location
– Will a patent or trademark be required?
• Resourcing: The stage in which the entrepreneur
identifies and acquires the financial, human, and capital
resources needed for the venture startup,
• Actualization: The stage in which the entrepreneur
operates the business and utilizes resources to achieve
its goals/objectives.
• Harvesting: The stage in which the entrepreneur
decides on venture’s future growth, development, or
demise.

Components of Culture Role of Entrepreneur’s in Economic Development

- Values Entrepreneur is a person who takes initiative or one
- Rules of Conduct who come up with an idea that helps to create new
- Vocabulary jobs, encourage society and disperse wealth because of
- Methodology new products or services that are introduced into the
- Rituals market. This gives great impact to each and every
- Myths and Stories individual as some ways or the other, we all get
correlated.
Elements of an Entrepreneurial Culture
- People and empowerment focused Economic Development is a process in which all efforts
- Value creation through innovation and change are made to increase national income, national output,
- Attention to the basics per capita income , per capita output and standards of
- Hands-on management living of people by exploiting all the available resources
- Doing the right thing of country.
- Freedom to grow and to fail
- Commitment and personal responsibility ROLL OF ENTREPRENEUR IN ECONOMIC
- Emphasis on the future and a sense of urgency DEVELOPMENT
• WEALTH CREATION AND SHARING - By establishing
Individualism vs Collectivism the business entity, entrepreneurs invest their own
• Individualism resources and attract capital (in the form of debt,
– Self-orientation equity, etc.) from investors, lenders and the public. This
– Emphasis on self-efficiency and control mobilizes public wealth and allows people to benefit
– Pursuit of individual goals from the success of entrepreneurs and growing
– Value system driven by pride in their own businesses. This kind of pooled capital that results in
accomplishments wealth creation and distribution is one of the basic
• Collectivism imperatives and goals of economic development.
– Group-orientation • CREATE JOBS - Any business start-up requires human
– Subordination of personal interests and goals resources that could fulfill the demand of the company
– Emphasis on sharing thereby making earning for them self. Thus it’s very
– Concern for group welfare much important for an entrepreneur to seek a
• Entrepreneurial Intensity is achieved by balance maximum number of employee to work that could help
between individualism and collectivism. each other in vice –versa manner. Hence it’s proven
that with each new startup by entrepreneur more and
Steps in the Entrepreneurial Process more people will get employed.
• BALANCED REGIONAL DEVELOPMENT -
Entrepreneurs setting up new businesses and industrial
units help with regional development by locating in less
developed and backward areas. The growth of
industries and business in these areas leads to
infrastructure improvements like better roads and rail
links, airports, stable electricity and water supply,
schools, hospitals, shopping malls and other public and
private services that would not otherwise be available.
• GDP AND PER CAPITA INCOME - India’s MSME sector,
comprised of 36 million units that provide employment
for more than 80 million people, now accounts for over
37% of the country’s GDP. Each new addition to these
36 million units makes use of even more resources like
land, labor and capital to develop products and services
that add to the national income, national product and
per capita income of the country. This growth in GDP
and per capita income is again one of the essential goals
of economic development.
• STANDARD OF LIVING - Entrepreneurs raise the
standards of living of people by providing them new,
better and improved product. They supply goods having
additional features at reasonable prices. They also
remove scarcity of essential commodities and introduce
new products which lead to variety in consumption.
• EXPORTS - Any growing business will eventually want
to get started with exports to expand their business to
foreign markets. This is an important ingredient of
economic development since it provides access to
bigger markets, and leads to currency inflows and
access to the latest cutting-edge technologies and
processes being used in more developed foreign
markets. Another key benefit is that this expansion that
leads to more stable business revenue during economic
downturns in the local economy.
• COMMUNITY DEVELOPMENT - Economic
development doesn’t always translate into community
development. Community development requires
infrastructure for education and training, healthcare,
and other public services. For example, you need highly
educated and skilled workers in a community to attract
new businesses. If there are educational institutions,
technical training schools and internship opportunities,
that will help build the pool of educated and skilled
workers.
CHARACTERISTICS OF AN ENTREPRENEUR
• 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.
• The word entrepreneur is derived from the French
word “entreprendre” meaning to undertake. In fact in
16th century, the Frenchmen Who undertook military
expeditions were referred to as “entrepreneurs.” Later
on in the 18th century, this term got associated with
persons who started their own Enterprises. Richard
Cantillon, an Irish man living in France was the first
economist who introduced the term “entrepreneur”
referring to the risk taking function of establishing a
new venture.
Entrepreneur refers to a person who
establishes his/her own business or industrial
undertaking with a view to making profit. An
entrepreneur is considered to be an alternator of a
business winter he/she takes the role of an organiser in
the process of production.
- According to J.A.Schumpeter “A person who
introduces innovative changes is an entrepreneur and
he is an integral part of economic growth”
- According to Walker “True entrepreneur is one who is
endowed with more than average capacities in the risk
of organising and co-ordinating various factors of
production”.
CHARACTERISTICS OF AN ENTREPRENEUR
1. Hard Work
- A successful entrepreneur is one who is willing to work
hard from the very beginning of future enterprise. An
entrepreneur with his tenacity and hard work and
pervasive perseverance can revive his business even
from on the verge of collapse.
2. Business Acumen And Sincerity
- Business acumen stands for shrewdness and ability.
Again, the success of an enterprise depends upon the
sincerity of the people behind enterprise. If a person is
sincere about his venture, he will move heaven and
earth to make it a success.
3. Prudence
- A successful entrepreneur must be prudent in all his
dealings. He should have the ability to work out the
details of the venture from all angles, assess the
favourable factors and pitfalls and take suitable
measures to overcome the pitfalls.
4. Achievement Motivation
- The achievement motivation is the most important
characteristic of an entrepreneur since all other
characteristics emanates from this motivation. He must
have a strong desire to achieve high goals in business. In
fact, this achievement motivation helps him to
surmount the obstacles, supress anxieties, repair
misfortunes and device plans for success.
5. Self-Reliance And Independence
- A successful entrepreneur want to follow his own 13. Communication Skills
routine policies and procedures and he does not like to - Communication skill is the secret of the success of
guide by others. He is found to be self -reliant by acting most entrepreneurs. Good communication skills enables
as his own master and making him responsible for all his them to put their points across effectively and with
decisions. He does not like to work for others. clarity and thereby, helps them to win customers.
6. Highly Optimistic 14. Leadership
- Successful entrepreneur is always optimistic about his - Entrepreneurs not only lead themselves, but they are
future and he is never disturbed by the present also skilled at leading others. They know the importance
problems. He always expects the favourable situation of teamwork, and they understand the need to
for his business and hence, he is able to run is business appreciate others, support them, and reward them
successfully in the midst of temporary hurdles. He does accordingly.
not allow the past to obsess him. 15. Passionate About Learning
7. Keen Foresight - Entrepreneurs are often autodidactic learners, which
- An entrepreneur must have keen foresight to predict means that much of what they know they learned
the future business environment. He has the capacity to outside of a formal classroom setting. Autodidactic
visualise the likely changes to take place in the market, learners seek out information, ask questions and do
customer’s attitude, technological developments, personal reading and research to gain knowledge. They
government’s policy etc., and take timely actions also are quick to learn from their own mistakes, which
accordingly. mean they are less prone to repeating them.
8. Planning And Organising Ability
- An entrepreneur is a firm believer in planning and
systematic work. Above all he must have the ability to
bring together all scattered resources required for
starting up a new venture.
9. Innovativeness
- When all is said and done, innovation becomes a
different task. One should be always innovative to
satisfy the varying demands of customers. For this
purpose, the entrepreneur should initiate research
and innovative activities to produce new goods and
services. It is a never ending process.
10. Risk-Taking
- An entrepreneur is not a gambler and hence, he
should not assume high risk. However he must love a
moderate risk situation, high enough to be exciting but
with a fairly reasonable chance to win.
11. Secrecy Maintenance
- A successful entrepreneur must be capable of
maintaining and guarding all his business secrets.
Leakage of business secrets to trade competitors will
definitely lead to the downfall of his business hence, he
should be very careful in selecting his subordinates.
12. Maintenance Of Public Relations
- The extent of maintenance of public relations or
human relations has a vital role to play on the success
or failure of an entrepreneur. A successful entrepreneur
must have cordial relations with his customers to gain
their continued patronage and support. He must also
maintain good relations with his employees with a view
to motivating them to higher levels of efficiency.
Similarly, he must maintain good relations with his
suppliers, creditors and the community at large so that
he may succeed in his ventures.