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Introduction to Entrepreneurship and Small Business Management

What is Business?
 Zoltan Acs, a noted economist, defined a business as a

conscious, willful effort to organize economic activity that consists of a collection of contracts when more than one party is involved.  A business is a legal entity, recognized by law, which is permitted to enter into binding contracts with persons or other businesses.

Forms of Business  Sole Proprietorship  Partnership  Corporations .

once operating. It pays no corporate income taxes.Sole Proprietorship  A sole proprietorship is a business owned by a single       individual that is not incorporated. Advantages: It is easy and inexpensive to form. Disadvantages: The business usually has difficulty obtaining large sums of capital (money). and. and its earnings are taxed at the owner’s tax rate. The life of the organization is limited to the life of the individual who started it. it is subject to few government regulations. . The proprietors have unlimited liability for business debts.

Partnerships may operate under different degrees of formality ranging from informal (oral understandings) to formal agreements. Advantages: Low cost Ease of formation Disadvantages: Unlimited liability of the partners Limited life of the organization Difficulty of transferring ownership Difficulty in obtaining large sums of capital (money) .Partnership  A partnership exists when two or more persons associate to         conduct a non-corporate business.

A          corporation by law must display Inc. Advantages: It permits limited liability for the owners since they only own shares of stock of the corporation.Corporation  A corporation is a legal entity recognized by the state. The formation may require substantial legal effort and a fair amount of government regulation. . It permits easy transfer of ownership since there are rarely conditions placed on buying or selling stock. It can continue to operate long after the original owners have departed. It has unlimited life. Disadvantages: The legal costs of forming and maintaining the corporation can be substantial.

Promoter of All BusinessesEntrepreneur .

This gives three implicit factors to be inherent in him:  Moral Qualities for work judgment  Command over sufficient capital  Uncertainty of profits. .Entrepreneur  He is an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling them at uncertain prices in future. labour and capital to produce a product.  He is an organizer who combines the land.

.  The discovery of new source of supply of raw material  The carrying out of the new form of organisation of any industry by creating of a monopolyposition or the breaking up of it.Entrepreneur  As an innovator (Schumpeter)  The introduction of the new product in the market.  The instituting of the new production technology.  The opening of new market.

Characteristics  Hard work  Desire for High Achievement  Highly Optimiastic  Independence  Foresight  Good Organiser  Innovation .

Functions  Idea generation  Scanning of the best suitable idea  Determination of the business objectives  Product analysis  Market research  Determination of form of ownership  Raising necessary funds  Recruitment of men .

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Difference between Entrepreneur and Manager  On the basis of Motive  On the basis of Status  On the basis of Risk-bearing  On the basis of Rewards  On the basis of Innovation  On the basis of Qualification .

etc.  But most prominent and universal are of four types Innovative Entrepreneurs  Imitative Entrepreneurs  Fabian Entrepreneurs  Drone Entrepreneurs . on the basis of need.Types of Entrepreneur  There are many types of entrepreneur on the basis of skills.

The new can be anything of the following:  Bringing new product in the market  New technology  New market and much more. These possess characteristics like creativity. foresightedness etc. . problem solving.Innovative Entrepreneurs  Entrepreneurs which use their creativeness and logical thinking for doing something new.

He developed a two-prong strategy of expanding the market while maintaining a strong hold on competitors.Bill Gates 1955 Example… By linking his Microsoft software to IBM's first PCs. . he dominated the industry.

Michael Dell 1965  Created a new model for PC sales  Cutting out the retail middleman and custombuilding computers to suit buyer‘s needs put Dell at the front of the class of PC makers. .

 2006 Nobel Peace Prize . winner.Muhammad Yunus 1940  Founded a banking system 30 years ago  To lend small amounts of money to the rural poor in Bangladeshi villages.

Imitative Entrepreneurs  The persons who work according to the others’ innovations.  Examples from Your side!!!!! . and copy others’ way of doing business. strategies etc.

.  They imitate only when it becomes perfectly clear that failure to do so would result in a loss of the relative position in the enterprise.Fabian Entrepreneurs  Fabian Entrepreneurs are characterized by very great caution and skepticism in experimenting any change in their enterprises.

.Entrepreneurship  Entrepreneurship is the attempt to create value through recognition of business opportunity. finanacial and material resources necessary to bring a project to fruition. the management of risk taking appropriate to the opportunity and through the communicative and management skills to mobilize human.