Entrepreneurship

Development
Entrepreneur
• The word "entrepreneur" is derived from a
French root ‘entreprendre’, meaning, "to
undertake” and is commonly used to describe
an individual who organizes and operates a
business or businesses, taking on financial
risk to do so.
• The term "entrepreneur" seems to have been
introduced into economic theory by Cantillon
(1755)
Richard Cantillon : An entrepreneur is a person who
pays a certain price for a product to resell it at an
uncertain price, thereby making decisions about
obtaining and using the resources while
consequently admitting the risk of enterprise.
 An entrepreneur is a person who starts an
enterprise. He searches for change and
responds to it.
 Entrepreneur is someone who perceives
opportunity, organizes resources needed for
exploiting that opportunity and exploits it. 
Entrepreneurs use personal initiative, and
engage in calculated risk-taking, to create new
business ventures by raising resources to apply
innovative new ideas that solve problems,
meet challenges, or satisfy the needs of a
clearly defined market."
 E: xamine needs, wants, and problems to see
how they can improve the way needs and
wants are met and problems overcome.
 N: arrow the possible opportunities to one
specific "best" opportunity.
 T: hink of innovative ideas and narrow them
to the "best" idea.
 R: esearch the opportunity and idea
thoroughly.
 E: nlist the best sources of advice and
assistance that they can find.
 P: lan their ventures and look for possible problems
that might arise.
 R: ank the risks and the possible rewards.
 E: valuate the risks and possible rewards and make
their decision to act or not to act.
 N: ever hang on to an idea, no matter how much they
may love it, if research shows it won't work.
 E: mploy the resources necessary for the venture to
succeed.
 U: nderstand that they will have to work long and
hard to make their venture succeed.
 R: ealize a sense of accomplishment from their
successful ventures and learn from their failures to
help them achieve success in the future.
Four aspects of being an entrepreneur today

 Involves creation process.

 Requires devotion of time and effort.
 Involves rewards of being an entrepreneur.
 Requires assumption of necessary risks
 Characteristics of Entrepreneur

 be passionate about achieving their goals

 have a spirit of adventure (in fact, the word "adventure" is derived
from the Latin word meaning "to venture")
 have a strong need to achieve and seek personal accomplishment
 be self-confident and self-reliant
 be goal-oriented
 be innovative, creative, and versatile
 be persistent
 be hardworking and energetic
 have a positive attitude
 be willing to take initiative
 have a strong sense of commitment
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 act
and art of being an entrepreneur to transform
innovations into economic goods.
 It is a purposeful activity of an individual or group
of individual undertaken to initiate and maintain
an enterprise by production and distribution of
economics goods and services to generate profit.
 An enterprise is the business organization
that is formed and which provides goods and
services, creates jobs, contributes to national
income, exports and over all economic
development.
History of
Entrepreneurship
 History
Middle Ages.

1. The term entrepreneur was used to describe a

person who managed large production projects.

2. This person did not take any risks, but managed

the project with the resources provided.

3. A typical entrepreneur was the cleric who

managed architectural projects.
17th Century

By the 17th century the entrepreneur was a person

who entered into a contract with the government
to perform a service.

Richard Cantillon, a noted economist of the 1700s,

developed early theories of the entrepreneur and
is regarded as the founder of the term.

He viewed the entrepreneur as a risk taker who

“buys at certain price and sells at an uncertain
price, therefore operating at a risk.”
18th Century.
In the 18th century the entrepreneur was
distinguished from the capital provider.

19th and 20th Centuries.

 The entrepreneur “contributes his own initiative, skill
and perform the functions of planning, organizing
and administering the enterprise assuming the
chance of loss and gain.”

In the middle of the 20th century, the entrepreneur

was described as an innovator.
Innovation, the act of introducing something new, is
one of the most difficult tasks for the entrepreneur.
Factors Affecting
Entrepreneurship
Factors affecting
Entrepreneurship
 Individual factors
 Political Factors
 Economic Factors
 Social Factors
 Technological Factors
 Ecological Factors
 Legal factors
Individual Factors
 Desire to do something
 Technical Background
 No. of years of experience
 Occupational background-
 Educational background-
 Parental background
 Sometimes children continue their family business
and make some changes in the existing business in
the form of some new technology, new process,
new product etc. they are called second generation
entrepreneur.
Political Factors

The extent and process of government direct or indirect

intervention and influence on businesses in an economy.
Political factors include
 tax policy, labour law, environmental law, trade
restrictions etc.
 Political factors may also include goods and services
which the government wants to provide or be provided
(merit goods) and those that the government does not
want to be provided (demerit goods).
 Furthermore, governments have great influence on the
health, education, and infrastructure of a nation.
Economic Factors
Labour: Availability of quality rather than
quantity of labour. Entrepreneurship is
encouraged if there is a mobile and flexible
labour force.
Capital: Adequate sources of capital
Market: Understanding of latest market trends
and market techniques. The size and
composition of market both influence
entrepreneurship
Raw material: Adequate supply of raw material
Social Factors
 Caste Factor : There are certain cultural practices and
values in every society which influence the’ actions of
individuals. It has also defined limits to the social
mobility of individuals.
 Attitude of the Society: Certain societies encourage
innovations and appreciate 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 money-making activity
 Family background : This factor includes size
of family, type of family and economic status
of family.
 Technological Factors
 Research and Development (R&D) activity,
automation, technology incentives and the rate of
technological change.
 They can determine barriers to entry, minimum
efficient production level and influence outsourcing
decisions.
 Technological shifts can affect costs, quality, and
stimulate further invention, innovation and
competition.
 Technology is the art of converting the
natural resources into goods and services that
are more beneficial to the society.
 Due to technological development new
products, new production process, new raw
material ,new researches are encouraged for
modernization.
Legal Factors

 Included in this component are discrimination

law, consumer law, antitrust law,
employment law, and health and safety law.
 These factors can affect how a company
operates, its costs, and the demand for its
products.
Ecological Factors

 These include environmental aspects such as

weather, climate, and climate change, which
may affect industries like tourism, farming,
and insurance.
 Growing awareness of the potential impacts
of climate change is affecting how companies
operate and the products they offer, both
creating new markets and diminishing or
destroying existing ones.
Motivation

 The word Motivation has been derived from the

word “Motive” .Motive may be defined as an inner
state of our mind that moves or activates or
energise and directs our behaviour towards our
goal.
 Motivation is a drive to achieve a target.
 Motives are the expressions of a person’s goal or
needs.
 They give direction to human behaviour to
achieve goals or fulfil needs.
Motivating Factors
Internal Factors
 Desire to do Something
 Educational Background
 Experience
External Factors
 Government Assistance and Support
 Availability of Raw material
 Encouragement from big business houses
 Promising demand for the product.
Other Factors Responsible for
Emergence of Entrepreneurship
Background Factors
 Education ,Training and Experience
 Family ,Role models and association with
similar type of individuals
 Financial Conditions
Economic Factors
 Supportive Government Policies
 Availability of financial assistance from
various funding bodies
 Ancillary Support: Support from Suppliers ,
Distributors , Retailers etc.
 Availability of Technical factors like premises ,
electricity, Labour
Reward
 Recognisition
 Social Status
Entrepreneurship
Theories
Entrepreneurial Motivation
 McClelland says that, regardless of our
gender, culture, or age, we all have three
motivating drivers, and one of these will be
our dominant motivating driver. This
dominant motivator is largely dependent on
our culture and life experiences.
 The three motivators
are achievement, affiliation, and power.
People will have different characteristics
depending on their dominant motivator.
These characteristics are as follows:
 Achievement: Has a strong need to set and
accomplish challenging goals. Need to
accomplish something with own efforts.
 Takes calculated risks to accomplish their
goals.
 Likes to receive regular feedback on their
progress and achievements.
 Often likes to work alone.
Achievers need regular feedback in order to
monitor the progress of their achievement
 Affiliation:“a tendency of the people to
conform to the wishes and norms of those
whom they value.”Need to establish and
maintain friendly and warm relations with
others.
 Wants to belong to the group.
 Wants to be liked, and will often go along
with whatever the rest of the group wants to
do.
 Favors collaboration over competition.
 Doesn't like high risk or uncertainty.
Power
 Wants to control and influence others.
 Likes to win arguments.
 Enjoys competition and winning.
 Enjoys status and recognition.
 Those with a strong power motivator are often
divided into two groups: personal and institutional.
People with a personal power drive want to control
others, while people with an institutional power
drive like to organize the efforts of a team to further
the company's goals. Managers with a need of high
institutional power tend to be more desirable than
the managers with a high need of personal power.
 According to McClelland theory of needs,
entrepreneurs would generally labelled as
individuals with high need for achievement,
moderate need for power and low need for
affiliation.
Maslow Hierarchy of Needs
Maslow’s Need Hierarchy
Theory
 Physiological Need-Basic Needs to human life that
include food , clothing , shelter , water etc.
 Safety and Security Needs-Economic or financial
security and Safety from physical danger.
 Social Needs-These needs refer to
belongingness ,to be recognised and accepted by
others.
 Esteem Needs-Self confidence, achievement,
competence , knowledge and independence.
 Self Actualisation: Self fulfilment Need
 Barriers to Entrepreneurial
ENVIORNMENTAL BARRIERS
 Raw material
 Labour
 Machinery
 Land and Building
 Infrastructure Requirements
 Financial Barriers
PERSONAL BARRIERS:These barriers are caused by emotional blocks of an individual.
 Lack of Confidence
 Lack of dependability on others
 Lack of Motivation
 Lack of patience
 Inability to Dream
 Sense of embarrassment
SOCIETAL BARRIERS
 Pressure from community
 Pressure from Family
 Pressure from peer group
Classification of Entrepreneur

Classification of Entrepreneurs on the basis of

 Type of business
 Use of Technology
 Motivation
 Growth
 Stages in Development
 Others
Type of business

 Business entrepreneur: Convert ideas into reality; deal with both

manufacturing and trading aspect of business (Small trading and
manufacturing business)
 Trading entrepreneur: Trading means buying the finished
product from the producer and selling off to the customer
directly or through a retailer.
 He has to identify potential market, create demand through extensive
advertisement of his product and thus inspire people to buy his product.
 Industrial entrepreneur: Undertakes manufacturing activities
only; new product development etc (textile, electronics, etc)
 Corporate entrepreneur: Interested in management part of
organisation; exceptional organising, coordinating skills to
manage a corporate undertaking (Ambani, Tata families)
 Agricultural entrepreneur: Production and marketing of
agricultural inputs and outputs (Dairy, horticulture, forestry)
Use of Technology
 Technical entrepreneur: Production oriented,
possesses innovative skills in manufacturing,
quality control etc.
 Non technical entrepreneur: Develops
marketing, distribution facilities and strategies
 Professional entrepreneur: Uses the proceeds
from sale of one business to start another one.
Brimming with ideas to start new ventures
Motivation
 Pure entrepreneur: Pure entrepreneur is one who may or may
not possess an aptitude for entrepreneurship but is tempted by
the monetary rewards or profits to be earned from the business
venture. He is status-conscious and wants recognition.
 Induced entrepreneur: Incentives, concessions, benefits
offered by government for entrepreneurs motivates him.Most
of the entrepreneurs who enter into business are induced
entrepreneur as various kinds of financial, technical and
managerial facilities are provided by the government to
promote entrepreneurship.
 Motivated entrepreneur: Sense of achievement and fulfillment
motivate him
 Spontaneous entrepreneur: Born entrepreneurs with inborn
traits of confidence, vision, initiative. These entrepreneurs start
their business out of their natural talents.
Growth
 Growth entrepreneur: One who enters a sector with a high
growth rate; is a positive thinker.
 Super growth entrepreneur: One who enters a business and
shows a quick, steep and upward growth curve in terms of
liquidity of funds, profitability.
Stages in Development
 First generation entrepreneur: Innovator, risk taker, among
the firsts in family to enter business
 Modern entrepreneur: One who undertakes those ventures
which go well along with the changing demand and adapt to
change and dynamic market
 Classical entrepreneur: He is stereotype entrepreneur
whose aim is to maximize his economic returns at a level
consistent with survival of the firm with or without the
element of growth.
Others

 Area- Rural and Urban entrepreneur

 Gender/Age- Men and Women entrepreneur
 Scale- Small and Large scale entrepreneur
 Theories of Entrepreneurship
Early Theories of Entrepreneurship
 Richard Cantillon (1680-1734) was the first of the major
economic thinkers to define the entrepreneur as an
agent who buys means of production at certain prices
to combine them into a new product. He classified
economic agents into landowners, hirelings, and
entrepreneurs, and considered the entrepreneur as the
most active among these three agents, connecting the
producers with customers.
 Jean Baptise Say (1767-1832) improved Cantillion’s
definition by adding that the entrepreneur brings
people together to build a productive item.
Frank Knight's Risk Bearing Theory

 Frank Knight (1885-1972) first introduced the dimension

of risk-taking as a central characteristic of
entrepreneurship. He adopts the theory of early
economists such as Richard Cantillon and J B Say, and
adds the dimension of risk-taking.
 He points out that entrepreneurs are a specialized group
of persons who bears risk and deal with uncertainity.
 This theory considers uncertainty as a factor of
production, and holds the main function of the
entrepreneur as acting in anticipation of future events.
 The entrepreneur earns profit as a reward for taking such
risks.
Alfred Marshall’s Theory of Entrepreneurship

 Alfred Marshall in his Principles of Economics (1890) held land,

labor, capital, and organization as the four factors of
production, and considered entrepreneurship as the driving
factor that brings these four factors together.
The characteristics of a successful entrepreneur include:
 thorough understanding of the industry
 good leadership skills
 foresight on demand and supply changes and the willingness to
act on such risky foresights
Success of an entrepreneur however depends not on
possession of these skills, but on the economic situations in
which they attempt their endeavors.
 Many economists have modified Marshall’s theory to consider
the entrepreneur as the fourth factor itself instead of
Sociological Theory

 The sociological theory entrepreneurship

holds social cultures as the driving force of
entrepreneurship.
 The entrepreneur is a role performer
according to the role expectations by the
society. such role expectations are based on
religious beliefs, taboos, and customs.
Mark Casson's Economic Theory

 Mark Casson (1945-) holds that entrepreneurship is a result of

favourable economic conditions.
 In his book "Entrepreneurship, an Economic theory" he states
the demand for entrepreneurship arising from the demand for
change.
 Economic 
factors that encourage or discourage entrepreneurship include:
 taxation policy
 industrial policy
 easy availability of raw materials
 easy access to finance on favorable terms
 access to information about market conditions
 availability of technology and infrastructure
 marketing opportunities
Joseph Schumpeter’s Innovation Theory

 Joseph Schumpeter’s innovation theory of entrepreneurship (1949)

holds an entrepreneur as one having three major characteristics:
innovation, foresight, and creativity.
Entrepreneurship takes place when the entrepreneur
 creates a new product
 introduces a new way to make a product
 discovers a new market for a product
 finds a new source of raw material
 finds new way of making things or organization
 Schumpeter’s innovation theory however ignores the entrepreneur’s
risk taking ability and organizational skills, and place undue
importance on innovation.
 This theory applies to large-scale businesses, but economic
conditions force small entrepreneurs to imitate rather than innovate.
Leibenstein’s Theory of X-Efficiency

 Harvey Leibenstein (1922-1994) consider entrepreneur as gap-fillers.

 X-Efficiency is the degree of inefficiency in the use of resources. It
measures the extent to which the firm fails to realize its productive
potential.
 Gap Filling :If not all factors are marketed or if there are
imperfections in markets , the entrepreneur has to fill the gap.
The three traits of entrepreneurship include:
 recognizing market trends
 develop new goods or processes in demands but not in supply
 determining profitable activities
Entrepreneurs have the special ability to connect different markets
and make up for market failures and deficiencies.
McClelland’s Theory of Achievement Motivation

 McClellands Theory of Achievement Motivation hold

that people have three motives for accomplishing
things: the need for achievement, need for affiliation,
and need for power. Need for achievement and need for
power drive entrepreneurship.
 David McClelland (1917-1988) considers entrepreneurs
as people who do things in a better way and makes
decisions in times of uncertainty. The dream to achieve
big things overpowers monetary or other external
incentives.
 McClelland’s experiment reveled that traditional beliefs
do not inhibit an entrepreneur, and that it is possible to
internalize the motivation required for achievement
Peter Drucker Theory of Entrepreneurship

 Peter Drucker (1909-2005) defines entrepreneur as

one who always searches for change, responds to it
and exploits it as an opportunity.
 Innovation is the specific tool of entrepreneurs ,the
means by which they exploit changes as an
opportunity for a different business or a different
service.
 According to him entrepreneurship involves
increase in value or satisfaction to the customer
from the resource creation of new values
combination of existing materials or resources in a
new productive combination.
Concept of Entrepreneurship

Entrepreneur Entrepreneurship Enterprise

Person Process of Action Object

Entrepreneurship

 Entrepreneurship can be described as a

process of action an entrepreneur undertakes
to establish his enterprise.

 Entrepreneurship is a dynamic process

of vision, change, and creation. It requires
an application of energy and passion
towards the creation and implementation
of new ideas and creative solutions. 
 A.H. Cole “Entrepreneurship is the
purposeful activity of an individual or a group
of associated individuals, undertaken to
initiate, maintain or earn profit by production
or distribution of economic goods
andservices”.
 Entrepreneurship is the act of being an
entrepreneur.
Entrepreneur Entrepreneurship
Person Process
Organiser Organisation
Innovator Innovation
Risk-bearer Risk-bearing
capacity
Motivator Motivation
Creator Creation
Visualiser Vision
Leader Leadership
Imitator Imitation
Nature and Characteristics
of Entrepreneurship
1.Innovation : The process of commercialising an
invention is innovation.
a) new products ;
b) new methods of production ;
c) new markets ;
d) new sources of raw material
e)New source of capital
2.Motivation : Motivation comes from the word
‘motive’ (or goal). It means the urge in an individual
to achieve a particular goal
3. Risk Taking : Risk-taking implies taking
decisions under conditions where the reward
on a certain action is known, but the
occurrence of the event is uncertain.
4.Organisation Building: It means the ability to
‘multiply oneself by effectively delegating
responsibility to others.
Entrepreneurs are good leaders and excellent
administrator.
 5. Managerial-Skills and Leadership:
Performance of management functions using
different managerial skills.
 6.Creative and purposeful activity:
Entrepreneurship is a creative response to the
changing environment.
Difference between Entrepreneur and Manager
 Entrepreneur Manager

Primary Motives Wants freedom, goal Want promotion and

oriented.Self-reliant, and traditional corporate
self-motivated. rewards. Power-
motivated.

Time Orientation End goals of 5-10 year Respond to quotas and

growth of business. Budgets, weekly,
monthly, quarterly,
horizons, the next
promotion or transfer.

Primarily on technology Primarily on the

Attention and market place. events inside corporation.
Role of Entrepreneurship in
Economic Growth
Rate of economic progress of the country depend upon the rate
of innovations which inturn depend upon the distribution of
entrepreneurial talent in the population.
Entrepreneur initiate and sustain the process of economic
development in following ways
 Capital formation
 Improvement in per capita income
 Generation of Employment
 Balanced regional development
 Improvement in living standards
 Economic Independence
 Backward and Forward linkages
 Capital Formation:
Transfer of savings from individuals or households to
the business sector; directly through investments or
indirectly through bank deposits which are loaned out to
firms.

 Capital formation facilitates infrastructure development,

which is considered a vital tool for development and
growth of any economy. It helps to exploit and utilise
internal resources within a country for production or
manufacturing which leads to self sufficiency
 Improvement in per Capita Income:
Entrepreneurs locate and exploit
opportunities by converting the idle
resources into national income and wealth in
the form of goods and services.
 Generation of Employment : Entrepreneurs
generate employment directly(self
employment) or indirectly by setting up
industries and offering jobs to many.
 Balanced Regional Development:
Entrepreneurs setup industries in backward
areas to avail the various concessions and
subsidies offered by state and central govt
Improvement in living Standards: industries setup by an
entrepreneur remove scarcity of essential
commodities. Production of goods on mass scale and
manufacture of handicrafts in the small scale sector
to improve the standard of life of a common man.
Economic Independence: Industrialist help to
manufacture indigenous substitutes of imported
products thereby reducing dependence on foreign
countries. Business also export goods and services on
a large scale and earn the scarce foreign exchange for
the country.
 Backward linkages and Forward linkages:
 An entrepreneur initiate change which has
chain reaction.
Reasons for Entrepreneurship Development

 Increase in national production and productivity

in different sectors : Indian entrepreneurs should
work to increase the national production in primary,
secondary and tertiary sectors. They should work to
increase employment. They must be able to generate
wealth from both national and international markets.
They should produce such goods and services which
can substitute the imports. They should give more
effort for increasing export of goods and services.
  
  Balanced regional development : Industrial
setup in urban and semi-urban areas to the
migration of people from rural areas to big
cities which has created pressure on the
Government to provide housing and other
facilities to the people.
 In order to reduce this imbalance,
Government has provided facilities to
encourage entrepreneurs to setup new
ventures in rural areas.
 Re-investment of profit : The objective of re-
investment of profit for the betterment of the
productivity and welfare of the community.
 Decentralization of economic power : The
main drawback of large scale enterprises is
the centralisation of economic power. In
order to achieve equal distribution of wealth
and balanced economic growth, the
Government has targeted to develop
competent entrepreneurs who can setup the
small scale enterprises. This will help in the
dispersal of wealth.
 Solving the problem of unemployment and under-
employment : In large scale industries, the problem of
unemployment and underemployment is more. It is so due
to lack of capital and increase in labour force. The highly
educated and technically experienced peoples get
dissatisfied and frustrated with their job. In order to solve
this socio-economic problem of India, Government has
taken step towards the development of such programmes.
Besides setting up of large scale industries, small scale
industries are encouraged to setup, which can provide
large number of employment with the same amount
capital investment, compared to the large scale industries.
 Harnessing youth vigour : When government
cannot provide work to the educated and highly
qualified youths, to earn their livelihood, they turn
up to violent activities. In order to reduce their
frustration, anger and disappointment, the
development of entrepreneurs is necessary in
India. They provide self-employment work to the
youth, to earn their living. Thus, they are diverted
from destructive activities by entrepreneurial
motivation to work for the country.
Intra-preneurship

 Intra-preneurship is defined as entrepreneurship within an

existing business set– up.
 Intra-preneurship is corporate entrepreneurship.
 When a corporation indulges in entrepreneurial activities, like
diversification into new businesses, it is called intra-
preneurship.
 Intra-preneur is a manager who focuses on innovation and
creativity; who brainstorms, dreams and puts ideas into
profitable venture by operating within the organisational
environment.
 It gives managers the freedom to try new ideas by employing
firm’s resources in a unique way.
CHARACTERISTICS OF AN
INTRAPRENEUR
The major difference being that an entrepreneur risks
his own money where as an intrapreneur works with his
employer’s money. Thus, the risk level of an
intrapreneur is considerably reduced.
 Vision –An Intra-preneur has ability to visualize from
idea to implementation. 
 Motivation – Intra-preneur is generally self-motivated,
but expect corporation reward and recognition.
 Orientation – Intra-preneur is achievement oriented.
 Risk Bearer– Intra-preneurs are moderate risk takers
since risk acceptance depends on their skills.
EDP:Entrepreneur Development
programme
 A programme designed to help an individual in
strengthening his entrepreneurial motive and in
acquiring skills and capabilities necessary for playing
his entreneurial role effectively.
EDP gives
 General introduction to Entrepreneurship
 Motivation Training
 Management Skills
 Support System and Procedures
 Fundamentals of Project Feasibility Study
EDP

 The process of enhancing entrepreneurial

skills and knowledge through structured
training and institution building programmes.
 ED focuses on the individual who wishes to
start or expand a business.
 EDP is primarily concerned with developing and
motivating entrepreneurial talent and growing
him to be an effective entrepreneur.
Objectives of EDP
 To formulate project
 To select Project/Product
 To analysis the environment.
 To acquire the basic managerial skills
 To understand the process and procedure of
setting up of enterprise.
 Enable to communicate clearly and effectively.
 Enable to take decisions.
 It will give general introduction to entrepreneurship.
 It will afford motivational training.
 It will increase managerial skill of the entrepreneur,
 It makes entrepreneur to have expert knowledge on
various support systems and procedure.
 It will give fundamental idea on project feasibility
study.
 It will encourage plant visit to afford practical
knowledge to entrepreneurs.
Phases of EDP
 Pre-training phase
 Training phase
 Follow-up phase
Pre-training phase:
 Pre-training phase consists of all activities and preparation to launch
training programme.
Pre-training phase of EDP consists of the following activities :
 Selection of entrepreneurs for the training programme.
 Arrangements of infrastructure are for the programme like selection of
place of training.
 Deciding guest faculty for the programme from education industry and
banks.
 Taking necessary steps for inauguration of programme.
 Formation of selection committee to select trainees from the programme.
 Making provision with regard to publicity and campaigning for the
programme.
 2. Training Phase:
 The primary objective of training programme is to develop
motivation and skill or competency amongst the potential
entrepreneurs.
 Impart both theoretical and practical knowledge to various
trainees. The training phase of EDP will be so designed that
it will answer the following questions:
 (a) Whether the attitude of the entrepreneur has been tuned
towards the proposed project or no.
 (b) Whether the trainee has been motivated to accept
entrepreneurship as a career.
 (c) How the trainee behaves like an entrepreneur.
 (d) Whether the trainee has sufficient knowledge on
resources and technology or not.
 (e) What kind of entrepreneurial traits he lacks and what
steps should be taken to set it.
Training phase

 Technical Knowledge
 Achievement Motivation Training
 Market Survey
 Managerial Skills
 Project Preparation
 3. Follow-up Phase:
 Follow up phase of EDP has been termed as post-
training phase. The ultimate objective is to develop
competent entrepreneurs.
 Post-training phase is a review phase of training
programme. It consists of reviewing of work in the
following manner:
 Assessment to judge how far the objectives of the
programme have been achieved.
 Monitoring and follow up of earlier phases reveals
drawbacks in the earlier phases and suggests
guidelines for framing the future policy.
 Infrastructural support, Counselling and assistance
in establishing new enterprise and in developing the
existing units can be reviewed.
Factors Influencing
Entrepreneurial Mobility
 EDUCATION 
 Education plays an important role in
influencing one’s thinking and understanding
horizons.
 An educated person can also easily adjust
with the changed environment.
 Experience: An entrepreneur’s past
experience in business and industry also
increases his/her propensity to move.
 An experienced entrepreneur better
perceives the available opportunities, better
analyses his/her strengths and weaknesses.
 AVAILABILITY OF FACILITIES
 Entrepreneurs tend to move from areas with
no or less facilities to the areas with more and
better facilities.
 For example : Heavy concentration of
industries in okhla,ghaziabad and faridabad
near Delhi represent such examples.
 POLITICAL CONDITIONS 
 Entrepreneurial mobility is influenced by the
political factors .
 For example a well known enterprising
Punjabi community lost almost everything
during the partition and were compelled to
move from Pakistan to India
 SIZE OF ENTERPRISE 
 Larger business houses are found more
mobile than smaller ones.
 Initially entrepreneurs try to consolidate their
business position at a place, tries to achieve
success in that area, attain the dominating
position and thereafter try to successfully
seize the business opportunities elsewhere.
Entrepreneurship Mobility

 Occupational Mobility
 Locational Mobility
OCCUPATIONALMOBILITY

 Occupational mobility denotes movement or

changes in occupation. Occupational mobility
takes place in two forms :-
 1.Inter-generation occupational movement
 2.Intra-generation occupational movement
 Inter Generation Mobility: Movement of a
son/daughter from principal occupation of his/her
father
 Intra generation Mobility: Drift in one’s own
occupation during his or her occupational career.
 Mobility is called Horizontal when it takes place
between the occupational classes of the equal
rank.
 Mobility is called Vertical if it takes place between
the classes of unequal rank.
Several factors affects the Occupational
Mobility
 Freedom of choice
 Motivation
 Efforts of an individual
 Opportunities Available
Locational Mobility
 Location Mobility means movement of entrepreneurs from one location to
another.
 Movement of Entrepreneurs to another region helps to reduce the regional
imbalances in economic development.
The degree of the entrepreneurial mobility depends upon different factors :
 Availability of raw material

 Infrastructure and labour 

 Nearness to market

 Experience

 knowledge and information

 socio-political situation
Entrepreneur most important
Considerations while
selecting the location
Considerations Entrepreneurs
Homeland 52
Availability of Raw 8
Material
Government Incentives 2
Availability of Labour 4
Availability of Market 10
Availability of 20
Infrastructural Facilities
Others 4
Total 100
Entrepreneurial Process

The process has four distinct phases:

(1) identification and evaluation of the
opportunity,
(2) development of the business plan,
(3) determination of the required resources,
(4) management of the resulting enterprise.
Identify and Evaluate an
Opportunity
 Opportunity Assesment
 Real and Perceived Value of Opportunity
 Risk and Returns of Opportunity
 Opportunity Vs Personal Skills
 Competitive Enviornment
Business Plan

 A business plan is a complete description of a business, giving

information on the product or service, marketing and finances.
The plan brings your main ideas into focus, helps you work out
what you want to achieve and how you are going to do it.
An effective business plan can:
• Identify if there is a market for your product/service
• Determine your competition and identify advantages
• Estimate start-up costs, income, expenses and profit
• Show if your business idea is worth pursuing Strategic and
Operational Planning
  
Resources Required

 Determine the resources needed

 Determine the existing resources
 Identify the resource gaps and available
suppliers
 Develop access to needed resources.
Manage the Enterprise

 After resources are acquired, the entrepreneur

must use them to implement the business plan.
 The operational problems of the growing
enterprise must also be examined.
 Implementing a management style and
structure
 Establishing a ontrol system so that any
problem areas can be quickly identified and
resolved.
 Entrepreneur Process
 Opportunity evaluation Company's plan              Execution
(investment prospectus)

• Need / problem •Strategy •Market research

•Solution Target customer •Marketing
•Competitive position  •Business model •Business development
•Team •Position •Forecasting
•Risk / reward profile •Milestones / company •Sales planning
objectives •R&D management
•Operating plan •Operations management
Company timeline •People management
•Staffing plan •Process and infrastructure
•Budget •Budgeting 
•Financing plan •Financing
 1. Idea Generation: every new venture begins with an idea. In our context, we take an idea to
be a description of a need or problem of some constituency coupled with a concept of a
possible solution. (A characterization of this phase is still work in process on this site.) 
 2. Opportunity Evaluation: this is the step where you ask the question of whether there is an
opportunity worth investing in.  Investment is principally capital, whether from individuals in
the company or from outside investors, and the time and energy of a set of people. But you
should also consider other assets such as intellectual property, personal relationships,
physical property, etc.  
 3. Planning: Once you have decided that an opportunity, you need a plan for how to
capitalize on that opportunity. A plan begins as a fairly simple set of ideas, and then becomes
more complex as the business takes shape. In the planning phase you will need to create two
things: strategy and operating plan.  
 4. Company formation/launch: Once there is a sufficiently compelling opportunity and a
plan, the entrepreneurial team will go through the process of choosing the right form of
corporate entity and actually creating the venture as a legal entity. 
 5. Growth: After launch, the company works toward creating its product or service,
generating revenue and moving toward sustainable performance. The emphasis shifts from
planning to execution. At this point, you continue to ask questions but spend more of your
time carrying out your plans.
Psychological factors-
 Independence
 Challenge
 Dream desire
 Family background
 Market opportunity
 Idea driven
 Need for achievement
 Profit making
Creativity
 Creativity is concerned with producing unique
ideas, concepts and ways of doing things
that would have not occurred normally or
evolved routinely.
 Creativity can be defined as the discovery or
production of something that is novel and
also useful or relevant . The product or
outcome of creative effort must be significant
and markedly different from the existing
product or outcomes.
Component of Creativity
 Conceptual Fluency: Ability to generate large number of
relevant ideas relatively rapidly with reference to a
given problem/situation or issue.
 Conceptual Flexibility: Ability to shift perspective/view
points,to move from one frame of reference to another
and to change or vary the approaches to solution to
problems.
 Originality: Ability to produce unusual, novel answeres
to the questions to problems and interpretation of
issues/situations and events.
 Complexity Orientation: Ability to challenge , and find
meaning ,in complex and ambiguous problems and to
enjoy the efforts to analyze,integrate,clarify and resolve
them.
Creative Process
 Creative process consists of many stages and
in each stage , a creative individual behaves
differently to move an idea from the seed
stage of germination to verification.
Step1 : Inspiration(Idea Generation):In which
an individual generate a large number of ideas
Creative ideas can be traced to an individual
interest in or curiosity about a specific
problem or area of study.
Step 2 : Preparation
 Seeking information about the problem we define
the problem, need, or desire, and gather any
information the solution or response needs to
account for, and set up criteria for verifying the
solution's acceptability.
Step 3 : Incubation:
 In which you leave the work alone, though you still
ponder about it occasionally , leaving it ‘on the
surface of your mind’. After you’ve gathered so
much information, your conscious mind won’t be
able to make sense of it for awhile. Your main job is
to keep your conscious mind occupied with some
small thing so your unconscious is free to search for
new associations and connections.
Step 4 : Illumination(Realization) : Recognisition of ideas as
being feasible.
 As ideas begin to mature, it becomes more realistic. The
moment of illumination can happen unexpectedly. For
example, an individual with the task of putting together an
office party may have an idea for a theme while driving home
from work.
Step 5 : Verification : Refining knowledge into application .
Application or test to prove idea has value. This is the stage
where you make something tangible out of the insight you
received in Illumination, something that can be shared with
others.
  the final stage, one carries out activities to demonstrate
whether or not what emerged in illumination satisfies the
need and the criteria defined in the preparation stage
 Successful entrepreneurs can identify ideas that are workable
and that they have skill to implement them.
 Ideas in earlier phases afre in rough form so it needs to be
Entrepreneurial Plan

 An Entrepreneurial plan is a written

document that describes all the steps
necessary in opening and operating a
successful business.
 It serves as a blue print for building a
company.
Entrepreneurial Plan

EP Provides a means to
 Determine whether the business is viable
 Raise capital for the business
 Project sales, expenses and cash flows for the
business
 Explain to employees their responsibility as well
as company expectations
 Improve and access company performance
 Plan for new product development.
Purpose of Entrepreneurial
Plan/Business Plan
 Business Plan explains the idea behind the
business and spells out how the product or
services will be produced or sold.
 Business plans sets specific objectives and
describes how the business expects to
achieve them
 Business plan describes the background and
experience of the people running the
business.
 A Business Plan helps you evaluate the feasibility of a new
business idea in an objective, critical, and unemotional way.
 Marketing – Is there a market? How much can you sell?
 Management – Does the management team have the skill?
 Financial – Can the business make a profit?
 It provides an operating plan to assist you in running the
business and improves your probability of success.
 Identify opportunities and avoid mistakes
 Develop production, administrative, and marketing plans
 Create budgets and projections to show financial outcomes
 It communicates your idea to others, serves as a “selling
tool,”and provides the basis for your financing proposal.
 Determine the amount and type of financing needed
 Forecast profitability and investor return on investment
 Forecast cash flow, show liquidity and ability to repay debt
Elements of Business Plan
 History and Background
 Goals and Objective
 Products or Services
Industry:
 External factors affecting business
 Growth potential of industry
 Economic trends of industry
 Technology trends

 Forms of Ownership
 Management and Staffing
 Marketing
 Current and projected financial statements
 Market Summary: 
 Opportunities: 
 Opportunities Problems and opportunities State consumer
problems, and define the nature of product/service
opportunities that are created by those problems.

Business Concept: 
 Business Concept Summarize the key technology, concept,
or strategy on which your business is based

Competition: 
 Competition Summarize competition Outline your
company’s competitive advantage .
 Goals & Objectives: 
 Short term, long term and medium term goals .It ill also describe where an
entrepreneur wants his company to be in the future.
 Product or Services :This section describes the products or services the company
plans to produce or sells.

Financial Plan: 
 Financial Plan A high-level financial plan that defines the financial model and the
pricing assumptions and that reviews yearly expected sales and profits for the next
three years Use several slides to cover this material appropriately

Resource Requirements: 
 Resource Requirements Technology requirements Personnel requirements Resource
requirements Financial, distribution, promotional, etc. External requirements
Products, services, technologies that must be purchased outside the company

Risks & Rewards: 
 Risks & Rewards Risks Summarize risks of proposed project Addressing risks
Summarize how risks will be addressed Rewards Estimate expected pay-off,
particularly if seeking funding
SECTION 1: Overview
 a. Business Details
 b. Summary of the Business
 c. Aims of the Business
 d. The Business Product/Service
SECTION 2: Market Research
 a. The Market
 b. Competition
 c. The Environment
 d. Suppliers Information
SECTION 3: Marketing
 a. Marketing Strategy
 b. Branding
 c. Advertising & Promotion
 d. Internet Strategy
 e. Pricing Structure
SECTION 4: Operations
 a. Management
 b. Staff Resources
 c. Premises
 d. Regulations
 e. The Future
SECTION 5: Financial Forecasts
 a Survival Budget
 b Personal Survival Budget
 c Sales Forecast
 d Cash Flow Forecast
 e Projected Profit and Loss Account
 f Projected Balance Sheet
Idea Generation
 Idea Generation stage is the first step of entrepreneurial
activity.
 Ideas which employ the maximum of available resources to be
take up for further evaluation.
 The ideas should take care of customer requirements.
Such as
 Type of need
 Competitive ways to satisfy the need
 Perceived benefits and risks
 Price Vs Performance
 Market size and potential

Business ideas generation is a search of opportunities for new

avenues of growth in business.
Opportunities are of three types
 An additive opportunity more fully exploits already
existing resources. It does not change the character
of the business. The risks are small, so are the returns.
 The complementary opportunity will change the
structure of the business. It offers something new
which, when combined with the present business,
results in a new total larger than the sum of its parts.
The complementary opportunity always requires at
least one new knowledge area in which excellence
has to be attained.
 A complementary opportunity always carries with it
considerable risk. But it may have the potential to
enhance significantly the wealth-producing capacity
of the entire business.
 The breakthrough opportunity changes the
structure , strategies and characteristics of the
business. It requires great effort and the
employment of the best managers.
 New ideas, new technologies brings in
fundamental change.
 It often requires major spending on research
and development, if not also substantial capital
investment. And the risk is always great.
 Opportunities have to be evaluated on the
basis of the experience of a company and its
past successes and failures.
Methods of Idea Generation

 Focus Group: In this method group of individuals

discuss and provide information in a structured form
to arrive at new business idea. A leader or a
moderator sits with the group of people and
discussion are held in a free and frank manner
regarding the ideas for industries and services.
 A focus group is a form of qualitative research in
which a group of people are asked about their
perceptions, opinions, beliefs, and attitudes towards
a product, service, concept, advertisement, idea, or
packaging.
 Use : The method is generally used for
choosing apparel design, jewellery design,
cosmetics, health care products etc.
 Applicability: Less time consuming and
practical approach.
Brain storming
 Group method for obtaining new ideas and business solutions.
 Brainstorming works by focusing on a problem, and then deliberately
coming up with as many solutions as possible and by pushing the ideas
as far as possible.
Rules
 No criticism: Criticism of ideas are withheld during the brainstorming
session as the purpose is on generating varied and unusual ideals and
extending or adding to these ideas. Criticism is reserved for the
evaluation stage of the the process. This allows the members to feel
comfortable with the idea of generating unusual ideas.
 Welcome unusual ideas: Unusual ideas are welcomed as it is normally
easier to "tame down" than to "tame up" as new ways of thinking and
looking at the world may provide better solutions.
 Quantity Wanted: The greater the number of ideas generated, the
greater the chance of producing a radical and effective solution.
 Combine and improve ideas: Not only are a variety of ideals wanted,
but also ways to combine ideas in order to make them better.
 The group should be informed of the broad areas of
subject or area of discussions.
 People in a group are drawn from different streams
such as production, quality control,finance,marketing
etc.
 The member should have no inhibitions about their
status or departments.
 There should be no criticisms or negative comments
 The ideas can be improved but no repetition.
 The method is applicable for new product packing and
Distribution.
 Reverse Brainstorming :When criticism is allowed for
obtaining new ideas.
 Checklist Method: The new ideas for the
business are developed based on discussions
on list of related issues. A specific area of
discussion is listed by entrepreneur and a list
of questions ,suggestions and statements are
developed for in depth discussions and arrive
at a business idea.
 A method of generating new ideas by making
a list of related issues.
 Who uses the product? How it is used?
 What are the new ways of usage of the
products?
 Can a copied and improved product will add
value?
 Can we bring substitute product?
 What are the new emerging products in a
particular product range?
Problem Inventory Analysis
 Problem Inventory Analysis: it is a method of
obtaining new ideas and solutions for business by
focusing on the problems.
 The group is given the problems that are commonly
felt by consumers, dealers and general public.
 The discussion are more focused and related to a
particular problem.
 The method may not give many times new ,entirely
new, product ideas but it may add to the value of the
existing product.
 The PIA take care of the discussions on all the relevant
and related aspects and see that the problem in one
area doesnot become a headache in other areas.
Gordon Method
 When group members do not know the exact
nature of the problem the method of
developing new ideas is called Gordon
method.
 Entrepreneur gives the general concepts
associated with the problem to the group
who responds by their suggestions. The
actual problem is revealed at the end of the
discussions.
Idea Screening

 With your list of potential new product ideas, you

now need to decide which ideas to pursue and which
to discard.
 Criteria for Idea Screening
 Consider your competition,
 Fit with the company production capabilities or technical
expertise.
 Fit with company objective and image
 Market Sales and Profit Potential
 Draw on the customer needs list you have developed, and
the areas for product improvement you have identified.
Feasibility Analysis

 Feasibility Analysis is the process of

determining if a business idea is viable.
 Feasibility analysis is completed to
determines if an idea is worth pursuing and to
screen ideas before spending resources on
them.
Concept Statement
 Before a company undertakes a feasibility analysis a concept
statement should be developed.
 A concept statement is a preliminary description of a business
and includes the following
 A description of product or services offered.
 The intended target market : This section describes the lists
of businesses or people who will buy the product or services.
 The benefits of product or service : This section describes the
benefits of product or services and includes an account of
how the product or services add value and /or solves a
problem.
 A description of how the product will be positioned relative
to similar ones in the market.
 A description of how the product or services will be sold
and distributed.
Product/Service Feasibility
 Product Feasibility: Determine if the proposed
product or service is desirable and serves a need
in market place.
 An assessment of overall appeal of the product or
service being proposed.
 It is what the customer want and will have a
adequate market.
Two test: Concept Testing and Usability testing
Concept testing: A concept test entails showing a
representation of the product or service to
prospective users to gauge customer interest,
desirability and purchase intent.
 Purpose of Concept Test
1.To validate the underlying premises of a product
or service idea that entrepreneur thinks is
compelling.
To test his idea ,an entrepreneur must ask
prospective customers and key industry
participant what they think.
2.To develop an idea : The objective is to refine the
product or services to the point that the
entrepreneur is confident that it satisfies a
defined need and customers are willing to buy.
3.To estimate the potential market share the
product or service might command.
 Usability Testing requires that users of the
product perform certain task in order to
measure the product ease of use and the
user’s perception of the experience.
 Usability test is sometimes called user
test,beta test or field trials.
 A basic prototype is developed and is used to
gauge customer interest and to conduct
usability testing.
 Usability testing is important for websites
and software designs.
Market Feasibility

 To explore the industry of which your business will be

part of and the niche market you plan to go after.
 The most attractive industries for new businesses
have the following characteristics
 Are large and growing rather than small and shrinking
 Are important to their customers
 Environment trends moving in favour of the industry.
 Being fairly young rather than older and mature.
 Assess the attractiveness of the specific niche market
that has places to target
 An entrepreneur must know the overall
attractiveness of the industry it plans to
enter.
 Primary Research: Research that is original
and is collected by the entrepreneur
Assessing market involves analysing potential
customers and key industry participant.
 Secondary Research probes data that are
already collected such as industry related
publications, government statistics, industry
reports.
Organizational Feasibility
 The area to explore is whether the proposed business has sufficient
managerial expertise , organizational competence and resources to
be launched and successfully managed.
 Management Prowess: The two important factors are the passion
that the individual have for the business and the extent to which the
people involved understand the industry in which the business will
operate.
 Resource Sufficiency: Determine whether the potential new venture
has sufficient resources to move forward to successfully develop a
product.
 The focus is on non financial resources such as availability of office
space, quality of labour pool in the area where business is located
The other people related factors can be
 Relevant industry experience or prior business start up experience
 Experience and expertise in cashflow management.
 Access to mentors or people who can provide start up advice.
Financial Feasibility

 Two important factors to be considered are

the total start up cash needed(Capital
Requirement) and the financial performance
of the similar business.
 Issues to be considered at this stage are
capital requirements, `financial rate of return
and overall attractiveness of investment.
Importance of Idea Screening

 Minimize risk while maximizing the returns

 Decide what is important
 Identify the strengths and weaknesses of
ideas
 Make best use of limited resources.