Unit 1: Entrepreneurship Development

Perspective
By: Tulika Bansal
06/25/2020
To start with, a - Computer Engineering from NSIT
little about my - MBA (PGDM) from IIM Bangalore
background... - Professional Journey:
- Deloitte (Consultant)
- Lotus Forex (General Manager)
- Mercer-Mettl (Ops, Sales)
- CureFit (Strategy, Program Manager)
 ●
Lets know a bit Show of hands, how many students here want to start
something of their own?
about you… ● Show of hands, how many students here want to continue
running their family business?

● Show of hands, how many students here know any

Entrepreneur/ businessman personally?

● Other people who didn’t raise hands, what are your reasons
for opting for this class?

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What comes to your mind when you think about
these people in the picture?

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Most leaders display the following qualities…

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Introduction
• The word ‘entrepreneur’ immediately conjures up images of business tycoons like Jeff Bezos or traditional
businessmen like Ambani.
• Despite its current prominence, entrepreneurship still remains a rather vague concept.
• According to the dictionary the word “Entrepreneur” can be defined as “one who reorganizes and manages
only enterprise specially involving high risk”.

Do you guys agree/ disagree?

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Entrepreneurship – new definition
• Word “Entrepreneur” stems from French Verb Entreprendre – means “Undertake”
• Entrepreneurship is the process of creating something different with value by devoting the necessary time
and effort, assuming the accompanying financial, psychic, social risks and receiving the resulting rewards of
monetary and personal satisfaction and independence.

New Definition involves four aspects –

(a) The creation process
(b) Devotion of time and efforts
(c) Assumption of risks
(d) Rewards of independence, satisfaction, money.

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Common terms
• What do you think is the difference between Entrepreneur, Entrepreneurship and Enterprise?

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• So, what do you think are the advantages of Entrepreneurship? For the Entrepreneur and the nation.

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Advantages of Entrepreneurship
To an Individual
(a) Provides Self Employment for the entrepreneur
(b) Entrepreneur can generate employment for family and friends
(c) Entrepreneurship often provides an employment and livelihood for next generations as well.
(d) Freedom to use own ideas – Innovation and creativity
(e) Unlimited income / higher retained income – Bill Gates has risen to become richest in the world in a single life
time through entrepreneurship
(f) Independence
(g) Satisfaction - Although entrepreneurship is a challenging task but in most of the cases the rewards it gives are
much more than what one anticipates. It does not only reward an entrepreneur at financial levels but also on
individual level. It provides self-satisfaction to the entrepreneur.

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Advantages of Entrepreneurship
To the nation
(a) Provides larger employment – Entrepreneurs provide employment for self as well as other people and is source
of employment creation.
(b) Results in wider distribution of wealth – This is a logical sequel of above issue. Higher the employment,
greater the distribution of wealth
(c) Mobilizes local resources, skills and savings
(d) Accelerates the pace of economic development – Entrepreneurship is the govt’s one of the most trusted
vehicles for economic development. E.g. in the form of products or services or boosting the GDP rates or tax
contributions
(e) Contributed towards research and development system: Almost 2-3% of all innovations are due to the
entrepreneurs. Without the boom of inventions the world would have been a much dry place to live in. Inventions
provide an easier way of getting things done through better and standardized technology.

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Factors Favouring Entrepreneurship
1. Developed Infrastructure Facilities – Availability of infrastructure reduces the cost & efforts and improves
viability of projects through higher profit margins.
2. Financial Assistance – Easy availability of cheap funds is vital for promoting entrepreneurship.
3. Protective and Promotional Policies – Most of the entrepreneurship projects start very small and have no
resilience. They are extremely vulnerable to competitors, market, money markets, etc, for considerable time.
Favourable Govt policies shelter them from such vagaries.
4. Growth of Education – Science, Technology & Management – Growth of education is believed to be promoting
entrepreneurship. However, there are enough examples to suggest otherwise. A very large proportion of first
generation entrepreneurs are low educated. Take the case of Microsoft Chairman Mr Bill Gates or Reliance
Founder Mr Dhirubhai Ambani. (We also have Mr Narayan Murthy and Mr Ajim Premji to balance this scale). On
a wider spectrum, Kerala, the most literate state and West Bengal, another state high on literacy front, are least
entrepreneurial states where as Punjab, with 5 rank from bottom was top on entrepreneurial charts.

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Factors Favouring Entrepreneurship
5. Risk Taking Abilities – Risk taking ability is one of the pillars of entrepreneurial spirits.
6. Hunger for Success (Capitalistic View) – Fire in the belly and dreams of riches is what drives most
entrepreneurs on this risky path. Any person content with what he has would take the easier route of salaries job.
7. Environment/Culture Impact – Entrepreneurship is contagious. Communities like Punjabies and Marwaries are
historically entrepreneurial. They are known for seeking and exploiting business opportunities in most remote
areas. It is a culture that propels them. (Go to Pull_Factors )
8. Social Security – Social security acts as a safety net against failure of enterprise. Social security guarantees
basic ‘roti, kapada aur makan’ in case of failure. Entrepreneurial spirit of United States is born partly out of this
security.
9. Technical/Industrial Training Facilities – Industrial Training facilities on one hand generate skilled manpower
so vitally required for setting up enterprises while on the other hand they are also nursery for future entrepreneurs.
Among the educated entrepreneurs, a majority is product of technical institutes from IIT to ITI (Tier I to Tier III
institutes).
10. Globalization – Globalization has provided another avenue for business. Many dare devils have taken a head–
along plunge into this uncharted water and have written new success stories. 13
Who can be an Entrepreneur?
1. Who feels the need for achievement
2. Who can take moderate risks
3. Who possess skills in organizing
4. Who can capitalize on opportunities
5. Who has some financial strength – On his own or borrowed
6. Who has ability to work hard
7. Who has desire for responsibility
8. Who has a clear perception of probability of success
9. Who gets stimulation by feedback
10. Anyone – He can be male, female or even a Eunuch
11. Who does not have previous experience

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What makes a successful Entrepreneur?
1. The urge for achievement (most often monetary ambitions) – Most Important
2. Willingness to take moderate risks – (High risk takers are not entrepreneurs but gamblers).
3. Determination to win
4. Win– Win Personality
5. Ability to identify & explore opportunities
6. Analytical ability to take strategic decisions
7. Perseverance
8. Flexibility
9. Capacity to plan and organize
10. Preparedness to undergo physical and emotional stress
11. Positive self concept/Self Belief
12. Future orientation – Vision
13. Ethics and Values – Mission

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Are Entrepreneurs made or born?

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Questions?

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 Earning money is
easy and
spending is even
Importance of Entrepreneurship easier but
spending money
wisely is
• Creates wealth for nation and for individuals as well: All individuals who search difficult. Saving
business your resources
• opportunities usually, create wealth by entering into entrepreneurship. The wealth created and maximizing
by the same play a considerable role in the development of nation. The business as well as its potential is a
• the entrepreneur contributes in some or other way to the economy, may be in the form of huge challenge.
• products or services or boosting the GDP rates or tax contributions. Their ideas, thoughts, Unplanned
spending also
• and inventions are also a great help to the nation.
leads to
• 2. Provides employment to huge mass of people: People often hold a view that all those mismanagement
who do of terms of credit
• not get employed anywhere jump into entrepreneurship, a real contrast to this is that 76% and sales cycles,
of and ultimately
• establishments of new business in the year 2003 were due to an aspiration to chase a quick closure of
the entrepreneur
openings.
venture becomes
• This emphasizes the fact that entrepreneurship is not at all an encumbrance to an inevitable.
economy. 18
• What more is that approximately 34 million of fresh employment opportunities were
Entrepreneurship and Economic Development

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..So what does Entrepreneurship mean according to you?

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Entrepreneurship – Introduction
• Popularly the term ‘entrepreneurship’ refers to a process by which individuals launch and manage their
business and industrial enterprises.
• Entrepreneurship is also the process of creating something new, with value, by devoting the necessary time
and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting
rewards of monetary and personal satisfaction and independence.
• Entrepreneurship is often viewed as a function, which involves the exploitation of opportunities, which exist
within a market.
• Entrepreneurship is a role played by or the task performed by the entrepreneur.

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Entrepreneurship – Introduction (contd.)
• Entrepreneurship is the tendency of a person to organize the business of his own and to run it profitably,
using all the qualities of leadership, decisions making and managerial caliber etc.
• The term “entrepreneur” is often used interchangeably with “entrepreneurship”.

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Activity (5 mins)
• Consider an entrepreneur you know personally.
• Share 5-10 statements about what do you think makes that person an entrepreneur?

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Entrepreneurs
• Entrepreneurs are the ones who risk and invest their own capital into the business and industrial-ventures.
• The central task of the entrepreneur is to take moderate risk and invest money to earn profits by exploiting an
opportunity. For this (s)he must possess far-sightedness to perceive an opportunity so that he can exploit it
well in time.
• Hence, anyone who exhibits the characteristics of self-development, creativity, self-decision making and risk-
taking can be rightly called as a person with entrepreneurial traits.
• When these traits are exhibited by a person running a business he can rightly be called an entrepreneur.

Q. So, does the reverse also hold true? A businessman who does not take risks, or does not aim for self-
development, is not creative and one who cannot make a decision on his own. Can that person be called an
Entrepreneur?
Ans. No, this person cannot be rightly called as an entrepreneur.

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Entrepreneurs (contd.)
• Entrepreneurs usually are considered to bear risk while pursuing opportunities, and often are associated with
creative and innovative actions.
• In addition, entrepreneurs undertake a managerial role in their activities, but routine management of an
ongoing operation is not considered to be entrepreneurship.
• An individual may perform an entrepreneurial function in creating an organization, but later is relegated to
the role of managing it without performing an entrepreneurial role. In this sense, many small-business owners
would not be considered to be entrepreneurs.

Q. Can individuals within organizations (i.e. non-founders) can be classified as entrepreneurs?

Ans: Yes, as long as they pursue the exploitation of opportunities.

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Why do you think Entrepreneurship is important?

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Fill in the blanks:
1. Entrepreneurship is often viewed as a ……………… which involves the exploitation of opportunities, which
exist within a market.
2. Entrepreneurship is the …………………. of a person to organize the business of his own and to run it
profitably.
3. Entrepreneur must possess ……………………. to perceive an opportunity so that he can exploit it well in time.
4. Individuals within organizations can be classified as entrepreneurs since they pursue the exploitation of
……………………
5. Entrepreneurship provides opportunities of employment to huge mass of ………………..
6. The entrepreneur not only become self-sufficient but also provide great …………………
of living to its employees.
7. It does not only reward an entrepreneur at financial levels but also on …………….. level.
8. The individual goes through a ………………….. process when he becomes an entrepreneur.

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Questions?

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• Successful new business ventures and economic development do not just happen. They are the result of the
• combination of right environment, planning, effort, and innovation. And this right mix can only be achieved
by the
• entrepreneurs. They provide a clear blueprint for stimulating research, technology, finance to help promote
matured
• enterprises. At the same time, they enrich the eco-system and give a boost to economic growth. Economic
growth
• refers to an increase in a country’s production or income per capita, with economy’s total output of goods and
• services being measured by Gross National Product (GNP). At the present juncture, the country needs much
more
• than growth. Economic development, on the other hand, goes beyond economic growth to include changes in
output,
• distribution and economic structure, which may affect such things as improvement in material well-being of
the poor,
• technical breakthrough, increase in economic activities, increase in the educational level and improvement in 29
health.
Contributing Factors
• The factors contributing to economic development are labour, technology, natural resources, capital and
entrepreneurship. New business
• formation is the result of harnessing human skills with the developed technology, added by available capital
as well as other infrastructure to set in
• a development process. The key factor in this development process is the entrepreneur. This is the forte of the
entrepreneur whose policies and
• strategies cover such broad areas as production, marketing, financing, pricing and personnel relations. The
growth of entrepreneurship largely
• depends upon effective policies and their efficient implementation.
• Whose contributions as an innovator and coordinator will go towards the economic development of the
country. Thus entrepreneurship is the
• coordination of the production elements.
• Entrepreneurship management is basically concerned with the development, and coordination of
entrepreneurial functions. An effective 30
• organisation, sound planning, proper coordination of business activities and rational decision-making are the
Entrepreneurship ecosystem

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Culture
• There is always an Entrepreneurial spirit. In every community, locally or globally, it exists, although there
might be hard to see, or have a dent in it. You need to search out the places where entrepreneurs hang out to
encourage and support each other. You will find them in local markets where there is a small coffee shop,
small retail shop, chambers of commerce, or trade shows. Stay away from those that discourage you from
doing anything because of the perceived barriers you will face.
• Culture is affected by a lot of things, such as education, environment, policy and other factors. Today, the
infrastructure of a city or a country may drive people away from entrepreneurship — because we want
everyone to stay in their lane, follow the rules and regulations we’ve created.
• Some of the schools and teachers have found ways to expose students to entrepreneurship by offering classes,
bringing in guest speakers, or creating an environment in which entrepreneurs and students can interact and
further develop a business idea.
• Developing a culture takes a minimum of 5–10 years. To get started, you might want to think about the
balance betweenIf results
you color
and outside
long-termthe lines, you fail in art class. If you
vision.
step outside the prescribed career choices, you
become a challenge to the establishment.
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Markets
• There may initially be only a small market in the field in which you are launching or growing your business.
There might be some major players, some small players, but there are always other players. Acknowledge
them, be aware of them, and never say they don’t exist. If you say “No one else is doing this,” everyone
hears, “I have no clue what I am talking about.” There is always someone doing it, and doing it a bit
differently than you.
• If you go after the whole market — if you say or think things like “I’m going to sell bottled water, therefore
everyone is my customer,” you have fallen into a bottomless trap. It is simply not true that everyone you see
is a prospect.
• Certainly everyone is welcome to buy your water, but you need to think about who you are targeting.
• Let’s be specific and assume your bottle of water will sell for $1. There will be people who say that is too
expensive, and some who say you should be charging more. There will be those willing to pay, and some who
never drink water, or only drink a certain brand.
• You can call me crazy, but my goal is to get you re-thinking your assumptions and to be realistic in your
approach. What you will learn is the more specific you are about your customer, the bigger your market
becomes and the less specific, the bigger you think it is, the smaller market share you will capture. 33
• If you have to tell people “Everyone buys my water,” it is likely no one will buy it. But if you say
Human capital
• While it is important and vital that you have talent in your physical location, in today’s internet world you
can leverage talent that is virtual.
• Human capital includes skilled and unskilled workers, serial entrepreneurs, members of your extended
family, educated and uneducated. Talent is represented in many ways other than than traditional employment.
Talent can be in the form of internships, mentor-ships, coaches, biz advisors, peer-to-peer learning, part time
employment, contractors, and so on. It is important for the ecosystem to have the individuals AND attract
them. This can happen in several ways — first a mind-shift in the community, from traditional employee-
employer relationship, to the “gig” economy, which means people or persons having a job like a singer would
have a gig.
• It might be short term or long term, or performing in multiple places. Consider alternatives to staffing your
company other than the traditional relationship of employee/employer. This also requires that you respect the
rules, laws and regulations that come with, such as knowing how to ask for time and when, how to work with
the time they give you.

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Finance
• While finance can mean many things to many people, here we mean the accessibility of money. Many times
you don’t need funding, what you need is customers.
• Funding can happen in different ways. Throughout our global experience we see entrepreneurs seeking
funding, and we also see funders looking for good entrepreneurial ideas. There is always a healthy discussion
to challenge what entrepreneurs think or what funder’s think. Funding can come in the form of micro loans,
from angel investors, friends & family, venture capitalist, private equity, and of course, IPO.
• Many times the best funding comes from your customers. In today’s world, crowd funding can be a tool as
some countries or states might allow certain forms of it. Crowd funding can raise funds from your customers
in multiple ways. One is cash in exchanged for a product or service, another would be cash as a donation to
get started, and third cash for equity in your company. Remember to check local, state, and federal laws.
• The assumption that you have access or will have access to money gives entrepreneurs the courage to take the
risk to move forward. You don’t want to wait for funding to happen to take the first step to getting the
business moving. Always ask for enough (but not too much) money for your Runway. Think of the airport —
there is a limit to the length the runway should be — not too short, not too long, but you must maintain it.
Maybe you need XX, but can’t handle the payments in the end. 35
Supports
• Incubators, accelerators, conferences, legal advice, Support groups or agencies are readily available. Learn
how to leverage them. It’s not what you think you need, it’s what you can leverage.
• Business planning, technical training, and knowing how to use these resources is actually a skill you will
learn with time. Going to an organization that supports you learning how to write a business plan will do you
well if you are ready to draft your own plan. Don’t expect them to do it for you.
• Knowing when to use support and for what purposes is the key. And accepting the support can be challenging
because many entrepreneurs want to break all the rules, while the support systems want to establish all the
rules. There must first be a meeting of the minds.
• Finding the right people within the support organization is key. At the end of the day it’s not what or who you
know, it’s about who knows you doing what and connecting you to the right people or opportunities or
organizations.

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Policy
• Sometimes you have no control over the policies that impact your business, but you should be aware of them,
and you can lobby for or against them.
• Sometimes knowing how to word your business practice can help you mitigate the policies already in place.
Policy also comes from leadership. If it is missing in the community, you may have to take the risk of setting
the business up in a way that creates policies around you.
• A policy may allow angel investors to invest in startups or businesses. That creates the opportunity for
finance to be fostered within the community. That, in turn, promotes the culture of entrepreneurship that leads
to support from various organizations, which helps the funds go through, that might require human capital
such as mentor, advisors, and others to be engaged in this business, that might create the market for importing
or exporting via the policy that was initiated. As illustrated above, the ecosystem is circular!
• Of course, you should always consult with legal counsel on local and regional policy that could impact your
business. Sometimes culture can override policy.

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38
• Overnight package delivery-service allow companies to get parts from nearly anywhere within a day or two;
so, they don't
• necessarily need supplies to be nearby. Highspeed, low-cost communication systems link companies to
offices anywhere in
• the world, giving even small or remote communities opportunities to compete. Therefore, just as the
acquisition and application
• of knowledge will differentiate winners from losers in business, the adoption of a global outlook will mark
those communities
• and individuals who thrive in the next century. In addition to bringing jobs, any business moving into a
community is also
• likely to bring new services, technologies, and equipment that can help it grow. And cosmopolitans who
come to a community
• can help raise the standards of schools, government, public services, and its businesses.
• In 1990, six people threw up their jobs and set out to form a venture which would provide anything and
everything 39
• required in the infotech arena. Under the banner IT&T, the company’s activity termed ‘facilities management’
Importance of Entrepreneurship
• It is a challenging opportunity for the people: Although entrepreneurship is a challenging
• task but in most of the cases the rewards it gives are much more than what one anticipates.
• It does not only reward an entrepreneur at financial levels but also on individual level. It
• provides self-satisfaction to the entrepreneur.
• 5. Entrepreneurship provides self-sufficiency: The entrepreneur not only become
• self-sufficient but also provide great standards of living to its employees. It provides
• opportunity to a number of people working in the organization. The basic factors which
• become a cause of happiness may be liberty, monetary rewards, and the feeling of
• contentment that one gets after doing the job. Therefore the contribution of entrepreneurs
• makes the economy an improved place to live in.
• 6. Sky-scraping heights of apparent prospect: The individual gets maximum scope for growth
• and opportunity if he enters into entrepreneurship. He not only earns, the right term
• would be he learns while he earns. This is a real motivating factor for any entrepreneur as
• the knowledge and skills he develops while owning his enterprise are his assets for life
• time which usually, lacks when a person is under employment. The individual goes 40
• through a grooming process when he becomes an entrepreneur. In this way it not only