ENTREPRENEURSHIP

LECTURE NOTES 1

Prepared By Mr. Rahim

Introduction
DEFINITIONS
Entrepreneur (Oxford Dictionary) – Person who undertakes an enterprise
with chances of profit or loss. (As I have understood, Entrepreneur is a
person who undertakes a business activity of which he has no background
and faces considerable risks in the process. If either of the two elements,
i.e., “no background” or “considerable risk” is missing in the venture, it is
no entrepreneurship).

Entrepreneur – (New Encyclopedia Britannica) – An individual who bears

the risk of operating business in the face of uncertainty about the future
conditions. Common Meaning – one who starts his own, new and small
business

Entrepreneurship – It is a philosophy or process through which an

entrepreneur seeks innovation and employment.

Prepared By Mr. Rahim

 Introduction
Historical Evolution & Definition of Entrepreneurship
Entrepreneur Entrepreneurship Enterprise
Person Process or Philosophy Object
Entrepreneurship can also be described as a creative and innovative response
to the environment.
History of Entrepreneurship (Entrepreneurship Theories)
1600 – French verb – Entreprendre – to undertake.
1700 – Person bearing Risk or Profit in a fixed price contract (Risk)
1725 – Richard Cantillon – Person bearing risks is different from Capital
Supplier (Risk)
1803 – J. B. Say – Shifts economic resources out from an area of lower to
higher productivity & greater yields (Value Addition)

Prepared By Mr. Rahim

1934 – Joseph Schumpeter – Innovator and develops untried technology
(Productivity & Innovation)

1961 – David McClelland – Highly motivated, energetic, moderate risk

taker (Need for achievement)

1964 – Peter Drucker – Searches for change, responds to it & exploits as

opportunity (Opportunity Focused)

1980 – Karl Vesper – Behaviour Perceptions– Economists, Psychologists,

Businessmen, Politicians (Environment)

1983 – Gifford Pinchot – Intrapreneur

1985 – Robert Hisrich – Creating something different with value, devoting

time & effort, assuming risks (FPS); results– rewards and satisfaction
(Leadership & Vision)
Prepared By Mr. Rahim
Introduction
History of Entrepreneurship Cont…
However, the most substantial research into entrepreneurial theory was
achieved in the 20th century, under the tutelage of Joseph Schumpeter,
who claims that the entrepreneur has a creative destruction innovation
by replacing destroying an existing economy by a better, advance one.

Where some of the entrepreneurships emerged as a result of innovation

based on new products, others were merely an expansion of existing
businesses in markets that now showed areas of growth.

For instance, railroads and shipping, cargo, transport; factors that

became intertwined with growth in commerce during the late 18th
century and early 19th century.

Prepared By Mr. Rahim

Introduction

Note Well:
Please note that key word in Entrepreneurship is RISK. Any
venture where risk is mitigated due to any reason does not qualify
to be called entrepreneurship. Entrepreneurs are people who
create new business activity in the economy and bear considerable
business risk in the process. This is often done by starting new
companies. But they can also create new business activity by
introducing a new product or creating a new market

Prepared By Mr. Rahim

Introduction
How do you define an entrepreneur in the 21s t Century?
An entrepreneur of 21st century is a customer focused innovator.
He uses e– knowledge. Advantage is speed. He is a global thinker
even though he may not necessarily be a global player.

Standard (New) Definition

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. Word “Entrepreneur” stems from French Verb
Entreprendre – means between; taker or go between.

Prepared By Mr. Rahim

Introduction
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.

Prepared By Mr. Rahim

Introduction
Definition of Entrepreneurship
Entrepreneurship is a dynamic activity which helps the entrepreneur
to bring changes in the process of production, innovation in
production, new usage of materials, creator of market etc. it is a
mental attitude to foresee risk and uncertainty and do something
new in an effective manner to achieve certain goals.

An entrepreneur is an economic change agent with knowledge,

skills, initiative, drive and spirit of innovation to achieve goals. He
identifies and seizes opportunities for economic benefits. He is a
risk bearer, an organizer and an innovator.

Prepared By Mr. Rahim

Introduction
Definition of Entrepreneurship Cont…

Who Are Entrepreneurs?

The word „Entrepreneur‟ has been taken from the French word. It
means Between Takers. Entrepreneur is another name of Risk
Taker.
An entrepreneur is an individual who takes moderate risks and
brings innovation. Entrepreneur is a person who organises/
manages the risks in his/her enterprise. “Entrepreneur is a
individual who takes risks and starts something new”

Prepared By Mr. Rahim

Introduction
Definition of Entrepreneurship
According to J.B.say, “Entrepreneur is an Economic agent to unites all the
means of production”
An entrepreneur is an individual who takes moderate risks and brings
innovation.

An entrepreneur is a person who has possession of a new enterprise,

venture or idea and assumes significant accountability for the inherent
risks and the outcome.
An entrepreneur is "one who undertakes an enterprise, especially a
contractor, acting as intermediately between capital and labour."
Some facts about entrepreneurs and entrepreneurship:

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.

Prepared By Mr. Rahim

Introduction
Definition of Entrepreneurship
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.

Prepared By Mr. Rahim

Introduction
Successful Characteristics of Entrepreneurs

ENTREPRENEURIAL CHARACTERISTICS
Being an entrepreneur requires specific characteristics and skills that are often
achieved through education, hard work, and planning.
Risk Taker
Businesses face risk. Entrepreneurs minimize risk through research, planning, and
skill development.
Perceptive
Entrepreneurs view problems as opportunities and challenges.
Curious
Entrepreneurs like to know how things work. They take the time and initiative to
pursue the unknown.
Imaginative
Entrepreneurs are creative. They imagine solutions to problems that encourage them
to create new products and generate ideas.
Persistent
True entrepreneurs face bureaucracy, make mistakes, receive criticism, and deal
with money, family, or stress problems. But they still stick to their dreams of seeing
the venture succeed.

Prepared By Mr. Rahim

Introduction
Successful Characteristics Cont…
Goal-setting
Entrepreneurs are motivated by the excitement of staring a new business.
Once achieved, they seek out new goals or ventures to try.
Hardworking
Entrepreneurs need a great deal of energy to see a venture start and
succeed. Yet they are not deterred by the long hours to achieve their goal.
Self-confident
Entrepreneurs believe in themselves. Their self-confidence takes care of
any doubts they may have.
Flexible
Entrepreneurs must be flexible in order to adapt to changing trends,
markets, technologies, rules, and economic environments.
Independent
An entrepreneur’s desire for control and the ability to make decisions often
makes it difficult for them to work in a controlled environment.

Prepared By Mr. Rahim

Introduction
Types of Entrepreneurs

Prepared By Mr. Rahim

Introduction
Types of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Types of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Nature and Scope of Entrepreneurship

Prepared By Mr. Rahim

 Introduction
Nature and Scope of Entrepreneurship
Scope of Entrepreneurship
Individuals are opting for entrepreneurship as a career due to reasons such
as –
Desire of control over one’s future
More profits
Lack of employment opportunity
Government measures to promote entrepreneurship
Entrepreneurship provides employment and source of earning to
people. It helps in reducing the monopoly of the rich businessman and
achieving a balance regional development and growth in the economy.
Governments should conduct development programs to identify
entrepreneurial potential and assistance from financial and non-
financial institutions are being provided to entrepreneur.
Entrepreneurship training institutes should be establishes and financial
and operational support be provided to young entrepreneurs.

Prepared By Mr. Rahim

Introduction
Process of Entrepreneurs

Prepared By Mr. Rahim

Introduction
Process of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Process of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Process of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Barriers of Entrepreneurs

Prepared By Mr. Rahim

Introduction
Barriers of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Barriers of Entrepreneurs Cont…

Prepared By Mr. Rahim

Introduction
Barriers of Entrepreneurs Cont…

Prepared By Mr. Rahim

 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.
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.

 
 
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
Introduction
Risks associated with entrepreneurship activities
The following are risks that every entrepreneur must take, from ideation to
ongoing development:

Financial risk versus profit (return) motive varies in

entrepreneurs’ desire for wealth.
Abandoning the steady paycheck.
Sacrificing personal capital
Relying on cash flow.
Career risk—loss of employment security
Family and social risk—competing commitments of
work and family
Psychic risk—psychological impact of failure on the
well-being of entrepreneurs

Prepared By Mr. Rahim

Introduction
Risks Cont…
Estimating popular interest.
Trusting a key employee.
Betting on a crucial deadline.
Donating personal time (and health).

Prepared By Mr. Rahim

Introduction

The End

Thank you
Prepared By Mr. Rahim