LECTURE ON

ENTREPRENEURSHIP
DEVELOPMENT & VENTURE
CAPITAL

Presented by :
Vikash Barnwal
Assist. Professor
K.K University
Entrepreneur
 The word “Entrepreneur” derived from
French word ‘entreprendre’, meaning, "to
undertake"
 In 18th we called creator
 An entrepreneur is an individual who

creates a new business, bearing most of the

risks and enjoying most of the rewards. The
entrepreneur is commonly seen as an
innovator, a source of new ideas, goods,
services, and business/or procedures.
Entrepreneur
Concept of entrepreneur
 An entrepreneur may
Classical Concept of entrepreneur
 Adam smith (1776)
describe an
entrepreneur as an
individual Who form an
organization for
commercial purpose –
who is capitalist
be defined as an
individual who intend
to add value to the
economy by creating a
new business venture
through effective use
of his
knowledge ,passion
dreams and desire.

Modern concept of
entrepreneur
 SME IDE
(SMALL AND MEDIUM
(INNOVATION DRIVEN
ENTREPRENEUR)
ENTREPRENEUR)

Entreprene
urship
Entrepreneur v/s entrepreneurship
Entrepreneur entrepreneurship

 An entrepreneur refers
 Entrepreneurship is
to a person who defined as the process
organize and operates of starting , executing
multiple business with the business activities
different goal and with various
takes financial risk. departments in the
business is known as
entrepreneurship
Definition
 Entrepreneur is an Innovator, wealth and job creator , Change
agent, Problem solver ,excellence seeker and add the value of
local resources. Entrepreneur is a combination of all these not
only one of these .
 According to Cantillon, “ an entrepreneur is the agent who buys
means of production at certain prices in order to combine them
into a product that he going to sell at prices that are uncertain
at the moment at which he commits himself to his costs.”
 According to J.B. Say: “The entrepreneur is the economic agent
who unites all means of production, the labour force of the one
and the capital or the land of the others and who finds in the
value of products his results from their employment
reconstitution of the entire capital that he utilizes and the value
of the wages, the interest and the rent which he pays as well as
profits belonging to himself.”
To be continue…
According to Joseph A. Schumpeter,
“entrepreneur as an individual who carries out
new combines of means of production by
which there occurs disequilibrium.”
Entrepreneurship
 In economics, entrepreneurship connected
with land labour, natural resources and
capital can generate a profit. the
entrepreneurial vision is defined by discovery
and risk taking .
Characteristic of entrepreneurship
 Ability to take a risk
 Innovation
 Visionary and leadership quality
 Open minded
 Flexible
 Know your Product
Ability to take Risk: Starting any new venture involves a considerable
amount of failure risk. Therefore, an entrepreneur needs to be
courageous and able to evaluate and take risks is an essential part of
being an entrepreneur.

Innovation- It should be highly innovative to generate new ideas, start

a company, and earn profits out of it. Change can be the launching of
a new product that is new to the market or a process that does the
same thing but more efficient and economical way.

Visionary and Leadership quality- To be successful, the entrepreneur

should have a clear vision of his new venture. However, to turn the
idea into reality a lot of resources and employees are required. Here,
leadership quality is paramount because a leader imparts and guides
their employees towards the right path of success.

Open-Minded- In a business, every circumstance can be an

opportunity and used for the benefit of a company. For example,
Paytm recognized the gravity of demonetization and acknowledged
the need for online transactions would be more, so it utilized the
situation and expanded massively during this time.
 Flexible- An entrepreneur should be flexible and
open to change according to the situation. To be on
the top, a businessperson should be equipped to
embrace change in a product and service as and
when needed.
 Know your Product-A company owner should be
the product offerings, and also the latest trend in
the market. It is essential to know if the available
product or service meets the demands of the
current market, or it is time to tweak it a little. Being
able to point on yourself and then alter as needed is
a vital part of entrepreneurship.
Importance of Entrepreneurship
 Creation of Employment
 Innovation
 Increase standard of living
 Support research and development
 Impact on society and community

development
•Creation of Employment- Entrepreneurship generates employment. It
provides an entry-level job, required for gaining experience and
training for unskilled workers.

•Innovation- It is the hub of innovation that provides new product

ventures, market, technology, and quality of goods, etc., and increase
the standard of living of the people.

•Impact on Society and Community Development- A society becomes

greater if the employment base is large and diversified. It changes
society and promotes facilities like higher expenditure on education,
better sanitation, fewer slums, a higher level of homeownership.
Therefore, entrepreneurship assists the organization in a more stable
and high quality of community life.
 Increase Standard of Living- Entrepreneurship helps to
improve the standard of living of a person by increasing the
income. The standard of living means, increase in the number
of consumption of various goods and services by a household
for a particular period.

 Supports research and development- New products and

services need to be researched and tested before launching in
the market. Therefore, an entrepreneur also dispenses
finance for research and development with research
institutions and universities. This promotes research, general
construction, and development in the economy
Difference between Manager and entrepreneur
Intrapreneurship
 The term intrapreneurship refers to a system that
allows an employee to act like an entrepreneur
within a company or other organization.
Intrapreneurs are self-motivated, proactive, and
action-oriented people who take the initiative to
pursue an innovative product or service.

 An intrapreneur is an inside entrepreneur, or an

entrepreneur within a large firm, who uses
entrepreneurial skills without incurring the risks as­
sociated with those activities.
Defination:
 Pinchot defined intrapreneurs as “dreamers who
do. Those who take hands-on responsibility for
creating innovation of any kind, within a business”.

 According to The American Heritage Dictionary

intrapreneur, means “A person within a large
corporation who takes direct responsibil­ity for
turning an idea into a profitable finished product
through “assertive risk-taking and innovation”.
 1. Creates new ventures – Giving birth to new businesses within the
existing organizations is the typical characteristic of an
intrapreneur.

 2. Innovates products/services – A tendency towards technological

leadership by way of continual innovation of products/services is
desirable on part of an intrapreneur.

 3. Innovates processes – Under fiercely competitive business

landscape, busi­ness processes need to be reinvented time and again
by the intrapreneurs for better efficiency, productivity, and quality.

 4. Proactive – Intrapreneurs attempt to lead rather than follow the

competitors through their pro-activeness.
 5. Risk-taking – Intrapreneurs have a risk-taking
attitude with regard to in­vestment decisions and
strategic actions under situations of uncertainty.

 6. Renews organizations – An intrapreneur is expected

to transform the orga­nizations through renewal of key
ideas on which they are built.

 7. Competitively aggressive – An intrapreneur has the

propensity to directly and intensely challenge his
organization’s competitors to achieve entry or to
improve position.
Entrepreneur v/s entrepreneurship
Entrepreneur
 An entrepreneur start up
own business using his
own ideas and resources
 Uses their own financial
risk
 Takes full responsibility
 Independent
 Reward go to
entrepreneur
 Risk is taken by
entrepreneur
Intrapreneur
 An intrapreneur is company
employee who is in charge
of looking for areas of
growth in the company
 Uses Organization`s
resources
 Faces lesser risk
 Dependent on the
entrepreneur
 Reward must go to company
 Risk taken by company
Types of entrepreneur
On the basis of function
 Innovative
 Imitative or Adaptive
 Fabian
 Drone
 Innovative entrepreneur: an innovative entrepreneur is one who
launches new products ,discovered new market setup new
business ,establish new method of production and restructures
the enterprises .they are aggressive in nature.

 Imitative or Adaptive entrepreneur: He simply adopts successful

innovation introduced by other innovators. These entrepreneurs
imitate the existing entrepreneurs and setup their enterprise in
the same manner. Instead of innovating, they just imitate the
technology and methods innovated by others.
To be continue

 Fabian entrepreneur: They are very cautious and skeptical while

practicing any change .their dealing are determine by custom
religion tradition and past experiences

 Drone entrepreneur: They are characterized by refusal to adopt

any change in production, technology or market. They seldom
survive long

Based on Development angle

1. Prime mover

2. Manager

3. Minor Innovative

4. Satellite

5. Local trading
 Prime mover: this entrepreneur sets in motion a powerful
sequence of development, expansion and diversification of
business.

 Manager: such an entrepreneur does not initiate expansion

and in content just staying in business.

 Satellite: this entrepreneur assumes supplier's and slowly

moves toward production enterprises.

 Minor innovator: this entrepreneur contribute to economic

progress by finding better use for existing resources

 Local trading:such an entrepreneur limit his enterprises in

local Market
Based on types of entrepreneurial business
 Manufacturing
 Wholesaling
 Retailing
 Service
 Manufacturing: an entrepreneur who run such a business actually
produces the product that can be sold using resources and supplies
example: apparel and textile

 Wholesaling: An entrepreneur with such a business sells products

to middleman.

 Retailing: An entrepreneur with such a business sells product

directly to the people who or consume them

 Service: An entrepreneur in this business sells service rather the

product.
10 Must Have Traits of a Successful Entrepreneur

1. Passion
2. Strong work ethic
3. Strong people skills
4. Determination
5. Creativity
6. Competitiveness
7. Self Starter
8. Open Minded
9. Confidence
10. Disciplined
 Passion: This is the most significant characteristic that every
entrepreneur has, and for obvious reasons. They are successful
because they love what they do.

 Strong work ethic: Entrepreneurs who are successful make sure that
they are always the one who is first to the office and the last one to
leave.

 Strong people skills: A successful entrepreneur is someone who has

excellent communication skills for selling the products to customers
and motivating the employees.

 Determination: The successful entrepreneurs are never greatly

impacted by the defeats they encounter. For them, failure is like an
opening for a success story, and hence, they try again and again just
till they get the success they are expecting.
 Creativity: One of the main aspects of creativity is the ability
to find a relationship between two unrelated situations or
events. They usually come up with the solutions of these
problems that are a combination of other things.

 Competitiveness: The number of companies formed are

increasing every month and every year, as every entrepreneur
feels that they can do a much better job than others.

 Self Starter: Every successful entrepreneur knows that if

something has to be done, it needs to be done by
themselves. Parameters are set by them, and they ensure that
the projects are following that path.
 Open Minded: those entrepreneurs that are successful or are
following others who have been successful, understand that
each situation and event is a business opportunity. There are
new ideas that continually come out regarding new potential
businesses, people skills, efficiency, and workflows.

 Confidence: A successful entrepreneur never asks the question

or keeps doubts in their mind about if they can succeed or if
they are even worthy of success. They are normally confident
enough that their knowledge and their know-how will help
them make their business idea a success.

 Disciplined: Successful entrepreneurs always focus their energy

on making the business work, and for eliminating the
distractions or obstacles to their goals.
MOTIVATION AND ENTREPRENEURSHIP DEVELOPMENT

 Motive refers to drive and motivation means drive to achieve a goal. Motivation
refers to the way in which urges, drives, desires, aspirations, and strivings or needs
direct, control or explain the behaviour of human beings.

 Motivation is related with human behaviour. Motivation is a complex phenomenon.

In general motivation is a psychological phenomenon as it is related to those factors
operating within the individual employee which compel him to act or not to act in a
certain way. These phenomena have been a subject of research by many people.

 Characteristics of Motivation

 1. Motivation is internal feeling of a person.

 2. Motivation is a continuous process.

 3. Motivation varies with person and time.

 4. Motivation may be positive or negative.

Entrepreneurial process
 Entrepreneurship is journey not the
destination.it is a process . all the successful
entrepreneur always like Bill Gate (Microsoft),
Warren Buffet (Hathaway), Steve jobs(Apple
computers), G.D Birla, Jamshedjee Tata . All
are follow this process
Process of entrepreneurship
Idea generation
 To generate idea, the entrepreneurial process to pass through
three stages
 Germination:
this is like seeding process , not like planting seed .its more
like the natural seeding.
Most creative idea can be linked to an individual interest and
curiosity about a specific problem or area of study
 Preparation:
• Once the seed of interest curiosity has taken the shape of a

focused idea, creative people start a search for answer to the

problem
 Inventors will go on for setting up laboratories, designers will

think of engineering new product ideas and marketers will

study consumer buying habits
 INCUBATION: This is stage where the entrepreneurial process
entered the subconscious intellectualization. The sub-
conscious mind join the unrelated ideas so as to find a
resolution.
 Feasibility study: Feasibility study is one to see if the idea can
be viable .it passes through two process

 Illumination: After the generation of idea ,this is the stage

when the idea is thought of as a realistic creation.

 Verification: this is the last thing to verify the idea as realistic

and useful application. it is concerned about practically to
implement an idea and explore its useful to the society and
the entrepreneur.
UNIT -2 ENTREPRENEURIAL ENVIRONMENT

The entrepreneurial environment is the aggregation of all

those external conditions and effects which affect the life
of living beings and development of entrepreneurship
Characteristics of entrepreneurial environment :
1. Integral part of human life
2. Regular contact with environment
3. A person is the product of environment
4. Controllable
5. Geographical areas
6. Its brings the challenges
7. Relationship with goal and function
8. Responsibility towards all elements
 Integral part of human life : the environment is the
aggregation of all the external conditions and effect, which
affect the life of human beings and development of
entrepreneuship.
 Regular contact with environment: it`s essential to keep you
self regular in contact with the environment, so that
knowledge about changes and happening in the environment
may be observed
 A person is product of environment: a person works basically
according to the environment ,whatever good or bad ,in
which gets birth and develop.
 Uncontrollable: the environment is uncontrollable since its
composition of such factor which are beyond the control of
the business like govt. policy ,statutory control etc.
 Geographical Area: An entrepreneur is capable to
control the internal environment like suppliers,
cosumer,employees, etc.but the external environment like
political economic, technical, statutory have a large
geographical areas, which increases and decreases the scope
of institution.
 It brings the challenges:
Nature of entrepreneuship
 Risk bearing capacity
 Ability to innovate
 Systematic life style
 Motivational activity
 Creation of resourcess
 Practise based knowledge
 Creative activity
 Management is tool of Entrepreneurship
 It is based on principal
Identification of opportunities
 To be a successful entrepreneur , one need to
be continuously innovating and looking for
opportunities to grow the starts up.

 Listen to your potential clients and past lead

 Listen to your customer
 Look at your competitors
 Look at industry trends and insight
Listen to your potential clients and past lead

Listen to your potential clients and past lead

 When you are targeting potential customer ,listen to their

needs, wants, challenges and frustration with your

industry.ths will help you to find opportunities to develop
more product and services . Its help in to understand the
target market and over come common objection.
Listen to your customer

 When you are talking to your customers listen what they are
saying about your company and industry. products and
services
 This valuable customer information will help you to identify
key business opportunities to expend and develop your
current product and services
 Look at your competitors
Analyzing your competitor help you to identify the key
business opportunities to expend your market , and reach
develop the product and services.
Look at industry trends and insight
Absorb yourself in industry and continually educate yourself
on the latest technique and trends.
Converting business opportunities
into reality
 It`s rather easy to set up a small business due to
availability of unlimited opportunities to suit every kind
of expertise, skill, budget
 A great deal of effort is required to run a small business
successful
 It has been observed that most entrepreneur fail to
manage their companies within the first few year.
 They may have exceptional dreams, strategies plans but
still failed due to various reason
 In order to become a successful entrepreneur one
should recognize his her mistake
5 simple idea to turn your business
into reality
 Draft a plan to turn your business idea into
reality
 Consider your financing
 Register your business
 Hire technical staff
 Advertise your business prior to launch
Causes of business failure
 Leadership Failure:
 Lacking Uniqueness and Value:
 Not in Touch with Customer Needs:
 Unprofitable Business Model:
 Poor Financial Management:
 Rapid Growth and Over-expansion:
Causes of business failure
 1.  Leadership Failure: Your business can fail if you exhibit poor
management skills, which can be evident in many forms. You will
struggle as a leader if you don’t have enough experience making
management decisions, supervising a staff, or the vision to lead your
organization
 2.  Lacking Uniqueness and Value: You may have a great product or
service for which there is strong demand, but your business is still
failing. It may be that your approach is mediocre or you lack a strong
value proposition. If there’s strong demand, you probably have a lot
of competitors and are failing to stand out in the crowd.
 3.  Not in Touch with Customer Needs: Your business will fail if you
neglect to stay in touch with your customers and understand what
they need and the feedback they offer. Your customers may like your
product or service but, perhaps they would love it if you changed this
feature or altered that procedure. What are they telling you? Have you
been listening? Or is the market declining? Are they even still
interested in what you’re selling? These are all important questions to
ask and answer. Maybe you’re offering a product or service that is
fallen well below trend.
 4.  Unprofitable Business Model: Akin to leadership failure is building
a company on a business model that is not sound, operating without
a business plan, and pursuing a business for which there is no proven
revenue stream. The business idea may be good but failure may
come in the implementation of the idea if there are no strategic
guidelines in place.
 5.  Poor Financial Management: You must know, down to the
last dime, where the money in your business is coming from
and where it’s going in order for your business to succeed.
Your business can also fail if you lack a contingency funding
plan, a reserve of money

 6.  Rapid Growth and Over-expansion: Every now and then a

business startup grows much faster than it can keep up with.
You open a website with a trending product and suddenly you
are inundated with orders you are not able to fill. Or perhaps
the opposite is true. You are so convinced that your product
is going to take the world by storm that you invest heavily
and order way too much inventory and now you can’t move it.
Startup and business incubator
 A startup is a young company founded by one or more
entrepreneurs to develop a unique product or service and bring
it to market. By its nature, the typical startup tends to be a
shoestring operation, with initial funding from the founders or
their friends and families.

 A startup is an entrepreneurial venture in search of enough

financial backing to get off the ground.

 The first challenge for a startup is to prove the validity of the

concept to potential lenders and investors.

 Startups are always risky propositions but potential investors

have several approaches to determining their value.
 A business incubator is a company that helps
new and startup companies to develop by
providing services such as management
training or office space.
 According to Allen and Rahman, “The universal purpose of a
business incubator is to increase the chances of a firm
surviving its formative years, but the business incubator also
adds value by maximizing the firms’ growth potential.”

 As per Allen, “A business incubator is defined as a facility that

provides affordable rent to new and small firms, shared office
and logistical services, and arranges business management
and financial assistance.”
Types of Incubation Services

 Following are the most common incubator services:

 (i) They help with business basics
 (ii) They provide Networking activities
 (iii) They provide Marketing assistance
 (iv) Incubators help in Market Research
 (v) They provide High-speed Internet access
 (vi) Incubators Help with accounting/financial
management
 (vii) They help in providing Access to bank loans, loan
funds and guarantee programs
 (viii) Incubators help with presentation skills
 (ix) They link to higher education resources
 (x) They link to strategic partners
 (xi) They provide Access to angel investors or venture capital
 (xii) They organize Comprehensive business training
programs
 (xiii) They act as Advisory boards and mentors
 (xiv) They help in Management team identification
 (xv) They help with business etiquette
 (xvi) They provide Technology commercialization assistance
 (xvii) They help with regulatory compliance
 (xiii) They provide Intellectual property management
Stages of Business Incubation

 The whole process of business incubation is broadly divided

into three categories:
 Physical Facility Support :This refers to the incubation service
provided within the physical facility.

 Networking Facilities : After the physical facility, business

incubators help the start-up with networking facilities so as
to grow the business.
 Support Services : Once the business is up and running, the
incubators offer various support services to the businesses in
order to run the business smoothly.
Incubators – Who are They?

 Economic development organizations

 Government entities
 Local colleges and universities
 For-profit ventures
 Trade associations
SMALL SCALE INDUSTRIES
Small scale enterprises
a small business or a small-scale enterprise is a business that
employs a small number of workers and does not have a high
volume of sales. Such enterprises are generally privately
owned and operated sole proprietorships , corporations or
partnerships.
 Example :
 tissue paper
 Bakeries
 Candles
 Water bottles
 Leather belt
 Small toys
 Paper Bags
Characteristics of Small Scale Industries

Ownership: Such units are generally under single

ownership. So it is a sole proprietorship or sometimes a
partnership.

Management: Both the management and the control

generally is with the owner/owners. So the owner is
actively involved with the daily running of the business.

Limited Reach: Small scale industries have a restricted

area of operations. So they meet local and regional
demand.
 Labor Intensive: These small scale industries tend to use
labour and manpower for their production activities. So
their dependence on technology is pretty limited.

 Flexibility: These units are more adaptable to their

changing business environment. So in case of sudden
changes or unexpected developments, they are flexible
enough to adapt and keep carrying on. Large industries
do not have this advantage.

 Resources: They use local and readily available resources.

This also helps the economy with better utilization of
natural resources and less wastage.
Setting up of a Small Business Enterprise

 Broadly, there are two types of people who establish small

enterprises.
1. people who want to take the advantages of opportunities
available. ( Entrepreneur by choice)

2. people who have no option for making a livelihood.

( Entrepreneur by compulsion)
steps involved in setting up a small business
enterprise.

 (i) Information Collection

 (ii) Information Organization
 (iii) Acquiring Required/Vocational Skills
 (iv) Financial Requirements
 (v) Market Assessment
 (vi) Provision for Crisis
 (i) Information Collection : The first step involved is to decide
which enterprise one wants to set up. This begins with collecting
information about the units already working in that field of
concern.
 (ii) Information Organization
 (ii) Information Organization: Having collected information about
enterprise concern, the prospective entrepreneur needs to
organize the same in an orderly and systematic manner to derive
the meanings from them.
 (iii) Acquiring Required/Vocational Skills : The third step is to
understand the need for upgrading one’s vocational skills if it is a
pre-requisite for your Small Enterprise Unit (SEU). The importance
of acquisition of required skills is justified by the statement that “it
is better to teach a man to fish than to provide him with fish
everyday”.
 (iv) Financial Requirements: The fourth step involved is
ascertaining the financial requirements for setting up a small
business enterprise. This is particularly important because
generally small entrepreneurs do not have their own funds.
Hence, they depend upon borrowed funds from family
members or relatives or friends or financial institutions.
 (v) Market Assessment:
 No business enterprise can be thought of without market.
Enterprise exists, survives and thrives because of market.
Production has no value or meaning if it is not sold
/marketed. Therefore, while planning for establishing a small
business enterprise, the prospective entrepreneur needs to
know who will buy his/her product.
 (vi) Provision for Crisis:
 The last but not the least step involved in setting up a
business enterprise is the preparedness to manage crisis
situations, if any. Yes, some may not consider it as a
necessary step because foreseeing any crisis and its handling
is simply an additional step.
Sickness of small scale industries

Industrial sickness is defined all over the

world as” An industry and company which
has , at the end of any financial
year ,accumulated losses equal to, or
exceeding, its entire net worth and also
suffered any cash losses in such financial
year and the financial year immediately
proceeding such financial year.
Symptoms of industrial sickness
 Decline in capacity utilization
 Shortage of liquid funds to meet short term financial
obligation.
 Non submission of data to banks and financial institutions
 Irregularity to maintain bank account
 Frequent breakdowns in plants and equipment
 Decline in quantity of product manufacture and quality
rendered.
 Decline in technical deficiency
 Frequent turnover of personnel in industry
 Delay or default in the payment of statutory dues such as
provident fund ,sales tax,excise duty
Causes of sickness in small scale
industry
There are two causes of sickness in small scale industries
 Internal causes
 External causes

 Internal causes of sickness:

 a) Faulty project selection
 b) Marketing problems
 c) Financial problems
 d) Production problems
 e) Personnel problems
 f) Others
EXTERNAL CAUSES

1. External problems relating to banks and other financial institutions:

 a) Under-financing by banks

 b) Over-financing by banks

 c) Delay in disbursement of loans

 d) Delay in detection of early symptoms of sickness

 e) Delay in decision and action to rehabilitate the unit.

 f) Others.

2. Sickness made by government:

a) Change in government policies
b) Delayed in payment of bills by the government departments 
c) Red-tapism by government officials
d) Others.
3. External problems:

 a) Raw-materials
 b) Power
 c) Marketing
 d) Labour
 e) Finance
 f) Others

4. Other external problems:

 
 a) Fire, flood, other natural calamities 

 b) Other family problems

 c) Social problems like strikes, bandhs, insurgents, extortions etc.

Remedial measures to overcome
sickness
 Identifying sickness at initial stage
 Improving infrastructure
 Technology up gradation
 Marketing assistance
 Government intervention
 training
 Identifying sickness at initial stage: Identifying and detection of the sickness at
incipient stage is the first and foremost measure to detect and reduce industrial
sickness.

 Improving infrastructure: infrastructure facility can be improved by setting industrial

estate, common testing centre

 Technology up gradation: :Fund may be provided by financial institution for

adoption of advance technology.

 Marketing assistance : Government and non government organization N.G.O come

forward for marketing the goods produced by the S.S.I.

 Government intervention : Periodic review of financial statement by government can

help to identify and prevent sickness at initial stage

 Training : A proper environment must created where an entrepreneur will be

educated and will have proper knowledge, skill and experience about internal and
external environment of businesses to compete with large scale industries and
multinational company.
 Lack of finance:weak equity base, poor utilization of assets,
in efficient working capital management ,absence of costing
Right Location for Your Business

 State: Income taxes and sales taxes vary greatly from state to
state, as do regulatory requirements. Is the state you live in
friendly to entrepreneurs? To the specific type of business
you want to run? Now might be the time to consider a move if
it isn't, or possibly to open your business in a nearby state if
you live near a state line.
 City: Rent and other costs, availability of labor, taxes,
regulations, and government economic incentives can also
vary greatly from city to city, even within the same state. Or
maybe a small town is the perfect spot for your business.
 Part of town: What kind of commute is involved? Is the part of
town consistent with the image for your business? Rent varies
greatly according to location
 Type of location: Do you need office space, retail space, or a
warehouse? Retail is generally the most expensive of the
three.
 .Location relative to streets, parking, and other businesses:
Do you need to be visible and/or easily accessible to
pedestrian and automobile traffic? Will being close to
businesses that draw a similar clientele help your business?
For example, a sporting goods store or health food store
might do very well next to a gym.
Factors to Consider in Choosing Your Location
 You: The space for your business has to work for you, or it won't work at
all. If a space doesn't feel right, find another place for your business.
Remember, you're the one who has to work there every day.

 Your customers: The space also has to work for your customers, or it won't
work. No customers = no business.

 Your employees: This issue may not be as critical at first, especially if you
don't have any employees yet. But the ability to attract and keep good
employees will be affected by your location.

 Strategic partners: While this may not seem like a big issue, the reality is that
strategic partnerships happen more easily when the partners are local to
each other. Why do you think that certain areas become hubs for certain
types of businesses, such as Silicon Valley for the tech industry?

 Potential investors or buyers: You may not even be thinking about that yet,
but potential investors looking at the long-term value of the business will
consider location as part of their financing determination.
 

 Facility requirements: Do you have any special needs, such as high

power consumption or specialized wiring? Do you need meeting
space, but only occasionally? You might consider a shared office
suite (often called executive suites) in that case

 Zoning: Many cities have strict zoning requirements that limit the
types of businesses that can operate in a space. Make sure your
business is even allowed there before you sign the lease!

 As you can see, a fully informed decision involves a fairly complex

matrix of issues. Determine your priorities, keep an open mind
about your options, and do your research to make one of the most
important decisions you'll make for your business.
 Cost: Most obviously, can you afford it? Also, consider whether your
customers and employees can afford it. For example, is there free parking
or is it expensive? Will higher rent cause you to charge higher prices to your
customers? That's not necessarily a bad thing, but it is a factor to consider.
What about taxes? Income taxes and sales taxes vary greatly from state to
state, county to county, and even between municipalities. The cost can also
be impacted by whether or not you buy or rent the property
 Convenience: Is it easy to find? Is parking close by? Consider your clients
and customers. If you're dealing with pregnant mothers and the elderly,
they may have a different concept of "convenient."
 Safety: This is an increasingly important issue for both customers and
employees. Is the parking close by and well-lit? Is there security on the
premises?
 Prestige: Would a downtown address add credibility? Will wealthy clients
favor a business in their own neighborhood? Some places even provide
virtual offices with prestigious addresses, such as Beverly Hills, Silicon
Valley, or Manhattan.
Motivation
 Motivation is the word derived from the word ’motive’ which
means needs, desires, wants or drives within the individuals.

 It is the process of stimulating people to actions to

accomplish the goals. In the work goal context the
psychological factors stimulating the people's behavior can
be - desire for money. success.
 According to Likert, “It is the core of management which
shows that every human being gives him a sense of worth in
face-to face groups which are most important to him….A
supervisor should strive to treat individuals with dignity and a
recognition of their personal worth.”
 “It is the stimulation of any emotion or desire operating upon one’s will
and promoting or driving it to action.”- Lillis:

 “Motivation implies any emotion or desire which so conditions one’s will

that the individual is properly led into action.”- Vance

Nature of Motivation:
 1. Motivation is an inner feeling which energizes a person to work
more.
 2. The emotions or desires of a person prompt him for doing a
particular work.
 3. There are unsatisfied needs of a person which disturb his
equilibrium.
 4. A person moves to fulfill his unsatisfied needs by conditioning his
energies.
 5. There are dormant energies in a person which are activated by
channelizing them into actions.
IMPORTANCE OF MOTIVATION
 Productive use of resources
 Increased efficiency & output
 Achievement of goals
 Development of friendly relationships
 Stability in workforce
 Good human relations
 Low absenteeism & turnover
 Good corporate image
MEANS FOR EFFECTIVE MOTIVATION
 Fair remuneration
 Job Satisfaction
 Job Security
 Fair promotions
 Congenial working environment
 Honest & competent leadership
 Efficient organisation,coordination & control
 Democratic management techniques
 Other techniques
THEORIES OF MOTIVATION
 Maslow hierarchy of needs theory
 Mc Clelland achievement motivation theory
 MC Gregor theory X & theory Y
MASLOW HIERARCHY OF NEEDS
THEORY
 CRITICAL APPRAISAL:
 Oversimplification of human needs and motivation
 Satisfaction of one need may not activate the next
level need
 The hierarchy of needs is not always fixed
 The need priorities may change with time
 It fails to take individual differences into account
 Needs are not the only determinant of behaviour
 Physiological needs- These are the basic needs of air, water, food, clothing
and shelter. In other words, physiological needs are the needs for basic
amenities of life.
 Safety needs- Safety needs include physical, environmental and emotional
safety and protection. For instance- Job security, financial security,
protection from animals, family security, health security, etc.
 Social needs- Social needs include the need for love, affection, care,
belongingness, and friendship.
 Esteem needs- Esteem needs are of two types: internal esteem needs (self-
respect, confidence, competence, achievement and freedom) and external
esteem needs (recognition, power, status, attention and admiration).
 Self-actualization need- This include the urge to become what you are
capable of becoming / what you have the potential to become. It includes
the need for growth and self-contentment. It also includes desire for
gaining more knowledge, social- service, creativity and being aesthetic. The
self- actualization needs are never fully satiable. As an individual grows
psychologically, opportunities keep cropping up to continue growing.
Mc Clelland
 1. Need for Achievement
Someone with a need for achievement would:
 Be motivated by achievement and the opportunity for

promotion.
 Have a strong desire to complete complex tasks, set

records, or do something not done before.

 Prefer it when results are under their control and based

on their effort rather than external factors.

 Like to receive regular feedback.

 Avoid high-risk and low-risk situations. Low-risk

situations offer no sense of achievement, and high-risk

situations are too much outside of their control.
 2. Need for Affiliation
 Someone with a need for affiliation would:
 Be motivated by achieving and retaining

acceptance as part of a group. They like to be

liked.
 Follow the social norms of an organization for

fear of rejection.
 Enjoy collaboration but dislike competitive

situations.
 Avoid high-risk and low-risk situations.
 3. Need for Power
 Someone with a need for power would:
 Want to be in charge of others.
 Enjoy winning and competition.
 Place a high-value on discipline.
 Enjoy having status and motivating others.
 Team members with very low power needs tend to be
subordinate and dependent. Conversely, people with very
high power needs can be rude, exaggerate their own abilities,
and want to control everything.
Entrepreneurial motivation
Entrepreneurial motivation is the process of
transforming an ordinary individual to a powerful
businessman, who can create opportunities and
helps in maximizing wealth and economic
development. It is defined as various factors
stimulate desires and activates enthusiasm in
entrepreneurs which make them attain a particular
goal. Entrepreneurship is the process of identifying
strengths and opportunities which help in the
realization of one’s dreams for designing,
developing and running a new business by facing
threats and risks effectively.
TECHNIQUES TO INCREASE
MOTIVATION
 NON-FINANCIAL  FINANCIAL
MOTIVATORS: MOTIVATORS:
 Recognition  Wages & Salaries
 Participation
 Profit Sharing
 Status
 Leave with pay
 Medical
 Competition Reimbursements
 Job enrichment  Company paid
insurance