Entrepreneurship Identifying Myths and Bridging the Gap

between Failure and Success

Vishwa Ratna Nigam
PGPM Student,
Mobile- +91 9884448612
Great Lakes Institute of Management,
Chennai
vishwa.pgpm15c@greatlakes.edu.in

Debeshi Sur
PGPM Student
Mobile- +91 9176664239
Great Lakes Institute of Management,
Chennai
debeshi.pgpm15c@greatlakes.edu.in

Abstract

Entrepreneurship has emerged as a new trend and increasing number of youngsters want to
become an entrepreneur today. However a number of myths associated with entrepreneurship
often mislead those who aspire to start their own ventures. Some of these myths scare
individuals away from entrepreneurship, while some others make individuals dive into
entrepreneurship without knowing how far they are from reality. People often do not realize
that to become a successful entrepreneur, they first need to understand the need of their
customers that they are going to address, and that they have to address it better than their
competitors to survive. For this, they need extensive research and domain knowledge, without
which they will fail miserably. Coupled with this, they also have to be flexible to the changing
needs of the market they are catering to, and change their ideas accordingly if needed.
However no venture can succeed without a proper entrepreneurial ecosystem that supports
innovation, ideation and change. To increase the success rate of new ventures, there needs to
be a change in the mind-sets of the people, along with changes in the education system and
official infrastructure.
Keywords: Closed economy, Entrepreneurship, Opportunity cost, Innovation, Lifestyle, Selfemployment, Timeline.
Introduction
Entrepreneurship is the process of starting a business or other organization.
The entrepreneur develops a business model, acquires the human and other required
resources, and is fully responsible for its success or failure. Entrepreneurship operates within
an entrepreneurial ecosystem. The concept of entrepreneurship was initiated in the 1700s, and
the meaning has evolved ever since. Different experts have different opinions and definitions
for
entrepreneurship.
Some economists say "the entrepreneur is one who is willing to bear the risk of a new venture
if there is a significant chance for profit." Others defined the entrepreneurs role as an
innovator who sells his innovation. Some other economists say that entrepreneurs develop
new goods or processes that the market demands and are not currently being supplied.
In the 20th century, economist Joseph Schumpeter focused on how the entrepreneurs drive
for innovation and improvement creates upheaval and change. Schumpeter viewed
entrepreneurship as a force of creative destruction. The entrepreneur carries out new
combinations, thereby helping render old industries obsolete. Established ways of doing
business are destroyed by the creation of new and better ways to do them.
Business specialist Peter Drucker explained this idea in a better way, describing the
entrepreneur as someone who actually searches for change, responds to it, exploits change as
an opportunity and ready to take risk. See the changes in communicationsfrom manual
typewriters
to
personal
computers
to
the
Internet.
Most of the experts, now a days agree that entrepreneurship is a compulsory formula for
stimulating economic growth and creation of employment opportunities in any country
irrespective of the wealth of the country. In the under developing and the developing world,
small businesses are the major engine of job creation, Income growth, and poverty
alleviation.

The Gap between Expectations and Reality (the Indian context)

India has one of the fastest growing economies in the world. It also has a significant youth
population. However India is yet to tap the entrepreneurial talent of its people. At a glance,
you wouldn't think India has a problem. Entrepreneurs have consistently contributed to the
country's vibrant growth-oriented economy since its economic liberalization in 1991.
Entrepreneurship has become increasingly important in sustaining India's rapid growth.
However a 2011 Gallup study of 20 economic entities in Asia showed that India ranked in the
bottom quartile on several important indicators of a well-functioning entrepreneurial
ecosystem.
Entrepreneurial activities are an outcome of the interplay between individual variables (like
talent and attitude) and contextual variables (like role of Government and access to
information).Industry research shows that the key barrier to current and aspiring
entrepreneurs is the lack of a robust support system. External factors like Government
support, culture, social capital and access to training are key hindrances for budding
entrepreneurs. The Indian society still puts tremendous pressure on the youth to get secure
well-paying risk free jobs instead of getting into risky ventures. Indian Education System
is an even greater barrier for entrepreneurship, as it destroys the ability of Indians to innovate
through rote learning. The Indian Government still does not have sufficient policies and
framework in place to help entrepreneurs raise equity capital, avail raw materials and hone
their entrepreneurial skills through proper mentoring and networking.
Costly Myths preventing budding entrepreneurs from succeeding
A number of myths surrounding entrepreneurship prevent individuals with potential from
testing the waters, or even worse, doing things the wrong way. Entrepreneurship success rate
is very low. Normally people have their own perception for entrepreneurship. Some of the
perceptions are over optimistic that drive them towards entrepreneurship without proper
planning and some perceptions are over pessimistic that scare people away even if they have
the idea and the ability.
Lifestyle
People normally think that starting a business is easy and entrepreneurs have very lavish life
styles. Movies and serials create the perception in their minds that entrepreneurship is all
about attending board meetings, having power lunches and residing at 5 star hotels. The truth
is that entrepreneurship requires real, grueling hard work in the initial period for about 2-3
years, before one can even think of leading a luxurious life. More often than not
entrepreneurs have to deal with skepticism from peers for leaving a prestigious or cushy job,
and pursuing something that may have no future at all. Entrepreneurs have to be strong
(physically and mentally) to deal with the struggle of the initial years, and to handle the peer
pressure.
Entrepreneurial Personality
People often think that to excel as entrepreneurs, a certain kind of personality is required. A
very common misconception people have is that entrepreneurs are risk takers taking wild

uncalculated risks. However that is not really true. It is possible to take calculated risks while
starting a venture and operate, without having to put your house and car on loan. Many
people are afraid of starting their businesses in the fear that they are not the entrepreneurial
type and they will not survive the journey. Any person can become an entrepreneur by
taking calculated risks. However, what people need to realize is that if a person likes the
comfort and security of a regular 9 to 5 job, he/she needs to rethink her entrepreneurial
aspirations, as in the initial years, there is no security or comfort in setting up a new venture.
Identifying Need of Becoming an Entrepreneur
Most of the people, who plan to or do enter into entrepreneurial activities, are not very sure of
their needs and capabilities. The most common myth is mistaking self-employment for
entrepreneurship. People, who just want to work for themselves and have domain expertise,
but are not very well in handling big teams, are more suitable for self-employment. The
problem arises when people mix self-employment and entrepreneurship or dont plan
properly, and fail miserably while expanding to entrepreneurship.
Financial Requirement
People have the belief that it takes a lot of money to finance a new business, which is often
not true. Amount of investment depends solely on the nature of business, and it is very much
possible to start many ventures, usually service-related, with as little as 10,000 INR.
Opportunity Cost
Starting own venture has a high opportunity cost associated with it too. Normally people after
completing management or engineering degree think about starting something of their own.
Some go ahead and start but most of them stop after seeing a handsome salary as opportunity
cost.
Closed Economy and Timeline mismatch
If we take the example of India, Indians are still not comfortable taking loans and starting
their own businesses. However, banks are one of the primary sources of getting funds for
start-ups that are 2 years or younger. Although things have changed in last one decade but
still the closed economy mindset dominates. After getting a graduation and post-graduation
degree, Indians are typically in the age bracket of 24-26 years. While weighing the option of
having a safe job on one hand and new venture (starting on ground zero) on the other, the
former option seems pretty lucrative to them as they need to get married, settle down and
support their family. What they do not realize that it is perfectly possible to start a revenue
generating venture that they are passionate about, without losing all their savings. Also
Indians still have the perception that only individuals coming from business families can
become successful business men/women. With scores of first generation entrepreneurs all
over the world, its time for that perception to change.

High Tech Invention

Its still a myth that most entrepreneurial journeys start with a breakthrough invention. A
unique product or a radically new process is not a necessity for building a successful

enterprise. Especially in an emerging market like India, where there are numerous options of
filling various demand and supply gaps of consumers, entrepreneurs do not need to have a
dazzling technical innovation.
Gap between Innovation and Solution
Some of the budding entrepreneurs come up with good innovation but they are unable to
understand customer requirements and need for the particular product or services. This gap
becomes a major reason for failure. According to a venture capitalist, most of the ideas
presented to him are half baked. They are innovations but they dont pass the customer
validation test. Hence they are not a feasible solution to the problem in hand.
How to Fill the Gap
With the growth of entrepreneurship, the situation is changing, but a critical question that
budding entrepreneurs often fail to answer is- Why do they want to become an entrepreneur.
According to survey conducted on 50 management and 50 non-management graduates,
results show that people are not very sure about their motives of becoming an entrepreneur.
Table: Showing MBA Responses

Reasons to become entrepreneur

MBA Response
17
13
9

8
3

I don't want to work under others

Source: primary research conducted by the authors

Table: Showing Non-MBA Responses

Reasons to become entrepreneur

Non-MBA Response
16
13

12

I don't want to work under others

Source: primary research conducted by the authors

The first step towards entrepreneurship should be the knowledge of why one wants to become
an entrepreneur and whether entrepreneurship is the solution to ones problem.
Entrepreneurial approach Vs Entrepreneurship Vs Self Employment
One should understand the difference and similarities among entrepreneurial approach,
entrepreneurship and self-employment. Based on the survey results, people who cant work
for and under other people, who want to decide their working hours and who want to work
for themselves can become self-employed. Those, who have no problem in working with
others and have good ideas but are not willing to take risks, can try having an entrepreneurial
approach inside their organization only. This is very major point- difference between
entrepreneurial approach and entrepreneurship. For example- There are two persons, one is
type A- having an entrepreneurial approach and other is type B- having the abilities of
entrepreneurship. Both have good ideas related to their fields and want to implement them.
Let us assume that both have viable and sustainable plans. Type A person creates a business
plan and showcases it to higher authorities of his/her organization. His plan gets selected and
he gets opportunity to head that segment with some equity share in that division. Type B
person goes ahead with his/her idea and implements it in small measure, and after getting
success, he attracts some investors or funding ventures and then he expands. In both the cases
the involved persons are getting good returns and a have a hold or authority over their ideas.
The difference is that type A person doesnt want to take risk. So, he goes ahead with a safer

alternative but type B person is more of a risk taker and he opts for a riskier alternative. So, it
depends on the personality type and each persons need of becoming an entrepreneur.
Opting for Entrepreneurship over Entrepreneurial Approach
As we have shown in the data- most of the start-ups dont touch success, people involved in
those start-ups have to suffer the burden. Reasons for the failure include - having the idea and
not having full knowledge of the domain, not having done full market research and scarcity
of resources. All these factors lead to failure of an idea because in todays competitive
market, an idea cannot work by itself if it is not properly implemented. Sometimes start-ups
face difficulty even after going smooth for some years and it is hard for them to expand and
even harder to increase profits without expansion. For example Speakwell, English training
centre, was doing well for 2 years and earning good profits. However it is now facing
difficulties in expansion and according to a co-founder, even after training 80,000 people in 4
years and having good cash inflow it is not having a smooth run now.
One thing most of the new entrepreneurs fail to realize is that a person can pursue his/her
entrepreneurial ambitions by being part of an entrepreneurial organization. Many new age
businesses have a start-up environment that supports innovative ideas from their employees.
If a person has a long association with an organization that has catapulted him/her to a
position with authority, he/she can implement new ideas or processes within the scope of the
organization using the tools and resources of the organization itself. Organizations often give
ample scope to employees who have proved their mettle, to undertake new opportunities and
challenges and create new growth trajectories for the organizations. This provides
opportunities to people to take an entrepreneurial approach to their organizational
responsibilities, as opposed to starting a completely new venture. This is especially useful for
individuals who have an entrepreneurial bend, who are decision takers, yet who cannot
survive without the support and security of an organizational network.
The recent example in this context is- Mr. Sundar Pichai, who has been designated as incharge of major products and services of Google. Heading a large division of a giant
company like Google and owning good number of shares in the company is also a type of
ownership.

Creating Good Mentorship Opportunities

As India has less number of entrepreneurs, so mentorship opportunities and success stories
are also less for those who want to start something of their own. It is a cyclical pattern as less
number of entrepreneurs are the reason of lesser case studies and lesser mentorship and lesser
mentorship leads to lesser success rate and lesser success rate leads to lesser entrepreneurs.
So, more mentoring opportunities like- workshops, competitions like- TechStocks,
Hackathons can be helpful for budding entrepreneurs.

Change in Teaching Pattern

India doesnt have many business schools promoting entrepreneurship. Very few boast of
alumni who have graduated to emerge as entrepreneurs. Some IITs and management institutes
like ISB and Great Lakes have recently started entrepreneurship focused courses.
Change of Mind-set
One interesting fact observed in some of the management courses run all over the world is
that Indian students are low risk takers as compared to their western counter parts. Closed
economy mindset can be one reason for this. Faculties teaching courses in both Indian and
Western universities state that Indian students are generally shy and conservative as
compared to their western counterparts. Despite having similar skills and generating products
and services of similar quality, Indians are reluctant to charge a high price, or spend
generously in marketing and promotions. The reason behind this may be lack of market
research and lack of insights as small organizations think that they cant afford big
expenditure in this area and they choose to play only price game. It has been observed that
traditional businesses and small scale businesses are reluctant in hiring consulting companies.
They are not much willing to take help from consulting companies. Consulting can help in
changing mindset and help to think broader and bigger
Change of Mindset: Service Vs Product Approach
India is currently a service based economy monetizing its human capital. For last one decade
service based industries have been playing cost optimization game or rather cost cutting
game. Indian entrepreneurs replicate the same, playing low in margins and try to attract more
customers through low prices. For growth of entrepreneurship, equal emphasis should be
there on new product development in high growth industries backed by good market research.
Through this entrepreneurs can earn good margins and help the economy to grow.
Conclusion
The situation today is much better than it was even 3 years ago. With a promising political
scenario and increasing opportunities, India has never looked better for entrepreneurs. With
foreign banks ready to invest in Indian start-ups, it is time for the aspiring entrepreneurs to
step in and take advantage of the opportunities. They need to learn from the past, recognize
the demand and supply gaps of the future and be a part of the entrepreneurial revolution that
is going to shape Indias future.
References
[1] Wikipedia: http://en.wikipedia.org/wiki/Entrepreneurship
[2] Economic times: www.articles.economictimes.indiatimes.com