Chapter-1 Introduction to Entrepreneurship

Concept of Entrepreneurship: Entrepreneurship is the process of

creating new ventures (enterprise).
- Involves creativity and innovation.
- Requires assumption & bearing risk for receiving(reaping) reward.
- Brings together various resources such as physical, financial,
human, informational, intellectual
- Provides self-employment as well as employment for others.
- is the mind-set of creativity & risk-taking in order to identify
opportunities.
- Brings together resources, perform management functions such as
planning, organizing, decision-making etc to explore new
opportunities.
- It aims for innovation, profitability & growth.
- Entrepreneurship has resulted in millions of new ventures in the
world & act as driving force for economic development.
 Features/ Characteristics of Entrepreneurship
1. Creation of New Venture: give birth to new business venture by
investing capital and bearing risks.
2. Hard Work: Hard work & full commitment are essential for
initiating any venture successfully: full devotion of body, mind,
money, time & effort required
3. Assumption & Bearing of Risks: Financial risk, Career risk, Family
& social risk, Physic risk
4. Desire for High Achievement: The entrepreneurs have a strong
desire to achieve high goals in business venture.
5. Receiving(reaping) fro Rewards: Financial(monetary) rewards &
Non-financial rewards
- Financial: profit, wealth
- Non- financial: personal satisfaction, self-development, name,
fame (recognition), reputation, independence in work.
 Importance/Significance of Entrepreneurship
 Capital Formation: Entrepreneur creates new venture by
mobilizing idle savings into productive sector.
 Increased Productivity: Entrepreneurs make effective utilization of
resources.
- Resources are effectively utilized to provide goods & services to
customers
 Equitable Distribution of wealth: Because of entrepreneurship local
ownership & control in the economy increases.
- They help to reduce concentration of wealth, income & political
power in the hands of big corporate houses & multi-national
companies(MNC)
 Industrialization: Entrepreneurs create various new ventures by
learning new skills which are the major source of industrialization
in developing countries like Nepal.
Import Substitution & Export Promotion: Entrepreneurs develop
new products for the needs of domestic as well as foreign markets.
- Fulfilling domestic need makes nation self-dependent.
- Exports helps to earn foreign currency which is essential for
economic development.
 Opportunities for Entrepreneur: Entrepreneurship provides
various opportunities such as independence(can use own knowledge,
skills & experiences in own organization), better lifestyle & profit for
entrepreneur.
 Employment: Entrepreneurship creates both self-employment as
well as employment for others.
 Revenue Generation: Enterprise is the most important source of
government revenue. They pay various taxes to the government
such as income tax, VAT, custom duty, excise duty
 Entrepreneurial Process
1)Conducting Opportunity Analysis: Entrepreneurs generate many
new business ideas through opportunity analysis.
- They identify & select the best business idea for
execution(implementation). Promising, marginal, rejected
- An opportunity analysis include:
• Viability of business(cost, benefits)
• Description of product or service
• Specifications of all activities & resources needed
• Sources of capital
• Growth & development of new venture

2) Developing Business Plan: A business plan provides future road-

map(direction) for new venture.
-
- It describes various aspects of new business venture such as
objectives, scope, process, technology, target market, product, place,
price, promotion aspects, financial & other managerial aspects , risk
associated with venture etc
3. Set-up the Venture: The new venture is established.
- The legal aspect of business venture such as proprietorship,
partnership, company or co operative is determined.
- Similarly the site(location) and scope are determined.
- The scope of venture can be manufacturing, construction, service
business etc.
4. Acquire Financial Resources: The various options for financing the
new venture are identified.
- Initial investment can be from self, family, friend, relatives &
government sources.
- In the growth stage, financing can be done from financial
institutions or by issuing shares for public (IPO-initial public offering)
 5. Implementing Business Plan: The venture is organized at this stage
by acquiring all required resources including human resource to
form management team.
- The intellectual property of venture such as trademark, patent,
copyright are protected.
Managerial functions are performed and new venture becomes
operational.
Meaning of Entrepreneur (Individual Entrepreneur)
- Entrepreneurs are creative individuals who launch new ventures in
order to perform functions of entrepreneurship.
- They have vision & inspiration to create new ventures.
- They identify new business opportunity & bear risks.

- An entrepreneur is a visionary individual who takes risks by

creating new venture through accumulating & utilizing various
resources in order to receive uncertain reward.
 Relationship between Entrepreneur & Entrepreneurship
Entrepreneur Entrepreneurship
1. Refers to an individual 1. Refers to a process to
create new venture.
2. is a creator 2. is creation
3. is visionary 3. is vision
4. is an innovator 4. is innovation
5. is a risk-bearer 5. Process of risk-bearing
6. is a motivator 6. is process of motivation
7. is a leader 7. is leadership function
8. is an organizer 8. is an organization
9. is an imitator 9. is imitation (sometimes)
 Entrepreneurial (Business)Venture
1. Lifestyle Venture: Entrepreneur seeks independence,
autonomy, self-control & comfortable living.
- Large sales & profits are not expected.
-Small business entrepreneurs
2. Profitable Venture: Entrepreneur seeks profit from business
venture.
- Entrepreneur enjoys autonomy & control.
3. High Growth Venture: The driving force is high sales & profit
growth.
- Capital needs are high.
4. Social Entrepreneurial Venture: which focus on creating
products & services that solve social needs & problems.
-their goal is to make the world a better place, not to take
market share. They may be non-profit, for-profit or hybrid.
Types of Entrepreneurship / Entrepreneur
1) Innovative Entrepreneurship: It has following types:
i) Innovating Entrepreneurship: They introduce new
products, services, employ new production methods, open
new markets & exploit new sources of raw materials.
- are aggressive in experimenting & found in developed
economies.
ii) Imitative Entrepreneurship: They simply adopt & imitate the
techniques , methods & technology innovated by others.
- They use limited resources & found in developing
economies.
iii) Fabian Entrepreneurship (येथास्थथथथबादी): They are cautious &
skeptic in experimenting changes.
- are determined by custom, religious, tradition & past
practices.
- They imitate innovation of others only when they feel
insecure for survival otherwise not.
- Follow footsteps of predecessors & fond in joint family
business.
iv) Drone Entrepreneurship(अल्छी): They refuse to innovate,
they do not make changes in production & venture even
if their profits decline.
- They stick to conventional ideas & products. Are
inert(inactive) & traditional.
v) Forced Entrepreneurship: They are forced to become
entrepreneur in order to fulfill their own economic
livelihood.
- They are victims of circumstances & forced to start a
new venture to create self-employment.
vi) Empire Builder Entrepreneurship:
- They go on creating new ventures one after another.
- They build on the strength of existing venture to
promote new ones.
- They are innovator as well as imitator to build an empire.
2) Behavioral Entrepreneurship:
i) Solo Entrepreneur: who essentially work alone. They
may employ few employees for their assistance.
ii) Active & Sleeping Entrepreneur: Active partners
actively participate in the operations of the enterprise.
- Sleeping Entrepreneur refers those who only
contribute funds to the enterprise but do not actively
participate in business operation.
iii) Inventors: they invent new venture, new products,
services, process etc
- Their basic interest lies in research & innovative activities and
are also known as Scientist Entrepreneur.
iv) Challenger Entrepreneur: They are challenge seeker & take
risks.
- They start a new venture because of the challenge in it. After
meeting one challenge, they look for new challenges.
V) Buyer Entrepreneur: They like to buy an on-going business
venture to avoid risk. They do not take the risk of starting a
new business.
vi) Life Timer Entrepreneur: Family enterprises are included in
this category. Their objective is to earn income for
themselves & their family.
-Entrepreneurship is the part of their lifestyle.
3) Focused Group Entrepreneurs:
i) Women Entrepreneur: Women who are involved in
independent business venture are know as women
entrepreneurs.
- Women entrepreneurs are increasing because of
development in education, IT, consciousness & desire
for independence.
ii) Minority Entrepreneurs: They are minority races
(ethnicity) in business venture. Discrimination pushes
them to start new ventures.
- Their growth & desire to be an entrepreneur is
influenced by level of education, experience, trainings
& access to capital and credit. Eg: Asian, black in USA ; Tibetan,
Bhutanese in Nepal are regarded as minority.
iii) Immigrants Entrepreneurs: who are from one country &
establish business venture in another country are regarded
as immigrants entrepreneurs. Also known as “Deviant” .
iv) Part-time entrepreneurs: They work for a salary but also
run independent business on part-time basis for making
extra income.
- Also known as “Moonlight Entrepreneur”
v) Home-based Entrepreneurs: They run business from their
homes.
- E-commerce & virtual enterprises make this more
feasible & viable.
vi) Family business Entrepreneurs: They are family members
who operate & control business and are widespread all
over the country.
vii) Corpreneurs: They are couples (husband & wife) who
work together as a co-owners of business venture.
- They have their own roles, responsibilities & duties in the
business venture.
viii) Intrapreneurs / Corporate Entrepreneurs : They are
entrepreneurs from the established corporations.
- They establish & handle another new business ventures
based on innovations.
- Some large companies provide opportunities to their
managers for innovation and encourages them to
undertake entrepreneurship activities.
 Traits/ Qualification of an Entrepreneur
1) Desire for High Achievement: Entrepreneurs have strong need for
achievement.
- This need motivate them to work hard and grab the opportunities by
establishing new ventures.

2) Hard Working: Entrepreneurs are motivated to work hard consistently by

devoting necessary time & efforts.
- They are action-oriented, take initiative, possess high level of energy,
enthusiasm & diligence(determination).

3) Desire for Responsibility: Entrepreneurs feel personally responsible for

the results.
- They are fully committed to their enterprise, accept responsibility with
enthusiasm.
- They are committed to successful business & committed to provide
goods & services for the customers.
4)Optimistic: They are optimistic for future that the situation will
become favorable to business in the future.
- They effectively deal with problems, mistakes & failures.
- They are self-confident & believe that success depends on their
own efforts.
5) Independent: Entrepreneurs like independence in work so they
start their own business enterprise.
- They are not guided by others, they set their own routine.
- They like to be their own boss.
- They are job provider not job-seeker.

6) Foresight: They anticipate(predict) future opportunities & threats

and take timely actions.
- They have long term vision & perspective.
- They can anticipate changes in markets, customer preference.
7) Preference for Risk: They are risk taker and likely to take moderate
to high risk
- They take risk by investing capital in new venture.
- The risk associated with entrepreneurship can be financial risk,
social & family risk, career risk, physic risk.

8) Innovative: Entrepreneurs are creative & continuously involved in

innovation.
- They innovate new business enterprise, product, services,
technology.

9) Flexibility: They are able to adapt changing demand of customers,

market & environmental forces.
- They are flexible in their operations & activities.
10) Good Manager & Leader:
- Entrepreneurs are good leaders because they perform various
functions of management such as planning, organizing, decision-
making…………………….
- Similarly, they accumulate, allocate, mobilize & utilize various
resources such as physical, financial, human in order to achieve the
goals of business enterprise.
- Entrepreneurs are also good leaders because they motivate &
influence behaviour of employees toward goal achievement.
 Entrepreneurial Motivation
- Entrepreneur is the person who has dignity, self-respect, values,
aspirations, dreams to achieve.
- Economic betterment & social upliftment motivates a person to
become an entrepreneur.
- Motivation refers to the inner drive that stimulates a person to
put higher level of efforts in order to satisfy needs.
- It stimulates entrepreneur to use skills and abilities to perform
effectively.
Motivation for Becoming an Entrepreneur
1) Achievement: It is the desire to achieve something. The need for
achievement motivates entrepreneur to start a new venture.
Achievement can be desire for growth, self-development, using
creativity & talent, self-fulfillment etc
2) Independence & Identity: Independence refers “nothing wanting
to work for anyone else” .
- The desire to be one’s boss motivates entrepreneurs to start a new
venture.
3) Economic Betterment: Money serves as an important motivator
for entrepreneurs for starting new venture. It serves as a social
status symbol in our society.
4) Role Model: The name, fame and recognition motivates a person
for becoming entrepreneur.
5) Pursuing their own ideas: Employees with new ideas desire to see
them realized when ideas go unfulfilled, employees leave the
organization to start their own business.
Entrepreneurial Culture
- It refers to the environment where the employees are constantly
motivated for innovation, creativity & risk-bearing.
- It focuses change, innovation, risk-taking & opportunities.
- It facilitates growth, performance, and success of business.
- In this culture, employees are encouraged for learning, creativity,
innovation and failure is tolerated.
- Entrepreneurial culture encourages autonomy in work, risk-taking
& entrepreneurial behaviour & activities.
- Entrepreneurial culture has the following characteristics:
- New ideas, creativity & innovations are encouraged.
- Opportunity oriented
- Experimentation is promoted, trail & errors is encouraged.
- Resources are accessible
- Long term horizon & goals are established
 - Failures are allowed but repetitive mistakes are
not allowed, repetitive attempts can be made.
- Appropriate reward system for risk-taking, energy &
effort.
- Support of top management
Similarly, Entrepreneurial Culture has following characteristics:
- Achievement Oriented
- Hardworking
- Desire for responsibility
- Optimistic
- Independence
- Foresight
- Preference for risk
- Innovation
- Flexibility
- Creativity
 Entrepreneurial Feelings
• Entrepreneurs are from different family, education, social,
religious, cultural, ethnic background so they have different
attitude, values& beliefs, emotions, thinking and mindset.
• Entrepreneurial feelings are outcomes of these factors and forces.
• Entrepreneurial feelings are concerned with followings
elements/ Factors affecting entrepreneurial feelings:
i) Locus of Control: It is the degree to which people believe that
they are master of their own fate. It can be classified into
following two types:
* Internals: Individuals who believe that they are the masters of
their own fate, they control what happens to them, they are
achievement-oriented, self-confident.
* Externals: Individuals who believe that their fate is controlled
by outside forces such as chance or luck, they are less satisfied
with their work, they have higher absenteeism & less involved in
work, lack self-confidence.
ii) Feelings about Independence: It indicates the need for being
one’s boss. It is the strong feelings of entrepreneur to derive
satisfaction.
iii) Feelings about Need for Achievement: It indicates an
individual’s need & desire to be recognized.
- It is concerned with individual’s desire for solving problems,
setting goals, taking risks and reaching goals through their
own effort & hard work.
iv) Feelings about Taking Risk: It refers willingness to take
financial, social, psychological & career risk.
v) Optimistic Feelings: Optimistic feelings leads towards being an
entrepreneur. Optimistic feelings provides self-confident in
entrepreneur. (half empty & half full)
 Function of an Entrepreneur

1. Planning: Entrepreneur performs the function of planning

within the enterprise.
- It is the process of determining future course of action.
- Planning includes vision, mission and objectives of the
organization.
- Entrepreneurs carry out the some basic functions such as
setting goals, developing business plans.

2.Organizing: The process of determining departments,

hierarchy, authority, responsibilities resources in the
enterprise.
-It is concerned with grouping of tasks and co-ordinating various
activities in the enterprise.
.
3. Mobilizing resources: Resources of the enterprises are
human, physical, financial ,intellectual and informational
resources.
-Entrepreneur accumulate, mobilize & utilize those resources
to achieve objective of the enterprises.
- Entrepreneur determine the resources required for the
establishment of new venture.

4.Relationship management: Entrepreneurs need to

establish business-oriented relationship with various
stakeholders such as customers, suppliers, government
agencies etc.
- Relationship management includes following relationship:.
- Professional Relationship: It is the relationship of entrepreneur
with many internal and external professionals such as auditors,
bankers, Insurance companies, consultant, lawyer etc.
-Exchange relationship: maintaining relationship with
suppliers,customers,distribution channels.
-Government Relationship: it is concerned with maintaining
relationship with various government bodies such as Inland
Revenue Department, Dept of Commerce, Dept of Industry, Office
of the Company Registrar.
-Social Relationship: it is the relationship of entrepreneur with
social and local community. It helps to get community(social)
support to business.
5. Control: It is the important function performed by entrepreneur
which includes taking corrective action if deviation found between
actual performance and standard /target performance. It includes
following:.
-Financial control: related with controlling cost and minimizing
wastage in business enterprise as well as optimum utilization of
resources.
-Production Control: concerned with raw materials, plant and
machinery, production process,efficiency,productivity etc.
-Management Control: it is concerned with performing managerial
functions and proper decision making within the enterprise.
Proper decision making by entrepreneur is essential for smooth
functioning, growth development of business venture.
 Male vs Female Entrepreneurship
Features of Male Entrepreneurs
-More ambitious
- High risk-taking & bearing
- Tend to grow faster and get bigger
- Technical based
- Trouble in retaining employees
Features of Female Entrepreneurs
- Hardworking
- Better at dealing with people
- Low risk-taking & bearing
- Emotional
- Likely to seek & listen to advice
- Careful, accurate, serious & inquiring
 Small Business Vs Entrepreneurship

- Small business is an organization which is engaged in small

production, marketing or retailing.
- It is established and managed by small business owner to attain
personal objectives.
- It is the means for fulfilling owner’s needs, objectivity &
personality.
- It is small in terms of size, capital base and employees.
- In Nepal, business having fixed assets up to rupess thirty million is
regarded as small industry.
 Small Business Vs Entrepreneurship
i) Small business give more focus
on achieving personal goals,
normal profit & financial
independence.
ii) It uses normal management
practices.
iii) Small business mainly deals
with product & services that are
already established in the
market.
iv) The primary aim is to achieve
limited growth with stable
profit.
v) The risk associated with small
business are known in nature.
i) Entrepreneurship gives more
focus on achievement,
profitability & rapid growth.
ii) It uses new & innovative
practices as well as strategic
management.
iii) Entrepreneurship focuses more
on product & services that are
innovative in nature.
iv) The primary aim is rapid
growth and high productivity.
v) The risk associated with
entrepreneurship are unknown
in nature.
 Small Business Vs Entrepreneurship
vi) The are of operation and focus is
limited for small business.
vii) It generally stays small in size
and does not become dominant
in its field.
viii) Owners of small business are
not appreciated and rewarded
by society of their effort.
vi) The area of operation and focus
of entrepreneurship is
wide(broad scope).
vii) It grows from small to large size
through rapid growth and tries
to be dominant in its field.
viii) Public reward and recognition
is a norm of entrepreneurship
because they provide innovative
product, provide employment,
utilize local resources, provides
social welfare.
 Women Entrepreneurship
Women entrepreneur is a woman or group of women who initiate,
organize & run a business venture. This definition is based on
women women’s participation in equality.
- In other words, women entrepreneurs are those women who
think of a business enterprise, initiate it, organize & combine the
factors of production, operating the enterprise and take risks.
- Any venture initiated by women for economic independence is
women entrepreneurship.
- Women entrepreneurs are like other entrepreneurs who
perform all the functions involved in establishing an enterprise
such as idea generation, determination of objectives, product
analysis, determining forms of business, raising funds,
accumulation of various resources etc

- To Be Continued………………………..