Unit-1

Introduction to Entrepreneurship

# Entrepreneur:
The term „Entrepreneur‟ has been derived from a French word „Entreprendre‟
meaning to under take certain activities. A person, who organizes, manages and
assumes the risk of a risk of a business is an entrepreneur. Such person is dedicated in
making the business successful and is willing to risk money and reputation to make an
idea work. In other words, an entrepreneur is someone who can see opportunities, pull
together resources and team up with others. The entrepreneur brings their vision,
leadership and passion to bear on the new opportunity. The entrepreneur produces and
adds value to the world.
According to American Heritage Dictionary, “An entrepreneur is a person who
organizes, operates, and assumes the risk for a business venture.”
According to ILO, “Entrepreneurs are people who have the ability to see and
evaluate business opportunities, together with the necessary resources to take
advantage to them and to ensure appropriate action to ensure success.”
Thus, entrepreneur is an individual who, rather working as an employee, runs a
small business and assumes all the risk and reward of a given business venture, idea,
or good or services offered for sale. The entrepreneur is commonly seen as a business
leader and innovator of new ideas and business processes.

# Entrepreneurship:
Entrepreneurship is a process of being an entrepreneur. It begins with an
innovative idea and creates employment for self and others. It is the capacity to create
new opportunities for innovation, investment and expansion in new markets, products
and technology. In simple words, Entrepreneurship is the process of being an
entrepreneur, of gathering and allocating the resources- financial, creative, managerial
or technological- necessary for new venture‟s success.
According to Hisrich & Peters, “Entrepreneurship is the process of creating
something different with value of devoting the necessary time and effort, assuming the
accompanying risks, and receiving the resulting rewards.”
According to Dr. G.R. Agrawal, “Entrepreneurship is the process of exploiting
opportunities by creating new venture through resource pulling, risk taking,
innovating and managing for rewards.”
Thus entrepreneurship is the process of identifying opportunities in the market
place, marshalling the resources to exploit the opportunities for long term gains.

# Characteristics/Qualities of Entrepreneur:
1. Innovative: Entrepreneurs are continuously involved in innovation. They
produce products that suit the changing need of the customers. They are
aggressive to change and to create something new. They focus more on
innovation rather than invention.
 2. Leadership: Entrepreneurs are good managers and leaders. They utilizes all the
resources (5 m‟s) wisely. They posses the capacity to motivate and influence
people and enhance the effective communication between them. They lead the
organization and take initiative according to the situation.
3. Committed & Hard Working: A small business person should have to put his
maximum effort in the organization. Entrepreneurs possess high level of
energy, enthusiasm and diligence. Thus, they are highly committed towards
their organization and work hard to pursue excellence.
4. Flexible: Small business persons are flexible enough to change with the
changing environment. They are responsive to suggestions and welcome
criticisms. They desire to immediate feedback about performance which makes
them flexible.
5. Farsightedness: Small business owners who thrive are good at both short- and
long-term planning. They are as likely to have a well thought-out plan for the
day-to-day running of the business as a road map for how to run the business
for years. They are visionaries with versatile knowledge and experience.
6. Independent: Entrepreneurs are independent in their work. As they are self
employed, they are their own boss. They set their own routine, processes and
work procedures to carry out organizations tasks. Similarly, they also make
plan and take decisions on their own.
7. Optimistic: Entrepreneurs are highly optimistic. They effectively deal with
problems, mistakes and failures and always remain optimistic about the future.
They are self confident and deal with uncertainties in positive way. They never
give-up.
8. Self-disciplined: Small business persons are self disciplined. They need strong
personal discipline to keep them and the business on the schedule. The owners
play a great role in motivating the employees to be disciplined. They are
punctual, honest, and well mannered which helps the business to be intact.

# Importance of Entrepreneurship:
1. Production of Goods and Services: The first and foremost function of
business entrepreneurship is to produce goods and services. These goods and
services fulfill unlimited human wants. It innovate new ideas and technologies
to produce various kinds of goods and services according to consumer‟s choice
and demand. It has great importance as it produces various goods and services
out of different resources.
2. Utilization of Natural Resources: Business entrepreneurship produces
different types of goods, producing goods it requires various natural resources
in to use. Most of the natural resources are used in term of raw material by the
business. While, using natural resources business must considered about its
ability and avoid it wastage as fast as possible. Natural resources are scarce
material so their used must be very appropriate.
 3. Creation of Employment: Business entrepreneurship needs different human
resource both skilled and unskilled. It must create employment opportunity all
kind of human resources available in the society. These help to reduce
unemployment problem of the company and help the unemployed people to
generate income. Creation of employment opportunity not only improves living
standard of people but also contribute in economic development of a country.
4. Earning Foreign Currency: Entrepreneurship is the major source of earning
foreign currency. Development of industry and trade can help to export various
kinds of goods to different countries. Such export business earns maximum
foreign currency and helps in increasing the national reserve of foreign deposit.
The earning of maximum foreign currency through business keeps the value of
national currency high.
5. Economic Development: Entrepreneurship is the basis of economic
development of a nation. Entrepreneurship helps in economic development of a
country. It economically develops the nation by proper utilization of resources,
creating investment opportunities and employment opportunities, by earning
foreign exchanges and so on.
6. Self Reliance: It plays important role in making a county a self sufficient
development of industries in the county. Production of goods within the
country not only reduces the size of import but also makes the country self
sufficient country because of development of business in his country.
7. Increase in Government Revenue: Business entrepreneurship is the only
sector that pays maximum revenue at the government. Government realizes
different kinds of revenue in form of excise duty; value added tax, custom duty,
cooperate tax etc. from the business. The country can increase its national
income and utilize them in various development programs. In this way,
business plays very important role in developing infrastructure necessary for
the country.

# Concept of Small Business:

A business is said to be small one when it has small amount of investment
involved and the value and quantity of its output is also not big. Additionally, such a
business employs a small number of work forces, uses a limited quantity of raw
materials and has less complexity involved in its operations.
In other words, a small business is a business that is privately owned and
operated, with a number of employees and relatively low volume of sales. Small
businesses are normally privately owned corporations, partnerships, or sole
proprietorships.
According to Small Business Act 1953, US, “A small business is one that
independently owned and operated and not dominant in its field of operation.
Thus, a small business is a business that is independently owned and operated,
with a small number of employees and relatively low volume of sales. Besides the
number of employees, other factor such as annual sales (turnover), value of assets and
net profit (balance sheet) are also considered to classify any business as a small one.

# Feature of Small Business:

1. Independent Management: Small business is generally managed by a small
group of people or an individual manager. It does not have to manage the
business with consult of many heads. The decisions regarding the management
of business can be taken independently without being coerced by external force.
2. Local Operation: Small business operates locally in a slam area. They operate
in local level using local resources. But they may or may not sell its product in
local market. They practice niche marketing.
3. Small Size: Small business is in small size. As they have limited capital and
limited resources, they cannot carryout huge transactions. Thus, the most
common characteristics of small business is that they have small size.
4. Lower Revenue and Profit: The revenue of small business is generally lower
than of larger scale business. Lower revenue does not necessarily translate into
lower profitability. But, in comparison to larger business, small business earns
lower profit.
5. Limited Employees: Small-scale business employ smaller teams of employees
than companies that operate on large scales. The smallest businesses are run
entirely by single individuals or small teams. Therefore, they have limited
number of employees.
6. Limited Market: Small scale businesses have limited resources & cannot serve
a large market area. As they have a particular marketing niche, they focus on
particular geographic location or particular market segment. The number of
customers of small business is limited.
7. Uncertain Life: Generally, a single person or few numbers of persons run
small business. The death or lunacy of the entrepreneur may lead to the
termination of the business. Thus, small business has short life span.

# Obstacles in Women Business:

1. Public Discrimination: It has been seen that the public generally discriminates
the women entrepreneurship. They have lower trust in comparison to male
entrepreneurship. Mediateries doubt long term relationship with women
entrepreneurship.
2. Lack of Investor’s Confidence: Most entrepreneurs need investor‟s support to
carry out business operations. The investors do not trust women entrepreneurs.
They fear losses investing in the project of women entrepreneurship.
3. Time Management: Time management is a biggest challenge for women
entrepreneurship, especially more in Nepal. People have expectation with
women regarding family management. Women seem to utilize only their spare
time for handling the business.
 4. Lack of Role Models: There are successful female entrepreneurs throughout
the world, but male entrepreneurs get better media coverage and visibility.
Women tend to start businesses in the sectors where they have work experience,
skills and networks. The low percentage of female startups in the tech sector
reflects the low numbers of women working in this sector in general.
5. Utilizing Connections: One of the biggest challenges for a female entrepreneur
is not understanding how important it is to have networks and trusted advisors.
In almost any type of entrepreneurial endeavor, a key contributor to success is
obtaining introductions and connections to people who can help us to get
through the door.
6. The Expectation to Succeed at Everything: Working women face the
expectation to do well in all areas of their multi-faced lives. In general, men are
judged by how well they do in their careers, while women are judged by how
well they excel with family, friends, looking their best, and if they work their
career. It‟s a struggle to find enough time in the day to focus on them all.
7. Fear of Success: One of the biggest challenge as a women entrepreneur has
been letting the fear of success keep them from taking the next step. As the
business grows, new devils come with every level of success. The more the
business grows the more time the woman has to spend being as entrepreneur.

# Role of Entrepreneur in Economic Development:

1. Capital formation
2. Improvement in per capital income.
3. Generation of employment.
4. Balanced regional development.
5. Improvement in living standards.
6. Economic independence.
7. International relation.

# Entrepreneurial Motivation:
Motivation is next to directing / leading. Managers can motivate their
subordinates while guiding them. Motivating means encouraging people to take more
initiative and interest in the work assigned. It is an art of getting things done willingly
from others. Motivation avoids clashes and non-cooperation and brings harmony,
unity and co-operative outlook among employees. Managers have to work as
motivators of their subordinates. For this, effective communication, proper
appreciation of work done and positive encouragement are necessary and useful.
Motivation inspires and encourages people to work more and contribute for achieving
the objectives of the company. The creation of the desire and willingness to perform
the job efficiently is known as motivation. Motivation is a sociological concept as it
relates to human behavior and human relations. It is the most fundamental and all
pervasive concept of psychology.
 According to W.G. Scot, “Motivation means a process of stimulating people to
action to accomplish the desired goals.”
According to Micheal J. Jucius, “Motivation is the act of stimulating someone
or oneself to get a desired course of action, to push the right button to get a desired
course of action, to push the right button to get a desired result.”
Thus, entrepreneurs should make effort to satisfy the different needs and
employees so that they will be satisfied, happy and away from tensions. This creates
favorable environment because of which employees take more interest and initiative
in the work and perform their jobs efficiently. Motivation is a technique of creating
attraction for the job. It is encouraging employees for better performance in order to
achieve the goals of an organization. The process of motivation is continuous one and
is beneficial to both – employer and employees. It is a key to improve work
performance of employees.

# Importance of Motivation:
Motivation is willingness to put high level of efforts to achieve goals. The importance of
motivation is due to the following reasons:
1. Understand Employee Behavior: Motivation is important in understanding
employee behavior at work. It gives purpose and direction to behavior. Managers
must understand why people behave as they do so. All human behavior is affected
by motivation.
2. Productivity Improvement; Motivation improves productivity. Motivated
employees are more productive in terms of performance. Motivated employees
work willingly to increase productivity. It guides the action towards goal
achievement. Manager must understand motivation for higher productivity. It is the
key to organizational effectiveness.
3. Quality Improvement: motivated employees are quality oriented. They are
always looking for better ways of doing jobs. They minimize scrape and waste for
efficiency. Total quality management is facilitated by motivation. Employees give
their best at work.
4. Employee retention: Motivation helps retention of competent employees.
Motivated employees remain in the organization. They become strategic resource
for the organization. They feel a sense of belongingness and pride in staying in the
organization. Their commitment increases. Employees‟ retention increases.
 Creativity Promotion: Motivated employees are creative and innovative. They
can easily adapt to changing technologies and environmental forces. Change
management is facilitated. Creativity is promoted. can be done.
 Low employee turnover: High retention reduces turnover.
 Reduce absenteeism: Employee feel satisfied.
5. Better employee discipline: Rul
6. Employee factors: Motivation is important for the following employee related
factors:
 Enrich job design: Job enrichment es of conduct are followed.
  Reduce employee grievances: disputes go down.
 Industrial relations become harmonious.

# Achievement Theory of Motivation (McClelland’s Theory):

The Achievement theory was propounded by David McClelland. It is also
known as three needs theory. They are achievement, affiliation and power. A person‟s
motivation and effectiveness in certain job functions are influenced by these three
needs. If these needs are satisfied, employees get motivated towards work and
effective performance takes place.
i. Need for achievement: Need for achievement is the desire to accomplish a good
task or perform more effectively than in the past. It is competition with a standard
of excellence. This needs focus on desire to accomplish difficult tasks solve
difficult problems to achieve in relation to a set of standards to strive to succeed.
People with a high need for achievement seek to excel and thus then to avoid both
low risk and high risk situations.
ii. Need for power: desire for taking more authority and keeping others under control
is called need for power. It is desire to influence others to behave in a specific way.
It is holding authority to make impact on others. Thus it is the need to dominate
and control over people. The people, who give performance to this need like set
goals, make decision. They like to be status oriented. An organization should
motivate this type of employees and utilize their qualification, skills, efficiency and
expertise for the organizational effectiveness.
iii. Need for affiliation: Need for affiliation is desire to establish and maintain
friendly and warm relationships with each others. It is a social need. Those with a
high need for affiliation need harmonious relationship with other people and need
to feel accepted by other people. They tend to confirm to the norms of their work
group. They perform well in customer service and client interaction situation.
Achievement theory of motivation highlights the importance of matching
the individual and the job. Proper work environment can be created by managers to
raise the achievement needs of employees.