Module-1 Entrepreneurship: A Perspective: Intrapreneurship

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MODULE-1
ENTREPRENEURSHIP: A PERSPECTIVE
1) Introduction: Meaning, Definition.
2) Features of Entrepreneurship- Meaning and Characteristics
of a successful entrepreneur.
3) Types of entrepreneurship and entrepreneurs
4) Intrapreneurship
5) Entrepreneurship- its relation to the Indian economy.
6) Women Entrepreneurs – Meaning, Definition, problems and
prospects of women entrepreneurs.
Entrepreneurship Page 1
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Introduction
The term entrepreneurship has become very important in the last few years after many studies and
surveys have shown that small firms indeed contribute significantly to economic growth of a country.
Many people have chosen entrepreneurship as a career because it offers a lot of economic and psychological
rewards. Entrepreneurship has brought about a lot of economic development since independence. This module
helps you to understand various topics such as the concept of entrepreneurship, entrepreneur and intrapreneur
and the role of entrepreneur in economic development.
Concept of Entrepreneurship Development
The word entrepreneurship is derived from the French word “entreprendre” which means “to begin
something” or “to engage in”. So, entrepreneurship means to take the initiative, take the risk and
begin a new business. It involves innovation and fulfilling the needs of people with a profit motive.
The person who undertakes this endeavor is an entrepreneur. He plans and innovates, organizes,
arranges the capital and takes the risk of business and investment. He bears the risk of buying the raw
materials at certain prices and selling the produce at certain prices which includes the profit.
Entrepreneurship initiates new product development and organizes the various factors of production
to make a product marketable. It also introduces technology. It is also defined as the process of
bearing the risk of buying at certain prices and selling at uncertain prices. So, the concept of
entrepreneurship is action oriented which involves much planning, calculated risk, which starts as a
small business and then gradually grows and develops.
Entrepreneurship plays a vital role in the economic development of a country. The various socio,
economic and institutional resources are combined for the development of entrepreneurship which
ultimately lead to a better quality of life. The standard of living can be improved when there is
availability of goods, increased jobs, education and economic well-being etc., which further leads to
economic development. This growth and advancement can be facilitated by the business houses
when the need for making use of the opportunities arises in them. This need is shown by the business
houses, which convert the thinking into action and bring the way for economic development.
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Approaches to the Concept of Entrepreneurship
There are three approaches which can be used to explain the concept of entrepreneurship:
(1) Economic Approach: In the economic approach entrepreneurship is taken as a process in which
an entrepreneur identifies the potential opportunity in the market and exploits the same.
He identifies the consumer demand for a particular product and takes risk in initiating,
innovating and producing the goods. He is a person who makes decision of utilizing the
resources and starting up a new venture.
(2) Sociological Approach: In sociological approach, entrepreneurs are governed by the needs and
desires of the society. They need to assess the demands of the society and then take up
the initiative, which in turn leads to social responsibility, and industrial development.
(3) Psychological Approach: In this approach, it is said that it is the high need for accomplishment
which drives people in to taking risk and initiation of a business. It is the desire for
material success, responsibility and the courage to take on challenge which drives the
entrepreneurs.
Therefore entrepreneurship is the outcome of complex economic, social and psychological variables.
Definitions
Various authors have defined the concept in different manner. Entrepreneurship is a qualitative
concept and cannot be precise. Following are some of the definitions given by various authors:
(1) According to A.H.Colen Entrepreneurship is “the purposeful activity of an individual or group of

associated individuals, undertaken to initiate, maintain or earn profit by production or
distribution of economic goods or services”
In this definition entrepreneurship is defined as an activity which is undertaken to earn profit by
production of goods and services.
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(2) According to Schempeter - “Entrepreneurship is essentially a creative activity. It consists of

doing such things as are not generally done in the ordinary course of business. An
entrepreneur is one who innovates i.e carries out new combination or enterprise.
The process of innovation may be in the form of:
(a) Introduction of a new product
(b) Use of a new method of production
(c) Opening a new market
(d) The conquest of new source of supplying raw material
(e) A new form of organization”.
In the above definition entrepreneurship is defined as a creative activity which involves introduction
of new product and undertaking such activities which are not generally performed in the
routine business.
(3) According to Peter F. Drucker-“Entrepreneurship is neither a science nor an art. It is a practice. It
is a knowledge base. Knowledge in entrepreneurship is a means to an end. Indeed, what
constitutes knowledge in practice is largely defined by the end that is by the practice.
Entrepreneurship is not just about making money. It is about imagination, flexibility,
creativity, willingness to think conceptually, readiness to take risks, ability to mobilize
agents of production and the capacity to see change as an opportunity. It is also about
marrying passion and process with a good dose of performance.”
Peter F. Drucker defined entrepreneurship as a practice and as a base of knowledge which involves
creativity, willingness, ability to utilize the factors of production and capacity to see
opportunity.
(4) According to H.N.Pathak “Entrepreneurship involves a wide range of areas on which series of
decisions are required which can be grouped into three categories : (i) perception of an
opportunity, (ii) organizing an industrial unit, and (iii) running the industrial unit as
profitable, going and growing concern.” In the above definition, entrepreneurship has
been grouped into three parts as seeing an opportunity and organizing and running of
industrial unit as a going concern.
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To summarize the above definitions we can say that entrepreneurship is a process which is action
oriented and which involves visualizing, risk taking, decision making and formulation of a business
plan, its implementation and utilization of various resources to the maximum possible extent with a
profit motive.
Concept of Entrepreneurship Development

The principal objectives of the Entrepreneurship Development Programme include the search for the
latent entrepreneurial ability and its development through promoting small enterprises by training of
potential entrepreneurs.
It was in the year 1970 that the first systematic effort to identify and develop new entrepreneurs from
non-conventional communities and occupational groups was initiated in the state of Gujarat. It was at
the same time that a beginning in training entrepreneurs had been initiated by Small Industries
Development Organization (SIDO) had been initiated with unemployed engineers. Since then
Entrepreneurship Development Program (EDP) has spread across the country and has become an
essential platform for creation of employment and project plans of national and state governments.
Abolishing financial control: the tip of the ice berg
One of the primary aspects that has been suggested to be important in incubating entrepreneurship is
removal of financial constraints on competent, aspiring individuals who could not secure loan
assistance from commercial banks because of the bank’s restrictive terms and their own limited
resource. Loans up to 100% of the project cost at attractive terms need to be available without
stringent collaterals or securities or third party guarantees. The loans need to be available on the
assessment of the capability of the individual rather than the financial background of the individual.
Experience and studies have revealed there is indeed a vast untapped potential amongst traditional
non-business communities and castes which get initiated and develop when such financial constraints
are removed, particularly in the middle and lower income groups.
Searching far and wide
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When searched far and wide, it is often seen that there is even a wider spectrum which may not be
responding owing to several other constraints. There may be many more machine operators, turners,
fitters, sales men, fresh engineers , rural artisans, sons of rural agriculturists who continue to remain
frustrated in their current jobs and who would like to be on their own. Some of these factors include
lack of motivation to take risks, some may need information on what is a good business opportunity
or how to go about setting up an enterprise, some may know how to produce, repair or service a
product but are ignorant of how to produce, repair or service a product. They are also ignorant of
how to manage en enterprise or market or sell, some may lack confidence of standing on their own
feet due to lack of own or family’s business experience, some may be discouraged by formalities and
procedures and fear of dealing with government organizations
An entrepreneurship program meets many of the constraints discussed above through a package of
training-cum-counseling inputs combining motivation development, project counseling, managerial
orientation, information on sources of help and support, making a project plan and over all
confidence development through constant counseling and support by a skilled entrepreneur trainer-
motivator (ETM).
Characteristics of Entrepreneurship
Entrepreneurship is a process, the person who follows the process is an entrepreneur and the object is
an enterprise. To make it simple entrepreneurship is an act of being an entrepreneur. It involves
various actions to be undertaken by an entrepreneur in formulation of an enterprise. Following are
the main characteristics of entrepreneurship:
(1) Innovation: The process of transforming a creative idea into goods and services for which people
pay a price is called innovation. It is an eagerness to do something new. Innovation involves
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intentional application of information, imagination, and initiative in deriving maximum value

from the resources, and includes the process by which new ideas are generated and converted into
useful products.
According to Schumpeter, innovation may occur in any of the following ways:
(a) The introduction of a new product which the customer is not familiar yet.
(b) The introduction of a new method of production which is not yet tested by experience in the
branch of manufacture concerned.
(c) The opening of a new market-the customers are not yet familiar with the product and the market
for that innovative product has not previously been entered.
(d) The conquest of a new source of supply of raw material irrespective of the fact whether that
source already exists or it has been created.
(e) The creation of a new organization of an industry –a new innovation may create the monopoly for
that product or break the monopoly of similar existing product.
Thus an entrepreneur identifies new opportunities, employs advanced technology and produces new
and improved products and services to meet the customer requirements.
(2) Risk Bearing: A risk is a threat of loss, or other negative occurrence that is caused by external or
internal factors. Entrepreneurship involves risk bearing. As a consequence, unforeseen
contingencies should be taken into consideration before starting a business. An enterprise
might earn profit or incur losses. So an entrepreneur should not be averse to risk, he
should be a risk taker. His risk bearing ability will enable him to proceed further and take
up the challenge.
(3) Decision Making: It is the thought process of making a choice from the available options. All the
pros and cons of the available options should be taken in to consideration before making a decision
and the end result of the decision should be forecasted before opting for the same. There is
uncertainty; this implies assuming the responsibility of loss that may occur due to the factors which
are out of control.
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(4) Building Economic Organization: It involves allocation of scarce resources. J.B.Say describes
entrepreneurship as an organizing function whereby the entrepreneur brings together
various factors of production, ensures the continuing management and renders risk
bearing function as well. According to him, an entrepreneur is one who combines the
land, the labour of another and capital of yet another, and thus produces the product. By
selling this product in the market, he pays interest on capital, rent on land, wages to
labourers and what remains is his profit. He further clearly distinguishes between the role
of a capitalist as a financier and the entrepreneur as an organizer.
(5) High Achievement: It is the need for accomplishment which drives a person to undertake risk.
And different people are inspired by different things. David McClelland identified two
characteristics of entrepreneurship, namely
(a) Doing things in a new and better way and
(b) Decision making under uncertainty. He stressed on the need for achievement as the
most important factor. He also stressed that entrepreneurs are highly motivated by
challenging and competitive work situations.
Importance of Entrepreneurship
1. It helps in growth and development of the economy.

2. It helps in balanced regional development
3. It results in proper utilization of economic resources.
4. It creates employment opportunities.
5. It helps in meeting the changing requirement of the markets.
6. It also helps in distribution of products to large-scale business houses, thus, support
large business.
Introduction to the Concept of Entrepreneur
When we go to a shop or stores there are a large variety of products available. All these products are
an end result of creative thinking done by someone. To convert these ideas into tangible product a
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manufacturing unit , place of business and capital are needed. In fact all the four factors of
production i.e land, labour, capital and organization are required. One who organizes these factors
and transforms the thinking process into action is called an entrepreneur.
An entrepreneur is a person in whose mind the idea of initiating a venture takes place. He is
courageous to take risk and grab the opportunity available in the market which was not identified
earlier. He has a strong need for accomplishment. He introduces new products and services in the
market and improves the existing products or services available with the help of new and advanced
technology.
Entrepreneur is a person who takes risk to start the business integrates and manages various factors
of production. He is the person who recognizes the opportunity, creates an idea and then transforms it
into action and reaps the rewards of those efforts.
Definitions
1. According to J.A. Schumpeter: “An entrepreneur as an innovator who carries out new
combinations to initiate the process of economic development through introduction of
new products, new markets, conquests of new source of raw materials and establishment
of a new organisation of industry”. He said “The carrying out of a new combination we
call enterprise, the individuals whose function is to carry them out we call entrepreneurs”.
He has put emphasis of profit, which is the product of innovation and the prime mover of
economic development. According to him “the process of development is a deliberate
and continuous phenomenon, which is actively promoted by the escort services of a
change agent who provides economic leadership. This change agent is what is called
entrepreneurs”.
2. According to McClelland : “An entrepreneur is someone who exercises some control over the
means of production and produces more than what he can consume in order to sell (or
exchange) it for individual (or household) income”.
3. Peter F. Drucker defines : “An entrepreneur is one who always searches for change, responds to
it explains it as an opportunity. Innovation is the basic tool of entrepreneurs, the means
by which they exploit change as an opportunity for a different business or service”.
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4. According to Max Weber : “Entrepreneurs are a product of particular social condition in which
they are brought up and it is the society which shapes individuals as entrepreneurs”.
5. International Labour Organization (ILO) defines: “Entrepreneurs as those people who have the
ability to see or evaluate opportunities, together with the necessary resources to take
advantage of them and to initiate appropriate action to ensure success.”
Thus entrepreneur is a person who is an independent thinker, one who takes risk of initiating a
business and organizes the factors of production with a motive to earn profit and accomplish his
goals.
1.5 Types of entrepreneurs
A) Based on the Business Type
Depending on the type of business, entrepreneurs are classified into the following
types:
i) Trading Entrepreneur
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A trading entrepreneur refers to a person who undertakes business-related

activities. These types of entrepreneurs usually buy finished products in bulk
from manufacturers at some discount. They then sell these products directly or
with the help of retailers or vendors with profits. A business entrepreneur
usually acts as a middleman between manufacturers and customers. This may
include wholesalers, retailers, dealers, etc.
ii) Manufacturing Entrepreneur
The founder of a business to manufacture products is known as a manufacturing

entrepreneur. Manufacturing entrepreneurs analyze market needs or customer
needs and manufacture products to meet such needs using various resources or
technologies. In simple words, manufacturing entrepreneurs transform raw
materials into finished products according to the customer's needs.
iii) Agricultural Entrepreneur
Agricultural entrepreneurs refer to the types of entrepreneurs who primarily do

agricultural work. They participate in a wide range of agricultural activities such
as farming, irrigation, agricultural produce, mechanization, technology, etc.
B) Based on the Technology
Based on technology, entrepreneurs are classified into the following types:
i)Technical Entrepreneur
Such entrepreneurs are called technology entrepreneurs who use to start and
continue industries primarily based on science and technology. These
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entrepreneurs develop new ideas and turn those ideas into technology-based
innovations and inventions. They always work to create new methods of
production in the fields of technology and science. Besides, they also
manufacture products that can help ordinary citizens and other non-technical
entrepreneurs in their enterprises.
ii) Non-Technical Entrepreneur
As the name suggests, entrepreneurs who do not set up and run enterprises
based on science and technology are known as non-technical entrepreneurs. In
short, non-tech entrepreneurs are those who work for innovations using
traditional methods. They typically use alternative and exemplary marketing
methods and follow non-technical delivery strategies to engage directly with
customers. This ultimately helps them to survive and grow their business in a
competitive market. Moreover, they create better relationships and meet
customer needs.
C) Based on Ownership
Based on ownership, entrepreneurs are classified into the following types:
i) Private Entrepreneur
When an entrepreneur starts something personal of his or her own, such as

setting up an enterprise, he/she is called a private entrepreneur. A private
entrepreneur is the only person who plays the sole proprietor role for a business
venture and bears the risk associated with it.
ii) State Entrepreneur
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When a state or government does a business or industrial undertaking, it is

referred to as a 'state entrepreneur'. In this case, the government is the sole
owner of the enterprise and will bear all the profits and losses involved with it.
iii) Joint Entrepreneurs
When a business or industrial undertaking is established and operated jointly by

the private entrepreneur and the government, it is called joint entrepreneurship.
The parties involved are called joint entrepreneurs. In this case, risk and profits
are shared by both parties. However, the sharing percentages generally depend
on the type of business and the agreement between the two parties.
D) Based on Gender
Based on gender, entrepreneurs are classified into the following types:
i) Men Entrepreneurs
When any business venture is formed, managed and operated by men, these men
are referred to as men entrepreneurs.
ii) Women Entrepreneurs
When any business venture is formed, managed and operated by women, these
women are referred to as women entrepreneurs. Besides, if women have a
minimum 51 percent share of the capital, they can also be known as women
entrepreneurs.
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E) Based on the Enterprise size
Based on the size of the enterprise, entrepreneurs are classified into the following
types:
i) Small-Scale Entrepreneur
If an entrepreneur has invested up to a maximum of 1 crore in starting an

enterprise, including plant and machinery, such entrepreneur is called Small
Scale Entrepreneur.
ii) Medium-Scale Entrepreneur
If an entrepreneur has invested a minimum of 1 crore to a maximum of 5 crores

in starting an enterprise, including plant and machinery, then such entrepreneur
is called Medium Scale Entrepreneur.
iii) Large-Scale Entrepreneur
If an entrepreneur has invested more than 5 crores in starting an enterprise,

including plant and machinery, such an entrepreneur is called a large-scale
entrepreneur. This includes any investment above 5 crores.
F) Based on Clarence of Study
Clarence conducted a study on American agriculture and classified entrepreneurs

accordingly. According to him, entrepreneurs generally have less initiative and drive
when they start any business venture. However, they learn things with their continued
economic work and become more innovative and enthusiastic. Based on his study, he
classified entrepreneurs as follows:
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Innovating Entrepreneurs
Innovative entrepreneurs, also known as innovators, are the type of

entrepreneurs who usually come to the market with new ideas or innovations. In
particular, they create new products, find new production methods, create new
markets and restructure the business. Such entrepreneurs always try to innovate
and invest their time and money in research and development.
i) Imitative Entrepreneurs
Imitative entrepreneurs or imitating entrepreneurs are often called 'copy cats'.

This is because these entrepreneurs mainly follow and adopt the innovative
entrepreneurs' existing successful enterprise system. They do nothing new of
their own. Imitative entrepreneurs apply strategy from other enterprises in a
manner where all core fundamentals of the original business model are
replicated, and all efficiencies are retained. These entrepreneurs help improve
any product, production process or suggest the use of improved technology
addressed by other enterprises.
ii) Fabian Entrepreneurs
Fabian entrepreneurs are defined as those types of entrepreneurs who generally

do not seek to implement changes in their enterprise techniques. They are very
careful in applying any approach and cautious in exercising any change. These
entrepreneurs are known for not making sudden decisions. They imitate the
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change in their strategy only when it is completely clear that failing to do so will
not harm.
iii) Drone Entrepreneurs
Drone entrepreneurs are defined as entrepreneurs who do not like to adopt any
changes in their enterprise techniques. They strictly follow their traditional
strategies or methods for development, production or marketing. These
entrepreneurs feel or experience pride and tradition in the old ways of doing
business. This is why drone entrepreneurs sometimes suffer losses, yet they do
not adopt changes in their current methods.
Intrapreneur
An inside entrepreneur, or an entrepreneur within an established firm, who uses his creative thinking
without exposing oneself to the risks associated with those activities is an intrapreneur. They are
basically employees within a company. They can use the resources of the firm that they are
employed. Their main objective is to turn their creative idea into a profitable deed.
In the mid-80s, Gifford Pinchot introduced the term “intrapreneur” to describe employees of
established firms who have a creative mind and who act as an entrepreneur within the organization.
Pinchot defines intrapreneurship as “behaving like an entrepreneur when you’re employed at a large
corporation for the benefit of the corporation as a whole”. He further explains the term as “those who
take hands on responsibility for creating innovation of any kind within an organization. The
intrapreneur may be the creator or the inventor but is always the dreamer who figures out how to turn
out an idea into a profitable deed”
Big business houses are always in a need and search of employees who have creative mind and use
their ideas to earn profits. They basically allow their employees to use their resources for
transforming the idea into action and they bear the risk associated with the project. These
organisations take advantage their potential and meet the demands of the market. Thus both
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entrepreneur and intrapreneur have creative thinking and are innovators and seek development and
change which further leads to material growth in the economy
Difference between Entrepreneur and Intrapreneur
Entrepreneur Intrepreneur
1. Entrepreneurs are liberated and self- 1. They are not independent.
contained.
2. They raise the capital on their own. They 2. They utilize the funds of the organization
may face difficulty in arranging the funds. they work with. The resources are readily
available for them.
3. They are their own bosses and the owners of 3. They are the employees of the organization.
the business.
4. They bear the full contingency of loss in 4. They don’t have to bear the contingency of
business. loss.
5. They reap the fruits in the form of profit, if 5. They may not share the profit but may be
the venture is successful. They take the full given some compensation for their innovation.
profit of the business.
6. They may manage the business from outside 6. They manage and operate within the
the organization. organization.
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1.7 Entrepreneur Vs Entrepreneurship
Entrepreneur Entrepreneurship
1. Entrepreneur is a person who has the capacity 1. Entrepreneurship is a venture. It is a process.
to take conception, organization and
management of a venture.
2. He organizes the resources. 2. It is an organized form of resources.
3. He takes the risk. 3. It is an activity of taking the risk.
4. He is an innovator of new product or process 4. It is the process of innovation of new product
or services. or process or service.
5. He is a creative thinker. He generates an idea. 5. Entrepreneurship is putting that idea into
action.
6. He is the person who perceives and envisions. 6. It is the perception and vision.
7. He is the manager and the director for the 7. It is the management and the direction to
business. achieve the goals
Attributes and Characteristics of a successful Entrepreneur
1. Achievement Motivation: The entrepreneur has a high need for accomplishing his goals. He has a
self-motivated attitude. To them attaining their goal is of utmost importance. He is driven
by a need to achieve certain target.
2. Vision and Clear Objective: He has a clear vision in his mind where he wants to go and what to
achieve. In other words his objectives are clear to him as to what type of product to
produce, what changes are needed and how to go with the changing demand of the
consumers and what are their requirements. Based on that he sets his objectives and
works to achieve them and aim at earning profit.
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3. Creativity: An entrepreneur is a creative thinker. He creates an idea in his mind and then
transforms it into action. It is something which is characterized by originality. It is an
ability to produce something new out of imagination.
4. Independence: Entrepreneurs are the persons who like to be their own boss. They can’t work
under others direction. Hence they are independent to work on their own. They like to
make decisions and don’t like to work on the guidance provided by others.
5. Risk Bearing: They are the people who undertake calculated risk and take care of the unforeseen
contingencies which might arise out of various vulnerabilities.
6. Dynamism: The business environment keeps on changing so the entrepreneur keeps on taking the
changing circumstance into account and keeps on improving the things for the better. He
is the person who is pragmatic in approach and moves forward by taking into account the
changes which keep on coming over a period of time.
7. Commitment, Determination and Perseverance: Entrepreneurs are the people who are
determined to achieve their targets and committed towards their goals and continue to
exert their efforts until they succeed in their work. So this never dying attitude works
wonders for an entrepreneur and endlessly motivates him to work.
8. Ability to Find and Explore Opportunity: They are the people who find the opportunity and
explore it and start with a creative mind and visualize. Then they further look for
resources and turn their idea into action.
9. Initiative: They are the people who take a start and begin a new thing or produce a product and
service. They are the problem solvers and possess the inclination and courage to take up
the challenge and then proceed with it taking into consideration all the pros and cons of
the situation.
10. Tolerance of Ambiguity and Failure: Entrepreneurs face ambiguity in every phase of business.
There is uncertainty in every step they proceed because they are initiating a new venture.
But there is always a hope of success and if there is any failure they learn from it and
then move forward.
11. Integrity and Reliability: These two attributes help in building and maintaining trust and
confidence. These are the features which help in building personal and business
relationships and the goodwill of the business and the entrepreneur.
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12. Problem Solver: An entrepreneur is a problem solver. He identifies a problem and gathers
information on the problem to be solved, identifies various alternatives available, approaches the
problem and takes action to solve the problem. Once the problem is solved, he analyzes the results as
well, which involves brain-storming during which a host of new ideas are generated.
13. Team Building: A team is a group of individuals sharing a common goal. The purpose of team
building is to assist the team members in becoming cohesive units of individuals that can
effectively work together to achieve a goal. It helps in making the workplace more
enjoyable, improving communication and productivity. So an entrepreneur should have
the ability to build a team as he will be heading the business towards a common goal.
14. Business Planning and Ability to Mobilize Resources: When an entrepreneur visualizes
something he further makes a plan to achieve it. He frames the process of achieving the
target, lays down the budget, makes strategies to see if there is any competition, and then
takes the requisite action. He always follows the principles of management while
preparing a plan for future. He mobilizes all the resources i.e. men, material, money,
machinery, market and method effectively and efficiently to make a final product or
service.
15. Learning from Experience and Open to Feedback: A successful entrepreneur is a person who
learns from his experiences and then moves forward. He is open to receive any feedback
positive or negative and then makes the changes and the improvement required.
16. Leadership: Leadership is one of the core competencies of an entrepreneur. They need to
provide the necessary motivation and inspiration to the team they are heading in order to
achieve the goals. They must have the capability to drive the team towards the goal. They
need to ensure that the team is functionally strong in certain values like inner morale,
discipline and active participation of the members of the team.
Competencies of an Entrepreneur
An entrepreneur needs to possess certain skills in order to be a top performer. A competence is an

underlying quality of persons, which results in efficient performance. An entrepreneur needs to
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possess certain functional as well as personality traits in order to accomplish the goals and objectives
of the business.
Following are the competencies of an entrepreneur.
1. Initiative: It is the quality of the person in which he initiates work before it is demanded of him or
forced by the event. He takes actions that well go beyond the job requirements or
demands of the situation. These may be the actions to initiate a new venture or those
required to expand the business to new areas and products and services.
2. Sees and Acts on Opportunities: This competency makes an entrepreneur groom seek new
opportunities and build on them. He is shrewd enough to identify opportunities and
obtain various resources such as finance, equipment, land, work space or assistance.
3. Persistence: This competency prompts a person to make repeated efforts to overcome the
obstacles and blocks that come in the way of reaching goals. He may opt for repeated or
different actions to clear the road towards the goal.
4. Information Seeking: He resorts to multifarious ways to seek information and clarify the
problem. He may do personal research, analysis or investigation, consult experts for
advice whether technical or business or use his contacts or network to obtain the required
information.
5. Concern for High Quality of Work: This personal attribute kindles a desire to perform work of
high quality. These are the acts performed to beat the existing standards of business
where own work is compared favorably to that of others.
6. Commitment to Work: His first priority is to complete the work. Irrespective of the challenges
and hurdles that come his way and the sacrifices that he may need to make, he ensures
that he takes on the full responsibility and does everything possible within his ability to
ensure that the customers are satisfied. In this role, the entrepreneur pitches in with
workers to get the job done and expresses a concern for satisfying the customer.
7. Efficiency Orientation: It is a skill to find ways to do things faster, with fewer resources and at
lower cost. The entrepreneur uses information to improve efficiency and express concern
about cost.
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8. Systematic Planning: Make step- by-step plan to reach goals by breaking a large task down into
sub task, develop plans that anticipate obstacles and evaluate alternatives.
9. Problem Solving: It is identification of new ideas to reach goals, gathering all the information,
knowledge seeking as well as keeping in mind the alternative strategies available in order
to solve problems in the work place. It involves generation of new ideas or innovative
solutions. The entrepreneur is a born problem solver and always seeks solutions and
learns from them.
10. Self Confidence: It is a quality of having strong belief in self and own abilities. It is sticking with
own judgment in the face of opposition.
11. Assertiveness: It involves confrontation of problems and issues with other directly. It also is
reprimanding those who fail to perform as expected.
12. Persuasion: It is convincing people in favor whether it is a customer or a financer providing
finance or convincing someone to do any work. It asserts own competence, reliability, or
other personal or company qualities.
13. Use of Influence Strategies: It is using variety of strategies to affect others. It involves acts to
develop business contacts, using influential people as agents to accomplish own
objectives, selectively limiting information given to others and using strategy to influence
or persuade others.
14. Monitoring: It involves developing or using procedures to ensure that work is completed and has
met the standards of quality, personally supervising all aspects of a project.
15. Concern for Employee Welfare: It involves taking action to improve the welfare of employees,
taking positive action in response to employees, personal concerns and express concerns.
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Functions of an Entrepreneur:
The following are the functions of an entrepreneur:
The above mentioned entrepreneurial functions in the diagram can be summed up in three core
functions, which are as follows:
1. Innovation: He is the person who creates new product and services. He is the person who
introduces new combination of products and services in the market.
2. Risk Bearing: He bears risk of unforeseen pitfalls and initiates the new business. An entrepreneur
is a person who looks for the opportunity and then takes risk and moves forward.
Business is a game in which both risks and rewards are huge.
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3. Organization and Management: The entrepreneur organizes the various factors of production in
an efficient and effective manner and then manages the business and takes decisions by keeping all
the alternatives in mind to achieve the goals. Managing finance, production, work force and market is
a responsibility of an entrepreneur.
Importance of an Entrepreneur
1. Economic Growth: He contributes to the economic growth by generating employment

opportunities, capital formation, improve in the standard of living of people by producing
new and better product and services. They play a vital role in infrastructural development
by establishing their business etc.
2. Generation of Employment: They generate employment opportunities as they employ people to
work for them.
3. Bringing Social Stability: They bring social stability by absorption of work force, creating social
infrastructure like schools and colleges and hospitals and supply of qualitative goods and
services.
4. Balanced Regional Development: They bring regional development by setting up industries in
backward areas, developing handicrafts and cottage industries etc.
5. Export Promotion and Import Substitution: They manufacture consumer and capital goods in
order to minimize dependence on foreign industries .Entrepreneurs play a vital role in
export of handicraft items and carpets and stone carvings etc.
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Role of Entrepreneurs in Indian Economy and Developing Economies with

reference to Self-Employment Development.
(1) Employment generation: Entrepreneurs provide employment opportunities on a large scale.

They provide more employment opportunities as compared to large-scale industries as
they also provide employment to artisans, technically qualified persons and professionals.
Educated unemployment is the problem of the nation. They generate employment
opportunities by starting many industrial units and offering jobs to millions. Thus
entrepreneurship is the best way to erase unemployment.
(2) Optimization of capital: Small scale industries raise less capital as compared to large business
houses and provide quick returns on investment due to shorter gestation period. They also
raise capital by mobilizing small savings of people and putting them into productive use
by investing the money in the business.
(3) Balanced regional development: Entrepreneurs set up industries in rural and backward areas.
They help reduce overcrowding in cities by providing employment in rural areas which in
turn lead to better standard of living of people in rural areas. The development and
establishment of industries in these areas leads to better transport facilities, health
facilities, education and entertainment facilities etc .This helps in development of
backward regions.
(Please find from udyogmitra the latest statement for all the above data)
(4) Utilization of local resources: When entrepreneurs set up industries in small and backward
areas, they use the savings, artistry and ability, capability and raw materials etc. Thus
they make the effective and efficient utilization of local resources and provide
employment to the people and also promote the traditional skills. In the nonappearance of
industries in these areas, these resources would not be utilized.
(5) Export promotion: Entrepreneurs help in export promotion of handicraft items, and sometimes
market within the country is not sufficient to absorb the production and therefore new
markets are explored, besides development of small scale industries also help in
development of the economy and rise in production of goods and services. The pressure
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on country’s Balance of Payment is also reduced with the help of small scale industries.
They contribute a significant percentage in India’s total exports.
(6) Consumer Satisfaction: Entrepreneurs identify the needs of the consumers and then produce
goods. They produce a large amount of consumer durables and offer vast choices to the
consumers. They also provide goods and services which are necessities on a large scale.
All this leads to consumer satisfaction.
(7) Better Standards of Living: They help in attaining economic development. They provide goods
and services to the customers at less cost and of good quality as per their needs. If the
goods are available at lower cost than more and more needs can be met, the purchasing
power of consumer increases. This helps in raising the standard of living.
(8) Ancillaries to Large Business Houses: Entrepreneurs may sometime play as feeder to large
business houses by manufacturing components and accessories which are raw material
for large scale units. So they play a complementary role for big business houses.
(9) Distribution or Spreading of Economic Power: Entrepreneurs help in equitable distribution of
income among people by providing self- employment and use of local and limited
resources. They also help in development of backward areas. While big business houses
may enjoy monopoly which further leads to concentration of economic power in few
hands. Promotion and advancement of entrepreneurship helps in distribution of economic
power which in turn debilitate the negative effects of monopoly.
(10) Creating innovation: An entrepreneur is a change agent. He introduces new blend of factors of
production. He introduces new mixture of products in the market. He brings development
in the economy and explores new opportunities available in the market. An entrepreneur
helps in competing the international market and keep on introducing the new technology
and products .So, an entrepreneur’s role as an innovator is of great significance. In a
nutshell we can say that entrepreneurship is the cause of economic development.
Concept of Women Entrepreneurship
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Introduction
Jawahar Lal Nehru remarked “when a woman moves forward, the family moves, the village moves
and the nation moves.”
Modern times have witnessed an array of changes in societal activities. Among them the most
significant and pertinent is woman liberation and empowerment.
Women entrepreneurs have always been contributing to the society in their own ways. However,
there is a growing awareness among women that they can start a new enterprise which helps them to
attain financial independency, self-sustenance, social status and professional achievement. Women
entrepreneurs have come out of the niche market they had created and they have entered in all
industrial sectors. This has created a sizable employment and also has set a trend for other women to
become entrepreneurs.
The number of women entrepreneurs has been rising steadily. In 1981 only 5.2% of entrepreneurial
forces were women. In 2001 it increased to 11.2% and currently it is around 20%. Women have now
started setting up their own enterprises and they are running them very successfully.
Definition of Women entrepreneurs
Government of India has defined women entrepreneurs as an enterprise owned and controlled by
women having a minimum financial interest of 51% of the capital and giving atleast 51% of
employment generated in the enterprise to women.
According to J. Schumpeter an economist and a political scientist:
“Woman who innovates, imitates or adopts a business activity is called woman entrepreneur”.
According to Frederick Harrison:
“Any woman or group of women which innovates, imitates or adapts an economic activity may be
called woman entrepreneurship”.
According to Kamal Singh
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A women entrepreneur can be defined as “a confident, innovative and creative women capable of
achieving self economic independence individually or in collaboration, generates employment
opportunities for others through initiating, establishing and running the enterprise by keeping pace
with her personal, family and social life”.
Thus women Entrepreneurs are women or group of women who initiate, organise and run a business
enterprise. A women entrepreneur has to perform all the activities involved in establishing an
enterprise. These include idea generation and screening, determination of objectives, project
preparation, product analysis etc.
Functions of women entrepreneurs
Women entrepreneurs have to perform all those functions that any entrepreneur would do to start and
run the enterprise. They also have to generate, screen ideas, conduct market analysis, feasibility
analysis (technical, financial, marketing and commercial viability) and project preparation, raise
capital, procure material and men for production and for day-today operations.
The sets of functions performed by an entrepreneur as mentioned in the first module remains the
same for even women entrepreneurs.
a. Innovation
b. Risk- Bearing
c. Organization and management
Further Mr. Frederick Harbison, author of Education, Manpower and Economic Growth has quoted
the following as the functions of women entrepreneurs 1. Exploration of the prospects of
starting a new business enterprise
2. Undertaking of risks and the handling of economic uncertainties involved in business
3. Introduction of innovations or imitation of innovations
4. Coordination, administration and control
5. Supervision and leadership
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There are many challenges which are being faced by women entrepreneurs’ right from the start-up of
the enterprise to its day-to-day functioning. One of the major problems faced by women
entrepreneurs is that they are women. The problems are due to a woman’s duties and responsibilities
towards family and work. These responsibilities are highly demanding and time consuming leaving
little time and energy for entrepreneurial activities.
Literacy, better socio- psychological and educational environment in the family, occupational
structure, financial conditions of the family, status of women etc. also affects the women
entrepreneurs.
Some of the reasons for there being few women entrepreneurs are as follows:-
I. Work/ Home role conflict: - In India, women plays a significant role in looking after the family.
As women give importance to family and relationship, they will have to devote more
time and energy towards the domestic needs. In such situation, tension exists in the form
of dual role conflict; where the women entrepreneur has pressures from the
entrepreneurial role and homemaker role.
There are a number of variables which enhance the dual role conflict such as the family size,
demands of younger children, support from the family etc. The success of women
entrepreneurs also depends on the support extended by her family members in her
business.
Owing to these reasons, women cannot devote all their time and energy towards their business, so
women entrepreneurs must be prepared to cope with work/home role conflicts in the initial
years of the business.

II. Closing the funding Gap:- The major problem faced by many women entrepreneurs across the
globe is funding, it can be initial funding or for expansion. Women entrepreneurs suffer
from lack of funds. Most of women entrepreneurs are not able to provide collateral
security for the loans.
Women’s credit worthiness are considered to be lesser than that of men, one of the reasons is that
they are unable to provide tangible security. The financial institutions cannot fund
without collateral security. Only a few can provide them. Thus the access to external
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funds is limited. To start and run the enterprise women depend mostly on their personal
funds, personal savings and personal loans. This gap of funds i.e. the difference between
the desired level of funds and the actual funds available acts as a barrier for women to
start their own enterprise.
However this phenomenon is beginning to change and the financial institutions along with support of
Government are funding women entrepreneurs; They are also helping and providing
assistance to women entrepreneurs to start their business.
III. Changing preparation : - Traditionally, few women entrepreneurs had formal education and
training of running an enterprise. Most of the women entrepreneurs had started their
business accidentally. They might have worked in some organisation and due to some
problem broke away and started their own enterprise. For many women entrepreneurs
business planning, organizing, staffing, directing and controlling functions of
management were learnt through first–hand experience. The new enterprise they started
was a learning experience.
IV. Raw materials, Labour issues :- Approximately 60% of all women entrepreneurs are in the
service sector (examples; restaurants, boutiques, hotels, cultural, educational institutes,
retail trade etc.) . They have low barrier to enter and exit. This service sector continues to
offer important opportunities to the women entrepreneurs. Many of these are labour
intensive, and highly competitive in nature which poses problems for the women
entrepreneurs to start and run the business.
V. Psycho–Socio factors:- This also acts as a major reason for few women entrepreneurs. Some of
the Psycho – Socio factors are
i. Poor self image
ii. Inadequate motivation
iii. Discriminating treatment in society
iv. Cultural values
v. Lack of courage and self confidence
vi. Inadequate encouragement
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vii. Lack of social acceptance

viii. Unjust social-economic and cultural system
ix. Lack of freedom of expression
x. Afraid of failures and criticism
xi. Susceptible to negative attitudes
xii. Non- persistent attitude
xiii. Low dignity of labour
Role of women entrepreneurs
It is a fact that women entrepreneurs are increasing steadily in the business world and so is their
contribution to the economic growth of the country.
In the process of starting and running the enterprise women entrepreneurs are leaders, innovators, job
creators, and promoters of economic transition. These factors have contributed to economic
empowerment which in turn has led to social empowerment of women. Being Micro entrepreneurs at
the grass root level of society they have been a great boon by aiding in the welfare and development
of people in the lower strata of the society. Women entrepreneurs at the micro level with the help of
self-help groups and government organisations have helped to increase the standard of living of the
poorer sections of society.
In advanced countries women entrepreneurs own more than 1/3rd of small businesses and in Africa,
Asia, Eastern Europe, and Latin America their numbers are growing rapidly.
Any country for its development, needs to utilize its resources to the maximum possible extent
including its human resource component. Women constitute around 45% of the total population, so
their participation in the economic activity is very necessary not only from the human resource point
of view but also for empowering and upgrading the socio-economic status of women. Women
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entrepreneurs are not only contributing towards the economy of the country but are also working at
raising the socio-economic status of women.
Problems of women entrepreneurs
1. Problems to access finance: Women entrepreneurs face difficulty in organizing funds for their
start up enterprises. Even the financial institutions are skeptical about funding ventures
started by women. Added to it some of the reasons for problems to access to finance are
:-
a. Women generally donot have any property in their name, which can be used as collateral security
to borrow from the financial institutions and banks. They usually start from their
personal funds and personal borrowings.
b. The financial institutes do rate women’s’ credit worthiness lesser than men on the reason that
women entrepreneur may discontinue the enterprise at any point of time and it is
also easy for them to exit out of the business.
c. Family members of women entrepreneurs have little confidence in the capabilities and they do not
finance the women entrepreneurs.
2. Limited Mobility: Men entrepreneurs enjoy the liberty of being mobile that is they can travel
from place to place. Mobility of women entrepreneurs in India is limited, it can be due to
family commitments or for safety reasons. The level of confidence to travel across
different regions and states during are less in women compared to male entrepreneurs.
This shows the low level freedom of expression and freedom of mobility of the women
entrepreneurs.
Women entrepreneurs, by and large face the problem of marketing their products and services due to
limited mobility, therefore women entrepreneurs have to depend on the middlemen for
marketing of their products, who charge higher amounts and exploit women
entrepreneurs.
3. Family ties: Women give importance to their family both in developed and developing countries.
Women’s family obligations also pose problems for them to run the enterprise efficiently
as their primary responsibility will be towards their home, children and other dependents.
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Married women entrepreneurs have to do a tight rope walk as they have to strike a balance between
their business and their family life. Their success also depends on the support by her
family members.
4. Male dominated society: The socio-cultural attitudes and views prevailing in the society is not
conducive for women entrepreneurs. Traditionally entrepreneurship was considered to be
forte of men, any deviation to this by women will be discouraged, and their dream of
starting enterprise will be curbed. These attitudes and beliefs act as block for the women
entrepreneurs to start their enterprise and run it successfully.
5. Family conflicts:As discussed earlier women perceive that their primary responsibility is towards
the family, they face a conflict of performing the duties towards the family as they find it
difficult to devote much time with their family.
Women entrepreneurs need to spend much of the time towards business; hence they find it extremely
difficult to meet the demands of their family members and society, all these add to their
conflicts with the family.
6. Role Conflicts: A higher level of commitment, dedication is required for running an enterprise
successfully. As discussed earlier women have to look after the family, they are
overloaded with the role of entrepreneurs added to this the role of taking care of family
aggravates their strain and stress. They will have to cope up with the different roles they
play.
7. Lack of education: Census in India proves that fact that literacy level of women is much lesser
than that of men. Currently the literacy rate of women is around 65.46%. This is one of
the major problems that women entrepreneurs face.
Due to lack of formal education, they are ignorant about opportunities, new technologies, support
given by several institutes, market etc. These create problems even for the smooth
running of the enterprise.
8. Discrimination in their upbringing: We still witness cases on female foeticide. They are
discouraged to start a venture on their own kith and kin, and they are expected to be
passive and to take care of the family.
Even major decisions are taken by others in the family on behalf of women, which acts as a barrier to
their entrepreneurial profession.
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9. Low need for achievement: The major attribute for the success of entrepreneurship is the need
for achievement, self sustenance, independency. But women do lack in the urge for these
attributes, as a reason only few women do venture out and become successful women
entrepreneurs.
Achievement motivation of women is less when compared to men. Lack of education and low self-
confidence leads to low level achievement.
10. Low risk bearing capacity: -Women in India are not financially independent; they depend on
the family for the financial decisions. Thus the risk bearing capacity of women
entrepreneurs is low and it hampers the entrepreneurial career.
Investing funds, running the enterprise and decisions regarding money requires high risk bearing
capacity, courage and confidence. But women have high risk taking capability in day-to-
day life, on the contrary their risk bearing capability is low.
11. Lack of self confidence: Women lack in self-confidence and even hesitate to take decisions on
their own. This may be partly because of the socio–cultural norms prevailing. They have
accepted a subordinate status for a long time.
Women are conservative in their approach towards business.
12. Lack of access to technology and lack of training: Knowledge of new technological changes,
know-how and educational level of the person running the enterprises has a significant
effect on the business.
Lower level of literacy, discrimination, lack of access to training prevents women to acquire the
benefits of technology and they are unskilled to use the technology and have to depend
on others to use the technology for their benefit.
According to ‘The Economist’, “this lack of knowledge and the continuing treatment of women as
second-class citizens keeps them in a pervasive cycle of poverty” (“The Female Poverty
Trap,” 2001). The study indicates that uneducated women do not have the knowledge of
measurement and basic accounting.
Summary
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The term entrepreneurship has grabbed a lot of attention over the last five decades as the small firms
contribute significantly to economic growth. The word entrepreneurship is derived from the French
word “entreprendre” which means “to begin something” or “to engage in”. Entrepreneurship means
to start a new business and face up to the challenges that might come its way. It involves innovation
and fulfilling the needs of people with a profit motive. The person who undertakes this endeavor is
an entrepreneur.
Entrepreneur Vs Intrapreneur
It is interesting to understand various aspects of entrepreneurship, their nature and characteristics. In

modern times we do see entrepreneurs in corporate and are known as intrapreneur, different from
entrepreneur.
Entrepreneur Vs Entrepreneurship
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Entrepreneur is a person who has the capacity to take conception, organization and management of a
venture. He organizes the resources. He takes the risk. He is an innovator of new product or process
or services. Entrepreneurship is a venture. It is a process. It is an organized form of resources. It is an
activity of taking the risk. It is the process of innovation of new product or process or service.
Various attributes and characteristics of a successful entrepreneur are discussed so also functions.
Entrepreneurs in Indian Economy have contributed immensely to growth of economy in terms of

employment generation, optimization of capital, balanced regional development, mobilization of
local resources and creating innovation.
It also interested to know there is entrepreneurial culture which is discussed.
Self Assessment Questions
Fill in the Blanks
1. Entrepreneurship is a process which is …………..

2. ……………… is a person who has the capacity to take conception, organization and management
of a venture.
3. ……………….are employees of established firms who have a creative mind and who act as an
entrepreneurs within the organization.
4. Entrepreneurs are driven by………………..
5. Entrepreneurs help in…………………….
6. Entrepreneurs play a vital role in………………..
7. Entrepreneurs act as a ………….in large business houses.
8. Promotion and advancement of entrepreneurship helps in …………………..
9. An entrepreneur is a…………………..
10. Entrepreneurship is the cause of........................................Entrepreneurship
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1.13 Terminal Questions
(2 marks questions)
1. Define entrepreneurship.
2. Define entrepreneur.
3. Give any two differences between an entrepreneur and intrapreneur.
4. Give any two differences between entrepreneur and entrepreneurship.
5. Mention any two characteristics of an entrepreneur
6. What is entrepreneurial culture?
(5marks question)
1. What is entrepreneurship? What are the characteristics of entrepreneurship?

2. Who is an entrepreneur? What are the attributes of an entrepreneur?
3. Give differences between an entrepreneur and an intrapreneur.
4. Give differences between entrepreneurship and entrepreneur.
5. What are the various characteristics of an entrepreneur?
6. What are the characteristics of entrepreneurship?
7. What are the various competencies of an entrepreneur?
(14 marks question)
1. What do you mean by the concept of entrepreneurship? Define entrepreneurship. What are the
various features of entrepreneurship?
2. What do you mean by the concept of an entrepreneur? Define entrepreneur. What are the various
features of an entrepreneur?
3. What is the role of an entrepreneur in an Indian Economy?
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1.14 Answers
Answers to Self Assessment Questions.
1. Action oriented.
2. Entrepreneur
3. Intrapreneurs
4. Achievement motivation
5. Employment generation
6. Balanced Regional Development
7. Feeder
8. Distribution of economic power
9. Change agent
10. Economic development
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MODULE 2
ESTABLISHMENT OF ENTREPRENEURIAL VENTURE
1.1 Environmental Analysis-PESTEL ANALYSIS

1.2 Methods/techniques of generating ideas - Brainstorming , Mind
mapping, Storyboarding, Role-playing & Reverse Thinking
1.3 Business planning process – steps in preparing Business plan
1.4 Feasibility study- Technical, Financial, Marketing, personnel
and management Feasibility
1.5 Estimating and Financing fund requirement.
1.6 10 Steps for improved Innovation Management
1.7 Entrepreneurial decision process
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1.1 ENVIRONMENTAL ANALYSIS – PESTEL ANALYSIS
Before starting the business, it is wise on the part of the entrepreneur to generate an idea, which
is commercially viable in all respects. There are many factors which affect the business
environment some are controllable and some are uncontrollable. The government policy,
changes in consumer tastes, advancement and development of new technology are some of the
factors over which a business has limited control. The level of inflation, interest rates and
exchange rates are the factors which are macro and business taxes, flooding and all are the
factors which are micro. While framing a business plan the influence of all these factors in the
present scenario as well as the future should be kept under consideration.
Pace of Environmental Change
The business environment keeps on changing and there are three of change namely levels which
the environment changes stable, dynamic and turbulent. The business strategy or the business
plan is different for different kinds of environment.
1) Stable –In this type of environment there is very less change in the environment in which a
business operates. If there are any changes then they are easily adaptable without any much
modification in the business plan.
2) Dynamic – In this type of environment the changes are there but not at such a grave level.
Some changes can be predicted and some cannot. Some may be entering the market and
some may be leaving the market and business adapts in order to remain competitive in the
market.
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3) Turbulent –This type of market there are a lot of changes that take place which cannot be
predicted and the changes are swift. Frequent new development, new entrants, changes in
relation between the business parties and others.
Search and Scanning
An entrepreneur first identifies the key elements and their features by a process called scanning
environment. The main aim of scanning is to track the change which is under way and giving a
proper lead time to business for adopting the change. Thus scanning the environment helps an
entrepreneur to make decisions in favor of the business by considering the various factors which
affect the business. It helps in understanding the market. It is not just observing the deviation in the
environment but also sensing the opportunities out of the present situation.
PEST (Political, Economic, Social and Technological) analysis is a part of the environmental
scanning and is used by the companies while framing their business strategies. This analysis reveals
the various external factors which affect the performance of business.
Following is the list of various environmental factors which affect the business as per the nature of
the business:
P-Political
This refers to the degree of intervention of the Government in the economy. Political decisions can
influence many areas like health, education and infrastructure. It involves the inclination of political
parties. Some of the factors which affect the political environment are:
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a) Taxation Policy- Indian economy has a well-developed tax structure. It comprises of taxation
policies Union Govt., State Govt. and Urban and Rural local bodies. The taxes and duties which are
levied are income tax, custom duty, central excise, state tax, service tax, stamp duty, state excise,
octroi tax etc. All these affect the business environment.
b) Deregulations
c) International trade regulations
d) Government Stability
e) International Stability
E-Economic
It involves the tools like interest rates, inflation, exchange rates etc.
a) Higher interest rates may bring the investment down because it makes borrowing costlier.
b) If the currency is strong it may bring the exports down because it will raise the price in terms of
foreign currency.
c) Inflation may provoke the demand in terms of wages.
d) The product demand may grow if there is increase in national income.
The factors can be listed as:
i) Rates of Interest
ii) Supply of Money
iii) Credit control
iv) Financial markets
v) Inflation in the Economy
vi) Price strategies of the competitors
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vii) Globalization
S-Social
The changes in the social and cultural values of an economy and the shifts in demography may occur
over the period of time. Hence the changes in social trends can impact the demand of a particular
product and service. It is important to take into account the direction in which the society is moving
and frame the policies according to the changing scenario of the society. The factors can be listed as:
i) Population Growth
ii) Age Structure
iii) Rural to Urban Migration
iv) Social and Cultural Shifts
v) Income Distribution etc.
T-Technological
The technological changes can have immense impact on the business. It includes the following
i) The expenditure on research and development done by the competitors which may give
an indication if any changes are taken place in the process or new product development.
ii) Whether the introduction of new product creates a new market in the economy.
iii) How the improvement in production process can be done with the use of technology and
to gain a competitive advantage.
iv) The rate of adoption of new technique also influences the business plan as it should be
considered as to how long it will take for a new product to get adopted in the market.
E- Environmental Factors
Environmental factors concern the ecological impacts on business. As weather extremes become
more common, businesses need to plan how to adapt to these changes.
Key environmental factors include the following:
 Weather Conditions
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 Temperature
 Climate Change
 Pollution
 Natural disasters (tsunami, tornadoes, etc.)
L - Legal Factors
There is often uncertainty regarding the difference between political and legal factors in the context
of a PESTEL analysis. Legal factors pertain to any legal forces that define what a business can or
cannot do. Political factors involve the relationship between business and the government. Political
and legal factors can intersect when governmental bodies introduce legislature and policies that
affect how businesses operate.
Legal factors include the following:
 Industry Regulation
 Licenses & Permits
 Labor Laws
 Intellectual Property
1.2 METHODS OF GENERATING NEW IDEAS
Even with the wide variety of sources available, coming up with an idea to serve as the basis for the
new venture can still be a difficult problem. The entrepreneur can use several methods to help
generate and test new ideas, including focus groups, brain storming and problem inventory analysis.
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1. Brainstorming
A group method of obtaining new ideas and solutions is called brainstorming. The brainstorming
method for generating new ideas is based on the fact that people can be stimulated to greater
creativity by meeting with others and participating with organized group experiences. Although most
of the ideas generated from the group have no basis for further development, often a good idea
emerges.
2. Storyboarding
Storyboarding has to do with developing a visual story to explain or explore. Storyboards can help
creative people represent information they gained during research. Pictures, quotes from the user, and
other pertinent information are fixed on cork board, or any comparable surface, to stand for a
scenario and to assist with comprehending the relationships between various ideas.
3. Role Playing
Walking in someone else’s shoes is everything but easy, but sometimes it’s the only way to break the
barrier and think of a brilliant idea. The process is simple: you just need to switch places with your
colleagues and try to embrace their point of view. It doesn’t guarantee immediate results, but it often
leads to interesting conclusions and brand new ideas.
4. Mind Mapping
Mind mapping is another method to get through the creative drought successfully. By definition,
a mind map is a diagram for representing tasks, words, concepts, or items linked to and arranged
around a central concept or subject using a non-linear graphical layout that allows the user to build
an intuitive framework around a central concept.
5. Reserve Brainstorming: Reverse Brainstorming is much more effective. It’s another way
of brainstorming. This reverse brainstorming technique can help to solve problems and leads to the
development of creative ideas everyone participates in. It’s a technique to approach problems that
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initially appear difficult from a different perspective. This method is also known as ‘negative
brainstorming’.
1.3 BUSINESS PLANNING PROCESS
Businesses in today’s world face lot of challenges. Business Planning Process involves extensive
planning using data drawn upon a number of assumptions. Thus a business planning process is
critical and important. Irrespective of how uncertain the future may be, the stakeholders, the financial
institutions and other supportive institutions will need to approve a project and they will look for a
formal business plan with a comprehensive plan process.
A document with a comprehensive business planning process will be of great value to an
entrepreneur who is trying to achieve his dream of bringing to reality his business idea business idea
by using the document to monitor evaluate and strategize as the business is implemented.
The Nature of the Business Planning Process
The business planning process should be an unending exercise that has to be regularly conducted.
The pace with which a business undergoes change will be a deciding factor of how frequently a
business plan should be reviewed and updated. If an industry moves fast then brisk and regular
business planning activities are required because of need for quick decision making. Some even
adopt for changeable business plan approach so that regular incorporation of changes and updation
can be made with the changing business environment and the market. A technique known as scenario
planning may be used to predict what changes may take place in future and what are the warnings
and danger signals which are arising that a particular sequence of events may emerge in future. The
environment should be continuously observed and if the changes are taking place in the market, then
the modification and review of the business plan should be done accordingly.
Overview of the Business Planning Process
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The Business Planning Process must be compliant, easily modifiable and an unending exercise
providing assessment at every stage. It should be adaptable to meet the needs of the organization.
Following is the overview of a business plan.
1. Strategic Planning: Strategic planning is a management tool for making decisions about the
future keeping in mind the present sequence of events. That is, a strategic plan is a road map
to lead an organization towards attaining its goals. It takes into consideration the main
objectives and the output of the business. It is a systematic and continuous decision making
process which takes into consideration the customers, suppliers, competitors, business
environment, industry analysis, firm analysis, product and portfolio analysis and also the
stakeholders analysis.
2. Marketing Plan: Considering the current state of affairs of the business and its environment,
the future may be examined by the planning process. Techniques like scenario planning may
be used to predict the market for the future taking care of the present environment and the
steps taken by the competitors. Various marketing strategies should be made and the business
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plan should be flexible enough to adapt to alternative marketing strategies and how the
business should proceed with it should be taken into account.
3. Operational Planning: At this stage, the vision, mission and objectives of the business
should be clear so that the alternative strategies can be adopted to go further. The objectives
may be further broken into small operational plans which should define how the action should
take place. A financial model should be built at this stage of business planning process.
4. Business Model: A business planning is a framework for testing the strategy and operational
plans of the business, whether it will help in achieving the goals of the business or not. It
describes the revenue a business may generate and the expenses it may incur. The quality of
the strategy adopted may be assessed, but a business model also allows the strategic choices
to be evaluated quantitatively with the help of internal rate of return, net present value and the
payback period. In other words a business model discovers the financial strength of a strategic plan
and through a repetitive process the strategy and tactics keep on changing until the final solution is
reached.
5. Examine Funding: Business model can be used as a key to evaluate the funding
requirements and to know the period, as to how long the funds are required. With the aid of
the business model, those who will sanction the funds, be able to thoroughly examine the
funding requirements of the firm.
6. Risk Analysis: Investors are concerned about the risk involved in the project. Qualitative risk
analysis can be done to identify the probable risks. Business model can also be used to do the
quantitative risk analysis and describe the variables which can affect the output. Further,
sensitivity analysis can be performed. In general risk analysis is done after the financial
strategy has been framed.
7. Approval of Business Plan: At this stage the business plan is completely framed and written
to make it consistent. Later it is presented to those who will finance the project and sanction
the implementation of the plan.
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8. Implementing the Business Plan: This is the final stage where a business plan which has
been approved is implemented and actions that will be taken.
1.4 FEASIBILITY STUDY
A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an
existing business or proposed venture, opportunities and threats present in the environment, the
resources required to carry through, and ultimately the prospects for success. In its simplest terms,
the two criteria to judge feasibility are cost required and value to be attained.
A well-designed feasibility study should provide a historical background of the business or project, a
description of the product or service, accounting statements, details of the operations and
management, marketing research and policies, financial data, legal requirements and tax obligations.
Generally, feasibility studies precede technical development and project implementation.
A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an
important factor in the credibility of the study for potential investors and lending institutions. It must,
therefore, be conducted with an objective, unbiased approach to provide information upon which
decisions can be based.
Investment proposals, involving huge capital outlay are invariably irreversible. Therefore, before
starting a project/proposal, it is necessary and imperative to find out whether the same is feasible or
not.
1. Technical Feasibility: Technical feasibility or analysis involves determination of technical

requirements of an industry. When a project is formulated, the analysis of technical and
engineering aspects need to be understood. It is generally seen that small scale units may not
go for projects which involve huge costs and high technology. But they rather adopt proven
technology, which makes the proposition to begin easily. The demand potential and the
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project design are to be considered while making a choice of technology. Technical feasibility
reviews the techniques and processes which are applied to the project which is proposed.
The following aspects are considered while considering a particular technology:

a) The technology should be proven and beneficial for a particular project to be adopted and
the success and risks should be calculated.
b) The technology should be based on the raw material availability.
c) The technology should work in the local environment.
d) The risk of obsolescence and the updating of technology should also be considered while
selecting a particular technology.
e) Have the preliminary tests been done or not?
f) Have the optimal scale of production been opted?
g) Is there a provision for auxiliary equipment and supplementary engineering work?
h) Is the technology adopted is acceptable from social point of view?
The technical analysis seeks to determine whether the prerequisites for the successful
commencement of the project have been considered and good choices have been made with
respect to location, size and process etc.
2. Financial Feasibility: Financial analysis deals with the estimation of total cost of a project
and whether it is realistic or not. It seeks to ascertain whether the proposed project is
financially viable or not and will be able to give the returns to those who financed the project
and provided for the capital. It comprises of startup capital requirements, start-up capital
resources and potential return for the investors. The following aspects need to be studied
while conducting a financial feasibility study:
a) The start-up capital required, its break-up in terms of capita required to purchase plant and
machinery, land and building, other fixed assets.
b) The requirement of working capital.
c) Sources of finance
d) Profitability of the project
e) The probable financial position
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f) The risk factor involved

g) All the tools of financial analysis like ratio analysis, break even analysis etc.
3. Market Feasibility: The primary motive of a business is to sell a product and earn profits.
So, there is a need of a good market of products manufactured by a unit. The business mainly
depends upon the market share it possesses. There is a cut throat competition in the market.
Market analysis comprises of the potential market, the segmentation of the market, the
forecast of demand, the strategies to be adopted for marketing, the cost and pricing methods
etc.
It is basically concerned with two main queries.
(i) Is the projected demand reasonable in light of the customer trends, the competitors in
the market, the capacity of the plant?
(ii) What would be the market share of the project?

The following information is required for market feasibility study:
a) The trend of consumption in the market in the past and the present consumption.
b) The possibility of production and the hindrances in production.
c) The imports and exports
d) The competitive structure
e) The cost structure
f) The consumer behavior
g) The distribution channels available
4. Personnel and Management Feasibility:
To run an enterprise, it must require a management and some personnel to control the
management issues. This also includes:
a) Manager’s names, titles, responsibilities, background, experiences, skills, cost

etc.
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b) Personnel requirement.
1.5 ESTIMATING AND FINANCING FUND REQUIREMENTS
Cost of Project and Explanatory Notes
Cost estimates have to be up-to-date and comprehensive to avoid over runs.
It should include the following:
1. Land and Land Development

2. Building
3. Plant and Machinery
4. Miscellaneous fixed assets
5. Deposits (for power, telephones etc.)
6. Preliminary and Preoperative expenses
7. Interest during Implementation period
8. Contingencies (% of fixed assets)
9. Working Capital Margin
TOTAL :
Explanatory Note on Cost of the Project:
Brief details regarding various items of cost of project including the facts and assumptions will
be furnished under this head.
1. Land & Land Development:

The land cost including legal expenses of registration, stamp duty + land development
expenses like leveling, approach roads, fencing etc., will be included.
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2. Building:
The total cost of building will be included and the detailed estimates from the Architects will
be given in an annexure.
3. Plant and Machinery: This cost will include in ex-works price + custom duty, clearance
charges (wherever applicable), transportation and insurance charges, handling and erection
charges, power wiring expenses etc. Also it includes other material handling facilities,
factory furniture’s, laboratory facilities and maintenance workshop.
4. Miscellaneous fixed Assets: It will be towards acquiring office equipments and other
miscellaneous fixed assets.
5. Preliminary and preoperative expenses: The details regarding fees paid to consultants for
preparation of project report, fees for initial explanatory or investigation studies, loan
application fees, postage / telephone charges, traveling and conveyance, preoperative
salaries and cost of trial runs and other contingencies etc. will be included in this head.
6. Interest during construction period: Depending on the implementation schedule,

the interest on loan - term loan during pre-commissioning period at the rates presented by
financial institutions will be provided (in months).
7. Contingencies: Provision for contingencies could be made as a % on the cost of fixed

assets. This may vary from 5% - 10% of fixed assets. This will take care of unforeseen
expenses and any variation or escalation on estimated fixed assets.
9. Working Capital Margin: This will be the margin to be brought in by the company for the
first year of operation. The working capital assessment will include estimating the quantity and
cost as follows
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1. Raw materials for ……… months / days.

2. Semi finished materials for ……… months / days.
3. Finished materials for ……… months / days.
4. Working expenses (Salaries, Utilities, Administrative expenses etc.,)
for ……… months.
5. Less sundry creditors for ……… months / days.
Banks follow certain norms like Tandon committee report, Chore committee reports for
working capital assessment. The margin may also vary depending upon the specific product,
raw materials and its specifications etc., interest rate as applicable and fixed by the banks.
Means of Finance and Explanatory Notes

Having assessed the cost of project, it would be essential to find out the proposed arrangements
and sources for the cost.
The following are some of the sources of finance normally considered under project financing.
a. Term loan from financial institution / Banks: ---------------
b. Own capital: ---------------
c. Unsecured loan from friends and relatives: ---------------
In addition the working capital requirement has to be arranged by seeking working capital loan
from Commercial Banks.
Own Capital: Normally certain % of cost of project will be stipulated to be brought in by the
promoters as their contribution. This will vary depending upon the proposed location of the
unit and the professional / technical background of the promoters. It varies from 20% - 30%
(The percentage can be lower than and it may vary for different products/services and different
type of entrepreneurs)
Also the overall debt: Equity ratio will be permitted depending upon the size of unit.
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Generally the financial institutions / banks insists for debt equity ratio as 75: 25 (3:1) and 66:
34 (2:1) based on the project cost.
However while computing equity in addition to promoter’s contribution, unsecured loan from
friends and relatives can be included under equity side.
Term loans: The term loan is provided for acquisition of fixed capital assets like land,
building, plant and machinery. The loan will be secured and the security margin will be
decided by institute lending the loan. Generally the security margin is the difference between
the value of fixed assets offered as security and the amount of loan sanctioned against secured
assets.
Production Program
In the project report, it will be necessary to assess the production levels achievable for first,
second, third and subsequent years. The operating capacity levels will depend on the nature if
the project / product, technology absorption levels and other infrastructure facilities, training
and acquisition of the skill by workers, etc. The capacity level can accordingly fix as 60%, 70%
or 80% for I, II and III year for a particular process industry. Also the number of operating
days in a year and the number of operating shifts will have to be indicated.
Cost of Production and Profitability and Explanatory Notes
Cost of production and profitability will be worked out for a period of 9 – 10 years after the
project goes into commercial production. Profitability projection computed on the basis of
sales/ production program and operating costs indicate the viability of the project. Availability
of other sources of income such as sale of scrap, sale of by-products or waste, job work etc. are
to be incorporated in the statement.
The statement should indicate the approximations such as subsidies, tax exemptions, etc. and
net tax payable for the respective periods.
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It is essential to make realistic forecasts of the total production manufacturing cost in a project
report in order to determine the future viability of the project. Inaccurate estimate leads to
unexpected future losses. Production costs should be calculated as total costs and preferably
also as unit costs. In the detail project report, total production costs should be worked out.
Normally total production costs should be worked out for full working capacity level and then
adjustment to the percentage capacity utilization of lower level could be worked out.
Broadly the costs are grouped as follows.

a. Factory costs.
b. Administrative costs.
c. Sales / distribution costs.
d. Financial costs and depreciation.
Labor & Supervisory charges: After calculating the labor and supervisory charges, it should
also provide for an increase in wages and salaries at about 5% level per year, 25% additional
provision on wages and salaries is to be made for provident fund gratuity and other perks.
Depreciation: Provision for depreciation is to be calculated by two methods, Straight Line

Value (SLV) and Written Down Value (WDV). The rate of depreciation is as follows.
On Building @ 3.5% and Plant and Machinery, Equipments, Furniture and other fixed assets
@ 10% by SLV method and the corresponding rates WDV method are 10% and 25%
respectively.
Cash flow & Financial Indicators: A cash flow statement indicating sources of funds and
application of funds for pre-construction period (pcp-taken as one block period) and for 9-10
years of operations will have to prepared. The cash flow should indicate the debt service
coverage ratio for each period shown as under.
(𝐏𝐫𝐨𝐟𝐢𝐭 𝐃𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧(𝐒𝐋𝐕) 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐨𝐧 𝐭𝐞𝐫𝐦 𝐥𝐨𝐚𝐧

Debt Service Coverage Ratio(DSCR)
𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐨𝐧 𝐭𝐞𝐫𝐦 𝐥𝐨𝐚𝐧 𝐭𝐞𝐫𝐦 𝐥𝐨𝐚𝐧 𝐢𝐧𝐬𝐭𝐚𝐥𝐥𝐦𝐞𝐧𝐭
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Cumulative DSCR is calculated by dividing sum of the nominators of DSCR for individual
years by sum of the denominators. Normally cumulative DSCR should be above 1.50 for a
viable project.
Break even analysis: The cost of production has to be segregated into fixed cost and variable
costs. If there are certain semi variable costs, they have to be further divided into fixed and
variable costs.
E.g. of fixed cost :Salaries, interest on term loans, Administrative expenses & overheads
Depreciation, factory overheads, Demand charges of power etc.
E.g. of variable cost :Raw materials, consumables, energy, fuel & water charges, interest on
Working capital, selling expenses etc.
Fixed Cost for the period

Breakeven Point =Sales value for the period − Variable cost for the period Fixed Cost for the period Χ
Break even turn over : BEP% X sales turnover per annum
Debt Equity Ratio: The actual Debt Equity Ratio shall be worked out. The outer limit of the
Debt Equity Ratio for is 3:1for small projects and it is 2:1 for large scale projects. While
calculating the ratio personal borrowings by the promoter from the relatives and friends are to
be taken on the equity side.
Return on Investment: Return on investment (ROI) is a financial metric that is widely used to
measure the probability of gaining a return from an investment. It is a ratio that compares the
gain or loss from an investment relative to its cost.
Return on Investment = Net profit / Cost of Investment x 100
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Pay Back Period: Pay Back Period is defined as the length of the period required to recuperate
or recover the original investment outlay (i.e. cost of project) through the profit earned by the
project. Profit is defined in this case, as net profit after tax adding financial cost and
depreciation. This profit is considered as cash inflow.
For example if the original capital outlay for a project is 600,000 SAR and if it generates cash
inflow of 100,000 SAR, 150,000 SAR, 160,000 SAR and 200,000 SAR in the first, second,
third and fourth year respectively, it’s payback period is slightly less than 4 years.
(1st year + 2nd year + 3rd year + 4th year) i.e.
(100,000 + 150,000 + 160,000 + 200,000) is more than 600,000 SAR (cost of project).
If the project has an initial outlay of 1,500,000 SAR and constant cash inflow of 300,000 SAR
then the payback period will be
1,500,000/ 300,000 = 5 Years
Shortest the payback period, the more desirable the project. It is the simple concept of
evaluation. But it has serious limitations like its failure to consider the time value of money,
and ignores cash flows beyond payback period etc. However it is still used in project appraisals
since it conveys information about the rate at which the uncertainty associated with the project
is resolved.
Net Present Value (NPV):

The net present value (NPV) of a project is defined as the value obtained by discounting,
separately for each year, the difference of all cash out flows and inflows, accruing through the
life of the project at a fixed, predetermined interest rate. This difference is discounted to the
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point at which the implementation of the project is supposed to start. The NPVs obtained for
the years of the life of the project are added to obtain the project NPV as follows.
1.6 10 STEPS FOR IMPROVED INNOVATION MANAGEMENT
Step 1: Know what innovation means

Before you start on the path to innovation, be sure you know what innovation is and is not. A lot of CEOs say,
“innovation is our number one priority.”. Innovation is the implementation of creative ideas in order to add
value to the firm, usually through increased income, reduced operational costs or both.
Step 2: Innovation is a group thing

Innovation is not an individual thing. It is a corporate thing. In business, ideas need to be evaluated for
viability, developed into concepts and turned into reality. A new product idea, for example, will likely involve
developing prototypes, seeking feedback, testing functionality, setting up production facilities, seeking
suppliers and much more. Each of these steps requires the participation of numerous different people, all of
whom contribute to the overall innovation process.
Step 3: Define your innovation goals

Just doing innovation is not enough. You need also to have clear innovation goals to shoot for.. Typical
innovation goals might be to ensure that 25% of your product line is replaced annually; or to improve process
efficiency by 5% per year; or that your firm is the technology leader in your sector; or that your company
achieves a billion dollar turnover by 2021. Once you have clarified these goals, you will find innovation
initiatives are a breeze to set up.
Step 4: Priority sized budget

After all, you need to set up an innovation process, put a team in charge, invest in innovation tools and
probably invest in training. The ideas with the greatest innovation potential are by necessity radically different
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to business as usual. If you are going to aim for breakthrough innovation, then you need to provide budget for
developing and implementing breakthrough ideas.
Step 5: Work on your innovation culture

For creativity and innovation to thrive, you need to have a corporate culture that nurtures creative thinking,
sees mistakes as on the job training and embraces every step of the innovation process.
Step 6: Establish diverse teams

Diversity of membership brings a broader range of knowledge, experience, thinking and creativity to any
team. You should therefore ensure that project teams, problem solving teams and all teams that are expected to
contribute to your innovation process are as diverse as possible.
Step 7: Collaborative tools

Collaborative tools can help support your innovation process, particularly if your firm has hundreds or
thousands of employees. In smaller firms, Wikis, blogs and shared documents permit a lot of collaboration
with little technological investment. In larger firms, innovation process management tools can help ensure
cross enterprise collaboration, facilitate collaboration by predefined teams as well as ad hoc virtual teams and
provide a detailed record of your innovation results.
Step 8: Make mistakes

Make mistakes and learn from them. Most great innovations are built upon mountains of mistakes. As long as
you can identify ideas that will not work relatively early in their implementations, you can avoid them before
they eat up too much budget.
Step 9: Implement
Innovation is not about ideas or creativity or training programmes. It is about implementing creative ideas in
order to add value. If the firm is reluctant to implement highly creative ideas, then the entire innovation
process will be little more than a creative thinking exercise. Moreover, if employees note that highly creative
ideas are routinely not implemented, they will not bother sharing or developing such ideas.
Step 10: Evaluate and improve
The company’s innovation process can also improve through innovation. That’s why entrepreneur’s need to
review the process and the results on a regular basis. Moreover, the entrepreneur must implement the process
for generating, developing and implementing ideas for improving that innovation process.
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1.7 ENTREPRENEURIAL DECISION PROCESS
1. The Present Status:
There is an apt saying: “Change is the law of nature and change is the only permanent thing in this
world” Yet, change is often resisted because it involves uncertainty which causes fear. It is due to
uncertainty, the present state of affair is considered better than the unknown one after the change.
As such, leaving the present status and becoming an entrepreneur (i.e., a synonym of risk and
uncertainty) is not easy as it takes a great deal of preparation and courage to do so. Nonetheless,
individuals dare it and become entrepreneurs.
Broadly, there are two reasons for individuals to become entrepreneurs:
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(i) By chance, and
(ii) By compulsion.
2. Reasons for Changing the Present Status:
Entrepreneurship being a difficult journey, the obvious question is: What are the reasons that people
still become entrepreneurs? Researchers have tried to understand and answer these questions. The
researchers report that people generally become entrepreneurs because of economic reasons.
These include unemployment, completion of education, dislocation, no or less possibility for career
and / or economic prosperity, etc. Nonetheless, the personal dislocation is reported as one of the most
powerful reasons galvanizing an individual’s will to become an entrepreneur.
3. Desire for Change from the Present Status to Become Entrepreneur:
Evidences are available to believe that the desire to start one’s own enterprise and, thus, become an
entrepreneur is spawned by some factors like the culture and family one belongs to and the teachers
and peers one comes into contact with. Like elsewhere in the world, there are cultures in India also
which place a high value on being entrepreneur.
For example, Punjabis and Gujaratis in India represent such cultures which value more on making
money, becoming one’s own boss, having more individual opportunities for being successful in
career and life.
4. Possibilities to Become an Entrepreneur:
No doubt, the desire to form an enterprise needs to be present before forming an enterprise, but just
desire to form an enterprise cannot make an individual an entrepreneur. Also needed is possibility,
better call it supportive and facilitative structure, to form an enterprise.
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Available literature on entrepreneurship indicates that an individual’s business background,

educational background, previous experience, government attitude, availability of finance and market
and, of course, one’s role models in business world make it possible to form an enterprise.
5. Entrepreneur:
Finally, to have someone else successful in business as one’s role model also makes enterprise
formation possible. The reason is the role model develops the feeling of ‘self efficacy’ in the
individual.
That is: “If that person can do and succeed, so can I also.” In other words, entrepreneurs are not born,
they develop. It is possible to become entrepreneur.
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Module-3
Entrepreneurship Development and Government
1. Role of Central Government and State Government in

promoting entrepreneurship.
2. Introduction to various incentives, subsidies and grants.
3. EOUS-fiscal and tax concession available.
4. Support extended by Commercial Banks and Financial
Institutions and Government like IDBI,ICICI, SIDBI,
SFCS, KSIDC, SIDO, AWAKE, TECKSOK, KVIC.
5. Role of various agencies in entrepreneurship
development- DIC, SISI, EDII, NIESBOD, NEDB.
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ENTREPRENEURSHIP DEVELOPMENT AND GOVERNMENT
 Role of Central Government and State Government in promoting entrepreneurship.
 Introduction to various incentives, subsidies and grants.
 EOUS-fiscal and tax concession available.
 Support extended by Commercial Banks and Financial Institutions and Government like
IDBI,ICICI, SIDBI, SFCS, KSIDC, SIDO, AWAKE, TECKSOK, KVIC.
 Role of various agencies in entrepreneurship development- DIC, SISI, EDII, NIESBOD,

NEDB
ROLE OF CENTRAL GOVERNMENT AND STATE GOVERNMENT IN PROMOTING

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A lot of entrepreneurs in small scale sector should have some technical knowledge to look after
production and quality aspects. In small scale sectors entrepreneurs require a lot of guidance and
support in the starting and production stage of the industry in various projects and business activities.
The main areas needed are: guidance, project report preparation, lay out of the plant and location,
selection of human resources and machinery, competition range, and other different marketing
aspects, several marketing aspects, a numerous types of finance facilities and Government assistance
and subsidies.
Institutional support will extent essential guidance and provide inputs and helping industries in
molding during the beginning stages of an enterprise. Any enterprise will have certain problems and
troubles in the beginning stages of the organization. By taking the institutional support organization
can sort out the troubles. Infrastructural facilities are minimum level requirement to start any
enterprise. The deficiencies of the infrastructure can’t be compensated by financial assistance and
concession control, e.g. communication and transport etc… because of this reason industries have not
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been developed in the backward areas although they are having financial assistance and concessions
given by the Government. Small entrepreneurs lack huge funds which is required creation of
infrastructural facilities.
By viewing this, Central Government and State Government have established various institutions for
non-financial assistance for the small scale sector and they are:
1. National small industries corporation Ltd. (NSIC).
2. Small Scale Industries Board (SSIB).
3. Small Scale Industries Development Corporation (SSIDC).
4. Micro Small and Medium Development Institute.
5. District Industries Centers. (DIC).
6. Directorate of industries and commerce of the State Governments.
7. Specialized institutions.
8. Technical Consultancy Organization. (TCO’s).
9. Khadi village industries commission. (KVIC).
10. Industrial estates.
11. Entrepreneurship Development Institute of India (EDI).
12. Association of Women Entrepreneurs of Karnataka (AWAKE).
13. Technical Consultancy Services Organization of Karnataka. (TECSOK).
Financial Assistance from Commercial Banks
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The Small Scale Industry faces many problems despite its importance in an industrialization strategy
and generation of employment. The biggest hurdle is lack of availability of timely and adequate
credit. During the early days of promotion of SSI, The Government of India focused on the need of
credit policy for SSIs. The following components have been included in the credit policy.
Priority Sector Lending
It has been ensured as the priority of banks to give credit to small scale industries. Banks are also
required to ensure that out of their overall lending 40% is made to priority sectors like agriculture,
small scale industries, exports etc. Hence lending to small scale industries is taken as a priority
lending.
Institutional Arrangements
Small Industries and Development Bank of India is set up with an aim to help the growth of micro
and small industries. It is an apex refinance bank. State Financial Co-operation and Scheduled banks
provide term loans. NABARD and National Small Industries Corporation also provide credit lending
in direct and indirect form.
CENTRAL GOVERNMENT INITIATIVES IN PROMOTING ENTREPRENEURSHIP
The Government of India has undertaken several initiatives and instituted policy measures to foster a
culture of innovation and entrepreneurship in the country. Job creation is a foremost challenge facing
India. With a significant and unique demographic advantage, India, however, has immense potential
to innovate, raise entrepreneurs and create jobs for the benefit of the nation and the world.
In the recent years, a wide spectrum of new programmes and opportunities to nurture innovation has
been created by the Government of India across a number of sectors. From engaging with academia,
industry, investors, small and big entrepreneurs, non-governmental organizations to the most
underserved sections of society.
Recognizing the importance of women entrepreneurship and economic participation in enabling the
country’s growth and prosperity, Government of India has ensured that all policy initiatives are
geared towards enabling equal opportunity for women. The government seeks to bring women to the
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forefront of India’s entrepreneurial ecosystem by providing access to loans, networks, markets and
trainings.
A few of India’s efforts at promoting entrepreneurship and innovation are:
Startup India: Through the Startup India initiative, Government of India promotes entrepreneurship
by mentoring, nurturing and facilitating startups throughout their life cycle. Since its launch in
January 2016, the initiative has successfully given a head start to numerous aspiring entrepreneurs.
With a 360 degree approach to enable startups, the initiative provides a comprehensive four-week
free online learning program, has set up research parks, incubators and startup centres across the
country by creating a strong network of academia and industry bodies. Moreover, a ‘Fund of Funds’
has been created to help startups gain access to funding. At the core of the initiative is the effort to
build an ecosystem in which startups can innovate and excel without any barriers, through such
mechanisms as online recognition of startups, Startup India Learning Programme, Facilitated Patent
ling, Easy Compliance Norms, Relaxed Procurement Norms, incubator support, innovation focused
programmes for students, funding support, tax benefits and addressing of regulatory issues.
Make in India: Designed to transform India into a global design and manufacturing hub, the Make
in India initiative was launched in September 2014. It came as a powerful call to India’s citizens and
business leaders, and an invitation to potential partners and investors around the world to overhaul
out-dated processes and policies, and centralize information about opportunities in India’s
manufacturing sector. This has led to renewed confidence in India’s capabilities among potential
partners abroad, business community within the country and citizens at large. The plan behind Make
in India was one of the largest undertaken in recent history. Among several other measures, the
initiative has ensured the replacement of obsolete and obstructive frameworks with transparent and
user-friendly systems. This has in turn helped procure investments, foster innovation, develop skills,
protect intellectual property and build best-in-class manufacturing infrastructure.
Atal Innovation Mission (AIM): AIM is the Government of India’s endeavour to promote a culture
of innovation and entrepreneurship, and it serves as a platform for promotion of world-class
Innovation Hubs, Grand Challenges, start-up businesses and other self-employment activities,
particularly in technology driven areas. In order to foster curiosity, creativity and imagination right at
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the school, AIM recently launched Atal Tinkering Labs (ATL) across India. ATLs are workspaces
where students can work with tools and equipment to gain hands-on training in the concepts of
STEM (Science, Technology, Engineering and Math). Atal Incubation Centres (AICs) are another
programme of AIM created to build innovative start-up businesses as scalable and sustainable
enterprises. AICs provide world class incubation facilities with appropriate physical infrastructure in
terms of capital equipment and operating facilities. These incubation centres, with a presence across
India, provide access to sectoral experts, business planning support, seed capital, industry partners
and trainings to encourage innovative start-ups.
Support to Training and Employment Programme for Women (STEP): STEP was launched by
the Government of India’s Ministry of Women and Child Development to train women with no
access to formal skill training facilities, especially in rural India. The Ministry of Skill Development
& Entrepreneurship and NITI Aayog recently redrafted the Guidelines of the 30-yearold initiative to
adapt to present-day needs. The initiative reaches out to all Indian women above 16 years of age. The
programme imparts skills in several sectors such as agriculture, horticulture, food processing,
handlooms, traditional crafts like embroidery, travel and tourism, hospitality, computer and IT
services.
Jan Dhan- Aadhaar- Mobile (JAM): JAM, for the first time, is a technological intervention that
enables direct transfer of subsidies to intended beneficiaries and, therefore, eliminates all
intermediaries and leakages in the system, which has a potential impact on the lives of millions of
Indian citizens. Besides serving as a vital check on corruption, JAM provides for accounts to all
underserved regions, in order to make banking services accessible down to the last mile.
Digital India: The Digital India initiative was launched to modernize the Indian economy to makes
all government services available electronically. The initiative aims to transform India into a
digitally-empowered society and knowledge economy with universal access to goods and services.
Given historically poor internet penetration, this initiative aims to make available high-speed internet
down to the grassroots. This program aims to improve citizen participation in the digital and financial
space, make India’s cyberspace safer and more secure, and improve ease of doing business. Digital
India hopes to achieve equity and efficiency in a country with immense diversity by making digital
resources and services available in all Indian languages.
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Biotechnology Industry Research Assistance Council (BIRAC): BIRAC is a not-for-profit Public-

Sector Enterprise, set up by Department of Biotechnology to strengthen and empower emerging
biotechnology enterprises. It aims to embed strategic research and innovation in all biotech
enterprises, and bridge the existing gaps between industry and academia. The ultimate goal is to
develop high-quality, yet affordable, products with the use of cutting edge technologies. BIRAC has
initiated partnerships with several national and global partners for building capacities of the Indian
biotech industry, particularly start-ups and SME’s, and has facilitated several rapid developments in
medical technology.
Department of Science and Technology (DST): The DST comprises of several arms that work
across the spectrum on all major projects that require scientific and technological intervention. The
Technology Interventions for Disabled and Elderly, for instance, provides technological solutions to
address challenges and improve quality of life of the elderly in India through the application of
science and technology. On the other hand, the ASEAN-India Science, Technology and Innovation
Cooperation works to narrow the development gap and enhance connectivity between the ASEAN
countries. It encourages cooperation in science, technology and innovation through joint research
across sectors and provides fellowships to scientists and researchers from ASEAN member states
with Indian R&D/ academic institutions to upgrade their research skills and expertise.
Trade related Entrepreneurship Assistance and Development (TREAD): To address the critical
issues of access to credit among India’s underprivileged women, the TREAD programme enables
credit availability to interested women through nongovernmental organizations (NGOs). As such,
women can receive support of registered NGOs in both accessing loan facilities, and receiving
counseling and training opportunities to kick-start proposed enterprises, in order to provide pathways
for women to take up non-farm activities.
Pradhan Mantri Kaushal Vikas Yojana (PMKVY): A flagship initiative of the Ministry of Skill
Development & Entrepreneurship (MSDE), this is a Skill Certification initiative that aims to train
youth in industry-relevant skills to enhance opportunities for livelihood creation and employability.
Individuals with prior learning experience or skills are also assessed and certified as a Recognition of
Prior Learning. Training and Assessment fees are entirely borne by the Government under this
programme.
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National Skill Development Mission: Launched in July 2015, the mission aims to build synergies
across sectors and States in skilled industries and initiatives. With a vision to build a ‘Skilled India’,
it is designed to expedite decision-making across sectors to provide skills at scale, without
compromising on quality or speed. The seven sub-missions proposed in the initial phase to guide the
mission’s skilling efforts across India are: (i) Institutional Training (ii) Infrastructure (iii)
Convergence (iv) Trainers (v) Overseas Employment (vi) Sustainable Livelihoods (vii) Leveraging
Public Infrastructure.
Science for Equity Empowerment and Development (SEED): SEED aims to provide
opportunities to motivated scientists and field level workers to undertake action-oriented, location
specific projects for socio-economic gain, particularly in rural areas. Efforts have been made to
associate national labs and other specialist S&T institutions with innovations at the grassroots to
enable access to inputs from experts, quality infrastructure. SEED emphasizes equity in
development, so that the benefits of technological accrue to a vast section of the population,
particularly the disadvantaged.
GOVERNMENT SCHEMES FOR ENTREPRENEURSHIP DEVELOPMENT
1. Multiplier Grants Scheme (MGS) for IT Research and Development
Launched by Department of Electronics and Information Technology (DeitY), MGS has been
launched to ‘encourage collaborative R&D between industry and academics/ R&D institutions for
development of products and packages.’
This startup scheme has a corpus of Rs. 36 crores for Startups, incubator/academia/accelerators
engaged in electronics and information technology domain. Applicable Industries: Artificial
Intelligence, Technology, Hardware, Internet of Things, IT Services, Enterprise Software, Analytics.
2. Modified Special Incentive Package Scheme (M-SIPS)
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Launched by Department of Electronics and Information Technology (DeitY) and supported by

Center for Development of Advanced Computing or CDAC, M-SIPS aims to ‘promote large-scale
manufacturing in the Electronic System Design and Manufacturing (ESDM) sector.’
Besides infusing the startups with funds for expansion, M-SIPS will also provide subsidy up to 25%
in establishing offices, research centers in SEZs, all over the nation.
Applicable Industries: IT Hardware, Medical-tech, Solar Power, Automobiles, Healthcare,

Semiconductors, Processors/Electronica, LEDs, LCDs, Avionics, Industrial Electronics, Nano-
Electronics, Biotech, Strategic Electronics, Telecom and more.
3. The Venture Capital Assistance Scheme
Launched in 2012 by Small Farmers’ Agri-Business Consortium (SFAC), this special scheme aims to
assist agriculture based entrepreneurs to kick-start their agri-business.
SFAC has tied up with 42 banks, which help them to disperse interest-free loans to farmers
(individuals/groups), partnership firms, self-help groups, agriculture pass out/graduates, agri-
preneurs, producer groups, and companies.
4. Credit Guarantee
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has launched this unique
Government scheme to help assist retailers, educational institutes, self-help groups, farmers and
SMEs.
Basically, the Credit Guarantee scheme has been launched to smoothen credit delivery system, as
guarantee cover up to 85% is provided to the SMEs for loans up to Rs 5 lakhs.
5. Raw Material Assistance
National Small Industries Corporation or NSIC has launched Raw Material Assistance scheme,
which aims to assist manufacturers and MSMEs with procuring raw materials, both indigenous and
imported.
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As per the Government Schemes helps the manufacturer’s to focus on the quality of their products,
as they can avail low-interest loans and financial help to get raw materials.
6. Infrastructure Development Scheme
National Small Industries Corporation (NSIC) has launched this unique scheme to help startups
establish their own offices and infrastructure.
However, only those companies which fall under the official definition of startups, as highlighted by
the Ministry of Micro, Small and Medium Enterprises can avail this grant.
Startups which are not registered with Software Technology Parks of India Scheme can now get
office space ranging from 467 sq.ft. to 8,657 sq.ft.
7. MSME Market Development Assistance
Office of the Development Commissioner (MSME) has launched this scheme to help SMEs and
small retailers get more attention at international trade fairs and exhibitions.
Companies registered with Directorate of Industries/District Industries Centre can get up to 100%
reimbursement on air-fares and cost of placing their stalls in such fairs/exhibitions, all over the
world.
This scheme is not specific to any industry and applicable to SMEs, retailers, and startups
8. Credit Linked Capital Subsidy for Technology Up gradation
Office of the Development Commissioner (MSME) has launched this Government scheme to help
manufacturers, SMEs, and agri-startups to upgrade their existing machines and technologies.
In case any SMEs registered with State Directorate of Industries have upgraded their machines,
plants with state of the art technology, then they can apply for this grant, and receive funds to
compensate their expenses.
Applicable Industries: Khadi, Village or Coir industry, Manufacturing, SmallScale Industry, SMEs.
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9 Atal Incubation Centres (AIC)
Headed by Atal Innovation Mission, AIC aims to promote innovation and entrepreneurship in India.
Approved startups can get funding up toRs 10 crores for a maximum period of 5 years, to cover
capital and operational expenses.
Industries Applicable: AI, AR/VR, Automobiles, Telecom, Healthcare, Aeronautics, Aviation,

Chemicals, Nano-Tech, Pets, Animals, IT, Computers, Design, Non-Renewable Energy, Social
Impact, Food and more.
10 Bridge Loan Against MNRE Capital Subsidy
Launched by Indian Renewable Energy Development Agency (IREDA), Bridge Loan against MNRE
Capital Subsidy aims to promote startups engaged in renewable energy ideas such as biomass power
and small hydropower projects. Up to 80% of the project cost will be funded by IREDA, and the
minimum funding allocated shall be Rs 20 lakhs.
EXPORT ORIENTED UNITS SCHEME
The Export Oriented Units (EOU) scheme was introduced to boost exports, increase foreign earnings
and created employment in India. The EOU scheme is complementary to the scheme for Free Trade
Zone, Export Processing Zone. Units that are undertaking to export their entire production of goods
are allowed to set up as an EOU.
Export-oriented units are units undertaking to export their entire production of goods. EOUs can
engage in manufacturing, services, development of software, repair, remaking, reconditioning, re-
engineering including making of gold/silver/platinum jewellery and articles. Further, units involved
in agriculture, agro-processing, aquaculture, animal husbandry, biotechnology, floriculture,
horticulture, pisciculture, viticulture, poultry, sericulture and granites can also obtain the status of
EOU.
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The Export Oriented Units enjoys the below following benefits
 EOUs has a permit to procure raw material or capital goods duty-free, either through import
or through domestic sources;
 EOUs are eligible for reimbursement of GST;
 EOUs are eligible for reimbursement of duty paid on fuels procured from domestic oil
companies;
 EOUs are eligible for claiming input tax credit on the goods and services and refund thereof;
 Fast track clearance facilities;
 Exemption from industrial licensing for the manufacture of items reserved for SSI sector.
For the status of EOU, the project must have a minimum investment of Rs.1 crore in plant and
machinery. This condition does not apply for software technology parts, electronics hardware
technology parks and biotechnology parks. Further, EOU involved in handicrafts, agriculture, animal
husbandry, information technology, services, brass hardware and handmade jewellery does not have
any minimum investment criteria.
HERE ARE SOME TAX BENEFITS FOR ENTREPRENEURS IN INDIA
1. Tax holiday for three years:
In order to give entrepreneurial ventures a much-needed boost, the government in the union budget
2016-17 has announced to provide a deduction of 100% tax exemptions during the first three years of
operation. Only the companies that are registered as startups under the Department of Industrial
Policy and Promotion (DIPP) that involve in innovation, deployment, development or
commercialization of new products and services driven by technology would be eligible for the three
year tax benefits. Moreover, in the first three years the eligible startups would not have to pay any tax
for profits except MAT (Minimum Alternate Tax). MAT is calculated on `book profit'.
2. 20% exemption on Capital Gains:
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Capital gains are the taxes charged on profits gained from sale of capital assets such as stocks and
bonds. The government has recently made provision for an exemption of 20% capital gains tax. This
provision was a long-pending demand by the startups. Before this provision, most investments in
Indian startups were compelled to route their investment through Mauritius as the capital gain tax on
investment from there waived following provisions in the Double Tax Avoidance Treaty.
3. Taxes on Turnover:
The government levy 25% tax plus cess and surcharge on new manufacturing firms. However,
companies with a turnover of less than 50 crores per annum have to pay 29 percent tax. Medium and
small companies with a turnover of less than Rs. 50 crores are taxed at a rate of 25 percent.
Moreover, the period of claiming profit linked tax exemption is now increased from 5 years to 7
years. This step by the government would benefit approximately 6.67 lakhs companies in the
country.
4. Payment of EPF by the Government:
The government will now provide EPF (Employees' Provident Fund) contribution of 8.33% for the
period of three years. Earlier, the percentage of the contribution was 12% of employees’ basic salary.
This move will relieve many employers by cutting costs of startups by 12% for straight three years
and will provide opportunities to hire competent candidates for their company as candidates will
have job security. Many companies have started registering themselves with EFPO to avail the
benefits.
5. Presumptive tax:
It is mandatory for the entrepreneurs to maintain the books of account. However, under Presumptive
taxation scheme, it is not required to maintain the books of account and hence will reduce the burden
of the entrepreneur. Anyone whose income earned stands at 8% is eligible for this scheme. However,
a person whose income earned is more than 8 %, higher rate can be declared. Moreover, all the small
business man with a turnover of up to Rs 2 crore and professional with gross income of up to Rs 50
lakhs can avail benefit of this scheme.
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All these policies come under "Startup India” campaign of the government and were proposed in the
Union budget 2016-17. These policies were made with an objective to give a much-needed boost to
the budding entrepreneurial ventures. It is a subsidiary of the `Make in India' scheme and aims to
create more jobs within the country. This startup tax policy will definitely give the much-needed
boost to the startups.
MAJOR COMMERCIAL BANKS AND ITS ASSISTANCE TO SMALL SCALE

INDUSTRIES
State Bank of India has launched many schemes for the promotion of Small Scale Industries.
Some of them are as follows:
1) General Purpose Term Loans: Term Loans are granted to SSIs by State Bank of India to meet
commercial purposes like expansion of business, research and development, substitution
of high cost debt etc. The loan is granted for tenure of 3 years and the pricing is done to
suit the requirements of the borrower and the repayment is done as per the cash
generation cycle in monthly and quarterly installments.
2) Liberalized Credit for SSI: SBI extends credit on liberal terms and conditions to SSIs for
activities linked with production. Under this scheme the credit is given not according to
the security given but as per the requirement of the unit. Finer rates are given to the units
with strong ratings, as the pricing of the loan is done on the basis of credit assessment.
For loans up to Rs.5 lakhs there is no collateral security. Combining the term loan and
working capital, composite term loan is sanctioned up to Rs. 25 lakhs.
3) Entrepreneur Scheme: Entrepreneurs who are technically qualified, trained and experienced are
granted financial assistance by SBI for setting up projects which are commercially viable.
Technocrats who are unable to meet the margin requirements are granted loan under
liberalized schemes. The borrower has possesses a technical qualification and relevant
experience to avail the benefit under this scheme. The term loans, working capital and
equity finance are provided by the bank.
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4) Equity Fund Scheme: Entrepreneurs who are not able to meet their share of equity are granted
financial assistance under the equity fund scheme, repayable over a long period of time,
by way of loans which are interest free.
5) Stree Shakti Package: It is a unique scheme run by SBI to support women entrepreneurs. More
than 50% of the share capital should be owned by women in an enterprise in order to
make it qualified for the scheme.
6) Composite Loan Scheme: Under this scheme credit is granted to entrepreneurs for purchasing
equipments, construction of sheds, to meet the working capital requirements etc.
Artisans, village and cottage industries who utilize locally available natural resources or
human skills for manufacturing, processing, servicing and preservation, where individual
credit limit does not exceed Rs.25 lakhs are eligible to get assistance under this scheme.
Tiny units whose investment does not exceed Rs.25 lakhs in plant and machinery and
who come under SSIs are also eligible to get assistance under this scheme.
7) Margin Money Scheme: Industrial/Service units established in rural areas with an aim to provide
employment are benefitted under this scheme. Partnership firms and Private Limited
Companies are not benefitted under this scheme as they are not eligible under it.
8) MahilaUdyamNidhi Assistance Scheme: Women entrepreneurs who set up industrial units in the
small scale and tiny sector and undertake service activities get equity type soft loan
assistance under this scheme.
9) Export Finance Scheme: The small scale units who undertake export business are offered export
finance assistance by Canara Bank. Pre-Shipment credit in foreign currency and
Packaging credit in case of pre shipment finance are given. The post shipment finance is
given, foreign bank guarantee including deferred payment guarantee for import of capital
goods, Foreign Letter of Credit etc.
SCHEMES OFFERED BY VARIOUS FINANCIAL INSTITUTIONS AND COMMERCIAL

BANKS & GOVERNMENT AGENCIES TO PROMOTE SMALL SCALE ENTERPRISES
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First generation entrepreneurs generally promote Small Scale Industries. However, they lack
the technical and managerial skills along with the strong financial background which would be
required, understanding and knowledge about government sponsored infrastructural facilities and
subsidies and tax incentives. They are also often deficient in their knowledge about the existing
support systems developed by the Central Government as well as State Governments. As a
consequence they will need a lot of guidance and support both in the inception state and the
manufacturing stages in various project and business related activities. There are various areas where
they need assistance and some of them include project report preparation, location and layout of the
plant, selection of personnel and machinery, market scenario, various types of finance facilities
available, government assistance and subsidies. Hence, in order to facilitate the development and
growth of the small scale sector, the Central and State governments have created an elaborate
institutional framework in the country.
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Institutional support refers to the necessary guidance, inputs and the help rendered in
moulding during the initial stages of enterprise. Any new enterprise is bound to experience teething
problems and uncertain situations during the initial phases of the industry and institutional support
and assistance help them tide over the difficult situations.
Institutional support and assistance is necessary at three stages of enterprise development.

These phases include i) inception or promotion of a business or industrial unit ii) day-to-day
management or routine management and iii) expansion and diversification. These institutional
support institutions included government owned agencies, statutory corporations and semi-
autonomous organizations.
In the Indian context, institutional support assistance includes three phases:
a) Support/assistance developed by central government

b) Support/assistance developed by state governments
c) Non-government support/assistance.
Institutional finance to entrepreneurs- (Financial Assistance)
The financial requirements of various industries (small, medium and large) broadly fall under
the following areas:
Short-term finance: Short term finances normally pertain to a period of a year or two. These are
often required when it comes to changes in the production plan, seasonal demand and working
capital requirements. Often these are serviced by commercial banks, private financiers and trade
credit from vendors and advancers from dealers and customers.
Long-term finance: Long-term finance can be for a period of 2 to 10 years. Such finance are
required for fixed assets, expansion activities, modernization of business.
With the view to promoting small scale industries, the government of India as a part has set up a host
of institutions to meet the financial requirements of small entrepreneurs. Provision of institutional
support helps create a conducive environment for the business or industry.
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Finance is one of the most important elements in starting a business venture. In order to start
a venture the entrepreneur have to initially fund the project on their own and then can apply to the
institutions for loans. However, institutions provide only 75 to 80% of the loans and the rest of the
capital has to be generated by the entrepreneurs. In case of tiny and small scale industries the work is
begun with personal funds and then loan applications are made to financial institutions. This results
in small industries having to face higher financial risks and only if they are able to stand market
competition can they survive and grow. Tiny and small industries usually reach out to commercial
banks, co-operative banks, financial institutions and private financiers. On the other hand medium
and large industries have access to commercial banks and financial institutions for raising their
working capital. Post nationalization in 1969, considering the request of industries across various
sectors and types has opened branches in various towns and cities to serve their industrial customers.
In this regard both governments owned state finance corporations and government sponsored
financial institutions play a major role in industrial financing.
Institutions offering Institutional support

Industrial Development Bank of India (IDBI)
The IDBI was established on July 1,1964 under the Act of Parliament as the principal
financial institution in the country. Initially, the organization was set up as a wholly owned
subsidiary of the Reserve Bank of India. However, in February 1976, the IDBI was made an
autonomous institution and its ownership passed on from the Reserve Bank of India to the
Government of India.
Through its scheme of refinance and to a lesser extent of bills rediscounting scheme, the IDBI
assists various small-scale industries. Since it is not possible for IDBI to reach a large number of
small-scale industries scattered all over the country its assistance has been in the form of indirect
refinancing loans granted by the State Financial Corporations (SFCs). Assisting small-scale
industries has been an area of particular interest to the organization. In this regard it is noteworthy to
mention the setting up of the Small Industries Development Fund (SIDF) in May 1986 to facilitate
the development and expansion of small-scale industries. In 1988, the IDBI launched the National
Equity Fund Scheme (NEFS) for providing support in the nature of equity to tiny and small-scale
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industries engaged in manufacturing, cost not exceeding Rs. 5 lakhs. IDBI provides this scheme is
administered via nationalized banks.
The IDBI has also introduced the single window assistance scheme for grant of term-loans
and working capital assistance to new, tiny and small-scale enterprises. Also, the IDBI has set up a
Voluntary Executive Corporation Cell (VECC) to utilize the services of experienced professionals
for counselling small units, tiny and cottage units and for providing consultancy support in specific
areas.
During the year 1987-88, the small-scale sector got an assistance of Rs. 1,511 crores out of a
total outlay of Rs. 4,580.60 crores from IDBI which amounted to one third of total industrial
assistance.
MSME finance
MSME Finance is a new product category that takes care of the funding needs of Micro,
Small and Medium enterprises. With the objective of serving these units specifically, IDBI Bank has
introduced a range of attractive products. The products are designed to cater to various segments
among MSME borrowers. The Bank has the products that service all the stakeholders including
vendors, manufacturers and dealers. Moreover, there are specific products that cater to borrowers
such as Medical Practitioners, Transport Operators, Professionals &Self-employed, IT- Service
Providers etc. Further, there is also a product for start-up ventures where finance is provided as a
seed capital. In order to make the business easy for the MSMEs, the Bank has introduced collateral
free loans. The Bank not only offers finance to its MSME customers but also acts as a one stop shop
by taking care of all their banking needs under one roof with specific current accounts and full range
of other banking products and services.
As on March 31, 2011, the Bank had a network of 816 Branches and 1372 ATMs. The Bank’s total
business, during FY 2010-11, reached Rs. 3,37,584 Crores, Balance sheet reached Rs. 2,53,377
crores while it earned a net profit of Rs. 1650 Crores (up by 60 %).
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Industrial Credit and Investment Corporation of India (ICICI)

The Industrial Credit and Investment Corporation of India (ICICI) was set up in January 1955
under the Indian Companies Act with the primary objective of developing small and medium
industries in the private sector. Its issued capital has been subscribed by the Indian banks, Insurance
companies and the individuals and corporations of the United States, the British Eastern Exchange
Bank and other companies and general public of India.
The ICICI performs the following functions:
1) It provides assistance by way of rupee and foreign currency loans, underwriting and direct
subscriptions to shares/debentures and guarantees.
2) It offers variety of financial services such as deferred credit, leasing credit, installment sale, asset
credit and venture capital.
3) It guarantees loans from other private investment sources.
Small Industries Development Bank of India (SIDBI)

With the objective of providing larger financial and non-financial support to the small scale
sector, the Government of India set up the Small Industries Development Bank of India (SIDBI)
under a special Act of the Parliament in October 1989 as a wholly-owned subsidiary of the IDBI. It
commenced its operations from April 2,1990. Since its operations, the SIDBI has taken over the
outstanding portfolio of Rs.4000 crores of IDBI relating to the small-scale sector. Rs. 250 crores is
the authorized capital of SIDBI which can be increased to Rs. 1000 crores. The SIDBI currently
renders its services through 5 regional official and 36 branch offices.
The objectives of SIDBI include
• Promotion, technological up gradation and modernization of existing units

• Financing the entrepreneurs
• Development, expansion and up gradation of the small-scale industries
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• Establishing marketing channels to small-scale industries market their products better.

• Create employment opportunities especially in semi-urban areas thus check the migration of people
to urban areas.
Since its inception, SIDBI has helped an entire range of SSIs including tiny, village and
cottage industries through their specific schemes, which are tailored to meet the needs of each
industry by way of initiating new projects, and assisting in various areas like expansion,
diversification, modernization and rehabilitation of existing units.
Small scale industries derive their financial assistance through an existing credit delivery
system comprising State Financial Corporations, State Industrial Development Corporations, State
Industrial Development Corporations, Commercial Banks and Regional rural banks. In the year
1992-93, SIDBI introduced the equipment finance scheme for the purpose of directly financing
existing well-run small-scale units keen on taking up technological up gradation /modernization and
further refinancing for the purpose of resettlement of voluntarily retired workers of NTC. Yet another
scheme was launched by the SIDBI for the small scale sector and this was the venture capital fund
with an initial corpus of Rs. 10 crores. The venture capital fund enrolled itself as an institutional
member of the OTC Exchange of India (OTCEI). Further, financial support to the National Small
Industries Corporation for providing various services like leasing, hire-purchasing and market
support to the small scale industrial units.
New schemes
During 1998-99, with a corpus of 100 crores SIDBI unveiled the ‘SIDBI Foundation for
Micro Credit’ scheme as a measure to upgrade its micro-finance activities. The primary objective of
this scheme is not only to provide financial assistance but also build and strengthen the micro-finance
practitioners and related institutions by way of providing inputs for achieving sustainability,
economies of scale, desired outreach etc. This new scheme was much lauded and in Small Industries
Development Organization (SIDO) now known as Micro Small and Medium Development Institute
(MSME)
Small Industries Development Organization (SIDO) is a subordinate office of the department

of small scale industries. The organization was created by the government to fulfil and enable the
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needs of the Small Scale Sector. It is an apex body and nodal agency for formulating, co-ordinating
and monitoring the policies and programmes for promotion and development of small-scale
industries. The main functions of SIDO are classified into 1) co-ordination 2) industrial development,
and 3) extension. The other activities undertaken by the body include consultancy, evaluation of
needs of small-scale industrial units, training and development of industrial estates. Functioning
through a network 27 offices, 31 Small Scale Service Institutes (SSIs), 37 extension centers, 3
product-cum-process development centers, and 4 production centers, it provides technical,
managerial, economic and marketing assistance to small-scale industrial units.
Functions of SIDO:
Functions relating to co-ordination
• To evolve a national policy for the development of small scale industries

• To co-ordinate the policies and programmes of various state governments
• To maintain a proper liaison with the related Central Ministries, Planning Commission, State
Governments, Financial Institutions, etc., and
• To co-ordinate the programmes for the development of industrial estates.
Functions relating to industrial development
• To reserve the items for the production by small-scale industries

• To collect data on consumer items imported and then encourage the setting of industrial units to
produce these items by giving coordinated assistance
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• To render required support for the development of ancillary units, and

• To encourage small scale industries to actively participate in Government Stores Purchase
Programme by giving them necessary guidance, market advice and assistance.
Functions relating to extension
• To make provision of technical services for improving technical process, production planning,
selecting appropriate machinery, preparing factory lay-out and design
• To provide consultancy and training services to strengthen the competitive ability of small-scale
industries,
• To render marketing assistance to small-scale industries to effectively sell their products, and
• To provide assistance in economic investigation and information to small-scale industries.
State Finance Corporation (SFCs)
The State Finance Corporations (SFCs) are the integral part of institutional finance structure
in the country. SEC promotes small and medium industries of the states. Besides, SFCs are helpful in
ensuring balanced regional development, higher investment, more employment generation and broad
ownership of industries.
The important functions of State Finance Corporations are:
(i) The SFCs grant loans mainly for acquisition of fixed assets like land, building, plant and
machinery.
(ii) The SFCs provide financial assistance to industrial units whose paid-up capital and reserves do
not exceed Rs. 3 crores (or such higher limit up to Rs. 30 crores as may be specified by the central
government).
(iii) The SFCs underwrite new stocks, shares, debentures etc., of industrial concerns.
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(iv) The SFCs provide guarantee loans raised in the capital market by scheduled banks, industrial
concerns, and state co-operative banks to be repayable within 20 years.
KSIIDC Bangalore (Karnataka State Industrial & Infrastructure Development Corporation)
KSIIDC Bangalore (Karnataka State Industrial & Infrastructure Development

Corporation) was established in the year 1964, as a wholly owned undertaking of the Government of
Karnataka. KSIIDC is currently involved in recovery of the pending loan portfolios as well as major
infrastructure projects taken up on PPP basis like Development of a Sea Port at Tadadi, International
Convention Centre & Devanahalli Business Park near BIA, etc. In addition, KSIIDC has entered into
joint ventures with ILFS for providing consultancy & advisory services; and with GAIL for City Gas
Distribution project. It was earlier known as Karnataka State Industrial Investment and Development
Corporation.
Established in 1964, Karnataka State Industrial & Infrastructure Development Corporation

Limited has been greatly instrumental in the industrialization of the State, especially in the large and
medium sector. An important arm of the state in bringing industrial boom in various sectors, KSIIDC
has assisted 135 starts up ventures through equity participation to the extent of Rs. 118.28 crores
spread over the length and breadth of the State. KSIIDC has also extended financial assistance in the
form of debt to core sector industries like Steel, Cement, Mining and Textiles and modern sector
Industries like Information Technology, Aviation, Tele-communication and other infrastructure
projects to the extent of around Rs. 2223 crores.
Objectives of KSIIDC
 Carrying out integrated planning and physical development of declared urban areas.
 Formulating and submitting development plans, including capital investment plans.
 Undertaking the execution of development projects and schemes.
 Formulating and implementing urban land use policy.
 Developing environmental standards and preparing schemes for the environmental
improvement of urban areas.
 Providing technical planning services.
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 Preparation and implementation of regional Plans, Master plans, New township Plans and
Town Improvement Schemes.
 Promoting research and development of new techniques in City planning, Urban
Development and Housing Construction.
 To promote and secure better planning and development of the state.
ASSOCIATION OF WOMEN ENTREPRENEURS OF KARNATAKA – (AWAKE)

Association of Women Entrepreneurs of Karnataka – (AWAKE)is a not-for profit, Non-
Governmental Organization, established in 1983, with the mission of ‘Empowering Women through
Entrepreneurship for Economic Development’ and has been recognized worldwide. Being an affiliate
of Women’s World Banking, New York, and the organization is one of India’s premier Institutions
for Women which is completely devoted to entrepreneurial planning and growth particularly in the
women sector.
It is an ISO 9001-2008 accredited organization, totally devoted to Entrepreneurship Development

among women both in rural and urban areas of India.
AWAKE has a unique approach of ‘Entrepreneur guiding Entrepreneur’s through voluntary efforts of
successful women entrepreneurs by counseling, training, business incubation, mentoring and peer
group support.
AWAKE’s vision is as follows:
 To develop suitable membership programmes to increase member base and also to ensure that
members remain active
 To work together as a team in order to achieve the vision of reaching out to greater number of
women through its programmes
 To influence policy makers
 To offer need-based quality programmes tailor made to its clients
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The mission of AWAKE can be broadly described as “empowering women through entrepreneurship
development to improve their economic condition”. AWAKE’s mission also includes the
following:
• To offer entrepreneurship among women and thereby empower them to join the economic growth
and upgradation.
• To create a culture of entrepreneurship amongst women in both rural and urban areas and thereby
upgrade their economic and social status.
• To develop successful models of entrepreneurship which can be applied worldwide?
Activities of AWAKE: The major areas of activities which come under AWAKE’s umbrella include
Business counselling: Business counselling is one of the primary areas of AWAKE. Aspiring and
ambitious women who intend to establish their entrepreneurial activities reach out to AWAKE to
convert their ideas into a profitable business enterprise. Existing members take one-to-one business
counselling to those in need, on a voluntary basis. Apart from sharing their own personal
experiences, these women counsellors also provide training.
Entrepreneurship awareness programme: This program has been designed with the objective of
informing clients of the services offered by AWAKE and motivating them to take up
entrepreneurship. It is an awareness creation programme, where member entrepreneurs motivate
other women to tread the road of entrepreneurship. Under this umbrella entrepreneurial women
discuss and deliberate on business ideas, schemes and incentives offered by different agencies as
opportunities in business. Quite often these programmes are also conducted in interior rural areas to
reach out to a larger group of women.
Entrepreneurship development programme: Normally after either after every awareness

programme or at periodic intervals an entrepreneurship development programme is conducted where
the core training faculty along with a programme coordinator along with member entrepreneurs who
act as role models participate to educate the joining members.
The objectives and goals of these EDPs are
• Start-up enterprise training
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• Unique training module which is developed and followed by AWAKE

• Building the core capabilities and preparing the entrepreneurs for business development and
expansion
• Providing exposure to the new members in areas of empowerment, business, visits to the clients,
interaction with successful entrepreneurs, government officials and support agencies
• Helping the members in various soft skills such as building confidence, SWOT analysis, problem
solving techniques and so on
• Business sessions that deal with the core business activities like making a business plan, schemes
and incentives, reaching out to resources, production and quality control, various aspects of
marketing including market prospects, competition, market analysis, book keeping and accounting,
planning for growth and expansion.
• Networking with support agencies and providing escort services to customers.
• Procuring support from Karnataka State Women Development Corporation (KSWDC), SIDBI and
NABARD.
• Offering training programs which ranges from 10 days to 6 weeks.
Programs that help in the development of skill: Need-based skill development programmes are
conducted by AWAKE in specific sectors like food, floriculture, vermiculture, pottery, handicrafts,
eco-friendly products and others for the members. The training sessions are conducted by resource
persons with expertise in the fields concerned.
AWAKE has been identified as a training agency for NGOs by SWASHAKTI, a project for
empowerment of women, sponsored by World Bank and International Fund for Agricultural
Development (IFAD) and implemented by Karnataka State Women, Development Corporation.
TECHNICAL CONSULTANCY SERVICES ORGANISATION OF KARNATAKA
Technical Consultancy Services Organisation of Karnataka (TECSOK), is a multidisciplinary

technical, industrial and management consultancy organization set up.It was established in the year
1976 by the Government of Karnataka. The primary objective of founding TECSOK was to provide
reliable consultancy support for entrepreneurs to start up self-employment ventures in Karnataka,
India.
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Tecsok is a multidisciplinary management consultancy organization promoted by the

Government of Karnataka to provide reliable consultancy services in India. Tecsok has been
excelling its expertise in a wide range of services. The package of services includes feasibility
studies, market research, valuation of assets, environment impact studies, energy management and
audit, management studies like corporate plan, reorganization and restructuring of enterprises, man
power planning, budgetary control systems, mergers and acquisitions, investment opportunities,
technology transfers, diagnostic studies and also designing and organizing training programmes in all
related areas. Of late, Tecsok is also concentrating on studies relating to Cleaner Production
technologies and methods.
Tecsok has been considered by the Government of Karnataka, Government of India, State & Central
Financial Institutions, Commercial Banks, Asian Development Bank and a host of other institutions
of the Government and Private as the recognized consultancy agency.
Tecsok has been recognized as the State Nodal Agency by the Ministry of Food Processing
Industries, Govt of India to operate the Ministry's Promotional Schemes in Karnataka.
KHADI AND VILLAGE INDUSTRIES COMMISSION (KVIC)
Khadi and Village Industries Commission (The full form of KVIC) plans, promotes,
organizes and implements programs for the development of Khadi and other village industries
in rural areas nationwide. KVIC also helps in building up reserve of raw materials for supply
to producers. The commission focuses in creation of common service facilities for processing of
raw materials, such as semi-finished goods. KVIC has also helped in creation of employment in
Khadi industry.
Functions of KVIC
 Building up of a reserve of raw materials and implementation for supply to producers

 Formation of common service facilities for processing of raw materials that include semi-
finished goods
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 Promoting the sale and marketing of Khadi and Village Industries products, as well as
handicrafts
 Promoting research in the village industries sector related production techniques and
equipment
 Providing financial assistance to individuals and institutions for the development and
operation of Khadi and Village industries
Objectives of KVIC
 To promote Khadi in rural area

 To provide employment
 To produce saleable articles
 To create self-reliance amongst the poor
 To build up strong rural community
Features of KVIC
 Interest Rate: Depends on applicant’s profile and business requirements
 Loans offered are directed and governed by PMEGP under which is below mentioned criteria
for specific MSMEs:
° Loan Amount for Manufacturing Sector: Maximum Rs. 25 lakh

° Loan Amount for Business and Service Sector: Maximum Rs. 10 lakh
 Funding Pattern: Mentioned below in PMEGP Scheme

 Repayment Tenure: From 3 years – 7 years, including 6 months of moratorium period
 Income Capping: No criteria
 Margin: Lock-in for 3 years in separate account later adjusted with KVIC loan
Interest Rate Subsidy Scheme
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The interest subsidy scheme offered by KVIC shall be applicable to specific loans offered by
financial agencies. Loans raised by KVIC for disbursement as capital investment and working capital
loans are offered by:
 Institutions: Registered under Societies Registration Act 1860

 Co-operative Society: Registered under Co-operative Societies Act 1912
 Charitable Trusts for public welfare and religious purposes
 Financial Institutions: Scheduled and Non-scheduled banks, Nationalised Banks, Co-
operative Banks, State Financial Corporations and Industrial Development Banks
DISTRICT INDUSTRIES CENTERS (DICS)

With the objective of providing integrated framework at the district level for promotion of
small-scale industries in rural areas, the District Industries Centers (DICs) were established on May
8, 1978. The DICs can be viewed in as interacting agencies with the entrepreneur at the district level.
To the entrepreneurs, the DICs act as one stop shops where the services and support is delivered
under one roof. The various schemes of the Central and State Governments along with the
registration of small industries is done through DICs. They also implement the SEEUY/PMRY for
employment generation. State Governments manage the administrative aspects of DICs.
Functions:
The main function of DICs is a promotional and developmental one. In order to render this service
they will have to fulfil the following other functions namely
1) Identify market as well as industrial surveys, identify important and profitable product lines and
then provide information and advice to the potential entrepreneur.
2) To prepare an action plan which will help in the implementation of the projects and schemes
identified.
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3) To work with the entrepreneur and assess the requirement of raw materials, identify the raw
materials, identify their source, help the entrepreneur procure the material, procurement of
machinery, and procurement of imported machinery if needed
4) To help the entrepreneurs in procuring market related information, to help them market their
products and to help them in export promotion of their products
5) To undertake appropriate product development in small industries.
6) To function as technical wings of DRDA in implementing IRD and TRYSEM programs.
7) Preparing and keeping the abstracts or model project profiles for the reference of entrepreneurs.
8) Providing guidance for suitable loan amount and documentation.
9) Helping entrepreneurs for availing things like land, shed, equipment, furniture, tools and fixtures.
10) Describing the merits of the project-proposals received from entrepreneurs.
SMALL INDUSTRIES SERVICE INSTITUTES (SISIs) NOW KNOWN AS MSME

DEVELOPMENT INSTITUTE.
The Small Industries Services (SISIs) were set up for the provision of consultancy and
training to small entrepreneurs. The Industrial Management Training Division of the DCSSI’s office
coordinates the activities of SISI. Across the state capital and other places all over the country, over
28 SISIs ad 30 Branch SISI’s have been set up to ensure that they provide their consultancy services
to small scale units effectively.
The main functions of SISIs include
• Working as an interface between Central and State Governments

• Render various technical support services
• Conduct entrepreneurship development programmes in various sectors
• Bring forth promotional activities
Moreover, there are other areas as well where SISIs render assistance
• Economic Consultancy/ Information/EDDP Consultancy
• Trade and market information’s
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• Project profiles
• State industrial potential survey
• District industrial potential surveys
• Implant studies
• Regular and periodic workshops
Regular training sessions
ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA (EDII)
The Entrepreneurship Development Institute of India (EDI), was set up in the year 1983 as an
autonomous body which is sponsored by the IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and State
Bank of India (SBI). EDI Campus is built on twenty-three acres of land which has been pledged by
the Government of Gujarat.
EDI has helped in setting up twelve state-level entrepreneurship development centers and
institutes. One of its greatest achievements is to take entrepreneurship to large number of schools,
colleges and management institutes by including entrepreneurship in their curriculum.
University Grants Commission appointed EDI as an agency to develop curriculum on

Entrepreneurship because of its expertise in the field of entrepreneurship.
EDI’s success is led by its strong sense of commitment. Efforts made my EDI to develop
entrepreneurship by conducting training programmes and sharing resources in the international arena
have helped it to get support from World Bank, Commonwealth Secretariat, ILO, British Council,
Ford Foundation, European Union and other renowned agencies.
The Ministry of External Affairs also assigned tasks to EDI to set up Entrepreneurship
Development Centers in Cambodia, Lao PDR, Myanmar and Vietnam which has been successfully
done by the institute. At present the institute is working towards setting up of Entrepreneurship
Development Centers in Uzbekistan and Kazakhstan.
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EDI has a belief that entrepreneurs need not be born they can be developed through well
visualized and directed activities. EDI has the following objectives.
a) Boost the supply of trained entrepreneurs by training.

b) Create multiplying effect on opportunities for self employment.
c) Enhancing managerial abilities of small scale industries.
d) Contribute to the distribution of business ownership, expanding
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the social base of Indian entrepreneurial class.

e) Being a part in creation and diffusion of the new knowledge and insight into entrepreneurial theory
and practice by research.
f) For entrepreneurship development expand the supply of motivators.
g) Play a part in institution building efforts.
h) Providing a supporting environment to facilitate potential and existing entrepreneurs to establish
and manage the enterprises.
i) Promote small enterprises at the rural level.
j) Spread the spirit of entrepreneurship amongst youth.
k) To achieve the above objectives collaborate with same kind of organizations in the country and
other developing countries.
Functions of EDI:
a) Promoting the entrepreneurship process throughout the country.

b) To provide training for trainers for the officers of promotional agencies, banks and other trainer
motivators of the institutes of Entrepreneurship development (IEDs), NGOs and Centers
for entrepreneurship development.
c) Conducting product process EDPs, REDPs and EDPs.
d) Providing professional help to several institutions for their entrepreneurial development activities
such as ICICI and SBI.
e) Conducting conferences, seminars, workshops, to promote entrepreneurship development.
f) To behave as the national resource institution committed to investment, promotion,
entrepreneurship education, guidance and research.
g) To discuss with the developing countries and help them in capacity building programs for
industrial development.
h) Conducting cross-cultural programs to promote entrepreneurship development in small and
medium enterprises of India and Europe.
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i) Conducting distance education system which provides an opportunity for open learning.
EDI has established Centre for Research in Entrepreneurship Education and Development (CREED)
to act as an important bond between theory and practice in entrepreneurship field with focus on
theoretical underpinning.
With the help of this centre, EDI
a) Supports internal research major areas as far as entrepreneurship is concerned.

b) Catalyses the process of networking researchers and institutions in the field of entrepreneurship.
c) Provides an opportunity for the new comers in research to use intellectual and other resources at
the centre so that they contribute a valuable knowledge on entrepreneurship.
d) Promotes collaborative research programs with institutions and individuals outside the centre.
e) Distributes and reveals several research make outs among planners, policy-makers and
academicians and
f) Conduct colloquies, seminars, and workshops.
NATIONAL INSTITUTE OF ENTREPRENEURSHIP AND SMALL BUSINESS

DEVELOPMENT (NIESBUD)
National Institute of Entrepreneurship and Small Business Development (NISEBUD) was

established with the objective of coordinating and facilitating research and training in
entrepreneurship development and to impart specialized training to various categories of
entrepreneurs and also to act as a forum for interaction and exchange views and ideas between
various agencies, this apex national level institute was set up at New Delhi in 1983.
The Governing Council whose Chairman is the Minister of MSME gives the policy, direction
and guidance to the Institute. The Executive Committee consists of Secretary (Micro, Small &
Medium Enterprises) as its Chairman and Director General of the Institute as its Member-Secretary.
This committee executes the policies and decisions of the Governing Council through its whole-time
Director General. The institute has been established for the promotion and development of micro,
small and medium enterprises and undertakes following activities to enhance its competitiveness.
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• Conducting and organizing training programmes for the development of entrepreneurship.

• Field tested strategies and methodologies are evolved and standardized for the development of
entrepreneurship to suit the respective location and various target groups of individuals, clusters
and groups.
• Collaborating with various institutions and organizations which are involved in the development of
entrepreneurship and organizing and conducting training and research activities for the same.
• Identifying the need and providing training to the members of various Governments/ non-
governmental organizations engaged in supporting and promoting entrepreneurship.
• Gathering and analyzing information required for formulation of policies and implementing
programmes relating to entrepreneurship and industrial development.
• Identifying, designing and conducting training and offering services needed for improving the
management, productivity and the technology used for existing entrepreneurs.
• Documentation and dispersion of information relating to entrepreneurship and (industrial/ business)
enterprise development.
• Preparation and publication of information material related to development of entrepreneurship.
• To provide colloquium for interaction and exchange of views and experiences and practices among
Government/ non-governmental agencies, associations of enterprises and individual entrepreneurs
through seminars, workshops, conferences, etc
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• To conduct researches and study the problems to procure knowledge for accelerating the process of
development of entrepreneurship.
• To renew and revitalize entrepreneurship, and upgrade enterprise development, self-employment
and setting up of new industry/business
• Promoting the culture of entrepreneurship by evolving, designing and using various media.
NATIONAL ENTREPRENEURSHIP DEVELOPMENT BOARD (NEDB)
The national entrepreneurship development board is an apex body under the MSME (Ministry
for Small and Medium Enterprises).
The main objective of NEDB is to provide financial assistance for conducting

entrepreneurship development programs in educational institutions thus encouraging new enterprises
to emerge. NEDB also provides financial assistance to research and academic institutions to
undertake research projects which will enhance the understandings and the development of small,
medium and micro enterprises. The studies could be in the area of SME policy, market research for
specific products, area studies, growth, and sick small and medium industries.
NEDB has initiated establishment of business incubators in education institutions by funding

EDPs (Entrepreneurship Development Programs) and facilitate establishing new enterprises in the
incubators of educational institutions.
NEDB has been conducting programs related to cluster groups. Cluster is generally identified
by the product (or product range) and the place where it is located. A complete industry or a sector
(like the leather sector) cannot be referred to as a Cluster.
It is on the basis of the availability of the basic raw materials, etc. required for setting up of
a particular industry that certain States and districts are known for a specific group of industries. For
example, the knitwear cluster of Ludhiana, Gems and Jewellery clusters of Surat and Mumbai,
clusters of Chennai, Agra and Kolkata for leather and leather products, etc

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Module-4
Startups and their Contribution
 Introduction, Definition, Meaning of Startups

 Mobilizing resources for Startups.
 Facilities provided by the government of India for startups
 Preliminary contracts with the venders, suppliers, bankers,
principal customers, Basic startup problems
 Forms of Business ownership in India

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Introduction
Small and medium business has received importance in the frame of Indian planning or both
ideological and economic reasons. Support to SMEs; have been provided due to multiple reasons
and objectives. A few to mention and the same has been discussed in the earlier chapters. In the
following module we shall discuss the initiatives taken by the Government to promote
entrepreneurship and also the institute which promote the entrepreneurship development.
The Standup India initiative is also aimed at promoting entrepreneurship among SCs/STs,
women communities. Rural India’s version of Startup India was named the DeenDayal
Upadhyay Swaniyojan Yojana.
Definition of Start-up – Startup Action Plan2016
Startup means an entity, incorporated or registered in India not prior to five years, with annual
turnover not exceeding INR 25 crores in any preceding financial year, working towards innovation,
development, deployment or commercialization of new products, processes or services driven by
technology or intellectualproperty.Provided that such entity is not formed by splitting up, or
reconstruction, of a business already inexistence.
Policy Framework for Promoting Small Enterprises: Government realizing that the Small and
Medium Business are the vehicle of economic growth, emphasized the needs for legal support to
Small Enterprises.

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Resource Mobilization for Start-ups:

The term resource mobilization refers to all activities undertaken by a start-up or an organization to
secure new and additional financial, human and material resources to advance its mission. Inherent in
efforts to mobilize resources is the drive for organizational sustainability.
As fundraisers, we often come across the term ‘resource mobilization.’ Although technical in sense,
it merely means mobilizing resources. Now resources can include many different things, not just
money, for your organization.
Apart from money, you can also raise support from friends, family, dealers, knowledge of
employees, infrastructure etc. So, in order to put all these sources of support into one kitty, including
finances, we refer to them collectively as ‘resource mobilization.’
Resource mobilization is actually a process of raising different types of support for your
organization. As said above, it can include both cash and in-kind support.
Resource mobilization can also be called as the process of getting resource from resource provider,
using different mechanisms, to implement the organization’s work for achieving the pre-determined
organizational goals. It deals in acquiring the needed resources in a timely-cost effective manner.
Resource mobilization advocates upon having the right type of resource, at the right time, at right
price with making right use of acquired resources thus ensuring optimum utilization of the same.
Types of Resource Mobilization for Start-ups:

Every business model requires them, and it is only through them that companies generate Value
Propositions and Revenues. Key resources can be physical, financial, intellectual, or human.
A microchip manufacturer needs capital-intensive production facilities, whereas a microchip
designer depends more on human resources.
Any start-up would need all of the following resources, though the financial resource may be
considered most important:
(i) Financial resource
(ii) Intellectual resource
(iii) Human resource
(iv) Physical resource
(v) Educational Resources
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(vi) Emotional Resources

(vii) Moral Resources
(viii) Cultural Knowledge resource
(ix) Relational Resource
Let us discuss each resource one by one:
(i) Financial Resource:
The most important element in starting a business is funding. Even the most basic home business
incurs a multitude of start-up costs, including registering a business name, obtaining a business
telephone line and printing business cards.
Financial resources can be obtained from a variety of sources, the easiest being from:
a. The personal accounts of the company’s founder.
b. Alternatively, loans and lines of credit may be granted from financial institutions,
c. Friends and relatives,
d. Private investors
In addition, many grants are offered from private and public sources to entrepreneurs of all
demographics and personal situations.
“If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin
Here is an overview of typical financing sources for a start-up business:
(a) Personal Investment:
When borrowing, you invest some of your own money either in the form of cash or collateral on your
assets. This proves to your banker that you have a long- term commitment to your project.
(b) Love Money:
This is money loaned by a spouse, parents, family or friends. A banker considers this as “patient
capital”, which is money that will be repaid later as your business profits increase.
(c) Venture Capital:
The first thing to keep in mind is that this funding source is not necessarily for all entrepreneurs.
Right from the start, you should be aware that venture capitalists are looking for technology-driven
businesses and companies with high-growth potential in sectors such as information technology,
communications, and biotechnology.

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Venture capitalists take an equity position in the company to help it carry out a promising but higher
risk project. This involves giving up some ownership or equity in your business to an external party.
Venture capitalists also expect a healthy return on their investment, often generated when the
business starts selling shares to the public. Be sure to look for investors who bring relevant
experience and knowledge to your business.
(d) Angels:
Angels are generally wealthy individuals or retired company executives who invest directly in small
firms owned by others. They are often leaders in their own field who not only contribute their
experience and network of contacts but also their technical and/or management knowledge.
In turn for risking their money, they reserve the right to supervise the company’s management
practices. In concrete terms, this often involves a seat on the board of directors and an assurance of
transparency. Angels tend to keep a low profile.
(e) Business Incubators:
Business incubators or “accelerators” generally focus on the high-tech sector by providing support
for new businesses in various stages of development. However, there are also local economic
development incubators, which are focused on areas such as job creation, revitalization and hosting
and sharing services.
Commonly, incubators will invite future businesses and other fledgling companies to share their
premises, as well as their administrative, logistical, and technical resources. Generally, the incubation
phase can last up to 2 years. Once the product is ready, the business usually leaves the incubator’s
premises to enter its industrial production phase and is on its own.
(f) Grants and Subsidies:
You may have access to this funding to help cover expenses, such as research and development,
marketing, salaries, equipment and productivity improvement. Technically, a grant is a sum of
money conditionally given to your business that you do not have to repay.
However, you are bound legally to use it under the terms of the grant, or otherwise you may be asked
to repay it. As well, once you are granted money from one government source, it is not uncommon to
receive further funding from the source if you meet program requirements. The Government
announces grants and subsidies to Startups from time to time.
(ii) Intellectual Resource:

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Intellectual resource is the intangible value of a business, covering its people, the value inherent in its
relationships, and everything that is left when the employees go home, of which Intellectual property
(IP) is but one component. It is the sum of everything everybody in a company knows that gives it a
competitive edge.
The term is used in academia in an attempt to account for the value of intangible assets not listed
explicitly on a company’s balance sheets. On a national level intellectual capital refers to National
Intangible Capital NIC.
A second meaning that is used in academia and was adopted in large corporations is focused on the
recycling of knowledge via Knowledge management; Intellectual capital is used in the context of
assessing the wealth of organizations. Understanding the intellectual capital in an enterprise allows
leveraging of its intellectual assets
The start-ups also require this resource and can mobilize it from within the close circle.
(iii) Human Resource:
The success of an organization is heavily reliant on the talent and strength of its employees. The
hiring of experienced professionals with track records of excellence within their area of expertise
ensures that the mission and goals of the company will be carried out efficiently and with
competence.
Strong team members can be recruited using a variety of methods. Staffing agencies and executive
search firms specialize in placing talent of all levels within every industry. An alternative is to find
employees through referrals from individuals whose judgment is trusted.
Though initially the start-ups cannot do a large hiring, but whatever human resource, they hire, must
be “High Potential Individuals”.
“Teams should be able to act with the same unity of purpose and focus as a well-motivated
individual.” – Bill Gates
(iv) Physical Resource:
Whether a small home business or a retail operation with multiple locations, every organization must
have the appropriate physical resources to survive. This includes a proper workspace, working
telephone line, adequate information systems and effective marketing materials. This aspect of
business planning can be one of the costliest. As such, it is important for an entrepreneur to
realistically assess his needs before making any purchases.

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Most of the start-ups have had the history of starting the operations from home, garage of a very
small place initially.
(v) Educational Resources:
Perhaps the greatest thing an entrepreneur can do when establishing a new business is to gain as
much education possible. By understanding his/her competition and gaining an in-depth knowledge
of his/her industry, he/she will be better prepared to make smarter decisions regarding the direction
of his/her firm.
Educational resources can be found through professional trade associations that are geared toward
his/her industry, local chamber of commerce as well as the Small Business Administration.
(vi) Emotional Resources:
Starting a business can be an extremely stressful endeavour for an entrepreneur to undertake. To
maintain the sanity as well as stay motivated, it is important to have a support team that can give
inspirations and guidance as needed. This team may be composed of friends and family as well as a
mentor or professional group.
(vii) Moral Resources:
Moral Resources include solidarity support, legitimacy and sympathetic support. These resources can
be easily retracted, making them less accessible than other resources.
(viii) Cultural Knowledge Resource:
Cultural Knowledge resource has become widely necessary and universal. Known Examples include
how to accomplish specific tasks like enacting a protest event, holding a news conference, running a
meeting, forming an organization, initiating a festival, or surfing the web.
(ix) Relational Resource:
It consists of such elements as customer relationships, supplier relationships, trademarks and trade
names, which have value only by virtue of customer relationships, licenses, and franchises. In fact
relational resource is separate from human and structural resource and therefore, it indicates its
immense importance to an organization’s worth.
The value of the relationships a business maintains with its customers and suppliers is also referred
as goodwill, but often poorly booked in corporate accounts, because of accounting rules.
HIPOs, as they are called, high potential employees are the ones who have exceptional potential,
ability and aspiration for successive leadership positions.

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Facilities provided by the government of India for startups.
Incentives: The SSI sector plays an important role in industrial production, generation of
employment and exports. The government has taken steps to support this sector through policies
and financial assistance, incentives, subsidies, and technology. Entrepreneurs really need these
incentives for establishing their own industries. New ventures may have high risks and first
generation entrepreneurs may not be aware of the highrisk.
Meaning of incentives:
Incentives are the motivation elements which help entrepreneurs improve their productivity. It
helps them to take right decisions and help in achieving them.
Incentives mainly include three types:
a) Concessions.
b) Subsidies.
c) Bounties.
Incentives help entrepreneurs to achieve their goals and they can be either financial or non-
financial.
a) Concessions: Policies and guidelines are made liberal and relaxations are given to the
entrepreneurs to undergo a particular creative activity. They are nothing but some reliefs which
provide certain independence from the restrictions imposed by theGovernment.
b) Subsidy: Subsidy is a onetime lump sum payment provided by the Government to an
entrepreneur compensating him for the excess cost over the actual price for that particular
product.
c) Bounty: Bounty is nothing but a bonus or fund provided by the government to an industry or
a product to improve its quality to compete with other products or units in foreign markets. Thus,
the main objective of incentives is to encourage entrepreneurs to initiate entrepreneurial activities
so that there is an enhancement in the supply of goods and services in thecountry.
Advantages of incentives and assistance:
1) They encourage entrepreneurs to take on new entrepreneurialactivities.

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2) They inspire the new entrepreneurs to establish their industries in ruralareas.

3) They inspire first generation entrepreneurs to be a part of industrial development of the
country.
4) They help in improving the struggling ability of the entrepreneurs to face the environment.
Example: reservation of items for small scale sector is made to strengthen the SSIs in terms of
their strugglingability.
5) They actually solve the problems of entrepreneurs such as insufficient facilities, distance
between administrative offices and implementation sites, lack of intelligent human resource, lack
of training, banking amenities, scarcity of institutional mechanismetc…
Schemes of Incentives in operation:
These schemes are provided by the Central and State Governments along with the union
territories. They are:
Financial Incentives:
Following are some of the incentives available to small scale units:-

1) Subsidy relating to investment: Government has taken steps to initiate different schemes to
help the entrepreneurs and also to encourage them. They are capital investment subsidy, transport
subsidy, power generator subsidy, special investment schemes for women entrepreneurs,
provision for seed capital, subsidy for technical feasibility study etc… as SIDBI being the apex
bank for SSI sector it is providing equity type of schemes like seed capital scheme, national
equity fund scheme, wingle window scheme to give both term loan as well as working capital,
venture capital fund with a corpus of Rs. 80 crores etc…to improve the speed of investment in
small scalesector.
2) Export/import subsidies and bounties: Hundred percent Export oriented units (EOU) and units
in the Export Processing Zones (EPZ) take the benefit of incentives and facilities, such as duty
free import of capital goods, raw materials, and consumables along with tax concession onexport
3) Subsidies relating to research and development: Government is providing subsidies to
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develop research activities in small scale sectors. Rs. 50 crores has been sanctioned in 2000-01
for Technology Information Forecasting and Assessment Council. And also Rs. 50 crores has
been made in budget for initiating New Millennium Indian Technology Leadership Initiative.
4) Subsidy relating to taxes: Tax subsidies are provided with an objective to increase the pace of
entrepreneurial activities and to motivate entrepreneurship such as exemption from estate duty,
tax relief to NRIs, discount in income-tax, interest free sales tax loan, sales tax subsidy,
exemption from sales tax etc…
5) Subsidy relating to resources: The infrastructural facilities are provided by the Government
to these mall industries at subsidized rates. The subsidies are provided for purchase of testing tools,
industrial estates and parks, allotment of land and buildings, supply of water, arrangement of sheds,
arrangement of raw materials at concessional rates are few of the subsidies.
6) Capital subsidy scheme: The capital subsidy scheme was introduced by the Central
Government in November 2000 for SSIs for technology up gradation. Under this scheme a 12
per cent back ended capital subsidy will be permissible on loans and moved to SSI units by the
scheduled commercial banks/ designated state financial corporations. This scheme will be under
process for 5 years from October 1, 2000 to September 30, 2005 or till the nodal agency SIDBI
sanctions capital subsidy which reached Rs.600 crore the earlierone.
7) Excise duty exemption: This is the most important incentive for small scale units. This was
diluted by MODVAT (modified value added tax) and the drop in excise duties. Now the excise
duty exemption has been increased by the government from 50 lakh to 1crore.
Tax concession:
These are the special tax concession provided by the government. Such measures include:
i) Income tax concessions ii) customs duty drawbacks, iii) exemption and preferential treatment
in respect of excise duty, iv) exemption from sales tax v) tax holidays for new industries.
Government assistance:
The National Small Industries Corporation (NSIC) Ltd. was set up by Indian government in 1955
to encourage small industries. This allows entrepreneurs to hire machineries, get equipments on
lease, also helps in getting the raw materials, and provides technical and managerial assistance.

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Some of the NSICs assistance schemes are:

1. Raw material assistance: The Small Industries Development Organization used to provide
help in getting the raw materials both at Central and State level. Now the District Industries
Centers are responsible for providing Scarce and controlled raw materials. Now it is essential for
the small scale units to acquire registration certificate from the concerned directorate
ofindustries.
2. Assistance for obtaining plant and machinery: If an entrepreneur has a good financial position
he can purchase machinery or plants on his own otherwise he can purchase it from NSIC or state
level Small IndustriesCorporations.
3. Machinery and equipment (Hire-purchasescheme) Machinery and equipment (leasescheme
Technical assistance: NSIC has set up Technology Transfer Centers (TTC) at Okhala (Delhi) for
the technology up gradation. The services available for the industries are as follows.
a. Information distribution on technology, business and investment opportunities.
b. Finding suitable business partners and global identification oftechnology.
c. Training, Consultancy and evaluation oftechnology
d. Conducting technology transfer programs as technology missions/delegations. e. Making
available the reference librarypublications
f. Establishing a network for the access of database.
4. Marketing assistance: The success of the small industries mainly lies in marketing of their
products. For this assistance they have to get themselves registered with NSIC. The objectives of
NSICs marketing programare:
a) Make sure that there is a good margin for producers ofgoods.
b) Standardization ofProducts
c) Products should be marketed under common brandname.
d) Publicizing SSIproducts.
e) Supplying sophisticated machinery and equipment for technologicalupgradation.
5. Government Store Purchase Program Assistance. SSIs which are eligible (those competent to

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perform government orders) are registered with single point registration scheme on NSIC.
Bonafide SSI units registered with Directorate of Industries / District Industries Center are listed
under this scheme and are the main sources of supply to the Central and State Governments,
public sector undertakings andothers
Industrial Estates: The main hurdles in small scale industries development is they are not able to
command by their own, and couldn’t afford facilities like land, power, and transport etc… A
program for setting up of Industrial Estates was started in 1955 to encourage the entrepreneurs to
set up small industries.
Meaning: “An Industrial Estate is a group of factors constructed on economic scale in suitable
sites with facilities of electricity, transport, roads, bank, canteen, and drainage system and
provided with special arrangements for technical guidance and common business facilities.” The
program consists of the following facilities for entrepreneurs.
a) Acquiring correct land anddevelopment.
b) Establishment of factorysheds.
c) Basic infrastructure conveniences like water, electricity, transport, banks, canteen, roads etc…
Till 1979, 796 Industrial Estates were established with the help of Indian Government in
throughout the country. And then the process was given over to the State Industrial Development
Corporation (SIDCs). This helped the state government to be a part of Industrial
Estatedevelopment.
Types of Industrial estates: Industrial estates are mainly classified in the following types.
1) On the basis offunctions:
a) General purpose or composite industrial estates: These are mainly meant for providing
accommodationfacilitiestosmallindustries.Most oftheindustriesinIndiaareofthistype.
b) Special purpose of industrial estates: These types of industrial estates are mainly meant for
particular industry units, which areinter-dependent.
2) On the basis ofownership:
a) Government Industrial estates: In order to encourage industrialization most of the industries
are of this type. These falls under the ownership of the Government only and the state
government has established these estates in several cities andtowns.
b) Private Industrial Estates: Private owners have established theses industrial estates for small

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scale industries and they let them on rent. These might be supplementary for big private or
publicsectors.
c) Co-operative industrial estates: Co-operative sectors have established these industries. In
Maharashtra and UP there are a lot of co-operative sugar factories. There is a necessity of
development of such industries under co-operative sector for maintenance and facilities like
supply ofspheres.
3) Other categories of IndustrialEstates:

a) Ancillary Industrial Estates: Here in these types of estates only small-scale industries are
under shelter which are supplementary and produce parts or spares for large industries. These are
generally established near the large parent unit.
b) Functional Industrial Estates: These are usually the collection of the industries which
manufacture the same product. These estates are established for ceramics, food preservation,
sport goods, electronics, leather geodesic…
c) Flatted factory estates: These are nothing but huge multistory buildings built in metro cities to
provide place to industrial units, usually used for industries which manufacture light weight
goods using simple machinery tools. They help to save space.
Working of Industrial Estates in India: The government of India has established 796 industrial estates
up to 1979 in different parts of the country as it was a centrally sponsored program. And there after
the program was handed over to State Industrial Development Corporation (SIDCs). The
Government of Karnataka has established the Karnataka Industrial Areas Development Board
(KIADB) and Karnataka State Small Industries Development Board (KSSIDC) for the development
of industrial estates in the state.
Preliminary Contracts with the Vendors, Suppliers, Bankers, Principal Customers; Contract
Management:
Preliminary or Pre-Incorporation Contracts:
When the contract is agreed, on behalf of the company before its incorporation they are called the
preliminary Contract or pre-incorporation Contract. These contracts may relate either to the property,
which the promoter wants to purchase for the Company or the technical knowledge which is essential

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for the success of the company. These types of contracts cannot bind the company until it is
incorporated.
The legal position in case of preliminary contracts can be studied under two heads:
(I) Position before passing of Specific Relief Act, 1963
(ii) Position after passing of Specific Relief Act, 1963
(I) Position before Passing of Specific Relief Act, 1963:
a. The preliminary Contract made before passing of Specific Relief Act, 1963 cannot bind the
company because it has not legal existence before incorporation.
b. The companies are not in a position to sue on pre-incorporated contracts.
c. Ratification is not possible in the case of the preliminary contract, as the ostensible principal not
exist at the time of the contract.
(ii) Position after Passing of Specific Relief Act, 1963:
a. The promoters found difficulties in carrying out the work before the Specific Relief Act, 1963,
because the contracts prior to incorporation were void.
b. The Specific Relief Act, 1963 came as a relief to the promoters.
c. The Act provides that where the promoters of a public company have made a contract before its
incorporation, for the purpose of the company and if the contract is warranted by the terms of its
incorporation, the company may enforce it.
Basic Requirements for a Contract:
Entering into a legal contract with another individual or party helps provide legal protection, as well
as a specific outline of the deal. When you enter into a contract with another party, it should meet a
few requirements before it can be considered a valid legal contract.
(I) Specific Details:
In order for a contract to be valid it has to feature the specific contract details. In the contract, outline
exactly what is being dealt with. If you are buying material from a dealer, it has to have the legal
description of the material, so that there is no question about which material is being conveyed.
The contract should also be specific about the names of the parties involved and their role in the
transaction. It should also outline the nature of the agreement.
(ii) Consideration:
A valid legal contract also must have consideration. Consideration is giving something of value in
return for something else. In this section, the factors associated with consideration should also be
included. For example, you should include information about payment terms, time considerations
and other expectations.
(iii) Capacity to Contract:

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Before a valid legal contract is created, both parties must be able to prove that they have the capacity
required. This means that the individuals have to be of legal age, depending on state law and they
must be of sound mind.
This means that if they are mentally handicapped or are under the influence of drugs or alcohol, they
cannot enter into a binding contract. The parties must also enter into the agreement under their own
free will and cannot be coerced into signing.
(iv) Legal:
The agreement also has to have legal terms. If you enter into an agreement to perform an illegal act,
this would not constitute a legal contract. For example, if you enter into an agreement to launder
money for an illegal operation, that contract would not be enforceable by the law because you are
involved in an illegal activity.
(v) Proper Form:
A legal contract also must be in the proper form. Typically, this means that the contract must be in
writing. The proper form is determined by the type of contract that you are engaged in and the laws
of your state. In some cases, verbal contracts are binding and are perfectly acceptable. In most cases,
you should do the contract in writing so that no confusion exists if any legal matters come up later.
General Principles for Entering into Contracts:
A contract is created the moment two people agree to do something for each other. These people,
who are called “contracting parties”, can be individuals, bankers, customers, dealers, financial
institutions, and a group of people or representatives of a business.
In general, it is not necessary to sign a document for a contract to be created. A simple verbal
agreement can be enough. However, some kinds of contracts must be in writing, and some must even
meet other requirements to be valid.
For Example:
1. Many contracts between merchants and consumers must be in writing.
2. A mortgage contract for property must be in writing and made by a notary.
Of course, even when the law does not require a written document, it is often a good idea to put a
contract in writing. When there is a written document and a problem arises, the disagreement does
not become a case of “his/her word against mine”.
There are some areas that deserve careful attention during entering into a contract includes:
(I) The terms of a contract must be precise and definite and there must be no room for ambiguity or
misconstruction thereon should exist.
(ii) No contract involving an uncertain or, indefinite liability or any conditions of an unusual
character should be entered into without the previous consent of both parties.

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(iii) Subject to adequate prior scrutiny of terms, general or special, if any, standard forms of contracts
should be adopted, wherever possible.
(iv) In cases where standard forms of contracts are not used, legal and financial advice should be
taken in drafting the contracts and before they are finally entered into.
(v) Before entering into a contract or an agreement, all pros and cons should be considered and
validity of contractual documents should be ensured.
(vi) If you are sued because you did not respect your contract, you can avoid responsibility if you can
prove there was an “Act of God” (event beyond human control); unless the contract states that you
are responsible even if an act of God occurs.
(vii) To be considered an Act of God, the event must be outside your control. It must have been
absolutely impossible for you to predict the event and prevent its negative impact. Finally, you must
have been completely prevented from respecting the contract and from having someone else carry
out your duties under the contract for you.
(viii) Generally a contract cannot be cancelled. However, it is possible to cancel a contract in some
situations such as when the people involved did not have the right to enter into a contract.
(ix) If your contract is cancelled, it is as though it never existed. The people involved must therefore
return to the situation they were in before the contract was entered into. To do this, they must give
back to the other person everything they received because of the contract.
(x) While you may have the opportunity to negotiate before you agree, it is common for you to be
offered the same or a similar contract as everyone else. This is known as a standard form contract.
There are laws to protect you from unfair contract terms in standard form consumer contracts where
you have little or no opportunity to negotiate with the trader.
Ending a Contract by Consumer:
There are limited circumstances when consumers may end a contract without penalty and
these can include:
(I) If the business has misrepresented the goods, services, terms or conditions
(ii) If a cooling-off period applies.
A cooling-off period is a safeguard designed to give consumers the opportunity to change their minds
about a purchase or agreement they have made. You have a right to a cooling-off period when you
purchase goods or services through telemarketing or door-to-door sales.
Basic Start-Up Problems Faced by Entrepreneurs:

In the crucial initial period, start-ups face several problems to counter and overcome such as the
intense competition for customer, market and venture capital money, the list is very large.

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Keeping the venture from becoming one of the walking dead, the entrepreneur can do so by being
aware of these predictable, yet preventable problems that can affect its growth and development.
Some such problems faced by start-ups are being briefly discussed below:
(I) Developing the Vision and Business Idea:
Developing a business idea is usually the first challenge faced by every entrepreneur when starting a
business from scratch. Finding the right business opportunity or creatively developing an idea is
certainly not an easy task.
“Envisioning the idea” is the first true task of an entrepreneur. As an entrepreneur, you must possess
the ability to see what others cannot see. While others see problems, you must see opportunities.
(ii) Raising Capital for your Start-up:
After developing your idea, the next challenge you are going to face when starting a business from
scratch is that of raising capital. As an entrepreneur, you are the only one that knows business your
idea to the core. You are the only one that knows the story of your future.
Trying to convince investors about something that does not exist is definitely a challenge. Trying to
make them understand that you are trustworthy and equal to the task is not child’s play especially
when you are building your first business.
Market Problems:
A major reason why companies fail is that they run into the problem of their being little or no market
for the product that they have built.
(iii) Business Model Failure:
One of the most common causes of failure in the start-up world is that entrepreneurs are too
optimistic about how easy it will be to acquire customers. They assume that because they will build
an interesting web site, product, or service, that customers will beat a path to their door.
That may happen with the first few customers, but after that, it rapidly becomes an expensive task to
attract and win customers, and in many cases the cost of acquiring the customer is actually higher
than the lifetime value of that customer.
(iv) Poor Management Team:
An incredibly common problem that causes start-ups to fail is a weak management team. Weak
management teams make mistakes in multiple areas such as strategy; building a product that no-one
wants to buy bad marketing strategies etc. They are also usually poor at execution, which leads to
issues with the product not getting built correctly or on time, and the go-to market execution will be
poorly implemented.
(v) Liquidity or Cash Crunch:

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A fourth major reason that start-ups fail is because they ran out of cash. A key job of the CEO is to
understand how much cash is left and whether that will carry the company to a milestone that can
lead to a successful financing, or to cash flow positive.
(vi) Product Problems:
Another reason that companies fail is, because they fail to develop a product that meets the market
need. This can either be due to simple execution. Or it can be a far more strategic problem, which is a
failure to achieve Product/Market fit. Most of the time the first product that a start-up brings to
market does not meet the market need.
(vii) Finding Good Employees:
Business owners know how difficult it is to find a hardworking, trustworthy employee. Most
employees want to work less and get paid more. Finding a good employee who will be passionate
about delivering his or her services is quite difficult. Finding good employees is a minor task
compared to the business challenge of forging your hired employees into a team.
“The competition to hire the best will increase in the years ahead. Companies that give extra
flexibility to their employees will have the edge in this area.” – Bill Gates
“If you own a butcher shop, don’t hire vegetarians. To hire the right people, you have to let the
wrong people go.” – Rich Dad
(viii) Finding Good Customers:
The next challenge you will face in the process of starting a small business from scratch is finding
good customers. In the process of building a business, you will come to find out that there are good
customers as well as bad customers. You must be on guard for bad customers. Good customers are
really hard to find.
A good customer will be loyal to your company and will be willing to forgive you if you make a
mistake and apologize. A good customer will try to do the right thing that will benefit both himself
and your company mutually. Bad customers will always look for loopholes in the company’s policy
to exploit and make a few gains.
Bad customers will always try to exploit the company’s goodwill and look for ways to rip off the
company. Bad customers are responsible for bad debts. Good customers build your business and bad
customers will always try to liquidate your business.
(ix) Dealing with Competition:
Competition is yet another challenge you will face when starting a business. Most individuals see
competition as a plague but competition is a good challenge. It is a benchmark for creativity, the
main engine that stimulates innovation and production of quality products at great prices. Without
competition, there will be no innovation and without innovation, the world will be stagnant.

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Competition keeps us on our toes and drives us to constantly improve our products and services. But
you must be warned. Competition can make your business lose its relevance in the eye of your
customers so you must always be on guard.
“In business, the competition will bite you if you keep running. If you stand still, they will swallow
you.” – Victor Kim
(x) Unforeseen Business Challenges and Expenses:
Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for unpredictable
bad weather and thunderstorms, so must an entrepreneur have prepared for whatever comes.
Unexpected challenges can come in the form of:
I. Unexpected legal suits
ii. Inconsistent government policy
iii. Unexpected resignation of staff from sensitive office
iv. Bad debts from customers
v. Loss of market share
vi. Dwindling working capital
vii. Inadequate stock or inventory
These business challenges, if not handled properly can ruin your plan to build a successful business.
Another challenge you must expect is an unforeseen increase in business expenses. If not handled
properly, it might result in constant negative cash flow and eventually; business failure.
(xi) Lack of Research & Development Facility:
We all know that it is a time for innovation and creativity. Any business can fail if there are no
efforts being made to constantly innovate. The start-ups lack the financial viability and face cash
crunch always, therefore, they find it difficult to have a R&D.
Methods to Solve Start-up Problems:

Creating a startup, or managing any business, is all about problem solving. Some people are good at
it and some are not. People who are good at problem solving are some of the most valuable and
respected people in every area. In fact, success if often defined as “the ability to solve problems.”
In many cultures, this is called “street smarts,” and it is valued even more than “book smarts.” The
best entrepreneurs have both. Entrepreneurs who are great problem solvers within any business are
the best prepared to solve their customers’ needs effectively as well.
Following are some simple ways to solve or minimize a startup problem:
(I) Define the Problem Clearly:

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Many executives like to jump into solution mode immediately, even before they understand the issue.
In some cases, a small problem can become a big one with inappropriate actions. In all cases, real
clarity will expedite the path ahead.
(ii) Pursue Alternate Paths:
Remember, there are some things that you can do nothing about. They are not problems; they are
merely facts of life. Often, what appears to be a problem is actually an opportunity in disguise. Even
if it does not turn into an opportunity, the entrepreneur must take an alternative course.
(iii) Identify the Cause of the Problem:
Find the root cause of the problem, rather than treating a symptom because if the root cause is not
understood, the problem will likely recur, perhaps with different symptoms.
(iv) Identify Multiple Possible Solutions:
The more possible solutions you develop, the more likely you will come up with the right one. The
quality of the solution seems to be in direct proportion to the quantity of solutions considered in
problem solving.
(v) Make a Prompt Decision:
Select a solution, any solution, and then decide on a course of action. The longer you put off deciding
on what to do, the higher the cost, and the larger the impact will be. Many start-ups take too long to
decide & that becomes a reason for the failure.
(vi) Acknowledge and Correct:
Instead of getting offended or embarrassed when your product does not do well or someone bad-
mouths your brand in attempt to elevate their own, look at the problem as a direct route to connect
with your customers or competition. If your customers are unhappy, correct the problem.
(vii) Cut Costs In-House:
Entrepreneurs should run the business as lean an operation as possible, in every process from
manufacturing to administrative functions efforts should be made to cut costs wisely. The start-ups
should involve employees in this Endeavour as well so that they cut costs happily and understand the
entrepreneur’s perspective.
(viii) Overcome Your Fears of Risk-Taking by confronting them Head-on:
Being an entrepreneur is risky business. Every decision you make could potentially hurt or help your
company. Believe in trusting your instincts, educating yourself about the pros and cons of your
decisions, and getting a second opinion from another entrepreneur in whom you confide.
(ix) Formulation of Strong Business Strategies:
Without strategy, change is merely substitution, not evolution. A solid strategy must be implemented
in order to solve any problem. Many startups attempt to dissect a problem rather than identify the
strategy for change that lies within the problem itself.
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Effective startups always know how to gather the right people, resources, budget and knowledge
from past experiences. They inspire people to lift their game by making the problem solving process
highly collaborative; for them, it is an opportunity to bring people closer together.
Forms of business ownership in India
1. Private Ltd Company- Restricts the right of the shareholders to transfer their shares.
A private limited company can be formed with a minimum of two members and a public
company may be formed with a minimum of seven members. A private limited company
can have a maximum of 50 members excluding employee-members; whereas there is no
maximum limit on the number of members of a public company.
2 Public Ltd Company- It allows the shareholders to transfer their shares.

A Public Limited Company under Company Act 2013 is a company that has limited liability and
offers shares to the general public. Its stock can be acquired by anyone, either privately through
(IPO) initial public offering or via trades on the stock market. And has a minimum of 7 members,
and for maximum there is no limit.
3. Unlimited Company- Unlimited Company is a form of business organization under which the
liability of all its members is unlimited. The personal assets of the members can be used to settle
the debts. It can at any time re-register as a limited company under section 32 of the Companies
Act.
4. Sole proprietorship- Sole proprietorship is a form of business entity where a single individual
handles the entire business organization.
5. Joint Hindu Family business- Joint Hindu Family is a form of business organization wherein
the members of a family can only own and manage the business. It is governed by Hindu Law.
6. Partnership- Partnership is “the relation between persons who have agreed to share the profits
of the business carried on by all or any one of them acting for all”. It is governed by the Indian
Partnership Act1932.
7. Cooperatives- Co-operatives is a form of voluntary organization, wherein the members work

together for the promotion of the interests of its members. There is no restriction to the entry or
exit of any member. It is governed by Cooperative Societies Act1912.
8. Limited Liability Partnership (LLP) - Under LLP (Limited Liability Partnership) the liability
of at least one member is unlimited whereas rest all the other members have limited liability,
limited to the extent of their contribution in the LLP. Unlike general partnership this kind of

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partnership does not get terminated by the death or insolvency of the limited partners. It is
governed by Limited Liability Partnership Act of2008.
9. Branch Office- Foreign companies which are into manufacturing and trading activities abroad
are permitted to set up branch offices in India for various purposes like rendering of professional
and consultancy services, export/import of goods etc. Branch offices are not permitted to carry
out manufacturing activities on their own. RBI is the statutory body that grants permission to
foreign companies for setting up branch offices in India.
10. Project Office- Foreign companies can set up temporary project offices in India for carrying
out activities related to that specific project.
11. Subsidiary Company- In India the sectors where 100% foreign direct investment is permitted
their foreign companies can set up wholly-owned subsidiary.
12. One Person Company (OPC)

The constitution of a One Person Company (OPC) was recently introduced as a strong
improvement over sole proprietorship. It gives a single promoter full control over the company
while limiting his/her liability to contributions to the business. This person will be the only
director and shareholder (there is a nominee director, but with no power until the original director
is incapable of entering into contract). Hence, there is no scope of raising equity funding or
offering employee stock options.

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Module – 5
Entrepreneurship Sustainability
1. Introduction, Meaning and Definition of Sustainability.
2. Reasons/causes for entrepreneurial failures/sickness.
3. The four entrepreneurial pitfalls for industrial sickness.
4. Preventive measures and remedial measures for
improvement of industrial effectiveness.
5. Role of industries/entrepreneurs associations and self-
help groups.
6. The role of business incubators, investors, and venture
capitalist and equity funds in finding entrepreneurship
ventures.

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1. INTRODUCTION
What Is Sustainability?
Sustainability means meeting one’s own needs without compromising the ability of future
generations to meet one’s own needs. In addition to natural resources, we also need social and
economic resources. Embedded in most definitions of sustainability we also find concerns for
social equity and economic development. Therefore, sustainability is made up of three pillars:
the economy, society, and the environment. These principles are also informally used as profit,
people and planet.
Nonetheless, nowadays, because of the environmental and social problems societies around the
world are facing, sustainability has been increasingly used in a specific way. Nowadays,
sustainability is usually defined as the processes and actions through which humankind avoids
the depletion of natural resources, in order to keep an ecological balance that doesn’t allow the
quality of life of modern societies to decrease.
In this way, the term “sustainability” has been broadly applied to characterize improvements in
areas like natural resources overexploitation, manufacturing operations (its energy use and
polluting sub-products), and the linear consumption of products, the direction of investments,
citizen lifestyle, and consumer purchasing behaviors, technological developments or business
and general institutional changes. As long as an action causes little, less, or no harm to the
natural world – under the belief (not always ensured) ecosystems will keep on operating and
generating the conditions that allow for the quality of life of today’s modern societies not to
decrease – someone is often claimed to be sustainable.
Definition of Sustainability and Sustainable Development: What’s the Difference?

Sustainability means meeting our own needs without compromising the ability of future
generations to meet their own needs. In addition to natural resources, we also need social and
economic resources. Embedded in most definitions of sustainability we also find concerns for
social equity and economic development. Originally, "sustainability" meant making only such

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use of natural, renewable resources that people can continue to rely on their yields in the long
term.
Pearce, Makandia&Barbier (1989), “Sustainable development involves devising a social and

economic system, which ensures that these goals are sustained, i.e. that real incomes rise, that
educational standards increase, that the health of the nation improves, that the general quality of
life is advanced.”
IUCN, UNEP, WWF (1991), “Sustainable development, sustainable growth, and sustainable use
have been used interchangeably, as if their meanings were the same. They are not. Sustainable
growth is a contradiction in terms: nothing physical can grow indefinitely. Sustainable use is
only applicable to renewable resources. Sustainable development is used in this strategy to mean:
improving the quality of human life whilst living within the carrying capacity of the
ecosystems.”
In sum, "the term 'sustainability' should be viewed as humanity's target goal of human-ecosystem
equilibrium (homeostasis), while 'sustainable development' refers to the holistic approach and
temporal processes that lead us to the endpoint of sustainability"(Shaker, Richard Ross, 2015)
The views on sustainability seem to have a stronger focus on the present moment and on keeping
things above a certain level. By its turn, sustainable development focuses more on a long-term
vision. In fact, sustainable development has a universally agreed definition that was first written
in the Brundtland Report (aka Our Common Future), written in 1987.
By adding the concept of development, sustainable development means not only that humankind
should satisfy its current needs without compromising the ability of future generations doing the
same. Along with it also comes an idea of societal progress and an increase in quality of life
across the globe.
That’s why an agenda for 2030 with 17 sustainable goals (SDGs) was adopted by the UN
members in NY in 2015. Among them are goals such as ending poverty and hunger, ensuring
good health and well-being for all, providing quality education or achieving gender equality.

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Sustainable Development
Sustainable development represents an opportunity to construct a new approach, and the success
of these efforts has powerful implications for issues of peace and security.
The term ‘Sustainable development’, in place of ‘development’ is now being increasingly used
by scholars. It has become a major topic of discussion among all the social scientists, social
organisations, statesmen and leaders. The industrial-technological and economic development
registered by the humankind during the past 100 years has not proved to be a real development in
so far as it has created imbalances in the environment as well as among nations.
Degradation of environment, resulting from unprincipled and excessive exploitation of the

resources of our planet earth, has threatened to negate, and in fact has already adversely affected
the development registered by various societies. Undoubtedly, industrial and infrastructural
projects are means for development. In the past, the utility and feasibility of such projects used to
be determined only in terms of economic gains.
Of late, however, with environment and human rights issues gaining currency, it is considered
essential that such projects be formulated, planned and executed in such a way as may ensure the
real and enduring socio-economic welfare of the people without doing any damage to the
environment. Instead of thinking only in terms of GDP and GDP per capita, we have to think in
terms of GDH—Gross Domestic Happiness.
Development should be secured without in any way harming the human rights of the people,
particularly of those whose life is to be directly and physically affected by such projects. The
concept of sustainable development denotes this new positive approach. Sustainable
development is now held to be an essential condition for securing stable, enduring, real and
sustainable world peace, security and development.
Three Pillars of Sustainability

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Sustainability
Environmental Sustainability -Ecological integrity is maintained, all of earth’s environmental

systems are kept in balance while natural resources within them are consumed by humans at a
rate where they are able to replenish themselves.
Economic Sustainability - Human communities across the globe are able to maintain their
independence and have access to the resources that they require, financial and other, to meet
their needs. Economic systems are intact and activities are available to everyone, such as secure
sources of livelihood.
Social Sustainability - Universal human rights and basic necessities are attainable by all people,
who have access to enough resources in order to keep their families and communities healthy
and secure. Healthy communities have just leaders who ensure personal, labour and cultural
rights are respected and all people are protected from discrimination.

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Sustainability and Entrepreneurship
While debate continues regarding the appropriate level of government intervention via regulation
in the marketplace, one area in which government involvement appears to be steadily increasing
is social conduct. At the same time, consumers are demanding greater transparency on
environmental and social matters from the companies asking them to purchase their products and
services, and investors are integrating corporate social responsibility into their assessments of the
overall performance of portfolio companies. These trends have served as the catalyst for interest
in “sustainable entrepreneurship”, which has been described as the continuing commitment by
businesses to behave ethically and contribute to economic development (e.g., job creation that
increases disposable income that generates tax revenues that can be invested in projects focused
on sustainable development) while improving the quality of life of the workforce, their families,
the local and global community as well as future generations. Sustainable entrepreneurship
should be carried out using a business model aligned with the principles of “sustainability”,
which means that the model does not deplete resources, but rather replenishes them (e.g., natural
resources, human resources, knowledge and technology foundations etc.), and creates value and
material and non-material wealth (i.e., well-being and happiness) for all stakeholders through
actions which are ethical and just.
In many ways, the first definitions of sustainable development were vague and ambiguous;
however, commentators eventually began to focus on what became known as the three pillars, or
dimensions, of sustainable development: environmental protection, economic development and
social equity. Many of them argued that environmentally-conscious, or sustainable, businesses
should pursue environmental, economic and social objectives simultaneously and conduct their
operations ethically with sustainable environmental, economic and social dimensions embedded
within their products, processes and services. This approach has often been referred to as the
“triple bottom-line”, a nod to the notion that businesses should expand their traditional focus on
the financial “bottom-line” as the measure of performance to include ecological and social
impact. From time to time, others have suggested that additional dimensions of
sustainability should be recognized and integrated into a model along with the first three
dimensions. For example, a cultural dimension would take into account the need for sustainable

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businesses to sustain traditional or indigenous knowledge, maintain cultural diversity and prevent
the loss of personal and community identity.
Entrepreneurship is widely celebrated as an engine for progress that brings growth to the
economy, makes the marketplace more competitive, makes individual firms more productive
through technological change and creates jobs and added value and welfare for members of
society. However, while entrepreneurship is generally lauded for the positive impacts and
benefits it has provided to society, it is also true that entrepreneurial activities can have negative
consequences such as environmental degradation or unequal distribution of wealth. Recognizing
this situation, there have been calls for entrepreneurial skills and processes to be applied to
mitigate and resolve some of the problems that entrepreneurs may have created, an idea which
has provided the foundation for eco-premiership and social entrepreneurship, as well as
sustainable entrepreneurship.
One group of researchers argued that “entrepreneurship may be a panacea for many social and
environmental concerns” and another group asserted that entrepreneurs can be an important force
for social and ecological sustainability. Young and Tilley have been strident promoters of
sustainability entrepreneurship and the role that the skills of sustainable entrepreneurs with
respect to innovation, experimentation and risk taking can play in pursuing sustainable
development. Their position with regard to sustainable entrepreneurship has been succinctly
explained as follows:
“The sustainable entrepreneur is the only route to fulfilling sustainable development. Firstly, an
entrepreneur and their enterprise have to be financially sustainable to survive within the current
economic and regulatory systems. An organization just focusing on the environment as its goal
without a means of income beyond government subsidy or philanthropy cannot be an
entrepreneur, for example, a change of government or change of heart by the philanthropist could
remove the income for that organization and stop the environmental work. In addition,
concentrating on environmental values causes social damage, that is to say, creating a nature
reserve can exclude the local community from resource traditionally harvested from the land the
nature reserve now occupies. Similarly, concentrating on the social values can cause financial
failure and environmental damage, take a fair trade organization as an example, it can help bring

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disadvantaged communities out of poverty but if the organization cannot sell the fair trade
products its financial failure stops its good work. In addition, the fair trade organization is
damaging the environment through transporting goods across the world (contributing to climate
change) and having little regard to the impacts of the production process on the environment
(depletion of natural resources, pesticides, hazardous waste). Hence only those entrepreneurs
that balance their efforts in contributing to the three areas of wealth generation can truly be
called a sustainable entrepreneur.”
There is a continuously growing array of techniques and procedures that are available to promote
sustainable entrepreneurship and provide companies with standards and guidelines they can
follow in developing, implementing and monitoring their sustainable entrepreneurship
initiatives. For example, production standards focusing on measuring product quality and
performance have been around for a long time and that it is relatively easy to measure whether or
not a particular product complies with a standard. The more difficult task is assessing processes
that are thought to be necessary in order for sustainable entrepreneurship to be
successful. Guidelines for human resources management, eco-design and management systems
are available; however, they are often criticized for being either too complex or too general and
thus difficult to put into practice. As a result, work continues on developing practical
management systems for implementing and tracking sustainability initiatives and measuring their
performance and integrating sustainability into strategic and business
processes. Other instruments for sustainable entrepreneurship include sustainability reports,
audits, codes, sustainability communications and labels.
The Keys to Successful Sustainability Entrepreneurship
All the factors that are important to the entrepreneur in a standard business are critical to the
successful sustainable business. Sustainability entrepreneurship builds on the basics of
entrepreneurship and extends it to encompass addressing ecological and social concerns through
the creation of new enterprises and innovation in existing enterprises.
Sustainable businesses recognize change in the form of the increased scientific evidence about
the effects of ecological disruption on human populations and the environment and increasing

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evidence of rising social inequities that are disruptive to the business environment and global
society. Sustainable businesses recognize change by understanding that the consuming public is
becoming increasingly concerned about these challenges to a sustainable world.
These changes create market opportunities for sustainability-focused businesses. The market
opportunity includes the opportunity to address concerns about sustainability by providing new
products and services that reduce energy and natural resource use.
The opportunities to address sustainability concerns are worth pursuing if new ways of
addressing the concerns can be conceived and delivered in ways that bring net value to
significant numbers of consumers in the marketplace. A key for successful sustainability
entrepreneurs is to make sure that the new way of doing things they create provide value to their
potential customers.
Entrepreneurship as a mind-set, or kind of behavior, lends itself well to sustainable business

practices. For sustainable business practice, entrepreneurship is about constantly looking for
innovative ways to protect the environment or improve societal conditions by providing new
goods, services, or methods that reduce detrimental activities while also generating profits for the
entrepreneur. By always thinking about doing things in new and better ways, entrepreneurship is
highly relevant to individuals and organizations interested in sustainability.
From the business perspective, entrepreneurship and an entrepreneurial mind-set can be

advantageous. It can allow for quicker response to market opportunities, such as those emerging
for sustainable business. It can also allow for the ability to focus on particular customers, such as
the households most interested in minimizing their environmental footprint even if that means
having to purchase a product or service at higher cost than a similar product or service.
Meaning and Definition of Industrial Sickness
Sickness is a cause of great concern in small scale industries. There have been changes in the
definition of sickness in SSI over the period of time. The Reserve Bank of India has been
instrumental in appointing committees to look into the matter of sickness in SSI. The Working

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Group on Rehabilitation of Sick Units set-up by the RBI (Kohli Committee) gave the definition
of sickness.
A small scale industrial unit is considered sick when:
1) If any of the borrowal accounts of the unit remain sub-standard for more than six months i.e.,
principal or interest, in respect of any of its borrowal accounts has remained overdue for a period
exceeding one year will remain unchanged even if the present period of classification of an
account as sub-standard is reduced in due course;
Or
2) There is erosion in net worth due to accumulated losses to the extent of 50 percent of its net
worth during the previous accounting year; and
3) The unit has been in commercial production for at least two years.
Criteria to identify Sickness / Incipient Sickness – during the third census (2001):
To identify whether a unit is sick, outstanding sources of the loan both institutional and non
institutional, the delay in institutional loan for more than 12 month and erosion to the extent of
50% of the net worth is taken into consideration and this information was collected in the third
census. Kohli Committee gave the definition to measure sickness on the basis of the above
information. The continuous decline in the gross output compared to the previous two financial
data collected is an indicator to measure the incipient sickness. In the third census the following
criteria was adopted to measure the sickness of the unit:-
I. Constant decline in gross output as compared to previous two financial years;

II. Lingering in repayment of institutional loan, for more than 12 months and
III. Deterioration in the net worth to the extent of 50 percent during the accounting
year.
Sickness/initial sicknesses being a primary question, enumerations were asked from the
entrepreneurs of the units fulfilling at least one of the above criteria, and have not been running
adequately.

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Causes of Industrial sickness:
The reasons for industrial sickness are divided into two categories
I. External and
ii. Internal
External factors are the factors which are out of control and which originate outside the unit.
Internal factors are in control and they originate inside the organization.
External causes
1) The amendments in industrial policies of the Government from time to time egg, taxation,
industrial licensing, policies relating to imports and exports etc.
2) Insufficient and untimely availability of inputs like raw materials, power, transport and skilled
labor etc.
3) High manufacturing costs and lower sales and revenue. Lower revenue may be no control over
prices of output and high manufacturing cost may be due to inflation
4) Fall in demand for the product
5) Changes in consumer preferences
6) Trends of recession in the economy
7) Low Cost cheap products available in the market
8) Repeated industrial strikes and labor unrest
9) Financial resources storage like working capital
10) Fluctuations in foreign exchange leading to bad effect on the price of imported machinery
and raw-materials
11) Delay in the procedures relating to finance / licensing / other controlling or regulating
authorities, i.e., Banks, RBI. Financial institutions, Government departments, licensing
authorities, etc.
12) Lack of ability of big industries to give work load to smaller units

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13) Strong Competition from large business houses with cheaper products which has adverse
impact on the turnover of small scale entrepreneurs.
14) Inability of Small-scale units to adopt changes in the economic, social and political scenario
of the country and the world
15) Regular technological advancement in the industry
16) Instability in politics both at domestic as well as international
17) National disasters like drought, floods etc.
Internal causes
1) Selection of wrong product, process layout.

2) Wrong estimation of the cost of project
3) Out dated manufacturing
4) Wrongly selected project site, which resulted in increased transport cost, etc.
5) Excessive fixed assets investments
6) Quality of production affected by the defective working of plant and machinery
7) Wrong choice of technology
8) No flexibility of fixed assets, mainly machinery for utilization in the diversified
manufacturing setup
9) Lack of effective management, wrong managerial decisions, lack of control and absence of
control on the main areas of operations
Some of the examples of mismanagement are as follows:
A. Production management:
i. No attention towards the maintenance management leading to regular break down and lower
capacity utilization
ii. Inadequate inventory and material management resulting in high inventories and wastage
iii. Lack of scientific and efficient quality control system
iv. Wrong choice of technology

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v. Inadequate emphasis on research and development
B. Marketing management:
i. Wrong product mix

ii. Wrong demand estimation for the products
iii. Inadequate promotion of sales
iv. Limited number of buyers

v. Wrong pricing policies; and
vi. Inadequate product planning to face obsolescence.
C. Finance:
i. Insufficient capital source

ii. Mismanagement of working capital, resulting in inability in meeting the day-to-day needs of
business
iii. Inadequate utilization of funds.
D. Personnel:
i. Lack of skills amongst workman and lack of interest of key partner or owner.
ii. Wrong wage, increment and promotion policies
iii. Lack of industrial relations
iv. Inadequate manpower planning, and
v. Not enough motivation in the organization.
10. Management information system: The management and the lending institutions are not
properly informed about the actual conditions in business and therefore are not able take
remedial measures in time in the absence of such system.
11. Conflict among partners: This is a common problem in small units. The business partners
start off with great zeal and enthusiasm but end up in disharmony and discord.

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12. Problem of incompetency in entrepreneurs: The entrepreneur may not possess basic
technical knowledge required for the venture. No knowledge of the product, lack of business
acumen etc.
13. Problem of labour: Severe labor problems sometimes result in frequent strikes, lockouts and
even closure of the units. These problems may emerge from differences with management over
the issue of wages, bonus, retrenchment, inter-union rivalry etc.
Such problems may cause sickness if not tackled in time.

14. In order to avail the various concessions given to sick concerns by the Central Government
or State Governments most of the small scale units would like to declare themselves sick.
15. Failure in implementation of modernization programmed in the units and avoiding
technological up gradation causes sickness.
Consequences of industrial sickness:
1) Unemployment and industrial unrest due to workers agitation and strikes may be the
immediate effect of industrial sickness.
2) Industrial peace and co-operation is threatened because of the loss of jobs which leads to
social problem to millions of people.
3) Threatened industrial environment which may lead to industrial losses and setback of
production in number of units.
4) National loss might result in terms of capacity wastage; idle inventory, loss of revenue to
Government and setback to developmental activities.
5) It affects the competitiveness of the industry not only within the country but also in the
international markets.
6) Repayment of loans and interest on loans is not made to financial institution as a result they
face losses. Long time period and problems are faced while recovery of overdue.
7) Investment made in sick units by the entrepreneurs becomes completely dead. Potential
entrepreneurs and investors are disheartened and get aggravated. The climate of the industry
becomes non-conductive to industrial development.

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8) Sickness in one unit is expected to affect negatively a number of other units. Since an
industrial unit is linked up with other industrial units through backward and forward linkages.
9) Considerable investment in sick units causes national loss. There is wastage of scarce
resources due to decline in production and blocking up of variable capital.
10) The range for tax revenue to the Government is largely reduced, when a large number of
units become sick. A variety of programmers of social and economic development in the country
are affected due to shortage of tax revenue.
11) Machinery, equipments and buildings face rust when they are idle. They deteriorate and
additional expenses may be needed for restoration.
12) The employees lose their bargaining power and get confused wherever they go in search of
jobs. It is difficult to water down the disheartenment of the employees.
According to the Planning Commission:
“The phenomenon of industrial sickness not only tends to aggravate the problem of
unemployment, but also renders in fructuous capital investment and generally creates an adverse
climate for further industrial growth. While in advanced countries where there adequate social
security benefits, this is accepted as a normal feature of industrial scene. Such sickness has much
more serious economic consequences in a country where unemployment is a major problem and
resources are scarce. Loss of employment and production in an economy suffering from chronic
unemployment and shortages is a very serious matter”.
The Four Entrepreneurial Pitfalls
In the book “Managing in the Next Society”, Peter Ducker , the world renowned management
expert has identified four entrepreneurial pitfalls .The primary one is that often entrepreneurs
reject success. Secondly, they do not pay close attention to cash flow. The third pitfall is that the
entrepreneur outgrows his management base when business grows rapidly beyond expectations.
The fourth pitfall is that entrepreneur begins to puts himself before his business is a success.
Now, let us study each one of them in detail.

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1) Entrepreneurs reject success: The first of the pitfalls comes in when the entrepreneur has to
face the fact that the new product or service is not successful because he thought that it would be
successful in that market but the reality showed otherwise. Many entrepreneurs insist that they
know the market better. Infect entrepreneurs go one step further. They reject success. In the
sense that they are so convinced of their product’s success in one market, they fail to see its
success in a totally different market. He does not accept the success in the totally new and
unexpected market and rejects it and keeps waiting for success to come by in the market that he
thought and in turn fails to grab the opportunity in the market he never thought of.
2) Entrepreneurs don’t realize the importance of cash flow: This leads to pitfall two, which is
that entrepreneurs often see profit as the most important component over cash flow as the
success to their business. On the other hand, it is very important to understand that cash flow is
the most important component to keep a business going. Growing bodies need to be constantly
fed, and a business that grows fast eats up cash too. As a consequence, it goes without saying
that you have to make constant investments just to keep even .If a firm has six month’s to one
year’s cash reserve to keep it going, then the company is said to be in favorable terms.
Entrepreneurs make their second mistake here. They focus only on profits and do not ensure that
there is enough cash flow to keep the business running.
3) Entrepreneurs get caught in a management crunch: When business outgrows, the

entrepreneur gets extremely busy. The entrepreneur outgrows production facilities. He / she
outgrow management capabilities. While he sees his profit margins, he does not see that he is
outgrowing his management base. This is expected of even in a normally growing business.
Hence, one needs to prepare a contingency plan take adequate steps to handle this management
crunch.
In the beginning, the entrepreneur does everything by himself. He has helpers but not colleagues.
Then everything goes wrong. Customers don’t pay. Deliveries are missed. Quality drops. All this
is prevented by drafting a management team. Do a SWOT (Strength, Weakness, Opportunities
and Threats) analysis of the potential team members, place them in the right jobs and equip them
with the right assistant personnel to perform efficiently. You may also give him some

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complementary jobs that fit his core competencies. In this manner the entrepreneur will be able
to efficiently serve the customers.
4) Entrepreneur thinks he is the best: Sure. The business was the entrepreneur’s idea. It was
his brain child. He incubated it and worked extremely hard all these years to build up the
enterprise. And hence, he also thinks that he and only he knows what is best for the organization.
Infect it is hard for him to sit back and face this harsh reality, “what does the business require at
this stage?”, “Do I have those qualities?” if the answer is a “No”, he has to face up to the reality,
step aside and get in a new horse man who takes the reins and take the business forward. This he
may realize himself or needs to be told by an external source, where his lacunae lie and then the
entrepreneur.
Preventive Measures for Industrial Sickness and Remedial

Measures for Improvement of Industrial Effectiveness
Sickness is a major problem of Small Scale Industries in all countries of the world. Sickness of
Small Scale Industries is a matter of grave concern because it negatively affects owners,
employees, creditors and suppliers and it also leads to wastage of national resources and social
unrest. The funds which are loan able of financial institutions gets blocked in sick industries
which further leads to wastage of resources and affects the growth of an economy. Both
traditional industries like cotton textiles, jute, sugar and modern industries like engineering,
chemical, rubber, cement, electrical and paper are afflicted with sickness. Therefore it is very
important to detect the sickness of an industry at an initial stage and take preventive and remedial
measures.
Preventive Measures:
SSIs are the backbone for achieving unrelenting economic growth for a promising economy like
India. In the interest of economy timely action needs to be taken to protect the SSIs. The urgent
need is to focus on the troubles of the SSIs to facilitate them to face the rising challenges, in view
of the shifting economic state of affairs.

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To advance the effectiveness of SSIs and to avert the sickness in small scale units, the following
measure can be taken:
1) The first and primary preventive measure to spot and condense the industrial sickness is to
identify and detect the sickness at the initial stage.
2) The owners should control the internal problems in the unit.
With the help of parent industry engineers or consultants, the problems could be attended by
analyzing them and getting them solved on a sustainable basis.
3) By taking the help and guidance of the parent industry engineers or consultants, the poor work
load problem can be attended by doing diversification.
4) In an economy in which new markets with innovative products or services should be
discovered and greater emphasis should be put on realistic planning.
5) Effectively use the market information in business operations. SSIs must take advantage of the
services of internet particularly in marketing their products.
6) For product improvement, quality improvement, and cost reduction etc, more thrust should be
given to research and development. Professionalism in management should be promoted and
frequent training should be given to update entrepreneurial skills and so on.
7) Good relations should be maintained with Government officials, banks, financial institutions
vendors and customers so that small deviations and delays in transaction do not cause problems.
8) The funds and facilities should be allocated on priority basis in view of limited resources, such
that the main business activity is attended on continual basis.
9) To facilitate a smooth functioning of the SSI activities the infrastructure facility should be
improved by the state.
10) To keep away from labor unrest and strikes, workers non-cooperation or any other problems
should be attended to quickly and timely.
11) To strengthen their competitive edge, the modernization of plant is of utmost importance at
present among the SSIs and for which the Government should assist by providing enough
finance at liberal terms.

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12) To get expected orders and also undertake constant market research, the SSIs must give
attention to sufficient marketing measures with the probable buyers.
13) For regular publicity and research the products of SSIs need to be widely advertised in the
media.
14) To reduce the cost of working capital, it is very important that SSIs familiarize themselves
with inventory control techniques
15) BIFR (Board of Industrial and Financial Reconstruction) is referred if the industrial sickness
cannot be solved by the owners. Then efforts are made to revive the industry by
a) Making arrangements of funds,
b) Making changes in the management structure,
c) Making arrangements for acquisitions of mergers.
Arrangements are made to sell the unit if one of the methods or combination of methods does not
work, and then money is distributed among employees and creditors.
16) Any programmed on rehabilitation will have to be finalized and attended at a faster rate.
Financial packages and non-financial packages should be included in a rehabilitation
programmed i.e. managerial, marketing, and power, raw materials etc.
17) The rehabilitation programmed should have a monthly or quarterly technical and financial
auditing to make sure that the resources put in for rehabilitation are properly utilized and the
progress is in the preferred track. The programmed should be implemented quickly.
18) In order to seize sickness, at the initial stage, banks and financial institutions should
occasionally review the accounts of SSIs borrowers and recognize units which are becoming sick
or are prone to sickness.
19) The Government of India and RBI should be requested to direct commercial banks and
financial institutions to supply information on sickness to the agencies like BIFR implementing
the rehabilitation programmed to help them to take appropriate action.
20) RBI Guidelines for Sick Industrial Units:

Guidelines for detection of sickness and on time rehabilitation of potentially possible sick units
have been communicated and following steps have been suggested and circulated.

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a) Detection of sickness at initial stage.

b) Monitoring for accounts quarterly
c) Monitoring of rehabilitated accounts on monthly basis through quarterly review sheets;
d) Forming study teams for conducting techno economic feasible studies.
e) Conducting campaigns for recovery.
f) Bring awareness by conducting SSI workshops, training programmers and seminars to etc.
g) Necessary knowledge to be imparted to entrepreneurs in various functional areas in the course
of training programmers, entrepreneurship development programmers (EDPs) etc.
Remedial measures:
Owing to the numerous causes and results industrial sickness was for long considered a social
problem in the country. The government has devised various schemes and incentives in order to
revive these sick units and help them run smoothly. The Government in collaboration with RBI
has arrangements for monitoring and surveying sickness of industrial units. The sick industrial
companies Act (SICA) 1985 that provided for the setting up of the board for industrial and
financial reconstruction (BIFR), and the establishment of industrial investment Bank of India
contains the legislative and institutional framework for dealing with industrial sickness. Some of
the measures undertaken by Government of India for revival and rehabilitation of sick industrial
units were as follows:
1) Policy framework of the Government:
The policy framework in respect of measures to deal with the problems of industrial sickness for
guidance of administrative ministries of Central Government, State Governments and financial
institutions was laid down in the guidelines issued in October 1981 (which was subsequently
modified in February 1982). Under these guidelines, the administrative ministries in the
government were given specific roles to prevent sickness and resort to remedial action in case of
sickness in industrial sector which come within their charge. These administrative ministries
were asked to survey and monitor sickness and lay down revival and rehabilitation action. In
order to prevent industrial sickness early, financial institutions were asked to strengthen the

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monitoring systems, so that timely corrective action could be taken. To revive and restore the
health of the sick units, the financial institutions could even assume managerial responsibility.
In case the banks decided that the sick unit cannot be revived, and then banks and financial
institutions could take action and act upon their outstanding dues in accordance with the normal
banking procedures. Before resorting to action, the banks and financial institutions doing so, they
were supposed to report the matter to the Government who was to decide whether some actions
(like nationalization or worker’s participation in management) could revive the unit. In case the
Government deciding on nationalizing the management of the unit could be undertaken by the
provisions of the industries (Development and Regulation) Act, 1951. The Government could
also consider Steps such as restructuring, merger with healthy units etc by the government to
rehabilitate and revive the sick unit.
In case the rehabilitation and revival of the unit was considered not viable, then the government
could de-notify the unit resulting in its closure.
2) Sick industrial companies act, 1985:
The objectives of SICA are as follows:
i. Provide maximum employment protection.

ii. Use the funds to the optimum extent.
iii. Production assets to be salvaged.
iv. Releasing the amounts due to the banks; and
v. Replacing efficient machinery in place of time existing time consuming and inadequate
machinery for expeditious determination by a body of experts.
The sick industries companies (Special Provisions) act, 1985 governs and rehabilitates only those
industries which are engaged in the manufacturer of items included in the schedule –1 of the
industries (development and regulation) Act, 1951 but with a few exceptions. All other industrial
undertakings which are outside the purview of IDR Act are governed by the rehabilitation
Schemes of RBI.

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3) Steps taken by commercial banks:
Various concessions were granted by commercial banks to sick industrial unit’s like-
i. Provision of additional working capital facilities in order to help overcome the shortage of
working capital faced by such units;
ii. Use reduced recovery rates to recover interest;
iii. Allowing the sick units enjoy a moratorium on payment of interest;
iv. Freezing a portion of the outstanding in the accounts etc…
As regards the small-scale industries, RBI issued guidelines to the banks with a view to ensuring
that the potentially viable sick units in small-scale industries sector receive due attention and
timely support.
4) Steps for detecting sickness early:
Importance of deducting sickness in incipient stage is crucial as corrective steps can then be
taken early and well in time, with this end in view, the Reserve Bank of India (RBI) advised
banks to take necessary remedial steps in respect of industrial units which do not comes under
the purview of sick industrial companies (special provisions) Act, 1985, at the stage of 50 per
cent erosion of their net worth. Certain specific industries while Bank also closely monitored
certain specific Industries where sickness is more widespread.
5) From the RBI front, a number of other steps were also taken like:
a) Initiating up of sick industrial undertaking cell:

The Reserve Bank of India has set up a sick industrial understanding cell to function as a
clearing house for information relating to sick units and also to act as a co-coordinating agency
between the Government, banks, financial institutions and other agencies for tackling the various
related issues. This cell has been closely looking in to and following-up the banks’ performance
in identifying sick units and taking remedial action. In order to monitor sick units, the banks have
been instructed strengthen their organizational set up by establishing special cells for monitoring
sick units, to provide consulting services to these sick units and to take up suitable nursing

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programmers nurse the sick units to health. In cases where the banks are unable to provide the
assistance required, they have been asked to refer the cases to IDBI which would analyze the
problems of the units, suggest a package of measures necessary and bring together the different
agencies for finalizing the package.
b) Setting up of state level Inter Institutional Committees (SLIC)/ co ordination committee:
At the regional offices of the Department of Banking Operations and Development of Reserve
Bank of India, committees have been set up for the purpose of ensuring better co-ordination
between banks. These committees , besides providing a useful forum for exchange of
information and discussion on the problems faced by the industrial units and small entrepreneurs,
are expected inter alia, to deal with the problems relating to –
I. Co- ordination between banks and other financial institutions.
II. Provision of adequate infrastructure facilities to industrial units; and
III. General problems relating to the grant of credit to such units.
c) Setting up standing co-ordination committee:
In order to co-ordinate between commercial banks and term lending institutions on an ‘ongoing’
basis, a standing co-ordination committee has been constituted by RBI.
d) Setting up of special cell in RBI:
Within the rehabilitation finance division of the IDBI, a special cell has been set up a special cell
has been set up for attending to references received from banks in respect of units being sick or
in problem. Apart from this, the cell has been given with the task of carrying out diagnosing and
analyzing studies of projects for identification of causes of sickness and formulation of
appropriate rehabilitation programmers.
e) Setting up of screening committees:
Further the government has set up, a screening committee under the Chairmanship of secretary,
Department of Industrial Development. The objective of this committee is to study the proposals
sponsored by the various administrative ministries concerned with the sick units and the financial
institutions.
6) Concessions by Government:

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Certain concessions were also provided by the government to assist revival of sick units without
intervention.
a) Income-tax relief: In 1977, income tax was amended by addition of section 72A which
afforded grant of tax benefit to healthy units which in turn took over the sick units by
amalgamation with a view of reviving them.
b) Margin money scheme: On January 1, 1982, a scheme for provision of margin money to sick
units in the small-scale sector at soft terms was unveiled. This was to help them to obtain
necessary funds from banks and financial institutions to implement their revival plans and
formulations.
c) Liberalized money scheme: Another supplementary scheme was introduced in June 1987,
which supplemented the efforts of the State Governments in reducing sickness in small-scale
sector.
d) Excise loan scheme: In the year October 1989, the government introduced another scheme
which granted excise loan for viable sick/viable units. In this scheme, specific units were eligible
for excise loan not exceeding 50 percent of the excise duty actually paid for 5 years.
7) The Industrial Investment Bank of India:
With a view to reviving and rehabilitating sick units, the Government established the Industrial
Reconstruction Corporation of India (IRCI). The functions of the IRCI were as follows:
i. To grant financial assistance sick units.

ii. To provide managerial, operational and technical advice to them.
iii. To ensure that they are able to get the help of other financial institutions and government
agencies for the revival of sick units.
iv. In order for amalgamation, merger and other processes provide merchant banking services …
and
v. To banks, provide consistency services with respect to sick industrial units.
With a view to overcoming the inherent difficulties which had been faced by IRCI in its efforts
to rehabilitate the sick industrial units, by a notification issued on March 20, 1985, the

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Government converted the IRCI (which was a company registered under the companies act) into
a statutory corporation and it was given the name Industrial Reconstruction Bank of India
(IRBI). IRBI from March 27, 1977was reconstituted into a fully-fledged all purpose development
financial institution with effect and its new name is Industrial Investment Bank of India Ltd.
(IIBI).
8. Board for Industrial and Financial Reconstruction (BIFR):
The sick industrial companies (Special Provisions) Act, 1985, which provides for the
establishment of a board for industrial and financial reconstruction. The board stated functioning
with headquarters in Delhi form 12th January, 1987. The board exerts its power over a wide
array of areas of sick industrial units includes revival, change or take over management,
reconstruction etc. The sick Industrial Companies (Special Provisions) act enumerates the power
of BIFR which is given below.
i. Sick Industrial companies (Special Provisions) Act, 1985 applies to all the scheduled industries
under the industries (Development and regulation) Act, 1951 excluding ships and other vessels
drawn by power, small and ancillary industrial undertakings. A company owing an industrial
undertaking other than these would be years and there is a total erosion of its net worth by
accumulated losses. Such company is required under section 15(1) of the Act to make references
to the board for the financial year at the end of which company became sick for determination of
measures which shall be adopted with respect to that company.
ii. Industrial companies in existence for a minimum period of five years and having losses equal
to 50% or more of the peak net worth are to be deemed as potentially sick companies and are
required under Section 23 of the Act to report the fact of such erosion to the BIER in a
prescribed form in a period in a period of 60 days from the date of finalizing of duly audited
accountants of the company.
iii. The Central Government or the Reserve Bank or State Government or a public financial
institution or a state level institution or a scheduled bank may, if it has sufficient reasons to
believe that the accumulated losses of any industrial company have resulted in erosion of 50% or
more of its peak net worth during the immediate preceding four financial years, report the fact of

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such erosion to BIFR. The BIFR upon receiving such information or upon its own knowledge of
an industrial company becoming a potential sick unit may call for such information from that
company as it may deem it.
In case of BIFR is of a opinion that the concerned company is not likely to make its net worth
exceeds the accumulated loss within a reasonable time it may ask an agency to enquire and make
a report with respect to such matters as may be specified by BIFR. If after considering all factors
and giving reasonable opportunity to all concerned parties, the BIFR is of the opinion that the
industrial company is not likely to become viable in near future, it may forward the companies
case to the high court, as if it were a sick industrial company, for appropriate action under the
Sick Industrial Companies (Special Provisions) Act, 1985.
iv. The board has also been empowered to give directions to sick industrial company to make its
net worth positive within a reasonable time or in the alternative to get schemes or rehabilitation,
revival, reconstruction, merger or amalgamation etc… of a sick industrial company prepared
through its operating agency, i.e. one of the public financial institutions selected for this purpose.
On sanction of such a scheme by the BIFR, the same becomes binding on the sick industrial
company, its shareholders or as the case may be, transferee industrial company.
v. The BIFR has power to sell the assets of a sick industrial company, change its management,
alter or amended its memorandum or articles association. It may also decide winding up of sick
industrial company and on the basis of its opinion; the High Court shall order the winding up.
vi. The Government has the power to set up an appellate authority for industrial and financial
reconstruction for hearing appeals against the orders of BIFR. The civil court shall have no
jurisdiction in respect of any matter which falls within a purview of BIFR or the Appellate
Authority. No injunction shall be granted by any court or any other authority in respect of any
action taken or to be taken in pursuance to any powers conferred by or under the Act.
9) Working group on Rehabilitation of Sick Units:
The RBI, as per the recommendation of the Group of Ministries, set up a working group under
the chairmanship of Mr. S.S.Kohli, the then Chairman of Indian Banks Association, to look in to
the existing guide lines and reconstitute it in regard to rehabilitation and revitalization of sick SSI
units extended by banks and financial institutions, and to suggest revision of guidelines, marking

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them transparent and non-discretionary for the rehabilitation of currently sick and potentially
viable SSI sick units.
In may 2001, the report was submitted by the working group. The RBI accepted all the major
recommendations, including a change in the definition of sick SSI units and the norms for
deciding on the viability of sick units. The RBI drew up revised guide lines for rehabilitation of
SSI units were drawn up, which were circulated on January 16, 2002, to all scheduled
commercial banks for implementation, based on the accepted recommendations of the working
group.
Self Help Groups (SHGs)
Self-Help Groups (SHGs) are informal associations of people who choose to come together to
find ways to improve their living conditions. It can be defined as self-governed, peer controlled
information group of people with similar socio-economic background and having a desire to
collectively perform common purpose.
Villages face numerous problems related to poverty, illiteracy, lack of skills, lack of formal
credit etc. These problems cannot be tackled at an individual level and need collective efforts.
Thus SHG can become a vehicle of change for the poor and marginalized. SHG rely on the
notion of “Self Help” to encourage self-employment and poverty alleviation.
Functions
1. It looks to build the functional capacity of the poor and the marginalized in the field of
employment and income generating activities.
2. It resolves conflicts through collective leadership and mutual discussion.
3. It provides collateral free loan with terms decided by the group at the market
driven rates.
4. Such groups work as a collective guarantee system for members who propose to
borrow from organized sources. The poor collect their savings and save it in banks.
In return they receive easy access to loans with a small rate of interest to start their micro
unit enterprise.

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5. Consequently, Self-Help Groups have emerged as the most effective mechanism

for delivery of microfinance services to the poor.
The emergence of Self Help Groups – Origin and Development in India
 The origin of SHGs in India can be traced back to the establishment of the Self-
Employed Women’s Association (SEWA) in 1972.
 Even before, there were small efforts at self-organizing. For example, in 1954, the Textile
Labour Association (TLA) of Ahmadabad formed its women’s wing in order to train the
women belonging to families of mill workers in skills such as sewing, knitting, etc.
 Ela Bhatt, who formed SEWA, organised poor and self-employed women workers such
as weavers, potters, hawkers, and others in the unorganized sector, with the objective of
enhancing their incomes.
 NABARD, in 1992, formed the SHG Bank Linkage Project, which is today the world’s
largest microfinance project.
 From 1993 onwards, NABARD, along with the Reserve Bank of India, allowed SHGs to
open savings bank accounts in banks.
 The SwarnJayanti Gram SwarozgarYojana was introduced in 1999 by GOI with the
intention of promoting self-employment in rural areas through formation and skilling of
such groups. This evolved into the National Rural Livelihoods Mission (NRLM) in 2011.
 Today, State Rural Livelihood Missions (SRLMs) are operational in 29 states and 5 UTs
(except Delhi and Chandigarh).
 NRLM facilitated universal access to the affordable cost-effective reliable financial
services to the poor like financial literacy, bank account, savings, credit, insurance,
remittance, pension and counseling on financial services.
Evolution Stages of Self Help Groups in India
 Every Self-help group usually goes through 3 stages of evolution stated below:
 Formation of group
 Funding or Formation of Capital
 Development of required skills to boost income generation for the group

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 Many self-help groups are formed with the assistance of Self- help to promote agencies.
 The various types of Self-help promoting agencies are stated below:
 Non-governmental agencies
 Government
 Poverty management programmers
 State & commercial banks
 Microfinance institutions
 SHG Federations
 SHG leaders/Entrepreneurs
Benefits of SHGs
1. Social integrity – SHGs encourages collective efforts for combating practices like
dowry, alcoholism etc.
2. Gender Equity – SHGs empowers women and inculcates leadership skill among them.
Empowered women participate more actively in gram Sabah and elections.
There is evidence in this country as well as elsewhere that formation of Self-Help Groups
has a multiplier effect in improving women’s status in society as well as in the family
leading to improvement in their socio-economic condition and also enhances their self-
esteem.
3. Pressure Groups – their participation in governance process enables them to highlight
issues such as dowry, alcoholism, the menace of open defecation, primary health care etc
and impact policy decision.
4. Voice to marginalized section – Most of the beneficiaries of government schemes have
been from weaker and marginalized communities and hence their participation through
SHGs ensures social justice.
5. Financial Inclusion – Priority Sector Lending norms and assurance of returns incentivize
banks to lend to SHGs. The SHG-Bank linkage programmed pioneered by NABARD has
made access to credit easier and reduced the dependence on traditional money lenders
and other non-institutional sources.

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6. Improving efficiency of government schemes and reducing corruption through social

audits.
7. Alternate source of employment – it eases dependency on agriculture by providing
support in setting up micro-enterprises e.g. personalized business ventures like tailoring,
grocery, and tool repair shops.
8. Changes In Consumption Pattern – It has enabled the participating households to
spend more on education, food and health than non-client households.
9. Impact on Housing & Health – The financial inclusion attained through SHGs has led
to reduced child mortality, improved maternal health and the ability of the poor to combat
disease through better nutrition, housing and health – especially among women and
children.
10. Banking literacy – It encourages and motivates its members to save and act as a conduit
for formal banking services to reach them.
Challenges of Self Help Groups (SHGs)
1) Lack of knowledge and proper orientation among SHG-members to take up suitable and
profitable livelihood options.
2) Patriarchal mindset – primitive thinking and social obligations discourages women
from participating in SHGs thus limiting their economic avenues.
3) Lack of rural banking facilities – There are about 1.2 lakh bank branches and over 6
lakh villages. Moreover, many public sector banks and micro-finance institutions are
unwilling to provide financial services to the poor as the cost of servicing remains high.
4) Sustainability and the quality of operations of the SHGs have been a matter of
considerable debate.
5) No Security – The SHGs work on mutual trust and confidence of the members. The
deposits of the SHGs are not secured or safe. Only a minority of the Self-Help Groups are
able to raise themselves from a level of micro-finance to that of micro-entrepreneurship.
Measures to Make SHGs Effective

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1. The Government should play the role of a facilitator and promoter; create a supportive
environment for the growth and development of the SHG movement.
2. Expanding SHG Movement to Credit Deficient Areas of the Country - such as Madhya
Pradesh, Rajasthan, and States of the North-East.
3. Rapid expansion of financial infrastructure (including that of NABARD) and by
adopting extensive IT enabled communication and capacity building measures in these
States.
4. Extension of Self-Help Groups to Urban/Peri-Urban Areas – efforts should be made
to increase income generation abilities of the urban poor as there has been a rapid rise
in urbanization and many people remain financially excluded.
5. Positive Attitude – Government functionaries should treat the poor and marginalized as
viable and responsible customers and as possible entrepreneurs.
6. Monitoring – Need to establish a separate SHG monitoring cell in every state. The cell
should have direct links with district and block level monitoring system. The cell should
collect both quantitative and qualitative information.
7. Need Based Approach – Commercial Banks and NABARD in collaboration with the
State Government need to continuously innovate and design new financial products for
these groups.
Self Help Groups in India
 Kudumbashree in Kerala
The Kudumbashree project was started in Kerala in 1999, as a community action to eradicate
poverty. It has become the largest women-empowering project in India. There are 3 components
namely, microcredit, entrepreneurship and empowerment. Kudumbashree is a government
agency.
 MahilaAarthikVikas Mahamandal (MAVIM) in Maharashtra
SHGs in Maharashtra were unable to cope with the growing volume and financial transactions
and needed professional help. Community managed resource centre (CMRC) under MAVIM

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was launched to provide financial and livelihood services to SHGs. CMRC is self-sustaining and
provides need-based services.
ROLE OF BUSINESS INCUBATORS VENTURE CAPITALISTS AND EQUITY

FUNDING IN ENTREPRENEURSHIP VENTURES
A business incubator is a company that helps new and startup companies to develop by providing
services such as management training or office space. This is also Facility established to nurture
young (startup) firms during their early months or years. It usually provides affordable space,
shared offices and services, hand-on management training, marketing support and, often, access
to some form of financing. Business incubators differ from research and technology parks in
their dedication to startup and early-stage companies.
The formal concept of business incubation began in the USA in 1959 when Joseph Mancuso
opened the Batavia Industrial Center in a Batavia, New York, warehouse. Incubation expanded
in the U.S. in the 1980s and spread to the UK and Europe through various related forms. The
U.S.based International Business Innovation Association estimates that, there are about 7,000
incubators worldwide.
Incubation activity has not been limited to developed countries; incubation environments are
now being implemented in developing countries and raising interest for financial support from
organizations such as UNIDO and the World Bank.
TYPES OF INCUBATORS
There are a number of business incubators that have focused on particular industries or on a
particular business model, earning them their own name.
1. Virtual business incubator – online business incubator
Since the 1950s, an older incubator model required startups to set up at the incubator's
site. After the dot-com bubble, the virtual model was born, allowing companies to
receive advice on incubators without physically being at the shop. This new virtual

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business incubator model has been a major step forward for entrepreneurs, and are
especially ideal for those who need the advice that an incubator office provides but who
want to maintain their own offices, warehouses, etc.
2. Kitchen incubator– a business incubator focused on the food industry
Specialty foods are typically high value and low production. Starting a commercial
kitchen from scratch is a huge investment. The average food entrepreneur has to invest a
lot of money before even making their food product, therefore not making profit for quite
some time. Kitchen incubators give culinary entrepreneurs the opportunity to use low-
cost kitchen space where they can rent a commercial kitchen space for an hourly or
monthly rate. They also help culinary entrepreneurs make a profit by aiding in
packaging, marketing, and selling their food products.
3. Public incubator – a business incubator focused on the public good
Social incubators' goal, similar to all other business incubators, is to provide social
entrepreneurs with the tools they need to expand their business. While some businesses
avoid their social responsibility, others such as charities need to have the ability to be
more business savvy to survive.
4. Seed accelerator – a business incubator focused on early startups
"Seed accelerators, also known as startup accelerators, are fixed-term, cohort-based

programs, that include mentorship and educational components and culminate in a public
pitch event or demo day." While traditional business incubators are typically
government-funded, accelerators differ in that they can be either privately or publicly
funded and focus on a huge variety of industries. Seed accelerators also differ from
business incubators in that the application process for seed accelerators is open to
anyone, and is highly competitive.

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5. Corporate accelerator– a program of a larger company that acts akin to a seed

accelerator
A specific type of seed accelerator which is often a subsidiary or program of larger

corporations that act like seed accelerators, sponsored by an established for-profit
corporation.
6. Startup studio – a business incubator with interacting portfolio companies
Startup studio, also known as a startup factory, startup foundry, or a venture builder, is a
company that strives to build several companies in succession. This business-building
style is referred to as “parallel entrepreneurship”. The startup studio trend really became
popular in 2008 and just continued to blossom. Today, there are over 65 startup studios
across the world.
7. Venture Builder: These are similar to a startup studio, but builds companies
internally.
Venture-builders are also called tech studios, startup factories, or venture production
studios. Unlike incubators and accelerators, venture builders do not take any applications
and are a non-competitive program, but rather build companies using their own ideas and
resource and assign internal teams of engineers, advisors, business developers, sales
managers, etc. to develop them.
8. Medical Incubator: a business incubator focused on medical devices and

biomaterials
This type of business incubator focuses on start-up advice for medical devices and
biomaterials. Medical technologies are always changing and improving, and therefore
this type of incubator is ideal for encouraging innovation and entrepreneurship within the
medical field.
Role of Business Incubators

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• They guide startups/ventures on how to compete with established industry players.
• Business incubators help with the basics of business.
• They provide networking activities.
• They help startups save on operating costs.
• Incubators provide marketing assistance.
• Incubators help with market research.
• They provide high-speed internet access.
• They create long-lasting jobs for new graduates, experienced mid-career personnel, and
veteran executives.
• Incubators help with accounting/financial management.
• They provide access to bank loans, loan funds, and guarantee programs.
• Incubators bring credibility to the company. This helps the company receive loans and
credit facilities from financial institutions.
• Incubators help with presentation skills.
• They have a strong network of influential people who can connect startups/ventures with
established businesses and individuals.
• They provide access to higher education resources.
• Incubators can tap into their networks of experienced entrepreneurs and retired
executives.
• They link companies with strategic partners.

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• They provide access to angel investors and venture capital.
• Business incubators organize comprehensive business training programs.
• They act as advisory boards and mentors.
• They help in management team identification.
• They offer marketing and PR assistance to new companies for brand establishment.
• They help with business etiquettes.
• They provide technology commercialization assistance.
• They help with regulatory compliance.
• They provide intellectual property management.
• They create jobs for mid-career personnel and veteran executives which benefits
communities and drives economic growth.
Venture Capitalist
Venture capitalists or Angel investors are entities and individuals who fund startups and new
businesses. There are many entrepreneurs with great business ideas but who are in need of
funding for their ventures. It is not enough to have a great innovative idea when you cannot find
funding to take it to fruition. This is where venture capitalists enter the picture as they provide
the much needed seed capital to get the venture going. In other words, venture capitalists are
those entities or individuals who when they find a business idea compelling and makes economic
sense, they provide the ideates with funding so that their startups can be incubated. The term
incubation is used to denote to the fact that the initial handholding of the startups must be done in
a manner similar to how infants are incubated in their infancy. This means that the venture
capitalists and angel investors not only provide initial funding but also guide the startups through
their infancy so that they can be put on their feet and hit the ground running.

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Venture Capitalists as Drivers of Economies
Venture capitalists drive innovation and profitability of new ventures. Any economy needs new
ventures to succeed as part of the creative destruction process of capitalism. This means that for
an economy to grow, it needs constant innovation and productivity leaps that new ventures often
provide. As the new ventures need funding and support during the initial phases, venture
capitalists are needed for these startups to hit the ground running. Moreover, new ventures have
to be profitable as well as it has been estimated that nearly 50 percent of new ventures fail. This
is where venture capitalists who evaluate the business ideas and separate them according to how
profitable they would be play a critical and a crucial role in determining the success or otherwise
of these ventures. As the examples of Silicon Valley in the United States and to some extent
Shanghai in China show, venture capitalists with their deep pockets and keen economic and
financial sense can indeed be an asset to the economies of the countries. This is the reason why
the US is way ahead of other countries as far as innovation and innovativeness is concerned as it
has a long history of venture capitalists and angel investors funding startups and bringing them to
fruition.
Venture capital is one of the more popular forms of equity financing used to finance high-risk,
high-return businesses. The amount of equity a venture capitalist holds is a factor of the
company's stage of development when the investment occurs, the perceived risk, the amount
invested, and the relationship between the entrepreneur and the venture capitalist.
Venture capitalists usually invest in businesses of every kind. Many individual venture
capitalists, also known as angels, prefer to invest in industries that are familiar to them. The
reason is that, while angels don't actively participate in the daily management of the company,
they do want to have a say in strategic planning in order to reduce risks and maximize profits.
On the other hand, private venture capital partnerships and industrial venture capitalists like to
invest primarily in technology-related industries, especially applications of existing technology
such as computer-related communications, electronics, genetic engineering, and medical or

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health-related fields. There are also a number of investments in service and distribution
businesses, and even a few in consumer-related companies, that attract venture capitalists.
In addition to the type of business they invest in, venture capitalists often define their
investments by the business' life cycle: seed financing, startup financing, second-stage financing,
bridge financing, and leveraged buyout. Some venture capitalists prefer to invest in firms only
during startup, where the risk is highest but so is the potential for return. Other venture capital
firms deal only with second-stage financing for expansion purposes or bridge financing where
they supply capital for growth until the company goes public. Finally, there are venture capital
companies that concentrate solely on supplying funds for management-led buyouts.
Generally, venture capitalists like to finance firms during the early and second stages, when
growth is rapid, and cash out of the venture once it's established. At that time, the business owner
either takes the company public, repurchases the investor's stock, merges with another firm, or in
some circumstances, liquidates the business.
There are several types of venture capital:
1. Private venture capital partnerships are perhaps the largest source of risk capital. They
generally look for businesses that have the capability to generate a 30-percent return on
investment each year. They like to actively participate in the planning and management
of the businesses they finance and have very large capital bases--up to $500 million--to
invest at all stages.
2. Industrial venture capital pools usually focus on funding firms that have a high
likelihood of success, such as high-tech firms or companies using state-of-the-art
technology in a unique manner.
3. Investment banking firms traditionally provide expansion capital by selling a
company's stock to public and private equity investors. Some also have formed their own
venture capital divisions to provide risk capital for expansion and early-stage financing.
4. Individual private investors, also known as angels, can be friends and family who have
only a few thousand dollars to invest, or well-heeled people who've built successful

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businesses in a similar industry and want to invest their money as well as their experience
in a business. Sponsored by the SBA's Office of Advocacy, the Angel Capital Network
(ACE-Net) is a nationwide, internet-based listing service that allows angel investors to
get information on small, growing businesses looking for $250,000 to $5 million in
equity financing.
5. Small Business Investment Corporations (SBICs) are licensed and regulated by the
SBA. SBICs are private investors that receive three to four dollars in SBA-guaranteed
loans for every dollar they invest. Under the law, SBICs must invest exclusively in small
firms with a net worth less than $18 million and average after-tax earnings (over the past
two years) of less than $6 million. They're also restricted in the amount of private equity
capital for each funding. Being licensed and regulated by a government agency
distinguishes SBICs from other private venture capital firms, but other than that, they're
not significantly different from those firms.
6. Specialized Small Business Investment Companies (SSBICs) are also privately
capitalized investment agencies licensed and regulated by the SBA. They are designed to
aid women- and minority-owned firms, as well as businesses in socially or economically
disadvantaged areas, by providing equity funds from private and public capital. As with
SBICs, SSBICs are restricted in the amount of their private funding.
Importance of Venture Capitalists
It has often been said that venture capitalists fill the void that is created between the government
and the private sector. However, many governments across the world actively fund new ventures,
the bureaucracy, and the red tape that is involved in governmental decision making often stymies
the funding of startups and the new venture incubation process. Further, it is not possible for the
government or the banks and financial institutions to fund every good idea that comes their way.
Moreover, the venture capitalists are usually staffed with industry veterans and experts who can
evaluate a business idea in an expert manner and decide on the profitability or otherwise of the
idea. Apart from this, venture capitalists are also needed for guiding the startups in their
formative phase.

ENTREPRENEURSHIP
Venture capitalists are needed as they make the creative destruction process smoother and make
the startups transform themselves from chaotic outfits to well-oiled organizations. This means
that venture capitalists have a key role to play in shaping the economic destinies of countries.
Finally, without venture capitalists, the private sector would be left with no one to guide them on
the future directions of the economy and society.
1. Promotes Entrepreneurs: Just as a scientist brings out his laboratory findings to reality
and makes it commercially successful, similarly, an entrepreneur converts his technical
know-how to a commercially viable project with the assistance of venture capital
institutions.
2. Promotes products: New products with modern technology become commercially

feasible mainly due to the financial assistance of venture capital institutions.
3. Encourages customers: The financial institutions provide venture capital to their

customers not as a mere financial assistance but more as a package deal which includes
assistance in management, marketing, technical and others. Example: Hot mail dot com.
It was a project invented by an young Indian graduate from Bangalore, by name Saber
Bhatia. This project was developed by him due to the financial assistance provided by the
venture capital firms in Silicon Valley, U.S.A. His project was later on purchased by
Microsoft company, U.S.A. The Chairman of the company, Mr. Bill Gates offered 400
Million US Dollars in hot cash.
4. Brings out latent talent: While funding entrepreneurs, the venture capital institutions
give more thrust to potential talent of the borrower which helps in the growth of the
borrowing concern.
5. Promotes exports: The Venture capital institution encourages export oriented units
because of which there is more foreign exchange earnings of the country.

ENTREPRENEURSHIP
6. As Catalyst: A venture capital institution acts as more as a catalyst in improving the

financial and managerial talents of the borrowing concern. The borrowing concerns will
be more keen to become self-dependent and will take necessary measures to repay the
loan.
7. Creates more employment opportunities: By promoting entrepreneurship, venture

capital institutions are encouraging self-employment and this will motivate more
educated unemployed to take up new ventures which have not been attempted so far.
8. Brings financial viability: Through their assistance, the venture capital institutions not
only improve the borrowing concern but create a situation whereby they can raise their
own capital through the capital market. In the process they strengthen the capital market
also.
9. Helps technological growth: Modern technology will be put to use in the country when
financial institutions encourage business ventures with new technology.
10. Helps sick companies: Many sick companies are able to turn around after getting proper
nursing from the venture capital institutions.
11. Helps development of Backward areas: By promoting industries in backward areas,

venture capital institutions are responsible for the development of the backward regions
and human resources.
12. Helps growth of economy: By promoting new entrepreneurs and by reviving sick units,
a fillip is given to the economic growth. There will be increase in the production
of consumer goods which improves the standard of living of the people.

ENTREPRENEURSHIP

Module-1 Entrepreneurship: A Perspective: Intrapreneurship

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ENTREPRENEURSHIP

Concept of Entrepreneurship Development

Approaches to the Concept of Entrepreneurship

(1) According to A.H.Colen Entrepreneurship is “the purposeful activity of an individual or group of

(2) According to Schempeter - “Entrepreneurship is essentially a creative activity. It consists of

Concept of Entrepreneurship Development

Abolishing financial control: the tip of the ice berg

Searching far and wide

intentional application of information, imagination, and initiative in deriving maximum value

According to Schumpeter, innovation may occur in any of the following ways:

(a) Doing things in a new and better way and

1. It helps in growth and development of the economy.

Introduction to the Concept of Entrepreneur

1.5 Types of entrepreneurs

A) Based on the Business Type

A trading entrepreneur refers to a person who undertakes business-related

ii) Manufacturing Entrepreneur

The founder of a business to manufacture products is known as a manufacturing

iii) Agricultural Entrepreneur

Agricultural entrepreneurs refer to the types of entrepreneurs who primarily do

B) Based on the Technology

Based on technology, entrepreneurs are classified into the following types:

ii) Non-Technical Entrepreneur

Based on ownership, entrepreneurs are classified into the following types:

When an entrepreneur starts something personal of his or her own, such as

ii) State Entrepreneur

When a state or government does a business or industrial undertaking, it is

iii) Joint Entrepreneurs

When a business or industrial undertaking is established and operated jointly by

Based on gender, entrepreneurs are classified into the following types:

ii) Women Entrepreneurs

E) Based on the Enterprise size

If an entrepreneur has invested up to a maximum of 1 crore in starting an

ii) Medium-Scale Entrepreneur

If an entrepreneur has invested a minimum of 1 crore to a maximum of 5 crores

iii) Large-Scale Entrepreneur

If an entrepreneur has invested more than 5 crores in starting an enterprise,

F) Based on Clarence of Study

Clarence conducted a study on American agriculture and classified entrepreneurs

Innovative entrepreneurs, also known as innovators, are the type of

Imitative entrepreneurs or imitating entrepreneurs are often called 'copy cats'.

ii) Fabian Entrepreneurs

Fabian entrepreneurs are defined as those types of entrepreneurs who generally

iii) Drone Entrepreneurs

Difference between Entrepreneur and Intrapreneur

1.7 Entrepreneur Vs Entrepreneurship

Attributes and Characteristics of a successful Entrepreneur

An entrepreneur needs to possess certain skills in order to be a top performer. A competence is an

Following are the competencies of an entrepreneur.

1. Economic Growth: He contributes to the economic growth by generating employment

Role of Entrepreneurs in Indian Economy and Developing Economies with

(1) Employment generation: Entrepreneurs provide employment opportunities on a large scale.

Concept of Women Entrepreneurship

Definition of Women entrepreneurs

According to J. Schumpeter an economist and a political scientist:

According to Frederick Harrison:

According to Kamal Singh

Functions of women entrepreneurs

years of the business.

vii. Lack of social acceptance

Role of women entrepreneurs

Problems of women entrepreneurs