UNIT-1

What Is an Entrepreneur?
An entrepreneur is an individual who creates a new business, bearing
most of the risks and enjoying most of the rewards. The process of setting
up a business is known as entrepreneurship. The entrepreneur is
commonly seen as an innovator, a source of new ideas, goods, services,
and business/or procedures.

An entrepreneur refers to a person who plays an industrialist role and sets

up a business for commercial use, then becomes an active partner in
running that business. In particular, an entrepreneur is one who builds and
operates his enterprise. He is specifically a change agent who fulfill the
demand through supply by assuming or forecasting society's requirements.
A person starting a business venture is the most common example of an
entrepreneur.

Characteristics of Entrepreneurship
Many people try to become entrepreneurs, but not everyone is successful. There are
many essential characteristics of entrepreneurship that make a person a successful
entrepreneur. Some of the common characteristics are discussed below:

Risk-Taking Ability: When it comes to starting any business venture, there is always
a risk associated with it. For successful entrepreneurship, an entrepreneur must have
the courage to take risks and the patience to achieve better results. Additionally, they
should also have a strategy to evaluate the risks and overcome any such situation.

Innovation: Innovation is one of the important components of entrepreneurship. An

entrepreneur must incorporate innovative ideas. New ideas help earn more profits
related to launching new products to make operational business process changes to
delivery strategies.

Clear Visionary: To be a successful entrepreneur, one must have a clear vision. This
means that an entrepreneur should know various business processes, including
management, production, distribution, etc.

Leadership Quality: Without leadership quality, it isn't easy to manage any business
venture properly. Once a business is established, an entrepreneur needs to employ
more employees to turn his ideas into reality. Leadership quality is very important to
guide employees to follow proper procedures and make good use of resources.
Open-Minded: Venturing with an open mind can benefit. Therefore, it is essential to
keep looking for new opportunities where the business can be expanded or have
greater profits or better market visibility.

Flexible: Being flexible to try out new ideas, products or processes can sometimes
provide great results. While there are risks, it can also be beneficial if applied
carefully. An entrepreneur should be open to adapting to business changes
according to the market's needs or whenever he has a chance to defeat the
competitors.ava Try Catch

Importance of an Entrepreneurship/need of Entrepreneur

The entrepreneur's primary role is to develop new creative ideas and bring
innovations to the market by replacing the old ones. However, various other factors
make an entrepreneur and entrepreneurship extremely important:

o Creation of Employment: Entrepreneurs create employment for different categories.

By forming enterprises, they generally provide entry-level jobs for newcomers. This
eventually helps fresher to gain experience and work for further growth in a specific
sector.
o Innovation: Because of huge competition, entrepreneurs always try to introduce new
products, technology, goods and more in the market to further enhance the standard
of living for people.
o Making better society and community development: With the employment
options, entrepreneurs bring changes in the society and generate new ways for
betterment. They help promote better education, better sanitation, fewer slums, and
high-level homeownership with their innovations and support. Entrepreneurs help
the organization towards a more stable and higher quality of community life.
o Increases Standard of Living: Entrepreneurs help people improve their living
standards by giving them employment and assuring their income. Standard of living
generally refers to the consumption of various goods and services by a household for
various needs.
o Supports research and development: Before the products are launched in the
market, they are tested for safety and research. Therefore, an entrepreneur also
provides job options in research and development. This eventually promotes research
colleges and universities.
o Knowledge about products: It is the most important part of
entrepreneurship. An entrepreneur should be aware of the products that he or
his company is offering with market requirements. It should be periodically
 evaluated whether the current offerings are satisfying customer demands or
whether some changes need to be implemented to follow the latest trends in
the market to meet customer needs.
o

Types of Entrepreneurs
Entrepreneurs are categorized into different types based on the following
classifications:

o Based on the Business Type

o Based on the Technology
o Based on Ownership
o Based on Gender
o Based on the Enterprise size
o Based on Clarence Danhof

Let us understand each type in detail:

Based on the Business Type

Depending on the type of business, entrepreneurs are classified into the following
types:
Trading Entrepreneur
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.

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.

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.

Based on the Technology

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

Technical Entrepreneur
Such entrepreneurs are called technology entrepreneurs who use to start and
continue industries primarily based on science and technology. These 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.

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.

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

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.

State Entrepreneur
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.

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.

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

Men Entrepreneurs
When any business venture is formed, managed and operated by men, these men
are referred to as men entrepreneurs.

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.
Based on the Enterprise size
Based on the size of the enterprise, entrepreneurs are classified into the following
types:

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.

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.

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.

Based on Clarence Danhof Study

Clarence Danhoff conducted a study on American agriculture and classified
entrepreneurs accordingly. he classified entrepreneurs as follows:

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.

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.

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 change
in their strategy only when it is completely clear that failing to do so will not harm.

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.

Other Types of Entrepreneurs

Apart from the above types, there are several other types of entrepreneurs as given
below:

Solo Operators
Solo operators include those types of entrepreneurs who start their work primarily
alone. However, these entrepreneurs employ few employees if they require. It is the
most common type of entrepreneur, and most people start their ventures like solo
operators.

Active Partners
Active partners include entrepreneurs who jointly start their ventures. This may
include two or more people. However, each person should have equal participation
in the operation of the business. Besides, when the entrepreneurs support only with
the money but do not actively participate in the business's operation, they are just
called 'partners'.
Inventors
Inventors include entrepreneurs who work effectively and invent new products, using
their ability and inventiveness. These entrepreneurs are generally primarily interested
in innovative strategies.

Challengers
Challengers include entrepreneurs who seek new challenges in enterprise ventures,
including manufacturing, distribution, and marketing. Once they achieve their set
challenge, they begin to set and acquire new challenges.

Buyers
Buyers include entrepreneurs who do not like to take too much risk in completely
new business establishments. These entrepreneurs mainly purchase on-going
enterprises by paying a decent amount and start their operations. This ultimately
reduces the risk of establishing a new enterprise as the existing enterprise typically
has better business value and customer reach.

Researchers
Researchers include entrepreneurs who believe in facts and figures based on
business studies. These entrepreneurs analyze all aspects of an enterprise and take
enough time to gather enough information to make a clear assumption. Then they
put their detailed work and understanding to launch the products. Researchers are
usually least likely to fail because they leave no room for mistakes. They gather
information and analyze all ideas from all angles based on all aspects.

Life-Timers
Life-timers includes entrepreneurs who consider enterprises as an integral part of
their lives. In particular, these entrepreneurs mainly learn skills from their elders and
continue to operate family ventures further. These entrepreneurs usually consider
their enterprises a family tradition.

Need of institutional support for new Entrepreneur:

Entrepreneurship is a creative process of starting new venture. It
contains innovation and creativity. It needs sufficient amount of
resources.An Entrepreneur intreseted to start a new entreprise has
to face many problems.
 Shortage of capital: poor access to capital and credit
 Scarcity of raw material: unreliable supply sources for input
 Marketing problems: poor access to market and tough competition.
 Lack of market information
 Lack of opportunities for competency development.
 Poor access to information, lack of research and extension services.
 Lack of access to appropriate infrastructure
 Lack of supportive policies and incentives
Intrapreneur :
An intrapreneur is an employee who is tasked with developing
an innovative idea or project within a company. The intrapreneur may not
face the outsized risks or reap the outsized rewards of an entrepreneur.
However, the intrapreneur has access to the resources and capabilities of
an established company.

 An intrapreneur works inside a company to develop an innovative

idea or project that will enhance the company's future.
 Intrapreneurs are typically highly motivated individuals who have
specific skill sets—as well as leadership abilities and an innovative
vision that others in the corporation can get behind.
Intrapreneurs are employees of a company who are assigned to work on a
special idea or project. They are given the time and freedom to develop the
project as an entrepreneur would
Entrepreneurship Development Programme
(EDP) is a programme which helps in developing entrepreneurial abilities.
The skills that are required to run a business successfully is developed among
the people through this programme. Sometimes, people may have skills but it
requires polishing and incubation. This programme is perfect for them. This
programme consists of a structured training process to develop an individual
as an entrepreneur. It helps the person to acquire skills and necessary
capabilities to play the role of an entrepreneur effectively.
Thus, the concept of entrepreneurship development programme
involves equipping a person with the required skills and knowledge
needed for starting and running the enterprise.
 Objective:
1. To Promote First Generation Businessman and Industrialists

2. To Create Awareness about Availability of Resources

3. To Promote Small, Cottage & Local Industries

4. To Encourage Self Employment Tendencies

5. To Provide Knowledge about Government Plans and Programmes

6. To Make a Successful Entrepreneur

7. To Provide Training to Operate Business

8. To Create Awareness about Marketing

9. To Develop Entrepreneurs in all Areas of the Country

10. To Remove Doubts of Entrepreneurs, Give Solutions and Suggest Remedies

of Problems

Barriers in Entrepreneurship:
 Managing Finances
 Inadequate Market Experience
 Human Resource Problem
 Non-strategic Planning
 Lack of Capacity
 Political Barriers
 Lack of Practical knowledge
 Not Having the Right Team
 Corrupt Business Problems
 Difficulty in Reaching to More People
 Fear of Failure
 Fear of Failure
 No Training
 No Backup Plan
 Limited Technical Skills
 Lack of Motivation
The sole proprietorship is the simplest business form under which
one can operate a business. A sole proprietorship (also known as individual
entrepreneurship, sole trader, or simply proprietorship) is a type of
unincorporated entity that is owned by one individual only. It is the
simplest legal form of a business entity.

Features of Sole Proprietorship

The salient features of sole proprietorship form of organization are as under:

1. Single Ownership. A sole trading concern is owned by one individual. It is

run entirely at his risk of loss. The sole trader provides both capital and
management to the business.

2. Personal Organization or Common Identity. A sole tradership concern has

no separate legal entity independent of the owner. The owner and the
business concern are one and the same. The owner owns everything the
business owns and he owes everything the business owns.

3. Capital. In sole tradership, the capital is employed by the owner himself

from him personal resources. He may also borrow money form his friends and
relatives if he cannot depend solely on his personal resources.

4. Unlimited Liability. The liability of the proprietor for the debts of the
business is unlimited. The creditors have the right to recover their dues even
from the personal property of the proprietor in case the business assets are
not sufficient to pay their debts.

5. One Man Control. Sole tradership is one-man show. The sole trader
provides management to the business. He takes all the decisions, procures
material resources, employs persons and directs and controls the affairs of the
enterprise. He is not required to consult anyone else in taking any decision.
Though the sole trader may delegate some of his authority to his assistants but
the ultime authority to manage and control rests with him.

6. Profits and Losses. The surplus arising in the business of the sole trader
entirely belongs to him and similarly all the business losses and risk are to be
borne by him alone.

7. No Special Legislation. Sole tradership is not governed by any special

legislation. A partnership firm is governed by the Partnership Act, a joint stock
company is governed by the Companies Act and co-operative society by the
Co-operative Societies Act. Any person who is competent to contract can start
his business as a sole trader. However, he is subject to the common law, the
law of contract and the law of insolvency.
Partnership Firm
A Partnership is one of the most important forms of a business
organization. A partnership firm is where two or more persons come
together to form a business and divide the profits in an agreed ratio. The
partnership business includes any kind of trade, occupation and profession.
A partnership firm is easy to form with fewer compliances as compared to
companies.

The Indian Partnership Act, 1932 governs and regulates partnership firms
in India. The persons who come together to form the partnership firm are
knowns as partners. The partnership firm is constituted under a contract
between the partners. The contract between the partners is known as a
partnership deed which regulates the relationship among the partners and
also between the partners and the partnership firm.

Institutions Supporting Small-scale Industries or small

entrepreneurs: The following are the institutions which provide
different types of support to small entrepreneurs

1. Small Scale Industries Board (SSIB)

2. Small Industries Development Organisation (SIDO)
 3. National Small Industries Corporation (NSIC)
4. Small Industries Service Institutes (SISIS)
5. Specialised Institutions
6. State Directorate of Industries
7. State Small Industries Development Corporations (SSIDCs)
8. Industrial Estates
9. District Industries Centers (DICs)
10. Technical Consultancy Organisations (TCOS)
11. Commercial Banks
12. State Financial Corporations
13. Small Industries Development Bank of India (SIDBI)
14. National Bank for Agriculture and Rural Development
(NABARD)
15. Entrepreneurial Guidance Bureau (EGB)
16. Khadi and Village Industries Commission (KVIC)
17. Small Industry Extension Training Institute (SIETI)
18. Small Industry Development Corporation (SIDCO).

Small Scale Industries Board (SSIB):

Government of India constituted the Small Scale Industries Board in
1954 to advice on the programmes and policies for the development
of small-scale sector.
This board is also known as the Central Small Industries Board. The
SSIB consists of 50 members including the representatives of the
Central and State Governments, the Reserve Bank of India, the State
Bank of India, State Financial Corporations and non-officials.
The Union Industries Minister is the chairman of the Board.

The main task of the Board is to coordinate the activities of the

National Small Industries Corporation and the Small Industries
Service Institutes. The Board also offers advice on modifications or
improvements for small-scale industries in the country. There is
standing committee of the Board and an officer called Development
Commissioner of Small Industries.
The SSIB is mainly concerned with the development of small scale
units except those for which separate boards have been set up e.g.,
handmade paper, wool, gur, khandsari, rice husking, bee-keeping,
etc. The Board has adopted liberal terms of credit for small-scale
units. In recent years the Board has taken measures to increase the
flow of funds especially to village, cottage, tiny and small-scale units
at specified rates of interest.
These specific measures include:
(i) Bank credit to artisans, village and cottage industries would be
treated as composite term loan for equipment or working capital or
both. But the maximum limit of the credit with a repayment period
or 7 to 10 years or more has been fixed at Rs. 25000 only.
(ii) The rate of interest for all term loans has been brought down to
16 per cent.
(iii) Application forms for credit have been simplified.
(iv) Reserve Bank of India has instructed banks to bifurcate the
credit accounts to show separately the dues of the SSI units and
those remaining unpaid for over four months.
Small Industries Development Organisation (SIDO):
Small Industries Development Organisation (SIDO) is the apex level
organisation set up for policymaking, coordinating and monitoring
agency for the development of small-scale industries. It maintains a
close liaison with government, financial institutions and other
agencies which are involved in the promotion and development of
small-scale industrial units.
Development Commissioner of Small Scale Industries is the chief of
the Small Industries Development Organisation (SIDO). The
Development Commissioner is assisted by various industrial
advisors and directors in evolving and implementing a programme
of training and management consultancy, economic investigation
and survey, the development of different types of small-scale
industries, industrial estates, modernisation of small-scale
industries, development of backward areas, etc.
The SIDO functions through a network of 27 offices, 31 Small
Industries Service Institutes (SISI), 37 Extension Centers, 6
Product-cum-Process Development Centers, 4 Production-cum-
Testing Centers and 4 Regional Testing Centers.
The SIDO covers all the small-scale industries except those falling
within the specialised boards and agencies like KVIC, Coir boards,
Central Silk Board, etc. The main functions of the SIDO are
classified into three categories – coordination, industrial
development and; extension services.
The main functions performed by it in each category are
as follows:
Functions Relating to Coordination:
The SIDO’s main coordinating functions include:
(i) Evolution of a national policy for the development of small-scale
industries;
(ii) Coordination of the various policies and programmes
introduced by the State Governments;
(iii) Maintaining liaison with the relevant Central Ministries,
Planning Commission, State Governments, Financial institutions,
etc.; and
(iv) Coordination of the programme for the development of
industrial estates.
National Small Industries Corporation (NSIC):
NISC was set up in 1955 as a public undertaking. It is engaged in
promoting and developing small- scale industries in the country.
For this purpose, it has special schemes to meet the needs of
technocrats, physically handicapped, scheduled castes and
scheduled tribe entrepreneurs.
The main functions of NSIC are as follow:
(i) Supplying machinery on hire purchase basis;
(ii) Procuring Government orders for small-scale units;
(iii) Developing small-scale units as ancillaries to large industries;
(iv) Arranging the marketing of products of small-scale units and
promoting exports;
(v) Importing and distributing scarce raw materials, components
and parts among actual users in the small-scale sector;
(vi) Developing prototype of machinery and equipment for transfer
of technology and know- how for commercial production;
(vii) Undertaking the construction of industrial estates;
(viii) Providing training in selected trades and technologies through
prototype development and training centers;
(ix) Developing and upgrading technology particularly for projects
based on wastes.