ENTREPRENEURSHIP: CONCEPTS AND FUNCTIONS > 1.1 CONCEPTS Who is an Entrepreneur? (Enveprene in the s @ person who conceives the idea or who discovers the opportunity environment, arranges all the resources such as manpower, 1 1 or to grab the opportunity. ) =§ terial and capital required to give shape to an ide Every individual has knowledge, talent, skill, idea, compete who uses this to make the best use of become an An n innovator, and a job-and wealth-gener he must have the following qualities also: = Change agent ¢ or ability, The one available resources becomes an entrepreneur. To: ntrepreneur, one needs entrepreneurial qualities, treprene itor, Along with these, Problem solver Pace setter Excellence seeker Marketing executive \ Concept promoter ¢ word ‘Entrepre means to undertake. InGritish and Australian literature, this word means ‘change agents)In general, we can say entrepreneurship is basically an activity that helps in sensing the opportunities by scanning the environment, In the process of entrepreneurship (he individual scans an environment for opportunities, examines the feasibility of converting the opportunities into a possible enterprise for production In the process of entrepreneurship, the entrepreneur designs a plan of action and engages in the activities to start production. He gets “pay off” as a compensation for all the activities performed by him in this regard. eur’ is derived from a French word ‘Entreprendre’ which Why Seek an Enterprise? cs «| ~CEntrepreneur seeks an enterprise because it results in creating goods and seryices which bring happiness, joy, comfort and_peace>Every human being looks for a world full of happiness, joy, comfort and peace. In order ‘to bring thishie entrepreneur looks ities for converting challenges into comfort)Setting up of an enterprise is, “Setting up a venture, which brings about change.The spirit of entrepreneurship helps to bring the following: i The art of practising innovative ideas Converting innovative ideas into products and services (iii) Facing challenges , (iy) Planning enterprises _ (y) Improving interpersonal skill (vi) Research in markets : (ii) Understanding financial system (vii) Developing managerial skills (ix) Appreciation of quality (x) Management of products and services (xj) Social transformation (i) Becoming a part of dynamic and competitive society Why do We Need an Entrepreneur? ° d : t¥ GEvery country needs entrepreneurs for prosperity. Jfwe see the history, the « with more number of entrepreneurs are more developed countries $Ehe reas more entrepreneurs means production and more production eds to inc: Pieris domestic protucrand ross national product, which ultimately leads to inc: Zz ered d more prosperity for the country. Wf we see im India, the inci: Gwe Bumber of entrepreneurs in the past decades has brodght a tremendous rise 1 of India. Also, there is a remarkable increase in the foreign exchange of the court: to increase in the number of entrepreneurs in the field of information technolo | So, every country must motivate its people to become €ntrepreneurs to « growth and prosperity in the country. Definition of Entrepreneur/Entrepreneurship Richard Cantillon defines entrepreneur as, “A person who pays a certain ri product to resell it at an uncertain price, thereby making decision about obtaining and us resources while consequently admitting the risk of enterprise”. Adam Smith defines entrepreneur as, “An individual who undertakes the format an organisation for commercial purposes by recognising the potential demand for goods and s and transforms demand into supply”. ¢ Jean Baptiste Say defines entrepreneur as, ‘An individual who avails the land °f the of another and the capital of third and produces a produet to make profit. Thro sale of product, he compensates the rental value of the land, the wages of the labourers and | interest on the capital obtained and makes profit”. ) J} cuass:%LENTREPRENEURS®P CONCEPTS ANO FUNCTIONS According (0 Jean Baptiste Say’s definition (@) There ws a distinction between capitalist and entrepreneur, Capstalist ts a financier and entrepreneur ws the co-ordinator and organsser of resources to desygn a business enterprise (is) The entreprenenr influences the society by successful implementation of Jus ideas (Wi) He realises the need of the society and meets the need through his innovative idea and servwes. v According to Joseph Schumpeter(“E ntrepreneurship wa proces of creative destruct and i entrepmenerars are innovators who use this process of shattering the status quo of the existing product and seroices to set new products and new serowces.”)He called entrepreneur as innovator. According to Joseph Schumpeter’s definition ' (@) Entrepreneur is the fourth factor of economy. The other three factors are land, labour -naseeeer (i) Entrepreneur is an innovator who coordinates the other three factors (iit) Entrepreneur is not an inventor, An inventor discovers new methods and new servwes The entrepreneur, like an innovator, combines the new products and services and applies mnovation to produce better goods and services His definition clearly differentiates inventors and innovators (entrepreneurs) Difference between Inventors and Innovators (Entrepreneurs) — eee nmnitatentors He | Tnnovators (Entrepreneurs) Inventors discover new methods and | Innovators combine the new products and new services — services to produce better products Inventors are largely concerned with | Innovators are concerned with economical technical aspect. social and marketing aspects. Inventors give last preference to Innovators give first preference to commercial aspects and prospects. commercial and economic aspe: Schumpeter includes all personnel in the organisation who are involved in innovation function as the entrepreneur and he excludes all those who are a part of the ion but do not contribute to any innovation function at any level or in any form. develop new ideas whereas innovators give practical shape to new ideas. ng to Peter Drucker, “Entrepreneur is a person who is involved in gathering and and opportunities and produce results.” ts that the basic role of an entrepreneur is to use the resources for progressive ities rather than for administrative efficiency. differentiates the role of an entrepreneur from the role of a manager. The basic | (a) fu manager is the efficient utilisation of these resources. |ee 6 ENTREPRENE @ Exploits the change as an opportunity. (@) According to Peter Drucker, “Effective entrepreneur converts source into resour, , 4 source becomes a resource when it gets some use and economic value.” For ex.ar, land, water and air are available in abundance but when they are util, properly and given some economic value, they get converted into resourc, (v) Peter Drucker also insists that, “Entrepreneurship is a systematic inno: which consists of the purposeful and organised search for changes and analysin opportunities, which may use the changes for economical and social innovations. Thesgrowth of any country largely depends upon the entrepreneur contributio; The concept of entrepreneurship is not related to large or big enterprises. It is rat}, much more important for small-scale industries and small enterprises. If we see th, economic development of developed countries and developing countries we will obser that entrepreneurs contribute a lot to economic growth of any country. sector. | Entrepreneurship creates a healthy competition in industrial and ec catalyaes Me Ninmanr resource develope pment. The entrepreneur tries to p xcellenc ‘Wo Satisfy the “customers” and human needs. Due to competition, the entrepren: puts efforts and services to the remote and rural sectors. This indirectly promotes tli ‘Of living and economic growth of a country, So entrepreneurs ultimately le: ‘to economic growth and human development. The Concept of Entrepreneurship =~ i ENTREPRENEUR (PERSON) | Rate © : eres |= Production ces bl fermi, fa = froeucts isaion _ | =Siating" = Personnel — Directin, Accounting Leadership = — Finance ‘Communication & Motivation = Socordinating 4 cLass:X! 4ENTREPRENEURSHIP: CONCEPTS AND FUNCTIONS, | Entrepreneurial Functions as 3. Assembling the requirement: After making sure that project is fea: Innovation: As an innovator, entrepreneur uses new and different methods of production, distribution and marketing. Entrepreneurs introduce new technology arid do things differently. Examples: Door cool technology used by L.G., Bio fresh technology used by Samsung, etc. Risk taking: Risk refers to chance or probability of loss due to unforseen circumstances in future. An entrepreneur tries to reduce uncertainty in his/ her plan of investment. He acts as an optimist and is always ready to take risk involved in innovations and new ventures. Profit is the reward for bearing risk All the successful entrepreneurs have taken high risk to attain today's position. Examples: Dhirubhai Ambani, Narayan Murthy, Organisational bui ia Aseem Premji, Ratan Tat Iding: Building an organisation is the most crucial activity of an entrepreneur. Under this function, he brings together various factors of production in such a way so that there is minimum chance of loss and the cost of production is reduced. Entrepreneur takes all the decisions related to its expansion and growth. He alone decides in which line he must grow and employ capital. ie ie , etc, Functions 1. Discovering of an idea: Entrepreneur spots the opportunity and grabs it to convert it in a profitable venture. He discusses the feasibility of idea with experts and if they are convinced then he goes ahead with the idea. Generally, the idea is developed due to existence of problems. For example, the Nirma detergent powder was made to help the poor women to get the detergent at low price but it became a successful venture and today Nirma has 40% hold over the detergent market. 2. Detailed investigation: After discovery of idea, the entrepreneur tries to do a detailed investigation. He tries to find out the demand for the product. He also anticipates the availability of raw materials and other resources. Although it is a complicated process but he must do it with proper caution and care. le and investigating what all resources will be required, in this step he starts assembling the resources. He selects the factory site, contacts the supplier of raw materials, plants and machinery, signs preliminary contracts and acquires patent right if he has invented something new. 4, Financing the proposition: In this function, entrepreneur decides about the capital structure of the company. He estimates the long term and short term finance requirements. He also determines the sources from where the finance will be raised i,, whether to raise fund by issue of shares or debentures or by loan, etc. va8 ENTREPRENEY gerial Functions Iv. Comme! (a) Planning: Planning refers to thinking in adyance what is to be done, when j to bedlone, how itis to be done and by whom it will be done. Entrepreneur seis, | the objective of the firm and tries to find out the course of action to be followec| (b) Organising: Organising refers to bring together physical, financial and hun, » resources of an organisation. In this function, entrepreneur tries to coordina all the factors of production. (c) Staffing: Staffing does not only mean appointment of staff. Under this function entrepreneurs do manpower planning, recruitment, selection, taining promotion, transfer and appraisal of employees. (d) Directing: It is concerned with giving directions or instructions and orders Directing initiates action. The entrepreneur guides, instructs and motivaics employees to do the work in a desired manner. (e) Leadership: As a leader, the entrepreneur guides, directs and influences tI behaviour of employees towards the common goal. As a leader, he makes th employees understand that achieving goal will bring maximum benefit (o employees as well as employer. ( Motivation: Motivation is a psychological process of inducing people « perform to the best of their abilities. Through motivation, entreprenei develops the willingness to do the work among the employees. He understands the physiological safety, esteem and other needs of employees. Accordingly, i offers them incentives to motivate them (g) Supervision: Supervision means overseeing the activities of employees. \s a supervisor, entrepreneur guides and instructs the employees as to how to do the work. He also helps them to get maximum utilisation of resources with minimum cost. (h) Co-ordination: It means bringing together all the activities of the organisatio: and directing them towards the achievement of a common goal. Entreprencu' tries to balance the activities of all the departments and segments so that the work for the common goal. (i) Controlling: Controlling ensures implementation of plans. Under this function entrepreneur compares the actual performance with the planned performanc« If there is any deviation in both and he tries to find out the reasons for such deviations, and suggests measures so that in future such deviations do not occu! Controllinginvolves: (i) Establishing standards, (ii) Measuringactualperformance. (ii) Comparing actual performance with standard (iv) Finding variations (v) Taking corrective actions. inctit ay 5 é. i -. ervices. It (a) Production: Production is concerned with creation of goods or services: I includes manufacturing, ancillary and advisory activities. It is a key function cuass:X!‘ENTREPRENEURSHIP. CONCEPTS AND FUNCTIONS 9 an enterprise. In small organisations, it is car big organisations, itis carried on by a separate department called as production department Finance: It is the most important aspect of business as business cannot be started without finance and it cannot even survive and grow without finance. Under this function, the entrepreneur decides , (i) Capital structure (ii) Long-term and short term finance, (iii) Sources of finance — owner's fund or borrowed fund, (iv) Amount of fixed capital, (v) Amount of working capital, etc. d on by a single person but in _(©) Marketing: It is concerned with the movement of goods and services from producer to consumer. Under marketing function, entrepreneur tries to create a place for his product or service in the market. He uses various tools of promotion to increase the sale of his product and capture a bigger share in the market (d) Personnel: Under personnel function, entrepreneur takes care of his employees. This function is concerned about the well being of employees, providing good working conditions, adequate compensation and other welfare measures to keep the workforce satisfied (e) Accounting: It is defined as the systematic recording of all the transactions of the firm to know its financial position. The entrepreneurs must keep an eye on all the transactions recorded in the books of accounts so that he can know his financial position) > 1.3 NEED AND IMPORTANCE OF ENTREPRENEURSHIP X Entrepreneurship is important for national growth and social development. Most of the developing countries have the history of long years of foreign domination. They have attained freedom recently. The most common problem they are facing is to conserve the outflow of limited national wealth and fulfilling the demand for consumer goods and services by locally producing them, They are also facing the problem of foreign exchange. These countries need to import capital goods and technology and the major source of foreign exchange is export. In short, we can say that the present conditions demand developing countries to: (i) Produce import substitute goods to stop outflow of national wealth. fi) Produce more and more consumer goods and services to meet the increasing demand of these goods locally. (iii) Produce goods for export purpose to earn more and more foreign exchange. 3 3 a Allthe aboye mentioned requirements can be met by more and more entrepreneurs. Entrepreneurs bear the cost and risk of launching a new venture, developing new Products, adapting new technology and developing new markets. So, entrepreneurs a new strategy of development. Fig. 2 shows how entrepreneurship helps in increasing national production. ———ENTREPRENEUpg, Import substitute goods Entrepreneurship must raise production of Increase in ‘national production ‘Consumer goods and services Export products ‘and services Fig. 2 Need for entrepreneurship can be made more clear from the following points 1. Life line of a nation: Entrepreneurship is a yardstick to measure | development of any country as no country can prosper and grow withou development of entrepreneurship. We can see that in U.S., U-K., and oth: developed countries, there are well developed and well established enter prises So every nation tries to increase its trade by having more enterp 2. Provide innovation: Entrepreneur is an innovator who tries new metho: of production, new technology, new ways of marketing’etc. He develops in business ideas and puts therh into action to enhance the process of economic development. 3. Growth of economy: The Entrepreneurs adapt to changes as changes take plac in the environment. ‘The changes adopted by entrepreneurs in enterprisis even bring changes in the society and economy. Latest technology used | entefprises not only brings growth in the enterprises but it also brings growth of economy at large, Increased profits: An entrepreneur always tries to minimise cost. He alw. tries to get optimum utilisation of resources. The reduction of cost and incre in efficiency always result in increase in profit, 5. Employment opportunitie: Entrepreneurship not only provides the scope fo! self-employment but also offers employment to large number of people us i the case of successful enterprises. Growth in entrepreneurial activities leads more and more employment, 6. Social benefits: Entrepreneurs always try to adopt latest technology and rais¢ the standard of living by providing good quality products and services at lowes cost. By setting up enterprises in backward areas, they try to bring balanced regional growth By making optimum utilisation of resources, they save scarce resources of society. ~ Soy Lass)ENTREPRENEURSHIP: CONCEPTS AND FUNCTIONS > 1.4 WHY ENTREPRENEURSHIP FOR YOU? Being entrepreneur is great. ‘The re choose entrepreneurship are: 1. Independent Control. Lotal control of sole proprietorship firm lies in the hands of the proprietor only. He enjoys cor aplete freedom of ‘action, He has all the authority to take decisions and run the business in his own way, eu BADE can be an Innovator: Most of the great idc have come from entrepreneurs asons one should become an entrepreneur or ‘as that have turned into great business 2, Direct Incentive. In sole proprietorship firm there is direct rek efforts and reward which means if proprietor puts extra efforts then profit increases and proprietor gets extra income. So proprietor is to get extra reward. 8. Flexibility. In sole proprietorship firm all the decisions are taken by the proprietor himself: He is not supposed to consult any one and waste time. By quick decisions, immediate actions can be taken which bring flexibility of operation. There delays and business can quickly adapt itself to the changing environment Sole Beneficiary of Profits. All the profit earned by the sole proprietorship firm belongs only to the proprietor himself 5. Personal Touch. In sole proprietorship firm, generally all the work is carried out by the proprietor himself. So he can maintain direct contact with the customers and employees and can make changes in the products according to the demands and expectations of the customer. 6. Secrecy. The sole proprietor is not expected to share his secrets with others, There is no legal compulsion for a sole proprietor to publish his accounts. All the decisions are taken by the proprietor. So it becomes easy for him to maintain secrecy and get better competitive strength. 7. Suitable for Small-scale Operations. The sole proprietorship firm is the most suitable form of business for small-scale business enterprises. It is a suitable enterprise for business requiring small capital outlay, personal attention ete. It is a suitable form which offers opportunity of self-employment. Sense of Accomplishment. There is a personal satisfaction involved in working for oneself. The success in business not only contributes to self satisfaction, but also instills in the individual a sense of accomplishment and confidence. re 1.5 MYTHS ABOUT ENTREPRENEUR — x" Entrepreneurs must have some basic qualities, characteristics such as honesty, vision and drive to spot and can the opportunities. These qualities help the entrepreneur to §et success but there are some beliefs about entrepreneurs in the mind of people which not true. The myths about entrepreneurs are: xe _ @ Entrepreneurs are gamblers. Entrepreneurs take risk. (they are adventurous and exploit opportunities but that doesn’t mean they are gamblers. They do not LASS x i i. lation between the always motivated to work extra noENTREPRENEURS} invest their time and money on unpredictable situations rather they set a missioy, and use their time and money to achieve it} They do not try £0 assimilate ot! money or assets by unfair practices. They try to earn money and create wealth i), their innovative and creative skills. They work hard and are rewarded for (\ hard work and for their entrepreneurial skills and qualities. Gi) Entrepreneurs are born,({(¥¥ incorrect to say that entrepreneurs are born as «| the characteristics of an entrepreneur can be acquired with careful observatio, study and practice. There are many training institutes which impart trainin, for entrepreneurial skills) Some individuals might have genetic traits entrepreneurial skills but it does not mean all that the entrepreneurs are bor) (iii) Entrepreneurs have to be rich. Many time people believe that they canno: become entrepreneurs because they do not have money and they do not bel: to rich families. (fo be a successful entrepreneur, one must have the ability, 1 mobilise the resources in the most productive manner, To be an entreprency one needs creativity and innovation. Money does not assure success and it docs not facilitate creativity and innovation. )— yy ye (iv) Entrepreneurs should have good knowledge of English. (fo be successful, entrepreneur requires good communication skills and not good English. | ack of knowledge of any language is not a barrier to entrepreneurship as one cai easily learn all the languages with ce Wa can acquire competencic through one’s own mother tongue also. Entrepreneur must have mensurabi amount of communication skills so that he can communicate easily with others (v) It is easy to start business: The most common myth entrepreneurs believ is that it is very easy to start business. If we see the record, only one third o! entrepreneurs are able to make successful enterprises, as there is a complicate process of formation and even after formation there are many hurdles. (vi) It takes lot of money to start an enterprise: Another myth which entrepreneurs believe is that they will need huge finance to start a business but it is not correct ‘The entrepreneurs can start business even with small amount of capital as instea of buying assets, they can hire assets, they can take loan and get machineries on lease. The biggest example to prove this belief wrong is Infosys. Naraya Murthy started his venture with just % 10,000, which his wife had saved (vii) It is difficult to get debt for start-ups: New entrepreneurs have anothe: wrong belief that start-ups have to manage with equity only but in reality entrepreneurs must have combination of debt and equity. Government of Indi has set up many financial institutions which provide loan to start-ups also. (viii) Banks don't lend money to start-ups: Entrepreneurs feel that it is not possi! for new entrepreneurs to get loans from bank. The government has started various schemes under which start-ups and new entrepreneurs can get loan (ix) Most entrepreneurs start business in attractive industries: Most of (!¢ entrepreneurs start business in attractive industries which are running successfully but it does not guarantee success since in such industry, they ¥'!! have to face competition. $x) cuas J[BRTREPRENEURSHEP: CONCEPTS ANO FUNCTIONS ” {x) The growth oF success of « start-up depends upon entrepreneur's talent than ‘on the business he chooses: 11 is bring success, It mat t true as only entrepreneur's talent cannot ers alot that what business or industry he has chosen as some industries have reached stagnation whereas some have more scope of prosperity essful financially: This is another myth that entrepreneurs earn a lot of money and they are financially more successful mployees. Now-a-days, since MNCs are offering big salary packages, many employees can be more financially successful than entrepreneurs. // Entrepreneurs have to follow a sequence of steps before starting an enterprise following is the process of entrepreneurship \entitying opportunities ‘Generating and evaluating idea | Planning Raising start up capital %. Fig. 3 — Under this step, entrepreneur assesses what are his strengths _and weaknesses, what all he enjoys doing and his work experience. _ 2. Identifying opportunities: Under this step, he tries to find out the need, want and problems so that he can get an opportunity to overcome the problems and fulfil the need. ‘Generating and evaluating ideas: Through various measures such as discussion, brain storming, creativity and his own experiences, he tries to develop new ideas to overcome problems and meet the expectations of customers, Planning: Under this step, entrepreneur conducts research, makes business plan and strategies. __ 5. Raising start-up capital: By using business plan, entrepreneur tries to attract venture capitalist and partners.ENTREPRENEURS} 6. Start-up: Under this step, the entrepreneur launches his enterprise and tries to de |, more customers. He also makes changes as per changes in the environment. 7. Growth: Entrepreneur tries to expand and grow the enterprise. 8. Harvest: This means selling the business and harvesting the reward. May, entrepreneurs sell their existing business and start a new venture > 1.6 PROS AND CONS OF ENTREPRENEURSHIP (ADVANTAGES AND DISADVANTAGES OF ENTREPRENEURSHIP) Everything in life has both advantages and disadvantages and entrepreneurshi), no exception. Entrepreneurship involves a lot of risk yet it gives you the opportunity be your own boss, take your own decisions and earn nicely as well Pros/Advantages of Entrepreneurship — °° 1. Control: Entrepreneurs can have complete control over their ventures. O; can take his own decisions and choose the work he likes to do. This gives a | of job satisfaction. 2. Excitement: Each day of an entrepreneur is filled with new opportunities ai challenges, which is quite exciting. Due to high capacity of risk, there is a lot: adventure in entrepreneurship. 3. Flexibility: Entrepreneurs can change their decisions and can schedule thei work hours as per their other commitments such as spending quality time wi their facilities. 4. Rational salary: The income of entrepreneurs is directly related to their efforts More efforts lead to more earning and success of the business. 5. Flexibility: Entrepreneurs can work whenever they want, wherever they wat and however they want. Cons/Disadvantages of Entrepreneurship ~ x u'%? 1. No security of regular pay cheque: Being an entrepreneur often means giviis up the security of regular pay cheques. If business slows down, your person: income can also reduce. 2. Work schedule: There is no predictable work schedule of an entrepreneut requires more work and longer hours than being an employee. 3. Administration: All the decisions have to be taken by the entrepreneur himse!! which demands a lot of administrative ability and ability to do a lot of pape’ work before taking decisions which involves lot of energy and time. 4. Competition: Working at a small scale makes it difficult to compete unless «0! until you differentiate your business from others. 5. Loneliness: It can be lonely and scary to be completely responsible for th< success or failure of your business. Lass:ENTREPRENEURSHIP: CONCEPTS AND FUNCTIONS, ‘6 > 1.7 STARTUP AND ITS STAGES Meaning/Definition/What is Startup? A Startup is a business enterprise in the form of private Itd. company, partnership, limited liability partnership or sole proprietor, registered in India, which was started less than five years ago and have annual turnover of less than 25 crore. To be eligible for Startup, the enterprise should not have formed by splitting up or reconstruction and its turnover should not have exceeded % 25 crore since its existence Stages ofStartUp — y/. There are six main phases of a start up: 1, Concept and Research: The first stage of start up is to develop the idea before implementing the idea into reality careful research must be conducted to find out do people really need your product or service? Is your idea already sold in market or itis a new idea. Research help you to make a business plan. 2. Business Model/Plan: In this stage you move from a concept to a company, putting your research into practice, create a business model, build up a team, secure funding ete. $. Launch your Product: This is generally the first year of start ups. In this stage you gain your first customer. In this stage focus should be on growing your customers and grabbing a bigger share in the market. 4. Feed-Back: In this stage you receive the feedback about your product. The feedback must be used to continue refined your product. This stage show you are taking customer's concern and feedback into account and improving your product or services as per their expectations. 5. Growth: In this stage use various marketing strategies to expand and diversify your business. Build up your staff and resources to take the expansion load. 6. Established: In this stage focus on customer retention loyality, testing and refining your marketing strategies, etc _/ o> 1.8 ENTREPRENEURSHIP : THE INDIAN SCENARIO Entrepreneurship has gained greater significance at global level. Under . charging economic scenario. Indian economy in particular find plenty of scope for entrepreneurship. Presently the Indian economy is taking lot of steps to give a boost to entrepreneurship development. This is evident with the Boost to start up in the form of funding schemes and incentives offered. CLASS : XI16 Various Schemes and Ways to fund startup by Government of india is taking lot of steps to encourage startup ed by government are: The Government of Indi Common schemes/benefits off 1. No inspection under this scheme no inspection would be carried out at star three years regarding labour laws etc. as they need only self-cellfication 2. Registration. The Government has launched a mobile app in April 20 portal that will allow startup to get registered in one day. In addition ther: a single window for clearance, approvals and registration. 3. Income Tax Exemption. Income tax exemption is available for first thre: This exemption is available only after obtaining a certificate from inter-m board set up for this purpose. 4. Capital gain tax exemption. The startup can claim capital gain tax exemp for first three years. 5. Benefit in Patent and Intellectual property. In patent cost, startup can 80% rebate that means if a startup applies for patent the government 80% rebate in fees. Even faster patent registration and protection for int« property rights are also provided under this scheme. 6. Funding Schemes for startup. Government has announced @ 10,000 crore new startups and & 500 crore for credit guarantee scheme. Even foreign 2 provided to startups, for example a softbank of Japan invested $ 2 billion ir startups. Following are lists of 10 funding options for startups to help raise capital 1. Self Funding: To start business self funding is first option on later stage may get attracted. peers 2. Crowdfunding as a Funding Option: Crowdfunding is one of the newe funding a startup that has been gaining lot of popularity lately. It’s like (4 loan, pre-order, contribution or investments from more than one perso same time. This is how crowding works~An entrepreneur will put up a detailed descr) his business on a crowdfunding platform. He will mention the goals of his plans for making a profit, how much funding he needs and tor what reasons + and then investors can read about the business and give money if they idea. Those giving money will make online pledges with the promise of pie 8 the product or giving a donation. Anyone can contribute money toward {ix business that they really believe in. 3. Get Angel Investment in Your Startup: Angel investors are indivialis'> » surplus cash and a keen interest to invest in upcoming startups, Ange! <> have helped to startup many prominent companies, including Google. \\'« Alibaba. This alternative form. of investing generally occurs in a compan’ >>ENTREPRENEURSHIP: CONCEPTS AND FUNCTIONS Hi stages of growth, with investors expecting a upto 30% equity: They prefer to take more risks in investment for higher returns. 4. Get Venture Capital for your Business: Venture capitals are professionally managed funds who invest in companies that have huge potential. They usually invest in a business against equity and exit when there is an IPO or an acquisition 5. Get Funding from Business Incubators and Accelerators: Early stage businesses can consider incubator and Accelerator programs as a funding option. It is found in almost every major city, these programs assist hundreds of startup business every year. 6. Raise Funds by Winning Contests: An increase in the number of contests has tremendously helped to maximize the opportunities for fund raising. It encourages entrepreneurs with business ideas to set up their own business. In such competitions, you either have to build a product or prepare a business plan. 7. Raise Money Through Bank Loans: Normally, banks are the first place that entrepreneurs go when thinking about funding. Almost every bank in India offers finance through various programs. For instance, leading Indian banks-S61) KDFC, {CICD and Axis banks have more thait 7-8 different options to offer collateral freé business Toans. 8. Get Business Loans NBFCs: There is an option. Non Banking financial companies NBFC provide services to those who would not have access to conventional baking services. It is increasingly becoming popular for those whose requirements are limited and credit ratings not favoured by bank. 9. Government Programs that Offer Startup Capital: The Government of India has launched 10,000 Crore Startup Fund in the Union Budget to improve startup ecosystem in India, farther the government has also launched various schemes such as (i) Central Government Schemes (a) Bank of Ideas and Innovations programme—in order to boost innovative product companies (b) Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRZ)— To extent benefits to & 10 lakh small and medium enterprises-~~ B (c) SIDBI—Small Industries Development Bank of India also offer business loans to MSME sector. (ii) State Government Schemes <—{a) Kerala State Self Entrepreneur Development Mission (KSSEDM), ~(b) Maharashtra Centre for Entrepreneurship Development, t ~{c) Rajasthan Startup Fest, etc. _ These schemes are set up to boost up small business in India. _ Read about Indian government's Startup India Action Plan. ean assoENTREPRENEURSHip 18 JMPSE: a ‘ jon and engages in t} = Who is an Entrepreneur: The one who design a plan of action and engages in t activities to start production. am Why seek an Enterprise: To create goods and services. x ity in t tio: m Why do we need an Entrepreneur: To ensure growth and prosperity e nation, a Definition by different Authors. = Concept of Entrepreneurship. (Eset ~ [iene = Functions of Entrepreneurs — Innovation — Investigating — Planni — Production = Risk Taking anidea = Organsing = Marketing = Organisation Detailed = Staffing = Personnel building Investigation = Directing Accounting — Assembling _ -Leadership — Finance the required Communication resources” | Motivation fe -Aranging | — Co-ordinating r finance Controlling m= Need and Importance of Entrepreneurship (i) Life line of a nation (ii) Provides innovation (iii) Growth of economy (iv) Increased profits (v) Employment opportunities (vi) Social benefits = Myths about Entrepreneurs (i) Entrepreneurs are gamblers (ii) Entrepreneurs are born (iii) Entrepreneurs are Rich (iv) Entrepreneurs should have good knowledge of English (v) It is easy to start Business (vi) It takes lot of money to start an enterprise ri ass:» CONCEPTS AND FUNCTIONS 19 i) Itis difficult to get debt for start ups Bank don’t lend money to start ups. Most entrepreneurs start business in attractive industries | The growth or successor of a start up de] n entrepré b Y : ; p depends upon entrepreneur's talent than Seif discovery Identifying opportunities t Generating and jaluating idea Raising start up capital does the spirit of entrepreneurship help? do we need entrepreneurs? does Joseph Shumpeter define entrepreneurship and entrepreneur? does Jean Baptiste Say define entrepreneurs? does Joseph Shumpeter differentiate between inventor and innovator? ding to which researcher the entrepreneur must search for change, respond ge and exploit change? Peter Drucker the need and importance of entrepreneurship. do entrepreneurs help in increasing the national production? are the myths about entrepreneurs?\ & ENTREPREN 20 ENTREPRENE as gamblers? 13. Do entrepreneur: 14, “Only people born with entrepreneurial Do you agree? 15. “Only rich people can become entrepreneurs”. Do you agree? 16. “Only English speaking people can become entrepreneurs”. Do you agre« 17. What are the pros of entrepreneurship? 18, What are the cons of entrepreneurship? 19. Explain the process of setting up an enterprise. competencies can become entreprene, HOTS (Hit der Thinking Skills) AND APPLICA’ — 1. Differentiate between promotional and commercial functions of an entreprene 2. “Innovation is the key to success of any entrepreneur.” Explain why. 3. “Entrepreneur wastes our National resources.” Do you agree? Give reasons justify your answer. 4, “Entrepreneur is an important ingredient for a nation’s growth.” Explain hoy 5. Give step by step approach to start an enterprise. OBJECTIVE TYPE QUESTIONS 1. Risk taking is (@Aintrepreneurial function (b) Promotional function (© Managerial function (4) Commercial function 2. Which of the following is a myth about entrepreneur (a) Entrepreneur is an innovator (b) Entrepreneur is a wealth generator ntrepreneur is gambler (d) Entrepreneur is change agent 3. First three years there is no inspection by government authorities for startup (Dye Fal 4. Tose exemption is available for start up. 5. Entrepreneurship is considered as she of Nation, 6. Following is the myth about Entrepreneur (a) Entrepreneur is lifeline ofa nation (Wf Entrepreneurs are born (c) Entrepreneurs provide employment. opportunities (d) All of the above 7. Planning, organising are which functions of Entrepreneur? (a) Entrepreneurial functions (b) Promotional functions (O/Managerial functions i (d) Commercial functionsIP: CONCEPTS AND FUNCTIONS lividuals with surplus cash and interested to invest in upcoming startups are ywn as Self funding (pyAngel investor Bank loan (d) Crowd funding make pledges with promise of pre-buying the products or giving donation Angel investment (b) Venture capital rowd funding (d) Self funding wrepreneur should have good knowledge of English (b) Account jusiness he is planning to start —_(d) All of the above (b) Competitor ( (d) None of the above Ine of the Disadvantages of Entrepreneurship is Excitement (b) Rationale salary No security of regular pay cheques (4) All of the above step in the stages of start-up is (b) Launch of product (d) None of the above innovator lone of the above (d) Both of the above 1. (a), 2. (c), 3. True, 4. Income tax, 5. Life line, 6. (b), 7. (©), 8. (b), 9. (©) 10. (c), 11. (a), 12. (0), 18. (©), 14. (b). tty