CONCEPT OF ENTREPRENEUR

The word “Entrepreneur” is derived from the French verb ‘entrepredre’ which means ‘to
undertake’. It means Between Takers. Entrepreneur is another name of Risk Taker. An
entrepreneur is an individual who takes moderate risks and brings innovation. Entrepreneur is a
person who organizes/ manages the risks in his/her enterprise. “Entrepreneur is an individual
who takes risks and starts something new”

During the early 16th century the Frenchmen who organized and led military expeditions were
referred to as ‘Entrepreneurs’. During the early 18th century French economist Richard
Cantillon used the term entrepreneur for business. Since that time the word entrepreneur means
one who takes the risk of initiating a new organization or introducing a new thought, product or
service to society.

2.3 DEFINITION

An entrepreneur is an individual who takes moderate risks and brings innovation. An

entrepreneur is a person who has possession of a new enterprise, venture or idea and assumes
significant accountability for the inherent risks and the outcome. An entrepreneur is "one who
undertakes an enterprise, especially a contractor, acting as an intermediary between capital and
labour.

CONCEPT OF ENTREPRENEURSHIP

The term ‘entrepreneurship’ is associated with the term ’Entrepreneur’. Though, they apparently
look same, conceptually they are different. Entrepreneurship is the process of finding
opportunities in the market place, planning for the resources required to convert these
opportunities into success and to achieve long term gains. It involves creating capital by
exploiting resources in new ways to initiate and operate an enterprise. Entrepreneurship can be
defined by describing what entrepreneurs do. For example: "Entrepreneurs use individual
inventiveness, and take on calculated risk to create new business ventures by raising capital to
apply inventive new ideas that resolve problems, meet challenges, or satisfy the needs of a
clearly distinct market." But the entrepreneurship is not limited to business and profit:
"Entrepreneurship involves bringing about change to achieve some benefit. This benefit may be
financial but it also involves the satisfaction of knowing you have changed something for the
better.”

"Entrepreneurship is essentially the act of creation requiring the ability to recognize an

opportunity, shape a goal, and take advantage of a situation. Entrepreneurs plan, persuade, raise
resources, and give birth to new ventures."

According to Cole “Entrepreneurship is the purposeful activity of an individual or a group of

associated individuals undertaken to initiate, maintain and aggrandize profit by production or
distribution of economic goods and services”.

Classification According to Type of Business

 

1. Business Entrepreneur
Business entrepreneur is called solo entrepreneur. He/she is the one who conceives
an idea for a new product/service and establishes a business enterprise to translate
his idea into reality. He/she may establish small or large enterprise to commercially
exploit his/he idea. He/she takes up production, operations and pursues marketing
activities.

2. Trading Entrepreneur
Trading entrepreneurs are those who restrict themselves to buying and selling
finished goods. They may be engaged in domestic and international trade. Their
core strength lies in distribution and marketing. They get their income by way of
commission and marketing.

3. Industrial Entrepreneur
These are entrepreneurs who manufacture products to cater to the needs of
consuming public after identifying the need left unfulfilled by the manufacturer
hitherto. They may be small, medium and large entrepreneurs. Industrial
entrepreneurs mobilise the resources of various types and create an entity to
manufacture the products or service. They add utility to products rolled out by
them which is termed as value addition.

4. Corporate Entrepreneur
Corporate entrepreneur is called promoter. He/she takes initiative necessary to start
an entity under corporate format. He/she arranges to fulfil the formalities to start a
corporate entity under Company law. Corporate entrepreneur assembles all the
resources and put in place organisation to run the business on a day-to-day basis. In
corporate form of organisation, ownership and management are separated.
Corporate entities are registered under the Companies Act or under the Trust Act.
Corporate entrepreneurs install a team of experts to manage the entity on a day to
day basis.

5. Agricultural Entrepreneur
Agricultural entrepreneurs are those entrepreneurs who raise farm products and
market them. They use the various inputs like labour, fertilizer, insecticide, water
technology etc. to raise the products and market their products either directly or
through co-operative entities or through brokers or through tie up with large
retailers. Those who raise allied products like poultry, meat, fish, honey, skin,
agricultural implements, flower, silk, fruits, prawn etc., are called agricultural
entrepreneur. In short these entrepreneurs pursue their venture in agriculture and
allied sector.

6. Retail Entrepreneurs
Retail entrepreneurs are those who enter into venture of distributing the end-
product to final consumer while wholesale entrepreneurs take up the venture of
distributing the product to retailer. They used to buy the goods in small quantities
from numerous wholesalers and make it available different products of different
brands under one roof to end consumer.

7. Service Entrepreneurs
Service entrepreneurs enter into the venture of supplying service products to end
consumers. Hoteliers, airlines, banking, insurance and financial service providers,
repair service organisation, bus operators, train service, advisory organisation,
advertising firms, manpower supplier etc., come under service entrepreneur’s
category.
The Types of Entrepreneurs

1. Small Business Entrepreneur

You know that local restaurant that you take visitors to when they come to
town? Or your favorite coffee shop that you pop into every morning before
work? Those are owned by small business entrepreneurs. Many of the
businesses that you know and love are small businesses, or at least started
out as one.

2. Large Business Entrepreneur

The opposite of a small business owner, a large business entrepreneur refers

to the leaders of large companies and corporations such as Microsoft or
Disney. These types of entrepreneurs are often C-level executives like a CEO.

A large company is different from a small business in that its goal is to expand
by developing new products or services — or even buying smaller companies
— to meet consumer demand. The goal of a large business entrepreneur is to
lead the initiatives that will help the company increase its market value. To be
a large business entrepreneur, it helps to be strategic and have the ability to
focus on high-level goals.

3. Startup Entrepreneur

While the term ‘startup’ is often associated with Silicon Valley, you don’t need
to reside in the tech hub to be a startup entrepreneur. A startup entrepreneur
is the founder of a scalable company. Startups are often technology focused
and are either bootstrapped or rely on funding from outside investors.

Examples of startups include Canva, Airbnb, Square, and Uber, to name a

few.

4. Solo Entrepreneur

A solo entrepreneur, or solopreneur as they’re often referred to, is someone

who operates a one-person business. Similar to a small business
entrepreneur in that they are independently owned, a solopreneur doesn’t
work with partners. These types of entrepreneurs often run service-based
businesses like consulting, coaching, or freelancing.
5. Innovator Entrepreneur

Apple. Google. Amazon. Tesla. What word comes to mind when you think of
these companies? Innovation. The brains behind these brands — Steve Jobs,
Larry Page, Jeff Bezos, and Elon Musk — are examples of innovator
entrepreneurs.

But what exactly makes them innovators? And how can you tell if you’re an
innovator entrepreneur?

6. Imitator Entrepreneur

Before you question the credibility of an ‘imitator entrepreneur,’ keep reading.

These types of entrepreneurs take an existing business, product, or service,
and make it better. Many entrepreneurs fall into this category. There can only
be a few true innovators, after all — most businesses are usually an iteration
of something that already exists. But that doesn’t mean these types of
entrepreneurs can’t build massively successful businesses from it.

7. Social Entrepreneur

If your mission is to change the world, then you’re a social entrepreneur. This
type of entrepreneur strives to make a difference with their company, on either
a small scale or a global one. Leaders at nonprofits are great examples of
social entrepreneurs.

8. Buyer Entrepreneur

Rather than building a business, a buyer entrepreneur either buys or funds

another business to help them grow. This type of entrepreneur typically has
extensive experience building companies throughout their career and uses
that expertise to improve the companies they buy.

Warren Buffet, the CEO of Berkshire Hathaway, is a buyer entrepreneur. His

successful investments have earned him the position of being one of the
wealthiest people in the world.

9. Hustler Entrepreneur
A hustler entrepreneur lives up to their name. They are driven, highly-
motivated, and hustle hard to get to the top. These types of entrepreneurs are
often a natural when it comes to sales and will pitch their product or service to
anyone and everyone they meet.

10. Researcher Entrepreneur

Researcher entrepreneurs are, as the name implies, research and data-

driven. They have in-depth expertise about the product or service they offer
and are motivated to share that knowledge with their customers.

10 Traits Of Successful Entrepreneurs

1. Ambition
To be a successful entrepreneur, you have to have ambition. You need to be willing to
do more than just what it takes to keep your business going. You have to look at
projects that go above and beyond what everyone else is doing, even if those projects
might fail. Don’t look at what customers want right now, look for what customers are
going to want in the future. If you can create a product that will change your entire
industry, you’re going to be wildly successful.

2. Be Willing to Take Risks

Having ambition doesn’t do you much good if you aren’t willing to take risks. Yes, you
might fail, and in some cases, that could mean you might lose your business. But
without taking risks, you’ll never be able to get ahead of the game. This doesn’t mean
you need to take huge risks. Always make sure you have the resources you need to
keep your business running and that the risk has a good chance of succeeding. Don’t
blindly risk your company, but don’t always play it safe.

3. Be Determined to Succeed
The daunting tasks that starting and running a successful business require can be
discouraging. You have to learn so much, and in the beginning, you’re going to be doing
a lot of the work yourself. You may not even be able to make much money for the first
several years. Despite all of this, you have to be determined to succeed. If you feel that
determination start to fade, think about why you started your business and why you
were so determined that it be a success.

4. Be Motivated
If you do start feeling your determination to own a successful business start to drop off,
one thing you can do is find new motivation. You might simply find that what motivated
you to start a company doesn’t give you the push you need. In that case, it’s time to find
something new. You can look at your own life to determine if there are new reasons to
push yourself. You can follow some motivational speakers online and let their words of
wisdom give you a boost. Whatever you do, you need to find the passion you once held
because without it, you simply won’t have that spark you need to truly be successful.

5. Have (or Learn) Financial Management Skills

Even if you have someone who is in charge of managing your budget, you still need to
understand finances and money. In addition to understanding your financial situation so
you can make good decisions, you will also need to know your company’s financial
status when talking to potential partners and investors. Knowing how to raise funds and
properly use them to grow your business is vital, even if you have a financial expert on
hand.

6. Great Communication Skills

Communication skills are important to everyone, regardless of their job. As a business
leader, it’s even more important that you know how to communicate. You will need to
talk to investors about your plans, but you’ll also need to speak to many others. You
may need to talk to customers, employees, potential partners, and community leaders.
If you can’t successfully communicate what your business is about and what your goals
are, you may lose investments. If you can’t tell employees what you need from them,
you’re likely to create a confusing work environment.

7. Be Willing to Learn
A good entrepreneur knows they don’t know everything. You’re going to have to learn a
lot to get your business started, but it doesn’t stop there. As a business owner, you’ll
need to continue to learn. Industries are always changing, and if you don’t, you’re going
to fall behind. By continuing to learn, you’ll be able to keep ahead of the competition.
You’ll learn new techniques and methods that apply to your industry, be exposed to
different perspectives, and be challenged.

8. Learn from Failure

Successful entrepreneurs have come to one conclusion: failure isn’t bad. In fact, it’s a
part of every project. Failure isn’t the end of an idea. In fact, it’s just the beginning. When
you fail, you learn important lessons about what works and what doesn’t. You can use
these lessons not only to advance that project but also on future projects to avoid
failure. Understand and accept that failure is a part of every business and be ready to
learn the lessons failure offers.

9. Be Ready to Adapt
You have to be very flexible to enter the business world. If you’re married to an idea and
not willing to adapt, your business is likely to fail if that idea doesn’t work. Even if the
idea does start out strong, the economy can shift. You may find that the approach that
worked yesterday doesn’t work at all today. Entrepreneurs who can’t adapt to changes
in the industry are not going to be able to keep ahead of the competition.

10. Listen to Your Instincts

Finally, good entrepreneurs listen to their instincts. If something doesn’t feel right, even
if you have no proof that it’s the wrong decision, you should always take another look at
the facts before committing. There’s a chance your subconscious has picked up on
something your conscious mind hasn’t. Trust these instincts. They can save you a lot of
money.

Challenges of Entrepreneurship
In a highly competitive business environment, entrepreneurs face many challenges in the pursuit
of starting a business. In a country like India, which is regarded as the hotspot of startups, the
government is trying to provide a better platform for entrepreneurs by launching programs such
as Start-up India and programs for encouraging local production such as the Make In India
program.
1. Cash Flow Management: Cash flow management is one of the most important
components of any business. Still, some entrepreneurs find it difficult to pay their bills, while
waiting for the payment to be done by the clients.
The reason for such an issue can be delayed invoicing, which is a common occurrence in the
entrepreneurial world. The time taken between work done, invoicing and receipt of payment is
significant and in that time the business has to run its daily operations, which requires money.
2. Hiring Employees: Hiring of employees is another of the major issues faced by the
entrepreneurs. It is one of the most time consuming activities and is therefore often sidelined by
the entrepreneurs.
It will be difficult for business owners to manage daily operations and simultaneously invest time
interviewing candidates.
3. Time Management: Time management is one of the most highlighted issues and for modern
entrepreneurs, it is a difficult phase as they need to perform multiple roles.
4. Delegation of Tasks: Delegation of the task is essential for the success of the business.
Finding the appropriate resource is necessary for the proper execution of the task. The process of
finding resources is somewhat complicated.
5. Choosing the product to sell: The most difficult part for an entrepreneur sometimes is
deciding the kind of product or service they want to sell.

10 MYTHS ABOUT ENTREPRENEURSHIP

Myth#1: entrepreneurs stick to their project
We all grew up being told that if you want to be successful in your life then never quit. But not
every successful person follows this unspoken rule. If you know that your business is not going
to work then you should end that project and start again with a new one. But when you are
walking toward your success then you should not quit. Sometimes ending a project leads toward
greater opportunities. If you are sure that you are walking towards your success then ‘quit’ is not
an option for you.
Myth#2: Invest in something if you want to be successful
You must invest in something if you want to become a successful entrepreneur. That is a very
wrong statement. Entrepreneurship is not about investing something, it’s about inventing
something. But all entrepreneurs are not inventors. Invention comes from creativity and to find
solutions for the problems. Sometimes solutions are already out there; you just have to find a
better one. Most entrepreneurs came with a solution for public welfare.
Myth#3: success depends on luck
So many people tell the successful entrepreneurs that, ’you are lucky’. But this is not true. To
become successful you need to do lots of research, read a lot of books, invest each minute, and
do hard work. There is no overnight success. There are hundreds of failures before success.
You have to invest your time and your money in a project and give it your 100% to make it
successful. After achieving success it is more important to maintain it. There is a lot of hard
work and patience before becoming a successful entrepreneur.
Myth#4: entrepreneurs live a very easy life
Indeed, entrepreneurs don’t have to report to superiors. Once you enter the entrepreneurship
world, you will find that it is a very demanding job. Sometimes you have to work 12 to 15 hours
a day. You can’t take any leave because it’s your own business and you can’t afford the loss.
You have to work harder than those who work 9-5 jobs.
Myth#5: entrepreneurs need a proper plan while starting a business
Some entrepreneurs may have a clear goal or plan, but the majority of entrepreneurs have no
idea how to start a business. Many times they don’t know what they may end up in.
entrepreneurship is a flexible and never-ending process. As an entrepreneur, you have to create
your future.
Myth#6: entrepreneurs are born not made
Most people stick to their job even if they hate doing it and refuse to start their own business.
They just say, ‘I am not born an entrepreneur. Entrepreneurs start from zero and become
billionaires. A person who has an open mind, courage, desire to change the world, convert a
problem into an opportunity can become an entrepreneur.
Myth#7: entrepreneurs need a big idea
Most people drop their idea just because they think it is not big enough. Amazon, Facebook,
etc. were not very big ventures when they started, they started small and grew to as big as they
currently are. Always keep in mind small stuff leads to big business. You have to work hard to
make it a big success.
Myth#8: entrepreneurs need money to start
Many would-be entrepreneurs think that you need enough cash stacked aside before starting a
business. Some businesses need huge cash but others only require a few thousand to start a
business, especially online business. So many entrepreneurs start their business in their room
without any cash
Myth#9: entrepreneurs are job-hoppers
This is not entirely correct because entrepreneurs and job-hoppers are different things. If you
are always moving from one job to another, that doesn’t mean you are an entrepreneur. It would
be more accurate to call yourself a restless soul that hasn’t found its place. If you want to be an
entrepreneur you have to stay in a field longer to become an expert.
Myth#10: entrepreneurs do not have a boss
This myth is half true. Technically you do not have a boss above you but entrepreneurs still
have at least three bosses they have to report to. If you borrowed money from an investor then
you have to send him reports every month related to your progress. Your creditors, bankers are
going to be your bosses. Your most important boss is your customer. You have to create a
strong relationship with them by providing valuable things.
Entrepreneurial Process

Definition: The Entrepreneur is a change agent that acts as an industrialist and

undertakes the risk associated with forming the business for commercial use.
An entrepreneur has an unusual foresight to identify the potential demand for
the goods and services.

The entrepreneurship is a continuous process that needs to be followed by an

entrepreneur to plan and launch the new ventures more efficiently.

Entrepreneurial Process
 
1. Discovery: An entrepreneurial process begins with the idea generation, wherein
the entrepreneur identifies and evaluates the business opportunities. The
identification and the evaluation of opportunities is a difficult task; an
entrepreneur seeks inputs from all the persons including employees,
consumers, channel partners, technical people, etc. to reach to an optimum
business opportunity. Once the opportunity has been decided upon, the next
step is to evaluate it.
An entrepreneur can evaluate the efficiency of an opportunity by continuously
asking certain questions to himself, such as, whether the opportunity is worth
investing in, is it sufficiently attractive, are the proposed solutions feasible, is
there any competitive advantage, what are the risk associated with it. Above
all, an entrepreneur must analyze his personal skills and hobbies, whether
these coincides with the entrepreneurial goals or not.

2. Developing a Business Plan: Once the opportunity is identified, an

entrepreneur needs to create a comprehensive business plan. A
business plan is critical to the success of any new venture since it acts
as a benchmark and the evaluation criteria to see if the organization is
moving towards its set goals.
An entrepreneur must dedicate his sufficient time towards its creation, the
major components of a business plan are mission and vision statement, goals
and objectives, capital requirement, a description of products and services,
etc.

3. Resourcing: The third step in the entrepreneurial process is resourcing,

wherein the entrepreneur identifies the sources from where the finance
and the human resource can be arranged. Here, the entrepreneur finds
the investors for its new venture and the personnel to carry out the
business activities.
 4. Managing the company: Once the funds are raised and the employees are
hired, the next step is to initiate the business operations to achieve the
set goals. First of all, an entrepreneur must decide the management
structure or the hierarchy that is required to solve the operational
problems when they arise.

5. Harvesting: The final step in the entrepreneurial process is harvesting

wherein, an entrepreneur decides on the future prospects of the
business, i.e. its growth and development. Here, the actual growth is
compared against the planned growth and then the decision regarding
the stability or the expansion of business operations is undertaken
accordingly, by an entrepreneur.

Factors Affecting Entrepreneurial Growth

1. Economic Factors
2. Non-Economic Factors
Economic Factors
1. Capital

Capital is one of the most important factors of production for the

establishment of an enterprise. Increase in capital investment in
viable projects results in increase in profits which help in
accelerating the process of capital formation. Entrepreneurship
activity too gets a boost with the easy availability of funds for
investment.

Availability of capital facilitates for the entrepreneur to bring

together the land of one, machine of another and raw material of
yet another to combine them to produce goods. Capital is
therefore, regarded as lubricant to the process of production.

2. Labor
Easy availability of right type of workers also effect
entrepreneurship. The quality rather than quantity of labor
influences the emergence and growth of entrepreneurship. The
problem of labor immobility can be solved by providing
infrastructural facilities including efficient transportation.

The quality rather quantity of labor is another factor which

influences the emergence of entrepreneurship. Most less
developed countries are labor rich nations owing to a dense and
even increasing population. But entrepreneurship is encouraged if
there is a mobile and flexible labor force. And, the potential
advantages of low-cost labor are regulated by the deleterious
effects of labor immobility. The considerations of economic and
emotional security inhibit labor mobility. Entrepreneurs, therefore,
often find difficulty to secure sufficient labor.

3. Raw Materials

The necessity of raw materials hardly needs any emphasis for

establishing any industrial activity and its influence in the
emergence of entrepreneurship. In the absence of raw materials,
neither any enterprise can be established nor can an entrepreneur
be emerged

It is one of the basic ingredients required for production. Shortage

of raw material can adversely affect entrepreneurial environment.
Without adequate supply of raw materials no industry can function
properly and emergence of entrepreneurship to is adversely
affected.

3. Market
 4. The role and importance of market and marketing is very
important for the growth of entrepreneurship. In modern
competitive world no entrepreneur can think of surviving in
the absence of latest knowledge about market and various
marketing techniques.

The fact remains that the potential of the market constitutes the
major determinant of probable rewards from entrepreneurial
function. Frankly speaking, if the proof of pudding lies in eating,
the proof of all production lies in consumption, i.e., marketing.

The size and composition of market both influence

entrepreneurship in their own ways. Practically, monopoly in a
particular product in a market becomes more influential for
entrepreneurship than a competitive market. However, the
disadvantage of a competitive market can be cancelled to some
extent by improvement in transportation system facilitating the
movement of raw material and finished goods, and increasing the
demand for producer goods.

5. Infrastructure

Expansion of entrepreneurship presupposes properly developed

communication and transportation facilities. It not only helps to
enlarge the market, but expand the horizons of business too. Take
for instance, the establishment of post and telegraph system and
construction of roads and highways in India. It helped
considerable entrepreneurial activities which took place in the
1850s.
Apart from the above factors, institutions like trade/ business
associations, business schools, libraries, etc. also make valuable
contribution towards promoting and sustaining entrepreneurship’
in the economy. You can gather all the information you want from
these bodies. They also act as a forum for communication and
joint action.

Non-Economic Factors
1. Education

Education enables one to understand the outside world and equips

him with the basic knowledge and skills to deal with day-to-day
problems. In any society, the system of education has a significant
role to play in inculcating entrepreneurial values.

In India, the system of education prior to the 20th century was

based on religion. In this rigid system, critical and questioning
attitudes towards society were discouraged. The caste system and
the resultant occupational structure were reinforced by such
education. It promoted the idea that business is not a respectable
occupation. Later, when the British came to our country, they
introduced an education system, just to produce clerks and
accountants for the East India Company, The base of such a
system, as you can well see, is very anti-entrepreneurial.

Our educational methods have not changed much even today. The
emphasis is till on preparing students for standard jobs, rather than
marking them capable enough to stand on their feet.

2. Attitude of the Society

A related aspect to these is the attitude of the society towards
entrepreneurship. Certain societies encourage innovations and
novelties, and thus approve entrepreneurs’ actions and rewards
like profits. Certain others do not tolerate changes and in such
circumstances, entrepreneurship cannot take root and grow.
Similarly, some societies have an inherent dislike for any money-
making activity. It is said, that in Russia, in the nineteenth century,
the upper classes did not like entrepreneurs. For them, cultivating
the land meant a good life. They believed that rand belongs to God
and the produce of the land was nothing but god’s blessing.
Russian folk-tales, proverbs and songs during this period carried
the message that making wealth through business was not right.

3. Cultural Value

Motives impel men to action. Entrepreneurial growth requires

proper motives like profit-making, acquisition of prestige and
attainment of social status. Ambitious and talented men would
take risks and innovate if these motives are strong. The strength of
these motives depends upon the culture of the society. If the
culture is economically or monetarily oriented, entrepreneurship
would be applauded and praised; wealth accumulation as a way of
life would be appreciated. In the less developed countries, people
are not economically motivated. Monetary incentives have
relatively less attraction. People have ample opportunities of
attaining social distinction by non-economic pursuits. Men with
organizational abilities are, therefore, not dragged into business.
They use their talents for non-economic end.

EDP Programmes
As the term itself denotes, EDP is a programme meant to develop
entrepreneurial abilities among the people. In other words, it refers
to inculcation, development, and polishing of entrepreneurial
skills into a person needed to establish and successfully run his /
her enterprise. 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 of EDP Programmes

a. Develop and strengthen the entrepreneurial quality, i.e.
motivation or need for achievement.

b. Analyse environmental set up relating to small industry and

small business.

 c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a

small enterprise.