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Entrepreneurial Development

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PERIYAR INSTITUTE OF DISTANCE EDUCATION
(PRIDE)

PERIYAR UNIVERSITY
SALEM - 636 011.

MASTER OF COMMERCE
III SEMESTER
ENTREPRENEURIAL DEVELOPMENT
 MASTER OF COMMERCE
III SEMESTER
ELECTIVE-3
ENTREPRENEURIAL DEVELOPMENT

Unit-I

Entrepreneurial – Meaning - Evolution and Concept - Function of Entrepreneur –

Types –Characteristics - Differentiate Manager and Entrepreneur – Entrepreneur - Behavioral
Patterns of Entrepreneurs.

Unit-II

Entrepreneurship - Meaning – Traits and Types - Importance of Entrepreneurship -

Entrepreneurial Process - Theories of Entrepreneurship - Entrepreneurial Culture and
Structure -Barriers of Entrepreneurship - Growth of Entrepreneurship in India.

Unit-III

Women Entrepreneurship – Concept - Growth and Role – Functions – Problems -

Development of Women Entrepreneurship - Rural Entrepreneurship - Need - Problems and
Development of Rural Entrepreneurship - Small Entrepreneurs.

Unit-IV

Project and Business Idea-Classification and Identification-Selection-Project Report

Significance and Contents - Project Formulation - Project Life Cycle - Project Appraisal
Methods -Project Design and Network Analysis - Sources of Project Finance.

Unit-V

Entrepreneurial Growth - Role of Government and NGO in Promoting

Entrepreneurship in India – EDPS - Role of Promotional Institutions in ED - NIESBUD-
SSIC-SIDO-SIPCOT-SIDCS-TECOS-ITCOT-DIC-NSIC-TWDC-TIIC-IIC-SFC-
Development Bank and Commercial Bank-Future of Entrepreneurs.

Note:Question Paper Shall Cover 100% Theory

References

1. Entrepreneurial Development – S.S.Khanka– S.ChandandCompany Ltd.

2. Entrepreneurship Development in India – C.B.Guptaand N.P.Srinivasan– Sultan
Chand
3. Entrepreneurship – Bruce R.Barringer, R.Duane Ireland – Pearson Education.
4. Entrepreneurial Development – Jayashree Suresh – Margam Publication.
5. Entrepreneurial Development – RenuAroraand S.K.Sood– Kalyani Publication.
 CONTENT

Unit Topic Page No.

Entrepreneurial - Meaning - Evolution and Concept -

Function of Entrepreneur - Types - Characteristics -
1 1-47
Differentiate Manager and Entrepreneur - Entrepreneur -
Behavioral Patterns of Entrepreneurs.

Entrepreneurship Meaning - Traits and Types - Importance

of Entrepreneurship - Entrepreneurial Process - Theories of
2 Entrepreneurship - Entrepreneurial Culture and Structure 48-98
Barriers of Entrepreneurship - Growth of Entrepreneurship
in India.

Women Entrepreneurship - Concept - Growth and Role -

Functions - Problems Development of Women
3 Entrepreneurship - Rural Entrepreneurship Need - 99-139
Problems and Development of Rural Entrepreneurship
- Small Entrepreneurs.

Project and Business Idea - Classification and Identification

– Selection - Project Report Significance and Contents -
4 Project Formulation - Project Life Cycle - Project Appraisal 140-179
Methods - Project Design and Network Analysis - Sources
of Project Finance.

Entrepreneurial Growth - Role of Government and NGO in

Promoting Entrepreneurship in India - EDPS Role of
Promotional Institutions in ED – NIESBUD – SSIC –
5 180-213
SIDO – SIPCOT – SIDCS – TECOS – ITCOT – DIC –
NSIC – TWDC - TIIC - IIC – SFC - Development
Bank and Commercial Bank - Future of Entrepreneurs.
 UNIT – I

ENTREPRENEURIAL DEVELOPMENT

Entrepreneurial development today has become very significant; in view of its

being a key to economic development. The objectives of industrial development,
regional growth, and employment generation depend upon entrepreneurial
development. Entrepreneurs are, thus, the seeds of industrial development and the
fruits of industrial development are greater employment opportunities to unemployed
youth, increase in per capita income, higher standard of living and increased
individual saving, revenue to the government in the form of income tax, sales tax,
export duties, import duties, and balanced regional development.

Learning Objectives

Having gone through this lesson, you may be able to:

Understand the concepts of entrepreneurship, its need and scope, understand

the meaning of term entrepreneur, classification of entrepreneur and qualities of an
entrepreneur, appreciate the concept of innovation

Unit Structure

 Meaning of entrepreneurial
 Evolution of the concept of entrepreneur
 Meaning and definition of entrepreneur
 Characteristics of an entrepreneur
 Qualities of an entrepreneur
 Functions of entrepreneur
 Types of entrepreneurs
 Factors influencing entrepreneurial development
 Entrepreneurs in economic development
 Entrepreneurial process
 Importance of entrepreneurs
 Difference between entrepreneur and manager

1
  Entreprenneurial competencies

1.1 MEANING OF ENTREPRENEURIAL

It is not just about starting a business, or spinning out a company from

research. It’s a mindset, or a way of thinking. Entrepreneurs just think and do things
differently. You can be entrepreneurial even if you are working for someone else, with
the buzzword “intrapreneurial” highlighting the desire of employers to have
adaptable, flexible employees who can think for themselves. Being entrepreneurial
can mean knowing your industry inside out, and being able to exploit that knowledge
to create new opportunities. Being entrepreneurial can mean sharing ideas freely, and
celebrating so-called failures as learning and growing experiences. Being
entrepreneurial can mean simply thinking outside of the box, and expecting the
unexpected. The Garage Group have a great list of other ways someone can be
entrepreneurial.

Entrepreneurial thinking can manifest itself in many ways, whether it is the

hard-core serial entrepreneur who has developed a range of business ideas, or the
social entrepreneur using technology to empower women in India, or artists using
their work to raise awareness of social injustice or inequality. Entrepreneurial thinking
enables people to be flexible, adaptable, and see opportunities.

The Periyar University has a great post called “Learn to Think Like an
Entrepreneur”, which gives some great examples of how students and researchers can
use entrepreneurial thinking in their research:

2
 1. Think ahead – Where do you want to be in 5/10/20 years? Entrepreneurs are
good at thinking in the present, but also try and have a vision of the future.
2. Working across disciplines – Think about the broader picture and the impact
of your research. Entrepreneurs see opportunities in not-so-obvious places, and
are often able to find a way to exploit them.
3. Develop transferrable skills – Think about the skills you have and how they
can be applied to different situations. Entrepreneurs often must have a breadth
of transferrable skills, being the developer, marketer, salesman and accountant
for their idea.
4. Meeting people – Growing a network is important for both entrepreneurs and
students or researchers. Meeting people from other walks of life allow you to
have a broader perspective and allows you to connect with others who may be
able to help you or be helped by you in the future.
5. Mentors – Mentors will help an entrepreneur or student to visualize a goal or
pathway, giving advice and guiding the mentee on a path which is beneficial.
6. Be in Charge of Your Own Destiny – Entrepreneurs are generally agile and
adaptable, working around issues and finding new ways where necessary.
Researchers and students need to have the same flexibility, working towards a
goal, but being able to adapt to changing circumstances.

According to George Bernard Shaw, people fall into three categories: (i) those
who make things happen. (2) Those who watch things happen, and (3) those who are
left to ask what did happen. Generally, entrepreneurs fall under the first category.

1.2 EVOLUTION OF THE CONCEPT OF ENTREPRENEUR

The word ‘entrepreneur’ is derived from the French word entreprendre. It

means ‘to undertake’.Thus, entrepreneur is the person who undertakes the risk of new
enterprise. Its evolution is as follows.

 EARLY PERIOD: The earliest definition of the entrepreneur as a go-between

is Marco Polo. He tried to establish trade route to the far East. He used to sign a
contract with a venture capitalist to sell his goods. The capitalist was the risk
bearer. The merchant adventurer took the role of trading. After his successful
3
 selling of goods and completing his trips, the profits were shared by the
capitalist and the merchant.
 MIDDLE AGES: The term entrepreneur was referred to a person who was
managing large projects. He was not taking any risk but was managing the
projects using the resources provided. An example is the cleric who is in charge
of great architectural works such as castles, public buildings, cathedrals etc.
 17thCENTURY: An entrepreneur was a person who entered into a contractual
arrangement with the Govt. to perform a service or to supply some goods. The
profit was taken (or loss was borne) by the entrepreneur.
 18thCENTURY: It was Richard Cantillon, French Economist, who applied the
term entrepreneur to business for the first time. He is regarded by some as the
founder of the term. He defined an entrepreneur as a person who buys factor
services at certain prices with a view to sell them at uncertain prices in the
future
 19thCENTURY: The entrepreneurs were not distinguished from managers.
They were viewed mostly from the economic perspective. He takes risk,
contributes his own initiative and skills. He plans, organizes and leads his
enterprise.
 20thCENTURY: During the early 20th century Dewing equated the
entrepreneur with business promoter and viewed the promoter as one who
transformed ideas into a profitable business. It was Joseph Schumpeter who
described an entrepreneur as an innovator. According to him an entrepreneur is
an innovator who develops untried technology.
 21stCENTURY: Research Scientists live De Bone pointed out that it is not
always important that an individual comes up with an entirely new idea to be
called an entrepreneur, but if he is adding incremental value to the current
product or service, he can rightly be called an entrepreneur.

The Future of entrepreneurship will be growth with development of

technologies. The modern technologies and internet have improved the ways of
conduct business. Entrepreneurs now have the luxury of putting their business idea
into action through the click of button.
4
1.3 MEANING AND DEFINITION OF ENTREPRENEUR

An entrepreneur is ordinarily called a businessman. He is a person who

combines capital and labour for the purpose of production. He organizes and manages
a business unit assuming the risk for profit. He is the artist of the business world.

In the words of J.B. Say, “An entrepreneur is one who brings together the
factors of production and combines them into a product”. He made a clear distinction
between a capitalist and an entrepreneur. Capitalist is only a financier. Entrepreneur is
the coordinator and organizer of a business enterprise. Joseph A Schumpeter defines
an entrepreneur as “one who innovates, raises money, assembles inputs and sets the
organization going with the ability to identify them and opportunities, which others
are not able to fulfil such economic opportunities”. He further said, “An entrepreneur
is an innovator playing the role of a dynamic businessman adding material growth to
economic development”.

The word “Entrepreneur” is derived from the French word “Entrepreneurdy”,

which means to undertake Entrepreneur refers to a person who establishes his own
business or industrial undertaking with a view to making profit. An entrepreneur is
consider to be an originator of a business venture he takes the role of an organizer in a
process of production.

DEFINITION

According to Peter Drucker “entrepreneur is one who always searcher for

change, response to it and exploits it has an opportunity. Innovation is a specific tool
of entrepreneur, the means by which they exploit changes as an opportunity for
different business or services.”

According to Webster, “entrepreneur is one who assumes risk and management

of business.”

1.4 CHARACTERISTICS OF AN ENTREPRENEUR

Innovation: Entrepreneurship is a creative activity by means of team work,

which innovate new methods, techniques, produces, processes, new sources of raw

5
materials and commodities. The process of innovation results in entrepreneurship
development.

Risk Taking: The performance of an enterprise is the outcome of risk bearing

by the entrepreneur. The risk taking is the reward which enables the entrepreneur to
maxim mum his profits.

Decision Making: In addition to the innovation, entrepreneur has to take

appropriate decisions under uncertainty. This decision making activity is one of the
important features of entrepreneurship

Organization: Building an organization requires lots of skills and one can

build an organization effectively by delegating responsibility to others. Here, the
entrepreneurs should be good leaders. Entrepreneurship lays more emphasis on skills
and creative.

Skillful Management: The entrepreneur usually lacks managerial and

technical know-how as well as marketing, production and personnel management
skills. Managerial skills and leadership are the most important characteristics of
entrepreneurship.

Accepting Challenges: One of the important features of entrepreneurship is to

accepting the challenges with a view to exist in the competitive globalize economy.

Resource Mobilization: An entrepreneur’s job is to fill the gaps through

mobilization of resources. An entrepreneur has to marshal all the inputs to release
final products.

Earning Profits: Profit is the reward of risk-taken by an entrepreneur. Higher

the rate of risk, more the profits. The performance and existence of the
entrepreneurship is measured is the form of profits.

Making the Enterprise a Success: The succession of an enterprise depends

upon the efficiency and effectiveness of entrepreneurs traits. The entrepreneurship
will operate with more productive capacity by implementing such trials in appropriate
manner.

6
 Team Work: Team work is the important phenomena for the success of an
entrepreneurship. It is the contribution of group of individuals working collectively in
the enterprise for attainment of specific objective.

1.5 QUALITIES OF AN ENTREPRENEUR

Risk-taker: The performance of an enterprise is the outcome of risk bearing by

the entrepreneur. The risk taking is the reward which enables the entrepreneur to
maxim mum his profits.

Innovator: Entrepreneurship is a creative activity by means of team work,

which innovate new methods, techniques, produces, processes, new sources of raw
materials and commodities. The process of innovation results in entrepreneurship
development.

Organizer: Building an organization requires lots of skills and one can build
an organization effectively by delegating responsibility to others. Here, the
entrepreneurs should be good leaders. Entrepreneurship lays more emphasis on skills
and creative.

Creator: Creativity, as a field knowledge, seeks to explain how humans, either

individuals, reach solutions that are both novel and useful. Innovation means the
effort to create purposeful ventures.

Self-Confident: It is necessary for an entrepreneur to be self confident. He

should have faith I himself, only then the he can trust others.

Optimistic: An entrepreneur should approach his take with a hope of success

and optimistic attitude. He attempts any task with the hope that he will succeed rather
than with a fear of failure. Such a hope of success enhances his confidence and drives
him towards success.

Decision-maker: In addition to the innovation, entrepreneur has to take

appropriate decisions under uncertainty. This decision making activity is one of the
important features of entrepreneurship

7
 Business Planning: Planning is really nothing more than decision making that
is, deciding what to do how to do and when to do. It is vital for the success of a
business. As a business person puts it planning.

Courage to Face Adversities: Entrepreneurs face the adversities boldly and

bravely. They refuse to be beaten and become tougher during adverse situations.
They have faith I themselves and attempt to solve the problems even under pressure.
Every unpredictable situation is a challenge before them hich they overcome and
survive through.

Leadership: Leadership is the process of influencing and supporting others to

work enthusiastically towards achieving objectives. It is a critical factor that not only
helps an entrepreneur to identify his goals but also motivates and assists him in
achieving then stated goals.

Other Good Qualities:

• Technical competence

• Good judgment and intelligence

• Honesty and sincerity

• Enable to delegate authority

• Ability to criticize

• Aggressiveness

• Imagination

• Passions

1.6 FUNCTIONS OF ENTREPRENEUR

Production planning functions: Production denotes the activity of creating

goods and services. In practical life production means industrial activities involving
manufacturing, mining, processing, packaging etc., Production planning involves the
organization of an overall manufacturing system to produce a product.

8
 Marketing Functions: Marketing is the performance of business activities that
direct the flow of goods and services from the producer to the consumer. The
marketing functions of an entrepreneur necessary to determine consumer wants,
needs, taste and fashions to supply goods and services.

Public Relations Functions: Public relations of an entrepreneur are in the

form of dealing with public bureaucracy, customer and supplier relations and human
resources management.

Controlling Functions: Controlling is determining what is being

accomplished, that is evaluating the performance and if necessary, applying corrected
measures. So, that the performance takes place according to plan.

Decision making Functions: Decision making is both managerial function and

an organizational process. It is process of choosing between alternative to achieve a
goal. The entrepreneur considers three major stages of decision making activities.
Intelligence, Design & choice activity.

Motivate Functions: The entrepreneur is capable of inspiring confidence in

people, and has the ability to motivate them to work with him fulfilling the
economical goals set by him.

Innovative Functions: An entrepreneur is an innovator who introduces

something new in an economy. Innovation involves problem solving and an
entrepreneur is a problem solver. An entrepreneur does things in a new and better
way.

Leadership Functions: The entrepreneur is also a leader. He influences others

for the achievement of a goal in a given situation. Entrepreneur has two important
leadership functions, Function to incorporate interpersonal competence & Function to
incorporate administrative competence.

Financial Functions: Financial decision of an entrepreneur is a two

dimensional aspect. One dimensional of the financing decision whether there is an
optimum capital structures and in what proportion should funds be raised to maximum

9
the returns? The second aspect of the financing decision is the determination of the
appropriate capital structure.

Technological Functions: The entrepreneur’s technological functions are in

the form of Industrial Engineering & Upgrading Production Processes and product
quality.

Project Functions: A project is a one time, time bound and objective oriented
major effort involving the coordination of various skills and resources. A potential
entrepreneur can gather a number of project opportunities from the wide variety of
sources.

Profit Function: Knight identifies the entrepreneur as a recipient of pure

profit. Pure profit, in the words of Knight, with regard to the entrepreneur, is bearing
the cost of uncertainly. The entrepreneur must identify the profit functions.

1.7 TYPES OF ENTREPRENEURS

ACCORDING TO CLASSIFICATION GIVEN BY DANHOF

a) Innovating Entrepreneur

Innovating entrepreneur are generally aggressive and possess the art of cleverly
putting the attractive possibilities into practice. An innovating entrepreneur is one who
introduces new goods, inaugurates new methods of production, and discovers new
market.

b) Imitative Entrepreneurs

Imitative entrepreneurs are characterized by readers to adapt successful innovator in

aggregated by successful imitating entrepreneur. Imitative entrepreneurs do not
imitate the changes themselves, they only imitate techniques and technologies
innovated by others.

c) Fabian Entrepreneurs

Fabian entrepreneur are cautions and skepticism in experimenting any change in their
enterprises. Their dealing are determined by custom, religion, and tradition and past

10
practices. They are not interested in taking risks and they try to follow the footsteps of
their predecessors.

d) Drone Entrepreneurs

They are characterized by their refusal to utilize opportunities to make changes in

production. Such entrepreneurs may even suffer loss, but they do not make changes in
production method.

ACCORDING TO THE TYPE OF BUSINESS

a) Business Entrepreneurs

Business entrepreneurs are those entrepreneurs who conceive the idea of a new
product or service and then translate their ideas into reality. An entrepreneur examines
the various possibilities of sources of finance, supply of labour, raw materials or
finished product as the case may be.

b) Trading Entrepreneurs

Trading entrepreneurs is concerned with trading activities and not manufacturing.

Trading means the finished product from the producer and selling off to the customers
directly or through a retailer.

c) Industrial Entrepreneurs

An industrial entrepreneur has one who setup an industrial unit. He perceives the
opportunity to setup his unit, complete with necessary formalities of getting license,
power connection etc. An industrial entrepreneur has the ability to convert economic
resources and technology into a considerably profitable venture.

d) Corporate Entrepreneurs

Corporate entrepreneur is the one who plans, develop and manage a corporate body.
He is a promoter, an essential part of board of directors, an owner as well as an
entrepreneur. He get his corporate body registered under the requisites at which gives
his company the status at separate legal entity.

ACCORDING TO MOTIVATION

11
 a) Pure Entrepreneurs

Pure entrepreneurs are one who may or may not possess an aptitudes for
entrepreneurship but it is tempted by the monetary rewards or profit to be earned from
the business venture. He is status conscious and wants.

b) Induced Entrepreneurs

Induced entrepreneurs are attracted by the various incentives, subsidiaries and

facilities offered by the government. “An entrepreneur is not born”. This is not doubt
true as every person can be trained to become a good entrepreneur.

ACCORDING TO THE USE OF TECHNOLOGY

a) Technical Entrepreneurs

The strength of a technical entrepreneur is in his skill in production techniques. He

concentrates more on production than on marketing he possess skill in himself which
he applies to develop and to improve the technical aspect of the product.

b) Non-Technical Entrepreneurs

Non-technical entrepreneurs is not concerned with the technical aspects of the product
rather he spends more time in developing alternatives strategies of the marketing and
distribution to promote his business.

c) Professional Entrepreneurs

Professional entrepreneurs means an entrepreneurs who is interested in floating a

business but does not want to manage it.

ACCORDING TO STAGES OF DEVELOPMENT

a) First Generation Entrepreneurs

First generation entrepreneurs are those entrepreneurs who do not possess any
entrepreneurial back ground. They start an industrial unit by means of their own skill.

b) Second Generation Entrepreneurs

12
Second generation entrepreneurs are those entrepreneurs who inherit the family
business firms and pass it from one generation to another.

c) Classical Entrepreneurs

Classical entrepreneurs aim to maximize his economic returns at a level constant with
the survival of the unit, but with or without an element of growth.

ACCORDING TO CAPITAL OWNERSHIP

a) Private Entrepreneurs

When an individual or a group of individual set up an enterprise, arrange finance, bear

the risk and adopt the latest techniques in the business with the intention to earn profit,
he or the group is called as private entrepreneurs.

b) State Entrepreneurs

State entrepreneur’s means the trading or industrial venture undertake by the state or
the government itself

c) Joint Entrepreneurs

Joint entrepreneurs mean the combination of private entrepreneurs and state

entrepreneurs who joint hands.

ACCORDING TO TYPE OF PROFESSIONAL

a) Trading Entrepreneur

As the name itself suggests, the trading entrepreneur undertake the trading activities.
They procure the finished products from the manufacturers and sell these to the
customers directly or through a retailer. These serve as the middlemen as wholesalers,
dealers, and retailers between the manufacturers and customers.

b) Manufacturing Entrepreneur

The manufacturing entrepreneurs manufacture products. They identify the needs of

the customers and, then, explore the resources and technology to be used to

13
manufacture the products to satisfy the customers’ needs. In other words, the
manufacturing entrepreneurs convert raw materials into finished products.

c) Agricultural Entrepreneur

The entrepreneurs who undertake agricultural pursuits are called agricultural

entrepreneurs. They cover a wide spectrum of agricultural activities like cultivation,
marketing of agricultural produce, irrigation, mechanization, and technology.

ACCORDING TO GENDER AND AGE

a) Men Entrepreneur

When business enterprises are owned, managed, and controlled by men, these are
called ‘men entrepreneurs.’An entrepreneurial mindset is strongly associated with
being creative and a pioneer, who easily comes up with multiple ideas and business
opportunities.

b) Women Entrepreneur

Women entrepreneurs are defined as the enterprises owned and controlled by a

woman or women having a minimum financial interest of 51 per cent of the capital
and giving at least 51 per cent of employment generated in the enterprises to women.

c) Young Entrepreneur

A young entrepreneur is a child or young adult who finds opportunities to start and
operate a business.A person starting a new company who takes on the risks associated
with starting the enterprise, which may require venture capital to cover start-up costs.

d) Old Entrepreneur

The entrepreneurs those who are doing their business activities in the age of 60 and
above are called as Od entrepreneurs. Nearly a quarter of new entrepreneurs are
boomers aged 55 to 64. They have experience, financial stability and extensive
networks.

ACCORDING TO SIZE OF ENTERPRISE

14
 a) Small-Scale Entrepreneur

An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore
is called ‘small-scale entrepreneur.’

b) Medium-Scale Entrepreneur:

The entrepreneur who has made investment in plant and machinery above Rs 1.00
crore but below Rs 5.00 crore is called ‘medium-scale entrepreneur.’

c) Large-Scale Entrepreneur

The entrepreneur who has made investment in plant and machinery more than Rs 5.00
crore is called ‘large-scale entrepreneur.’

SOME MORE TYPES OF ENTREPRENEURS

a) Solo Operators

These are the entrepreneurs who essentially work alone and, if needed at all, employ a
few employees. In the beginning, most of the entrepreneurs start their enterprises like
them.

b) Active Partners

Active partners are those entrepreneurs who start/ carry on an enterprise as a joint
venture. It is important that all of them actively participate in the operations of the
business. Entrepreneurs who only contribute funds to the enterprise but do not actively
participate in business activity are called simply ‘partners’.

c) Inventors

Such entrepreneurs with their competence and inventiveness invent new products.
Their basic interest lies in research and innovative activities.

d) Challengers

These are the entrepreneurs who plunge into industry because of the challenges it
presents. When one challenge seems to be met, they begin to look for new challenges.

e) Buyers
15
These are those entrepreneurs who do not like to bear much risk. Hence, in order to
reduce risk involved in setting up a new enterprise, they like to buy the ongoing one.

f) Life-Timers

These entrepreneurs take business as an integral part to their life. Usually, the family
enterprise and businesses which mainly depend on exercise of personal skill fall in
this type/category of entrepreneurs.

1.8 FACTORS INFLUENCING ENTREPRENEURIAL DEVELOPMENT

1. ECONOMIC FACTORS:

Capital, labour, raw materials and market are the main economic factors.

a) Capital: Capital is one of the most important prerequisites to establish an

enterprise. Availability of capital helps an entrepreneur to bring together the
land of one, machine of another and raw material of yet another to combine
them to produce goods. Therefore, capital is regarded as lubricant to the
production process. Basically, capital is the life blood of any activity. If capital
is available, people who have innovative ideas would like to put them into
reality. Without having any obstacles, if capital is available, it will act as a
lifeline to entrepreneurs. So, if capital is available, entrepreneurial activities
will increase.
b) Labour: The quality and quantity of labour is another factor which influences
the emergence of entrepreneurship. Availability of labour makes
entrepreneurship attractive. More than abundantly available labour, the
presence of skilled labour force is very important because such a workforce is
generally less mobile than other resources. If entrepreneurial activities are
initiated near areas where labour is available, then it is easy to carry out the
business more comfortably and profitably at low cost. This is why one finds
textile units and machine tools manufacturing industries concentrated in certain
cities like Coimbatore, Tiruppur, Ludhiana, Rajkot, Baroda, etc. just because of
availability of skilled labour force required for such units.

16
 c) Raw Materials: Raw materials are required for establishing any industrial
activity and therefore has an influence in the emergence of entrepreneurship. In
the absence of raw materials, neither any enterprise can be established nor an
entrepreneur can emerge. In some cases technological innovations can
compensate for raw material inadequacies. The supply of raw materials is not
influenced by themselves but becomes influential depending upon other
opportunity conditions. The more favourable these conditions are, the more
likely is the raw material to have its influence on entrepreneurial emergence.
d) Market: It is not only the availability of capital, labour and raw materials but a
readily available market that attracts entrepreneurial activities. Ultimately, it is
the market that fetches revenue for any business. If sufficient market is not
there, people will naturally hesitate to do business in a sector where there is no
market. In addition to market opportunities, it is equally important to ensure
future market opportunities for the emergence of entrepreneurial activities.

2. SOCIAL FACTORS:

Development of entrepreneurship in a society may take place not just because

of better economic factors but because of the presence of positive social factors. The
following social factors influence the development of entrepreneurship in a society.

a) Social norms and values: A society sets certain norms and values for the
behaviour of people who are part of that society. If people violate or overstep
these norms and values, certain restrictions are likely to be imposed on them.
As a result, many people are forced to accept certain types of jobs and tasks
that reflect the social environment. If the society has an open and flexible
approach towards various types of jobs and works, then people will feel free to
do whatever they like and even go in for innovation and creativity. When there
is more openness and flexibility, entrepreneurship will not only emerge but also
thrive.
b) Role models: Societies that celebrate entrepreneurship and felicitate successful
entrepreneurs in a way encourage many future generations to take up
entrepreneurial activities. This is because successful businessmen prove to be

17
 role models for the society at large. For instance, states like Gujarat,
Maharashtra and to some extent Tamil Nadu and Haryana have experienced
better industrial development as a result of higher concentration of
entrepreneurs compared to lesser industrialised states such as Orissa,
Chattisgarh, Madhya Pradesh and other Northeastern states.
c) Social pressure: At times, entrepreneurship can emerge in a society due to
social restriction too. If a society is orthodox, close and imposes a lot of
restrictions, then it is likely to backfire. People who are at the receiving end are
likely to react strongly and go in for change. In other words, because of
negative pressure, more number of people would like to become entrepreneurs
as a means of improving their status. It has been noticed that where people
were marginalised, they became entrepreneurs just to prove their abilities and
establish an identity in the society.
d) Respect and Status: If societies accord recognition and respect to people who
dare to do something different and creative, it proves to be an encouragement
for others to do something enterprising. Therein lies the emergence of
entrepreneurship. In the traditional societies, people were looked down upon
rather than encouraged for deviating from the set norms or regular occupation.
This means there was no respect for change. Thus, societies where there is
respect and recognition for people to do something different are more likely to
see the development of entrepreneurial activities.
e) Security: The view regarding role of social security in encouraging
entrepreneurship development is rather divided. One school of thought is of the
view that people are more prone to take entrepreneurial risks in secure social
environments. On the other hand, there are others who argue that
entrepreneurship will more likely emerge if there are turbulent conditions. In
both cases, there is scope for entrepreneurship development.

3. PSYCHOLOGICAL FACTORS

a) Need Achievement: According to David McClelland’s theory of need

achievement, a constellation of personality characteristics which are indicative

18
 of high need achievement is the major determinant of entrepreneurship
development. Therefore, if the average level of need achievement in a society
is relatively high, one would expect a relatively high amount of
entrepreneurship development in that society. McClelland gives the
psychological concept of achievement motivation to account for the differences
in response to similar conditions. Referring to the encouraging impact of
achievement motivation training programmes organised by the Small Industries
Extension Training Institute (SIET), Hyderabad McClelland argues that the
need achievement can be developed through the intensive training programmes.
b) Withdrawal of Status Respect: E.E. Hagen attributed the withdrawal of status
respect of a group to the genesis of entrepreneurship. Giving a brief sketch of
history of Japan, he concludes that she developed sooner than other non-
Western society except Russia due to two historical differences. First, Japan
had been free from ‘colonial disruption’ and secondly, the repeated long
continued withdrawal of expected status from important groups (Samurai) in
her society drove them to retreatism which caused them to emerge alienated
from traditional values with increased creativity. This very fact led them to the
technological progress entrepreneurial roles.

4. GOVERNMENT ACTIONS

The government by its actions or failure to act also does influence both the
economic and non-economic factors for entrepreneurship. Any interested Government
in economic development can help, through its clearly expressed industrial policy,
promote entrepreneurship in one way or other. By creating basic facilities, services
and utilities and by providing incentives and concessions, the Government can provide
the prospective entrepreneurs a facilitative socio-economic setting. Such conducive
setting minimises the risks which the entrepreneurs are to face. Thus, the supportive
actions of the Government appear as the most conducive to the entrepreneurial
growth. This is true of the Indian entrepreneurs also.

19
1.9 ENTREPRENEURS IN ECONOMIC DEVELOPMENT

Economic development essentially means the process of upward change where

by the real per capita income of a country increases over a period of
time.Entrepreneurship plays a vital role in economic development. Entrepreneurs
initiate and sustain the process of economic development in following ways.

1. Capital Formation

Entrepreneurs mobilize the idle saving of the public through the issues of industrial
securities. Investment of public savings in industry results in productive utilization of
national resources. Thus an Entrepreneur is a creator of wealth.

2. Improvement in per capita income

Entrepreneurs locate and exploit opportunities. They convert the latent and idle
resources like land, labor and capital in to national income and wealth in the forms of
goods and services. They help to increase Net National product and per capita income
of the country.

3. Generation of employment

Entrepreneurs generate employment both directly and indirectly. Directly, self –

employment as an Entrepreneur offers the best way for independence and honorable
life. Entrepreneurs help to reduce the unemployment problem in the country.

4. Balanced regional development

Entrepreneurs in the public sector help to remove regional disparities in economic

development. They set up industries in backward areas to avail of the various
concessions and subsidies offered by the central and state governments. Public sector
steel plants and private sector industries by Modis, Tatas, Birlas and others have put
the hither to unknown places on the international map.

5. Improvement in living standards

Entrepreneurs set up industries which remove scarcity of essential commodities and

introduce new product. Production of mass scale and production of handicrafts etc in

20
small scale sector helps to improve the standard life of a common man.

6. Economic independence

Entrepreneurship is essential for national self – reliance. Industries help to

manufacture indigenous substitute of imported products there by reducing dependence
on foreign countries.

7. Backward and forward linkages

An Entrepreneur initiates change which has a chain reaction. Setting up of enterprise

has several backward and forward linkages. Entrepreneurs create an atmosphere of
enthusiasm and convey a sense of purpose. They give an organization its momentum.
Entrepreneurial behavior is critical to long term vitality of every economy.

1.10 ENTREPRENEURIAL PROCESS

Entrepreneurship is a process, a journey, not the destination; a means, not an

end. All the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet
(Hathaway), Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE)
GD Birla, Jamshedji Tata and others all went through this process.

Figure: The Entrepreneurial Process

21
 To establish and run an enterprise it is divided into three parts – the
entrepreneurial job, the promotion, and the operation. Entrepreneurial job is restricted
to two steps, i.e., generation of an idea and preparation of feasibility report. In this
article, we shall restrict ourselves to only these two aspects of entrepreneurial process.

1. Idea Generation:

To generate an idea, the entrepreneurial process has to pass through three

stages:

a. Germination

This is like seeding process, not like planting seed. It is more like the natural seeding.
Most creative ideas can be linked to an individual’s interest or curiosity about a
specific problem or area of study.

b. Preparation

Once the seed of interest curiosity has taken the shape of a focused idea, creative
people start a search for answers to the problems. Inventors will go on for setting up
laboratories; designers will think of engineering new product ideas and marketers will
study consumer buying habits.

c. Incubation

This is a stage where the entrepreneurial process enters the sub-conscious

intellectualization. The sub-conscious mind joins the unrelated ideas so as to find a
resolution.

2. Feasibility study:

Feasibility study is done to see if the idea can be commercially viable.

It passes through two steps:

a. Illumination

After the generation of idea, this is the stage when the idea is thought of as a realistic
creation. The stage of idea blossoming is critical because ideas by themselves have no

22
meaning.

b. Verification

This is the last thing to verify the idea as realistic and useful for application.
Verification is concerned about practicality to implement an idea and explore its
usefulness to the society and the entrepreneur.

CHARACTERISTICS OF SUCCESSFUL ENTREPRENEUR

1. Curiosity

Successful entrepreneurs have a sense of curiosity that allows them to

continuously seek new opportunities. Rather than settling for what they think they
know, curious entrepreneurs ask challenging questions and explore different
avenues.In Entrepreneurship Essentials, entrepreneurship is described as a “process of
discovery.”Without the drive to continuously ask questions and challenge the status
quo, valuable discoveries can easily be overlooked.

2. Structured Experimentation

Along with curiosity comes the need for structured experimentation. With each
new opportunity that arises, an entrepreneur must run tests to determine if it’s
worthwhile to pursue.For example, if you have an idea for a new product or service
that fulfills an underserved demand, you’ll have to ensure customers are willing to pay
for it. To do so, you’ll need to conduct thorough market research and run meaningful
tests to validate your idea and determine whether it has potential.

3. Adaptability

The nature of business is ever-changing. Entrepreneurship is an iterative

process, and new challenges and opportunities present themselves at every turn. It’s
nearly impossible to be prepared for every scenario. Entrepreneurs need to evaluate
situations and adapt so their business can keep moving forward when unexpected
changes occur.

4. Decisiveness

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 To be successful, an entrepreneur has to make difficult decisions and stand by
them. As a leader, they’re responsible for guiding the trajectory of their business,
including every aspect from funding and strategy to resource allocation.Being decisive
doesn’t always mean having all the answers. If you want to be an entrepreneur, it
means having the confidence to make challenging decisions and see them through. If
the outcome turns out to be less than favorable, the decision to take corrective action
is just as important.

5. Team Building

A great entrepreneur is aware of their strengths and weaknesses. Rather than

letting shortcomings hold them back, they build well-rounded teams that complement
their abilities.In many cases, it’s the entrepreneurial team, rather than an individual,
that drives a venture toward success. When starting your own business, it’s critical to
surround yourself with teammates who have complementary talents and contribute to
a common goal.

6. Risk Tolerance

Entrepreneurship is often associated with risk. While it’s true that launching a
venture requires an entrepreneur to take risks, they also need to take steps to minimize
it.While many things can go wrong when launching a new venture, many things can
go right. The key, according to Entrepreneurship Essentials, is for entrepreneurs to
actively manage the relationship between risk and reward, and position their
companies to “benefit from the upside.”

Successful entrepreneurs are comfortable with encountering some level of risk

to reap the rewards of their efforts; however, their risk tolerance is tightly related to
their efforts to mitigate it.

7. Comfortable with Failure

In addition to managing risk and making calculated decisions, entrepreneurship

requires a certain level of comfort with failure.It’s estimated that nearly 75 percent of
new startups fail. The reasons for failure are vast and encompass everything from a

24
flawed business model to a lack of focus or motivation. While many of these risks can
be avoided, some are inevitable.

Successful entrepreneurs prepare themselves for, and are comfortable with,

failure. Rather than let fear hold them back, the possibility of success propels them
forward.

8. Persistence

While many successful entrepreneurs are comfortable with the possibility of

failing, it doesn’t mean they give up easily. Rather, they see failures as opportunities
to learn and grow.Throughout the entrepreneurial process, many hypotheses turn out
to be wrong, and some ventures fail altogether. Part of what makes an entrepreneur
successful is their willingness to learn from mistakes, continue to ask questions, and
persist until they reach their goal.

9. Innovation

Many ascribe to the idea that innovation goes hand-in-hand with

entrepreneurship. This is often true—some of the most successful startups have taken
existing products or services and drastically improved them to meet the changing
needs of the market.Innovation is a characteristic some, but not all, entrepreneurs
possess. Fortunately, it’s a type of strategic mindset that can be cultivated. By
developing your strategic thinking skills, you can be well-equipped to spot innovative
opportunities and position your venture for success.

10. Long-Term Focus

Finally, most people think of entrepreneurship as the process of starting a

business. While the early stages of launching a venture are critical to its success, the
process doesn’t end once the business is operational.In Entrepreneurship Essentials,
it’s stated that “it’s easy to start a business, but hard to grow a sustainable and
substantial one. Some of the greatest opportunities in history were discovered well
after a venture launched.”Entrepreneurship is a long-term endeavor, and entrepreneurs
must focus on the process from beginning to end to be successful in the long run.

25
 An entrepreneur is an individual who sets up and grows a business. They
combine different factors of production (such as – land, labour and capital) to try and
create a new profitable business venture. Entrepreneurs are themselves an important
‘factor of production’ and an essential aspect of a functioning free market economy.

1.11 IMPORTANCE OF ENTREPRENEURS

Free Market Evolution

Entrepreneurs are important in a free market because they help the market
respond to changing prices and consumer preferences. For example, with the rise in
the use of the internet, an entrepreneur may see the potential to set up a new home
delivery service which uses an app for consumers to buy. Without entrepreneurs,
product markets would become static and be slow to changes in new technology and
trends

Efficiency Improvements

A successful entrepreneur may take revenue from an established business. This

can cause ‘creative destruction’ A phrase used to describe changes in the economy –
which in the short-term could lead to firms going out of business and/or job losses.
However, this potential for creative destruction also creates an incentive for an
established business to adapt and increase their own efficiency. For example, in

26
response to Uber taxi services, it created an incentive for established taxi-firms to
develop their own apps.

Dynamic Efficiency

Entrepreneurs can make radical changes and introduce new technologies which
significantly move on an industry. For example, Henry Ford’s novel use of assembly
lines enabled a drastic cut in the average cost of producing a motor car. His efficiency
savings forced other carmakers to follow suit.

New Markets

Entrepreneurs can often ‘redefine the rules’ of an established industry. For

example, in the 1990s, if you wanted to rent a room, you would scour newspaper ads
and have to make a decision based on 40 words of text. However, the new service
“Spareroom.co.uk” means you can easily scan through different possibilities and have
an opportunity to get to know your potential flatmate before you move in. This has
created a new market and new service that increases the efficiency of finding a
compatible person to live with.

A similar new product is ‘Room for help.’ Where people can rent a room in
return for providing a service such as cleaning/babysitting It was created by Ms
Rolando after she came across an advert whilst looking for a room to rent. It is an
example of how entrepreneurs often set up a business in response to their individual
need.

New Gig Economy

The new technological economy offers increased opportunities for

entrepreneurs. Low start-up costs give entrepreneurs the potential to find new niche
markets to develop. Many of the current large technological firms are relatively young
and started as small start-ups – often in someone’s room or garage.

New Values

An entrepreneur is not just about price and profit. An entrepreneur may be

motivated to enter an industry to offer a more ethical product or provide a service to a

27
community. For example, Anita Roddick set up Body Shop at a time when many
cosmetics were tested on animals. Her new set up eschewed animal testing. It proved a
successful business strategy and it soon became the industry standard. In other
situations, entrepreneurs may take a risk and provide a community service such as a
volunteer led railway – offering steam trains for tourists and locals.

MOTIVES OF ENTREPRENEURS

Profit

Profit is the biggest incentive. If the business is successful, the entrepreneur can
pay themselves a large dividend or sell the product

Income

Unemployed may feel self-employment is the best opportunity to gain an

income.

Overcome a particular Need

Sometimes, entrepreneurs set up a business to deal with a missing market. For

example, Louis Braille was completely blind – this led him to invent the braille
system to communicate and read.

Non-Financial Motives.

Mixed up with profit motive may be other objectives

Ethical Stance: An entrepreneur may wish to do a different type of business,

e.g. an organic farm which doesn’t harm the environment.

Independence: An entrepreneur may also be motivated by non-financial

factors, such as independence to work for themselves or to choose the hours and not
have to listen to another boss.

Social Entrepreneurship: Entrepreneurs don’t always act alone. They may form
partnerships with other entrepreneurs to create a stronger business or develop a social
enterprise which aims at serving the community.

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ROLE AND IMPORTANCE OF ENTREPRENEUR

1. Basis of Business

Businesses either of small scale or large scale, all have various types of disc
risks and uncertainties persisting at each step.Hence, it is said that business is the
game of risk and business is full of risk. Till a person is not ready to bear them, the
question of starting a business does not rise.

2. Organizer of the Society’s Productive Resources

An entrepreneur is the organizer of society’s productive resources.He is the

person who assembles the unused natural, physical and human resources of the
society, combines them properly, establishes effective coordination between them,
makes the economic activities dynamic, makes possible the optimum use of sources,
makes efforts for the best and maximum production at minimum cost, controls their
misuse and wastages and also creates their new utilities and work for development of
new areas and dimensions.

3. Creation of Industrial Environment

The entrepreneurs are also helpful in the creation of an industrial

environment.The industrial entrepreneurs always remain in search of industrial
opportunities and create such an environment, which inspires others also to establish
the industries by themselves establishing industrial ventures by arranging the
necessary sources, by bearing uncertainties and by performing innovations.

4. Captain of Industry

The entrepreneur is the captain of modern industries.The entrepreneur has

some important place in industries, as the captain has in the games, the general in the
army and the prime minister in the cabinet.The entrepreneur is the captain of the
industries because he only bears the risks and uncertainties, but he is also the manager,
predictor, inventor of new production methods and the builder of economic structure
to maximize profits on one side.

5. Removal of Poverty

29
 The people remain in the grip of a vicious circle of poverty if adequate
Industrial Development lacks in any country.But, the entrepreneur increases
employment opportunities by establishing new industries, also increase per capita
income and rate of capital investment, utilize innovations in various fields, establish
effective coordination between sources and manage the economic affairs with
efficiency.

6. Assists in Removing Regional Disparities

Regional disparities weaken the country and are an obstacle in the overall
industrial development.However, the entrepreneur plays important role in the removal
of these regional imbalances, reason being that he establishes new industries in the
backward areas of the country and also makes their development and expansion,
through the governments of the country also provide special rebates, concessions, and
subsites for establishment of industries in undeveloped and backward areas.

7. Increases in Employment Opportunities

The Entrepreneur creates maximum employment opportunities in the society,

by way of establishing new industries, developing and expending the existing
industries, and undertaking innovative activities.As a result, unemployed persons in
society get opportunities for employment. Accepting it,“The entrepreneur makes
available employment opportunities in development-oriented countries.”

8. Encouragement to Investigation and Research

Since the main function of the entrepreneur in the developed Nations is to carry
out innovations, the entrepreneur encourages new techniques of production, takes
risks in using new machinery and equipment, develops the scientific approach and
develops new markets also.As a result, investigations, and Research get
encouragement, which ultimately benefits society.

9. Search of New markets and Development of Existing Markets

The entrepreneur does not feel satisfied with the existing market products but
continuously goes on searching for new markets for sale promotion and also develops

30
the markets.Besides, an entrepreneur is also regularly occupied in developing and
expanding the existing markets.

10. Development of New Production Techniques

The entrepreneur does not feel contended only with the existing techniques of
production. Hence, he carries out various experiments for saving time, labor and
capital in the production, as also to improve the variety and quality of the product and
service. He also arranges research and uses methods like management by changes, etc.
As a result, consumers regularly get good quality products and low prices.I cause
improvements and a rise in the living standards of the consumers.

11. Helpful in Changing the Social Structure

Since the entrepreneur remains attempting in executing innovations in each

area and activity and at all levels, inclination towards the scientific approach, logic,
changes, and inventions develops in the society and hence people easily get ready to
accept the changes in unfair traditions, customs, superstitions, and social evils, etc.

12. Contribution to the Execution of Government Policies

The entrepreneurs provide an important contribution in implementing

government policies and achieving the national goals.The entrepreneurs cooperate
with the government for implementations of development plans of the country, for
establishing a balance between imports and exports and for encouraging balanced
development.Thus, the entrepreneurs widen the path of development by joining hands
with the government.

13. Optimum Utilisation of Resources

The entrepreneur makes optimum utilization of natural and human resources

available in the country.Like natural wealth, raw materials, Minerals, and human
skills, etc.Not only that, but the entrepreneurs also enhance national productivity by
efficient utilization of unused resources, with their managerial skills.The entrepreneur
shifts the economic resources from low productivity areas to high productivity areas.

14. Role in Social Responsibilities

31
 The industries are being established, due to assuming responsibility by
entrepreneurs.The regional imbalance is also improving. New avenues of employment
are opening, various new commodities and services are being produced and
distributed and the consumers are getting these at the lowest possible cost and the
economic social problems are continuously decreasing.Thus, The entrepreneur is
fulfilling responsibilities towards all sectors of society.

15. Contribution to Rapid and Balanced Economic Growth

The entrepreneur is not only the basis of business but is also the basis of rapid
and balanced economic growth because the entrepreneurs search for industrial
opportunities and establish various new industries to utilize those opportunities, which
result in the rapid economic development of the country.Besides, the entrepreneurs
also provide an important contribution to the balanced economic development of the
country, by removing provincial and regional disparities through the establishment of
industries and business and economically backward areas also.

WHERE AND WHEN ENTREPRENEURS MAKE MONEY

When it comes to money matters, timing is very important. Here is an

illustrative graph indicating possible cash flows and their timing during the different
phases of an entrepreneurial venture:

32
Term 1 to Term 4: The Pain Period

This is the initial investment period where different activities will be performed
including, but not limited to, product idea development, feasibility and market study,
prototype building, and customer identification. The order may differ depending on
the venture, but the concepts remain the same. It is assumed that funding from angel
investors becomes available in Term 4.

Term 5 to Term 6: The Introduction Period

Activities in this period may include applying for and securing patents and
building sales channels and a distribution model to final product introduction to the
market.

Term 7 to Term 9: The Profit Period

These terms are the profit-taking “monopoly” periods when the entrepreneur is
either protected by patents or copyright, or there are no competitors for other
reasons.Term 9 is assumed to be the peak profit period, just prior to competitors
entering the market. It is during this term that further development is initiated for
introducing new product variants. However, reinvestment and research and
development can come earlier, depending on the product's lifecycle and other factors.
This can also be the time to introduce the original offering to new markets.

Term 10 to Term 11: The Sunset Period

At this point, entrepreneurs may exit the venture completely by closing it

completely or selling it to interested parties, or they may continue with newly
developed variants. Profits will vary greatly during these terms.

FUNCTIONS OF AN ENTREPRENEUR

There are so many concepts about the functions of an entrepreneur, due to the
Complex role. His functions may vary, according to time, place, circumvention, level
of economic development, sources and size, etc.

1. Promotional Functions of an Entrepreneur

33
 The foremost functions of an entrepreneur are to promote and establish an
enterprise, after testing the business opportunities.

1. To conceive business thoughts and ideas.

2. To collect the required facts and information related to the idea and to test the
viability and profitability of the idea.
3. To forecast the economic analysis.
4. To select suitable ownership (leadership, partnership, company, and joint
ownership, organizations, etc.).
5. Determination of the size of the Enterprise.
6. To determine the objectives of the Enterprise.
7. To determine the location of the Enterprise.
8. To prepare plant layout.
9. To make financial planning by estimating the requirements of capital.
10. Registration and completion of other legal formalities.
11. To arrange the required resources and infrastructural facilities.
12. To take a decision regarding the internal organizational structure.
13. Selection of equipment and production production process.
14. To carry out market research.
15. To start business activities.

2. Risk Bearing Functions

Other main work of an entrepreneur are to bear risks. In all types of businesses
small or large, risks are quite inherent.Without bearing risk, the operation of the
business cannot be even imagined. The risk is related to capital.In modern business,
various types of risks and uncertainties always persist. Among these, some risks are
such from which one can feel secured by getting insurance against these, like fire
accidents, thefts, dacoity, earthquakes, labour accidents, floods, storms, tsunamis,
etc.However, some unknown risks are such which may neither be predicted nor may
be insured and are to be borne only by the entrepreneur, like:

1. The risk relating to fluctuations in demand and changes.

2. Risks arising due to competition (changes in tastes, fashion, and demand).
34
 3. Risks of changes in the prices and various resources.
4. Risks of changes in government policies.
5. Risks arising from trade cycles.
6. Risks arising from large changes in the business environment.
7. Risks of large changes in technology.
8. Risks of human relations and inefficiency.

3. Function Relating to Management, Organisation, and Control

An entrepreneur has to perform various functions relating to management,

organization, and control, along with the functions of the promotion of the
enterprise.The efficient operation of the undertaking, in sole ownership, business, the
entrepreneur is often, both the owner and the manager.

1. To decide the objectives, goals, and policies of the Enterprise.

2. To prepare plans and sub-plans for each department and at each level.
3. Selection of suitable pattern of the organization, according to the nature and
size of the undertaking.
4. To entrust the right work to the right person and to distribute all related work to
various specialists and groups of persons.
5. To determine the relationship between various persons working within that
department and outside.
6. To establish coordination between the functions and activities of various
departments and sub-departments to maintain uniformity formality in the
working of all departments.
7. To awaken the feelings of owning towards work, among the employees
working in the organization.
8. To provide situations for the development of the employees.
9. To improve the communication between the employees and the officers and to
perform the function of leadership and directions.
10. To develop a suitable control system to ensure that the work performed is in
accordance with the plans.

4. Financial Functions
35
 The Fourth main work of the entrepreneur is to manage the required finances
for the undertaking, according to the nature and size of the undertaking.Although all
the factors of production have their own importance, what among this capital is the
most important source, because if the capital is insufficient, then the arrangements for
various other factors also become futile.

1. To do rational financial planning.

2. To determine the financial sources to raise the funds in desired Quantum,
according to financial planning.
3. To arrange fixed capital and working capital, by keeping in view the short term
and long term financial requirements of the undertaking.
4. To determine the suitable sources of finances, like shares, and debenture, bank
loans, and loans from other Financial Institutions, etc. by keeping financial
requirements in view.
5. To select the most economical financial resources by making a comparative
study of various financial resources.

5. Functions Relating Innovations

In the context of a developed economy, by the term entrepreneur, we mean

‘innovator’.Innovations are major functions of an entrepreneur innovation that means
enforcing new methods in the business.For business, it is not as necessary to grow, as
to becoming continuously new.

1. Discovering new commodities.

2. Producing new commodities.
3. Making use of new methods, techniques, implements, and machinery in
production.
4. Bringing improvements in quality, size, color, designs, and packaging, etc.
5. Searching for new uses of commodities.
6. Searching for the new markets.
7. Improving existing products.
8. Locating new sources of raw materials and semi-finished goods.

36
 9. Developing innovations and adapt them to improve the position in the
competition, to improve customer services, quality and economy in various
fields.
10. Introducing product diversification in high stages of economic development.
11. Implementing new ideas in the field of Human Resource Management.

MANAGER

A manager is a person who is responsible for a part of a company, i.e., they

‘manage‘ the company. Managers may be in charge of a department and the people
who work in it. In some cases, the manager is in charge of the whole business. For
example, a ‘restaurant manager’ is in charge of the whole restaurant.

A manager is a person who exercises managerial functions primarily. They

should have the power to hire, fire, discipline, do performance appraisals, and monitor
attendance. They should also have the power to approve overtime, and authorize
vacations. He or she is the boss.The Manager’s duties also include managing
employees or a section of the company on a day-to-day basis.

DIFFERENT TYPES OF MANAGERS

There are many different types of managers across the whole spectrum of a
company’s or entity’s hierarchy.

 General Managers are responsible for managing a revenue-producing unit, such

as a product line, business unit, or a store.
 Top Managers are in charge of a company’s strategy. In other words, they are
the stewards of an organization’s vision and mission.
 Functional Managers are responsible for the effectiveness and efficiency of
specific areas of a company, such as marketing. They are also in charge of
personnel and accounts.
 Team Managers or Supervisory Managers are in charge of subgroups of a
particular function. They may also be in charge of a group of members from
different parts of the company.

37
  Line Managers are in charge of the output of certain products or services. They
hold authority in a vertical chain of command, or over a particular product line.

1.12 DIFFERENCE BETWEEN ENTREPRENEUR AND MANAGER

Basis for
Entrepreneur Manager
Comparison
Entrepreneur refers to a person who Manager is an individual who takes
Meaning creates an enterprise, by taking the responsibility of controlling and
financial risk in order to get profit. administering the organization.
Focus Business startup Ongoing operations
Primary
Achievement Power
motivation
Approach to
Informal Formal
task
Status Owner Employee
Reward Profit Salary
Decision
Intuitive Calculative
making
Driving force Creativity and Innovation Preserving status quo
Risk
Risk taker Risk averse
orientation

1. Meaning

An entrepreneur is a person or group of persons, who carry out activities

relating to the establishment of industry, and innovations.

The manager is the person who himself works for achieving the common
objectives and also gets the work done from others.

2. Status

The entrepreneur is in the status of the owner.

The manager or organizer is the status of the employee.

3. Functions

The main function of the entrepreneur is to undertake the risks in the

establishment of new industries and activities related to innovations.

38
 The main function of the manager is to manage various sources of production
and to establish coordination between them.

4. Rewards

Profit is the reward for the entrepreneur, but he may have to incur losses also.

Salary is the reward of the manager and there are no possibilities of losses to
him.

5. Responsibilities

The responsibility of the entrepreneur is much more because policies are

determined by him and he is also the owner of the industry or business.

The responsibility of the manager is much lesser than that of an entrepreneur

because his function is to implement the policies formulated by the entrepreneur and
that too in the capacity of an employee.

6. Concern with Time

The entrepreneur is associated with the present and future, both, because he has
to keep both in view, during the operation of the industry.

The manager is more concerned with the present because he has to keep the
management and control of the industry, in view.

7. Control

The final control of various activities of the industry is of the entrepreneur.

Control of the managers is on activities related to management, provided

powers have been delegated properly. But, the final control is of an entrepreneur.

8. Conclusion

Entrepreneurs are the owners, whereas managers are the employees.

The function of the entrepreneur is to undertake risks and uncertainties, and

take risks in the innovations, whereas the functions of the manager are to manage and

39
coordinate various sources of work production.Profit or loss is the reward of the
entrepreneurs, whereas salary is the reward of the manager.

KEY DIFFERENCES BETWEEN ENTREPRENEUR AND MANAGER

 A person who creates an enterprise, by taking a financial risk in order to get

profit, is called an entrepreneur. An individual who takes the responsibility of
controlling and administering the organisation is known as a manager.
 An entrepreneur focuses on business startup whereas the main focus of a
manager is to manage ongoing operations.
 Achievements work as a motivation for entrepreneurs. On the other hand, the
primary motivation is the power.
 The manager’s approach to the task is formal which is just opposite of an
entrepreneur.
 An entrepreneur is the owner of the enterprise while a manager is just an
employee of the company.
 A manager gets salary as remuneration for the work performed by him.
Conversely, profit is the reward for the entrepreneur.
 An entrepreneur’s decisions are driven by inductive logic, courage, and
determination; that is why the decision making is intuitive. On the contrary, the
decision making of a manager is calculative, as they are driven by deductive
logic, the collection of information and advice.
 The major driving force of an entrepreneur is creativity and innovation. As
against this, a manager maintains the existing state of affairs.
 While entrepreneur is a risk taker, the manager is risk averse.

BEHAVIORS OF ENTREPRENEURS

Being an entrepreneur isn’t easy. It requires the kinds of habits that most
people simply don’t have, along with a discipline, passion and dedication that are
unmatched among non-business owners. And while every entrepreneur is different, we
all have a lot in common including many of the same habits.

1. They plan their day in advance.

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 In business, it’s easy to let other people’s priorities run your day. Phone calls,
emails, appointments, meetings it never ends. Unstoppable entrepreneurs plan their
day in advance, before the mayhem begins. But they don’t just make any old plan they
make sure to block out time for their most important priorities.

2. They get proper nutrition and exercise.

This simply can’t be overstated. Being a productive, unstoppable entrepreneur

is about your body just as much as your mind and will. If you don’t take care of your
nutrition and daily exercise, you aren’t going to be at your best and you definitely
won’t be unstoppable. Drink a lot of water, eat breakfast and get your body moving.
You’ll be much more successful as a result.

3. They position themselves to serve.

Those who focus only on their own success are the ones who don’t succeed at
all. To be effective as a business owner, you need to serve your customers. That might
come through in the way your products make their lives easier or the way your
customer service efforts delight them. Whatever the case may be, setting service as
one of your top priorities is a surefire way to become unstoppable.

4. They set clear goals.

Every unstoppable entrepreneur has clear goals. Knowing your goals will keep
you going when things get tough and give you something to focus on when you’re not
sure what to do next. But your goals shouldn’t just focus on the long term. Have long-
term, mid-term and short-term goals. Doing so allows you to plan your days and
weeks with unmatched focus, knowing exactly what you’re shooting for.

5. They take calculated risks.

People have an image of entrepreneurs as those who take crazy risks just for
fun. But while the risks we take may be crazy to those without an entrepreneurial
mind, in reality, they’re calculated. Or, at least, they should be. If you’re the type of
business owner who jumps in without knowing the numbers and probabilities behind
your course of action, you won’t last long.

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6. They know their strengths and weaknesses.

Successful business owners are honest with themselves. They know their own
strengths and weaknesses, and take them into account with every business decision. It
takes humility to really examine yourself this way, but it will pay great dividends
when you know exactly who to hire, who to partner with and what skills you can
offer.

7. They hire A-team players.

Entrepreneurs that don’t succeed are often those who are afraid to have A-team
players on their staffs. They either feel threatened or they won’t offer the incentives
needed to hire the best. Either way, they lose. To be an unstoppable entrepreneur,
you’ve got to hire the best. Focus on those who fill in whatever gaps you currently
have. Doing so will help you create the amazing team that’s needed for success.

8. They are constantly learning.

Unstoppable entrepreneurs know that they don’t know it all. As a result, they
never stop learning. Never get so busy that you stop investing in yourself and your
knowledge of business, your industry and new technology. Staying up to date is
essential if you want to succeed.

9. They are always looking for opportunities.

Entrepreneurs who are really successful don’t rest on their current successes.
They realize that life changes quickly, and that business moves at an even faster pace.
To be unstoppable, always be on the lookout for your next opportunity. Spot new
trends in your industry, or look for a new application of an old tool. You’ll never get
stuck in the old when you make it a priority to watch out for the new.

10. They evaluate their actions and priorities each day.

Successful entrepreneurs know that with every day, they’re building their
futures. That’s why they rarely let one go by without doing a review. When you
review your accomplishments at the end of each day, you’ll be able to celebrate the
successes, as well as address the shortfalls. It’s a great practice to begin right away

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QUALITIES OF A SUCCESSFUL ENTREPRENEUR

In order to organize and run it successfully, the entrepreneur must possess

some qualities and traits. They are as following:

1. Willingness to Make Sacrifices and Assume Risks:A new venture is full of

difficulties and unanticipated problems. In such an inhospitable environment
entrepreneur has to be prepared to sacrifice his time, energy and resources in
order to carry out the venture and make it success.
2. Hard Work: Willingness to work hard distinguishes a successful entrepreneur
from an unsuccessful one. For example, Assim Premji (chairman of Wipro)
works in his office fourteen hours every day. He is a successful entrepreneur.
He is one of the richest persons in India.
3. Optimism: Successful entrepreneurs are not worried by the present problems
that they face. They are optimistic about the future. This enhances their
confidence and drives them towards success. Some of the world’s greatest
entrepreneurs failed before they finally succeeded.
4. Self Confidence: This is the greatest asset of a successful entrepreneur. He
must have the confidence to make choices alone and bounce back when he
fails.
5. Leadership: Successful entrepreneur generally has strong leadership qualities.
He should be a good judge of human nature and a good leader. He must be able
to select, train and develop persons who can properly manage and control the
labour force. McClelland identified two main characteristics in an
entrepreneur- (1) Doing things in a new and better manner. (2) Decision
making under uncertainty. A successful entrepreneur must be capable and well-
informed, a successful leader of men, a keen judge of things, courageous and
prudent. Above all he must be gifted with a large measure of practical common
sense. There are not many Fords, Tatas, Birlas, Thapars and Ambanis in the
world. Entrepreneurship is not limited to any class, community or religion.
There is no age bar, for any person who possesses certain behavioural traits and
attitudes can work to become an entrepreneur.

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NEED FOR ACHIEVEMENT (ACHIEVEMENT MOTIVATION)

It is the psychological need to achieve. It provides drive to the entrepreneurto

set up a new venture, to achieve targets, to sense problems and opportunity, to take
much risk so as to run the business successfully. It is nothing but a person’s desire
either for excellence or tosucceed in competitive situation. Thus achievement
motivation means a drive to overcome challenges in reaching higher goals. It is a
strong desire to achieve a higher goal and make dreams come true. In short it is the
strong desire to win.

1.13 ENTREPRENNEURIAL COMPETENCIES

Competency is a characteristic of a person, which results in effective and/or

superior performance in a job. It is a combination of knowledge, skills and appropriate
motives or traits that an individual must possess to perform a given task.

Meaning

It is defined as characteristics such as generic and special knowledge, motives,

traits, selfimage, social roles and skills which result in birth of a venture, its survival
and/ or growth. In short, the competencies required by an entrepreneur for starting a
business venture and carrying it on successfully are known as entrepreneurial
competencies.

TYPES OF ENTREPRENEURIAL COMPETENCIES

It may be classified into two types:

A) PERSONAL ENTREPRENEURIAL COMPETENCIES: These are

required to perform the tasks effectively and efficiently. This includes the
following:

Initiative: It is an inner urge in an individual to do or initiate something.

Ability to See and Act on Opportunities: Entrepreneurs look for opportunities

and take action on such opportunities.

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 Persistence: It means the capacity or skill to take repeated and different actions
to overcome obstacles.

Information Seeking: A successful entrepreneur always keeps his eyes and ear
open. He should accept new ideas which can help him in realizing his goals. He is
ready to consult experts for getting their expert advice.

Concern for High Quality of Work: Entrepreneurial persons act to do things

that meet or beat existing standards of excellence.

Commitment to Work: Successful entrepreneurs are prepared to make all

sacrifices for completing the commitments they have made.

Commitment to Efficiency: Entrepreneurial persons have to look and find ways

for or find ways to do things faster or with fewer resources or at a lower cost. They
should try new methods aimed at making work easier, simpler, better and economical.

Systematic Planning: Entrepreneurial persons should be able to develop and

use the logical step by step plans to reach goals.

Problem Solving: Entrepreneurial persons are supposed to possess the skill of

identifying new and potentially unique ideas to reach goals. They should generate new
ideas or innovative solutions to solve problems.

Assertiveness: They assert own competence, reliability or other personal or

company’s qualities. They also assert strong confidence in own company’s products
or services.

Persuasion: Entrepreneurs should have the ability to successfully persue others

to perform the activities effectively and efficiently.

Use of Influence Strategies: Entrepreneurs should have the competence of

using a variety of strategies to influence others. Such entrepreneurs can develop
business contacts and use influential people to accomplish his/her own objectives.

B) VENTURE INITIATION AND SUCCESS COMPETENCIES:

An entrepreneur must also posses the competencies required for launching the

45
enterprise and for its survival and growth. These competencies may be further divided
into two categories of competencies:

1. ENTERPRISE LAUNCHES COMPETENCIES:

Competency to understand the nature of business.

Competency to comply with Government regulations.

Competency to deal with the business.

Competency to finance the business.

Competency to locate the business.

Competency to plan the marketing strategy.

Competency to choose the type of ownership.

Competency to obtain technical assistance.

Competency to develop a business plan.

Competency to determine the potential as an entrepreneur.

2. ENTERPRISE MANAGEMENT COMPETENCIES:

Competency to protect the business.

Competency to manage customer credit and collection.

Competency to manage the finances.

Competency to manage the business records.

Competency to manage sales efforts.

Competency to promote the products and services of the business.

Competency to manage human resources.

Competency to manage the business.

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Book Reference

1. Entrepreneurship Development in India (2021) - Debasish Biswas - Routledge

Publications
2. Innovation and Entrepreneurship (2014) - Peter Drucker - Routledge Publications
3. Fundamentals of Entrepreneurship (2005) - Sangram Keshari Mohanty - PHI
Publications Pvt. Ltd.

Question Bank

Part - A

1. Who is an entrepreneur?
2. What is meant by entrepreneurship?
3. What is meant by Intrapreneur?
4. State the good qualities of entrepreneur

Part - B

5. Explain the functions of entrepreneur

6. Discuss the process or steps of an entrepreneur
7. What are the types of entrepreneur? Explain
8. Explain the theories of an entrepreneur.

Part - C

9. What are the merits and demerits of entrepreneur?

10. Discuss the differences between entrepreneur and manager
11. Explain the role of the entrepreneur in economic development
12. Elaborate the Concept of Entrepreneurial Personality with examples.
13. Discuss the knowledge & skills of Entrepreneur with neat sketch.
14. Explain the Characteristics of Successful Entrepreneurs.
15. How Entrepreneurship as a Career? Explain.
16. Explain the Qualities of Entrepreneur.
17. Write a note on Women Entrepreneur in India.
18. What are factors affecting Entrepreneurship growth?

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 UNIT – II

ENTREPRENEURSHIP

Entrepreneurship refers to all those activities which are to be carried out by a

person to establish and to run the business enterprises in accordance with the changing
social, political and economic environments. Entrepreneurship includes activities
relating to the anticipation of the consumers likes and dislikes, feelings and behaviors,
tastes and fashions and the introduction of business ventures to meet out all these
expectations of the consumers. Entrepreneurship is considered as a new product that
would enable business men to develop new form of business organization and new
business activities catering to the changing needs of the society. Entrepreneurship is
the ability of entrepreneurs to assess the risks and establish businesses which are risky
but at the same time suits perfectly to the changing scenarios of the economy.

Learning Objectives

Having gone through this lesson, you may be able to:

The need for developing entrepreneurial culture, the various aspects of

entrepreneurial culture, the process of nurturing culture, the counseling and follow up
process, entrepreneurial education prevailing in India, problems of entrepreneurship
development in India, how to become successful entrepreneur?

Unit Structure

 Definition of entrepreneurship
 Nature of entrepreneurship
 Features of entrepreneurship
 Characteristics of entrepreneurship
 Functions of entrepreneurship
 Importance of entrepreneurship
 Types of entrepreneurship
 Entrepreneurial process
 Theories of entrepreneurship

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  Differences between entrepreneurship & intrapreneurship
 Nurturing the culture of entrepreneurship in India
 Barriers of entrepreneurship
 Entrepreneurship development in India
Concept of Entrepreneurship:

The word “entrepreneur” is derived from the French verb enterprendre, which
means ‘to undertake’. This refers to those who “undertake” the risk of new
enterprises. An enterprise is created by an entrepreneur. The process of creation is
called “entrepreneurship”.

Entrepreneurship is a process of actions of an entrepreneur who is a person

always in search of something new and exploits such ideas into gainful opportunities
by accepting the risk and uncertainty with the enterprise.

2.1 DEFINITION OF ENTREPRENEURSHIP

In the words of Stevenson and others, “Entrepreneurship is the process of

creating value by bringing together a unique package of resources to exploit an
opportunity.” According to A.H. Cole, “Entrepreneurship is the purposeful activities
of an individual or a group of associated individuals undertaken to initiate, maintain or
organize a profit oriented business unit for the production or distribution of economic
goods and services”.

All activities undertaken by an entrepreneur to bring a business unit into

existence are collectively known as entrepreneurship. It is the process of changing
ideas into commercial opportunities and creating values. In short, entrepreneurship is
the process of creating a business enterprise.

Entrepreneurship is a tendency of a person to organize the business of his own

and to run if profitably, using all the qualities of leadership, decision making a
managerial process etc. The term entrepreneur is often used interchangeably with
entrepreneurship but conceptually they are different.

Entrepreneur Entrepreneurship
Refer to person Refers to a process

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 Creator Creation
Organisor Organising
Decision maker Decision making
Initiator Initiative
Leader Leadership
Motivator Motivation
Risk taker Risk taking
Administrator Administration
Technician Technology

2.2 NATURE OF ENTREPRENEURSHIP

1.Economic Activity: Entrepreneurship is a primarily an economic function

because it involves the creation and operation of an enterprise. It is basically
concerned with the production and distribution of goods and services.

2.Creative Activity: Entrepreneurship is a creative response to changes in the

environment. It involves innovation or introduction of something new & better. An
entrepreneur is a change agent.

3.Purposeful Activity: The entrepreneur who creates and operates an enterprise

seeks to earn profits through satisfaction of needs of customers. Therefore,
entrepreneurship is a goal oriented activity.

4.A Function of Risk bearing: Risk is an inherent and inspirable element of

entrepreneurship. An entrepreneur guarantees rent to the landlord, wages to
employees, and interest to investors in the hope of earning more than the expenses.
He assumes the uncertainty of future. In the pursuit of profits there is every
possibility of loss.

5.An organizing function: An entrepreneur brings together various factors of

production. He coordinates and controls the efforts of all the persons engaged in his
enterprise. He harnesses land, labour, capital and other resources for the benefit of the
mankind. Therefore, an entrepreneur is an organization builder.

6.Gap Filling Function: The gap between human needs and the available
products and services gives rise to entrepreneurship. An entrepreneur identifies this
gap and takes necessary steps to fill the gap. He introduces new products & services,

50
new methods of production or distribution, new sources of inputs and new market for
this purpose.

7.Dynamic Process: Entrepreneurship is a dynamic function. Entrepreneurs

thrive on changes in the environment which bring useful opportunities for business.
Flexibility is the hallmark of a successful entrepreneur.

8. Innovative Function: Entrepreneurship is an innovative function as it

involves doing things in a new & better way. Innovation may take several forms eg.,
a new product, a new market of production, not yet applied in a particular branch of
manufacturing, etc.,

2.3 FEATURES OF ENTREPRENEURSHIP

1)It is a function of innovation.

2)It is a function of leadership.

3)It is an organization building function.

4)It is a function of high achievement.

5)It involves creation and operation of an enterprise.

6)It is concerned with unique combinations of resources that make existing

methods or products obsolete.

7)It is concerned with employing, managing, and developing the factors of

production.

8)It is a process of creating value for customers by exploiting untapped

opportunities.

9)It is a strong and positive orientation towards growth in sales, income, assets,
and employment.

2.4 CHARACTERISTICS OF ENTREPRENEURSHIP

1. Economic and dynamic activity

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 Entrepreneurship is an economic activity because it involves the creation and
operation of an enterprise with a view to creating value or wealth by ensuring
optimum utilisation of scarce resources. Since this value creation activity is performed
continuously in the midst of uncertain business environment, therefore,
entrepreneurship is regarded as a dynamic force.

2. Related to innovation

Entrepreneurship involves a continuous search for new ideas. Entrepreneurship

compels an individual to continuously evaluate the existing modes of business
operations so that more efficient and effective systems can be evolved and adopted. In
other words, entrepreneurship is a continuous effort for synergy (optimization of
performance) in organizations.

3. Profit potential

“Profit potential is the likely level of return or compensation to the

entrepreneur for taking on the risk of developing an idea into an actual business
venture.” Without profit potential, the efforts of entrepreneurs would remain only an
abstract and a theoretical leisure activity.

4. Risk bearing

The essence of entrepreneurship is the ‘willingness to assume risk’ arising out

of the creation and implementation of new ideas. New ideas are always tentative and
their results may not be instantaneous and positive.An entrepreneur has to have
patience to see his efforts bear fruit. In the intervening period (time gap between the
conception and implementation of an idea and its results), an entrepreneur has to
assume risk. If an entrepreneur does not have the willingness to assume risk,
entrepreneurship would never succeed.

5. Ability to take a risk

Starting any new venture involves a considerable amount of failure risk.

Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks,
which is an essential part of being an entrepreneur.

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6. Innovation

It should be highly innovative to generate new ideas, start a company and earn
profits out of it. Change can be the launching of a new product that is new to the
market or a process that does the same thing but in a more efficient and economical
way.

7. Visionary and Leadership quality

To be successful, the entrepreneur should have a clear vision of his new

venture. However, to turn the idea into reality, a lot of resources and employees are
required. Here, leadership quality is paramount because leaders impart and guide their
employees towards the right path of success.

8. Open-Minded

In a business, every circumstance can be an opportunity and used for the

benefit of a company. For example, Paytm recognised the gravity of demonetization
and acknowledged the need for online transactions would be more, so it utilised the
situation and expanded massively during this time.

9. Flexible

An entrepreneur should be flexible and open to change according to the

situation. To be on the top, a businessperson should be equipped to embrace change in
a product and service, as and when needed.

10. Know your Product

A company owner should know the product offerings and also be aware of the
latest trend in the market. It is essential to know if the available product or service
meets the demands of the current market, or whether it is time to tweak it a little.
Being able to be accountable and then alter as needed is a vital part of
entrepreneurship.

2.5 FUNCTIONS OF ENTREPRENEURSHIP

1. Creation of Employment

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 Entrepreneurship generates employment. It provides an entry-level job,
required for gaining experience and training for unskilled workers.

2. Innovation

It is the hub of innovation that provides new product ventures, market,

technology and quality of goods, etc., and increase the standard of living of people.

3. Impact on Society and Community Development

A society becomes greater if the employment base is large and diversified. It

brings about changes in society and promotes facilities like higher expenditure on
education, better sanitation, fewer slums, a higher level of homeownership. Therefore,
entrepreneurship assists the organisation towards a more stable and high quality of
community life.

4. Increase Standard of Living

Entrepreneurship helps to improve the standard of living of a person by

increasing the income. The standard of living means, increase in the consumption of
various goods and services by a household for a particular period.

5. Supports research and development

New products and services need to be researched and tested before launching in
the market. Therefore, an entrepreneur also dispenses finance for research and
development with research institutions and universities. This promotes research,
general construction, and development in the economy.

6. Growth of Entrepreneurship

Entrepreneurship the advent of new venture particularly small ventures to

materialize the innovative ideas of the entrepreneurs.Thus, the growth or
establishment of small enterprises ii the specific contribution of entrepreneurship in
every economy of the world.The statistics reveal that in USA economy nearly half a
million small enterprise is established every year. Our country is not an exception in
this regard.

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7. Creation of job opportunities

Entrepreneurship firms contributed a large share of new jobs. It provides entry-

level jobs so necessary fur training or gaining experience for unskilled workers.The
small enterprises are the only sector that generates a large portion of total employment
every year.Moreover, entrepreneurial ventures prepare and supply experienced labor
to large industries.

8. Innovation

Entrepreneurship is the incubator of innovation. Innovation creates

disequilibria in the present state of order.It goes beyond discovery and does
implementation and commercialization, of innovations.Thus, entrepreneurship nurses
innovation that provides new ventures, products, technology, market, quality of good,
etc. to the economy that increases Gross Domestic Products and standard of living of
the people.

9. Impact on community development

A community is better off if its employment base is diversified among many

small entrepreneurial firms.It promotes abundant retail facilities, a higher level of
homeownership, fewer slums, better, sanitation standards and higher expenditure on
education, recreation, and religious activities.Thus, entrepreneurship leads to more
stability and a higher quality of community life.

10. The consequence of business failure

The collapse of the large industry almost has irresistible damage to the
development of the state and the state of the economy and the financial condition of
the relevant persons.The incumbents lost their jobs: suppliers and financial institutions
face a crisis of recovery.Customers are deprived of goods, services, and government
losses taxes. This could not happen in the case of failure of entrepreneurship.There
shall be no measurable effect upon the economy and no political repercussions too.

2.6 IMPORTANCE OF ENTREPRENEURSHIP

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 Entrepreneurs are seen as national assets to be motivated, cultivated, and
remunerated to the greatest degree possible. Entrepreneurs develop innovative ideas
that provide civilization with a large number of products and services which change
the way we work and live. The importance of entrepreneurship can be understood by
what it does for society. The benefits they offer are by creating job opportunities,
improving standards of living, and contributing to the overall growth of the economy
(GDP).

Today, communities across the country are struggling. Workers are worried about
their jobs, and the youth is unsure of their future with little prospects of growth. There
are no clear solutions but entrepreneurs do come as innovators taking the economy
and the society to a state of prosperity and progress.

1. Entrepreneurs are Innovators

With the rapid growth in technology, many occupations don’t exist anymore.
For instance, remember the elevator attendant or the movie film projectionist?
Entrepreneurs keep a close eye on these changes and take measures to fill the gaps.
They understand the negative impact of technological innovations and the loss of
certain occupations but they also sense newer opportunities that can be derived from
this age of technology.Consequently, they innovate and create new products.These
new products or services need more employees in the various fields of marketing, HR,
finance, operations, etc. Innovators observe consumer problems and find ways to
address the same. Their innovation is what creates employment.

2. Entrepreneurs create jobs

The importance of entrepreneurship can be understood by the number of jobs

that are created once entrepreneurs launch new businesses. These establishments
become the source of job creation. Entrepreneurs start a business in completely new
domains and sectors. Take, for instance, Byju’s – The Learning App. It provides
educational content to school students in the form of videos and online tutoring.As of
2019, the organization has around 8,000 employees and none of these existed until the

56
idea of an online mobile application for providing tutoring and educational classes
was started.

Think about the development of the internet. It has made tremendous progress
but it also came with its own set of troubles like cyber attacks, where criminals are
trying to steal confidential information and rob users. In response to the consumers’
needs, a software company developed security applications that can defend and
protect against attacks on websites.

3. Entrepreneurs improve the standard of living

The journey of entrepreneurship is dynamic. As they see a problem in the lives

of the consumers, they use their creative thinking to identify a solution.They start a
new organization and create employment. When new employees are hired, they are
remunerated, and this income is spent in the local economy. This generates an
incremental wealth for the population and results in raising the standard of living for
all involved.

When a company launches a better product or service, competitors need to

match or withdraw themselves from the industry. Increasing competition forces
everyone to improve their efficiency and become better at their jobs. They don’t have
a choice but to be more productive and live a higher standard of living.

4. Entrepreneurs are Philanthropists

One of the most highlighted importance of entrepreneurship is the nature to

give back to the community.As entrepreneurs earn for themselves and their
employees, they get involved in donations and charities. Infosys is a classic example
of philanthropy. Infosys Foundation supports the underprivileged sections of society
in education, destitute care, healthcare, culture, and rural development.

Entrepreneurs donate generously to veterans’ groups, homeless shelters, health

organizations, and libraries. As a result, the entire economy develops and flourishes.
This would not have been possible if entrepreneurs did not start new businesses and
did not offer jobs to employees.

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5. Entrepreneurs introduce changes in the community

Entrepreneurship benefits the local community and society. The new company
hires employees who earn an income to spend at local stores. This generates more
business for the store owners. When one business grows, it contributes to the progress
of another.Some business organizations require highly skilled individuals. This creates
a demand for schools, intern programs, and workshops that can provide skill training.
The community responds to the demand by creating training institutes and everyone in
the community advances. The company hires the kind of individuals it requires and
the community gets highly educated and trained individuals.

6. Entrepreneurship leads to economic growth

Entrepreneurship is a process that starts with new businesses making money for
civilization. New industries add economic wealth as entrepreneurs invest funds to
create new products and services. Venture capitalists and angel investors also provide
more capital increasing the number of funds that are put into the growth and success
of the organization.

Businesses earn profit and pay taxes; employees pay income tax. The
government utilizes this additional income to stimulate the economy and generate
better facilities. It leads to an overall increase in the country’s gross domestic product
(GDP).

7. Entrepreneurs support other entrepreneurs

Some entrepreneurs move on to also become mentors and consultants. This is

because they have a passion for their business and like to guide aspiring innovators on
their path to success.Seasoned entrepreneurs can share the common mistakes, the
obstacles, the usual challenges, and the methods to overcome the same. This allows a
newbie to save on time, which would have otherwise been spent on making mistakes
out of business immaturity. It also helps in saving money and other crucial resources.

Entrepreneurs can advise on ways to arrange funds – like obtaining loans for
entrepreneurship. They establish local groups and communities that can interact with

58
each other, brainstorm ideas, discuss the hurdles of starting a business, hire
employees, etc.

2.7 TYPES OF ENTREPRENEURSHIP

Entrepreneurship is an innovative process that involves multifaceted and

diversified activities for providing new things to society and civilization.The
orientation makes it different and therefore.It may be classified as individual and mass
entrepreneurship or private and public; entrepreneurship.Entrepreneurship classified
into 9 types that involve multifaceted and diversified activities for providing new
things to society.

1. Administrative Entrepreneurship

The entrepreneurial activity under this category is centered around

administrative techniques and functions.It gives a new option to handle prevailing or
future situations in a more effective way that provides advantages and a competitive
edge.Total Quality Management, job redesigning, new techniques of doing things,
participative management or management by consensus are a few of the examples of
administrative entrepreneurship that increase overall organizational efficiency and that
nukes the firm successful and sustainable in the competitive market environment.The
old-age pension scheme is such administrative entrepreneurship of the government.

2. Opportunistic Entrepreneurship

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 There is a proverb “Hit! while the iron is hot”. It is the best exhibit of the
characteristic of this category of entrepreneurship.Environmental changes always
offer new opportunities. But everybody is not equally capable of identifying and to
utilize that opportunity on time.The entrepreneurship that identifies, exploits and
executes the opportunity in the first hand regarded as opportunistic entrepreneurship.

3. Acquisitive Entrepreneurship

The entrepreneurship that learns from other competencies is called acquisitive

entrepreneurship.It acquires something new of value front, the competitive
environment or achieves the competitors’ technical capacities. It keeps
entrepreneurship sustainable in a competitive environment.The failure never restraints
them from acquisition but motivates them further to discover such a thing with a new
visitor.

4. IncubateEntrepreneurship

This category of entrepreneurship generates and nurses new ideas and ventures
within the organization.It productively executes them and ensures material gain for the
organization.They pursue and help to get differentiated technologies to promote
creations and innovations Microsoft, Nokia, etc. always incubates new varieties types
of product and creates product differentiation in the market.

5. Imitative Entrepreneurship

The entrepreneurship that imitates a good or service operating in the market

under a franchise agreement is the imitative entrepreneurship. It is the medium that
spread technology over the world.It adopts an existing technology in countries over
the world. It also adopts an existing technology with minor modifications appropriate
to the local condition.

6. Private Entrepreneurship

The entrepreneurship that is initiated under the private sector is private

entrepreneurship.The government gives various support services through private and
public concerns that encourage private initiative in taking entrepreneurial ventures.A

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layer and mutual relationship between private and public sectors would make
economic development speedy and balanced.

7. Public Entrepreneurship

The entrepreneurship that is undertaken by the government through its various

development agencies is defined as public entrepreneurship.All countries, developed
or underdeveloped, take a public initiative in venture ideas to fulfill the initial
deficiency of private entrepreneurs.

8. Individual Entrepreneurship

The entrepreneurship that is undertaken by an individual or a family with his

initiative is called individual entrepreneurship.

9. Mass Entrepreneurship

This type of entrepreneurship emerges in an economy where a favorable

climate of motivation and encouragement exists for developing a wide range of
entrepreneurship among general mass is mass entrepreneurship.It increases small and
medium enterprises in a country.

Hans Schollhammer (1980) has classified entrepreneurship into five categories

such as administrative, opportunistic, acquisitive, incubative and imitative
entrepreneurship.But with the change of time Entrepreneurship definition has changed
and classification has increased.

2.8 ENTREPRENEURIAL PROCESS

Entrepreneurial process can be defined as the steps taken in order to establish a

new enterprise. It is a step-by-step method, one has to follow to set up an enterprise.

There are mainly five steps one needs to follow. These steps are

Preliminary Steps

Preliminary steps are the initial steps one has to follow for establishing a firm.
At this stage, the to-be entrepreneur should be able to make a decision that is going to
affect the company.We can say that an entrepreneur is born at this stage. An

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entrepreneur searches for business opportunity and collects information/data from all
sources available.

Decision-making Steps

Decision-making steps can be defined as those steps or say the lessons learnt
by an entrepreneur to make decisions efficiently.In this step, the entrepreneur is seen
consulting with DIC (District Industrial Centre) and MSME (Medium Small & Micro
Enterprise). Some of the decisions to be taken are −

 Decision of acquiring fund from banks or financial institutions.

 Acquisition of permission, recognition, application.
 Making of PPR (Preliminary Project Report).
 Decision regarding land, building, plant, machinery, labor, raw material, fuel,
energy, water supply, filtration, etc.
In order to make effective decisions that is adaptable and comfortable for the
company, the clients and all those who are directly or indirectly linked to the decision-
making step play a very vital role.

Planning Steps

Planning is an assumption or prediction of business requirements and outcome

in the future. It provides a space to review the best strategy to run the business by
cutting expenses and maximizing profit.Some of the planning steps include −

 Planning for infrastructure like plant and building.

 Getting permission and recognition from the government or any other reputed
authority.
 Applying for environmental clearance.
 Purchasing of land and licensing of mines, if necessary.
 Applying for electric connection and water supply.
 Planning the final feasibility, technical feasibility, and operational feasibility.
 Study of PPR and preparation of Detailed Project Report (DPR).
 Getting loan and/or capital investment.
 Acquisition of machineries and planning for installation.

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 Now, let us move forward to see how this planning step is further transformed
to implementation steps.

Implementation Steps

Implementation is the execution of plan; it is the action taken to implement the

plan so that something actual happens.Given below are some steps that will help us
get a clear picture of how actions in planning steps are groomed into implementation
steps

 Acquisition of land, setting up building, and purchasing raw materials.

 Installation of plant and machineries, and arranging human resource.
 Receiving permission and reorganization letter, and receiving capital
investment.
 Starting operation and production.
 Arranging fuel, electricity, and water supply.
 Making infrastructural development, i.e. road, hospital, school, residence, etc.
Implementation is the most important and difficult step, during implementation
the actuals come to figure and something of real value is generated.

Managerial Steps

We have seen about the roles and duties of an entrepreneur. Managerial duties
are also very important for an entrepreneur as well as the organization. Some of the
managerial duties to be taken care of are −

 Preparing market policy and strategy.

 Managing promotion of product or services.
 Formulating pricing policy.
 Managing wholesalers and retailers.
 Deciding the profit margin.
 Managing marketing strategy, managing advertisement of product or service,
managing distribution system for efficient distribution.
 Warehouse management.

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 Each step has its own importance and its own role in the development as well
as deterioration of a company.

2.9 THEORIES OF ENTREPRENEURSHIP

1. Schumpeter’s Theory of Innovation:

Joseph Schumpeter propounded the well-known innovative theory of

entrepreneurship. Schumpeter takes the case of a capitalist closed economy which is
in stationary equilibrium. He believed that entrepreneurs disturb the stationary circular
flow of the economy by introducing an innovation and takes the economy to a new
level of development. The activities of the entrepreneurs represent a situation of
disequilibrium as their activities break the routine circular flow.Innovations of
entrepreneurs are responsible for the rapid economic development of any country.

Innovation could involve any of the following:

a. Innovation of new products.

b. Innovation in novel methods or processes of production.
c. The opening up of a new market.
d. Entrepreneurs might find new source of supply of raw materials
e. Innovation in management. This means reorganization of an industry.
The introduction of new product means the product which the consumers have
not seen and is of a new and better quality and utility. A new method of production
refers to a novel process not yet been used in manufacturing and commercial
production. This may increase the productivity and lower cost of production.

Schumpeter had differentiated between invention and innovation. We should

understand that invention refers to creation of new materials and innovation refers to
application of new materials into practical use in industry. Similarly, there is a
distinction between an innovator and an inventor. The inventor is the one who invents
new materials and new methods. On the other hand, the innovator is the one who
utilizes these inventions and discoveries in order to make new combinations.

2. Max Weber’s Theory of Social Change (Emphasis on Impact of Religion):

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 Max Weber advocated a sociological explanation for the growth of
entrepreneurship in his theory of social change. He felt that religion had a profound
influence on the growth of entrepreneurship. The religious belief and ethical value
associated with the society plays a vital role in determining the entrepreneurial
culture.

Max Weber opined that the entrepreneurial energies of a society are

exogenously generated and supplied by religious believes. Some religions profess the
basic values to earn and acquire money whereas some religions put less emphasis on
it. In order to understand the gist of Max Weber’s theory we need to understand few
fundamental points of the theory.

In his theory spirit of capitalism is a fundamental concept. Capitalism refers to

the economic system where market forces of demand and supply are allowed to play
freely. As economic freedom and private enterprises are promoted in capitalism, the
entrepreneurism is eulogized and entrepreneurial pursuits are encouraged. Spirit of
capitalism promotes the entrepreneurs to engage in entrepreneurial pursuits and earn
more and more profits.

3. The Uncertainty-Bearing Theory of Knight:

Frank H. Knight (1957) in his book Risk, Uncertainty and Profit regards profit
of the entrepreneur as the reward of bearing non-insurable risks and uncertainties.
Entrepreneurship is genuinely associated with risk bearing. Knight had distinguished
risk into insurable risks and non-insurable risks.Let us try to understand the underling
concept of risks.

There are certain risks that are measurable and the probability of such risk can
be statistically estimated and hence such risks can be insured. Example of insurable
risks include theft of commodities, fire in the enterprise, accidental death etc. On the
other hand, there are certain risks which cannot be calculated.

The probability of their occurrence cannot be statistically ascertained. Such

risks include risks associated to changes in prices, demand and supply. These risks are

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non-insurable. Prof. Knight opined that the profit is the reward for bearing the non-
insurable risks and uncertainties.

Uncertainty-bearing is one of the most vital functions in a dynamic economy.

The entrepreneur bears the uncertainty involved in the enterprise. The expectation of
profit is the supply price of the entrepreneurial uncertainty bearing exercise. In a state
of economy (competitive) where there is no risk, every entrepreneur will have a
minimum supply price.

4. Theory of Frank Young (Emphasis on Changes in Group Level Pattern):

A Micro-sociological interpretation of entrepreneurship as coined for the

theory propounded by Frank Young emphasizes that the entrepreneurial initiatives are
conditioned by group level pattern. Young rejected the psychogenic interpretations of
entrepreneurship. He considered the solidarity groups responsible for building
entrepreneurship.We shall try to understand his theory by studying the various specific
elements attached to this theory.

Frank Young opined that the entrepreneurial characteristics are observed in

clusters, ethnic groups, occupational groups and groups with political orientation.
Entrepreneurism at the individual level is the manifestation of the group level pattern.
Young disapproves the notion of an entrepreneur working individually. The
entrepreneur functions as a member of a group.

The entrepreneurial initiatives and actions are the outcome of the experiences
and exposures of an individual entrepreneur as a member of a particular group, the
family background of the entrepreneur and the manifestation of the general values of
the group. The economic problems faced by the individual entrepreneurs are mitigated
by the solidarity of entrepreneurial groups. The individual entrepreneurs enjoy the
confidence of their association with the solidarity groups which help the individual
entrepreneurs to overcome any sort of economic problems.

5. Economic Theory of Entrepreneurship:

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 G.F. Papanek (1962) and J.R. Harris (1970) were of the view that economic
incentive is the main factor that influences entrepreneurial activities. Economic gains
spontaneously develop the willingness among the entrepreneurs to undertake diverse
entrepreneurial initiatives. The relationship between an individual’s inner urge and the
desired economic gains has a profound influence in the development of
entrepreneurial competencies. Entrepreneurship development and economic growth
takes place whenever certain economic conditions are favourable.

6. Mark Casson Theory (Economic Theory):

Mark Casson’s theory is an original synthesis of other approaches. Mark

Casson in his book ‘The entrepreneur- An Economic Theory’, published in 1982, talks
about the entrepreneur. According to Mark Casson the Entrepreneur might be a
property developer, a small businessman or just someone who knows how to ‘turn a
fast buck’. His book as expressed by Mark Casson endeavoured to provide a balanced
view on the topic of entrepreneur.

Mark Casson felt that there was no established economic theory of the
entrepreneur. Except for the discipline of Economics, all the social sciences had a
definition of entrepreneur. He felt that there were two main reasons for the non-
existence of an economic theory of the entrepreneur. These reasons were related to the
limitations of the two main schools of economic thought prevalent at that point of
time. First reason was that the neoclassical school of economics made extreme
assumptions regarding the access to information.

7. Kunkel’s Theory (Emphasis on Entrepreneurial Supply):

John H. Kunkel had built up his theory on the edifice of entrepreneurship

supply. He was of the opinion that the sociological and psychological factors
influence the emergence of entrepreneurs.Supply of entrepreneurs has a functional
relationship with the social, political and economic structure.In order to understand
Kunkel’s theory, let us understand few concepts associated with his theory.

a. Demand Structure
b. Limitation Structure

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 c. Opportunity Structure
d. Labour Structure
8. Hoselitz’s Theory (Emphasis on Marginal Groups):

Hoselitz’s theory emphasized that the cultural factors and the role of culturally
marginal groups in entrepreneurial development. In his theory, Hoselitz had
highlighted the importance of the culturally marginal groups in development of
entrepreneurship and their contribution to economic development of the economy.
The marginal groups are the minorities in the society and they yearn to elevate their
conditions and in the process promote economic development.

In several countries the entrepreneurial aptitude are associated to persons of

particular socio-economic classes. The importance and contribution of the culturally
marginal groups like Lebanese in West Africa; Jews in Europe towards the economic
development of those regions reflect the gist of the theory.Hoselitz opined that the
marginal men placed in an ambiguous position and therefore they are best suited to
make creative adjustments in situations of change. They bring about genuine
adaptations in their behaviours. They become entrepreneurs and promote economic
development.

9. Cochoran’s Theory:

Thomas Cochran in his theory had tried to discuss the supply of

entrepreneurship from the sociological point of view.We can understand the crux of
his theory by discussing some of the principle elements of his theory.Cochran had
suggested that the cultural values of a society, social expectations and role
expectations play an important role in determining the supply of entrepreneurs. The
basic problems associated with economic development include non-economic issues.
The social factors are responsible in determining the entrepreneurial dynamism and
the supply of entrepreneurs.

As far as the entrepreneur is concerned, Cochran opined that the entrepreneurs

are not extraordinary persons or super normal persons and they are not abnormal

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individuals deviant from the society. Rather the entrepreneurs represented role models
of the society. An entrepreneur represents a society’s model personality.

The entrepreneur plays an important social role. The role played by the
entrepreneur is highly influenced by the model personality that crops up depending on
the social conditioning. The role of an entrepreneur is defined by the defining group in
corporate world which include the members of board of directors and other top
officials.

Cochran was of the opinion that the intrinsic character and behaviour of the
executive is highly dependent and conditioned by the type of childbearing and
schooling. Thus all social and cultural factors play an important role in influencing the
expectation levels, personality, behaviour of everyone in the society and
entrepreneur’s role specially.

10. E. E. Hagen’s Theory (Emphasis on Withdrawal of Status Respect):

E. Hagen in his theory had accredited the withdrawal of status respect of a

group as the starting point for entrepreneurship development process. Before we
discuss the concept of withdrawal of status respect let us try to consider the various
crucial facets of the theory.The theory is based on a general model of the society. His
theory viewed the entrepreneur as a trouble shooter who contributes to economic
development. The creativity of the entrepreneur brings about social transformation
and economic development. Economic growth is associated with the social and
political changes. He didn’t encourage the entrepreneurs to imitate other’s technology.

Hagen had ascribed the genesis of entrepreneurship to withdrawal of status

respect of a group. The social group that experiences the withdrawal of status respect
engulfs itself into aggressive entrepreneurism. In such a situation the status loosing
group and the members of status loosing group endeavour to regain their status by
undertaking rigorous entrepreneurial drive.

11. Leibenstein’s Theory (Emphasis on X-Efficiency):

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 The concept of X-efficiency was introduced by Harvey Leibenstein a noted
economist in1966 in his article titled “Allocative efficiency vs. X-efficiency”. This is
also referred to as X-inefficiency. In general X-inefficiency refers to the difference
between the optimal efficient behaviour of business in theory and the observed
behaviour is practice which occurs owing to different factors.

X-efficiency refers to the effectiveness with which a given set of inputs are
used to produce outputs. If a particular firm is producing the maximum output it can,
given the resources it employs with the best available technology, it is said to be
technical-efficient. X-inefficiency occurs when technical-efficiency is not achieved.
Whenever an input is not used effectively the difference between the actual output and
the maximum output attributable to that input is a measure of the degree of X-
efficiency.

12. M. Kirzrier’s View on Entrepreneurship:

Israel Meir Kirzner, an American economist has made remarkable

contributions towards entrepreneurship. He has contributed many books. His ideas and
theory on entrepreneurship can be understood by the going through his book
‘Competition and entrepreneurship’ published in 1973. There are six chapters. The
second chapter is devoted to discuss the topics like nature of entrepreneurship, the
different facets of entrepreneurs, entrepreneurial profits.

The basis of Kirzner’s idea of entrepreneurship is spontaneous learning. The

simplest situation in which spontaneous learning can occur is a Crusoe situation.
Further, Kirzner calls the state of mind that enables spontaneous learning to occur
alertness.Kirzner introduces the notion of the pure entrepreneur by saying that there
are two distinct ways in which this notion enters the analysis of the market process:
First, by means of contrast with Robbinsian economizers, and Second, through the
alertness.

13. Baumol’s View on Entrepreneurship:

William J. Baumol a noted economist had made significant contributions

towards the theory of entrepreneurship. He has many articles like ‘Entrepreneurship in

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Economic Theory’, ‘Entrepreneurship: Productive, Unproductive, and Destructive’ to
his credit that reflects his notion on entrepreneurship.

Baumol (1968) discussed role of entrepreneur. He felt that the role of the
entrepreneur is vital to economic growth. Baumol’s approach to entrepreneurship
within the economy shows that the entrepreneur is basically nonexistent in the models
of economics. He stated that the entrepreneur has been read out of the model because
the economic models are based on well-defined variables like output and price. There
is no scope for analyzing the issues related to like inventiveness, cleverness, ambition
of the entrepreneur in the models. He opined that theories won’t be able to portray the
function of entrepreneurial activity.

14. Peter Drucker’s View on Entrepreneurship:

Peter Ferinand Drucker was an Austrian born American multifaceted

management consultant, author, professor who described himself as a social ecologist.
Drucker’s book Innovation and Entrepreneurship published in 1985 is a great
contribution. Peter Drucker regards the definition of J. B. Say on entrepreneur. J.B.
Say was of the opinion that the “entrepreneur shifts economic resources out of an area
of lower and into area of higher productivity and greater yield.”

Peter Drucker viewed the entrepreneur as a unique agent of change. Drucker

writes that “the entrepreneur always searches for change, responds to it, and exploits it
as an opportunity.”In his book “Innovation and Entrepreneurship”, Peter Drucker
offers guidelines on how entrepreneurs can become innovative. Drucker opined that
successful innovation practices are result of systematic hard work. Drucker introduces
systematic innovation as a framework for exploiting innovative opportunities.

2.10 DIFFERENCES BETWEEN ENTREPRENEURSHIP &

INTRAPRENEURSHIP

Points of
Intrapreneurship Entrepreneurship
difference

Definition Intrapreneurship is the Entrepreneurship is the dynamic

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 entrepreneurship within an process of creating incremental
existing organization. wealth.

Risk Hears moderate risk. Bears all types of risk.

To increase the competitive

Core strength and market To innovate something new of
objective sustainability of the socio-economic value.
organization.

Enhance the rewarding capacity

Primary Innovation, financial gain tad
of the organization and
motives independence.
autonomy.

Direct participation, which is

Direct and total participation in
Activity more than a delegation of
the process of innovation. _
authority.

Organizational employees The free and sovereign person

Status
expecting freedom at work. doesn’t bother with status.

Keep risky projects secret unless

Recognizes mistakes and
Failure and it is prepared due to high
failures to take new innovative
mistakes concern for failure and
efforts.
mistakes.

Collaborative decisions to Independent decisions to

Decisions
execute dreams. execute dreams.

Organization and intrapreneur Customers and entrepreneur

Whom serves
himself. himself.

Family May not have or a little Professional or small business

heritage professional post. family heritage.

Relationship Authority structure delineates A basic relationship based on

with others the relation. interaction and negotiation.

Time Self-imposed or There is no time-bound.

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orientation organizationally stipulated time
limits.

The focus of Increasing sales and sustaining

on Technology and market.
attention competition.

Attitude
Follows self-style beyond the Adaptive self-style considering
towards
given structure. Structure as inhabitants.
destiny

Attitude
Strong self-confidence and hope Strong commitment to self-
towards
for achieving goals. initiated efforts and goals.
destiny

Operates from inside the Operates from outside the

Operation
organization. organization.

DIFFERENCE BETWEEN ENTREPRENEURS AND MANAGERS

Area of
Entrepreneurs Manager
operation

To start a venture of difference To render effective and efficient

to provide with distinct service in a created venture of
Motive
qualitative goods or services to the entrepreneur to run the
the economy. venture successfully.

Servant of the venture

Owner of the venture or the
organization who is a salaried
Status holder of the patented goods or
person and not independent of
service.
his employer, the entrepreneur.

Assumes all types of risks. He is It doesn’t take any risk.

not a gambler but he faces He is responsible for systematic
Risk-taking uncertainty and lakes both risks but not for any uncertainty
systematic and unsystematic involved in running the
risks. enterprise.

Reward The profit is uncertain. Salary, that is certain.

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 Independence and psychic
satisfaction.

Innovate new ventures with the

vision and values of the
Executes innovation developed
entrepreneur to meet the
by the entrepreneur. Managers
Innovation changing needs of the market
translate the entrepreneur’s ideas
and the organization with a new,
into practice.
differentiated, modified and
effective way.

A set of entrepreneurial
Qualification A set of managerial qualities.
qualities.

Abstract, creative and Concrete, absolute and

imaginative. Entrepreneurs have organizational. Managers have a
Thinking
a high tolerance for ambiguity low tolerance for ambiguity and
and uncertainty. seek.

Do not submit to any authority

and accept organizational roles
that have driven them to become Identify themselves in a positive
Responses to entrepreneurs. constructive way with authority
authority They are a misfit for the given figures using them as role
authority rather they enact their models.
authority to obey and execute in
their ventures.

Self-oriented, action-oriented,
Power-oriented while work
Orientation highly motivated for
along with others.
achievement.

COMPARISON OF MANAGERS, INTRAPRENEURS & ENTREPRENEURS

Features Managers Entrepreneurs Intrapreneurs

Promotion and other Independence, Independence and ability

Primary
traditional corporate opportunity to to advance with the
Motive
rewards, such as create, and corporate rewards

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 office, staff, and money
power.

Short-term-meeting
Between entrepreneurial
quota and budgets; Survival and
and traditional managers,
Time weekly, monthly, achieving 5-to
depending on urgency to
orientation quarterly, and the 10- years growth
meet the self-imposed and
annual planning of a business
corporate timetable.
horizon.

Delegates and
supervises more Direct Direct involvement more
Activity
than direct Involvement. than delegation.
involvement.

Moderate risk-
Risk Careful Moderate risk taker
takers

Not concerned with

Concerned with No concern with
Status traditional status symbols-
status symbols. status symbols.
desires independence.

Tries to avoid Deals with Attempts to hide risky

Failure and
mistakes and mistakes and projects from view until
Mistakes
surprises failures ready

Usually agrees with

those in upper Follows dream Able to get others to agree
Decisions
management with decisions. to help achieve a dream.
positions.

Self and Self, customers, and

Who serves Others
customers sponsors

Entrepreneurial
Family members Entrepreneurial small-
Family small business,
worked for large business, professional. or
history professional, or
organizations. firm background
farm background

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 Transactions and
Relationship hierarchy as a basic deal-making as Transactions within
with others relationship the basic hierarchy
relationship

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77
REASONS WHY ENTREPRENEURSHIP IS STILL UNPOPULAR IN INDIA

1. India has a diverse culture, and somehow that has seeped into the professions
chosen by the communities too. For instance, we assume Gujaratis and
Marwaris to be born entrepreneurs. So, if we see a Marwari working in the IT
department, it comes as a shock to most people, not now maybe but was
before! Similarly, we assume that South Indians are cautious by nature. The
prevailing notion is that they neither take many risks nor do they like to invest
money in anything unconventional. They are more likely to spend their lives
conservatively and hence, stick to the 9-5 jobs where there is financial security
and stability. The lines are quickly blurring though. So, while we have a Ritesh
Agarwal of Oyo Rooms, we also have a Vivek Kooparthi from Chennai who
made it to the Forbes’ list of super achievers with his revolutionary NeoLight,
which can treat jaundice at home. However, culture still plays a significant role
in influencing the career choices of people, and it will take a long time for the
trend to change.
2. Entrepreneurship, especially start ups is like walking on a thin rope. Even if
this may not be the truth, it perceptually seems like that for many. You may fail
or succeed in your venture. There is no financial security. This makes it an
unconventional choice for many people, including the youth who are otherwise
known for their risk taking abilities.
3. Indians (including the business people) by nature are cautious and like to play
safe. This is definitely a generic statement and does not apply to all. That is
because our older generation has taught us to be prudent and play safely in life.
Their life revolved around earning enough to look after the kids and family and
saving for an after retirement life. We have grown up on the lessons of
survival. Entrepreneurship, on the other hand, is all about taking risks.
Inspiring stories of an Elon Musk, Steve Jobs or Dhirubhai Ambani has taught
us that you only grow when you take major risks in business. As there is a
considerable risk involved in business – right from investing a lot of money in
your plan, to getting the right customers to sustain the business; people are
dissuaded from becoming an entrepreneur.
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 4. Marriage is an important part of the Indian society. There has been a hierarchy
of sorts followed while selecting a groom for a girl. Boys in government jobs
and banks are the most sought after as those jobs are considered the safest,
followed by boys working in private companies. Boys who are entrepreneurs
are the last choice, because there is a lot of uncertainty involved in the future.
Girls, on the other hand, are completely discouraged from becoming an
entrepreneur – one of the many reasons, why you find very few women
entrepreneurs in India.
5. I remember seeing a meme where an old man asks a young man what he does
for a living. The young man replies that he is an entrepreneur. Pat comes the
reply from the old man, ‘Why? Didn’t you find a job?’. The meme perfectly
encapsulated the thinking of the society. As a society, we are wired to
appreciate success and criticise failure and let us be honest, not every business
is going to be a success. If there is a huge turnover suddenly, then the business
is very well appreciated. However, if there are some initial setbacks, it is not at
all taken respectfully by the society. This discouragement from the society
stops some of the brightest minds in the country from trying their hand at
entrepreneurship.
6. Another most important reason for the dearth of entrepreneurs is the lack of
financial banking. Some people may have brilliant ideas, but they do not have
the funding to implement The financial institutions and Venture Capitalists also
have a lot of bias and lay down unreasonable terms and conditions that
discourage the young entrepreneurs from pitching their ideas. Crowdfunding,
which is a popular way of receiving funds, is still an unexplored segment in
India. And unfortunately, there is no Erlich Bachman or Russ Hanneman of the
Silicon Valley fame either, who have faith in the young minds of our country.
2.11 NURTURING THE CULTURE OF ENTREPRENEURSHIP IN INDIA

It is going to be a long-term effort, but thankfully it is doable as everyone from

government to management institutes and even organisations have realised the
importance of promoting entrepreneurship in India. Few of these initiatives include:

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 1. The government of India and even the state governments are already
encouraging startup ideas with initiatives such as Startup India and the major
Global Entrepreneurship Summit (GES) that was held last year in Hyderabad.
Of course, there are certain hiccups in the execution. However, it is
undoubtedly a sign of positive development. Entrepreneurs should look for
updates from the government and identify avenues that can help them realise
their ideas and execute it.
2. Leading management institutes such as SP Jain Institute of Management,
NarseeMonjee Institute of Management Studies, and many more have realised
the need for a structured format of learning entrepreneurship. Entrepreneurs
can enrol in these courses to understand how it works. No time to attend
classroom lectures? Well, there are several online lectures such as Udemy’s
Entrepreneurship and Innovation course or EdX by Massachusetts Institute of
Technology (MIT) to learn the latest lessons on entrepreneurship.
3. There are many networking conferences conducted in major Indian cities.
Entrepreneurs can look for the ones that interest them and attend it to get an
idea of how startups work. They also get access to mentors who can guide them
in areas such as business development, raising capital etc. These events are apt
for budding entrepreneurs to learn the lessons of entrepreneurship.
4. Organisations can also play a significant role in nurturing entrepreneurship.
Many organisations have an initiative called Intrapreneurship that allows
employees with innovative ideas to pitch and receive funding for it. This gives
people the opportunity to test the water before plunging into it.
BUILDING AN ENTREPRENEURIAL CULTURE IN INDIA

While entrepreneurship has been a hot topic of discussion with the likes of
Flipkart, Oyo rooms, Ola and several other Indian startups going global and being
covered vastly in the media, here I would like to discuss what it would take to build an
entrepreneurial culture in the country.

The fact that entrepreneurial culture leads to economic growth is a well

understood fact, especially as we look at the entrepreneurial ecosystems in US, Israel

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or London and the growth in those regions. So, how does one actually build an
entrepreneurial culture?

Lower the opportunity cost of failure.

Whether it is through improved government regulation, evolution of a society

that embraces failure or an investor community that invests in second- or third-time
entrepreneurs, we need to lower the cost of entrepreneurial failure. By making failure
acceptable we allow more people to take the risk of trying something new, whether as
a start-up or as an employee within a firm.

Foster a culture of questioning.

Entrepreneurship by its very nature is disruptive and bringing a culture of

questioning what is the norm, has to start from our schools and carry on through our
universities. We need to encourage young people to think out of the box and reward
innovation of new ideas and concepts, rather than just reward top performance in
grades. This requires a re-think of our entire concept of learning, and while there is a
lot of work happening here, we still have a long road ahead to bring our entire
education system in line with the needs of the industries of tomorrow.

Create more networks for mentoring.

While there are several early stage investors in India, we still need more mentor
speakers for entrepreneurs in the ecosystem. Mentors play an important role in
encouraging entrepreneurship and guiding new entrepreneurs in their journey. Having
more networks to connect mentors and entrepreneurs through our universities and
organizations, will only lead to a better entrepreneurial culture being developed.

So, as we look at discussions on how to drive more growth in the economy,

let’s also bring a part of the discussion into how to build an entrepreneurial culture, so
we can continue to bring the more sustainable and long term growth that can come
through disruptive entrepreneurial ventures.

WHY DOES INDIA NEED ENTREPRENEURSHIP CULTURE?

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 An idea coupled with rigorous efforts makes a person an entrepreneur.
Entrepreneurship is basically creating a business from naught – generating an idea and
converting it into a profitable venture. Quoting this definition is very easy but the
actual implementation is equally difficult. In India, we have a number of examples of
successful startups like Zomato, Flipkart, Paytm, Ola, Snapdeal, Redbus and many
more. As per Nasscom report, India is the third largest country when it comes to
ranking on the basis of number of startups. Every day, a number of startups take birth
most of which do not remain into existence after few months. But some entrepreneurs
take the pain to sustain for long and make it happen. The average age of a founder in
India is about 37 years which is lower as compared to other countries.

India is a labor intensive economy which has laid foundation for

entrepreneurship culture. In India, people have great skills. They are full of innovative
ideas. But they do not have huge financial resources. The population of India is
growing at rate of around 1.2%. With increase in population, the unemployment also
increases. The solution to the massive unemployment in India lies in the spirit of
entrepreneurship. Entrepreneurship helps in creating more jobs and thus removes the
issue of unemployment. As per a recent survey in Gurgaon by The Entrepreneurship
School, a startup creates around 5 jobs initially which increases upto 50 if it survives
in long run. Micro, Small and Medium Enterprises (MSME) contribute nearly 8
percent of GDP of India and also contribute majorly to the exports. This clearly shows
that the entrepreneurship culture has a lot of potential in India. We do not have much
capital to start with big businesses directly. But through small startups, the economy
of India can thrive in a healthy manner.

In India from food to shoes, there are ample opportunities for business in all.
There are a lot of areas still untapped which can be turned into profitable
opportunities. To make use of these opportunities, India needs entrepreneurs. The
environment is also becoming very conducive towards entrepreneurship culture. The
costs of starting a business have decreased by 5.5% since 2005 and also the average
time period spent has decreased from 56 days to 29 days only. A lot of investors are
taking interest in startups. So getting funds for initial investment is not very difficult

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in the current scenario. The bank loans are also easily available thanks to the number
of schemes the government has implemented for small new ventures.

2.12 BARRIERS OF ENTREPRENEURSHIP

In today’s world, each one us dreams of being an entrepreneur and starting up

something that we are passionate about. It’s all about making a difference in the world
of business and solving the pain areas of the target audience through our offerings of
products and services.Entrepreneurship requires a thorough thought process, radical
thinking, market know-how, and a strategic plan that is clear and crisp. Also, the
vision and mission need to be divided as per the short term and long term goals and
objectives.

1. Finances

We are all bustling with ideas that are unique and can make for an amazing
business start-up. But no matter how good your idea is, you will always need stable
finances and funding from the investors to begin the process and take the first step
towards your journey of entrepreneurship.And getting a sound financial investment or
funding can be one of the biggest Barriers to Entrepreneurship as many of banks,
private investors, angel investors, and organizations find it quite difficult to believe in
the start-up ideas owing to the risk of failure and losing their money.

2. Fear of not to be a success

We all go through the fear of failure. And if the fear is associated with the risks
and stakes taken in the stream of business and entrepreneurship, the level of fear
elevates.There is a fear if we are on the right track, is the idea worthwhile, will there
be profit, will I find investors, and various such fears and tensions act as the Barriers
to Entrepreneurship.

3. No strategic plan in place

Lack of proper planning and strategy in place is one of the most common
Barriers to Entrepreneurship. Many of us think to build a business out of a hobby
without having any sort of long term and short term vision and plan in mind.Running

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a fully-fledged business or being an entrepreneur requires a huge amount of skill set,
passion for excelling, strategic vision, the mission to accomplish the goals, market
research, and a lot more.Right from the target market, finances, human resources, to a
proper strategic plan is required to build a successful business or a brand in the
market.

4. Human resource issues

Entrepreneurs cannot handle and run a business alone by themselves. We

require the support of human resource to carve a niche in the market.Employees with
the required knowledge, expertise, and experience are needed for the efficiency of the
business processes and high levels of productivity.First of all, it is quite difficult to
find the employees that share the same vision and wavelength of the business. Plus
paying a hefty annual or even a monthly retainer income is a problem of the start up’s
as the finances at hand are always limited, and the overheads and expenses are also to
be taken care of.

And secondly, it is also difficult to manage human resources as each of us work

with a different mindset and perspective. Hence, human resources and employees can
be as one of the Barriers to Entrepreneurship.

5. Stringent rules and regulations of the market

It is not very easy for entrepreneurs to enter the new market as there are quite
many rules and regulations imposed by the government authorities.Plus there are
various laws and compliances to be adhered to such as taxation, environmental
regulations, licenses, property rights, and much more than act as the Barriers to
Entrepreneurship.

Some of the countries have many corrupt officials that act as a hindrance for
the new entrepreneurs and start-up brands to start or expand their business in the new
market. And if the brand is planning to expand its business operations in any of the
foreign countries, it gets even more difficult.

6. Fewer opportunities

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 Even though there is a lot of talent pool in the market with the aspiring
entrepreneurs buzzing with the ideas, but the opportunities presented to them are quite
less and fewer.Reasons such as nepotism and corruption act as the Barriers to
Entrepreneurship with not many vital and lucrative opportunities.

7. Lack of capacity

Even if there are opportunities presented to the aspiring entrepreneurs, there is

a lack of capacity in some them to embrace the opportunities with open arms. The
reasons can vary from lack of knowledge, lack of education, lack of willingness, lack
of strategic knowledge, and cultural hindrances amongst others; but the factor of
motivation and zeal gets missing.To start a new business venture amidst all the risks
and market-related issues, it requires a lot of hard work, passion, and high capacity to
handle all of it.

8. Less market experience

The experts always mention that one should never rush in setting up a business.
It is quite necessary to gain a relative amount of work experience by working in the
industry domain or sector of choice and as per the education levels. It also helps to
sharpen the required expertise and find the ground in the career graph.Once the person
is ready to take risks and have a relative amount of market exposure, he is ready to
take the entrepreneurial plunge.

9. Lack of risk-taking capacity

It is always said that entrepreneurs never sail in safe waters and are never
confined to their comfort zones. Lack of risk-taking capacity is the psychological
mindset and perspective towards the business and acts as one of the major Barriers to
Entrepreneurship.The budding entrepreneur has to have a structured and organized
approach towards the various business elements and should risks rather than averting
them.

10. Corrupt business situations

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 As mentioned earlier, if the business situations and the environment are not
very supportive and corrupt for the young and aspiring entrepreneurs, it acts as one of
the top Barriers to Entrepreneurship.Bribing, rampant corruption, unfriendly ties of
government with other nations, inconsistent laws, stringent compliances, and
enforcing regulations that are unhealthy and negative in their approach hamper the
growth of businesses in the country.Russia is one of the examples of having an
unhealthy and unsupportive business environment.

11. Inadequate training

With no proper education, development, training, entrepreneurial skills, and

technical know-how acts as the Barriers to Entrepreneurship.

12. Lack of practical knowledge

Having a strong educational background is just not enough to pursue business

as it requires practical knowledge as well to stay relevant amidst the various market
cycles. And many entrepreneurs lack practical knowledge.

RISKS FACED BY THE ENTREPRENEURS IN INDIA

1) Competitive Risk :

These types of Business risks are very common in the market since competition
is present in almost every industry. Competitive risk is the advantage that competitors
may gain over you by achieving the target. A decrease in market share is also a kind
of competitive risk because that means other competitors are gaining the market share.

2) Economic Risk :

The risk associated with the economy is termed as an economic risk. The
possibility of economic slow down or economic changes on the global level is also
associated with economic risk. Industry slowdown, drastic measures from the
government is also part of the economic risk.

3) Operational Risk :

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 The possibility of failures in the day-to-day operations of an organization is
called operational risk. Any failure in any process is associated with operational risks
such as customer service process error, internal process error or the operational failure
of the supply chain or mismanagement of inventory is also associated with operational
risk. Operational risks are present at every step of all the processes and even after
completion of the process that is a risk of operational failure.

4) Compliance Risk :

There is always a possibility that when performing a certain task, the laws of
the tsar and may be overruled. While following the processes of the organization
many times the compliance may be put at risk. It is very important that organization
prevent itself from running into compliance risk because this may have long-term bad
effects on the organization.

5) Strategy Risk :

A risk related to a particular strategy is called as strategy risk. These types of

risks are common with your products and new industries. Even the new company runs
at the risk of strategy execution. The latest strategy is not executed properly it poses a
threat to the entire organization.For example, Cadburys to correct with the new
product silk. The product did not successfully run in the market owing to its gooey
nature and improper advertising. This is the reason why Cadbury silk did not do well
in the market.

6) Reputational Risk :

Every organization runs at the risk of the reputation. The declining reputation
may cause long-term losses for the organization. The causes for reputation decline can
be a product failure, product non-compliance or a general dissatisfaction from the
entire customer base. The customers blame the product and the company which causes
the organization to lose its reputation.For example, The Tylenol incident of Johnson
and Johnson caused a big reputation risk for the organization. However, the company
managed it very well by pulling all the Tylenol batches back and issuing an apology.

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7) Project Risk :

Undertaking a new project is always risky for an organization. A turnkey

project, for example, poses risk for the organization. While a successful turnkey
project would always be welcome, there is always a possibility of failure. The success
of the project could mean a lot in terms of money as well as reputational preferences.
Does every new project run with these types of business risk which is project risk?

8) Innovation Risk :

Developing a new product requires a lot of investment in research and

development department. However, the innovation runs at risk because the product
may or may not work in the market. It is not necessary that every innovative product
should work in the market at the right time. The important thing is even the market
should be ready to accept the product.

For example, before Apple had launched full touchscreen phones Nokia and
few other companies had tried launch touchscreen phones without keypad but since
they will not popular enough the customers did not accept them however when the
same concept was brought in my apple it worked wonders for the company.

9) Quality Risk :

Product quality is a very essential parameter for the success or failure of the
product. A good quality product even though expensive will always find customers
while a bad quality product, however cheap, will not sustain in the long run. It so
happens that even after a product is developed at a certain quality, the standard may
not be compliant enough in the long run which risks the quality of the product and
puts it ar quality risk.

10) Credit Risk :

The sure to pay money to the person you owe is called credit risk. As much as
the surprising financials of the company this also applies to the products of the
company that are taken from distributors. If the customer is unable to make the

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payment of for the products, he runs at credit risk and if the product sales have gone
down and the customer does not return the product, he again runs at credit risk.

11) Political Risk :

Every organization runs at political risk. The political situation may cause a
disruption in the company for a long term which may modify or permanently change a
part of the entire organization. These political factors are external and cannot be
controlled by anybody. For example, in 2017, there was demonetization carried out in
India which affected a lot of factors.

Since the cashless economy was being propelled in the market multiple
applications which provided the facility of cashless nature were drastically increased.
Since then these have gained popularity in the Indian subcontinent. Thus, every
organization runs at political risk.

12) Seasonal risk :

Most of the products and services run on a seasonal basis. During the season
the sales pick up all during of season they have to push this is numbers. For example,
during January of every year gym memberships rise by a substantial percentage.
These are few of the factors which are out of control and since these cannot be
controlled organizations, try to push the sales even in non-peak seasons to make it an
even business for them all throughout the year.

13)Financial risk :

This is the most important risk of all types of Business risks. The financial risk
is not only for the organization but also for the investors that seek a return on
investment. Depending on the nature of the organization, industry growth and product
quality, financial risk can be assessed.

Banks while issuing loans also have a financial risk factor which they take into
consideration. It is crucial that the products of the company perform in the market and
get sales which will bring revenue to the organization and profits for investors. The
better the sales, the lower is the financial risk. But there are always unforeseen

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circumstances like economic slowdown or depression or inflation or war when the
financial risk runs higher.

2.13 ENTREPRENEURSHIP DEVELOPMENT IN INDIA

A self-made individual who takes financial risks in setting up a business for

profit is called anentrepreneur. Today, amidst a struggling economy, India has
witnessed many start-up successstories including Flipkart, OYO, Ola Cabs,
BookMyShow, Nykaa, Big Basket, and Swiggy toname a few. However, all self-
employed people cannot call themselves entrepreneurs. Thepotential for growth and
economic impact is what truly defines an entrepreneurial business.

“Startups have emerged as engines of growth for our economy.

Entrepreneurship has alwaysbeen the strength of India. Even today, young men and
women have given up greener pastureselsewhere to contribute to India’s growth. They
are risk-taking and come up with disruptivesolutions to festering challenges…We
recognise the knowledge, skills and risk-takingcapabilities of our youth. He is no
longer the job seeker. He is (a) creator of jobs. Now we wishto create more
opportunities and remove road-blocks from his path.” -Nirmala Sitharaman, Finance
Minister of India

In recent years, entrepreneurs have faced countless obstacles in the business

environment.Extreme harassment from tax officers was an issue that was addressed in
the budget. “Ourgovernment would like to reassure taxpayers that we remain
committed to taking measures sothat our citizens are free from harassment of any
kind,” – Nirmala Sitharaman

The government is now determined to empower Indian society, digitally.

Introducinginvestments, technology, employment and seed funding for ideation and
development progress.Crucial moves were also made to defer tax payment on
employee stock option plan (ESOP) byfive years. This is the best way to entice young
start-ups to retain their talented employeesduring the initial years of business. Now
taking more risks when performing on a large scale ispossible.

Objectives of Entrepreneurship

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 • Help reduce the unemployment problem

• Surmount stagnation issues

• Boost competition and growth of the business

GROWTH OF ENTREPRENEURSHIP IN INDIA

After taking a long sigh of political relief in 1947, the Government of India
tried to spell out the priorities to devise a scheme for achieving balanced growth. For
this purpose, the Government came forward with the first Industrial Policy, 1948
which was revised from time to time.The Government in her various industrial policy
statements identified the responsibility of the State to promote, assist and develop
industries in the national interest. It also explicitly recognised the vital role of the
private sector in accelerating industrial development and, for this; enough field was
reserved for the private sector.

The Government took three important measures in her industrial resolutions:

1) To maintain a proper distribution of economic power between private and

public sector.
2) To encourage the tempo of industrialisation by spreading entrepreneurship
from the existing centers to other cities, towns and villages.
3) To disseminate the entrepreneurship acumen concentrated in a few dominant
communities to a large number of industrially potential people of varied social
strata.
To achieve these adumbrated objectives, the Government accorded emphasis
on development of small-scale industries in the country. Particularly since the Third
Five Year Plan, the Government started to provide various incentives and concessions
in the form of capital, technical know-how, markets and land to the potential
entrepreneurs to establish industries in the industrially potential areas to remove the
regional imbalances in development.

This was, indeed, a major step taken by the Government to initiate interested
people of varied social strata to enter the small-scale manufacturing field. Several

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institutions like Directorate of Industries, Financial Corporations, Small-Scale
Industries Corporations and Small Industries Service Institute were also established by
the Government to facilitate the new entrepreneurs in setting up their enterprises.

Expectedly, small- scale units emerged very rapidly in India witnessing a

tremendous increase in their number from 121,619 in 1966 to 190,727 in 1970
registering an increase of 17,000 units per year during the period under reference.

The recapitulation of review of literature regarding entrepreneurial growth in

India, thus, leads us to conclude that prior to 1850; the manufacturing
entrepreneurship was negligible lying dormant mainly in artisans. The artisan
entrepreneurship could not develop mainly due to inadequate infrastructure and
lukewarm attitude of the colonial political structure to the entrepreneurial function.

The East India Company, the Managing Agency Houses, and various socio-
political movements like Swadeshi campaign provided, one way or the other, proper
seedbed for the emergence of the manufacturing entrepreneurship in India from 1850
onwards.The wave of entrepreneurial growth gained sufficient momentum after the
Second World War. Since then the entrepreneurs have increased rapidly in numbers in
the country. Particularly, since the Third Five Year Plan, small entrepreneurs have
experienced tremendous increase in their numbers.

But, they lacked entrepreneurial ability, however. The fact remains that even
the small entrepreneurship continued to be dominated in business communities though
at some places new groups of entrepreneurs too emerged. Also, there are examples
that some entrepreneurs grew from small to medium-scale and from medium to large-
scale manufacturing units during the period.

The family entrepreneurship units (family business) like Tata, Birla, Mafatlal,
Dalmia, Kirloskar and others grew beyond the normally expected size and also
established new frontiers in business in this period. Notwithstanding, all this happened
without the diversification of the entrepreneurial base so far as its socio-economic
ramification is concerned.

FACTORS AFFECTING ENTREPRENEURIAL GROWTH

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 There are large number of varied factors which contribute to the growth of
entrepreneurship. These factors can be broadly classified into five.

PSYCHOLOGICAL FACTORS: - Inspiration for achievement prepares an

entrepreneur to set higher goals and achieve them. The important psychological
factors influencing entrepreneurial growth may be outlined as below:

(A) Need for Achievement: - Need for achievement means the drive to achieve a
goal. People having need for achievement will be so much self – confident that they
do not believe in mere luck. If an individual has need for achievement, he will become
a successful entrepreneur.

(B) Personal Motives: - These have been found to be one of the crucial factors
responsible for entrepreneurship amongst individuals. Bill Gates dreamt that one day
he would become the richest person. His dream became a reality later.

(C) Recognition: - Many people become successful entrepreneurs just for getting
recognition from others.

(D) Need of Authority: - ‘Need of authority’ will inspire men to work. When they
become entrepreneurs, they can exercise authority over managers, employees etc.

CULTURAL FACTORS: - Culture consists of (1) Tangible man – made objects like
furniture, buildings etc.., (2). Intangible concepts like Laws, morals, knowledge etc..,
(3) Values and behaviour acceptable within the society. The important cultural factors
influencing entrepreneurial growth are briefly explained as follows:

(A) Culture: - Culture is closely related with accepted values and human behaviour.
For e.g. some societies have customs of polygamy and some have not.

(B) Religious Belief: - According to Max Weber, entrepreneurism is a function of

religious belief and the impact of religion shapes the entrepreneurial culture. He
emphasized that the entrepreneurial energies are exogenous supplied by means of
religious belief.

(C) Minority Groups: - Hoselitz explained that the supply of entrepreneurship is

governed by cultural factors, and culturally minority groups are the spark plugs of

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entrepreneurial and economic development. Minority groups like the Jews and Greeks
in Medieval Europe, the Lebanese in West Africa, the Indians in East Africa has
important roles in promoting economic development.

(D) Spirit of Capitalism: - It guides the entrepreneur to engage in activities that can
bring more and more profits. The profit motive character coupled with the attitude
towards acquisition of money urges the individual to start new venture.

SOCIAL FACTORS: - What mould a man into an entrepreneur is the sociological and
environmental factors during childhood, and at the school, personal experience in
adult life at the college and job environments, the mobility, occupation and support
from parents. The social factors include:

(A) Legitimacy of Entrepreneurship: - System of norms and values within a socio –

cultural setting is responsible for the emergence of entrepreneurship. The degree of
approval or disapproval granted to entrepreneurial behaviour will influence its
emergence and its characteristics if it does emerge.

(B) Social Marginality: - Individuals or groups on the perimeter of a given social

system or between two social systems provide the personnel to assume the
entrepreneurial roles. Social marginality is likely to promote entrepreneurship are
largely determined by two factors, namely the legitimacy of entrepreneurship and
social mobility.

(C) Family, Role Models and Association with Similar Type of Individuals: - If an
individual has a supportive family, he or she is more likely to become an entrepreneur.
Similarly, if an individual has role models who have been successful in
entrepreneurship, certainly, he may be motivated to start ventures. If a person is in
association with entrepreneurs, this may add to his or her desire of setting up a new
venture. Reliance, Tata, Birla etc. are the industries depend upon family based
inheritance. Roberts (1991) has developed the idea of the ‘entrepreneurial heritage ‘ to
describe the importance of the family background for the entrepreneur. This heritage
includes factors such as the father’s occupation, the family work ethic and religion,
family size and the first born son, growing up experience and so on.

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(D) Caste System: - Certain religions and caste encourage the growth of
entrepreneurial talent. Some religious communities like the parsees, marwaris and
sindhees seem to have an affinity for entrepreneurial activity. The caste system in
Hindu society has promoted to the growth of business and professional skills.

(E) Occupation :- Those born in rich families with silver spoons in their mouth
have not only an advantage of having financial resources for carrying out business but
also learn the business skill by continuous interaction and contacts with parents,
customers, employees and visitors in family shops, offices and homes.

(F) Education and Technical Qualifications: - Education is the best means of

developing man’s resourcefulness which encompasses different dimensions of
entrepreneurship. It may be expected that the high level of education may enable the
entrepreneurs to exercise their entrepreneurial talent more efficiently and effectively.

(G) Social Status: - Every human being aspires for a high social status and once he
achieves a reasonable level, his aspirations and desires for its start getting multiplied.
People work hard to maintain their status as it also contributes to their entrepreneurial
growth.

(H) Social Responsibility: - It is the obligation to the society in which the business
enterprise operates. An entrepreneur generates employment for others besides helping
himself.

ECONOMIC FACTORS: - Economic factors also influence the growth of

entrepreneurship. The important economic factors are:

(A)Infrastructural Facilities: - Entrepreneurship development requires certain basic

infrastructure like power, transportation, communication, technical information etc.
These provide external economies and improve the efficiency of investments by
entrepreneurs. These infrastructural facilities are scarce in less developed countries.
The entrepreneurs themselves have to procure these facilities at their own cost. They
have to obtain these facilities at higher costs. This will greatly discourage the
entrepreneurship development. In advanced countries, those who are desirous of

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starting an enterprise will find no difficulty in procuring the infrastructural facilities at
reasonable costs.

(B) Financial Resources: - Finance is the life blood of business activity. Capital is
required to obtain materials, machinery, equipment, etc. and to undertake innovation.
Capital is regarded as lubricant to the process of production. The lack of financial
resources discourages the youth and potential entrepreneurs to start new ventures.
Hence, the need for fixed and working capital should be adequately met if new
entrepreneurs are to come forward and grow.

(C) Availability of Material and Know – How: - Entrepreneurship is encouraged

only if there is an adequate supply of materials and know-how. Easy availability of
materials attracts more individuals towards entrepreneurship. Technical know-how is
essential for innovation. With technical knowledge, men discover more and
sophisticated techniques of production.

(D) Labour Conditions: - The quality rather than quantity of labour is another factor
which influences the emergence and growth of entrepreneurship. The availability of
cheeplabour positively affects entrepreneurship. Labour problem can be solved not by
capital intensive technologies but by increasing their mobility, by offering them
facilities, incentives and concessions in every remote corner of the country.

(E) Market: - The size and composition of market influence entrepreneurship in

their own ways. Practically, monopoly in a particular product in a market becomes
more influential for entrepreneurship than a competitive market.

(F) Support System: - Ability, initiative and support systems include financial and
commercial institutions, research, training, consultancy services, ancillary industry
etc.

(G) Government Policy: - The socio- political and economic policies of the
government inhibit or foster entrepreneurial growth. Land and factory sheds at
concessional rates, adequate sources of power, supply of materials and other physical
facilities should be provided by the government to facilitate the setting up of new

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enterprises. The government has a dominant role to play in the industrial development
of backward regions with a view to attain a balanced regional development.

PERSONALITY FACTORS: - The supply of entrepreneurship in a society is largely

influenced by the presence of individuals with the initiativeness, foresightedness and
organizing and managerial competence. The following personality factors contribute
to the entrepreneurial development:

(A). Personality: - The entrepreneurial personality comprises of the person, his skills,
styles and motives. Impressive personality and individual skill help to develop
entrepreneurship. These qualities are required for entrepreneurs because they have to
work with officers, managers, engineers, labourers, customers, investors, govt.
officers, ministers etc.

(B). Independence:-Another personality factors which influences entrepreneurship is

independence. An entrepreneur works out plans on his own, searches and explores
resources and experiences and uses inner urge to make the enterprise a success instead
of waiting for suggestions or directions from others.

(C). Compulsion: - Certain compelling reasons also force the people to become
entrepreneurs. These include: (a) unemployment or dissatisfaction with existing job or
occupation, (b) to use technical or professional knowledge and skills, (c) to put the
idle funds to use. A large number of technically qualified people after gaining initial
experience and confidence and not being satisfied by their growth in the profession
have a compulsive reason to try entrepreneurship.

Book Reference

1. Entrepreneurial Development (2006) - S S Khanka - S Chand Publications

2. Entrepreneurship Development (2008) - S. Anil Kumar - New Age
International Publishers
3. Entrepreneurship Development And Communication Skills (2012) - R.R. Chole
- Scientific Publishers India
4. Entrepreneurship Development and Small Business Enterprises (2013) -
Poornima M. Charantimath - Pearson Publications

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Question Bank
Part - A

1. What is mean by entrepreneurial motivation?

2. Define motivation
3. Write the process or concept of motivation
4. What is means by entrepreneurs behavior?
5. What are the motivating factors?
Part - B

6. What are the nature or functions of motivation?

7. Explain the important of motivation
8. State the theories of motivation
9. Why entrepreneurs motive for starting an enterprise?
10. Explain the process of motivation
Part - C

11. Discuss about EDI (or) Entrepreneurial Behavioral

12. What are the points include in developing or process of entrepreneurial
behavior?
13. What are the types of motivation?
14. What are the financial institutions which help entrepreneur?
15. Is there any entrepreneurial Initiatives in India? Mention it.
16. What is the Role of Government in Supporting Entrepreneurship?
17. List out phases of EDPs.
18. What is the role of the Entrepreneurship in economic development?

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 UNIT – III
WOMEN ENTREPRENEURSHIP
Of late entrepreneurship amongst women has become a topic of concern for all
of us. Since women constitute nearly fifty percent of the total population of our
country, it is necessary they play a positive and constructive role in the socio-
economic development of the country. After Independence a good deal of attention
has been given to spread of literacy, increasing employment through industrial
development and improving health and quality of life of women in the country.
Women entrepreneurs may be defined as the woman or a group of women who
initiate, organize and operate a business enterprise. Any women or group of women
which innovates, initiates or adapts an economic activity may be called women
entrepreneurship
Learning Objectives
This lesson plans to describe the emergence of women entrepreneurship on the
following heads.
 Need for women entrepreneurship
 Special schemes for women entrepreneurs
 Problems of women entrepreneurs
 Nurturing process of women entrepreneurs
Unit Structure

 Women entrepreneurship – definitions

 Women entrepreneurship – common features
 Women entrepreneurship – need and factors
 Features of successful women entrepreneurs
 Functions of women entrepreneurs
 Need for women entrepreneurs
 Qualities of a women entrepreneur
 Roles of a women entrepreneur
 Problems faced by women entrepreneurs
 Suggestions to promote women entrepreneurs
 Government initiative to promote women entrepreneurs in India

INTRODUCTION
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 An increasing number of startups and new businesses have been founded in
India over the last decade, the majority of them by men. While many Indian women
have entrepreneurial ambitions, it is often more difficult for them to succeed. This
brief examines the impediments to greater participation of female founders in India’s
economy by first gathering available data to describe the situation of women
entrepreneurs in the country. It then explores the causes of low female
entrepreneurship rates, primary of which are unconscious biases, low confidence in
business skills, difficult access to finance and networks, a lack of family support and
child-care options, as well as insufficient safety in work and public spaces.

Women entrepreneurs may be defined as a woman or a group of women who

initiate, organise and run a business concern.Women entrepreneurs are those women
who think of a business enterprise, initiate it, organise and combine factors of
production, operate the enterprise and undertake risks and handle economic
uncertainty involved in running it.

3.1 WOMEN ENTREPRENEURSHIP – DEFINITIONS

Women entrepreneurs may be defined as a woman or a group of women who

initiate, organise and run a business concern.

Schumpeter – “Women entrepreneurs are those women who innovate, initiate

or adopt a business activity”.

Government of India – “A woman entrepreneur is defined as an enterprise

owned and controlled by a woman having a minimum financial interest of 51 percent
of the capital and giving at least 51 percent of the employment generated in the
enterprise to women.”

Frederick Harbison – “Any women or group of women which innovates,

initiates or adopts an economic activity may be called women entrepreneurship”.

In short, women entrepreneurs are those women who think of a business

enterprise, initiate it, organise and combine factors of production, operate the
enterprise and undertake risks and handle economic uncertainty involved in running it.

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 According to Government of India, “A Woman enterprise is the one owned and
controlled by a woman having minimum financial interest of 51% of the capital and
giving at least minimum 51% of generated employment to women”.

According to J. Schumpeter, “Women who innovate, initiate or adopt business

actively are called women entrepreneurs.”

CONCEPT

World over 1/3rd of the entrepreneurial ventures are run by woman

entrepreneurs. Due to economic progress, better access to education, urbanization,
spread of liberal and democratic culture and recognition by society, there has been a
spurt in woman entrepreneurship in India. Special incentives and drives have been
created in India to bolster the growth of women entrepreneurs. Schemes like Startup
India and Standup also make special case to promote entrepreneurial drive among
women.

Gradually but steadily, world over, women entrepreneurs have emerged as

successful entrepreneurs while earning many accolades for themselves. For e.g. Oprah
Winfrey, an American entrepreneur, television host and media executive received the
Presidential Medal of Freedom in 2013 for her outstanding work in the field of
entertainment and social impact.

Closer to home, Indian woman Entrepreneur, Kiran Muzumdar Shaw,

Chairman and Managing Director of Biocon Limited, received various coveted
corporate award and civilian awards like Padma Shri (1989) and Padma Bhushan
(2005) for her remarkable contribution to health and medicine industry. Other famous
Indian Women entrepreneurs include personalities like Vandana Luthra, Ekta Kapoor,
Naina Lal Kidwai and so on.

3.2 WOMEN ENTREPRENEURSHIP – COMMON FEATURES

Some common features of women entrepreneurs found in India are listed below:

1. Most women with small income are likely to become entrepreneurs

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2. Women with small facilities are likely to become entrepreneurs

3. A majority of women entrepreneurs are married. With the support of their husband
they accepted entrepreneurship.

4. Most spinsters face difficulties in obtaining financial support to start their

enterprises.

5. A large number of women with little or no education and training enter into the
business field.

6. Many women become entrepreneurs out of economic necessity.

7. Women’s sincerity and hard work is the cause for sustainability and growth.

8. Women entrepreneurs are security oriented rather than growth oriented

9. Most women prefer stabilization of income and minimization of risk

10. Business enterprises of women lack working capital, this causes low profit margin

WHY WOMEN BECOME ENTREPRENEURS?

1. To become economically independent

2. To establish their own enterprise

3. To establish their identity in the society

4. To achieve Excellency in their endeavour

5. To build confidence to themselves

6. To develop risk assuming ability

7. To claim equal status in the society

8. To secure greater freedom and mobility

3.3 WOMEN ENTREPRENEURSHIP – NEED AND FACTORS

In modern days, particularly in India, there is a great need for women

entrepreneurs. Several factors are responsible for compelling the women members of

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the family to set up their own ventures.These factors suggesting their need can be
broadly classified into two groups:

I) Motivational factors or needs and

II) Facilitating factors or needs.

Factor # (I) MOTIVATIONAL NEEDS:

The following are the motivational needs for which modern women are
motivated to become entrepreneurs:

1) Economic Necessity:

In business, the entry of women is relatively a new phenomenon. Because of

the break-up of the joint family system and the need for additional income for
maintaining the living standards in the face of inflation or rising prices, women have
started entering the most competitive world of business. Thus, because of the
economic necessity, women have begun entering business field for earning some
income and increasing their family income in modern days of inflation.

2) Desire for High Achievement:

Another motive force compelling women to enter business world is their strong
desire for high achievement in their life. In modern days, though women are educated,
they are not able to find jobs in the market place or they may not be able to go out of
their homes for working somewhere else because of family problems.

Therefore, a woman is tempted strongly by a desire to achieve something high

and valuable and prove herself as an asset and not a liability to the family. This is the
strongest motivating force for a woman to become an entrepreneurs.

3) Independence:

Another strong motive force compelling a woman to become an entrepreneur is

to lead an independent life with self-confidence and self-respect. The ownership and
control of a successful business provides a woman entrepreneur a prestigious status,
personal reputation and a sense of independence in the society.

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4) Government Encouragement:

The Government and non-government bodies have started giving increasing

attention and encouragement to women’s economic conditions through self-
employment and business ventures.

They have formulated various policies and programmes and introduced various
incentive schemes to promote women entrepreneurs in the country. Such
encouragement and incentive schemes have induced women to undertake business
mentors.

5) Education:

Women have been taking up various kinds of technical, vocational, industrial,

commercial and specialised education so as to qualify themselves to be self-employed
in some kind of trade, occupation, vocation or business. Facilities are also being
provided to women in areas where they can grow and blossom as persons in their own
right. Women have proved in modern days that they are no less than men in
efficiency, hard work or intelligence or even they can surpass men in several fields.

6) Model Role:

Women, like men, are also desirous of contributing their might to the economic
development of their country. Similarly, our women in India would like to play a key
role model. They have already entered other fields like politics, education, social field,
administration, etc. Now they have started entering the business field where they can
also show their importance as in other fields.

7) Family Occupation:

Family occupation is an important factor motivating a woman member to

participate in the family business, along with her husband and other members of the
family. There is a great need for women to undertake economic activity or business of
the family and support their families in family occupation or family business so as to
reduce the expenses of the family business and increase its income.

8) Employment Generation:

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 Another influencing factor that motivates women to become entrepreneurs is
the creation of employment opportunities. Women entrepreneurs generally take up
labour intensive small scale and village industries or handicrafts and they have high
potential in employment generation. Therefore, they serve as a solution to the
widespread problem of women unemployment to some extent.

9) Self Identity and Social Status:

Women desire to enjoy some social status and recognition in the society.
Women entering business can achieve such a position of self-identity and recognition
of social status because they come in contact with high level officers, ministers,
authorities, and others holding high positions.

10) Growing Awareness:

With the spread of education and the growing awareness among women, the
women entrepreneurs have been increasing, not only in the kitchen extension activities
i.e. the 3 Ps viz. pickles, powder (masala) and papad or the traditional cottage
industries, such as toy-making, basket-making etc. as they require less technical
know-how, but they are entering also into engineering, electronics and many other
industries which require high level technical skill. Thus, women entrepreneurs are
found in such technical industries as T.V. capacitor, electronic ancillaries, and small
foundries.

Thus, in modern days, women do not want to stay within the four walls of a
house but they want to become, like their male, counterparts, achievement-oriented,
career-minded and economically independent so that they would be able to provide
costly high level medical and technical education to their children and, lead a high
standard of living in their life.

Factor # (II) FACILITATING NEEDS:

Facilitating needs are the needs for providing various facilities for the
successful working of the women enterprises.These are given below:

1) Adequate Financial Facilities:

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 Finance is the life-blood of any business, whether it is run by men
entrepreneurs or women entrepreneurs. The Government has set up industrial estates
for women. It should therefore provide the required financial facilities to the women
entrepreneurs so as to motivate them to start their business or industry in such estates.

Several financial schemes like MahilaUdyam Nidhi, Marketing Development

Fund etc., have been set up only for women entrepreneurs. In addition, banks and
development finance institutions also provide financial assistance to women
entrepreneurs. Women will be tempted to start their own business ventures when such
facilities are easily available to them.

2) Innovative Thinking:

Innovative thinking in women motivate them to become entrepreneurs. Women

who have entrepreneurial talent and who have innovative thinking are naturally
induced to take up small business or industry to convert their innovating and talent
into a position of entrepreneurship instead of employment.

3) Support and Cooperation of the Family:

Another important factor that induces women to take up entrepreneurship is the

full co-operation and encouragement of the family members, particularly, husband,
father-in-law and mother-in-law, grown-up sons and daughters and other members, if
any. In a modern educated family, women members generally enjoy more liberty and
economic freedom. So naturally, they will be anxious to have their own source of
income from their business.

4) Availability of Experienced and Skilled Women:

Women entrepreneurs would be able to provide experienced and skilled people

to family occupations. Therefore, women will be motivated to become entrepreneurs.

5) Development Programmes:

The Central and State Governments have started several development and
training programmes particularly for women so as to enable them to become

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entrepreneurs. Such training and development programmes provide all types of
facilities to women to start their business independently.

3.4 WOMEN ENTREPRENEURSHIP – AREAS

Women entrepreneur in earlier years after independence were confined to

entrepreneurship in traditional areas like food, fruits, vegetables, pickles, papads,
tailoring, hosiery etc. However, often, Women entrepreneurs have branched out to
several new areas like engineering, beauty parlours, jewellery, handicraft, electrical,
electronics, chemical and other manufacturing. This shows that entrepreneurial base of
women expanded from traditional 3Ps – pickle, powder and papad to modem 3ES –
Engineering, Electrical and Electronics.

There are vast numbers of industries under small business sector where women
are playing a major role.Such industries can be listed as under:

1. Agriculture and Allied industries – such as sericulture, horticulture, dairying and

animal husbandry etc.

2. Home based industries-such as handicrafts, Agarbati, Candle making, bidi industry,

hosiery, and textile, doll making, jewellery pottery, designing etc.

3. Outside home industries – such as electrical and electronics, food processing etc.

Apart from the above, most Indian Women have performed well in both
organized and unorganized sector. For example, Kiran Mazumdar shaw, Shahnaz
Hussain, Ekta Kapoor, Kathi Ben who started their enterprises in small scale and
achieved wonders and created history.

3.5 FEATURES OF SUCCESSFUL WOMEN ENTREPRENEURS

1. Courage and clear vision:

 Courage is one of the most important characteristics of an woman entrepreneur.

 They many have the passion to start their own business, it's the courageous
ones who succeeds in their career.

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  A successful woman remained balanced and stays calm under all circumstances
and has a sound mind.
 A woman with a sound mind has the ability to take the right decision which
helps her to succeed in her business.
2. Self-confident and bold:

 Self-confidence is one of the most important characteristics for a successful

life.
 A confident woman has tremendous faith in herself and her abilities.
 She can easily resist the changes in the consumer market and succeed in her
business.
 A woman who is bold has the inner strength to face and cross the hurdles of
life, if any, with an open mind.
3. Hard working with an optimistic approach:

 Women entrepreneurs are capable of transforming her ideas into reality through
her optimistic approach.
 They work hard with the hope of success and do not give room to fear of
failure in their mind.
 Hard work is one of the greatest abilities of a successful woman entrepreneur,
they willingly works hard for achieving her goals.
 She takes up every work with Women a challenging mind and with an
orientation to achieve success.
4. Capable of taking risks and Goal Oriented:

 She is capable of confidently taking risks and is efficient in making the risk, a
rewarding one.
 Most of the successful business women set targeted goals in spite of their
family responsibilities.
 They work hard for achieving their set goals.
 Women who are goal oriented, work harder and succeed in her business.
5. Assertiveness and decision making:

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  A successful woman entrepreneur takes various decisions on various activities
of her enterprise with assertiveness.
 She takes firm decisions on the type of venture she undertakes and the way of
doing/handling it.
 She is clear, creative and assertive in her decision making.
6. Work-life balance:

 She can efficiently cope up with the stress levels in a better way by spending
value time with her children, spouse and family members.
 She very well knows how to balance her work-life which is one of the keys to
successful business.
 She makes time to spend with her children and supports them in every possible
way without any excuses of busy work life.
7. Build and develop their networks:

 One of the most prominent characteristics of a successful woman entrepreneur

is she is keen on meeting new people and thus tries to grow her business
contacts.
 She readily socializes with people whom she thinks are useful in developing
her business.
 She will never miss the social events / gatherings and she is keen on increasing
her circle.
 She is a good relationship builder and develops mutually beneficial relationship
in the society.
8. Good organizer and manager:

 Good organizing skills and managerial skills are the important traits of a
woman entrepreneur.
 She is competent in developing/building a good organization.
 She efficiently co-ordinates with her employees and effectively manages the
finances/capital.
 To expand her business and achieve her targeted goals, she occasionally
organizes minor events like sales and exhibitions etc.

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9. Leadership qualities:

 A successful woman entrepreneur exhibits high leadership qualities.

 She is capable of influencing her employees and creates an enthusiastic work
environment for them.
 She supports them in all possible ways and encourages for a good team work to
achieve targeted goals.
 A successful business woman is mostly profit-oriented and focuses / works for
her business growth.
3.6 FUNCTIONS OF WOMEN ENTREPRENEURS

Women Entrepreneur is not different from the concept of Entrepreneur, all the
concept characteristics & functions are applicable to Women Entrepreneur. The role
of women in family & society is changing very fast. Those days are gone where
typically women are expected to look after household activities change in various
social aspect like equal treatment to women, no discrimination among male & females
availability of equal opportunities to work in any field slowly these changes have
forced her to become more competitive & also encouraged into business operations.

After the II world war, there was a phenomenal increase in the number of self-
employed women around the world. The women entrepreneur is defined as a group of
women who organize & operate a business enterprise. Women entrepreneurs are
expected to innovate imitate to adopt economic activities. The government of India
has defined “An enterprise run by entrepreneur which is owned & controlled by
women having a minimum financial interest of 51% of capital& given at least 51% of
employment to the women.

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1. Planning

Planning is the basic managerial function of a woman entrepreneur. It helps in

determining the course of action for achieving various entrepreneurial objectives like
what to do when to do, how to do and who will do a particular task.

2. Organizing

Every woman entrepreneur needs personnel to look at the different aspects of

the enterprise. She sets up the objectives, goals to be achieved by its personnel. The
function of organizing is to arrange, guide, coordinate, direct and control the activities
of other factors of production i.e. men, materials, money, and machines so as to
accomplish the objectives of the enterprise.

3. Staffing:

Every woman entrepreneur has to perform the function of staffing which

includes manpower planning, recruitment, selection, and training, placement of
manpower, development, promotion, transfer, and appraisal, and determination of
employee remuneration.

4. Directing

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 Directing is concerned with carrying out the desired plans. It initiates organized
and planned activities and ensures effective performance by subordinates towards the
accomplishment of group activities.

5. Leadership

A woman entrepreneur has to issue various orders, instructions and guide her
subordinates in their work to improve their performance and achieve enterprise
objectives. It is the ability to build up confidence and zeal among people and to create
an urge in them to be a successful leader, she must possess the qualities of foresight,
drive, initiative, self-confidence, and personal integrity.

6. Motivation

A woman entrepreneur has to provide some personal incentive to the

subordinates to motivate, persuade and inspire them for contributing their best towards
the achievement of enterprise objectives.

7. Supervision:

After giving instructions, the woman entrepreneur has to see that the given
instructions are carried by subordinates at work to get the required and directed work
done and to correct the subordinates whenever they go wrong.

8. Coordination

Coordination is one of the most important functions. It creates a team spirit and
helps in achieving goals through collective efforts to provide unity of action in the
pursuit of common objectives.

9. Controlling

Controlling is the process that enables to get its policies implemented and take
corrective actions if the performance is not according to the pre-determined standards.

3.7 NEED FOR WOMEN ENTREPRENEURS

There are various reasons why women Entrepreneurs are always required in the
world of business. The first and foremost reason is that they have vast qualities that

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can beat any enterprise operating by men. So, here are some of the reasons why we
need Women Entrepreneurs in the business. Let us have a look.

1. Better Management of Finance

It is a fact that women can easily utilize the funds whether it is raised for home
expenses or the business expenditure. They will provide a better as well as quick
access to finance or credit for a business. To exemplify, if you will give a thousand
rupees to women, then she will surely commence a business with her finance
management skills. On the other side, she can also utilize another 1000 INR to provide
bread and butter to their family and also for their employees as well.

2. Access and Vigilance

The basic characteristic of an Entrepreneur is that they must stay high on the
updated information related to science and technology which would be helpful in the
business field. So, it is undeniable that women have a lot of potential as well as
entrepreneurial skills which can be used for the production and manufacturing of
various products innovatively and cost-effectively.

3. Challenges and opportunities

In this digital era, women are developing day by day and shifting from job-
seekers to job creators. They all are growing in all fields such as designers, exporters,
clothing, interior designers, etc. to give a contribution to the economic growth by
partaking actively. Their accessibility to local as well as foreign markets is
remarkable.

4. Self-employment

As all women are doing study and capable to grab the job opportunities but due
to less availability of positions in their field of interest they are facing unemployment.
Thus, the best way to deal with this unemployment is to generate some income by
commencing its own business. Women Entrepreneurs are regarded as a strong strategy
to eliminate all the issues of rural and urban areas.

5. Achiever

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 Women have always a misconception in their minds that they cannot manage
or run a business like other men. However, they forget that they are the creators of this
whole world and can easily achieve anything as they want, just require confidence and
a little change in mentality.

6. Overcome from the conventional pattern and structures

The traditional patterns and cultures as setting up by the ancestors hinder the
growth of women and they keep their potential inside the walls of their home. Women
need to take part in advancements and grow by breakthrough the traditional culture.

8. Breakthrough Orthodox views

In this world of non-conventional business fields, women need to get up and

stay strong to change the conventional thinking of segregating different sectors for
women and men as well.

9. Narrow down the Gender Gap

After making a lot of effort, then the gap between the men and women is still
large, not equal yet. Women Entrepreneurship motivates women to inspire and run a
business. Not only inspire a single woman to work but also give opportunities to other
women and establish a business kind of “made for women” only.

10. Better company culture

It has been observed that women-owned enterprises provide a well-developed

and safe atmosphere within the company. It is a pre-requisite to creating a strong as
well as a positive environment for ensuring long-term growth and success.

3.8 QUALITIES OF A WOMEN ENTREPRENEUR

Flabbergasting how the Women Entrepreneurs are becoming such successful

entrepreneurs? Want to know about the essential traits to work like those inspirational
ladies? As the women empowerment is increasing, there is a gradual incline in the
count of Women Entrepreneurs who hit the list of best-ever entrepreneurs in the
world.

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 Here, we have analyzed the qualities of a Women Entrepreneur which are a
must to get into the role of a successful business entrepreneur. Let us begin with
courage.

1. Courage

The first and foremost trait that is required in Women Entrepreneurs is courage.
Anyone can commence a business with great passion but only a few dares to keep
running the business for the long term and get success in this field.

2. Sound mind

Women Entrepreneurs need to have an active and sound mind that encourages
her to keep going with the trends and demands in the market. However, a disturbed
mind can hamper and works as a hindrance in the way to successfully run a business.
She needs to cross and tackle hurdles to overcome the hard times of the business. A
small setback in the business is a ritual.

3. Clear Vision with a strong mind

It is a decent sign of a successful Women Entrepreneur that she never gets

distracted from her goal. She should predict the upcoming market conditions and
situations as maybe arise in near future. A Women Entrepreneur must think out of the
box and provide all the things that are required by society.

4. Self-confidence and Bold

A tremendous faith, as well as her abilities, can help a Women Entrepreneur to

succeed rapidly in the business. She can withstand the difficult times and changes as
introduced in the market as per consumer’s demand and taste.

5. The orientation of Goals

Apart from fulfilling family responsibilities, many Women Entrepreneurs set

their target goals and working towards the same. They work harder to achieve the
desired goals and succeed in their business.

6. Optimistic approaches

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 An optimistic approach is very helpful in the business as the ideas need
conversion and this approach is an eye-catching aspect of a Women Entrepreneur to
get the ideas into reality. There is no room for fear failure on top of the head and they
ought to stay strong and determined while adverse situations too.

7. Assertive and make decisions

Various decisions need to be taken while running a business and being

assertive is a must to get the job done in a better way. She undertakes a venture and it
requires a lot of firm decisions to handling it effectively. She has to be clean, clear and
assertive while working for a business.

8. Maintain a work-life balance

She can effectively combat the level of stress by spending some quality time
with their kith and kin. A Women Entrepreneur better knows how to keep a balance
between the work-life which is a crucial key to success. Moreover, she has to spend
time with her children to support them in any way.

9. Build up networks

She must have a keen to meet new people and other Entrepreneurs to learn
something new and at the same token, she should attend social gatherings and parties.
Ideally speaking, she socializes with the people and grabs some innovative ways to
develop her business as well as widen their circles.

10. Brilliant Organizer and Manager

The vital quality of a Women Entrepreneur is having good organizing as well

as managerial skills. She should control and organize their employees in such a way
that she can achieve the set goals and also develop the qualities to manage the cash
and ensure that there will be no wastage of funds.

3.9 ROLES OF A WOMEN ENTREPRENEUR

It has been recognized that a Women Entrepreneur is vital and also, untamed
way to achieve economic growth from the last few decades. Women Entrepreneurs

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have shifted from the orthodox style of business to a non-traditional approach that
increased their knowledge and education related to the higher activities associated
with the business.

After getting special training and entrepreneurial programs, they contribute

towards the growth of nations and play an unexplained role in its development. Here,
we are having some aspects where Women Entrepreneurs play a vital role in the
below-given points. Let us have a look.

1. Generating employment

Not only establishing an enterprise is the motive but they also generate growth
and employment opportunities for the job seekers. Women Entrepreneur is related to
the position of women in society and their role as an owner of the business. Thus, they
have the potential to create job opportunities for people and help to decline the
unemployment rate across the nations.

2. Development of economy

The business firm manufactures and produces products as well as services that
come up with a proportion of gross domestic product of the nation. Women
Entrepreneurs bring strength and dynamism in the market because of their
entrepreneurial activity. So, they increase the national income of the country.

3. Optimum Utilization of resources

It signifies that a women-owned firm gives rise to the development of the

industries to better utilize resources such as labor, capital, and raw material. Thus, not
even a single business resource gets wasted due to the less utilization of the resources.
It ensures better management of resources as per the usage.

4. Improvement in quality of life

Nowadays, women started thinking independently and take decisions

accordingly. Moreover, they are capable of growing up their children in a very better
way as they want to be. Better education is the foremost motive which will increase
the quality of life by improving the standard of living.

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3.10 PROBLEMS FACED BY WOMEN ENTREPRENEURS:

1. Problem of Finance: Finance is regarded as “life-blood” for any enterprise, be it

big or small. However, women entrepreneurs suffer from shortage of finance on two
counts. Firstly, women do not generally have property on their names to use them as
collateral for obtaining funds from external sources. Thus, their access to the external
sources of funds is limited.

2. Scarcity of Raw Material: Most of the women enterprises are plagued by the
scarcity of raw material and necessary inputs. Added to this are the high prices of raw
material, on the one hand, and getting raw material at the minimum of discount, on the
other. The failure of many women co-operatives in 1971 engaged in basket-making is
an example how the scarcity of raw material sounds the death-knell of enterprises run
by women (Gupta and Srinivasan 2009).

3. Stiff Competition: Women entrepreneurs do not have organizational set-up to pump

in a lot of money for canvassing and advertisement. Thus, they have to face a stiff
competition for marketing their products with both organized sector and their male
counterparts. Such a competition ultimately results in the liquidation of women
enterprises.

4. Limited Mobility: Unlike men, women mobility in India is highly limited due to
various reasons. A single woman asking for room is still looked upon suspicion.
Cumbersome exercise involved in starting an enterprise coupled with the officials
humiliating attitude towards women compels them to give up idea of starting an
enterprise.

5. Family Ties: In India, it is mainly a women’s duty to look after the children and
other members of the family. Man plays a secondary role only. In case of married
women, she has to strike a fine balance between her business and family. Her total
involvement in family leaves little or no energy and time to devote for business.

6. Lack of Education: In India, around three-fifths (60%) of women are still illiterate.
Illiteracy is the root cause of socio-economic problems. Due to the lack of education
and that too qualitative education, women are not aware of business, technology and

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market knowledge. Also, lack of education causes low achievement motivation among
women. Thus, lack of education creates one type or other problems for women in the
setting up and running of business enterprises.

7. Male-Dominated Society: Male chauvinism is still the order of the day in India.
The Constitution of India speaks of equality between MALE AND FEMALE. Women
suffer from male reservations about a women’s role, ability and capacity and are
treated accordingly. In nutshell, in the male-dominated Indian society, women are not
treated equal to men. This, in turn, serves as a barrier to women entry into business.

8. Low Risk-Bearing Ability: Women in India lead a protected life. They are less
educated and economically not self-dependent. All these reduce their ability to bear
risk involved in running an enterprise. Risk-bearing is an essential requisite of a
successful entrepreneur.

WOMEN ENTREPRENEURSHIP – BENEFITS

Women getting into areas like entrepreneurship and business governance have
positive influence on the society. While wealth creation is an aspect common and
shared amongst men, women have proven that they can also create and distribute
wealth in society and provide employment like any other entrepreneur.Women
entrepreneurs must participate in events, conferences, workshops and seminars and
actively involve themselves with educational initiatives, to create the image change.
Once a change in the image is achieved in the society, it becomes easy for women to
have a greater influence on the younger generation.

Women entrepreneurship can be a great tool to bring about social reforms. In

fact, issues like female infanticide, dowry and disparity based on gender etc., can be
curtailed if women start respecting their positions, holding on to their positions and
become independent in business and economics. The very fact that women can be a
positive contributor to a family income can change the image of women in rural parts
of India.

This can result in lot of rural families beginning to send their girl children to
study further. This can also impact the way the next generation grows up. Being the

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central piece in a family, aspects like culture and family values are better promoted by
women in society, at both personal and professional planes.

With the shift from industrial age to information age, it becomes all the more
important to see how women rights and respect are embraced today in the industry.
With technology invading most of the industries, the trend definitely seems positive
and encouraging for more women to participate and take part in entrepreneurial
activities. Though the overall trend is interesting, it is also important for both men and
women to consider practising the same seriously.

WOMEN ENTREPRENEURSHIP – PROBLEMS (WITH SOLUTIONS)

The greatest problem faced by women entrepreneurs is that they are women.
We are living in a male dominated society where women are treated as ‘abalas’. They
have to face several economic and social problems. Usually they will not get any
support or co-operation from various financial institutions, male entrepreneurs or even
from their families.They have to face resistance not only from men but also from
elderly women who are ingrained with this attitude of inequality.

Women entrepreneurs have to face two types of problems viz., general

problems of entrepreneurs and problems specific to women entrepreneurs.The
following are the important problems faced by women entrepreneurs:

1. Financial Constraints:

Finance is the life blood of every business. Both long term and short term funds
are required for business. For obtaining loans and advances from financial institutions,
they have to provide collateral securities. But, usually women do not have property in
their names and this hinders them from obtaining external sources of funds.

The banks also consider women as less credit worthy and discourage women
borrowers on the belief that they can at any time leave their business and become
housewives again. Under these circumstances, women entrepreneurs are bound to rely
on their savings and loans from friends and relatives. The quantity of such funds are
often negligible leading to the failure of women enterprises.

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2. Over Dependence on Intermediaries:

Women entrepreneurs have to depend largely on intermediaries for the

distribution of their products. These intermediaries take a major portion of their
profits. It may be possible for the women entrepreneurs to eliminate the middlemen,
but it requires additional investment of capital and a lot of travel. Women
entrepreneurs find it difficult to capture market and popularise their products.

3. Stiff Competition:

Women entrepreneurs have to face stiff competition for the products from the
organised industries and male entrepreneurs. They do not have organisational set up to
spend a lot of money for canvassing and advertisement. The society has a feeling that
the products manufactured by women are inferior in quality on account of the fact that
they are manufactured by women themselves. These factors will lead to the
liquidation of women enterprises.

4. Scarcity of Raw Materials:

Scarcity of raw materials is yet another important problem faced by the women
entrepreneurs. The price of raw materials is very high and women entrepreneurs
usually get the raw materials at minimum discount. The failure of many women co-
operatives engaged in basket making in 1971 is an example of how the scarcity of raw
materials affects entrepreneurship.

5. High Cost of Production:

Another problem faced by women entrepreneurs is the high cost of production.

The government grants and subsidies help them tide over this difficulty, but these
grants and subsidies are available only at the initial stages of its setting up. For
expansion and diversification activities these assistances will be negligible.

6. Limited Mobility:

Unlike men, women mobility in India is highly limited due to various reasons.
Physically they are not fit enough to travel a lot. A woman running an enterprise

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independently and alone is often looked upon with suspicion. The humiliating attitude
of officials towards women compels them to give up the idea of starting an enterprise.

7. Family Ties:

The family responsibilities also hinder the development of women

entrepreneurship. In India, it is mainly a woman’s duty to look after the children and
other members of the family. Man plays a secondary role in these matters. In the case
of married women, they have to make a fine balance between their business and
family.Their success greatly depends on the support given by the family. Occupational
backgrounds of families and educational level of husbands have a direct bearing on
the development of women entrepreneurship.

8. Lack of Education:

In India around 60% of women are still illiterate. Illiteracy is the root cause of
socio-economic problems. Due to lack of education, women are ignorant of business
technology and market. It also reduces the achievement motivation among women.
Thus, lack of education creates problems for women in the setting up and running of
business enterprises.

9. Social Attitudes:

This is one of the most important stumbling block in the path of women
entrepreneurship. The constitution provides equality for both men and women, but
there is widespread discrimination against women. In a male dominated society,
women are not treated as equals to men. Women have the potential but they lack
adequate training.There is a common belief that skill imparted to a girl is lost when
she gets married. Therefore, girls continue to be helpers in agriculture and handicrafts
and the rigid social attitudes prevent them from becoming successful and independent
entrepreneurs.

10. Male Dominated Society:

Male chauvinism is still the order of the day in India. The constitution of India
speaks of equality between sexes. But, in practice women are treated as ‘abalas’.

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Women suffer from male reservations about their roles, abilities and capacities. In
short, women are not treated as equal to men. This is the main barrier to women’s
entry into business.

11. Low Need for Achievement:

The pre-requisites for success in entrepreneurship are the need for

achievement, independence and autonomy. But in India the common Indian woman is
happy to bask in the glory of their parents, husband, children etc. They have
preconceived notions about their role in life. This inhibits them from achievements
and independence.In addition to the above difficulties, lack of infrastructural facilities,
shortage of power, difficulty in obtaining licenses from various control boards and a
number of other socio-economic problems stand as hurdles to the women
entrepreneurs.

SOLUTIONS TO THE PROBLEMS OF WOMEN ENTREPRENEURS:

From the above discussion, it is clear that women entrepreneurs have to face a
number of problems.In order to overcome these difficulties, the following remedial
measures can be adopted:

1. Separate Finance Divisions:

Separate finance divisions can be opened by various financial institutions and

banks for providing easy and ready finance to the women entrepreneurs. Through
these divisions they can provide finance at concessional rates to women entrepreneurs.
In order to avoid the humiliating attitude of the offices, these divisions may be under
the control and management of women officers.

2. Supply of Raw Materials:

Women entrepreneurs must be given priority over other entrepreneurs in the

supply of controlled and scarce raw materials. If possible, the government of local
authorities must give tax exemptions to the supply of raw materials to the women
entrepreneurs. The Government must make adequate steps to supply the raw materials
at the minimum price.

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3. Co-Operative Women’s Marketing Societies:

Marketing of products is one of the major problems faced by women

entrepreneurs. In order to overcome this difficulty, they can start co-operative
societies. These societies can collect the products manufactured by the women
entrepreneurs and sell them at competitive prices by eliminating middle men. A chain
of societies can be started all over the state/country for wider distribution of products.

4. Education and Social Change:

It is necessary to make people aware of entrepreneurship development, various

products, their marketing facilities, competition etc. The negative attitude of the
society towards women should be changed.

5. Training:

The modern concept of entrepreneurship is that ‘entrepreneurs are not born but
made.’ By giving proper training we can develop the inborn talents of an individual
and make him an entrepreneur. For this, the governmental agencies and financial
institutions can set up separate divisions for giving training to women entrepreneurs.
The training scheme of the syllabus should be so designed that women can take full
advantage of the training facilities.

6. Family Background:

There should be a sound family background for the development of women

entrepreneurs. Elders, particularly mothers, should be aware of the potential of girls
and their role in the society. Parents in the initial stage, and husbands in the later stage
should support women for doing the entrepreneurial activities successfully.

7. Support from the Society:

Necessary steps should be taken to make the society aware of the role of
women in its economic and social development. There must be a change in the
negative attitude of the society towards women entrepreneurs. The society shall
provide encouraging support to women who take up entrepreneurial activities.

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8. Support from the Government:

Both Central and State Governments should give priority to women

entrepreneurs for starting new ventures. The governments must give infrastructural
facilities, raw materials, tax exemptions and concessions to them. The government can
also give special grants and subsidies to the women entrepreneurs.

Women have to play a vital role in the economic development. They have the
potential and will to establish and manage business enterprises. For this, they need
encouragement and support from the members of their family, the government and the
society at large.

3.11 SUGGESTIONS TO PROMOTE WOMEN ENTREPRENEURS

(GROWTH)

Grow Your Network: Whether you’re an entrepreneur or you’re just looking to

expand your circle, it’s a good idea to connect with female business owners by
networking. Several organizations hold events that focus on bringing women together,
such as Create & Cultivate, Lean In Circles, Ellevate Network and the National
Association of Women Business Owners. You can also meet others by participating in
the groups’ online forums.

Spread the Word: If you have a favourite female-owned business, don’t keep it
to yourself. Promote the owner and the company on your social media channels, such
as Facebook, Twitter, Instagram and LinkedIn. Use the hashtag #Buy Women Owned
during October. You can also leave a positive review of the business on Yelp or
Angie’s List.

Supportive Organizations: Help budding female entrepreneurs by supporting

organizations that empower women and girls. Consider donating money and resources
or volunteering your time. Some organizations that help young women include Strong
Women Strong Girls, GirlStart and Girl Up. Similarly, groups that help women
include Womentum, Tory Burch Foundation and Women’s Venture Fund.

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 Application forms: Simple application forms should be prepared by the
promotional agencies as well as banks for the women entrepreneurs. Simple and
speedy procedure should be applied in the case of Women by the promotional
agencies and the lending institutions. Women entrepreneurs should realise that
training can enhance the Efficiency and effectiveness to develop the skills.

Training facilities: Women entrepreneurs training should be linked to the

sensitization and awareness aspects. There Is no argument for developing
entrepreneurial skills of women and men separately. Even more, Non-segregated
learning environments allow both men and women to take advantage of mixed-Group
interactive peer learning

Invest In The Right Places: Spending money on your business is not the only
way to be successful in business. Many people think the first step to starting a
company is by investing money on different platforms, however, we suggest you first
determine which platform can prove helpful and what type of content will attract the
target audience. You don’t need to be on all platforms, you need to be where your
target audience is.

Learn About Online Marketing Skills: Effective marketing is how you will be
able to increase your sales, but you don’t have to break your bank to promote your
items. You can hire a PPC agency, which stands for Pay Per Click, to increase
profitable traffic to your site. To get info about PPC agencies, you can visit
SUMMON. They provide entrepreneurs with different benefits to take their business
to the next level.

Define your brand: The first step with this is actually using your contract first,
by including protections like non-disclosure and confidentiality covenants. Don’t
forget to contemplate what happens if there’s a default, like stipulating to your right to
get an injunction to stop or prevent a disclosure

Goals: Participants will learn to analyze how a company Creates, develops and
delivers a service to Generate the resources in order to make the Company sustainable.
Participants will learn to analyze the Environmental changes that affect the

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Entrepreneurial success of a company and will Analyze how the organization is
prepared to Respond to these changes.

Bank loan: MSME Loan Interest rate: 7.35% . Females who are into rural and
cottage industries, MSMEs, entrepreneurs, and women working in farming, retailing
and government-backed firms can avail this loan. The purpose of the loan is to meet
day-to-day requirements, such as purchase of plant & machinery/equipment, etc. and
working capital expenditure. There are no processing charges applicable on the loan
amount. The upper limit of the loan amount that you can avail under this scheme is up
to Rs. 100 Lakh.

Stree Shakti Package from SBI – Interest rate: 11.20% onwards.Stree Shakti
Package or Stree Shakti Tractor Loan: State Bank of India’s business loan for women-
owned businesses features a no security required. Additionally, the loan is offered at
competitive interest rates with 50% for accessories

Promoting Through allocation through law: The Companies Act, 2013 and
guidelines issued by Securities and Exchange Board of India (SEBI) made it
mandatory for all listed companies to have at least one woman on their boards—either
as an executive or a non-executive director—before April 1, 2015.

3.12 GOVERNMENT INITIATIVE TO PROMOTE WOMEN

ENTREPRENEURS IN INDIA

The Women Entrepreneurship Platform (WEP): The Women

Entrepreneurship Platform (WEP) was launched by NITI AYOG with the motive of
providing an ecosystem for upcoming young women entrepreneurs across the country.
NITI AYOG has partnered with SIDBI to promote and implement this initiative.
Apart from providing services such as free credit, mentorship, funding support to
women entrepreneurs and corporate partnerships, WEP also provides entrepreneurs a
platform to share their entrepreneurial journey, stories and experiences. Entrepreneurs
who are at the ideation stage of their startups can register under the scheme to avail of
its benefits.

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 BharatiyaMahila Bank: The BharatiyaMahila Bank was founded with the
motive of providing financial assistance to underprivileged women who want to start
their own business. In 2017 it was merged with the SBI. In the manufacturing sector,
the bank is offering loans as high as 20 lakhs to the women entrepreneurs. The
BharatiyaMahila Bank has the authorization to issue a loan up to 1 Crore without any
collateral to be paid. Apart from the manufacturing sector, this bank has permission to
give loans to Small scale enterprises and in the retail sector.

Dena Shakti Scheme: This loan scheme is a solution for all women
entrepreneurs who want to make a business out in the manufacturing and food
processing sectors. Under the scheme women, entrepreneurs have sanctioned loans up
to 20 lakhs under the category of housing, retail, and education. The scheme also
provides concessions of 0.25 percent on the interest rates.

Mudra Yojana Scheme: This is one of the top schemes launched by the
government of India to enthusiastic women entrepreneurs who are looking to start a
small business with minimum efforts such as beauty parlours, retail shops or tuition
centres. The scheme does not require any collaterals but it is divided into several
schemes that target different stages of businesses. For businesses in the initial stage
the maximum loan granted is INR 50,000. For well-established businesses, the
scheme offers loan amount which varies from INR 50,000 to 5 Lakhs. And, lastly for
well-established businesses looking to expand its operations and geographical
presence the scheme offers loans up to 10 lakhs.

Annapurna Scheme: This is one of the first schemes introduced by the

government of India to uplift the condition of women entrepreneurship in India way
back in the year 2000. At present, the scheme is offered by the BharatiyaMahila Bank.
Under this scheme, the government of India provides women entrepreneurs in the
food, beverage and catering industry, loans up to INR 50,000. The best part is that the
Interest rate of this loan varies according to the market rates.

Shree Shakti loan for women entrepreneurs: This is a unique scheme run
under SBI to support women entrepreneurship by providing certain concessions. To
avail the scheme women entrepreneurs have to first enroll themselves in the
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Entrepreneurship Development Program (EDP) – a training program initiated to
develop entrepreneurial skills and skills that are required to run a business
successfully. This scheme enables women to avail loans at a concession of 0.005
percent on loans exceeding 2 lakhs.

3.13 SCOPES OF WOMEN ENTREPRENEURS

In the present time, a woman is breaking through the traditional perspective of

binding to the four walls of the home and move forward from the limited business
regions such as papad making, handcrafts, pickle preparation, paintings, and so on.

Over the last decade, they have shown a tremendous increase in the remarkable
shift from the conventional style of business to the modern style of business based on
technology. Here are some of the ventures under which Women Entrepreneurs can
grow more and create some innovations with their potential. Let us visit.

 Dissemination of information and computer services.

 Trade of computer stationery.
 Computer maintenance.
 Travel and Tourism.
 Nutrition and health clubs for schools and offices.
 Indoor plant library.
 Amusement centers for elderly people.
 Culture Centers.
 Kitchens for communities.
 Stuffed soft as well as wooden toys.
 Contracts for the packaging of goods.
 Beauty firms.
 Photocopying Centers.
 Communication centers like STD booths, cyber cafes, and so on.
It has been observed that Women Entrepreneurs are growing at an
unprecedented rate of growth from the last few years. Instead of lockdown inside the
walls of the homes, they are enough bold and confident to take the world by storm

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with the help of efforts and potential that they possess. Now, they are becoming
independent and beat the men in the business sphere.

They are contributing to the business along with catering to the needs of their
family. It is strikingly interesting that they are moving from the traditional business of
handicrafts and handlooms to the fashion industry, hairstyling, establishing online
stores and so on.

3.14 RURAL ENTREPRENEURSHIP

Entrepreneurship is the ‘capacity and willingness’ to develop, organize and

manage a business venture along with any of its risks in order to make a profit. The
most obvious example of entrepreneurship is the starting of a new business. The new
businesses create wealth, create new jobs and enhance the prosperity in the society.
Success of one business entity creates ancillary activities as well, triggering a chain
(backward as well as forward) reaction for rapid development. Entrepreneurship is
thus a necessary condition for any society’s development. The phenomenal rise of IT
Industry in India (during 1990s and 2000-2015) gave rise to huge Infrastructure –
Education, Training, Physical and Logistics development. We have a number of cities
housing IT Parks /IT-Hubs to incubate and promote Entrepreneurial activities in this
domain.

Rural Entrepreneurship caters to the rural needs such as employment

generation, income generation, rural development, build up village republics and
curbing rural – urban migration. There are huge opportunities rural areas to tap- the
demand for graded, packaged, fresh fruits and vegetables in the urban areas and the
rural youth can be trained to undertake entrepreneurial initiatives to get-into the
supply-chain of these rural products.

Rural Entrepreneurship is not a new concept for India. Indian has been one of
the most ancient developed rural economies. The village self-rule (gram-swaraj) is an
Indian Concept. We need to reinvent our economic prowess. As India still lives in
villages, the route of Indian economic development will be fast-forwarded by Rural
Entrepreneurship. Fortunately there is unison of thinking among policy makers (in all

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states and at federal level) on this subject at this point of time, as the country is facing
acute rural distress. Current situation provides a good opportunity for rural
entrepreneurship to flourish.

3.15 RURAL ENTREPRENEURSHIP- KEY CHALLENGES

Rural Eco-system is the mirror for the key challenges for rural
entrepreneurship. But along with challenges, embedded are the opportunities. The
purchasing power in rural areas in continuously increasing and so also the Rural
Infrastructure and availability of educated manpower. The current challenge for the
rural entrepreneurs is to convert these challenges in business opportunities. Micro-
finance provides an excellent such opportunity. Knowledge-based Entrepreneurship is
another option. There are huge challenges for rural entrepreneurs to get skilled
manpower in rural areas. This challengecan be converted into an opportunity by
starting ‘Skill Training Institutes’ making use of Skill Mission of India initiative.
Government of India is providing a big push to “Skill India Mission” and that can be
game-changer for taking up new skills in rural India.

RURAL ENTREPRENEURSHIP-SUPPORT SYSTEMS

Rural Areas provide a low-cost, low-pollution low-energy intensive

opportunities. The basic facilities like housing, schooling, travel are low cost in rural
areas. The access to all the (available) facilities is within walking distance reach. The
support from Banking and financial institutions is also more personal and courteous.
Government support isalso available for identified rural enterprises. Local market/
resources information is available through informal channels and a word-of-mouth
approach works very well in initial stages to launch the product. Rural entrepreneurs
can start their ventures with a low capital/ resource base and can then upscale the
same gradually with gradual success.

RURAL ENTREPRENEURSHIP AND PUBLIC PRIVATE PARTNERSHIP

Rural Entrepreneurship basically depends on rural population as clients and

rural eco-system as the critical human and natural resource base. These systems are
highly vulnerable to limited access of credit facilities and inadequate purchasing

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power of the rural communities. Hence rural entrepreneurship needs initial financial
support and hand-holding by Public

Systems/ Public Institutions. Government of India and many of the state

governments have initiated a number schemes to promote rural entrepreneurship with
pro-active Public Systems support. Job creation is a foremost challenges facing India.
In recent years a wide spectrum of new programs and opportunities to nurture
innovation and promote entrepreneurship have been created by the Government of
India across a number of sectors. From engaging with academia, industry, investors,
small and big entrepreneurs, non-governmental organizations to the most underserved
sections of the society. Some of these major initiative include:

1 Startup India:

Through the Startup India initiative, Government of India promotes

entrepreneurship by mentoring, nurturing and facilitating startups throughout their life
cycle. Since its launch in January 2016, the initiative has successfully given a head
start to numerous aspiring entrepreneurs. With a 360 degree approach to enable
startups, the initiative provides a comprehensive four-week free online learning
program, has set up research parks, incubators and startupcenters across the country
by creating a strong network of academia and industry bodies. More importantly, a
‘Fund of Funds’ has been created to help startups gain access to funding. At the core
of the initiative is the effort to build an ecosystem in which startups can innovate and
excel without any barriers, through such mechanisms as online recognition of startups,
Startup India Learning Programme, Facilitated Patent filing, Easy Compliance Norms,
Relaxed Procurement Norms, incubator support, innovation focused programs for
students, funding support, tax benefits and addressing of regulatory issues.

2 Make in India:

Designed to transform India into a global design and manufacturing hub, the
Make in India initiative was launched in September 2014. It came as a powerful call to
India’s citizens and business leaders, and an invitation to potential partners and
investors around the world to overhaul outdated processes and policies, and centralize

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information about opportunities in India’s manufacturing sector. This has led to
renewed confidence in India’s capabilities among potential partners abroad, business
community within the country and citizens at large. The plan behind Make in India
was one of the largest undertaken in recent history. Among several other measures,
the initiative has ensured the replacement of obsolete and obstructive frameworks with
transparent and user-friendly systems. This has in turn helped procure investments,
foster innovation, develop skills, protect intellectual property and build best-in-class
manufacturing infrastructure.

3 Atal Innovation Mission (AIM):

AIM is the Government of India’s endeavor to promote a culture of innovation

and entrepreneurship, and it serves as a platform for promotion of world-class
Innovation Hubs, Grand Challenges, start-up businesses and other self-employment
activities, particularly intechnology driven areas. In order to foster curiosity, creativity
and imagination right at the school, AIM recently launched Atal Tinkering Labs
(ATL) across India. ATLs are workspaces where students can work with tools and
equipment to gain hands-on training in the concepts of STEM (Science, Technology,
Engineering and Math). Atal Incubation Centers (AICs) are another programs of AIM
created to build innovative start-up businesses as scalable and sustainable enterprises.
AICs provide world class incubation facilities with appropriate physical infrastructure
in terms of capital equipment and operating facilities. These incubation centers, with a
presence across India, provide access to sectoral experts, business planning support,
seed capital, industry partners and trainings to encourage innovative start-ups.

4 Support to Training and Employment Program for Women (STEP):

STEP was launched by the Government of India’s Ministry of Women and

Child Development to train women with no access to formal skill training facilities,
especially in rural India. The Ministry of Skill Development & Entrepreneurship and
NITI Aayog recently redrafted the Guidelines of the 30-year-old initiative to adapt to
present-day needs. The initiative reaches out to all Indian women above 16 years of
age. The program imparts skills in several sectors such as agriculture, horticulture,

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food processing, handlooms, traditional crafts like embroidery, travel and tourism,
hospitality, computer and IT services.

5 Jan Dhan-Aadhaar-Mobile (JAM):

JAM, for the first time, is a technological intervention that enables direct
transfer of subsidies to intended beneficiaries and, therefore, eliminates all
intermediaries and leakages in the system, which has a potential impact on the lives of
millions of Indian citizens. Besides serving as a vital check on corruption, JAM
provides for accounts to all underserved regions, in order to make banking services
accessible down to the last mile.

6 Digital India:

The Digital India initiative was launched to modernize the Indian economy to
makes all government services available electronically. The initiative aims to
transform India into a digitally-empowered society and knowledge economy with
universal access to goods and services. Given historically poor internet penetration,
this initiative aims to make available high-speed internet down to the grassroots. This
program aims to improve citizen participation in the digital and financial space, make
India’s cyberspace safer and more secure, and improve ease of doing business. Digital
India hopes to achieve equity and efficiency in a country with immense diversity by
making digital resources and services available in all Indian languages.

7 Biotechnology Industry Research Assistance Council (BIRAC):

BIRAC is a not-for-profit Public-Sector Enterprise, set up by Department of

Biotechnology to strengthen and empower emergingbiotechnology enterprises. It aims
to embed strategic research and innovation in all biotech enterprises, and bridge the
existing gaps between industry and academia. The ultimate goal is to develop high-
quality, yet affordable, products with the use of cutting edge technologies. BIRAC has
initiated partnerships with several national and global partners for building capacities
of the Indian biotech industry, particularly start-ups and SME’s, and has facilitated
several rapid developments in medical technology.

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8 Stand-Up India:

Launched in 2015, Stand-Up India seeks to leverage institutional credit for the
benefit of India’s underprivileged. It aims to enable economic participation of, and
share the benefits of India’s growth, among women entrepreneurs, Scheduled Castes
and Scheduled Tribes. Towards this end, at least one women and one individual from
the SC or ST communities are granted loans between Rs.1 million to Rs.10 million to
set up Greenfield enterprises in manufacturing, services or the trading sector. The
Stand-Up India portal also acts as a digital platform for small entrepreneurs and
provides information on financing and credit guarantee.

9 Trade related Entrepreneurship Assistance and Development (TREAD):

To address the critical issues of access to credit among India’s underprivileged

women, the TREAD program enables credit availability to interested women through
non-governmental organizations (NGOs). As such, women can receive support of
registered NGOs in both accessing loan facilities, and receiving counselling and
training opportunities to kick-start proposed enterprises, in order to provide pathways
for women to take up non-farm activities.

10 Pradhan Mantri Kaushal Vikas Yojana (PMKVY):

A flagship initiative of the Ministry of Skill Development & Entrepreneurship

(MSDE), this is a Skill Certification initiative that aims to train youth in industry-
relevant skills to enhance opportunities for livelihood creation and employability.
Individuals with prior learning experience or skills are also assessed and certified as a
Recognition of Prior Learning. Training and Assessment fees are entirely borne by the
Government under this program.

11National Skill Development Mission:

Launched in July 2015, the mission aims to build synergies across sectors and
States in skilled industries and initiatives. With a vision to build a ‘Skilled India’ it is
designed to expedite decision-making across sectors to provide skills at scale, without
compromising on quality or speed. The seven sub-missions proposed in the initial

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phaseto guide the mission’s skilling efforts across India are: (i) Institutional Training
(ii) Infrastructure (iii) Convergence (iv) Trainers (v) Overseas Employment (vi)
Sustainable Livelihoods (vii) Leveraging Public Infrastructure.

12 Science for Equity Empowerment and Development (SEED):

SEED aims to provide opportunities to motivated scientists and field level

workers to undertake action-oriented, location specific projects for socio-economic
gain, particularly in rural areas. Efforts have been made to associate national labs and
other specialist S&T institutions with innovations at the grassroots to enable access to
inputs from experts, quality infrastructure. SEED emphasizes equity in development,
so that the benefits of technological accrue to a vast section of the population,
particularly the disadvantaged. All the above programs of Government of India are
flag-bearers in their own place and provide great opportunities to rural entrepreneurs
to build their capacity by joining Entrepreneurship training programs and thereafter
tying up with them to establish their Enterprise. They can also support building
others’ capacities by establishing Skill Training Institutes.

3.16 SMALL ENTREPRENEURS

Small and micro enterprises are the backbone of Indian Economy. In fact
MSME - an abbreviation of Micro, Small & Medium enterprises- is the pillar of
economic growth in many developed, and developing countries in the world. Often
rightly termed as “the engine of growth” for India, MSME has played a prominent
role in the development of the country in terms of creating employment opportunities-
MSME has employed more than 60 million people, scaling manufacturing
capabilities, curtailing regional disparities, balancing the distribution of wealth, and
contributing to the GDP. MSME sector contributes 8% of GDP. Though India is still
facing infrastructural problems, lack of proper market linkages, and challenges in
terms of flow of institutional credit, it has seen a tremendous growth in this sector.

The advantage of this sector is-it requires less investment, thus creating
employment on a large scale, and reducing the unemployment and underemployment
problems. Moreover, this sector has survived almost all threats emerging out of still

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completion from both domestic and international market. The most important
contribution of this sector is that it absorbs rural uneducated/ semi-educated youth,
and provides livelihoods to a large number of rural/ semi-urban families.

ENTERPRISES- MEDIUM, SMALL AND MICRO

Business Enterprises are classified as Medium, Small or Micro enterprises. The

definition of these enterprises is based on their size of investment in plant and
machinery (in the case of manufacturing enterprises) and equipment (in case of
service sector enterprises). As per the provisions of Micro, Small &Medium
Enterprises Development (MSMED) Act 2006 the Micro, Small and medium
enterprises (MSME) are classified as follows:

a. Manufacturing Enterprises: The enterprises engaged in the manufacture or

production of goods pertaining to any industry specified in the first schedule to the
industries (Development and regulation) Act, 1951) or employing plant and
machinery in the process of value addition to the final product having a distinct name
or character or use. The Manufacturing Enterprise are defined in terms of investment
in Plant & Machinery.

b. Service Enterprises: The enterprises engaged in providing or rendering of

services and are defined in terms of investment in equipment.
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ISSUES WITH SMALL AND MICRO ENTERPRISES:

Small and micro enterprises are the backbone of economic middle class, and
rural industries. Small scale enterprises are found in every state. Small scale industry
were given an important place in the framework of Indian planning since beginning
for economic and ideological reasons. Small scale industry is a vibrant sector for
towns and rural areas. Small scale and micro enterprises in India are a difficult
business for new-comers. These enterprises face a number of problems- absence of
adequate and timely banking finance, non-availability of skilled manpower, non-
availability of suitable technology, ineffective/ inefficient marketing due to limited
resources. These enterprise face some location-specific and size-specific problems like
lack of ICT literacy among various layers of employees, lack of formal procedures
and discipline, problems related to raw-materials, production problems and most
importantly the issue with financial resources.

ISSUES WITH SMALL AND MICRO ENTERPRISES IN RURAL AREAS:

The issues enumerated in above paragraphs are generic issues faced by small
and micro enterprises. The rural small and micro enterprises face another major issue
and that is road and power connectivity and maintenance. The access to markets and
efficiency to deliver goods and service in time is highly dependent on these public
infrastructure items. In rural areas the condition and maintenance of roads is not ideal.
Similarly, even after 70 years of independence, a number of blocks and villages are
yet to be provided regular supply (24 X 7) of power. This becomes a limiting factor
for establishing temperature critical or power-supply based production critical units in
rural areas.

Another important, and highly sensitive issue with rural small and micro
enterprises is the law and order situation, and fear of robbery in areas far-off from
main roads/ national and state highways. The quality of raw-material, manpower
availability and credit access reduces in direct proportion to the distance, as wemove
from main cities to small and medium towns and thereafter to remote locations. This
issue dissuades even the most enterprising young, educated and motivated
entrepreneurs to set up their units in most backward areas.
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Book Reference

1. Entrepreneurial Development (2006) - S S Khanka - S Chand Publications

2. Entrepreneurship Development (2008) - S. Anil Kumar - New Age International
Publishers
3. Innovation and Entrepreneurship (2014) - Peter Drucker - Routledge Publications
Question Bank

Part - A

1. Define women entrepreneurship

2. State the common features of women entrepreneurship
3. List out the needs and factors of women entrepreneurship
4. Explain the features of successful women entrepreneurs
Part - B

5. Narrate the functions of women entrepreneurs

6. Briefly explain the need for women entrepreneurs in India
7. State the best qualities of a women entrepreneur
8. Explain the roles of a women entrepreneur
9. Clearly explain about the problems faced by women entrepreneurs
Part - C

10. Give some suggestions to promote women entrepreneurs

11. State the government initiative to promote women entrepreneurs in India
12. What are the objectives of startup stage?
13. Distinguish between Rural Entrepreneurship and Rural Engagement?
14. Define Rural Entrepreneurship Business Eco-system.
15. What are key advantages in setting up a new enterprise in rural area?
16. Define the Role of Village Panchayat in Rural Development?
17. Discuss the start up process of establishing an entrepreneurs
18. What is the basic start up problems of an establishment of an enterprise or
problems of SSI? Explain

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 UNIT – IV
PROJECT IDENTIFICATION
An entrepreneur has an infinitely wide choice with respect to his project in
different dimensions such as product/service, market, technology, equipment, scale of
production, time phasing and location. Hence, the identification of investment
opportunities (projects) calls for understand-ing the environment in which one
operates, sensitivity to emerging in-vestment possibilities, imaginative analysis of a
variety of factors and also chance of luck. This chapter is concerned with the scouting
and screening of project ideas, steps in the project identification process and also
consideration involved in identifying the new projects by an existing company.
Learning Objectives
Having gone through this lesson, you may be able to:
 To know the importance of conceiving a good of project idea
 To ascertain the different sources from which a project idea can be generated
 To identify the steps involved in project identification and selection
Unit Structure

 Project identification
 Project selection
 Detailed project report (DPR)
 Costing, pricing and break even point
 Project management life cycle
 Phases of project management life cycle
 Characteristics of a project life cycle
 Methods of project appraisal
 Programme evaluation and review technique (PERT)
 Rural entrepreneurship and rural engagement

INTRODUCTION
Business Identification and selection for an Enterprise is the first and most
sensitive job. This decision has to be taken very carefully, as it becomes very difficult
to change the business at later stages. Normally the Entrepreneurs select the business,
considering various parameters –their own strength- education, knowledge, experience
and confidence, strength or opportunities in the area- availability of raw materials,
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string need for a particular product or service, or sometime on the opportunities
created by government policies and general positive business climate. Identification of
Business opportunity is also starting point for estimating investment and financial
requirements.This section explains the importance of understanding the process of
Enterprise Business Opportunity Identification and selection in rural eco-system.

4.1 PROJECT IDENTIFICATION

EXPLORING BUSINESS OPTIONS AND OPPORTUNITIES:

An Entrepreneur may select a business opportunity through a chance event-

meeting someone (of his age, comparative knowledge base, financial resources and
technical competence) undertaking a new business (e.g. putting up and running a
Common Service Centre or Agri-clinic or Agri-business Centre) highly successfully,
or based on his/her education and training and core-competency (e.g. A veterinary
graduate starting a Veterinary Clinic) or on the advice of Faculty/ mentors in his/her
skill training institute. It is always desirable to have a mentor, though every
entrepreneur may not be so blessed. Sometimes prospective Entrepreneurs
(particularly) in rural area join an established venture in their neighborhood (in their
proposed line of business) to get a first-hand idea of the business processes, possible
clientele, and revenue stream and also to understand other issues related to finance and
management. For example; a trained motor-cycle mechanic may first work in a near-
by motor-cycleservice-center for a few years to gain first-hand experience of
interaction with clients, need to store most-often needed (and low-cost) spare-parts,
essential tool-kit and other nitty-gritty of the business in that area. This experience is
also called “Attachment on the job” or “on the job training” in skill-development
/entrepreneurship development process. Business Opportunities do not, however,
present themselves, so straight. It is always good to understand the sequence of steps
to be taken for business opportunity identification. A typical Business Opportunity
identification process will have six sections:

Section I: Preparation of Personal Profile

Section II: Description of Business Idea and its completion

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 Section III: Assessment of its Competition (right now and in near future)

Section IV: Human Resources Requirement and Availability

Section V: Steps needed (including Finance and Infrastructure) to give

business shape to this idea

Section VI: Pre-Feasibility Study

4.2 PROJECT SELECTION

You have now reached the most critical point in Business Opportunity
Identification process. Until now it was exploration, information gathering and
analysis. Apart from facts and figures that establish the viability of an identified
business idea, it is crucial that you take cognizance of your strengths and weaknesses
while making a final selection of business ideas.Business Opportunity identification
and selection are most critical stages of starting a business venture. The Entrepreneur
has to have full knowledge of all the aspects of his proposed venture. He has to be
aware of all the risks (including uncertainty of getting bank finances in time, getting
delayed approvals for businessentity) and opportunities. In addition he has to be
prepared to face new and unforeseen challenges. Hence it is very important that the
Business Identification has to be done with utmost care.

PROJECT FORMULATION AND BUSINESS PLAN PREPARATION

A business plan helps an entrepreneur to analyze and document all the project
needs. A thoughtfully prepared Project report is an important tool as it helps the
entrepreneur in anticipating and solving the problems associated or likely to be faced
during the project implementation. It has been a common feedback in all the
Entrepreneurship Development institutes that in preparing Detailed Project Report
(DPR), the entrepreneur is forced to consider several financial and implementation
problems well in advance (at times based on the experiences of earlier entrepreneurs),
giving him/her enough time to solve these problems or work-out alternate solutions.
This section discusses the process of developing and understanding a business plan,
and preparation of detailed project report.

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4.3 UNDERSTANDING BUSINESS PLAN AND PREPARATION OF
DETAILED PROJECT REPORT (DPR)

You have identified a business opportunity and selected a project, which you
want to implement on ground. A sound business plan is the next step for effective
implementation of your project. The first question you have to ask yourself is- For
whom are you preparing this business plan? Is it needed for a banker to seek project
finance? No.

The business plan is meant for you- the Entrepreneur. This is the blueprint and
roadmap for you to implement. It has to explicitly contain all the

a) Assumptions- about expected finances required and their sourcing, raw

material requirements, anticipated production, and market linkages projections,
manpower requirements and their hiring and induction strategy etc.;

b) Projections-about Production, sales, net profit and repayment schedule of

loans etc.;

c) Information- about technology, plant andmachinery, competition, prevalent

prices of same, similar or alternative product; and –d) Documents about machinery
and raw material quotations, legal requirements and documents relating to partnership
and infrastructural resources like land, building, lease deed etc.

a) Purpose of a Business Plan:

The purpose of a Business Plan is to help an entrepreneur visualize the whole

process of setting up the business and foresee the physical and financial requirements
– man, material, money and efforts, and also visualize financial returns and likely
risks and their mitigation mechanism. It gives you a general idea of your resources (to
be committed to this project) and means to procure them. The business plan indicates
the feasibility and probability of achieving break-even point and profits. It also
prepares you to commit your appropriate time for the proposed business venture.

b) Components of a Business Plan:

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 The basic element of a Business plan include- General idea of the project,
Market Analysis and forecast, Promoters or Partners, Detailed Project Report (DPR),
Cost estimates, Means of finances, Market and selling arrangements and Profitability
and Cash Flow.

General Idea of the Project:

While developing the business plan, you must be clear about the product or
service you want to create. Once the product or service has been identified the next
stage is “the scale”. At what scale you want to start the operations. For example in
service industry if you want to start a coaching institute, then what will be first batch
for? What size will it have? How many subjects will you cover? How many more
teachers / coaches you will require to hire? Similar questions will have to be answered
for a product business as well. In that case the Quantity and quality of the product to
be started for product in the first run will decide about the plant size, infrastructure
and machinery required, number of manpower required and their skills/ training
levels. Answer to these questions will give idea of the finances required for one time
investment and working capital required for regular operations.

Market Analysis and Forecast:

Market analysis and short-term and long-term forecast for the product or
service proposed to be produced is essential to understand the smooth take-off and
sustainability of the business. It is advised that the Market Survey for the proposed
product or service is undertaken by theentrepreneur himself/ herself. This exercise will
give him clear understanding of product or service demand, its scope in near future, its
closest competition and their strengths and limitations. Market survey will also
indicate the “Quality parameters” of the proposed product or service, expected by the
clients. Entrepreneur may take specific pre-launch feedback from the prospective
clients about the desired product or service. In the best case scenario it is advisable
that the entrepreneur tries to take pre-orders (or advance bookings) for the product or
service. This will ensure confirm demand of the proposed service.

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 For example when FIITJEE (a coaching institution teaching/ training IIT
aspirants for 2-4 years) planned to start 2-year full-time +2 (Classes 11 and 12) in
Hyderabad, they visited number of CBSE affiliated senior secondary schools, where
they interacted with parents of the students who were appearing for class 10
examination. This interaction helped them to get a better idea of the facilities expected
by the parents at the proposed educational facility, and also expectations from faculty
(and their experience), proposed fee-structure and also realistic expectation about the
result of their wards. This market survey also helped FIITJEE to decide to provide air-
conditioned class-room education for +2 students, as the parents were willing to make
a little more investment for their wards, for taking this examination (JEE).

The entrepreneur may have to revise his/her budget upwards/ downwards to

suit the needs/ expectations from the clients.

Promoters or Partners:

The information about promoters and or partners (with full details about their
name, age, educational qualifications, family background and experience) is an
important part of business plan. The business plan must have full clarity about the
percent share of each partner, in case of partnership. The exit clause, in case of any
dispute must also be built-in the Business Plan.

Detailed Project Report:

The Detailed Project Report (DPR) is the most important document of the
Business Plan. DPR will contain all the technical information about the production-
facility, details of all plant and machinery requirements, capacity of the plant (current
and proposed later, so as to build the building foundations etc), procurement
arrangements (detailed drawing of the equipment, process to be followed, engineering
design standards to be followed, selection of equipmentsuppliers, constructions/
erection of storage/ go-downs, trail-runs and staffing pattern). The DPR will have full
details of plant location and layout (details of factory shed- own or rented) details of
total area and provision for extension, details about electrification requirements and
power consumption, and expected cost of land, building and machinery.

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The major component of Detailed Project Report (DPR) will include:

1. Introduction: Project Introduction, Project Objectives and Strategy, Brief

History of the Product/ Service, Key Properties (Utility/ Service Proposition),
BIS (Bureau of Indian Standards) Provision and Specifications
2. Market Study and Assessment: Present Market Scenario- at Gram Panchayat
Level, Block level, District level, State Level and National level, Present
Market Demand and supply, Estimated Future Demand and Forecast, Name
and Address of Existing Units (Present Players in your District/ State), Market
Opportunity.
3. Raw Materials Required: Full list of Raw Materials required-with Quantity and
specifications, Prescribed Quality Parameters and List of Suppliers in the area.
4. Manpower Requirement: Requirement of Skilled and unskilled staff and labor-
Managerial, Technical, Office Staff and Marketing Personnel
5. Plant and Machinery: Full list of Plant and machinery, repair and maintenance
Equipment (if needed) and Fire-safety measures.
6. Manufacturing Process and Formulations: Detailed Process of Manufacturing
with Formulation, Packaging requirements, Full process Flow Chart with
diagram.
7. Infrastructure and Utilities: Project Location, Layout, Requirement of Land and
Buildings, Construction Schedule, Plant Layout and Requirement of key
Utilities.
8. Project Cost and Financial Estimates: Detailed Project Cost and item-wise
estimates- Full Plant Economics detailing Assumptions for profit making, full
cost estimates of Land, Building, Plant and Machinery, Labor and
consumables, Working capital required every month, Site Development and
maintenance Expenses, Production Schedule, and Revenue flow.
9. Means of Finance: Own Capital, Share Capital, Partnership Capital and Loans.
Cost Estimates:

Cost of Total Project is a very serious issue to be estimated before launching

the same. Utmost care needs to be taken for this exercise. The cost estimates may

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include:

 Fixed Capital – The Cost required to set-up the Unit

 Working Capital– The amount required for day-to-day running of the unit
 Preliminary and Pre-Operations Costs- Costs to be incurred on Market-Survey,
DPR Preparation, Consultancy Charges (if any) and organization of pre-launch
Marketing events
 Provision for Escalation and Contingencies
You must always keep a margin of 15-20% for any additional requirements, while
preparing cost estimates.

 Means of Finance: The Cost estimates will give you clear idea of financial
requirements for establishing and running the business. Now you need to work-
out the sourcing of the required funds. These sources could include- Your own
investment, Equity, Bank Loan and /or Government subsidy.
 Market and Selling Strategy: As an entrepreneur, it is your responsibility to
ensure that there is a reasonable market potential for the product/ service,
before you take the final decision to set-up the facilities and hire the staff.
Proper marketing arrangements must be made before hand.
 Profitability and Cash Flow: The financial viability of the unit is one of the
critical financial requirements of any project. Your cost estimates must include
break-even point, return on investment and profitability and short and long run.
4.4 COSTING, PRICING AND BREAK EVEN POINT

Costing Pricing and Break-even points are very critical financial elements for
an entrepreneur. The success of any business will depend on how meticulously it has
been planned, implemented and managed. The entrepreneur must understand the
meaning and implications of each of the three elements- costing, pricing and break-
even point.

4.1. Costing- Cost of Production:

The cost of production need to be worked in realistic conditions and

assumptions (not on 100% capacity utilization). These costs will include- Material

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costs, cost of utilities, manpower costs, factory overheads, administrative expenses,
sales expenses and miscellaneous expenses. There are several factors which influence
these costs, these include- Volume of production, Product Mix, Internal efficiency,
method of production and labor productivity. The volume of production is the most
influential factor for the cost of production.

All the components of costs must be included while calculating cost of

production. Cost of production can be calculated batch-wise, day-wise or on monthly
basis. Imputed costs of all the utilities and miscellaneous expenses like administration,
security and maintenance must also be included in the cost of production.

4.2 Pricing:

Pricing is the most critical decision for a new product or service. The revenue
generation in any commercial venture/ business is based on price of product or
service. At the same time, however, the price should be most competitive so as to
attain desired market share. Therefore a realistic price shouldbe set, which would not
only ensure a targeted rate of return on the project investment but also create the
desired level of market share for the business unit.

The Pricing exercise will include the following calculations:

1. Manufacturing Cost: Cost of raw materials +Labor+ Direct Expenses+ Overheads

2. Add : Administrative Costs
3. Add : Marketing Costs
4. Add : Other Miscellaneous Costs
5. Add : Desired Margin
6. = Selling Price
The more the difference between cost and prices, the higher will be the profit
from business, but equally higher will the risk of getting new competition (as every
business is not a monopoly). Therefore, pricing decision must be taken very carefully.

4.5 BREAK-EVEN POINT

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 No business starts making profit from day one. It takes time to take-off. A
critical amount of production has to happen and then sold at pre-decided prices, to
achieve “break-even”. Break-even is the point when the total revenue receipt is equal
to total expenditure (a point of “no-profit no loss”). Here the total expenditure on the
production will include both fixed as well as variable costs. At break-even point:

Profit = Total sales revenue- Total Cost (Fixed cost + total variable cost)= ZERO

i.e. Total Sales Revenue = Total Costs (Fixed Cost + Variable Costs)

4.6 PROJECT LIFE CYCLE

Successful completion of a project is not an easy endeavor. It calls for a series

of tasks to meet stakeholder and client requirements; a lot is involved in the process
before the project reaches the completion phase. No matter what type of project you
are working on, having comprehensive knowledge about the Project Management life
cycle, project phases, or process groups is essential. It keeps your ongoing projects
more organized and more viable to execute from ideation to completion.

4.7 PROJECT MANAGEMENT LIFE CYCLE

A Project Management life cycle is a five-step framework planned to assist

project managers in completing projects successfully.The primary competency of a
project manager is to gain a thorough understanding of project management stages.
Knowledge and planning for the five Project Management steps will help you plan
and organize your projects so that it goes off without any hitches.

It is simpler for a project manager to handle all the current details of the project
when the project is broken down into various phases. Each phases of the cycle is goal-
oriented having its own set of characteristics and contains product deliverables, which
are reviewed at the end of the Project Management steps.

According to the Project Management Book of Knowledge (PMBOK), the

Project Management life cycle should define the following aspects:

 What work needs to be achieved?

 Who will be involved in the team?

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  What are the project deliverables?
 How to monitor the performance of each phase?
4.8 PHASE-TO-PHASE RELATIONSHIPS

In cases where projects have two or more phases, the phases are considered
part of a sequential process. However, in some situations, the project might benefit
from overlapping or concurrent phases. The phase-to-phase relationships can be of
two types:

Sequential Relationship: In a sequential relationship, a new phase starts only

when the preceding phase is complete. In the figure given below, you can see an
example of a project with three entirely sequential phases. The step-by-step nature of
this approach decreases uncertainty, but may also remove options for reducing the
overall schedule.

Overlapping Relationship: In an overlapping relationship, as the name

suggests, the next phase starts before the completion of the previous one. Overlapping
phases sometimes need additional resources because work has to be done in parallel. It
may increase risk or could lead to rework if a succeeding phase progresses before
correct information is gathered from the previous phase.

4.9 PREDICTIVE LIFE CYCLES

In predictive life cycles, also known as fully plan-driven the three major
constraints of the project, the scope, time, and cost, are determined early in the project
life cycle. These projects progress through a series of sequential or overlapping
phases. Now the planning can be done for the entire project at a detailed level from
the beginning of the project. Different work is usually performed in each phase.
Therefore, the composition and skills required of the project team may vary from
phase to phase.

4.10 ADAPTIVE LIFE CYCLES

The adaptive life cycles, also known as change-driven or agile methods, are
used in cases of high levels of change or application areas such as IT. Adaptive

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methods are also iterative and incremental, but the difference is that iterations are very
rapid (typically with a duration of 2 to 4 weeks) and are fixed in time and cost.
Sometimes the processes within the iterations can be going on in parallel.

5 PHASES OF PROJECT MANAGEMENT LIFE CYCLE

1. PROJECT INITIATION

Project initiation is the first Project Management life cycle phase, where the
project starts. It provides an overview of the project, along with the strategies required
to attain desired results. It is the phase where the feasibility and business value of the
project are determined.The project manager kicks off a meeting to understand the
client and stakeholders’ requirements, goals, and objectives. It is essential to go into
minute details to have a better understanding of the project. Upon making a final
decision to proceed, the project can move on to the next step: that is, assembling a
project team.

The Project Charter is considered to be the most important document of any

project as it comprises:

 Business vision and mission

 Project goals and benefits
 List of stakeholders

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  Scope of the Project
 Project deliverables
 Risks associated with the project
 Project budget and resources

Undertake a Feasibility Study

In the initial stage, it is essential to understand the feasibility of the project. See
if the project is viable from the economic, legal, operational, and technical aspects.
Identifying problems will help you analyze whether you can solve issues with
appropriate solutions.

Identify the Project Scope

Identifying the project scope involves defining the length, breadth, and depth of
the project. On the other hand, it’s equally essential to outline functions, deadlines,
tasks, features, and services.

Identify the Project Deliverable

Upon identifying the project scope, the very next step is to outline the project
deliverables. The project deliverables include defining the product or services needed.

Identification of Project Stakeholders

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 A thorough identification of project stakeholders is essential. It is better to have
meetings with team members and experts to identify project stakeholders.
Documentation of relevant information on stakeholders and impact on them on
successful completion of the project is required.

Develop a Business Case

Before developing a business case, check whether the essential pillars of the
project such as feasibility, scope, and identification of stakeholders are in place. The
very next step is to come up with a full-fledged business case.Creation of a statement
of work (SoW) and the formation of a team wrap up the project initiation phase.

2. PROJECT PLANNING

A lot of planning related to the project takes place during this phase. On
defining project objectives, it is time to develop a project plan for everyone to follow.
The planning phase frames a set of plans which help to guide your team through the
implementation phase and closing phase. The program created at this point will surely
help you to manage cost, quality, risk, changes, and time.

The project plan developed should include all the essential details related to the
project goals and objectives and should also detail how to achieve it. It is the most
complex phase in which project managers take care of operational requirements,
design limitations, and functional requirements.The project planning phase includes
the following components:

Creating a Project Plan

A project plan is a blueprint of the entire project. A well-designed project plan

should determine the list of activities, the time frame, dependencies, constraints
involved, and potential risks. It assists the project manager to streamline operations to
meet the end objective and track progress by taking appropriate decisions at the right
time.

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Creating a Resource Plan

The resource plan provides information about various resource levels required
to accomplish a project. A well-documented plan specifies the labor and materials to
complete a project. Resources used should have relevant Project Management
expertise. Experience in the concerned domain is a priority.

Budget Estimation

Framing a financial plan helps you to set the budget and deliver project
deliverables without exceeding it. The final budget plan lists expenses on material,
labor, and equipment. Creating a budget plan will help the team and the project
managers to monitor and control the costs throughout the Project Management life
cycle.

Gathering Resources

Gathering resources is an essential part of project planning as it helps to

monitor the quality level of the project. It is not enough to assemble a well-balanced
team from internal and external resources. Resources like equipment, money, software
solutions, and the workplace should be given to complete the assigned tasks.

Anticipating Risks and Potential Quality Roadblocks

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 The risk plan will help you identify risks and mitigate them. It will comprise all
the potential risks, the order of severity, and preventive actions to track it. Once
threats are under control, it is possible to deliver the project on time adhering to
quality.

3. PROJECT EXECUTION

Project execution is the phase where project-related processes are implemented,

tasks are assigned, and resources allocated. The method also involves building
deliverables and satisfying customer requirements. Project managers or team leaders
accomplish the task through resource allocation and by keeping the team members
focused.

The team involved will start creating project deliverables and seek to achieve
project goals and objectives as outlined in the project plan. This phase determines
whether your project will succeed or not. The success of the project mainly depends
on the project execution phase. The final project, deliverable also takes shape during
the project execution phase.

There are a lot of essential things that are taken care of during the execution
phase. Listed below are a few among them:

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Reporting Progress of a Project

During the project execution phase, it is essential to get regular project updates
as it provides the required information and even identifies the issues.

Hold Regular Meetings

Before you kick-off a project meeting, be clear about the agenda and make
team members aware of what the meeting is all about well in advance. If
communication is timely and straightforward, the productivity of ongoing projects and
those that are in the pipeline will not get affected.

Manage Problems

Problems within the project are bound to occur. Issues such as time
management, quality management, and a weakening in the team’s morale can hinder
the success of a project. So make sure all problems are solved in the beginning.

4. PROJECT MONITORING AND CONTROL

The project monitoring and control phase is all about measuring the
performance of the project and tracking progress. It is implemented during the
execution phase. The main goal of this phase is to check whether everything aligns
with the Project Management plan, especially concerning financial parameters and
timelines.It is the responsibility of the project manager to make necessary adjustments
related to resource allocation and ensure that everything is on track. To aid this, a
project manager may conduct review meetings and get regular performance reports.

Monitoring project activity after the project execution phase will allow the
project manager to take corrective actions. Meanwhile, considering the quality of
work will also help to make the necessary improvements. Keeping an eye on the
budget will help to avoid unnecessary expenses resources.

5. PROJECT CLOSURE

With much time and effort invested in the project planning, it is often forgotten
that the final phase of the Project Management life cycle phases is equally important.

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 The project closure phase represents the final phase of the Project Management
life cycle, which is also known as the “follow-up” phase. Around this time, the final
product is ready for delivery. Here the main focus of the project manager and the team
should be on product release and product delivery. In this stage, all the activities
related to the project are wrapped up. The closure phase is not necessarily after a
successful completion phase alone. Sometimes a project may have to be closed due to
project failure.

Upon project completion and timely delivery to clients, it is the role of the
project manager to highlight strengths, list the takeaways of the project, identify the
ambiguities and suggest how they could be rectified for future projects. Taking time to
recognize the strengths and weaknesses will help to handle projects with more
dedication; this, in turn, builds the project manager’s credibility.

4.10 CHARACTERISTICS OF A PROJECT LIFE CYCLE

The generic life cycle structure commonly exhibits the following characteristics:

 At the start, cost and staffing levels are low and reach a peak when the work
is in progress. It again starts to drop rapidly as the project begins to halt.
 The typical cost and staffing curve does not apply to all projects.
Considerable expenses secure essential resources early in its life cycle.
 Risk and uncertainty are at their peak at the beginning of the project. These
factors drop over the life cycle of the project as decisions are reached, and
deliverables are accepted.
 The ability to affect the final product of the project without impacting the
cost drastically is highest at the start of the project and decreases as the
project advances towards completion. It is clear from figure 2 that the cost
of making new changes and rectifying errors increases as the project
approaches completion.Once the product is handed to the customers, the
documentation is finalized, the project team is disbanded, and the project is
closed.

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 These features are present almost in all kinds of project life cycles but in
different ways or to different degrees. The intent of the adaptive life cycles lies
particularly with keeping stakeholder influences higher and the costs of changes lower
all through the life cycle than in predictive life cycles.

Let’s take a look at how knowledge on project life cycle benefits an

organization:

 It helps professional services teams to be more proficient and profitable.

 The project life cycle helps the organization.
 It makes the flow of communication easier.
 The knowledge emphasizes reporting and examining previous projects.
After the successful accomplishment of the project, there may be a few
unexploited project resources, including the remnant budget, which can be used by the
project later. These are recorded as surplus resources and budget to prevent wastage;

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this is the last of the Project Management steps before the conclusion of the phases of
the Project Management life cycle.

4.12 METHODS OF PROJECT APPRAISAL

1. ECONOMIC ANALYSIS:

Under economic analysis, the project aspects highlighted include requirements

for raw material, level of capacity utilization, anticipated sales, anticipated expenses
and the probable profits. It is said that a business should have always a volume of
profit clearly in view which will govern other economic variables like sales,
purchases, expenses and alike.

It will have to be calculated how much sales would be necessary to earn the
targeted profit. Undoubtedly, demand for the product will be estimated for
anticipating sales volume. Therefore, demand for the product needs to be carefully
spelled out as it is, to a great extent, deciding factor of feasibility of the project
concern.

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 In addition to above, the location of the enterprise decided after considering a
gamut of points also needs to be mentioned in the project. The Government policies in
this regard should be taken into consideration. The Government offers specific
incentives and concessions for setting up industries in notified backward areas.
Therefore, it has to be ascertained whether the proposed enterprise comes under this
category or not and whether the Government has already decided any specific location
for this kind of enterprise.

2. FINANCIAL ANALYSIS:

Finance is one of the most important pre-requisites to establish an enterprise. It

is finance only that facilitates an entrepreneur to bring together the labour of one,
machine of another and raw material of yet another to combine them to produce
goods.

3. MARKET ANALYSIS:

Before the production actually starts, the entrepreneur needs to anticipate the
possible market for the product. He/she has to anticipate who will be the possible
customers for his product and where and when his product will be sold. There is a trite
saying in this regard: “The manufacturer of an iron nails must know who will buy his
iron nails.”

This is because production has no value for the producer unless it is sold. It is
said that if the proof of pudding lies in eating, the proof of all production lies in
marketing/ consumption. In fact, the potential of the market constitutes the
determinant of probable rewards from entrepreneurial career.

Thus, knowing the anticipated market for the product to be produced becomes
an important element in every business plan. The various methods used to anticipate
the potential market, what is named in ‘Managerial Economics’ as ‘demand
forecasting’, range from the naive to sophisticated ones.

4. TECHNICAL FEASIBILITY:

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 While making project appraisal, the technical feasibility of the project also
needs to be taken into consideration. In the simplest sense, technical feasibility implies
to mean the adequacy of the proposed plant and equipment to produce the product
within the prescribed norms. As regards know-how, it denotes the availability or
otherwise of a fund of knowledge to run the proposed plants and machinery.

It should be ensured whether that know-how is available with the entrepreneur

or is to be procured from elsewhere. In the latter case, arrangement made to procure it
should be clearly checked up. If project requires any collaboration, then, the terms and
conditions of the collaboration should also be spelt out comprehensively and carefully.

In case of foreign technical collaboration, one needs to be aware of the legal

provisions in force from time to time specifying the list of products for which only
such collaboration is allowed under specific terms and conditions. The entrepreneur,
therefore, contemplating for foreign collaboration should check these legal provisions
with reference to their projects.

While assessing the technical feasibility of the project, the following inputs
covered in the project should also be taken into consideration:

(i) Availability of land and site.

(ii) Availability of other inputs like water, power, transport, communication
facilities.
(iii) Availability of servicing facilities like machine shops, electric repair shop,
etc.
(iv) Coping-with anti-pollution law.
(v) Availability of work force as per required skill and arrangements proposed
for training-in-plant and outside.
(vi) Availability of required raw material as per quantity and quality.
5. MANAGEMENT COMPETENCE:

Management ability or competence plays an important role in making an

enterprise a success or otherwise. Strictly speaking, in the absence of managerial
competence, the projects which are otherwise feasible may fail.

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 On the contrary, even a poor project may become a successful one with good
managerial ability. Hence, while doing project appraisal, the managerial competence
or talent of the promoter should be taken into consideration.

Research studies report that most of the enterprises fall sick because of lack of
managerial competence or mismanagement. This is more so in case of small-scale
enterprises where the proprietor is all in all, i.e., owner as well as manager. Due to his
one-man show, he may be jack of all but master of none.

NETWORK ANALYSIS

Project formulation and Project implementations are two essential functions of

project management. Project formulation ensures the scientific selection of a project
whereas project implementation ensures an optimal allocation of time and resources to
the project activities. All project design should have contain five elements it should
systematically formulates and describe each of the basic elements i.e. inputs,
activities, outputs, effects, and impact. Project design should start with defining the
desired impact. So we work from the Top down i.e what effects are needed to achieve
the desired impact? what outputs are needed to achieve the desired effects? and so
on…

Impacts

Effects

Outputs

Activities

Inputs

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 Projects should follow this hierarchy. The lowest level in the hierarchy is
inputs like finances’, raw material, human resources and time. All projects perform
various activities like communication, training, organization, construction and
management. These activities convert inputs into outputs and all the activities are
carried out for the output of goods and services.

Project management is very tough as well as challenging task with many

complex responsibilities. Luckily, many tools and techniques are available to support
the tasks and performing the responsibilities efficiently. Some require computer
knowledge, whereas others can be used manually. It is a duty of the project managers
to choose a proper project management tool that best suits their management style. No
one tool can serve all project management needs. Project design and network analysis
are important tools for effective implementation of the project. They are very useful
for development of a detailed work plan of the project and project time profile. A
project consists of a numerous activity. It is examined in detail and details are
utilized to compile the series wise explanationof the constituent activities of a project.
The compilation is known as the project logic. When it is presented in the form of a
graphical presentation, it is called the network.

IMPORTANCE OF NETWORK ANALYSIS/NETWORK TECHNIQUE

A project has divided into many small activities and these activities can be
analyzed with the help of network technique to achieve the objectives of the project.

 Network analysis helps management to minimize the total cost and total
maintenance time. With the use of network analysis cost of production can be
minimized through reducing the maintenance time.
 Network analysis ensures the effective utilization of limited resources. It also
ensures the optimal use of resources and help to control the idle resources so
that project can be effectively executed within the budgeted costs and
scheduled time.
 Network analysis facilitates co-ordination among the activities as well the
persons responsible for project.

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  Time management plays a crucial role in every project. Sometimes available
resources have to be arranged with a view to reduce the total time for the
project rather than reducing the cost of the project. Network analysis helps the
managers to manage activities without any delay.
 Network analysis is grea t tool which helps in planning, scheduling and
controlling the activities of the project.
 Network analysis also creates inter-relationship as well as inter-dependence of
various activities of project. It helps in integrating the project planning and this
relationship assists in bringing out the technological inter-dependence of the
various activities.
 Network analysis provides the project formulation team an apparent picture of
the work elements and also sequential relationship of the project.
4.13 PROGRAMME EVALUATION AND REVIEW TECHNIQUE (PERT)

Project Programme Evaluation and Review Technique, which is generally

popular as PERT, is a sophisticated and a fairly new tool used by the management for
planning and control in the case of special project. It is primarily a scheduling
technique. It shows any project or job as a set of processes of operations called
activities which must take place in a certain sequence. It involves diagrammatic
presentation of activities and events involved in a long term project. The
diagrammatic presentation is known as Network Drawing/technique and these
techniques are most commonly used in project management.

PERT was developed in 1958 as a result of collaboration between the

operational research division of the United States Navy and a team of management
consultants known as Boose Allen and Hamilton. It was developed as a management
tool to aid for completing Poloris Ballistic Missile Project which had 250 prime
contractors and over 9000 sub contractors engaged in research, development,
construction, testing and production of missiles, guidance system and maintenance
system. Since then, it has been adopted by many enterprises in different industries. So
PERT schedules the sequence of activities to be completed in order to accomplish the
project within a short period of time.

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 Basic objective of PERT is to control time. The execution of project becomes
very difficult where long times involved in the planning and scheduling of the project
because it involved lot of complexities and inter related activities. So for the
successful implementation of the project, project manager is to take some important
decisions such as estimation of resource requirement, time for each activity, and
maintaining inter-relationship amongst the activities.

4.14 CRITICAL PATH METHOD (CPM)

Project Another important method of networking is Critical Path Method.

Critical path method was developed in 1956-1957 at the E.I.Dupent Nemours and Co.,
USA in connection with the periodic overhauling and maintenance of a chemical
plant. Critical Path Method basically is a special application of analysis for planning
and scheduling. Critical path method was basically developed with the objective of
reducing duration and cost of the project. Critical path method is a special application
of network analysis. It uses network analysis for scheduling production, construction
projects as well as research and development activities. It is also useful in situations
which require estimates of time and performance. Critical path method deals with
repetitive type projects, such as overhaul of generating plant, which has to be carried
repeatedly after set time intervals.

The critical path, is the overall time, it will take to complete the project. It is
the longest path in time through the network. In other words, the longest path in the
network is called critical path. Identifying the critical path is of great importance as it
determines the duration of entire project. Critical path method differentiates between
the planning and scheduling of the project.

A Critical path method is a very important project management tool used to

formulate a time frame for a project in order to determine where potential delays are
most likely to occur. The process includes a step by step process that provides the
developer with a visual representation of potential bottleneck, throughout the course
of the project.

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4.15 RURAL ENTREPRENEURSHIP AND RURAL ENGAGEMENT

Rural Entrepreneurship is one of the key interventions for improving the

economic status of rural India. There are associated issues of improving rural
education (which in turn will again improve rural entrepreneurship), rural
communication, and rural management to enhance quality of life in rural areas, on
holistic basis. Rural communities are a system in themselves. Addressing their
empowerment needs calls for a comprehensive approach. With Panchayati Raj
Institutions the constitution addressed their political aspirations and ensured their
participation in local-self-government. This was only one-dimension- political
empowerment. Rural communities need development on comprehensive basis. They
need knowledge-empowerment and economic empowerment on sustainable basis. For
this the governments (both Central and States) have to initiate more holistic
interventions for rural empowerment by improving the quality and relevance of rural
education, enhancing means of rural communication and create a cadre of professional
rural managers (by promoting and supporting higher studies in Rural Management).
We discuss these issues, and way forward, in this section.

Rural entrepreneurship is starting a business unit/ business activity in rural

areas. Promotion of rural entrepreneurship will help more and more rural youth to be
engaged in productive economic activities. Rural engagement on the other hand is
more holistic approach for overall rural development. It is desirable for a Rural
Entrepreneur to understand the other dimensions of rural development, as he/she may
have to interact with one or more of such systems. Rural engagement includes more
inclusive and continuous interactions with rural communities by other support systems
like- educational system (colleges and universities), political system, financial systems
(banking and insurance companies) and government system (bureaucracy and public
institutions).

Rural Engagement is not a one-way communication. It is a long-term intense

relationship between the support agencies and the rural communities. Each one of the
support agency has to have a formal, structured engagement model which include 360
degree involvement with rural communities (in their vicinity or under their

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jurisdiction). This engagement will include that the concerned agencies inform,
consult, involve, collaborate and empower the rural communities in their sphere of
activities. For example an educational institution (a university) may engage with rural
communities in following ways:

Inform: Informing is a passive way and involves only one-way communication- The
Universities can share their knowledge (in local language) and their newsletters with
rural communities (this is first level of Rural Engagement);

Consult: Consulting is next (IInd) level of rural engagement. Here universities can
share their information (e.g. their proposals for next year’s research) and get feedback
from rural communities on the same. Here information is not only shared, the rural
communities are asked to react to it, to supplement it and may offer their ideas to
enrich it;

Involve: Involving is further higher level of engagement (level-III of Rural

Engagement). Involvement allows the rural communities to influence university
research proposal, university research priorities. Universities may present their
proposals in draft form and seek rural community support (ideas, options, solutions) to

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address;

Collaborate: Collaboration is further strengthening of engagement (level –IV).

Collaboration means that the rural community is a university partner (for one
particular activity) from the beginning. Together they decide upon the key research
areas to address and the methodology to go about it. They may have a joint research
team (or joint research advisory committee) or may have adequate representation of
rural community on the research advisory committee of the university; and

Empower: Empowering is the ultimate level of rural engagement (level-V).

Empowering means that the leadership comes from the rural community while
university and its systems support them.

Rural engagement is, thus a serious engagement of support system agencies

and institutions with rural communities. The support institutions need to accept rural
communities as their clients (not as beneficiaries). All the support systems need to
understand that their existence is dependent on rural systems, not vice-a-versa. It is the
rural prosperity which will increase the demand for their services, increase the scope
of their expansion, and will ultimately make both the system benefit from this
engagement.

NEED FOR A MISSION MODE APPROACH

Rural engagement is gaining acceptance in India only now. Although Mahatma

Gandhi visualized Gram Swaraj as model self-rule, self-restraint and village as a self-
sustaining unit. Gandhian vision of ideal village or village Swaraj is that it is a
complete republic, independent of its neighbors for its wants and yet interdependent
for many others in which dependence is necessary. In his own words “An ideal Indian
village will be so constructed as to lend itself to perfect sanitation. It will have
cottages with sufficient light and ventilation built of a material obtainable within a
radius of five miles of it. The cottages will have courtyards enabling householders to
plant vegetables for domestic use and to house their cattle. It will produce its own
grains, vegetables and fruit, and its own Khadi. This is roughly my idea of a model
village...

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 I am convinced that the villagers can, under intelligent guidance, double the
village income as distinguished from individual income. There are in our villages'
inexhaustible resources not for commercial purposes in every case but certainly for
local purposes in almost every case.”(Village Swaraj, 2015). Our education system
and Industrial development strategy for last 70 years has, however, been more focused
for urban development. Our education system has tilted the priorities for the educated
youth to look for the jobs in urban centers. Cities have emerged as big industrial hubs.
Big cities like Delhi, Kolkata, Mumbai, Chennai, Bengaluru, Hyderabad and
Ahmedabad have emerged as the job-providers and the educational institutions
(including top educational institutes- IITs, NITs, IIMs, ISB etc.) are focusing their
curriculum to serve the needs of big industries in these big towns and cities. Even the
students hailing from rural areas (and studying in these institutions) look for
placements or starting their business ventures in big cities. This paradigm has to be
reversed. India is a country with 70% population still living in rural areas. We need to
focus our development priorities considering this reality. Till now our cities have been
progressing and developing at the cost of rural areas. We need to reverse this trend.

There are some very good initiative taken by central and state governments to
promote rural engagement in general and rural entrepreneurship in particular.
Governments have launched highly effective and successful rural employment
guarantee schemes (to address rural livelihood distress) like MNREGA. The ASPIRE
scheme with its main objective to set up business incubators to incubate, impart
entrepreneurship, skill development training to youth, mentoring and hand holding
with facilitation for funding with a view to empower them to set up own business
enterprises, another such noble initiatives. Similarly on credit front also the a national
apex bank NABARD was specifically set-up with a mandate for providing and
regulating credit and other facilities for the promotion and development of agriculture,
small-scale industries, cottage and village industries, handicrafts and other rural crafts
and other allied economic activities in rural areas with a view to promoting integrated
rural development and securing prosperity of rural areas. But all these initiatives have
been looking at rural areas as beneficiaries, not as clients.

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 This thinking has to be reversed. The rural areas are to be considered as
opportunity hubs (for agro-processing), consumers and job-providers, not as
beneficiaries, only then this situation will change. With a rural population of over 833
million (83.3 crores, NITI Aayog 2015), we have only two Universities offering Ph.D.
in Rural Management ( Amity School of Rural Management, Noida, and Indian
Institute of Health Management Research (IIHMR), Jaipur), around 10 institutes
offering Master’s Degree in Rural Management ( Gujarat Vidyapeeth, Ahmedabad,
MJP Rohilkhand University, Bareilly, UP, Singhania University Rajasthan, Tripura
University, Tripura Doranda College, Ranchi, Jharkhand, Goodwill College
Firozabad, U.P.,MH Patel Gram SewaMahavidyalaya, Patan, Gujarat, Institute of
Rural Management Anand (IRMA- offering PGDRM) and few other institutes. All
these institutions do not produce even 10,000 post-graduates and even a 100 Ph.Ds in
Rural Management. This is too little an educational infrastructure to support a
basically rural country like India.

As indicated in the preceding two sections there is an urgent need to multiply

this infrastructure by involving all the universities- all State Agricultural Universities
and all general Universities to join this great rural transformation on a mission mode.
All Universities in India need to initiate Rural Engagement Program, Rural
Entrepreneurship Program, Rural Communication Program and Rural Management
Program at Masters Level. Governments (both Central and state) need to accord top
priority for initiating/ establishing Rural Entrepreneurship Hubs, Rural
Entrepreneurship Incubation Centers in all Districts (at least one in every block).
Faculty sensitization and Faculty Development programs must be organized in all
universities in a mission mode. Only then we will be able to address the rural
development challenge of our country.

4.16 RURAL ENGAGEMENT, RURAL ENTREPRENEURSHIP AND NCRI

National Council of Rural Institutes NCRI), Department of Higher Education

in the Ministry of Human Resources Development was established in 1995, with a
mandate to promote resilient rural India through Higher Education interventions.
NCRI designs, develops and promotes curriculum inputs for higher education

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programs offered by Universities and Autonomous Institutions in India. The higher
educational streams of focus for NCRI include: Rural Studies, Rural Development,
Rural Management, Social Work and Education. The curriculum inputs are both
theoretical and practical field-related relevant to rural India. The NCRI seeks to
strengthen the rural higher education curriculum and the faculty members transacting
it. Capacity building and professionalization of Rural Institutes, skill development,
entrepreneurship, livelihoods, community initiatives, creativity of local groups and
proactive development action constitute the core content of NCRI research and
interventions. The NCRI interfaces with rural institutes of higher learning like Rural
Universities, Rural Development Institutes, National Rural Livelihoods Mission and
State Livelihood Action Units.

With its vision, “To involve higher education curriculum in India in the process
of building resilient rural India i.e., Uthkrisht Gram for Unaat Bharat”, NCRI has
taken its mandate to undertake advocacy for Rural Engagement as a mission with
major Universities in entire India. Equipped with a very thin, but highly competent
and committed core faculty, NCRI is currently engaging with over a dozen major
Universities to introduce Rural Entrepreneurship, Rural Communication, Rural
Management and Rural Engagement Program at Masters’ level. NCRI is organizing a
series of workshops for the top-management of the Universities (Vice-Chancellors,
Registrars, and Deans of Colleges) and the faculty of Management, Commerce and
Social Sciences to sensitize them on Rural Engagement. NCRI is also involved in
organizing workshops and seminars to facilitate Curriculum development for these
subjects/ courses.

The present capacity of NCRI is, however, highly limited. There is a strong
need for strengthening of NCRI in terms of core faculty and consultants, so that it can
act as an implementation agency for promoting “Unnat Bharat Abhiyan” in letter and
spirit. Ministry of HRD may replicate the lessons learnt by Ministry of Rural
Development and Panchayati Raj (MORDPR) and Ministry of Agriculture and
Farmers’ Welfare (MOAFW), who have taken the services of National Institute of
Rural Development and Panmchayati Raj (NIRDPR) in case of MORDPR and

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National Institute of Agricultural Extension Management (MANAGE) in case of
MOAFW. Both these institutions have not only served as think-tanks for their
respective ministries, these organizations are assisting their controlling ministries by
providing advocacy, training and capacity building and also Monitoring and
Implementation support for the flagship schemes (e.g. Gram Panchayat Development
Plan –GPDP by NIRDPR for MORDPR and Extension Reforms and Agri-Clinics and
Agri-Business Center –AC&ABC schemes by MANAGE for MOAFW). NCRI is
ideally placed to play this historic role to lead and trigger Rural Engagement on
massive scale. Ministry of HRD may consider to undertake a mission mode project or
scheme with all India coverage to translate this dream in to reality.

LIVE PROJECT AND HANDS-ON SUPPORT

Entrepreneurship is a full-time job. You have to immerse yourself fully in the

entrepreneurial exercise. One of the key requirement for a successful entrepreneur is
to understand the local environment fully. You need to understand what works in rural
areas. What are the success factors of the entrepreneurs who are operating in these
conditions? What limits their expansion? What are the key institutions in the village?
Are there any trouble spots? Are there any serious law and order issues? IF yes, how
are you going to deal with this issue? You have to take account of all the key
stakeholders in the rural eco-system- Banks, Insurance Companies, Insurance
Company agents/ correspondents, Panchayati Raj Institutions, NGOs, Schools, and
Primary Health Centers etc. You may have to interact will all the support systems in
the rural area, to ensure proper and smooth establishment and functioning of your
enterprise. These support systems will include financial support systems, technical
support systems, human resources educational and training support systems and last,
but not the least, social support systems. You may also have a knowledge of local law
and order enforcing agencies and legal agencies.

Rural Entrepreneurs- the Local Eco-System

Establishing a new enterprise in a rural area is serious business and career

decision. You may have full idea of your business enterprise, it is always good to
understand the local business environment. The best person to explain this will be the
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existing entrepreneurs in the area, working for a few years or more. They are likely to
have better understanding of the local environment- what works in the area? What are
strictly “not acceptable” practices or behavior patterns? Who are the key stakeholders?
Who can potentially help you to move fasters? There are various ways in which a new
or potential entrepreneur can get this information/ experience from the successful
existing rural entrepreneurs. These include: Apprenticeship, Internship, Mentoring,
Lecture Method, Group-Discussions and Case-Study etc.

Apprenticeship

Apprenticeship is system of training, wherein a new trainee is imparted skills

on a new job or machine. This method is helpful in those fields which are highly
technical, and a long period is required for gaining proficiency in the desired trade or
crafts. This method will be highly desirable for the new entrepreneur, if one is going
to start a rural venture in a local craft or art. He/ she is required to gain a certain level
of confidence to create a good quality product, which is already being produced in
nearby unit. This experience will help the budding entrepreneur to identify areas for
improvement in the present product quality or improve efficiency of the existing
production process. This method is highly effective to learn the skills required for the
existing enterprise but at the same time it is time consuming.

The entrepreneur gets a good opportunity to observe the whole process of

manufacturing or delivering a good quality service. He/she also gets a look at the
process of planning and implementation of various sub-systems to complete the
production/ delivery process. One has to be a keen learner, attentive listener and
meticulous taker of notes. The disadvantage or limitation of the method is – it is time
consuming. One has to remain attached with an existing unit for a considerable time
(minimum 6 months to one year) to understand the full process of the concerned unit.
The entrepreneur has to take a call on this. Is it desirable to understand the full nitty-
gritty of an existing successful enterprise?

Internship

Internship gives a taste of your chosen field. It let you know how will feel

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“Being there”. One of the greatest advantages of internship is that this allows you to
experience your future industry. This van have two effects- makes you feel excited
and drives you to work hard and build a successful career/ new business venture in
this area or you realize- it is not meant for you. Either way it is a good learning.

Internship in a similar environment can help you get opportunity to know the
key business people or support-systems, you need to know. You may start networking
with them even before you start your own enterprise. You will come to know about
suppliers of raw-materials, consumables, manpower and potential clients for your
product or service. Internship experience will give you more confidence to handle
situations in your future enterprise. It will also help you realize your strengths- your
knowledge about the product or process, your work-efficiency, and your
communication skills (including limitations, if any). Internship will also help you get
acceptability in the market.

The limitations of Internship include- you will be seen as an assistant during

your internship. Sometime your full potential is not utilized and you are placed to
perform menial or less important tasks or processes, which may demotivate you.
Further when you establish your own enterprise, you will be known by your “ex-
company association”. There are quite a few disadvantages to internships, but the
advantages outweigh them. Interning will not only enhance your training and allow
you to gain skills, but it will also make you a better employee/manager by giving you
the self-confidence that is often a prerequisite in the workplace.

Mentoring

Mentoring is one the best methods for Entrepreneurship training or hand-

holding. In most of the Training Institutes the Institute allots this responsibility to an
experienced Faculty member, who is well versed with the kind of enterprise, the
budding Entrepreneur is planning to set-up. Having the guidance, encouragement and
support of a trusted and experienced mentor can provide a mentee with a broad range
of personal and professional benefits, which ultimately will lead to improved
confidence and better performance at the workplace. Sometimes the Mentee can select
an experienced and well-known (trusted) successful entrepreneur in same or similar
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area as his mentor. This option is equally helpful, as the experienced Entrepreneur in
the same area will bring in experiences of dealing with other institutional support
system, which will be helpful for the mentee.

The major advantages of having a mentor are- a mentee develops necessary

skills and competencies required for the job; Interaction with mentor improves his
confidence in his ability to execute the task at hand; mentor teaches the mentee how to
maintain a professional relationship and improves his communication skills; an
experienced mentor expands the mentee’s network of contacts. On the whole mentor-
mentee relationship is a kind of crash-course on the current rural entrepreneurship
culture prevailing in the concerned area.

Lecture Method

Lecture Method is the oldest method of learning and understanding about the
rural eco-system. All training and capacity-building Institutions have some
information about the concerned (or identified) rural location, and the same is shared
with the Entrepreneur trainee. This method is least costly, but least effective as well.
In today’s interactive environment hands-on experience and interaction with the rural
eco-system is highly advised.

Group-Discussions

Group discussion is also used as a method to understand rural eco-system. The

entrepreneur may visit the identified rural area, and conduct focused group-
discussions with various groups (raw material suppliers, other input suppliers,
potential clients and educational institutions in the area) to understand the prevailing
eco-system and business environment. This method is better than Lecture method, but
inferior to Apprenticeship, Internship or Mentoring.

Case-Study

Case study is one of most common methods to understand the rural business
eco-systems. Almost all training and Skill-development Institutions have a bank of
Case-Studies (on various enterprises), which serve as reading material and case-

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discussion material for the concerned group of Entrepreneurs. Case studies are
complex examples which give an insight into the context of a problem as well as
illustrating the main point. Case Studies are trainee centered activities based on topics
that demonstrate theoretical concepts in an applied setting. A case study allows the
application of theoretical concepts to be demonstrated, thus bridging the gap between
theory and practice, encourage active learning, provides an opportunity for the
development of key skills such as communication, group working and problem
solving, and increases the trainees’ enjoyment of the topic and hence their desire to
learn.

An entrepreneur needs to have full knowledge of the rural business eco-system,

before starting his new enterprise. It is advised that he/she may collect information
about all enterprises working in that area and understand the secret of their success.
Working as an apprentice or intern with one of the successful venture can give
him/her good system-knowledge. One can work with a senior Entrepreneur as a
mentee and get access to his mentors knowledge and wisdom.

ENTREPRENEURIAL OPPORTUNITIES-POTENTIAL AND LIMITATIONS

Rural Entrepreneurship is a highly location specific. This unit explains the

importance of understanding the opportunities and challenges in rural business eco-
system. An entrepreneur must be fully aware about the key opportunities and
challenging he is likely to face while establishing and running his business enterprise
in rural area. There are enormous opportunities in rural areas like –low establishment
cost, availability of raw material and labor, low promotion costs, but all these
advantages come with associated challenges- poor technical competence of labor, un-
even/ erratic supply of raw-materials and issues related to pricing and collection of
revenue. All these issues are discussed in this section.

Rural people always encourage and give the motivation to the entrepreneurs.
They are simple and less complicated to communicate. Rural population is easy to
approach- they have more free time to interact with entrepreneur, as their occupation
is not full time. Rural produce is fresh from farm and you can monitor and manage the
Quality of the raw-material closely. Some of the key opportunities/ advantages offered
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by rural India include:

a. Low establishment cost: when compared to the urban areas, rural entrepreneurs'
business establishment cost is very low. The land costs are lower. The building costs/
rents are also lower. There is no need to construct or facilities huge infrastructure and
buildings.

b. Competitive Advantage/ Availability of Labor: Rural youth is highly under-

employed and more than half of them are unemployed. This makes the availability of
Labor abundant and also the labor cost are lower in rural areas.

c. Availability of Raw-Material: Raw material, particularly Agricultural, Horticultural

and animal produce is more fresh and of consistent quality. This is a big advantage in
rural areas. Agro-processing provides huge opportunities for entrepreneurship. There
is a huge demand for processed/ graded/packaged food in urban/ semi-urban and rural
areas. This demand can be tapped by the rural entrepreneurs. India is highest producer
of Fruits and vegetables in the world but processes only around 2% of its produce
(against the world average of 16% in this sector). This underscores the opportunity in
this sector alone. There is enormous and ever increasing demand for fruit-juices,
sauces, pickles, jams, jelly, honey and many such products in immediate vicinity of
rural areas.

d. Optimal Utilization of Farm-Produce: Establishment of rural enterprises will not

only provide livelihood to majority of unemployed/ under-employed rural youth, but
will also save a lot of Agricultural produce from travelling long-distances for
processing or consumption. This will improve overall utilization percentage of the
farm-produce. India is among those countries, where there is largest wastage of
cereals and vegetables due to non-availability of processing and storage facilities.

e. Employment Generation for Rural Youth: Productive employment of rural youth

is the biggest incentive for the state governments and the central government to
promote rural entrepreneurship. This will kick-start faster growth in rural areas and
will also improve rural purchasing power.

f. Low Promotion Costs: Product or service promotion in rural areas is a low-cost

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process. Normally there is very little or no competition in rural areas for any new
product or service. Further the word-of-mouth is highly effective for promoting a new
product in rural communities. Their inter-personal communications cover all aspects
of their life, including their feedback on using a new product or service.

Rural entrepreneurship is full of challenges and opportunities. Although there

were and still are a lot of limitations like – irregular power supply, erratic supply of
raw materials, poor quality of technical know-how, but all these limitations can be
addressed by properly tying-up with good technical support institutions and tailor-
made training programs. Rural entrepreneurs may look for government programs and
schemes to improve their knowledge and skills and also look for CSR support from
nearby corporate houses.

Book Reference

1. Entrepreneurial Development (2006) - S S Khanka - S Chand Publications

2. Fundamentals of Entrepreneurship (2005) - Sangram Keshari Mohanty - PHI
Publications Pvt. Ltd.
3. The Economics of Entrepreneurship (2009) - Simon C. Parker - Cambridge
University Press
4. Skill Development and Entrepreneurship in India (2016) - Rameshwari Pandya -
New Century Publications
5. Management and Entrepreneurship (2009) - Veerabhadrappa Havinal - New Age
International (P) Limited

Question Bank

Part - A

1. Explain in detail about project identification

2. Briefly explain about project selection
3. Write short note on detailed project report (DPR)
4. Briefly write note on costing, pricing and break even point
5. Explain the project management life cycle with prompt examples

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Part - B

6. State the phases of project management life cycle

7. Draft the characteristics of a project life cycle
8. Explain in detail about the methods of project appraisal
9. Enumerate the programme evaluation and review technique (PERT)
10. Write in detail about rural entrepreneurship and rural engagement
11. State the key differences between the rural and urban entrepreneurs?
Part - C

12. Discuss the similarities between social entrepreneur and rural entrepreneurs
13. Define rural entrepreneurship eco-system.
14. Explain the role of financial institutions in establishing Rural Enterprises.
15. The training Institutions are best places to get technical-backstopping. Discuss.
16. What are key advantages in setting up a new enterprise in rural area?
17. What are key competencies required for a successful Entrepreneur?

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 UNIT – V

ENTREPRENEURIAL GROWTH

India is now becoming a hub for start-ups over the recent years due to high
growth rates and other factors. Many entrepreneurs like to invest in information
technology, finance, software, and other sectors to earn more money. The number is
likely to increase in the future due to the availability of high manpower and
government policies. A recent study says that India is growing at faster levels in the
start-up ecosystem which contributes more to the country’s economic growth. Start-
ups offer several job opportunities for jobs seekers who want to start their careers with
the best salaries.

Learning Objectives

Having gone through this lesson, you may be able to:

 Understand the development of entrepreneurship in Indian industry

 Know about the financial institutions to support the entrepreneurship
 Understand the development and growth of entrepreneurship
Unit Structure

 Role of NGO’s in developing entrepreneurship in India

 Institutional support for finances & technical assistance
 Institutions for entrepreneurship and skill training
 Institutions for technical guidance
 Future of entrepreneurs in India

INTRODUCTION

Today entrepreneurship has gained a lot of respect, withpeople from diverse

backgrounds breaking into the bigpicture. What has changed in the last 5-10 years is
thebelief that anybody can do business, provided theright idea.Indian government has
been supporting establishment ofsuccessful start-ups with its well-thought of policies,
over thelast 5 years. Its main policy pillars are funding support andincentives,

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industry-academic partnership and simplification& handholding.Indian tech start up
industry is a big target for visionaries likeGoogle, who has recently launched an India-
focusedmentorship and boot camp program for start-ups buildingboth business-to-
consumer (B2C) and business-to-business(B2B) tech products.

The government of India decided to initiate its own start updivision and
develop it to create a huge campaign toincrease awareness among the youth to
initiateentrepreneurship spirit. Indeed, the building of Start-updivision gave a essential
positive impact to the society andnation for the growth of entrepreneurship in the
nation. Itcreated job opportunity, raised living standards, reducedpoverty, created
more entrepreneurship opportunity,developed the industrial sector of involved
services,provided the gateway for the acquisition of relevanttechnological knowledge
and technical skills, businessskills, and encouraged innovation, R&D activities.

Modigovernment emphasized the growth of new start-up with

particularemphasis on technology, service industries, which resulted tothe
establishment of strong entrepreneurial environment.Indeed, a number of policies
were implemented during theleadership of Modi to encourage the acquisition
oftechnology and create public awareness on the significanceof technology
entrepreneurship in new globalization era. Inother words, the emphasis on technology-
basedentrepreneurship was carried out more forcefully during thetime of leadership.
The policy makersconcentrate on the development and advancement of thestart-up
policies including its supporting industry in order tofoster the growth of
entrepreneurship in India.

5.1 ROLE OF NGO’s IN DEVELOPING ENTREPRENEURSHIP IN INDIA

There is no denying of the fact that development of entrepreneurship has

emerged as a national movement due to its strengths to solve the twin problems of
unemployment and poverty. In fact, the need for development of ‘spirit of enterprise’
among the target population intensified more during the nineties with the failure of the
‘trickle down theory’ to percolate the development benefits to the masses at grass-root
level.

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 It is against this backdrop, several self- employment and anti-poverty
programmes like PMRY, TRYSEM etc., involving some entrepreneurial qualities
were introduced by the government as a tool of bottom up mode of development.
However, these programmes executed by the Government agencies proved ineffective
due to their weaknesses of one type or other.

Such a situation necessitated the NGOs to come out of their traditional bounds
like health, sanitation, education, family planning, environment protection, etc., to join
a noble mission to entrepreneurs the lesser known target groups (Singh 1992). The
government agencies engaged in this activity strengthened the NGOs by co-opting and
collaborating with them to reach the lower rungs of the society.

Today, we have several NGOs contributing to entrepreneurship development in

the country. The major ones are National Alliance of Young Entrepreneurs (NAYE),
World Assembly of Small and Medium Entrepreneurs (WASME), Xavier institute for
Social Studies (XISS), SEWA of Ahmedabad, ‘Y’ Self-Employment of Calcutta,
AWAKE (Association of Women Entrepreneurs of Karnataka), and Rural
Development and Self-Employment Training Institute (RUDSETIs) based in
Karnataka.

The NGOs involved in entrepreneurship development can be classified into

three types:

1. Primary Level NGOs:

The NGOs who mobilize their own resources, operate at international level and
execute developmental activities themselves or through intermediate fall within this
category. ACTIONAID, OXFAM, Christian Children Fund, etc. are prominent
examples of the primary level NGOs in India.

2. Intermediate NGOs:

These NGOs procure funds from various agencies, impart training, and conduct
workshops for target work force. SEWA and AWAKE are examples of intermediate
NGOs.

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 3. Grass Root Level NGOs:

These NGOs are those who conduct field activities by establishing direct
contact with the grass-root needy people. Examples of such NGOs are RUDSETIs,
ANARDE Foundation (Gujarat), Indian Institute of Youth Welfare (IIYW) of
Maharashtra etc.

The NGOs have revealed the following strengths as an edge over others:

a) The lean overhead and operating costs to reach the poor and needy.
b) Flexibility and responsiveness in operation to invent appropriate solution.
c) Nearness to client groups made them to be sensitive to community need.
d) Capacity for innovation and experimentation with new groups and untried
development approach.
e) Stimulating and mobilizing interest in the community.
f) Dependence on customer satisfaction.
g) Act as a test bed and sound board for government policies and programmes.
That one cannot imbue in others what one cannot possess oneself applies to the
NGOs also.

5.2 INSTITUTIONAL SUPPORT FOR FINANCES & TECHNICAL

ASSISTANCE

Rural Entrepreneurs carry out their business in rural eco-systems. These eco-
systems are relatively less robust and accessible in comparison with urban eco-
systems for Entrepreneurship. The lack or limitation of these systems has plagued the
rural entrepreneurship from growing. Now these systems are being promoted by
Union Government on top-priority. The programs like Start-up India, Stand-up India,
Make in India and Jan Dhan Aadhaar Mobile (JAM) initiatives are making rural
entrepreneurship a household name. Skill Development has taken central stage in the
scheme of things to promote entrepreneurship in rural and urban areas alike. We will
discuss all these initiatives and other Institutional support systems and Technical
back-stopping being made available to rural entrepreneurs.

5.3 INSTITUTIONAL SUPPORT SYSTEMS

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 The most important support systems requirements for an entrepreneurs are-
Human resources, critical physical infrastructure, technical competence, working
capital, managerial competence and market linkages. Human resources, technical
competence and managerial competence are the starting point for any Entrepreneur
and are most likely to be within his/ her control. For credit, technical guidance,
equipment support, marketing a Rural Entrepreneur will need external support.
Government of India and state governments have established or mandated some of the
existing to provide this support to entrepreneurs. These institutions can be grouped in
totwo categories- i) Financial Institutions, ii) Institutes for Skill Development and iii)
Institutions for Technical Guidance.

The Financial Institutions mandated by Government of India to support Rural

Entrepreneurs include:

Industrial Development Bank of India (IDBI)

IDBI was set up by Government of India to coordinate the activities of existing

financial institutions. Initially (since July 1964) was a wholly owned subsidiary of
Reserve Bank of India, it became independent apex institution for industrial finance in
1976, with Government of India taking over its functions from RBI. The main object
of setting up this institution have been to bridge the gap between demand and supply
of finance by providing direct financial assistance to industrial concerns wherever
necessary and to bring into existence an apex body to coordinate activities of various
financial institutions providing term finance to industries. Therefore, IDBI has been
created not only as a financial agency but also for the purpose of integrating activities
of all the financial institutions providing short, medium and long term benefits for the
industry. The main function of the Industrial Development Bank of India, as its name
itself suggest is to finance Industrial enterprises in both private and public sector.
Financial assistance is provided either directly or through special financial institutions:

a) Direct Assistance: IDBI assists Industrial unit directly by way project loan,
underwriting of and direct subscription to industries securities (Share &
Debentures) soft loans, technical development fund loans and equipment

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 finance loan. IDBI provides direct assistance for project costing more than Rs.
3 Crore under the Project finance scheme.
b) Indirect Finance: IDBI Indirect assistance is provided basically to tiny, small
and medium enterprises mainly. (i) By way of refinance of Industrial loan
granted by State Finance Corporations (SFCs), State Industrial Development
Corporations (SIDCs), and commercial banks, co-operative banks an Regional
Rural Banks (RRBs). (ii) Rediscounting of bills arising out of safe of Indigenes
machinery a deferred payment basis. (iii) Seed Capital assistance to new
enterprise never generally through SFCs & SIDCs.
c) Special Assistance: IDBI Act 1964, provides for a Development Assistance
fund. This fund is to be used by the IDBI to assist those Industrial concerns
which are not able to secure funds in the normal course either because of heavy
investment or low rate of return both.
d) Direct Assistance to Industries: The IDBI has been empowered to finance
industrial concerns directly under the following structural arrangements: (i) To
grant financial accommodation up to a 16 year period for export of capital
goods and other commodities, (ii) To grant loans or to subscribe to the shares
and debentures of industrial concerns. Such loans, advances, and debentures
can be convened into equity shares at the option of the Bank, (iii) To
underwrite new issues of Industrial 60 concerns and accept, discount or
rediscount bonafide commercial bills or promissory notes of industrial
concerns, (iv) To guarantee deferred payment due from industrial concerns for
loan raised by them in the market or from scheduled banks etc.
e) Assistance to other financial institutions: IDBI has carried out the following
refinancing functions: IDBI can refinance term advances of 3 to 25 years
maturity made to industrial concerns by IFCI, SFCs and other financial
institutions which may be notified by the Government. It can similarly
refinance term loans of 3 to 10 years maturity made by scheduled banks and
State Co-operative Banks. It can also refinance export credit of 15 years'
maturity where primary lending institutions grant loans to person in India and
to parsons outside India repayable within a period of 12 years.

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 f) Creation of Development of Assistance funds: The Bank created a
development assistance fund in 1965 with an initial contribution from Central
Government. This fund is intended to provide assistance for industries which
for various reasons like, heavy investment involved or low anticipated return
on capital, may not be able to obtain funds in the normal course. The prior
approval of the Central Government is necessary for any assistance from the
Fund.
g) Soft loan scheme: The soft loan scheme came into existence in November
1976 for financing the modernization program of five selected industries,
namely, cotton, textiles, jute, cement, sugar and specified engineering
industries. The scheme aims at modernization, replacement and renovation of
industry which has become necessary to achieve a more economic level of
production in order to enhance their competitiveness in domestic and
international markets.
h) Technical Development Fund Scheme: Technical Development Fund Scheme
was introduced in March 1979 with the object of promoting fuller capacity
utilization, technologies upgradation, and export development. The fund can
provide foreign exchange for small value imports with the object of procuring
technical know- how, foreign consultancy service, drawings and designs.
i) Automatic Refinancing Scheme: The main features of Automatic refinancing
scheme are as follows: (a) Sanction and disbursement of refinance in respect of
loans upto Rs. 5 lakhs from the eligible institutions to small scale industries
including those in the tiny sector which are normally covered under the IDBI
Credit Guarantee Scheme, (b) The IDBI will not levy commitment charges on
credit institutions in respect of refinances under the ARS (c) Only one general
agreement will be taken from the eligible institution covering drawls of
refinance under different schemes of the IDBT
INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI):

IFCI was the first term-financial Institution, which was set up in July 1948 by
the Government of India under the IFCI Act 1948 with objective of providing medium
and long-term loans to largest small Industrial concerns in the private sector.
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However, joint and public sector also have been made eligible for its assistance. It
provide direct rupee and foreign currency loans for new industrial projects and for
expansion, diversification, renovation and modernization of existing units, It also
underwriter and directly subscribe to industrial security, provided financial guarantees
merchant banking services and leave finance.

The Corporation performs the following functions:

1. Underwriting the shares, bonds or debentures of industrial enterprises;

provided such stocks, shares or debentures are disposed of by the
Corporation within a period of seven years from the date of acquisition,
2. granting loans or subscribing to the debentures of industrial undertakings
repayable within a period not exceeding 25 years,
3. guaranteeing loans traded in the public market by the industrial concerns,
repayable within 25 years or raided from scheduled banks or State co-
operative banks,
4. subscribing directly to the stock or shares of any industrial concerns,
5. guaranteeing deferred payments in respect of import of capital goods' by
industrial concerns who are able to make such arrangements with foreign
manufacturers or in connection with the purchase of capital goods
manufacturing in India,
6. guaranteeing loans raised from any banks or financial institutions in and
country outside India,
7. acting as the agent of theCentral Government and IDBI in respect of loans
sanctioned by them to industrial concerns,
8. undertaking Merchant Banking Operations,
9. providing technical and administrative assistance to any industrial concern
for the promotion, management by expansion of any industry, and
10. undertaking research and surveys for evaluating or dealing with marketing
or investments and 57 undertaking and carrying out techno-economic
studies in connection with the development of industry.
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

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 The SIDBI was set up in October 1989 under the act of Parliament as a wholly-
owned subsidiary of IDBI. It is the principal financial institution for promotion,
financing and development of Industries in the small scale sector. SIDBI also
coordinate the activities of agencies which provide finance to small enterprises. The
main objectives of SIDBI are to serve as the principal financial institution for
promotion, financing and development of Industry in the small scale sector and
coordinating the functions of other institutions engaged in similar activities. The
Bank, right from its inception has strived to make effective use of the existing network
of institutions serving the small scale sector. Further the bank has collaborated with
various national and international development organizations to synergize the efforts
in serving the small scale sector.

NATIONAL SMALL INDUSTRIES CORPORATION LTD (NSIC)

The National Small Industries Corporation Ltd. (NSIC) was established by the
Government of India in Feb. 1955. The main objectives of NSIC are to aid, counsel,
assist, finance, protect and promote small scale industries in the country. The
Corporation provides support to small scale sector in the following areas:

a) Supply of both indigenous and imported machines on easy Hire purchase items.
Special concessional terms have been introduced for units in backward areas
and also for units promoted by entrepreneurs from weaker sections of society.
b) Marketing of small industries products, based on consortia approach.
c) Export of products from small industries and developing export worthiness of
small scale units.
d) Enlisting the competent units and facilitating their participation in Government
stores Purchase Programs.
e) Developing prototypes of machines, equipment and tools which are then passed
on for commercial production.
f) Training in several industrial trades.
g) Development and upgradation of technology for projects based on wastes.
h) Supply and distribution of indigenous and imported raw material.
i) Setting up small scale industries in other developing countries on turnkey basis.

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STATE FINANCIAL CORPORATIONS (SFCS):

The State Financial Corporation (SFCs) are state level financial institutions
playing an important role in the development of small & medium enterprises in their
respective state in tandem with national priorities. They play an effective role in the
development of small and medium enterprises and bringing about regionally balanced
economic growth. Assistance Provide by SFCs: SFCs aim at wider dispersion of small
scale industries within each state they meet term credit needs of such units. SFCs
provide assistance to small scale industries by way of soft loans, direct subscription to
equity share /debenture guarantees, discounting of bills of exchange and seed capital
/special capital.

Their main objectives are to finance and promote these industries in the state
for achieving the balanced growth. The activities of SFCs were under the overall
control and supervision of the IDBI and RBI till about 1990 after which the SIDBI
and RBI have been performing the overseeing function. SFCs operate a number of
schemes of refinance and equity type assistance on behalf of IDBI/SIDBI. Besides
they also have special scheme for artisans and special target groups such as SC/ ST
women, ex-servicemen, physically handicapped etc. Over the year, they have
diversified their activities and increased the scope and coverage of their assistance.

STATE INDUSTRIAL DEVELOPMENT CORPORATIONS (SIDCs)

State Industrial Development Corporations were established under the

Companies Act as wholly-owned undertaking of the state government, the SIDCs acts
as catalysts for Industrial development and provide impetus to investment in their
respective states. The first SIDC was established in Bihar in 1960. Besides SFCs there
are 28 StateIndustrial Development Corporations (SIDCs) which promote states and
also provide financial assistance to small scale units. The main objectives of SIDCs
are as follows- a)-to develop Industrial Areas. b)-to ensure Market Facilities. c)-to
establish New Development Centers.

They act as a catalyst for industrial development in their respective States.

SIDCs provide land, infrastructure facilities like factory sheds, developed plots, roads,

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power, water supply, drainage and other amenities. SIDCs were set up mainly to cater
to the financial requirements of medium and large-scale industries. But they also
provide assistance to small-scale sector by way of term loan, subscription to equity
and promotional services. In addition all the nationalized banks, Reginal Rural Banks
(RRBs), Cooperative Banks and Gramin Banks have also been advised to support
Entrepreneurs with timely credit on easy terms, under various schemes of government
of India.

5.3 INSTITUTIONS FOR ENTREPRENEURSHIP AND SKILL TRAINING:

Entrepreneurship Development Institute of India (EDII)

Entrepreneurship Development Institute of India (EDII), an autonomous and

not-for-profit institute, set up in 1983, is sponsored by apex financial institutions - the
IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India (SBI). EDII
is the apex institution of Entrepreneurship in India. EDII has helped set up twelve
state-level exclusive entrepreneurship development centers and institutes. These
include: Institutes of Entrepreneurship Development (IEDs) Lucknow, Bhubaneswar,
Patna, Maharashtra Centre for Entrepreneurship Development (MCED), Aurangabad,
Madhya Pradesh Centre for Entrepreneurship Development (MPCED), Bhopal, Centre
for Entrepreneurship Development of Karnataka (CEDOK), Dharwad and Centre for
Entrepreneurship Development, Ahmedabad.

In order to broaden the frontiers of Entrepreneurship Research, EDII has

established a Centre for Research in Entrepreneurship Education and Development
(CREED), to investigate into a range of issues surrounding small and medium
enterprise sector, and establish a network of researchers and trainers by conducting a
biennial seminar on entrepreneurship education and research. In the international
arena, efforts to develop entrepreneurship by way of sharing resources and organizing
training programs, have helped EDII earn accolades and support from theWorld Bank,
Commonwealth Secretariat, UNIDO, ILO, British Council, Ford Foundation,
European Union, ASEAN Secretariat and several other renowned agencies. The
Ministry of External Affairs, Govt. of India has assigned EDII to set up
Entrepreneurship Development Centers in Cambodia, Lao PDR, Myanmar and
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Vietnam and Uzbekistan. Five more such centers in African region will also be
established by EDII.

Small Industries Service Institute (SISI)

At the heart of all agencies dealing with development of small industry is small
industries development organization, (SIDO). The Small Industries Development
Organization (MSME Development Organization (formerly known as SIDO)), is one
of the apex bodies of the Government of India, Ministry of Micro, Small and Medium
Enterprises, to assist the Government in formulation of policies and programs,
projects schemes, etc., for the promotion and development of Micro, Small and
Medium Enterprises in the country and also coordinating and monitoring the
implementation of these policies and programs, etc. Promotion and development of
Micro, Small and Medium Enterprises is primarily the responsibility of the States and
Union Territories (UTs) and the role of the Central Government (including the MSME
Development Organization in this field is to aid and assist the States/UTs in this
endeavor. Attached to the ministry, SIDO administers small industries service institute
(SISI’s). The small industries service institutes (SISI’s) are set-up one in each state to
provide consultancy and training to small and prospective entrepreneurs.

National Institute of Entrepreneurship and Small Business Development

(NIESBUD)

The National Institute for Entrepreneurship and Small Business Development

was established in 1983 by the ministry of industry (now ministry of small scale
industries), Government of India, as an apex body for coordinating and overseeing the
activities of various institutions/agencies engaged in entrepreneurship development
particularly in the area of small industry and small business The major aim of
NIESBUD is to evolve standardized materials and processes for selection, training,
support and sustenance of entrepreneurs, potential and existing. Activities and
objectives of NIESBUD include:

 To evolve standardized materials and processes for selection, training,

support and sustenance of entrepreneurs, potential and existing.

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  To help/support and affiliate institutions/organizations in carrying out
training and other entrepreneurship development related activities
 To serve as an apex national level resource institute for accelerating the
process of entrepreneurship development ensuring its impact across the
country and among all strata of the society.
 To provide vital information and support to trainers, promoters and
entrepreneurs by organizing research and documentation relevant to
entrepreneurship development.
 To train trainers, promoters and consultants in various areas of
entrepreneurship development.
 To provide national/international forums for interaction and exchange of
experiences helpful for policy formulation and modification at various
levels.
 To offer consultancy nationally/internationally for promotion of
entrepreneurship and small business development.
 To share internationally experience and expertise in entrepreneurship
development.
 To share experience and expertise in entrepreneurship development across
National frontiers.
National Institute of Micro, Small and Medium Enterprises (ni-msme)

ni-msme was originally set up as Central Industrial Extension Training Institute

(CIETI) in New Delhi in 1960 as a Department under the Ministry of Industry and
Commerce, Government of India. The Institute was shifted to Hyderabad in 1962, and
was renamed as Small Industry Extension Training (SIET) Institute. SIET was
conferred the status of national institute by the Government of India with the charter
of assisting in the promotion of Small Enterprises mainly by creating a pro-business
environment. In 1984, the UNIDO had recognized SIET as an institute of meritorious
performance under its Centers of Excellence Scheme subsequently, it was
alsoaccorded the national status in the same year and SIET Institute became National
Institute of Small Industry Extension Training (NISIET).

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 Since then the institute has come a long way, carving a place of distinction for
itself in the domain of entrepreneurship promotion, achieving recognition both at the
national level and in the international arena. To cope with the pressure of
globalization, the Government of India has enacted the MSMED Bill in the
Parliament, which became effective from 2nd October 2006. Accordingly, the
Institute, in order to reflect the expanded focus of its objectives with name was
rechristened as ni-msme from 11th April 2007 and re-designed its structure and
organization. It is an organization of the Ministry of Micro, Small and Medium
Enterprises (formerly Ministry of SSI & ARI), Government of India.

Over the years the Institute has gained immense experience and expertise in the
areas of entrepreneurship development, technology, management, and extension and
information services. ni-msme’s inherent capacity to innovate together with its top-
class infrastructure has enabled the institute to excel in its endeavors towards micro
and small enterprise promotion. From the time of inception, ni-msme has been
providing unstinted support to small and medium industries and has evolved to be the
best in offering services like research, consultancy, information, training and
extension to not only enterprises but also to concerned development agencies.

National Skill Development Corporation (NSDC)

It has tied up a number of other organizations and agencies, across the country
to provide Skill development and Entrepreneurship training. In fact now NSDC
supported training organizations are available in almost every district of the country.
National Skill Development Corporation India (NSDC), established in 2009, is a not-
for- profit company set up by the Ministry of Finance, under Section 25 of the
Companies Act,1956 corresponding to Section 8 of the Companies Act,2013. NSDC
aims to promote skill development by catalyzing creation of large, quality and for-
profit vocational institutions. Further, the organization provides funding to build
scalable and profitable vocational training initiatives. Its mandate is also to enable
support system which focuses on quality assurance, information systems and train the
trainer academies either directly or through partnerships.

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 NSDC acts as a catalyst in skill development by providing funding to
enterprises, companies and organizations that provide skill training. It also develops
appropriate models to enhance, support and coordinate private sector initiatives. The
differentiated focus on 21 sectors under NSDC’s purview and its understanding of
their viability will make every sector attractive to private investment. As of now (till
January 23, 2018) NSDChas partnered with 352 training partners- having 6565
training centers covering 569 districts of the country. These training partners have
trained over 74.4 lakhs potential entrepreneurs, out of whom around 40 lakhs have
been placed with concerned industries.

5.4 INSTITUTIONS FOR TECHNICAL GUIDANCE

There is paradigm shift in the eco-system of Entrepreneurship and skill

development in the country. Earlier the potential entrepreneurs were trained by the
institutes/ agencies and left to fend for themselves. Now the Government of India and
NSDC have advised all the training partner institutes and agencies to provide training,
placement and hand-holding support to the candidates approaching them for
entrepreneurship. Thus the Training partners are now helping the entrepreneurs to
develop Detailed Project Reports (DPRs) getting these submitted to banks for
financing and following-up with banks, to support the entrepreneurs establish their
enterprises at the earliest.

For example under the Agri-Clinic and Agri-Business Scheme (ACABC) of

Ministry of Agriculture and Farmers Welfare, all the nodal training institutes (NTIs)
identified by ACABC project implementation agency- National Institute of
Agricultural Extension Management (MANAGE), the success rate of the NTIs is
measured not only by the number of candidates they train, but by number of
Enterprises they establish. All the NTIs are provided financial incentives to ensure
hand-holding of all the established ventures for a period of one-year. These
entrepreneurs are again provided refresher training by MANAGE after a period of 3 to
5 years. Thus there is long-term engagement of the Entrepreneurs with the scheme and
the technical hand-holding institutes. Hence all the training partners of NSDC are now
technical support institutes as well.

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5.5 TECHNICAL BACK-STOPPING

Technical back-stopping is very critical in the technology-based Enterprises.

An entrepreneur has to be in constant touch with the Faculty, experts and mentors in
the concerned areas for at least first 3 years of establishing any enterprise. Higher
educational institutions in the country like IITs/ NITs provide this support to their
alumni by way of technical seminars and personal contacts. In rural and agricultural
sector the Entrepreneur has to tie-up with the nearest Agricultural college/ Krishi
Vigyan Kendra (KVK) scientist working in concerned area. A list of experts with their
mobile numbers, e-mail addresses must be collected by the entrepreneur before
leaving the training institute. Further he/she should always look for more experts,
mentors in the area of his enterprise.

Institutional support systems are life-blood of the rural enterprises. One needs
to scan the rural eco-system carefully to ensure proper and timely access to credit,
market and technical backstopping for smooth and uninterrupted operation of his
business. Skill development and Entrepreneurship training is now available in each
district of the country, and all these training institutes have been charged with the
responsibility of proving hand-holding support to trained candidates, so that they can
establish and run their enterprises successfully. This 360 degree support to
entrepreneur gives him confidence to get in to unchartered journey of taking up rural
entrepreneurship.

NATIONAL INDUSTRIAL DEVELOPMENT CORPORATION:

The N.I.D.C. was established by the Central Government in 1954 which has
been regarded as the instrument to achieve a balanced development of industries in the
private as well as the public sector.The NIDC plans and formulated projects for setting
up new industries. The main objective of the corporation is promotion of industries
rather than granting finance. It can also provide assistance for modernisation of
industries.

The corporation was set up with the authorized capital of Rs. 1 crore out of
which Rs. 10 lakhs have been issued and paid up by the government. It can also

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borrow from the government.The management of NIDC is entrusted to a Board of
Directors consisting of total 8 members including its Chairman and a Managing
Director. All the appointments are made by the central government.

INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA

The Industrial Credit and Investment Corporation of India (ICICI) was

established in year 1955 under the Companies Act as public limited company.Any
industrial concern may approach ICICI for assistance in financing a sound proposal
for the establishment, modernisation or expansion of the company.In order to promote
new industries to help in the expansion and modernisation of existing industries and to
provide technical and managerial assistance, the ICICI grants long term and medium
term loans subscribes debentures and shares and guarantees loans from private finance
source.

ICICI also provides assistance by way of suppliers’ credit, equipment leasing,

and renders merchant banking services.The corporation was registered with an
authorized capital of Rs. 25 crores divided into 5 lakh equity shares of Rs. 100 each. It
has also raised money by issuing debentures.

Industrial Development Bank of India (I.D.B.I.)

Industrial Development Bank of India was established by Govt. of India in

1964 under the IDBI Act as a wholly owned subsidiary of Reserve Bank of India to
provide credit and other facilities for the development of industrial sector. It
coordinates the activities of the other financial institutions and banks which provide
term finance to industries.It has also been assigned the responsibility of providing
financial and technical assistance for the promotion of certain basic and key industries
like pharmaceuticals fertilizers, mining, shipping power generation and setting up
industrial estates etc.

Unit Trust of India (U.T.I.)

The Unit Trust of India was set up in 1964 under the Unit Trust Act of 1963.
The main objective of the UTI is to encourage and mobilize saving of the companies

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and to make diversified investment for the economic growth of the country.It
accumulates the saving of the community through the sale of units and invests the
finance collected in various types of securities in such a way which may be
advantageous to the individuals. The investible funds of UTI are usually invested in
preference shares, debentures or bonds. The returns on these investments provides
main source of income to U.T.I.

The surplus funds for short periods are placed with commercial banks in call
loans.The management of the trust is entrusted to the Board of trustees. The chairman
of the Board and other trustees are appointed by R.B.I. One trustee each is nominated
by L.I.C. and State Bank of India and two others elected by other subscribers to the
capital of the trust.

DISTRICT INDUSTRIES CENTRE (DIC)

DIC have emerged since 1978 as the model agency for development of small
and village industries to provide all the support services need for such development.
These DIC have assisted more than 1.5 lakhs units generating employment for more
than 10.3 lakhs persons. The four metropolitan cities are Mumbai, Chennai, Delhi and
Kolkata have been kept out the preview of DIC.

FUNDING OF DIC:

The district industry centres are funded by the state concerned and the central
jointly.

STAFF PATTERN OF DIC:

The DIC has a general manager on the top assisted by 7 managers in various
fields. Which were identified as key area in which small industries needed specific
supports and attention.

FUNCTIONS OF DIC:

 Identification of entrepreneurs: DIC develops new entrepreneurs by conducting

entrepreneurial motivation programmers throughout the district especially in
Panchayat Union Headquarters and small towns.

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  Selection of projects: DIC offers technical advice to new entrepreneurs for the
selection of projects suitable to them.
 Provisional Registration under SSI: After the selection of projects,
entrepreneurs are issued with provisional SSI registration which is essential for
obtaining assistance from the financial institution.
 Purchase of fixed assets: DIC sponsors the loan application to TIIC, SIDCO
and banks for the purchase of land and building and sanctions margin money
under rural industrial project loan scheme payable to other financial agencies
for the purchase of plant and machinery.
 Clearances from Various Departments: It takes the initiative to get clearness
from various departments and takes follow up measures to get speedy power
connection.
 Assistance to Raw Material Suppliers: It makes necessary recommendations to
the concerned raw materials suppliers and issues the required certificates for
the import of raw materials and machinery, whenever necessary.
 Assistance to Village Artisans & Handicrafts: DIC arranges for the financial
assistance with the lead banks of nationalized banks of the respective areas.
 Subsidy Schemes: DIC assists SSI units and rural artisans to get subsides such
as power subsidy, interest subsidy for engineers, subsidy under IRDP et., from
various institutions.
STATE INDUSTRIES PROMOTION CORPORATION OF TAMILNADU
LIMITED (SIPCOT)

SIPCOT was set up in 1971 as a Public Limited Company, wholly owned by

the Government of Tamilnadu for the Medium and major industries. The office is
located in Egmore, Chennai. It works in liaison with TIIC and extends term loans
under IDBI refinance scheme.

Objectives/ Role of SIPCOT:

 To establish, develop, maintain and manage industrial complex, parks and

growth centers at various places across the state of Tamilnadu.
 To channelize incentives for industries set up in the state.

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  To provide escort services to medium and large scale industries.
 To provides entrepreneurial development programmed for the weaker sections
to generate employment opportunities.
 To help in project assistance and clearance
 To provide single window statutory clearance
 To provide marketing assistance
Instead of just accelerating then pace of industrial growth in already
development and densely populated areas, SIPCOT has created industrial complexes,
parks, growth centers in 17 stategies places. They are located in Bargutr, Cheyyar,
Cuddalore, Gangaikondam, Gummidipoondi, Hosur, Irungattukottai, Manamadurai,
Nemili, Nilakkottai, Oragadam, Perundurai, Puddukkoti, Ranipet, Siruseri,
Sriperumpedur and Tuticorin.

Other Assistance offered by SIPCOT:

 SIPCOT has compiled a Data bank, containing information on various aspects

of industries
 It also helps entrepreneurs in assessing the merits of alternative location for the
proposed projects with reference to the source of raw materials, market
potential and facilities available in a particular area.
 SIPCOT takes initiative to contact entrepreneurs holding Indent, Letters and
Licenses in the State and help them overcome their implementation problems.
 It guides the entrepreneurs to decide on the economic size of the unit, foreign
collaboration, supply of machinery, technical know-how, etc.,
 The business development department guides entrepreneurs in applying for
license and registration with the central government, approval of collaboration
 It also helps entrepreneurs to obtain supply of power
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI):

Setting up of Small Industries Development Bank of India (SIDBI) marked the

fulfilment of a long felt need to have a separate institution at the national level
exclusively cater to the requirements of the small scale sector in the country. SIDBI

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became operational on April, 2 1990 with an initial paid up capital of Rs.250 crores.
The activities of SIDBI have been patterned to suit the requirements of small scale
industries consisting of both modern and traditional ones.

Broadly, these activities can be categorized as under

 Refinancing of term loans granted by banks and other eligible financial

institution.
 Direct discounting as well as rediscounting of bills arising out of sale of
machinery/ capital equipment by manufacturers is small scale sector on
deferred credit.
 Equity type assistance under National Equity Fund (NEF) and by way of seed
capital to entrepreneurs.
 Rediscounting of short term trade bills arising out of sale of products of small
scale sector.
 Resource support to NSIC & Other institution engaged in supply of raw
materials, marketing of SSI products, setting up of industrial estates,
development of industrial areas and infrastructure, extension hire purchase and
leasing facilities.
 Direct assistance for setting up and expansion of marketing outlets for SSI
products and development of industrial areas for SSI units.
 Share capital and resource support to factoring organization.
 Assistance for promotion of exports of SSi products
 Extension of technical and other related support services for promotion,
development and growth of small scale sector
TAMILNADU INDUSTRIES INVESTMENT CORPORATION (TIIC)

TIIC is wholly owned by Government of Tamilnadu and it is the first state

level financial institution in the country. It was established in 1949 and as government
of Tamilnadu holding more than 53 % of the shares. The rest paid up capital is
subscribed by IDBI, Government of Pondicherry and other public institutions.

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  Provision of long term loans for acquisition of land building, plant and
machinery to tiny, small and medium scale industries. Term loans for
modernization, expansion and diversification of existing units on easy terms.
 Underwriting of shares.
 Designing special schemes for economically weaker section like scheduled
caste, tribe entrepreneurs, physically handicapped persons etc.
 Provision of loans to those engaged in manufacturing, processing and
refrigeration of goods or in hotel or in industry or in transport business or
development of industrial estates or share facilities for fishing or to any
concern for purchase of clerical and surgical instruments.
Schemes offered by TIIC

 General schemes: Under the general scheme, term loan assistance is provided
for small and medium scale industrial unit. To set up new industries and
expansion of the existing units.
 Nursing home schemes: The corporation provides assistance for constructions
of nursing homes and purchase of electro medicine equipment in all areas
including metropolitan areas with a minimum bed. Strength of 20 non medical
persons is also eligible for assistance under this scheme.
 Transport operator scheme: The corporation provides loans for purchase of
transport vehicles that is delivery vans, lorries, tempo’s to operate as
commercial goods carriers and for the purchase of autos, tourist taxi, pickup
vans and passengers bus ( having route permits) to be operated as public carries
and for purchases.
 Generator scheme: Assistances are given for installation of power generating
units for power consumption of the individual units.
 Hotel scheme: Financial assistance is considered for setting up of hotels in
order to promote tourism and also for expansion of the existing hotels.
 Single window scheme: All eligible small scale units including tiny units
whose project outlay is within RS 200 lakhs would be eligible for both term
loan and working capital assistances under the scheme.

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 Ex service man scheme: A special scheme being operated in collaboration with
SSDBI and ex service man board for ex service man (EBE). The total cost of
the project under the scheme should not exceed Rs. 15 lakhs. Ex service man
can also apply under national equity fund scheme.
 Mahilaudhayamnidhi service: Women entrepreneurs can avail assistances to
setup to new projects; it is the project can does not exceed Rs 10 lakhs.
 Re-finance scheme for technology development and modernization (RTDM):
Existing profit making SSI which go in for modernization and technology,
upgrade can avail assistances under this scheme. Re-finance scheme of ISO
9000 services and certification by SSI units.
 Technology development fund services: The government of Tamilnadu
constituted the fund for technology development and modernization of SSI.
 TAHDCO scheme: The Tamilnaduadhidravidar housing development
corporation provides margins money assistances to scheduled caste enter for
setup SSI and purchase of transport vehicles.
 Soft loan: Soft loan is a loan repayable in a longer period with lesser rate of
interest. TIIC also provides soft loan assistances to eligible first generation
entrepreneurs who look back of adequate financial resources.
 National equity fund: TIIC is the implementing agency for the national equity
fund scheme. Tiny unit whose project cost do not exceed Rs 50 lakhs and
which are coming up in rural areas can avail assistances under the scheme.
 Hire purchase scheme or lease financing scheme: Existing and financially
viable SSI with proven truck can avail hire purchase assistance for purchase of
machinery equipment and operating route buses.
 Warehouse: To provide warehouse facilities pre dominantly for storing goods
manufactured by ssi units
 Marketing assistances scheme; To provide support to small scale industrial
sector in marketing their products
 Computer training institute scheme: To setup computer training institute that
offers good scope.

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  Marriage hall / community hall: To provide financial assistances for
construction of marriage halls as well as business development measures.
NATIONAL SMALL INDUSTRIES CORPORATION (NSIC)

It provides support and works for the growth of the Micro, Small and Medium
Enterprises (MSMEs) nationwide. NSIC works under the Ministry of Micro, Small
and Medium Enterprises (MoMSME) for the promotion of these enterprises. NSIC
has been working to promote, aid and foster the growth of micro, small and medium
enterprises in the country. NSIC operates through countrywide network of offices and
Technical Centres in the Country. NSIC works with its wide network of branch offices
and technical centres spread across the country. Its range of services includes financial
assistance, core training and incubation. NSIC offers integrated support services under
finance, technology, marketing and support services. The corporation also focuses on
providing machinery on hire purchase basis and marketing in exports.

Mission: “To promote and support Micro, Small & Medium Enterprises (MSMEs)
Sector” by providing integrated support services encompassing Marketing,
Technology, Finance and other services.

Vision: “To be a premier Organization fostering the growth of Micro, Small and
Medium Enterprises (MSMEs) Sector”.

Schemes of NSIC:

NSIC facilitates Micro, Small and Medium Enterprises with a set of specially
tailored scheme to enhance their competitiveness. NSIC provides integrated support
services under Marketing, Technology, Finance and other Support service.

a) Marketing Support: Marketing has been identified as one of the most important
tools for business development. It is critical for the growth and survival of
MSMEs in today’s intensely competitive market. NSIC acts as a facilitator and
has devised a number of schemes to support enterprises in their marketing
efforts, both domestic and foreign markets. These schemes are briefly
described as under:

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b) Consortia: Small Enterprises in their individual capacity face problems to
procure & execute large orders, which deny them a level playing field vis-a’-
vis large enterprises. NSIC forms consortia of Micro and Small units
manufacturing the same product, thereby pooling in their capacity.
c) Single point Registration for Government Purchase: NSIC enlists Micro &
Small Enterprises (MSEs) under Single Point Registration scheme (SPRS) for
participation in Government Purchases. The units enlisted under Single Point
Registration Scheme of NSIC are eligible to get the benefits under Public
Procurement Policy for Micro & Small Enterprises (MSEs) Order 2012 as
notified by the Government of India, Ministry of Micro Small & Medium
Enterprises.
o Issue of the Tender Sets free of cost.
o Exemption from payment of Earnest Money Deposit (EMD),
o Consortia facility for Tender Marketing.
d) MSME Global Mart B2B Web Portal for MSMEs: Information today is
becoming almost as vital as the air we breathe. The corporation is offering
Infomediary Services through its MSME Global Mart www.msmemart.com;
which is a Business to Business (B2B) web portal. The services are available
through Annual Membership.
o Create your Company’s Web Page in minutes
o Display Products & Services 24*7
o Connect with Buyers & Suppliers Globally
o Information’s on Events & Exhibitions
o Keyword based Unlimited Tender Alert
o Franchise & Distributorship Opportunities
o Request for Quotations
o Trade Leads
o Platform to Buy/Sell Used Machinery
o Service Available in Multiple Language
o Free Membership for SC/ST Entrepreneurs for one year

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e) Exhibitions and Technology Fairs: To showcase the competencies of Indian
MSMEs and to capture market opportunities, NSIC participates in select
International and National Exhibitions and Trade Fairs every year. NSIC
facilitates the participation of the small enterprises by providing concessions in
rental etc. Participation in these events exposes MSMEs to international
practices and enhances their business prowess.
f) Buyer-Seller meets: Bulk and departmental buyers such as the Railways,
Defence, Communication departments and large companies are invited to
participate in buyer-seller meets to enrich small enterprises knowledge
regarding terms and conditions, quality standards, etc required by the buyer.
These programmes are aimed at vendor development from MSMEs for the bulk
manufacturers.
g) Credit Support: NSIC facilitates credit requirements of small enterprises in the
following areas
h) Financing for procurement of Raw Material (Short term): NSIC’s Raw Material
Assistance Scheme aims at helping Small Enterprises by way of financing the
purchase of Raw Material (both indigenous & imported). The salient features
are:
o Financial Assistance for procurement of Raw Material upto 180 days.
o MSMEs helped to avail Economics of Purchases like bulk purchase, cash
discount etc
i) Credit Facilitation Through Bank: To meet the credit requirements of MSME
units, NSIC has entered into a Memorandum of Understanding with various
Nationalized and Private Sector Banks. Through syndication with these banks,
NSIC facilitates MSME in accessing credit support (fund based or non-fund
based limits) from the banks. NSIC assists MSMEs in completion of the
documentation for submitting the proposals to the banks and also does the
follow up with the banks. These handholding support are provided by NSIC
without any cost to the MSMEs.
j) Technology Support: Technology is the key to enhancing a company’s
competitive advantage in today’s dynamic information age. Small enterprises

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 need to develop and implement a technology strategy in addition to financial,
marketing and operational strategies and adopt the one that helps integrate their
operations with their environment, customers and suppliers.
THE SMALL INDUSTRIES DEVELOPMENT ORGANISATION (SIDO)

It is an apex body for formulating policies for the development of small-scale

industries in the country. Small Industries Development Organization (SIDO) is a
subordinate office of the Department of SSI & Auxiliary and Rural Industry (ARI). It
is an apex body and nodal agency for formulating, coordinating and monitoring the
policies and programmes for promotion and development of small-scale industries.

The main functions of the SIDO are classified into:

1. Co-ordination,
2. Industrial development, and
3. Extension.
These functions are performed through a national network of institutions and
associated agencies created for specific functions. At present, the SIDO functions
through 27 offices, 31 Small Industries Service Institutes (SISI), 37 Extension
Centres, 3 Product-cum -Process Development Centres, and 4 Production Centres.

All small-scale industries except those falling within the specialized boards and
agencies like Khadi and Village Industries (KVI), Coir Boards, Central Silk Board,
etc., fall under the purview of the SIDO.

The main functions performed by the SIDO in each of its three categories of functions
are:

1.Functions Relating to Co-ordination:

 To evolve a national policy for the development of small-scale industries,

 To co-ordinate the policies and programmes of various State Governments,
 To maintain a proper liaison with the related Central Ministries, Planning
Commission, State Governments, Financial Institutions etc., and
 To co-ordinate the programmes for the development of industrial estates.

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2.Functions Relating to Industrial Development:

 To reserve items for production by small-scale industries,

 To collect data on consumer items imported and then, encourage the setting of
industrial units to produce these items by giving coordinated assistance,
 To render required support for the development of ancillary units, and
 To encourage small-scale industries to actively participate in Government
Stores Purchase Program by giving them necessary guidance, market advice,
and assistance.
3.Function Relating to Extension:

 To make provision to technical services for improving technical process,

production planning, selecting appropriate machinery, and preparing factory
lay-out and design,
 To provide consultancy and training services to strengthen the competitive
ability of small-scale industries.
 To render marketing assistance to small-scale industries to effectively sell their
products, and
 To provide assistance in economic investigation and information to small- scale
industries.
STATES INDUSTRIAL DEVELOPMENT CORPORATION (SIDCO)

In many state governments, for the promotion of small-scale industries, a

separate corporation has been set up which is known as Small Industries Development
Corporation. They undertake all kinds of activities for the promotion of small-scale
industries. Right from the stage of installation, to the stage of commencing
production, these Corporations help small scale industries (SSI) in many ways. In
short, they provide infrastructure facilities to small scale industries. Due to the
assistance provided by SIDCO, many backward areas in most of the states have been
developed. So, SIDCO has also been responsible in spreading the industrial activity
throughout several states.

Functions of SIDCO

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1. Supplies scarce raw materials: Some of the scarce raw materials are procured
by the corporation either from the domestic market or from abroad and are
provided to the needy small-scale industries. For this purpose, SIDCO has a
number of raw material depots and these depots are procuring various scarce
raw materials, as per the requirements of small-scale industries in the state.
2. Provides marketing assistance: In order to provide an efficient marketing
support to small scale industries, the corporation has taken up various schemes.
In fact, the corporation participates in the tenders floated by the state
government departments and also with the DGSD (Director General of
Supplies and Disposal). SIDCO makes advance payments for obtaining orders
and distribute them among the various small-scale units. SIDCO also arranges
for buyer — seller meets frequently.
3. Assists in Bills discounting: When small scale units supply goods to
government departments, there is a delay in receiving payments. In such a
situation, the bills drawn on government departments will be discounted by
SIDCO and up to 80% of the bill value is given to the supplier. This helps the
SSI units in solving their working capital crisis.
4. Provides Export marketing assistance: To promote export marketing among the
small-scale industries, SIDCO has developed websites because of which it is
able to display the products of the small-scale industries in foreign markets and
obtain export orders. Once an export order is obtained, the Common export
manager of SIDCO will make arrangements for extending various services for
export of the product. SIDCO also helps in the small-scale units taking part in
the international trade fair at New Delhi, Pragati Maidan so that the products of
small-scale industries of Tamilnadu are displayed.
5. Promotes women entrepreneurs: In addition to the above, in order to promote
women entrepreneurs, a separate industrial estate for women has been set up at
Tirumullaivayil, near Chennai, where women entrepreneurs are trained in
various fields of small-scale industries. In addition to SIDCO, there are various
corporations that assists in the promotion of small-scale industries such as,
Small Industries Promotion Corporation of Tamilnadu (SIPCOT), Tamilnadu

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 Small Industries Corporation (TANSI), Industrial and Technical Consultancy
Organisation of Tamilnadu (ITCOT) and Tamilnadu Industries Investment
Corporation (TIIC).
6. Promotes skill development centres: In an effort to supply skilled laborers to
various small-scale industries, skill development centres are being set up in
various industrial estates which will be training workers in varied industrial
activities and they will be trained in modern skill.
7. Set up Captive power plants: In order to provide uninterrupted and good quality
power supply, SIDCO has taken up a plan to set up captive power plants in
major industrial estates. It is now planning to set up these plants in 10 industrial
estates.
8. Information Technology and Telecommunication Division: It provides
software and hardware solutions to central and state government departments,
central and local self-government bodies, public sector undertakings.
Autonomous Institutions and SSI units.
THE KHADI AND VILLAGE INDUSTRIES COMMISSION (KVIC)

The Khadi and Village Industries Commission (KVIC) is a statutory body

formed in April 1957 (During 2nd Five Year plan)(as per an RTI) by the Government
of India, under the Act of Parliament, 'Khadi and Village Industries Commission Act
of 1956'. It is an apex organisation under the Ministry of Micro, Small and Medium
Enterprises, with regard to khadi and village industries within India, which seeks to -
"plan, promote, facilitate, organise and assist in the establishment and development of
khadi and village industries in the rural areas in coordination with other agencies
engaged in rural development wherever necessary."

In April 1957, it took over the work of former All India Khadi and Village
Industries Board. Its head office is in Mumbai, whereas its six zonal offices in Delhi,
Bhopal, Bengaluru, Kolkata, Mumbai and Guwahati. Other than its zonal offices, it
has offices in 28 states for the implementation of its various programmes

Functions

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  The KVIC is charged with the planning, promotion, organisation and
implementation of programs for the development of Khadi and other village
industries in the rural areas in coordination with other agencies engaged in rural
development wherever necessary.
 Its functions also comprise building up of a reserve of raw materials and
implements for supply to producers, creation of common service facilities for
processing of raw materials as semi-finished goods and provisions of facilities
for marketing of KVI products apart from organisation of training of artisans
engaged in these industries and encouragement of co-operative efforts amongst
them.
 To promote the sale and marketing of khadi and/or products of village
industries or handicrafts, the KVIC may forge linkages with established
marketing agencies wherever feasible and necessary.
 The KVIC is also charged with the responsibility of encouraging and
promoting research in the production techniques and equipment employed in
the Khadi and Village Industries sector and providing facilities for the study of
the problems relating to it, including the use of non-conventional energy and
electric power with a view to increasing productivity, eliminating drudgery and
otherwise enhancing their competitive capacity and arranging for dissemination
of salient results obtained from such research.
 Further, the KVIC is entrusted with the task of providing financial assistance to
institutions and individuals for development and operation of Khadi and village
industries and guiding them through supply of designs, prototypes and other
technical information.
 In implementing KVI activities, the KVIC may take such steps as to ensure
genuineness of the products and to set standards of quality and ensure that the
products of Khadi and village industries do conform to the standards.
5.6 FUTURE OF ENTREPRENEURS IN INDIA

Entrepreneurship is the dynamic process of creating incremental wealth. The

wealth is created by individuals who assume the major risks in terms of equity, time
and/or career commitment or provide value for some product or service. The product
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or service may or may not be new or unique, but value must somehow be infused by
the entrepreneur by receiving and locating the necessary skills and resources
efficiently and effectively.Entrepreneurship is thus considered as the process of
creating something new with value by devoting the necessary time and effort,
assuming the accompanying financial, psychic, and social risks, and receiving the
resulting rewards of monetary and personal satisfaction and independence that comes
with it.

There is always been a big rush to join the IITs and the other elite engineering
colleges in India. One of the primary reasons is bright career opportunities. The
students and parents as they conceptualize “career” by evaluating the performances of
the alumni and fresh graduates in the job market deduce that graduating from these
colleges will fetch those jobs with hefty packages. However, the nation has lately
realized that to help grow the economy faster, there is a need for entrepreneurial
ventures. The fresh young minds from the elite engineering institutions are just the
right people for generating new ideas and innovations and launch them through
entrepreneurial projects. This will not only help them in their own career development
but will help the career of many more through creation of jobs. Also it will boost the
economy of the country. Companies like Microsoft, Apple, and Facebook are all
started by young entrepreneurs within or beyond the campus. Thus, the engineering
colleges could become the incubation centres for successful ventures in India from the
generations to come and create Indian entrepreneurial brands.

Indian entrepreneurs today are successful and have gone global. They are not
only helping themselves but also are creating jobs in the market at an unprecedented
rate. This is helping the Indian economy to larger extend.Recently, India is considered
to be amongst the three top investment destinations. The Indian experience has
established that, when the right environment is created by the policy makers, the
entrepreneurial spirit of the people finds expression and the economic activity booms.
The government and the citizens alike have realized the potential of private initiatives
ever since the Indian economy was liberalized in the 1990s. The trend of private

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enterprise is picking up pace in India and is likely to be supported by all executive and
legislative functions of the country irrespective of political ideologies.

Despite many challenges, the entrepreneurial opportunities in India are

substantial. A new-found entrepreneurial culture is creating a favourable ecosystem of
service and resource providers. Besides government programs and agencies, a number
of private funds, mentors, and service providers are entering the arena to further
accelerate the trend. There is a long way to go to reach a mature entrepreneurial
landscape in India, but the opportunities are sufficiently large and numerous that the
future of India will likely be shaped by its entrepreneurs.

Book Reference
1. Entrepreneurship Development in India (2021) - Debasish Biswas - Routledge
Publications
2. Innovation and Entrepreneurship (2014) - Peter Drucker - Routledge
Publications
3. Fundamentals of Entrepreneurship (2005) - Sangram Keshari Mohanty - PHI
Publications Pvt. Ltd.
4. The Economics of Entrepreneurship (2009) - Simon C. Parker - Cambridge
University Press
5. Skill Development and Entrepreneurship in India (2016) - Rameshwari
Pandya - New Century Publications
6. Management and Entrepreneurship (2009) - Veerabhadrappa Havinal - New
Age International (P) Limited

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 Question Bank

Part - A

1. What are the importance / objectives of EDP?

2. What are the process of EDP?
3. Explain the phases or types of EDP?
4. Write the merits and demerits of EDP?
5. Explain about SSIB
Part - B

6. Discuss about SIDCs

7. Explain about the NSIC.
8. What are the institutions of EDP? Explain
9. Explain the problems in the conduct by EDP
10. Explain the suggestion to made EDP successful
11. Explain the role of government in organizing the EDP?
Part - C

12. Evaluate the performance of entrepreneur development programme

13. Explain the role of SISI, SIPCOT & SIDBI
14. Explain the functions of SIDO
15. Explain the special features of schemes of commercial bank.
16. Discuss the various function of DIC
17. Discuss the various financial assistance of the TIIC.
18. Explain the assistance given by various institutions to develop
entrepreneurship.

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