Unit-2

• The word “entrepreneur” is derived from the French verb “entreprendre”, which means ‘to undertake’.
• Meaning“Entrepreneurship is the investing and risking of time, money and effort to start a business and
make it successful. Characteristics of Entrepreneurship
• Economic and dynamic activity:it involves the creation and operation of an enterprise
• Related to Innovation:involves a continuous search for new ideas.
• Profit Potential:Without profit potential, the efforts of entrepreneurs would remain only an abstract and a
theoretical leisure activity.
• Risk Bearing:‘willingness to assume risk’
• Skillful Management:the role of an entrepreneur is to initiate and supervise design of organization
improvement projects
• Accepting Challenges:the resources of building and running the enterprise
• Goal-Oriented Activity:Entrepreneurship emphasizes results, achievements and targets achieved
• Value Creation:Through entrepreneurship, new products, services, transactions, approaches, resources,
technologies, and markets
• Dynamic Process:Entrepreneur thrives on changes in the environment,
• Uniqueness:
• Interest and Vision:
• Risk and Rewards:An entrepreneur who invests in a franchise pays for someone else’s
business plan and receives a respectable income, Entrepreneurship requires riskHowever, if
she is right, she can suddenly become extremely wealthy.
E n tre p re n e u rs h ip d e v e lo p me
: n t

• The whole point of entrepreneurship development is to increase the number

of entrepreneurs. The steps below will explain how to create an effective
entrepreneurship development
• Outline the objectives of the program and focus on the venture
development:Entrepreneurship development aims at individuals who want to start or
possibly expand a business
• Select educated people who have high entrepreneurial potential:
• Identify the local market and search for people who have potential in it.
• Provide support through private sector-based organizations.
• Provide an easy yet detailed methodology that will help entrepreneurs improve
in the short and long-run. how to gather the required resources in order to meet the
goals of their venture.
• Implement special measures to improve the usefulness of trainers and
facilitators:
• The selection of areas for pilot programs must be right:
• The selection of areas for pilot programs must be right: If the program shows signs of
high promise, it can be launched on a national level.
• A successful entrepreneurship development program requires
government policies:Entrepreneurship helps the economy of a country grow and creates
new jobs. Government policies usually have a substantial impact on the number of
Factors Affecting Entrepreneurship:

• Personality Factors:willing to work for long hours and assume risk;

are self-confident and hard-working .
• Environmental factors:Unsatisfied personal needs for growth and achievement in
employment conditions results in successful entrepreneurship.
• Political: Political stability in a country is absolutely essential for smooth economic
activity. Frequent political protests, strikes, etc.
• Socio-Economic Factors:Family background, Level of Education, Legitimacy of
Entrepreneurship, nvestment capacity.
• Economic Factor:availability of finance, labor, land, accessibility of customers,
suppliers are the factors that stimulate entrepreneurship. This results in increase in
profit, which ultimately goes to capital formation. Due to this capital supply increase,
entrepreneurship also increases. Other Factors
• Entrepreneurial Education:Many universities and institutes are nowadays offering
entrepreneurship education. A number of institutes have set up successful
entrepreneurship centers, which provide help to budding entrepreneurs by conducting
formal training and structured mentoring programs.
Impact of Services Sector: Increase in per capita income leads to a greater share of the services
sector in the national economy.
Internal Control System:Entrepreneurship largely depends upon the control system designed for
controlling the business activities. If the control system is effective they will result in optimal inventory,
good quality products and high profit margins. This will have a positive effect on the success of
entrepreneurship.

• Characteristics and Skills of an Entrepreneur:Visionary Thinking:, Risk-Taking :,

Leadership:, Good leadership involves communication, empathy, and the ability to make tough
decisions. Adaptability:The business environment is constantly changing, and successful
entrepreneurs must be adaptable. Strategic Planning:Effective entrepreneurs excel at strategic
planning. They set clear objectives, develop actionable plans, and anticipate potential challenges.
Networking:. Networking helps them leverage resources and expand their influence in their
industry. Decisiveness:Entrepreneurs must make decisions swiftly and confidently, even when
faced with uncertainty. Financial Acumen:Entrepreneurs need to be adept at budgeting, financial
forecasting, and analyzing financial statements. Customer Focus:This customer-centric approach
helps build loyalty, improve satisfaction, and drive growth. Self-Motivation:This characteristic
ensures they remain dedicated and passionate about their ventures, fueling their commitment and
perseverance.

•,
 Comparison Chart
BASIS FOR COMPARISON ENTREPRENEUR MANAGER
Entrepreneur refers to a
Manager is an individual who
person who creates an
takes the responsibility of
Meaning enterprise, by taking
controlling and administering
financial risk in order to get
the organization.
profit.
Focus Business startup Ongoing operations
Primary motivation Achievement Power
Approach to task Informal Formal
Status Owner Employee
Reward Profit Salary
Decision making Intuitive Calculative
Driving force Creativity and Innovation Preserving status quo
Risk orientation Risk taker Risk averse
• The Evolution of Entrepreneurship
• The need and the constant necessity for a good leader is one of the many
factors that drive the evolution of entrepreneurship. Besides this, there are a
few other factors:
• Trading: With the improvement in communication between the countries
and the advancement in transportation, start the process of trading.
• Advent of stable specialization and communities: When more and
more individuals start to settle in secure communities, a huge change was
noticed in their lifestyles. Each group had a leader who was qualified and
specialized in one task and that helped in speeding the development of
leadership skills and innovation.
• Need of independent career: More and more people are looking for a
career path that is totally independent. The majority started to take risks by
developing their own businesses in order to achieve maximum benefits.
Entrepreneur Intrapreneur

An entrepreneur is independent in his An intraprenuer is dependent on the

operations entrepreneur i.e. the owner.

An entrepreneur himself raises funds

The Intrapreneur does not raise funds.
required for the enterprise.

Entrepreneur bears the risk involved in the An intrapreneur does not fully bear the risk
business. involved in the enterprise.

On the contrary,an intrapreneur operates

An entrepreneur operates from outside.
from within the organization itself.

An entrepreneur begins his business with a An intrapreneur sets up his enterprise after
newly set up enterprise. working someone else’s organization.

As an entrepreneur establishes new An intrapreneur establishes his business

business, so he does not posses any after gathering experiences through working
experience over the business. in the other organization.

Entrepreneurs may find it difficult to get Intrapreneurs have their resources readily
resources available to them.

Entrepreneurs are found anywhere their Intrapraneurs work within the confines of an
vision takes them. organization.

Entrepreneurs know the business on a macro Intrapreneurs are highly skilled and
scale. specialized.
Types of Entrepreneurs

• Innovative Entrepreneur: These are the ones who

invent the new ideas, new products, new production
methods or processes, discover potential markets and
reorganize the company’s structure2-Imitating
Entrepreneurs: The imitating entrepreneurs are those
who immediately copy the new inventions made by the
innovative entrepreneurs. Fabian EntrepreneursThey
do not initiate any inventions but follow only after they
are satisfied with its success rate.They wait for some
time before the innovation becomes well tested by
others and do not result in a huge loss due to its failure.
• Drone Entrepreneurs: These entrepreneurs are
reluctant to change since they are very conservative
and do not want to make any changes in the
organization. Entrepreneurs are broadly classified
into/our categories as mentioned below:
• Entrepreneurial Functions
• Managerial Functions
• Promotional Functions
• Commercial Functions
• Entrepreneurial Functions:
• The major entrepreneurial functions include risk bearing, organizing, and
innovation. Managerial Functions:
• In simple words, management is getting things working with and through
others. Different experts have defined term management differently. The
management functions performed by entrepreneur are classified
into the following five types:
• Planning
• Organizing
• Staffing
• Directing
• Controlling
•
Promotional Functions:

• Identification and Selection of Business Idea:

• Preparation of Business Plan or Project Report:
• Requirement for Finance:
• Commercial Functions:Production / Manufacturing:, Marketing:,
Accounting:
• Thus, accounting involves a process consisting of the following
four stages:
• Recording the Transactions
• Classifying the Transactions
• Summarising the Transactions
• Preparing the Final Accounts
• Analysing and Interpreting the Results.
Advantages of Becoming an Entrepreneur

• You set your principles

• You have all the rights. One of the greatest issues you had with
getting a “genuine” employment was being overseenCan work
any placeIt is the reality you can work from anyplace it’s up to
you. Never be exhaustedIf you like to experience, rivalry and the
thrill of gambling it all, you’ll like owning your own business. Make
your own destinyYou can make your own particular open doors by
doing things like attending conventions, organizing with similarly
invested individuals on the web and substantially more by picking
the people you work with and join forces with, as your own
particular manager. Work Your Own Schedulen any case, being
able to manage when you work, when you’ll be ‘in the workplace’,
accessible for gatherings, and so on
• Entrepreneurial Decision-Process
• The difference between the entrepreneurial style and the managerial style (administrative
domain) involves five business dimensions.
• A. Strategic Orientation
• The entrepreneur’s strategic orientation depends on his or her perception of the opportunity.
• When the use of planning systems is the strategic orientation, the administrative domain is
operant. Commitment to Opportunity
• The entrepreneurial domain is pressured by the need for action and has a short time span in
terms of opportunity commitment. Control of Resources
• The administrator is rewarded by effective resource administration and has a drive to own or
accumulate as many resources as possible.
• The entrepreneur, under pressure of limited resources, strives to rent resources on an as-needed
basis.
• E. Managerial Structure
• In the administrative domain, the organizational structure is formalized and hierarchical in nature.
• The entrepreneur employs a flat organizational structure with informal networks.
• Challenges Faced By Entrepreneurs
• An entrepreneur is one who plays significsignificant role
in the economic development of a country. Finance,
Marketing the Business, Finding the Right
Business, Finding Good Customers, Keeping Up
With Industrial Changes and Trends
• Change in trends is a challenge an entrepreneur must
be prepared for when starting a small business. Trends
have made and broken lot of businessesFinding Good
Employees, Assembling a Business Team
• Common Mistakes in Entrepreneurship, Changing
Role of Entrepreneur:Don’t be afraid to fail, Get
organized
• , Don’t misinterpret your market, Don’t hire too
soon, Don’t give yourself the wrong salary, Don’t
move too slowly,
• Changing Role of Entrepreneur
• Entrepreneurs occupy a central position in a market economy. For
it’s the entrepreneurs who serve as the spark plug in the
economy’s engine, activating and stimulating all economic activity.
The economic success of nations worldwide is the result of
encouraging and rewarding the entrepreneurial instinct.
A society is prosperous only to the degree to which it rewards and
encourages entrepreneurial activity because it is the entrepreneurs
and their activities that are the critical determinant of the level of
success, prosperity, growth and opportunity in any economy. The
most dynamic societies in the world are the ones that have the
most entrepreneurs, plus the economic and legal structure to
encourage and motivate entrepreneurs to greater activities.
• Role of Women Entrepreneurs:Empowerment of
Women:Employment Generation:Promotion of
Women’s Rights:Economic Growth:Social
Impact:Community Development:
• Challenges faced by Women
Entrepreneurs:Gender Discrimination:Balancing
Work and Family Responsibilities:Lack of
Mentorship and Networking Opportunities:Skills
and Capacity Building:Legal and Regulatory
Constraints:
• Social entrepreneurship is the attempt to draw upon business techniques to
find solutions to social problems. haracteristics of Social Entrepreneur
• The usual ideologies and principals do not holdback social Entrepreneurs. They are
always looking at breaking them.
• Social Entrepreneurs are impatient. They do not go well with the bureaucracy
around them.
• Social Entrepreneurs have the patience, energy and enthusiasm to teach others.
• Social Entrepreneurs combine Innovation, Resources and Opportunity to derive
solutions to Social problems.
• Types of social entrepreneurship:The Leveraged Non-Profit:The
entrepreneur sets up a non-profit organization to drive the adoption of an
innovation that addresses a market or government failure. The Hybrid Non-
Profit:The entrepreneur sets up a non-profit organization but the model includes
some degree of cost-recovery through the sale of goods and services to a cross
section of institutions, public and private, as well as to target population groups
• The Social Business Venture:The entrepreneur of a social business venture seeks
investors who are interested in combining financial and social returns on their investments.
Examples of Social Enterprises:Aravind Eye Hospital & Aurolab
• Social Entrepreneur: Dr.Govindappa Venkataswamy (Dr. V) & David Green
• Type of Organization: Trust
• Location: Madurai, India,Shri Mahila Griha Udyog Lijjat Papad
• The social entrepreneur sector is increasingly important for economic (and social)
development because it creates social and economic values:The social entrepreneur sector is
increasingly important for economic (and social) development because it creates social and
economic values
• :Employment Development:Innovation/ New Goods and Services; Physical capital
• The initial endowment of social capital often brings access to physical capital,usually in the
form of rather run-down buildings. Financial Capital
• The initial network of supporters and helpers is vital to bring access to funds, through
fundraising, donations and corporate giving. The more diverse and richer the network, the
easier it will be to raise the funds.
• Entrepreneurs are people who create and develop enterprises and likewise “entrepreneurship” is the process
through which enterprises are set up. First, it will provide employment opportunities. Rural entrepreneurship is
labour intensive and provides a clear solution to the growing problem of unemployment. Secondly, it can help
check the migration of people from rural to urban areas in search of jobs. Features
• Rural industries also help preserve the age-old rich heritage of the country by protecting and promoting art and
creativity.
• The development of rural industries by providing jobs to rural unemployed helps in reducing disparities in income
between rural and urban areas.
• These industries promote balanced regional development by dispersing industries to rural areas. Types:Artisan
Entrepreneurs
• These entrepreneurs represent the skilled persons in rural society. Such skills are either acquired through
professional training in association with their kinship group, or through inheritage as for example, blacksmithy,
carpentry, etc. Farm Entrepreneurs:Merchant and Trading Group
• This includes primarily the business community of rural areas who form a small segment of rural populationGeneral
Entrepreneurs:Agro based industries include processing and sale of agricultural products such as pickles, jiggery,
juice, fruit jam, dairy productsTribal Entrepreneurs,
• Significance:
• Rural entrepreneurship can significantly contribute towards promotion of balanced regional development.
• Rural entrepreneurship has the potential of protecting and promoting traditional artistic activities, art, craft and
handicraft of the rural areas. The social problems like poverty, inequality, caste distinctions can be reduced by rural
entrepreneurship.
• Benefits of Rural Industrialisation:
• Rural industries are labour-intensive. They provide additional employment
to men and women. Ensure decentralisation of economic power and
elimination of monopolistic exploitation.
• Rural industries provide additional employment opportunities, raise
production and improve economic conditions in rural areas. Decentralised
production through network of well-knit rural industries obviates the
necessity of complicated managerial and competitive marketing
techniques, thus reducing the costs on account of overheads.
• Rural industries will strive to build up village republics and human
resources development.
• Rural industrialisation leads to the development of rural areas thereby
lessening the disproportionate growth in large cities, reducing the growth of
slums, social tensions, exploitation and atmospheric pollution.
Unit-3Entrepreneurial Finance, Assistance
and Entrepreneurial Development Agencie
• Create a realistic forecast of your financial situation.
• Estimate your funding need.
• Create a funding time frame. Runway: The amount of time funding
needs to last before your business becomes profitable and self-sufficient or
until additional funding will be required
• Burn rate: The speed with which you expect to spend the funding you’ve
raised in practical terms, the amount of cash required each month to cover
the costs of staying in business
• Tip:Create a 12-month detailed projection and expand it into three to five
years by estimating a year-over-year growth percentage. Doubling your
results year-to-year isn’t realistic, so keep your growth estimates well under
the 100 percent level
• Warning:. Have an accountant, banker or experienced business owner
review your projections with a critical and realistic eye.
Sources of finance: Banks

• Internal Self-Finance:the household not only invests out of its own saving but it
also has surplus which it lends to other units via, financial institutions. Like banks,
capital market etc.
• Public Deposits:Under this system, people keep their money as deposit with these
companies or managing authorities for a period of six months, a year, two years,
three years or so.
• Loans from Banks:
• The Managing Agency System:In the past when there was a great shortage of
industrial finance and almost complete lack of financial institutions, and capital
market in the real sense had not even come into existence, managing agents did
render a valuable service in the promotion of industries within the country
• Development Finance Institutions:The new institutions supplying industrial
finance are Industrial Development Bank of India, Industrial Finance Corporation of
India, Unit Trust of India, and General Insurance Corporation of India, Industrial
Reconstruction Bank of India, State Financial Corporations, and State Industrial
Development Corporations.
SOURCES OF FINANCE FOR A SMALL
BUSINESSES

• OWN CAPITAL / SAVINGS

• FAMILY & FRIENDS
• BANKS
• SMALL BUSINESS LOANS
• PERSONAL LOANS
• CROWDFUNDING:A typical example of crowdfunding is
proposing people to invest US$ 10, and even if 1000 people
invest, the company can raise US$ 10,000. Such financing is
usually done for a particular project. The benefit of
crowdfunding is that small company can make flexible
proposals as per their requirement.
Role of Central Government and State Government in
Promoting Entrepreneurship with Various incentives,
Subsidies, Grants

• Startup India: Through the Startup India initiative, Government of

India promotes entrepreneurship by mentoring, nurturing and
facilitating startups throughout their life cycle. Make in India:
Designed to transform India into a global design and manufacturing
hub, the Make in India initiative was launched in September
2014.Atal Innovation Mission, AIM is the Government of India’s
endeavour to promote a culture of innovation and entrepreneurship,
and it serves as a platform for promotion of world-class Innovation
Hubs, Grand Challenges, start-up businesses and other self-
employment activities, particularly in technology driven areas
• The Digital India initiative was launched to modernize the Indian
economy to makes all government services available electronically.
• Export Oriented Units: Fiscal and Tax Concessions
• Some incentives given to EOUs
• No import licences are required by the EOU units and import of all industrial inputs exempt from customs duty.
• Supplies from the DTA to EOUs are regarded as deemed exports and are hence exempt from payment of excise
duty which means that high quality inputs are available at lower costs.
• On fulfillment of certain conditions, EOUs are exempted from payment of corporate income tax for a block of 5
years in the first 8 years of operation. Export earnings continue to be exempt from tax even after the tax holiday
is over
• . Fiscal Incentives available to 100% EOUs:
• Exemption from Customs and Central Exciuse duties on import/local procurement of Capital goods, raw materials,
consumables, spares, packing material etc.
• Reiumbursement of Central Sales Tax (CST) on purchases made from Domestic Tariff Area (DTA) Special Package
of Incentives for Star Export House EOUs (Fast Track Clearance):
• Permissions and Customs clearances for both Imports and Exports on self declaration basis.
• Fixation of Input-Output norms on priority within 60 days.
• Exemption from compulsory negotiation of documents through Banks.
• 100% retention of foreign exchange in EEFC account.
• Enhancement of normal repatriation period from 180 days to 360 days.
• Exemption from furnishing of Bank Guarantee in Schemes under this policy.
Overview of MSME Policy of Government in
India

Investment
The guidelines with regard to investment in plant
in plant and andor equipment as defined in the MSMED Act, 20
machinery Investment in equipment
machinery excluding land
excluding land and
and building for
Nature of activity of the building for enterprises
enterprises engaged in
Enterprise engaged in providing or
manufacturing or
rendering of services
production, processing or
(loans up to Rs 1 crore)
preservation of goods
Not exceeding Rs.25.00 Not exceeding Rs.10.00
Micro
Lakhs Lakhs
More than Rs.25.00 lakhs More than Rs.10.00 lakhs
Small but does not exceed but does not exceed
Rs.500.00 lakhs Rs.200.00 lakhs
More than Rs.500.00 lakhs More than Rs.200.00 lakhs
Medium but does not exceed but does not exceed
Rs.1000.00 lakhs Rs.500.00 lakhs
• What is the Importance and role of MSMEs in the Indian Economy?
• To generate large scale employmen ,&to sustain economic growth and increase exports, Making
Growth Inclusive, The Twelfth Plan has listed the following as the objectives for the MSME
sector
• Promoting competitiveness and productivity in the MSME space.
• Making the MSME sector innovative, improving technology and depth.
• Enabling environment for promotion and development of MSMEs.
• Strong presence in exports.
• Improved managerial processes in MSMEs. What are the challenges of MSME?
• Most of the unregistered MSMEs would predominantly comprise micro-enterprises, particularly confined to
rural India, operating with obsolete technology, limited access to institutional finance etc. And there is a
need to transform the huge unregistered MSME into registered MSME.
• Need to improve the competitiveness of the overall MSME sector.
• Access to technology.
• IPR related issues.
• Design as a market driver.
• Wasteful usage of resources/manpower.
• Energy inefficiency and associated high cost.
• Social Security for MSME Sector Employees
• During last year, the government highlighted the need
for introducing social security for the MSME sector
employees. The finance ministry note says that a
mission will be launched to ensure that they have Jan
Dhan Accounts, Provident Fund and Insurance. Modi
added that the implementation of such an ‘Outreach
Programme’ for monitoring Social Security for MSME
Sector Employees will be intensively monitored over the
next 100 days.
Entrepreneurship Development Institute (EDI)

• 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). EDI has
helped set up twelve state-level exclusive entrepreneurship
development centres and institutesCurrently focusing on:
• (1) Entrepreneurship education and research;
• (2) Micro-enterprises, micro-finance and sustainable livelihood;
• (3) SMEs and business development services;
• (4) Cluster competitiveness, growth and technology;
• (5) Social entrepreneurship and CSR and
• (6) Women entrepreneurship and gender studies.
• The ‘District Industries Centre’ (DICs) programme was started by the central government in 1978 with
the objective of providing a focal point for promoting small, tiny, cottage and village industries in a particular
area and to make available to them all necessary services and facilities at one place. Activities of District
Industries Centre (DIC):
• Economic Investigation
• Plant and Machinery
• Research, education and training
• Raw materials
• Credit facilities
• Marketing assistance
• Cottage industriesFunctions of District Industries Centre (DIC):
• Acts as the focal point of the industrialisation of the district.
• Prepares the industrial profile of the district with respect to :
• Statistics and information about existing industrial units in the district in the large, Medium, small as well as
co-operative sectors.
• Opportunity guidance to entrepreneurs.
• Compilation of information about local sources of raw materials and their availability.
• Manpower assessment with respect to skilled, semi-skilled workers.
• Small – Scale Industries of India (SSIs)
• An industrial undertaking is graded as small-scale industrial
undertaking in which the investment in fixed assets in plant and
machinery, whether held on ownership terms, on lease or on hire
purchase, does not exceed R.s 10 million. Thus the speedy
growth of entrepreneurship in the country may be
attributed to mainly two conditions:
• Economic Reforms Policy, 1990, which liberalized the industrial
policy by doing away with the compulsory cumbersome licensing
system and making trade practices easier.
• Cumulative impact of urbanization and modernization processes
in the country.
• The NSIC was established in 1995 by the Central Government with
the objective of assisting the small industries in the Government
purchase programmes. Its main functions are to:
• Provide machinery on hire-purchase scheme to small-scale
industries.
• Provide equipment leasing facility.
• Help in export marketing of the products of small-scale industries.
• Participate in bulk purchase programme of the Government.
• Develop prototype of machines and equipments to pass on to small-
scale industries for commercial production.
• Distribute basic raw material among small-scale industries through
raw material depots.
• he principal activities of EDII are conducting and
organising EDPs for potential entrepreneurs throughout
the country, generation and dissemination of new
knowledge, conducting seminars and workshops on
various themes, extension of motivation programmes
for officers, performance improvement programmes for
existing entrepreneurs, competent management
programmes for unemployed non-technical graduates
etc. The various programmes run by EDII is said to be
the oldest, largest, most comprehensive, organised and
successful EDPs in the country.
Role of Agencies Assisting Entrepreneurship:
NIESBUD, NEDB

• It was established in 1983 by the Government of India. It is an apex body to

supervise the activities of various agencies in the entrepreneurial development
programmes. It is a society under Government of India Society Act of 1860.The
major activities of institute are:
• i) To make effective strategies and methods
• ii) To standardize model syllabus for training
• iii) To develop training aids, tools and manuals
• Salient Features:
• (i) To identify and remove entry barriers for potential
entrepreneurs (first generation and new entrepreneurs) including study on
entrepreneurship development.
• (ii) To focus on existing entrepreneurs in micro, tiny and small sector and identify
and remove constraints to survivals, growth and continuously improve performance.
• (iii) To facilitate the consolidation, growth and diversification of existing
entrepreneurial venture in all possible ways.